Charting ahead

By Joce | Nov 7, 2019

In this post, I'll lay out some general guideposts and milestones to keep myself on track to achieving my goal. All calculations are based on the following assumptions:

  • I continue holding a full-time job until minimally, age 40
  • Very conservative estimate of salary appreciation at 3% p.a.
  • My family is not saddled with unexpected costs (eg. health emergencies)
  • One-off purchases (eg. wedding, house, renovation, furnishing) are paid without dipping into investment capital or returns
Current: Single and living with my parents

This is my current state of affairs and will likely continue unchanged for the short term (2-3 years). Current expenses: $800 per month (food, entertainment, transport, subscriptions, insurance, tax all in)

Within the next 3-5 years: Married with house loan, no kids

If my partner and I get married in the next few years, we would likely add a house loan to our expenses (additional ~$800 per month) which will be covered by each month's CPF contribution.

Estimated expenses per person: $800 + $130/2 electricity^ + $50/2 water* + $200 groceries + $40/2 fibre broadband + $50 buffer = $1160 per month

Assuming a 5% p.a. dividend rate, I would need 557k invested to earn enough in dividends to pay for 60% of our combined monthly expenses

>5 years from now: Married with house loan, with 1 kid
>20 years from now: Married with > 1 kid, house loan paid off

Ahh, the cost of raising a kid in Singapore. These 2 scenarios are so far removed from my current lifestyle that I'm not going to try and estimate the household expenses. Furthermore, referencing published averages I can't verify or cross-check will only contribute to 2nd/3rd degree estimation bias. I leave these calculations to another day in the future

Game plan

With just over a decade to achieve my goal of financial freedom by 40. I have divided my investment journey into three time-based stages:

  • Capital appreciation
  • Dividend reinvestment
  • Aggressive approach

Build a deep foundation by picking good businesses to hold for the long-term

Increase portfolio value to 100k by 2021
Increase portfolio value to 500k by 2027
  • Maximize gains
  • Dividend reinvestment
  • Balanced approach

Maximize returns from my investments while taking moderate risk

Increase portfolio value to 1 million! 😎
  • Capital preservation
  • Dividend ladder
  • Defensive approach

Preserve investment capital while distributing dividends evenly across the year. Re-balance and adjust withdrawal as needed, based on the wider economic conditions

#4 Finalize and execute my retirement plan (check it out here!) which includes CPF Life, SRS and investments

* Average water bill for a 4 room HDB flat (PUB, Singapore's National Water Agency)
^ Average cost of SP bills for a 4 room HDB flat(Average Cost of Monthly Singapore Power (SP) Bills)

Tags: Milestones

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