Is there a point in setting a personal financial milestone?

On 20 Feb 2020, I wrote in a blog post that I have reached my networth financial milestone. Prior to that post, on 29 April 2018, I highlighted that my ‘journey’ to reaching this milestone was facing some hiccups mainly due to stock portfolio losses and I might need a longer time to reach the milestone than I have anticipated.

Reached the next milestone! (read here)

Reaching the next milestone (read here)

I did not state the exact (net worth) amount in my posts as I felt the post only really matter to me alone, and act as markers for me to reflect upon in the future. I also felt that this figure fluctuates from time to time, and I have a significant portion of my net worth in stocks… So the amount I see now may trend lower in the (near) future, despite me periodically ‘feeding’ the stock portfolio ‘beast’ – inject cash.

The ‘Art’ of comparing, Singapore style

Forum: Why Singaporeans cannot afford to give up the rat race (read here)

I am sure many Singaporeans reading the above article will agree that living in Singapore is a constant rat race.

Comparing Yourself With Others Is Pointless (read here)

To quote the article: “The Straits Times editorial published on June 17 referred to the young in China wanting to give up the rat race (‘Lying flat’ in China bears watching).

Some young people in China want to “tang ping”, translated as “lying down” or “lying flat” It may eventually lead to “nei juan” or involution, the opposite of evolution, which in turn could affect China’s progress and development.

I think the authorities in China do not have to worry much about “tang ping”.

Big countries like the US, Britain and China with huge populations can afford to relax.

But in Singapore, which has a small population, every individual contribution counts. We cannot afford to be complacent. Moreover, we have no natural resources. The only asset that Singapore has is its people.”

Yes, Singapore is a small country with no natural resources. Its resources (asset) is the small population.

Being brought up in Singapore, a typical thorough-bred, true blue Singaporean, that has gone through the local (pressure cooker) education system, we are constantly in a competition to ‘win’ (or lose). To score better grades, go to a better school, get a stable job (as a civil servant or with a MNC), to climb the corporate ladder, etc.

Then start accumulating assets or while others like to YOLO.

Once we start calculating our net worth it is tempting to compare. To see how it scales up against others’ net worth. To peep over … like how we compare grades in school.

Sometimes even within among the investor blogosphere or forums like Investing Notes, investors will compare among themselves as to who have the higher net worth, bigger portfolio, higher dividend income, or capital gains…

Although I do not think that in itself is a bad thing as it helps to motivate one another in reaching personal finance goals, but sometimes I just can’t help but feel if some of us are missing the big picture. Eg. the process and our circumstances and needs/wants/purposes.

Comparing Yourself With Others Is Pointless (read here)

To quote the above article:

“If you compare the amount of money someone earns with yourself, and the result isn’t to your liking, it’s easy to become disillusioned.

You wouldn’t be human if you didn’t.

However, this is like looking at a house through a keyhole. You only see part of the picture, your view is obscured and you can’t make out the finer details.

You’re seeing the results without understanding the cause behind them.

We are neglecting to look at the processes that person employed to get to where they are today.This is why comparing yourself to others is a recipe for disaster, because we often have no point of reference.

Comparison is a useful tool, but should we turning it on ourselves instead of on others?“

There is always a higher ‘mountain’

Personally, for me, when I look at net worth (cash, SRS, CPF, cash values of my insurances, stocks, bonds) today, I am surprised at the rate of growth. For instance, as mentioned at the start of the post, I reached my net worth financial milestone on 20 Feb 2020.

It took me close to 16 or 17 years to reach this amount. Actually, it was shorter than what I have anticipated. This net worth is excluding the value of our fully paid property which we are currently staying in.

From what I have read, I understand due to the compounding effects and probably higher earned income, to reach the next milestone (same amount x 2) will probably take a shorter period.

Nevertheless, I was surprised that I reach 1/4 of this amount (first milestone + 1/4 of first milestone amount) in early June 21. That is probably only about 1yr and 4 months. Anyway I am probably jinxing it, as stocks are well… volatile (BTW I don’t have any amount in crypto).

If I assume a linear comparison, it would probably take me about 4 years to reach 1/4 of the milestone amount. Although it should not be so (linear comparison), as I have housing loans to pay off and my salary was lower, years back. Having said that, salary wise, 2020 and 2021 are not good years.

Then again, I am starting from a low base, and my milestone amount is just a modest amount.

Yup, it is a modest amount, in a broader sense.

There are many millionaires / multi-millionaires among the financial investor bloggers. In addition, there are many more silent multi-millionaires who are (active or non-active) users in the online forums.

Singapore Investor Bloggers with min. 1 SGD Million Stock Portfolios (read here)

The Five Titans of InvestingNote (read here)

Singapore is after all a rich country, with many high net worth individuals. As per investopedia.com (read here), a high-net-worth individual (HNWI) is somebody with around US$1 million (or SGD 1.35 million) in liquid financial assets. The VHNWI classification—very high-net-worth individual—can refer to someone with a net worth of at least US$5 million (SGD6.73 million). Ultra-high-net-worth individuals (UHNWI) are defined as people with investable assets of at least US$30 million (SGD40.37 million), usually excluding personal assets and property such as a primary residence, collectibles and consumer durables

Number of millionaires in Singapore to surge 62% by 2025 to 437,000: Report (read here)

To quote the above article: “Singapore may have 437,000 millionaires by 2025 compared with 270,000 in 2020, according to the bank’s 2021 Global Wealth Report. That 62 per cent pace would be faster than Hong Kong’s estimated 60 per cent for the same period, but slower than the growth forecast in mainland China, India, Australia, South Korea and Taiwan.”

