2023 finances and net worth thoughts

Hope everyone has had a great start to 2024. 

Well, I reckon I could have had a better start. 

Been battling a bug and sinus infection in the early weeks of 2024, but it looks like it is more or less healed up now. 

Certainly serves as a timely reminder that good health is a foundational piece to live the good life. 

Anyhow, I had some time to take a look at my finances for 2023 and this mainly serves as a pulse check now I have the time to sit and reflect for a bit. Personal financial planning and analysis - lol. 

In 2023, my total spending excluding rental and parental allowances came up to about c. S$65k or S$5.5k per month. 

My share of the rent and parental allowances came up to be c.S$31k or S$2.5k per month and I reckon this will come down by a few hundred per month in 2024 as my partner ramps up her contribution to the rent, and it will probably come down to S$1.5k per month once I get the keys to my BTO flat.  

Expenses

1) The largest contributor to the expenses line in 2023 was undoubtedly travel as total category spend came up to be c. S$28k, or c.43% of total spend. 

To give some context, this was the schedule of travel in 2023: 

1) c.2 months in Europe across France, Portugal, Spain and the United Kingdom over 2023; 
2) c.3 weeks in Japan;
3) c.2 weeks in Vietnam;
4) c.2 weeks in Hong Kong and Bangkok; and
5) c.1 week diving in East Malaysia 

So it works out to be close to 4 months overseas in 2023, or 33% of the time. I do think this expense might potentially drop in 2024 as I am contemplating basing myself more in Singapore to focus on building routines to develop and improve my skills. But hold that thought as contemplation is still underway.  

2) The second largest category was Food & Beverage, or expenses for dining out. This totaled S$13k, or c.20% of total spend. 

We do eat out as a couple quite a bit, even as we are currently trying to move towards home cooking for some part of the week. Alas, there ain't much insights to be had in this category. The highest single expenditure for each meal was perhaps c.S$350 and these were limited to special occasions.

I do think this might rise in 2024 though, given inflationary conditions and if I actually stay in SG more often. It is quite expensive to live in Singapore comparatively to the other places that I have visited last year.

3) The third largest category was surprisingly "Gifts" and that came up to be c. S$5.6k or c.9% of the total amounts. Weddings, birthdays of loved ones, ang pows for CNY and some treats for my old team at work over the course of the year to keep these guys going and motivated.

Now that I am an unemployed and unproductive member of society, I am going to heavily underweight the CNY ang pows and be more selective of the weddings I attend, especially when it comes to the extended family.

In summary - while the headline monthly expense of S$5.5k has surpassed my original FIRE budget (back in 2018) of S$4k, I think 2023 was an extraordinary year and I do expect expenses going forward to moderate accordingly within reason. 

That said, I do have some other thoughts on my increased flexibility towards expenses vis-a-vis experiences that I would probably espouse on in another future post. 

Net Worth - Total Resources and Total Liquidity 

I thought it might be helpful for the F.I.RE aficiondaos out there if I gave a breakdown on how I measure my net-worth while embarking on my F.I.RE plans. 

For measuring my own personal finances, I divvy it up into various categories below: 

1) Pure Cash and Deposits on Hand ("Cash") - Cold hard cash split into various traditional and digital bank accounts earnings meagre ST interest and also staggered ladder of T-bills. This is used to pay for my daily operating expenses. 

2) Cash Equivalents ("ST Trading") - Once used primarily by me to convert USD into SGD given the best exchange rates on market, this has morphed into a short term trading account where I test out various stonk strategies, like selling options, short term growth stock trading etc. 

This was only set up in 2020 and is currently 40% underwater due to perfect market timing and a lack of knife juggling training lol. This account is fully fungible with Cash and will be liquidated to supplement lifestyle when Cash runs low. 

3) Central Provident Fund and Supplementary Retirement Scheme ("CPF/SRS") - To the uninitiated, the Central Provident Fund is Singapore government's version of social security, with mandatory employer and self contributions which are awarded certain returns that are risk-free in nature. It comprises the Ordinary Account, Special Account and Medisave Account. 

I do utilize past contributions to my Ordinary Account for investments under the CPF Investment Scheme and this has been performing reasonably above the OA rate of 2.5% since I first started investing. The sole purpose of my OA is to fully cover my share of the HDB flat. I leave my Special Account alone as the base 4% rate of return is hard to beat and try to refrain from touching my MA (currently at maximum level) given the 4% rate of return. 

The Supplementary Retirement Scheme allows S$15.3k of tax deductible contribution annually, and is subject to a penalty and tax payment if this is withdrawn before your applicable statutory retirement age (was 62 when I set it up years ago).

This source of funds largely acts as a back-up in a shit hits the fan situation and I need an urgent emergency cash infusion. 

There are penalties to be paid but it will be lower than the tax rate I had to pay if I did not do these contributions then. 

4) LT Investments ("AUM") - This forms bulk of my net worth and is invested in a globally diversified managed fund across more than 1,000 equity counters. There is nil leverage involved and the fund solely invests in equities. 

This is the account where I am supposed to perform the much vaunted "safe withdrawal" method when my Cash and ST Trading starts running dry. But you know what the experts say - safe withdrawal also can make babies and cause you to change your plan lol. 

5) Other Investments ("OI") - This is my highly illiquid account which comprises private direct equity investments and crypto (only BTC and ETH). Also holding a right to receive liquidation proceeds from HodlNaut which I am ascribing a value of donut.

6) Employee Share Option Plan ("ESOP") - This is the see-through value of my equity I have earned with the start-up i worked for over 2.5 years, with a hefty discount applied on it.

I would think I do have a good handle on what the right discount is to apply since I actually led the fund raising efforts, but given the illiquidity and binary nature of things of such ESOP in these market conditions, even though the ESOP on a post discounted basis contributes to 20% of an aggregated list of items 1 to 5, I will be giving this a big 0 and excluding it from my net worth thoughts. 

As of 31 Dec 2023, this is the split of contribution for items 1 to 5 above: 

1) Cash - 8%
2) ST Trading - 4%
3) CPF/SRS - 18%
4) AUM - 69%
5) OI - 2%

I like to think of this as a indication of "Total Resources" on hand. 

To think of if in even tighter terms, lets see the breakdown of what I like to call "Total Liquidity" since these can be liquidated at ease to serve life purposes. 

1) Cash - 10%
2) ST Trading - 4%
3) AUM - 85% 

As of 31 Dec 2023, my cash runway (summation of 1 and 2) before drawdown of AUM is roughly 5 years, so I do hope that it will help alleviate any sequence of returns risk and allow my AUM to grow in the market before I actually need to enact drawdown actions. 

AUM did grow 8% in 2023 which contributed to Total Resources growth of 6% despite having zero employment income for 7 months, and this gives me some confidence going forward. 

Separately, I do feel that to go 5 years without any income at 38 years old is quite improbable, which is another one of these thoughts that have surfaced quite quickly during my second time taking a F.I.R.E sabbatical. 

It is a bit hard to put a pulse on things, and might be worthwhile expounding on in a future post, but generally doing this sabbatical for the second time has given me more confidence to adapt my plans accordingly and not dwell too much on the numbers or get into a form of "analysis-paralysis". 

In any case, hope this post is somewhat helpful to the public, as it is to me in reflecting on the state of my personal finances in 2023. 

Wishing all readers good health to come in the upcoming year of the Dragon!