Aaaaaaaaand end scene!

Happy New Year everyone!

As 2024 comes to a close, it’s again time for me to review my investment performance, pen down my thoughts about the year and also reflect on where I am going from here on my journey towards FIRE.

However, first and foremost, 2024 is without a doubt the best year of investment returns for me so far.

This has certainly been an interesting year to say the least. Again, like last year (especially after last year’s monster S&P 500 performance), most people did not expected this year’s spectacular market performance.

After the stock market hit all time highs again at the end of 2023, people were wondering what 2024 will bring – especially since it would be an election year in the U.S. However, driven by the AI boom, the victory over inflation in the U.S., the strong U.S. economy, the Fed interest rate cut, and the election of Donald Trump all fueled the massive stock market growth.

Luckily I’ve stayed the course, both with consistent contribution as well as a continued leverage position (with a decent safety margin.)

At the same time, this has also been a year in which I’ve switched my portfolio more towards diversification than ever before – removing some of my concentrated bets.

Why? Well, we’ll get to that, but first!

Some life updates and year end reflections

Moved into a new home

We moved into a new larger home at the start of this year in preparation for our growing family. While this has definitely increased our monthly expenses by quite a bit (~S$7,200 / month vs previously about ~S$2500 / month) and affected our savings rate – this was well planned for and has been amazing from a lifestyle perspective.

This has been a good reminder for me that there are choices that we make for lifestyle reasons rather than it being an optimal financial decision.

While yes the new home will mean I have to increase our FIRE number to cover the added expense (and thus push out our FIRE date quite significantly) the new home brings way more lifestyle benefits than our previous home.

So for those considering to make a purchase of a new home – but are hessitating due to the financial considerations – here are some of the non-financial considerations that were way more important for us:

1. This is way nearer to my parents in-law – so they’ve been able to come visit our new baby and help look after him from time to time when we needed help.
2. This location is nearer to the schools that we’d want him to attend in the future – just a walking distance so that he won’t have to wake up too early and will be able to easily go to and from school on his own at some point.
3. There is MRT, shopping malls, supermarket, clinic, and hawker centers near by to satisfy all our daily needs and commute to our office.
4. It’s very accessible to both KKH as well as the hospital we were going to deliver our baby – making any medical emergencies or if our baby needed care quite convenient – which is very important.
5. The condo is old but spacious – it has enough space to comfortably accommodate our new baby, any visiting family members, our confinement nanny, and eventually a domestic helper. This much space is certainly a luxury in Singapore.

Note that I never mentioned “investment potential” in here. While it would be a nice bonus that our home will go up in value – it is not a primary consideration… it’s not even in the top 5 reasons.

Welcomed our first baby

Our biggest life moment this year, hands down, no contest!

Welcoming our first son has been an amazing experience – it’s the first time I truly felt I’m 100% completely responsible for the well-being of another person… it has been extremely rewarding to see every little milestone that he has achieved.

Again, this is another family decision that Mrs. FIRE-Path Lion and I made despite the negative financial impact and the fact that it would certainly push our FIRE date out several years.

How we’ve planned for this so far is that for each child, we’re adding an additional S$2,000 in expenses per month that we would need to be able to absorb – split equally this means S$1,000 per month per child added to each of our FIRE number.

I’m being told that this is potentially not enough since the sky’s the limit with spending on children – and I think I agree… seeing how expensive early childhood education and childcare can be. However, we’re using this number for now 😅 and we’ll increase it later once the actual expenses start coming.

So far baby expenses are more one-off purchases rather than permanent cost increase – so we haven’t had real-world numbers yet. We’re still taking care of him at home and will only look to childcare likely when he turns 18 months old. That will likely be when we will know how much we’ll be spending.

Thoughts on lifestyle inflation

This year has been eye opening from a lifestyle inflation standpoint.

When I was growing up my family was not well-to-do and often did not have very nice things. We only ever had 1 bedroom for our entire family of 4 so I grew up sleeping in the same room with my sibling and parents up till I went off to college.

To me that was quite normal as that’s all I’ve really ever known. I’ve also learned to be very frugal with my allowances as if I wanted something, I will often have to save for it myself from my own allowance.

During university, as I was studying in Singapore as a foreign student, everything was expensive when I convert SGD back into my home currency. So I was very conscious with my spending.

