Whats your net worth

Since you are now rich, have you ever thought of living in a GCB with your own swimming pool and gym? GCBs are now quite cheap.

Originally Posted by Unregistered

It is not so important as to where you stand now, what is more important is your growth/career potential.

Let me explain. I grew up in a kampung at a time where if you have completed "O" level your parents expected to go out and work and support the family.

My neighbours did just that. After "O" levels they started work. Within a few years, you can see them buying new TVs, sofas and other household appliances. For us, my parents believed we should continue with our studies where our results permitted. And study we did, all the way up to our honours degree, all this while still living in our old home with all the old appliances.

When we graduated and started work, some of our neighbours even managed to own cars. In their eyes, we were very far behind in status. I remembered one of my neighbours even told my mother "what's the use of studying so much? Look at my son, got his own flat already and bought a car also".

Fast forward 30 yrs, the kampung is no longer around, all of us resettled to HDBs. We are now staying in a condo, have 2 cars and our net worth is above $5m. My neighbours are still staying in their 4 room HDBs and the sons have been drifting from job to job with long stretches of unemployment. I am not saying this to look down on them, but to highlight that measuring your success at one point in time is not indicative of where you will head in future. Your career potential, investments and health are other important factors. You may be ahead today, but tomorrow, you will fall behind.

In fact, don't compare with others, just do your best, don't rest on your laurels, but enjoy the journey!

$5m combined net worth is nothing. $5m net worth per person is the least to be considered rich in Singapore. You need to work harder until the age of 80 before you can retire. By 80, your combined net worth should reach $20m. This is enough for you to retire. You can then leave behind $19m for your kids so they too can retire.

A good plan is one where you start with achievable small steps. You will build up your confidence when you achieved the small targets. Also assess whether you really need that much money. Setting an unrealistic target will only mean disappointment for yourself and prevent you from enjoying the little gains you made in the process.

Thus, instead of setting a target of $20m, aim to save $100k each year. If already achieved, then raise the bar to $200k and so on.

For our case, early in our career, we were thrilled when we were able to meet our savings target of $50k pa. We then upped the target by another $50k for the next year. To cut the long story short, we are now achieving $350k savings each year. Thanks also to a healthy passive income stream.

I can imagine that we will be miserable if we stupidly set $20m as our target from the start knowing that it will be almost impossible to meet. As it is, with our small targets each year, we will always celebrate whenever we achieved one.

Try it and you will not feel so miserable and bitter.

Originally Posted by Unregistered

$5m combined net worth is nothing. $5m net worth per person is the least to be considered rich in Singapore. You need to work harder until the age of 80 before you can retire. By 80, your combined net worth should reach $20m. This is enough for you to retire. You can then leave behind $19m for your kids so they too can retire.

The key to retirement is expenses. As long you can meet your expenses whether from your passive income or drawdown of your savings, then you can retire. However, it is recommeded that you depend on your passive income to meet your expenses since if you depend on your savings, it may be gone one day while you are still alive. So, build up your investments in high dividend yield stocks over many years and one day your dividends will be higher than your expenses. Then you can retire.

There are people who live simple lives and they need only $3k pm to retire as a couple. So if they have investments which give them dividends of more than $36k pa, they will be ok. If they want more income, they can rent out their spare rooms in their hdb flat to FTs and they can get $800 pm for each room. FTs are important for our old retirees to depend on.

This is such an interesting thread with plenty of good points.

Sorry if this post takes the discussion on a different track.

I was wondering what the general view was on how much one would need to retire.

From my point of view, retirement is not ceasing work. It's about taking time to enjoy life, and doing things for pleasure as opposed to being obligated to do something. Freedom perhaps.

As I examined my own situation, it boiled down to what lifestyle I would want and how much I would need to fund it via passive income. I think the net worth part is the smaller part of the equation because it's how much you would like to spend that should drive the net worth component.

In addition, I see one's primary residence as almost inconsequential in determining if one is well prepared to retire because unless one is ready to downgrade, and incur all the associated costs of making the switch, both financial and emotional, the value of your primary residence will not put food on the table.

I remember reading a book about personal wealth, and it said most prudent and down to earth "wealthy" people live in a home that is worth no more than 20% of one's total net worth. I guess in Singapore, this % gets skewed but wonder how far it should be stretched...the more you allocate to the roof over your head, the less you have to provide you with an alternative source of income.

I also recall the value of one's car should be like 5% or less of one's net worth.

So I kinda tried to apply these guidelines +/- as I was planning my own scenario, using annual anticipated expenditure to derive the size of an income generating portfolio and came up with these numbers:

Value of primary residence 1.5m
Value of income generating portfolio 7m (zero real estate)
Target yield 4% or 280k which more than covers my household expenditure.
Simple used japanese car - value probably not much now.

I am in my mid 40s now, wife is slightly younger. We've just about achieved this target and now contemplating entering the new phase of our lives which basically entails not being bound by an employment contract or obligations to business partners. We kinda know what we want to do with our time, and it won't involve chasing any more dollars.

