See also my post on passive income generators
I don’t have a lot of wealth, but what I have, I want to preserve. Education is the superior/correct way to leave a heritage to the next generation, but here I’m talking about “preservation” till my twilight days and beyond. For that purpose, passive income is one of the key factors. Insurance is another key factor, esp. to cover debts that would otherwise threaten liquidations.
Even before retirement, we would need vehicles to preserve wealth against inflation, economic upheavals, natural disaster, or global asset devaluation etc. OK no 100% waterproof, airtight preservation, but relatively speaking, some investments provide relatively higher security than others. My #1 favorite is ….
- prime-location property such as my Beijing/Singapore homes. Location is everything.
- gold, but negative yield
- blue chip stocks, often dividend-paying
- —– below are not really preservations —–
- CPF Life, but Unable to take out the money.
- other special insurance plans, backed by the insurer.
Liquidity — is presumably poor for many of them, though some are slightly better.
Market risk and macro economic risk — the insurance products (including CPF Life) are safer, but over long term suffers from inflation and FX risk. If you think about them, these risks are higher the more we depend on the asset for a longer period.
Capital appreciation — (possibly significant) only comes with market risk. No risk no appreciation.
For properties, are we sure that established leading cities like Shanghai, NY, Sydney … better than developing countries for wealth preservation? I feel there are too many factors (for and) against them:
- HK and Singapore are small economies sensitive to global and esp. Chinese economy. London can, in theory, be sensitive to Brexit
- hot money is a major driver of these property markets. Volatility
- Partly due to the perceived safety, transparency, political stability etc, valuations in top cities are way too high, so some would say limited upward potential?