Therefore I’ve grown up to be rather low maintenance and was able to be quite content with very little. When I started my first job at S$2,000 per month, that was enough for me to be reasonably happy. When I started earning S$4,000 a month, I felt I had way more money than I knew what to do with. At that time I thought earning S$10,000 was like having infinite money.

Thus when I started investing in 2016 and when I first discovered the concept of FIRE, I felt having S$5,000 in monthly income was way more than enough to live well and very comfortably. Oh how times have changed.

Fast-forward to today, it’s funny to see how easy it is for lifestyle inflation to creep up on you. We all believe we’d never change, but can’t foresee the lifestyle decisions that we’d want to make in the future.

It’s easy to get used to new creature comforts and me at 25 can tolerate a lot more discomfort than me at 40. I used to be willing to rough it out when I’m traveling, but now I’d need at least a nice AirBnB or a 4 star hotel.

I once thought that I’d bring up my kids the same way I was brought up, no need for much enrichment nor tuition, no need to travel or take overseas vacation – but once I’m faced with my son, it’s hard to resist the temptation to give him the world.

Not sure what message I’m trying to say here, but giving some context to my increased FIRE number and to appreciate that I am fortunate enough to be in a position to push up my FIRE number without it impacting my FIRE date too drastically.

While I’m OK with the current increases, this also reminds me that I need to be more careful about spending on creature comforts – once you experience an upgrade… it’s really hard to go back. Something that I didn’t use to care for can quickly become something I can’t live without – so better not experience it in the first place.

On the flip side, money is just a resource but the most valuable resource we all have in limited supply is time – so it’s very important to also be conscious of spending too much time to save money. Once you have a certain amount of money, the best way to spend that money is to spend it to save you time – so it’s important to balance between paying for time-saving services (like cleaning service, childcare, taking grab everywhere) and the ultimate money-for-time trade – being completely financially free.

The more I spend on the luxuries of time-saving services – the longer it would take me to get to FIRE – so there’s a balance to be struck here.

Anyway! With all the life reflections out of the way, let’s take a look at how my investments performed!

How I invested in 2024

In summary, here are the significant investment decisions that I made in 2024 in chronological order:

1. Fully deployed my annual bonus as soon as I received it – this should be self-explanatory.
2. Added leverage to maintain my leverage ratio to at least 1.5x – I had to do this several times as the market continued to increase bringing my ratio down unless I added more leverage.
3. Sold out of all my AAPL (Apple) shares and swap it for CSPX (S&P 500) after it jumped after Apple Intelligence announcement.
4. Sold out of QQQ in November to switch it for CSPX to diversify after the market jumped after Trump’s election win.
5. Sold out of CSPX in December to switch it for VWRA to reduce U.S. concentration now that the Shiller P/E ratio for the S&P 500 is one of the highest it’s ever been since the Dot Com boom and the 2021 post-Covid bubble.

As a result of all of the above moves, I am now ending the year with a significantly paired down portfolio with just IWDA, VWRA, and Amundi Index MSCI World Fund (CPF & SRS.)

Let me expand a bit more about some of the investment decisions I made above – and also how it has panned out since I’ve made those decisions.

Swapped AAPL for CSPX – 27 Jun 2024

Size of the position at the time of the switch: S$190,800 (5% of overall portfolio at the time)

My thoughts at the time

I decided to switch out of Apple for S&P 500 after Apple jumped from below USD 200 (where it’s been hovering back and forth for some time) to above USD 210 after the Apple Intelligence announcement.

Given the lackluster reception of Apple Vision Pro as well as the fact that Apple has finally made a significant move, I thought it was unlikely to make any further huge moves in the future. So I took the opportunity to sell at the high (I thought), and switched to S&P 500 which is more diversified and has been doing better than Apple itself did in the past 2 years.

At the same time, since I’ve been using leverage, I felt it was better to move towards a more diversified portfolio and it was a good time to shift my only stock pick towards S&P 500 for more diversity (but still have a focus on the U.S. for higher growth.)

Result

As you can see, this did not work out in my favor 🤣 (at least so far) while the S&P500 didn’t do badly – it has gone up more than 8% since the swap after all – Apple has done tremendously better!

This attempt at timing has failed from an outcome perspective. However I think the thesis of the switch is still sound.

