WEBVTT - Even if you have only S$100 extra, put it to work | EP 1

0:00:00.040 --> 0:00:01.500
<v Speaker 1>This is a C. N. A.

0:00:01.500 --> 0:00:02.259
<v Speaker 2>Podcast.

0:00:05.040 --> 0:00:08.840
<v Speaker 1>Hello and welcome to our brand new podcast. Money talks,

0:00:08.850 --> 0:00:11.340
<v Speaker 1>my name is Sarah al Khaldi and I'm a business

0:00:11.340 --> 0:00:14.330
<v Speaker 1>news presenter at C. N. A. As a young mother

0:00:14.330 --> 0:00:17.010
<v Speaker 1>and like many others of my generation, I want to

0:00:17.010 --> 0:00:19.610
<v Speaker 1>get better with my money. So each week I'll tap

0:00:19.610 --> 0:00:22.090
<v Speaker 1>into different experts from C. E. O. S. Two financial

0:00:22.090 --> 0:00:22.760
<v Speaker 1>advisors

0:00:22.840 --> 0:00:26.170
<v Speaker 1>and we'll find out how to make wiser financial decisions

0:00:26.180 --> 0:00:28.660
<v Speaker 1>relating to how we live, work and play.

0:00:41.840 --> 0:00:45.190
<v Speaker 1>We'll go for some quick fire questions in a few words.

0:00:45.190 --> 0:00:47.300
<v Speaker 1>Can you give us your thoughts on the following?

0:00:47.310 --> 0:00:48.670
<v Speaker 2>Okay, high

0:00:48.670 --> 0:00:50.090
<v Speaker 1>inflation. It

0:00:50.090 --> 0:00:50.900
<v Speaker 2>will come down.

0:00:50.909 --> 0:00:52.530
<v Speaker 1>Green finance

0:00:52.710 --> 0:00:54.530
<v Speaker 2>definitely worth looking

0:00:54.530 --> 0:00:56.550
<v Speaker 1>at robo advisors

0:00:56.560 --> 0:00:59.220
<v Speaker 2>definitely worth considering also

0:00:59.230 --> 0:01:00.459
<v Speaker 1>china.

0:01:00.470 --> 0:01:03.460
<v Speaker 2>Um

0:01:03.540 --> 0:01:05.870
<v Speaker 1>okay

0:01:05.880 --> 0:01:10.100
<v Speaker 2>china belongs in the slightly riskier part of your portfolio

0:01:10.600 --> 0:01:11.980
<v Speaker 1>investment scams,

0:01:12.170 --> 0:01:16.130
<v Speaker 2>definitely be wary of them. Don't trust anybody. The old

0:01:16.130 --> 0:01:19.000
<v Speaker 2>rule of thumb is trust but verify.

0:01:19.640 --> 0:01:20.150
<v Speaker 1>Great.

0:01:20.840 --> 0:01:22.150
<v Speaker 1>Yeah.

0:01:24.640 --> 0:01:31.090
<v Speaker 1>We kick off the series with a renaissance man of money.

0:01:31.100 --> 0:01:34.110
<v Speaker 1>David cho is the co founder of the smart investor,

0:01:34.120 --> 0:01:37.839
<v Speaker 1>a website dedicated to educating people about how to grow

0:01:37.840 --> 0:01:41.390
<v Speaker 1>their wealth. David himself has been growing his money for

0:01:41.390 --> 0:01:43.940
<v Speaker 1>decades and I want to ask him if it's true

0:01:43.940 --> 0:01:47.080
<v Speaker 1>that you need money to make money, can you afford

0:01:47.080 --> 0:01:49.830
<v Speaker 1>not to invest and how should you spend your hard

0:01:49.840 --> 0:01:52.360
<v Speaker 1>earned bonus, David, thanks for joining us

0:01:54.440 --> 0:01:57.800
<v Speaker 1>for those starting out on their investment journey. What would

0:01:57.800 --> 0:02:00.230
<v Speaker 1>an ideal portfolio look like?

0:02:00.240 --> 0:02:03.730
<v Speaker 2>Okay, before I even start doing that, Sarah what I

0:02:03.730 --> 0:02:05.860
<v Speaker 2>would like to say is

0:02:06.340 --> 0:02:09.350
<v Speaker 2>you have to invest and the sooner you invest the

0:02:09.350 --> 0:02:10.859
<v Speaker 2>better it is for you

0:02:11.340 --> 0:02:15.460
<v Speaker 2>and for those people who haven't started investing for their

0:02:15.460 --> 0:02:19.040
<v Speaker 2>retirement or later on in life. There is a general

0:02:19.040 --> 0:02:20.960
<v Speaker 2>rule of thumb that says that

0:02:21.540 --> 0:02:24.690
<v Speaker 2>You take your age and you divide it by two

0:02:24.710 --> 0:02:28.880
<v Speaker 2>and that is the percentage of your salary that you

0:02:28.880 --> 0:02:32.660
<v Speaker 2>should be putting aside into an investment. So if you're

0:02:32.660 --> 0:02:34.860
<v Speaker 2>a 20 year old and you just starting work

0:02:35.440 --> 0:02:37.610
<v Speaker 2>I don't know how many people start working 20 but

0:02:37.620 --> 0:02:39.840
<v Speaker 2>a 20 year old who's starting work, you should be

0:02:39.840 --> 0:02:43.760
<v Speaker 2>putting 20 divided by two which is 10% of your

0:02:43.760 --> 0:02:44.459
<v Speaker 2>salary

0:02:44.840 --> 0:02:48.200
<v Speaker 2>Into an investment. Now if you leave it later, if

0:02:48.200 --> 0:02:50.690
<v Speaker 2>you wait until you're 30 years old before you start

0:02:50.690 --> 0:02:54.660
<v Speaker 2>investing you're gonna have to put aside 15% of your salary,

0:02:54.660 --> 0:02:57.620
<v Speaker 2>30 valid by two is 15. If you wait until

0:02:57.620 --> 0:03:00.510
<v Speaker 2>you're 50 before you do anything, you're going to have

0:03:00.510 --> 0:03:04.079
<v Speaker 2>to put aside 25% of your salary

0:03:04.240 --> 0:03:07.480
<v Speaker 2>in order to be able to enjoy your retirement. So

0:03:07.480 --> 0:03:11.050
<v Speaker 2>that's a quarter of your salary going into some kind

0:03:11.050 --> 0:03:14.350
<v Speaker 2>of investment. And so the secret really is

0:03:14.740 --> 0:03:16.560
<v Speaker 2>to start as early as possible.

0:03:17.139 --> 0:03:20.070
<v Speaker 2>And as soon as you start work, start putting some

0:03:20.070 --> 0:03:23.750
<v Speaker 2>money aside into a portfolio so that you will be

0:03:23.750 --> 0:03:27.260
<v Speaker 2>able to let that money grow over time and then

0:03:27.270 --> 0:03:30.440
<v Speaker 2>enjoy life later on when you get older. So that

0:03:30.440 --> 0:03:32.830
<v Speaker 2>is the general rule of thumb as to what the

0:03:32.830 --> 0:03:34.450
<v Speaker 2>portfolio should look like.

0:03:35.340 --> 0:03:38.610
<v Speaker 2>Again, it is actually sort of based on your age

0:03:38.620 --> 0:03:40.840
<v Speaker 2>and the general rule of thumb, there is, it's called

0:03:40.840 --> 0:03:43.690
<v Speaker 2>the rule of 100 and the rule of 100 simply

0:03:43.690 --> 0:03:44.360
<v Speaker 2>states that

0:03:44.740 --> 0:03:45.760
<v Speaker 2>you subtract

0:03:46.440 --> 0:03:50.610
<v Speaker 2>your age from 100 that is the amount of money

0:03:50.610 --> 0:03:55.180
<v Speaker 2>that should be going into riskier investments. Okay, so if

0:03:55.180 --> 0:03:57.580
<v Speaker 2>you are a baby, if you're investing safe for your

0:03:57.580 --> 0:04:00.960
<v Speaker 2>child and your child is zero age on the day

0:04:00.960 --> 0:04:04.620
<v Speaker 2>that they are born, 100% of whatever money you're going

0:04:04.620 --> 0:04:06.060
<v Speaker 2>to be putting to one side

0:04:06.240 --> 0:04:09.890
<v Speaker 2>Should be going into a riskier investments such as the

0:04:09.890 --> 0:04:13.430
<v Speaker 2>stock market. And as you get older, less of that

0:04:13.430 --> 0:04:16.560
<v Speaker 2>money should be in the riskier side and more of

0:04:16.560 --> 0:04:19.490
<v Speaker 2>it should be in the less risky side. So things

0:04:19.490 --> 0:04:23.369
<v Speaker 2>like stocks and bonds. So if you are for instance

0:04:23.380 --> 0:04:25.159
<v Speaker 2>a 20 year old, then

0:04:25.240 --> 0:04:28.190
<v Speaker 2>80% of whatever you are going to be saving

0:04:28.339 --> 0:04:30.870
<v Speaker 2>Needs to be put into the stock market and the

0:04:30.870 --> 0:04:34.349
<v Speaker 2>other 20% can be put into other things such as

0:04:34.360 --> 0:04:39.210
<v Speaker 2>Singapore savings bonds or cash or whatever. But 80% of

0:04:39.210 --> 0:04:43.179
<v Speaker 2>it should be in riskier investments such as stock market

0:04:43.190 --> 0:04:45.880
<v Speaker 2>primarily because that is the only way you're going to

0:04:45.880 --> 0:04:47.560
<v Speaker 2>be able to grow your money.

