Dating My Girlfriend Taught Me the Sheer Severity of Forex

Updated: Oct 11

The story of how I lose 5.2% every year. :(


I started dating my girlfriend back in August 2016.


Manow - as you guys hopefully know by now - is a Thai local. She’s a big part of my ‘Origin Story’, which I detailed last year.


SEE ALSO: An Earnest Conversation


Back in those days of 2016, I had barely started this job as a Financial Consultant.

I was still very much in an ‘intern’ phase – making cold calls, talking to old friends and hoping that people would give me a chance… We were so poor.


Some of my fondest memories are huddling up in those $15 hotels, with less-than-queen size beds, toilets which looked like someone died in them and floors that were always wet because the air-con would leak like crazy, or fluctuate in temperature.


Over time, we’ve gone from questionably beat-up hotels to places where the air-con doesn’t leak anymore. Then we added a fridge. Starting renting a motorcycle.

[These upgrades are about $30, at most $40 a night more]


But more than 3 years later, despite actually being able to make a little more money at this job – and when I was tracking my expenses, I realized that I haven’t found that I have a significantly higher amount of spending power than I did before.


I’ll be honest – I thought I’d be doing everything that Nas Daily was doing in his Thailand video by now.


Why didn’t it happen? O_O


The Unknown Cost of My Relationship – or Investing


Let’s look at the value of the SGD versus the Thai Baht from the time I started dating Manow.


In August 2016, 1 SGD was worth about 25.93 Baht. That’s pretty sizable.


But by August 2019, the SGD was worth considerably less.


In fact, that’s a 17% drop over 3 short years.


For the sake of illustration, I want to show you how that would affect the investment return of a Thai National investing in SGD – bid to bid, no spreads. 2016 – Invests lump sum of 259,300 Baht

2016 – It converts into $100,000 SGD


2019 – Assuming 0% investment growth, he converts the $100,000 SGD back into Baht

2019 – It becomes 220,800 Baht.


Ouch.


Losing over 38,000 baht is about -5.2% annualized, not to mention an actual spread (which there always will be) just for a fund to breakeven on the losses caused by forex.


I’m not an investor from Thailand, obviously.


But in the last 3 years, I’ve gone from expecting almost 26 baht for my dollar to becoming satisfied if I can get 22 after spreads. It’s pretty sad.


On the Flip Side


The thing about risk though, is that it can go either way. Taking controlled risk can be extremely profitable, and this applies for Forex as well.


If we look at the 10-year Forex difference between SGD and Ringgit though, it spells a different story from the SGD/Baht situation above. 10 years ago, 1 SGD was worth about 2.40 Ringgit.

Now, 1 SGD is worth about about 3.05 Ringgit.


For a Malaysian Investor, let’s illustrate this as well – investing in SGD, bid to bid, no spreads.


December 2009 – Invests lump sum of 240,000 Ringgit

December 2009 – It converts into $100,000 SGD

December 2019 – Assuming 0% investment growth, he converts the $100,000 back into Ringgit.

December 2019 – It becomes 305,000 Ringgit


That difference across a 10-year period is about an additional 2.4% annualized to boost your returns, even after heavy volatility.


If a Malaysian Investor had invested that $100,000 and made 7% annualized across that 10-year period, they’d have made about 589,300 Ringgit instead of 472,100 – or basically well over 127,000 Ringgit more from nothing but Forex alone.


How It Affects You


Part of my job as a consultant is obviously fund selection.


If we’re looking at returns outside of Singapore – and you SHOULD, you’ll find that Forex Risk is almost certainly a given.


One of the key advantages of professional management in a specific sector or inefficient area is the ability to recognize and cope with Forex risk – as opposed to a passive instrument which would just take it. This can result in:


a) Hedging, or even leveraging, against Forex risk

b) Fairly long term, predictable results backed by a necessity.


And many other strategies that tend to create alpha through simple and basic statistics.


Of course, there are no guarantees – but certainly a useful and logical method towards generating higher returns.


Reflection/Conclusion


If you’re dating someone from another country where their currency continues to appreciate against your earning power, you’re a little unlucky.


But of course, if you have someone who loves you at all, I suppose that evens it out a little.


(My poor wallet though.)



I haven’t seen a lot of evidence that Forex risk is a huge thing for Singaporeans. Many of them are crazy about the STI ETF, but equally crazy about IWDA and SNP500 despite the Forex risk.


(And rightfully so, since these indices have a much more extensive and valid reason for making much more money.)


But for foreigners or people with different income currencies looking to diversify or otherwise, Forex is actually pretty important.


Do consider the future of your investments against your future situations.


As an investment specialist, Money Maverick has clients who:


1) Are doing long-term investing in Singapore and under SGD currency with Forex consideration despite being in another country.


2) Are using USD currency investments with Forex consideration.


3) Have profited off funds that outperform benchmarks due to fund manager Forex strategies, and have accurately selected these funds.


4) Are aware of Forex risk and can take individual hedging strategies, or even leveraging strategies.


All investments come with risks that a specialist like myself can address and account for - including a review of your own investment strategies, if you already have experience as a seasoned investor.


Whether you’re a seasoned investor, or someone who just doesn’t know how to invest safely in the markets, or a foreigner - I’m right here.


I would love to help you get a boost in your returns and a predictable, stable income stream - instead of a depreciating situation.


Money Maverick

As one of the Top Financial Bloggers in Singapore (Feedspot, Withcontent.co), I would be happy to answer any emails and questions you may have, as I have been doing for my readers over the past few years - especially about Insurance and Investing, as it is my forte of personal and professional knowledge.


If you have any such questions about the articles and how it may apply to your finances, you can feel free to leave a comment, or drop a message through any preferred medium (if you prefer privacy).


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Money Maverick is a Licensed Financial Consultant with MAS, who specializes in Investments and Critical Illness Insurance.


The views on his blog are strictly of his own opinion and have no affiliation to any of the companies he works with.


Here are some of my resources on:


1) Investing: Why you should invest aggressively NOW (and how you still can have peace of mind)


2) Insurance: The Newest, Rising Critical Illnesses in Singapore (2019)


3) Retirement and Leverage: Leveraging a Private Annuity, Pros and Cons (ft. Jamus Lim)


4) Spending and Saving: The Biggest Spending Mistakes You DIDNT Even Know you were Making (and how to avoid them)


5) Job Assessment: A Case Study on How a $6k/mth GIrl makes MUCH more money than a $10k/mth Guy


6) Financial Optimisation: How I Avoid the Largest 'Fees' of All


Investments are also available using CPF (Ordinary Account), SRS (Supplementary Retirement Scheme) and Cash.



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The views, opinion and information in all articles are those of the author. These materials do not represent or reflect the views of Manulife Financial Advisors nor is endorsed by them. Manulife Financial Advisors shall not be liable or responsible for the materials of the author. 

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