The Harsh Reality

I do not intend to talk about all these because it is not my personality to be dis-empowering. It’s far better to be an empowering speaker and friend.

Despite all of my own hesitation about writing this post, I decided to go ahead and do this because it is so important to everyone out there.

The Problem

Most of my peers are not earning enough. Is $4,500 enough? That would be $54,000 per annum.

Let’s suppose we save 15% of our yearly pay, starting from the age of 25 and retire at age of 65, 40 years later, the amount saved will be $324,000. While it may seem like a decent amount of money, it is hardly enough for retirement.

We suppose all of us are going to live up to 85 years old, that’s another 20 years to go after retirement.

You want to enjoy a good life and travel occasionally. I’ll budget an average of $1,500 every month or $18,000 every year. Multiply that by 20 years, that’s $360,000.

Sounds possible, right? But do not forget that our body will have problems when we are old unless we take proper care today.

Let’s budget another $40,000 for it. You’ll see that it is not enough.

The problem is we do not factor the destruction power of inflation. Do you remember that bowl of noodles? It used to cost $2 and now it’s $3.50.

The purchasing power of our money falls over time. 

I did the math… you will need $4,893 in 40 years time to buy what you can buy with $1,500 in the present. My assumption is an inflation rate of 3% yearly.

The new math:

$4,893 multiplied by 12 months and multiplied by 20 years of longevity, you’ll need $1,174,320 to live normally. That’s the new norm and expectations.

We’ll need to increase our % of savings, our income and investment returns! All 3 together!

The sad fact is that most of us just live our lives without wanting to know the consequences of the future.

“It’s going to hit it some day but let’s not think about it today.”

How can we solve it? There is no silver bullet… except understanding how to create wealth.

My friend Richmond pieced together something called The 3 Things to be Wealthy.

1. Time
2. Your Return on Capital
3. Access to Capital

The formula is “Time x Return on Capital x Access to Capital  = Wealth Building”

If you have time and you know how to generate returns but you do not have capital, it is no use.

If time has already gone by, then we need to increase our size of capital or the rate of our returns.

Each part of the equation is equally important.

For some of us who are starting in investing, I suggest building our cash flow first. The common source of cash flow is our job.

It does not make sense for you to aim 20% returns on your portfolio of $1,000. That’s $200. I rather you go out and do a tuition job and you can easily earn more than $200.

Cutting expenses is good but earning more money to create more savings is more sustainable.

When your capital is small, focus on your cash flow. Build and let it grow.

After your capital is huge, focus on your returns on investments. Build and scale it.

Now instead of sharing my strategies of investments, I will focus on something different.

Why jobs are different and how to become a high income earner.

Skilled Labour Versus Manual Labour

Are all jobs made equal? Definitely not. Some jobs are made more superior and paid higher per hour. It is nobody’s fault because we’re living in a world of capitalism.

What is the key difference, you may ask? It’s all about having not a skill set.

Scenario #1

In Singapore’s context, there are some people who take up delivery jobs like FoodPanda, Deliveroo or Grab Food as a full-time career. It is a respectable profession but it is a low-skilled work. It is more labour intensive than skill set intensive.

Scenario #2

A marketing director has an ongoing sales arrangement with his company. For every big deal (>$1mil) he brings to the company, he is entitled to 5% of it. 5% of $1mil is $50k. That’s how property agents and insurance agents get so wealthy. They are not paid for their labour, they are paid for their marketing and sales persuasion abilities.

In the former scenario, it is always a fixed amount of remuneration for the time put in. For scenario #2, there is a form of exponential money-making potential as a percentage of the deal being earned. There is an upside component.

Also, a manual labour job is easily replaceable by someone else. It isn’t that hard to learn how to deliver food as compared to learning how to negotiate for big deals successfully.

One makes you easily replaceable, and another prevents you from being replaced to some extent.

Forget about being a manual labour worker. If you’re doing it now, raise your standards, upgrade by acquiring skill sets. Do not get stuck in low skilled and highly manual labour.

Aim for one of the skill sets below:

Marketing.

Sales.

Finance.

Property investing.

Stock investing.

I spent the last 7 years of my life honing my skill set of stock picking and analysis. I chose to be known for growth investing because that’s how I differentiate myself from the rest. I am able to grow my money at around 15-30% per year.

When you’re doing the same as everyone, you’ll be paid/earn the same as everyone else.

Look at the highest paid jobs in the world, what are they doing?

Do You Know Your Worth?

Most people do not have a good sense of how much are they worth. This is because they pegged themselves to their peer groups despite having better skill set.

“If James is earning $3,500 and I am earning $3,500, I am considered very good already. I should be very happy.”

“My colleagues are earning $2,800 and I am earning $2,700, I am roughly there. I’m good.”

While there is nothing wrong with these statements, subconsciously, have you already decided your value because someone said you’re worth that amount?

My answer is always DON’T!

A friend of mine used to earn $2,500 and she was doing an incredible amount of work. After she left her job, she was filled with anxiety. She struggled because she was always told that she’s worth $2,500. She dared not quote proper rate for her freelance work.

After some time with me, I told her:

“Look, I know about your skill sets and your value proposition. Your stuff makes money for your clients. If you suck, I’ll tell you. But trust yourself and please quote a reasonable price. You’re doing quality work.”

She did what I told her and her income is 3x of her previous job.

That’s $5,000 extra per month. If you multiply that by 12 months, that’s $60,000.

She’s an investor as well and she will probably make 15-20%. That’s roughly $9,000 to $12,000 extra.

People who are stuck with low paying job would save lesser and their money compounds slower. It goes back to the The 3 Things to be Wealthy. Focus on building skill sets.

Always remember this THREE THINGS:

• Do not ever ask for a pay raise if you cannot back yourself up.
• If you keep thinking you want to make more money, the chances are… you won’t, but ONCE you shift your attention to solving problems for your clients competently, you will be rich. The biggest problem solvers are the best paid.
• Focus on the value you can give FIRST.

Don’t be Comfortable

Do not be comfortable and accept things as they are.

In the corporate world, if you don’t ask for your promotions, it won’t happen to you. Let’s not talk about the usual 5-6% increment to match inflation.

There are people who get paid the same salary for years!

Have the courage to approach your higher-up to understand how you can exceed your KPIs. Once you’re able to do that, there is no reason why you won’t be promoted.

As asians, we are not accustomed to asking for what we want… but all of us gotta fight for our future. Have the courage.

I’ll end with a quote… which applies to all gender: