Want to retire early in Singapore? Ever wondered how some people seem to be making serious progress? One Singaporean redditor, firepathlion, shared their journey, and it’s got many of us thinking. Let’s dive into what we can learn from their experience, and how it applies to us here in the Little Red Dot.
Makan Kakis’ Key Takeaways (Reddit Insights)
- Leverage is a Thing: Some Singaporeans are using leveraged loans (borrowing against their investment portfolios) to amplify returns. As one redditor put it, “The true leverage is being in Singapore with no capital gain tax.” This is not for the faint of heart, but a topic of interest for those aiming for faster FIRE.
- Family Finances are Complex: Many Singaporean couples, like firepathlion, keep separate accounts but have combined goals. They split daily expenses, but larger costs are covered by the higher earner to help the other partner save more. This is a practical approach that balances individual and shared financial goals.
- SRS & CPF: Know Your Tax Bracket: The Supplementary Retirement Scheme (SRS) and CPF are useful for tax savings, especially for higher income earners. As firepathlion points out, “CPF and SRS for tax savings only start making sense when you move above 7% tax bracket.” For those earning less, focus on consistent investing first.
- VWRA is Popular: Many Singaporeans are investing in VWRA (Vanguard FTSE All-World UCITS ETF) for diversified global exposure. It’s a convenient way to access the global market.
- Time in the Market Still Wins: Despite market ups and downs, the consensus is that “time in the market” beats “timing the market.” It’s about consistent investing, not trying to predict the next big thing.
SG Context: The Latest Updates & What It Means For You
Recent discussions on Reddit highlight the challenges of achieving FIRE in Singapore. With the rising cost of living and property prices, saving aggressively is a must. While many Singaporeans are drawn to leveraging, it’s crucial to understand the risks involved. Also, navigating the complexities of CPF and SRS requires careful consideration based on your individual income and tax situation. Remember, CPF interest rates are subject to change, and SRS withdrawals are taxed.
Real Talk from the Ground: Singaporean Experiences on Reddit
Based on your salary progression, you are basically getting like 10% increment on a yearly basis whereas average is 3 to 4%. The tech industry has been down since 2022 and I had many applications from heads earning around your amount applying for lower levels because they are facing the danger of axe.. it is kinda hard to believe.
Accomplished-Let4080
I’m guessing his leverage is long term across the portfolio level, barring any substantial rise in IR. 150% will be his stomach capacity. He has illustrated that a 50% dip will cause almost a 80% hit to net-worth at that gearing level.
Mundane_Life_5775
Not OP, but I think people are unnecessarily scared of this 400K number. Even if your SRS portfolio grows to 800K, if you have no other income when start withdrawing, at $80K/year for 10 years, you’re going to be taxed $550 a year. That’s nothing and less than 1%.
DuePomegranate
These quotes highlight the range of experiences and concerns of Singaporeans in their FIRE journey. Some are skeptical of rapid progress, while others are actively strategizing around leverage and tax-efficient tools like SRS. The key is to find a balance that works for your own unique circumstances.
Chiong Ah! Your Practical Action Plan for Singaporeans
- Know Your Numbers: Calculate your FIRE number, taking into account Singapore’s cost of living and your desired lifestyle.
- Start Investing Early: Time in the market is crucial, so start investing as soon as you can. Consider index funds like VWRA for diversification.
- Understand Leverage: If considering leverage, do thorough research and understand the risks involved. Don’t go in blind.
- Strategize on CPF & SRS: Maximize tax benefits if your income level makes it advantageous.
- Review & Adjust: Regularly review your portfolio and make adjustments as needed based on your risk tolerance and financial goals.
- Don’t Compare Too Much: Everyone’s journey is different. Focus on your own progress and what works best for you in the Singaporean context.
Ultimately, achieving FIRE in Singapore is a marathon, not a sprint. By learning from others’ experiences and taking practical action, you can increase your chances of reaching your financial goals. Jiayou!
Source: My FIRE Journey: Year 9 Update