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Speaker 1: This is a C. N. A.

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Speaker 2: Podcast.

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Speaker 1: Hello and welcome to our brand new podcast. Money talks,

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Speaker 1: my name is Sarah al Khaldi and I'm a business

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Speaker 1: news presenter at C. N. A. As a young mother

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Speaker 1: and like many others of my generation, I want to

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Speaker 1: get better with my money. So each week I'll tap

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Speaker 1: into different experts from C. E. O. S. Two financial

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Speaker 1: advisors

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Speaker 1: and we'll find out how to make wiser financial decisions

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Speaker 1: relating to how we live, work and play.

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Speaker 1: We'll go for some quick fire questions in a few words.

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Speaker 1: Can you give us your thoughts on the following?

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Speaker 2: Okay, high

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Speaker 1: inflation. It

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Speaker 2: will come down.

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Speaker 1: Green finance

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Speaker 2: definitely worth looking

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Speaker 1: at robo advisors

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Speaker 2: definitely worth considering also

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Speaker 1: china.

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Speaker 2: Um

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Speaker 1: okay

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Speaker 2: china belongs in the slightly riskier part of your portfolio

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Speaker 1: investment scams,

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Speaker 2: definitely be wary of them. Don't trust anybody. The old

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Speaker 2: rule of thumb is trust but verify.

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Speaker 1: Great.

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Speaker 1: Yeah.

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Speaker 1: We kick off the series with a renaissance man of money.

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Speaker 1: David cho is the co founder of the smart investor,

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Speaker 1: a website dedicated to educating people about how to grow

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Speaker 1: their wealth. David himself has been growing his money for

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Speaker 1: decades and I want to ask him if it's true

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Speaker 1: that you need money to make money, can you afford

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Speaker 1: not to invest and how should you spend your hard

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Speaker 1: earned bonus, David, thanks for joining us

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Speaker 1: for those starting out on their investment journey. What would

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Speaker 1: an ideal portfolio look like?

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Speaker 2: Okay, before I even start doing that, Sarah what I

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Speaker 2: would like to say is

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Speaker 2: you have to invest and the sooner you invest the

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Speaker 2: better it is for you

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Speaker 2: and for those people who haven't started investing for their

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Speaker 2: retirement or later on in life. There is a general

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Speaker 2: rule of thumb that says that

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Speaker 2: You take your age and you divide it by two

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Speaker 2: and that is the percentage of your salary that you

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Speaker 2: should be putting aside into an investment. So if you're

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Speaker 2: a 20 year old and you just starting work

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Speaker 2: I don't know how many people start working 20 but

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Speaker 2: a 20 year old who's starting work, you should be

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Speaker 2: putting 20 divided by two which is 10% of your

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Speaker 2: salary

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Speaker 2: Into an investment. Now if you leave it later, if

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Speaker 2: you wait until you're 30 years old before you start

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Speaker 2: investing you're gonna have to put aside 15% of your salary,

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Speaker 2: 30 valid by two is 15. If you wait until

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Speaker 2: you're 50 before you do anything, you're going to have

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Speaker 2: to put aside 25% of your salary

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Speaker 2: in order to be able to enjoy your retirement. So

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Speaker 2: that's a quarter of your salary going into some kind

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Speaker 2: of investment. And so the secret really is

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Speaker 2: to start as early as possible.

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Speaker 2: And as soon as you start work, start putting some

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Speaker 2: money aside into a portfolio so that you will be

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Speaker 2: able to let that money grow over time and then

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Speaker 2: enjoy life later on when you get older. So that

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Speaker 2: is the general rule of thumb as to what the

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Speaker 2: portfolio should look like.

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Speaker 2: Again, it is actually sort of based on your age

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Speaker 2: and the general rule of thumb, there is, it's called

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Speaker 2: the rule of 100 and the rule of 100 simply

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Speaker 2: states that

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Speaker 2: you subtract

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Speaker 2: your age from 100 that is the amount of money

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Speaker 2: that should be going into riskier investments. Okay, so if

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Speaker 2: you are a baby, if you're investing safe for your

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Speaker 2: child and your child is zero age on the day

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Speaker 2: that they are born, 100% of whatever money you're going

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Speaker 2: to be putting to one side

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Speaker 2: Should be going into a riskier investments such as the

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Speaker 2: stock market. And as you get older, less of that

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Speaker 2: money should be in the riskier side and more of

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Speaker 2: it should be in the less risky side. So things

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Speaker 2: like stocks and bonds. So if you are for instance

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Speaker 2: a 20 year old, then

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Speaker 2: 80% of whatever you are going to be saving

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Speaker 2: Needs to be put into the stock market and the

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Speaker 2: other 20% can be put into other things such as

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Speaker 2: Singapore savings bonds or cash or whatever. But 80% of

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Speaker 2: it should be in riskier investments such as stock market

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Speaker 2: primarily because that is the only way you're going to

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Speaker 2: be able to grow your money.

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Speaker 1: A lot of young people though are saying, but I

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Speaker 1: have CPF

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Speaker 2: Yeah,

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Speaker 1: so why do I have to go to the stock

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Speaker 1: market if I have CPF to rely on?

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Speaker 2: I agree with that totally. And I think the CPF

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Speaker 2: is a great thing because it forces people to save

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Speaker 2: Now in many countries, particularly one where I grew up

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Speaker 2: in Hong kong they didn't have a mandatory savings scheme

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Speaker 2: for people

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Speaker 2: and so nobody actually saved because you weren't forced to save.

