\u00a0\u00a0<\/span><\/span><\/p>\nCrypto<\/b><\/span><\/p>\nI am a complete beginner in this space therefore I don\u2019t
\nthink there\u2019s much for me to share, but I have started buying some
\ncryptocurrencies and this will form a small part of my portfolio going forward.
\nCurrent allocation is capped at 1-2% of portfolio.<\/span><\/p>\nCredit Cards<\/b><\/span><\/p>\nApplied for a number of credit cards mainly for the deals
\nfor new customers \u2013 perhaps too hurriedly which was detrimental to my credit
\nscore. The lesson learnt here is not to apply for a number of cards in a short
\nperiod of time, as this may give the impression of a weak credit profile. <\/span><\/p>\nI try to use credit cards for nearly all my expenses. I see
\nthis as a way to reduce my \u201cworking capital\u201d, similar to how companies seek to
\noptimise their receivables and payables. If I were to pay for most expenses
\nusing cash\/debit cards, it would mean that I have to keep a cash balance in my
\nbank account for monthly spending. But with credit cards, I am literally living
\n\u201cpaycheck to paycheck\u201d (with emergency funds set aside, of course) where my
\ncurrent expenses are funded by the following month\u2019s salary, and any excess
\ncash can then be put to investments. The additional benefit of credit cards
\nwould be the cashback perks, but for now this is rather insignificant given my
\nlow expenses.<\/span><\/p>\nSeeking FIRE<\/b><\/span><\/p>\nThe idea of FIRE has been a goal for me for some time.
\nRecently, there was an article on Today which found that around 6 in 10 of
\nyoung adults in Singapore aimed to retire early, which I found rather ironic
\ngiven that the Govt has just announced that the retirement age will be raised. I
\nthink that there are too many variables to account for at this point of time,
\nthus I would not want to set a specific net worth or age for FIRE. Instead, I
\nbelieve that a simple three step strategy will eventually lead to attaining FIRE,
\nwhether it is 10, 15 or 20 years away. But it would be inevitable. My three steps
\ninvolves: (1) Maximising income, (2) Keeping expenses below average, and (3)
\nInvesting consistently and prudently, and let compounding work its magic. <\/span><\/p>\nFor point (1), the caveat would be what trade-offs one is
\nwilling to take \u2013 for example, one could take on various side hustles in
\naddition to a full time role to maximise income, but that would be at the
\nexpense of burnout or sacrificing time spent with loved ones. Therefore, I
\nthink this should be framed as \u201cgiven X number of hours I\u2019m willing to work,
\nwhat would allow me to maximise my income?\u201d. <\/span><\/p>\nFor point (3), \u201cprudently\u201d is open to interpretation and I
\nthink there will always be the temptation to bet on riskier stuff such as options
\nor cryptocurrencies and hope for a 100x return. For me, I think that a more balanced
\napproach would be more practical, keeping most of my investments in ETFs and perhaps
\nhaving a small allocation to hopeful moonshots.<\/span><\/p>\nI\u2019ve ran the preliminary numbers based on the expectation of
\nhaving $4,500 SGD (in 2021 dollars, adjusted for inflation) of passive income monthly,
\nwhich I consider to be Barista FIRE or Coast FIRE. This $4,500 figure represents
\nthe median income in Singapore and my perspective is that being able to generate
\nthis income would be sufficient to live the lifestyle of an average Singaporean.
\nAny additional \u201cluxuries\u201d can then be funded through part-time employment.<\/span><\/p>\nMy base case assumes a conservative 5.5% CAGR for my
\ninvestments (100% equity), which I think is reasonable given that pension funds
\nare projecting similar expected returns on their portfolios, which include
\nfixed income. What I noticed when running the numbers was that the sequence of
\nannual returns actually makes a difference on the portfolio\u2019s growth trajectory.
\nFor example, having a -30% drawdown in the earlier years is better than a -30%
\ndrawdown in the later years, even though the CAGR over the period remains the
\nsame \u2013 meaning that $1 today still grows at a 5.5% projected rate over the projected
\nperiod. The main difference would be because there would still be capital injections
\ninto the portfolio over time, thus it would be more ideal for the years with
\nhigher returns to be the later years when the portfolio is considerably larger.
\n\u00a0<\/span>\u00a0<\/span>\u00a0<\/span><\/span><\/p>\nConclusion<\/b><\/span><\/p>\nMy perception is that the idea of early retirement is still
\npretty controversial, and there are people who are puzzled by the idea pursuing
\nFIRE. My view is that it is simply to have the option to retire once one has
\naccumulated enough wealth, regardless of which age you achieve it by. If
\nsomeone attains a net worth of X million by 60 and retires, then why shouldn\u2019t
\nsome who attained the same X million by 40 be able to retire? To me, as long as
\nboth portfolios generate the same amount of passive income, there is no difference.<\/span><\/p>\nIn any capitalistic society, there is always the battle between
\nCapital vs Labour. And more often than not, Capital is better rewarded than Labour.
\nWhile most of us begin as salaried employees (Labour), the goal should be to
\ninvest in income generating assets over time (Capital), and eventually being
\nable to depend on passive income instead of active income.<\/span><\/p>\nUltimately, I view all our choices as trade-offs that we
\nhave to make. In our 20s and 30s, we are trading our time for money; the wealth
\naccumulation stage. At some point, we would have to use that accumulated wealth
\nto \u201cbuy\u201d time \u2013 that is, to have earned yourself the freedom to pursue whatever
\nyou want. To me, that\u2019s the true purpose of seeking FIRE.<\/span><\/p>\n<\/div>\n