The word inflation was the topic of 2021 and entering 2022 and can be summed up in the following phrase.

‘Americans are getting stronger. Twenty years ago, it took two people to carry 10 dollars’ worth of groceries. Today, a 5 year old can do it’ – Henny Youngman

 

In Singapore, we are also living with inflation. From small items such as a cup of coffee, daily transport cost to large expenses like housing, inflation is happening daily. According to the department of statistics Singapore, the consumer price index (CPI) increase at a rate of 2.3% in 2021.

In other words, the $10 you had in 2020 is worth $9.77 in 2021. If we extrapolate the figures for the next 5 years, the $10 we had in 2020 will be worth $8.90 in 2025. Inflation is called the silent thief for a reason. 
 
Moderate inflation is generally seen as a sign of health economy as it grows and expands. However, that will also equate that the dollar we owe, diminishes over time. So how we can live and deal with inflation?
There are several ways to accumulate wealth such as the traditional savings account, endowment plans, or through investments.

 

1. Traditional savings account
While the interest rate in most saving accounts in Singapore can hardly keep up with inflation, it is recommended to save at least 6-12 months of your living expenses in times of emergency such as retrenchment, deterioration of health.

 

2. Endowment plans
Endowment plans are considered as the safe and predictable way to save over a period of time as your capital is guaranteed once the policy matures. Traditional endowment plans have evolved over the years, such as cash back endowment, lifetime cash benefit endowments, whole life endowments and anticipated endowments.
 
3. Investments
On hindsight, 2020 was the year of investment during the market crash due to the fears of how the pandemic will affect the economy, and bounce in economy after government interventions.
While investment can potentially yield higher returns, it also takes a high level of discipline and a strong ‘gut’ to stomach through years of volatility.

 

Speak to our advisors to make an informed comparison of the various types of endowment plans, or understand if investment is suitable for you.


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