Money not enough? That's why you need to invest

In Singapore, the property price is expensive and based on the average salary, it will take a lifetime to pay off the house. Currently, it is still a person's working life time, if it increases to 2 generation to pay off the house, it will become very scary.

1. Life time income of SGD 1,946,880

The below table is from Ministry of Manpower, the average salary in 2016 is SGD 4,056/month. Based on 40 years of working life, the total income is SGD 1,946,880. 

2. Life time expenses of SGD 2,704,000

a. Expenses during single-hood

In Singapore, the average man age is 30 years old and woman is 27 years old. Assume that the man graduate when he is 24 years old, he will take 6 years before he get married. Assume that he has an average monthly expense of SGD 2,000. His total expense for 6 years will be SGD 144,000.

b. Expenses from 31-60 years old

Assume that the house is SGD 1m including incurred interest over a lifetime will be SGD 1.25m.

Assume that he bought a car for SGD 150,000 including COE

Assume that he has a kid, the cost of bringing up will be SGD 200,000 (conservatively speaking).

Assume that monthly expense from 31-60 years will still be SGD 2,000. 30 years will be SGD 720,000. I did not take into consideration pay increment and increase in expenses for the illustration.

Hence, total expenses between this age group will be SGD 2,320,000.

c. Expenses between 61-80 years old

Assume that for retirement the man just need to go downstairs to drink kopi o and eat mixed vegetable rice, his monthly expense is only SGD 1,000 including occasional visit to polyclinic for medical expenses.

His expense will be SGD 240,000.

Therefore, this friend of ours will face a shortage of SGD 757,120.

Yes, he can buy a HDB and if he is married, both can help to pay down the house. However, I do not foresee any surplus for a better and earlier retirement.

From the above picture, it shows a conversation between myself and a friend. He was burnt previously before because he invested in get-rich-quick scheme through gold investment. However, he should learn from the mistake and educate himself in terms of investing. He has another good 25 years of working life and with proper planning, he can achieve a fruitful retirement. "Not much money" is not true because he saves a big portion of his income and if there is not much money then it will become a real headache. When he says that he has no interest, he is rejecting me not at the notion of investing. Will anyone be not interested in money? If I tell you that you can make a lot money, will you be interested? Yes, I will definitely be. That's why I am on this quest to understand how to crush this shortage between income and expenses and retire earlier. I will choose to work on my own terms because I am financially free not because I have to. 

In my next post, I will share about how you can gather small wealth through savings and middle class wealthy through shares investment.