Thanks to a reader, Sun, who reminded me of the fact that STE is a "millionaire next door", I remember that there is a very good book that shows us how common people can become millionaires.
Generally, there are two types of people:
1. "Under-accumulators of wealth (UAWs)": This type of people spend everything they earn as soon as they get it.
2. "Prodigious accumulators of wealth (PAWs)": This type of people are frugal. They save and invest. They become millionaires.
People sometimes think that high income earners are wealthy people. This might not be true. In fact, in the book, it is revealed that most high income earners are not wealthy. They make a lot of money but they don't keep much of it.
To become wealthy, we have to own income generating assets which will appreciate in value over time.
STE's story shows us, once again, how common people can become millionaires. He has done it and so can you! (You must be tired of hearing "If AK71 can do it, so can you!". So this is a change.)
I have found some bargains for anyone who doesn't mind pre-owned books:
Paperback:
15 copies in Very Good condition at US$ 6.48 each.
Hardcover:
US$8.98 each.
Free shipping worldwide.
Related posts:
1. STE's story: Personal finance.
2. STE's story: Investment strategy.
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STE's story: The Millionaire Next Door.
Friday, August 9, 2013
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13 comments:
Hi Ak,
It is great that you share the book with all. Hopefully, this book will help alter people's mindsets and attitudes towards money, debt, wealth and financial independence.
Cheers,
The Sun
Hi Sun,
There are many good books out there and they could cost very little to own.
Thanks to your reminder, I remember this one. :)
"It breaks down stereotypes of the rich and shows that most of them are really blue collar at heart. Very frugal people who for the most part have worked their entire lives very hard to create the wealth they have. Interesting and filled with stories of millionaires the authors know personally and have interviewed."
- Madonna Analla
Hi AK also recommend Millionaire Mind by same author. Am interested in buying 2 copies of these books (in Singapore): can contact pls at jordanwkidd@gmail.com? Thks.
Hi Jordan,
Just click on the images of the books and you will go to BetterWorldBooks where you will be able to find thousands of books, pre-owned, selling at knocked down prices. Free shipping worldwide. :)
You will be helping the good people at BetterWorldBooks fund literacy for the poor and doing your bit for the environment too. :)
I bought the book. Better late than never :)
I bought the book. Better late than never. Hope you can recommend more books!
Hi David,
Never late, just later. ;)
Dear AK,
Hope this comment finds you well.
I just reread your post on the millionaire next door with interest and amusement because I am a PAW surrounded by UAWs.
My colleagues joined the company around 5 years before I did, so they definitely earn more due to their seniority. The office conversations sometimes revolve around branded goods, jewellery and ironically, how "we" can never afford to retire. For example, colleague A would happily share that she bought a branded handbag at 50% discount and paid $200 for it. Colleague B would then share that hers costs $500 but she bought it overseas and it is not available in Singapore. They would look to me, expecting me to contribute some piece of information but I am just using a three year old $20 backpack from Decathlon which to me is more practical and useful. There are many other examples but I realised that we find value in different things and this can make all the difference in whether someone becomes a millionaire.
Both colleagues are single with above median income, relatively high spending power and do not invest their money. They also bought 15-year-old HDBs way upwards of half a million with bank loans and are paying relatively high monthly mortgages which deplete their monthly CPF OA contribution and eat into their OA principals every month. Yet they were elated to share that the CPF OA interest helps to slow down the draining of money from their OA. To them, "CPF money is not their money". In comparison, my spouse and I were lucky to get a BTO and be able to split the monthly mortgage between us. Because I attained FRS and BHS some time ago, my CPF OA contribution has been around $1.8k a month for most months (and even more during bonus months) which more than covers for my share of the monthly mortgage. Even if I have to service the entire mortgage on my own, as long as I continue working, my CPF OA principal will still be growing, albeit at a slower rate.
Fast forward 10-15 years, assuming that we are all still alive, still working in the same jobs, did not make lump sum payments along the way and that we did not strike toto (haha), my monthly mortgage would be entirely serviced by the interest from my CPF OA with leftover in my OA principal. Conversely, they would have depleted their CPF OA before then as the initial principals were very much reduced due to downpayments for their properties. On top of that, their now 25-30 years-old properties would have depreciated and be harder to sell at a profit. Not to forget the accrued interest that needs to be paid back when the properties are sold.
I recognise that I am lucky to have been able to get a BTO and to have someone to split the monthly mortgage with me. But had I not met my significant other, I would have chosen to continue staying with my parents, invest my savings and not purchase my own property until I can confidently afford one. The real life examples I see in the UAWs illustrated how difficult it is for high earners who are high spenders to retire and reinforced in me the importance of living way below my means and recognising true value. I am often amused when people brag about recently purchased branded goods that cost several thousand dollars, try to convince me that they are good deals and taunt me by asking surely I can afford it? I often smile and reply that I do not have the budget for it now. In truth, I cannot see the value in them, and would much rather buy stocks which can appreciate in value with time.
At this point, I wish to share that, thanks to the sagely counsel of my wise mother who has also inculcated frugal living habits in me, as of Boxing day, in my mid-30s, including cash, stocks, bonds, savings plan, fixed deposits, property (half of it) and CPF, I have just become a millionaire next door. I intend to continue working, live way below my means, invest cautiously and let compound interest do its magic.
Happy New Year and thank you for taking the time to read what I typed.
Regards,
Spotlessmind
Hi Spotlessmind,
Thank you so much for taking the time to share your story.
I enjoyed it thoroughly!
Millionaire Next Door is not fiction.
You are a good example. :)
Happy New Year. :D
New readers might be interested in this blog:
Is AK a rags to riches story?
Hi AK,
This goes to show that anyone can be a millionaire with simple approach. It makes more fulfilling means to be a simple/content/low-profile peasant with many options at his/her disposal.
Ben
Hi Ben,
Well, to be realistic, we are all wired differently.
If everyone is like AK or Spotlessmind or Ben, the economy will suffer. ;p
Having said this, in Singapore, becoming a millionaire is not a dream unless we are seriously disadvantaged.
"If we max out our CPF contributions annually and top up our CPF SA to hit the Full Retirement Sum (FRS) earlier, we could have this magical $1 million in our CPF account by the time we are 65."
Source:
An average HDB household and $1 million.
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