facebookCurrently 25 years old and have been working for more than 2 years now. Income is not high, I'm drawing $3K now. Ultimate goal is to be rich. What should I do if I'm looking to grow my wealth? - Seedly



03 Nov 2020



Currently 25 years old and have been working for more than 2 years now. Income is not high, I'm drawing $3K now. Ultimate goal is to be rich. What should I do if I'm looking to grow my wealth?

AMA The Woke Salaryman

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Hi, I am a financial advisor. If you are willing, we can work together and help plan for your future. We will work out short term and long term goals and plan according to your habits. You can contact me at my linkedin here; we can discuss further there.

There are a lot of answers from investment gurus and claimed experts but personally I prefer relying on my own introspection and logical deduction while trying to stray away from investment jargons, so here's my piece:

You just have to ask yourself three simple questions.

1) Do you believe that the world will indefinately grow/improve/generally get better and more efficient (at least for the period of your investment horizon, i.e next 30 years)

2) Do you believe in collective intelligence?

3) Can you stay diligent?

The questions can seem perhaps a little irrelevant, but i'll explain.

The first question really is just an insight to your overall belief on whether the world will continue to improve. Unless you're cycnical and/or skeptical and you think that the end is nearing, many, if not most, of us generally tend to assume the world will simply continue to get better (think of technological advancements, increasing efficiency, and just overall increase in the output value of the world). And if this is the case for you, then obviously we can safely assume you expect the world economy to also get better, and consequently this would mean you should expect that stock markets (thankful for capitalism) should also continue to grow (since stocks are just a reflection of the market and economy). The deduction? You should start investing, and preferrably so by investing into the entire world (as much as possible). For those who are cycnical/skeptical, i would guess they would invest specifically into fundamental elements like water and agriculture, or invest/bet on the other side of the market.

The second question can be abit more polarizing, but again i wanted to take the context out of investments as much as I can. Imagine you are in a group of 50 people. Everyone in this group is unique and different in every way imaginable. (e.g there are divorced doctor, mentally ill kid, Bill Gates, your dumb neighbour Tom, real estate agent, high school student - you get the point). Now, imagine that there is a baby girrafe. The person who can most accurately guess the height of this girrafe will be handsomely rewarded - yourself included. But here's the thing - you are privvy to an additional piece of information - the average guess of the other 50 people in the group. If you find yourself relying more on yourself and your own initial guess of the giraffe's height, then your investment strategy should be tilted towards shorter term buying and selling of stocks. If you find yourself relying more on the average guess of the other 50 people, then your investment strategy should be longer term, invest and hold. My opinion: most people like to think they're special (be it by being smarter / different / or just arrogantly superior). And that leads us to wanting to believe that our own individual assessment, of whatever the matter, to be correct / more accurate than others' (especially if its not relating to an expert subject matter). It's not wrong, but you just have to be aware of that biasdness, and once you do, it will be easier to see why you should have relied more heavily on the average guess of the group instead of your personal guess. Statistically, you're more likely to come closer to the actual answer if you relied more on the group's guess (the height of the baby girrafe). This is the same story for stocks and their prices. And it is what i see as collective intelligence. Stock prices are just everyone's guess on the actual price of the stock, just that now you have millions if not billions of people contributing to that guess - everyday, every second, from every possible perspective and angle. You have to be awfully smart and comprehensive in your thinking and assesment to beat that. So why not just take the group's average guess of the baby girrafe's height to be accurate? And just wait for the baby girrafe to grow overtime into an adult and become twice/thrice its height and then reap the benefits.

The last question is arguably the most straightfoward but hardest to do - can you wait for the girrafe to grow and mature into an adult? This takes diligence. Some days the girrafe might feel sick and shrink in size (just like how the stock market is volatile, just like how the world is volatie, e.g coronavirus & pandemics, financial crisis & corrections, periods of slow growth and pessimsm in the world), but if you stay diligent, if you stay true to what you believe in (that the world will continue to improve and get better - then similarly - that girrafe will also eventually grow into an adult and at the end of the day, you will be a proud owner of a domesticated, tall, and large adult giraffe. Best part? You only paid the seller of the baby giraffe a price that is fair, based on that baby giraffe's initial height.​​​

I would suggest keeping a 50-30-20 rule for your monthly expenses, savings/investment and wants. Yes I have swapped the β€œSavings/investment” and β€œWants” as opposed to the common advise to save 20% instead. 30% ($900) should go into a high yield account, 20% ($600) into personal entertainment and socialising, 50% ($1500) for your personal expenses such as insurance premiums, food, transport, allowance for parents (if any), daily personal hygiene necessities. I would suggest saving up to 6 months of emergency savings, i.e. $1500 x 6 = $8000 before dabbling into investments. For passive investing, roboadvisors and RSPs will be sufficient. For active investing or even towards trading, please invest in your personal knowledge through reading more financial books, videos and articles before deciding to DIY invest or conducting small trades. For risk adverse individuals, if you have already saved up your emergency savings, you may consider to top up your CPF SA as well, where you can enjoy tax rebates from doing so. Every little step you make for long term investing will probably not make you rich but definitely not requiring to worry about retirement life.

Maximise cashback or rewards credit cards for your daily spending, so that you will never have to spend a cent on a plane ticket (miles) or getting extra savings through cashback.

How salary can banking to account...

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