MANY must have been jolted by the recent financial crisis, and some may even have lost a fortune in stocks and other investments.
I am sure many Singaporeans have lost sleep in the past week due to the turbulence in the financial markets. Some have invested their life savings in questionable investment instruments with a much reduced return, whereas others will now have to delay their retirement as their investments have gone sour.
I lost six-figure sums during the 1997 Asian financial crisis and have sworn off stocks and shares since then.
It was a wise decision, as the stock market took another battering during the 2001 crash due to 9/11 and Sars.
Aside from a $10,000 CPF unit-trust investment, I now have practically zero exposure to the wild swings of the stock market, for which I am very grateful.
Many have told me that money deposited with banks earns less than 1 per cent in interest and cannot beat the high inflation rate here.
However, I could argue that my principal sum saved in the bank is very safe and liquid, and I can sleep peacefully at night.
If I had always taken this approach to money, I am sure that my savings would have multiplied many times over.
Many invested in the stock market and structured investment products to earn a better return on their hard-earned cash.
Sad to say, not many are able to realise that appreciation without seeing the effects of market volatility on their investment.
Even for insurance products, which are technically foolproof, there is the risk of the insured losing money when the insurer goes bust.
It goes to show that nothing is safe, even if we go for banker- guaranteed investment products.
In any form of investment, there is no such thing as a principal- guaranteed financial product.
One has to pay management fees and annual charges, and Singaporeans need to be financially astute to realise that their investment will be exposed to some form of risk regardless of how financial advisers 'guarantee' their products.
Once he signs on the dotted line, the investor has little chance of reversing his decision.
As Singaporeans slowly recover from the financial shock of the century, let us learn not to be too greedy in how we approach our finances.
Even if the CPF Board gives an annual interest rate of 2.5 per cent on our CPF money, it is better than putting it in stocks and unit trusts and hoping for the best.
It is better to be conservative with our hard-earned money than to put it in the hands of brokers and traders whom we have little control over when the tide turns against our investment.
Those who have lost much in this financial crisis should learn a hard lesson and be shrewder with our investments.
Sometimes, it is prudent just to leave our money with commercial banks.
The heartache from our investments being caught in a financial downswing is just too much for many to bear.
