Aug 31, 2014
Doing nothing could mean losing more than you think you've saved
By Cheryl Ong
At the first Young and Savvy seminar on investing and personal finance matters on Aug 22, a student bravely stood up to ask a panel of speakers: Is it not a "waste of yourself" to be caught up with the idea of investing, just because everyone else seems to say it is important?
The sociology student admitted he was "not as interested in financial literacy" as he was in the performing arts, adding that the speakers had also pointed out the pitfalls of greed and "chasing the idea of money" during their presentations.
I suppose the young man's question really was: Why should he invest if he has no inclination for it?
[And the writer spends the rest of the article skirting around the question.]
He reminded me of myself as an undergraduate at the Wee Kim Wee School of Communication and Information a few years ago.
As a student enrolled in courses such as "News Reporting and Writing" and "Media Law, Ethics and Policies", I was hardly interested in how much the Straits Times Index closed at yesterday, or how much it would cost to buy one lot of OCBC Bank shares.
In fact, I was first exposed to the financial markets - or any form of financial literacy - because I had to sit The Capital Markets and Financial Advisory Services Examinations required by the bank I worked for after graduating.
I understood only the principle of saving more than I could spend, which while undoubtedly prudent is not really an investing principle.
Perhaps it was the limited exposure I had that led to my lack of interest in the subject. My parents have a very low risk appetite, and as a result, the only investments I was familiar with were insurance and property.
But working in the financial sector meant I had to "live and breathe" a myriad of investment products, which I later grew to understand and eventually, appreciate.
The irony was, I never took the plunge to invest at all - until I joined the Money Desk.
A few months into the reporting job, a supervisor, who knew that I had been apprehensive about investing my extra savings, asked: "So, when are you going to buy your first stock? The value of your money is just going to get eaten up by inflation if it's just sitting in your savings account, you know!"
I knew that, of course. But until then, I did not trust whatever rookie instincts I may have had.
I was prompted to take the plunge though, because what my colleague had said illustrated a very simple point: Doing nothing could mean losing more than you think you've saved.
My banking stint and reporting for the business desk had also given me a better understanding of the potential risks of investing.
Judging by the other questions posed by the students at the seminar, it was telling that many were definitely more proficient that I was as an undergraduate. However, it might not be a stretch to say that the majority of students today still do not see the need to create more value from what they have. Blame it on the blind optimism that comes with youth perhaps, or simply a lack of awareness.
[Or maybe an awareness of the risk of investing. ]
I know for a fact that many 20-year-olds and even those who have started working and are around my age do not see investing as a life skill. But living in Singapore is not going to get cheaper, whether one finds growing a nest egg a stimulating challenge or a complete waste of time.
Developing an interest in this field is only good common sense. Many performing artists, for instance, are financially savvy and have keen investment acumen.
Actor-host Paul Foster said in an interview with this paper earlier that he does not get paid a steady amount every month because his work commitments vary. As a result, he factors in a three-month buffer when budgeting for his finances.
Actor Robert De Niro, known for his roles in The Godfather II and Raging Bull, reportedly invested in an 850,000 sq ft mixed development in Shanghai's historic Bund district.
These famous faces may have glittering careers on screen, but they are still certainly paying heed to the returns that investing can yield.
"Money isn't everything, but without money, you have nothing," as the famous Chinese saying aptly puts it.
Surely, planning to have enough to see one's dreams come to fruition is vital for many aspiring young entrepreneurs. Whether it is raising funds for an exhibition or getting capital for a new restaurant, managing and forecasting finances are key to the project's development.
A successful investment or enterprise could also be used to help build someone else's dreams which offers a sense of satisfaction as well as financial returns.
For the uninitiated, the onus is on them to seek the relevant skills and knowledge, even if their background or friends might mean that this instinct does not come naturally.
Investment clubs aplenty operate in schools while reading columns written by my colleagues are great ways to start. The Singapore Exchange also organises investor education seminars while some brokers like Maybank Kim Eng Securities allow customers to attend learning sessions if they sign up with the trading platform.
I don't admit to being all that savvy with my investments now, but I have taken baby steps by buying two lots of a local real estate investment trust (Reit). I have also since invested in insurance policies, since they are still affordable while I am young and healthy.
So, my answer to the young man, which could apply to myself: "Never say never, my friend, for what better time than now to invest while we are young and have less to lose."
More importantly, being indifferent is arguably the worst of all reasons for losing out on gains that could have been realised.
[It is all very easy to say, "you need to invest because..." The question is still how? Everyone wants to invest, but does everyone who invest make a "profit"? Is it simply a matter of investing in the right instrument?
Yes, it's all very easy to say you must do your homework, but there really isn't any pointers or help as to HOW to do the homework, what to look out for.
One advice is to never own stocks. Make that two advice, at least.]
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