Create your own retirement plan

1. The peril of longer life expectancy
Are you ready? Most of the elderly aged 65 years old and above do not have sufficient retirement sum and they depends on their children and the government to assist. The age group between 45 – 64 years old needs to depend on oneself and may need to extend their retirement age. Hence, a lot of people who are not ready will find themselves working beyond 65 years old.

As one ages and lose the ability to provide, there are other insecurities such as fear of deterioration in health, run out of money and need to take care of spouse.

2. How to get yourself prepared?
A lot of people like to comment on how some entrepreneurs are very thrifty and they become wealthy out of their thriftiness. Actually, their wealth comes from their leverage through business and not through saving on small money such as your favorite daily Starbucks coffee. Thriftiness is good but it can only create small amount of money. In order to create wealth, you need to invest in shares.

In 3rd century BC, Greek philosopher Archimedes discovered the principle of mechanical advantage in the lever. His famous remark with regards to the lever,”Give me a place to stand on, and I will move the Earth.” In the world of investment, the pivot is “investment knowledge”, with this knowledge, you can choose the right investment tools such as ETFs, bonds, shares, forex, futures, etc. You can gain leverage through investment knowledge.

From our previous post, assume our example character is a 30 years old single man, his annual salary is between SGD 36k to 48k and he is able to save SGD 12k per annum. Assume he works from 24 years old to 30 years old, see below for illustration. 

By 30 years old, he should be able to achieve a total saving amount of about SGD 100k. Based on SGD 36k annual income, SGD 12k is a saving rate of 33.3%. If the single man stays with the parents, a saving rate of 33% is highly feasible.

The above illustration is based on a very conservative investment of 4% return.

3. The rich makes more money with money and sometimes with other people’s money
After 31 years old, with SGD 100k can be used to pay for property down payment or invest in more shares.

The rich makes more money with money. In 2013, Capgemini and Royal Canadian Bank published a report on 2013 Global Wealth Report and those with asset of USD 1m and above will have access to different financial tools and investment products. They are able to accumulate more wealth than the lower income group.

4. At the start, it is very slow but after 40 km/hr, it will be faster
Remember the momentum theory we learn during our college days, the vehicle/car when it first overcome its inertia, it is moving very slowly and once it hits 40 km/hr, it starts to pick up and can accelerate. The SGD 100k we seen earlier will roll and compound and grow over the years. When the man reaches 60 years old, he will achieve SGD 980,426 and by 61 years old, he will achieve SGD 1,031,644. Imagine if he can change his return from 4% to 10% or increase his saving rate or increase his income.

If he can achieve 10% return, he can achieve SGD 1m by age 47 years old.

If he can achieve 10% return and double his savings, he can achieve SGD 1m by 40 years old.

It is highly doable. All it takes is a bit of discipline and willingness to invest for your future. 


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