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How To Secure A Million-Dollar Retirement In Spite Of COVID-19 Crisis Type Market Crashes

A financial crisis should not be a barrier to your retirement adequacy. With the right moves, it can even be a boon.

This article was contributed to us by Loo Cheng Chuan.

It was a night in July 2014 and I just reached my hotel in Tel Aviv, the capital of Israel, for a business trip. I was really tired and crashed in bed after a very long flight from Singapore.

Suddenly, a very loud alarm sounded, and there was an announcement that rockets from Hamas (a para-military organisation hostile to Israel) were being fired towards the city in which our hotel was located.

Everyone were to head to the bomb shelter located near the hotel lobby. I hurried to the bomb shelter and waited for over 30 minutes. Inside, we felt and heard nothing.  Eventually, the hotel staff came and told us it was all-clear and we could go back to our hotel rooms. I was grumbling non-stop on the way back that my precious sleep was disturbed by a false alarm.

It was reported in the news the following day that the Israeli military had deployed the high-tech “Iron Dome” missile defence system against Hamas rockets with great success, and that everyone could continue to go on with our lives as usual.

I thought: “Life as usual? Seriously? How can life go on as usual during wartime?”

Yet, every Israeli living in Tel Aviv was taking the rocket attacks as a non-event. Life for them went on as usual, and no one was concerned.

So, I went on with my business meetings, and when the day was over, I went back to the hotel for a jog at a nearby beach. Suddenly, there was a very loud explosion in the air.

I looked up and saw a puff of smoke high up in the skies. Apparently, a pair of “Iron Dome” missiles had just shot down a Hamas rocket! I was shocked and quickly took my phone and photographed the scene before getting ready to run back to my hotel’s bomb shelter.

However, every Israeli around me looked up in the skies and continued on with their lives, totally chill and relaxed. Diners outside restaurants continued with their meals, fellow joggers continued with their runs, and surfers in the water went on surfing.  All of them seem to have utmost trust that their “Iron Dome” defense system would shoot down every enemy rocket, so to them, there was no need to panic or worry.

Read Also: SQ368 Plane Fire – Why You Should Do Your Estate Planning, And How I Have Done It

Do You Have Your Own Financial “Iron Dome” Defense System?

In May 2019, I wrote an article titled “A Stock Market Crash Is Coming, Are You Ready For It?“. In it, I warned of an impending stock market crash, and suggested what everyone should be doing to prepare for such an event.

Readers who heeded my advice would find themselves better equipped to handle the recent market crash. In the article, I reiterated the need to build the ultimate financial Iron-Dome: the 1M65 CPF safety net which you may also read about here and here.

1M65 – A “Financial Iron Dome” Against Stock Market Turmoil

Over the past three weeks, the stock market had crashed to an unprecedented degree.

Investors terrified by the COVID-19 crisis and its economic impact dumped their stocks with frightening speed in an attempt to cut losses. Even astute investors like Warren Buffet and Ray Dalio saw their portfolios crash significantly.

Fortunately for me (and all CPF members), the CPF Special Account (SA) still compounds exponentially at 4% to 6% per annum. Young couples who heeded the 1M65 roadmap and ramped up their SA contributions over the years to $130,000 each, would be comforted knowing that no matter how badly stock market investments fare; how much property values dropped; or even if they end up being retrenched, their million-dollar retirements as a family is still secured thanks to their CPF.

With the hope of inspiring more couples to strive for a multi-million dollar retirement, I am pleased to share that one of our 1M65 fans have created a 1M65 app (for free!) to help you forecast what your CPF savings would be at 65 years old. For those who are interested, more details are available in our 1M65 Telegram Channel.

Read Also: Singaporeans’ Roadmap For Accumulating $4 Million As A Couple Using CPF By Age 65 (4M65)

1M65: An Indispensable Financial “Iron Dome” For Surviving Thriving Amid Market Crashes

Personally, the peace of mind knowing my wife and I will have at least $1 million by 65 years old in our CPF helped me react rationally and capitalise on the recent market crash.

For me, and many other savvy investors, this crash was a long-awaited fire sale for picking up equities on the low. Sadly, many others panicked-sold instead of buying low during the crash and are now staying far away from investing.

Many investors have written to ask me what they should do. When I shared that I am buying during these crashes for the long-term, the common remarks would be: “What if the market goes down some more?” or “I will only buy when prices crash more”.

From my experience of previous major stock market crashes, namely the Great Recession of 2008, the Europe Debt Crisis of 2012 and the China Stock Market Crash of 2015, investors who think like this miss out on stock market recoveries as they wait for the “best time” on the sidelines.

I cannot predict when the market will bottom out, but the comfort of a 1M65 “Iron Dome” has given me the guts to buy on the crash amid uncertainty and panic in the market. 1M65 also helps me to sleep better at night during these turbulent times, knowing that my retirement is still secured financially.

So, I would encourage you to first pursue a solid financial foundation based on 1M65, otherwise you would be living in fear of constantly “stock market rocket attacks” without the protection of a “financial Iron Dome” as a safety net.

Read Also: Why Are Many Singaporeans Still Poor – Despite Working Hard And Saving Diligently?

My Personal Advice On Investing During Market Crashes

By now you should realise that buying on market crashes requires emotional mastery more than intellectual skill.

Given the COVID-19 uncertainty and imminent rise in death counts in the US, Europe and the rest of the world, I think that the worst of COVID-19 is far from over. I expect more volatility and market downs, and that’s why I would continue to spread-out my purchases as the market continues to tumble.

In addition, it is not easy to go through it alone, given the unnerving emotional experience, but it helps to have a community of like-minded investors who can support and encourage one another to keep believing. Our 1M65 community on Telegram has many experienced investors who are more than happy to help out and play that important role.

Read Also: Kiasu Singaporeans’ Guide For Improving Luck In Investing

Financial Crash From COVID-19 Is A Crisis Unlike Any Other, But Economic Principles Remain The Same

The COVID-19 pandemic is a terrifying crisis, unlike other financial shocks we’ve experienced in the past. No amount of financial safety measures can completely allay fears of the virus and its economic impact.

Yet, having a 1M65 “Iron Dome” would give you the comfort that a million-dollar retirement is secured in your CPF.

Finally, please practice social distancing and maintain the highest standard of hygiene. I believe that we will all go through this crisis and emerge wiser and stronger.

Read Also: A Stock Market Crash Is Coming. Are You Ready For It?

Loo Cheng Chuan, is the Founder of the 1M65 Movement. He developed the 1M65 ($1 Million By 65 Years Old) CPF investment strategy to help Singaporean couples to become millionaires at retirement. He was one of the few non-civil servants to be awarded the Public Sector Transformation award in 2018 for his 1M65 efforts. You may learn more about him on his website or join his Telegram Channel.