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Given the huge amount of effort by the Singapore government in providing top-class education to its citizens, we would expect everyone to be smart about their own money. However, I always get asked the same question,”I have loads of spare cash just idling away in my bank account. What should I do?”, or “I hardly have enough money after spending on food. How to save?”

Let’s just assume 3 different guys at different stages of lives: Jack at Almost Nothing, Harry at Middle Zone and Gerald at Financially Free.

wealthgroup

  1. Almost Nothing. This is where most of us start off. Jack has zero streams of income except big dreams, drive and optimism along with boundless energy to make his mark on this planet and (hopefully) amass his fortune by 30 years old.
    Net worth Estimate: SGD 0 – 50,000
  2. The Middle Zone. This is the stage in life where things get interesting. After cutting his teeth in the corporate world, (or launching a successful business that generated positive net revenue,) Harry finally has enough to live a comfortable lifestyle, and has also managed to squirrel away some cash to build up his financial nut.
    Net worth Estimate: SGD 50,000 – 250,000
  3. Financially Free. This is where everyone wants to be at, but almost never seem to make it to. Everyone’s definition of being financially free is different. You could be dreaming of living in Bali with enough passive income to lead a comfortable life sipping mojitos by the beach, or you could be like Gerald, who earns enough passive income to spend enough time with his kids without having to work again for another employer in his lifetime.
    Net worth Estimate: > SGD 250,000

It is important to note that I defined the different wealth statuses by Net Worth, and not by age. You could be 35 years old today, but without proper financial planning in your younger days, you might still be in the “Almost Nothing” stage. Likewise, you could be only 25 years old, but if you started developing proper habits from young, you could well be in the “Middle Zone”.

Before we dive into some Personal Finance 101, it’d be good to know several asset classes to grow your wealth.

Introducing The 5 Main Asset Classes

  • Equities
  • Bonds
  • Property
  • Commodities
  • Cash & Cash Equivalents

The 5 main asset classes are Cash & Cash Equivalents, Equities, Bonds, Commodities and Property. Over the years, Insurance and Alternative Investments (Art, Venture Capital) were recognized as asset classes in which people used to grow their wealth as well, but we will not be adding them in for simplicity sake.

In my next post, I’ll be going into detail about the asset classes I’ve listed and how each of them can help you in achieving the life that you dream to have.