The price of financial education
What is the price of financial education? Imagine this situation. You are 70 years old and you have invested all your savings in a bond of a company because your financial advisors said it was safe. You believe you are close to your objective of retiring comfortably after a lifetime of working. Finally! However, one day you wake up and find out that the company went bankrupt. And your 250,000$ bond is worth 7,000$.
Scary? You bet it. Unfortunately, it happened in Singapore. The company is Hyflux, and that is what the article explains (in Mandarin). I was very sad to hear that, even though I did not know the person, and even upset that a financial advisor could suggest such a “gamble”. If you remember in a previous article, we made the point clear that one should definitely not invest all the eggs in one basket. And that is just the minimum level of diversification.
The problem is that when people do not have any financial knowledge, they prefer to delegate investing to so financial advisors. Nothing wrong with that, but you should find a good advisor. And in order to assess if that person is good, you need a minimum level of financial education. This way, you can at least know if the strategy he/she is proposing is reasonable. In this case, it was not!
The idea of this blog is to share the basics so people can make a better-informed decision. By subscribing to it, you are already way ahead of the average person without any financial education. As the famous quote goes:
if you think education is expensive, try ignorance.