Is it worth it to travel to Germany during COVID season

Is it worth it to travel to Germany during COVID season?

Travelling is not the same after COVID19. There are new terms such as VTL, PCR and 2G ruling. However, that’s not the most frustrating and most worrying thing.

It is that these rules can change overnight.

For those of you who are concerned about the cost of travelling and if it will be worth it, I will be writing on a sole account on my trip to Germany and the cost of it. I will also share my frustrations and what you should take note for your trip if you wish to do so.

Disclaimer: COVID19 rules change often. Please get the most updated information from official sources and let this blog be a guide for your safe travels to Germany.

Is it worth it to travel to Germany during COVID season
Is it worth it to travel to Germany during COVID season

Booking of Flights

The booking of flight was the easiest part. When we were booking our flights, we were quite worried when we couldn’t find a VTL (Vaccinated Travel Lane) from Singapore to Germany. Fear not, this is because VTL is only applicable from Germany to Singapore. The flight from Singapore to Germany will not have a VTL status as shown below.

SIA Tickets Singapore to Germany Cost COVID
SIA Tickets Singapore to Germany Cost COVID
SIA Tickets Germany to Singapore Cost VTL
SIA Tickets Germany to Singapore Cost VTL

Noticed that there is a box in blue (from Frankfurt to Singapore) that shows Vaccinated Travel Lane (VTL). If you do not wish to be quarantined when you are back, pick the VTL (Vaccinated Travel Lanes). There will be VTL and non-VTL flights so choose properly. Hope this put to rest some of the doubts that some of you might have.

There are only two airlines namely Lufthansa and Singapore Airlines are serving this route for now.

In our case, We flew by SIA to Frankfurt during December 2021 and it costs $1007 both ways.

Travel Insurance

Travel insurance isn’t compulsory during the period of time when we were travelling to Germany but we purchased it anyway. There were 3 decent insurance companies that covers for COVID-19 situations that you can consider. These companies are namely AIG, AXA and NTUC. I won’t go into the details. Please note that some countries require proof of insurance before entering.

AIG COVID19 Coverage Travel Guard
AIG COVID19 Coverage Travel Guard

Personally, I selected AIG Travel Guard for my trip there. It cost $137 for a ten days trip to Germany.

Vaccination Proof

This is probably the most important item you will need for a trip. Go to Notarise to download and print a copy of your vaccination proof. (I have also save a copy of the vaccination proof in my phone just in case).

Notarise Vaccination Certification
Notarise Vaccination Certification

Germany treats COVID19 very serious. Every single retailer and restaurant will definitely check your vaccination status. You have to be fully vaccinated (with Germany approved vaccines) with 6 months of validity. You can consider this like a “passport / Trace Together” to be checked before entering any facilities.

FFP2 Mask

FFP masks are “filtering face piece”. It is a European standard for mask efficiency, ranging from one, the lowest grade, to three, the highest. Some hotels or tourist attractions will need you to wear a FFP2 graded mask before you can be allowed in.

It is very similar to America’s N95 or China KN95.

Is it worth it to travel to Germany FFP2 mask
Is it worth it to travel to Germany FFP2 mask

I wasn’t sure how strict Germany will be so I bought the FFP2 mask from Shoppe that bore the wording FFP2 on the mask. I bought 10 FF2 masks for 10 days. However, 2 of them was faulty. Luckily, it is generally quite easy to buy a mask in Germany. The box I bought cost $16 for 20 pieces.

German Rail Pass

This is the least complicated of them all. You just have to check if buying single train tickets are worth it or buying a rail pass.

Is it worth it to travel to Germany Rail Pass
Is it worth it to travel to Germany Rail Pass

If you are travelling inter cities, you might be thinking if it is worth it to get a German Rail Pass. A German Rail Pass is like an “unlimited” travel pass that you can use to get yourself around. The German Rail Pass allows you to travel on Deutsche Bahn trains (U Bahns are not part of the DB series). It will get you to most places. It is generally worth it if you plan to travel to more than 3 cities (with a combination of Frankfurt, Cologne, Munich, Heidelberg, Stuttgart, Hamburg, Berlin). It is quite flexible and you can choose if you want it for 3,4,5,7,10,15 days consecutive or selected travel dates version.

