Playing it safe might feel comfortable, but in the world of personal finance, the safety blanket of “comfort” can be incredibly costly. By not investing, you expose yourself to the silent threat of inflation and also miss out on the power of compounding.
If you’re ready to take that step, the Seedly Personal Finance Festival 2025 is the perfect place to start. Exclusively for DollarsAndSense readers, the Promo Code: DOLLARSANDSENSEPFF100 will give you 100% discount on tickets to the Seedly PFF 2025. Limited to the first 50 sign-ups.
When it comes to our savings and money, “playing it safe” often feels like the responsible choice. That’s because many Singaporeans have become accustomed to automatic CPF contributions, as well as allocating our spare cash to savings accounts, fixed deposits, Singapore Savings Bonds (SSBs) or Treasury bills (T-bills).
After all, money in the bank – that’s also basically “risk-free” – isn’t going anywhere, right? But there’s a massive catch. While your savings might feel secure, their value is slowly being eroded over time by one big killer component called “inflation”.
This inflation eats away at the purchasing power of our dollars every year, and if your money isn’t working harder than inflation (i.e. giving you an average annual return higher than the rate of inflation), then you’re effectively going backwards.
The perceived “safe” options could be the most costly ones in the long run, preventing us from reaching our wealth-building goals.
Why Saving Alone Isn’t Going To Be Enough
Let’s put some numbers to this because data tell a story that no one can refute. Imagine you keep $50,000 in a high interest savings account with a bank, earning 2% per annum (p.a.) in interest per year. That sounds decent, right?
But, what if inflation averages 4% p.a.? Between 2020 to 2024, the Consumer Price Index (CPI) has risen by about 3.9% p.a.
The real value of your money is actually shrinking by 2% annually. If you continue to lag behind inflation over years and decades, it can be a massive loss in purchasing power.
Now, compare that to investing in a low-cost, broad-based exchange-traded fund (ETF) that tracks global equities. Even with the inevitable ups and downs along the way, we can see from over 120 years of historical data that global stocks have delivered an average annual return of 7% to 9% per year.
For example Singapore’s STI ETF, has risen about 7.8% p.a. over the last 10 years. Another example is the S&P 500 in the US – it has risen 14.6% over the past 10 years.
The difference between earning a return of 2% versus 7% compounded across decades is staggering. At 2% p.a. your $50,000 would turn into $74,297 in 20 years. What about your $50,000 at a 7% p.a. average return over those 20 years? It would turn into a whopping $193,484.
This is without you ever having to put another dollar towards the investment. Imagine if you continue to diligently contribute to your investments each month.
In other words, the “safer” method of saving your money in the bank is going to cost you over $100,000 over 20 years. You will end up with less than 40% the amount of money you could have had if you just invested it in a broadly diversified ETF. Saving can feel safe in the short term but the investor who puts their money to work, over the long term, always comes out on top.
The Illusion Of Safety
For many people, risk is defined as the chance of losing money in the short term. That’s why market volatility can feel frightening. Prices go up and down, sometimes dramatically, and the natural instinct is to avoid it altogether.
That’s not the right approach to have.
Instead, we need understand the financial market. Because the bigger risk is not volatility, it’s the stagnation of your wealth journey. By choosing not to invest, you take on the hidden risk of your money failing to keep pace with rising costs which, in Singapore, always seem to be rising fast.
Think about basic things like housing, education, healthcare, or even groceries. These are all expenses that have steadily climbed (or in some cases surged) in Singapore. Not preparing for that reality could leave you short when you need funds the most.
Long-Term Thinking Is Your Best Protection
The good news is that time is on your side. Historically, markets reward patience. Over any given year, stock prices may swing wildly. Even though the “average return” is 7% to 9%, the markets will rarely give you this in any one year.
For example, the S&P 500 is already up 10.7% this year. Last year, it was up about 24%. In 2023, it was up about 26%, while in 2022, it was down 18%. None of these numbers are in the single digits. But, when looked at across a long timeframe, the annualised return for the S&P 500 is about 7% to 9% per year.
As Morgan Housel, author of the book The Psychology of Money, once said, “volatility is the price of admission” to stock markets.
In other words, there are superior long-term returns on offer, but you have to be willing to “pay the price” of having to stomach volatility to get them.
While this is easier said than done, if we stretch the horizon to 10, 20, or 30 years, the volatility trend smooths out. Long-term investors who stay the course when investing typically see positive returns that easily outpace both inflation and savings rates.
It’s not about trying to guess the next hot stock or timing the market perfectly. It’s about consistently putting money into low-cost and passive ETF options and letting compounding work its magic. That’s the essence of building real wealth.
Always Learning About Investing Builds Confidence
Of course, knowing this and acting on it are two different things. Many people hesitate because investing feels intimidating. Terms like “ETFs”, “portfolio allocation”, or “dollar-cost averaging” can sound overwhelming at first.
Without knowledge, the fear of making a mistake can freeze you into inaction. However, the more we come to understand the basics of investing, the easier it becomes to see through all the short-term “noise” and focus on the bigger picture – growing our wealth in both a responsible and sustainable fashion.
Learning about different asset classes, understanding fees, and knowing how to avoid common pitfalls all give you the confidence to get started and (most importantly) stay invested.
Learn From Experts At The Seedly Personal Finance Festival
At this year’s Seedly Personal Finance Festival (PFF) 2025, on 11 October 2025 at the Sands Expo & Convention Centre, Hall F, you can hear directly from investment industry experts and seasoned investors about how to make your money work harder for you.
To stretch every dollar further, DollarsAndSense readers can enjoy an exclusive Promo Code: DOLLARSANDSENSE100 for a 100% discount off ticket prices to the Seedly PFF 2025. This is limited to the first 50 sign-ups.
You can look forward to a wide range of sessions covering everything from the fundamentals of investing, through to deeper dives on more advanced topics. Some highlights include:
- Thrive in Expensive Times: Financial Strategies to Beat Rising Cost of Living – Join for a panel with leading personal finance publishers on coping with inflation through smarter budgeting, optimising savings, and aligning short-term needs with long-term goals.
- Your First Investment Portfolio: How to Start Investing – Uncover fundamentals like choosing between stocks, bonds, ETFs, and REITs, plus tips for beginners to build a diversified portfolio. DollarsAndSense Co-Founder Timothy Ho will be on the panel sharing his take, alongside other personal finance experts and industry insiders.
- Roadmap to a Million-Dollar Portfolio in Singapore – A discussion on portfolio construction, managing foreign exchange risk, and how early investing can accelerate your path to a $1 million portfolio. SGX Market Strategist Geoff Howie will be on the panel, sharing his insights with other panellists.
- Investor’s Playbook for 2026: Winning Strategies to Maximise Your Wealth – Panel insights delving into market trends, balancing opportunity and risk, and adapting strategies for a changing investment landscape. DollarsAndSense Co-Founder Dinesh Dayani will moderate this panel to uncover the strategies that industry insiders, from Tiger Brokers, moomoo, and CMC, are using.
Whether you’re just starting out or looking to refine your strategy, these panels will be packed with practical insights that you can apply immediately to your financial journey.
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