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Speaker 2: But here in Singapore, you are forced to save for

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Speaker 2: your retirement. But

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Speaker 2: that money goes into the CPF fund and if you

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Speaker 2: just allow it to grow

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Speaker 2: using the interest that is actually being paid for you

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Speaker 2: and that only gives you around 2.5% that is not

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Speaker 2: going to be enough. And I go back again to

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Speaker 2: that rule of 100 which is how much of that

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Speaker 2: money in the CPF should be in stocks, how much

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Speaker 2: should be in cash and bonds that will tell you

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Speaker 2: what you are allowed to invest in.

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Speaker 2: But the CPF has very strict rules, so the amount

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Speaker 2: of money that you put into the CPF will not

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Speaker 2: be sufficient for you to grow that money over time

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Speaker 2: because they restrict the amount of money that you can

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Speaker 2: invest in stocks and bonds, you can't take the money

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Speaker 2: out from the CPF, but you need to invest outside

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Speaker 2: of the CPF

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Speaker 2: in order to achieve that kind of balance because otherwise

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Speaker 2: When you reach 55 or 60 or 65 years of

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Speaker 2: age and you have a look at what that money

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Speaker 2: has done for you, you will say I'm not going

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Speaker 2: to have enough to retire on. And that is the

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Speaker 2: big danger that you have because whilst it is great

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Speaker 2: for somebody to force you to save money,

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Speaker 2: that money will not be sufficient for you. When you

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Speaker 2: retire a

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Speaker 1: lot of money to goes to your house, those getting

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Speaker 1: an H D B a loan or a mortgage loan

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Speaker 1: and some people are saying, OK, I'll just rely on

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Speaker 1: my property, I'll rely on my HDB when I get older,

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Speaker 1: I'll just sell it or downgrade and maybe

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Speaker 1: that can help beef up my retirement from my CPF.

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Speaker 1: What do you think of that?

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Speaker 2: I don't disagree with that either. If you have a

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Speaker 2: look at property, property prices tend to appreciate over time.

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Speaker 2: And you have to have a look at some examples

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Speaker 2: outside of Singapore, there are lots of people in the U. K.

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Speaker 2: For instance, that have put their money into their property

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Speaker 2: and just as you have highlighted, they say, well, you know,

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Speaker 2: my property can be my pension later on, but

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Speaker 2: how is that even possible? Because you have to downgrade,

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Speaker 2: you have to sell your house in order to do

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Speaker 2: something

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Speaker 2: and over in the UK, they've come up with some

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Speaker 2: really ingenious schemes, such as mortgage equity, withdrawal, lifetime mortgages

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Speaker 2: whereby you can say, oh, I'll take a portion of

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Speaker 2: that equity that I have in my house and I

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Speaker 2: don't have to repay that. But instead I'll be able

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Speaker 2: to live off that lump sum that I take from there?

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Speaker 2: And on the other side,

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Speaker 2: whoever is actually financing that lump sum that you've taken

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Speaker 2: out will roll up the interest slowly over time. And

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Speaker 2: as we know, if you keep on doing that, eventually

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Speaker 2: the interest will become quite onerous. But you don't have

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Speaker 2: to worry about it. You don't have to pay it off.

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Speaker 2: But

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Speaker 2: on the day that

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Speaker 2: you pass away, you may actually find that

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Speaker 2: The 100,000 or the 200,000 you took out from your

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Speaker 2: property plus the interest that has been accruing will mean

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Speaker 2: that there is no equity left in your property at all.

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Speaker 2: And so if you thought that I would be able

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Speaker 2: to leave the property to my Children, that isn't going

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Speaker 2: to happen. Because the person who will be taking the

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Speaker 2: property will be the insurance company,

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Speaker 2: not your Children.

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Speaker 2: So you spent your life buying a property, financing the

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Speaker 2: property through mortgage repayments. And then you hope that you

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Speaker 2: will be able to leave something for your Children. And

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Speaker 2: you find out that you've got nothing left for your

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Speaker 2: Children at all. And so you're not really sort of

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Speaker 2: helping the next generation.

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Speaker 1: Now, there was a survey done recently last year by

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Speaker 1: franklin Templeton and it showed that a third of young

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Speaker 1: singaporeans think that making the right investment is difficult and

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Speaker 1: investments make them anxious. So where do you think they

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Speaker 1: should start? And do you think this is something that

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Speaker 1: they can do alone or should they tap into an

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Speaker 1: advisor perhaps or some

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Speaker 1: kind of person who will give them advice on their investments.

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Speaker 2: There are several ways of looking at that and

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Speaker 2: my philosophy and it's not my philosophy, but it's just

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Speaker 2: a general philosophy of most people.

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Speaker 2: Is that that rule of 100 will apply right. That

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Speaker 2: rule of 100 has been around for a very long time.

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Speaker 2: And the rule of 100 will help to guide you

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Speaker 2: as to how your portfolio should look. So if you

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Speaker 2: are a 40 year old, then 60% of that portfolio

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Speaker 2: should be in stocks

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Speaker 2: And the other 40% should be in cash and bonds.

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Speaker 2: And just use that as your template. Now, the other

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Speaker 2: question is that 60% that you put into stocks, how

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Speaker 2: should I allocate that 60%. Should I just go and

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Speaker 2: take the 60% and go and buy investments in emerging markets?

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Speaker 2: Should I buy penny stocks? Should I do what

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Speaker 2: The answer is no right? You don't do that. You

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Speaker 2: take that sum of money that 60% that you're going

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Speaker 2: to be investing in the stock market and then whatever

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Speaker 2: that amount of money is, you then need to apply

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Speaker 2: another rule and this is the rule that has stood

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Speaker 2: the test of time. And what that rule actually says

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Speaker 2: is that 60

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Speaker 2: of that amount of money should be in safer investments.

