If you and your spouse are working professionals making median salaries, it’s not hard for both of you to accumulate $1 million before you reach 45 years old.
Suppose both of you started working at age 25, and always save and invest one-third of your income. If your savings and investments earn just a 3% rate of return a year, you would have accumulated half a million dollars by age 37 and a full million bucks by age 45.
And this is just for median-salaried professionals.
Let’s look at another hypothetical couple who are median-salaried managers. Let’s assume they save more, say 40% of their income. Further assume that they are able to generate a 5% rate of return.
This couple’s savings and investments will hit $1 million before they turn 39. And $2 million by age 46.
When did your savings and investments reach $1 million?
Don’t have a million dollars? Don’t worry. You probably have that upmarket condo, BMW and Birkin bag that you can be proud of. 🙂
169 Comments
Saving 33-40% of monthly income is quite high. I don’t know what kinda lifestyle they’re having and they must be living with their parents!
The calculations also don’t consider income taxes. I imagine even if you apply the most optimistic assumptions it would be at least 50 years old for the average graduate Singaporean to have a million.
But with inflation rates of ~5% a year, there’s no big deal if you’re a millionaire in 20-30 years time! 5% inflation for 30 years means in nominal term you need to have ~4.5 million dollars to have the same purchasing power as a millionaire today!
Does the 500k involve the value of your flat? or just pure cash and stock?
it’s obvious that your savings is a function of 3 things: income, savings rate and investment return.
of the 3, only the savings rate is within one’s control. so if you find you are slower than others, try to save more.
3-5% investment return on your entire savings is within the norm, but there are people who make severe losses and there are those who claim more than 10% (dunno how much of their savings they invest, and whether they take on unreasonable risks and leverage).
Alan, I think you should not consider your flat as an investment. But if you have a condo that you rent out, then you can add that in.
ok la .. then still a long long where to go to reach that 1 mil on my own
to be honest , you can reach there by being frugal , i.e no car no toys ( iphone led tv console games or anything with a i -) also no partying..practically people will regard you as boring no life etc
Quote title:
“Graduate Couples Should Have No Problem Saving $1Million”
Well, maybe…
1. Provided your investment are not cut in half by the stock market crash.
2. Provided you don’t get locked into an expensive housing.
3. Provided you don’t get retrenched in recession.
4. Provided you are not under-employed because your job has been outsourced.
5. Provided you don’t have to go back to school because your degree is no longer worth much.
6. Provided you are not hit by expensive illness.
7. Provided you don’t have to care for destitute family member.
8. Provided you don’t start a business which failed miserably.
9. And many more…
Basically, I would say it’s quite unlikely that you would not suffered any one of these misfortune and got derailed. That’s why Singapore is NOT awashed with graduate millionaires.
Also provided that you marry a graduate who continue to work full time and climb corporate ladder after having children.
According to ML/CapGemini Asia Pacific World Wealth Report 2006, there are about 67000 dollar millionaire (excluding primary residence. So if you move out of expensive condo, rent it out and move into a rented 2 bed HDB, that helps) in Singapore.
With around 4 million population and assuming HNWI number is now 80000, there is about 1 in 50 people in Singapore (or 1 in 25 couple) who are dollar millionaire (and hence probably abit more SGD millionaire, say 1 in 20 couple). So, while not really awah, they are certainly many of them on the street.
I assume that your couple does not have any children!
Was driving my brother-in-law to the airport the other day with his three kids and we passed by a Lamborghini. He kindly pointed out to them that he had a choice – the three of them or the Lamborghini!
there’s a theory that says if you have kids, you actually save more. this is because you’ll be more prudent and not spend on unnecessary things such as holidaying in exotic places like madagascar. parents will little kids also go out less often, eg to the movies, spas, hotel buffets and shopping, because they have to stay at home to spend quality time bonding with their children.
with kids, the reason why an increasing number of married Singaporeans like myself are considering not having children is because, if I decide to forego kids, with the same amount of the money I have from my hard work, I can “holiday in exotic places like madagascar and go to the movies, spas, hotel buffets and shopping”.
so with or without kids, one should still be able to save up the same amount!
actually kids are a lot of fun and adds more meaning to the work
It’s possible, but the assumption is that one’s investments do well consistently every year, which is easier said than done. I am pretty sure many investors who placed their hard-earned savings with so-called professional fund managers over the last 5 years would still be seeing a loss, much less any profit. Worse-off are those who invested in structured deposits like credit-linked notes. One has to overcome market volatility, corporate scandals, financial crises and emotions, as well as have a bit of luck to succeed. Personally I have been quite fortunate in my investments over the past 6 years, and managed to turn 200K capital into 1.25M through real-estate and stock.
that’s very impressive! could you share how you managed to do it? i know luck plays a part, but would just like to see what you invested in and your thought process. appreciate your sharing.
