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Credit Suisse Report: Is Your Net Worth Above the Average Singaporean?

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Here’s an interesting article I came across during the weekend: according to a Credit Suisse report, the average wealth of Singaporeans is the highest in Asia.

In the report, it states that the average adult has US$276,885 (S$395,000) in wealth, which is 1.4% higher than last year.

“The Global Wealth Report ranked Singapore number 1 in Asia, and when compared to the major economies, Singapore is ranked number 7.”

 

averageSource: Today Online

 

 

This is great news and I’m quite humbled that our tiny nation has managed to achieve this. However, remember that there are two main sources of household assets:

#1: WEALTH FROM FINANCIAL ASSETS

“Financial assets — which include items such as currency, deposits and equities — accounted for more than half of the average wealth per adult in Singapore at US$180,414.”

Wealth from financial assets accounted for >50% of the wealth of a singaporean adult. That means an average Singaporean has $130,000 in cash, foreign currencies, deposits, stocks, and other liquid investments.

Of course, the figure is just an average. I went to Singstat to get a visual of these figures, and here’s what I found: while the growth rates of household assets and liabilities have slowed down dramatically since 2010, net worth continued to climb every single year alongside liabilities!

householdThe growth rate for assets and liabilities slowed down in the past 6 years.
Source: Singstat

I recommend that you click the image above to expand it. Take a look at the details: liabilities have never exceeded assets, but the growth rates have plummeted severely over the past 5 years. It seems that low growth rates in household net worth is going to be the norm.

The average Singaporean has about S$130,000 in financial assets. Cash, stocks, deposits, and foreign currencies included.

That’s a very good figure to have, because most Singaporeans will be able to tide through a 1-2 year period of retrenchment before having to look for sources of income.

What about the statistics on Non-financial assets?

#2: WEALTH FROM NON-FINANCIAL ASSETS

“Non-financial wealth, including assets such as housing, accounted for US$151,239.”

I wanted to find out if this was accurate, and dug deeper to get the data. I decided to do away with Credit Suisse’s claims and check out the figures reported by the statistics department:

householdMost of the wealth is still held in financial assets, rather than in homes.
Source: Singstat

This gives a more accurate figure in my opinion. The data until Q4 2015 reveals that approximately half of every Singaporean adult’s financial wealth came from residential property valuation. The average Singaporean’s wealth in residential property assets could be anywhere from 40-60% of his/her personal wealth.

A casual glance like this might lead you to conclude that Singaporeans are well-protected, wealthy, and financially-savvy.

It is no wonder that even though Singapore has a great number of millionaires as a percentage of population, much of the wealth is held in property. I managed to find statistics on the total assets of Singaporean households, and these are presented in the tables below.

Note: The figures below are in millions of dollars.

householdNot counting CPF & Residential Property, Singaporeans have a lot less liquid assets as a percentage of total assets.
Source: Data from Singstat, Chart generated using MS Excel

In essence, the Singapore as a whole without CPF and Residential Property can be almost 65% poorer on average! That means the true amount of liquid capital that our country commands is much lower than the net worth figures reported. Take note that the data is in millions of dollars and represent the whole nation.

SIDENOTE: DEBT

“The average debt was US$54,768, or 17 per cent of total assets, moderate for a high-wealth country, the report said.”

The average debt was “moderate” for a high-wealth country, and I wanted to understand what this meant. To my pleasant surprise I realized we could actually get the data for our CPF, life insurance, pension funds, shares, liabilities classified by category, and many other statistics from our very own statistics department of Singapore.

excelWith data, in hand, much magic can be performed.
Data Source: Singstat

After downloading their data in XLSX format, I saw that there were several categories for liabilities. They are:

  1. Mortgage loans – to financial institutions
  2. Mortgage loans – to Housing and Development Board (HDB)
  3. Personal loans – motor vehicle
  4. Personal loans – credit cards
  5. Personal loans – education loans, renovation loans, hire purchase loans, loans for investments etc.

After putting them in a pie chart, this is what it looks like:

pieMortgage loans in both categories take up 75% of liabilities Singaporeans have.
Source: Data from Singstat, Chart generated using MS Excel

It was interesting that much of household assets include residential property, while much of household liabilities also include residential property. It’s understandable that most of the loans would be made with financial institutions since HDB has a fixed loan rate, while the FI’s have variable ones (good news for us in a low interest rate environment).

