Size Matters. Really!

 

When we hear that Norwegian billionaire has set aside USD $60 million into Bitcoins, what will be your reaction if you are crypto fan boys and girls?

But calmer folks may realise that this Bitcoin bet is just 1% of his net worth at USD $5 billion.

I mean Bitcoin can go to zero and its just a paper cut. 

You?

Let's use SGD $100K as your opportunity fund since I see quite a few youths have goals of accumulating $100K before age 30.

And let's be generous by assuming you bought Bitcoins at USD $10,000.  

If you followed the Norwegian billionaire's risk management for your own position size, you would have invested SGD 1K in Bitcoins.

If Bitcoins hit USD $100K, it will be a 10 bagger! In percentages sexy! But in money...

Even if Bitcoins moonshot into a 100 bagger by hitting USD $1 million dollar selling price, will SGD $100K change your current lifestyle?

Good to have, but no right?

To make serious money in Bitcoins, you'll need to go full YOLO and all-in your SGD $100K opportunity fund right?

No diversification, no hedging. Its a show hand high conviction bet!

When people say the rich get richer, I think this is what they are implying.  

Context is important.

Now we swing to the opposite end of the pendulum.

Those people who cry O$P$ at Hong Lim Park to get their CPF out, make a guess. Would their CPF savings be a big part or tiny part of their total LIQUID net worth?

Must add this LIQUID adjective as most Singaporeans are not "poor" if we count the property we live in. I mean any HDB 3 room flat would be worth more than the current CPF Full Retirement Sum (FRS).

But asset rich cannot pay our bills or put food on the table if we have no savings outside of CPF...

Now contrast the above O$P$ crowd to those CPF fan boys and girls who can't wait to put more money into CPF, and to squeeze blood from stone for that extra 1.5% by abusing optimizing transfer from this CPF account to that account...

I mean is it worth it if your CPF is below the FRS sum? 

Would it not be more likely these CPF fan boys and girls are old fogeys mature adults who have made most of their money OUTSIDE of CPF?

The "rich" get "richer" for CPF? 

How's that for an inconvenient truth?

Nothing spells this truth out more than CPF Life.

I mean anyone who can count will know the "default" CPF Life payout plan "sucks". 

But if you desperately need that few extra dollars every month, you got no choice... The "default" plan it is.

For those of us who don't have to depend on CPF Life, we can afford to chose the other 2 plans that offer a better risk/reward trade. (Sorry, occupation hazard) 

I mean all 3 CPF Life plans are the "same" if we live to age 90 and beyond. 

However, if we go "up lorry" early, its ironic its those who have "no choice" are the ones who are subsidizing those who got options...

For those who want to further abuse optimize CPF Life payouts even more, delay our CPF Life payouts till age 70 and we can squeeze more blood from stone!

Hey! Let's all be CPF vampires!

The rich get richer...

Which is another way of saying, "Size matters!"