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Speaker 2: So by that we're talking about income generating stocks. And

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Speaker 2: here in Singapore, we have this wealth of real estate

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Speaker 2: investment trusts. So if you are going to be putting

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Speaker 2: that money into the stock market

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Speaker 2: than 60% into strong income generating stocks such as

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Speaker 2: The real estate investment trusts or maybe the bank shares

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Speaker 2: that we have here in Singapore, they pay good dividends.

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Speaker 2: The Singapore stock exchange is another good example of a

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Speaker 2: company that is able to reward you with regular dividends.

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Speaker 2: So that is the 60% of whatever you're going to

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Speaker 2: be putting into the stock market,

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Speaker 2: then you have the 30% which is slightly riskier investments.

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Speaker 2: And these are the faster growing companies. And unfortunately in Singapore,

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Speaker 2: we don't have that many faster growing companies. So you

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Speaker 2: have to look overseas for that. So, a good place

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Speaker 2: to go and sort of look for those kind of

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Speaker 2: stocks would be NASDAQ

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Speaker 2: where you have a lot of faster growing companies.

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Speaker 2: So if you do your math 60 plus 30 is

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Speaker 2: 90 that still leaves you 10% and that 10% can

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Speaker 2: be then put into what we call speculative investments. And

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Speaker 2: so as long as you have that, whether you want

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Speaker 2: to call it the pyramid or the beer bottle call

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Speaker 2: it whatever you want,

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Speaker 2: you must have a stable base of income generating shares,

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Speaker 2: some faster growing shares and then the other 10% put

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Speaker 2: into whatever you want, I don't care what you put

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Speaker 2: it into. Put into something that you think is going

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Speaker 2: to be quite exciting for you. Be the value shares,

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Speaker 2: shares that you think have been undervalued by the market.

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Speaker 2: You could even put it into Cryptocurrency, I don't really

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Speaker 2: care what you put that 10% of your investment into,

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Speaker 2: But don't fool around with the 60% of the income

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Speaker 2: shares and the 30% of the growth shares because that

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Speaker 2: will generate for you. The kind of returns that you require.

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Speaker 1: Conventional investment wisdom says that over time stock markets go

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Speaker 1: up despite the volatility in the near term. Do you

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Speaker 1: think that still holds now, Do you think

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Speaker 1: decades down the line, we can still get some kind

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Speaker 1: of return from equity market investments right now.

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Speaker 2: Oh, for sure. You see one of the big problems

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Speaker 2: that investors have, and I'm not just talking about new

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Speaker 2: investors coming into the market, I'm talking about seasoned investors also,

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Speaker 2: What they suffer from is something called recent events syndrome

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Speaker 2: and recent events syndrome just says that what is happening

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Speaker 2: now is going to be happening into the future and

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Speaker 2: it scares them, right. They think that the kind of

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Speaker 2: geopolitical problems that we have at the moment is going

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Speaker 2: to persist for the very long term. And that isn't true, right?

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Speaker 2: If we have a look at the stock market, say

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Speaker 2: over the last

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Speaker 2: 70 years, which is slightly older than me. But over

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Speaker 2: the last 70 years we have had 10 bear markets

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Speaker 2: right over that 70 year period. And each time we've

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Speaker 2: had a bear market, we've recovered

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Speaker 2: Somehow we have recovered. So if you say 70 years

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Speaker 2: and we've had 10 bear markets, that's one bear market

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Speaker 2: every seven years. So if you are a new investor now,

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Speaker 2: you are going to be experiencing a bear market roughly

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Speaker 2: every seven years. I wouldn't set my clock on my

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Speaker 2: calendar by it. But roughly about every seven years you're

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Speaker 2: going to see

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Speaker 2: a downturn in the stock market. But don't be scared

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Speaker 2: by it. When you get that downturn jump in and

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Speaker 2: buy more shares, right? Just carry on carry on investing.

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Speaker 2: It's going to be harder at the moment because inflation

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Speaker 2: is a big problem. And there will be some people

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Speaker 2: out there that will be saying,

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Speaker 2: hey, inflation is so bad. I can't afford to invest. Well,

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Speaker 2: don't fall into that trap. Cut whatever you can, but

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Speaker 2: don't cut the amount of money that you're going to

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Speaker 2: be investing for your long term future because that is very,

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Speaker 2: very dangerous. You might think, oh,

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Speaker 2: I won't put my $100 or my $200 into my

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Speaker 2: savings pot now because I need it in order to

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Speaker 2: buy food or whatever, do anything else. But don't sacrifice

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Speaker 2: that $100 that you're going to be putting into the

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Speaker 2: market and don't listen to those people who are saying,

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Speaker 2: oh the market is terrible at the moment is going

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Speaker 2: to go down even further. Well if it goes down

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Speaker 2: even further,

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Speaker 2: you are a long term investor. So

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Speaker 2: if you don't buy today and you think I can

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Speaker 2: buy tomorrow, well tomorrow, the prices could be higher. Nobody

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Speaker 2: will tell you when the bottom of the market is there.

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Speaker 2: So don't fall into that trap.

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Speaker 1: Yeah, that's an interesting point because markets have been under

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Speaker 1: a lot of pressure this year and some young investors

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Speaker 1: are experiencing their first down market or bear market ever.

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Speaker 1: I've had people tell me they're down thousands of dollars

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Speaker 1: in the stock market right now. So what advice would

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Speaker 1: you give them?

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Speaker 2: Well, I was up last night and I was buying

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Speaker 2: shares last night, even though the market was down,

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Speaker 2: I don't really care because primarily I am an income investor.

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Speaker 2: And what that really means is that I am buying

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Speaker 2: shares that have the ability to pay me dividends regularly.

