Portfolio Review (November 2023)

Review of my Portfolio (30/11/2023)

Total unrealized profit: +1.8%

YTD performance: +24.9%

Added in November

Goal 1: ( $71,073.34 / $66,186)⚔️

Growth Portfolio: GOOGL, BABA

Dividend Portfolio: United global durable Equities, BUOU, 558

Portfolio Weightage

Dividend Recieved

Goal 2: ($9,927.61 / $11,000)❤️

Dividend recieved in NOV = $1,150.23

Opinons

• Too far from moving averages at start of the month, expect some short term pullback on December.😔

• US GDP grow +5.2%, US economy remain strong and resilient.
• The PCE index have seem to be declining, 3%, while the FED target inflation is at 2%.
• If the index continue to decline, the FED may maintain the interest rate at current level, stop hiking.
• Median PE is 17.86. Range between 19.46 - 27.92. Currently at 25.14. Market is Fairly valued.
• Strong foundation for continue and substainable growth.

Is it possible to achieve $1 million net worth by 40 for median income earners?

• Net worth will includes property, CPF, investment, insurance plans that have cash value and cash minus off liabilities.
• This is a checkpoint if you want to achieve F.I.R.E. in Singapore and with life expectancy of 83, half of our life had gone.

CONCEPT OF IKIGAI VS F.I.R.E

• Currently there are two different concepts that both aim to help people find happiness and fulfilment.
• From my observation, it seem most people are subscribe to ikigai. Do what you love, you'll never work a day in your life.
• The ikigai consists of mission, passion, job and vocation, which can be a challenge if the passion is eat, play and sleep.😆
• Personally i prefer F.I.R.E. because it is much simpler, i only need to focus on 1 thing, have enough then do nothing. 😆

THINGS THAT HAVE TO CHANGE

1. Attitude Toward Money

• Money is a valuable asset.
• Although it is not the sole determinant of happiness or fulfilment.
• Money do provide comfort, security and opportunities.
• Those who claim money is everything / not everything are oversimplifying a complex issue and failing to appreciate the boarder aspect of life that contribute to well-being.
• People who do not see the value of money will not seek it purposefully.

2. Ignite The Desire If You Cant Find Your Passion

• We need to ignite the burning 🔥🔥 desire within us to achieve the seemingly impossible.
• If you are an entrepreneur, F.I.R.E , probably not your thing because your buisness is your baby.
• Feeling been trap in the job is often the main motivator for F.I.R.E.
• We may require to do things that we dislike to achieve things we like.
• This is the main difference between ikigai. One is driven by passion while the other is driven by desire.

• Passion make work dont feel like work. While desire make you persist in the face of obstacles and setbacks.

EMBRACE THE NEGATIVITY

• Relationship, work and money are usually the main sources of unhappiness.
• Some may go for a shopping therapy, a vacation, or a simple jog to release the stress.
• More serious cases, may look for professional help.

• However, these are just temporary escape, feeling better and being optimistic does not solve the problem.

• We should always have something, anything, that generate side income other than our job.
• Whenever you feel trap, want to escape, feeling useless and like a loser, it is because you have no control over your life.
• Either because not enough money to do what you want or being push around by others.
• Most of us, our identities are tied to our job, if we feel our career is a failure, we will feels our life is a failure.
• Channel that negative energy into working on your side income and gradually become less reliant on your salary.
• When you persist in this endeavor, you will eventually reach a point where negativity no longer holds a significant sway over you.
• It's not that you've become more optimistic; you've simply grown accustomed to it, developing greater resilience
• Harness the negative energy and channel it towards financial success. Instead of dwelling on problems, use them as fuel to propel your journey.
• Deal with your problem by becoming rich!
• Money cant buy happiness, but it can buy freedom, it is the closest thing you can get.

3. Budgeting Strategy

• The 50-30-20 rule is popular and easy to implement budgeting strategy, but it has limitations.
• First, it assumes our income is sufficient. Second, it does not account our financial goals like buying a house, invest for retirement and paying off debt.

• Also, if you are already a frugal person the rule will serve no purpose. You probably able to save 30% to 40% effortlessly, but is it enough?🤔

• Assuming you are single, did not buy a house, your CPF is ~$220,000 at 40 and have emergency fund of 12 month of living expenses, $20,000
• To achieve $1 million networth by 40, you will have to invest $26k p.a. or $2.2k/mth.
• The total cash invested will be around $390k over 15 years. This is probably unattainable by most based on the number of angry comments.😆
• Using the rules, we will need to have a gross salary of ~$12k/mth with 20% saving rate. It is definitely not possible.
• In addition, investing will always have uncertainties, even if we have the discipline to invest consistently, it do not guaranteed we are able meet our goals, because of assets price fluctuation, stock dont just go up in a straight line.

