Three Timeless Money Lessons from Business and Singapore’s Reserves

This week I was at my company’s offsite conference.

Amid all the strategies being shared, two points stood out to me: “having a strong balance sheet” and “achieving good returns from our capital.” These, we were told, will put the company in a strong position to capture opportunities on the horizon.

And I thought — hey, these aren’t just corporate strategies. They’re principles that apply just as much to us, the L-Plate Retirees, in how we plan and fund our retirement.

First, a strong balance sheet. On a personal level, that means owning more than you owe. Assets (things that put money in your pocket) outweigh liabilities (things that take money out). With healthy savings, manageable debt, and enough cash on hand, you’re better prepared for unexpected bills, job loss, or market downturns — and flexible enough to seize opportunities when they come along.

Second, good returns from capital. This is about making your money work for you — investing wisely and letting compounding do its job. Just as a company measures success by the return on its capital, we can measure it by how effectively our investments generate income and growth over time.

Third, not spending every cent of the returns. This one wasn’t from the conference, but an extension of the second principle that came to mind. The example is Singapore. Through decades of prudence, the government has built large reserves, which generate annual income called the Net Investment Returns Contribution (NIRC). By law, it can only spend up to half; the rest is reinvested for future generations. For pre-retirees, this principle is vital: don’t spend all your investment returns — reinvest a portion so your “reserves” keep growing. For retirees, the situation is different. Some may want to reinvest part of their returns for longevity or legacy goals, while others — if their finances are strong — can afford to spend 100% of their “personal NIRC” without guilt.

If we can apply these three principles — build a strong balance sheet, seek good returns, and reinvest wisely where appropriate — our retirement finances will look more like Singapore’s: resilient, flexible, and future-ready.

Back to the offsite: I may have overindulged a little (hard not to, with a company meal allowance and interstate travel). Time to lace up the runners again now that the weather’s warming up…

Your Turn
How strong is your personal “balance sheet” today — assets vs. liabilities?
Are you putting your capital to work so compounding can do its magic?
Do you reinvest some of your returns — or spend them all? How would your answer differ if you were pre-retired or retired?

👉 Hit reply and share your thoughts — I’d love to hear what’s resonating with you.

Building Your Investment Recipe

You understand the ingredients (asset classes) and know how they work together (diversification). Now comes the practical part: combining them into a portfolio that works for your specific situation. The three-bucket approach simplifies this complexity.

Bucket One: Safety (20-40%) includes cash and short-term bonds you can access quickly without market worries. This is your emergency fund and money for near-term needs. It's boring and earns little, but lets you sleep at night.

Bucket Two: Income (30-50%) contains government bonds, corporate bonds, dividend stocks, and REITs. This provides steady cash flow with moderate growth potential. Less volatile than pure growth investments but better returns than your safety bucket.

Bucket Three: Growth (30-60%) holds stocks and equity funds that build wealth over time. This is your most volatile bucket but historically offers the highest returns. This is where compound growth does its magic, but you need patience for the inevitable ups and downs.

The exact mix depends on your situation. Conservative portfolios might be 40% safety, 40% income, 20% growth. Moderate portfolios could be 20% safety, 40% income, 40% growth. Aggressive portfolios might be 10% safety, 30% income, 60% growth.

But here's what textbooks don't tell you: your optimal allocation isn't just about age—it's about what you can actually stick with during market turbulence. A theoretically perfect aggressive portfolio is useless if you panic and sell during the first downturn.

Your allocation should evolve with life stages. Early career investors can handle more volatility. Pre-retirees should gradually shift toward income and safety. Implementation matters as much as allocation—start with broad market funds, automate everything possible, and rebalance annually.

L-Plate Takeaway: Perfect portfolio construction is less important than starting with a reasonable approach and sticking with it. Focus on the big decisions (overall allocation) rather than small details. Time in the market beats timing the market, and a good plan implemented consistently beats a perfect plan you abandon.