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Speaker 2: Some of those dividends come in quarterly, some come in

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Speaker 2: semi annually, some only come in once a year.

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Speaker 2: But the stocks that I buy are rewarding me with income.

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Speaker 2: And because I've been investing for such a long time sarah,

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Speaker 2: my biggest problem

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Speaker 2: is the amount of cash that is coming into my

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Speaker 2: portfolio

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Speaker 2: and for the young people that are investing today, you

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Speaker 2: will have the same problem later on in life. It

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Speaker 2: may not seem like that

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Speaker 1: now doesn't seem like

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Speaker 2: It may not seem like that now, but in 2030

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Speaker 2: years time you will have that problem because the cash

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Speaker 2: generated from the investments that you have made

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Speaker 2: will be coming in regardless of what is happening in

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Speaker 2: the market.

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Speaker 2: I will be collecting dividends from one of Singapore's banks

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Speaker 2: today and whether the market is

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Speaker 2: high, whether the market is low, it will be paying

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Speaker 2: me a dividend. So my problem is

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Speaker 2: putting that money to work and looking at where it

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Speaker 2: is going to be able to generate for me more

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Speaker 2: money in the future. And that is what you should

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Speaker 2: be looking at, not what is happening today.

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Speaker 1: And because if you don't put that to work, David,

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Speaker 1: the value of that money will go down because prices

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Speaker 1: are now going up, inflation

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Speaker 1: going up. And that is a problem that we all

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Speaker 1: have to face, isn't it?

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Speaker 2: Well, quite right, Sarah. I mean if if you have

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Speaker 2: $100 today and you don't put it to work

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Speaker 2: In a year's time with 5% inflation, that $100 will

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Speaker 2: only buy you $95 worth of goods. That is what

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Speaker 2: inflation really means is that it is the shrinking of

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Speaker 2: the money that you have. If you don't put it

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Speaker 2: to work somewhere else now, the other thing is

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Speaker 2: Right, I'm going to throw in another rule of thumb, right?

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Speaker 2: I promise no more rules of thumbs after this because

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Speaker 2: I haven't got that many thumbs. Yeah. Okay, so the

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Speaker 2: third rule of thumb is the rule of 72. Right?

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Speaker 2: And what that really tells you is if you take

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Speaker 2: an investment and you have some rough idea as to

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Speaker 2: how that investment is going to be rewarding you over

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Speaker 2: the long term,

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Speaker 2: Take that percentage divided into 72 and that will tell

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Speaker 2: you how long it will take your money to double. Okay,

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Speaker 2: so let's for argument's sake say that you put it

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Speaker 2: into the Singapore stock market, a good stable Singapore stock

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Speaker 2: market and on average it should give you about 7%

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Speaker 2: return a year.

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Speaker 2: So it means that if you put $100 into the

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Speaker 2: Singapore stock market today, that $100 should double in 10

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Speaker 2: years time, 72 divided by seven is roughly 10. So

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Speaker 2: it means that the $100 will double to $200 in

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Speaker 2: 10 years time. The $200 will double to $400 in

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Speaker 2: another 10 years time.

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Speaker 2: So in 20 years time, your $100 will have turned

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Speaker 2: into 100 204 $100

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Speaker 2: In 20 years time. Now if you don't put $100

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Speaker 2: in this year, you're gonna be missing out on $400

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Speaker 2: in 20 years time.

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Speaker 2: And that is really what you should be looking at

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Speaker 2: over the long term.

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Speaker 2: And if you think, oh, I won't put the $100

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Speaker 2: in because I need $100 for something else, find $100

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Speaker 2: or don't spend $100 on the other things, but put

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Speaker 2: the $100 in because you're going to be missing out

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Speaker 2: on $400 in 20 years time and that is what

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Speaker 2: you should be looking at, not what is happening today.

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Speaker 1: We're going for a short break, we'll be

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Speaker 2: right back.

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Speaker 1: Hi, my name is julie you and I'm the host

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Speaker 1: of the new season of the climate conversations

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Speaker 1: from chefs to scientists, join me as we get personal

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Speaker 1: with the people driving change in sustainability. Look out for

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Speaker 1: our episodes wherever you get your podcasts, you're a seasoned investor,

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Speaker 1: you've done this for so many years and as you mentioned,

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Speaker 1: you've got a lot of cash coming in, But do

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Speaker 1: you still remember your first investment loss when you saw

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Speaker 1: all the red and the screen and you felt that

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Speaker 1: it affected your perspective on investments?

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Speaker 2: Both. Yes and no, I think I learned some very

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Speaker 2: valuable lessons when I first started investing and one of

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Speaker 2: the biggest lessons I learned was that I invested in

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Speaker 2: the company,

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Speaker 2: which at the time was a very stable company.

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Speaker 2: But then this company decided that it wanted to take

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Speaker 2: advantage of what was going on in the booming dot

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Speaker 2: com era. And so consequently it changed its business model

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Speaker 2: and because it changes its business model,

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Speaker 2: it borrowed a lot of money and eventually it went past.

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Speaker 2: And so the biggest lessons I learned was if you

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Speaker 2: were investing in a business,

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Speaker 2: then make sure that this company is going to carry

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Speaker 2: on doing what it said, it was going to be

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Speaker 2: doing right.

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Speaker 2: Don't invest in the company. That suddenly changes direction and

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Speaker 2: does something else. Because that wasn't your original investing thesis.