0:04:47.839 --> 0:04:49.700
<v Speaker 1>A lot of young people though are saying, but I

0:04:49.700 --> 0:04:50.560
<v Speaker 1>have CPF

0:04:50.740 --> 0:04:51.060
<v Speaker 2>Yeah,

0:04:51.440 --> 0:04:53.230
<v Speaker 1>so why do I have to go to the stock

0:04:53.230 --> 0:04:56.210
<v Speaker 1>market if I have CPF to rely on?

0:04:56.220 --> 0:04:58.730
<v Speaker 2>I agree with that totally. And I think the CPF

0:04:58.730 --> 0:05:02.750
<v Speaker 2>is a great thing because it forces people to save

0:05:02.760 --> 0:05:06.720
<v Speaker 2>Now in many countries, particularly one where I grew up

0:05:06.720 --> 0:05:10.650
<v Speaker 2>in Hong kong they didn't have a mandatory savings scheme

0:05:10.650 --> 0:05:11.360
<v Speaker 2>for people

0:05:11.640 --> 0:05:15.580
<v Speaker 2>and so nobody actually saved because you weren't forced to save.

0:05:15.589 --> 0:05:18.480
<v Speaker 2>But here in Singapore, you are forced to save for

0:05:18.480 --> 0:05:20.160
<v Speaker 2>your retirement. But

0:05:20.640 --> 0:05:23.790
<v Speaker 2>that money goes into the CPF fund and if you

0:05:23.790 --> 0:05:26.160
<v Speaker 2>just allow it to grow

0:05:26.640 --> 0:05:29.610
<v Speaker 2>using the interest that is actually being paid for you

0:05:29.870 --> 0:05:32.940
<v Speaker 2>and that only gives you around 2.5% that is not

0:05:32.940 --> 0:05:35.360
<v Speaker 2>going to be enough. And I go back again to

0:05:35.360 --> 0:05:38.310
<v Speaker 2>that rule of 100 which is how much of that

0:05:38.310 --> 0:05:41.980
<v Speaker 2>money in the CPF should be in stocks, how much

0:05:41.990 --> 0:05:45.060
<v Speaker 2>should be in cash and bonds that will tell you

0:05:45.140 --> 0:05:47.150
<v Speaker 2>what you are allowed to invest in.

0:05:47.240 --> 0:05:50.610
<v Speaker 2>But the CPF has very strict rules, so the amount

0:05:50.610 --> 0:05:52.910
<v Speaker 2>of money that you put into the CPF will not

0:05:52.920 --> 0:05:56.120
<v Speaker 2>be sufficient for you to grow that money over time

0:05:56.120 --> 0:05:58.300
<v Speaker 2>because they restrict the amount of money that you can

0:05:58.300 --> 0:06:01.420
<v Speaker 2>invest in stocks and bonds, you can't take the money

0:06:01.420 --> 0:06:04.310
<v Speaker 2>out from the CPF, but you need to invest outside

0:06:04.310 --> 0:06:05.150
<v Speaker 2>of the CPF

0:06:05.310 --> 0:06:08.250
<v Speaker 2>in order to achieve that kind of balance because otherwise

0:06:08.540 --> 0:06:11.630
<v Speaker 2>When you reach 55 or 60 or 65 years of

0:06:11.630 --> 0:06:13.910
<v Speaker 2>age and you have a look at what that money

0:06:13.920 --> 0:06:16.539
<v Speaker 2>has done for you, you will say I'm not going

0:06:16.540 --> 0:06:19.390
<v Speaker 2>to have enough to retire on. And that is the

0:06:19.390 --> 0:06:22.660
<v Speaker 2>big danger that you have because whilst it is great

0:06:22.670 --> 0:06:25.550
<v Speaker 2>for somebody to force you to save money,

0:06:26.140 --> 0:06:28.489
<v Speaker 2>that money will not be sufficient for you. When you

0:06:28.490 --> 0:06:29.650
<v Speaker 2>retire a

0:06:29.650 --> 0:06:33.969
<v Speaker 1>lot of money to goes to your house, those getting

0:06:33.970 --> 0:06:36.150
<v Speaker 1>an H D B a loan or a mortgage loan

0:06:36.160 --> 0:06:38.370
<v Speaker 1>and some people are saying, OK, I'll just rely on

0:06:38.370 --> 0:06:42.030
<v Speaker 1>my property, I'll rely on my HDB when I get older,

0:06:42.029 --> 0:06:44.160
<v Speaker 1>I'll just sell it or downgrade and maybe

0:06:44.240 --> 0:06:47.789
<v Speaker 1>that can help beef up my retirement from my CPF.

0:06:47.800 --> 0:06:48.810
<v Speaker 1>What do you think of that?

0:06:48.820 --> 0:06:51.210
<v Speaker 2>I don't disagree with that either. If you have a

0:06:51.210 --> 0:06:55.660
<v Speaker 2>look at property, property prices tend to appreciate over time.

0:06:56.040 --> 0:06:58.900
<v Speaker 2>And you have to have a look at some examples

0:06:58.910 --> 0:07:02.840
<v Speaker 2>outside of Singapore, there are lots of people in the U. K.

0:07:02.839 --> 0:07:06.310
<v Speaker 2>For instance, that have put their money into their property

0:07:06.320 --> 0:07:09.990
<v Speaker 2>and just as you have highlighted, they say, well, you know,

0:07:10.000 --> 0:07:13.050
<v Speaker 2>my property can be my pension later on, but

0:07:13.740 --> 0:07:17.400
<v Speaker 2>how is that even possible? Because you have to downgrade,

0:07:17.670 --> 0:07:19.630
<v Speaker 2>you have to sell your house in order to do

0:07:19.630 --> 0:07:20.160
<v Speaker 2>something

0:07:20.540 --> 0:07:22.910
<v Speaker 2>and over in the UK, they've come up with some

0:07:22.910 --> 0:07:28.250
<v Speaker 2>really ingenious schemes, such as mortgage equity, withdrawal, lifetime mortgages

0:07:28.250 --> 0:07:31.120
<v Speaker 2>whereby you can say, oh, I'll take a portion of

0:07:31.120 --> 0:07:34.120
<v Speaker 2>that equity that I have in my house and I

0:07:34.120 --> 0:07:37.320
<v Speaker 2>don't have to repay that. But instead I'll be able

0:07:37.320 --> 0:07:40.360
<v Speaker 2>to live off that lump sum that I take from there?

0:07:40.640 --> 0:07:42.080
<v Speaker 2>And on the other side,

0:07:42.340 --> 0:07:46.270
<v Speaker 2>whoever is actually financing that lump sum that you've taken

0:07:46.270 --> 0:07:49.950
<v Speaker 2>out will roll up the interest slowly over time. And

0:07:49.950 --> 0:07:53.480
<v Speaker 2>as we know, if you keep on doing that, eventually

0:07:53.490 --> 0:07:56.810
<v Speaker 2>the interest will become quite onerous. But you don't have

0:07:56.810 --> 0:07:59.170
<v Speaker 2>to worry about it. You don't have to pay it off.

