What Colour is your Retirement? [Self Check]

Posted 1 December, 2016 by Clearly
in Guest Contributions

This article was kindly contributed by Zest Chia


What color do you associate money with?  Most people would think that money is green (no small thanks to the greenback).  However, I look at money slightly differently, and I encourage you to do the same.

The amount of money we earn, save and spend is directly correlated with our lifestyle habits, driven by our personality and beliefs. Monitoring your cash flow and evaluating your current assets by knowing the colors of your money invested in these assets can help you reach your retirement goal.


To give you a helping hand, I am going to share with you the concept of red, yellow and green money. After understanding this concept, you would be able to evaluate your retirement plan and consolidate them by focusing on the color of money that is invested or placed in each colour.

In a way, this concept should give you a tangible way to understand asset allocation and the logic behind why your asset allocation changes with your life stages, age, and investment time horizon.


Lets behind by understanding the three types of colour that money can possess.


Green Money


Lush and Lucky – what else can green represent?


Green money represents your assets which provide guaranteed values or growth. In financial planning, when we look at the accumulation and preservation, green money should be the base of your financial pyramid as it provides stability every financial plan needs.

Examples of such are: cash value of life insurance, fixed deposits, fixed annuities, endowment plans, CPF monies, government bonds and other safe money options.

Green money need not be easily converted to cash (that is not the aim), but rather, is a source of continuous payout or growth.


Yellow Money


Yellow: Protective but oh so necessary


Yellow money is used for daily expenses and money to pay for unexpected emergencies. Yellow money will likely be earning a low rate of return because it must be safe and have high liquidity. Most importantly, it must have no risk of loss. Liquid means it can be turned into cash on short notice and without suffering a loss.

Examples of such are deposits, savings accounts, short-term bonds or other safe assets with short maturity.


Red Money


Red is what we use to warn people with – no surprises here


Red money represents assets that are at risk or in danger of loss. Red money can be invested in investment vehicles like stocks, bonds, REITS, unit trust or may be placed in mediums that do not provide guarantees.

These types of accounts are typically used during the accumulation (start) phase of a retirement account. Red money enjoys the possibility of the upside market potential.  The tradeoff is they are not safe, secure, or guaranteed.

Note that, there is nothing inherently good or bad of either of the three types, but each serves a different purpose. It is important to know how your assets are allocated between the three and keep an appropriate balance without compromising your retirement goal.


How does this money concept help with my retirement planning?



It has to do with allocation. If you are young and still a long way to go from retirement, then a possible allocation might look like this:

Red money: 70% of assets
Yellow money: 20% of assets
Green money: 10% of assets

This allocation works well for a fresh graduate. But it spells disaster for a pre-retiree!


Even apples have different colours – why not your money?


I firmly believe that everyone has a common goal (To be financially free). Regardless of our financial status we want to retire successfully.  We not only need to determine how much income we wish to receive by our retirement age, which can be a challenge.

It is also very important that we have a new “Money-Mindset”. This is where we color code our retirement planning to help us evaluate the color of our money in our retirement portfolio.

Naturally, our default thinking is that we relate retirement to accumulation of a large nest egg to sustain us in our retirement years. The bigger the nest egg, the better our retirement years.

For sure, size does matter (no matter what she says). But how many of us thought about what type of nest egg are we accumulating?


The way our dollars are allocated to (i.e. the color of our money) will make a real difference in your final financial outcome. Risk is the obvious determinant that would make or break our retirement plan.

When we see the traffic lights, we follow the red, yellow and green lights because we know what to expect if we did not comply. This is the exact same concept for investing and saving for retirement.

  • Red means to examine carefully
  • Yellow means to take note, or be alert
  • Green means its safe to proceed

For most advisers who might not know this concept, they are more interested to talk about the next investment product we “should” buy. Yes, it will have an enticing potential gain. Yes, more than likely it will have a “track record”. Yes, there will be fine print that will be glossed over.

When we are overly focused on the returns of the product, rather than the color (the nature) it belongs to, it can cause our retirement to be easily derailed. Minibonds, anyone?


Life is full of bumps: So plan accordingly


All that is left to do… is to fill in the colours


We all can attest that life is not a smooth journey. So, expect the same for your financial planning. If life was all about smooth sailing, nobody would bother to plan anything.

Nonetheless, we all can agree that little bumps in life can seriously affect our financial plan. Just as you thought that you have it all settled, that your investments in shares, REITS, unit trusts, bonds and real estate were a sure hedge against inflation, a large company called Enron collapsed and drag many people together down into flames. The retirement dreams of people who banked their savings on Enron’s shares had their retirement dreams turned into a nightmare.


Are you worried about the next crash or the next political shift that can bring shock to the market?

My answer is, if your retirement is protected by “Green” money, who cares?


What are you doing for yourself, or what has your adviser done for you? What have you prepared for your family? My hope is that you agree with what I have touched on throughout this article and get your act together.

Evaluate your adviser and determine if he or she has the relevant skill set to advise you in this area. All you should do is act first before the next bump comes along.

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

This article was contributed by Zest Chia, and he represents an independent Financial Advisory firm. He wrote this article in the hope of educating more people and assisting them in their finances. He had inspiration for this article from his colourblind Dalmatian. You can reach out to him at 9675 9587.

Want to submit your own guest post? Contact us here or email us! (talktous@clearlysurely.com)


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