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Speaker 2: That wasn't the company that you invested in. This company

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Speaker 2: originally made household goods and all kinds of things and

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Speaker 2: suddenly decided that it wanted to go into the internet

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Speaker 2: and in order to do that, it borrowed a lot

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Speaker 2: of money. Then the dot com bubble came and it

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Speaker 2: couldn't repay the debt, it went bust and I lost

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Speaker 2: my money. But in the short term the share price

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Speaker 2: went up phenomenally. And I thought, what a clever guy

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Speaker 2: I am right. But then I forgot my first investing rule,

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Speaker 2: which was

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Speaker 2: don't lose money,

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Speaker 2: right? And the second investing rule is, don't forget rule

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Speaker 2: number one, don't lose money if you were invested in

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Speaker 2: the company and it suddenly changes direction.

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Speaker 2: Think twice about whether or not you want to carry

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Speaker 2: on investing in that company. And generally it is not

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Speaker 2: a good idea when a company does that.

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Speaker 1: What happens though? If you as an investor can't track

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Speaker 1: all these businesses that closely if I have to invest

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Speaker 1: all this money in the stock market, how do I

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Speaker 1: ensure that all these companies are going to stay on

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Speaker 1: track to what they set out to do.

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Speaker 2: Okay. There are two ways of doing it. Sarah. The

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Speaker 2: first one is keep your portfolio relatively small.

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Speaker 2: And so generally we say that you shouldn't invest if

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Speaker 2: you're going to be picking single stocks. Single companies don't

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Speaker 2: try and invest in hundreds or thousands of different companies

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Speaker 2: but keep your portfolio to around the 20 best companies

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Speaker 2: that you think you want to put your money into

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Speaker 2: and tracking 20 companies isn't that difficult?

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Speaker 2: But

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Speaker 2: my Children are at that stage now where they also

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Speaker 2: need to start investing money. And my advice to them

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Speaker 2: was invest in an index tracker and E. T. F.

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Speaker 2: And the E. T. F. That I suggested to them

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Speaker 2: was the MSC I World Index. And so you will

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Speaker 2: get exposure to the whole world and within that index

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Speaker 2: there will be thousands of companies and you don't have

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Speaker 2: to actually sort of know what is going on and

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Speaker 2: instead just let the index tracker do whatever you wanted

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Speaker 2: to do.

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Speaker 2: Now if you don't want to go overseas, you can

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Speaker 2: stick to the Singapore straits times E. T. F. And

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Speaker 2: that way you will have exposure to Singapore's 30 biggest companies.

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Speaker 2: You don't have to watch how all 30 are doing

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Speaker 2: because that index will regenerate over time. It'll refresh over time.

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Speaker 2: Companies will go out to the index companies will come

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Speaker 2: into the index.

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Speaker 2: But what you are getting is

454
00:23:01,440 --> 00:23:05,859
Speaker 2: Exposure to the 30 biggest companies here in Singapore that

455
00:23:05,859 --> 00:23:08,229
Speaker 2: way you don't have to worry about anything. So going

456
00:23:08,230 --> 00:23:11,080
Speaker 2: back to all those different rules that I had, if

457
00:23:11,080 --> 00:23:14,330
Speaker 2: you're going to be putting 60% of your money into

458
00:23:14,330 --> 00:23:17,270
Speaker 2: the stock market, make sure that 60% is in the

459
00:23:17,270 --> 00:23:18,770
Speaker 2: Singapore Straits Times Index

460
00:23:18,940 --> 00:23:21,400
Speaker 2: and just let the do it for you. You don't

461
00:23:21,400 --> 00:23:22,170
Speaker 2: have to do anything

462
00:23:22,440 --> 00:23:25,090
Speaker 2: and the charges are considerably lower as well.

463
00:23:26,040 --> 00:23:29,180
Speaker 1: If our listeners have some extra cash, let's say from

464
00:23:29,180 --> 00:23:32,409
Speaker 1: a bonus payout or even a side hustle, where do

465
00:23:32,410 --> 00:23:33,360
Speaker 1: you think they should put it

466
00:23:34,040 --> 00:23:37,060
Speaker 2: right, you have to go back again to those earlier

467
00:23:37,060 --> 00:23:40,140
Speaker 2: rules that I had. And first of all remember that

468
00:23:40,140 --> 00:23:44,390
Speaker 2: a bonus payment isn't guaranteed. So a bonus this year

469
00:23:44,390 --> 00:23:46,560
Speaker 2: may not be a bonus next year. There may not

470
00:23:46,560 --> 00:23:49,060
Speaker 2: be a bonus next year, but if you have got

471
00:23:49,060 --> 00:23:51,860
Speaker 2: some extra cash then put it to work straight away.

472
00:23:52,260 --> 00:23:54,760
Speaker 2: What I wouldn't suggest is to spend that money

473
00:23:54,840 --> 00:23:57,290
Speaker 2: or to go on holiday because it is a bonus.

474
00:23:57,300 --> 00:23:59,590
Speaker 2: But just think of it as being something that you

475
00:23:59,590 --> 00:24:03,390
Speaker 2: can put to work immediately and if there are various

476
00:24:03,390 --> 00:24:06,110
Speaker 2: parts of your portfolio that you think need beefing up

477
00:24:06,119 --> 00:24:09,470
Speaker 2: then do so just put that money in because remember

478
00:24:09,470 --> 00:24:12,490
Speaker 2: what I said, the $100 that you put in today

479
00:24:12,520 --> 00:24:14,160
Speaker 2: at a 7% return

480
00:24:14,240 --> 00:24:18,750
Speaker 2: Will turn into $200 in 10 years time and $400

481
00:24:18,750 --> 00:24:21,729
Speaker 2: in 20 years time. So just think of that bonus

482
00:24:21,730 --> 00:24:24,399
Speaker 2: as being something extra. And the other thing that people

483
00:24:24,400 --> 00:24:25,760
Speaker 2: need to remember is that

484
00:24:26,140 --> 00:24:29,010
Speaker 2: It isn't what you earn that makes you rich Sarah.