0:07:59.180 --> 0:07:59.560
<v Speaker 2>But

0:08:00.040 --> 0:08:00.960
<v Speaker 2>on the day that

0:08:01.440 --> 0:08:04.160
<v Speaker 2>you pass away, you may actually find that

0:08:04.640 --> 0:08:07.550
<v Speaker 2>The 100,000 or the 200,000 you took out from your

0:08:07.550 --> 0:08:10.950
<v Speaker 2>property plus the interest that has been accruing will mean

0:08:10.950 --> 0:08:13.650
<v Speaker 2>that there is no equity left in your property at all.

0:08:13.660 --> 0:08:15.830
<v Speaker 2>And so if you thought that I would be able

0:08:15.830 --> 0:08:19.060
<v Speaker 2>to leave the property to my Children, that isn't going

0:08:19.060 --> 0:08:21.760
<v Speaker 2>to happen. Because the person who will be taking the

0:08:21.760 --> 0:08:23.860
<v Speaker 2>property will be the insurance company,

0:08:24.140 --> 0:08:25.550
<v Speaker 2>not your Children.

0:08:25.740 --> 0:08:29.250
<v Speaker 2>So you spent your life buying a property, financing the

0:08:29.250 --> 0:08:32.850
<v Speaker 2>property through mortgage repayments. And then you hope that you

0:08:32.850 --> 0:08:35.060
<v Speaker 2>will be able to leave something for your Children. And

0:08:35.059 --> 0:08:37.660
<v Speaker 2>you find out that you've got nothing left for your

0:08:37.660 --> 0:08:40.559
<v Speaker 2>Children at all. And so you're not really sort of

0:08:40.559 --> 0:08:42.150
<v Speaker 2>helping the next generation.

0:08:43.140 --> 0:08:46.290
<v Speaker 1>Now, there was a survey done recently last year by

0:08:46.290 --> 0:08:49.130
<v Speaker 1>franklin Templeton and it showed that a third of young

0:08:49.130 --> 0:08:53.670
<v Speaker 1>singaporeans think that making the right investment is difficult and

0:08:53.670 --> 0:08:56.620
<v Speaker 1>investments make them anxious. So where do you think they

0:08:56.620 --> 0:08:59.270
<v Speaker 1>should start? And do you think this is something that

0:08:59.270 --> 0:09:02.080
<v Speaker 1>they can do alone or should they tap into an

0:09:02.080 --> 0:09:04.350
<v Speaker 1>advisor perhaps or some

0:09:04.540 --> 0:09:07.920
<v Speaker 1>kind of person who will give them advice on their investments.

0:09:08.410 --> 0:09:11.260
<v Speaker 2>There are several ways of looking at that and

0:09:11.640 --> 0:09:15.730
<v Speaker 2>my philosophy and it's not my philosophy, but it's just

0:09:15.730 --> 0:09:18.660
<v Speaker 2>a general philosophy of most people.

0:09:19.040 --> 0:09:22.640
<v Speaker 2>Is that that rule of 100 will apply right. That

0:09:22.640 --> 0:09:25.750
<v Speaker 2>rule of 100 has been around for a very long time.

0:09:26.010 --> 0:09:29.510
<v Speaker 2>And the rule of 100 will help to guide you

0:09:29.510 --> 0:09:33.199
<v Speaker 2>as to how your portfolio should look. So if you

0:09:33.200 --> 0:09:37.890
<v Speaker 2>are a 40 year old, then 60% of that portfolio

0:09:37.890 --> 0:09:39.100
<v Speaker 2>should be in stocks

0:09:39.340 --> 0:09:42.380
<v Speaker 2>And the other 40% should be in cash and bonds.

0:09:42.460 --> 0:09:45.679
<v Speaker 2>And just use that as your template. Now, the other

0:09:45.679 --> 0:09:49.350
<v Speaker 2>question is that 60% that you put into stocks, how

0:09:49.350 --> 0:09:52.920
<v Speaker 2>should I allocate that 60%. Should I just go and

0:09:52.920 --> 0:09:57.110
<v Speaker 2>take the 60% and go and buy investments in emerging markets?

0:09:57.240 --> 0:09:59.550
<v Speaker 2>Should I buy penny stocks? Should I do what

0:10:00.140 --> 0:10:03.490
<v Speaker 2>The answer is no right? You don't do that. You

0:10:03.490 --> 0:10:06.340
<v Speaker 2>take that sum of money that 60% that you're going

0:10:06.340 --> 0:10:09.790
<v Speaker 2>to be investing in the stock market and then whatever

0:10:09.790 --> 0:10:12.679
<v Speaker 2>that amount of money is, you then need to apply

0:10:12.679 --> 0:10:15.179
<v Speaker 2>another rule and this is the rule that has stood

0:10:15.179 --> 0:10:18.630
<v Speaker 2>the test of time. And what that rule actually says

0:10:18.640 --> 0:10:20.750
<v Speaker 2>is that 60

0:10:20.940 --> 0:10:24.880
<v Speaker 2>of that amount of money should be in safer investments.

0:10:24.900 --> 0:10:29.540
<v Speaker 2>So by that we're talking about income generating stocks. And

0:10:29.540 --> 0:10:32.740
<v Speaker 2>here in Singapore, we have this wealth of real estate

0:10:32.740 --> 0:10:36.000
<v Speaker 2>investment trusts. So if you are going to be putting

0:10:36.000 --> 0:10:38.250
<v Speaker 2>that money into the stock market

0:10:38.429 --> 0:10:42.800
<v Speaker 2>than 60% into strong income generating stocks such as

0:10:43.040 --> 0:10:46.430
<v Speaker 2>The real estate investment trusts or maybe the bank shares

0:10:46.429 --> 0:10:49.270
<v Speaker 2>that we have here in Singapore, they pay good dividends.

0:10:49.530 --> 0:10:52.479
<v Speaker 2>The Singapore stock exchange is another good example of a

0:10:52.480 --> 0:10:56.470
<v Speaker 2>company that is able to reward you with regular dividends.

0:10:56.480 --> 0:11:00.099
<v Speaker 2>So that is the 60% of whatever you're going to

0:11:00.100 --> 0:11:01.660
<v Speaker 2>be putting into the stock market,

0:11:02.140 --> 0:11:06.500
<v Speaker 2>then you have the 30% which is slightly riskier investments.

0:11:06.700 --> 0:11:11.950
<v Speaker 2>And these are the faster growing companies. And unfortunately in Singapore,

0:11:11.950 --> 0:11:15.070
<v Speaker 2>we don't have that many faster growing companies. So you

0:11:15.070 --> 0:11:17.990
<v Speaker 2>have to look overseas for that. So, a good place

0:11:17.990 --> 0:11:19.520
<v Speaker 2>to go and sort of look for those kind of

0:11:19.520 --> 0:11:21.060
<v Speaker 2>stocks would be NASDAQ

0:11:21.340 --> 0:11:23.880
<v Speaker 2>where you have a lot of faster growing companies.

0:11:24.140 --> 0:11:26.970
<v Speaker 2>So if you do your math 60 plus 30 is

0:11:26.970 --> 0:11:30.610
<v Speaker 2>90 that still leaves you 10% and that 10% can

0:11:30.610 --> 0:11:34.229
<v Speaker 2>be then put into what we call speculative investments. And

0:11:34.230 --> 0:11:36.720
<v Speaker 2>so as long as you have that, whether you want

0:11:36.720 --> 0:11:39.939
<v Speaker 2>to call it the pyramid or the beer bottle call

0:11:39.940 --> 0:11:40.959
<v Speaker 2>it whatever you want,

0:11:41.040 --> 0:11:44.390
<v Speaker 2>you must have a stable base of income generating shares,

0:11:44.540 --> 0:11:48.030
<v Speaker 2>some faster growing shares and then the other 10% put

0:11:48.030 --> 0:11:50.150
<v Speaker 2>into whatever you want, I don't care what you put

0:11:50.150 --> 0:11:52.990
<v Speaker 2>it into. Put into something that you think is going

0:11:52.990 --> 0:11:56.449
<v Speaker 2>to be quite exciting for you. Be the value shares,

0:11:56.460 --> 0:11:59.190
<v Speaker 2>shares that you think have been undervalued by the market.

0:11:59.200 --> 0:12:02.450
<v Speaker 2>You could even put it into Cryptocurrency, I don't really

0:12:02.450 --> 0:12:05.660
<v Speaker 2>care what you put that 10% of your investment into,

0:12:05.740 --> 0:12:09.800
<v Speaker 2>But don't fool around with the 60% of the income

0:12:09.800 --> 0:12:12.620
<v Speaker 2>shares and the 30% of the growth shares because that

0:12:12.630 --> 0:12:16.360
<v Speaker 2>will generate for you. The kind of returns that you require.

