I apologize if feathers were ruffled (for reasons best known to those who got their knickers in a knot) by the thread I started in another section, and I appreciate the mature way in which the primary purpose of this discussion was brought back into focus.
Anyway, to put a simple perspective into some of the finer aspects of what I said:
I'm nearly 50 years old. I've been working in Singapore for more than 25 years, the last 15 years in private practice. The first 10 years as a doctor in the government service, and I rose to the rank of a consultant.
Let's just focus on the last 15 years. As I've previously alluded, a consultant with the same seniority and experience in the same specialty (I'd rather keep that private & confidential) is expected to make about S$3,000,000 to S$4,000,000 gross per annum. Suffice to say, consultation fees make up only a modest portion of our earnings. Sure, we charge $150 to $200 for a standard consultation, but it's still only a small part of the overall income. Theatre fees/procedural fees/special medications make up a far larger bulk.
These are obviously not medications you'd rock up to your local pharmacy to buy. Biologics, Immunotherapy drugs - these are highly specialized, extremely expensive medications that can and must only be dispensed by qualified professionals. As an example, just by adhering to a mark-up of 20% on the cost price as per guidelines, it’s a fair profit of at least $1,000 - $2,000 per injection (check out Xolair, Humira, Enbrel, Dupixent, Stelara just to quote you a few examples). Those are the kind of figures I'm referring to. Like I said, 一山比一山高. I’m not talking about a script for Panadol or Piriton here. The best paymasters are not the local Singaporeans, but my patients from Indonesia, Vietnam, Myanmar and even Malaysia (ironic).
Multiply that with the last 10 (not even 15) years of private practice, and you'll figure out why a post-tax "war chest" of about S$30,000,000 is not actually that far off the mark (kudos to the person who worked it out backwards).
Bear in mind also that my wife works as a chartered accountant, we have no children & we are both used to (as Malaysian Chinese) the culture of working twice as hard to receive half as much. We delay our need for gratification, and we don't feel the need to flaunt our income by way of expensive, branded items. I wear an Apple Series 4 watch (after my Apple Series 1's battery finally died), and she still wears the Tag Heuer I bought for her at her graduation in Australia. Our daily living expenses are already more than fully covered by her salary alone (she was previously with one of the big 4 in a senior role, she's now an in-house accountant for better hours), with change to spare.
Also consider our attitude towards housing: despite owning private properties in Singapore (and Australia), we continued to live in our humble little HDB flat that we bought the minute we qualified as PRs back when we first came down to Singapore. The savings alone, in living a humble existence, is not something to scoff at. This arrangement continued until our neighbours whom we've gotten to know very well moved away & new ones came in. One of the new neighbours got into some trouble with loan sharks and his house was spray-painted & his shoe rack was set on fire. That was our cue to make like a bat out of hell, right out of the neighbourhood.
We also don't drive flashy cars. She made do with our first car until the wheels fell off (a Honda City, then upgraded to a C-class which she's still driving), and I drive an S-class after the wheels fell off my old E-class (the W211 version). I know some of my colleagues or her friends of similar status would be zipping about town in their Ferraris and Porsches, and there’s absolutely nothing wrong with their automotive choice, but that's simply just not our style.
My medical studies were also fully funded by the Colombo Commonwealth Plan scholarship, and included a very generous stipend. So, upon graduation, I had no debt and I’ve worked very hard all my life to avoid debt. My wife’s 1st year in her accountancy degree was initially paid for by my parents, but she applied herself diligently and obtained a University scholarship that covered tuition fees and since we both studied in Australia, my stipend was more than enough for both our living expenses. In this sense, we already had an advantage compared to many of our peers – being debt free from right off the bat.
So that’s a little bit on our background.
In the spirit of this thread, I'll share with you my portfolio (obviously, no need for hard numbers, just %)
50% liquid investments - in SGD & AUD (10:5 ratio)
50% properties - in Singapore & Australia. We've consolidated our property portfolio. We used to have units in Auckland & KL, but sold those as there were too many tax jurisdictions to worry about, and I couldn't do this full time.