Most of my gains come from property. I bought a condo in 2003 when the property market was under-valued with 200K as downpayment, sold in 2007 for 850K profit when the price more than doubled.
Bought another condo earlier in 2009, and price increased by 200K by end 2009. I’m still holding on as I think the price of my unit will increase by another 250K in 5 years time.
The key is to find the right condo, as not all condos have the potential for significant capital gain. Location as well as the plot layout matters a lot.
sigh lucky u are so lucky to be born in a certain time. In 2003 i was still in school. now i want to play the market like you also cannot..
to Please:
Don’t blame “time” if you want to be rich. You could have bought a lot in March low in stock market and you would have done well. If you had shorted bank shares in end 2008, you would have done well also.
Green revolution is coming etc…there is always opporunities (some easier than the other, but there is always opportunity, up or down)
I wanted to buy stocks in march and went to open an account with my spouse but he took his own sweet time after opening the account and he was very busy with work, said he had no time to care about the stock market or do research on which counter to buy. And because I thought I was going to ride on his account to trade I didn’t buy any then because I didn’t have his password, when I told him to go and check his email, he said he was very busy. When I called the brokerage firm, they said they can’t reveal the password to me though i’m the wife.
save up and wait for the right time. when it comes, don’t depend on anyone but yourself. tell yourself: no more excuses.
like lucky investor, i made some money investing in a condo in 2002 and selling in 2007. then i stayed out of stocks and property because i thought they’re overheated. kept telling myself to be patient.
then subprime came and i loaded stocks with my cash savings throughout the trough. i have since sold more than half my stocks to take back my capital plus some good profits, leaving the rest to ride the uptrend. if double dip comes, i’ll load again.
this is my rather-risk-averse investment philosophy. i have to play it safer than the rest cos i have a few mouths to feed and i hate investment setbacks having experienced them when i was a newbie investor.
I believe that there is something wrong with the title. Instead of “Graduate Couples Should Have No Problem Saving $1Million”, it should be “It is possible for graduate couples to save up $1 Million with median pay, eventually”
Both my wife and I are local graduates and both of us took loans for our studies. When I graduated in 2004, my starting pay was 2,400 (but after bonuses, it was about 3.9K)
It took me 1.5 years to clear my NUS loan of $17,743. I do not have a car but when I bought my re-sale flat in ’07(the reason why I bought a re-sale flat was because I tried applying for new flats for 6 times and my number was always above 10,000) I had a COV of 20K (that was considered MINIMAL in 2007). The place was quite run down, so I have to do very basic renovations that cost me $10K. I had to buy some furniture and that was another $15K.
Realising that I was not getting anyway with my engineering job, I decided to do an online MBA (which I realised later that it was not a good move) at a price of 22K.
My wife and I dun club, dun drink, dun smoke, dun drive, hardly shop and I have paid off about 60K of loan after 5 years. I am a month away from 31 years old and I dun even have 10K of savings to my name.
I believe that this article has made too many assumptions. I too would like to save up 1/3 of my salary but it really isn’t too realistic to do if you would like to have your own place and your parents are too poor to help you with the down payment.
Now that you have repaid your study loan, paid the down payment for your HDB and renovated it, and probably earning a higher salary while still leading a relatively frugal lifestyle, how much are you saving now?
Can people who make their 1 million from the 25-29 age bracket share how they made it? People who got it from inheritance/work in family’s company need not apply.
To sceptic2:
Actually, I still haven’t finished paying.
NUS loan – 17.7K
COV – 20K
Furniture – 15K
Reno – 10K
MBA – 22K
Total = 84.7K
I only paid 60K so far ……….
