Had a interesting conversation with some friends over the rising cost of living so here is my attempt at tracking the monthly expenses of FatFIRE in Singapore, according to the aspirations of most middle-income Singaporeans.
Quite sure the below would be a dream come true for >90% of the Singaporean population. And well, maybe we can update it every couple of years to see where inflation leads us.
Accommodation ($7,000)
Based on a quick empirical research on Propertyguru, a desirable three bedroom apartment in the Katong/East Coast area would cost about $3 million.
Personally, at this end of the market, my preference would be to rent as it offers more flexibility and rental yields are likely lower than 3%. My belief is it might cost only $7,000 a month to rent a similar unit and the downpayment saved could be used to earn higher investment returns.
Transport ($3,000)
A brand new Tesla 3 in Singapore with minimal downpayment would likely cost around $3,000 a month to maintain it. Cheaper than a continental car, and just as cool? And if one is retired, one should have the time to find a charging point and chill?
Obviously, we include road tax, insurance and parking expenses.
Food ($3,000)
This number is plucked out of thin air? But well, $100 a day for a family of 3 should get you very far.
Travel ($3,000)
The hunch is that $36k should cover a trip to Europe and another to Japan on business class, especially if airmiles are being redeemed.
Others ($4,000)
This amount should cover shopping, utilities, school fees, insurance and other miscellaneous expenses like a helper.
Total ($20,000)
Working backwards using a typical 4% withdrawal rule, one would need a portfolio of $6 million to cover the annual expenses of $240k.
Do note that the above calculation is for two 38 year olds with a 3 year old toddler (i.e. our situation) and if it’s for a family of 5 or 6, the figure should approach 8 figures.
Conclusion
Even if your household earns $400k a year and manages to save half of it, it will still take close to 3 decades to stash off $6 million.
Or maybe you make a $100k investment and it 60x? But well, most people don’t make a $100k lump sum investment in a risky asset and the harder part is diamond hodling it after the said investment manages a 6x.
Otherwise, successful entrepreneurship.
So yes, fatFIRE early in Singapore is a big and formidable challenge. Less than 1% makes it.
Hi, I think the budget is reasonable given the inflation we are having. the most debatable is probably the $7,000 property rental. The SG middle class aspiration is to BUY property, not rent it, because in Singapore, buy property sure huat!
So it might be more realistic to base accomodation costs on remaining mortgage payments (assume that when you FIRE, you would have paid off at least part of the loan).
I would add that if your household owns 2 EVs, it may be more worth it to buy a house and do home charging, which is a whole lot cheaper than charging through commercial charging points, because charging prices have been going up more than the cost of electricity. #FATFIRE_problems.