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A fresh grad and $100K by 30. (A fast track to wealth building!)

Sunday, July 7, 2013

I have been spending more time on Facebook lately. It requires less work than blogging and with real time people to people interaction, it is somewhat addictive. 

For someone who does not go out much to meet people, Facebook is appealing to me. I think I have discovered another time guzzler.

Well, this morning, my Facebook wall (Is that what it is called?) was abuzz with comments on an article in papers. 

It is an article on how it is possible for a fresh graduate to have more than $100k in net worth by age 30.

See the chart:

Click on chart to enlarge.

Anyway, judging by the amount of activity this article has generated in Facebook, this is an interesting topic for many people. 

It is about money and how to make big money from money. $100k is no loose change. So, I am not surprised.

There is a fair bit of scepticism as to how it is possible to do something like this. Well, read the 

If the stars align the way they should, then, wonderful things would happen.

In Economics, when we say "ceteris paribus" which means "everything else remaining equal", it shows how changing a variable will affect results. So, for certain arguments to hold water, certain assumptions must be made.

So, how useful then is such an article? Is the article realistic?

Personally, I have suffered scepticism at the hands of others in my almost 4 years of blogging about personal finance and investment as well. So, I am not surprised by some of the reactions to the article.

What I want to say is that it is doable but it might not be easy. All of us have different circumstances and it is harder for some than others to save (and not for want of trying). Some might be luckier than others. 

Yes, we have to be honest here. Luck plays a part.

I will look at the article as something to inspire young working adults on what is possibly achievable if we are willing to give it a go and not cling on to every word (and number) in the article in an attempt to ridicule or discredit. 

Be inspired and I have no doubt that we will all become richer for it.


Is it possible to have $100k by 30?

The Straits Times.

Related posts:
1. Retiring a millionaire is not a dream.
2. Wage slaves should be fearful.
3. Wealthy nation cannot afford to retire?


OT83 said...

100k is small amt nowaday. Should be easily achieveable by 30

AK71 said...

Hi OT,

I guess I am somewhat outdated. Need to update me. ;)

Please share your experience with us. Thanks. :)

Musicwhiz said...

Of course it is achievable. But it entails sacrifice, discipline and determination, attributes which not everyone may have. The assumptions are not out-of-this-world, and even the investment return assumption is realistic (6% per annum), though the bonus amount is rather generous (3 months on average? Erm, not during recessions!).

But overall, I'd say this would be achievable. It certainly helps if the person knows how to invest prudently, buys sufficient insurance (to protect against injury or illness) and saves diligently.

Looking at history, when I was 30, I just managed to breach this mark; and that was after spending $25,000 (all my own money, not sponsored by parents) on an MBA, as well as paying off my University student loan to my dad's CPF account (I think about $15,000).

But my advice - build up your stash and passive income before starting a family. It is true that it will be very hard to save substantial amounts after kids, utilities and a house come along. Many friends complain to me about that.

la papillion said...

Hi AK,

Haha, maybe the reporter should interview me instead (i'm kidding, don't find me)! 3 yrs, 50k savings equal 150k. Don't even need to invest at all.

How to do that? Get extra job on top of your job, work after work, work during weekends. The 4.5% pay increment is utopic, I think, and is largely based on holding one single job.

How many people is willing to sacrifice for this? Haha, not me anymore

AK71 said...

Hi MW,

Thanks for weighing in on this. Much appreciated. :)

Your personal story should be an inspiration to all young working adults and why the article in The Sunday Times is not a fairy tale.

Definitely, it is easier for a single man to grow his net worth more rapidly compared to married man, everything being equal.

How many actually realise this and take full advantage of singlehood to save more and invest prudently?

AK71 said...

Hi LP,

ren pa chu ming, zhu pa fei! LOL!

You are definitely an inspiration to anyone who says he doesn't make enough money and therefore cannot save!

I still remember sharing your story here:
Do you want to be richer?

It is how much we want it. If we want something bad enough, we will work hard for it but it should not be at the expense of our mental health. ;)

SGYI said...

Great post! Its a goal for me. haha. Exactly at my age.

They are assuming that a 25 year old has no savings at all at the start. Those with savings of 10k or more at age 25 will definitely reach 100k before age 30.

AK71 said...

Hi SG Young Investment,

Looking back 17 years, I think I would have done many things differently if I knew the things I know now. You and your cohort have all the resources at hand to get it right albeit in a more challenging environment! Young and promising, you people are. :)

Blauereiter said...

At 25 I was barely out of the army and had no savings whatsoever, but I agree this the target is still possible to reach by 30.

