Here’s why many Singaporeans are unable to retire early

Retirement Planning, Investment Strategy, Investment2022-06-06

Ever thought of retiring earlier seems impossible?

This is probably because you prioritise other financial needs, like for your kids and family members — rather than planning for retirement.

Or you lost money in the market — be it a business venture, stock market or property — and never really recovered.

It feels way out of reach when you can’t see yourself retiring.

And to make matters worse, did you know that even the best savers may not be able to retire earlier?

Here are the causes of why many Singaporeans today can’t drop their 9-5 sooner even if they tried. And how you might be the few who can.

Read on to find out.

At The Money Folks, we help our clients invest and build multiple income streams that potentially enable them to retire with more than $1 million. Reach out to us for a financial assessment call (by application approval only).

Disclaimer: This post represents our personal views and opinions and is neither associated with any organisation nor reflect the position of any organisation. This content is also only for informative purposes and should not be construed as financial advice. Past performance does not necessarily equate to future performance. Please seek advice from a Financial Adviser Representative before making any investment decisions.

1. Is inflation really around 1-2%?

The word inflation had been thrown around and become a common household word nowadays.

This is because goods and services are getting more and more expensive.

Beyond the increase in prices, are you aware of the consequential effects of this monetary phenomenon?

And, is inflation really around 1-2% like we were told?

Before we get into the juicy details, let us first tell you a tale of the Roman Empire and how inflation contributed in the collapse of the Roman Economy...

After being hit by the Antonine Plague, the Roman empire became a highly cash-based economy due to the growing expenses of the government. During the same period, the Roman military grew as well which also meant more expenses were required.

The government attempted to rectify the situation by devaluing its currency by increasing the supply of the coins, with lesser silver content.

Silver was the primary value of ancient Roman coins. The purity of the coins decreased over time which resulted in the debasement of their currency. For illustration purposes only.

The currency stretch resulted in hyperinflation in the empire. Prices became ridiculously expensive and in turn, increases the government’s costs as well. The government decided to impose taxes to manage the costs but this further paralysed the people’s power to buy and sell goods.

Eventually, the Roman government was unable to meet its military costs and collapsed as most emperors were killed in battle.

From what we can learn from history, alongside excessive taxation and regulation, inflation is a very influential factor in the fall of the Roman Empire.

Doesn’t this sound familiar with the Federal Reserve supplying more and more dollars into the market when Covid-19 hit?

Although the circumstances are different for both, the Roman Empire and the COVID-19 pandemic, the aftermath is similar in the sense that it leads to a higher rate of inflation.

From an individual point of view, inflation hurts your purchasing power and reduces your standard of living, because the same amount of money can afford you fewer goods and services over time. For every dollar we earn, we are able to buy less with it – things became more expensive for us.

Prices are inflating at a rate we can’t control. As you can see, the graph below shows that the inflation growth in Singapore has been on an increasing trend since 2020.

For illustration purposes only.

And to make matters worse, not all of our wages are increasing at the same rate, right?

Also, with so much money printed by the Federal Reserve over the past years, have you ever wondered where did all the money go?

Did it all go into consumer goods? Since we are measuring inflation against consumer goods after all.

When money is being handed out to laypeople and corporations, a substantial amount goes into the stock market as well.

Take a look at how the prices of S&P 500 surged after the pandemic.

For illustration purposes only. Past performance is not necessarily indicative of the future or likely performance of ****the S&P 500. Source:

Think about this – why did the stock market rise? After 2 years of lockdown, with factories shutting down and people losing their jobs, is the world actually in a better place?

Why does it seem like the stock market is behaving differently from ground sentiments? Is this the true effect of the dollar printing?

Also, have you ever thought about this – if you find that your property or stock’s price has appreciated, is it really because it has truly appreciated in value?

Or is it because like all other consumer goods, prices increase because of inflation?

After all, we are still using money to purchase these assets.

So how much of this price increase is actually due to an increase in value?

Hence, if we think about where the money is being channelled to — and think about how much real estate and stock prices have increased, has it been really a 1-2% inflation rate after all this time?

When more and more money is created out of thin air, while it may be a great short-term solution, the long-term consequences would eventually catch up.

Hence, increasingly, more people are unable to retire earlier, as they need more money for retirement. It then becomes a cycle.

But there’s a limit to your ability to work — are you able to work and earn forever?

So how do we prevent things to get more and more expensive for us?

Is there a way to protect our purchasing power from regressing?

2. Are you having a poor person’s or a millionaire’s portfolio?

You probably already have some investments in place, be it stocks, bonds, property and many more.

