“Sedikit-sedikit lama-lama jadi bukit.” This was the first Malay proverb I came across in my teens. And it made all the sense while I was growing up. But common sense is not common practice. And investing is one of them.

We all know… at school, regular revision makes it easier to score better in exams. Regular clean diet helps to keep our body system healthy. Regular exercise builds muscle and strength eventually. A small impact/contribution is the step towards getting a worthwhile reward. A little of (something) can go a long way. Thi “something” can be replaced with “effort” / “kindness” / “empathy” / “compassion” etc… and it will still work. Life’s wisdom can be as simple as this.

The Crisis, My Wake-up Call

I came to appreciate this quote truly when I was at my lowest point in life: the 7-month stay in the hospital. As someone who was always lucky enough to not get left behind with a last effort of final sprint, I enjoyed the thrill of effortless success. Without effort, the “success” I get eventually made me become more complacent. So when I was at my lowest point, when I couldn’t reach my desired goal (to recover), I wanted (really) to just-give-up — at that point in time.

During that tortuous period, I was encouraged (by the supporters in my life) to just take a step at a time. Just a 1% improvement a day is good enough. The next day, I would have achieved 1% of (100%+1%) and on the third day, I would have achieved 1% of [ 100% + (100%+1%) ]. At that time, I wasn’t able to relate, but today as I looked back, wasn’t that the Power of Compounding at play?

Power of Compounding

This is one of the most fundamental concept in wealth accumulation. Yet, survey results seemed to suggest a number of us aren’t practising this enough.

In 2019, when OCBC first conducted the financial wellness survey¹, they found 1 in 3 are not financially prepared for retirement.

The economic effects from COVID in 2020 caused the biggest hit in most people’s lives. OCBC’s survey² this time revealed 2 in 3 working adults do not have enough savings to allow them to maintain their current lifestyle beyond six months without a job.

This year 2021, in a recent article, an AIA Singapore survey³ found that 54 per cent of Singaporeans will be “14 years short” when it comes to the adequacy of their retirement savings. This is an alarming percentage!

From 1 in 3 (2019) to 54% (2021), has the pandemic worsened our financial position?

How much do we really need at retirement?

It’s one of those questions that most of us wouldn’t have a clear idea. I don’t. But, it shouldn’t stop us from making the first step. I didn’t.

It is okay not to know the exact amount or final destination, because in life, many things can change along the way. How much you need may be different from how much I need. What is more important is getting started. Have you done a stock-take of your financial position?

Timeless Concept that is often Overlooked

Just like most things in life, sedikit-sedikit lama-lama jadi bukit (bit by bit, over time, it becomes a mountain). The little steps you take towards a positive change, counts.

To reach a goal, we need to establish a goal, even if it’s a hypothetical figure, it can still help you move ahead. Some progress is definitely better than no progress. And if some references can help in setting your goals, here’s another study in 2019⁴. Note the weekly expenses from the different groups of respondents. Where do you stand?

Power of Compounding also applies to Inflation

Remember how much a bowl of Wantan Mee, or a cup of Kopi-O cost 15 years ago? How much do they cost today? Can you guess how much would it be 15 years later? Using the survey results above as references, wouldn’t you use a hypothetical figure to work out your retirement needs?

Early Diagnosis leads to Better Prognosis

Today there are many tools available to help work out the amount. I can’t think of any better reason not to think for your own future. Yes, I agree we have to be content with what we have today. As well as in our tomorrow and future.

If you need some guidance, take charge, be responsible for yourself, and reach out for professional advice.