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Journey Investments
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How much do I need to retire?

You can use this handy calculator to find out how much you need to retire right now. 
​
You can edit the orange cells to play around with the numbers to make your own calculations.​
Regular expenditure is for all your current expenditure in a year. This includes food, transport, travel, loan repayments, insurance premiums etc. 

Future capital expenditure is for all your expected future large expenditures, like a large house or a long vacation. ie. your dream purchases.

The amount you need to retire right now is the total amount needed to fund these 2 types of expenditures.

Regular expenditure example

​The default numbers you see above is my current situation. To pay for

1) my wife and 2 kids
2) a car
3) 3-4 regional (Asia/Australia) vacations a year
4) a maid
5) other miscellaneous expenses

it costs about $72,000 a year or $6,000 a month.

Let's have a look at how much I will need to fund my regular expenditure:

Picture
Scenario 1
​
I found the rate of inflation here. 
​
The rate of return used is the 
CPF ordinary account interest rate. 

​It comes up to a whopping requirement of $3.14 million right now just to meet my existing expenditures. I don't have $3.14 million. How can I say I am financially free?

Picture
Scenario 2

Using the same rate of inflation, this time I change the rate of return to something I have been consistently achieving, which is 15%. 

The amount I need to retire now drops to $520K, which is far more attainable for most people. 

Future capital expenditure example

I dream that in 15 years time, I would like to buy a nice landed property to live in with my family. Let's just say my dream home is fairly modest and can be bought at about $3 million right now. 

Let's have a look at how much I will need to fund my dream purchase:

Picture
Scenario 1

As it is very difficult to predict how much the price of a similar property would have inflated to in 15 years time, I used the same inflation rate as above. Feel free to play around with the inflation rates if you think 1.21% is unrealistic. ​

So if I had $2.1 million to put into my CPF ordinary account right now, I should be able to buy the property in 15 years time. Again, I don't have $2.1 million right now.

Picture
Scenario 2

Using the same rate of inflation, instead I invest the money I have right now and if I consistently achieve 15% in the next 15 years, I only need to have $430K right now. 

So if I can generate a return of 15% on my total wealth consistently over the years, instead of requiring $5 million to retire, I can comfortably retire right now with a little less than $1 million.

So the trick to becoming financially free becomes clear. It is a 2 step process. First you need to generate a large amount of cash ($1 million in my case) but much more importantly, you will need to be able to passively grow this cash by a reasonable rate. ​​

    ​Have any questions? Drop me a note and I will get back to you via email. 

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All content in this website is formed from my personal opinion based on my personal experience in saving, generating income and investing. None of the content should be read as a recommendation for any particular investment, these are my personal opinions only. Please do your own due diligence before embarking on any investment.
Journey Investments
​dru@journeyinvestments.co
  • Home
  • Blog
  • General Tips
    • Road map
    • Retirement calculator
    • Align your help
  • Savings Tips
    • Pay yourself first
    • Understand your spend
    • Spend the same
    • Pay for value
  • Income Tips
    • Rent your room
  • Investment Tips
    • Amateur missteps
    • Stock instrument glossary
    • Get educated
    • Understanding risk
    • Plan your allocation
    • Selecting a broker
    • Investment criteria
    • Fundamental analysis >
      • Automated extraction
      • Analyze the data
    • Technical analysis
    • Targeted averaging in
  • Meet & Greet