Are you Poor, or not?

Generally, Singaporeans have the perception that we are poor. With rising costs of living (think housing prices, healthcare costs, education fees) and widening income equality, it is right to presume based on comparison with yesterday’s standards.

Yet, are we that far off from the norm as proclaimed?

How does Singapore compare worldwide?

According to Credit Suisse’s 2018 Global Wealth Report, of the world’s population

Top 1% currently holds over 47% of global wealth. Minimum net worth of US$871,320 required.

Top 10% holds over 85% of global wealth. Minimum net worth of US$93,170 required.

Bottom 50% holds under 1% of global wealth. Minimum net worth of US$4,210 required to be richer than 50% of the world’s population.

Income of the 1 Percenters

Income standards could differ wildly in each country, depending on whose perspective you are looking at. The same 1 Percenters in oil-rich United Arab Emirates could be earning a stark difference to those in China, in fact almost 9 times more. For Singapore, the top 1% earns at least US$694,000 annually, faring much better against the rest of the world.

Singaporeans are number six actually, if we were to look at the world ranking of household wealth per adult.

World Inequality Database, Statistics Canada. All figures are in 2017 USD, adjusted for Purchasing Power Parity.

Taxes of the 1 Percenters

The only things certain in Life are Death and Taxes. Anyone who earns an income would usually not get to keep all of it. France currently has the most progressive tax rate against the rich with 45% on income well about €156,244. Taxable income for France includes earnings from employment, investments, dividends, bank interest, pensions, and property.

Singapore has a progressive resident tax rate ranging from 0% to 22% on annual net assessable income well above S$320,000.

KPMG, 2018

Expenses of the 1 Percenters

The “Rich” will lead a rich lifestyle, though cost of luxuries and amenities will be relative as well. What you pay for a luxurious bungalow in Singapore might get you slightly above a charming apartment in Monaco.

Knight Frank, Chamness WorldWide (2018)

Half of Singaporeans are the world’s richest 10% – 226,000 among the elite 1%

The term “top 1%” of global income may sound like an exclusive club, but the membership from Singapore alone is 226,000 Singaporeans. Out of the 226,000, there are 207,000 millionaire Singaporeans.

We are constantly being reminded of how prosperous nations like Singapore are compared to the vast majority of the others on the same planet.

Wealth Class divide

The issue is that the sharpest social divide now is based not on race nor religion, but on class – Wealth. Wealth refers to the overall value of a person’s entire assets, including income, disposable cash, investment instruments and property, minus all their debts, such as loans and mortgages.

The Institute of Policy Studies’ (IPS) Study On Social Capital In Singapore had a “revelation” in a 2017 study:

Singaporeans who live in public housing have fewer than one friend who lives in private housing.

Singaporeans who study in elite schools also tend to be less close to those in non-elite schools, and vice versa.

3,000 Singaporeans were interviewed in a first of its kind study on such a scale. Even with equal opportunities, society tend to gravitate or hang out with people “within their class”, which is worrying for Singapore as a whole.

We’ve done a pretty good job in fostering multiculturalism and mixing between ethnic groups, but maybe the next step now is to increase efforts to increase mixing between class groups

The results are apparent enough. The richer are not mixing around with the poorer. The smarter are not mixing around the the lesser.

Forward thinking

Should Singapore continue to be divided by wealth class? Is the low-income class doomed to remain in this class by generations to come? Will middle-income class never be “rich”? Are the high-income siloed in their ivory tower, forever?

Formal Education will make you a Living; Self Education will make you a Fortune.

Possessing a formal education like diploma, degree, masters or even PhD does not mean that he or she is adept in savings & investment as compared to a lesser educated Singaporean.

The case in point is that as long as one makes it a point to be interested and self-read, self-educate or self-motivate, he or she can still possibly amass a fortune amid small, over time. It is not hard nor complicated. With so many financial instruments in the market, study the one(s) that is of your risk appetite and level of interest.

Start small, work and think long term. Let the power of compound interest do the rest. Even for myself, my learning journey was not all that smooth. I had to really read and pick up knowledge, sometimes from my own personal experience. Some recent reads include:

My 21 Cardinal Investment Rules

Why I refuse to fall between the cracks during my retirement

Investing in UOB Gold

Take control of every dollar flow for your Monthly Salary

Maximising my CPF returns while I am young

Would you not start early, while you are young?


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