The recent Swiber bond debacle has sparked off a new debate as to whether the Singapore government should save "accredited investors" - individuals who have at least S$2 million in assets. Because they have more money than the average man, these "not-so-wealthy" individuals are being given more choices in investment products, including those that are deemed as more exotic, riskier or too complicated for laymen to understand.

But does being rich necessarily equate to being smart about your money?

Sadly, no. This is a tough lesson in personal finance to 
those who invested in Swiber bonds, who have each lost at least $200,000 or more, now that the company has defaulted on its bond repayments. It is unlikely that these investors will get their money back.

As a result of this saga, people are crying out for the government to protect these accredited investors. Bloomberg reported on this piece with the headline of "How Singapore's Not-Really-Rich Have Been Burned By Swiber's Bonds". The argument is that many of Singapore's "accredited" investors are given that label because of their property asset, which isn't exactly a true reflection of their liquid wealth. But given competing interests, should the government be saving folks with over S$2 million to their name, or focus their energy on helping the poor instead?

Now, I frankly don't really care whether or not the government decides to overhaul the accredited investors scheme in Singapore. While I feel sympathetic for those who lost their money in this saga (especially those who lost their life savings), we cannot simply pin the blame on the bankers who sold them those Swiber bonds.

It is YOUR money. No matter who sold it to you, you need to take responsibility for making the decision to sign your money away to Swiber.

Every investment comes with risk. Just because bonds are generally classified as a safer investment choice, it is foolish to simply assume that all bonds are made the same. 

You can continue blaming your banker or financial agent. "How was I supposed to know? They're supposed to be the expert! They're supposed to know what is best for my money!"

The government can overhaul the whole scheme and save these investors from becoming victims like this again. But I can assure you that this will continue to happen, and happen again. That's because:

There is no cure for stupidity.
There is no cure for laziness.
There is no cure for plain naivety. 

Now, I'm not saying these investors who lost their money in Swiber bonds deserve it. They clearly don't. Some of them went into the investment only because they genuinely believed it would help them grow their money for their other life goals.

But here's the hard truth. If you refuse to pick up financial literacy and learn to manage your own money, then that is your own responsibility. If you choose to believe that your banker and financial agent TRULY has your best interest at heart (hahahahaha) then that's being plain naive. If you choose to believe that this investment is safe just because someone tells you it is, admit that you've been lazy enough to not have bothered checking up on the investment before you put your money in.

So since that is the case, then don't call for help. Take responsibility for your own mistake, even if you only erred because you were mistakenly led on by someone else. If you hadn't signed and approved those papers yourself, there's no way Swiber could have gotten your money, right?

Remember that no one except you truly have your best financial interests at heart. This may come off as harsh, but it is better to learn this now than never.

With (tough) love,
Budget Babe


  1. Quote : "There is no cure for stupidity."

    Wah! Evergreen!

    I heard in Cantonese when I was a youth and now @ 60 I read in the cyberspace. This quote has stuck in my mind since then and will stay with me to my coffin.

    1. Oops! I hope I'm not too harsh. I think it was my dad who said this to me when I was young, when I didn't study hard in primary school LOL


  2. So i only NTC 2 must be quite "stupid' compare to all U Graduates or A level.
    (Academically i think i am lol).

    Even seasoned business-man can be persuaded to buy some "sophisticated" financial products from Bankers.

    Then, when they lost BIG money, they make a lot of noise and may even sues the Bankers.

    Be careful & beware, no matter who we are, we can not be smart all the times.

    We all have our stupid moments.
    (i can sell you anything if i know where is your perpetual weakness)

    Have you lost some money in the stock market recently.

    i always have lost some money in the market but somehow have managed to survive until now.

    T o survive is first aim before thinking of making any money in the market.

    1. This comment has been removed by the author.

    2. Is one's intellect measured only by they academic grades or the institution that they attended as a student?

    3. Yes, in a sense almost to a perfect SQ that is the way the World is.

      And not only that but in many similar ways too.

      But i always have my own idea of what my "Own World" should be.

      That's not to say it is easy for me to think against the norms of the World.

      In fact had been thinking for so long until 40 years old then i dared to put it into actions.

      i plunged into the stock market with almost my all.

      Really lock, stock and barrel at that time.

    4. Haha I know a lot of people who are academically stellar but not exactly smart. Lol. We should build our own world like you said!

  3. Hi,
    Can the banks sell unrated bonds like the Swiber? Have the banks done up an evaluation on Swiber before selling the bonds or just because they want to sell the unrated bonds to the naive investors who have placed their faith in the banks?

    1. Hi Meng Choon, those are good questions but they should be targeted at the banks which sold Swiber bonds instead who ought to have the answers.

  4. Even if the bonds are rated.....Hmmmm....
    During 2008/2009 fiasco, many bonds (MBOs, CDOs, etc...) were rated too.

    It is the same as if someone propose to sell you a "guarantee return financials product", i am sure after reading the fine print, it is not so guaranteed after all.

    Or if it is after 3 to 5 years which meanwhile you can not touch your money, there's such a product but the returns is about 2.xx to 3.xx % P/A only.

    In fact to me, if anyone use the word guaranteed returns, be very ,very careful about the terms and conditions.
    If you think they are O. K. for you, then go ahead lol.

  5. I disagree. Nobody lost their entire savings if they can afford to plonk 200k for the minimum certificate size. Blame the bankers if they must to dodge their own culpability but nobody put a gun to their head to make them buy the stuff. Greed plus ignorance is a deadly combo.

    The fundamental point of investing in high yield bonds like Swiber is diversification so that the higher risk of default can be mitigated so that the potnetial loss at the portfolio level is much less than owning just 1 or 2. Individuals do not have he wherewithal to build a diversified portfolio of high yield bonds. If they want the higher returns, then they should buy High yield bond funds.

  6. Ha! Ha!
    "Greed plus ignorance is a deadly combo."
    How about the Chinese saying, "Your ears are very light".
    But i pity those who are naturally easily convinced.
    And 101 reasons why some people are like that.