I paid $325 (for myself) for a 10 days consecutive German Rail Pass Twin Pass. Simply print a copy of Rail Pass before going to Germany.

Travelling In Germany

That’s all the heavy lifting you need to do before going to Germany.

At the time of travel (Dec2021), we did not need to do any COVID-19 test to go to Germany (Check the latest here). It would be good to familarise yourself with the 3G, 2G and 2G plus rules in Germany. In most cases, you will see 2G more often, this means that you have to be fully vaccinated or recovered from COVID-19. In most cases of Singaporeans, you will be fully vaccinated already. Simply show your vaccination proof and your passport to be allowed in.

You will also need to wear a mask when you are indoors (trains, shopping center).

The restaurants do not practice safe distancing (which was strange to us). It tends to be a squeezy at times. On the bright side, the food portion is huge and affordable. Order as you deem fit.

Is it worth it to travel to Germany Food Cost
Is it worth it to travel to Germany Food Cost

VTL Preparation into Singapore

This worried us the most as we needed to do a Pre-Departure test before coming back to Singapore. When we first booked the air ticket, the requirement was to do a PCR test which cost around 70Euros.

Germany To Singapore Pre Departure COVID Test VTL
Germany To Singapore Pre Departure COVID Test VTL

However, when we re-checked the website, we realised that PCR OR ART was allowed for Germany (Category II). Although apprehensive, we decide to wing it and take the ART which cost 8.5Euros instead. Talk above massive savings!

We did our test at Zentrum. You should be able to find a COVID test center quite easily in Germany. Please remember to go to a center which will be able to provide you a test certificate showing negative results. In our case, the results came after 1 hour (phew).

You will then need to do a E-Health Declaration and book a PCR test upon arrival in Singapore (SGD$125).

Back To Singapore

We were very fortunate to be the batch that require us to go for 7 days of ART test. On the on the third and seventh days, the tests will have to be done under supervision at a combined test centre. After being tested negative, we can proceed out to do our daily activities.

Fortunately, it wasn’t very expensive. 5 days of test kits cost around $25 in total and the 2 days of ART supervision cost $30. In total, this is an extra $55 that we didn’t see coming.

Conclusion

The whole trip costed around $3000 per person. Transport costed the most as airticket and the rail pass was the most hefty item. Accommodation was the second on the list. I found the hotel rates pretty similar as compared to before COVID so book according to your requirement.

I find that budgeting around SGD$100 for daily meals (with beer) is quite reasonable. You probably will have some extra to get some presents.

If you are planning to do skiing, it is not the cheapest activity but it will definitely be worth it.

There is a “new norm” COVID related expense at 6.3%. These includes my FFP2 mask, the PCR test and various ART test.

Is it worth it to travel to Germany Total Cost

Is it worth it to travel to Germany Total CostSomebody asked me if given the choice again, will I travel to Germany?

The answer is a resounding yes. Germany is a country that treat COVID seriously. The streets are generally safe and people are friendlier than Singaporeans (I will use myself as a basis point). It is nice to try different food and walk in a different street once in a while. Overall, I enjoyed myself very much and look forward to your experience overseas.

Lastly, take note that COVID rules have changed before and are very likely to change again in future. Please check the latest requirements and let this article serves as a general guide.

Safe travels.

Is it worth it to travel to Germany 2021
Is it worth it to travel to Germany 2021

Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

Feel Free To Reach Out To Share Your Thoughts.

Contact: 94316449 (Whatsapp) chengkokoh@gmail.com (Email)
Telegram: Wealthdojo [Continuous Learning Channel]
Reviews: About Me

The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.

Impact Of Genetic Testing On Insurance Singapore

Impact Of Genetic Testing On Insurance

Genetic testing is getting more common as the medical scene evolves. If you find out that you have a  “bad” result from the testing, you might fear whether your insurability will be impacted or worried that this is considered a pre-existing condition.

