Jun 15, 2014

Cory Diary : Currency Risk

Strength of Currency drives purchasing power. Determines where, what and how to park and invest my money.

What's the use of doubling my S$ denominated Stocks if Singapore currency devalue by half. Most likely I will see super inflation like Venezuela with soaring prices.

What happen overnight we have a watershed election and Opposition won the day. Will I still see Singapore progress or sustainability as normal ? The risk is there but am i prepared ? It will be a serious mistake to say i have S$100K today and still same number after that there is no loss. The notion that Value is Absolute can be disastrous in my financial well being.

I will first have to classify all my net worth by currency denominations as below.

Pretty enlightening after i draw up the pie chart. What's next ?

Using back Venezuela economic situation as an example, i would have to increase my net worth by 60% within a year just to break even on all the basket of items i could buy last year with the same items today.

Well i am not in that part of the world ? It won't happen ! Will 15% devaluation within realm of possibilities ? That will set me back years of investment gains without need of global financial crisis. Well, if to act, at least i have something to plan ahead today.

15th Jun 2014

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