I’m 26 and have been working for the past 3 years with 270k worth of savings in cash. Am feeling vexed as to what I should do with the money to FIRE? What is the allocation of savings I should place? - Seedly
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Anonymous

Asked on 27 Oct 2020

I’m 26 and have been working for the past 3 years with 270k worth of savings in cash. Am feeling vexed as to what I should do with the money to FIRE? What is the allocation of savings I should place?

I would like to get inputs on how I could allocate my savings appropriately to grow my money at a steady pace. If anyone is also in quite a similar situation as well? I’ve already done Singlife 10k from my peers and reading seedly’s posts :)

R
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Congrats for saving so much till date.

I think you're still single and available.

If i were you, i'll set aside a portion for my married life. House, reno and wedding cost a bit.

Set aside 6 months worth of emergency funds.

Calculate your expenses x 6 months.

Put that in the high savings account like DBS Multiplier.

Go and sort out my insurance.

But for a start since, you don't have liability.

Settle hospitalisation plan first. Up to you if you want to choose A ward or PTE Ward.

Next i'll settle early critical illness of about 100k( i got multipay as i think more worth it). Just in case you do not want to work when you got an ECI, you don't need to drain your savings.

The rest of the money, i'll invest heavily into ETF.

Won't go into stocks. Though i set aside 20% for high growth stocks.

For the money i'll do a lump sum of 50% into the ETF that i want.

The remaining 50% i'll split equally over 6 or 9 months.

When i first started i split over 9 months as i kiasi.

But now i split over 5 months as i more confident in the market and have went through rough period like march crash.

Along the way, DCA in all the time.

Lower your expenses all the time.

Increase your income all the time.

Which eventually increases your investment all the time too.

And you'll be able to FIRE earlier than you think....

2

Question Poster

4w ago

Thanks for the advice! I’ve settled my hospitalisation plan, Whole Life Insurance Plan & also have one Manulife readylifeIncome plan too! Thus am looking to how I can grow the remaining 270k and do something good with the money to make it grow, so I have a small chance of doing well in life. Cheers!
Caleb Seah Hua Xiang
Caleb Seah Hua Xiang

2w ago

Great to hear that. Go ahead and invest in etf that compounds your money for you. I've been doing it since the start of the year and never regretted. All the best
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C

CookieMonsters

Level 2. Rookie

Answered on 03 Nov 2020

Hey Caleb

Congrats for saving so much till date! Did you save all $270K within those 3 years of working? More than giving you an advise, I would like to ask if you could share with us on how you've managed to save up $270K within 3 years. We could all learn something & efficiently save up more too :)

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S&P500 possibly. After setting aside all of your financial commitments.

Your biggest return is from your gig that gave you $270k in the first place. I would double down on that gig if it is scalable. Why go for 7% if you have something that can give you 5-6 times your money on an item that you are familiar with?

Follow me here.

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Crimson Hatch

Crimson Hatch

Level 2. Rookie

Answered on 01 Nov 2020

I wont spend a single cent on insurance coverage at your age. At your age, take more risk. Invest 100% of it into stock market, the money in there is fairly liquid anyway. No need to set aside emergency fund. Make every dollar count. Grow your portfolio into $1.5-2.5m by age 40 and you will achieve FIRE. In between now to 40, avoid talking to any insurance agents, banks RM, property agents, or any human being who wear a shirt with a tie. Don't ever give anyone an opportunity to sell you anything, do not give away your contact details. If you are cornered, give them somebody else's namecard which you must always keep in your wallet.

1

Question Poster

4w ago

This plan seems quite risky and I already purchased insurance plans anyways already. Made a not sure silly move or not but bought a Manulife Readylife income plan from DBS RM.... Thanks for the input anyways!
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Terence Lee

Terence Lee

Level 3. Wonderkid

Updated on 31 Oct 2020

First of all u should only take what u read here as SUGGESTIONS- nothing more. if u are willing to pay some fees for professional advice, alwyas hire a financial consultant to draw up a investment plan for you.

Now on to my suggestions for you:

1)allocate emergency funds aka living expenses for 6 months(incase u get retrenched/fired/whatever reason u've lost your job)

2)If you're single, allocate the amount of wedding u think you would need for your wedding. Also, consider u're u would want a car(if u haent got 1)

3)allocate 2/3 for your total savings in investments.

robostocks <=== they make decisions for you and you cant adjust anything in your portfolio. You need to read up on what they are investing in and decide whether you're keen. In laymen's terms, you're passing them funds and they will decide what to do with it in order to adopt various strategies(their individual algorithms) to give you back u an optimised amount of returns

Stocks <=== HKEX-listed(linked to Shanghai index) China stocks like SMIC(if u're willing to submit your to the whims of forex fluctuations). Otherwise, just buy SGX-listed China stocks. Dont bother with other geographical areas as the Greater China region is gonna be the 1 that's likely to grow for a long time to come.

