Target networth

[Toni90]

My target net worth was 15k when I started working at 25. It took me 8 years to achieve it, mainly because student loan and buying of a car with debt. After achieving it, I decided to do part time and pursue my dreams. Now in my mid forties, basically I have been living my version of ideal life for the past ten years. In a few years, I will be moving to a 3 rm hdb and continue this lifestyle. Many of my friends have been working really hard and saving tons of money, preparing for some “future” retirement. I have been doing the exact opposite, I was enjoying my life for the past 10 years. Have my friends retired with their millions? No. The truth is their mindset of accumulating stops them from retiring, I can bet they will keep working to reach some impossible moving target, until one day their health deteriorates and then congratulations they can finally have some excuse to enjoy their lives. My experience is this, stop all the debt nonsense. Live minimally and enjoy the real life. Interact with people and the environment. Our surroundings are filled with wonders, it is really a miracle to be here.

Can you share what your dreams are and what are your part time job? See if any chance to do it or not.

 

[Minimalists]

Possibly also like minded couples without children.

I believe it is still possible with kids. When I was growing up, families with 3 kids or more were staying in 2 rm hdb flats. If it is not possible now, the only reason is rising expectations. Now young couples want a 5 rm hdb or a condo for their first home. Overstretching with debts, how can they afford kids? Just have to be realistic, look at the combined salary, if only 4k, the practical thing to do is buy the cheapest 2 rm from hdb direct. Many young couples I know are just doing the opposite, buying big expensive first homes. After that, spending tons of cash renovating and filling the big empty spaces with junk. All these add up to a few hundred thousands of future money, enough to bring up a few kids. The thing about expectations is the environment plays a huge part. If a kid stays in a 2 rm flat, it probably costs less than a hundred thousand to bring him up, but put him in a condo, it will cost a million. A condo kid will definitely be expecting the latest 2k iPhone every year, a 2 rm kid will be very happy with his $300 xiaomi while his dad is still using an old $100 second hand Nokia phone.

 

[BBCWatcher]

If it is not possible now, the only reason is rising expectations.

The examples you provide aren't the "rising expectations" I had in mind.

In purely economic terms, there is still a high return on most educational investments. There are other returns as well. I'm willing and able to make those investments, and I think that's quite important. They shouldn't be forced, but it's great if children have such choices available, without financial constraints.

Health is important as well. To pick an example, some vaccinations are mandatory, and some are recommended. Do the recommended ones, too. As another example, orthodontic services are often genuinely important for long-term well being and pain avoidance, not only for cosmetic reasons. A nutritious, balanced diet costs a bit more. Keeping kids' feet in properly fitting shoes (note: not designer labels) costs a bit more. Equipping even a modest home with basic child safety features costs a bit more. Getting a helmet for a bicycle/scooter riding child costs a bit more. With smaller extended families, childcare and babysitting necessarily costs a bit more.

Standards of care are broadly higher than they were a generation ago, and by and large that's a good thing. Everybody should want the next generation to enjoy even better life experiences than the current one. I'm not talking about iPhones, or bigger homes, or designer clothes, or some other nicety. HPV vaccines didn't exist when you were a child, and now Gardasil 9, which costs about S$600 for 3 jabs, permanently reduces a girl's lifetime risk of cervical cancer by at least 2/3rds. (It's also a great idea for boys, because it reduces their risk of certain less common diseases but also reduces the risk for their partners and spouses.) Isn't it nice not to even worry about the $600, to make this decision based on science and not on finance? It sure is!

 

[havetheveryfun]

Fortunately or unfortunately, only singles can opt for this path..

not just singles, but singles without any dependents (parents who can take care of themselves and have retirement savings)

 

[rrr2015]

wonder how realistic are these inflation figures? … i believe inflation should differs between different lifestyle choices? e.g simple, normal, rich etc?

Revhappy is retiring in India. At last report (August, 2018) Indian rupee inflation is running at 3.69%/year. Within the past 5 years India’s inflation rate has varied from just below 2% to just over 12%.

Must inflation be factored into your retirement financial planning? Oh yes, in every country.

 

[revhappy]

wonder how realistic are these inflation figures? … i believe inflation should differs between different lifestyle choices? e.g simple, normal, rich etc?

It is very relevant for someone planning retirement. For poor people inflation affects very badly in a large way. For rich people inflation doesn't affect much. Usually they are invested in property, so inflation actually helps them grow their networth.

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[rrr2015]

am not saying it's irrelevant but just curious how realistic … my guess they probably based on selected "essential" items which the poor or simple living may not even need.

It is very relevant for someone planning retirement. For poor people inflation affects very badly in a large way. For rich people inflation doesn't affect much. Usually they are invested in property, so inflation actually helps them grow their networth.

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[revhappy]

am not saying it's irrelevant but just curious how realistic … my guess they probably based on selected "essential" items which the poor or simple living may not even need.

By definition essential items are basic food items which poor consume and forms big part of inflation basket. So if there is high food inflation then poor are affected directly.

