The Virtue of Thriftiness

Thriftiness is a good virtue and it is practiced by many.

I see many working parents and professionals careful with their money. They do not spend on un-necessary things and save every cent for the future. They live a very simple and humble life-style.

On closer examination, they may save $1 and lose $10. And they do not know about that.

We will discuss a few examples.

In today high cost living and modern world, most are aware of the simple notion of investment - let the money work for you. Being thrifty and careful about their money, they intend to invest without taking high risk. They want to be very prudent. They invest in properties, stock, unit trusts, insurance etc. that are "explained" by agents or friends as safe, and for long term.

After the investment made, they leave the whole thing to the system and time, and they do not monitor, do not really know the performance, rate of return of the investment. Even if they know the performance results, making money or losing money, they may not have the basis to make further decisions like let the profit grow, protect their capital, cut loss, make necessary switching etc. etc.

They rely on hope, long term, diversification, .. without knowing that their investment is a function of the market forces. That is, when they really need the money and if the market is profitable, they may make some handsome gain. But if the market is depressed, they may lose heavily, creating difficulties to meet the higher financial needs of the later years.

They may save $1 and loss $10.

The virtue of thriftiness needs to be put in the context of financial and investment literacy.

End.