How Did A Salaryman With Hearing Loss Accumulate $100,000 Cash In 5 Years?

One of the joys of financial planning is planning alongside your friends and Victor was one of those I’ve the privilege of planning with. Victor and I were friends since our teenage years and it’s heartening yet challenging to see how he had persevered on his finance journey despite life’s odds and adversities. Despite these difficulties, Victor managed to accumulate $100,000 in a span of 5 years through a series of hard work, side-hustles, astute planning and investments.

Recently, I’ve had the privilege of reviewing his finances and chatting with him to find out more about his journey and he has shared with me his life, financial journey and tips on how he achieved this milestone. Hopefully this will encourage and challenge all readers. Read on!

Background

Victor was born with a hearing disability, rendering him deaf at a young age. With his hearing impairment, it brings a unique set of challenges that we may find it hard to empathise with. Being slapped with a bunch of exclusions - without comprehensive insurance coverage, his parents had to bear the financial brunt of expensive medical treatment and equipment.

Victor started wearing a cochlear implant and travelled overseas often for surgery and treatment, as medical care there were better then. Subsequently, the costs of maintenance of his implant posed a huge financial strain on his family. With the pressure of meeting his exorbitant medical bills in the future, Victor needed to find a way to grow his money to ensure his present medical needs and future retirement needs are met.

Through side hustles and part time jobs, he saved enough to graduate from university. However, he had to up-skill himself in a discipline that he feels more passionate about after he has completed a degree which well-meaning people had advised him to take, which he disliked. So that was a certain level of opportunity cost, as he had to spend more beyond university as well. He managed to land a job after a year with his salary being in the $2,000 spectrum, so you get a rough idea of how much his take-home pay is.

Here are some of the things he have shared!

Investment Tips

“Upon hindsight, I realise that it helped that I started investing early before university. I realise that investment have to begin early because it’s always better to make smaller mistakes when you’re young than to incur a huge financial loss when you’re older. Starting early helps to feel the pulse of the financial markets and to build the mental resistance against any unexpected events. Investments can feel like a roller-coaster, emotional affair and we have to learn to better cope with our emotions to reap better returns over the longer term. I could afford to invest aggressively when I’m young as I’m aware that being older in a different life stage, I may have to dial down my risk appetite for more guaranteed sources of income. It’s a “now-or-never” sort of mindset.

When I started investing before university, since I was a beginner, I started with dollar cost averaging into the Straits Times Index. I assumed that it was too risky to invest overseas so there was a level of home-bias in my investment decisions. Later on, I realised that the growth rate isn’t ideal. I was displeased with SGX’s yields and desired to take on a higher risk, higher returns, higher profits – considering that I’m still young and able to afford the long time horizon. I read financial books, financial blogs and consulted financial advisors into building up my financial knowledge. Hence, I decided to begin investing in the US market.

Later on, I started venturing into ETFs, roboadvisors and REITS as a form of risk management through a diversification of instruments. There is a temptation to ensure your investment plan and returns are “perfect” but my goal is to outbid inflation and at least reap a return that’s satisfactory to me. Perfection can be paralyzing and we can spend inordinate time trying to find the “best” stock or fund and end up not investing.

For the shares that I buy, I usually buy into companies where I understand and believe in the business model. I believe that if the company has a good business model, the stock price will reflect that accordingly in the future. I put myself in the shoes of a consumer: If I’m a consumer, will I buy into the business? Technology is something I strongly believe in and I believe that’s the future for the world so my shares do reflect that belief.

One thing that has helped me in my investment journey is to adopt a long term view and to set concrete goals. It helped me visualise and to take practical steps in budgeting and investing to achieve my goals. My goal was to achieve $100,000 by 30, and I achieved it by 27 years old.

I am also following the 1M65 movement and transferred my CPF-OA balances to my CPF-SA to utilise the additional 1% interest that comes with the first $60,000. With my remaining CPF-OA balance, I decided to transfer them to Roboadvisor funds to maximise returns over the mid-long term since I had no immediate use of this CPF-OA.”