In my view those inflation percentages are very real, if you ask households how much their expenses have gone up, you will find it is inline with those inflation figures.

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[rrr2015]

that's interesting. ever since i started to live simply, my expenses have been on decline.

it depends what they items they included for CPI calculation. i read UK added ipad, tablets into their CPI /inflation measurements … am sure these are not essential items for the poor

By definition essential items are basic food items which poor consume and forms big part of inflation basket. So if there is high food inflation then poor are affected directly.

In my view those inflation percentages are very real, if you ask households how much their expenses have gone up, you will find it is inline with those inflation figures.

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[revhappy]

that's interesting. ever since i started to live simply, my expenses have been on decline.

it depends what they items they included for CPI calculation. i read UK added ipad, tablets into their CPI /inflation measurements … am sure these are not essential items for the poor

Here is India inflation basket:

https://www.numberbasket.com/india/economy/cpi/consumer-price-index-weights-table

This is Singapore inflation basket

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[rrr2015]

for india CPI base year is 2012, though they have announced it will revise to 2018 for next fiscal. interestingly there is uban & rural CPI for india

https://www.thehindubusinessline.com/economy/gdp-cpi-data-with-new-base-year-from-next-fiscal/article24323403.ece

singapore CPI base year currently 2014. and i thought annual inflation should be with reference from last year?

you tell me now if it's still realistic?

if you look at singapore items weightage at group level … private transport 1149 vs public transport 304 … does it means most of Singaporean owns car? anyway irrelevant to non car owners …

restuarant food 486 vs hawker 806 …
tuition 606 … means most folks atbrestuarant 1/3 of the time? what about those who home cook?

also for those eating out food items are actually redundant since there no need to buy groceries

Here is India inflation basket:

https://www.numberbasket.com/india/economy/cpi/consumer-price-index-weights-table

This is Singapore inflation basket

Sent from Dont Take Any Of My Statment As Investment Advice. Do Your Own Due Diligence. using GAGT

 

[BBCWatcher]

singapore CPI base year currently 2014. and i thought annual inflation should be with reference from last year?
you tell me now if it's still realistic?

All that means is that 2014 (January probably) equals 100 in the index. Realistic? Sure, it’s just math. If the index was 100.5 in August, 2017, and 101.0 in August, 2018 (just examples, not actual numbers), those index values are perfectly comparable and generate an inflation rate. No problem.

Then you go on to explain why the basket of goods and services in the index is not the rrr2015 basket. That’s true; it’s very unlikely you personally will be the statistical median consumer across the entire economy. For example, diapers are undoubtedly included in some fashion. But maybe you don’t have a baby, so you don’t buy diapers.

That’s all perfectly OK. The price index is one number, and it necessarily has to collapse a range of experiences down into one number. And this doesn’t really matter over medium and long time horizons. One month to the next, when diapers (in particular) could double in price for some strange reason, but nothing else does, sure, it matters if diapers represent a big share of your household spending. The index won’t capture that particular movement for you and your household. But relative to the whole economy and your life experience over the medium to long term, it’s perfectly fine and a very reasonable aggregation into a single number. After all, if hawker food prices are halved, do you think restaurant food and groceries aren’t correlated? Of course they are. Not perfectly correlated, perhaps, but whether you prefer hawkers more than restaurants or vice versa doesn’t actually matter too much, especially over the medium to long term of the index.

A lot of people (who don’t know much about inflation measures) raise this complaint, that they aren’t the same as the basket. We know that! Practically nobody is! But you’ve got to pick some basket, and the statisticians do a very good job picking a basket of goods and services, and weights, that are economy-wide valid.

Every CPI announcement includes some information on what caused a particular big change, if there is one. The report includes some details on goods and services categories that were big movers, if any were. You can dig into that information if you want to understand whether the “headline” number that particular month is a decent match for you or an excellent match for you that particular month.

 

[rrr2015]

initially i thought index base 100 means reference point to calculate for all CPI. after reading the terms, i realise it's just weighting pattern … my misunderstanding

am puzzled on inclusion of private transportation (car ownership?) which i felt is non essential item (at least for me)

btw diapers not in the list
not even baby products. even education is not an item but tuition is …

perhaps you like to take a look at the report

probably i misunderstood many items … but am still learning

All that means is that 2014 (January probably) equals 100 in the index. Realistic? Sure, it’s just math. If the index was 100.5 in August, 2017, and 101.0 in August, 2018 (just examples, not actual numbers), those index values are perfectly comparable and generate an inflation rate. No problem.

Then you go on to explain why the basket of goods and services in the index is not the rrr2015 basket. That’s true; it’s very unlikely you personally will be the statistical median consumer across the entire economy. For example, diapers are undoubtedly included in some fashion. But maybe you don’t have a baby, so you don’t buy diapers.