At the same time, this is the result in the last 6 months, which is not really a good gauge for how this decision would do in the long term. I do believe this will mean my portfolio will be less volatile which is a good thing given I’m employing leverage rather aggressively.

Swapped QQQ for CSPX – 29 Nov 2024

Size of the position at the time of the switch: S$160,600 (4% of overall portfolio at the time)

My thoughts at the time

This is more recent, but QQQ has gone up more than 24% YTD at this point, and more recently it has jumped after Trump won the election. There is a sense that the U.S. market is over valued given the run-up during the year and could face slower growth or a correction in the future.

With Donald Trump taking the office, there’s also uncertainty around what he’ll be able to enact and whether that’s going to be good or bad for the market. So I was leaning towards more diversity – again given my heavy use of leverage – more diversity and stability is probably better than less. Since the Mag 7 are the major components of both QQQ and S&P 500 anyway, switching from QQQ to S&P 500 will still give me exposure to the top tech stocks to benefit from their growth but with lower volatility – so I made the switch.

Results

I think it’s a bit too soon to look at the results only after 1 month. However, just for fun, here’s how that’s panned out just 1 month after the switch.

Again so far the outcome of this switch has not been good if we only look at performance! Of course it’s rather useless to look at this over just 1 month, but it’s interesting nontheless.

Basically all of my active moves has turned out worse for me so far (and similarly so in the past as well.) But such is the peril of trying to time the market!

And now for the last swap of the year…

Swapped CSPX for VWRA – 9 Dec 2024

Size of the position at the time of the switch: ~S$460,000 (11.45% of overall portfolio at the time)

My thoughts at the time

As the stock market has been in the incline since late 2022, it’s been about 2 years worth of massive growth of the S&P500. This has resulted in the S&P500 reaching a cyclically adjusted price-to-earnings ratio (aka CAPE or Shiller PE ratio) of 37.49 – the highest it’s ever been since the Dot Com bubble and the post-Covid bubble at the end of 2021.

The CAPE ratio is a valuation measure that uses real earnings per share (EPS) over a 10-year period to smooth out fluctuations in corporate profits that occur over different periods of a business cycle.

Investopedia (CAPE Ratio (Shiller P/E Ratio): Definition, Formula, Uses, and Example)

It is often used to determine whether the stock market is overvalued or undervalued compared to other times in the past. And in the past, when the Shiller PE has reached this level, there’s often a correction or a crash that follows.

Just one caveat, the above chart only represents the Shiller PE of the S&P500 or the U.S. market.

So given this, it seems that valuation could be reaching an all-time-high for U.S. stocks – and I felt that it would be a good time (again) to add more diversity to reduce U.S. concentration.

I came to this conclusion after watching some well-researched videos on the topic of valuations and expected stock returns by Ben Felix:

Plus (again) given my relatively heavy use of leverage, I find that it would be better to shift away from concentration and favor more diversity to reduce volatility. Thus given the high U.S. stock valuation, it seemed like a good time to add more international exposure where valuations are lower.

I also had the option of paying down my leverage position instead of switching to VWRA – this way I will reduce my leverage risk and potentially have dry powder to take advantage of market downturns in the future. However, I don’t believe I can predict the future. While a crash is inevitable, I will not be able to predict when it would happen. Even with the current high valuation, it is not useful for timing or predicting a market crash.

Therefore I can only look at this decision based on expected future returns – and I still believe the expected returns of global equities are still higher than the current interest rate for my leverage – so it’s still worth holding stocks instead of paying down my leverage to wait for a market down turn.

Results

Given this move has been made within the last month, it’s not useful to look at performance comparison here. We’ll likely revisit this decision in the coming years to see if this decision turned out well for me.

So where does this leave me at the end of 2024?

So with the switch away from concentration towards more diversification, here’s what my portfolio allocation looks like now at the end of 2024:

The portfolio is now completely made up of global index funds (except the tiny sliver of ETH at 0.35% of overall portfolio just for fun.) My holdings are still tilted towards developed markets due to my continued holding of IWDA and Amundi MSCI World Index – but I’m fine with this.

Total Contributions

In terms of source of contributions of funds for the year, in total I’ve injected a total of ~S$764,000 for the year with the below breakdown:

Here’s the chart representation:

Cash

All cash investments went into VWRA during the year whenever I had spare cash – as per usual.

