Reflecting on 30 years of successful work and investing and why it matters more today

The original version of this article first appeared in The Business Times.

As we celebrate National Day and take stock of how far the nation has come, let me offer a birthday thought experiment that is relevant for all generations, using those who started their career in the mid-1990s as reference. Now within sight of their retirement, they have only known a Singapore that has thrived throughout their working lives.

In 1996, the median worker earned S$1,800 a month. Today, that figure stands at S$5,775. That is a tripling over a full working life, through multiple crises and a pandemic. The individual journeys were probably more successful. It reflects thirty years of raises, promotions, job changes, upskilling, and the extraordinary transformation of the Singapore economy. By any global standard, it is a remarkable achievement.

And yet, here is the uncomfortable truth. A single dollar invested in global equities* would have grown more than 14 times. Same thirty years. Same world. Same crises endured. One tripled and the other fourteen-fold. That gap between "nearly tripled" and "14x and counting" is not a criticism of work. It is the entire lesson of this column. It is about the choices we make and the consequences that we face.

The arithmetic our brains refuse to do

Albert Bartlett said that the greatest shortcoming of humans is our inability to understand the exponential function. This applies to physics but also retirement planning. Wages grow linearly. Capital compounds exponentially. Our brains are wired for the first and systematically fooled by the second.

Consider why. Your income is anchored to your time and position, and both have ceilings. There are only so many hours in a day. There are only so many rungs on an organisational chart. Singapore's nominal median wage growth has averaged 4% a year over thirty years, which feels like good progress, and it is. But it is progress on a treadmill that is moving backwards.

Capital faces no such constraints. A dollar invested does not wait for a performance review or plateau in your forties. It compounds through holidays, and while you are watching the fireworks this year. The Rule of 72 shows that a 10% return a year for 7.2 years doubles your money, and vice versa. 7% to 10% is broadly the range global equities have delivered in most rolling 10-year periods. Over a 40-year working life, that is five to six doublings and the last doubling in the last decade alone adds more than everything you've earned before it.

Your salary is the engine that funds your life, but it is your invested capital that determines whether you can one day stop relying on the engine. Human capital—your ability to earn—when converted to financial capital and properly invested, is the only asset that can keep working when we no longer can. The job of a working life is to convert the first into the second, as early and as consistently as possible.

The question is not whether to invest, but how

Which brings us, naturally, to the CPF because for most Singaporeans, CPF is where a lot of that lifetime of conversion actually sits. In January, Mr Shawn Loh discussed in Parliament the Lifetime Retirement Investment Scheme (LRIS) noting that a typical balanced portfolio had earned 9.5% p.a. over the past five years, and that further delay may deprive CPF members of the option to take measured risk for higher expected returns.

The Ministry of Manpower replied that it was in the final stages of its study, and we have since learnt that a new, simple, low-cost investment scheme is on its way, built around globally diversified portfolios with a glide path—meaningful equity exposure when members are young, de-risking gradually as they approach retirement.

This is one of the most important developments in Singapore's retirement landscape. Not because of the specific product, but because of what it acknowledges: that time in the market is an asset CPF members own in abundance, and that leaving decades-long money entirely uninvested in growth assets has a real cost.

The CPF Ordinary Account guarantees 2.5%, which doubles your money every 29 years. About once in an entire career. A sensible global equity-heavy portfolio would double three or four times over the same period. Compounded over 30 years, it is the opportunity to retire on your savings multiplied many times over.

Safe and uninvested are not the same thing

Let me be very clear about what I am not saying, because this is where the debate usually goes wrong. CPF's guarantees are genuinely valuable. A risk-free 2.5% to 4% is a foundation most retirement systems can only dream of. The floor matters, especially for those close to drawdown. But "safe" and "uninvested" are not the same thing.

For a 30-year-old with a 35-year horizon, the biggest risk is not a bear market. Markets have always recovered within the horizons that matter for retirement. The biggest risk is arriving at 65 having compounded a lifetime of savings at a rate that barely outpaces inflation. That is a slow, certain and real loss paid in retirement adequacy, the one goal that matters most. Consequently, the riskiest asset is actually cash-like savings, as you are 100% certain to fail.

This is precisely the logic of the glide path, and why the proposed scheme is so encouraging. A glide path does not choose between growth and security; it sequences them. Heavy global equity exposure when you have time to ride out volatility, shifting toward stability as the horizon shortens and the guarantees become more valuable. It is the portfolio expression of a simple truth: risk is not a fixed personality trait; it is a function of time.

Raising the probability of success

If the science of compounding is so well established, why do so few people capture it? Because the gap between knowing and doing is where most retirement plans fail. The empirical evidence on investor behaviour is consistent and humbling: we start too late, we sit in cash waiting for clarity that never comes, we chase past winners, we panic and sell near the bottoms, and we pay fees that confiscate a large share of our compounding.

Each of these is an unforced error and correctable. This is where advice earns its keep, not by predicting markets which nobody can do, but by making you actually stay on course. A good fiduciary advisor like Endowus and others do a handful of unglamorous things: puts you in a globally diversified portfolio at low cost, sizes your equity exposure to your actual horizon rather than your current anxiety, automates the investing so that discipline does not depend on willpower, and stands between you and your worst instincts in the moments that matter. None of it is exciting. All of it compounds for a better outcome.

The forthcoming CPF scheme will lower the barriers for members to get started, and that is worth celebrating. But retirement adequacy and the probability of success still depend on the process you build around your money and the behaviour you bring to it—how much you contribute, how your cash, SRS, CPF savings work together, and whether you stay invested.

The next 30 years start now

Singapore's story is itself a compounding story. Nothing about this island's transformation happened in a straight line or a single bound; it was six decades of reinvestment—in education, infrastructure, institutions, and trust—each building on the last. We intuitively celebrate that kind of compounding every August. We are far less good at applying it to our own accounts.

So this National Day, look back at what thirty years of work bought you or your parents. It is almost certainly a story worth honouring. Then look forward at the next thirty years, and ask what your capital could do alongside your labour if you finally put it to work properly. Your salary built your life. Only your investments can build your retirement. The nation did not get here by leaving its resources idle. Neither should you.

*Note: Using S&P 500 index as a proxy with dividends re-invested net of US dividend tax.