Can I be Stay at Home Parent with my Portfolio?
When I was having Tea with one of my friend, this question was asked by my friend to me.
Both my friend and spouse are still working and they are thinking to have one of them quit and be Stayed at Home Parent. After all, time are limited with the kids and if one financial and mental strength allow it (must know how to fill, survive unstructured time with no social status), why not?
Hence, I asked more details from them.
Why one person quit corporate life only and for how long?
My first question to them.
Why one person quit corporate life only?
They are worried if they have enough. Ultimately, they are still “relatively” young late 30+, with household combine income of $10-$15k. Assuming life span of 80 years old, they still have 40 years left if they are lucky. Hence, with at least 1 stable income would let them feel safer.
For how long?
They are not planning to F.I.R.E (Financial Independent, retired early) like many people. In fact, they are ok with working, but work take their limited time away with their growing kids. Once time gone is gone, but money can be earned back. Hence, they only want to take a break for few years before going back to work again.
Their combined family portfolio un-invested cash (but is earmarked as investible funds) + Invested money in volatile assets such as equities/etf etc + emergency fund is about 1.3 millions.
They have vested almost 400k in the favorite Singapore Saving Bonds, which give them cash flow of about 1k per month. Their portfolio is currently generating about 2k per month worth of dividends. Hence, total 3k per month (2k volatile assets, 1k safe stable asset for 10 years).
If they add in high bank interest rate (which currently most of us are enjoying), they should have another 1 to 1.5k. Hence over all about $4 to $4.5K monthly, assuming high bank interest rates are not gone.
In term of CPF, both of them has hit Full Retirement Sum (FRS). The yearly SA interest would definitely exceed the ever increasing FRS every year.
Their houses are also fully paid.
Insurance all fully paid except one whole life that cost them about $2.6k every year for another 10 more years.
They have been tracking their family expenses since year 2015.
Their household expenses is about 3k per month on average. Worst year hit until $4.1K due to parents hospital expenses, with some of the years hitting 2.6k per month. The expenses so far included their insurance whole life plans. However, all the plans are fully paid by end of 2022, except one whole life that cost them about $2.6k every year for another 10 more years.
With the above…conclusion
With the above, could they afford one spouse to stay home?
- One spouse still working which will generate at least $5k per month from active income (exclude bonuses).
- Portfolio income about $4 to $4.5k (mixture of both volatile and non-volatile components).
- Household expenses about $3k per month.
- House fully paid.
- Both spouse hit FRS.
Can my friend take a short sabbatical and be with kids before they grow up and don’t need my friend?
Next year GST is 9% with high inflation, financial markets also very volatile.
What should my answer to them? I told them to let me think a while, but haven’t answer them yet.
What do readers think?
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Money just buy you the chance of freedom but can’t buy back time. In life, there is no reset button. Time is limited but money is not.
When you are young and working, you exchange time for money. When you are old, you can have lots of money but you can’t buy time back, especially the things that you have missed (your strong health, time with young child) while busying striking out in career.
Your kids grew up and they no longer need you to accompany them. They no longer want to sit on your lap to share/do things with you…all these time you spent in your 9 to 6 or even longer cubicles…can the money that you have earned by you back these?
We always thought we have more time with our old parents, but we are wrong. Time with them is ticking away every day. One day it will suddenly be gone. There is no regret medicine, no reset in time. Gone is gone and cannot come back. No matter you are billionaires or millionaires, you cannot reset this.
We always thought that we have more time with our spouse every day, but we are wrong. One day they will be gone too. When you read this, please go tell your spouse that you love him/her and he or she is the best thing that you ever had in your life.
Love your life daily. You have one less day with your spouse, parents, children and yourself. Time is ticking away.
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