How I manage my money as a 90s kid

It has been a while since I wrote about money. Hence, thought I’d write this post on how I am thinking and approaching my money as someone born in the 1990s or a Millennial.

In other words, how I do my asset allocation. For those who are unfamiliar with the term Asset Allocation, it is basically how you manage your money and where you put it.

The idea here is to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance, and investment horizon.

Please note that this is not financial advice. I don’t think there is a one size fits all approach for everyone.

I feel like I got to say this upfront, because the right way to manage one’s money is like religion to some people – have a different view from them and they get all opinionated and berserk.

My goal of sharing my thought process behind how I manage my money is so that

(1) Other Millennials and Gen Z can start thinking about how they want to approach asset allocation based on their own individual current life stage, circumstances and goals

(2) Open myself to suggestions on how I can make this more optimal

(3) For anyone who is curious to learn about how the younger generation is thinking about wealth

How I am thinking abt Asset allocation as of Feb 2023 – excluding my property from this.

1. Cash

I keep an emergency fund of a minimum of 18 months worth of expenses.

This is especially important for me as a tech worker given that layoffs are happening across various companies every week. If you’re in tech, I highly recommend you set aside a larger emergency fund and have a proper tech winter game plan.

I also have some personal goals in the next 3-5 years and have put the money needed for that into fixed deposits. Seedly does a great monthly comparison of all the fixed deposits rates. You can view them here.

Keeping my expenses under control and avoiding lifestyle inflation is important to me. I’ve always advised tech workers to live on your base, not your commissions and certainly not your stock options.

My top few expenses include income tax; filial piety allowance for parents; caregiving allowance for my aunt as she takes care of my ah gong and uncle.

I also donate to 6 charities every month via Giving.sg

There are some habits I’ve adopted which have helped me keep my expenses low

• I eat vegetarian meals at home; do meal prep; hawker centre for weekday lunch unless I am eating with investors and customers (because I can expense it haha)
• I am also trying to be a responsible consumer by buying good quality items that last longer.
• I avoid buying luxury bag, wallet, belt or shoes. I personally do not like items with a lot of logos and also do not want to support animal products such as leather

Cash used to be trashy. Cash is pretty attractive now. It’s attractive in relation to bonds. It’s actually attractive in relation to stocks.”

Ray Dalio

2. Private Markets

I first got interested in investing in private markets at the start of 2022. I met this VP of Investments for dinner who told me that he worked in alternative investing in Southeast Asia. The conversation got me interested in learning more.

My interest grew when I started mixing with a lot of VCs, PEs and startup leaders due to my current role.

I learned that private assets have outperformed those in the public markets for decades. I started to read much more into it and listened to a few podcasts.

So far, I have signed up for a couple of digital wealth platforms, just to explore and learn. The relationship managers assigned to me to be helpful and responsive.

Right now, I have not deployed any capital and am sitting on top of dry powder which I’ve allocated to this.

There are several options available.

Venture debt will be an area I wish to look into as I forsee that many will turn to this to avoid down rounds.

Angel investing is another area I am trying to learn more about. My friends referred me to their angel syndicate where they share deals a few times per month via whatsapp.

The idea of investing in pre-IPO companies made a lot of sense to me.

A lot of tech workers join startups hoping they will IPO. Rather than invest in just one company via stock options, why not invest in multiple pre-IPO companies. Investment firms typically invest in several companies to spread out their risks. Why do tech workers put all their eggs in one basket?

I am continually trying to grow myself and explore more about this field. Please do drop me a DM if you’d like to meet up for coffee to discuss and share ideas.

3. Stocks

I started investing in the stock market in 2017. I only invest in technology stocks because it is a field I can understand.

This also includes my company stocks. At time of writing, I am also still holding on to my Salesforce shares and did not sell a single cent. I participate in NetApp ESPP program but do not hold on to their shares.

Hence, you can imagine that my portfolio is quite red now.

While we’re in a bear market, I have not exited any position and am continually investing on a quarterly basis.

I do not do trading, options, leveraging etc or know much about it.

I’ve always wished that I will have an opportunity to invest in a bear market like how many were able to do so in the 2008 financial crisis. Now is the time 🙂

Besides tech stocks, I also invest regularly into indexes.

Many consider indexing to be less sexy compared to stocks. However, there are a lot of benefits to doing so. The Woke Salaryman have written a great post regarding the preference for indexes.

