On 7 July last year, the Straits Times published an article titled ‘Is it possible to have $100k by 30?‘ As I was pursuing my 100k by 26 goal at that time, the headline immediately piqued my interest to read on. In his report, journalist Jonathan Kwok made a few assumptions and calculations and declared that it was completely possible. I recall reading plenty of sceptical and cynical responses to his piece online.
Some time later, I stumbled upon two local finance bloggers who also wrote about Kwok’s article (Cheerfulegg and Investment Moats). Each proposed their own set of assumptions and calculations, and also concluded that saving $100k by 30 was indeed possible.
(Incidentally, I recently came across a rather interesting post at Singapore 2B – on how to save $400 000 in 60 years.)
And as for my take on this……
In my case, I have been saving close to an average of $20k annually since I started working in December 2010, after graduating from university at 23. (And my starting salary was nowhere near the starting salary of $3050 that Kwok proposed for his hypothetical case study!) Thrift and discipline are definite musts!
So $20k multiplied by roughly six years would be $120k. After deducting my study loan of about $25k, that would still leave a respectable $95k. And I didn’t take into account pay rises and so on. So yes, even if my parents had not paid my university fees nor given me an endowment policy, I think I would have been able to hit $100k by 30 anyway.
I think its focus on $100,000 creates an all or nothing mentality. Between $20,000 (reasonably low figure) and $100,000 there are a good 80,000 other numbers a person could end up at and each will be better than $20,000.
Ultimately each person should have a target that he/she is happy with and that he can achieve with reasonably conscious effort and of course start making that effort. E.g. If someone has plans to get married before 30 there is no way he can save up $100,000. He should not even be investing in the stock market because a wedding is a short term commitment. Perhaps even $20,000 would be hard.