1 Million Combined Net Worth By Age 30

We have achieved another one of our goals - $1,000,000 net worth by age 30! We ended 2019 with a net worth of ~$886,000 and was hoping to achieve the goal this year. When covid happened and the stock market crashed in March, I told CZM that it's not happening this year since the majority of our wealth is in the market. Surprise surprise, the market has recovered even before the pandemic is over (technically the vaccine isn't out yet, the economy is still bad and we still can't travel).

Let me introduce the concept of net worth and its importance once again for the new readers.

Net worth can be calculated by taking all the assets and subtracting away all the debts/liabilities. This is the classic comic where everyone is actually poorer than the beggar who has a net worth of $2.73. Your friends/colleagues may be living in a huge condominium, driving some fancy car but it could all be financed by debts. There is absolutely nothing wrong with that as long as their income allows so but anything can happen! Do not be the The "Poor" Pilot With Multiple Properties. You can refer to the following article on the importance of net worth by InvestmentMoats - Don’t Track Your Expenses or Budget First. Plot Your Net Worth Instead. 

In our previous net worth update, I simply share the numbers but since this is a special occasion, shall share some screenshot too :)

Cash
This is all the money we have in our savings accounts.

KPO DBS Accounts

CZM DBS Accounts

I have blogged about how we used the Multiplier as our main savings account and the use of a joint account to achieve higher interest previously. The last/latest article can be found here - DBS Multiplier Upcoming Changes. 

KPO UOB Account

The UOB account was created when we refinance our HDB housing loan/mortgage to UOB. I usually keep this around $1k to avoid the fall below fee and it just went below $1k after the giro deduction for my credit card bills. I also have multiple SCB accounts that have $0 balance (no fall below fee for priority customer) which I will show later for a different reason.

Regular readers will know we are investing aggressively that we hardly keep/hold onto cash. No emergency fund as well which I do not recommend since it is personal finance 101. We felt that there's no need for it at the moment, will probably work start saving when we get older.

Our Cash: ~$16,000

CPF
Every month, I will try to show CZM her net worth in order to motivate her to work harder towards financial freedom. However, she would always say I inflate her net worth because I included CPF. lol. I am sure some of you may have the same mentality but like I always tell her, CPF is our money and should be included as part of our retirement planning.

KPO CPF

CZM CPF

At the start of our career and before we got our BTO, we transferred everything in OA to SA to take advantage of the higher interest in SA. However, the plan now is to leave more money in OA to act as a buffer for our mortgage. As of now, we can become jobless for ~3.6 years without worrying about the mortgage. Another reason why I stopped transferring to SA is for tax optimization purposes. The option to top up SA up to $7k yearly will disappear once FRS is met. You can how I reduce our taxes by performing Voluntary Contribution (VC) to CPF Medisave and RSTU (Retirement Sum Topping-Up to SA).

Our CPF: ~$308,000 (OA + SA + MA) 

Investment

Our portfolio has grown to >$600,000 (another record high!) after the news of the vaccine came out and since our last update (Portfolio - October 2020 - $567,374).

All our investments are tracked using StocksCafe (including StashAway and Syfe) except for the Endowus portfolio.

Hence, our total portfolio is ~$625,000 currently (including leverage).

The only 2 stocks in my CDP were from an IPO (Just Another Netlink Trust IPO Analysis) and the one time when DBS/Vickers thought I was an accredited investor and offered a private placement (Keppel DC REIT Private Placement). Probably applied too little and the banker found it suspicious. Stopped receiving all those HDB bonds/private placement emails shortly. Oh well.

The majority of our investments are with SCB in 2 different accounts and one of them is a lien account where I pledge shares in order to borrow money from the bank at a lower interest. You can read more about it here - Leverage - A Double-Edged Sword.

The account highlighted in yellow is the leverage/amount I am borrowing from the bank to invest. $15k Euro was used to invest in Cromwell European REITs. Although you see $51k, $20k were used on Singlife for 2.5% interest (ignore it since I did not include it in the cash section) and $31k were invested - Biggest Losses in a Day + Start of Leverage.

Total Leverage: ~$56,000

Our Investment: ~$569,000

Property

I believe that property should be included in the computation of net worth. If one excludes the value of the property, the money (cash/CPF) you use to pay for the loan/mortgage will be no different as disappearing into the thin air or throwing it into the sea. Hence, I will be valuing the property based on the total payment (interest + renovation cost) till date. This ensures that our money will not "disappear" and act as a floor/minimum amount (total payment + remaining loan + markup/profit) to sell in the future.

I can imagine people selling their house at market value + markup, thinking that they made money from the sale but it is totally possible that market price + markup < total payment + remaining loan. Does this make sense or is it too confusing? lol.

Property value based on total payment (including interest + renovation cost): ~$514,000

Valuing at cost + total payment is pretty conservative as the market valuation is ~$635,000!

Our Housing Loan: $365,000

Our Property: ~$149,000

Total

Our Net Worth: ~$1,042,000

The question is how to achieve something similar? Honestly, there's no get rich quick scheme. In my opinion, it always boils down to the followings:

1. Work hard to increase your salary/career/business

Unfortunately, this will always be your main source of income, not from dropshipping or owning multiple properties. I have blogged about this previously - >100% "Return" on Salary and your salary growth should not be linear especially at the early stage of your career. If you are below median income, work towards it. After that work towards getting $6k for maximum CPF contribution rate and towards the next tax bracket and so on. Work for your promotion, if there's no growth or you are getting too comfortable, change a company. The best way to differentiate yourself is to learn programming and automate some manual tasks e.g. Python to automate the boring stuff.

2. High Savings Rate

Our savings rate is around 60-70%. Ignore the last 3 months as I have not tabulated our expenses and they are after deducting those fixed expenses only (e.g. housing loan, parents' allowance, insurance, etc.). To do that, cut down on your expenses. Determine what are your needs (e.g. food) and wants (e.g. new shirt/bag). In addition, we made a decision that we will not get a car (even after Baby Ong is born).

Anyway, multiple bloggers have blogged about this previously. One of the more popular ones would be from Mr. Money Mustache - The Shockingly Simple Math Behind Early Retirement. If you are only saving 10% and leading a YOLO life, good luck to you!

3. Invest and do not time the market

We continued to invest regardless of the market movement. We have a monthly investment plan through StashAway, Syfe, and Endowus and we stick to it. If you are constantly holding on to cash waiting for the next big crash that may/may not happen, you are losing money - the opportunity cost to invest and grow your money. 

In the past, to invest/DCA, one will have to either purchase ILP or do it through a unit trust/fund sold by the banks. All these have a very high cost/expense ratio. However, with the various robo-advisors currently in the market, there is really no excuse not to invest your money when they make it so hassle-free and cost-effective. In addition, remember that you are investing for the long term, there's no need to think about selling/withdrawing them when you see a little profit. Sharing this old article again - Never Ever Buy Investment-Linked Policy (ILP). 

At the end of the day, everyone's journey towards financial freedom is different. Let's work hard towards them! Start by tracking your net worth :)

You might be interested in these blog posts too:
- 2017 Net Worth: ~$510,000
- 2018 Net Worth: ~$640,000
- 2019 Net Worth: ~$886,000

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