This is something that I think a lot of people are benchmarking their networth to.
Often, I receive email asking if they’ve done good enough by accumulating $X at the age of Y. To be honest, any answer you may get is going to be arbitrary at best because every single permutations depend on many mutual factors that are very relative.
What Constitutes Networth?
Networth, by its own definition, is very personal.
To me, in the local context, networth should consists of all liquid funds including cash, bonds, stocks and gold and also includes retirement social security such as cpf and any endowment plan that have yet to mature.
I have excluded property used for own stay for both the equity and liability portion because I believe the value portion of the asset will always be more than the liability, hence making it positive in the event of a liquidation. Also it is likely that owning a house will be factored in as survival asset because everyone needs a roof over their head to live, unless one is subscribing to the rental model asset light strategy.
What Should Your Networth Be At 20s
Your main goal in the 20s is to get your networth up to a positive number as fast as possible.
At your 20s, your networth is likely at the mercy of your current state of war and fiscal responsibility and the big dark horse determinant is how much your parents contributions add to your circumstances.
For example, if you are lucky enough to have parents that help fund your university, you are likely to start your adult year on a positive note given your student loans are non-existence.
There are also some who started working as soon as they finish their polytechnic and started to contribute positively to their networth at an earlier stage as compared to those who only completed their studies at the age of 25. There are some who also earns a higher salary by having a fast track route to career ladder than the others.
Usually, at this age, this is accompanied by a lot of massive other bombs such as getting married, a new home, renovation loan, car loans, dog loans etc.
Hence, to be able to end your 20s with a positive number is so far a good enough redemption.
What Should Your Networth Be At 30s
Your 30s is where you really want to speed things up.
There will be many financially demanding decisions you have to make, in particular if you decide to start a family but this is usually the stage where you just finished your 20s on a strong note, enjoy greater job security, command a higher salary and physically at the peak of your life.
Everyone at this stage should be cruising along the best decades of your life and the only thing that could sabotage the result is through your very own aspirational reckless spending.
In my opinion, this is where you ramp up your production of higher income, higher saving, lower reckless spending and higher investment return.
At the end of your 30s, you should have minimally a range of between $100k to $250k in your networth.
What Should Your Networth Be At 40s
At your 40s, this is where things start to slow down a little bit because you just had a fully driven F1 race at your 30s and your health starts to decline because you cannot “chiong” as hard as you were in your 30s.
If you have a family, your children would be at a stage where they are getting to be independent so a lot less worry on that part.
If you are lucky enough, you’d probably start thinking of your longer term future retirement plans and what and how should you transition from a phase of rising dragon to a phase of falling tiger.
At the end of your 40s, you should have generated a networth range of between $300k to $450k minimally.
What Should Your Networth Be At 50s, 60s
Ideally, at this age range, it would be nice to have the options of whether to retire or continue to work leisurely in a workplace where they called their second home.
This should be a moment of treasuring relationship more than anything else because everything else in life is arbitrary when you’ve seen everything out there.
You should be completely free of debt by this stage and start to drawdown on the networth you’ve been accumulating all these years with your hard work.
At the end of your 50s, 60s, your networth should be north of $500k and enough to last you a lifetime of drawdown expenses.
What Is Required From You?
It seems a hell lot of daunting task for beginners out there to see an amount worth of 6 digits but all it takes is really some simple basic savings technique, an amateur investment skills and a lot of determination.
All you need to do at the age of 25 is to put aside $500/month into an investment that yields you a rate of return of 5% and slowly increase the capital injection gradually as your income increases over the years. We keep doing this until we reach the age of 50 and that’s where it gets optional on whether you’d still like to inject more funds or leave your investments run on auto mode.
| Age | Annual Contribution | Rate of Return | Net Worth |
|---|---|---|---|
| 25 | 6000 | 5% | 6,300 |
| 26 | 6000 | 5% | 12,915 |
| 27 | 6000 | 5% | 19,861 |
| 28 | 6000 | 5% | 27,154 |
| 29 | 6000 | 5% | 34,811 |
| 30 | 12000 | 5% | 49,152 |
| 31 | 12000 | 5% | 64,210 |
| 32 | 12000 | 5% | 80,020 |
| 33 | 12000 | 5% | 96,621 |
| 34 | 12000 | 5% | 114,052 |
| 35 | 12000 | 5% | 132,355 |
| 36 | 12000 | 5% | 151,573 |
| 37 | 12000 | 5% | 171,751 |
| 38 | 12000 | 5% | 192,939 |
| 39 | 12000 | 5% | 215,186 |
| 40 | 12000 | 5% | 238,545 |
| 41 | 12000 | 5% | 263,072 |
| 42 | 12000 | 5% | 288,826 |
| 43 | 12000 | 5% | 315,867 |
| 44 | 12000 | 5% | 344,260 |
| 45 | 12000 | 5% | 374,073 |
| 46 | 12000 | 5% | 405,377 |
| 47 | 12000 | 5% | 438,246 |
| 48 | 12000 | 5% | 472,758 |
| 49 | 12000 | 5% | 508,996 |
| 50 | 0 | 5% | 534,446 |
| 51 | 0 | 5% | 561,168 |
| 52 | 0 | 5% | 589,227 |
| 53 | 0 | 5% | 618,688 |
| 54 | 0 | 5% | 649,623 |
| 55 | 0 | 5% | 682,104 |
| 56 | 0 | 5% | 716,209 |
| 57 | 0 | 5% | 752,019 |
| 58 | 0 | 5% | 789,620 |
| 59 | 0 | 5% | 829,101 |
| 60 | 0 | 5% | 870,556 |
Depending on how much you need as a household, you can then play around with the amount at your leisure but with the same ratio that your household needs.
"Usually, at this age, this is accompanied by a lot of massive other bombs such as getting married, a new home, renovation loan, car loans, dog loans etc."
Did I see dog loans? Something unheard of, hahaha! Nice article Brian, and yes I agree that in the 20s our aim is to first clear our debts and obtain a positive networth. While at the same time we could start to seriously think of our investment strategy and keep a watchlist of stocks to buy when the prices are attractive enough.
Hi Jiawei
Yes!!! You’d be surprised to hear that there are people who took out loans to buy their pets and spend hefty on them (ok la can’t entirely blame them)
Indeed simple strategy like that executed well for the next few years will do the trick to success
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Hi B, if only it is that easy saving and putting $12k (equal to $1000 per month) into investments! with 2 kids, my saving rate has dropped drastically. haha
Hi MIM
I thought your capital injection has been doing rather well actually given your investment.
My savings also dropped super drastically since I have kids but I think it’s an investment all worth it 🙂
Hi B,
Interesting post. I guess I just set foot into the first chapter months ago. HAHA.
With fingers crossed, I do hope that your projection will happen to me successfully :p
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