0:12:16.840 --> 0:12:21.790
<v Speaker 1>Conventional investment wisdom says that over time stock markets go

0:12:21.790 --> 0:12:25.390
<v Speaker 1>up despite the volatility in the near term. Do you

0:12:25.390 --> 0:12:27.360
<v Speaker 1>think that still holds now, Do you think

0:12:27.840 --> 0:12:30.740
<v Speaker 1>decades down the line, we can still get some kind

0:12:30.740 --> 0:12:34.590
<v Speaker 1>of return from equity market investments right now.

0:12:34.600 --> 0:12:37.060
<v Speaker 2>Oh, for sure. You see one of the big problems

0:12:37.059 --> 0:12:40.100
<v Speaker 2>that investors have, and I'm not just talking about new

0:12:40.100 --> 0:12:44.849
<v Speaker 2>investors coming into the market, I'm talking about seasoned investors also,

0:12:45.140 --> 0:12:49.069
<v Speaker 2>What they suffer from is something called recent events syndrome

0:12:49.080 --> 0:12:52.250
<v Speaker 2>and recent events syndrome just says that what is happening

0:12:52.250 --> 0:12:55.670
<v Speaker 2>now is going to be happening into the future and

0:12:55.720 --> 0:12:59.000
<v Speaker 2>it scares them, right. They think that the kind of

0:12:59.010 --> 0:13:02.610
<v Speaker 2>geopolitical problems that we have at the moment is going

0:13:02.610 --> 0:13:07.160
<v Speaker 2>to persist for the very long term. And that isn't true, right?

0:13:07.540 --> 0:13:09.940
<v Speaker 2>If we have a look at the stock market, say

0:13:09.940 --> 0:13:10.860
<v Speaker 2>over the last

0:13:11.240 --> 0:13:15.910
<v Speaker 2>70 years, which is slightly older than me. But over

0:13:15.910 --> 0:13:20.370
<v Speaker 2>the last 70 years we have had 10 bear markets

0:13:20.370 --> 0:13:23.680
<v Speaker 2>right over that 70 year period. And each time we've

0:13:23.679 --> 0:13:26.060
<v Speaker 2>had a bear market, we've recovered

0:13:26.440 --> 0:13:30.309
<v Speaker 2>Somehow we have recovered. So if you say 70 years

0:13:30.309 --> 0:13:33.650
<v Speaker 2>and we've had 10 bear markets, that's one bear market

0:13:33.650 --> 0:13:37.670
<v Speaker 2>every seven years. So if you are a new investor now,

0:13:37.679 --> 0:13:40.800
<v Speaker 2>you are going to be experiencing a bear market roughly

0:13:40.800 --> 0:13:43.080
<v Speaker 2>every seven years. I wouldn't set my clock on my

0:13:43.080 --> 0:13:46.199
<v Speaker 2>calendar by it. But roughly about every seven years you're

0:13:46.200 --> 0:13:46.960
<v Speaker 2>going to see

0:13:47.140 --> 0:13:49.790
<v Speaker 2>a downturn in the stock market. But don't be scared

0:13:49.790 --> 0:13:53.100
<v Speaker 2>by it. When you get that downturn jump in and

0:13:53.100 --> 0:13:57.030
<v Speaker 2>buy more shares, right? Just carry on carry on investing.

0:13:57.040 --> 0:14:00.980
<v Speaker 2>It's going to be harder at the moment because inflation

0:14:00.990 --> 0:14:04.010
<v Speaker 2>is a big problem. And there will be some people

0:14:04.010 --> 0:14:05.459
<v Speaker 2>out there that will be saying,

0:14:05.940 --> 0:14:10.079
<v Speaker 2>hey, inflation is so bad. I can't afford to invest. Well,

0:14:10.090 --> 0:14:13.970
<v Speaker 2>don't fall into that trap. Cut whatever you can, but

0:14:13.970 --> 0:14:15.990
<v Speaker 2>don't cut the amount of money that you're going to

0:14:15.990 --> 0:14:20.440
<v Speaker 2>be investing for your long term future because that is very,

0:14:20.440 --> 0:14:23.250
<v Speaker 2>very dangerous. You might think, oh,

0:14:23.340 --> 0:14:26.820
<v Speaker 2>I won't put my $100 or my $200 into my

0:14:26.820 --> 0:14:30.210
<v Speaker 2>savings pot now because I need it in order to

0:14:30.220 --> 0:14:34.550
<v Speaker 2>buy food or whatever, do anything else. But don't sacrifice

0:14:34.550 --> 0:14:36.790
<v Speaker 2>that $100 that you're going to be putting into the

0:14:36.790 --> 0:14:40.180
<v Speaker 2>market and don't listen to those people who are saying,

0:14:40.190 --> 0:14:42.690
<v Speaker 2>oh the market is terrible at the moment is going

0:14:42.690 --> 0:14:45.800
<v Speaker 2>to go down even further. Well if it goes down

0:14:45.800 --> 0:14:46.650
<v Speaker 2>even further,

0:14:46.740 --> 0:14:48.960
<v Speaker 2>you are a long term investor. So

0:14:49.140 --> 0:14:51.090
<v Speaker 2>if you don't buy today and you think I can

0:14:51.090 --> 0:14:55.390
<v Speaker 2>buy tomorrow, well tomorrow, the prices could be higher. Nobody

0:14:55.390 --> 0:14:57.640
<v Speaker 2>will tell you when the bottom of the market is there.

0:14:57.640 --> 0:14:59.360
<v Speaker 2>So don't fall into that trap.

0:14:59.370 --> 0:15:02.940
<v Speaker 1>Yeah, that's an interesting point because markets have been under

0:15:02.940 --> 0:15:06.290
<v Speaker 1>a lot of pressure this year and some young investors

0:15:06.290 --> 0:15:10.160
<v Speaker 1>are experiencing their first down market or bear market ever.

0:15:10.240 --> 0:15:12.800
<v Speaker 1>I've had people tell me they're down thousands of dollars

0:15:12.800 --> 0:15:15.370
<v Speaker 1>in the stock market right now. So what advice would

0:15:15.370 --> 0:15:16.010
<v Speaker 1>you give them?

0:15:16.150 --> 0:15:18.310
<v Speaker 2>Well, I was up last night and I was buying

0:15:18.310 --> 0:15:21.550
<v Speaker 2>shares last night, even though the market was down,

0:15:22.240 --> 0:15:27.170
<v Speaker 2>I don't really care because primarily I am an income investor.

0:15:27.180 --> 0:15:30.080
<v Speaker 2>And what that really means is that I am buying

0:15:30.080 --> 0:15:34.570
<v Speaker 2>shares that have the ability to pay me dividends regularly.

0:15:34.790 --> 0:15:38.180
<v Speaker 2>Some of those dividends come in quarterly, some come in

0:15:38.180 --> 0:15:41.050
<v Speaker 2>semi annually, some only come in once a year.

0:15:41.340 --> 0:15:46.340
<v Speaker 2>But the stocks that I buy are rewarding me with income.

0:15:46.350 --> 0:15:50.040
<v Speaker 2>And because I've been investing for such a long time sarah,

0:15:50.050 --> 0:15:51.450
<v Speaker 2>my biggest problem

0:15:51.940 --> 0:15:54.350
<v Speaker 2>is the amount of cash that is coming into my

0:15:54.350 --> 0:15:55.290
<v Speaker 2>portfolio

0:15:55.740 --> 0:15:59.100
<v Speaker 2>and for the young people that are investing today, you

0:15:59.100 --> 0:16:02.210
<v Speaker 2>will have the same problem later on in life. It

0:16:02.210 --> 0:16:03.300
<v Speaker 2>may not seem like that

0:16:03.300 --> 0:16:05.000
<v Speaker 1>now doesn't seem like

0:16:05.010 --> 0:16:09.690
<v Speaker 2>It may not seem like that now, but in 2030

0:16:09.690 --> 0:16:13.160
<v Speaker 2>years time you will have that problem because the cash

0:16:13.440 --> 0:16:16.220
<v Speaker 2>generated from the investments that you have made

0:16:16.440 --> 0:16:19.390
<v Speaker 2>will be coming in regardless of what is happening in

0:16:19.390 --> 0:16:20.460
<v Speaker 2>the market.

