Asked by Anonymous
Also, I've got a 3 room flat that I can continue to rent out after I stop work but I don't want to rely on it for an income. I took a HDB loan and I'm paying for it via my CPF. I'd feel more comfortable putting the rental income into my CPF.
Your money needs to earn 5% annually to hit $375K, so you could divide your $2400 between Autowealth and BCIP to be safe?
Basically given the situation, you need a annual rate of 5% to hit your goals.
Cash earns you close to zero (granted some accounts gives you 2% and more but that caps off after 50k)
Given that its unrealistic to keep a zero cash allocation, that means that your investments have to yield above 5% - depending on your level of familiarity as well as luck it can either be an easy cap to hit or really tough.
I would distribute it across a mix of equities and fixed income products - no ILPs or whatever nonsense cause that yields too low.
Probably something like 60% global equities and 40% fixed income
Work backwards. $370k/10 years = 37k/year = about 3k a month in savings.
So based on this calculation, you need another 600 to top up to your 2400 a month.
To achieve that you need to save at least 3k/month. So use your 2400, half of it in SSB and the other half in a robo-advisor. Alternatively, you can look at areas of your expenses and see where could be cut down. So that you can save/invest more and hit your target earlier than the projected 10year.
Few assumptions on your questions. $2,400 mentioned is on a monthly basis, S$28,800 a year or US$20,000 (plus minus a bit) a year. Also gonna assume you roughly know about the choices of investment vehicles I will mention. Lesser risk / easier to stomach in Singapore context vehicle is a basket of reits. Set aside every month and invest in one lump sum, or consider doing dca via platforms like maybank ke. Depending on sector, you may be looking at between 5-7% yields on the ones with strong sponsors. Reinvest the distributions back into the selected reits. Alternative to this is robo advisory, maybe stashaway since they do not have a minimum amount and can take in US dollars. Now if you are less risk adverse, you can consider creating a portfolio of options on stocks in the US market. Sell put options on good stock counters and generate income. Benchmark for returns is around 30% or more per annum. You should hit your target by around year 7 or 8 using this method. I'm personally using this to fund my retirement, looking at a timeline of 3 years or so. All the best!
FIrstly, you can start tracking your expenses. Download an expense tracker (I personally use the seedly app as well as ClevMoney), and input a transaction in everytime you spend/receive money. Sounds troublesome, but trust me, it will go a long way in helping you reduce your expenses :)
After you start tracking your expenses, you can then review it monthly and cut away expenses you don't need. For me, that means no drinks other than plain water during meals (good for health too!), walking/cycling instead of taking the bus, etc.
As for investments, you can start by looking at regular savings plans. Seedly has an article talking about it, which can be found here: https://blog.seedly.sg/regular-savings-plan-the-piggy-bank-for-working-adults/ .
Good luck and all the best!
Qs: I want to save about $370,000 in 10 years' time and stop work. I can start putting aside about $2400 towards savings and investments. But what's the best way to do this?
The Best way is to reduce your spending and increasing your income.
The increase in income will also boost up your CPF fund.
Answering this Qs by Mathematic is not tough but what is going to happen when u are x age with $370k without a consistent income after 10 years?
Please think about my Qs for you.
To go more indepth into saving and investment, we can discuss futher when this reply have 50 upvotes.
Did a calculation back then for S$100,000 in 5 years.
Check out the numbers and see if it is a comfortable saving rate. At 0.5% growth rate, one needs to save S$1.7K every month.
The Days where people use HDB as investment is getting smaller. I use to think HDB is the safest way for assest progression until I bought my first private investment property by chance and life have never been the same.