Budgeting should be goals based.

• A goal based budgeting require us to specifically identify what, when, how much we are still lacking and examine our options.
• This will ensure we are able to achieve our goals within the reasonable timeframe, because we have taken time as a function in budgeting.
• The first step is to draft out your financial roadmap.
• We can either shift the timeline further to have more time to accumulate or increase our earning and saving.
• Since the goal is to achieve $1 million by 40. The time is fixed, we can only increase saving.
• What if our saving had already maxed but still not enough? Then we have to increase our income!

5 Steps to $1 million networth by 40

Step 1: Get a Degree, Minimally

• The more we earn, the easier for us to achieve our financial goals, as long as we have self-control and avoid lifestyle inflation.
• To have high certainty that we are on track of our goal, we will need a stable job.
• This make projection (step 2) simpler to set reasonable expectation.

• We do not need to be a high income earner, it will be nice if you are. But we need to be minimally in the median income range. (the yellow columns)
• We will definitely need to have at least a degree, a correct degree, unless you are working a commission-based job.
• While a degree doesnt guaranteed our career success, but it will give us a higher market rate to begin with.
• If you are in the wrong industry, it will be difficult to break the income ceiling.
• You should aim to do a career switch before 30 years old, if you have the intention.
• Income will start to diverge significantly after 30, so is our networth.

Step 2: Project your income over 15 years

• This is to assess the probability of achieving the goal and set a reasonable target.
• If we can project our investment returns , 8 - 10% p.a. into the future, we can also be able to project our earnings with the same principle.
• Companies will usually give a 2% to 3% p.a. inflation adjusted increment yearly, if you know your company rate then just use that to project your current income over 15 years.
• You may also assumed that you will get a promotion or job hop every few years. Each time give yourself a salary increment of 10% to 20%.

• This give you a good estmation for your accumulated earnings range to set your target.

• With a median income, we will be likely able to earn $1 million, but we wont be able to keep it unless we are able to save 100% of our salary.
• Having an accumulated earnings of $1 million or more over 15 years is the key.
• If you have a lower income, you may still achieve $1 million by 40 with the help of investing, compound interest.
• But as mention, there are always uncertainty in investing.
• A more possible target net worth will be ~$600k by 40 for a lower income- service & sales workers (Right Table)

STEP 3: Keep your expenses low, Really LOW!

• The focus should be on the 3 major expenses house, transport and food.
• We should not only be thrifty on small expenses, but also the major expenses.
• These can eat away more than 50% of your income, inclusive CPF, if you are not careful.
• Instalment for house and car are fixed cost that cant be cut, if you cant hedge them then is better to eliminate it.

• For housing, some people may choose to (1) stay with their parent or (2) buy a smaller house even if they are able to afford a bigger one.
• In my opinon, we should always be a home owner and own at least a 4 room HDB, if we can afford. Even we dont have the intention to get into property investment.
• Then we will be able to rent out spares rooms. For hdb, rental should be able to cover the monthly instalment with excess cashflow generated.
• When we buy a small hdb, 2 or 3 room hdb, indeed we will save alot of money but renting may not be possible or suitable.
• This mean we will still have to fork out money from our own pocket to pay for the house
• Any price appreciation will have nothing to do with us, if we choose to stay out of the market, not buying.
• Rising interest rate is a bad news for tenants; but is a good news for the landlord.

• The goal is to get paid for owning a house and enjoy the price appreciation of the property while we holding onto it

• For transport, owning a car in singapore will eat away $2,264 per month of your income.
• Most of us really should not own a car in Singapore, regardless of our justification.
• Unless you are a high income earner, $9,000 and above, have the spare cash to pamper yourself.

• Owning a car in Singapore is a luxury. Just take public transport.

• For Food, as shared previously, we can chose to eat lavishly or just simple meal. It is just a matter of choice and self-con
• We wont have time to track every single cent you spend.
• Instead, spend our time on more productive tasks, like earning money and generate more income.
• It is best to routinize our lifestyle, so we can cut down decision making time on unimportant stuff.
• In addition, if you enjoy vice activities, particularly drinking and gambling, it is advisable to consider quitting as they can drain your finances and have negative health consequences.

STEP 4: Survive on Side hustle !!!

• While some people advocate solely focusing on career development to increase income, I disagree.
• The reality is that many of us will remain in relatively lower positions due to the limited availability of top-level roles.
• Those with a very good career can depend on their career for financial success. Unfortunately, most who don't will have to find other ways.
• We should still strive for excellence in our full-time jobs when we are young, as we may yet be recognized by management.

