I started serious Investing Journey in Jan 2000 to create wealth through long-term investing and short-term trading; but as from April 2013 my Journey in Investing has changed to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Since 2017 after retiring from full-time job as employee; I am moving towards Investing Nirvana - Freehold Investment Income for Life investing strategy where 100% of investment income from portfolio investment is cashed out to support household expenses i.e. not a single cent of re-investing!

It is 57% (2017 to Aug 2022) to the Land of Investing Nirvana - Freehold Income for Life!

Click to email CW8888 or Email ID : jacobng1@gmail.com

Welcome to Ministry of Wealth!

This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

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Value Investing
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Sunday 4 December 2011

Insurance, Leverage, and Peace of mind.

Read more? Past postings on Insurance


Why are we paying premiums for insurance?

It is the fear that drives us to seek protection. It is paying money for protection.

We fear and seek protection against specific unexpected high financial losses coming from some unforeseen life events by paying premiums to insurance companies for them to take it away from us. So, in fact, we are just transferring this risk from ourselves to someone else so that we can have peace of mind and sleep well at nights with one thing less to worry.

Life with less things to worry will be easier to catch more moments of happiness.

Read? Four Pillars in our life to support our happiness index


Read? Playing The Game of Leverage (11) - Win Big or Lose Big

I believe most people will sensibly leverage themselves within their financial strength and avoiding taking too much risks as they still want to sleep well at nights. Who will want more things to worry and keep awake at nights?

Then how did some people get themselves so highly leverages and go bankrupt after a series of bad investment failures?

The greed in these people may have slowly strengthen up to drive them to see more "opportunities" to make more money but overlooking their associated risks. More opportunities taken may actually translate to higher risks exposure. No meh?

BTW, who don't want more money?

Most of us like to believe that our mind is strong and sensible enough to control financial losses from escalation, able to cut losses fast, and prevent taking us towards the path of bankruptcy.  Unfortunately, in reality, many more can't.

Chinese has a saying "Lose until mad!" and it is true.

When someone loses so much money and once that level of sanity has breached; madness will take over one's mind and that will probably explain why some people can leverage so much and take so much risks far far beyond their means to do so.


The key here is unexpected high financial losses and protection against it.

In insurance, we pay for that peace of mind and we know it is worth paying for. Similarly, in investment we too can leverage for much larger financial gains; but at what price will we be paying for that same peace of mind that has been already paid for through our insurance premiums. Don't understand? or too cheem?

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