"Compared to anger and fear, shame is 1,000 times worse."

UPDATE (30 Dec 16):
If we are prepared, we need not fear the big bad letter "R".

"About 120 employees from Toyota agent Borneo Motors and Suzuki agent Champion Motors will be retrenched in the coming weeks, in one of the largest downsizing exercises to hit the local motor industry. 

Their parent company, vehicle distribution giant Inchcape, is restructuring its operations here. The cohort represents 12 per cent to 14 per cent of Inchcape's headcount in Singapore. 

The latest retrenchments come amid a gloomy economic outlook."
Source: The Straits Times.





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This is a very touching letter from a new reader. I edited the letter before publishing it. 

However, I tried to keep the original tone and definitely the content:

Dear AK,

I am a father of 3. They are 16, 14 and 10 years old. I was retrenched last year and felt very bitter towards the company. Being retrenched at 48 and with a family to feed is no joke.

That bitterness became fear with passing time. How was I going to support my family? My wife tried to find work too in those months but having been out of the workforce for so many years, she was unable to find suitable employment.

Bills still had to be paid. Our savings were used up quickly and I had to borrow money from our families to meet expenses. It was shameful.

Compared to anger and fear, shame is a thousand times worse.







I was going crazy. I was about to break down. I thought of killing myself.

My children are the reason why I was able to continue living and I finally found employment two months ago. It pays one third less than my previous job but I am grateful that the months of not knowing how to provide for my family are over for now. 

When I visited my younger brother last month to return some of the money I borrowed from him, we had a long talk.

I told him I was angry and fearful. 

He asked if I was still angry. 

He asked if I was still fearful. 





I told him that I no energy to be angry anymore but I will always be fearful.

He gave me a few suggestions and he referred me to your blog. He has been following your blog.
AK, you opened up my eyes! 

I read all the blog posts I could find on personal finance in your blog. I did not waste time on the blog posts on investment because I am not ready for that.

I did save some money but I did not plan. Now, I know I have to save for:

1. An emergency fund - 24 mths of expenses.
2. Topping up my CPF - for my retirement.

My salary is lower now and I have to return money borrowed from families. 

I know I don't really have a choice and I am prepared to work till I am 65 when I have a monthly allowance from my CPF like you said in your blog. 

All my children should be independent then.





My retrenchment is probably a good lesson for my children. 

They saw how it got me badly. I hope they remember. 

My eldest is reading your blog too because he got interested when I explained to him.


By sharing my story, I hope that others will avoid the bad feelings I had when I was retrenched.

见贤思齐焉

LHY







If we had an umbrella handy, we wouldn't have to fear the rain and we wouldn't be angry because we got drenched.

(If someone could help me decipher the Chinese phrase accurately, please do, because Google Translate isn't very helpful.)




Related posts:
1. Don't depend on wage increases...
2. Best insurance to have in life...
3. Emergency fund...
4. Too late to plan at age 57?
5. Retirement adequacy (CPF Life).

How many 20 years and $29,000 do we have?

Friend, sighing, "I should have listened to you."

AK, "Huh?"

Friend, "I finally surrendered my PruLink policy."

AK, "Oh, congratulations!"

Friend, "Congratulate what lah? I put in total of $29,000 since 1996. Every year put in money. 20 years and I took back less than that! I lost money!"

AK felt like saying "I told you so" but AK kept quiet. 

Friend, "Leave money in the bank or fixed deposit also better. Should have terminated long ago. My agent told me to continue paying for another few years and maybe it will make money. Stupid, right?"

AK, "Er... Ahem..."

Friend, "I still remember you said to terminate and put the money in my CPF-SA. How much would I have now if I did that?"

AK, "Well, I don't think you want to know..."

Friend, hesitating, "Ya, you are probably right. Haiz. Sad lah."






My dear readers, are you curious?

If my friend had placed the yearly contribution of $1,450 into his CPF-SA for 20 years instead of the Investment Linked Policy (ILP), how much would he have today?

About so much:

Calculator at:
http://www.moneychimp.com/calculator/compound_interest_calculator.htm

$48,000.

A hard truth and the truth hurts.




That's not all. 

My friend would also have had the benefit of income tax relief which is given for the first $7,000 of Minimum Sum (MS) Top Up. 

In my friend's case, the income tax savings would have probably been a few hundred dollars a year. Multiply that by 20 years? Ouch.




The long and short of it, buy insurance for the sake of insurance. 

Don't mix insurance and investment.


Related posts:
1. Should I terminate an expensive ILP?
2. Free ILP or Term Life policies?
3. How to upsize $100K to $225K in 20 years?
Hey, sexy S A! Oppa AK style!