When it comes to wealth building and investing for retirement, there are two stages you will have to go through:

  • Stage 1 – Wealth Accumulation
  • Stage 2 – Wealth Preservation

Unless you have a filthy rich parent or a massive inheritance, you probably have to work your butt off to accumulate wealth before you can talk about wealth preservation. Naturally, we all want to somehow invest our money to give our retirement fund a boost. But what is better to invest for retirement?


If you think about it, there are really only 3 ways you can accumulate wealth besides earning income from your work

Any of the 3 ways can offer you financial freedom, but the most solid wealth is always built on top of all 3 of them. However, what I observed in the course of my work was that most people invest randomly.

  • You may buy some stocks when your friends give you some “tips”
  • You may attend a $4,000 course and be promised some “investment secrets”
  • You may put your life savings into a “property investment scheme with little capital outlay”, or
  • You may just diligently roll your fixed deposits whenever it expires

The problem is that you may have focused too much on what to invest in. The secret of investing for retirement is not what you invest, but how you invest. You need to approach investment in a systematic way.

Over the years, I have developed a simple investment strategy which most people can use. The strategy is originated from investing in paper assets but the same philosophy can be applied in other areas of the wealth accumulation process. Let me share with you…

Understanding your financial life stage

The common mistake people make is that they apply the wrong strategy without considering their financial life stage. To understand this, let’s go back to the two stages of the wealth-building process.

Stage 1 – Wealth Accumulation

It is a stage where you have to earn and invest at the same time. You do not have a lot of capital, but you have time as your friend. Your seemingly small monthly contribution to your financial freedom funds can turn into massive wealth if managed well.

At this stage, you aim to generate as much return as possible, but without jeopardizing your current lifestyle should your investment goes sour.

At this stage, the danger is to follow blindly what is being promoted. For example, income investing has gained so much popularity and people just blindly follow without knowing why. If you think carefully, at this stage, income investing does not make much sense because you do not need the income anyway. What you need is to grow your wealth relentlessly.


Stage 2 – Wealth Preservation

At some point in time, you would have enough wealth to live a comfortable life. If you can turn your wealth into income-generating assets to replace your needs of continuous cash inflow, you can declare your financial freedom and enjoy earlier retirement.

Unfortunately, because most of us spent decades to only “accumulate wealth”, you may not be prepared to handle wealth. There was a Chinese saying “it is difficult to conquer a country, but it is more difficult to protect the country.” It happens countless times that people who are in the Wealth Preservation stage made one bad financial decision and turned back to the Wealth Accumulation stage, if not worse.

Investing is Simple but not Easy

If I tell you that investing is simple, you probably won’t believe me.

But let’s think about it: if you can do rocket science, manipulate human cells which our eyes cannot even see, build skyscrapers or send men to the moon, why can’t we do investing?

Investing seems difficult because most of us were trained to work in our own fields, but not to invest. If we can spare the same amount of time and energy of working on investments, we can achieve an extraordinary result.

That sounds great, but that is not the reality.

Most people have NO interest in investing

People talk about investment because they associate investing with making money. But just like any other profession, investing requires you to put in blood, sweat and tears.

Everybody wants to make money in stocks, but few people are willing to put in the effort to make it happen.- Ivan Guan

Our human brains are bad investment decision machines

Not only we tend to look at our investments too frequently because we are genetically wired to pay attention to noises, but we are also very loss averse. Research shows that we regret losses almost twice as much as we appreciate gains.

Therefore, despite all the justification of traditional ways of investing, for most people:

The investment market is more unpredictable than ever before

The investment world has undergone great volatility over the last 20 years.

  • 1997 Asian Financial Crisis
  • 2000 Dotcom bubble
  • 2008 the Great Financial Crisis (GFC)
  • 2009 Eurozone crisis and so on

Crises like these have caused many investors not only to lose their sleep but also their pants.


Traditional ways of diversification and buy & hold have lost their effectiveness with the modern technology and volumes of money flowing around the world every second. Even Warren Buffett’s legendary value investing has failed to generate phenomenal outperformance over the US stock market in the past decade.

How much return do you think you will make if you have been faithfully holding our own Singapore ETF for the past 5 years?


The truth is, you will be still LOSING 11.36%!

Yes, that is not a joke, just look at the chart below.

Straits Times Index ETF Past 5 Years Performance
Straits Times Index ETF Past 5 Years Performance (03/05/2011 to 03/05/2016)

ETF Investing is often a misunderstood strategy. Click here for the 3 myths of ETF investing.

Is there a better way to invest for retirement?

Because I have been providing investment advisory services for more than 10 years, I often get asked my opinion about the markets. Questions such as

  1. How much do you think the stock market can drop?
  2. I am losing money on my investments, what should I do?
  3. How much return can you generate for me?

If you ask these questions, you probably have no systematic approach toward investing.

People ask investment opinions not because they want your opinion; they just want affirmation of their own opinions. – Ivan Guan

A systematic approach can help us make better investment decisions beforehand.

Think about…

  • The first time you selected your wedding photo package
  • The first time you chose your car
  • The first time you bought your house

Were you completely satisfied with the decisions you made?


Like many other things in life, if we do it for the first time, we may let our emotion carry us away. It is because unless you are properly trained or experienced, you cannot handle stress. The same thing amplifies in investment when our hard-earned money is involved.

Our natural inclination is to believe we are better than average, but in reality, we cannot always be right. If we leave our day to day investment decisions to discretions, we will be wrong more than 50% of the time.

Billionaire Ray Dalio taught us that we must acknowledge our own fallibility and constantly remind ourselves that we may be wrong. That is why we need to have a system when it comes to investing for retirement. A system that we can slavishly follow so that we don’t feel like a genius one morning and feel like an idiot the next day.

A simple and systematic approach via momentum investing

If you have never heard of this, I had a short introduction to momentum investing here. I have been used this strategy for a long time and I have developed my own system which I called Global Momentum Compass (GMC) Portfolio.

This portfolio is designed with risk management in mind. The system has two aims:

  • To mitigate the devastating drawdown of your investment
  • To help you capture the market upside.

In another word, it is to deliver an optimal return with acceptable risk for individual (retail) investors. I emphasize this strategy is suitable for “retail investors” because retail investors have very different behaviours from professional investors. From my observation, retails investors:

  • Have a shorter time horizon (even if they say they have a long one)
  • Are inpatient, uninformed and inexperienced
  • Are emotional whenever the market goes up or down
  • Have little resources (time and tools) for investment research or have no interest at all

If you want to find out more about how I help my clients manage their investment portfolio using this strategy, I offer a non-obligatory investment discovery meeting. You may submit your request below and I will get back to you with the time slot allocated to you.

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

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