If this is something you’re thinking about, my brother recently share this video by Kelvin Learns Investing. He explains the pros and cons of investing in S&P 500 pretty well.

4.Unit Trust 3.6%

I invest some cash and my SRS in unit trusts.

For those who are unfamiliar with unit trusts, it is a type of financial vehicle where money is collected by the fund manager from many investors to invest in securities like stocks, bonds and other assets. Unit trusts are often bought and sold through financial advisors and online fund platforms.

One of the platforms I use is Endowus. Endowus clients get 100% of these trailer fees back as Cashback, as they want to stay independent and completely focused on building the best portfolios for you rather than selling you products that pay us the highest fees.

I got to admit, I was late to the game when it came to SRS and only started last year.

Supplementary Retirement Scheme (SRS) is a voluntary, tax-advantaged retirement savings account that’s offered by the Singapore government. It’s available to locals AND foreigners.

Like retirement accounts in other parts of the world, the SRS offers good tax benefits for contributing to its investment accounts:

• Tax deferral: You can deduct your contributions from your taxable income that year
• Investments compound tax-free
• Upon retirement, 50% of your withdrawals are tax-free

Funds that we contribute to our SRS account earn a nominal bank interest rate of 0.05% per annum (p.a.). This means that if we want to meaningfully grow our retirement nest egg, we need to invest our SRS funds to earn better returns. Dollars and Sense highlight the various ways you can do so here.

I had no idea why it did not cross my mind but I guess I had other priorities. Would have saved on income tax if I started earlier!

⭐ Get $20 off your Endowus fee by using my promo code here: https://endowus.com/invite?code=BWO4C

5. CPF

I added money to my CPF in my early years but no longer do so.

There are good reasons for adding money into your own CPF.

Any funds that we top-up into our CPF Special Account (SA) will earn us a minimum return of 4.0% per annum (p.a.). This represents a relatively good rate of return considering that it is virtually risk-free. Of course, there are limitations on withdrawing these funds.

Another benefit is that if you use cash to top up your CPF, you get tax reliefs. You are eligible for tax relief of up to $8,000 if you top up in cash to your own retirement savings. If you make a cash top-up to your loved ones, you will be eligible for additional tax relief of up to $8,000. 

What I do now is simply invest my CPF in some funds and also use quite a lot of my OA for housing. However, in the example above, I chose to exclude my property from it.

To learn more about property, I highly recommend this detailed sharing by my friend, Ku Swee Yong.

The content was really well-received. What he has shared is pretty helpful and many of his views are similar to mine.

14:00 How reliable is housing as a retirement nest egg for our generation?

42:19 Should Millennials invest in private property for passive rental income?

1:10:00 Is renting really a terrible idea?

1:17:43 How much do you really need to buy a house in Singapore?

1:35:49 How can we curb the “lottery effect” of HDB, where owners of subsidized flats in prime areas sell their homes for far higher prices than initially purchased.

Ending off this post by sharing some principles I have on money:

💰 Tracking is key. I track my money on a monthly basis and use a personal finance spreadsheet which you can download here. What I have learned in life is that “If you can’t measure it, you can’t manage it.”

💰For most of us, our main source of wealth will come from our day job or the business that we create and run. This is why I choose to focus on career and spend a lot more time and effort on it versus investing. I am not a huge advocate of side-hustles as focus is really critical. Will write a post on this some day. SaaStr’s Jason Lemkin wrote a recent post that sums up my views.

💰Giving back is important. For all of us, we are able to be where we are today because of the opportunities provided by this country. I believe in donating to pay it forward. You can set up monthly donations at Giving.sg

💰It is important to have open conversations about money with our peers. It should not be taboo. Sharing helps us all learn and grow. I try to talk to my juniors about this and share my salary with my close friends. It is especially important to discuss this with your significant other as money is one of the biggest causes of relationships failing.

💰Personal relationships will bring us a lot more happiness than money. This is backed by science and even Warren Buffett agrees. It is important to be balanced and spend time with people you love regularly 🙂 I make sure I walk the talk and remind myself of this when I plan my schedule weekly.

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Hope you found this useful. I care about the challenges and aspirations of our generation and create content around how we can I share ideas on how we can grow ourselves; give back to the community and lead balanced lives. Join my weekly mailing list here.