I'm sure Mr Ak71 knocked this one out of the ballpark when you were 30. :P

Now a much more challenging target would be 200k, or even 300 by 30. ( assuming one has no savings at 25 )

I think the article serves as a good source of motivation to save up. :]

EY said...

Hi AK,

Taking into account inflation, $100K for the 25 years old who start financial planning today isn't the same as during our days.

Coincidentally, yesterday I had a similar conversation with my Sec 1 son about delaying gratfication and saving for his first $100k. I told him if he saves $1000 a month and some of his bonus, that would add to about $14k - $15K a year, he would reach $100k in about 7 years. I told him if he would learn to invest wisely, taking bigger risk while he is still young, then his chances of being able to afford a private property will be much higher.

I actually think that getting married can help us accumulate wealth quicker. That is if both parties are reasonably prudent in their finanical management. Or maybe marital status doesn't make a difference but rather it's our financial habits formed since young that determine whether we make or break? Savers will always find ways to save. With a family, there is probably even greater need and urgency to accumulate wealth.

I recall LP shared that he saved hard for something important in his life. Motivation is key. Really admirable to save up $150k in 3 years! :D

But yes, money hoarding in itself is no fun when we have to even count the pennies we spend. Been there, done that. I had been really thrifty before. Oh please, don't shoot me that unbelievable look can? :P Life in the 30s and 40s should be less penny pinching and more fulfilling, both spiritually and materialistically. If we have earned it, should feel too guilty spending it. :)


AK71 said...

Hi Blauereiter,

Honestly, I cannot remember how much I had when I was 30. It was quite a long time ago. :(

However, to have $200k to $300k by 30 is rather mind boggling to me. Of course, this is not saying that it is impossible. ;)

Like your photo! Very cool! :D

AK71 said...

Hi Endrene,

You are right to start your children on the path to saving and investing early! 101% agree!

I talk to my niece about this too and although all she has are a few lots of SPH's stock right now, at least she sees how she can make money work for her. The earlier children learn about this, the better it is for them.

yogi said...

Hi AK,

Just to put this 100k into perspective, when considering one's net worth, should we also be factoring in CPF and cash values of whole life policies?


AK71 said...

Hi yogi,

I guess the kind of accounting used could differ from individual to individual.

Very often, the banks consider HNWI to have at least $1m in investible wealth which excludes the residential property they live in.

Maybe, other readers could throw some light on this matter. :)

AhJohn said...

What's next topic? $1M by 40?
My dream is yearly have >10k passive income, then can retire.

AK71 said...

Hi Ah John,

Yearly >$10k passive income is enough for you?

If we already have a significant exposure to stocks now, it might be prudent to build up that war chest and wait for the next bear market.

yogi said...

Hi AK,

Agreed on that... Was just wondering aloud, 'cos depending on which way you slice it, well 100k can look bigger or smaller


AK71 said...

Hi yogi,

For sure, it is always a matter of perspective. Accounting can get quite creative, after all. ;)

Anonymous said...

It is achievable with investment and saving. Never spend a cent from the bonus and always pay oneself first when you get a salary (i.e. take out a portion for saving)! :P

Only wish that I knew about investment and the power of compound interest at the age of 20 so that I have a better head start. Better late than never though.

AK71 said...

Hi Rusty,

Oh, you are absolutely right and, of course, the best time to start for anyone is always NOW. :D

Anonymous said...

100k is the first milestone for the youngster. Once you have reached there, next is the 1 mil target.

AK71 said...

Hi Vanson,

Wah! $100k to $1m is a big jump if we are looking at the next 5 years (which mean age 35)!

Unknown said...

Wondering why so many ppl is obsessed with the money. As I'm currently understudying accounting, the word net worth is derived from the most basic and famous accounting equation. Assets = Liabilities + Equity. If we were to put it into our daily life, it can be translated into Net worth = Assets - Liabilities. Therefore, the 100k should be the assets that you have deducting all the loans and liabilities you are required to pay off.


Steph Li said...

I started off after leaving uni with $50k of savings (since childhood) when I was 28. The first few years of working, I put all my effort in and a lot of sacrifices, and learning about personal finances from scratch. Currently 32, I have about $650k (not lying).

Nope, I'm not a banker, investor, or financial guy. Just a hard worker in a 'blue collar' trade servicing 'white collar' people.

Saving >80-90% of my monthly/yearly paycheck helped me reach that goal - there is an article by MMM (Mr Money Moustach) on saving rates that is very helpful.

AK71 said...

Hi Steph,

I believe you!

There is much to be said about industry and thrift.

You are a good example. :)

WTK said...

Hi Steph,

It is not an easy feat to save $650K in four years. You are an inspiration to all who want to achieve financial independence.

Don't mind if you could share whether the $650K is inclusive of CPF?


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