On 27 October 2021, the Ministry Of Health (MOH) and Life Insurance Association (LIA) have put together a Moratorium to protect Singapore Residents from having their insurability impacted as a result of having taken predictive genetic testing.

Please refer to the complete details on the LIA’s website. In an event of doubt, please refer back to the complete details as hyperlinked above.

Impact Of Genetic Testing On Insurance Singapore
Impact Of Genetic Testing On Insurance Singapore

A Brief Background

If you know that you have a higher chance to develop a condition in future (via those gene testing), you might load up on more insurance now. Insurers knowing that will ask for those test results. To then prevent this from happening, you might be deterred to undergo such testing anyway.

This Moratorium serves as a safeguard to prevent unfair discrimination during risk assessment (or insurance purchase) and adverse selection against insurer.

The Summary

Life Insurers in Singapore are NOT ALLOWED to ask applicants for their predictive genetic test results if they have taken the test. They will not be allowed to use those results for underwriting purposes.

However, given certain criteria are satisfied, life insurers may ask and use results of approved predictive genetic test for underwriting.

This is applicable for Singapore Residents only (Singaporeans, PR and valid pass holders). Non Singaporean residents are required to disclose genetic test results. If genetic test are done for biomedical research, applicants are not required to disclose those results.

This is also applicable to the following insurance policies (Life Insurance, Total Permanent Disability Insurance, Critical Illness Insurance, Long Term Care Insurance, Disability Income Insurance) only.

The Criteria Of Being Asked

Impact Of Genetic Testing On Insurance Singapore LIA Infographic
Impact Of Genetic Testing On Insurance Singapore LIA Infographic

There will be 2 keys that need to be satisfied before the life insurer can ask for and use the results of the certain predictive genetic tests.

The first key involves the sum assured you are considering. This sum assured refers to the total insurance coverage under all policies issued by insurers in Singapore (including concurrent insurance application). If you require a high sum assured, you might have satisfied the first key.

The second key involves the approved predictive genetic test for Huntington’s disease (HTT) and Breast Cancer (BRCA 1 and BRCA2). If you have done a predictive genetic test for the above, you would have satisfied the second key.

A simple example:

Sarah wants to buy $1,000,000 sum assured for critical illness. She would have satisfied key 1 because she is buying a sum assured more than $500,000 for critical illness.

If she have taken a predictive genetic test for breast cancer previously, she would have satisfied key 2.

As both keys are satisfied, Sarah will have to declare the result of the predictive genetic tests for her insurance application review.

If you have any questions, there is a listed of FAQs here.

 

Final Thoughts

Please refer to the complete details on the LIA’s website. In an event of doubt, please refer back to the complete details as hyperlinked above.

Stay safe and take care.

Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

Feel Free To Reach Out To Share Your Thoughts.

Contact: 94316449 (Whatsapp) chengkokoh@gmail.com (Email)
Telegram: Wealthdojo [Continuous Learning Channel]
Reviews: About Me

The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.

Financial Lessons From The Squid Game

Financial Lessons From The Squid Game

Financial Lessons From The Squid Game
Financial Lessons From The Squid Game

This show from Netflix needs no introduction. Amidst the games, the show highlighted the Korea Economy. One with highly-skewed income disparity, worsening household debt and survival of the fittest amid fierce competition.

South Korea is the 12th biggest economy in the world with a GDP of $1.6T. Singapore is trailing behind at 36th with a GDP of $364.2B. Though they are larger in GDP, it seems like the struggles they have with money is the same as Singapore or even worse.

While watching the show, I keep feeling that the characters behave very badly when it comes to money (or the lack of money). Just a few days after, I can’t help but think that it is an representation of what is happening in real life. (That’s probably why the show resonates to us on some level).

To avoid going down the slippery slope, I decided to consolidate the lessons we can learn from this so that we will NEVER have a situation like this EVER.

Hope you enjoy the read.