But is the combination of financial assets that you are invested in giving you sufficient returns for retirement?

Some people might have the assumption that their investment efforts are enough without doing the math, realistically.

Before one of our high-net-worth clients met us, he was unhappy with his returns on investment, but has no idea why.

Here’s his asset allocation before he met us, which is similar to many of our clients’ before working with us. Let’s call this the typical asset allocation of our clients:

After further digging, we saw that his current portfolio’s total returns were not able to potentially achieve his retirement goals. It was primarily allocated towards property assets that were not able to generate enough passive income to match his goals within his investment time horizon.

Subsequently, this is what we tailored for him – optimised for the returns he is looking for, with well-managed risks:

Of course, everyone’s risk appetite and investment goals are different, so there is no one-size-fits-all approach to asset allocation, but what we are trying to say here is, have you taken a closer look at your asset allocation and measured what returns has it been giving you? Are you happy with it?

If you are not, it may be time to relook at your strategy and reallocate your assets to optimise them for the returns you are looking for.

If you are unsure of how to reallocate your assets for an effective investment strategy, you might want to reach out to a professional, such as a skilled financial advisor representative to help you with it.

3. Having the wrong expectations of defensive assets

For many Singaporeans who prefer to take lower risks, it is common to invest in assets such as bonds. This is because some investors perceive that bonds are stable investment vehicles.

But is this really the case?

First, we need to recognise that there are different types of bonds – from government-issued bonds, corporate bonds and many more. And different types of bonds have different levels of volatility.

Although government-issued bonds in stable countries such as the US or Singapore tend to be of higher ratings and less volatile than higher-yield corporate bonds or bonds issued by developing countries, the former still has a certain level of volatility, especially during a market downturn.

For example, take a look at the iShares 20+ Year Treasury Bond Exchange Traded Fund (ETF). It is a fund that tracks the investment results of an index comprising of bonds issued by the US Federal government that have remaining maturities of more than 20 years.

Below is its performance from 2020 up until early 2022 when its price dropped by 15%:

Performance of the iShares 20+ Year Treasury Bond ETF:

For illustration purposes only. Past performance is not necessarily indicative of the future or likely performance of ****iShares 20+ Year Treasury Bond ETF. Source:

Similarly, we can see that prices of the ABF Singapore Bond Index Fund also fell by 15% from late 2021 up until early 2022 as pictured below. This fund tracks the investment results of an index comprising of bonds issued or guaranteed by the Singapore government, other Asian government or their linked entities.

Performance of ABF Singapore Bond Index Fund:

For illustration purposes only. Past performance is not necessarily indicative of the future or likely performance of ****the ****ABF Singapore Bond Index Fund. Source:

However, despite this volatility, these bonds with higher ratings may still generally experience less volatility compared to equities. Hence they are often used by investors to hedge their risks.

Besides this, many people also perceive bonds as a wealth preservation tool.

But with rising inflation rates, can these bonds effectively protect your capital from inflation?

For example, if you decide to invest in the July 2022 issuance of Singapore Saving Bonds (SSB), you are expected to earn 1.69% p.a. for the first year. And if held to maturity, the returns would be 2.71% p.a.

However in mid-2022, the Monetary Authority of Singapore (MAS) expects the core inflation rate to be between 2.5% and 3.5% based on their policy statement in April 2022.

Therefore, although defensive assets such as government-issued bonds have potentially lower risks, they may not help you beat inflation. They might only be able to protect your purchasing power from being eroded by inflation to a certain extent.

If you have a large portion of your portfolio in such assets, you might eventually find that your retirement fund is not growing sufficiently.

This is why it’s important for us to have the right expectations of why we are investing in certain low-risk bonds:

Are we incorporating them into our portfolio together with other diversified assets so as to hedge our risks against more volatile assets?

Or are we allocating a high percentage of our portfolio to these low-risk bonds with the expectation that they can help to preserve our future purchasing power when we retire?

It is only when we invest in these defensive assets with the right goals and expectations that we are able to achieve our desired retirement financial goals.

4. Investing blindly into a fund

“Eh I heard this fund is good! Has great performance over the past 10 years.”

“Wah really? Safe or not? Maybe I should also invest in it.”

“Aiya, you hold for long term sure rise one lah.”

For those of us who enjoy investing, this may be a typical conversation we have with our loved ones.

Because good things must share right?

And most of us discuss investment tips with good intentions.

But have we thought about whether we are investing into a single fund blindly without understanding what this might actually mean to our investment?

Yes, even investing with a long holding period may not guarantee that you will reach your financial goals.