Investment Mistakes

“I’m open about my investment mistakes because every mistake is a lesson learnt. Some of them were lost opportunity costs, others were highly expensive mistakes. Opportunity costs included starting my investments through the Straits Times Index. It was a home bias where it was easier to trust home-grown products. If I had started in the S&P500 from the very beginning, the returns would have been magnified compared to the STI.

Another very costly mistake I made was to sell some of my stocks during the March 2020 Crash based on misplaced trust in well-meaning people who told me to cut loss and buy back lower. It was our first severe recession as millennials. I did not want to sell my holdings then. I had regretted not trusting in my convictions to average down instead, but acted against my better judgment. I ended up missing the boat completely. Selling my shares incurred quite a substantial loss which I managed to recoup back during the recovery phase but it was quite painful. One of my biggest lessons learnt here is to not allow emotions or mere hearsay to dictate our investment decisions and convictions. Trust yourself, you have control over your finances. The only person who cares about your life and finances is you yourself.”

Budgeting

“My monthly expenses are rather lean, spending $200-$300 on essentials, eg. transport. I love my mum’s home-cooked food, it’s the best! I also enjoy traveling, yet I chose to sacrifice travel experiences to secure my financial future instead - delayed gratification. I have not travelled the last 4 years. On hindsight, I ought to have enjoyed life a little bit more, but no thanks to Covid-19.

I saved my remaining take home pay, and distributed my savings into fortifying my war chest and into high-interest savings accounts (Cash Management, etc) so that I’ll be ready to deploy into the stock market whenever such opportunities arises. I also have a pool of emergency funds which I drawdown upon whenever a medical bill hits and I’ve used it before at times whenever my cochlear implant malfunctions. Without my emergency funds, I would have to liquidate even more of my investments to meet my medical needs, if the bill exceeds my emergency funds, which has happened once unexpectedly.

Insurance is also a huge part of budgeting and protecting our downsides. Insurance should form 10% of your budget, depending on your needs. Being struck with a disability since birth, I cannot over-stress the importance of insurance. One of the two most important aspects of insurance to focus on will be Critical Illness and Health Insurance. Critical Illness coverage serves as a form of income replacement and Health Insurance provides coverage for hefty hospital bills. The lack of comprehensive insurance since I was a child was one of the reasons why meeting my medical needs financially is an uphill battle. The costs of rising medical expenses can be expensive!

I take on flexible side jobs to help supplement my income whenever possible. This, in turn, helps to contribute towards a bigger pool of investible funds and daily expenses. Some of the side jobs I’ve taken on revolved around a variety of industries eg. Writing, design, logistical support etc”

My Motivations

“Even though my disability has been a huge impetus in my personal financial journey, my family, friends and faith has helped me tremendously to stay grounded even when I feel like giving up. Having trusted financial advisors have also helped expand my financial knowledge as well.

I made it my goal to not only financially protect myself, but also to protect and provide for my family and loved ones. Especially so for my parents who had sacrificed so much for me when I was younger.

I believe in having a growth mindset and a long-term mindset being very crucial - as by having knowledge, we understand more, we learn more and succeed better. This goes beyond investments into other areas in life too. This is why, I am passionate for accumulating new knowledge and skills over time to better add value to myself and others. Learning never stops. But never forget to focus on the intangibles, as emotional management is also important for your mental health - healthy connection with your family and friends are very important too!

Always think long-term, what’s your endgame? Do due diligence in everything. Make calculated risks. I am thankful for having a like-minded community to grow together and keeping each other on track, especially for my investing mentors, who has taught and guided me in achieving better investment returns. There’s a proverb that highlights this so well:

“If you want to go fast, go alone. But if you want to go far, go together”

The above article and picture was posted with permission from the original interviewee.