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HomeInvestmentPortfolio Updates and Reflections on Work versus FIRE - July 2023

Portfolio Updates and Reflections on Work versus FIRE – July 2023

Portfolio allocation as of July ’23:
– SG Shares: CDG, DBS, Haw Par, SGX, Valuetronics
– SG Reits: Syfe Reit+, DigiCore Reit
– US Growth: BABA, INMD, PYPL, SHOP, TDOC, UPST
– US ETFs: SCHD, QUAL

There was limited portfolio activity to report for July due to the frenzy in the markets. The only purchase made was the regular DCA for Syfe Reit+. In a fun calculation, the portfolio value at the end of July was 6.9% higher than the portfolio value at the end of June, excluding inflows during the month. This increase in value is equivalent to more than 1 month of my salary, highlighting the importance of capital returns over labor returns.

On my Instagram page, I discussed the impact of projected inflation rates on retirement calculations. GIC reported a 20-year rolling real return of 4.6%, which is the return above global inflation. When estimating my FIRE targets, I used nominal returns of 5% and inflation of 2.5%, resulting in an expected real return of 2.5%. Some argued that using a long-term expected inflation rate of 2.5% was too low and suggested using an expected inflation rate of up to 4%.

People tend to have recency bias, assuming that high inflation will persist based on the current spike. These individuals expect to beat inflation by generating nominal returns of 8-10%. Comparing two scenarios, the expected real return for FIRE projections is more aggressive with an expected nominal return of 8% and expected inflation of 4% than with an expected nominal return of 5% and expected inflation of 2.5%.

It is crucial to consider expected real returns when doing financial projections. Assuming higher nominal returns to compensate for higher inflation does not add much value. Ultimately, it is the real returns that matter.

In terms of the concept of “work,” throughout history, work has been a means of survival and earning income. However, in today’s advanced economies, work is often associated with finding purpose, passion, and societal contributions. While some jobs may have more purpose than others, work is fundamentally about earning income for survival.

To reconcile working for survival with doing something one loves, I plan to aggressively build up my portfolio in the early years of working. Once my passive income covers my expenses, I can retire from full-time employment and pursue my passions freely. This approach allows for financial stability while pursuing what I love.

The source of income should not be seen as superior to other forms of non-conventional income. The notion that earned income from work is more valued than dividend income or rental income is influenced by societal biases. However, as long as money is earned through ethical means, there is little difference in how it is generated.

Ultimately, it is important to live life on your own terms and not worry about societal judgments. Money is fungible, and a dollar earned from dividends or traditional employment buys the same things. Pursuing unconventional paths can lead to a fulfilling and meaningful life.

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