It is remarkable that credit card loans amounted up to almost the same size as motor vehicle loans!

WHAT ABOUT YOU?

The average adult Singaporean has $130,000 of liquid assets, has 75% of liabilities in housing loans, 19% of liabilities in education/renovation/investment loans, and, unsurprisingly, derives most of his/her wealth from CPF and Residential Property.

What does your balance sheet look like? It’s important to review your own finances periodically and see how they have changed over the years.

Perhaps it’s time for a financial health check-up as we round up and conclude the year 2016. Hope you enjoyed plowing through the numbers like I did!

Cheers!

 

REFERENCES & RESEARCH SOURCES:

http://www.todayonline.com/business/singaporeans-average-wealth-increases-us277000-credit-suisse-report
http://www.singstat.gov.sg/statistics/browse-by-theme/household-sector-balance-sheet
http://www.singstat.gov.sg/statistics/visualising-data/storyboards/household-sector-balance-sheet
http://www.tablebuilder.singstat.gov.sg/publicfacing/createDataTable.action?refId=1952

Personal Checklist: The Top 5 Habits of Singaporean Self-Made Millionaires

Just last week, I came across this interesting article, talking about some of the prominent millionaires in Singapore, and how they created their wealth.

vulcan-postSource: Vulcan Post

As I read it through, I couldn’t help but think about what they did to make, keep, and grow their wealth. Sure, some of them inherited their wealth, but it takes a different kind of education in order to preserve and grow the inherited wealth.

It is definitely not chance that these people have achieved phenomenal success. There were, in fact, common patterns of behaviour that keep them successful.

The difference lies in just 5 actions they take consistently:

1. THEY CREATE MULTIPLE INCOME STREAMS

The average person lives from paycheck to paycheck, while the average wealthy person receives cash from various sources, so that even if one source were to be temporarily cut off, they can still enjoy the same standard of living they currently have. Here are just some of the commonly known income streams that they have:

Earned Income: working for money

Interest Earned: earning money by lending it

Dividend Income: earning money by share ownership

Profit: Selling something you make or own

Capital Gains: Selling something higher than what you bought it for

Rental Incomes: Money gotten from owning real estate

Royalty Incomes: Money from selling intellectual property or franchise systems

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Having multiple streams of income is like having many waterfalls flowing into the same ocean. The more streams you have, the more reliable the flow.

Which do you currently have? The average person struggles to survive because he only has one stream. Personally, I like trading and portfolio management. The great thing about portfolio management is that you can enjoy interest earned, dividend income, and capital gains.

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2. THEY TREASURE EVERY SECOND OF THEIR TIME

Let’s be honest with ourselves; how many hours a day do you do things that do not contribute to your financial success? Most people would rather procrastinate or spend time on enjoyment rather than on what really matters.

I found this really interesting image of how most people spend their time in a year:

4Source: The Visual Communication Guy

It’s amazing; out of 365 days a year, 183.7 days are spent on media! If we were honest with ourselves, perhaps what we need is to rethink the way we live. Perhaps if we all take some time away from Media and reallocate it to self-improvement, learning, investing, and growing as a person, we could be living a very different life indeed.

How would your life look if you re-arranged your priorities?

Robert Kiyosaki once made a quip about what he noticed of rich and poor dads; he said that poor dad would sit on the couch and watch TV every night, while rich dad would review his investments and upgrade his skills every night. Poor dad would spend the weekends wasting time, while rich dad would build a business during the weekends.

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Many of you would know that I read more than 200 books before I embarked on my trading journey. Even now, I make it a point to read at least 3 books a week, because I feel that it is important to never stop learning and upgrading oneself. Here are some key pointers:

  • Don’t waste time. Find out what you need to do, and do it.
  • Re-prioritize. Find out which areas of your life you can do away with, and cut them out quickly.
  • Learn. Just because you have graduated doesn’t mean you should stop learning. Successful people get where they are because they have an attitude of lifelong-learning.