However, there will always a higher ‘mountain’ or bench mark so to speak. Singapore’s millionaire density – or percentage of millionaires in the total population – was 5.5 per cent in 2020, the second-highest in Asia after Hong Kong’s 8.3 per cent.

In fact, one in every 125 Hongkongers is worth at least US$5 million. Eg. More than 60,000 Hongkongers, or one in every 125 residents, have a net worth of at least US$5 million

Hong Kong’s multimillionaire population hit record high last year even as its economy had its worst recession on record (read here)

One in every 125 Hongkongers is worth at least US$5 million, ranking the city fifth globally, Wealth-X survey finds (read here)

To quote the April 2021 article above: “As many as 515,000 people in Hong Kong were estimated to have HK$10 million (US$1.28 million) each in total assets last year, up from 413,000 in 2019, according to Citibank’s Hong Kong Affluent Study 2020, which was conducted between November last year and January this year. A multimillionaire is defined by the bank as someone who has more than HK$10 million in total net assets and at least HK$1 million in liquid assets.”

Millionaires in China to nearly double by 2025: Credit Suisse (read here)

To quote the above article: “Ranked second globally in terms of the number of millionaires behind the US, mainland China had 5.3 million millionaires in 2020, accounting for 9.4% of the world’s total, according to the Credit Suisse Global Wealth Report 2021 released on Tuesday (June 22).”

Singapore and Hong Kong are both densely populated cities. And yes, Singapore’s millionaire density might ‘pale’ in comparison to Hong Kong’s millionaire density… but this again pales in comparison to New York (where it is now talking about billionaire density).

San Francisco now has the 3rd-most billionaires of any city in the world, beating out London, Moscow, and Beijing (read here)

To quote the above July 2020 article: “New York remains the city with the most billionaires, with Hong Kong clocking in second. And third is San Francisco, the 49-square-mile city in Silicon Valley that’s home to much of the region’s tech elite.”

So back to Singapore. The total population of Singapore is projected to grow to 6.12 million in 2025. As highlighted in the earlier mentioned article, Singapore may have 437,000 millionaires by 2025. That will 1 out of 14 people (is a USD millionaire) in Singapore.

Singapore millionaires: Figures in perspective (read here)

Comparing to myself

Anyway not sure where all these comparisons is bringing me to.

Yes, good to know.

Comparison with others has its uses, but the only person I should be comparing myself to is myself. I cannot control others, but I can use it as an inspiration to control something I can, which is myself.

I guess the first step is understanding my own needs and wants (expenses) and keep to the budget. Do I want a Fat FIIRE, Lean FIRE or just want to have a Coast FI, as I can’t forsee myself doing no work. To put it simply and to quote Mr Money Mustache: “Work is better when you don’t need the money” (read here).

“Independence, to me, doesn’t mean you’ll stop working. It means you only do the work you like with people you like at the times you want for as long as you want.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

Personally, for me, at the moment my average monthly dividend income can cover my monthly essentials. I will try to target that my dividend income go beyond the essentials and cover for my family wants and needs as well.

My wants and needs (plus my family’s) are probably different from many others.

To quote Josh Tan from TheAstuteParent: “Fear of running out of money is a problem I hear from retiree clients. 80% of retirees have their savings after 20years. Many hoard onto their cash. Some even grew their assets! Scarcity mindset is real. 50% of Singaporeans feel they need to rely on children for their retirement

From studies, 70% of your current expenditure is a good projection for your retirement expenditure. If you spend $3,000/m now, expect to spend about $2,100/m when you retire.”

And yes, I am still take very little steps to reach my next milestone.

There was a recent post by Happily in June 21, in Investing Note asking members to rank their passive income (see below).

I like the reply by investor_jo below. Likewise, I am also a small small investor.

“Past a certain level of income, what you need is just what sits below your ego.”
― Morgan Housel, The Psychology of Money

Nevertheless, it is always good to aim higher, set a higher bar and higher ‘margin of safety’, and finding things we love enough to spend extravagantly and having control over our time.

“Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.” Warren Buffett

“Frugality, quite simply, is about choosing the things you love enough to spend extravagantly on—and then cutting costs mercilessly on the things you don’t love.”
― Ramit Sethi, I Will Teach You To Be Rich

“More than I want big returns, I want to be financially unbreakable. And if I’m unbreakable I actually think I’ll get the biggest returns, because I’ll be able to stick around long enough for compounding to work wonders.

Money’s greatest intrinsic value—and this can’t be overstated—is its ability to give you control over your time.

Use money to gain control over your time, because not having control of your time is such a powerful and universal drag on happiness. The ability to do what you want, when you want, with who you want, for as long as you want to, pays the highest dividend that exists in finance.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

Actually, I was reflecting on one conversation I overheard between 2 friends (probably ex-classmates) who have not met each other for a very long time, at an event once (before the pandemic struck). One of them is self-employed (likely a sole proprietor), while the other is in the corporate sector (likely a Senior Director or Senior VP). Both are old. So the corporate guy after some ice breaker talks, started asking his friend bluntly… so how much do you make (per year)? The self-employed guy probably gave him the best answer I heard (for a very long time).. without missing a beat or pausing, he said: “What I make is enough for me.”

Thank you for reading!

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