Spoiler Alerts: Please do not read this as it contains spoilers on the show. We invite you to come back after you finish the series.

 

We Have Emotions

Financial Lessons From The Squid Game Emotion Greed Fear
Financial Lessons From The Squid Game Emotion Greed Fear (Source: Distractify)

I feel that this is something that isn’t acknowledged much in the financial world. It is often thought that most financial decision can be made logically easily. The basic assumption in most economic literature is that humans are rational in nature. However, behaviour economics proven time over time that this couldn’t be more wrong.

Starbucks Behaviour Economics Financial Lessons
Starbucks Behaviour Economics Financial Lessons (Source: S-Retech)

Consider this, you walk into Starbucks (or any other coffee places) to get your daily small dose of coffee. After looking at the prices, most people end up getting the big cup not because they wanted it but because it is a “much better price” than the medium. If you have also chosen the big cup, congratulations, you have experienced the Decoy Effect.

The Decoy Effects explains how an inclusion of an inferior 3rd choice (medium cup) will affect your consideration of between the initial 2 choices (large and small). When there is a decoy alternative, most people makes decision based less on what suits their needs and what we considered as a more beneficial alternative. This results in people spending more as a result at Starbucks.

This is just one of the many cognitive bias that we experience.

This is why it is not easy to invest in the long run, buying term and invest the rest is bad advice or why buy low and sell high is useless advice. I’m not denying that those are rational. It is logical. But we are humans. We experience fear, greed, anger, denial, lost, guilt, shame, hope, envy etc.

These makes it very tough to be rational in a body where we feel so much. Today, most people only focus on the rational side which makes it tough to have a good conversation on finances. I hope that more and more people can come to acknowledgement with their emotions in future.

You Can Win With The Right Strategy

Financial Lessons From The Squid Game Right Strategy
Financial Lessons From The Squid Game Right Strategy

In this very epic game of tug of war, strength is very important. In the team of 10 people, the protagonist team have 3 ladies, 1 weak elderly and 6 men. They faces off a stronger team consisting of all men.

While it feels like the protagonists team have a clear disadvantage in this game, the weak elderly share his wisdom and experience on how to strategize and win against teams that are bigger and stronger than them.

The protagonists team barely escape death by execute the strategy and winning against a team far stronger than them.

In the financial world, you can consider the 10 people the resources that we have. Some of my peers have rich parents, some are left properties under their names, some have good networks and have parents financially independent. But, they may not be financially as well off.

I also have friends who have siblings who depend on them, a study loan, parents who believes that children is the ultimate retirement plan. In spite of this, some of them do succeed in their financial goals by having a right strategy and executing it well.

Having a strong 10 people/resource is important. It is as important as having the right strategy and executing it well.

Learn From Others Mistakes

Financial Lessons From The Squid Game Learning From Mistakes
Financial Lessons From The Squid Game Learning From Mistakes

In another nerve wreaking game called the glass stepping game, participants are made to cross a glass bridge. Participants are presented 2 choices. Stepping on the right choice would mean safety, stepping on the wrong one would meant death. In any event the participant chooses the wrong one and dies, the one after him/her can choose the right one and proceed with the game.

In this game, it is awful being the first one.

In the financial world, money was first originated some where as early as 5000 B.C., in which tons of literature has already been written. One of the classics of financial books is The Richest Man in Babylon. Many important clues have been record and it is up to us to follow that roadmap presented to us.

Another way is to learn from the people around us. If our parents have achieve a certain level of financial freedom, we can learn from it. If our parents have not achieve any, we can also learn from that too.

In whichever case, there is always something to learn.

People Can Behave Badly When It Comes To Money

Financial Lessons From The Squid Game Bad Behaviour
Financial Lessons From The Squid Game Bad Behaviour

In the final game of the series, Squid game, the 2 protagonists face off in a brutal, savage and barbaric fight. As their lives and the prize money was on the line, they really had a lot to fight for.

