Inspired by blogger friend Kevin of Turtle Investor, whom I hold high regards of in terms of his personality and his writings, I dug into my annual income tax return recently, and started to tabulate my salary and earnings. Over the years, I have seen many financial bloggers posted their Investment returns, but rarely have I seen anyone post their salary growth and be so transparent about it, except Kevin.
Frankly, I have never posted the actual figures of my portfolio. Likewise in this article, I will not share my actual salary figures and total earnings. Alternatively, I will normalised my first full year salary as 100 percent, and with the rest of the earnings benchmarked against it. You can have your own guess.
There are a few reasons for my lack of total transparency in this blog. First, I am still an employee, and it is a bit sensitive in my position to reveal who I am, publicly. Apologies. That said, I am not totally mysterious as I already met with several of the bloggers over the years. Until the day when I am totally on my own, I will reveal myself. Hope it is not too far away.
Secondly, I am quite cautious to reveal actual figures, not solely because I may be seen as proud or big-headed, but I also do not wish to give the wrong motivation to readers. The motivation should never be material success. Instead, it should be the righteous attitude of self-learning, overcoming difficult times, improving oneself and thereby helping others along the way.
MY ANNUAL INCOME CHART 2004 TO c2020
Above is my gross income chart from 2004 to 2020. Investment dividends and profits/losses realized are excluded. This can be covered in a separate post.
2020 income is an estimate (i.e. c2020). It is included as I am more or less guaranteed of my current job and is confident to achieve the forecast amount.
- Blue bar – Gross annual salary including CPF contributions from both employer and employee
- Orange bar – Extra annual income generated from property(s) rental, giving tuition, writing etc.
- Red line – Total annual income i.e. Addition of salary and extra income.
Normalized to 2004 annual salary
The chart is normalized to 100% of my 2004 annual income. This arbitrarily means,
- If my gross annual income in 2004 is 30K, then my additional income is 0.13 x 30K = 3.9K. And my 2008 total income will be 5.0 x 30K = 150K p.a. And, if my gross annual income in 2004 is 60K, then my additional income is 0.13 x 60K = 7.8K. And my 2008 income will be 5.0 x 50K = 250K p.a.
Exponential growth of salary 2004 to 2010
Year 2004 to 2010 saw exponential growth in my salary of more than 600%. This exemplifies the growth of my human capital in climbing the career ladder. In fact, in less than 5 years since 2004, my salary rose phenomenally by close to 5-folds.
I must admit that the sector boom during this period helps. Yet, it is not entirely luck and timing. Behind every success, there is always an unseen hardwork, sacrifice and perseverance. One sacrifice I made was health deterioration accompanied by ridiculously high workhours. I was hospitalized and it led me to learn about priority in work. In turn, it gave rise to my efficient and balanced time management today.
Sustainability 2010 to 2020
From 2010 to c2020, my per annum total income averages at 615 percent (normalized), while annual salary averages at 547 percent (normalized) in the same period. Income fluctuation is also not excessive. This shows the ability to sustain stable income over a period of more than ten years and not just opportunistic growth. I have seen opportunistic peers, lauded with promotion and pay-rise during boom time, but when the crisis come, they were not spared from the catastrophic crash and firing.
Additional income 2011 to 2020
From 2004 to 2008, my additional income is mainly from private tuition, something I enjoy doing for more than decade. From 2010 onwards, I started to grow my additional income, by acquiring additional property to have rental income. There is also ad-hoc income from professional writing. I also started to invest in stocks to have additional taps of income. This income is not reflected in the chart though. The capital to invest in extra property and stocks is only possible because of the exponential growth of my salary in earlier years. Hence, I will like to emphasize the importance of human capital!
MORE RESILIENCE DURING CRISES
The “transparent grey” boxes depict period of crises, namely 2009-2010 GFC, 2015 Oil Crisis, and 2020 Covid pandemic and Oil crisis. In a short span of my career, I had experienced three of the worst crises in the history of mankind and in the oil and gas segment.
Yet, it is interesting to note from the chart, that I tend to do best during crises, complemented with highest earnings. I learn that one important ingredient to be resilient during crisis, is to be very conscientiousness before the crisis or during the good times. This is something that many people fail to realise. In the Bible, Joseph save the entire country of Egypt, by imparting God’s wisdom during their best harvest year, advising the people not to over-spend but to save for one of the worst crises ahead, seven years later.
FACTORS CONTRIBUTING TO INCOME GROWTH
There are a few important reasons on my income trend.
Focus on Human Capital
I wasn’t a financial blogger or stock fanatics back from 2004 to 2010. It allows me to have full dedication to build my human capital in my career without any distraction, thereby growing my salary. During this period, I also traveled around the world for work and gain invaluable experience and friendships that money cannot buy.
While it is good to be financial savvy as early as possible, it is also important not to over-dedicate your early career years into earning extra ad-hoc income, neglecting the building of your human capital for career or for your own business.
You can do the math. Is quickly growing your monthly salary 5-6 or more folds and keep it sustained, a faster way towards financial freedom or just waiting for your dividends to compile, when you have so little to start with?
The lesser you have, the more you accomplish
Both myself and wife have zero family financial support since the nineties. In fact, it is the other way around where we have to support our parents. Even our poorest friends’ parents we know, will at least have a small HDB to divide among them and their siblings. Or they will have at least parents’ CPF to help them in their studies. We have no parental support, not in the past, present, nor in the future. When we have nothing, there is a larger impetus to strive harder. It is the theory of the opposite! The lesser the provision, the more we accomplish! The more we are being provided for, the lesser we work and earn.
The more you give, the more you have
My father and my most respected auntie are both very poor financially. However, the type of people they hated most, when they were still alive, are those who are very “niao” (or stingy), saving on themselves at the expense of others. This is something I remember vividly and always remind myself to be generous to those in need. When my financial ability become stronger, a part of my income will always be giving away to the needy.
The explosive income growth during the early part of my career does give me an extra edge, in my financial management effectiveness today. Nonetheless, the importance of it, is not just the money earned, but the knowledge and experiences gained, and the friendships developed, which can translate to long term sustainable wealth.
In the last decade, while the ability to maintain my income level is a good thing, on the hindsight, there is limited growth in my salary. This is probably due to my distributed focus in growing and managing my family, as well as time devoted in my own portfolio investment outside office hours. I hope to change this in the next decade, as I look to grow my total income with a steeper positive gradient.
There are times when I feel that, the more we manage to grow our investment portfolio or dividend income, the more it will impede our salary or career growth and limit our human capital. Somehow, there may exist a hidden arrogance in our work attitude. We will probably look at our boss and think, “I do not need this job anyway. I am rich and have a big enough investment portfolio, and will retire very soon”.
This type of self-aggrandizing attitude will not carry us far in life. It is those who can overcome crises or work-related problems “even when they have a choice” who are really going to excel in life.
While I am an advocate of financial literacy at early age, I also urge all readers (including my own children) and those who are newer in the workforce, to also consider spending more time to invest in your human capital. In the early years of our career, it is better to focus on learning to increase our knowledge and expertise as well as to build our soft skills, that includes good interpersonal, communication and presentation skills, and the ability to develop good relationships even with the most difficult people.
Also, unless you only want to serve the small local market only, it is better to have a job that can give us as much exposure as we can, in a regional or even global level. The regional experiences and interactions with foreigners understanding their countries’ cultures, can broaden our mindset and expand our horizon. These attributes will definitely be useful in the later stages of our life.