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Have a huge amount of savings and still work till age 70?

Thursday, January 30, 2014

It seems that for many Singaporeans, there is no problem with having an emergency fund. According to research by Manulife Singapore, their sample shows that Singaporeans hold an average of 33 months of personal income in cash!

A fifth of this is for daily and unexpected expenses. The balance, which is being underutilised, is losing value because of inflation. So, cash is a favoured asset. Guess which asset is in second place?

The property we own and stay in.


Being mostly in cash is a bad idea given the paltry interest income from the banks. Inflation is chipping away at our wealth.

Then, isn't our home a good investment? No, the property we stay in is not an investment. It is an asset but if it does not generate cash, it is a consumption item.

In the same report, it was revealed that Singaporeans expect to only retire at age 61 and continue working for another 9 years after. That means a grand old age of 70.

At age 61, if people continue working because they want to, I am happy for them, but if people continue working because they have no choice but to do it, then, it is rather sad.

The latter doesn't have to happen.

I have blogged about how the first step to wealth building is saving money which some find difficult to do. However, for people who already have substantial amount of savings but are holding themselves back from investing for income, it is really sad because their wealth is simply wasting away.

It is probably considered bad manners in Asia to talk about money but with the long weekend coming up, I am tempted to ask you to give it a try, to talk about this with people who are closer to you and people you care about. Or, perhaps, just email the link of this blog post to them.

Everyone's life could be and should be better.

Never depend on single income. Make investment to create a second source. Warren Buffet

Related posts:
1. Achieving financial freedom is a family affair.
2. A letter from a 66 year old retiree.
3. Inflation adjusted retirement income plan.
4. Secrets of Millionaire Investors.
5. Ambassadors of Financial Freedom.

9 comments:

SGYI said...

Great post! Actually people do talk about money but its always about 4D/Toto or complain that money not enough.

Whenever i bring up the topic of investment, there is always negativity. Investing is risky, now not a good time to invest, don't burnt your fingers in stocks bla bla bla...

Financial literacy is still relatively low in Singapore. Not sure about other parts of the world.

Solace said...

Hi Ak,

i do not know how accurate manulife report is, maybe they are just urging people to buy their endowment or ilps instead of holding on cash position.

some people i know off are actually skeptical of investment. i do feel it is a real pity that they don't give a try.

i often recommend people to try w something simple like etf of index funds. i have been trying to get my sliblings interested in investing, thats why you find me researching on index fund etf recently.

i would also make use of this chance to wish you a happy lunar new year. May you have good health and fortunate. and lastly hope u continue to blog for many yrs.

AK71 said...

Hi SGYI,

I buy TOTO too...

But only when the prize money is $5 million or $10 million. Does that make me better? -.-"

AK71 said...

Hi Solace,

I am not promoting insurance products here but even putting money into an endowment policy which returns 3% per annum is better than leaving the money in a savings account. ;p

Yes, I know what you mean about people fearing the stock market. I fear it too, actually. LOL.

All I can do is to lead horses to water (and hope that the water is not poisoned). :)

Gong Hei Fatt Choy!

AhJohn said...

Actually, the best bet of Toto should be $3m, because I don't see any $5m & $10m shared by 1 person only.

AK71 said...

Hi Ah John,

I think there is a $10 million Toto coming on chap gor mei. ;p

Musicwhiz said...

The good thing about investing is that one can do it at any age, even when one has "retired" from active full-time employment, as long as your mental faculties are sound and your brain still can function well enough to analyze and sift through numbers. With the assistance of spreadsheets these days, the job is made much simpler (though not easier!).

I meet people who are interested to learn how to invest, but the process can be a slow one as most people would need to be familiar with the accounting and investment jargon before they can begin. Some find that daunting and I don't blame them. I have a natural propensity with numbers and therefore I don't complain when someone thrusts a wad of numbers at me. But I do admire the people who still try their best to put their money to work even if they are not numbers-inclined.

Our savings can only last us for XX number of years after we retire, and even then that's assuming nothing bad happens to you health-wise. Being able to invest means you can generate steady income and continue to grow your wealth even without working at a day job. That is something I would encourage, but not everyone can do it.

Having the discipline and perserverence to stay the course is something which should be admired.

AK71 said...

Hi MW,

Thanks for weighing in on this. :D

Yes, it is difficult, not easy, for most. However, like you said, we should do it and stay the course because it could improve our life. :)

AK71 said...

For the first time in two years, households in the Republic expect the rate of inflation to rise in the short term, according to a Singapore Management University (SMU) survey - which indicates that Singapore households are wary of possible price increases on essential items, the varsity said.

Source:
http://www.channelnewsasia.com/news/business/singapore/singaporeans-wary-of/1424642.html

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