The SRS offers tax benefits and you can find a quick summary of SRS here. This information is crucial to you especially if you are above 40. I will be conducting a SRS webinar in the next few weeks. Join my Telegram Group where I share 1 financial tip a day where I will be posting more details.
Why is this a last chance?
SRS allows you to make penalty free withdrawals from your SRS on or after the statutory retirement age (currently at 62) that was prevailing at the time of your first SRS contribution.
In the National Day Rally in 2019, it is already made know that the statutory retirement age will increase to 63 (in 2022) and 65 (by 2030).
This means that if you don’t make your firstSRS contribution before 2022, your penalty free withdrawal year will increase by 1 year to age 63. This is your last chance in doing so.
SRS Last Chance Retirement Age Increase National Day Rally 2019
How much do I need to contribute?
All it takes is $1. You didn’t hear me wrong. You don’t need to invest in anything yet. The account opening only require $1 (and around 1 minute). The purpose of it is to “lock in” your statutory retirement age to be 62. You can find out more in one of my most read article last year called the $1 SRS strategy.
Personally, I think it is a no-brainer to open the account. The “opportunity cost” is just $1. That being said, the choice is still yours at the end of the day.
For those of you who have opened your accounts. What are you investing in currently?
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.
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.
In the most recent webinar that I conducted, I asked the participants what are they concerned about when it comes to investing in the long run?
I thought that most people’s answer would the lack of time or the inexperience in the market. It turns out that for most people, they are not too sure if they are doing it right.
Why is it not easy to invest in the long run
If you think about it using a proxy, it is like a person driving on the roads but unsure if they driving properly. If this is not risky, I don’t know what is.
The Why
Fear Of Missing Out FOMO
As we get more plugged into the internet, social news gets spread very quickly. With more people getting stuck at home during the COVID-19 period, we log in more to these social platforms to keep updated on the world around us.
One popular topic is how people are getting rich during the pandemic. Topics like Bitcoin, NFTs, Value Investing or Growth Investing gets thrown around. Because it seems that every Tom, Dick and Harry is doing it, people fear missing out and started participating into these.
Redefine Basics
Investing is the act of allocating resources (usually money) to buy an asset, in hopes of reselling it later at a higher price (Definition from Investopedia).
For most people, they get the concept that they will make money when the price goes up. I believe there is a certain form of Social Investing (a term that I just made up) going around in the recent market. Reddit has made certain stocks like Gamestop pop. Elon Musk has certainly contributed to the popularity of Bitcoin and Tesla. One thing for sure is that prices seems to be influenced by social pressures.
While it has created some millionaires, some people are unsure what they are doing anymore.
The art of investing starts from buying an asset. This concept seems to have lost its’ way in this season.
Our Mind Plays Tricks
Let’s play a game. Find a place to record your answer for Quiz A and B.
Quiz A
Choice #1: You get a 100% chance of getting $50.
Choice #2: You get a 50% chance of getting $100, 50% chance of getting $0.
Write down which one will you choose?
Quiz B
Choice #1: You get a 100% chance of losing $50.
Choice #2: You get a 50% chance of losing $100, 50% chance of losing $0.
However, if you understand it mathematically, you should be indifferent between all the 2 choices in Quiz A or Quiz B. The expected value of both Choices in Quiz A are the same (i.e. +$50), while the expected value of both Choices in Quiz B are the same (i.e. -$50), so there should be no difference (at least mathematically) between the Choices in either Quiz. (Thank you Kok Ming for your help)
This tells us that as humans, we feel losses more keenly than gains (loss aversion). That’s probably the reason why you might have taken gains off the table early out of fear and hold onto large losing positions in the hope that they will rebound.
Our minds are not wired to maximise performance but to minimize regret.
Anyway, that’s just one problem. These are other cognitive bias we need to overcome as investors.
Cognitive Bias Investing
So What Can You Do?
