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How Long Will It Take To Become A Millionaire If You Have A $4,000 Salary?

Create a habit of saving and investing as much as you can.

According to the Ministry of Manpower, the median monthly income from work (including employer CPF contributions) in 2016 is $4,056.

However, with up to 37% of our monthly income going into our CPF, it leaves us with a smaller portion of our salary available for us to spend, save and invest. With the median income of about $4,000 salary (as reported as the median income salary in the link above), your take home pay would actually be less than $2,800 every month after deducting your employer’s CPF contributions (17%) and your own CPF contributions (20%).

With less than $2,800, we have to pay for our bills, contribution to our parents, paying off loans and other expenses. This leaves us with lesser money available to set aside for saving and investing. However, how much we can save each month varies from individual to individual. Some of us might be able to save 50% of that $2,800 as we have lesser commitments while others may struggle to save just 10%.

Investing Your Savings

Putting a fixed sum every month into a Monthly Investment Plan is one of the easiest ways we can start investing our money with minimal effort. Monthly Investment Plans focus on dollar-cost-averaging and help you purchase stocks of your choice each month.

Putting some of the money we saved into Monthly Investment Plans allow us to invest without having to time the market to buy stocks at the right time. Some of us also do not have the capital to purchase the more expensive stocks. Monthly Investment Plans allow us to invest in many of the bluechip companies with as little as $100 a month.

Read Also: Why Average Singaporeans Should Buy The STI ETF As Their First Stock

We look at 3 scenarios where 3 different amounts are set aside each month into a Monthly Investment Plan (also known as Regular Savings Plan) offered by our local banks.

For the purpose of our comparison, we take investing in the STI ETF using a Monthly Investment Plan (MIP). We also assume annual returns of 5% (with dividends reinvested) and starting with no prior savings. To keep it simple, we exclude transaction cost for our calculation.

Person #1: Puts $400 a month into MIP ($4,800 a year)

Person #2: Puts $800 a month into MIP ($9,600 a year)

Person #3: Puts $1,200 a month into MIP ($14,400 a year)

With time, the effects of compounding are more prominent. Of course, it would be difficult to save up a sum like $1,200 every month when you are just entering the workforce. However, investing part of your salary early on in your career, regardless of how little the amount is, would help you achieve financial freedom sooner than your peers.

Read Also: Singapore Is One Of The Richest Countries In The World – Are Singaporeans Really That Rich?

Don’t Forget Your CPF Savings Account (CPF-SA)

What can also be included in your long-term calculations should also be the funds in your CPF-SA, which can be used, in old-age and retirement-related financial products. The interest rate for your CPF-SA is 4% with an additional 1% interest for the first $60,000 across all accounts.

Your CPF-SA has a higher interest rate than your CPF Ordinary Account (CPF-OA) interest rate, which earns up to 3.5%. Some people transfer money from their CPF-OA to their CPF-SA to enjoy the higher interest rates. However, this would come at the expense of having less money in your CPF-OA, which can otherwise be used for housing, investment, insurance and education.

Read Also: 5 Things You Need To Know About Cpf When You First Start Working



Don't Time the Market - Invest regularly with's ETF RSP feature. Investors can now apply for Regular Savings Plan (RSP) on a selected list of 40 ETFs listed on SGX, HKEX and US stock exchanges. Use Dollar Cost Averaging to help you take small but steady steps towards building a diversified portfolio.