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Wednesday, 28 February 2018

You know how to beat inflation?


I bet you do!

I mean nowadays, just do a bit a reading on the internet, one can all of sudden become an "expert".

All you need to do is to quote who and who said this, or cut and paste what others have said and you can write about anything!

Yes, its that easy to be a blogger!

Serious. No entry barriers at all!


Inflation is serious. Not fun and games. Just look back 10-20 years and see how much HDB and private property prices have gone up. How much education and health care costs have ballooned. And of course for those who drives, the price of cars and motocycles today are crazy right?

Funny thing though. You can afford them right?

Unless you jobless or retired with little to no savings.

Now ask yourself, what is the single biggest reason you can afford the lifestyle you are having today?

Was it your investments? The insurance policies you have bought? Your savings?

No right?

Did it surprise you?



Now lets make things a lot more interesting.

Let's use 1965 as our index 100. That's the year Singapore gained independence mah!

Talk to your parents and/or grandparents.

If they were financially literate, what were the asset classes they used to protect themsevles against inflation?

How did these asset classes panned out 52 years later?

More regrets or more smiles over their good foresight?



If your parents/grandparents were not financially savvy, even better!

That meant they never "invested" or did anything to protect themselves against inflation.

How?

What's the asset class they "accidentally" stumbled into that kept pace with inflation?

Not only that. It turned out to be a little windfall for you the descendant!

That's almost like, "Look ma! No brains needed!"



So. 

Do you still think we need to "invest" or else? 








23 comments:

  1. Hi SMOL,

    The asset class last time may not necessarily beat inflation like the way it did for our grandparents in the next 50 years leh.
    With aging population, no more another event like HK transfer of sovereignty, less migration and foreign talents influx - can property prices still go up up up?

    Besides assets, human asset aka job earnings may also be able to keep up with inflation but it also pretty much depends on which industry one works in.

    ReplyDelete
    Replies
    1. Rainbow girl,

      Interesting. I belong to the Singapore population growth to 10 million camp.

      You may want to pause and think about what you have just said.

      If what you say comes true, why on earth do you want to invest in Singapore equities?

      You may also want to be mentally prepared to find work in another country ;)


      Delete
    2. Yeah, exactly! So I have been thinking of how to diversify out of Singapore (to foreign equities).
      Finding work in another country did crossed my mind but easier said than done haha.

      Delete
    3. Rainbow girl,

      Bingo!

      Just like that, a girl has discovered the best hedge against inflation - her mind ;)

      Delete
  2. Human capital & property? Hahaha!!!

    Although in today's Singapore, property probably will just meet long-term inflation, not beat it ... Unless buy at depressed price during bad recession.

    With faster paced industry disruptions & mass worker immigration, human capital may resemble more of callable long-dated TIPS ... getting "called" with a bronze handshake (lucky ones may still get golden handshake LOL!!).

    ReplyDelete
    Replies
    1. Spur,

      Thank goodness for your comment!

      I was thinking people are taking my post too seriously ;)


      Sometimes I suspect the "smart" know-it-all financial freefom seekers are missing the main point:

      Human capital.


      P.S. Its never good to disrespect Lady Luck too ;)

      Delete
  3. Your grandparents property is inflation proof, your recent property purchase will be known whether inflation proof when current baby boomers fully retired from workforce in the next decade 2028

    ReplyDelete
    Replies
    1. CW,

      Excellent!

      That's why on hindsight, everyone is a genuius!


      The same can be said about non-property asset classes anyone is "investing" into now to protect themselves against inflation ;)

      Who can see 50 years into the future?

      If so convinced, why all those who "sell" you the idea dare not offer a money back guarantee?

      Instead they write in small print lots of disclaimers which basically says:

      "Of course I must say until got dragons and phoenixes mah! If not how you buy? But if anything goes wrong, my reply to you is if I ask you to jump off a building will you do so?"

      LOL!

      Delete
    2. Do something tends to be better than not doing anything.
      Buy somethings tends to be better than not buying anything. Then again, depends on who you buy from. Hehe.

      Delete
    3. Rainbow girl,

      Just as long you didn't fall for those gold trading and land banking scams...

      Didn't buy those high yield junk bonds that defaulted...

      You do not own stocks that have gone to zero or taken private at prices lower than our entry prices...

