Sunday, June 8, 2014

$1 Million gone in one year

I read a story on the Sunday times today and this caught my attention. Two years ago, this widow's husband was killed in an accident at Changi Airport's budget terminal and she received nearly $1 Million in insurance payouts and donations from the public. One year later, her $1 Million dollars are all gone. You may think is it possible to spend $1 Million dollars in just one year? This has happened not just to this widow but to many other people before. No wonder people say the faster money come, the faster money would go also.

So how did she lose all the money? 

Initially she bought an annuity plan for each of her four children. Each children $200,000 so it's $800,000 in total. She paid up an outstanding debt of $50,000 which leaves her with $150,000 for herself. This was all good and buying the annuity was advised by a financial advisor from Changi Airport Group.

The problem came when she invested $100,000 in her brother's transport company. Then she invested another $400,000 which she withdraw from the annuity she bought earlier.

The business suffered losses and eventually folded. She lost all her money and never got back a single cent. She then withdraw the rest of the $400,000 from the annuity which only lasted her 5 months. She said she didn't know how she finished using the money

The moral of the story

If you can't manage a small amount of money, then you certainly can't manage a big amount of money. Giving someone money may not be a good choice if he/she cannot handle the money. This was the exact words she told the Sunday times: "I made a mistake. People knew I had so much money and they all came to me. I am so stupid. I never buy house and finished all the money meant for my children,"

Teaching someone how to get the money and how to manage money may be a wiser choice to do.

Read the full story here

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  1. Actually with 1million singapore dollars, she doesn't have to work, ever, unfortunately she does not know how to better manage her sudden wealth, so sad, most pitiful are her 4 young kids.

    1. Hi,

      With greater wealth comes greater problems. The problem with people who are poor is not because they don't have money but its because they can't handle money. Feed a man a fish and you feed him for only a day. Teach a man to fish and you feed him for a lifetime.

    2. Agreed.
      It is a psychological thing that poor people are stuck in the cycle because they do not know how to deal with money.
      It's been proven time and again.

  2. Some ppl always preach and think that they know how to manage their money. I unfortunately, such ppl may be the ones who dun know and respect money.
    I know of ppl who earn close to half a million a year but they r in debt due to vices.
    I also know friends who earn less than 80,000 (after working for 10 years). But their bank account is healthy.
    To lead a financially prudent lifestyle is the only way. If u r a normal person.

    1. Hi Julian,

      Yes its not how much money we can make but how much money we can keep that's important.