Friday, 24 March 2023

You Can't Avoid Risks - Even If You Save More


And that's the frustrating and super exasperating experience for risk averse savers, isn't it?

Imagine waking one day to discover there's a bank run on the bank you have most of your savings in!?

Or to learn the insurance company you have bought all your insurance policies from is going bankrupt?

And the kicker is you not even a speculator on the Earn More path!!!

Imagine telling your Save More family members they got to monitor the financial well-being of their banks and insurance companies (if CPF must follow Singapore's economy/population statistics)!?

They would probably tell you if they must do all these due diligences, they might as well just hop on the Earn More path and speculate on the shares or bonds of these financial institutions instead!!!

Wait a minute... 

Now that's a thought!




  1. Earn more can also be risky once out of job or retrench then back Earn less.

    1. CW,

      Earn More, from the get-go, is RISKER than Save More!

      My previous post "Don't Ever Say" is to highlight the folly of treating Earn More vehicles as Save More - when Save More vehicles themselves can even go to zero...

      During 2008 Lehman, Money Market Funds almost went below parity in the US - it's the equivalent of negative interest rates "impossible cannot happen" seismic event!?

      As Savers, we can get screwed in many ways even if we have done all the right things all our lives.

      For eg, if you living off your fixed deposit interest during retirement. Then interest rate went to near zero. How to survive?

      You are now "forced" to move to REITs or junk bonds to get a yield...

      But for the past 30 years you were a saver! You have ZERO Earn More track record!!!

      Now interest rates go up, you very shocked you are suffering capital losses???

      Inflation in Eurozone is 8%, US around 6%.

      Even if sell and cut-loss your REITs or junk bonds and move back to fixed deposits at 4% interest rate, eh...

      You fixed deposit interests are negative yielding in real terms... You are still getting screwed!!!

      That is why big daddy evaluates their shepherds' investment returns AFTER inflation.

      For us retail, if we can't beat CPF's 4% over a full bull/bear cycle, it's probably a signal we should re-evaluate whether we are cut-out for Earn More...

  2. Replies
    1. WTK,

      We can't avoid risks.

      It's all around us.

      Even at home, if we slipped in the bathroom, it can be fatal if we hit our head against the sink...

      Go out its the usual as in traffic accidents...

      At my old flat in Stirling Road, there's a horrific accident where a car just skipped the road and mowed down a pedestrian sitting at the bus stop. That's why we now have bollards at most bus stops.

      Travel? We just hope our number is not up whenever there's a plane crash...

      Taken to the extreme, we develop agoraphobia.

  3. Smol,

    Keep the risks to the minimum where possible. Take control rather being controlled. Common sense prevails in most of such circumstances. It is up to one making the appropriate decision.


    1. WTK,

      Couldn't agree more,

      We can't avoid risks, but we can mitigate them with common sense.

      Worry too much until paralysed; no good.

      Too cavalier in dismissing risks; that's not wise too...

      Middle path.

  4. Hi SMOL,

    Cannot avoid risk, no matter what we do, definitely. Therefore should learn to take calculated risk.

    1. Rainbow girl,

      The earlier we start taking calculated risks, the stronger (or more competent) we'll become - provided it does not destroy us first!

      Better this than to avoid risks at all costs during our youths; and when we become old fogeys flushed with retirement savings, suddenly get a rush of shit to the brains...


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