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Pup's view of Systematic Risks !

Updated: Jul 4, 2021

Just to set the context, shinju (pup's officially named) principal cost of $6588 is a HBD gift to my lady-girl of the house and daughter of the lady-boss. To them, it's merely a new family addition but as a number crunching guy, the risks & returns started as soon as the ka-ching chimed from my digital card.

How do I input this super adorable pup in my personal financial sheets? Asset or Long-term Liability in my Net Worth or Variable Outflow in my Cash Flow Statement!

To me, it's an aggregation of a lovable asset with one-off cash outflow but a long term liability.

Systematic Risks is the overall, day to day ongoing risks caused by multitude of factors; geopolitical, markets, interest rates, economy and so on...

Risk management is the cornerstone of any financial planning effort because risks are inherent in our everyday life. Crossing the streets, driving a car, having a meal, and now even breathing in confined space carry risks (Covid-19 driven).

The main premise to mitigate such risks is the development of a sound financial plan such that in case of adverse events, my family and i can weather through, emerging stronger and better.

Risk-Returns cannot co-exist with the unwillingness to bear inherent risks in higher yielding investment instruments, likewise high volatility in shorter time horizon. To counteract inflation, a calculated risk is needed for long term investing while tapering risk for mid-term goals, and even more conservative for short-term play.

Going back to the number game, I had conjured a battle plan a while back (perhaps a long while kekeke) to gain financial independence as I wanted the freedom of choice, albeit not absent commitments. Risk management through effective use of insurances, investment and tax planning, retirement and estates planning within blocks of 5 years goals was my approach.

  • 30yo - A home and a child (Adequate insurances as Risk transfer)

  • 35yo - 2nd home & 5yo girl (MRTI & CPF FRS+BHS as Risk reduction)

  • 40yo - Investment (Core/Satellite/Play/SRS portfolio as Risk retention)

Hey what of Risk avoidance? Strictly speaking, there's no way to completely avoid risk, for instance, would you stay rooted at home and forever live in isolation till Covid-induced pandemic is over (just be a masked hero and wear a badge)?

Beyond the next bound towards financial freedom requires some personal assumptions and economic postulations:

  1. Greater longevity beyond 86yo hence longer retirement projection

  2. Inflation estimated at 2.5% (Developed nation data & coincidentally on par with OA)

  3. Risk adjusted returns of investment minimally to be 2x of SA returns at 8%

  4. Inflation adjusted returns therefore at 5.366% (Perhaps Shiba coins)

  5. An adage 4% rule* for 40K safe annual withdrawal with 1 million

  6. Having achieved that, but is it enough for a family of 3 (Now 4)

  7. Full or barista/lean retirement at **60yo

The recommended pace of change is gradual with an increase of either 0.5% or 1% in each of the employer and employee contribution rates for those aged above 55, initially effective 1 Jan 2021. However, to assist employers with costs during the pandemic, this was postponed to an effective date of 1 Jan 2022.

This would be added impetus to maintain some form of employment till 60yo (in excess of 26% CPF contribution rates target) to sustain 30 years in actual retirement till 90yo. Case to point, there should be multiple sources of passive income and capital drawdown for a trade off between retirement age and income.


As content gets commoditised with technological advancements and fungible resources, readers should comprehend materials for informational purposes ONLY and NOT be taken as tax, legal, business, or investment advice. It also does NOT constitute as an offer or solicitation to consider any investments or securities. Case to point, the content is not directed to any individual and may not be used to evaluate or make any investment.

Do note that this is not financial advice. Please always do you own due diligence all the time and consult relevant professionals or financial advisor. (Or a chat with me!)


*Bengen’s (1990s) 4% annual withdrawal outlasted over 30 years of constant withdrawal rate was on the premise of then near 5% fixed income yields on a 50-50 Equites/Bond ratio. Short of a protracted employment period, a lowered withdrawal rate with adjusted investment asset ratio would probably be needed. **


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