Save or be in debt ?

We are all taught to save money from a young age, or at least that's what i choose to believe.

But is saving money a financially smart move ?

I mean saving money throughout your entire working life, is it a smart move?

Some people would say yes, saving for rainy days you would say.

But really, think about it again, is it a really really smart move?

Inflation is a platform that is used to steal your wealth with or without you knowing if you are a saver.

I can work for my entire life saving for my child's education or my retirement, but when I need the money to pay for them, I realised money wasn't as valuable as when compared to the point of time when I saved my money.

And to save for a child's education can takes alot of time considering that most of us are heartlanders.
Years after years of hard earned money goes into savings, and my child spend my savings within 3 years. Well done man you kids!

Many of us couldn't save money as fast as the inflation is growing, and therein lies the danger.

If you could save money to grow as fast as our inflation, your money retains it's value.

Ironically,

It makes sense in our world today to be in debt, imagine me borrowing $1000 from you.

I'll return you the $1000 in 1 year time.

Which make more sense ? save or be in debt ?

That's provided there's no interests on the $1000.

And I believe that "ah longs" understand this and make it into a "lucrative" business, BUT it is illegal and our authorities is coming down very hard on illegal money lenders.
Even if they don't splash paints on your doors & chain up your house, it will still be illegal.
Because it's like robbing the people through it's absurd interests rate.

But seriously, don't you agree with me if money is all you want, it's a very good business?

So what else can we do?

Open a bank ?

Lend people money to pay for their condos and cars, and charge them more reasonable interests on that.

Or personal line of credit ?

Are you aware that your credit card actually have a facility call credit line or line of credit, which you can up your limits to 4 times your earned income. (Some of the banks I know of they offer 4times your earned income, might be more or less)

You can withdraw the money from their atm to buy anything you want to just in case some of you might argue some items you want to buy might not accept credit cards.

Many of you understand that our currency is being peg to the US dollar.

Till date, US dollar is still THE dollar.

But what many of you don't realized is that, our currency today is no longer money, it's debt.

There is no real value in our currency today, people accept our currency due to good faith on your government and the employees in the country able to pay it taxes.

Prior to 1971,

every US dollar is peg to gold or silver, meaning, for every dollar notes out there circulating, there is a physical gold or silver in the bank to back the piece of paper up.

After 1971, ever since president Nixon severe the relationship between dollars and golds, something changed.

Means you don't need to have a physical gold or silver in the bank to circulate that piece of paper anymore.

Instantaneously, our currency which used to be an asset, became a debt instead, which is back by good faith of our nation and it's economy.

Knowing this truth, hiding your money in your milo tin under your bed is no longer a wise financial move.

Learn the rules of the game

Sunshine Empire head jailed

http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_560214.html

They amassed over SGD 180 millions dollars

That's $180,000,000!

Jailed 9 years & fined $60,000.

What is that compared to the $180millions?

As much as this is an extreme case of a ponzi scheme at work in singapore, it is not an isolated case.

Who's fault is it anyway ?
Is it their fault? definitely to a certain extent.

or should MAS tighten their investment guidelines?

or is it the consumers fault ?

"Without financial education, your money flows to those who profit most from your financial ignorance." - Robert Kiyosaki

Or should we invest with the mega banks so that it will be safer?

As you will remembered, the SEC sued Goldman Sachs for fraud and eventually fined Goldman $550million - on Goldman's condition that they didn't have to plead any wrongdoing and drop the lawsuit.

The fine, $550millions, one of the largest fine the world have ever seen, is nothing compared to the damages they have done to the world's economy.

$550millions dollar is alot to people like you and me.

But if you realised, $550million is only 3 days income to Goldman.

When it comes to investing,

there are 3 groups of people.

1st group is what i call the gamblers,

they talk to themselves and then convinced themselves on why they can buy a particular investment and they just buy it, and then they pray that it will make them money.

or it might be their friends tell them certain stocks good, can buy, will hit a certain price by a certain date, their friends are so sure of that but is still holding on to a day job which pays them $2000 every month, work 10 hours a day.

2nd group of investors is this group of people who invest to win,

they do their market research, they find out everything about the investments or stocks and how it works, and only when they are really sure that it is a good investment, then they buy in.
They are the professional investors who is studying everyday to become better investors.

There are this 3rd group of investors, people who invest not to lose.

you asked me, i thought everybody invest to win ?
no, you might be surprise. Alot of people invest today just not to lose.

Have you ever met certain people who brought some shares at let's say $2, but once they buy,
they price drop to $1.50.
Then they pray and say, i will sell once the price hit $2, so that i get back my capital.
If only they put their money in the bank, they will save on the agony of watching the stocks go up and down.

Which group do you belongs to ?

And which group do you want to move into if you're not satisfied with where you are right now?

Is It a Sales Pitch or Is It a financial advice ?

We are continuing our series on "Is your advisor an asset or liability?"

Today we are going to touch a little bit more on identifying your advisor and his/her abilities.

The number one issue in our country today is retirement planning.
Your agent ask you, have you thought of saving for your retirement?
Sundays times also share on a projection amount which you need in order to retire comfortably.

The most common solutions that i know of is a 25years saving plan. Agents are literally, not figuratively selling them anyway and everywhere. Throw in a cash withdrawal options and it's every young graduate dream plan.

Then, there are another more atas group of agents, who believe in investment linked. They argued, the returns from an endowment is not good enough to hedge against inflations. So we need an investment linked policy to hedge against inflations and on top of that, giving my clients good returns for his/her money.

I sincerely believed both group of agents think that they are doing their clients a favor.
Though their intention is good, but the lack of knowledge will caused them some problems in the near future. But i will not touch on that in this post.

Whenever your agents recommend you an investment linked product, as you know there are higher risk involved in such products and its totally non guaranteed, so initially, most of us would be paralyzed by this fact. And our agents will pacify us by saying

"Don't worry, as long as you invest for the long term, do dollar cost averaging and diversify your portfolio, everything will be fine."

They are right. But your agent haven't finish what he/she wants to say.

Everything will be fine provided the market always go up, they are saying that as long as the market always go up, it is safe.

So when your agent is talking, please don't cut him off.

But I beg to differ.

Anyway, Is that a Sales pitch or Is that a financial advice ?

IF you are still not convinced, they will tell you, why not we put your money in bond funds. instead of equities funds.
It's lower risk, but also give you a lower returns.
Equity higher risk, but also higher returns !

Then people assumed that their agents know their stuffs.
The agent assumed the fund managers know what they are doing.

In the end, you make an ASS out of U and ME.

When your agent asked you to buy equities, you should asked, "what is equities?"(if you do not already know)
Ask them to take this financial term and put it into layman's term for you to understand.
Ask them "What is bonds? you say lower risk, why is it lower risk compared to equities?"
Ask them "how does bonds and equities work?"

I think you get my point, my point is that you make sure you understand the investment well before you buy.

You think your agent understand it well, i can tell you, more than 50% of the agents selling you bonds and equities totally have no idea what are they actually.

So it is important for yourself, the consumers to understand what you are buying.
It's not about the guidelines and rules set by MAS to govern the financial industry.
I think guidelines and rules has it's place but the emphasis should be on your own financial education.