Investment does not equal wealth. In fact, investing is just an action to put money into something, with the hope of generating return in the future.
(Note: For those selling or marketing investment opportunities, this blog post is not for you.)
Retirees can’t afford to lose a single dollar
After his retirement, a famous Hong Kong disc jockey changed path to be an investment guru. He has financial freedom at the age of 55. His new life purpose is to share with fellow retirees how to manage their money.
There is a message he keeps repeating in his books and youtube channel: Don’t invest in anything new when you are about to retire or after you have retired. After the age of 50, you cannot afford to lose a single dollar. Because for every dollar you lose, you have one less dollar for retirement.
I can’t agree with him more.
When approaching retirement, your number one priority is to protect your money and safeguard your wealth. Leave your money in the safest place.
Investment is not a must. It is perfectly fine if you don’t invest. Retired or not, we can all afford not to invest. Even savvy investors don’t have to be fully invested all the time.
Because if you never invest, you won’t lose a single cent. At most the growth of your savings cannot beat inflation which is not a big problem anyway.
The truth is: Most investments end up in losses. This is especially true for those investments advocated or managed by so-called financial professionals. Be very careful whenever anyone talk to you about investment. If you believe the salesperson and take action, there is a high chance that you will lose money. And the loss is likely much larger than any increase in inflation.
Try recall your worst investment. Compare the loss with the inflation rate over your holding period. Wouldn’t you rather lose to whatever inflation that the media or the salesperson once instilled the fear in you?
Why retirees lose it all to investment
When people enter a new phase in life, it is the perfect time to sell them things. That’s why whenever we face unknown or uncertainties ahead, we tend to make big investment mistakes.
In the investment world, ignorance is never bliss. The punishment is particularly harsh to the retirees who are individual investors.
Once some retirees and elderly stepped into a neighborhood bank to place fixed deposits. After chatting with a friendly bank officer, they ended up buying Lehman Brothers minibond. That was how 10,000 Singapore retail investors lost their S$500 million hard-earned savings.
Last year I mentioned this in my post “What retirement planning has taught me”: Financial literacy and investment savviness have nothing to do with age, education, career or income level. I can find many examples in my one-to-one property consultation sessions.
Many professionals and senior executives have decades of experience and knowledge in their field. When they hit 50, they are doing very well in building professional reputation and personal wealth. With a lot of self-confidence, they believe that they can do well too in investment.
But unfortunately, the investment world is completely different from the world they know. And they forget that no baby can learn how to walk without falling many times.
“They have worked hard all their life and have a large sum of money from their savings, pension and CPF account. The retirees may be experienced in their own field, but they often have little or no experience investing. They try their hands at investing, not knowing they can risk losing a huge amount. Refraining from a reckless investment is already the best way to protect their wealth.”
Fail, and fail earlier
People in their 50s often come to me for property investment advice. Many want to have passive income after retirement. Some wish an investment property can increase their retirement fund.
Two decades ago, with so many value-for-money buys in the market, and interest rates were low, when they were young and fearless, why didn’t they buy? What’s keeping them so long to take action?
If they didn’t manage to invest back then, what makes them think that they could do it now? Honestly, if one could invest well and be rich, he would have done it long ago instead of waiting till his 50s.
Only those in their 20s and early 30s can afford to invest all and lose it all.
This was exactly what I did. I put every single dollar I saved into buying properties. If the dirt-cheap prices continued to fall another 35 percent, I could be forced to default or declare bankrupt. But I still had 30 years to make it back.
Invest as early in life as possible. It’s rare to do anything very good the first time. You need ten, twenty or thirty years to fail, learn the lessons and improve along the way.
When my elder daughter was 17, I helped her to buy her first stock. Even if she lost all her money, it’s not much anyway.
“In a lifetime, you must make a wrong financial decision, lose your hard-earned money and have your heart broken at least once. Then you can learn to be smarter. The earlier you fail, the better. Making elementary mistakes is best reserved for the young. It is too late and too painful to fail when you are no longer young.”
Think buying stocks is safe? Think again
Last Wednesday (April 26), The Business Times published an article titled “Retirement savers in Singapore need to cast their nets wide for growth”. It mentioned that results of Singapore stocks in the last decade have been “downright dismal”.
“Based on 10-year returns from the iShares exchange-traded fund (ETF) tracking MSCI Singapore, the annual average price return was less than 1 per cent – no better than a savings account.”