We know that the financial markets will experience volatility to a certain extent. So if you buy and hold an asset for a long period of time, without a clear direction and regular monitoring, you are actually leaving your retirement funds at the mercy of the markets.

Regardless of whether you are getting 10% returns or -3% for the year, you just have to accept it and make do with what you get.

Let’s take the S&P 500 index for example.

For illustration purposes only. Past performance is not necessarily indicative of the future or likely performance of S&P 500. Source:

From December 1999 to December 2009, the index reflected an annualised simple price return of -2.72%.

So if you were to solely invest in S&P 500 in 1999 and retire in 2009, it is highly likely that your retirement fund might not be enough.

Wouldn’t it be better if you had a bit more certainty about your retirement income?

What if you have an investment strategy that is diversified enough and not dependent on a single fund? Regardless of what happens to it, your portfolio would be optimised such that you can still be on track to reach your goals.

You can read more here on why investing blindly for the long term is not a good strategy for your retirement.

Going into an investment without a strategy and knowledge poses a huge risk itself. You might not get the returns you need to retire earlier. And how long can you realistically delay your retirement until you are no longer able to work?

So what can you do to retire earlier realistically?

1. Grow multiple passive incomes instead of putting all your eggs in one basket

As we have had our fair share in retirement planning for more than 400 clients for almost 10 years, the strategy that is effective as well as sustainable for anyone who plans to retire earlier is to grow multiple passive income streams.

This is the act of allocating your money efficiently with the intention that it will grow to cover your expenses – in short, having an investment strategy that is designed to bring you passive income either in the short to mid-term or long term.

Generate passive income this way has enabled our clients to be on track to potentially retire 10-15 years earlier.

To achieve this retirement strategy, an investment portfolio should take into consideration the right financial asset mix, effective asset composition and many other factors so that it is potentially able to achieve your desired goals.

Which assets should you invest in?

What kind of investment mix provides sufficient diversification for your portfolio?

Will the current combination of assets you are investing in potentially get you the returns you are looking for?

These are the questions you would need to ask yourself, or work with a professional who would be able to work these out for you.

2. Embrace risks and manage them

Risks can be misunderstood as market volatility, but volatility itself is in the nature of financial markets.

If you ask us, to us, risk is depending too much on a single fund.

Risk is losing out on other opportunities.

And risk varies among individuals as each person’s needs and goals are different.

But the ultimate risk is not reaching your retirement objectives.

Did you know that it is possible to tailor an investment strategy that is aligned to your own risk tolerance?

For illustration purposes only. Past performance is not necessarily indicative of the future or likely performance of the financial instruments.

If you select suitable assets with a good and effective strategy, you would be able to potentially grow your wealth by maximising the returns and keeping your risks at a tolerable level, suitable for your risk appetite.

Consult a professional to provide you with better insights and knowledge on what kind of investment strategy potentially provide you sufficient downside risk protection.

3. Commit to your retirement strategy

Once you have established an investment strategy that is able to generate multiple income streams for you, you now need to always monitor and review its performance and strategy so that you are always on track to your desired financial goals.

This is where it gets a bit tricky as it requires a high level of commitment on your side. You need to know the current market development as well as investment strategies that remain relevant for you over time.

Your portfolio needs to be regularly rebalanced so that it is on track to meet your objectives and you are able to manage the risks that you are taking on.

At The Money Folks, we help monitor and review our clients’ portfolios periodically to ensure that they are always on track to retire earlier, accordingly to their retirement goals. Feel free to reach out to us to find out how we can help you achieve this too.

Do you have a multiple-income-stream framework?

To systematically get steady results from your investments and generate multiple passive income streams, you need to rely on a sound investment framework that is specifically tailored to your own goals and risk appetite.

It’s also important to ensure that your framework is recession-resilient so you can still potentially get returns despite any market volatility.

Most of our team members are recognised as the top 5% of financial advisor representatives worldwide, and this multi-income-stream framework is exactly what we design for our clients, so that they are on track to potentially retire earlier than planned.

Preserve wealth in volatile market fr. $20/day

At The Money Folks, we help our clients invest and build multiple income streams - potentially enabling them to achieve early financial independence. This is done using our recession-resilient investment framework.

The information in this article is meant for general information purposes only and does not constitute financial advice. Please consult your Financial Adviser Representative before making any investment decisions. Investments have risks. Past performance is not necessarily indicative of the future or likely performance of an investment.

Further Reading

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The dangers of doing dollar-cost averaging blindly

Dollar-cost averaging is a popular investment strategy, but do you know it can be costly if you are just doing so blindly without paying attention to investment fundamentals or market movements?

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Dangers of investing in REITs for passive retirement income in a volatile market

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