Thursday, December 13, 2012

Saving 25% of Take-Home Salary Beats Net Profit Margin of DOW

Personal finance books recommend saving at least 10% of paycheck. Personally i consider that low in S'pore's context of job misery suffered by many including me. In the past i'm a mad saver leaving very little $$ for enjoyment. Back then my mentality is since so much time in job misery it makes no sense for me to blow $$ on unnecessary purchases leaving me further trap in the rat race.

Many western economists call on the chinese to spend more to help stimulate the global economy as they are saving too much. In China, the average savings rate of urban households is 29% in 2009. If we compare the average chinese savings rate to the net profit margin of the companies that make up the DOW index, the chinese wins hands-down with their 29%.

Net profit margin (%) of last financial year:

Simplistic formula:
Net Profit Margin (Companies) is what's left after deducting costs, utilities, salaries, rent etc
Net Profit Margin (worker) is what's left after deducting our bills, living expenses etc

Now let's look at 2 more companies:
  • Luxury good maker Louis Vuitton 14.76%
  • Current iPhone craze Apple 26.67%

Still the average chinese trumps the above 2. The mindset of the average chinese is worth emulating. Those chinese saving 33% of their paychecks is like working 2 months & accumulating 1 month of freedom. The few who save 50% is like working 1 month & accumulating 1 month of freedom.

Unfortunately many sinkies are hooked to retail therapy as a way to spend their way out of their job misery - a form of short-term happiness via a purchase.

Retail therapy doesn't work long term. Is misery galore.

- 98% of S'pore Workers Are 'Bochup' aka Disengaged in 2010
- 'Zombie' Workers - Plenty of Them In S'pore
- S'pore 2nd Lowest Globally for Job Satisfaction


  1. agreed. with more and more shopping malls being created what more can the sg'eans do? Plus the weather getting hotter and hotter each year. The best refuge is a shopping mall with the "free" air-conditioning for visitors.

    1. Yes, weather is hotter & hotter each year. Is been raining with thunder almost every afternoon. Many consider it due to monsoon season. I don't think so as i consider the weather pattern has changed.

      Some people go to malls with no aim in mind. They just want to be 'with people' since people's lives are so frentic & busy as to no time to meet up with no cellphone distractions.

      Anyway i don't buy much stuff from malls due to their killer rent component. Just shop online & save time.