I was reminded of estate planning stories and divorce stories that were shared during my recent IBF Certification for Private Banking. Most of the stories were very unfortunate. In almost all cases, humans behaves very badly when it comes to money issues.

A old example happened in 2013 when a Singapore based couple committed “financial suicide”. Both have spend SGD$1.7 million on legal costs – just to decide where the divorce should be heard as well as litigation costs linked to the child. You can find the article from multimedia stations from NLB Libraries. It is written in The Straits Times dated Friday, 2 Aug 2013 by Senior Law Correspondent K.C. Vijayan.

Divorce Case Financial Suicide
Divorce Case Financial Suicide

In a more recent example, siblings are suing their elder brother over 2 properties worth SGD$3.1 million. As the estate planning was not poorly set up, it has resulted in a messy inheritance battle of which relationship will be ruined. Though it is not known what the legal costs are, I believe their relationship will never be the same again.

The Financial Journey

Financial Lessons From The Squid Game The Journey
Financial Lessons From The Squid Game The Journey

In the most iconic game called Green Light, Red Light, participants win by making their way towards the end of the line in a given time limit. They can only move when it is Green Light (when the doll is not facing them) and they have to stop any movement during Red Light (when the doll is facing them).

At the start, the participants don’t really understand what to do. 2 brave souls started the journey but ended up dead. This causes panic to everyone and people scrambled towards the “exit”. Unfortunately, they were all shot dead.

The cooler headed participants began their journey again. Unfortunately, some tripped either because they were moving too fast or just unlucky to bump into themselves. They died in their attempt to reach the end.

As some participants crossed the line and won the game, there were others that couldn’t cross the line and died as well.

In this game, it closely symbolizes our journey with money. In a given period of time (working years), we want to reach the end (retirement). Some people panic when they see others lost money in the investment and ran towards the exit (panic selling). Some people overleverage (move too fast), some people suffers from critical illness (bump into themselves), some people start too late (couldn’t reach the end). In all these cases, it resulted in people having a less than ideal lifestyle.

Final Thoughts

Overall, this show was a dark, ghastful and yet awfully realistic in showcasing the behaviour of humans put in those desperate situations.

I recommend watching a comedy after the show.

What other financial lessons have you learn from this show? Let me know in the comments below.

Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

Feel Free To Reach Out To Share Your Thoughts.

Contact: 94316449 (Whatsapp) chengkokoh@gmail.com (Email)
Telegram: Wealthdojo [Continuous Learning Channel]
Reviews: About Me

The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.

Jack Ma's 5 Best Quotes On Life, Business and Relationship

Jack Ma’s 5 Best Quotes On Life, Business and Relationship

It is amazing how a man’s destiny can be changed in one year. Jack Ma, more famously known as the Founder of Alibaba (BABA) has disappeared from the public eye around the time when Ant Group was unable to list on the US stock exchange. China stocks are not having a good year ever since the CCP started to have impose regulations on various sectors. There might be times where you might think dollar cost averaging is not working on Chinese stocks.

That being said, Jack Ma has spoken wisdom on life, business and relationship. I have compiled Top 5 quotes which I particularly enjoy.

Hope that Chinese stocks turn around soon.

Jack Ma's 5 Best Quotes On Life, Business and Relationship
Jack Ma’s 5 Best Quotes On Life, Business and Relationship (Photo Source)

#1: On the path to success, you will notice the successful ones are not whiners, nor do they complain often.

After thinking for a long time, I personally felt that this should be the first one on the list (or on any list). If you ask someone what are the ingredients of success, you might get answers like family background, intelligence, the amount of money they have, the school they come from or being hardworking.

I believe that one point stands above all of those listed above. I’m not undermining any of them but without this one point, the rest might fall short.

The Right Positive Attitude.

In my industry and in the previous companies that I worked for, I noticed a similar pattern. The top performers are usually silent (of course they will be loud performers too) and they do what they are suppose to do diligently. Most of them look at the bright side and are often grateful for what they receive or accomplish in their work. Don’t be mistaken though. They do complaint (they are not saints). After releasing the negative energy, they will pick themselves up again and continue preserving in what they do. In time, most of them find success.