“ … in Singapore, where individuals, burnt by losses from stocks over the past two to three decades, have either retreated into cash or are forced to cast their nets wider.”
“Retail investors’ reluctance to invest and the shrinkage of the Singapore stock market are a vicious cycle, manifest in lower valuations, an overall decline in market capitalisation, fewer initial public offerings and a rising trend of delistings.”
Ten years ago on 1 May 2014, the Straits Times Index was 3,295. On 30 April 2024, by coincidence the index was also 3,295. What about the NASDAQ? During the same period, it jumped 3.66 times from 4,370 to 15,983. What about Hong Kong’s Hang Seng Index? It plunged from 23,082 to 17,791 in the last ten years.
Of course, it is unfair to pick specific points of time for comparison. Under market volatility and cycles, there are ups and downs in any decade. However, the three stock indices prove one thing: When you buy stocks, you can make money, make nothing, or lose money with an investment horizon of ten years.
Say you retire today and start investing in the stock market. Ten years later, you may need to cash out because of depleting savings or critical illness. How can you foresee whether market performance is like Straits Times Index, NASDAQ or Hang Seng Index?
Scammers love Singaporeans
Wherever there is money, there are thieves.
Rich countries like Singapore are favorite targets of scammers all over the world, including licensed scammers going around marketing bad investment.
There is a joke that you can get a call or a message from scammers every other day. There is a scammer in every other street. It doesn’t have to be a love scam or a ponzi scheme. They can be properties, stocks, bonds, ETFs or any investment that guarantee to eat deep into your savings.
“The rich have teams. The average person does not have a team. The average person has a financial advisor, stockbroker, or real estate broker giving them advice. And very often, that “advice” is a sales pitch, not financial education.”
– Robert Kiyosaki, Fake: Fake Money, Fake Teachers, Fake Assets: How Lies Are Making The Poor And Middle Class Poorer
What happened to your first investment? Did you make anything from your last investment? Could you recall your biggest investment loss?
“With my social media channels getting more traffic and followers, they also draw a lot of questions, comments, complaints and grievances from former, current and potential property buyers … Why are investors losing money? Why is there so much buyer’s remorse? Why do people feel they are being cheated? Why are homebuyers’ rights not being protected?”
By the way, for anyone interested in property investment, it is meaningless to read anything in local media or property portals. Because they are all bought up by property developers with their advertising dollars. To know what is really happening, look at what developers and agents are doing now. Talk is cheap. Why are developers not bidding new sites? Why are agents so desperate these days?
No new investment please
To avoid reading another investment victim’s long sad e-mail, let me repeat myself again.
1) If you are about to retire, don’t invest in anything new, including properties, stocks or businesses. You can be a student at any time. But not for new investment. The school fees are too high to learn how to invest at your age. You need decades to build the wealth of thousands and millions. But you can lose thousands and millions overnight.
2) Don’t dream of making it big or growing rich after you retire. If you could make it big, by now you should have already been there and done that.
3) Don’t let any risky or high maintenance investment stress or upset you. You need peace of mind and to be able to sleep well at night. Health, not wealth, is your priority at this stage in life.
4) Don’t listen to any marketer who scares you with inflation or insufficient fund for retirement. I can confidently say that Gen X Singaporeans are all able to retire comfortably because we have CPF, MediShield, and benefits for the silver generation – provided that you didn’t overspend, indulge in any addiction, or lose your savings in a business, investment or scam.
What if “investment” is your hobby?
Fine. If you can’t live without lottery or soccer betting, by all means allocate a small portion of your retirement sum to do that. Just make sure it won’t hurt even if you lose every time.
Food for thought
Let me end this post with a strategy adapted from Sun Tzu’s The Art of War.
善战者，立于不败之地，而不失敌之败也。-《孙子兵法·军形篇》
(For those who are good at fighting battles, they always make themselves stand at an undefeatable place, then find every opportunity to defeat their enemies. – Su Tzu, The Art of War)
Safeguarding your retirement fund is a long battle. Make sure you build a strong fortress around you for protection.
Check out my new online courses How To Buy Good Quality Properties and Buy The Right Condos.
You can watch the recording of the presentations at the 2023 Mid-Year Singapore Property Review and Outlook seminar.
The video 2023 Singapore Private Home Market is available for viewing here.
If you need advice on property matters or residential properties in Singapore, you can check out my one-to-one consultation service.
My book Behind The Scenes of The Property Market is available for preview and order online.