485
00:24:29,020 --> 00:24:32,090
Speaker 2: It's how you spend what you've got that counts, right?

486
00:24:32,100 --> 00:24:36,100
Speaker 2: And so the bonus is an extra and so put

487
00:24:36,100 --> 00:24:39,540
Speaker 2: that to work somewhere and you will not regret it

488
00:24:39,550 --> 00:24:41,860
Speaker 2: in 20 or 30 years time

489
00:24:42,440 --> 00:24:45,660
Speaker 1: you just talked me out of buying a nice bag.

490
00:24:45,670 --> 00:24:50,620
Speaker 2: There's nothing wrong with having a nice bag. No.

491
00:24:50,630 --> 00:24:54,070
Speaker 1: Back to what you're saying about putting your money to work.

492
00:24:55,440 --> 00:24:59,030
Speaker 2: My goodness, my husband.

493
00:24:59,040 --> 00:25:03,240
Speaker 1: Um back to what you're saying is putting your money

494
00:25:03,240 --> 00:25:06,270
Speaker 1: to work immediately, not making sure it's not just sitting there.

495
00:25:06,640 --> 00:25:10,200
Speaker 1: There is another side to this where recently we've seen

496
00:25:10,210 --> 00:25:11,889
Speaker 1: a lot of young people put their money in the

497
00:25:11,890 --> 00:25:16,180
Speaker 1: crypto market or crypto related products and like what we

498
00:25:16,180 --> 00:25:19,540
Speaker 1: saw in the stock market, the crypto market has also

499
00:25:19,540 --> 00:25:22,490
Speaker 1: been battered. We heard what happened with us T and

500
00:25:22,490 --> 00:25:26,240
Speaker 1: luna crashing one report by Today online said one investor

501
00:25:26,240 --> 00:25:30,680
Speaker 1: here in Singapore lost $40,000 just in days. So what

502
00:25:30,680 --> 00:25:34,730
Speaker 1: do you think young investors should take away from this experience?

503
00:25:34,740 --> 00:25:39,140
Speaker 2: Okay, remember what I was saying about the pyramid, right? 60%

504
00:25:39,140 --> 00:25:43,660
Speaker 2: in income shares, 30% in grow shares and the other 10%

505
00:25:43,840 --> 00:25:47,290
Speaker 2: In whatever you want now, if that whatever you want

506
00:25:47,300 --> 00:25:51,430
Speaker 2: that 10% you put into cryptocurrencies and then you suddenly

507
00:25:51,430 --> 00:25:52,960
Speaker 2: had a look at your pyramid

508
00:25:53,940 --> 00:25:58,100
Speaker 2: And you suddenly found that that 10% is now 60%

509
00:25:58,100 --> 00:26:01,220
Speaker 2: of your portfolio. You need to rebalance, you need to

510
00:26:01,220 --> 00:26:05,090
Speaker 2: do something and keep that at 10% because otherwise, what

511
00:26:05,090 --> 00:26:08,000
Speaker 2: you'll end up with is the pyramid being tipped upside

512
00:26:08,000 --> 00:26:10,909
Speaker 2: down and we all know that you cannot balance a

513
00:26:10,910 --> 00:26:14,270
Speaker 2: pyramid on its point easily. So that is what happened

514
00:26:14,270 --> 00:26:15,270
Speaker 2: to these people.

515
00:26:15,340 --> 00:26:18,840
Speaker 2: They put their money into the crypto currencies and sure

516
00:26:18,850 --> 00:26:20,990
Speaker 2: they probably made a lot of money. What they should

517
00:26:20,990 --> 00:26:23,730
Speaker 2: have done was to take that money that they had

518
00:26:23,730 --> 00:26:28,370
Speaker 2: made and then rebalance their portfolio so that the cryptocurrencies

519
00:26:28,369 --> 00:26:31,300
Speaker 2: or whatever it was, is still only 10% of your

520
00:26:31,300 --> 00:26:35,860
Speaker 2: portfolio that way, if you lose 10%, you still have 90%.

521
00:26:36,340 --> 00:26:40,590
Speaker 2: But if that 10% suddenly becomes 60% of your portfolio

522
00:26:40,600 --> 00:26:44,270
Speaker 2: and that blows up, then you've lost 60% of whatever

523
00:26:44,270 --> 00:26:48,399
Speaker 2: investment you had. So the pyramid is a very, very

524
00:26:48,400 --> 00:26:51,910
Speaker 2: sort of strong base. It's a very strong concept for

525
00:26:51,910 --> 00:26:55,680
Speaker 2: people to think about how their portfolio is looking. And

526
00:26:55,680 --> 00:26:56,260
Speaker 2: I am,

527
00:26:56,440 --> 00:26:59,570
Speaker 2: I wouldn't say constantly, but I'm regularly looking at my

528
00:26:59,570 --> 00:27:00,760
Speaker 2: portfolio and say

529
00:27:00,840 --> 00:27:04,310
Speaker 2: Have I got 60% in income, have I got 30%

530
00:27:04,310 --> 00:27:07,880
Speaker 2: in growth and that other 10% of those investments that

531
00:27:07,880 --> 00:27:11,070
Speaker 2: I have have, they grown too big. If they have

532
00:27:11,100 --> 00:27:14,159
Speaker 2: then I need to either number one put more money

533
00:27:14,160 --> 00:27:17,810
Speaker 2: into the income side or number to try and reduce

534
00:27:17,810 --> 00:27:20,270
Speaker 2: the amount on the top by selling some of it

535
00:27:20,340 --> 00:27:21,359
Speaker 2: in order to

536
00:27:21,440 --> 00:27:24,830
Speaker 2: maintain that pyramid shape again. And if you have the

537
00:27:24,830 --> 00:27:27,780
Speaker 2: pyramid shape, I can assure you you will sleep very

538
00:27:27,780 --> 00:27:31,190
Speaker 2: well at night. But if that pyramid is tipped upside

539
00:27:31,190 --> 00:27:34,220
Speaker 2: down and it's balancing on its point, you will have

540
00:27:34,230 --> 00:27:37,570
Speaker 2: loads of sleepless nights and I love my sleep.

