Saturday, July 07, 2018

Coping with Financial Pornography from Millennial Deci-Millionaires.

The question every financial blogger should ask himself or herself is whether have we reached peak Millennial Deci-Millionaires. This is when somebody goes online to talk about attaining a net worth of $100,000. This is often done by a Millennial who attained this net worth before the age of 30.

I want to congratulate anyone who meets this goal before 30 because it is a significant achievement. Absolutely nothing to scoff at.

When I wrote Growing Your Tree of Prosperity I was largely ridiculed  because authors are supposed to write about how to become millionaires - $100,000 was effectively low-balling. Thereafter, I refused to talk about making one million dollars in all my books because becoming a millionaire has become cliche. One author I knew of even wrote his book about attaining millionaire status when he was still an undischarged bankrupt, and I was adamant about not becoming a financial pornographer.

I think there is a better framework readers can employ when reading these news instead of viewing it as financial pornography.

( I use this term because I was inspired by La Papillon who really does not like savings porn and spoken out against it on the BIGScribe FB group. )

Here are some reasonable questions to ask whenever some Millennial Blogger talk about achieving $100,000 in savings :

a) How did the Millennial earn his/her money?

The first question is how the money was earned. This generation of bloggers have a wide variance in earnings. A local graduate can earn $3,600 per month but a private degree holder can only expect $2,400. Currently, the advantage goes to the Millennial who has a job in a bank, law firm, MNC or Public Sector. Otherwise, we might want to give credit to those who are doing sales where earnings have no set limits.

At this stage, we might want to be inspired if the blogger earned the money with extraordinary effort.

Maybe they held multiple jobs, worked overtime, or did so well they received multiple promotions. I made quite a bit of money doing overtime as I was the only AS/400 administrator in my first year of work and had 30% increments on a good year.

This might be an area that the reader can emulate.

b) How did the Millennial save his/her money?

If you earn more, you can naturally save more. The best approach is to see if the Millennial can share how much savings was generated as a percentage of take home pay. Absolute numbers are meaningless.

Also, when calculating the $100,000, the next question is whether it includes CPF money. CPF, along with our low tax regime, is a powerful savings engine that no blogger thanks the government for.

Beyond asking about CPF, you can benefit the most from how frugal the Millennial is. Are there various acts of demonstrating conscientiousness that you can learn from ? Is there a budgeting tool or an active denial of conspicuous consumption ?

For me, I naturally saved a lot because I never had a financial advisor. This means that I only have one term life plan from SAF. If you like to hear of my own savings pornography story, in my early thirties, I was bordering 70% savings from my take home pay, but I spent all my dividends from my investments.

Of course, I also lived with my parents, never drove a car, and ate mainly hawker food.

c) How did this Millenial invest his/her money?

This is the most exciting part of the framework.

No matter what kind of investments people claim to participate in, it's fair to assume that you can blend the equity/bond component to a pro-rated blend of 8%/3%, so reasonable returns will be 3-8% minus costs.

The magic is in controlling costs. Unit trusts and ILPS are expensive and could reduce returns by 1% every year. ETFs are slightly better. The cheapest investments are generally self-directed. This gives you the ability to estimate whether, moving forward, whether the blogger can reach a net worth of $1,000,000 before his or her 40s.

At this stage, IMHO,  I think it's safe to discount the crypto-currency and derivative components of the investment plan. Some financial porno should just be treated as such.

Of course, having gone through this exercise, the $100,000 that Gen-X accumulated should be adjusted to about $120,000 in today's money after accounting for inflation.

Most bloggers, being human beings, would have a long way to go before hitting $1,000,000 because of intervening life events like marriage and children. This can shift their priorities into things other than money.

I guess the fun is in reading about other people's lives and extracting their best practices so that you can benefit from them.

So be kind, reasonable and good-spirited when other people meet their financial objectives.


  1. Hi Chris,

    You mentioned that one will achieve a networth of $1 million before his or her 40s. Does your stated networth include CPF savings based on your perspective?


  2. Generally, a lot of millionaires will need not just CPF, but also home equity thrown into the mix.

    Otherwise a lot of folks will certainly not make the cut.

    I'm not speaking for myself, though. * wink *

  3. Hi Chris,

    Well said. My personal take is that it is not necessary for one to have a networth of $1 million to be considered FI. As long as one keep his/her expense low, the FI amount will be less than $1 million.

    An example is a yearly expense of $25,000 for one. The required FI amount will be $625,000. One does not need to retire early and continue to work part-time in the work he/she likes. This will free up more time for one to focus on embarking on the interests he or she likes.


  4. Yup. This is why FI is more important than an arbitrary figure.

    That being said, folks who FI find it very easy to push their net worth further north because they can farm their entire paycheck into their investments.

  5. Eeeer Chris, the picture too "strong" liao.

  6. The picture is the best part of this post !