BT Money Hacks: Million dollar retirement - Enough or good start?
In the latest episode of Money Hacks by The Business Times, host Howie Lim explores the question of whether one million dollars is still the aspirational benchmark for financial independence and retirement.
Howie is joined by Sara and Aaron Wee, millennial siblings and content creators known as The Weeblings, who share their personal journey to financial freedom.
The journey to $1 Million
The Wee siblings started their journey to $1 million in 2023, driven by the desire for financial independence rather than mere financial freedom. According to Sara, their ultimate goal is a milestone of $5 million, which they believe will offer not just freedom of choice but also the stability they seek.
By applying the 4 per cent rule, they plan to withdraw only 4 per cent of their investments annually, allowing the money to last between 36 to 40 years. This approach will provide them with a stable income, while still preserving capital over the long term.
Financial planning and transparency
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The Weeblings emphasise the importance of financial planning and transparent communication. Both siblings share financial responsibilities and have devised a comprehensive financial projection plan, which they review yearly. This includes considering significant expenditures like holidays and concerts, helping them remain aligned on their financial goals.
Open about their financial mistakes, they share how they lost money in the cryptocurrency market, highlighting the risks associated with volatile investments and emphasising the need for thorough research and risk management.
Practical tips for aspiring investors
Later in the conversation the Weeblings introduce their 3M framework - Making Money, Managing Money, and Multiplying Money. They go on to explain this strategy underscoring the importance of first earning money, then managing personal finances proficiently before venturing into investing
This is a particularly valuable point to younger investors which Aaron passionately stresses. The Weeblings reiterate the need to accumulate capital before focusing on investment strategies like stocks or ETFs.
Risk tolerance and investment strategies
Understanding your risk tolerance is crucial, according to the Weeblings. While Aaron has a higher risk tolerance and focuses on investments, Sara manages personal finances and ensures they have a healthy emergency fund. They advocate for diversification and caution against extreme risk, especially for those new to investing.
For those with limited time or lower risk tolerance, Sara suggests passive investing strategies like dollar-cost averaging into ETFs, such as the S&P 500. This method involves investing a fixed amount of money monthly, regardless of market fluctuations, thus leveraging the compounding effect over time.
The Weeblings acknowledge that a million dollars may be sufficient for some but not for others, emphasising that individual circumstances dictate financial needs.
Listen now to start your journey towards financial independence and acquire some actionable advice to get you there.
If you have feedback or an idea for a podcast episode, contact us at btpodcasts@sph.com.sg and stay tuned for more episodes of Money Hacks with Howie Lim.
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Written and hosted by: Howie Lim (howielim@sph.com.sg)
With Sara and Aaron Wee, content creators
Edited by: Howie Lim & Claressa Monteiro
Produced by: Howie Lim & Chai Pei Chieh
A podcast by BT Podcasts, The Business Times, SPH Media
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