That’s all perfectly OK. The price index is one number, and it necessarily has to collapse a range of experiences down into one number. And this doesn’t really matter over medium and long time horizons. One month to the next, when diapers (in particular) could double in price for some strange reason, but nothing else does, sure, it matters if diapers represent a big share of your household spending. The index won’t capture that particular movement for you and your household. But relative to the whole economy and your life experience over the medium to long term, it’s perfectly fine and a very reasonable aggregation into a single number. After all, if hawker food prices are halved, do you think restaurant food and groceries aren’t correlated? Of course they are. Not perfectly correlated, perhaps, but whether you prefer hawkers more than restaurants or vice versa doesn’t actually matter too much, especially over the medium to long term of the index.

A lot of people (who don’t know much about inflation measures) raise this complaint, that they aren’t the same as the basket. We know that! Practically nobody is! But you’ve got to pick some basket, and the statisticians do a very good job picking a basket of goods and services, and weights, that are economy-wide valid.

Every CPI announcement includes some information on what caused a particular big change, if there is one. The report includes some details on goods and services categories that were big movers, if any were. You can dig into that information if you want to understand whether the “headline” number that particular month is a decent match for you or an excellent match for you that particular month.

 

[rrr2015]

yes if $1 kopi increase 10cents means 10% inflation … siao liao how to survive

My rule of thumb is that real inflation on the ground for me is usually >2x that of reported inflation rate.

This is just like when GST goes up 2% but in actuality prices going up 4% to even >10%!

 

[bigrooster]

My rule of thumb is that real inflation on the ground for me is usually >2x that of reported inflation rate.

This is just like when GST goes up 2% but in actuality prices going up 4% to even >10%!

Yes I just read the announced CPI figure as a reference. I always read my inflation figure from my peasant lifestyle spendings, which I track. And it has always been way higher than the official figure.

 

[BBCWatcher]

am puzzled on inclusion of private transportation (car ownership?) which i felt is non essential item (at least for me)

No statistical basket will perfectly match your personal consumption patterns. That's an unreasonable standard. But there are approximately 500,000 private automobiles in Singapore, and the costs associated with them are highly correlated with shared ride services such as Grab that a large percentage of Singaporeans use. Those prices also influence the prices of delivered goods, such as flowers, catering, grocery delivery, plumbing services -- anything involving somebody driving to visit your household (or other location). So it's very statistically reasonable to include those prices in the basket in some measure.

btw diapers not in the list not even baby products.

They are. See page 46 in this list for diapers. On page 20 prepared baby cereals are listed. Baby feeding accessories are listed on page 37. Baby prams and strollers are listed on page 47.

even education is not an item but tuition is …

I'm not sure what distinction you're trying to draw here. Tuition is the price of education.

probably i misunderstood many items … but am still learning

Happy to help.

 

[Toni90]

Yes I just read the announced CPI figure as a reference. I always read my inflation figure from my peasant lifestyle spendings, which I track. And it has always been way higher than the official figure.

Can you share your spending figure in the last few years to compare with CPI?

 

[bigrooster]

Can you share your spending figure in the last few years to compare with CPI?

I am not going to re-produce my 5-year financial statement against gahmen CPI here to "substantiate" my comment.

All I can say is the pattern is pretty consistent. E.g. Reported that CPI for a period is 0.6%, but my total costs of living increased by > 3% for the same period.

And I am a poor peasant. But NTUC "Fair"price raised the prices of several items. Kopi-O up by 10 to 20c from $1. Cai png up by $0.50 from $2.50. Electric and water tariffs up and up. Town council fee up and up. And definitely not up by 0.6%.

 

[rrr2015]

thanks for your explanation

erm tuition to me means those private tuition which are much costly than public school fees

looks like am looking at summary report, will study the details how they calculate when I'm back to SG. becoz am interested to create my personal CPI for more meaning results.

however one issue i have is e.g 10cents increase will appear highly inflated for small ticket items. is it possible to adjust to make it more reasonable?

also, been reading about relative prices changes compared to salary. and wondering if it will be better alternative than inflation rate for planning?

https://www.clevelandfed.org/newsroom-and-events/publications/economic-commentary/economic-commentary-archives/2008-economic-commentaries/ec-20080601-rising-relative-prices-or-inflation-why-knowing-the-difference-matters.aspx

TIA!

No statistical basket will perfectly match your personal consumption patterns. That's an unreasonable standard. But there are approximately 500,000 private automobiles in Singapore, and the costs associated with them are highly correlated with shared ride services such as Grab that a large percentage of Singaporeans use. Those prices also influence the prices of delivered goods, such as flowers, catering, grocery delivery, plumbing services -- anything involving somebody driving to visit your household (or other location). So it's very statistically reasonable to include those prices in the basket in some measure.


They are. See page 46 in this list for diapers. On page 20 prepared baby cereals are listed. Baby feeding accessories are listed on page 37. Baby prams and strollers are listed on page 47.


I'm not sure what distinction you're trying to draw here. Tuition is the price of education.


Happy to help.

 

[rrr2015]

yeah agree it's confusing me too.

am thinking of using relative price changes i.e comparing against income / expense budget.

that said, I haven't really figure out how to calculate yet, just an idea for now

All I can say is the pattern is pretty consistent. E.g. Reported that CPI for a period is 0.6%, but my total costs of living increased by > 3% for the same period.