Are you really as rich as you think you are?
Odd choice for a title because in this personal finance blogosphere, we’re all saying that you are NOT as rich as you think but ever since my trip to Singapore I have been thinking a lot about what it means to be rich in your environment.
1 OUT OF EVERY 30 SINGAPOREANS IS A MILLIONAIRE
When I was in Singapore, I was told that a lot of people were rich there. Like SERIOUSLY rich.
They made their money back when the Asian stock market exploded, and legend goes that Singapore became a super rich little island almost overnight.
Forbes says that 1 in 30 Singaporeans were millionaires in 2012, which means out of the 5.312 million people living in Singapore, 177,067 of them are millionaires, or 3.33%.
The average Singapore multimillionaire is male, 66 years old, married and has 3 children.
This makes him the oldest in the world in terms of average age, only a notch below those in Argentina or Austria.
In fact, the global average age is 60 years.
In contrast, HuffPo reports that Canada has 422,000 millionaires but it only makes up about 1.2% of the population.
Those numbers are certainly impressive but having visited Singapore, I couldn’t help but wonder if it was due to these reasons:
THEY’RE LIKE GOLDFISH IN A MONEY BUBBLE
Since Singapore is an island, the following happens:
1. They don’t have enough space
It’s an island. Where are they going to go if they want to try and get into the real estate market to buy something or even rent?
There is only so much space to go around, and as a result the prices of homes have skyrocketed to rather insane amounts.
Rental prices for a condo?
- Near city center: S$7,000 per month and can go up-to S$15,000
- Waterfront housing: S$8,300-S$13,000 per month
- City fringe areas: S$4,500 and can go up to S$7000
- Condos outside of city-center: S$3,300-S$5,000
Just to give you a perspective of what it costs per year in USD:
2. Cost of living = Insanity; they have to import everything from food to cars
If the apartment costs did not tip you off, they also have to import everything onto their tiny island from food (Malaysia and neighbouring countries) to cars.
They do not grow ANYTHING there. They don’t manufacture ANYTHING.
It’s basically just an import/export country because it’s so well located in the hub of things.
When we were there, I was numbed into submission by the prices of food, because even after converting SGD to USD ($1 SGD = $0.78 USD), I couldn’t believe anyone would really pay $4 for a single stalk of green onions.
Or $30 for a bag of walnuts.
Malaysia and surrounding countries that export food to Singapore are certainly making them pay for the privilege of eating.
Sure, other stuff is cheap and delicious like their mangoes (we were right at the peak of the mango season from India), but anything that is foreign and imported is just ridiculously overpriced to my Western eyes.
Mmmm.. mangoes from India — absolutely THE BEST I have ever had
But let’s compare something more concrete and easily quantified:
“How much can a car REALLY cost in Singapore?“, you scoff.
Disclaimer: I know jack squat about cars and am not into them. I am only picking similar cars based on the name but have no idea if the specifications match up exactly or not, but this should give you a rough idea.
Well let’s take a look at a Honda Accord in Singapore:
*COE = Certificate of Entitlement, or basically the government’s tax on those who can afford a car.
Now let’s look at the cost of a Honda Accord in the U.S.:
Putting it all together?
It costs around $120,000 USD for the lowest model of this car in Singapore versus $22,000 in the U.S. or 5.45 times as much.
Lastly, I went to a restaurant for some of their famous Chili Crab when I was in Singapore, it cost $50 SGD for a single, small crab covered in their “famous” (overly sweet and kind of gross) chili sauce.
$50 SGD = $39 USD for a single crab.
Now tell me again how rich they are?
3. They are living among others who are of a similar mindset
One major thing that stood out to me when I was in Singapore is how into money they are.
You think Americans are into money? Nuh uh.
Singaporeans are REALLY into money, that is the image of money and consuming it in gross quantities.
All they talk about is money. It’s the #1 topic of conversation there.
It is NOT taboo to ask someone how much they make or to try and glean a number out of them.
We think it’s impolite to talk about money (well, not anyone who blogs about money, obviously), but older generations such as our parents would never think of casually dropping in a conversation how much they make in rental income each month or how much their net worth is.
A millionaire might walk around in flip flops and a t-shirt there, but they are not above spending their money and showing off:
It’s kind of evident when you see women decked out in designer bling, and trying to outdo each other in who has more money, although this girl made a tragic choice of clothing the day she happened to come across my camera:
If you want an insight into how the uber rich spend their money, you can always read this work of fiction written by a Singaporean on how the rich in Singapore live:
FOREIGNERS ARE THEIR MAIN SOURCE OF WEALTH
Another point that is brought up but not really emphasized is that many mainland Chinese (among others in other countries) leave their respective countries and go to seek out opportunities in other countries with their newfound millions / billions, and Singapore is a hotspot destination for them.
So, how has the average Singaporean multimillionaire acquired his status?
Surprisingly, from being the CEO or COO of a bank, hedge fund, private equity, venture capital, insurance or wealth advisory.
An average Singapore multimillionaire has a day job and he makes wealth, off the millions and billions of dollars parked in Singapore or the nearby region by the ultra-rich.
So, that Ferrari which whizzed past you on Orchard Road was probably that of an Indonesian.
And that high roller on the Baccarat table in the casino is probably a China “whale.”
China for instance, is extremely polluted and the government is not exactly democratic, not to mention the fact that the majority of Chinese people are poor, and the only ones who can actually afford to leave and start a new life abroad, are the uber rich.
The average salary of a Chinese worker varies by region, and ranges from 1000 yuan to 1600 yuan a month or $164.99 to $263.99 a month in USD.
Just think about it.
They have to live on about $165 – $264 USD a month, and while their cost of living is very, VERY low compared to the U.S. or Canada, it is not really a lot of money if they leave their country and try to start anew elsewhere.
THEY’RE RICH.. BUT ONLY IF THEY DIDN’T LIVE THERE
So what’s my point in this entire post?
It’s ironic that they’re considered rich, but only if they were to leave Singapore and move elsewhere with their money.
Otherwise with everything taken into account of what it would cost to live a “normal” American life there, a million is not a million.
WE ARE ONLY AS RICH AS THE ENVIRONMENT WE LIVE IN
Millionaires in Canada or the U.S. ARE rich (well, relative to the city they live in, but it’s not as inflated as in Singapore), and if they have money, they really DO have the money because the majority of Canadians don’t, and our cost of living reflects that.
It’s not like our government puts a special $100,000 tax on millionaires who want to buy a car, or that if you’re a millionaire and you walk into a store, you would immediately pay 5X the price of what an average person would pay.
To put into another perspective, if we were to move to a country like Thailand, India, or Vietnam with the money we have saved now, we’d be filthy rich and able to live there comfortably the rest of our lives because the cost of living is just so low.