How a taxi driver got richer than a doctor by age 50
There once lived 2 people in sunny Singapore.
(Actually it’s roughly 6 million but for the purposes of this story, let’s just focus on these 2)
One didn’t study hard and get good grades blah blah blah and ended up a taxi driver.
The other one studied hard, got good grades, became a leader of his track and field team, was well loved by everyone and went to medical school.
Alas he misses his scholarship opportunity during the interview because those things are super competitive, and has to pay the entire thing out of his pocket. More specifically, his parents’ pocket. Or maybe the bank’s pocket. Same difference.
Let’s call taxi driver… what’s a taxi driver sounding name… hmm
Wang Teng Hock
Let’s call doctor-to-be… what’s a doctor-to-be sounding name… hmm
Just kidding. Let’s call him Michael.
Wang Teng Hock and Michael are both 21 years old and are about to embark on very divergent life paths, both financially and emotionally. Because emotions are hard to quantify (actually it’s outright impossible), we shall be focusing on the financial aspect. Also because it’s a finance blog.
Let us then assume that Wang Teng Hock drives Grab religiously for the rest of his life. He lives and breathes Grab. The familiar scent of leather seats becomes his perfume. His car is always clean and has cute satchels of scented gels hanging on the seats. He even adds in some cute neon lights for good measure.
He becomes a Singapore DarrenLevyOfficial https://www.youtube.com/c/DarrenLevyOfficial
You can thank me later guys.
Teng Hock ends up making a decent living for himself. Across the next 7 years, he earns $4,000/mo nett ($48,000/yr) from driving Grab and lives with his parents in Yishun like the cheapo Singaporean he is.
Why move out when you can save on rent and cap your spendings at $1000/mo, right?
This strategic lack of ambition allows him to save $3000/mo, or $36,000 per year.
Across the next 7 years, he would have effectively racked up $36,000 x 7 = $252,000 in savings.
However, like the smart man he is, he decides that bank interest rates aren’t good enough for him and for once in his life decides to do better.
Screw saving, he thinks.
He promptly begins investing the excess $36,000 every year till age 50.
Meanwhile in Somerset, on the other side of the world…
Michael heads over to NTU to settle his matriculation into medical school, driving his parents’ 1984 Cadillac like the baller he is.
Michael begins his long, arduous, emotionally rewarding journey through medical school denoted by nice Instagram photos of him partying and having fun with his friends. He maintains a balance, though, and always makes sure he has put in sufficient effort for his studies.
6 years later, he has racked up $205,200 in student loan debt according to Yahoo https://sg.news.yahoo.com/much-does-cost-study-worlds-203703406.html , has yet to make any money, BUT he now is able to qualify as a general practitioner and earns $100,000 per year.
He now has a prestigious high paying job which his relatives will use, very much against his will, to torment their children into feeling not good enough during Chinese New Year. But not all is bad. He is now able to cure the sick, give aspiring truant school kids MCs and charm the neighbourhood’s housewives with his great bedside manner.
Going back to our lacklustre Teng Hock, he can be seen smiling as he scratches his butt and picks his nose on the way to the bank to collect his dividend check, which he smartly re-invests.
“Why spend money when I don’t have much I want to do?”, he thinks.
He walks off into the sunset, playing Mobile Legends while raging in Chinese “猪队友，神对手！！！”
Classic Teng Hock.
Let’s see where their finances are when they are both at 50 years of age.
Having had head start in investing, at an 8% annualised rate of return, his projected returns are as such:
By the age of 50, his net worth has reached $4,042,195.60 as a TAXI DRIVER because of ONE calculated decision to invest early at the age of 21.
Having went through medical school for 6 years, he now has a $205,200 student loan to pay off. He spends the next year in post-graduate training, reading blogs such as these https://www.geraldtan.com/premed/life_cycle.html and lamenting about life before officially settling down as a General Practitioner.
He is now 28 years old and ready to start the journey of GIRO payments that will clear his debt and set him free. Let’s assume our baller med school student Michael, after spending the last 7 years surviving off the 2 main student food groups, 1) instant noodles and 2) whatever is in your cupboard on toast, has learnt the value of money.
He is still cool, just that instead of being a cool baller, he is now a cool cheapo baller. He decides to live with his parents in their multi-storey Somerset bungalow on $1,000/mo and use the rest to clear off his debt. Due to bank interest rates kicking in, he takes 3 years to fully pay off his student loan debt of $205,200.
Michael is now a 31 year old man. Reflecting upon his life, he realises that he only just broke even at 31 and even went through an instant noodle diet/cupboard remnants on toast phase. He realises that he can’t depend on his parents financially forever either so he decides that he’s gonna grow his own money. Good Michael.
Total Income: $100,000
Yearly expenses: $12,000
Yearly investments: $88,000
He invests till 50 in a bunch of assets in a solid, well diversified investment portfolio. Unbeknownst to both our taxi driver and charming neighbourhood doctor, they are invested in the exact same assets. By the age of 50, his portfolio…
…tragically falls short of our dear Teng Hock.
Teng Hock’s portfolio: $4,042,195.60
Michael’s portfolio: $3,939,052.86
Net difference: $103,142.74 in favour of our taxi driver
How did this happen?
The answer is simple. Compound interest.
According to Einstein (or at least according to what the internet thinks Einstein said)…
Now I have no idea if Einstein actually did say that, but because I like his face I’m just gonna leave it there for you guys.
Dramatic language aside, compound interest is pretty sick.
Our taxi driver invested only $36,000 a year, whereas our doctor invested $88,000 a year.
Because of the 10 year head start Teng Hock had, he is now able to ward off criticisms of nosy aunties during Chinese New Year. Whenever they begin comparing him to his other more successful cousins and siblings, he just remembers his bank account balance and laughs silently whilst stuffing his face with popiah.
His nephews and nieces love him because he is always able to give the biggest, fattest angpaos despite being a taxi driver because he planned ahead and took decisive action. He is their favourite uncle because he has spent his life doing what he wants rather than living someone else’s narrative.
Michael, on the other hand, had a good run in life too. However he:
1. Slogged way more to get through school. He had to study an extra 6-7 years before he could even start work
2. He had to spend an additional 3 years clearing off student loan debt
3. Ended up with less money than Teng Hock at the same age despite having higher social standing and earning power
Moreover, in case you guys haven’t realised, C-suite executives / Specialists like our dear Michael in general do not save this much and are much more complacent in their finances due to their high earning and spending power.
Do you think a taxi driver earning $4000/mo or a doctor earning $10,000/mo is more likely to be conscious of tracking their finances and spending habits?
Obviously, if you have less, you have a much greater impetus to take action to improve your finances than someone who has more. You are much more likely to actually want to improve your financial circumstances simply out of necessity.
Regardless of whether your current financial circumstances are closer to the Teng Hock or Michael end of the spectrum, taking advantage of compound interest early is never a bad thing.
In my capacity as a content creator and investment specialist, I’m open to discuss your options to see how we can prevent a Michael scenario from happening in your life.
If you have read this far, you are the type of people I love working with.
DM me the code “TAXI”and we can start your investment journey together.