Now that you understand that the society and your own mind is against you, what can you do? I would humbly like to suggest 3 steps.
#1: Get financially educated and informed of the investment process.
#2: Focus on the controllable.
#3: Consider a multi asset class portfolio to minimise drawdown.
Why is it not easy to invest in the long run education
This graph records the S&P500 gains and losses over the past 60 years. The stock market can be considered like the following season (Spring and Winter). The average period for Spring (we love Spring don’t we) is 57 months and the average period for Winter (we don’t like the cold) is 12 months.
IF we are in a crisis now, it typically takes around 12 months before it is spring again. In the more recent COVID-19 crisis, the winter lasted around 6 months (Feb21 to Aug21) before roaring back into Spring again.
It is what you do during winter that determines your financial results. Getting financially educated allows you to prepare for such opportunities.
Dollar Cost Averaging VS Buying the Dips
Let’s assume that you can predict each and every dip (technically impossible) and buy them (further assuming you have the mental resilience to buy at the lowest). Do you know that Dollar Cost Averaging (DCA) beats buying the dip in this time period? Instead of focusing on the unknowns or black swan events, why not focus on what’s controllable which is doing simple Dollar Cost Averaging?
As you can see, different asset class performs differently every year. Because our minds are loss averse in nature, we might not be able to weather through each storms if we are only into one asset class. Consider a multi asset portfolio might make it easier for our minds to weather through each storms when it comes.
Final Thoughts
Personally, I’m invested in the long run. In investment, there will be volatility and it is something we have be comfortable with either through education, experience or both.
Do you related to the above? 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.
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.
You probably would have known him. Robert Kiyosaki is famously known for being the author of “Rich Dad, Poor Dad”. My friends and I religiously read his books and I felt that it was a good place to start off with for financial literacy.
The concepts he came up with was simple, easy and gamified. You might have played his Cashflow 101 game in your pursuit of earning knowledge.
The above is a possible interpretation from his twitter.
Robert’s Track Record
If you read his books, you will get an idea that Robert is a big fan of debt. He used debt to create huge amount of passive income by purchasing properties.
He also believes that fiat money is worth lesser and lesser due to the extensively QE. As a result, savers are being punished and that hyperinflation will come in future. He is a big believer in Gold because there is value in Gold and have recently talked more about cryptocurrencies.
The very first time (in my memory) when he talked about market crash was in 2015. He believes that a huge market crash will happen in 2016. Of course, it didn’t really happen.
In 2018, he believes that market is going to get a lot worse and we are heading into bear territory. This was the period of time when the FED was raising interest rates.
Biggest Crash In History By Rich Dad Tweet Gold Sliver Bitcoin
What I Think About His Predictions
Next year, I will be celebrating my 10th year in the financial industry. I read extensively, upgraded my knowledge and here’s what I think about his predictions.
While there is nothing wrong about having a prediction, I personally feel that Robert has a deep sense of distrust in the financial system and he is extremely bearish in nature.
I don’t know whether he is right about this prediction and I’m in no position to say so. However, his money script (more on this in the articles in future) caused him to react very negatively to money. His focus is on money being money. He will be right if people start to question the existence of fiat money and stop using fiat money altogether. As a results, gold silver and bitcoin may become storage of value then. It is a long shot but who knows.
Over the last 5 years, Gold has been doing relatively okay. If he have bought it 5 years ago (as he said he did), Gold would roughly 38% up or around 6% CAGR depending on his entry.
Biggest Crash In History By Rich Dad Gold Prices Trend
Final Thoughts
Personally, I’m invested in the long run. In investment, there will be volatility and it is something we have be comfortable with either through education, experience or both. Are you looking to learn about investment?
What do you feel about Robert Kiyosaki’s prediction? 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.
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 done to the last quarter for the year. Have you accomplished your goals? Hope that things have been going well for you. In any case, this article is a simple reporting for my SRS updates.
