Financially independent but still working? It’s a possibility worth exploring

There’s nothing wrong with Financial Independence, Retire Early as a goal, but true financial freedom can look very different from the picture this ethos paints. (Illustration: CNA/Samuel Woo, iStock)

Over the past decade, the FIRE movement (Financial Independence, Retire Early) has been gaining widespread popularity online, inspiring and motivating more people to manage their money better in order to retire sooner.

Some fantasise about how they can “fire” their boss once they retire early. Others dream of being able to stop working entirely to spend time on family or passion projects.

There’s nothing wrong with FIRE as a goal, but true financial freedom can look very different from the picture this ethos paints. 

NO LONGER TRAPPED BY OUR NEXT PAY CHEQUE

The relationship between our work and finances is a tightly entwined one – most of us need our next pay cheque in order to cover our living expenses and bills, so we keep working. As such, it can be easy to equate the idea of “financial freedom” with that of “freedom from work”. 

But in reality, financial independence and early retirement are two distinct, different things. 

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Not everyone wants to stop working. Studies show that purpose and productivity are essential for our long-term happiness – even post-retirement. 

Many who reach financial independence continue working, not because they have to but because they want to. But what financial freedom really gives us is the power to make decisions about how we work without worrying too much about financial repercussions. It allows us to choose roles that align with our values, take breaks when needed, or say no to toxic work environments. 

When we're no longer trapped by the need to rely heavily on our next pay cheque, we gain the freedom to work for our own growth and purpose. 

WHAT IS YOUR VERSION OF FIRE?

The original FIRE ethos called for saving aggressively (usually more than half your income) and investing wisely so you can retire early. It sounded great in theory, but for most, it often required high income and extreme frugality. 

Today, the FIRE movement has evolved to encompass varying definitions of financial independence. It is no longer about reaching an end goal, but more about the type of lifestyle we desire and the level our finances will need to hit in order to support our aspirations. 

For instance, “Lean FIRE” refers to a minimalist lifestyle where you retire with a lower budget. There’s also “Barista FIRE”, describing a point where withdrawing from your savings and investments can cover your major expenses and bills, while you supplement the shortfall with part-time or passion-based work (such as being a barista).

The original FIRE ethos called for saving aggressively and investing wisely so you can retire early. It sounded great in theory, but for most, it often required high income and extreme frugality. (Photo: iStock)

These newer variations of FIRE may seem like dilutions or compromises – but in reality, they are just as true to the core essence of financial freedom. 

True financial freedom empowers us with choice rather than demanding retirement. It should mean more options, not less. 

This shift in mindset can be liberating. Instead of chasing a retirement date or age, we can focus on building a lifestyle where money supports flexibility, purpose, and well-being rather than escape.

Perhaps you might decide to stay in your current job, but negotiate fewer work hours that would allow you to care for your children or ailing parents. You might explore part-time roles, start a small business, or pull a Jeremy Tan and pursue advocacy for change (even if it’s not as an independent candidate in a general election). 

ARE WE LOOKING FOR ESCAPE, OR A BETTER BALANCE? 

Out of all the people I know who’ve successfully achieved financial independence, the happiest ones are those who never quit working – but it’s not because they particularly love slogging. 

A friend downsized his role to two days a week to spend more time looking after his mother after her cancer diagnosis. Another stopped chasing yearly pay increments and started mentoring juniors instead, finding deeper fulfilment in growing the next generation than a fatter pay cheque.

Clearly, the real problem isn’t work itself – many people find meaning, identity, and purpose through their work. Rather, it is the lack of control over what, how, when, and why we work that has us dissatisfied.

Financial freedom can still mean not working at all, but it’s important for us to understand that this isn’t the only version of true freedom. 

Maybe it’ll mean a smaller pay cheque, but while it may look to others like you’re settling for less, you’re in fact gaining more in time, autonomy, and peace of mind.

Ironically, when we do work that we’re passionate about – work that energises us instead of draining us – we are much more likely to stay the course.

WE DON’T HAVE TO WAIT

Even so, I get why FIRE remains so popular not just in Singapore but around the world. 

Trying to achieve financial security is getting trickier and trickier, especially in a world where inflation only seems to keep climbing and job stability is quickly vanishing in the face of repeated layoffs and the proliferation of artificial intelligence. 

That’s why the FIRE movement appeals to millions of people around the world, because it seems to offer a solution. A way to regain control.

But the core tenet of financial independence was never about never working again – it was about never needing to work out of fear or survival.

So instead of running towards an arbitrary finish line, consider the path you’re on instead. Is there a way to redesign the way work fits into your life now? 

