You know why Singaporeans aren’t happy? It’s because we’re always pushed to get the biggest house. The sexiest car. The most expensive smartphone. “That’s an unusually mature observation from you.” I know, that’s why I make farting sounds and testicle jokes when people judge me that way. Here are some signs you’re succeeding already, whatever they say:
1. You’ve put more money in investing than you have in investment books and seminars
If you’ve put so much as $100 toward an investment fund, congratulations.
You’re way ahead of people who haven’t put one cent in an investment fund, but who’ve spent thousands on trading seminars, get-rich-quick schemes, and finance books (of which they’ve read maybe 10 pages of each).
One of the keys to successful investment is to start early. And while I’m not dissing homework (by all means, understand what you invest in), Singaporeans too rarely accompany book learning with actual action.
2. You reach 35 with no credit card debt
At around 30, most of us start making major financial decisions.
This is the age when we’re getting married, buying a house, and wondering why every song on the radio now sounds like a car accident.
It’s also when we’re earning more than we’re used to (beyond entry level pay), which translates to higher credit ceilings.
The combination of factors explains the number of frequent revolvers out there. And as a frank admission, even I ended up as one of them for a while (medical bills).
If you’ve managed to avoid it, you have a tighter grip on your finances than a lot of your peers.
3. You know what an index fund / exchange traded fund is
Many new investors fall prey to expensive asset management schemes, overpriced insurance policies, or outright Ponzi schemes.
Sooner or later, they’ll find that index funds deliver better returns at lower costs. The only reason they’re not in everyone’s portfolio is that they’re less advertised – few fund managers or financial advisors will recommend a product that brings them little to no commission.
So if you actually know about ST Index funds, or are already invested in them, you’ve got a better sense of financial markets than Joe Average.
4. You bought your flat before your car
Cars are overpriced, thanks to the COE. They’re also depreciating assets; the only thing your 10 year old Honda will bring you is a sense of relief when you scrap it.
Flats, on the other hand, appreciate. With few exceptions, most sellers experience capital gains – hold on to your property for 10 years, and it’s a stepping stone to a condo. Or maybe even to becoming a landlord.
So if you’ve held off on your car purchase, congratulations. That flat is the first of your major assets.
5. You’re making at least $200 – $500 a month in side income
The amount you need to improve your life is smaller than you think. While a few hundred bucks may seem like chump change, consider what it’s buying:
$500 is enough for plenty of cab rides, which can eliminate the need for a car $200 is enough to start accumulating blue chip shares, through the banks If you want to be indulgent, $200 is three restaurant dinners a month
In short, that tiny bit of side-income is dramatically helping your quality of life; if you’re already earning it, you know it.
6. You know how to compare insurance policies
If you can tell the difference between endowment, investment-linked and term insurance, then congratulations. Too many of us would buy dog poo from a financial advisor, so long as they remember to chant “retirement” while smearing it on our hand.
When it comes to insurance policies, the costs matter. Your returns may be compounding; but indirectly, so is the amount you’re paying out in fees.
By being paranoid about the effect of deduction, you’re going to experience a truly happy retirement over a passable one.
7. You’ve completed building your emergency fund
The emergency fund is six months of your income, stashed in a savings account somewhere. Not invested mind you, but saved and ready to be withdrawn on short notice.
This fund is the basic requirement you need, before you try starting a business, dabbling in stocks, or making a radical career switch.
Think of it fuel in your financial tank – having that fund empowers you to take the big financial leaps, and to have a chance ay equally big rewards.
That aside, the emergency fund also prevents you from using credit in a crisis. If you get laid off, or develop a severe illness, you won’t end up owing money.