• We should always consider, how fast and how high we can climb. If you have to wait more than 5 - 6 years for a promotion, 10% -15% increment, then we better do something.🫠

• After working for a period of time, most of us will come to the realization that we are merely cogs in a larger system.
• You may think acquiring skills that is so valuable will make you indispensable; the fact is the world will not stop spinning for anybody.
• We can either accept the reality or devise a plan.
• Side hustles can be a powerful tool for achieving financial goals, enabling you to surpass median income levels even at a younger age.
• Consider starting a side hustle even if you don't have an immediate need for the additional income, as inflation will inevitably erode your purchasing power over time.
• If our side income can fully cover our living expenses, we can save 100% of our full-time job salary.

• Having a low expenses, Step 3, just make it easier to achieve.

• Barista F.I.R.E can also be achieved relatively easily.
• You are able to barista / Lean F.I.R.E. , does not mean you should
• It will be very difficult to achieve real F.I.R.E. if you do it.
• A self-employed will have more cash-on-hand, because 20% CPF contribution is not mandatory, thus their investment portfolio will tend to be be bigger than a salaried worker, assuming both earned the same amount.
• But they will lose out the 17% employer CPF contribution.
• There are still many financial benefit to be a salaried workers.
• Barista and lean F.I.R.E are unsubstainable unless you plan to live in Malaysia or Bali, the strong SGD make it possible.

• Personally, i still love ❤️ Singapore and want to retire here. If it is a money problem then i will just make sure i have enough.😉

• Most of the famous singapore youtube finfluncers, have more than half a million networth in their mid 30s.
• Because they have youtube and other side income when they are still working a 9 to 5.
• If you are a high income earner with a side income, you may even hit $1 million in your mid 30s.
• AK71SG had shared that he had once worked 3 jobs, working 7 days a week.
• Mr Loo also said second sources of income is a must in the recent video.

• And i always say side hustles do not need to be complicated, even a simple one can have a significant impact to our finances.

• Neither do i have a very high salary nor have i have rich parent nor had i done anything special, all are low/no skill jobs.
• Thus, it is not necessary to be smart, is good if you are, the key is to be consistent.
• Half a million in cash in mid 30s may have some challenge but is not impossible.
• We dont really need 27.3 years to do that.
• Having a full time job that pay okay with side hustle and staying frugal are usually the common traits.

• Majority of us have the choice of either have work-life-balance and work for 40+ years OR compact everything you need to do in 25 years or shorter, then just eat, play and sleep after all is done.

• Burnout is unavoidable, just take short breaks in between and continue to hustle.😉

STEP 5: Buy Assets

• Following Step1 to 4, we can already achieve a net worth of $1 million by 40.
• We just need to protect it from inflation by investing in assets.
• However, based on the survey, Singaporean love hoarding cash.

• Investing is full of uncertainty, thus is important to diversify across different asset class and not just equities.
• Market can only move 3 directions, up, down and sideway. i can guarantee that.😆
• Build a multi-assets portfolio that can generate returns in some form regardless of market conditions.
• It will help to ensure we are on track of our financial goal, specifically retirement.

• Retirement will be more on how you distribute your net worth among assets.

Liquidity Consideration When Building Assets.

• As shared previously, regarding current and non-current assets.
• There are alot of method to reach a million net worth.
• We can have a million net worth by paying off our million dollar HDB mortgage or having millions in our CPF.
• Dont rush on clearing your HDB mortgage or transferring all your OA to SA to get the risk-free 4%.
• It is a great idea if you have alot of cash-on-hand, else asset rich but cash poor is not ideal.
• Having liquidity will make your life easier, unless you love playing game on hard mode.
• Non-current assets provide stability but lack liquidity, while current assets provide liquidity but high volatility. Cash or cash equivalent provide liquidity, no to low volatility but lose value due to inflation.

• Thus is important to find the balance.

• Some people exclude non-current assets (Property & CPF) for their networth because it cannot convert into cash immediately.
• However, those are still our assets and money so we should still include them.
• We are still able to unlock your CPF value and property value if we choose to.

• For a guideline, our current asset divided by total labilities at around 1.2 to 2 is healthy.

Conclusions

• Achieving $1 million networth by 40 is a want and not a need.
• But to get what you want, you will have to do what is needed.
• Net worth is a rough indicator to determine if you are on track to your financial independence.
• Therefore, it is still important for you to define a number to achieve by certain age, even F.I.R.E is not your goal.
• It is never be too late to plan, but the later you plan the lesser you have when you are old.

• It is not fun to be broke during retirement age.

• Thus, it is important and ideal to plan before 30, Because:

1. Salary will usually peak at 40s,
2. Difficult to job hop as you aged,
3. the banks will lend you less money after 35
4. Less energy to hustle
5. Less time for money to compound.