By Mr. Propwise

A reader recently wrote in to share his story of how he achieved semi-retirement at the young age of 44. He no longer needs to work for active income, and now spends his time consulting for technology startups and ferrying his three teenage kids to their swimming, running and shot put training and competitions.

How did he do it? He diligently followed a plan for 20 years to invest and fully pay off his housing mortgage and car loan. Here is the plan he followed (I’ve taken the liberty to add in some of my own thoughts on his strategy in italics):

Step #1: Consistently buying Blue Chip stocks over 20 years despite the ups and downs of the market

Mr. Propwise: Equities has been one of the best performing asset classes over the long term. The key, though, is not being swept up by waves of greed to buy at the market top, and then panicking and selling out at the market bottoms. Mass hysteria compels the majority of investors to do exactly that, which will hurt your long term returns.

One way to overcome this is to do what our smart reader has done – ignore the market cycles and just buy quality stocks through market ups and downs. This is akin to an investing strategy known as Dollar Cost Averaging, which involves buying a fixed dollar amount into the market at regular intervals – you will end up owning more during market bottoms and less during market tops.

One final consideration is perhaps buying an Index ETF (Exchange Traded Fund) instead of individual stocks if you are not confident in your stock-picking. This will help to diversify your stock-specific risk. You might also want to diversify country risk by buying a regional or even global ETF.

Step #2: Fully paid up his HDB flat and then rented it out for extra income

Mr. Propwise: HDB flats are how the majority of Singaporeans and PRs come to own their first home. Historically, they’ve been fairly affordable and a typical working couple who progress in their careers can aspire to pay down the entire mortgage in perhaps 10 to 20 years.

HDB flats also tend to be one of the highest yielding properties you can own given the fairly resilient rentals.

Step #3: Finally moved to a condo and then fully paid down the mortgage.

Mr. Propwise: If you’ve the financial means to, buying a second property will turn you into a bona fide property investor. When you’ve fully paid off both properties, you now have an investment property that is giving you an extra income from the monthly rental. This is a key retirement strategy – creating streams of additional (not necessarily passive) income for yourself beyond your job, and then gradually making your way to Financial Freedom when your additional income supersedes your expenses.

A variation of this strategy is to keep the mortgages on your property (as home loans are likely to be one of the cheapest loans you will ever get), and then invest this into high yielding assets such as dividend stocks. This will help to maximize your return, but could lead to increased anxiety as whatever assets you buy (e.g. stocks) could experience a lot of volatility.

Of course, skill and luck had a part to play as well. Our wise reader had worked for a listed Tech company in the United States, climbed the corporate ladder to a fairly senior position, and had received stock compensation that performed well.

But by achieving financial freedom at a relatively young age, our kindhearted reader has also not forgotten the less fortunate – in addition to spending his time on his consulting projects and kids, he also serves breakfast to one-room HDB dwellers in Punggol, and together with a group of friends gives stationery and bicycles to poor kids in Cambodia twice a year.

He hopes that by sharing his story it will inspire others (especially the younger readers) to start their saving and investing journey – with lots of discipline and a bit of luck you too can semi-retire and spend your time on activities you find worthwhile.

Do you know of others with an inspiring story to share? Do let me know at and I’ll be happy to profile them.

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