541
00:27:37,580 --> 00:27:42,120
Speaker 1: Don't you mentioned that as a rule of thumb, your

542
00:27:42,119 --> 00:27:45,690
Speaker 1: investment should double in 10 years if you get a 7% return,

543
00:27:46,160 --> 00:27:46,760
Speaker 1: is that right?

544
00:27:46,940 --> 00:27:51,070
Speaker 1: Where do we find 7% returns now? You're seeing the

545
00:27:51,070 --> 00:27:55,030
Speaker 1: market down and sometimes it's quite discouraging when I think 7%.

546
00:27:55,030 --> 00:27:55,780
Speaker 1: Where do I go?

547
00:27:55,790 --> 00:27:59,260
Speaker 2: Okay, right. I think it is primarily because you are

548
00:27:59,260 --> 00:28:02,209
Speaker 2: falling into that same trap of the recent event syndrome.

549
00:28:02,210 --> 00:28:04,960
Speaker 2: You're saying that the stock market is down at the moment.

550
00:28:05,140 --> 00:28:07,040
Speaker 2: But if you go back and you have a look

551
00:28:07,040 --> 00:28:07,270
Speaker 2: at

552
00:28:07,340 --> 00:28:09,590
Speaker 2: Over the long term, if you have a look at

553
00:28:09,590 --> 00:28:12,580
Speaker 2: how the stock market has performed over the long term,

554
00:28:12,590 --> 00:28:16,810
Speaker 2: you will be able to find the 7% right. It is,

555
00:28:16,820 --> 00:28:18,410
Speaker 2: it is not that difficult.

556
00:28:18,700 --> 00:28:21,600
Speaker 1: 7% over 10 years. Not every year,

557
00:28:21,609 --> 00:28:22,949
Speaker 2: 7%. Every year.

558
00:28:22,960 --> 00:28:23,949
Speaker 1: Every year, I'm looking at

559
00:28:23,950 --> 00:28:27,050
Speaker 2: 7% a year accumulating

560
00:28:27,140 --> 00:28:30,379
Speaker 2: Over the ten-year period. So you should be able to

561
00:28:30,380 --> 00:28:32,659
Speaker 2: get a 7% return on your investment

562
00:28:32,740 --> 00:28:35,879
Speaker 2: Without a great deal of difficulty. If you want more

563
00:28:35,880 --> 00:28:38,400
Speaker 2: than that, then you will have to actually start looking

564
00:28:38,400 --> 00:28:41,370
Speaker 2: at shares that I have the capability of delivering more

565
00:28:41,370 --> 00:28:45,120
Speaker 2: than the 7% return. But in general you should be

566
00:28:45,120 --> 00:28:48,900
Speaker 2: able to get at least 7%, I'm getting more than that.

567
00:28:48,910 --> 00:28:51,459
Speaker 2: But where

568
00:28:51,640 --> 00:28:52,960
Speaker 2: that is because I am

569
00:28:53,040 --> 00:28:57,140
Speaker 2: That is because I am more tolerant of risk. And

570
00:28:57,140 --> 00:29:00,090
Speaker 2: so I am able to pick stocks that have the

571
00:29:00,090 --> 00:29:05,940
Speaker 2: ability of growing 15, a year. And because I do

572
00:29:05,940 --> 00:29:09,710
Speaker 2: that my portfolio grows a lot faster than 7% a year.

573
00:29:09,720 --> 00:29:11,060
Speaker 2: So if you can pick

574
00:29:11,140 --> 00:29:14,050
Speaker 2: A portfolio that can grow at 14% a year,

575
00:29:14,240 --> 00:29:16,800
Speaker 2: Then you will double your money every five years instead

576
00:29:16,800 --> 00:29:19,720
Speaker 2: of every 10 years. There are those investments around

577
00:29:19,720 --> 00:29:24,739
Speaker 1: you mean like specific stocks versus index funds that you mentioned.

578
00:29:25,340 --> 00:29:27,840
Speaker 2: If you want to look for index funds that have

579
00:29:27,840 --> 00:29:31,890
Speaker 2: the ability to grow faster than 7%, then you will

580
00:29:31,890 --> 00:29:35,440
Speaker 2: have to have a look at certain specific indices. So

581
00:29:35,440 --> 00:29:38,480
Speaker 2: something like a bunch of stocks that follow NASDAQ will

582
00:29:38,480 --> 00:29:40,360
Speaker 2: give you more than 7% a year.

583
00:29:40,440 --> 00:29:42,610
Speaker 2: But if you have a look at say the Singapore

584
00:29:42,610 --> 00:29:45,860
Speaker 2: Straits Times Index, that is around 7% a year.

585
00:29:45,940 --> 00:29:49,520
Speaker 1: Okay, anything else that you think the young investors should

586
00:29:49,520 --> 00:29:52,750
Speaker 1: keep in mind or any mistakes that you, you're seeing

587
00:29:52,750 --> 00:29:53,920
Speaker 1: too often.

