JUST ASK: ‘At 40, have $400K cash, earn $7K/mth. Am I a failure?’ Written by NextInsight team Saturday, 09 January 2010 02:00 Leong Sze Hian, President, Society of Financial Service Professionals. In this new, weekly series titled JUST ASK, we invite readers to send in questions on stock investing, and personal finance. We will ask an expert to provide answers. Below is not quite a question from a reader but a lament which was posted in a Channel News Asia forum recently. Well, it looked intriguing enough for us to ask Leong Sze Hian, the President of the Society of Financial Service Professionals, for a comment to put the poor reader in a better frame of mind! Reader: Working for a MNC can bring a stable income (about $7K a month X 14 months). However, life is tedious. Am coming to middle-age puzzle. At the age of 40, my salary is still $7K/month. Invest in stocks, but only made losses. Currently only $400K cash on hold. Meanwhile, I invested in some small business and can make $2K/month. I don’t have a condo, just a HDB flat. Have about $130K in the CPF. I just feel stressed doing so many things. I wish for an automated machine that can flow money from customers to my pocket, instead of my actively working and working without much time even for sleep. BASIC & GROSS MONTHLY WAGES (S$) FOR AGE 35-39. Source: Ministry of Manpower, June 2008 survey Accountant 4,179 4,200 Advertising account executive 3,332 3,332 Advocate and solicitor 11,750 12,243 Aeronautical engineer 3,993 5,494 Air-conditioning and refrigeration engineer 3,222 4,324 Application programmer 5,129 5,170 Audio and video equipment engineer 3,650 3,900 Auditor (Accounting) 5,300 5,375 Automation engineer 2,855 3,200 Automotive engineer 5,050 5,050 Biologist 3,520 3,520 Biomedical engineer 4,499 4,499 Building architect 5,000 5,097 Building construction engineer 3,600 4,081 Business analyst 6,167 6,167 Business management consultant 9,053 9,619 CAD CAM engineer 2,796 3,812 Chemical engineer 3,774 3,877 Chemical engineer (Petrochemicals) 4,852 5,969 Chemical engineer (Petroleum) 7,854 7,854 Chemist 4,238 4,630 Civil engineer 4,235 4,382 Computer and information systems manager 6,500 6,779 Computer engineer 4,623 5,209 Computer operations and network manager 6,572 7,107 Credit analyst 5,572 5,572 Database administrator 4,850 5,128 Editor (Newspapers and periodicals) 3,600 3,600 Editor (Radio, television and video) 5,148 5,148 Electrical engineer 3,802 4,091 Electronics and electrical engineer 3,472 4,184 Electronics engineer 3,432 3,655 Financial analyst 6,030 6,120 Fund manager 11,854 11,854 General physician 7,439 8,176 For full list, go to Ministry of Manpower website www.mom.gov.sg Leong Sze Hian: I was thinking how I should try to address your concerns. Well, let me start by saying how lucky you really are relative to others. With your total yearly income of $122,000, you are in the top 10 per cent of income earners. With $130,000 in your CPF at age 40, you are probably in the top 10 per cent of CPF account holders, in terms of CPF account balance. According to the Longevity Insurance Committee’s report on CPF Life, only 60 per cent are projected to have at least $67,000 at age 55 in 2013. With a HDB flat, $400,000 cash and stock investments (amount which you have not stated), you are also probably in the top 20 per cent by net worth. As to having a HDB flat instead of a condo, historically, the rate of return on HDB flats may arguably have been better than for condos, after factoring the interest difference between a HDB concessionary loan and a bank loan, lower monthly maintenance fees, etc. If you feel stressed, doing so many things, to earn $7,000 a month, consider this – Even if you stop working, you may possibly get a monthly income of $4,500 (assuming a return of six per cent on $400,000 cash, $100,000 (stocks assumed value), plus $2,000 business investment passive income)). Moreover, your current CPF of $130,000 may grow to about $440,226 by the time you reach age 65 (assuming 5 per cent average rate of return and zero future CPF contributions). I wouldn’t mind being in your shoes! ——————————————————————————– Recent story: JUST ASK: How to invest a small sum of money?
About the Author
Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional qualifications.