Of the liquid assets, I have them split up as follows:
50% bonds (Senior subordinated, Tier 1 or Tier 2, rated - never junk grade) – bond issues from UOB, DBS, OCBC, Sembcorp Industries (not Marine), Credit Suisse, SIA, Wing Tai, Guocoland, SCB, HSBC, and in Australia, I favour Westpac, NAB, ANZ. As you can see, I'm heavily into banks. If they collapse, I'll probably jump from the proverbial 14th floor so beloved in /k. The average return ranges from 3.5% - 5%. If I were to sell off all of the bonds right now, the only 2 bonds that I would lose money on would be Sembcorp Industries & SIA. All the others are in positive territory. A lot of the bonds are also perpetual issues, with a call date some 10 years down the road. This does help with financial planning & stability somewhat.
10% in SGX blue chip stocks - the dividend yields are decent, if not overly exciting. I'd say they pay on average 5-6% returns.
20% in index-tracked stocks, with memory knock-out feature. Mainly in FMCG and consumer/entertainment stocks - like Starbucks, McD, VISA, Mastercard, Pepsi, Disney (by far my best investment so far) and Yum foods. These are slightly riskier assets, but they have paid 8-10% on average. I also have these in Pharma stocks, obviously, as I’m a little more attuned to potential sensitivities brewing in this industry. The key thing here is that I have no issues getting knocked in, should the share prices fall below the threshold, as these counters are also blue chips. I’ll just switch over from collecting the 8% to receiving the dividend payments instead.
20% in cold, hard cash (SGD & AUD). I'm lucky that I managed to lock in the bulk of my AUD savings in 60 - 80 month time deposits, so those are still paying nearly 8% in interest (non-compounded), but I'll have a major headache when those good deals run out in a couple of years' time. As for my SGD, because of my relationship with the bank, I get a special 2.25% return to keep my money with them. The rate is reviewed/renewed every quarter, but they've kept it more or less the same for a while now. Some may say that we’re quite silly to keep this portion in low returns of cash, but it does give us a bit of flexibility and there’s always emergencies that having a bit of money at hand would be helpful.
We also have an annuity plan that will pay us a comfortable income upon official retirement ($10,000 per month in total). We bought ours from AIA.
Of the 50% in properties, we have a mix of residential and commercial units. We are receiving at least 3 – 4% in rental returns. The relatively higher yield is from the fact that we own a couple of commercial shop houses, which are in quite good locations with good traffic footfall. In additional to residential properties in Australia, we also have a couple of medical suites bought in Australia, rented out to my classmates from University (oh, what a small world!) Those are paying quite good returns too – about 5% per annum.
In my opinion, the crucial factors that some detractors might have missed in their initial scepticism are:
1. Us being totally debt free upon graduation
2. Singapore’s meritocratic system being a haven for talent – they do recognize & reward performance
3. Singapore’s position as a regional medical hub (for me) & a regional headquarters for many MNCs (my wife)
4. The Singapore dollar being stable & relatively strong against major currencies
5. The Australia dollar peaking at 1.31 against the SGD some years ago – I liquidated ALL of my AUD and converted them into SGD at nearly the highest point (having accumulated AUD at an average buy in price of 1.02 – 1.03 over the preceding years leading to that spike)
6. My wife and I being debt free, and without obligations to our elders (my parents passed away many years ago, as has her dad, and she’s estranged from her gambler of a mother)
7. We have no children – so no need to plan for their education costs
So, if you do your sums and add all of that up, you’ll realise that what I quoted, in terms of passive returns of $40,000 to $50,000 a month is easily achievable – and that’s honestly, me being on the conservative side. I will still be working full time in Singapore for the next 2 or 3 years, so I do expect to increase the portfolio significantly, before we make the move over to Sydney to retire.
Thank you for the opportunity to clarify myself.
Nov 26 2019, 10:10 PM
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