Disclaimers: This is not and should not be taken as a buy/sell recommendation.
If you would like to see my past quarter thoughts, you can refer to March2021 and June2021.
It is also close to the end of the year, you might be considering SRS investment. Please refer my most read SRS article, 5 Things You Need To Know About SRS to learn more.
My Thoughts And Consideration
My SRS Portfolio Sept 2021 Data
The elephant in the room is the exposure into Chinese Technology Stocks (SGX:HST). It has obviously pulled down the entire portfolio as 50% of my portfolio is invested into it. Unfortunately, this SRS portfolio is still small and there is a concentration risk that I acknowledged.
Policymakers in China announced regulatory reforms that has impacted sectors like construction (think Evergrande), private education (think TAL Education Group) and Technology companies that are handling data (think Didi).
In the case of my SRS impact, it was due to the technology sector. As you can see in the Top ETF holding for SGX:HST, it haven’t been doing well year to date.
SGX HST ETF Top 25 Holdings
I remain positive in this exposure as this ETF is invested into quality Chinese companies that can deliver sustainable growth in the next 3 to 5 years. With high internet penetration in China, I believe the performance of the companies will follow suit.
SGX: BTOU is a recovery play in the portfolio. The recovery will depend on COVID19 recovery attempts in US. I’m optimistic that the recovery towards working in office will come in 3 to 5 years time.
Lastly, I’m still considering if I should inject new capital into the SRS portfolio.
Final Thoughts
Disclaimer: this is not and should not be taken as a buy/sell recommendation. Like what Charlie Munger famously said: the big money is not in the buying or selling.. but in the waiting.
We have be having a 3 parts webinar for last quarter of the year. Feel free to reach out to me for more information.
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.
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.
After the CPF webinar on April 2021, some of you have been asking if there would be more this year. As 2021 has been an interesting year, I wanted to consolidate all the lessons during this period of time and it took longer than expected. It is already September and in less than 24 days, we will be in our final quarter of the year.
Although most people says that they are a long term investor, the truth as shown by statistics is that not many people are like that. My observation is that most investors especially on YouTube tends to have a shorter horizon in nature.
I believe that investment in the long run is as important as taking care of your health in the long run. The focus on the webinar is on the following.
Letting market volatility be in your favor.
The market has been volatile recently and it will continue to be like that in future. However, this keeps people from investing as they are always afraid of market crash and correction. Research has again shown that not fully invested will have disastrous effects in the long run. Just missing the five best days when you’re otherwise fully invested drops your overall return by 35%! We will explore how to let market volatility be in our favor.
Investment Styles
Value Investing has been made popular by Warren Buffett across the decades. However, there is a new investment style called Growth Investing. This has been making rounds across Facebook due to the huge momentum that happened in 2021. Active investment is also back in trend as volatility often invites more players into the market. We will seek to explore the pros and cons of each style and how to potentially combine them together.
What is my End Game?
It is equally important to know when you can live on your investment portfolio. The transformation of the investment portfolio to serve as an income source for retirement. This is the reason why people start to invest in the first place. We will seek how it all make sense in the grand scheme of things so that you know what’s your end game.
#2: Investment as an income
There are many ways to create income from your investment. There are dividends, bonds, derivatives etc. Seminar #2 is more straightforward than seminar #1. We will explore the following.
The instruments that are available to create income from your investment
What kind of instrument might be more suitable for you?
The AUM (asset under management) needed to have a comfortable income.
This webinar will follow shortly after seminar 1.
#3: How to use SRS as an investment
This is one of my favourite topics and I have wrote extensively on the use of SRS. I have written a guide and here are some links that you should read before attending this workshop.
We will be focusing on what SRS is and how you can use it to investment and retire.
Final Thoughts
It will be a busy one month moving forward as I prepare for the 3 webinars. If you have any feedback, feel free to write to me and I look forward to seeing you for the next webinar.
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.
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.
