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Secret for graduate Singaporeans to retire early

Many of us work long hours and feel very tired. We wake up early in the morning and return home late at night and this has been going on for many years, 25 or even 30 years. If you want to get out of this rat race and retire early to spend more time with your family and friends or pursue new interests or devote more time for society at large as a volunteer or spend more time to do things which you never had time for, you can.

The key consideration is your finances. You must have enough savings or a passive income source to sustain your retirement. They key is to reduce your expenditures, increase your savings and generate passive income. You must replace your active work income with passive income. At the same time, you must reduce your expenditures so that your passive income and cash flow from your savings will cover your expenditures. It is best you do all of these together.

Generating passive income

To generate passive income, you need assets. A good asset to own is a basket of blue chips stocks that gives you good dividends. If the dividend yield is 5%, every $1 you invest will give you 5 cents per year. So, if you need a passive income of $50,000 per year in dividends, you need to have $1 mil to invest.

Increase savings

In order for you to buy assets that give you dividends, you need to save while you are working. Save as much as possible. You can save a lot by (1) not having a car; (2) not eating at restaurants often; (3) buying cheap groceries; (4) not buying branded goods; (5) not smoking; (6) not drinking alcohol; (7) not partying; (8) not womanising; (9) not gambling; (10) not spending on expensive holidays; (11) not having a maid; (12) not wasting electricity and water; (13) not buying a home you cannot afford; (14) not buying unnecessary gadgets, toys and goods, etc. The list can go on. There are many ways to reduce our expenditures and increase our savings. Also, to reduce on medical expenses, lead a healthy life by eating healthy food and exercise regularly.

Action plan

Let’s assume you bought your BTO flat at 25 years old and because it is priced so low, you can pay it off easily, within 30 years. Many can pay off their mortgage earlier than that using just their CPF savings. So, at 55 years old, many have no more mortgage loan on their BTO flat. So, no more mortgage worries and assured of a roof over their heads.

Assuming a typical, average graduate couple has a combined income of $10,000 per month and a take home pay of say $7,000. Assuming they don’t waste on owning a car and do not have a maid, they can save as much as $3,000 per month in cash or $36,000 per year on average over 30 years. After 30 years, they will have $1.08 mil in cash. They can then invest this cash in blue chips and get $50,000 per year in dividends, assuming a 5% dividend yield. Another way is for them to invest $36,000 every year in buying good blue chips which will appreciate over time and they reinvest the dividends. They should get at least $2 mil by the time they reach 55. The $2 mil will generate them $100,000 per year, more than enough for them to retire as their prudent, debt free lifestyle means they only spend $50,000 per year. As a bonus, when they reach 65, their CPF Life payout will kick in.

For the super high achiever graduate couple who can afford to upgrade to a condo or landed property, they can also retire at 55 by downgrading to a cheaper condo. For instance, they can sell their District 9 penthouse or landed for $4 mil. They can then use the $4 mil cash proceeds to buy a cheaper 3 bedroom condo in the Jurong Lake District for $1.5m, paying in cash. Assuming they have cash savings of $1m, plus the net proceeds of $2.5 mil, they will have $3.5 mil to invest in good blue chips which gives 5% dividend yield or $175,000 in dividends per year. This would be more than enough for them to retire as their expenditures by 55 should only be $100,000 per year, at most. As a bonus, when they reach 65, their CPF Life payout will kick in.

So, in summary, it is possible for every graduate couple (both the average and super performers) to retire early. They just need to be intelligent and disciplined.

This is another way to retire early.

https://forums.salary.sg/investments-...hailand-2.html

Originally Posted by Unregistered

This is another way to retire early.

https://forums.salary.sg/investments-...hailand-2.html

That is stupid way to retire.

Originally Posted by Unregistered

That is stupid way to retire.

You are very arrogant.

[darkstar]

Originally Posted by Unregistered

Hi, thanks for taking the time to reply. Why do you say that early 30s to late 30s is the right time to do a masters? You see many people of that age range doing it?

Excluding executive MBA for senior managers

Hello, my apologies for the late reply.

Yes, i would say early 30s is the right time to do it for the following reasons:

1) People of that age range actually benefit more from the Master's degree; meaning that the effects of promotion and salary increment are more apparent at that age range. If you are too young with a Masters, people might not take you seriously or they might not want to hire you but if you are too old, having a Masters would not improve your situation significantly.

2) They are more mature; they display significant leadership skills and better understanding compared to younger project mates, but are still able to display considerable creativity and innovation, better able to absorb new ideas, compared to students in their 40s

3) They are at the age where they can manage both money and time better, compared to younger peers, whom may be financially strapped by this or by older students, whom by then would be more weary and perhaps worrying about retirement.

