SG Young Investment crosses 1 Million

Yes its official. SG Young Investment has crossed one Million page views just this morning. I hope all of you enjoyed reading my blog as much as I had enjoyed writing for the past one year or so. 

I have learnt a lot through writing on this blog as most of the time I have to research the stuffs that I write. Researching and writing on personal finance topics such as housing, wedding and CPF made me understand these issues more clearly. To say the truth, I had no prior knowledge on the CPF earlier this year. I did not understand what it means to pledge your house for CPF or even know that I can transfer my monies from CPF OA to SA to earn higher interest. I also did not know what is the CPF life. It was only after gathering all the available information and reading the materials from CPF website repeatedly for many times before I understood the whole thing. I'm glad I wrote on the topic of CPF which gave me an understanding of how it plays a part for our retirement. 

There are many exciting things ahead. All these will be announced in due time. Yes, I'm planning some great stuffs for everyone which hopefully can be finalised by the end of this year. I've met a few number of people in my blogging journey and certainly there will be more chance to meet other people along the way. However, I can't meet everyone and will only meet if there's a need to. I've received hundreds of emails and really enjoyed interacting with all of you. Keep it coming. Most of you are quite encouraging and have been rather kind to me. I deeply appreciate it! 

I know there are a lot of students who're reading my blog and even young couples who read my blog. Maybe there could be a gathering for all of you to meet and support one another someday in the future. It is good to start planning your finances at a young age but even if you're not too young, the best time to start is now. If you still have at least 10 years before you retire, it's not too late. 

Nevertheless, we're fast approaching November soon and then it's just 2 months to the end of 2014. What are some goals you've set at the beginning of this year but have not fulfilled yet? There's still time to review it and act on it. 

I shall end this short post here. Cheers to a Million! It's Friday soon. Have a great weekend!

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1. 100,000 page views!

2. 1 year of blogging and it continues....

Why extreme savings is more powerful than investing

Very often, I receive a lot of emails from readers on how they should start investing. Somewhere and somehow, I suppose many of them heard that investing is important or investing can actually be an answer to a better life. This kind of question on how should I start investing was a question I asked myself a few years back. It was because I asked myself this question that gave me a clearer understanding of what investing is really about.

The myth of investment returns

Investing early is important as your money gets compounded over time. However, investing too early without sufficient capital will only yield a little return. Let's say you have a $5000 savings that you want to invest. If you're lucky enough to get a 10% return every year for the next 5 years, your capital will only grow to $8052.55. This is not going to make you rich in any way even if you had invested it for 20 years. Mind you we're talking about 10% return on investment here. On the other hand if you focused on saving money say $1000 per month, your money grows at an astonishing $12,000 per year. Invest this savings at a 8% return and you would have accumulated $100,000 in just 6 years. If you started saving this $1000 per month at the age of 24 and invest consistently, you would be worth a million dollars by the time you're 50.

Let's review the numbers again. $1000 saved every month and invested at a 8% return will make you a millionaire by age 50 if you start at age 24. At 8% return, it takes only 9 years for your money to double (72÷8). This is the rule of 72.

There will be people who will tell you that you can turn $1000 into $10000 in just a few weeks or even days trading Forex, Options, Futures etc. To me, that's just not realistic at all. From $1000 to $10000 is a crazy 1000% return. If you do not have enough money, quit thinking of using that little money you have and think that you can make a lot of money with it. It's just too much risk and you can lose everything and even more if you're trading using those leveraged products.

Let's face it. Investment returns depends on the market. You cannot and don't have the power to demand any returns from the market. If you're lucky, you get more than 10%. Not so lucky you get 5%. If you're unlucky, you get less than 2% or worse still you lose your hard earned money. Throughout history, the average returns for the average person is about 5-8%. Dreaming of a 20% return every year for the next 20 years is almost impossible. The reality is, investment returns are not as high as we thought it would be. On the other hand, savings is completely predictable and can be controlled by us. You decide where you spend that money on, you can try to earn more money. There's a certain level of control there.


Savings before investment

Your savings play a vital role in your accumulation of wealth. Retiring a millionaire is not a dream if we plan it correctly. Save $1000 per month at 8% return will give you 1 million dollars in 27 years. Save only $200 and you would require a 18% return to achieve the same 1 million dollars. It is very hard to achieve 18% return on investment for a long period of time.

If you manage to bump up your savings to $2000 per month and invest it at the same 8% return, then you would be able to achieve a million dollars in 20 years. This means if you start at the age of 25, you would become a millionaire by the age of 45. Savings is important. Investing is also important. Savings is the basic foundation in financial planning. Get the foundation right and your financial future is on the right track. Start saving first while you look at ways to increaseyour income. Focusing on only increasing your income is just one sided. Go for both increasing your income and start a savings plan at the same time.


P.S: Found out about a site ShopBack that gives you coupon codes and offers, on top of cashback. This allows you to save more when you shop. You can find merchants like Taobao, Aliexpress, Lazada and more on ShopBack.  You can even find groceries deals and offers too, with merchants like RedMart. (Updated in Jan 2016)


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Related Posts:
1. Save 75% of your income to retire in 7 years
2. Why it is hard for most Singaporeans to retire early?

Weekend Video: Shark Tank

It's the weekend again. I'm here to share with you a series of episodes which I've been watching the past few weeks. It's called shark tank. I know the name sounds funny and why am i recommending some sharks video to you? However, the video has nothing to do with real sharks. The series is actually all about 5 investors who're looking for opportunities to invest in some companies. These companies will come one by one and pitch their business to the investors. The investors will then evaluate the business, value it to see whether its worth the risk and see whether there's any potential in the business. Its interesting to see how these rich investors, who already own successful businesses themselves, evaluate their investment decisions.

There are quite a lot of things we can learn from the videos as small investors ourselves. It was quite addictive that I finished watching the whole of season 1.

Watch season's 1 episode 1 here: