ONE of my favourite words is "cacophony". I love the way it sounds. At times, cacophony can refer to chaotic mixtures of colours and scents but usually it pertains to riotous bangs and clangs assailing our ears.
Its adjective form is cacophonous; so, here are two illustrative sentences:
1. The accountant's scrutiny of the company's audited accounts triggered a cacophony of worry; and
2. As thousands of coins from the big metal chute fell, their cacophonous clattering upon the steel vault floor made it impossible for the skilful safecracker to do her job.
Our lives are besieged by distracting "noise", both audible and figurative; a racket that makes it tough for us to stay focused on what matters. Those "noises" form a cacophonous backdrop which reduce our ability to zero in with laser-like focus on what's important. Consider this:
Most of us will live fewer than 100 years, and even the hardest working amongst us are unlikely to labour actively for money for longer than 45 to 50 years, with most people getting by with fewer than 40.
So, whether we toil at our careers for 35, 40, 45 or 50 years, we need to largely disregard the distracting cacophony intent on separating us from our hard-earned money. Components of that cacophonous onslaught include cleverly crafted advertisements that assault us from newspapers and magazines; TV, computer and smartphone screens; the radio; as well as static and dynamic billboards.
LIFE-SUSTAINING STREAMS
I recently delivered a speech to a group of elderly Malaysians in their 60s, 70s and 80s. The title of my presentation was Money — Fear, Fantasy or Freedom?
As part of my pre-talk preparation, I spoke to many older longtime clients of my financial planning practice, particularly those for whom I've constructed and currently manage private pension programmes (PPPs), which fully or partially fund their living expenses.
Here's what they told me:
1. The rise of online and phone-initiated scams is paralysing some of them when it comes to figuring out which among various offers of savings, investments and speculations are bona fide and which are malicious;
2. The escalation of their living expenses — partly caused by our weak ringgit and largely associated with the growing costs of quality food and private healthcare options — is destroying their dreams of a golden retirement;
3. Those who seem to be in the best financial shape are the ones who enjoy a combination of high levels of financial literacy, street smarts, scepticism, and access to trusted advisers.
My audience comprised a mix of ladies and gentlemen who still worked long hours for income, who were semi-retired, and who were fully retired. So, I shared with them this illuminating income formula, which I have written about in previous Money Thoughts columns:
TI = AI + PI
Regular readers will know those terms stand for Total Income, Active Income, and Passive Income.
As each of us ages, our capacity to earn AI diminishes. Yet, our need for healthily growing quantities of TI keeps rising because of the compounding effects of inexorable inflation. So, the importance of establishing and growing different lifestyle-sustaining streams of PI is paramount.
In that talk, I explained the need for each of us, especially the working adults who are still in their prime AI earning decades to develop four different streams of PI — interest from cash savings, dividends from EPF and stocks, cash distributions from income-focused unit trust funds, and rental from investment real estate.
Using a sizable chunk of our current and future AI to gradually build up four solid streams of PI is a prudent financial goal for all of us who aren't (yet) financially loaded, which would be most of us who have to work very hard and very smart to get ahead in life.
Now, remember the cacophonous distractions I mentioned earlier? Life is noisy, and replete with lures that can veer us off course.
So, what do we do?
BACK TO BASICS
I suggest getting back to the basics and learning (and memorising) the foundational definition of financial planning:
"Financial planning is the process of meeting your life goals through the proper management of your finances."
It's an especially potent definition when you realise it's just 17 words long utilising only 14 different simple English words because of repeated instances of "the", "of", and "your".
I recommend you memorise this definition as a tool to help you focus on what's important in life and thus more readily block out the countless other things that aren't important yet ceaselessly and cacophonously swirl about your ecosystem.
After you identify your unique set of the top, say, three life goals that matter most to you, write them down.
Then do so again and again and again, every day. You'll soon internalise your three goals so effectively they will morph into a compound filter you can automatically use to block out modern life's cacophonous onslaught to only focus on what matters to you.
My professional advice to you, then, is to make one of your three top life goals the creation of a sizable PI stream. Does that make sense?
© 2024 Rajen Devadason
Rajen Devadason, CFP, is a securities commission-licensed Financial Planner, professional speaker and author. Read his free articles at www.FreeCoolArticles.com; he may be connected with on LinkedIn at www.linkedin.com/in/rajendevadason, or via rajen@RajenDevadason.com. You may also follow him on Twitter @Rajen Devadason and on YouTube (Rajen Devadason).