Saturday, September 13, 2014

If I was a multi-millionaire...

I just read this post written by Christopher Ng about what he would do if he became a multi-millionaire.

I must say, his 3 simple ideas are pretty much perfect!

1) Buy a house without a loan
2) Secure reasonably risk-free passive income
3) Educate yourself financially

I have to say that I was nodding my head in complete agreement while reading his article, but I have some tweaks that I would like to make.

Firstly, I would change the order from 1-2-3 to become 3-(1+2).

Secondly, before even doing anything, I think we must first realize that now that we are super rich, it does not mean we have to behave super rich. If today you are a $50,000 net worth man, if you become a $5 million net worth man, will you spend 100 times more? I am a strong disbeliever that your expenses and lifestyle should match your income. Your expenses must ALWAYS be less than your income, that is a golden rule no matter what (unless you are in retirement and are slowly drawing down on your assets). Too many people think that because they are rich, they have to behave and spend like a rich person. So I think to add to that sequence, it is to be humble about your wealth and not make massive adjustments to your lifestyle.

I think financial education is extremely important. No one cares more about your money than yourself. You also must become financially savvy and be aware of scams and tricks that might come your way. This is a problem that wealthy people will have, because the best con-men only go after the big fish (you!). To protect yourself and to look after yourself, you must equip yourself with very strong solid financial knowledge and try to learn from the experience of others.

Wise people learn from other people's mistakes.
Smart people learn from their own mistakes.
Silly people never learn from anyone's mistakes.

Once you have sufficiently built up your financial knowledge, you should proceed to engage the services of professionals that will have your best interest at heart, to help you make a decision regarding your house AND your investments in conjunction. There is no point to overspend on your house and underestimate the amount that goes towards your investments and vice versa. Of course, we are assuming that the money is finite, because if not, then who cares about investing it anyway?

I agree that the house should be paid off in full. Why borrow money when you don't have to? There is no need for leverage, this house is your home, so it is an expense. As long as you are not planning to flip it for a profit, there is no need to get a loan on it. Just pay off the house in full.

Finally, invest safely to get a reasonable steady income. Although Christopher thinks that 5-7% is his target, I think I would be even more conservative. My aim would be for 5%, with 3% going into income and 2% being reinvested into the portfolio. However, that is just my preference. I think 5% is a very low-ball target that can be easily hit. Of course, you can keep the outperformance!

So in summary, if I became a multi-millionaire, I would:
1) Be humble about my wealth and not adjust my lifestyle drastically
2) Educate myself financially and treat it as my full-time job
3) Holistically allocate my assets to afford a comfortable home and a reasonable passive income
4) Enjoy financial freedom and live the dream: Do what you would do if money was no issue

For me, I think that I would become a teacher. I like to share my experiences and I think that it is really one of the fews jobs that you can really feel the impact of your work. I think teaching is a very noble job. On the plus side, I also will have school holidays, then I can also pursue my other interests like travelling and meeting new people!

What about you? What would you do if you became a multi-millionaire? What would you spend the rest of your days doing?


  1. Over the years I have seen several of my ex-colleagues trade off their higher pay to go into teaching; but they are not millionaires themselves.

    They are willing to follow their hearts and do mid-career switch.

    1. As much as I like the idea of teaching, I think that the pay is holding me back. I do still enjoy my job, but it is of course not as noble as teaching. I will seriously considering teaching in retirement as an activity to give me purpose and to stay active in the mind! Maybe in the future the government will introduce personal finance class and teach about CPF, insurance, savings and investing, haha!

  2. Hi

    I respectfully disagree with the things about taking leverage but maybe its the risk profile that is different.

    My take on leverage has always been to use it smartly as a low cost of debt rather than allocating it to how much capital I hv at hand. So even if I may hv 100 million one day I probably will use leverage the same way I did. Its not about being greedy its about taking advantage of playing the cost of capital vs returns :)

    1. Hi B!

      Of course it is okay to disagree! I agree that the use of leverage is dependent on risk profile. Skillful users of leverage can easily make a good investment into a great investment. Unexperienced leveragers can lose their shirt (or house) if they don't know what they are doing!

      Actually I am a bit on the fence now that you mentioned this. Do I want to continue investing actively and make fantastic investments even though I don't need the money? I think I would, because I think investing is one of the biggest and most fun puzzles to figure out.

      On the flip side, I would no longer need the extra money. It would just be a mental exercise to me, like finishing a sudoku puzzle. There is a small fear that things could go wrong and having a fully paid off home does give some piece of mind. Maybe I would fully pay off my home and consider it an expense, and instead leverage other parts of my investments, like an investment property?

      I shall think about this some more!


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