What you need in your personal financial model

I stumbled upon this article over the weekend about the kind of mindset you need to ensure success in your personal investments. It’s written by Yap Ming Hui, an expert in wealth management and he is one of Malaysia’s best selling authors on personal finance management. Have a read if you are into personal finance/managing your own wealth.

I just want to reiterate the first mindset which is “to always be clear of the big picture”. Yap highlighted that “the key is to be as detailed as you can possibly be”, when it comes to planning and modelling your investment portfolio.

I couldn’t agree more. When it comes to investing, there are a lot of variables and assumptions that you need to factor in. For my household financial model, I actually included to the extent the fees schedule of my kids’ education from pre-school to university (and which country I want them to go to because it matters, the cost of living in the US can be substantially higher than the UK, so that needs to be embedded in the model as well). I also have factored in how many households would I have in my house over time and when the numbers vary (so that includes helpers, driver if I ever need one), who knows right? If you think you need, you should put that in your model, then only you know how much you need to start saving/what kind of investment you need based on your returns and risk and how much you can actually spend without compromising future cashflow.

Ok that reminds me that I have yet to sanitize my model so that I can share it here. You can read more about it in my post “Lack of investment opportunities“.


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