Year 1999. Exhausted from another 12-hour night shift, I boarded the train. The usual morning rush was underway, yet the passengers looked as weary as I felt.
Perhaps, I was the tired one. Nonetheless, it brought about a stark realisation: this was not the future I had envisioned.
Year 2000. I left my previous job and embarked on an exciting new journey to become a teacher.
I was observing a lesson. The students were disengaged but the seasoned teacher was oblivious and just kept talking to himself.
A fellow contract teacher and I exchanged a knowing glance. “We should leave the service if we ever become disinterested in teaching,” I whispered.
These two seemingly disparate experiences ignited a spark within me.
It was the beginning of a quest for something more — a path towards financial independence (FI), providing me options when and if I wanted to dictate life on my own terms.
Did I make it?
Fast forward to 2024, a quarter-century has passed since those early experiences.
While the seed of FI was planted, it took several years for me to grasp fundamental financial and investment concepts.
Not trying to find excuse for myself but as a new teacher, I was also learning my trade then and that was priority.
It was only in 2007 that I finally set a specific goal. While I have surpassed the initial target, its relevance has diminished due to life’s changes.
Nonetheless, my net worth has grown, albeit at a slower rate, since leaving my regular job in early 2022, suggesting that I have achieved FI.
Yet, I remain cautious, as we have recently experienced a bull market. I will wait to weather the next bear market before drawing definitive conclusions.
Ultimately, the journey itself holds more significance than the destination.
A sustainable approach to FI
I don’t subscribe to the extreme FIRE movement, which often involves intense work and frugal living to achieve early retirement by 40.
Instead, I was inspired by the timeless wisdom of The Richest Man in Babylon. Published in 1926, this classic book by George S. Clason offers principles that remain relevant today.
In particular, these three principles resonated with me.
- Start thy purse to fattening
- Make thy gold multiply
- Increase thy ability to earn
In essence, these principles translate to a simple yet effective approach: work, save, and invest. The key to success lies in sustaining these three elements.
Let me elaborate on how I’ve applied these principles to achieve FI.
Increased Income (Increased thy ability to earn)
Few of us are fortunate enough to work solely in our passions. Many of us fall somewhere between passion and pay check. Therefore, it’s crucial to find work that aligns with our interests and personality.
Despite specialising in semiconductors during my studies, I quickly realized it wasn’t my ideal career path. Within a year, I transitioned to teaching, a profession I dedicated two decades of my life to.
Like any job, teaching had its challenges. However, the satisfaction from interacting with students, designing curriculum, and strategic planning kept me motivated.
This not only kept me in the job but also led to significant contributions, recognition, and increased income over the years.
Consistent Savings (Start thy purse to fattening)
I am grateful that Singapore’s Central Provident Fund (CPF) system helps us to squirrel away 20% of our salary for retirement.
Extending the idea, I implemented a similar strategy for my personal savings.
I automated the transfer of 10-20% of my take-home pay to a designated bank account. By intentionally avoiding an ATM card for this account, I made it more difficult to access the funds impulsively.
This approach allowed me to enjoy the present without guilt. I could spend the remaining portion of my salary on needs and wants, such as traveling to Nepal and Egypt or buying a car for my family.
Of course, any amount unspent at the end of the year would go into savings.
These occasional indulgences likely contributed to my long-term work ethic. After all, a happy worker is a productive worker.
Strategic Investing (Make thy gold multiply)
There’s a limit to how much we can earn and save.
As we learnt in Additional Mathematics, geometric progressions grow much faster than arithmetic progressions, highlighting the power of investing in wealth accumulation.
While investing can be challenging, especially in the early stages, it’s a rewarding endeavor.
It’s like having a second job, requiring research and analysis of multiple companies.
Short-term market fluctuations can lead to losses, but a long-term perspective and a focus on strong, resilient companies can yield substantial rewards.
Fortunately, I found investing to be enjoyable. It provided me with an opportunity to learn about various industries beyond my day job.
This passion helped me overcome initial setbacks and small losses. Over time, through consistent learning and experience, I have become a better investor, reaping the benefits of long-term growth.
If you are not interested in the intricacies of individual stock picking, exchange-traded funds (ETFs) offer a more accessible and diversified way to invest.
The potent combination
These three elements — increased income, consistent savings, and strategic investing — have proven to be a potent combination.
While each is beneficial on its own, their synergy has significantly accelerated my journey towards financial independence.
Without increased income, there would be less to save. Consistent savings provide a steady flow of funds for investing, allowing me to capitalise on market volatility. And without investing, my wealth would likely be significantly less.
Looking back, I am grateful for the transformative journey to financial independence.
It wasn’t just about the money; it was about personal growth, resilience, and also the courage to take the less travelled path.
Remember, plan for the future but live in the present, to enjoy the journey.
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