IntroductionHi everyone, welcome back to The Investing Iguana, where we talk about all things money and finance in Singapore. I’m your host, Iggy, and today we’re going to look at 7 signs that you are above average financially. Now, you might be wondering, why does it matter if you’re above average or not? Well, it doesn’t really matter in the grand scheme of things, but it can be a useful way to benchmark your financial progress and see how you compare to your peers. After all, we all want to know if we’re doing well or not, right? But before we get into the signs, let me just say that being above average financially doesn’t mean you’re rich or successful. It just means that you have more money than most people in Singapore. And having more money doesn’t necessarily mean you’re happier or more fulfilled. Money is just a tool that can help you achieve your goals and live the life you want. So don’t get too obsessed with the numbers or the rankings. Focus on what matters to you and what makes you happy. Alright, with that out of the way, let’s get into the 7 signs that you are above average financially in Singapore. Sign #1: You have no high-interest debtThe first sign that you are above average financially is that you have no high-interest debt. High-interest debt is any debt that charges an interest rate of more than 10% per year, such as credit cards, personal loans, or payday loans. These types of debt can quickly eat away at your income and savings, and trap you in a cycle of debt that’s hard to escape. According to a report by ValueChampion, the average debt per adult in Singapore is S$73,618, which includes housing loans, car loans, credit card debt, and personal loans. Of course, not all debt is bad. Some debt can help you build assets or increase your income, such as a mortgage or a student loan. But high-interest debt is usually bad because it doesn’t add any value to your life and only costs you more money in the long run. So if you have no high-interest debt, congratulations! You are already ahead of many Singaporeans who are struggling to pay off their credit cards or personal loans. You are also saving yourself a lot of money in interest payments that you can use for other purposes, such as investing or saving for retirement. Sign #2: You have an emergency fundThe second sign that you are above average financially is that you have an emergency fund. An emergency fund is a stash of cash that you can use to cover unexpected expenses or emergencies, such as a medical bill, a car repair, or a job loss. Having an emergency fund can help you avoid going into debt or dipping into your long-term savings when something goes wrong. But how much emergency fund do you need? Well, there’s no one-size-fits-all answer to this question. It depends on your income, expenses, lifestyle, and risk tolerance. However, a common rule of thumb is to have at least 3 to 6 months’ worth of living expenses in your emergency fund. This means that if your monthly expenses are S$3,000, you should aim to have at least S$9,000 to S$18,000 in your emergency fund. According to a survey by Manulife, only 28% of Singaporeans have enough savings to last them six months or more if they lose their income. This means that most Singaporeans are living paycheck to paycheck and are vulnerable to financial shocks. If you have an emergency fund that can cover at least 3 to 6 months’ worth of expenses, you are definitely above average financially and have more peace of mind than most people. Sign #3: You have a positive net worthThe third sign that you are above average financially is that you have a positive net worth. Net worth is the difference between your assets and your liabilities. Assets are anything that you own that has value, such as cash, investments, property, or jewellery. Liabilities are anything that you owe to others, such as loans, mortgages, or credit card balances. To calculate your net worth, simply add up all your assets and subtract all your liabilities. For example, if you have S$100,000 in cash and investments, S$500,000 in property value, and S$300,000 in loans and mortgages, your net worth is S$100,000 + S$500,000 - S$300,000 = S$300,000. Having a positive net worth means that your assets are more than your liabilities. This means that you have more wealth than debt and that you are building equity over time. Having a negative net worth means that your liabilities are more than your assets. This means that you have more debt than wealth and that you are losing equity over time. According to the Credit Suisse Global Wealth Report 2022, the average mean and median net worth per adult in Singapore is S$483,575 and S$125,729, respectively. However, these figures are skewed by the high property values and the high-income earners in Singapore. A more realistic way to measure your net worth is to compare it to your income. A good rule of thumb is to have a net worth that is at least 2 to 3 times your annual income. For example, if you earn S$60,000 a year, you should aim to have a net worth of at least S$120,000 to S$180,000. So if you have a positive net worth that is at least 2 to 3 times your annual income, you are above average financially and are on track to achieving financial freedom. Sign #4: You have multiple streams of incomeThe fourth sign that you are above average financially is that you have multiple streams of income. Having multiple streams of income means that you earn money from more than one