If you are in your 20s, start investing as early as your first salary. Once you have a $1,000,000 portfolio, you're set for life. Why? Because even a low 7% capital growth leaves you with $70,000 extra cash to spend in a year's time after that $1,000,000 portfolio is complete.
Regardless of your income, skills, knowledge or martial status, unless you have a huge necessary liability - you'd have to get that addressed first. It might probably take 24 years if you're willing to sacrifice enough, it also depends on how disciplined of a person you are to constantly be saving at large to invest
Let's address a possible problem that you might have (bear with me if you don't have that problem, but many do):
Remember the days where you were in secondary school and your expenditure was just canteen food and drinks based on your allowance? Going to the everywhere else and getting whatsoever was free, because your parents paid for them as you get your allowance weekly or monthly.
Let's recall your days in secondary school, did you actually went for the cheap wanton mee to get just enough, or did you went for that pricey western food with an additional drumstick to completely bloat your stomach? I'm not comparing the prices of canteen food right then and kopitiam food right now. I am pointing out the root cause of the problem with being poor, or having a poor mindset towards wealth: OVERCONSUMPTION.
The problem with high income earners that never seem to have enough these days is not exactly about the money they make, it's about how much they are consuming. When you're an adult, you get access to not just a full time income. There's Apple, Beers, Cars, Dining, Shopping, and all sorts of luxurious ways to splerge your money at, you are ENCOURAGED TO BE A CONSUMER, but psychology and science has proven that overconsumption is not the way to happiness. Instead, gratitude and kindness is, I'll leave that one for you to read and figure out how to change that part. Moving on...
Are there liabilities in your life you don't need right now? Let me address the alternatives.
Large telcos filling up your expenses? There is Circles, GOMO or TPG available for you to switch
Phone costs too much? Xiaomi, Huawei, Realme and heck, even Nokia is still around for you to purchase.
iPhone user? Switch to a second hand one from Reebelo, a second hand marketplace for phones.
Astons double up chicken? Why not just go kopitiam get 1 chicken chop and 1 chicken cutlet on your own? Still got 10% kopitiam card discount, costs even cheaper.
Why do you want to go to the Restaraunt, when that hawker centre Mee Rubus can satisfy your tummy and get you all the nutrients and energy you need?
Daily Bubble Tea for the sugar rush? Daily sachet of tea is healthier for you, add ice, condense milk, sugar level ownself set. Tastes quite the same, for real. Need pearl? buy yourself the entire packet of pearl on Lazada or Shopee!
Gym membership? Why not learn to use the fitness corners and resistance bands? Aren't there not enough parks to run around? You don't like fresh air in the morning issit?
Cars? How would you like a some COE? Parking? Maintenance? Road Tax? Fines? Repairs? Insurance? Jams? You sure about that? Does it make sense if you're not using a company's car, or having the car doesn't generate you more income?
Having a concession card costs way lesser than cabbing. If you're on foot, a bicycle is definitely an asset that saves you preciohs time.
Food Delivery? Invest on a good cheap riverside 100 bike and get your lazy ass down. Keeps you fit as well. Save that delivery fee. Help that eatery earn more.
You see, there are solutions everywhere to solve consumption habits and gear it towards spending lesser. Although it is important, wealth is not exactly about how much you earn, it's actually about how much you set aside to accumulate and invest.
Here's the execution to get you to millionaire status in 24 years time:
Let's say you've graduated, found a job at 21, you have a girlfriend who has yet started working, your salary is $1800 take home monthly. Can you spend less than $800 and invest $1000? It's really up to you. Along the way there might be marriage, houses and kids, but your combined salary of you and your partner, together with the yearly increments should be just enough to tackle it. Can you and your partner sacrifice to keep up putting aside $1000 for investing monthly? Your earning power might peak out one day in your fourties. But your saving and accumulating power can become so immense, it covers your ability to earn. Years down the road, you might have achieve financial freedom sooner than you realized, maybe in your fifties rather than your sixties.
Let me elaborate, 8-10% profit a year from S&P 500, NASDAQ, VOO mainstream index is very possible to double your average money invested every 7.2 years. If you have been consistently putting aside $1000 monthly for investing, you will reach $100,000 in 6 years, from $100,000 it runs really fast. In an additional 18 years time you are sitting on 1,000,000 with 10% returns a year.
So how long does it take to be a million dollars richer? Approximately 24-30 years with $1000 saved a month. If you are good at investing, even lesser time than that.
At this point, the 45/51 year old you is running a $1,000,000 portfolio. Let's do something about that huge pile of money... How would you like, to draw down $4000 a month for you and your partner each to spend for the rest of your entire life? Sounds good right? Your portfolio still runs 8-10% profit and still ends up a little more before or the same. Now the value of $4000 drawdown per month is NOT ENOUGH for you and your partner, because INFLATION IS A BUGGER. But, the pool of money in your invested assets can tank the necessary lifestyle as long as you remain frugal enough and live a simple life, spending a mere $4000 a month, while working and providing society.
That $1,000,000 portfolio has become a tree that keeps on giving without losing any value. Carrying on working till you're 60. Your retirement plan is figuring out what to do with that $2,000,000 together with your family. Live the life and do whatecer you want. Because you put in the hard work to save and invest in your early days.
Let's snap back to reality from the example I have portrayed, start doing yourself a favor if you are still in your 20s, start sacrificing by setting aside money to invest, NOW. So you don't have to ever worry about money for the next half of your life in your fifties.
P.S. Just an investor with 3 years of experience, warning about the dangerously high profitability if one invests over a few decade following the current economic trajectory that dates even over 200 years back.
Declaration: $100,000 in personal assets under management