Your Purchasing Power
Do you remember a time when $50 was sufficient to pay for all your meals and expenses in a day? Receiving $50 in your CNY red packet seemed like such a big deal.
Inflation, which erodes your purchasing power slowly and silently over time, means that $50 in 1982 could buy you about the same amount of things as $100 today.
Over the last 53 years, the Singapore dollar has lost about 76% of its purchasing power due to inflation. $1 would have the purchasing power of about $0.24 cents in today’s value.
In comparison, an investor investing in a global portfolio in Singapore dollars would have grown his wealth by 3,684%, $1 would have grown to $37.85, a rate of growth of about 7% per year.
Research has shown equities to have the ability to perform well during periods of inflation and is one of very few asset classes able to match and beat inflation over time. The intuition is simple; companies innovate and create higher value goods, and are able to pass costs onto consumers and grow their earnings.
So unless you are sitting on a mountain of cash which would last you generations, this is the reason you need to invest.
In the same way that you would not attempt a high risk activity such as sky-diving without professional supervision, investors can benefit greatly by relying on an adviser — having the peace of mind knowing that their plan is in the hands of a professional.
If you would like to get started on protecting and growing your wealth, click here to schedule a exploratory chat with us. (Complimentary 30-minutes session)