We don’t have to wait until we retire, whether it’s early or not.

Dawn Cher, also known as SG Budget Babe, has been running a popular blog on personal finance for the last 10 years.

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China's quantum computing industry has developed replicable, iterative engineering production capabilities: developer

 

A model of Origin Wukong, China's independently developed third-generation superconducting quantum computer Photo: VCG

China's quantum computing industry has made new progress. Recently, Chinese startup Origin Quantum in Hefei, East China's Anhui Province, launched Origin Tianji 4.0, a self-developed superconducting quantum measurement and control system that supports 500-plus-qubit quantum computers. The progress indicates that China's quantum computing industry has achieved replicable and iterative engineering production capabilities, laying the foundation for the mass production of hundred-bit quantum computers, Kong Weicheng, head of the system's development team, told the Global Times.

Dubbed the "nerve centers" of quantum computers, measurement and control systems manage precise signal generation, acquisition, and control for quantum chips. In 2018, Kong's team developed the first domestically produced quantum computer control system with completely independent intellectual property rights, filling a gap in the domestic quantum computing measurement and control field.

The latest Origin Tianji 4.0 system can effectively shorten the development and delivery time for quantum computers at the hundred-bit scale, while enhancing the system's automation capabilities and long-term stability, according to Kong, who is also deputy director of Anhui Quantum Computing Engineering Research Center.  

Previously, China relied heavily on imports for high-end instruments and equipment, and we could only use traditional commercial instruments to build our quantum computing measurement and control systems, with signal output and acquisition tasks being conducted separately. This approach was not only costly and redundant in functionality, but also had drawbacks such as poor compatibility and difficulty in integration, Kong told the Global Times. 

"Now, after multiple iterations, China's quantum computing measurement and control system has improved in terms of product scalability, integration, performance stability, and automation level. What we need to do is to go from nothing to something, and from something to a usable and durable product," Kong said. 

The Origin Tianjin 4.0 system was built and upgraded based on its preceding 3.0 version, which powers Origin Wukong, China's independently developed third-generation superconducting quantum computer. 

Since it went into operation on January 6, 2024, Origin Wukong has served users in 139 countries and regions over 26 million times, and completed more than 380,000 quantum computing tasks, covering a wide range of industries from finance to biomedicine, the Global Times learned from the team. 

According to Kong, in recent years, the process of quantum computing industrialization has been growing rapidly around the world. Eight years ago, Barclays Bank began to explore the application scenarios of quantum technology in the financial sector. Subsequently, leading international financial institutions such as JPMorgan Chase and Goldman Sachs formed quantum research teams to explore quantum computing applications.

Domestically, quantum computing has been explored in various industries, including national defense and security, biopharmaceuticals, energy materials, artificial intelligence, financial markets, and transportation and aviation. However, "there is still a significant gap from the industry's expectations for exponential acceleration and leaps in computing power," Kong said. 

According to Kong, the development of quantum computers is influenced by various factors such as hardware devices, cooling environments, and temperature, and these challenges require cross-disciplinary collaboration, including efforts in ecological construction and other dimensions. - Global Times In Depth

Heralding the Golden Age of Cryptocurrency

 ■ Presidentelect Donald Trump’s embrace of cryptocurrencies marks a pivotal moment

■ Analysts projecting Bitcoin to reach US$200,000 by end-2025

■ The outlook for Bitcoin and the broader crypto market is overwhelmingly positive, but risks remain

THE cryptocurrency world is buzzing with speculation that bitcoin could reach an unprecedented US$200,000 by 2025. While bitcoin has yet to stabilise around the US$100,000 mark, its meteoric rise in 2024 has emboldened investors and analysts to project a bullish future for the world’s leading digital asset.

Bitwise Asset Management, a prominent voice in the crypto sphere, has described the upcoming year as the Golden Age of Crypto.

According to the firm, the regulatory landscape in the United States has significantly improved following the 2024 US elections. President-elect Donald Trump’s embrace of cryptocurrencies marks a pivotal moment.

“We believe we are entering the Golden Age of Crypto,” Bitwise analysts, led by chief investment officer Matt Hougan and head of research Ryan Rasmussen, state in the group’s report.

Bitwise expects Crypto’s magnificent three – Bitcoin, Ethereum and Solanato – to hit new all-time highs in 2025, with bitcoin leading the rise to trade above US$200,000.

In addition to Bitwise, other analysts projecting bitcoin to reach US$200,000 include Geoff Kendrick, head of crypto research at Standard Chartered, and analysts at Bernstein, led by Gautam Chhugani.

