Friday, 19 June 2015

Do You Have a Safety Net?

Do you risk it all when you are handling your hard-earned cash? (Many will say they are not so hard up on money).

I have a safety net, which you can refer it to my post on my basic retirement plans. To summarise the link, it is actually my "bond-like" instruments such as CPF Life, Private Annuities and Insurance. I know, you are going to be sceptical again as many against the cost and performance of insurance companies. Do you know something, I recently requested my NTUC Income agent to show me matured policies and all of them, yes, all of them, performed better than the 5.25% return stated in their benefit illustrations. So far, all my policies' have bonus declared yearly on par or better than the 5.25% that they used as an example.

I do know many companies don't perform well and their insurance / annuities are more costly and hence, resulted in less return. It is best if you find some senior friends who have matured policies with the company you are looking at to at least, understand their historical performance (which is not a sure thing for future performance but served as a reference).

I am not encouraging you to invest in these, but what I did was simply to diversify my asset with annuities and insurance, since I need financial protections anyway. The key, do your homework and assess how much you need to be protected and make sure you have sufficient emergency fund and liquid fund before you commit to anything long term like insurance and annuities. The next step is to convince yourself to act and frequently, people procrastinate.

So, what I am trying to say here? Definitely not about buying insurance or private annuities. Basically, If I am going to lose every single cent in stock market (Which is highly not possible unless I dump all into 1 stock and that stock is a Lehman Brother' friend), I still can retire at 55.

Having a safety net is important, as it gives you a sense of financial security. You know nowadays, financial security is the big thing to live your life with self esteem (I know, some will say they live spiritually and money don't affect their lives). Especially if you are already a working adult, let alone being a parent. You don't want to dig your children piggy bank and appear in the advertisement, don't you? I still remembered those days when my pocket and bank was $0. This is also when you know you don't need a lot to live a fulfilling life. Zen.

I would still think steady win the race. Read Hare and the Tortoise. I take my time to invest but I am not going to procrastinate. I am merely waiting for golden opportunities and I invest based on my asset allocation strategy, which consist of bond, cash and equity.

Do you have a safety net? Why not? Trampoline is not that bad, either.

Frugal Daddy


  1. Frugal_Daddy,

    I do hope I have a trampoline character and mindset.

    Singaporeans are generally "luckier" as in we don't suffer from natural disasters.

    Tornadoes in US Mid-West, tsunamis, earthquakes, bush fires, monsoon floods, etc.

    Imagine losing all our physical assets and loves ones in one night?

    We see the survivors fall into 2 main groups:

    1) Those who just pick up the pieces and start all over again, and

    2) those who disintegrate and can't function anymore...

    Less dramatic in Singapore, we can observe the same for those who lost their businesses or jobs...

    Some bounce back; some don't.

    I hope I'm made of rubber; not ceramic...

  2. Hi SMOL, thanks for dropping by. I can always rely on you for good feedback. I am sure with your experience (老江湖), you will not break like a ceramic. Just make sure you don't caught off guard when you are not wearing anything.

    Can I request that you continue to give feedback, and if there is anything you feel otherwise, feel free to poke. Just make sure I still live with my pride, dignity and I will still feel good about you will do. Haha. :)