Of course, there may be counter-arguements against all this but although I am not a lecturer or academic, my entire working carreer has revolved around tertiary education and have come into close contact with students of Bachelors and Masters programs.

You are absolutely right. My brother, who was a banker, did that last year. He is a good investor and grew his wealth over the past 20 years of working. At the age of just 48, he quitted and now managing his own money full time. he now has the flexibility to spend time with his wife and teenage son. His dividend income plus trading profits is now a lot more than his household expenses. His wife can practically save the whole of her salary. Contrary to the image of a banker, he is really a nice man. He spends a lot of money on our parents too.

Originally Posted by Unregistered

In today's modern world, where we have equal rights and shared responsibilities, it is possible for a man to retire early while still performing his duty in a marriage. Today, most couple in Singapore work and both husband and wife earn a salary and they usually agree in sharing the household expenses, usually 50% each. Household chores and child care taking responsibilities are also shared, 50% each. A maid is usually employed to perform the household chores.

For some couples, the man can be very driven and intelligent. He moves up the corporate ladder fast, earn a lot and invest heavily. Once he achieves a certain level of wealth and able to generate income from his assets, he may decide to retire. His passive income will be able to cover his portion of household expenses. So for instance, a household expenses is $100k pa. The husband cover $50k and the wife $50k. If the husband say earn $200k, he saves and invest $150k pa. If he is able to grow his assets which then generate consistent returns of more than $50k pa, he is able to retire. The wife will still need to work and save more and invest more until her passive income reaches $50k pa.

I know of men who are high achievers who retired in their late forties after their investment portfolio generates more than their expenses portion. Their wives, who usually earn lesser, continue to work for 10 years more to achieve the same amount of investment portfolio and returns as the men. The wives retire in their late fifties and by then both husband and wife are millionaires.

Most bankers will reach VP level at early 30s, and will hit base 200k, bonus another 2-3 months at least.
By late 30s, most will reach ED and base will be 300k
By late 40s, some will reach MD and base will be 500k

If a banker is prudent and wise in investing, he or she will have a big pot of assets for retirement

Originally Posted by Unregistered

Most bankers will reach VP level at early 30s, and will hit base 200k, bonus another 2-3 months at least.
By late 30s, most will reach ED and base will be 300k
By late 40s, some will reach MD and base will be 500k

If a banker is prudent and wise in investing, he or she will have a big pot of assets for retirement

Yes, my brother is now very rich. I think his net worth alone is at least $10m, not some puny $5m combined. LOL.

Strange how a earnings threads becomes a retirement thread. Or rather one man's ideal of retirement should be.

I don't see what is the problem if people want to work till they croak, maybe they like working? Some people are more important than others, my own parents are still working because they run a company with 10's of staff that stayed loyal with them throughout the years. Maybe its kind of selfish? But that's what gives them meaning so I will give them my support until they can bear no more.

Who says we don't enjoy yourselves when we are working, I enjoy interacting with the people around me everyday. My idea of retirement is to start a proper investment firm with a proper office and fly around in business class looking for investments at my own pace and have my children see how money is earned around the world, barter and trading and not playing with ticker codes on computer screens like pac man.

Granted this individual has done well and should be appreciated, but he too has to understand every man has different drivers in life and to purely think his way is the best is just silly.

For instance I don't like to do charity, I prefer to donate money instead. Is that so bad in comparison?

I for one will not be sated sitting in a penthouse all day, it kind of reminds me a bird in a Gilded Cage.

People want to retire early, let them retire early. They happy, why you kay poh?

Just because you and your old father don't want or cannot retire, don't force others to listen to you.

You sound just like the kind of boss people want to avoid looking at their face every morning. That is why they want to retire early.

Originally Posted by Unregistered

Strange how a earnings threads becomes a retirement thread. Or rather one man's ideal of retirement should be.

I don't see what is the problem if people want to work till they croak, maybe they like working? Some people are more important than others, my own parents are still working because they run a company with 10's of staff that stayed loyal with them throughout the years. Maybe its kind of selfish? But that's what gives them meaning so I will give them my support until they can bear no more.

Who says we don't enjoy yourselves when we are working, I enjoy interacting with the people around me everyday. My idea of retirement is to start a proper investment firm with a proper office and fly around in business class looking for investments at my own pace and have my children see how money is earned around the world, barter and trading and not playing with ticker codes on computer screens like pac man.

Granted this individual has done well and should be appreciated, but he too has to understand every man has different drivers in life and to purely think his way is the best is just silly.

For instance I don't like to do charity, I prefer to donate money instead. Is that so bad in comparison?

I for one will not be sated sitting in a penthouse all day, it kind of reminds me a bird in a Gilded Cage.