0:16:20.840 --> 0:16:24.290
<v Speaker 2>I will be collecting dividends from one of Singapore's banks

0:16:24.290 --> 0:16:27.350
<v Speaker 2>today and whether the market is

0:16:27.740 --> 0:16:30.320
<v Speaker 2>high, whether the market is low, it will be paying

0:16:30.320 --> 0:16:32.960
<v Speaker 2>me a dividend. So my problem is

0:16:33.740 --> 0:16:36.540
<v Speaker 2>putting that money to work and looking at where it

0:16:36.540 --> 0:16:38.910
<v Speaker 2>is going to be able to generate for me more

0:16:38.910 --> 0:16:40.940
<v Speaker 2>money in the future. And that is what you should

0:16:40.940 --> 0:16:43.230
<v Speaker 2>be looking at, not what is happening today.

0:16:43.480 --> 0:16:46.110
<v Speaker 1>And because if you don't put that to work, David,

0:16:46.110 --> 0:16:48.910
<v Speaker 1>the value of that money will go down because prices

0:16:48.920 --> 0:16:50.700
<v Speaker 1>are now going up, inflation

0:16:50.940 --> 0:16:53.430
<v Speaker 1>going up. And that is a problem that we all

0:16:53.430 --> 0:16:54.470
<v Speaker 1>have to face, isn't it?

0:16:54.540 --> 0:16:57.570
<v Speaker 2>Well, quite right, Sarah. I mean if if you have

0:16:57.570 --> 0:17:00.570
<v Speaker 2>$100 today and you don't put it to work

0:17:01.540 --> 0:17:05.550
<v Speaker 2>In a year's time with 5% inflation, that $100 will

0:17:05.550 --> 0:17:09.220
<v Speaker 2>only buy you $95 worth of goods. That is what

0:17:09.220 --> 0:17:13.210
<v Speaker 2>inflation really means is that it is the shrinking of

0:17:13.210 --> 0:17:15.649
<v Speaker 2>the money that you have. If you don't put it

0:17:15.650 --> 0:17:18.680
<v Speaker 2>to work somewhere else now, the other thing is

0:17:18.940 --> 0:17:21.540
<v Speaker 2>Right, I'm going to throw in another rule of thumb, right?

0:17:21.550 --> 0:17:25.190
<v Speaker 2>I promise no more rules of thumbs after this because

0:17:25.190 --> 0:17:27.980
<v Speaker 2>I haven't got that many thumbs. Yeah. Okay, so the

0:17:27.980 --> 0:17:31.530
<v Speaker 2>third rule of thumb is the rule of 72. Right?

0:17:31.540 --> 0:17:34.790
<v Speaker 2>And what that really tells you is if you take

0:17:34.800 --> 0:17:38.050
<v Speaker 2>an investment and you have some rough idea as to

0:17:38.050 --> 0:17:41.770
<v Speaker 2>how that investment is going to be rewarding you over

0:17:41.770 --> 0:17:42.760
<v Speaker 2>the long term,

0:17:43.740 --> 0:17:47.450
<v Speaker 2>Take that percentage divided into 72 and that will tell

0:17:47.450 --> 0:17:50.530
<v Speaker 2>you how long it will take your money to double. Okay,

0:17:50.540 --> 0:17:54.580
<v Speaker 2>so let's for argument's sake say that you put it

0:17:54.580 --> 0:17:58.420
<v Speaker 2>into the Singapore stock market, a good stable Singapore stock

0:17:58.420 --> 0:18:01.670
<v Speaker 2>market and on average it should give you about 7%

0:18:01.670 --> 0:18:02.760
<v Speaker 2>return a year.

0:18:03.240 --> 0:18:05.649
<v Speaker 2>So it means that if you put $100 into the

0:18:05.650 --> 0:18:10.190
<v Speaker 2>Singapore stock market today, that $100 should double in 10

0:18:10.190 --> 0:18:13.870
<v Speaker 2>years time, 72 divided by seven is roughly 10. So

0:18:13.869 --> 0:18:17.310
<v Speaker 2>it means that the $100 will double to $200 in

0:18:17.310 --> 0:18:21.629
<v Speaker 2>10 years time. The $200 will double to $400 in

0:18:21.630 --> 0:18:23.060
<v Speaker 2>another 10 years time.

0:18:23.140 --> 0:18:26.210
<v Speaker 2>So in 20 years time, your $100 will have turned

0:18:26.210 --> 0:18:28.659
<v Speaker 2>into 100 204 $100

0:18:29.040 --> 0:18:32.619
<v Speaker 2>In 20 years time. Now if you don't put $100

0:18:32.619 --> 0:18:36.750
<v Speaker 2>in this year, you're gonna be missing out on $400

0:18:36.760 --> 0:18:38.359
<v Speaker 2>in 20 years time.

0:18:38.840 --> 0:18:41.770
<v Speaker 2>And that is really what you should be looking at

0:18:42.440 --> 0:18:43.670
<v Speaker 2>over the long term.

0:18:44.040 --> 0:18:46.950
<v Speaker 2>And if you think, oh, I won't put the $100

0:18:46.950 --> 0:18:50.860
<v Speaker 2>in because I need $100 for something else, find $100

0:18:50.869 --> 0:18:54.130
<v Speaker 2>or don't spend $100 on the other things, but put

0:18:54.130 --> 0:18:56.540
<v Speaker 2>the $100 in because you're going to be missing out

0:18:56.540 --> 0:19:01.010
<v Speaker 2>on $400 in 20 years time and that is what

0:19:01.010 --> 0:19:03.960
<v Speaker 2>you should be looking at, not what is happening today.

0:19:04.240 --> 0:19:05.790
<v Speaker 1>We're going for a short break, we'll be

0:19:05.790 --> 0:19:06.460
<v Speaker 2>right back.

0:19:06.740 --> 0:19:10.770
<v Speaker 1>Hi, my name is julie you and I'm the host

0:19:10.780 --> 0:19:13.460
<v Speaker 1>of the new season of the climate conversations

0:19:13.840 --> 0:19:18.110
<v Speaker 1>from chefs to scientists, join me as we get personal

0:19:18.109 --> 0:19:21.719
<v Speaker 1>with the people driving change in sustainability. Look out for

0:19:21.720 --> 0:19:28.080
<v Speaker 1>our episodes wherever you get your podcasts, you're a seasoned investor,

0:19:28.080 --> 0:19:29.909
<v Speaker 1>you've done this for so many years and as you mentioned,

0:19:29.910 --> 0:19:32.330
<v Speaker 1>you've got a lot of cash coming in, But do

0:19:32.330 --> 0:19:35.330
<v Speaker 1>you still remember your first investment loss when you saw

0:19:35.330 --> 0:19:37.350
<v Speaker 1>all the red and the screen and you felt that

0:19:37.350 --> 0:19:40.170
<v Speaker 1>it affected your perspective on investments?

0:19:40.740 --> 0:19:43.760
<v Speaker 2>Both. Yes and no, I think I learned some very

0:19:43.760 --> 0:19:47.669
<v Speaker 2>valuable lessons when I first started investing and one of

0:19:47.670 --> 0:19:50.490
<v Speaker 2>the biggest lessons I learned was that I invested in

0:19:50.490 --> 0:19:51.449
<v Speaker 2>the company,

0:19:51.840 --> 0:19:54.770
<v Speaker 2>which at the time was a very stable company.

0:19:55.240 --> 0:19:59.139
<v Speaker 2>But then this company decided that it wanted to take

0:19:59.140 --> 0:20:02.379
<v Speaker 2>advantage of what was going on in the booming dot

0:20:02.380 --> 0:20:08.350
<v Speaker 2>com era. And so consequently it changed its business model

0:20:09.140 --> 0:20:11.449
<v Speaker 2>and because it changes its business model,

0:20:11.840 --> 0:20:15.510
<v Speaker 2>it borrowed a lot of money and eventually it went past.

0:20:15.619 --> 0:20:18.780
<v Speaker 2>And so the biggest lessons I learned was if you

0:20:18.780 --> 0:20:20.450
<v Speaker 2>were investing in a business,

0:20:20.840 --> 0:20:23.250
<v Speaker 2>then make sure that this company is going to carry

0:20:23.250 --> 0:20:25.570
<v Speaker 2>on doing what it said, it was going to be

0:20:25.570 --> 0:20:26.659
<v Speaker 2>doing right.

