This year marks my fifth year of dipping my toes in the investment world
Half a decade.
Not a long time, but we went through a lot – the COVID market crash in 2020, the market boom and Great Resignation in 2021, the interest rate hikes, and so much more.
It's enough to learn plenty about myself and the world around me.
It’s also when I realised that finance is both a science and an art – not just coolly following numbers on a spreadsheet but actually taking my emotions into account so I can sleep better at night instead of worrying whether I have enough to pay the bills.
We all know the mantra: "Earn more, spend less, save the most.”
But what happens when life throws you curveballs? You might wish to explore a digital nomad life or suddenly get into an arm dislocation accident that left you out of commission for three months.
I’ve talked about the power of true peace of mind and cashflow provides that blanket of security for me.
Having a stream of income coming in, even a small one, provides the cushion and mental resilience needed to weather storms and stay invested instead of constantly thinking if I should liquidate part of my assets to pay the bills.
Okay, this might sound a little controversial but listen to my rationale.
Previously, like all new investors, $100k was my first target, especially since it was popularised by the finance guru Charlie Munger.
In fact, quoting him word-for-word in the 1990s, he said, “I don't care what you have to do. If it means walking everywhere and not eating anything that wasn't purchased with a coupon, find a way to get your hands on $100,000.”
I took his words like gold – side hustling as a skating coach, tutor, and freelance writer, splitting the bill down to cents with friends, and generally being a stingy miser all around.
When I eventually reached the $100k target, I felt proud and started dishing out finance “advice” to whoever would listen. After all, I could achieve it with my then below-average income – what more you? Looking back, I was a nightmare – how did friends continue to stay by my side?
For one, I didn't take into account my own privilege. I had zero dependents. My loved ones were self-sufficient. I basically stayed with my parents rent-free. At most, I gave them a small sum plus an allowance for groceries monthly.
This is all in comparison to friends who had to rent as Singapore wasn’t their home country, those who started a family early, or even acquaintances who were stuck in low-paying jobs purely by the nature of their industry.
We’re also conveniently forgetting one thing – inflation. $100k in 1990 is equivalent to $250k today, accounting for an average 2.66% inflation rate.
Back then, people were saving up for $100k on a median salary of $2,296.
For some, it’s now much easier to reach $100k with higher starting salaries of $4,500. In fact, $100,000 might be a drop in the bucket for some of my friends who simply interned in tech.
On the flip side, for others, it’s also harder and harder to reach that shiny target with food, entertainment, and house prices increasing.
So, how about reframing the target? The new one to aim for will vary depending on your lifestyle and goals.
For a close friend starting out, it could be a target figure for her 1-year emergency funds for peace of mind.
For another, it might be saving up for a wedding.
For me, it’d be getting a full-time job.
Remember this: You can choose to run your own race. You can choose to celebrate what you’re doing right and how you’re already the person you want to be.
Celebrate small wins and the big satisfaction comes.
My mum bought a savings plan from an insurance company and as some of us might know, it isn't the most optimal. When I heard about it, I was upset – both with her and the agent who sold her the plan.
“The projected payouts (roughly 2-3%) aren’t spectacular. In fact, it’s barely beating inflation.”
“Why didn’t you let me help you invest in an ETF? It’s got better returns.”
These were some arguments I brought up.
In hindsight, I realised that the factors that my mum paid attention to were totally different from what I looked at.
I was focussing on the projected returns. She was taking into account her tendency to spend rather than save. This plan has a tangible payment deadline, which fostered and forced discipline in her to save for the premium.
It addressed her real emotional and behavioral needs, which my simple ETF investment wouldn't.
And that's the whole point.
Humans are not purely logical. We are flawed creatures, influenced by feelings, fears, past experiences, and personal values. A purely rational approach often ignores these powerful motivators.
This is why investments that look ridiculous to one person can make sense to another. Investing isn't always about coolly maximising returns, but also accounting for emotional human behaviours too.
In my mum's case, consistent, even if less optimal, actions can lead to better long-term outcomes than erratic attempts at maximising returns.
Investing in your well-being – physically and mentally – pays dividends far greater than any stock market return.
The only ray of sunshine during my first few corporate years was my after-work skating and climbing dates with friends. These activities were my 5-9 after my 9-5 and I’m glad I stubbornly didn’t compromise on neglecting them no matter how busy I was.
Even then, I was falling ill 2-3 times a month during the peak periods at work. Imagine if I didn’t have anything to look forward to!
A healthy mind and body directly impact our ability to work, create, and make sound financial decisions. Meanwhile, chronic stress and burnout can lead to decreased productivity, increased healthcare costs, and ultimately, a diminished ability to achieve our aspirations.
Prioritise your interests and healthy relationships. Cherish the time you have with loved ones and savour the experiences that bring you joy.
They are the foundation upon which everything else is built.
Yes, this is a privileged saying. After all, it’s definitely not enough if you struggle to put food on the table or bills consistently go unpaid.
But, let me make a case here.
When I graduated from Wee Kim Wee School of Communications in NTU, I told myself at least I’m getting a job soon. When I started working, I told myself I no longer had to rely on my parents for pocket money. When I switched to a higher-paying job, I told myself I could now take on less side hustles.
I thought I had enough, until I looked up and found myself suspiciously aiming for higher targets without realising it was happening.
It's time to break this chain.
I want to remind myself of what I already have, how I’m already achieving my goals, and how I’m already the person I want to be.
Don't let the pursuit of future wealth rob you of the present moment.
Money is meant to fund your moments of meaning. What truly matters to you? Is it spending time with loved ones, pursuing a passion, or making a difference in the world?
Everyday we’re given is a gift – so let’s build a life that's fulfilling and with greater meaning.
Cheers,
Val