I did not write this, but I have read about it and consulted various sources (OK AI like Perplexity) and here are some practical steps to ward off the inevitable cash decay over 10, 20 and even 30 years.
Lets think about building a 'cash ladder', not 'investing all cash'. Cash decays mainly through inflation, low deposit yields, and currency depreciation. However on the flipside, it does give you safety and options.
Keep Emergency Cash
Standby 12 - 18 months funds
Depending on your monthly expenses, this may range anything from $5K per month to $10K per month. These funds are for emergency use, for survival and opportunity - like business and perhaps a surprise anniversary trip with your wife.
For business opportunities, be careful, always use your risk return calculation mindset to see whether the business is viable and the returns are worth whatever sum you put into.
I have a small business, so recently we are asked to venture to sell equipment in Penang Malaysia to a top multinational pharmaceutical company. I did my math, flew to Penang, spoke with the stakeholders, and did my best pitch.
The risks ?
About $1K in return airfare, hotel stay, expenses for 2 days and some opportunity costs (marginal since I have my staff covering for me in my absence).
The return ?
If we secured the project, we would have earned approximately $100 K in gross profit.
So the risk return is low investment cost and high return.
I took it and flew to Penang,
Outcome ?
We lost the deal ; because we were bidding against an established incumbent supplier in Penang.
The verdict ?
Its a risk worth taking given the upsides are very high in light of our :
a) relevant experience in this industry of 3 decades
b) established and familiar supplier of the equipment whom I have personally visited in China and have 5 years priori experience selling their products.
c) Downside of $1K is definitely manageabale from my point of view.
Put Idle Cash into Short Term Instruments.
Safest options are
> Singapore T Bills (was high 3.+ to 4.+ % per annum just 2 - 3 years ago)
> High yield savings accounts
> Trusted funds managed by competent financial advisors.
> REITs (dividends of 6%) ; however, the share price has eroded these last 2 years from geopolitical movements, the recent Middle East War and the formation of the multipolar world order leading to capital flight which cannot be forecasted accurately.
I am honestly not savvy and have not ventured into ETFs, so I can't comment or write about my experience.
> Stay away from gambling either through casino, social media and cryptocurrency
> Singapore Savings Bonds - use for mid term cash.
> Own real assets selectively ; Property, REITS, infrastructure funds, and some commodities can offset inflation but they carry cycle, interest - rate and liquidity risks.
> Avoid over insurance and opaque products
Time Horizon
0 - 6 months Bank Cash
6 - 12 months T Bills, Fixed Deposits, money market funds
1 - 10 years SSBs, SGS bonds, conservative bond funds
5 + Global equities, REITS, Property, business reinvestment.
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