Kendrick forecasts that bitcoin could hit this milestone by the end of 2025, driven by institutional investments in bitcoin exchange-traded funds (ETFS).

In a recent note, he stated that Standard Chartered’s target of US$200,000 by 2025 is “achievable”, adding: “We would become even more bullish if bitcoin experienced accelerated adoption by US retirement funds, global sovereign wealth funds, or the establishment of a potential US strategic reserve fund.

“We anticipate institutional flows to continue at or exceed the pace set in 2024. Microstrategy, for instance, is ahead of its Us$42bil threeyear plan, suggesting its purchases in 2025 will likely match or surpass those of 2024.”

Meanwhile, Bernstein’s analysts attribute their bitcoin price target of US$200,000 by end-2025 to unprecedented demand stemming from spot bitcoin ETFS managed by leading asset managers, according to media reports.

Trump effect

Essentially, crypto has emerged as a clear winner in the 2024 US elections, giving it a brighter regulatory outlook in the United States, Bitwise notes.

For one thing, Trump has announced plans to create a strategic bitcoin reserve and nominated Scott Bessent as Treasury Secretary. Bessent’s earlier comment that “crypto is about freedom and the crypto economy is here to stay” reflects the administration’s pro-crypto stance. The reshuffling of the Securities and Exchange Commission (SEC), which has historically taken a sceptical view of digital assets, adds another layer of optimism.

Similarly, Bernstein analysts attribute bitcoin’s rise to Trump’s support for cryptocurrencies. They point out that his plan to position the United States as a global leader in the crypto space and his choice of Paul Atkins, a known crypto advocate, to lead the SEC have bolstered market confidence.

Record highs

Bitcoin has since cooled to below US$95,000 at the time of writing, after reaching an alltime high of US$103,992 earlier this month.

This marks a 141.72% increase year-to-date as of Dec 6, 2024. According to Bitwise, the surge was largely driven by the US launch of spot bitcoin ETFS, which set records with Us$33.6bil in inflows within their first year.

Other crypto assets, including Ethereum and Solana, also posted substantial year-to-date gains of 75.77% and 127.71%, respectively. This performance highlights how cryptocurrencies, led by bitcoin, ethereum and solana, have outpaced all major asset classes in 2024.

Crypto equities mirrored this bullish trend. Companies like Microstrategy and Coinbase saw their shares skyrocket by 525.39% and 97.57%, respectively. In comparison, traditional assets such as the S&P 500 and gold returned 28.07% and 27.65% over the same period, highlighting crypto’s dominance.

Catalysts for next milestone

The factors driving bitcoin’s trajectory towards US$200,000 are multifaceted, Bitwise highlights. The launch of bitcoin

ETFS in 2024 shattered expectations, and Bitwise believes 2025 will see even greater inflows.

“When US spot bitcoin ETFS launched in January 2024, ETF experts forecast the group to see Us$5bil to Us$15bil of inflows in their first year. They passed the higher end of that range within the first six months.

“Since launching, the record-setting ETFS have gathered Us$33.6bil in inflows. We expect 2025’s inflows to top that,” Bitwise says.

Drawing a parallel with gold ETFS launched in 2004, Bitwise notes that ETF inflows typically accelerate in subsequent years.

“The best historical analogy we have for the bitcoin ETF launch is the launch of gold ETFS in 2004. Flows petering out would be unusual,” it explains.

At present, major financial institutions such as Morgan Stanley, Merrill Lynch, and Bank of America have yet to fully embrace bitcoin ETFS.

Bitwise anticipates this to change in 2025, unlocking a wave of institutional investments. “The trillions of dollars these firms manage will start flowing into bitcoin ETFS,” Bitwise predicts.

Risk tolerance

While bitcoin remains the focal point, other cryptocurrencies like Ethereum and Solana are also poised for substantial gains in 2025. Bitwise’s price targets for Ethereum and Solana are US$7,000 and US$750, respectively.

Ethereum, despite its impressive 2024 performance, has faced competition from fastergrowing programmable blockchains.

However, Bitwise anticipates a “narrative shift” as activity on

Layer 2 blockchains and spot Ethereum ETFS gain traction.

Solana’s resurgence, driven by memecoin mania in 2024, is also expected to continue as serious projects migrate to its network, it says.

Meanwhile, JP Morgan points out that the role of crypto in portfolio construction is mostly a function of risk tolerance.

“Cryptocurrencies are inherently unpredictable: there is little visibility into future price movements and blockchain technology, while exciting, also has few barriers to entry, meaning tokens can become obsolete (and therefore worthless) as new ones enter the market with improved functionality,” the US asset management company cautions.