588
00:29:56,040 --> 00:29:59,620
Speaker 2: I think the biggest problem that people have is listening

589
00:29:59,620 --> 00:30:00,270
Speaker 2: to

590
00:30:02,140 --> 00:30:03,640
Speaker 1: say it, David,

591
00:30:03,650 --> 00:30:08,090
Speaker 2: no, is listening to experts out there, right. There are

592
00:30:08,090 --> 00:30:12,300
Speaker 2: many experts out there, and the problem with experts is

593
00:30:12,300 --> 00:30:12,670
Speaker 2: that

594
00:30:13,140 --> 00:30:16,550
Speaker 2: they are experts in their own field. And so when

595
00:30:16,550 --> 00:30:19,190
Speaker 2: you listen to too many experts, what you then end

596
00:30:19,190 --> 00:30:22,400
Speaker 2: up with is far too much information that you need

597
00:30:22,400 --> 00:30:25,590
Speaker 2: to be able to digest. The simplest thing that you

598
00:30:25,590 --> 00:30:26,960
Speaker 2: need to remember is that

599
00:30:27,340 --> 00:30:31,250
Speaker 2: over the long term the stock market will grow, right?

600
00:30:31,260 --> 00:30:34,620
Speaker 2: That is just a feature of capitalism that the stock

601
00:30:34,620 --> 00:30:38,460
Speaker 2: market will grow. Companies will find ways of generating profits

602
00:30:38,460 --> 00:30:41,860
Speaker 2: for their shareholders and they will do whatever they can

603
00:30:41,870 --> 00:30:45,570
Speaker 2: if they are dividend paying companies. The last thing they

604
00:30:45,570 --> 00:30:47,260
Speaker 2: want to do is to cut the dividend.

605
00:30:47,340 --> 00:30:49,490
Speaker 2: The last thing they want to do is to withhold

606
00:30:49,490 --> 00:30:50,290
Speaker 2: that dividend.

607
00:30:50,440 --> 00:30:53,070
Speaker 2: They want to carry on paying that dividend. And there

608
00:30:53,070 --> 00:30:56,690
Speaker 2: are some companies out there which we call dividend aristocrats.

609
00:30:56,830 --> 00:30:59,900
Speaker 2: And these are companies that have been able to either

610
00:30:59,900 --> 00:31:05,740
Speaker 2: maintain or to grow their dividends over the last 25 years. Right?

611
00:31:05,750 --> 00:31:08,510
Speaker 2: And if a company is able to grow its dividend

612
00:31:08,510 --> 00:31:11,670
Speaker 2: over 25 years, can you imagine what has happened to

613
00:31:11,670 --> 00:31:13,860
Speaker 2: the share price over the 25 years

614
00:31:13,940 --> 00:31:17,070
Speaker 2: it has actually gone up at the same rate. And

615
00:31:17,070 --> 00:31:21,080
Speaker 2: so consequently look for those kind of companies, they do exist.

616
00:31:21,090 --> 00:31:24,780
Speaker 2: I'm not here to give you stock specific tips but

617
00:31:24,790 --> 00:31:28,930
Speaker 2: there are companies that fall into that dividend aristocrat google

618
00:31:28,930 --> 00:31:31,320
Speaker 2: that and then you'll be able to find those companies

619
00:31:31,320 --> 00:31:32,060
Speaker 2: and you'll go

620
00:31:32,440 --> 00:31:35,630
Speaker 2: wow those are the companies that I want to invest

621
00:31:35,630 --> 00:31:38,240
Speaker 2: in over the long term and I don't ever want

622
00:31:38,240 --> 00:31:39,370
Speaker 2: to sell those shares.

623
00:31:39,820 --> 00:31:45,870
Speaker 1: Lots of rules of thumb from David today you have

624
00:31:45,870 --> 00:31:49,650
Speaker 1: to invest and the sooner the better in your investment

625
00:31:49,650 --> 00:31:51,960
Speaker 1: portfolio depends of course on your age

626
00:31:52,140 --> 00:31:55,250
Speaker 1: and that inflation will eat away the value of your

627
00:31:55,250 --> 00:31:58,390
Speaker 1: money if you don't do anything about it. Thanks so much,

628
00:31:58,400 --> 00:31:58,930
Speaker 1: David for your

629
00:31:58,930 --> 00:32:00,060
Speaker 2: thank you. Thank you so much.

630
00:32:03,240 --> 00:32:05,830
Speaker 1: We hope you enjoyed this episode of money talks. My

631
00:32:05,830 --> 00:32:09,580
Speaker 1: guest next week is planning on retiring at 35 so

632
00:32:09,580 --> 00:32:12,210
Speaker 1: I find out how he's planning to do that. The

633
00:32:12,210 --> 00:32:15,660
Speaker 1: team behind this podcast is hope a name. Danieley Christina

634
00:32:15,660 --> 00:32:19,010
Speaker 1: Robert and you've got a refreshed slate of audio material

635
00:32:19,010 --> 00:32:21,860
Speaker 1: you can listen to on your commute or your workout

636
00:32:22,040 --> 00:32:24,080
Speaker 1: go to the C. N. A. Website or app. Look

637
00:32:24,080 --> 00:32:25,060
Speaker 1: for the listen button

638
00:32:25,240 --> 00:32:28,710
Speaker 1: and subscribe to the podcast. See like if you have thoughts,

639
00:32:28,710 --> 00:32:31,300
Speaker 1: ideas or even stories you'd like to share. Please write

640
00:32:31,300 --> 00:32:34,140
Speaker 1: to us. The details are in our episode notes. Until

641
00:32:34,140 --> 00:32:37,060
Speaker 1: next time. This is Sarah call Dean.

642
00:32:37,440 --> 00:32:37,670
Speaker 2: Mhm