SRS & CPF

As usual, I’ve maxed out my SRS and CPF OA contributions during the year and everything has been placed into Amundi MSCI World Index fund via Endowus as soon as the funds were available within those accounts.

Now that Amundi MSCI World Index is also available for cheaper via POEMs, I’m still considering whether to go through the hassle of moving my holdings over.

At the moment the total investments on Endowus is hovering around S$385,000 – and at 0.3% Endowus platform fee, that works out to an extra cost of about SGD S$1,155+ per year compared to POEMs… so it could be worth switching over.

Leverage

Leverage contributions has gone into CSPX during the year, but has all swapped over to VWRA as mentioned earlier by the end of the year. At the time of deployments, the U.S. market seems to still have room to run as rate cuts has yet to be announced and U.S. election has yet to take place.

I also try to deploy leverage only on down days rather than averaging in when the market is on a run up – this is one benefit of using direct leverage myself instead of using a leveraged ETF – I get to control when to make buys rather than being forced to buy when the market goes up.

Portfolio Performance

Now to the exciting part, how has the portfolio performed this year? Let’s take a look.

Overall Investment Portfolio Value vs Capital Injection (Cost)

This is the breakdown in terms of market gains vs contribution:

Here’s the data in table form:

Summary and thoughts:

1. The portfolio started this year at S$1,760,804.12 on 1-Jan-2024 and ended the year at S$2,603,157.18 on 31-Dec-2024, a total increase of S$842,353.06 or 47.8%.
2. This was a result of S$202,681.64 in capital injection and S$639,671.42 of market gain.
3. The portfolio grew by 36.3% from market gains alone.
4. Market gains was more than 3x larger than my own capital contribution from working at my day job – basically my money worked 3x harder than I did this year.
5. The portfolio grew from market gains this year more than what I accumulated over the first 5 years of investing.
6. The portfolio increased this year almost the same amount as last year, but contributions was S$360,000 lower than last year.

This is the kind of performance that really help me see the power of compounded returns. It’s the year where my money worked way harder for me than I did for myself – and I hope that I’ve hit a tipping point in which this fact will continue. From now on, I hope my portfolio works way harder for me than I can for myself 😆

Of course, this was not done with cash alone, as long-time readers will know, I’ve also employ a pretty hefty dose of leverage to my investment portfolio to try to juice returns.

So let’s see how that contributed to my returns.

If we include leverage

Obligatory Warning: Using leverage for investing is extremely risky and can wipe out your portfolio if you do not know what you are doing. This post is not intended to be a recommendation for anyone to use leverage. If you are considering to use leverage, ensure you are fully informed about the risks and have a clear plan before jumping in.

On this note, I only use leverage for my own portion of the investment portfolios. While I also invest for my wife, her portfolio is invested in similar global index but is leverage-free (and is thus lower risk.)

Background

For those who wish to read the background on my leverage investing (why I started, the thought process behind it, and some updates on how it’s going) you can read these sections on my previous posts:

1. The Risky Investment Experiment – Leverage & Lifecycle Investing Strategy
2. H12023 Update – Lifecycle Investing Update
3. 2023 Year End Update – Leverage

But basically with leverage, you are multiplying your gains and also losses – at the cost of borrowing the funds (the interest rate.)

If I expect the returns of the investments is higher than the cost of borrowing and that I can hold the investment and the leverage over the long term without getting margin called, then I will be able to make the difference.

For more on both the power and dangers of leverage, this is a good video by Ben Felix on the subject:

Anyway, here’s what my portfolio looks like when we add in the leverage:

Summary for the view with leverage:

