To The Moon

In today’s environment of rising prices and expectations for a better quality of life, no one can blame us for feeling like certain financial milestones are out of reach.

However, understanding how hard something is to achieve is only possible by looking at the underlying data. One of the most commonly-cited landmarks for young people growing up in Singapore is the goal of reaching a $100,000 investment portfolio by the time we reach 30 years old.

While that might seem like an unattainable number for many people in their early or mid-20s, we crunch the numbers to determine if it is really so out of reach.

Understanding The Average Wage In Singapore

First off, we need to understand the average, or median, salary of young Singaporeans today. According to the Labour Force in Singapore 2023 report, the median monthly salary (excluding employer CPF contributions) was $4,550.

Of course, younger workers generally start out earning less than this headline amount. By looking at the median monthly salary across three age groups (15-19, 20-24, and 25-29), the median young Singaporean would have a monthly take-home pay of $1,350, $2,604 and $4,000 respectively – excluding employer CPF contributions.

Saving and investing a sizeable amount of your disposable income – i.e. cash after CPF contributions and necessities such as utilities or groceries – is not easy but there are certainly still ways for investors below to reach these goals.

Starting Your Investing Earlier Helps

Of course, that old saying of “time in the market, not timing the market” is even more true when just starting your investment journey (hopefully as young as in your teenage years).

While the median across the three age groups may not be very high in nominal terms, a small contribution monthly could compound strongly over time. In terms of Dollar Cost Averaging (DCA), which means investing into the market at regular intervals – that typically means monthly – young Singaporeans can start building an investment portfolio that has momentum.

So, how much would you need to contribute per month to reach $100,000 in your investment portfolio by the age of 30? That very much depends on when you start putting money to work. 

For most investors globally, putting your money into the stock market will yield the best “average” return over the long term. When we say “long term”, your investment horizon should be least 10-15 years if not longer. In other words, you should not be relying on this portfolio for your everyday expenses or even nearer-term payments for your university education, home downpayment or renovation costs.

Over the long-term, global equities have, on average, given investors a total nominal return in the range of 8% to 10%. While the future is never certain, this figure has a track record of holding relatively steady over the past 100 years.

So, even if you’re a fresh-faced 15 year-old with some spare “hong bao” money – or savings from your side hustles – investing just S$300 per month for 15 years you help you reach the $100,000 goal by the time you’re 30.

Over the 15 years horizon, you would have invested $54,000 – or about half of your eventual $100,000 portfolio. The other $46,000 would have earned through “time in the market” compounding the 8% market returns over 15 years.

To better visualise this figure, you can see the dark blue line in the chart below representing the overall portfolio growth over 15 years, while the light blue line represents the cumulative $3,600 investments (amounting to $54,000) over the time frame.

Even if young Singaporeans aren’t able to meet the $100,000 investment portfolio goal by age 30, the option is there to start earlier to help that compounding process.

It also makes it much easier being able to contribute a lower percentage of your disposable income rather than having to make it up later in your career. Understanding how much money you can reasonably invest from a young age is critical as young people will still want to balance enjoying their life with planning for their future financial goals.

Whatever path you choose, reaching an investment portfolio that’s worth $100,000 by the time you’re 30 is certainly achievable but the key is to remain disciplined and patient over a long time horizon. 

Additionally, as the market is trending upwards, I've discovered an excellent trading tool on Tiger Trade with the cash boost account. we could make the most of contra trading. It's like shopping now and paying later without needing all the cash at the start, which allowing us to trade now and settle later. Super handy for those who don't have the cash ready or are aiming to bump up their profits. It's quite suitable for short-term traders and upward trends.

Contra trading just requires simply selling before the settlement date and paying the difference between our buy and sell trades. Tiger Cash boost account provides contra trading. I often use it for this situation. You can check it out to get more details. We can receive an initial limit of over SGD 20,000, and can trade stocks and ETFs in the SG, US, and HK markets with free commissions.

Hope this helps someone =)