TLDR;
This video concludes a series inspired by Nick Muli's "The Wealth Ladder," focusing on managing wealth beyond the first million dollars in Singapore. It addresses enjoying financial success without overspending, protecting wealth from erosion through diversification, and growing wealth further through business ownership. The speaker shares personal experiences and strategies, emphasizing the importance of financial discipline, continuous learning, and adapting to changing economic conditions.
- Enjoy financial success without overspending by following the 0.01% rule for expenses.
- Protect wealth through diversification into alternative investments like high-yield ETFs and crypto.
- Consider business ownership, particularly buying existing businesses from retiring owners, to grow wealth beyond a million.
Introduction [0:00]
The video is the final part of a series about the millionaire journey, inspired by Nick Muli's "The Wealth Ladder." The speaker will discuss managing wealth beyond the first million dollars, specifically for a Singaporean context. The key ideas are adapted from the book to be more suitable for the local context.
Enjoying Financial Success [1:05]
Upon reaching millionaire status, it's important to enjoy financial success without excessive worry about spending. Nick's rule of thumb suggests that expenses below 0.01% of net worth shouldn't require much thought, as compounding this daily over a year only amounts to 3.7%, less than a 4% withdrawal rate. For example, with $1.5 million, a $150 fountain pen is a negligible expense. The speaker shares personal anecdotes of gradually allowing himself small pleasures, like buying white strawberries for his kids, while still maintaining financial discipline and avoiding significant expenses like a car COE or additional properties that would impact dividend payouts.
Protecting Your Wealth [5:57]
As a millionaire, protecting wealth from erosion is crucial, as there's a chance of falling below the million-dollar mark. Wealthy individuals often prioritize lowering risk over increasing returns, leading them to diversify into alternative investments through private banking services. The speaker, however, prefers a simpler approach, suggesting a balanced mix of home ownership and dividend income. He recommends allocating a small percentage (e.g., 5%) to high-yield junk bond ETFs to shift risk from market fluctuations to credit risk, potentially earning a 7-8% dividend yield. Additionally, he supports the "1% crypto rule" for educational purposes and potential gains without significant risk. For those with wealth above $1.5 million, he suggests developing advanced landlord skills by investing in small retail or office spaces for rental income, avoiding Additional Buyer's Stamp Duty (ABSD).
Growing Wealth Beyond a Million [11:29]
To grow wealth beyond a million, the book suggests going into business, as many individuals with $10 million or more have a significant portion of their net worth in businesses they own. However, the speaker cautions against survivorship bias, noting that starting a business doesn't guarantee wealth due to the high failure rate. He shares US statistics indicating that while 75% of businesses survive the first year, only about 34% last for 10 years. He emphasizes the importance of cash flow discipline, early paying customers, and operational resilience for business survival. As a middle ground, he recommends buying existing businesses from retiring owners, as highlighted in Cody Sanchez's "Main Street Millionaire," which often have lower price-to-earnings ratios (3-4) compared to listed companies, allowing for quicker break-even.
Personal Journey and Strategies [22:13]
The speaker shares his personal wealth journey, noting that he is about halfway to the $10 million mark. He inherited additional sums of money after reaching his first million. His wealth is now evenly split between property values and investment portfolio. He is currently working to immunize his portfolio from interest rate changes by balancing bank stocks with real estate investment trusts (REITs) and exploring commodity-related stocks. To maintain fiscal discipline, he calculates his net worth per capita within his family, which temporarily brought him below millionaire status. He remains active in learning and exploring new opportunities, such as artificial intelligence, and plans to consolidate his millionaire series into a mini-course, potentially offered through a paid membership section.