Asked on 05 May 2020
Hi, I would like to ask this question with relation to the current situation.
25Y/O - $100k ~ $0.5M in savings
30Y/O - $1.5M ~ $5M in savings
35Y/O - Buy a $1M ~ $2.5M home
40Y/O - $5M in savings
50Y/O - "FIRE" Status
Any ways to build up this type of 'extreme' goals? Currently, I'm 19Y/O with ~$1k savings, no investments, on/off part-time job during the holiday (~$1.5k)
I'm tracking my spending, $200 ~ $220 /mths. Occasional overspending (family treats, personal wants, etc)
Wow this is very ambitious goal..
you are 19 years old, to achieve 100k by 25 years old...you have 6 years...if u save 1000 per month and get a returns of 10% per annum...you probably will achieve 100k.
So u need to ask yourself... do u have the risk appetite to invest in riskest assets? equity?
if you have, you can look at various investment: passive investment: robo advisors, ILP, etc
active investment: building your own portfolio. FSM, Interactive brokers, etc
you can reach out to me to understand on how to achieve your goals and also planning for the future.
25yo -19yo = 6 years period
$1k - $100k = -$99k
$99k / 6 years = $16.5k required to be saved per year to hit $100k in 6 years
$16.5k / 12 months = $1375 required to be saved per month for 6 years
Including your expenses of $200+/month and some overheads, you probably need to have inflow of $2000/month.
What is your current monthly income level?
And what are your plans to grow your income?
You need a plan and break it down into smaller parts and work on them.
I read this yesterday and thought this might apply to you.
Behavior = Motivation + Ability + Prompt
I managed to slash my Singtel bill by $40 every month, so yesterday when I received a message stating my current bill this month, I immediately went to transfer $40 from my POSB account to my higher-interest, never-touch-at-all-costs ICBC account. So I paid myself using the savings I had gained.
I hope to identify other great prompts so that I can build good behaviors towards saving more.
You are motivated by your goals and have the ability to earn $1,500 this holiday. What you need is to set up good prompts. How do you pay yourself first?
Hope this helps!
07 May 2020
09 May 2020
Before we talk about whether the numbers are realistic, we need to know one cannot just save to be rich or reach a retirement goal (unless you have a super high income). While saving is important, there is a limit to how effective it can be. Imagine saving 90% of a $3,000 income ($2,700) and saving 50% of a $10,000 ($5000). Investments are critical to help appreciate your capital and maintain it's real value from inflation.
Time should also be spent t build up your skillsets and knowledge, not just on investing and savings. Good acamdemic performance in university gives one of the highest return on investment so you should consider that in your planning too. You can look at the 4M65 movement (though a spouse is needed) which relies mainly on CPF.
I would like to think being FIRE as a by product of a lifestyle instead of a goal to work towards. If your aim is solely FIRE by 50, you may neglect relationships and experiences in your 20s and 30s that you may regret later on.