I've talked about it in bits and pieces throughout the years but I think I've never really summarized it into a single post.
So I'll talk about how I did it.
Not how it's possible to do it. But rather how I, personally, did it.
Cos there's other ways to do it, and I know I'm starting off in a position of privilege.
Is it due to a high earning job?
I worked in the finance industry for around a total of 7-8 years. With a 2 year break in the middle.
My pay started at $2,500 and my last drawn was around $8,000 per month.
The numbers are fuzzy, cos I don't remember. But it's around those amounts.
Of course I didn't get to farm the $8k for many years. That's my last drawn so my accumulation was done way before I reached that pay.
Is it due to good investments?
I did my first big investment during 2008/2009. I think I made close to 80%-100% returns on those investments. It definitely contributed to my early retirement. Note, the total earnings aren't THAT much. Cos I was still young and my assets, relatively, weren't much at that time.
I think what helped was that AFTER I doubled up my investments, I switched to investing in REITs and got around a 5% return yearly. Then along with my salary, I continued to reinvest into more REITs. Similar to compounding the returns and investing my salary.
Is it due to spending less?
I don't spend much, personally. Since young, I just don't like spending. I don't feel happy spending money.
I know many people get happy when they spend money and they get the product. Even if it's just for a short period of time. However, I don't get that. I feel displeasure when money leaves my hand/bank account.
Currently, our overall expenses are high due to my wife working. Cos we have transport expenses, clothes, entertainment, buying gifts for colleagues, stuff like that.
However if we look at our non-work related expenses, it's around $1,500 per month for the both of us.
Here is a whole year expenses when I was in SG.
I always count using my SG numbers cos that's where I'm expecting to return to and retire sometime in the future.
Even now in the US, cos she's working from home, there's hardly any other expenses except groceries.
Simply put, we don't buy stuff. We don't have hobbies that need money. We don't go shopping for fun. We tend to walk around for fun, or find food. That's all.
Is it due to getting stuff for free?
Getting stuff for free was a game changer for me.
When I last left my job, I knew that I probably needed to return to work for around 3 years more for asset accumulation.
However, when I learnt that I could get a lot of stuff for free, I was more confident that I needed less for retirement. My expenses dropped significantly and I realized that it wasn't necessary for me to go back to work.
Basically, my accumulated assets could last maybe 5 times more than what I thought I needed.
I think what was fun about getting free stuff was that basic food and groceries became free. Then every once in a while, I would get a nice toy, like a coffee machine, or maybe some beers would be available or potato chips.
I know people who got basic food for free, then reallocated that excess money to other expenses. So they saved on one side, but increased their expenses on another side.
So HOW did I retire young?
I think it's a combination of all the factors.
I think they all have a compounding effect.
It's not linear. Each aspect builds upon each other aspect and multiplicatively enhances the end result.
I think I was considered a fairly high earner at my age at that point in time.
I did some good investments.
I don't spend much overall.
I get free stuff, which results in an even lower spending.
And all that that contributed to me retiring young.
Could it be done in other ways?
Yes. Of course.
To retire early isn't the same as retiring young.
One could retire at 45 and people would deem that as an early retirement.
Someone with less income could also retire earlier than his/her peers. They'll just need to spend less, invest and work a bit longer.
Someone who doesn't like risky investments could also do something similar.
They could have a fairly ok income, invest in low risk assets, but also have a low spending.
So they also have to work longer.
Someone with average spending patterns would probably need to work and invest for a longer period.
Someone with high spending patterns... well they better be super rich or forget about retiring.
Naturally, if someone is able to compound all the factors together, then they can retire younger.
What's the most important factor?
Personally, I think the most important factor is reduced spending.
It's the same as, "You cannot out-exercise a bad diet".
We can consume more calories than we can exercise in a day.
Or...
An elephant eats 100-300kg of food in a day.
But a mouse eats around 5 grams of food in a day.
The amount of food an elephant eats in a day, a mouse can eat for it's whole lifetime and probably feed it's family as well.
Most people don't have the ability to earn more.
I would think in Singapore, with some education, one would be able to earn $3k-$5k per month in the right job.
Investing requires risk, but I think an average 3%-5% per year return should be quite easily attainable.
So probably the most controllable aspect is to reduce spending.
The results are immediate.
Don't need to wait for annual increment or year on year returns.
Conclusion
And so that's how I retired young.
Yes I did start from a position of privilege.
Good education, good job, lucky investments.
But also discipline in saving, spending less, looking for even cheaper alternatives, looking for free alternatives.
No. I don't feel like I sacrificed much for it.
To me, this lifestyle is normal for me. I'm not proactively having to control myself from spending. I'm not suffering. I naturally don't like to spend. So maybe I'm lucky in this aspect, that my character is like this so it makes frugal living very natural for me.
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