Lehman Brothers and AIG Events: Don't Lose Your Savings

Lehman Brothers and AIG Events: Don’t Lose Your Savings

In the light of the collapse of US investment bank Lehman Brothers after it filed Chapter 11 protection that affected some investors who ploughed their savings into structured products like DBS High Notes 5, and the near-financial meltdown of AIG causing queues of panicky customers at AIA offices in Singapore, many savers must be wary of recent events and the safety of their Singapore savings, investments and insurance.

These are uncertain times with uncertain events in the global financial markets. There has not been such financial turmoil nor gut-wrenching events in recent memory. Who would have thought that Lehman Brothers and AIG, such huge financial institutions, could falter so badly and lose their way in their financial pursuit of profits?

How many other investment banks, savings banks or financial institutions are in trouble with similar Lehman Brothers or AIG type of events? How many more Lehman Brothers or AIG will lose their credibility in the future? How many more AIG companies will need saving?

With knowledge of these Lehman Brothers and AIG events, we now know how low things and events can fall. Are our savings, investments and insurance safe? Are we aware of more events that may befall the financial markets that can affect our savings?

The worries will flow during these difficult Lehman Brothers and AIG events and at the very least we should learn some lessons not to lose our savings, investments and insurance. But what can small savers like us do in Singapore?

After seeing events that affected Lehman Brothers and AIG, the last thing Singapore savers want is to lose their savings. We should also not blindly liquidate all savings, investments and insurance, to hide these savings, returns and whatever sources of money under our pillow.

This should really be the time to reflect on what money and savings mean to you. Now is the time to reflect on what you want your savings and investments to do for your life. Of course, in practice it is difficult to find a foolproof way to safeguard your savings AND make money that will boost your own ego.

At the very least, go back to basics. Educate yourself on the various savings, insurance and financial products that you plan to use.

Understand how they work, how long they take to work, how high the potential returns are and how much downside risk you are prepared to stomach in a worst-case scenario.

Use your common sense and do not be swayed into making savings, investments or insurance decisions without thinking hard during the cooling period.

As a reminder, your Singapore bank savings account denominated in Singapore dollars is guaranteed in Singapore up to the amount of S$20000 net of your liabilities. For sums above that savings level, you really must decide for yourself how you wish to deploy your savings in Singapore or elsewhere to avoid a Lehman Brothers or AIG type of event from happening to you.

Take care.
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