source, such as your salary, your side hustle, your investments, or your rental property. Having multiple streams of income can help you diversify your income sources, increase your cash flow, reduce your reliance on a single employer, and achieve your financial goals faster. According to a survey by GoBear, only 36% of Singaporeans have more than one source of income. This means that most Singaporeans rely on their salary as their main or only source of income. While there’s nothing wrong with having a stable job that pays well, relying on a single source of income can be risky and limiting. What if you lose your job or face a pay cut? What if you want to retire early or pursue your passion? What if you want to grow your wealth faster and enjoy more financial freedom? If you have multiple streams of income, you are above average financially and have more options and opportunities than most people. You are also more resilient and adaptable to changing economic conditions and personal circumstances. Sign #5: You have a retirement planThe fifth sign that you are above average financially is that you have a retirement plan. A retirement plan is a strategy that outlines how much money you need to retire comfortably, how much money you need to save and invest for retirement, and how long your retirement savings will last. Having a retirement plan can help you prepare for your golden years and avoid running out of money in retirement. But how do you create a retirement plan? Well, there are many factors to consider, such as your desired retirement age, your expected retirement expenses, your expected retirement income, your expected rate of return, your expected inflation rate, and your life expectancy. You can use online calculators or tools to help you estimate these numbers and create a retirement plan that suits your needs and goals. According to a report by Manulife, only 25% of Singaporeans have invested in a retirement plan12, revealing an average savings gap of S$677,000. This means that most Singaporeans are not saving enough for retirement or don’t have a clear idea of how much they need to retire. If you have a retirement plan that covers your basic needs and lifestyle preferences in retirement, you are above average financially and have more confidence and security than most people. Sign #6: You have an investment portfolioThe sixth sign that you are above average financially is that you have an investment portfolio. An investment portfolio is a collection of assets that you own for the purpose of generating income or capital appreciation. These assets can include stocks, bonds, funds, ETFs, REITs, cryptocurrencies, or alternative investments. Having an investment portfolio can help you grow your money faster than saving alone, beat inflation, diversify your income sources, and achieve financial freedom. But how do you create an investment portfolio? Well, there are many factors to consider, such as your risk appetite, your time horizon, your investment objectives, your asset allocation, your diversification strategy, and your rebalancing frequency. You can use online platforms or tools to help you research, analyse, buy, sell, and manage your investments. You can also seek professional advice from financial planners or robo-advisors if you need guidance or support. According to the Credit Suisse Global Wealth Report 2022, financial assets account for 57% of personal wealth for Singaporeans. This means that more than half of Singaporeans’ wealth comes from investments rather than cash or property. However, this figure may not reflect the true picture of the average Singaporean investor. According to the DBS Investor Sentiment Survey 2021, only 38% of Singaporeans invest regularly, while 28% do not invest at all. This means that many Singaporeans are missing out on the benefits of investing or are not investing enough or consistently. If you have an investment portfolio that matches your risk profile and investment goals, you are above average financially and have more potential and opportunity than most people. Sign #7: You have a positive money mindsetThe seventh and final sign that you are above average financially is that you have a positive money mindset. A positive money mindset is a set of beliefs and attitudes that support your financial success and well-being. Having a positive money mindset can help you overcome financial challenges, achieve your financial goals, and enjoy your financial journey. But what does a positive money mindset look like? Well, it can vary from person to person, but here are some common traits of a positive money mindset:
According to a study by OCBC, only 23% of Singaporeans are confident about their financial future. This means that most Singaporeans are worried or uncertain about their financial situation and prospects. If you have a positive money mindset that empowers you to take charge of your finances and live your best life, you are above average financially and have more happiness and satisfaction than most people. ConclusionSo there you have it, 7 signs that you are above average financially in Singapore. How many of these signs do you have? Let me know in the comments below. And if you enjoyed this video, please give it a thumbs up and subscribe to my channel for more videos like this. Thanks for watching and I’ll see you in the next one. This is Iggy from The Investing Iguana, signing off. Peace!
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