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.
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)
All our investments are tracked using StocksCafe (including StashAway and Syfe) except for the Endowus portfolio.
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.
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
Do like any of the following for the latest update/post!
1. FB Page - KPO and CZM
2. Twitter - KPO and CZM
3. Click here to subscribe using email :)
4. Instagram - KPO_and_CZM (Did you see those delicious food photos to the right --> Unfortunately, you can't see it on mobile.)
