In life, we learn things from school, and the main things we learn by interacting with people who have gone before us and 'won' in the game so to speak. I have been very fortunate to meet such a person and he was my best friend, and mentor, Roland Teo. He passed on this year on 31st January 2026 from complications of COPD or Constrictive Obstructive Pulmonary Disease.
One great takeway he taught me over the 16 years I have known him and had the pleasure of dining with him is this below. Many people in Singapore, who have had compulsory Central Provident Funds CPF stashed away till they are 65 will get to utilize this through by regular payouts until they pass on. There will be many, who on top of the CPF monthly payouts will get a lump sum, either through inheritance from their parents by way of a will.
with Roland Teo Cheng San
This is where the problem comes in. Many people will lose this golden egg within months or a maximum of 5 years, all through wanton spending on expensive trips, lavish dinners, toys like designer bags, the latest EV SUV or sports car - its not wrong at all - it is their money after all - BUT what happens when there is so much life at the end of the money ??
That is when the misery will set in, imagine you are 80 and cant afford even a decent meal in the restaurant, or go for a short holiday to (for example) Australia or UK to see your grandkids (quite a number of Singaporeans have family all over the world). Worse still, many have to work at 75 to 80 just to pay the bills.
Cash Capital Decay
What exactly is this ?
This is a situation, which happens when your cash loses real value or earning power over time.
What are the main causes for this decay or decline ?
> Inflation : In Singapore it is about 2.5 to 3% per annum.
> Currency depreciation : We are fortunate that SG dollar has appreciated, over many of the major currencies like USD and RMB. But against the MYR or ringgit, it has dropped quite significantly.
> Low interest rates : If you put your inheritance money in fixed deposits, which garner only less than 1% per annum and the inflation rate if say 3%, you lose 2% in purchasing value per year.
Multiply than by 20 years and in theory your (for example) $1 Million today is only worth $600,000 in today's purchasing power terms IF you continue to keep that $1 Million in the bank.
> Opportunity Cost : There are many businesses looking for funds. Its true many go bust, but it might be beneficial to put your spare liquid cash in mutual funds, TBills (it was 4% a few years ago), or investments such as property (of course the entry barrier for property is $1.5 million for a new condominium of a miniscule size of say 800 sq ft).
> Fees or Taxes : Bank charges, witholding tax or account costs, all can slowly chip away the balance of your inheritance.
So what is the strategy to counter and grow out of this problem whereby 90% of people feel trapped by the sinking value of their liquid capital ?
Watch out for the next post while I try to give some ideas
(I am still tweaking my own model).
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