In our life-cycle of investing; we should be investing largely based on our needs and wants in respect of tight and discipline money management and estimated future cash flow to avoid liquidating any part of our investment portfolio to fund shortfall to meet future years of household expenses.
Low return is not ZERO return and it is far better than negative return when we are NOT in the position to inject monthly capital to our investment portfolio anymore.
We often hear bloggers in the investment blogosphere warning us about impact of future inflation eroding our cash. So what?
Uncle8888 has been living through years of inflation and same as generations before him. The generations before him have survived and so we will survive inflation too. But, we will NOT survive years of negative investment return and followed by years of partial cash draw-down to fund household expenses under negative investment return!
Inflation may be painful; but negative return will kill us faster when we are not capable of any capital injection any more! Get it?
Able to take risks? Willing to take risks? Need to take risks?
ReplyDeleteIf answer is "no" to any of the above then probably not good idea. :)
Inflation & disinflation keeps occurring in cycles. The last time with elevated inflation was in 2011/2012 ... gold at US$1900, Brent crude at US$120, unaffordable BTOs, inflation at 6%, PAP kena whacked at the polls ... think people all forget liao LOL! Now inflation is at miserable 0.1% yoy as of Apr 2018.
Periods of high inflation will be followed by periods of disinflation (or touch wood, deflation) & vice versa. Nowadays with ultra flexible monetary & fiscal policies, usually don't stay in extremes for too long (unless govt really incompetent or corrupt).
In fact for those with plenty of cash & not afraid to invest in risk assets should be praying that central banks all around the world quickly jack up interest rates much higher & faster! This will accelerate bear markets (stocks & property) & recession. No pain no gain Hohoho!
Uncle 8888
ReplyDeleteWaiting for posb savings acc int to 8% lIke in the 1970s
May be we can slow down our investing goal to get more yield since we have enough and days ahead are getting shorter.
ReplyDelete