Bonds <=== SGS government bonds.

ETFs <=== either Nikko AM STI or SPDR STI. These are realistically the only 2 logical choices

Unit Trusts <=== use CPF, minimum 10k in each fund for worthwhile returns. You should treat this as your retirement nest.

Gold <=== use any leftover investment funds for this

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Congrats on saving so much at such a young age.

If I were you, I would first set aside at least 6 to 12 months of my living expenses as emergency funds. (depending on how conservative you are). Put it into high-yield savings account (instead of FD because emergency funds are meant to be liquid)

Next, settle my Protection-based insurance (e.g. hospitalisation, CI, disability, death, personal accident) to ensure my income would be protected and/or my dependents' lives will not be too drastically affected financially if something unfortunate were to happen.

After emergency funds + income protection are settled, the spare cash I would then put into investments. Quoting you, 'GROW my money at STEADY pace'...for the growth aspect I would say put into equities (instead of bonds or REITS), for STEADY growth, put into an index ETF - growth won't be massive but also won't be too shabby. Only if you are hardworking enough to do your research and to monitor your holdings then I would recommend putting into individual equities.

Then, you may also consider your Retirement planning. You can read up more on some 'CPF hacks' on Seedly to understand how you can build up your CPF savings / optimise CPF for your retirement needs.

Just a very brief idea, hope this helps.

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Congrats. 270k @ 27 is not to be sniffed at.

No one has said this yet, so I will.

Google 'bogleheads.org', go to their wiki page and look up investing in Singapore.

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K

Kong

Level 2. Rookie

Answered 2w ago

My first time post here:) and congrats on your saving it is big compare to myself that time!

First I will ask what is really your financial/lifestyle goal over 10 Yrs, 20 Yrs and 30 yrs. Giving your age I think 10 year focus should be more relevant. there are 3 main goal.

1.Capital preservation

2. Income capital

3.Growth capital

usually all plan will cover all these 3 goal unless you satisfy either one of this specifically. For capital preservation I agree with most to set 6 month emergency and some form of insurance, this can help you invest more inemotionally as the market can drop over 50% along the way and that would cause many investor to sell at the wrong time(High emotion).

For Income capital, I think having asset that generate an income so you can live life more freely life is better as many source of income, myself I mix in bond, property,P2P which about 5%-7% per year. This part is vital as you can save all your income once this income portfolio cover your yearly expense generating more liquidity for you to invest or another option which I use this spare cash flow for high risk investment(Stock and Some form of derivative) speed up my investment portfolio.

For the Growth capital, this is something that you can invest for long term to generate your wealth because it is long term this part rely on equity, Like buying stock or ETF as many suggested or even set a side for your venture.

You should expect at least 10% over long time why? Without doing any hard-work S&P500 give on average 11% pa since started while Singapore only 6%pa. If you want more that that the key is you need know to learn how invest, subset of stock style, business characteristics etc. Some stock can give 2-3 times of market return but this come with risk(Even more risk if you don’t know what you doing). I think give yourself some idea by reading a good book like Peter lunch, buffet for value way and if you are trading style personally I think Adam Khoo book not bad.

Once your knowledge grow soon your return follow.

There is no one way fit for all. The key is the more you know what you want, more concrete plan for yourself. Hope this help!

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Dabble into something safe like etfs and bonds to boost confidence and gain experience then move to higher risk investments like equities, forex, crypto.

Keep aside 3months max of emergency cash, side savings for big ticket items and invest the rest, the whole lot of it. You can afford to take more risk now than later

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Rey

Level 2. Rookie

Answered on 03 Nov 2020

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.

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Wow that's a lot of money, congrats! can consider endowus cash smart

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Patrick Ng
Patrick Ng

01 Nov 2020

Now banks share is at their low. Good to buy with a horizon of 2 or 3 years with target of 25 %
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Daniel Kok

Daniel Kok

Level 6. Master

Answered on 31 Oct 2020

Work backwards. Have a figure to work towards to. For example I want to hit $1m by 40. If I'm 30 with $300k, I'll need to grow $70k per annum.

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Yang Teng

Yang Teng

Level 9. God of Wisdom

Answered on 28 Oct 2020

The first few steps are to ensure sufficient insurance coverage and having emergency funds.

Afterwards, you could read up more on investment articles such as 'How to invest $10,000'. Subsequently, you can compare the investment thesis amongst other websites/blogs to find one you prefer. From there you can DIY your own portfolio and rebalance it periodically.

Alternatively, you can employ the services of an advisor to help you with financial planning and wealth management, especially if you are completely clueless on what/how to proceed.

1

Question Poster

4w ago

Thanks for the input! Have done the insurance coverage already! Emergency funds also stashed up! Cheers
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