It is actually quite possible for any ordinary person earning a very average salary to be able retire early - the secret is "save more spend less"!
Just give a very simple example:
Gross Median household income from work of employed residents (excluding non-employed and retiree) in Singapore is S$7,870 per month in 2013.
Note that this figure for Household income from work includes employer Central Provident Fund (CPF) contributions.
I can't find latest figure on household expenditures, but in 2007 the household expenditures of those household with income of $7000-$7999 is $4685 per month. Assuming inflation of 3% from 2007 to 2013, let's assume the expenditure is $5,594 per month in 2013.
That means the median household can save $2,276 per month.
Let's assume the household maintain this savings for 30 years, and they are able to obtain 5% return per year.
At the end of 30 years, they would have: $1.894m !!!
You would ask: "Is your calculator faulty?", "Did you make a mistake in the calculation?"
Well, the answer is: NO!
You see $1.894m is because of the power of compounding return at 5% !
Thus, as you can see, your return need not be large over a long-term of say 30 years, you just need 5% compounded return or more!
BUT: Assuming you obtain low returns, or worse, you obtain 0% return, then at the end of 30 years, you would only have: $819,360.
Showing posts with label expenditure. Show all posts
Showing posts with label expenditure. Show all posts