3. HAVING A MENTOR MAKES A BIG DIFFERENCE

Mentors are looking for people who are humble, hungry, and hard-pressed for success. No matter where you are in your career or life, it helps to have successful people to reach out to and learn from. They’ll be able to quickly point you in the right direction if you are going off-track.

When I started my trading career at a professional fund, I had wonderful, experienced mentors to guide me in the right direction. I quickly picked up on what worked and what did not. I learnt their habits, their lifestyle, and the difficulties that they went through to get where they were.

Where can you look for mentors if you have no one at the moment? This is what many people ask me from time to time.

  • Build connections: Networks are not built overnight. As you expand your social circle to include successful people, you will start to find people who could potentially guide you to where you want to go.
  • Be inquisitive: People will only want to mentor someone who has the attitude for success. While at the beginning you might lack aptitude, the right mentality and motivation would attract the right people to you.
  • Keep learning: As you learn more, you discover you will have the vocabulary to connect with people. With greater proficiency, you would be able to speak at the same level as industry practitioners, asking smart questions, being able to understand jargon, and make an impression.


4. THEY VISUALIZE THEIR DREAMS IN DETAIL

Goals without dreams are dead; they become mere tasks rather than the exciting outcome that you hope for. It helps to have an idea of what you want; most people want to be wealthy but don’t know what it would look like.

What does a wealthy life look like for you? For YOU personally?

For some, it could mean having to work only 2-3 days a week. Financial goals differ from person to person, and it’s not just the monetary goal, but also the lifestyle goal. For me, I knew I wanted to have the luxury of making passive income even when I am travelling. This may not be everyone’s goal.

“How much money do you want to make exactly, and what would that lifestyle look like exactly?”

Many people want to lose weight. Losing weight isn’t a definite enough goal; Losing 12 kg by the end of 6 months is a definite goal. Many people fail to achieve their goals because they don’t even define their goals!

It’s also important to visualize yourself doing what you hope to be doing. Having a lot of money is pointless if all you are going to do is sit aroud with the cash; it is accomplishing the goals you have, those bucket lists, that make life worthwhile.

So what is it for you?

Grab a piece of paper and start getting your hands dirty. It doesn’t matter if you are old or young, experienced or inadequate; what matters is a willing heart and dilligent hands, and of course, a big enough dream that will knock you off your sofa and get you started.

  • Be specific about your goals. General goals generally don’t work. Specific goals help you to move toward exactly what you want.
  • Keep track of your progress. You never know if you are on the right path if you don’t take stock regularly. Even better, get a mentor to help you evaluate where you are.
  • Focus on the dream with its details. Keep reminding yourself of where you eventually want to be. Otherwise, you’ll just lose steam and burn out, bum around, and end up not getting where you were heading toward.


5. THEY DO NOT GIVE UP OR QUIT

If you’ve got your foot into the investing arena, you would be familiar with financial losses. It is at this point where your mettle is truly tested; is this what you want? Are you willing to sit through heartache and tough lessons to get where you want? Is the life you left behind really worth going back to? Do you still believe in the dream you have?

When that business fails, would you stand up again and start all over? When you family doubts you and the pressure to provide hits you, will you continue to stand by your dream? People want the glory without the trials and training. Just take a look at the infographic below that I found:

33Source: Anna Vital (Founders & Founders)

I also came across this interesting quote, which I thought was very useful in clarifying what we really value. Millionaires invest their money and make investing a priority, while poor people spend their money first and make spending a priority.

5Source: Gecko and Fly

Always, always seek to make investing your primary objective. Invest your time, invest your money, invest in your team if you are running a business. Invest, invest and invest.

Is investing your primary objective, or is spending your primary objective? Would you be willing to delay gratification, in order to enjoy a lot more in the future, far more than you can ever imagine?

  • Do not quit. Ensure that you have made a commitment. Tell your friends, and engage people to keep you on this path.
  • Invest your money, your time, and in your team. Investing is what multiplies your returns in the long-run. Keep at it!
  • Prioritize learning, rather than earning. It pays to be more proficient at what you want to do. When you are starting out, make learning a priority, and the profits will come eventually.

Don’t give up on your dreams!