Observe the “more successful” colleagues that you have. Are they like what I have described? Do you want to be like that too?

 

#2: You need the right people, not the best people.

I was inspired by this book called Good To Great by Jim Collins. Jim Collins put together 5 years of research to explain how a company can grow from good to great. In one of the chapter, Jim Collins writes about “getting the right people on the bus“. He didn’t say the best people, but the right people.

The right people or team will figure out how to drive the bus to the direction they want. I believe that everyone gives out a different kind of energy and it is your job (as a leader) to manage that energy. In the world, there are really smart people/best people out there. But if they won’t be able to have the right resonance with the team, they are not right at all. The bus might be driven in a different direction or be broken down entirely.

The right culture takes time to build up and seconds to be broken down. You might have friends who “overstayed” in a role because they enjoyed their colleagues company too much. You probably might have heard of friends who quit their jobs immediately because of a bad manager.

The book Good To Great will give a different dimension in explaining this.

 

#3: When people think too highly of you, you have the responsibility to calm down and be yourself.

One word can summarise this entire sentence: Ego. This comes as a bad joke because I felt that ego might have gotten better of Jack in the last few years.

As we become more successful and people start looking up to you, I believe it is important to remember our roots and how we get there. I have met people who got successful very quickly and (very quickly as well) became arrogant. I like this quote from Will Smith: Money and success don’t change who we are; they merely amplify what is already there. People will see how you treat people and that is an indication on who you are as a person whether successful or not.

The price of ego could be a heavy one and it is up to us to have humility whether successful or not.

What kind of person do you want to be?

 

#4: When doing sales, the first people who will trust you will be strangers. Friends will be shielding against you, fair weather friends will distance from you. Family will look down upon you. The day you finally succeeded, paying the bills for every get-together dinner, entertainment, you will realised: everyone else is present except strangers.

I don’t blame them. As Walter Bradford Cannon once said fight or flight is a physiological reaction that occurs in response to a perceived harmful event, attack, or threat to survival. A sale may seem like a harmful attack to their wallets (whether or not the product/service is useful for them or not). Any and every exposure to a sale person might seem daunting for some.

I know of some friends who put down everything to start a business. It isn’t as glamorous as it seems. Behind the nice Facebook post lies hard work, sweat and tears (not exaggerating). There are also countless heart aches that they (myself inclusive) have experienced in the course of running a business.

  • Working well beyond 9am to 5pm. Some quit their jobs and suddenly they are working 24/7
  • Some might face discouragement from family or their close ones. Some very hurtful sentences include “You have a degree, why do you want to do this?”, “Why don’t you find a proper job?”, “Why are you not setting aside time for the family, is money that important?”, “Why are you not working hard enough (when things are not going well), do you know we have a family to support?”, “I can get this cheaper from Taobao”, “I can do this myself by reading up” etc

Yet, the day you succeeded in the world eyes. Suddenly, the applause comes in. Comments like “I knew you could do it all this time”. I heard this first hand from a friend who successful sold away his business for millions of dollar. However, I would have to say it is not easy. It is hard to suddenly trust someone to buy something straight away. It is even harder to refer them to someone that you know. But for those of you who did, a big thank you.

Do you know someone who is running a business or a practice? Lend them a helping hand. Here are some from I know run great business and I would like to extend to them a helping hand.

Disclaimer: I do not get any referral fees for promoting them. I personally feel that their products and services are great.

Platter With Love: Luxurious Handcrafted Artisanal Gourmet Platters with a Social Mission

OlaBakes: Sweets Made Fresh

Oriental Remedies Group: Bilingual TCM Physicians You Can Trust – #FeelBetterFaster with TCM x Technology

 

#5: Buying Life Insurance cannot change your life; instead it prevents your lifestyle from being changed. After tolling for decades, an illness can wipe out an entire family’s saving by medical bills incurred.

You will not turn bankrupt because of buying insurance but you will cause your loved ones to turn bankrupt if you don’t.

