Hedge Against Inflation

When it comes to growing your wealth, it is great to do it the fastest way, but this is not realistic. In reality, there is very few get-rich-fast ways out there. If there is any, they are laden with enormous risks. As an average individual, you should be really wary of those get-rich-fast programs. These programs are not out there for you to gain, instead they are there for you to feel the pain.

I personally have come across several such programs. They turned out to be the best learning experiences so far, they allowed me to realize what is suitable for me and what is not. It is great to realize this early, the earlier, the better. What I have realized so far:

  • Forex trading is not for me
  • Trading with leverage is not for me
  • Short term trading is also not for me

While experiencing the above, I lost more often than I won in spite of such program’s usual promise of sure-win. As a result, if you happen to get invited to similar programs, be very cautious before you take the plunge, it is always so much deeper than you can imagine.

In the context of Singapore, interest rates have remained very low for the past years. With inflation at about 3%/year, putting your money in the bank is definitely a sure loss.  As a result, what is suitable for an average individual who wants to grow his/her wealth without too much risk?

First, parking them in the Central Provision Fund(CPF) is quite good. Money parked in the CPF will return you somewhere from 2.5% to 4.5% per year. This is very much in line with the inflation rate in Singapore. You don’t gain much but you also don’t lose(guaranteed principle sum). The risk is close to zero.

Second, getting a savings plan will also be a good choice. For example, based on projection, one particular savings plan from AIA returns from 3.25%/year onwards and this plan comes with a bit of insurance element. Under this plan, the principle sum is also guaranteed. The risk is close to zero as well. You can also contact me to know more about this plan.

Above are the two ways you can counter inflation in the context of Singapore. They are meant to hedge against inflation in Singapore with close to zero risk. They are good for the cautious and conservative.

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