Good and well said article. Im reaching 50, I dig your anrticle, especially the last 4 points. However, with so many YouTubers and influencers preaching “investing” via social media, even though I stand with your opinions, it goes against the general flow of public thoughts. And with Fed just announcing rates to continually staying high, it’s just banks laughing all the way to banks with loaners continue paying higher interest for years.
Thanks for reading my post. When interest rates are low, it is easier for scammers and marketers alkie to steal our hard-earned money. They can easily manipulate our greed with higher returns and our fear with the talk of inflation eating into our retirement fund. Now interest rates are high. Target to pay back all the outstanding loans as soon as possible. We shouldn’t be over-leveraging in the first place.
Welcome. I chose to pay off my property last July in order to feel financially free and it does feel good. However, there are times where I think about the opportunity costs and stuff despite channeling funds to enjoy SBS and T-bills. I guess I am not aiming high and learning to desire less helps. As you often mentioned, mental health is indeed more important. Its true, everything takes practice. Which is why I’m not into stocks, for now, unless I truly learn how to. Its a process and lessons to be paid.
Well said ! Property Forum kept sharing how great and how good to OVER LEVERAGE to become wealthy . The smart and wealthy one will be now a silly + ignorant. I definitely choose to pay off to the last one cent…which I had done. Never listen to those who sing the loud songs
Yes, those who encourage others to borrow are the salespeople or money lenders. Good debts or bad debts, all are at the mercy of high interest rates now.
WOW ! If you truly believe above all and practise what you said, please do NOT advertsie all your courses and /or accept people above 55 to attend any of your courses or talks. Cut off all people who are retirees or retiring from your blogs as they must NOW consciously know they NO LONGER need or required to invest. Go tell every one retired to enjoy, relax, spend within their means and lead healthy lives.
Hahaha don’t worry. My online courses are a few hundred dollars only that won’t make anyone bankrupt. You don’t have to pay a few thousand dollars to attend an intensive seminar. Then invite you to join a property investment group to buy some “undervalued properties” that aim to dry up your retirement fund. In a nutshell, allocate a low percentage of one’s savings for financial training or try one’s hands to invest with that amount won’t hurt. Just make sure that you only invest the money you can afford to lose.
Thanks for the article! When one is above 55, it is about wealth preservation. There are risks a retiree can’t take. If one does not understand basic financial metrics like PE, price to sales, free cash flow, payout ratio, it is wise not to risk squandering your money away in stocks.
Investing is my part time “hobby”. But when you are older, I can’t stress enough – for wealth preservation, no big bets, diversification is key, and be prepared to be wrong.
At current interest rate, cash equivalents like money markets / T-Bills offer >3.5% yield- at little risk. I take it any time.
You are right. There are many people in their late 40s or 50s still buying new launch or resale properties with loans. Many are trying to buy stocks for the first time. They are not just using 5 to 10 percent but 80 to 100 percent of their net worth to do so. Honestly, I would rather they spend their money on vacations or luxurious goods than lose all their savings to bad investments – at least they spend the money on themselves and their loved ones and enjoy the experience.
Absolutely correct!!! Silly right to be so stingy on foods and self care but choose to pour money to the market… no need to eat Kiam Cai for investment
Exactly. When we have money, we can choose to save or spend. Why waste it on risky investment?
Your investment advice for retirees is very prudent. Retirees should live within their means and enjoy whatever remain of their physical life in this planet. Forget about making more money from young influencers who are more interested in moving money from your bank account to theirs.
You are right. Retirees can look at what they have and deploy their funds carefully for their golden years. Lifetime savings are best to be used on themselves than lost to bad investment.
Hi, I think with SSB, T-bills offering such attractive rates now, there is really no need to take on unnecessary risks if we are close to or already retired.
May I add that since the announcement that CPF SA will disappear at age 55, many people have been advocating to invest to get higher returns. However, even if u do nothing, u r still earning 2.5% annually. Better than losing money. Or u can buy SSB to lock in 10 year rate at close to 3% using the upcoming tranche as example.
For investments like stocks, REITS, properties etc, with risk free rate at 3+%, we need to demand a higher yield to compensate for the risks that we are taking. Ultimately, need to be selective and only buy at right price. I do not invest in physical properties but in REITS but I believe the concept of rental/property yield still holds true.
Yes just put your retirement sum in a safe place. Investing risk-free is more important than making higher return at this stage.