There are certain things we want to happen and certain things we don’t want to happen. In the 21st century, humanity is facing one of the greatest war ever: the war against critical illness. Mortality has improved over the years because of medical innovation. At the very same time, the cost of medical provision has also increase. What seems to be like a death sentence decades ago can now be cured.. but you need money to have access to that treatment.

After chatting with past critical illness survivors, I realised that concern of falling ill runs deeper than just the cost. At the end, affording the treatment is the start. Recovering from the illness is the end game. Give yourself a chance to win this game by having the adequate insurance.

 

Final Thoughts

Let’s all thrive in our lives, business and relationships.

Stay Safe.

Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

Feel Free To Reach Out To Share Your Thoughts.

Contact: 94316449 (Whatsapp) chengkokoh@gmail.com (Email)
Telegram: Wealthdojo [Continuous Learning Channel]
Reviews: About Me

The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.

We are forced to be investors whether we like it or not

We are “forced” to be investors whether we like it or not

We are forced to be investors whether we like it or not Low Interest Rate
We are forced to be investors whether we like it or not: Low Interest Rate Singapore 25 Years

This one chart explains it all. It was just a “few years” back when my parents told me that it is important to save money in the bank. Saving money in the bank does have many tangible benefits. Firstly, it creates a pool of emergency funds for a peace of mind. Secondly, it gives you a lump of money to prepare for any opportunities. Thirdly, if you don’t do anything, the banks will give you up to 7% interest per annum (Dec 1980). That sounds good to me!

Fast forward to 2021, the bank is giving on average around 0.05% and it seems to be getting lower. The low interest rate environment has changed many areas of finance. Firstly, it has already affected the insurance companies’ participating plans. Secondly and more importantly, it has lead to the erosion of money.

This means that the money you have now, will be worth less in future. For every $10,000 you have in your bank, the real value of your $10,000 will be halved ~$5,454.84 in 30 years if you continue to keep money in bank. (assuming 2% inflation rate)

You can say that we are in a generation that is “forced” to invest or suffer the erosion of money value with time.

We are forced to be investors whether we like it or not Value Erosion

What It Means For You?

Whether you are in your 20s who might be working for the next 40 years (damn) or in your 50s who might be retiring for the next 30 years, we are all exposed to the same erosion. As a retiree, it is important to understand that your savings value will go down in quantity and value. As a working adult, it is important to understand that your hard earned money is worth less down the road.

There is only one obvious thing to do. Either you keep pace with inflation (endowment plans/selected bond funds/etc does a decent job for this) or you have beat inflation. If you want to beat inflation, you will most possibly be expose to other asset classes which might have higher volatility and risk. It is crucial to know your risk profile here before you proceed.  You might be not suitable for certain asset classes and it is important to talk to professional to assess this.

The Chase For Higher Yield

There are only 2 ways to do this. Either you do it yourself or let others do it for you.

Do it yourself: This is an active role. It involves many things such as knowing what asset classes to buy, what assets in the asset classes to choose from, the pros and cons associated into each assets, the co-relationship between each assets, the duration of investment, the investment thesis and when to exit. This list is not exhaustive.

There is a very strong emphasis here on the level of financial knowledge which might take years to acquire. (All this time, still spending most of your waking hour working on the job). It is a longer process but definitely rewardable.

Do it for you: This is a semi passive role. There is still a personal responsibility to know what you are investing in. Otherwise, you are completely at mercy of the provider. In Do It For You, usually a portfolio is readily available. There will be an explanation on the investment thesis and if you subscribe to the investment thesis, you can consider taking up the Do It For You.

Annual reviews or semi-annual reviews are important here to see how the investment is doing. Generally, it is a passive role after that.

 

Final Thoughts

Whether you choose to do it yourself or do it for you, the reality is that you have to do something. If you don’t, the retirement journey just might be a little hard.

We are forced to be investors whether we like it or not
We are forced to be investors whether we like it or not

Till then, take care!

Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

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The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.