1. I had gradually increased my leverage contribution throughout the year – as seen by following the yellow line. I kept added on leverage as the market increased.
2. The collateral value (orange line) represents the amount I have pledged as collateral for the leverage to allow me to borrow funds against it. It is not the same as the portfolio value as the investments inside CPF and SRS cannot be put up as collateral for the leverage loan.
3. The margin call line (green line) is where I need to keep the collateral value line above – or else I get margin called 😱 – At the moment I have about 50% buffer, which means that I can withstand a 50% market correction without getting margin called.
4. I try to keep my margin call line at about 50% of the ATH (all-time-high) value of my portfolio – as that means it should be able to withstand a 50% drop from ATH.
5. Thus as new ATH is reached, the margin call line can increase, and so can my leveraged position.
6. As the market increased and I continued to invest and add to my leverage positions, the total portfolio value, including leverage, grew from S$2,605,000 at the beginning of the year to currently sitting at around S$4,010,000. An increase of 54%.
7. From just the leverage position perspective, the total outstanding leverage amount grew from around S$846,000 at the beginning of the year to roughly S$1,408,000 now. An increase of 66.4%.
8. This presents a pretty scary picture on the downside… which is why leverage is really not for the feint of heart. The current net portfolio value is roughly S$2,603,000 after deducting but if the market drops 50% from here, the net value of the portfolio will only sit at roughly S$597,000 – just slightly more than 22% of the current net value!
9. I’m going to have to be ready to stomach this level of downside without flinching (and selling out) if I’m looking to continue this leveraged approach.
10. Of course, if the bull market continues, the 1.5x leverage ratio will give me 1.5x the market’s returns.

Due to the power of leverage in a bull market, the portfolio experienced massive gains during the year. Let’s take a look.

Let’s take a look at the gains

1. I started the year with total gains at $424,739.53 on 1-Jan-2024 and ended the year at $$1,072,987.01 on 31-Dec-2024, more than double in just 1 year.
2. This means I made more market gains this year than I had in the last 8 years – insane.

So how has this impacted the rate of returns for the portfolio?

Internal Rate of Return

In terms of XIRR over the last 8.5 years of investing, I’m hovering at 17.68% as of 31-Dec-2024, up from 11.89% on 1-Jan-2024, a huge increase due to the outsized performance this year.

If we look at this year alone, for 2024, if I assume I had bought all my holdings at the start of the year, continued to invest throughout this year, and then sold everything on 31-Dec-2024 the XIRR for this year would be 36.40% – even higher than that of last year (35.56%.)

Needless to say, the past 2 years have been amazing for stock returns.

Distribution (Probability) of Returns

Now, just for fun, let’s take a look at my daily returns distribution over the last 8 years, if I plot it as a histogram, this is what it would look like:

My Average XIRR on any given day is now sitting at 12.60% with a standard deviation of 6.22%. This distribution has shifted towards the right hand side over the course of last year – skewing the probability of positive returns higher for any given investing day.

Here’s another way to chart out the distribution of returns, as cumulative probability up to 100%:

To read this chart, the Y-axis cumulative percentage represents the percentile, and the X-axis is the rate of return. So some information we can get out of this chart is… Out of the 3,062 total investing days:

1. 50% of days, my annual returns are below 12.5% and 50% of days my annual returns are above 12.5%.
2. Only 3.5% of the investing days have my annual returns at 0% p.a. or below.
3. Conversely, on 96.5% of days my annual returns have been positive.
4. 8.23% of days have annual returns below 4% and 91.77% of days have annual returns above 4%. So my portfolio has beaten CPF SA on more than 91% of investing days.
5. 75% of investing days have annual returns higher than 8% p.a.
6. Conversely only 25% of investing days have annual returns below 8%.

Overall this has given me a lot of confidence that over the long term, with my investment approach, returns will have the tendency to be positive – and if for some reason the market tanks and drops my total returns, they tend to be short-lived and only make up a much lower percentage of investing days. In fact days with per annum returns lower than 8% only made up 25% of investing days so far.

So if I see days where my portfolio returns drop below my average returns, those are the times to load up as much as possible as it is likely that stocks are on sale – knowing that it won’t likely stay low for long.

Net Worth Review

Now comes to my net worth:

1. I started the year with a net worth of about S$2,240,000 and ended the year at about S$3,187,800 – an increase of S$947,800 or about 42.31%.
2. While my new home has appreciated in value, it has got nothing on the equities portfolio appreciation.
3. It was just the middle of last year when I crossed the S$2 million net worth mark, and now a year and a half later, I’m above S$3 million.
4. The 1st million net worth took 6 years for me to achieve.
5. The 2nd million took 2.5 years.
6. The 3rd million took just under 1.5 years.

As they say, the first million is the hardest, and the subsequent millions come quicker.

That’s the magic of compounding – and why investing as early as possible, as much as possible, and as consistently as possible is extremely important. Get your money working for you as quickly as possible.