0:20:27.640 --> 0:20:31.020
<v Speaker 2>Don't invest in the company. That suddenly changes direction and

0:20:31.020 --> 0:20:34.690
<v Speaker 2>does something else. Because that wasn't your original investing thesis.

0:20:34.940 --> 0:20:38.360
<v Speaker 2>That wasn't the company that you invested in. This company

0:20:38.359 --> 0:20:41.470
<v Speaker 2>originally made household goods and all kinds of things and

0:20:41.470 --> 0:20:44.260
<v Speaker 2>suddenly decided that it wanted to go into the internet

0:20:44.740 --> 0:20:47.060
<v Speaker 2>and in order to do that, it borrowed a lot

0:20:47.060 --> 0:20:50.100
<v Speaker 2>of money. Then the dot com bubble came and it

0:20:50.100 --> 0:20:52.780
<v Speaker 2>couldn't repay the debt, it went bust and I lost

0:20:52.780 --> 0:20:55.859
<v Speaker 2>my money. But in the short term the share price

0:20:55.859 --> 0:20:59.530
<v Speaker 2>went up phenomenally. And I thought, what a clever guy

0:20:59.530 --> 0:21:03.550
<v Speaker 2>I am right. But then I forgot my first investing rule,

0:21:03.550 --> 0:21:04.170
<v Speaker 2>which was

0:21:04.240 --> 0:21:05.050
<v Speaker 2>don't lose money,

0:21:05.140 --> 0:21:08.500
<v Speaker 2>right? And the second investing rule is, don't forget rule

0:21:08.500 --> 0:21:11.080
<v Speaker 2>number one, don't lose money if you were invested in

0:21:11.080 --> 0:21:13.659
<v Speaker 2>the company and it suddenly changes direction.

0:21:14.540 --> 0:21:16.619
<v Speaker 2>Think twice about whether or not you want to carry

0:21:16.619 --> 0:21:19.850
<v Speaker 2>on investing in that company. And generally it is not

0:21:19.850 --> 0:21:22.060
<v Speaker 2>a good idea when a company does that.

0:21:22.940 --> 0:21:26.879
<v Speaker 1>What happens though? If you as an investor can't track

0:21:26.890 --> 0:21:31.080
<v Speaker 1>all these businesses that closely if I have to invest

0:21:31.090 --> 0:21:33.840
<v Speaker 1>all this money in the stock market, how do I

0:21:33.840 --> 0:21:36.840
<v Speaker 1>ensure that all these companies are going to stay on

0:21:36.840 --> 0:21:39.060
<v Speaker 1>track to what they set out to do.

0:21:39.070 --> 0:21:42.570
<v Speaker 2>Okay. There are two ways of doing it. Sarah. The

0:21:42.570 --> 0:21:45.770
<v Speaker 2>first one is keep your portfolio relatively small.

0:21:45.840 --> 0:21:49.790
<v Speaker 2>And so generally we say that you shouldn't invest if

0:21:49.790 --> 0:21:53.030
<v Speaker 2>you're going to be picking single stocks. Single companies don't

0:21:53.030 --> 0:21:57.010
<v Speaker 2>try and invest in hundreds or thousands of different companies

0:21:57.020 --> 0:22:01.090
<v Speaker 2>but keep your portfolio to around the 20 best companies

0:22:01.090 --> 0:22:03.280
<v Speaker 2>that you think you want to put your money into

0:22:03.290 --> 0:22:06.170
<v Speaker 2>and tracking 20 companies isn't that difficult?

0:22:06.540 --> 0:22:06.770
<v Speaker 2>But

0:22:07.340 --> 0:22:11.199
<v Speaker 2>my Children are at that stage now where they also

0:22:11.200 --> 0:22:14.340
<v Speaker 2>need to start investing money. And my advice to them

0:22:14.340 --> 0:22:18.460
<v Speaker 2>was invest in an index tracker and E. T. F.

0:22:18.840 --> 0:22:21.450
<v Speaker 2>And the E. T. F. That I suggested to them

0:22:21.450 --> 0:22:25.870
<v Speaker 2>was the MSC I World Index. And so you will

0:22:25.869 --> 0:22:29.330
<v Speaker 2>get exposure to the whole world and within that index

0:22:29.330 --> 0:22:32.050
<v Speaker 2>there will be thousands of companies and you don't have

0:22:32.050 --> 0:22:34.820
<v Speaker 2>to actually sort of know what is going on and

0:22:34.830 --> 0:22:38.090
<v Speaker 2>instead just let the index tracker do whatever you wanted

0:22:38.090 --> 0:22:38.550
<v Speaker 2>to do.

0:22:38.640 --> 0:22:41.439
<v Speaker 2>Now if you don't want to go overseas, you can

0:22:41.440 --> 0:22:44.690
<v Speaker 2>stick to the Singapore straits times E. T. F. And

0:22:44.700 --> 0:22:49.170
<v Speaker 2>that way you will have exposure to Singapore's 30 biggest companies.

0:22:49.180 --> 0:22:51.620
<v Speaker 2>You don't have to watch how all 30 are doing

0:22:51.630 --> 0:22:56.310
<v Speaker 2>because that index will regenerate over time. It'll refresh over time.

0:22:56.320 --> 0:22:58.930
<v Speaker 2>Companies will go out to the index companies will come

0:22:58.930 --> 0:22:59.760
<v Speaker 2>into the index.

0:23:00.040 --> 0:23:01.359
<v Speaker 2>But what you are getting is

0:23:01.440 --> 0:23:05.859
<v Speaker 2>Exposure to the 30 biggest companies here in Singapore that

0:23:05.859 --> 0:23:08.229
<v Speaker 2>way you don't have to worry about anything. So going

0:23:08.230 --> 0:23:11.080
<v Speaker 2>back to all those different rules that I had, if

0:23:11.080 --> 0:23:14.330
<v Speaker 2>you're going to be putting 60% of your money into

0:23:14.330 --> 0:23:17.270
<v Speaker 2>the stock market, make sure that 60% is in the

0:23:17.270 --> 0:23:18.770
<v Speaker 2>Singapore Straits Times Index

0:23:18.940 --> 0:23:21.400
<v Speaker 2>and just let the do it for you. You don't

0:23:21.400 --> 0:23:22.170
<v Speaker 2>have to do anything

0:23:22.440 --> 0:23:25.090
<v Speaker 2>and the charges are considerably lower as well.

0:23:26.040 --> 0:23:29.180
<v Speaker 1>If our listeners have some extra cash, let's say from

0:23:29.180 --> 0:23:32.409
<v Speaker 1>a bonus payout or even a side hustle, where do

0:23:32.410 --> 0:23:33.360
<v Speaker 1>you think they should put it

0:23:34.040 --> 0:23:37.060
<v Speaker 2>right, you have to go back again to those earlier

0:23:37.060 --> 0:23:40.140
<v Speaker 2>rules that I had. And first of all remember that

0:23:40.140 --> 0:23:44.390
<v Speaker 2>a bonus payment isn't guaranteed. So a bonus this year

0:23:44.390 --> 0:23:46.560
<v Speaker 2>may not be a bonus next year. There may not

0:23:46.560 --> 0:23:49.060
<v Speaker 2>be a bonus next year, but if you have got

0:23:49.060 --> 0:23:51.860
<v Speaker 2>some extra cash then put it to work straight away.

0:23:52.260 --> 0:23:54.760
<v Speaker 2>What I wouldn't suggest is to spend that money

0:23:54.840 --> 0:23:57.290
<v Speaker 2>or to go on holiday because it is a bonus.

0:23:57.300 --> 0:23:59.590
<v Speaker 2>But just think of it as being something that you

0:23:59.590 --> 0:24:03.390
<v Speaker 2>can put to work immediately and if there are various

0:24:03.390 --> 0:24:06.110
<v Speaker 2>parts of your portfolio that you think need beefing up

0:24:06.119 --> 0:24:09.470
<v Speaker 2>then do so just put that money in because remember

0:24:09.470 --> 0:24:12.490
<v Speaker 2>what I said, the $100 that you put in today

0:24:12.520 --> 0:24:14.160
<v Speaker 2>at a 7% return

0:24:14.240 --> 0:24:18.750
<v Speaker 2>Will turn into $200 in 10 years time and $400

0:24:18.750 --> 0:24:21.729
<v Speaker 2>in 20 years time. So just think of that bonus

0:24:21.730 --> 0:24:24.399
<v Speaker 2>as being something extra. And the other thing that people

0:24:24.400 --> 0:24:25.760
<v Speaker 2>need to remember is that

0:24:26.140 --> 0:24:29.010
<v Speaker 2>It isn't what you earn that makes you rich Sarah.

