"Pay Yourself First”—How One Woman is Investing For Peace of Mind and Early Retirement: Money Diaries #5

In this week’s Money Diaries, we speak to Ping Theng. Ping Theng is in her 40s and works in a family office in the financial services industry. She shares about taking a self-directed approach to investing, balancing both discipline and flexibility. While she looks out for income-generating assets with high-growth opportunities, her approach is also grounded in careful research and taking a clear-eyed view of inflation and risk. 

The following is a deep dive into her personal finance habits and investment strategy. 

Money Diaries #5: "Pay Yourself First”—How One Woman is Investing For Peace of Mind and Early Retirement

How would you describe the life stage you are in at the moment? E.g. single, married, divorced, going to marry, buying a house etc. 

I’m single.  

Living situation: are you renting, staying with your parents, or do you own a home, etc? 

I live independently and own my own place. 

Breakdown of typical expenses in a month. Categories such as food (meals), transportation, entertainment, groceries, kids’ tuition, insurance premiums, etc. If no absolute numbers, please provide as a % of your total spending.

I do not monitor my expenditures by category as I find it a hassle and too regimented. I also believe impulse buys sometimes provide the best retail therapy! I adopt a “pay myself first” concept and direct every pay check to 2 accounts – 1 for daily expenditures and the other for investments/others. I only draw on my expenditures account as my way of monitoring my expenditures.

Estimate of how much you save every month. 

I save more than 50% of my income.

What are your financial/investment goals?

I categorise my funds into different pools to secure my lifestyle and retirement spending – cash and cash equivalents for daily expenditures and emergency situations which I mostly invest in Singapore Savings Bonds (SSB). Given that SSB are withdrawable anytime by giving 1 month’s notice, it can be utilised as a savings account earning interest of around 2% to 3% per annum, higher than a typical savings account. 

The next pool is in higher-yielding instruments such as high yield bonds and dividend stocks which include Singapore bank shares with dividend yields of between 4% to 7%. 

Finally, I set aside some cash in an investment account for high-growth investments with capital gains of 15% and more in US, Singapore and Malaysia stocks.

I would broadly categorise my investment portfolio as follows: 

• Safe and guaranteed portfolio: This portfolio fulfils an important purpose in ensuring certainty of cash flow and provides peace of mind, especially when I am fully retired and have no active employment income. The drawback of this portfolio is that it typically yields a low return of 2 to 3% per annum and is insufficient to beat long term inflation. I have accumulated savings in SSB, CPF and insurance annuities which is sufficient for a mid to high 4-figure monthly payout at retirement.
• High-yield portfolio: This portfolio beats long-term inflation and allows me to accelerate and achieve full financial freedom prior to age 55, and covers unexpected contingencies, such as spike in medical costs due to inflation or changes in health condition, additional expenses from a change in lifestyle such as living abroad for extended periods etc.
• Growth portfolio: I select stocks in the growth portfolio based on a 15% baseline annual return. The intention of this portfolio is to accelerate the build up of the safe and guaranteed and the high-yield portfolios.

How close/far would you say you are from your financial goals? 

I like to view financial goals as a work-in-progress. Circumstances change, and financial goals should be reviewed every 6 or 12 months.

Describe your investment approach / What steps have you taken or are taking towards achieving these goals? What are some challenges you’ve faced? 

I prefer to invest in what I know and I spend a lot of time analysing financial statements of the companies I invest in. I don’t typically invest in unit trusts for this reason – they can be too spread out at times and I don’t know why there are significant price fluctuations when it happens. I usually invest in passive index ETFs such as S&P500 for diversification purposes.

How would you describe your mindset with regards to money? Describe some of your money habits and beliefs. 

I would like to feel secure in my finances, and investing in income-yielding instruments makes the investment process less painful. Most of the time, we are unable to time the market at the lowest and prices do fall despite our best efforts. Nevertheless, the dividend payouts make the wait less onerous. I advised a friend to invest in Frasers Hospitality Trust (FHT) right after the privatisation offer, which did not go through back in 2022. FHT’s unit price fell to a reasonable level, offering 4% to 5% yield and well below its net asset value. My view then was the offeror could make another attempt to take it private and/or the tourism sector would recover with the relaxation of Covid travel restrictions. The unit price actually fell below the investment entry price and took 2 years for the investment to realise a 40% gain even without a privatisation offer and, in the meantime, the investment yielded another 4% distribution yield per year. In short, for such investments, we are paid to wait for the fair value to materialise.

What is one money habit you struggle with the most? (Alternatively: What is the expense you find hardest to cut down on?) 

I would like to consider both money and time factors before I spend. We may purchase a device, equipment or membership with the view that it will improve a certain aspect of our lifestyle. However, the hardest thing is actually to acquire the habit of using the product consistently to realise such benefits. For instance, it is very easy to spend and acquire a gym membership but it requires time and effort to visit the gym consistently. 

Is there a financial decision you wish you could do over?

I would like to have a stronger conviction in my investment decisions. I have been using an iPhone since 2013 and Apple stock has appreciated by 10 times over the same period.

What are you most concerned about when it comes to personal finances? 

I noticed an escalating increase in hospitalisation insurance premiums in recent years and am concerned about the impact on my retirement funding at an older age. Assuming a 10% increase in hospitalisation insurance premiums every year, these premiums will cost more than S$20,000 annually when I reach age 65. 

If you won S$1 million in the lottery tomorrow, what would you do with the money and why? How would your spending/lifestyle change? 

80% of the S$1 million will go into the different investment pools I have mentioned earlier. The remaining 20% will go into experiential learning – I would include travel, learning a new skill or trade, and charity in this pot.

What is one practical financial tip that has been useful in your own financial journey? 

Separating my banking accounts and investments into different pools for effective monitoring and risk diversification. Once you are secure in your finances, you will make better decisions in your life. Financial planning and investing need not be a lonely process and I am glad to have family and friends who are with me on this financial journey, which makes me strive to make better financial decisions.

What is a personal finance related lesson you’ve learned that you think others might benefit from? 

Understand the power of inflation as a possible headwind or tailwind to support your financial goals especially in the case of long term (longer than 10 years) financial planning. For instance, a 55-year old in 2025 who sets aside sufficient funds in an annuity may receive a monthly payout of S$3,500 at age 65 commencing from 2035. 

However, after accounting for inflation of say 2% per annum for the ten years from 2025 to 2035, the stated payout of S$3,500 only has a purchasing power of S$2,900 based on 2025 prices. The real value of the S$3,500 stated payout continues to be eroded to less than S$2,000 when the person reaches 85 years old 30 years later. 

Conversely, taking on “good” debt when purchasing an income-producing asset such as property for instance, inflation has the effect of reducing the real value of the debt amount over time.

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