Higher net worth growth rate

It’s mid-week and a pocket of time has opened up tonight for me to blog. I have department lunch, division event, early releases from work, catch-up lunches and dinners all scheduled in the next 2 weeks. Have to say that end Dec continues to be my favourite time to work as I wind up the year with celebrations and fun times.

It’s also a popular time for self-reflection but I’m not inclined to write a post about the things I have achieved, did not achieve, grateful for, can improve on, etc. Maybe in bits and pieces when the topic comes back but it seems like too much effort to consolidate so many things into one post.

What triggered this write-up was my updating of our personal finances Google Sheet and watch the numbers flow into our net worth tracker & graph. Since 1 Jan 2016 when we started monitoring our personal finances progress, I browsed through our monthly net worth figures and even did a year on year comparison.

This is how much our net worth has increased by every year since 2016:

• 2016 – S$120,000 yearly
• 2017 – S$130,000 yearly (8% increase)
• 2018 – S$150,000 yearly (15% increase)
• 2019 – S$180,000 yearly (20% increase)

When I look at the graphical representation of our monthly net worth for the past 4 years, it’s like a wobbly positive slope line.

This is how much our average net worth has increased every month since Jan 2016:

• 2016 – S$10,000 monthly
• 2017 – S$10,833 monthly (8% increase)
• 2018 – S$12,500 monthly (15% increase)
• 2019 – S$15,000 monthly (20% increase)

I have come to realise that compounding is real and it works but only if you don’t keep thinking about it. We didn’t do anything special in the past 4 years since we started tracking our personal finances. We made investments (some good, some bad, others disastrous), used high interest savings accounts well and spending went up along with our income but at a slower rate.

Nothing significant other than a higher level of awareness of where our money is going to. So when we get asked what did we do that made this happen. It’s difficult to pinpoint a specific action we took that led to this result. If we had to pick the most important thing we did, we would have to go with the change in mindset.

At the beginning of this journey, it’s easy to be overwhelmed. You have people telling you all sorts of ways to achieve financial independence, financial freedom and early retirement. Value investing, growth investing, robo-advisors, ETFs, stocks, property, cryptocurrency, all kinds of investing seminars. And the list keeps going on. Start a business, be self-employed, spend less, earn more, be happy, be satisfied, want less, want more, do nothing, do something.

If we followed all the advice that’s given, we would have gone nuts. Because it was a combination of everyone else’s life experiences and none of them were yours. We would just be trying to live everybody’s lives and not ours. So the essential thing we did after realising this was to tune everything out.

And only tune in to what could affect us directly. We don’t read books about investing and attend any kind of investing seminars. Whether they are on stocks or properties. The moment we decided to use ETFs, we had to be okay with market returns. And the average returns are likely to lower over time. Convenience comes at a cost after all. But that means we get to lock out useless financial knowledge that confuses us more than anything.

We focused on what could potentially make us jobless and monitor only the relevant developments. At our age, it’s difficult to pick up new high paying job skills. Neither have we demonstrated the interest or willingness to access these types of jobs. Too lazy because it’s too much work. And so we pivot in our jobs according to our skill sets. Keep ourselves relevant enough to change departments, divisions, companies within the same industries and firms in different industries.

This takes an incredible amount of effort because it means we cannot just go into the office and go through the motion in the way we work. We almost have to be actively working by ensuring we keep learning to continue being in knowledge-based jobs that have longer expiry dates. It’s true, the inevitable outcome for us is that we will eventually become jobless.

While change takes place over time, it has a consistent habit of accelerating when you least expect it. Which means we will eventually run out of time to pivot fast enough into relevant jobs. Not at the pace technology is advancing and developing. New age jobs are already here and not everyone can work in them.

It used to be the case that an average person can go to university, graduate, get a job and improve at it until you can do it well. The job may change in nature but your skill sets would remain relevant. Nowadays, jobs are changing so fast they are rendering entire skill sets irrelevant. Everything you spent years learning now has little value.

You will need to have such a transferable skill set and flexible mindset to be able to switch from one job to another. And probably often from one industry to another as entire industries can be made irrelevant. The average person can’t keep up. Well, we can’t anyway and unfortunately that means a very real timeline exists for us to make this journey work out. The question becomes. How long do we have?