2nd law of money: make your savings work hard

Imagine that one day, you have an army of workers. These workers will work non-stop, 24 hours a day, 365 days a year. They will never fall sick, nor stop working. How does it feel? It will definitely feel good, that one will finally have a day where he can stop working, or simply work whenever he wants to.

So, how can we form an army of workers? Of course, one has to start with a small trooper, and then slowly build up the army. What am I talking about? I'm talking about investing, setting aside a portion of my income every month, and putting it to work for me. The money will grow every year, and as more money is put in, grow even more and even faster. One day, the money will be sufficient to enable me to stop working.

I will set aside a targeted 50% of my take home pay every month, and put into a diversified basket of risky assets, and hold them to the long term. My allocation is as such: 40% into the Singapore market, 30% into the World market, and 30% into the US Small Caps market, which are the STI, VT, and VB respectively. Every money, I will put in the same dollar amount into the three ETFs via my Standard Chartered account, and at every 12th month, I will rebalance the portfolio by buying into determined amounts so that my portfolio holdings in the 3 ETFs remain at the stated percentage.

The historical return of STI, VT, and VB has been 8%, 7%, and 11% respectively. Should the past be a good guide for the future, it should give a return of 8.6% yearly. Assuming that inflation stays at 2.5%, it is a net return of 6.1%, which technically means I can stop working after 18.7 years (according to networthify.com). It seems really long but if I can increase my savings rate to 75%, then I can stop working in 8.4 years.

2nd law of money: make your savings work hard