Having a high savings rate early on

The day I received my first paycheck was memorable. At 23, I remember feeling I was financially independent, and I didn't need to spend my parents money anymore. So I spent about 80% of my salary for the first 3 years, enjoying food, drinks, partying, whatever the Singapore food scene and nightlife had to offer. A 20% savings rate is alright, but looking back I could've gotten by with 50%.
That would have given me an extra 30% boost in savable cash, to use for blue chip dividend investments.

Below is a simple expense/savings chart, of someone who commutes to work regularly, and does not pay rent (lives at home, but contributes to utilities).

The difference is very glaring. If both scenarios invest in the same 4% bond or dividend stock at the end of Year 3, the results after 12 years with interest reinvested is as follows.

About $28k of extra interest gained, due to a high savings rate in the first 3 years. Enough said.

Comments

Trade wars, Hong Kong riots

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Purchasing life insurance

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I increased term + critical illness coverage further with Manulife

I recently increased my term and critical illness coverage by another $1M and $300k respectively. I checked around with many providers and ended up with Manulife as it's what I need, without all the bells and whistles. AIA offered total coverage for recurrent illnesses, but I figure if I get the same cancer twice, I'd probably be dead by then. So there's no need to pay a premium for that type of policy. Sometimes plain vanilla is the best. I also considered disability insurance where they pay you an amount on a monthly basis. While this sounds like a great idea, the insurers will make it difficult for you to claim this, with strange delay clauses and exclusions. It's much cleaner to receive a large lump sum payment and manage it from there. Why these figures for critical illness? I based it on annual family expenses. Most insurance agents will tell you like 5-10x of your salary, just to get you to buy a bigger policy. An agent that looks out for you will tel...

Eyes On Retirement

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