How I managed to save $100k before hitting my 28th birthday

Now this calls for a celebration. After scrimping and saving and working hard saving everything I could afford, I have finally achieved my target of $100k before the age of 30, with 2 more years left to spare. I shall make full use of these 2 extra years to continue to build my savings and wachest to the next target, which is to achieve $200k in savings and investments before my 32nd birthday.

Why 32nd birthday?

Well, some readers may ask this question, so I might as well answer it first. Well, its more like an extrapolation of my saving abilities. When I started working after graduation at age 25, I took 3 years to achieve 100k in savings and investments, so I had simply added 3 years + additional 1 year buffer for unforeseen circumstances. So voila, the number 32 comes to my mind. Furthermore, I had a headstart after graduation as I had already saved around the region of $20k before starting to work full time.

How I did it

I am going to spoil the surprise by saying there is no magic involved. All it takes is sheer hard work and discipline. I cannot emphasize it any more, discipline in delaying instant gratification goes a long way to achieving your goals before you even know it.

In fact, I didn't even realise I achieved my target until I recently checked on my investments and saving accounts. I had multiple saving accounts which makes it harder to keep track of the total amount I had saved.

My income 

I am not going to reveal my income, but I have to say my gross income is definitely less than the median income of the employed people we see in Singapore. Yes, even though I have been working for 3 years, I have not experienced a phenomenal increase in salary to even assist in my saving goals. So this shows that, increasing incomes do matter, but even without it, it is still possible to achieve it if we have the perseverance and focus, we can achieve it.

Investment returns

Next, people may point to my investment growth. Well, my returns coming from my investments are almost similar to the returns we get from the STI. It is simply because my portfolio had been weighted heavily to the local banks and telcos. However, due to the weak telco sector, my returns have been staying even below the performance of the STI, so that also means I didn't make more than say from a regular investor who had invested in the STI ETF at similar times I had entered the market. Thus, it is clear that there was no stellar returns to assist in boosting the growth of my savings towards the $100k level faster than anticipated.

My advice

What I am trying to drive here is, simply sheer perseverance and discipline goes a long way to achieve the savings goal we all have always dreamed of. We always see in sensational facebook feeds of making tons of money from the stock market, and this person relaxing at the beach as a result without lifting a finger. This is definitely a scene which this advertisers would like you to believe to buy their product, be it their hugely expensive courses or products they are looking to sell to you to make that commission. Don't fall for it to make another person reach their savings goals a lot faster!

So I am going to give a simple reminder. Stay focused on your goals. Make it a game, a game you would want to unlock the achievement. The achievement of financial independence, the dream of all financial bloggers out there. It is a lot closer than you think, as you let the power of compounding do its work, while you work hard to save more from your income.

Now you just need some motivation, and I hope this can motivate others seeking for some affirmation of their belief or simply looking for a way to grow their wealth. Stay the course and may we have a good weather ahead!

Portfolio Update - December 2016

*As of 31 December 2016

Counter	Average Price	Yield on cost(%)	Weightage
UOB Bank	17.8600	4.00	11.05%
OCBC Bank	8.6000	4.00	10.44%
Starhub	3.4700	5.70	9.47%
Singtel	3.6700	4.00	8.91%
First REIT	1.2525	6.75	6.84%
M1	2.3600	5.50	6.44%
SembCorp Industries	2.4500	3.00	5.95%
Capitaland Mall Trust	1.9050	5.80	5.20%
Fraser Logistics & Industrial Trust	0.9200	7.00	5.02%
CDL Hospitality Trust	1.3050	6.80	3.56%
Keppel Corp	5.3700	5.00	4.89%
SPH	3.7500	5.00	3.41%
Keppel DC REIT	1.0822	6.17	2.63%
Capitaland Commercial	1.3523	6.15	2.05%
SPHREIT	0.9293	5.80	1.97%
Ascendas Hospitality	0.6991	8.03	1.06%
Mapletree Logistics	0.9800	7.40	0.89%
STI ETF	2.8058	3.50	10.21%
Total		4.84	100.00%

Legend

CDP

SCB

Total Invested Capital = $32,964.37

Total Expected Dividends/month = $136.52

Average Dividend Yield = 4.97%

Equities for the month December continued their rally from the Trump election into the middle of the month. The rally ended with heavy profit taking, particularly in the banks which were thought to be the strongest beneficiaries from increase in interest rates and Trump policies.