“As a result, for most investors, any allocation to crypto in a portfolio should be kept both small enough to ensure that even in the event of a significant sell-off it does not derail overall portfolio objectives and well diversified,” it adds.

While the outlook for bitcoin and the broader crypto market is overwhelmingly positive, risks remain.

Regulatory clarity, though improving, is still a work in progress.

The global economic environment, including interest-rate policies and geopolitical tensions, could also impact investor sentiment.

However, the convergence of favourable regulatory developments, institutional adoption and technological advancements positions bitcoin as a strong contender to achieve new heights, potentially reshaping the global financial landscape.

By CECILIA kok cecilia_kok@thestar.com.my

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CAPITAL MARKETS: Maximising your unit trust returns

 

Unit trust is an investment vehicle that allows you to invest in a variety of asset classes, offering diversification benefits ■ It’s important to select the best of breed unit trust funds tailored to your asset class and target market to optimise your investment porfolio. when comparing investment options, look at both the investment fee and the overall ROI that the investment offers.

Unit trust is an investment vehicle that allows you to invest in a variety of asset classes, offering diversification benefits. However, to get the most out of them, it’s important to select the best of breed funds, diversify your investments globally and invest through channels with lower management fees.

■ When comparing investment options, look at both the investment management fee and the overall ROI that the investment offers

A COUPLE of weeks ago, I met with a middle-aged couple interested in getting serious about achieving financial freedom.

During our initial consultation, they mentioned that their current investments were in the form of unit trusts recommended by a friend, who is an agent.

However, when I inquired about the specific asset classes their unit trust funds were invested in, they struggled to answer and seemed confused.

This is not an uncommon scenario. Unit trust, one of the most popular investment types in Malaysia, is often misunderstood.

Its easy accessibility and affordability makes it a seemingly a friendlier option for beginners compared to more aggressive investments.

The fact remains, there are still many aspects that are misunderstood about unit trust funds. The ease of access masks the complexities.

So, in this article, we are going to reveal five truths about unit trusts that will help investors make better investment decisions.

Misconception 1: Unit trust is a type of investment

Truth 1: Unit trust is an investment vehicle

A common misconception among new investors is that a unit trust is a standalone investment that focuses on a single asset class, such as property, gold or shares.

In reality, unit trust is an investment vehicle that allows you to invest in a variety of asset classes, offering diversification benefits.

Think of it as a basket containing a mix of investments, like equities, bonds, or even real estate investment trusts. This differs from directly buying individual stocks, where you invest solely in the equity asset class.

For example, if you are looking to invest in Malaysia equities, one option is to directly purchase stocks from several Malaysian companies on the stock market.

Alternatively, you can also invest in a Malaysian equity-type unit trust fund. While the unit trust fund is managed by a fund manager, the asset class you are investing in remains essentially the same or similar.

The specific investment vehicle that you choose is not important. What is more important is the underlying asset classes that you choose to invest into, whether it is using unit trust, exchange-traded funds (ETFS), or other vehicles.

For instance, if you purchase

Malaysian equity unit trusts from three different fund houses, you may think that you are diversifying your investments.

But in reality, these Malaysian equity funds, despite being from different fund houses, still concentrate your exposure to a single market segment.

In essence, you are putting all your eggs into one basket, ultimately investing in a single asset class.

Misconception 2: Equity unit trust funds are as risky as other high-risk investments

Truth 2: Equity unit trust funds are much safer than other high-risk investments

Unit trust funds benefit from a third-party trustee structure, which acts as a safeguard by ensuring the fund’s assets are held on behalf of investors and invested according to the trust deed.

Compared to many other investment schemes, unit trusts are indeed much safer.

Why is that? To illustrate this, let’s take a look at the accompanying diagram.

There are three parties involved in a unit trust fund in Malaysia. The first party is the unit holder, which is you.

Let’s say you invest RM100,000 capital through your fund manager. The money does not actually go into the fund manager’s bank account; it goes into a trustee account, which duty is to hold and protect your capital.

The fund manager is responsible for identifying which equities to allocate the capital to, while the trustee buys and holds the shares according to the fund manager’s instructions.

The beauty of this unit trust model is that it protects your investment.

Even if the fund manager hypothetically goes bankrupt, and has to close its business, your capital is still safe.

This is because the trustee, not the fund management house, holds your money.

Therefore, when you invest in a unit trust fund, you not only getting a return on investment (ROI), but also a return of investment – the return of your capital that you had initially put in.

