“Save 100k by 30” goal review

Whenever you reach a milestone in life, you tend to reflect on what has been and sometimes, what could have been. As I celebrate the 5th anniversary of joining the workforce yesterday and my 30th birthday today, I am reminded of a goal I once had but have not tracked for a long time.

Back in July 2013, as a young fresh graduate about to embark on my career as a legal sweatshop worker auditor at a mid sized audit firm, I read an article in the Sunday Times entitled “Is it possible to have $100k by 30?“. Author Jonathan Kwok surmised that as a 25 year old male fresh graduate, if you earned the median salary of $3,050 per month, had 3 months bonus (AWS + 2 months variable bonus), had a 4.5% annual pay rise, saved 50% of your salary, you would have managed to accumulate $123,000 of pure savings (excluding CPF contributions). If you choose to invest 60% of the savings and obtain a 6% return per annum, the average 10 year year return of the STI then, that amount will be $134,000.

Back then, upon reading this, I thought to myself…

Challenge Accepted

5 years on, if you simply look at my portfolio value, you would see that I’ve already achieved that goal with some time to spare. The exact time I achieved the $100k goal was approximately slightly before my 29th birthday, 1 year ahead of schedule. In fact, my current tally is quite close to Jonathan’s estimates.

Reliving my 5 year mission

Let’s examine how I did it with a trip down memory lane.

Tough start

When you study among so many brilliant individuals throughout your education years, there comes a certain basic expectation that there is a set path that you must follow to career success. However, when you can’t even get on that path to begin with, you sometimes feel like a failure, especially when you see your peers start to outpace you in terms of opportunities and salary growth.

I’ve made peace with myself on this, but to date I still face a uphill battle as a result as my salary was by some measures much lousier than Jonathan’s assumptions:

Starting point

*My bonuses were never more than 1 month, some years were less than that.

I was starting off a giant back foot, with my only redeeming factor being auditors’ comparatively large annual increments. To this day I’m still lagging behind Jonathan’s salary assumptions. With that said, I can’t complain too much as I know there are people out there who start from even further behind, with student loans and large parental support contributions monthly.

Leading a simple and frugal lifestyle

I have relatively simple tastes, I am a bit like what some would call a 宅男 (Nerd / Otaku), the most important things I possess is my computer, mobile phone and Nintendo Switch. Netflix / Youtube / Video Games with the odd movie at the cinema being my entertainment, analysing business news stories and financial reports my interests. The only time I go to restaurants are with close friends whom I catch up with every few months or colleagues, my family innately prefer hawker centres. No girlfriend either so no expenses there as well.

As a auditor in a firm previously, leave was mainly used for professional exams, there was little time for overseas trips. In fact, since starting work, I’ve never taken leave to go on a leisure trip overseas.

Zero in 5 yearsPogchamp

I can imagine the horror that is going through your minds now. While I love the idea of travelling for leisure, I hate spending tons of money on it. Also, I feel that if I were to go on trips, I feel it is more meaningful if it were with friends or family. As a single introvert, my attached friends don’t really ask me to join them on their trips. This was partly why I took my current job in the hospitality industry, as it afforded me a chance to travel and have a first hand look at how business is done overseas.

Saving and investing half my take home pay

This low cost lifestyle enabled me to consistently save half my take home pay. I’ve also been rather aggressive with my savings, investing at least 80-90% into the US market at first, with my portfolio now more weighted towards the SG market. How I rationalise this approach is through the fact that I’m young and can afford to take the risk. I also have low expenses and in the event I’m screwed over by Mr. Market and/or retrenched by my employer, I take comfort in the fact that my parents will take care of me.

I know its considered a bit reckless by finance advisors, but I really frown on holding too much cash. Also, I would argue that if you know what you’re doing, focus on buying quality stocks and take a long term view, the risk of being wiped out by the market is relatively low. You might suffer massive draw downs in your investing journey, but quality companies always have the ability to bounce back.

Being lucky with my investments

I try as far as possible to be right with my stock picks based on fundamentals, but ultimately the market has a large say in whether you are right or wrong. I’m lucky to say I’ve managed to achieve an XIRR of 16.57% p.a. (according to Stocks.Cafe) to date since 2013 or 15.22% between 2013 – 2017, well outperforming the 6% assumption Jonathan had. This helped me make up for the salary gap I have and am still facing.

Financial goals on track, life goals still lacking?

Some of you might be looking at all of this in “disgust”, saying that I do not have a life. “Why don’t you live it up a little?”. In a way, I would somewhat agree with you. While I like the finer things in life, I am content with my nerdy and simple lifestyle. The only true failing I have is that I’ve yet to find a partner in crime in my journey to financial freedom, probably due to my 宅男ness. I’m reminded of it from time to time by my mom, as all mothers do. I’m open to being single forever if that is path given to me, but that sometimes sounds too lonely.

