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Growing our wealth can be a daunting task especially when our resources are limited.
I think of wealth building as plucking fruits from a tree.
Being a lazy fellow, I try to use as little energy as possible and would go for low hanging fruits.
Why climb higher up to pluck fruits and risk a bad fall when there are low hanging fruits?
I would climb higher up when my tree climbing skill has improved or if there is a safety net to catch me if I were to fall.
Know what I mean?
Hint, hint.
Nudge, nudge.
Wink, wink.
I received this email from a reader:
Hi AK,
Thanks for sharing your knowledge with us young folks.
Saw you previously at investx.
I just did this calculation last night.
I realized if at 25 years old, you put in 40k into your SA and have 20k in your OA.
Then you do not contribute a single cent from then on.
Based on 5% interest on the first 40k in your SA, then 4%, and 3.5% on your first 20k in OA, then 2.5%, at the end of 40 years, at 65 years old, 60k would have become $332k.
This is without doing a single thing. It's actually quite impressive returns.
Cpf is good haha.
“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”
― Albert Einstein
Correction by the reader:
The extra 1% from OA doesn't actually compound in OA. It is credited to SA. So for 20k in OA, the interest 1 yr later is 20500 in OA and an additional 200 into SA.
Furthermore, after 55yrs old, first 30k gets another 1%.
CPF has a lot of intricacies, but in the end, the magic of compounding is still wonderful!
This magic is very powerful!
Make it your friend!
If AK can do it, so can you!
Related posts:
1. Upsizing Oppa AK style!
2. $1 million in CPF by 65?
Bloggy Award
7 comments:
From today's news, looks like many Singaporeans believe money magically appears out of thin air even without having to work a single day in their lives. Even their children are learning fast from their parents:
More Singaporeans riding on cryptocurrency wave on soaring Bitcoin prices
3 Nov 2017 08:13AM
(Updated: 13 Nov 2017 08:20AM)
Mr Chan’s rig is currently mining a cryptocurrency called ZCash. All the coins in his rig mines go into a virtual wallet, which he can then choose to cash out or store in the hopes that its value will rise in the future.
The amount of ZCash his rig mines currently gives him an income of about S$300 a month.
After removing the additional electricity cost that comes with having a rig running 24/7 in his home, Mr Chan estimates that he would take about two years to break even.
His 13-year-old son, Ryu, also now has his own mining rig.
More Singaporeans riding on cryptocurrency wave on soaring Bitcoin prices
I wonder if Singaporeans are increasingly trying to find ways to retire without even having to work a single day in their lives. I imagine your reader read this:
How would Your First $60,000 in CPF Compound Over Time?
Hi Laurence,
Apparently, the same reader wrote to the blog master of Investment Moats too who also decided to blog about it. :)
Hi AK & Laurence,
Coincidentally, I wanted to point out the fact about cryptos too! Magical internet money is appearing everywhere now!
Hi SD,
Too cryptic for me, I fail to see the allure of cryptos.
I find them as valuable as black tulips and tea bricks. ;p
Hi all,
My take is that it will be more prudent to focus on the usual way of generating passive income through shares and CPF saving. I must say that CPF saving through voluntary contribution and the usual employer-employee contribution is one of the sure-win strategy towards financial freedom. Having said this, we also need to rely on own saving via share investment to ensure that we are more stable and secured towards the financial independence.
I believe that it is the matter of time we will achieve financial freedom. Avoiding debt at all times is one of the ways towards a secure financial independence. It will come to the circumstance in which we work because we want to do so and not need to do so. Financial independence will give us the flexibility to change jobs without the fear of livelihood which is supported by the investments as well as the cash stash.
The above circumstance is the best situation for all.
Ben
UPDATED
“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”
― Albert Einstein
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