      And not vested with stocks at -50% down when STI is at 3500... What beat inflation? Just breakeven at nominal price happy oredi!

      Sometimes doing nothing can be better than "being" busy ;)



      Delete
  4. Hi SMOL,

    Beating an inflated head more important.

    Overconfidence comes before a fall ;)

    ReplyDelete
    Replies
    1. Unintelligent Nerd,

      A young man sees the craftsman; not his tools ;)

      You did not return what you've learnt to your lecturers!

      Wink.



      Delete
  5. Inflation is everywhere ... It's scary

    Marks inflation, sorry? My time ACC is good enough to get into local engineering university... Now? Marks inflation, because everyone chase the last mark, last time mark where got so hot.

    Anyway, the best guard against inflation is either human capital or luck la. 3 percent we kaobei, 4 we say dood is coming. U just need to have a useless govt to mismanage economy, Google hyper inflation, u find plenty of examples

    Capability can also be inflated too, so can human capital. What is hot demand for your skills might be gone ...

    Ti gong bao you..

    Let us have another peaceful 50 years and perhaps 100

    ReplyDelete
    Replies
    1. Sillyinvestor,

      The same can be said of graduates inflation?

      I've lost track. How many % of each cohort make it to university today? I'm guessing around 50%?

      Especially when we take into account those poly graduates moving on to universities eventually through part-time local private or overseas universities.


      I just wish no wars at our doorsteps during my next 50 years I'll be very grateful!


      Compared to that, inflation is nothing... Anyway, Singapore experienced high inflation in the 70s together with everyone else through the 2 oil shocks.

      If I want to learn about how to beat inflation, I rather talk to my mom and dad or anyone who has lived through it.

      People ignore the "treasures" living with us, and give greater weight to strangers telling us how to think and what to do!?

      家有一老, 如有一宝。



      Delete
  6. Hi all,

    I think that cherishing every day is the way to life fufilment. Be content and satisfied for a peaceful day at the end of every day. Live in the moment!

    Ben

    ReplyDelete
  7. So now who is the one who started the inflation topic? hahahahaha

    Inflation is not that scary. It is hyper inflation that is scary like in Venezuela now and in pre WW2 days in Germany.

    Many people talk about inflation but, we have to know what is the cause of it.

    Inflation means the same amount of money buying lesser amount of goods and services. This means devaluation of money. The reason is because of fiat currency.

    ReplyDelete
    Replies
    1. Rolf,

      No me ;)

      Opposite sides of the same coin approaching the same topic from different angles!


      As for hyperinflation, we don't need to look far.

      Just ask our colleagues from neighbouring South East Asian countries where there are lots of zeros behind their currencies... They are probably more "savvy" than Singapoeans who only knew "mild" inflation ;)

      On that same topic, can be good to say hello to our Malaysian cousins acroos the causeway.

      In the 70s, I remember using Malaysian coins and notes were interchangeable with Singapore currencies.

      A more "financially literate" (or luckier) Malaysian parent would have done better if he/she had bought life insurance policies denominated in SGD over MYR ;)

      You think why Indonesians come Singapore buy properties and insurance policies denominated in USD or SGD?


      How many who exhort others to "invest" in equities to overcome inflation ever considered hedging currency risks?

      Land owners hedge differently from shepherds, and shepherds differently from sheep ;)




      Delete
  8. Easy lar! Just marry someone richer than ourself lor.
    My thoughts is that in Sg our growth now is not the same as our father’s yr. Mild Inflation yes ,but not hyperinflation like 8-12% during the 80s.
    Better sell all the reits and high debts dividend stocks now while you can.

    ReplyDelete
  9. WolfT,

    Easy for you!

    At 50 now, its not easy to marry rich...

    I would think a rich tai tai would prefer a toy boy that is more like the energizer bunny - can go on and on, and on all night ;)

    LOL!


    ReplyDelete
    Replies
    1. To a 60-80 tai tai, you are the toy boy! Lol!
      Just make sure you maintain the BGR feel!
      希望在人间.

      Delete
    2. Agreed. For 70 and 80s tai tai. They need sweet talks more than body. Still got chance to be toy boy. :-)

      Delete
    3. WolfT and CW,

      OK, maybe I can extend my free kopi services to lonely tai tais?

      Buy me a drink and I'll spend an hour with them - listening and giving them my full attention?

      LOL!


      Delete

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