Will I be anointed a 铁公鸡” (stingy person) like AK in 10-20 years? Haha I certainly hope not.

What next?

I hope my story will be an inspiration (nightmare?) to the fresh graduates of 2018 as their embark of their careers, as a Sunday Times article once did for me. Financial freedom can be planned and achieved if we take pro-active, positive steps towards achieving those goals.

As for me, let’s set a new 5 year goal:

Save 350k by 35

Watch this space.

Happy Birthday to me,
KK

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So proud of Singapore

I thought I’ll have a change of pace today and do a post on life instead of my usual post on investing.

WHUUUUT?? KK ISN’T TALKING ABOUT INVESTING? UNFOLLOW KTHXBYE

Come on guys, not everything is about money. And stocks. And work. Damn what am I doing with my life.

Host for a day

Anyway, a Spanish colleague from my department in the UK flew down to Singapore over the CNY weekend for a quick stopover in Singapore during her vacation. I played host to her and her 2 friends on Sunday and brought her for a mini-tour of Singapore.

We met in the afternoon and went down to visit Marina Bay Sands and Gardens by the Bay to take in the city skyline and bay view.

We then took the MRT to Chinatown to find out that most of the things are closed (CNY duh). We had lunch at People’s Park Hawker Centre before walking down to Clarke Quay Central for some coffee and tea at Ya Kun Family Cafe. We then wrapped up the day with a leisurely walk down the Singapore River to Merlion Park (with a stopover at a random bar for drinks along the way) to see Marina Bay by night.

My Thoughts

It is rare that I take the time to walk around Singapore and take in the beauty of the place particularly at night. The colourful shophouses along Clarke Quay and Boat Quay, the gentle breeze in your hair and beautifully lit city skyline, I am reminded how blessed we are to be born on this island away from some of the world’s worst struggles. The fact this was achieved in 1 generation makes it all the more remarkable.

Hearing my guests profess their love for Singapore (even if it was only after a superficial tour) fills me with pride at being Singaporean, even if it isn’t National Day.

Singaporean and proud,
KK

2018 Goals and Expectations

2018

The new year is just hours away, so its time to think a bit about the future and what success would look like in 2018. No lofty goals here, just practical, achieveable life stuff.

Financial

1) Achieve portfolio returns of 10%

This has been my minimum goal every year, to achieve double digit returns annually to beat inflation and make my time worthwhile. As you can see in my recent 2017 Performance Scorecard, this goal has not always been a reality for every year. I have managed to achieve and exceed it this year, but I hope to build some consistency to prove to myself that what I’m doing is correct and a good way going forward.

2) Grow dividend/distribution cashflows

My portfolio has been driven by capital gains in the prior years due to my tech heavy lineup. Returns from this strategy have been great, but I want to develop a decent income stream so that I don’t have liquidate my stocks all the time to reinvest in the next big idea.

I hope to grow this further through investing in undervalued Singapore dividend stocks. There are a few prime candidates I’m eyeing at the moment, I’ll update you guys when I actually make a move.

3) Achieve a savings rate of 40%

Having large investment percentage returns means nothing if your capital base is small. The fastest way to boost your capital base is save, save and then save some more. I’ve managed to save an average of 40-50% of my take home pay in the past 4 years, and I hope to keep that record going in 2018.

Life

1) Blog more to flesh out all aspects of financial freedom

Financial literacy is not taught well, if at all, in our education system. Experiencing the effects of poor personal financial management first hand with someone close to me has driven me to write more about what I know and try to educate others at the same time. Navigating the financial jungle can be difficult, I hope to guide everyone through the wilderness with views in a simple, non-technical manner.

2) Bond more with the family

Growing up, my family (Dad especially) have not been the most vocal people at sharing their thoughts and feelings, as they do not want to burden others with their worries (or at least that’s how I see it). Consequently, it culminates in explosions in emotion when things come to a head.

I’ve been trying to bridge the gap more by sharing my day, talking about random things that come to mind, asking them how they are doing, etc. It feels like I’m peeling an onion sometimes. The recent staycation we had as a family has been a step in the right direction and I hope we can have more shared experiences together in 2018.

3) Utilise that gym membership more

My work involves me having a significant portion of my time travelling, as such there is some wastage on the gym membership that is subsidised by my company. I hope to maximise the use of that membership as I anticipate not travelling much in the first half of 2018.

Signing off on 2017

2017 has been a great year for me personally and 2018 seems like a year of great uncertainty to me (on the job front and investment front). If I’m able to get through 2018 having achieved the above goals, I would be content.

Here’s me wishing everyone, friends and readers, a happy and successful new year. 🙂

What are your hopes for the new year? Do feel free to share them with me via the comments or my email.

Happy hunting in 2018,
KK