So although it is true that I am receiving higher pay now, my lifestyle remains frugal with minimum savings because I still have a remaining loan of 24.7K.
If I were to pay $1K per month from now, it would still take me 2 years and a month to clear the remaining loan (no interest because I borrowed the money from relatives but that is also the reason why I am doing my best to return it as quickly as possible)
When that happens, I will be 33 years old.
Therefore, my scenario will be
1) Married couple who both graduated from NUS (I was from Mech Eng while my wife’s from Civil Eng)
2) Both working. (By then, I would have clocked 8 years while my wife would have clocked 7)
3) Starting with almost zero savings for myself. (my wife would have some savings of her own)
4) Still no car.
5) Another 25 years left to our HDB loan.
To sceptic2:
Actually, I have yet to repay all my loans.
NUS loan = 17.7K
MBA loan = 22K
Reno = 10K
COV = 20K
Furniture = 15K
Total = 84.7K
I have ‘only’ paid up 60K so far and still have 24.7K more to go. If I didn’t have all these loans, I would definitely be able to save up a substantial amount of money even after downpaying for a car, but the reality of life is Singapore is that if you do not have any ‘sponsors’,it would not be easy for you to buy a roof over your head (Even if you and your spouse graduated from university and are both working)and if you do get one finally, you would spend some time repaying its miscellaneous cost.
Skeptical : U have time on your side…once all the loans are cleared, u will be on ur way stashing away bigger amounts of savings.
Just curious, u took a loan on ur reno and furniture and COV too???
Dear Poor but surviving:
I never considered myself an optimistic or pessimistic person as I try my best to be as realistic as possible in my outlook of life. (As much as I believe as I should clear my loans as quickly as possible, life would be meaningless to me if I didn’t take some time or money to enjoy it every once in a while). But I would agree that my present ‘training’ does prepare me for the future when I finally clear my loans and start squirrelling money in my bank account.
As for my loans, I borrowed from the best bank in the world. It is called “Relatives Banking Pte Ltd”
COV + Reno: Borrowed from sister.
Furnitture: Mother-in-law
I do not need to pay any interest for these loans but I still constantly push myself to clear the loans as soon as possible. (It’s only right to do so lah)
I count myself lucky in this aspect because at least my relatives WERE able to lend me the money, and I bought my flat JUST before the market went crazy. I really wonder about those whose relatives are not able to help.
This topic is much bigger than my situation alone and I wrote in just to inform the author that it really isn’t THAT easy for the average couple to save up to a million before reaching 45, simply because I am aware of many others who are in similar or worse financial states as me.
my wife and i did it without help from anyone- cov, reno, furniture, studies, you name it.
my wife even had to fork out money to buy new furniture for HER mum when she started working as lowly paid secretary after getting a poly dip.
and both of us still give $2k plus in total to our parents both sides.
ok, my mum did lend me her car to drive, but i would have been fine talking buses.
and we now have squirrelled more than $1m in savings and investments.
there is no secret. just don’t get into the habit of borrowing from others. we only borrow for our hdb and condo investment. just upgraded car to jap mpv with cash.
we are in our late thirties.
did it : amazing! How did u do it?
how did we do it? it’s really no secret. (1) we save a large part of our disposable income. (2) we were lucky and invested in a condo during SARS and bought blue chips early last year. having got burnt with unit trusts when we were younger, we have since never put our money with any funds- anything that’s too good to be true is definitely too good to be true.
we keep telling ourselves that loans benefit the lenders and funds benefit the fund managers.
we are just average-earning professional / manager.
we have sold the condo in 2007 and made 200k. sold some of the blue chips and made a further 100k. the rest of the $1m plus are all pure savings now earning a miserly 0.x% in the bank.
if we did not have savings, there’s no way for us to exploit the downturns during SARS and the great recession.
that’s why it’s important to save up, for rainy days, retirement and taking advantage of opportunities which definitely will come once in a while.
did it : U guys have also fully paid up your hdb and/or condo investments?
I’m really impressed.
no, still servicing our 30-year hdb loan. as for condo, we also took a 30-year loan after 20% down, but we have since sold it off for a profit as mentioned above.
did it: good move. 🙂
Dear Did it:
Congratulations!! It is nice to hear success stories like that. =)
Just a few questions to understand your situation better.
