| For a graduate couple in Singapore earning median salaries, the goal of becoming millionaires is not too distant, at least on paper.
That is, if they save a third of their income from age 25, and invest prudently to earn a modest return of three per cent a year. This does not include non-liquid assets such as property.
Singapore website salary.sg says that according to the Ministry of Manpower's report on wages 2008, the median salary for professional in the 25-29 age group is $3,416. Professionals in their late thirties can expect to earn a median salary of $5,048. According to this estimate, their combined income will range from $6,832 to $10,096, and by saving a third of their income every month, they can afford to invest between $2,277 to $3,365 a month.
The website claims, "suppose both of you started working at age 25, and always save and invest one-third of your income. If your savings and investments earn just a three per cent rate of return a year, you would have accumulated half a million dollars by age 37 and a full million bucks by age 45".
It also says that a couple who are both managers, earning a median salary of $3,860 a month, can become millionaires by age 39, if they save 40 per cent of their income.
Some netizens have reacted to this post with enthusiasm, while others were doubtful. One commented that the hypothetical couple must have no children, while some said the blog post assumed that the couple suffered no financial setbacks such as failed investments, retrenchment or expensive medical treatments.
However, a financial adviser interviewed by Lianhe Wanbao agreed that by saving conscientiously and investing prudently, this is possible.
Financial adviser Mr Dennis Ng told Wanbao that low to medium risk investments can yield a three to five per cent return, so the assumption of a three per cent rate of return is relatively conservative.
"If they can invest shrewdly, such as putting a portion of their savings into high-yield stocks, then they can reach their target even faster, but this also entails higher risk."
Mr Ng says he earned his first million just 15 years after he started working. He started with a monthly income of $6,000.
"I agree that how fast you accumulate your first million is due to two main factors - how much you save and the rate of return of your investments," he said.
A poll on the site also asked readers how old they were when they accumulated $1 million in cash and investments. The majority - 50 per cent - said they have yet to reach that goal. Thirty-eight per cent said they had saved $1 million by age 44. However, it is not clear how many people took the poll.
One forummer nicknamed "lucky investor" shared that it was possible with the assumption that one's investments do well consistently every year.
"I am pretty sure many investors who placed their hard-earned savings with so-called professional fund managers over the last five years would still be seeing a loss, much less any profit. Worse-off are those who invested in structured deposits like credit-linked notes. One has to overcome market volatility, corporate scandals, financial crises and emotions, as well as have a bit of luck to succeed.
"Personally I have been quite fortunate in my investments over the past six years, and managed to turn $200,000 capital into $1.25 million through real-estate and stocks," he said.
Another forummer "Skeptical" shared that "my wife and I don't club, don't drink, don't smoke, don't drive, hardly shop and I have paid off about $60,000 of loan after five years. I am a month away from 31 years old and I don't even have $10,000 of savings to my name".
He also wrote that after graduation, he had to pay off study loans, spent an additional $22,000 on an MBA and purchased an HDB flat in 2007 at the height of the property market.
He concluded, "I too would like to save up one third of my salary but it really isn't too realistic if you would like to have your own place and your parents are too poor to help you with the down payment." | 
No comments:
Post a Comment