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Interesting forum letter today. Somehow I feel that when you hit a certain level of wealth, say S$1 million, a whole range of other investment opportunities open up to you. The breadth of financial products is also wider, and some may be labelled as "Accredited" and get access to better interest rates, products and even private equity deals. Hence, this is why the "rich get richer", I feel.

Apr 9, 2011
Income streams of the rich and poor

I REFER to the debate on the widening income gap in Singapore and growth benefits not accruing to the lower-income, or even the middle-income group.

The problem lies in the low- and even middle-income deriving almost all of their income from work. On the other hand, the rich tend to have most of their income coming from returns from capital. There is a limit as to how much one is able to work as well as the level of productivity any single worker can achieve. On the other hand, there is virtually no limit to the amount of capital one can hold.

Indeed, when the labour force already has a high level of productivity, further increases to productivity would generate relatively fewer returns. On the other hand, increase in productivity would actually increase the returns to capital.

The way to solve the income disparity is to boost the poorer segment's financial literacy so as to encourage them to hold more capital, and to do so in an informed and educated way.

Only through proper savings and investment would they be able to raise their standard of living significantly.

MoneySense Singapore is doing a fabulous job but on a very limited scale. Perhaps the Government could enlarge the scope and scale of the MoneySense project.

Goh Ching Soon
I agree with the letter writer. I always joke with my frens that on top of my 13th month bonus (in Dec), I have a 14th month bonus and more recently a 15th month bonus from Uncle SGX. Of cos inevitably I will be the source of their envy.

But I dun particularly feel that what I am doing is particularly fantastic (in fact my portfolio is still in the red overall) or that I have put in a big chunk of money in investment. But what I have done correctly all my working life is a conscious effort to spend within my means, be sensible with my purchase and not over-commit myself financially. Of cos I have also make correct career decision along the way so that my earnings generally increase over time.

The concept of delayed gratification is lost on most people.
(09-04-2011, 11:02 AM)lonewolf Wrote: [ -> ]The concept of delayed gratification is lost on most people.

Agree with this line, it seems as we get more and more "affluent", the traditional good values of thrift and spending below ones means are also gradually being eroded......
Singapore's doing too well for its own good.
Good jobs are aplenty, jobless rate is low.

Most of us work for a multinational company drawing a decent pay.
But if we look closer, we are bits of a giant clockwork.

We are so specialized in an area that we are no longer in tune with the other functions.
This mechanism exist so that the MNC will function with or without a person. No one is indispensable.
You need the company more than the company needs you.

The wealthy somehow is able to develop a sustainable system(inflation adjusted) that works for them.
It is usually by making the right judgment calls and tapping onto someone else's effort that they prosper.
It is seldom by their own solo effort.

Actually, if one saves and invests well, it could be easier to grow one's wealth in percentage terms than the rich. This is because the base is low, so even a modest amount of savings & investments can grow nicely.

I know a bunch of half-dozen aunties who used to work at Shell as clerical staff, O level -holders, probably started their working life with a net worth of $10 or $100, retired 10 years ago, probably have around $0.5-5m in assets. During one of their gatherings in Sep 2008, when the sky was falling, they were calmly talking about taking out their fixed D's and selling their jewelry to buy Keppel Corp if it ever went below $4.50.

In comparion, lets say somebody starts out working career in mid 20s, and also happen to inherit a $1m sum - maybe a property or some money. When he retires, it's unlikely that he'd have been able to grow his net worth by 5,000 times and end up as a billionaire.