Financial adviser has pulled this off through disciplined saving and cautious investing. -ST
Magdalen Ng
Tue, Dec 11, 2012
The Straits Times
Financial adviser Damien Pang was inspired by a client to be financially free by the age of 35.
He said: "There was a lady client who was able to do so through good business acumen coupled with an unassuming lifestyle."
The 32-year-old reckons he has already achieved his goal through a disciplined saving habit and cautious investing.
"When I started out in the financial planning business, I did not want to be just another agent selling financial and insurance plans. Rather, I wanted to be able to live by example to show that it is possible to be financially free early through good and prudent financial discipline," he said.
Mr Pang is married to fellow financial adviser Isabelle Oh and they live with his parents.
The couple met during their student days at the Nanyang Technological University, where he graduated with a degree in business marketing.
He used to work in the luxury division of the L'Oreal group, specialising in marketing for high-end cosmetics and fragrances.
Q: Are you a spender or saver?
I am definitely a saver.
I always hold tightly to the principle of spending what's left after your savings, rather than saving what's left after spending.
I save around 70 per cent of my monthly income.
Whenever I receive my pay, I quickly transfer part of it to a separate bank account so I will not be tempted to spend it.
This is my opportunity fund and rainy day fund.
The remaining amount will be used to grow my portfolio of dividends and interest-yielding investments.
I started a "sugar mummy fund" with the intention of using the annual returns from it to pay for electronic gadgets and holidays with my family.
It was tough initially but I am now able to enjoy small overseas escapades and electronic purchases without dipping into my savings. That's the beauty of deferred enjoyment.
Q: How much do you charge to your credit cards every month?
I have only one credit card because I do not want the hassle of tracking multiple bills every month.
I charge an average of $3,000 a month.
I also make it a point to pay off the bill fully as I firmly believe in spending only money that I have because enjoying future money now through credit is actually an unconscious act of pushing back one's retirement.
I tend to draw only $200 each time I go to the ATM because I have this fear that the more money I have in my wallet, the greater the temptation to buy things.
Q: What financial planning have you done for yourself?
I am not a hard-core investor, and I always tell my customers that I am a "safety first" person because I treasure a peaceful night's rest more than anything else.
Currently, I am keeping 50 per cent of my portfolio in liquid instruments in anticipation of any opportunities should the economy plunge.
I manage it myself.
I have been able to achieve average returns of about 4 per cent to 5 per cent a year, and that is good enough for me even though it is only on par with inflation.
I have a weak heart for fluctuations, thus my investment objective is capital preservation while achieving net-worth growth through working and saving hard.
My insurance coverage is for US$1million (S$1.22million) for death and disability.
I am also worried about critical illnesses because, in my line of work, I have witnessed Singaporeans diagnosed with cancer even at an early age.
I recently increased my critical illnesses coverage to US$500,000.
I also ensure that my hospital shield plan is up to date so that my medical bills are all covered and, should anything unforeseen happen to me, my family will be financially protected.
Q: Moneywise, what were your growing-up years like?
I grew up in a family of five. My dad was a factory production manager while my mum was a canteen operator.
We were not rich but also not lacking materially. Life was simple but happy.
While we could not afford long and expensive overseas trips, we enjoyed driving trips to Malaysia and being able to spend quality time together.
I was forced to save as my parents would put aside all my red packet money in a savings account.
I would cry because I didn't have a lot of money to buy toys.
Even while at university, I was given only US$50 a week to spend and I had to budget and manage my expenses very carefully.
This amount included my dating expenses with Isabelle back then.
However, I grew to appreciate these virtues of forced saving and thriftiness.
My parents finally felt that I was mature enough to handle my own money upon graduation.
That was when they gave my POSB Bank book to me and, to my pleasant surprise, I discovered that my savings account had $50,000.
Q: How did you get interested in investing?
During the dot.com bubble, I got interested in investing because everyone seemed to be making money, no matter which stock they bought.
That period coincided with my National Service, and that was when I had the luxury to start reading more to find out about investments.
Q: What property do you own?
I own two properties in Singapore.
My first property is a 720 sq ft apartment in Tiong Bahru, which I bought in 2006.
It has since doubled in value.
The second apartment is along Sixth Avenue. It is 1,200 sq ft and I bought it last year for US$1.2 million. One of the nearby units was recently sold for about US$1.6 million.
The two properties are rented out for about $5,000 a month.
Q: What's the most extravagant thing you have bought?
My properties have been my most extravagant purchases.
My wife always jokes that the economy will collapse if it has to wait for me to spend and that only property agents, taxi drivers, book sellers and durian stall-owners will earn my money.
Q: What's your retirement plan?
My initial plan was to be financially free by age 35 and I feel that I have achieved this goal.
However, I do not plan to retire at all and plan to continue with my passion of helping my customers stay financially protected at every stage of their lives.
My wife and I need around US$5,000 a month, which is already taken care of by our passive income.
We have also saved up enough to pay off both the mortgages should interest rates spike.
We have diversified our available cash into endowment plans so that we will have an extra lump sum of cash in future in addition to our passive income.
I want to ensure that I can enjoy my current lifestyle even after retirement and that my family is financially protected at all times.
Q: Home is now...
I am living with my parents in a terraced house along Sixth Avenue.
Q: I drive...
I travel around using public transport and this keeps my expenses low, which allows me to pay off my mortgages doubly fast.