The strengthening USD was a result of the Fed being expected to raise interest rates for the first time this year, which they did, but what was surprising was the conviction in increasing interest rates at a faster pace than the market was expecting. But with so much uncertainty surrounding Janet Yellen's position once Donald Trump takes the White House, her words may not carry much weight in the end.

In this month of expected interest rates, it was my favourite moment. That is because the shock from the expected higher interest rates has caused the price of interest rate sensitive stocks to correct much further. This includes REITs which I was closely monitoring, and eager to add more to my portfolio.

In December, I added 2 REITs, First REIT and CDL Hospitality Trust.

Around the middle of December, First REIT dropped to its lowest in the last 6 months. At $1.255, I picked up some units which was lower than the purchase prices by Ronnie, one of the directors of First REIT, which I felt was a vote of confidence in the REIT. I was considering averaging down my position in Capitamall Trust vs First REIT, but I chose the latter because of its exposure to the healthcare segment which was deemed more defensive than the retail sector.

I was ready to purchase more units in Capitamall Trust should prices correct to $1.855, which my order had been in queue for the past month but it eventually did not trigger, much to my dismay.

In addition, I decided to purchase CDL Hospitality Trust to increase my hospitality segment in my portfolio. I decided not to increase my position in the Ascendas Hospitality because I felt the price of the REIT was more expensive compared to CDL, even though Ascendas was offering higher yields. Finally, I decided to go with past management performance on this one.

This is a short post, and I will end it off here. It has been a very busy month even though December is always considered a lull period, but not for me. Many of the people I know have already collected their bonuses, which I suppose some would have used them to put it back into the market, probably partially the reason why the markets rallied like it did in December. However, it was not so great for me, because I did not receive any bonus this year ever since I made the career switch out of the oil and gas industry. So much of the funds used are mainly from the salary I saved from the past month.

At the time of writing, the prices of REITs has increased in value, along with a general increase in stock prices, which is probably due to the Capricorn effect, for those who believe in it. I am probably not going to do anything, now that prices has risen.

Stay safe and invest wisely!

How much do you need to earn to be average in Singapore?

Well, we all might wonder, if we took all the recorded salaries of everyone in Singapore and took an average, what would it be? Of course, people in Singapore are "kiasu", which basically means hating to lose out to others, so would very much like to know this in order to know where they stand.

Hate to disappoint, but the average salary would be $5,493. If you are like me, you will most likely be really disappointed with your current salary. But emotions aside, lets see how this is calculated. We arrived at $5,493 from taking all the recorded incomes, basically GDP, and then dividing by the total number of the country's population.

Some of you might say, oh wait, how about the unemployed, the retirees, the school-going children and students? Now, we know where is this heading, taking more people out of the equation is going to make the average income even higher!

Well, the Comprehensive Labour Force Survey done by the Ministry of Manpower proves this by stating the average income to be... wait for it...... $9,207!!!

Oh crap, you might say. This is really way beyond us. In fact, Many people would not even be able to work till they get a salary of $10k or beyond. Actually, that is true, because the average income is skewed so high because the rich are really really rich and the poor are really really poor. The gap between the poor to the middle class is say 5cm, and the gap from the middle working class to the rich is really like 100cm. This is just an analogy to show how skewed this is, which propels the average wage to a whooping $9,207.

The median income is a better indicator. It shows the income earned by the majority of the population. And it is actually just $3,770. Phew!!! We can all breathe a sigh of relief, now that is more realistic some might say.

What we should take from this is actually much more important than simply benchmarking ourselves. We should note that the incomes declared include not just the monthly wages but other forms of incomes as well. So what does this mean?

Don't just stop at working hard to boost your wages. Complaining how low your wages isn't going to make things any better. Instead, look for other forms of income, particularly passive forms of income. The rich got really rich because of the very powerful boost from passive incomes, combined with the power of compounding as I have shown in a previous post. So really, we should stop procrastinating and start working towards our financial freedom today!