If you’re wondering whether you should start investing, this should be a very clear answer!

FIRE Goal Progress

Just as a reminder, as part of last year’s post, I’ve doubled my FIRE target (both due to lifestyle creep and the fact that I reached my original goal much sooner than expected.) My current target retirement income is sitting at S$10,000 in passive income per month at 3.25% Safe Withdrawal Rate – which works out to a FIRE number of ~S$3,692,000.

Based on the above chart, here are the summary of the important points:

1. The conservative projection (red dotted line) is predicting that I will reach my FIRE number (the solid green line) in a little less than 3 years from now. (The x-axis difference between where the yellow line intersects the red dotted line and there the green line intersects the red dotted line.)
2. The more optimistic projection based on the best fit trend line of the actual portfolio growth (the light purple line) is predicting that I will reach my FIRE number in around 1.5 years from now. (The x-axis difference between where the yellow line intersects the light purple line and where the green line intersects the light purple line.)
3. This also shows that I’ve reached the current portfolio value around 5.5 years earlier than projected. (The length of the yellow line between the dark purple line and red dotted line.)
4. This also shows that my current portfolio is S$1.6 million higher than originally projected. (The Y-axis difference between the dark purple line and the red dotted line directly below it.)
5. It also shows that I have contributed much more at this point than the projection by about S$523,000. (The Y-axis difference between the dark blue line and the dotted blue line below it.)
6. Which also indicates that I am more than 5 years ahead in terms of contributions than the projection. (The X-axis difference between the solid dark blue line and the dotted blue line to the right.)

When I compare just the gains I currently have against the projection, this is what the gains look like:

Based on this, I’m more than 5.5 years ahead of my projection due to a confluence of several factors:

1. My investment portfolio has had higher returns than the 8% p.a. conservative benchmark that I used for the projection.
2. I’ve been able to contribute more funds than initially expected due to extremely good luck in my career
3. Several of my contributions had very good timing (by accident) which means they were done right after a big market drop and before a big market run up.
4. I’ve also used leverage to boost returns above and beyond the normal returns – and I’ve done so during a time with outsized market growth.

This all resulted in returns far ahead of the conservative expectations… but looking at this it does give me pause since “all of this luck must run out at some point, right? This can’t possibly continue…”

Now you can kind of see why I took so many defensive moves with my portfolio overall this year.

Another Lens: FIRE Income vs Lifestyle Spending ‘Tiers’

This was a lens that I introduced last year as well.

If you wonder how I came up with the S$10,000 monthly spending, basically I break down my living expenses into several ‘tiers’ based on the lifestyle that I want to be able to achieve.

Note: All numbers is for just myself – does not include my wife. To get the full family income picture, you can roughly multiply the number by 2.

• Tier 1 (S$3,000 per month) is the bare minimum for me to live a minimalist-comfortable-life in Singapore. This means no kids, all the necessary insurance, regular living expenses, monthly HDB mortgage payment, mostly hawker center meals with occasional restaurant meals, public transportation with occasional Grab or taxi. Minimal annual travel within ASEAN.
• Tier 2 adds S$1,000 per month to account for having a child. (This assumes S$2,000 for a child as I assume my wife will contribute the other S$1,000.)
• Tier 3 adds another S$1,000 per month for a 2nd child.
• Tier 4 adds another S$1,000 per month for travel budget (can either be 1 really nice vacation, a few good ones, or several OK ones – up to us to mix and match!)
• Tier 5 adds S$3,000 per month in order for us to pay for the mortgage to live in a condo. Multiplied by 2, this assumes up to S$6,000 per month for both my wife and I. This is the biggest part of the budget – the price of living in a private property.
• Tier 6 adds another final S$1,000 to give buffer to allow for room to splurge on other “nice to haves” if we wish without having to make room in the budget from other tiers. This is a buffer I added to give us a tier to “strive for” to be truly comfortable.

With this tiering system, I can theoretically stop saving at any point above Tier 1 if I wish. Everything above Tier 1 are, by definition, not “necessities” they are lifestyle choices that we can make… which have consequences in the form of added monthly expense that we’d have to add to our FIRE number.

This helps me visualize my lifestyle inflation and make clear that these are conscious choices I am making. I can quit any time if I wish, but I’m continuing because I want to add these things to my FIRE budget.