Misconception 3: Investing in one or two super-performing unit trust funds can grow our serious money effectively

Truth 3: To grow your wealth effectively, you need to diversify globally

The quest for the “best” unit trust fund is a common one, but is it the right approach?

Many investors believe that investing in a single unit trust is effective enough to grow their money in the long run.

The truth is, the way to ensure the growth of your portfolio is by diversifying your asset classes globally.

Take, for example, the impressive performance of the global equities, which have shown an upward trend over the past 30 years.

Several key factors contributed to this phenomenon, including a rising global population and advancements in technology that fuel global demand and productivity.

As many businesses worldwide experience growth and increase their profit, this translates into a rise in global equities.

In contrast, if you were to invest in a share or one fund that focuses on one sector or country, the growth would be unpredictable and less sustainable in the long run.

Therefore, to achieve sustainable growth in your unit trust ROI, ensure that you are diversifying your unit trust funds globally to optimise your growth.

Misconception 4: Unit trust funds are expensive

Truth 4: Unit trust funds can be either expensive or cheap, depending on the channel and market you invest in

One crucial cost to consider for unit trust investors is the sales charge, also known as a front-end fee, applied when purchasing from your chosen fund manager.

When investing in unit trusts through traditional channels, the fees can sometimes go as high as 5%.

It’s important to scrutinise these fees, as high fees can significantly eat into your portfolio’s performance.

For example, suppose your unit trust generates an 8% return in the first year. If the front-end fee charged by your fund house is 5%, your actual return becomes only 3%.

Fortunately, with the online investment platform options and corporate unit trust advisor channel available today, there are many platforms where you can find front-end fees as low as 2% or even lower.

This makes choosing the right channel crucial, as it significantly impacts the fees you pay.

When comparing management fees of your different investments side by side, it is also important to take into account not just the percentage of the fees, but the overall returns of each type of investment and the markets that you invest in.

For example, investors often compare unit trusts to ETFS. ETFS typically boast lower average annual management fees compared to unit trusts.

Due to these lower fees, ETFS might appear to have the potential for higher returns compared to unit trusts.

On the surface, ETF may seem like a better investment option. However, this is not true for all markets.

For example, the investment environment and opportunities in developing markets are vastly different from the developed markets.

In such cases, some unit trust funds managed by experienced professionals have a higher chance of outperforming ETFS despite the higher fund management fees.

Therefore, when comparing investment options, consider the bigger picture.

Look at both the investment management fee and the overall ROI that the investment offers.

Misconception 5: Any unit trust fund salesperson can help you access to the best of breed unit trust funds from the whole market

Truth 5: Only selected qualified advisors can help you access the best of breed unit trust funds from the open market

To optimise your investment portfolio, consider investing in the best of breed unit trust funds tailored to your asset class and target market.

This means that if you are looking to invest in an equity fund in the local market, you should ensure that you pick the best quality fund among all the Malaysian equity funds.

But how do you identify the “best” unit trust fund for your needs? It’s not as straightforward as it seems.

The reality is that many investors rely on bankers or unit trust agents to recommend funds for them to invest in.

However, relying on these recommendations might not be the best approach, as their choices are often limited to the funds offered by their own companies or fund houses.

Therefore, the best recommendation they can make may not be the best fund for you to invest in.

Let’s take the example of several Malaysia equity funds under a single fund house.

The best performing fund within the single fund house, Fund A has achieved an ROI of just under 60% over a five-year period, which is quite impressive.

However, when we broaden our horizons and compare Fund A’s performance to options available in the open market, we are faced with the truth that the fund we initially thought was the best performer (Fund A) ranks lower when compared to other Malaysian equity funds in the open market.

Even more striking, the actual top performer in the open market delivered nearly double the ROI!

In other words, by choosing the seemingly “best” fund within one company only, you could have missed out on potential gains of an additional 60% of ROI. That’s a significant difference!

To ensure that you’re not missing out on potentially better options, consider consulting with independent financial advisors who operate under corporate unit trust advisor company.

They can advise and recommend a wider range of unit trust funds in the open market, not just limited to options within a single fund house.

From the points that I shared above, you’re now equipped with a better understanding of the ins and outs of unit trusts.

Unit trust funds can be a valuable tool to effectively grow your money.

However, to get the most out of them, it’s important to select the best of breed funds, diversify your investments globally and invest through channels with lower management fees.

By following these steps, you can build a sturdy portfolio that will grow steadily in the long run and provide you the financial growth that you seek.

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“Many investors believe that investing in a single unit trust is effective enough to grow their money in the long run. The truth is, the way to ensure the growth of your portfolio is by diversifying your asset classes globally.”