May I know the price of your condo and HDB when you bought it?
What was the COV that you paid for your HDB back then? I am aware that you bought your condo during the SARS period, but did you have to pay any COV for that as well?
May I know what do you term as average earning? (Just a range will do).
Thanks again.
our exec hdb flat was bought quite high at 30k cov. for condo, there’s no such thing as cov- bank will lend you 80% of the buying price. we paid about 160k for the 20%.
our pay now is slightly above the median salaries quoted by admin in the above article. all along, i believe we were both just average earners, esp my wife who started as a secretary in a stat board.
did it : did you think about fully paying up your HDB flat? Or is it coz you are the HDB loan rate and figure it’s a good deal?
we’ve done some calculations before. we think it’s better to leave the loan as it is for 2 reasons:
(1) hdb rates are very reasonable historically and will continue to be in our opinion
(2) the low-premium hps insurance that we are required to buy seems to be a very good deal- if either of us dies, the surviving one will get the flat free. if we fully pay up the hdb, this insurance will be as good as void, so might as well leave the loan as it is.
furthermore, we’re already in positive territory in our hdb value. there is no hurry to settle this debt even though we as a couple are very very debt-averse. can’t remember who, but someone important said that the only good debt in this world is mortgage- i think it’s definitely true in singapore.
did it : for ur pt 2), i suppose that is the worse case scenario. Nobody will wish for that to happen.
Ur HDB is in a prime location?
non-prime, matured estate in the east.
I would think it is possible that a graduate couple do accumulate a wealth of SGD1mio with proper planning and wise investment etc. However, unforseen circumstances do happen. Parents do get sick, children do get sick, ppl do lose jobs, ppl do lose $$ in stock mkt, you don’t always get to sell ur condo for a profit. Ur education loan may be all paid up by ur parents, others have a full 20+ K to settle.
All these are hurdles to the SGD 1 mio figure…jump these hurdles and SGD 1 mio is possible….but the fact is there are too many hurdles in life…u just have to fall hard in one and there goes ur 1 mio target….which is why u don’t find alot of 1 mio couple around.
Dear Did it:
Thank you for sharing. From your story, we do seem to share some common scenarios. (Except for timing lah, because I bought my flat in late 2007)
my wife and i are 30 this year…we have about 100k of cash savings now….have a HDB and a car…remaining car loan is about 70k…bought my 5 room HDB at 400k and 5 room HDBs ard my area can easily fetch 600-700k…..we earn a combine monthly income of near to 12k each month but we save only about 2.5k a month together after all expenses….do u think we can earn a million cash by 40 yrs old?
want to do it: u guys are doing great! 2.5k savings a mth means 30k per year. in 10 yrs it’s 300k. That will be when u r 40. Still pretty decent.
How much outstanding loan on ur HDB?
Poor but surviving: r u sure we are doing great? 300k at the age of 40, i dont think its fantastic right? Hope to get $1 mil by 45. hopefully the 2.5k savings a mth will continue growing by 10-20% every year and my investments can bring in at least 10-15% annually. outstanding loan on my HDB is about 300k.
Definitely do-able to hit 1m by 45. I’m 36, my wife’s 32, combined salary about $12k, expenses about half of that with one kid. Car loan ~$34k, Mortgage ~$265k, no other debt. Combined net worth ~$520k, home not included. Home value as of today is ~$650-700k. If i want to accelerate things, i will just sell my current place and buy a HDB, we have enough CPF to buy a 5-room outright but of course not in a prime location. I’m not too hung up about where i live and what i live in as long as the family is comfortable. I’ve started dollar averaging into blue chips about 18 months back so returns have been ok.
on my way: 520k net worth is fantastic! U r on ur way to becoming a millionaire by 45.
want to do it: i mean it in a good way. im sure u will hv more than 300k by 40. Ur hse alone is reaping capital gains.
do you guys include your cpf balances in your calculations? for my wife and i, our combined net worth excluding residence is 940k if we count cpf. if we don’t count cpf, it’s only 680k.
we’re in our mid-thirties with 2 kids. current combined pay is about 15k. we’re able to save more than half of pay.
cpf? : At least for me, cpf not included. Looks like you’re doing pretty ok yourself.
U guys are doing so well. 🙂