So with that explanation out of the way, what does the chart tell us? Well:

1. I’ve converted my net portfolio value in 3 lines corresponding to 3 different withdrawal rate:
   • 5% – More risky but has been shown to be fine if you’re willing to be flexible and cut down when the market drops significantly.
   • 4% – The standard 4% rule which historically provides 95% success rate for 30 year retirements.
   • 3.25% – Conservative withdrawal rate that I chose to go with for added safety. 95% success rate still sounds rather risky to me especially when it is based on U.S.-only data when the U.S. has been rather exceptional in the last several decades.
2. The chart shows that if I choose to live life a little bit more on the edge (than I already do with leverage) and go with a 5% withdrawal rate, I have already hit my FIRE number!
3. It also shows that I will likely also reach my FIRE number with a 4% withdrawal rate some time in 2025, if I’m willing to reduce my safety margin a little bit.
4. Even with a 3.25% withdrawal rate, if I’m lucky, I’m also likely to hit the S$10,000 monthly income near the end of 2025 – if the trend line holds.
5. Even with the conservative 3.25% withdrawal rate, I’m already working my way through tier 5 – trying to cover my condo mortgage payment in perpetuity.
6. I generated more than S$2,000 in additional FIRE income this year due to the growth of my portfolio – whoop! That’s more than 20% of the passive income I needed for my FIRE income – all in 1 year!

This is probably just me creating new ways to keep me motivated along my journey.

But this really helps me see that my FIRE goal is so close now… I can almost taste it!

Conclusion & reflections for what’s in store in 2025

Aaaaaaand that’s it! 2024 has been an amazing year overall for the FIRE-Path Lion household – both financially as well as in life milestones.

Looking forward to 2025, here are some of my thoughts, some of which are already touched upon above:

1. Since the market has done incredibly well both in 2023 and 2024, it’s unlikely that the same level of performance will continue in 2025.
2. This is corroborated by the high U.S. stocks valuation reflected in the Shiller PE – high valuation often indicates lower expected returns.
3. However, this cannot be used to predict or time a crash or recession. The market could simply remain flat for a long period.
4. Current high valuation is only on U.S. stocks and does not apply currently to international stocks.
5. Donald Trump will be taking office for his second term on next year. Nobody knows what he will or will not be able to enact. There’s already intense in-fighting within his own transition team… so nobody knows at the moment how things will pan out.
6. Lots of the policies he wants to enact seem to be inflationary, so that’s certainly bad if you’re going to be holding cash.
7. If we go by what happened in his previous term, then maybe more bull market is in store.
8. However, that might also mean potentially another bout of a global pandemic (I hope not…)
9. Interest rate will likely go down, but at a slower pace as the U.S. Federal Reserve monitors what Trump policies will be put in place. Given the inflationary potential of some of Trump policies the Fed will be more cautious in lowering rates too soon.
10. I have no idea whether the market will have a huge correction before continuing upwards, or it will be flat for prolonged period, or it will continue going up a lot from here before having a massive correction some time down the line.
11. My track record for market timing has ranged from lackluster to horrible…
12. The times I invested at the right timing has mostly been by accident…

What does this mean for how I will be investing next year?

Well, these are probably what I have planned:

1. Maximize my CPF contribution and SRS contribution to minimize my income tax – as per usual.
2. Continue to invest as much as I can, as soon as I can.
3. SRS and CPF will be going into Amundi MSCI World Index – I would choose this over Amundi Prime USA to be more globally diversified rather than concentrated only in the U.S.
4. Cash will be going into VWRA or IWDA for the same reason.
5. Leverage will be added on days when the market goes down rather than automatically when market goes up – this is to avoid volatility decay.
6. Leverage will be used to purchase VWRA for maximum diversification. I’m already taking risk with leverage, no point adding more risk by concentrating my investment choice.
7. As I get closer to my FIRE number, I’ll need to think about how to reduce leverage. I would want my leverage to be 0% at the time of my retirement to eliminate leverage cost. I am still determining the best way to do this – maybe a subject of a separate post.

That’s it! I hope this makes sense and that you found all of this sharing useful for your own investing and FIRE journey! If you have questions or comments, please feel free to post them in the comments section down below! I’ll try to answer them as soon as I can!

I wish everyone a prosperous and wonderful 2025 and beyond!

Until next time!
FPL