0:24:29.020 --> 0:24:32.090
<v Speaker 2>It's how you spend what you've got that counts, right?

0:24:32.100 --> 0:24:36.100
<v Speaker 2>And so the bonus is an extra and so put

0:24:36.100 --> 0:24:39.540
<v Speaker 2>that to work somewhere and you will not regret it

0:24:39.550 --> 0:24:41.860
<v Speaker 2>in 20 or 30 years time

0:24:42.440 --> 0:24:45.660
<v Speaker 1>you just talked me out of buying a nice bag.

0:24:45.670 --> 0:24:50.620
<v Speaker 2>There's nothing wrong with having a nice bag. No.

0:24:50.630 --> 0:24:54.070
<v Speaker 1>Back to what you're saying about putting your money to work.

0:24:55.440 --> 0:24:59.030
<v Speaker 2>My goodness, my husband.

0:24:59.040 --> 0:25:03.240
<v Speaker 1>Um back to what you're saying is putting your money

0:25:03.240 --> 0:25:06.270
<v Speaker 1>to work immediately, not making sure it's not just sitting there.

0:25:06.640 --> 0:25:10.200
<v Speaker 1>There is another side to this where recently we've seen

0:25:10.210 --> 0:25:11.889
<v Speaker 1>a lot of young people put their money in the

0:25:11.890 --> 0:25:16.180
<v Speaker 1>crypto market or crypto related products and like what we

0:25:16.180 --> 0:25:19.540
<v Speaker 1>saw in the stock market, the crypto market has also

0:25:19.540 --> 0:25:22.490
<v Speaker 1>been battered. We heard what happened with us T and

0:25:22.490 --> 0:25:26.240
<v Speaker 1>luna crashing one report by Today online said one investor

0:25:26.240 --> 0:25:30.680
<v Speaker 1>here in Singapore lost $40,000 just in days. So what

0:25:30.680 --> 0:25:34.730
<v Speaker 1>do you think young investors should take away from this experience?

0:25:34.740 --> 0:25:39.140
<v Speaker 2>Okay, remember what I was saying about the pyramid, right? 60%

0:25:39.140 --> 0:25:43.660
<v Speaker 2>in income shares, 30% in grow shares and the other 10%

0:25:43.840 --> 0:25:47.290
<v Speaker 2>In whatever you want now, if that whatever you want

0:25:47.300 --> 0:25:51.430
<v Speaker 2>that 10% you put into cryptocurrencies and then you suddenly

0:25:51.430 --> 0:25:52.960
<v Speaker 2>had a look at your pyramid

0:25:53.940 --> 0:25:58.100
<v Speaker 2>And you suddenly found that that 10% is now 60%

0:25:58.100 --> 0:26:01.220
<v Speaker 2>of your portfolio. You need to rebalance, you need to

0:26:01.220 --> 0:26:05.090
<v Speaker 2>do something and keep that at 10% because otherwise, what

0:26:05.090 --> 0:26:08.000
<v Speaker 2>you'll end up with is the pyramid being tipped upside

0:26:08.000 --> 0:26:10.909
<v Speaker 2>down and we all know that you cannot balance a

0:26:10.910 --> 0:26:14.270
<v Speaker 2>pyramid on its point easily. So that is what happened

0:26:14.270 --> 0:26:15.270
<v Speaker 2>to these people.

0:26:15.340 --> 0:26:18.840
<v Speaker 2>They put their money into the crypto currencies and sure

0:26:18.850 --> 0:26:20.990
<v Speaker 2>they probably made a lot of money. What they should

0:26:20.990 --> 0:26:23.730
<v Speaker 2>have done was to take that money that they had

0:26:23.730 --> 0:26:28.370
<v Speaker 2>made and then rebalance their portfolio so that the cryptocurrencies

0:26:28.369 --> 0:26:31.300
<v Speaker 2>or whatever it was, is still only 10% of your

0:26:31.300 --> 0:26:35.860
<v Speaker 2>portfolio that way, if you lose 10%, you still have 90%.

0:26:36.340 --> 0:26:40.590
<v Speaker 2>But if that 10% suddenly becomes 60% of your portfolio

0:26:40.600 --> 0:26:44.270
<v Speaker 2>and that blows up, then you've lost 60% of whatever

0:26:44.270 --> 0:26:48.399
<v Speaker 2>investment you had. So the pyramid is a very, very

0:26:48.400 --> 0:26:51.910
<v Speaker 2>sort of strong base. It's a very strong concept for

0:26:51.910 --> 0:26:55.680
<v Speaker 2>people to think about how their portfolio is looking. And

0:26:55.680 --> 0:26:56.260
<v Speaker 2>I am,

0:26:56.440 --> 0:26:59.570
<v Speaker 2>I wouldn't say constantly, but I'm regularly looking at my

0:26:59.570 --> 0:27:00.760
<v Speaker 2>portfolio and say

0:27:00.840 --> 0:27:04.310
<v Speaker 2>Have I got 60% in income, have I got 30%

0:27:04.310 --> 0:27:07.880
<v Speaker 2>in growth and that other 10% of those investments that

0:27:07.880 --> 0:27:11.070
<v Speaker 2>I have have, they grown too big. If they have

0:27:11.100 --> 0:27:14.159
<v Speaker 2>then I need to either number one put more money

0:27:14.160 --> 0:27:17.810
<v Speaker 2>into the income side or number to try and reduce

0:27:17.810 --> 0:27:20.270
<v Speaker 2>the amount on the top by selling some of it

0:27:20.340 --> 0:27:21.359
<v Speaker 2>in order to

0:27:21.440 --> 0:27:24.830
<v Speaker 2>maintain that pyramid shape again. And if you have the

0:27:24.830 --> 0:27:27.780
<v Speaker 2>pyramid shape, I can assure you you will sleep very

0:27:27.780 --> 0:27:31.190
<v Speaker 2>well at night. But if that pyramid is tipped upside

0:27:31.190 --> 0:27:34.220
<v Speaker 2>down and it's balancing on its point, you will have

0:27:34.230 --> 0:27:37.570
<v Speaker 2>loads of sleepless nights and I love my sleep.

0:27:37.580 --> 0:27:42.120
<v Speaker 1>Don't you mentioned that as a rule of thumb, your

0:27:42.119 --> 0:27:45.690
<v Speaker 1>investment should double in 10 years if you get a 7% return,

0:27:46.160 --> 0:27:46.760
<v Speaker 1>is that right?

0:27:46.940 --> 0:27:51.070
<v Speaker 1>Where do we find 7% returns now? You're seeing the

0:27:51.070 --> 0:27:55.030
<v Speaker 1>market down and sometimes it's quite discouraging when I think 7%.

0:27:55.030 --> 0:27:55.780
<v Speaker 1>Where do I go?

0:27:55.790 --> 0:27:59.260
<v Speaker 2>Okay, right. I think it is primarily because you are

0:27:59.260 --> 0:28:02.209
<v Speaker 2>falling into that same trap of the recent event syndrome.

0:28:02.210 --> 0:28:04.960
<v Speaker 2>You're saying that the stock market is down at the moment.

0:28:05.140 --> 0:28:07.040
<v Speaker 2>But if you go back and you have a look

0:28:07.040 --> 0:28:07.270
<v Speaker 2>at

0:28:07.340 --> 0:28:09.590
<v Speaker 2>Over the long term, if you have a look at

0:28:09.590 --> 0:28:12.580
<v Speaker 2>how the stock market has performed over the long term,

0:28:12.590 --> 0:28:16.810
<v Speaker 2>you will be able to find the 7% right. It is,

0:28:16.820 --> 0:28:18.410
<v Speaker 2>it is not that difficult.

0:28:18.700 --> 0:28:21.600
<v Speaker 1>7% over 10 years. Not every year,

0:28:21.609 --> 0:28:22.949
<v Speaker 2>7%. Every year.

