In short, to accumulate wealth, your role is to make sure the money flows to the right channel (asset class), and therefore letting the money work harder for you in the process.

When you work, whether you are salaried worker or self employed entrepreneur, you have an income. The monthly income gets credited into your bank, and flows out of the bank for expense purposes. If the inflow is more than the outflow, you have excess money, and we call that a saving. Sounds simple right? The thing is, what do many of you do with that excess?

1. You save it in the BANK, for future emergency needs. Hence you create an Emergency fund.

2. You save it in the BANK, for big ticket items. Examples, wedding banquets, house down payment, car down payment, holiday trips, etc. I call it Big Ticket Fund.

3. You save it in the BANK, on top of the emergency fund, for opportunities. Hence I call it Opportunity fund.

In fact, it is the the opportunity fund which will eventually be channeled into all the different investment and asset classes, which in turn generate you a decent return over time. That’s where you build your wealth from. I’ll dedicate another post for this opportunity fund. In this post, we shall just focus on storage of these money before you deploy it out.

Did you realise that many of us actually store a lot of money in the bank? Just waiting to deploy to somewhere someday…

On the surface, sitting on cash position in the bank gives you comfort. Imagine you login to your bank balance daily, and you see those numbers, and it increases, it comfort you. However, comfort is where it kills growth. Needless to say, our money in the bank has been slowly eaten up by inflation. Many of us didn’t realise it. You know what’s the best part? Your most trusted bank, which you have stored lots of money inside, use your money legitimately, to lend it to someone else who needs those money (including yourself!), and make a profit out of it. Bank gives you a low interest rate on your deposits, and charge you higher interest rate on your loan, thus earning the difference. It doesn’t matter whether the Federal Reserve raise or lower the interest, the fact is this; Bank make huge profit on your un-utilised money by lending it to someone else. Ask the shareholders of the bank, will they approve their bank (which they own) to give the depositor higher interest rate and charge a lower interest rate to the borrower? If you are in business, you won’t do that. The only reason why they will do so, it’s because other banks want your business and hence they give slightly higher interest rate, and charge slight lower loan rate. They do so to fend off competition! Hence, whether you like it or not, you have to realise that it’s never in the interest of the bank to give you a higher bank deposit rate, and lower loan rate. Come on, how are they going to answer to their sharesholders? Shareholders only wants higher dividend yield and stock price appreciation!

If you understand the above, the next question you want to ask yourself is, where else can I store my money such that it’s of higher return, and of high liquidity?

1. Treasury bills/ Singapore Savings bond? I’d recommend that as it’s safe and backed by government. It’s highly liquid as well. If you need to deploy your money for opportunities/big ticket/emergency needs, you can access it fast too.

2. Money market funds? When you store money, you want it to be safe and liquid. In money market funds, they are liquid and you can actually purchase it off from your brokerage firm. It is safe as well as the underlying assets of money market funds are of minimum investment grade, government grade, sovereign grade bonds.

3. Staking Crypto? There’s what many ignorant people are doing now. They indeed fire off their banker, set up Decentralized Banking Systems via Cryptocurrency Exchange. Binance, FTX, Coinbase are like the bank of crypto world. While they may be liquid, and offer higher interest, they are very risky and unsafe. Look at the FTX saga and it require not much explanation further. If I want to store money inside, I want it as safe as the bank, the safer the better. For Cryptocurrency Exchange, it’s a new platform, and based on past few years of “bank run” where such exchanges fail, I wouldn’t want to park my hard earned money there.

4. What if I say life insurance company through a financial strategy called IBC? The strategy might seems new to you, but life insurance companies and life insurance policies have existed for centuries and it definitely is safe. In fact safer than the bank if you look at how they make money. As your insurance accumulate cash value in your policy, it is liquid as well. I know what some of you might think now…Insurance as storage of money??? Are you sure? Let’s be opened minded, and I shall more in due course.

I shall dedicate my next post on IBC. However in this post, I hope you can catch my message that perhaps, there’s a better place to store your money elsewhere. Our grandmas used to store their money in the biscuit tins, and then they were introduce to bank. I still see many elderly people going to the ATM to update their passbook to see their latest bank balance. You might laugh about it, but we are same. We login to our online banking, and also see the bank balance. What did we achieve end of the day? Comfort…that’s all. What did we lose then? We didn’t lose our money, but we lose the opportunity to let the money grow and work harder. Over the long term, as we lose those opportunities, we gotta work harder ourselves, and hence lose the time which could have been better spend with our family, enjoying the vacations with our loved ones, and doing the things you truly love. Never belittle these little actions we miss, as it will change the fortune for you forever.

Hence start shifting your money away from the bank, and make your money work harder for you. Money in the bank should be kept at minimal for daily expenses only. Store it elsewhere, let those dollars work hard for you, otherwise you may have to work hard forever.

Look out for my next post where I’ll introduce you a place to store your money