5 Ways You Could Be Screwed By The Imminent Recession

Loo Cheng Chuan

Loo Cheng Chuan

Last updated 30 July, 2019

This is the story of Loo Cheng Chuan, dubbed Singapore’s Mr CPF. Opinions expressed reflect the view of the writer.

Singapore’s manufacturing sector declined by 6.9% in June and this is the fourth straight month of decline.

Singtel suffered a 44% profit decline, SPH share price is at its 25-year low and Venture Corp, OCBC and many others are beginning to announce bad financial results. 

Deutsche Bank announced at 18,000 job cuts globally. Unemployment crept up in Q2 as many companies froze hiring.

The economic slowdown or even a full-blown recession seems unavoidable.  Arguably, the biggest risk of a recession would be a pay cut or even retrenchment.  

Here are 5 ways that you could be screwed in recession:

1) You could be screwed if you’re working for a company vulnerable to a recession

In a recession, revenues usually decline significantly. Banks tighten their lending and venture funds often dry up.  These are several types of companies would be more prone to bankruptcy in a recession

  • Companies heavily in debt
  • Companies with weak or no revenue models
  • Companies with high cash burn that rely heavily on investor/bank funding

It’s unfortunate that companies of this nature are usually high tech startups that appear very sexy and exciting to work in during good times. Many such companies follow a Silicon Valley-like business model: raise funding, scale and burn cash, and raise funding again. However, when a recession hits, they are unable to raise funds and crash out.  You have to prepare a larger safety net if you work for such companies.   

2) You could be screwed if you don’t have an emergency fund

In a recession, the risk of retrenchment goes up and it’s important to prepare a financial safety net–– generally 3 to 9 months worth of living expenses (in cash) and mortgage payments (in CPF ordinary account).  

For older workers, I would encourage 6 to 9 months of emergency funds as it is harder for older workers to find a job, given their expectation of higher wages and possibly limited skill set in the new economy.  For younger workers, I would expect a shorter 3 to 6 months spent for a job search, given the lower wage expectations and better-aligned skill sets in the digital economy.

3) You could be screwed if your skills are outdated and you are costly to hire

Sadly, in a retrenchment, it’s the middle or senior age workers that usually take a much longer time to be re-employed.  I am surprised so many middle-aged executives (usually in their 40s and above) are so unskilled in the digital economy.  

I would consider it a prerequisite now for all workers to be equipped with some digital economy know-how; for example, digital marketing, social media management, eCommerce, cyber-security, software coding and data analytics.   

Unfortunately, it pains me to know how reluctant my fellow middle-aged Singaporeans are towards re-training themselves in the digital age. In a retrenchment scenario, these workers would likely to suffer the most as their salaries are very high, and they pale in comparison to the younger co-workers in terms of their digital skillset and productivity. 

Fortunately, government-supported schemes like SkillsFuture exist to help Singaporeans up-skill themselves in this digital/future economy. I would urge fellow Singaporeans to quickly grab a course to enhance your skillset.

4) You could be screwed if you’re heavily in debt

You might be surprised that I get frequent requests from “rich-looking” executives to give them financial advice on how to manage their debts.  Many Singaporeans are over-leveraging themselves in housing and car loans.  Social pressure in Singapore pushes you to upgrade your house to a condominium or a landed house and to drive a posh-looking BMW or Mercedes to prove you have attained a certain status in life.  Unfortunately, most of these status symbols are usually purchased with the help of huge bank loans.

During a recession, many workers face pay cuts and/or bonus cuts or even retrenchment. In a severe downturn, the Government may even legislate CPF cuts to save jobs such as in 1986 and 1997. During these scenarios, if you are over-leveraged (whether in housing, car or credit debt), you could be screwed financially. 

5) You could be screwed if you don’t follow a time-proven investment strategy 

Many investors do not follow a time-proven investment strategy.  They often buy and sell opportunistically, and following sophisticated trading guidelines (usually picked up from other investors or trading books).  What’s worse, they buy and sell based on gut-feel or rumours.

During a market crash driven by fear and greed, many investors bail out and miss out on great buying opportunities.  Even expert active traders and bankers lose a lot of money during market crashes. 

I would encourage investors to adopt time-proven investment techniques that would survive market crashes. 

The only person that gets hurt in a roller coaster ride is the one that jumps out! Ignore the downturns and upswings of market cycles and continue to invest regularly. Over a course of 10-30 years, you will easily make mult-ifold returns on your investment regardless of the market cycles.   


Now in my late 40s, I have lived through many economic downturns; the Asian Financial Crisis of 1997, Dot.com bust of 2001, Great Recession of 2008 and Europe Debt Crisis of 2012.

As an investor, professional and entrepreneur, I have observed that those who survive recessions well are those who are:

  • well-prepared financially, equipped or retrained with an updated skillset
  • live frugally and humbly
  • follow religiously time-tested investment strategies 

I hope you will take heed of my advice and prepare yourself holistically in light of the imminent recession. 

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Loo Cheng Chuan is the founder of the 1M65 Movement that aims to help many Singaporeans retire as millionaires. He is a regular public speaker and writer in the area of Personal Finance. In 2018, Loo was one of the few non-civil servants to be awarded the Public Sector Transformation award for his 1M65 efforts.


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