Cory Diary : Exchange Rate Matters

Something strikes me today when I was thinking whether S&P500 ETF is the way to go that many financial experts recommended besides Warren Buffett who is an American.

So what I do is to pull up the historical exchange rate for the past 30 years. Basically, USD has depreciated roughly -25% against Singapore Dollars. So what-if I have invested say $1M starting 1990s. What is my compound returns for S&P500 ETF in Singapore dollars be like ?

Long term is 5% for Singapore Investor ?

Any investment in Oversea Market need to consider the risk of exchange rate. I am sure there are other considerations as well but I stop it here. BTW, the figures are ROUGHLY.

Cory

2021-0626

Articles in this Blog is personal take and educational purposes only. Reader should seek their own professional help when making financial decision and be responsible for their decision.

Cory Diary : The Elephant in the Room

From the day we are born and going through years of educational learning (Some take it further ), the whole idea is to get a good job so that we have enough money for our family and retirement. That's like basic needs in life. 

What-if we push ourselves further and achieve earlier the monetary needs can be covered ? Will grinding for one more million make sense ? And here's the take. When we do call it stop and do things that we truly like ? And here is the crux of the matters. We procrastinate on many things, get them postpone intuitively but unfortunately only the top few percentage will able to meet the biologicals deadline. We have limited lifespan and productive years.

Life is not 1 and 0. However many people thinks that way including myself. For example, some people may only want to marry the pretty lady or handsome man that everyone is also hoping for else will not get settled. But time do not wait. Soon you will find yourself in mid 30s, 40s, 50s .... . You really want to remain single for rest of your life? Deep down most will not if they can. Who is going to care for you when you on wheel chair or sick. Do we think this scenario is improbable or most likely ? Living in a luxurious apartment but only have yourself in it. What for ?

Personally for myself, I want to make sure I have enough before getting married and having kids. For many, by then we are too old. Fortunately, I am a guy so no problem. But for the ladies once you hit near 40, is really pray for miracle to have one. Even then there maybe health issue and both parent can be contributing factors. The best time to have babies probably is in early 20s.

Same with Retirement we want to make sure to have all it needs before we call a day. We truly forgot how to live our days before that. If there is not enough we can do part time for few hours and enjoy the process of socializing with others. Is not a clear cut retired line that has to be drawn which places the bar too high. People who get retrenched in late 40s or early 50s, maybe is not a bad thing after all. The key is how we manage our finance before and after. Delay gratification helps but Procrastination is not.

Life is Now. Don't be 1 or 0. We cannot turn back the clock.

Cory

2021-0623

Articles in this Blog is personal take and educational purposes only. Reader should seek their own professional help when making financial decision and be responsible for their decision.

Cory Diary : Interest rates - Saver Alert

I remember many years ago, accidentally decided to put $10k into a fixed deposits for 5% annually. Think nothing much of it then. Financial Literacy is non-existence especially from a family of below average where investing in stock market is equate to Gambling. If we think 5% will happen again, is highly unlikely, and we will probably be in trouble if indeed it happens.

Interest rates on average has been coming down for the past 40 years. Savers are thoroughly burned. Long term wise, chances are interest rates won't be high even in between there maybe rate fluctuations that confuse investors for a tiny moment in time.

Therefore, any bet of interest rates impacting Reits long term or benefitting banks are likely hallucinations in the long run. Bottom line is how each of this businesses are run. So for opportunists, any news of rate hikes one could benefits from trading due to market sentiment driving respective business sector.

A simple arithmetic on Saving in Fixed Deposit vs Stock in reliable Reit. We don't even want to talk about growth stock.

From table above, a saver takes more than 8 years what a stock investor can do with just a single year to achieve. Yes the later has Risk but what doesn't in life ? The Risk in fixed deposit will be much higher due to inflation is definite. Saver anchoring to mental fixed number in bank account could be detrimental to their financial well being.

However, a saver who has no interests in Fundamental of Business could be a tall order able to choose the right Unit Trust or Stock Picking. Even Insurance Investment and Bank Products could be even worst for them as they have significant vested interests to profits from the sales. Many Bonds are mediocre and not easy to understand and assess by Savers with potential to even risk away their coffin money.

What else can a saver person do if they have no interest to pick up on stock investment ? Personally I feel that's left with CPF and Broad Market index such as STI and S&P500 with preference to the later due to Wider Market. I would probably fill all three if I am them. 

Just reminder this is Not replacement for insurance which I feel is critical. And all above is just my personal view and not advise as I am not qualified. But who else can they seek advise from that is whole heartedly helping them  ? Maybe we need a National Reach system.

So Please DYODD.

Cory

2021-0620