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Having a high savings rate right early on

The day I received my first paycheck was memorable.  At 23, I remember feeling I was financially independent, and I didn’t need to spend my parents money anymore.  So I spent about 80% of my salary for the first 3 years, enjoying food, drinks, partying, whatever the Singapore food scene and nightlife had to offer.  A 20% savings rate is alright, but looking back I could’ve gotten by with 50%.

That would have given me an extra 30% boost in savable cash, to use for blue chip dividend investments.

Below is a simple expense/savings chart, of someone who commutes to work regularly, and does not pay rent (lives at home, but contributes to utilities).

The difference is very glaring.  If both scenarios invest in the same 4% bond or dividend stock at the end of Year 3, the results after 12 years with interest reinvested is as follows.

About $28k of extra interest gained, due to a high savings rate in the first 3 years. Enough said.

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