Learn how to become financially free through savings and wealth accumulation.
The Financial Independence, Retire Early (FIRE) movement is a lifestyle goal to have enough investment income and returns to pay for one's living expenses - forever. The objective is to grow your financial assets extremely quickly by spending way less than you earn, avoiding debt, and investing consistently & aggressively to reach FIRE as early as possible.
During this session, FIRE-Path Lion, a Singapore based finance blogger and Sheng Shi Chiam, Personal Finance Lead of Endowus, will share their motivations and plans around achieving FIRE in Singapore. They will talk about the magic formula and savings rate to calculate how much wealth you need for FIRE. They will interact with viewers through the Live QnA, and share their thought around CPF for FIRE.
1:04 Self introductions
6:51 What is FIRE about?
12:07 Personal motivations around financial freedom
18:00 How much do we need to be financially independent?
21:56 Simulations of success rate
30:04 Investing to reach FIRE
40:37 How holding more cash affects your returns
50:35 Investing more aggressively, and CPF LIFE considerations
1:00:39 Why index investing works
1:05:13 Why stock picking is difficult
1:17:00 Investing in familiar companies and dividend stock
We have also picked out a few questions that we didn't get around to answering. Here they are:
Q: If a portion of CPF goes into investment, at age 55 will that portion be considered into Full Retirement Sum (FRS)/Basic Retirement Sum (BRS) without selling away?
A: No, CPFIS investments, be it through Ordinary Account (OA) or Special Account (SA), will not be liquidated and your existing SA and (if there is not enough CPF SA or OA balance will form your CPF Retirement Account
Q: The CPF returns were simulated until Sep 2019, right before the Covid-19 crisis. Would you still have that kind of 3-digit total returns as of now?
A: In the presentation, we used the MSCI All Country World Index, to provide an illustrative example of the returns from investing your CPF. Click here to check out the returns from September 2019 onwards till now on our website for the CPF portfolio.
Q: Do ETFs or unit trusts allow us to own the underlying companies?
A: It depends on the funds that you own. Funds can be synthetically replicated, which means the underlying assets owned are derivatives, or it can be physically replicated, which means that the underlying assets are actual securities (stocks or bonds). You are indirectly owning the underlying assets through the fund vehicle, be it ETF or unit trust.
Q: How does the Endowus platform sustain itself if there are no sales charges/transaction fees?
A: We charge an access fee of up to 0.6% per annum for cash, and 0.4% per annum for CPF and SRS. We try to build our business in a scalable way so that we can pass on these cost efficiencies to our clients.