“I could be working and earning $12 per hour”
“I could be doing an internship”
“I could have gone to University 2 years earlier”
These are just some of the complaints about the high opportunity cost of National Service (NS) in Singapore (I myself am guilty of saying these at times). However, as NS is necessary to safeguard Singapore’s sovereignty (and compulsory), the optimist in me prefers to look on the brighter side of things. As someone who is currently serving NS, I will share how I have made use of this time as well as what I plan to do moving forward. Thus, instead of viewing NS as a “complete waste” of two years of your life, I hope to inspire you to make the most out of these 2 years.
If you are here, you’re probably keen to learn about investing and how to begin your journey to financial freedom. This is the perfect time to do so. I began learning about investing 1 year before NS. However, I could not devote much time due to A-levels and other school commitments. Thus, my progress was slow. After A-levels, I had a lot more time to focus on investing and I continued to do so even after I enlisted. During my free time in NS, I read books and articles and watched plenty of videos on YouTube. This was how I began my journey to financial independence. NS has also provided me with much more free time to screen the stock market for any undervalued stocks and conduct thorough analysis. This has led me to finding my biggest winners. I cannot emphasise how important doing your due diligence on every potential investment is. This is also why I spend so much time studying companies. Moving forward, I will continue investing regularly and learning more about investing. I aim to take this two years to build a strong foundation in investing that will set me up for successful investing when I start to earn more money in the future.
Apart from time, the NS pay has also provided me with capital to invest, no matter how small. Let us take a look at a hypothetical scenario to see how the money you save and invest during your NS years can grow to a substantial sum at the end of 10 years.
Imagine that Tom draws basic BMT pay for the entire duration of two years ($630 at the time of writing). Tom wisely invests $200 per month in an Exchange Traded Fund (ETF) that tracks the S&P500 index. Historically, the S&P500 has returned an average of 10% annually since inception in 1926. Thus, assuming that the average returns remain the same for the foreseeable future, we can calculate the return on investment using a simple investment calculator.
After 2 years, the total contributions by Tom will amount to $4,800. This $4,800 will grow to a decent amount of $5,550. Assuming that Tom continues to contribute $200 a month for 10 years, his contribution of $28,800 will compound and almost double to $54,689! That’s a handsome sum at only 30 years old that will set you on the right path to purchasing your first home.
In this example, Tom draws a basic pay of $630 and only invests $200. By going to command school and/or spending less, it is possible to draw a higher pay and set aside more money to invest. Thus, by taking on more responsibilities to ensure the safety of our country, it is possible to make the most out of NS and start working towards financial independence. This is something that I intent to continue doing for the remainder of my two years.
Furthermore, NS allowance is received monthly, similar to how you will receive your salary in the future. Thus, this can be an opportunity for you to learn how to manage your finances through practice. Take this time experiment with different budgets, learn how to save, learn how to control the urge to splurge and find out what works for you. As financial freedom is a lifelong journey, the habits you form and lessons you learn will go a long way as you start drawing higher pay when you start working.
Last but most definitely not least, apart from investing in the stock market, it is also possible to invest in yourself. In this day and age, there is a wealth of information that is readily available to us. With just a few clicks, you can enroll into a course or download an eBook. As such, you can learn virtually anything online. Take these two years to explore your interests. For me, that would be economics and investing and I did so by reading books, attending courses and watching videos. It need not be something related to your future career. Explore a wide variety of things and even if you may not use it in the future, you would have learnt how to learn. In today’s fast-paced and dynamic world, the only constant is the need for continuous learning. Thus, these values and life lessons are what will allow you to continually grow and remain competitive. For instance, I recently started to learn the basics of Python programming, something completely foreign to me and may not be applicable to my future career. As Warren Buffett, one of the greatest investors in the world, so aptly put it “The best investment you can make, is in yourself”. As a firm believer in self initiated learning, I strongly urge you to take advantage of this time to pursue an interest of yours.
I hope that this post has given you some insights into how you can make use of your time in NS. I would like to end of this post with a classic proverb – when life gives you lemons, make lemonade! Whatever you walk away with after these two years is the lemonade.