I was wondering what general views were on how much one would need to retire comfortably, when would you stop "working", etc and perhaps, what instruments one would use to generate one's retirement income.

You can definitely retire now. Your passive income of $280k is a lot. As you get older and your kids move out and your parents pass on, you will have less financial responsibilities. A couple can easily retire with a passive income of $100k pa provided they are debt free and do not have luxuries such as a car and a maid. Food, utilities, condo maintenance, medical, insurance, etc will be $5k pa the most. The rest of passive income can be spent on holidays and entertainment.

Can you share how do you accumulate so much at such a young age?

Originally Posted by Unregistered

This is such an interesting thread with plenty of good points.

Sorry if this post takes the discussion on a different track.

I was wondering what the general view was on how much one would need to retire.

From my point of view, retirement is not ceasing work. It's about taking time to enjoy life, and doing things for pleasure as opposed to being obligated to do something. Freedom perhaps.

As I examined my own situation, it boiled down to what lifestyle I would want and how much I would need to fund it via passive income. I think the net worth part is the smaller part of the equation because it's how much you would like to spend that should drive the net worth component.

In addition, I see one's primary residence as almost inconsequential in determining if one is well prepared to retire because unless one is ready to downgrade, and incur all the associated costs of making the switch, both financial and emotional, the value of your primary residence will not put food on the table.

I remember reading a book about personal wealth, and it said most prudent and down to earth "wealthy" people live in a home that is worth no more than 20% of one's total net worth. I guess in Singapore, this % gets skewed but wonder how far it should be stretched...the more you allocate to the roof over your head, the less you have to provide you with an alternative source of income.

I also recall the value of one's car should be like 5% or less of one's net worth.

So I kinda tried to apply these guidelines +/- as I was planning my own scenario, using annual anticipated expenditure to derive the size of an income generating portfolio and came up with these numbers:

Value of primary residence 1.5m
Value of income generating portfolio 7m (zero real estate)
Target yield 4% or 280k which more than covers my household expenditure.
Simple used japanese car - value probably not much now.

I am in my mid 40s now, wife is slightly younger. We've just about achieved this target and now contemplating entering the new phase of our lives which basically entails not being bound by an employment contract or obligations to business partners. We kinda know what we want to do with our time, and it won't involve chasing any more dollars.

I was wondering what general views were on how much one would need to retire comfortably, when would you stop "working", etc and perhaps, what instruments one would use to generate one's retirement income.

A friend of mine, an ex investment banker, retired at 42. He now spends his time volunteering at charitable organisations. Salute.

Hi,

thanks for the replies.

To the first respondent, I was a corporate rat for many years and made little progress with respect to wealth accumulation. I left that life in my mid 30s with perhaps 100k? of nett worth? I embarked on a few business, the first few wiped me out and more. Then I found one that worked and although it did not last very long (less than 3 years), I milked it for all it was worth.

When that business failed (it was a matter of time), I reinvested in a couple of other businesses and one did well. It wasn't really rocket science.

To the second respondent, yes, I do admire people who give back to society. I feel very fortunate as an individual and although I don't consider myself "rich", I mean there are loads of people on this forum and out there who have far more, I feel it's more than enough and it's time to give back to society.

I guess nett worth is only a number, I pursued it as I had certain goals, and now that's done, I think it's time I spend my time and energy giving back. It's how we live our lives and what good we do that matter more...at least to me...

Originally Posted by Unregistered

Hi,

thanks for the replies.

To the first respondent, I was a corporate rat for many years and made little progress with respect to wealth accumulation. I left that life in my mid 30s with perhaps 100k? of nett worth? I embarked on a few business, the first few wiped me out and more. Then I found one that worked and although it did not last very long (less than 3 years), I milked it for all it was worth.

When that business failed (it was a matter of time), I reinvested in a couple of other businesses and one did well. It wasn't really rocket science.

To the second respondent, yes, I do admire people who give back to society. I feel very fortunate as an individual and although I don't consider myself "rich", I mean there are loads of people on this forum and out there who have far more, I feel it's more than enough and it's time to give back to society.

I guess nett worth is only a number, I pursued it as I had certain goals, and now that's done, I think it's time I spend my time and energy giving back. It's how we live our lives and what good we do that matter more...at least to me...

Inspiring story. How much cash did you use to invest in your first few businesses?

Originally Posted by Unregistered

You can definitely retire now. Your passive income of $280k is a lot. As you get older and your kids move out and your parents pass on, you will have less financial responsibilities. A couple can easily retire with a passive income of $100k pa provided they are debt free and do not have luxuries such as a car and a maid. Food, utilities, condo maintenance, medical, insurance, etc will be $5k pa the most. The rest of passive income can be spent on holidays and entertainment.

Can you share how do you accumulate so much at such a young age?

Never believe everything you read here.