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Feel free to share this with people you know who are working hard toward their dreams, and striving to build their first pot of Gold. And with these 5 actionable steps, you’ll be one step closer to your first million! 😀

Bonus: Download free ebook: The 7 Best-Kept Secrets of Professional Traders

RESEARCH SOURCES & REFERENCES

vulcanpost.com/593788/in-forbes-2016-asias-richest-families-list-we-see-some-prominent-singaporean-names
businessinsider.sg/habits-of-self-made-millionaires-2016-3/#rJDS8hCPPhHm5qpK.97
fastcompany.com/3052770/how-to-be-a-success-at-everything/7-habits-of-self-made-millionaires
allbusiness.com/slideshow/9-smart-habits-of-real-millionaire-entrepreneurs-16769866-1.html
huffingtonpost.com/timothy-sykes/top-30-millionaire-habits_b_8260134.html

Bloomberg Report: Around 14% of Singaporean Young Adults Don’t Expect to Be Able to Ever Retire – Are you One of Them?

While at the gym yesterday, I was browsing the news (when my gym trainer was taking a break), and I came across this interesting report by Bloomberg.

“A study, released on Tuesday by workforce solutions company Manpower Group and conducted by surveyor Reputation Leaders, found that 12 percent of millennials around the world expect never to retire. In Japan, a whopping 37 percent said they think they’ll work until they reach the grave, compared to 18 percent in China, 12 percent in the United States and the United Kingdom, and just 3 percent in Spain. The study polled 19,000 working millennials across 25 countries.”

bloomberg survey millenials retire

According to this survey, Singapore ranks 4th in world! 🙁 Definitely not a good sign.

My guess is that this is due to a combination of inflation, spending habits, and cost of living.

Another reason why saving, investing, and financial literacy is so important in this time and age.

Source: http://www.bloomberg.com/news/articles/2016-05-25/these-are-the-countries-where-millennials-will-work-themselves-to-death

Free Video Tutorials | Basics of Trading & Investing – 1(c) An Easy Way to Diversify your Portfolio

In collaboration with TradeHero & SGX (Singapore Exchange), we have developed a series of video tutorials that will make learning fun & easy for all beginners!

I have been tasked as the mastermind behind the content, drawing from my knowledge of the 200+ books I have read and 10,000+ hours of professional market experience as mentioned in the video.

For more free lessons, you can check out http://synapsetrading.com/free-lessons. Enjoy! :D

How much do you need to earn to be above Singapore’s “average”?

Lifestyle_22

Forbes has named Singapore as the third richest country in the world. This wealth is measured using the Gross Domestic Product (GDP) per capita. Simplistically, it adds up everyone’s income for the year – to obtain GDP – before dividing it by the country’s population.

So how much should the “average” Singaporean be making based on this calculation?

At first glance, the golden number is $5,943. But is really the average wage?

As mentioned, GDP per capita is a simple method to define how rich a country is by understanding how much everyone in the population earns per annum.

However, using the entire population is not a good gauge, as children, students and retirees are not working, and hence should be excluded from the calculation.

Using labour force instead of total population will be more accurate since we are basing our calculation only on those who are working.

So what is the real “average” earner in Singapore?

The golden number is $9,207!

So what are your numbers telling me?

If you are like us, then this number may appear exceedingly high to you, perhaps even unattainable. Do not worry, you’re not alone.

The median salary in Singapore is SGD3,770. That means the majority of us are not earning the average, unless we have other source of income. This is normal, as income are usually skewed towards the higher income earners and thus medium hardly ever equates to mean.

What you should make out of this number is that there is potential to increase your wages in Singapore. Unlike poorer countries, where your future growth in earnings would be easily capped by the low potential in the country, we do not lack this in Singapore. There is money to be made, somewhere and somehow, in Singapore.

The above write-up is an extract/abridged version of this original article:
https://sg.finance.yahoo.com/news/much-earn-above-singapore-average-000031337.html

Mr Personal Views

Looking at the income distribution, we can see that the there is a growing gap between the “normal” Singaporeans, and the high-income earners. But what is not included is many of the “side jobs” which provide normal Singaporeans a 2nd source of income, such as online businesses and trading income, which may not be reflected in GDP or income surveys.

One thing is certain though: Unless you are drawing a 5-figure salary from your job, it is going to be hard to live comfortably in Singapore without a 2nd source of income. And it is never too late to start. Good luck! 😀