I asked TV viewers to Raise Cash Level in Nov 2007...

[Dennis Ng]

On 13 Nov 2007, 9.30 pm, Channel News Asia's Financial Planning TV program entitled "Cents and Sensibility" look at the possibility of achieving Financial Independence by age 50 in Singapore.

I was asked to share about common mistakes and common misconceptins about Financial Planning. (Channel News Asia put my short segment as "Financial Myths Buster").

One of the things I shared is that it is easy to achieve Average Annual Return of 6%. However, most people would have the misconceptions that this is a "smooth" 6% returns.

As I shared, in the real world, there is no such thing as straight line returns. You might earn 100% or even 200% returns in one year and make nothing or even lose 10%, 20% in another year.

What I said thereafter was "cut" and not shown on TV.

I also shared that I do not believe in staying invested 100% of the time. There are times we want to be fully invested (when markets are low) and there are times it makes sense to raise cash level. For instance, as the markets move higher, one might want to take profits and raise cash level and Opportunity Fund.

On is it reasonable to achieve 6% annual returns?
I shared that it is very achieveable as if one makes 100% returns, one is actually on par with someone who save for 20 years and make annual returns of 3.5%.

Does one need to wait for more than 20 years for a crisis? Unlikely, from past record, most crisis happens about once in 10 to 12 years.

Thus, even if a person who does not know how to invest can choose to invest only "during crisis" or what I called "Crisis Investing" can easily beat another person who play it safe but only manage to earn 3.5% annual returns.