0:28:22.960 --> 0:28:23.949
<v Speaker 1>Every year, I'm looking at

0:28:23.950 --> 0:28:27.050
<v Speaker 2>7% a year accumulating

0:28:27.140 --> 0:28:30.379
<v Speaker 2>Over the ten-year period. So you should be able to

0:28:30.380 --> 0:28:32.659
<v Speaker 2>get a 7% return on your investment

0:28:32.740 --> 0:28:35.879
<v Speaker 2>Without a great deal of difficulty. If you want more

0:28:35.880 --> 0:28:38.400
<v Speaker 2>than that, then you will have to actually start looking

0:28:38.400 --> 0:28:41.370
<v Speaker 2>at shares that I have the capability of delivering more

0:28:41.370 --> 0:28:45.120
<v Speaker 2>than the 7% return. But in general you should be

0:28:45.120 --> 0:28:48.900
<v Speaker 2>able to get at least 7%, I'm getting more than that.

0:28:48.910 --> 0:28:51.459
<v Speaker 2>But where

0:28:51.640 --> 0:28:52.960
<v Speaker 2>that is because I am

0:28:53.040 --> 0:28:57.140
<v Speaker 2>That is because I am more tolerant of risk. And

0:28:57.140 --> 0:29:00.090
<v Speaker 2>so I am able to pick stocks that have the

0:29:00.090 --> 0:29:05.940
<v Speaker 2>ability of growing 15, a year. And because I do

0:29:05.940 --> 0:29:09.710
<v Speaker 2>that my portfolio grows a lot faster than 7% a year.

0:29:09.720 --> 0:29:11.060
<v Speaker 2>So if you can pick

0:29:11.140 --> 0:29:14.050
<v Speaker 2>A portfolio that can grow at 14% a year,

0:29:14.240 --> 0:29:16.800
<v Speaker 2>Then you will double your money every five years instead

0:29:16.800 --> 0:29:19.720
<v Speaker 2>of every 10 years. There are those investments around

0:29:19.720 --> 0:29:24.739
<v Speaker 1>you mean like specific stocks versus index funds that you mentioned.

0:29:25.340 --> 0:29:27.840
<v Speaker 2>If you want to look for index funds that have

0:29:27.840 --> 0:29:31.890
<v Speaker 2>the ability to grow faster than 7%, then you will

0:29:31.890 --> 0:29:35.440
<v Speaker 2>have to have a look at certain specific indices. So

0:29:35.440 --> 0:29:38.480
<v Speaker 2>something like a bunch of stocks that follow NASDAQ will

0:29:38.480 --> 0:29:40.360
<v Speaker 2>give you more than 7% a year.

0:29:40.440 --> 0:29:42.610
<v Speaker 2>But if you have a look at say the Singapore

0:29:42.610 --> 0:29:45.860
<v Speaker 2>Straits Times Index, that is around 7% a year.

0:29:45.940 --> 0:29:49.520
<v Speaker 1>Okay, anything else that you think the young investors should

0:29:49.520 --> 0:29:52.750
<v Speaker 1>keep in mind or any mistakes that you, you're seeing

0:29:52.750 --> 0:29:53.920
<v Speaker 1>too often.

0:29:56.040 --> 0:29:59.620
<v Speaker 2>I think the biggest problem that people have is listening

0:29:59.620 --> 0:30:00.270
<v Speaker 2>to

0:30:02.140 --> 0:30:03.640
<v Speaker 1>say it, David,

0:30:03.650 --> 0:30:08.090
<v Speaker 2>no, is listening to experts out there, right. There are

0:30:08.090 --> 0:30:12.300
<v Speaker 2>many experts out there, and the problem with experts is

0:30:12.300 --> 0:30:12.670
<v Speaker 2>that

0:30:13.140 --> 0:30:16.550
<v Speaker 2>they are experts in their own field. And so when

0:30:16.550 --> 0:30:19.190
<v Speaker 2>you listen to too many experts, what you then end

0:30:19.190 --> 0:30:22.400
<v Speaker 2>up with is far too much information that you need

0:30:22.400 --> 0:30:25.590
<v Speaker 2>to be able to digest. The simplest thing that you

0:30:25.590 --> 0:30:26.960
<v Speaker 2>need to remember is that

0:30:27.340 --> 0:30:31.250
<v Speaker 2>over the long term the stock market will grow, right?

0:30:31.260 --> 0:30:34.620
<v Speaker 2>That is just a feature of capitalism that the stock

0:30:34.620 --> 0:30:38.460
<v Speaker 2>market will grow. Companies will find ways of generating profits

0:30:38.460 --> 0:30:41.860
<v Speaker 2>for their shareholders and they will do whatever they can

0:30:41.870 --> 0:30:45.570
<v Speaker 2>if they are dividend paying companies. The last thing they

0:30:45.570 --> 0:30:47.260
<v Speaker 2>want to do is to cut the dividend.

0:30:47.340 --> 0:30:49.490
<v Speaker 2>The last thing they want to do is to withhold

0:30:49.490 --> 0:30:50.290
<v Speaker 2>that dividend.

0:30:50.440 --> 0:30:53.070
<v Speaker 2>They want to carry on paying that dividend. And there

0:30:53.070 --> 0:30:56.690
<v Speaker 2>are some companies out there which we call dividend aristocrats.

0:30:56.830 --> 0:30:59.900
<v Speaker 2>And these are companies that have been able to either

0:30:59.900 --> 0:31:05.740
<v Speaker 2>maintain or to grow their dividends over the last 25 years. Right?

0:31:05.750 --> 0:31:08.510
<v Speaker 2>And if a company is able to grow its dividend

0:31:08.510 --> 0:31:11.670
<v Speaker 2>over 25 years, can you imagine what has happened to

0:31:11.670 --> 0:31:13.860
<v Speaker 2>the share price over the 25 years

0:31:13.940 --> 0:31:17.070
<v Speaker 2>it has actually gone up at the same rate. And

0:31:17.070 --> 0:31:21.080
<v Speaker 2>so consequently look for those kind of companies, they do exist.

0:31:21.090 --> 0:31:24.780
<v Speaker 2>I'm not here to give you stock specific tips but

0:31:24.790 --> 0:31:28.930
<v Speaker 2>there are companies that fall into that dividend aristocrat google

0:31:28.930 --> 0:31:31.320
<v Speaker 2>that and then you'll be able to find those companies

0:31:31.320 --> 0:31:32.060
<v Speaker 2>and you'll go

0:31:32.440 --> 0:31:35.630
<v Speaker 2>wow those are the companies that I want to invest

0:31:35.630 --> 0:31:38.240
<v Speaker 2>in over the long term and I don't ever want

0:31:38.240 --> 0:31:39.370
<v Speaker 2>to sell those shares.

0:31:39.820 --> 0:31:45.870
<v Speaker 1>Lots of rules of thumb from David today you have

0:31:45.870 --> 0:31:49.650
<v Speaker 1>to invest and the sooner the better in your investment

0:31:49.650 --> 0:31:51.960
<v Speaker 1>portfolio depends of course on your age

0:31:52.140 --> 0:31:55.250
<v Speaker 1>and that inflation will eat away the value of your

0:31:55.250 --> 0:31:58.390
<v Speaker 1>money if you don't do anything about it. Thanks so much,

0:31:58.400 --> 0:31:58.930
<v Speaker 1>David for your

0:31:58.930 --> 0:32:00.060
<v Speaker 2>thank you. Thank you so much.

0:32:03.240 --> 0:32:05.830
<v Speaker 1>We hope you enjoyed this episode of money talks. My

0:32:05.830 --> 0:32:09.580
<v Speaker 1>guest next week is planning on retiring at 35 so

0:32:09.580 --> 0:32:12.210
<v Speaker 1>I find out how he's planning to do that. The

0:32:12.210 --> 0:32:15.660
<v Speaker 1>team behind this podcast is hope a name. Danieley Christina

0:32:15.660 --> 0:32:19.010
<v Speaker 1>Robert and you've got a refreshed slate of audio material

0:32:19.010 --> 0:32:21.860
<v Speaker 1>you can listen to on your commute or your workout

0:32:22.040 --> 0:32:24.080
<v Speaker 1>go to the C. N. A. Website or app. Look

0:32:24.080 --> 0:32:25.060
<v Speaker 1>for the listen button

0:32:25.240 --> 0:32:28.710
<v Speaker 1>and subscribe to the podcast. See like if you have thoughts,

0:32:28.710 --> 0:32:31.300
<v Speaker 1>ideas or even stories you'd like to share. Please write

0:32:31.300 --> 0:32:34.140
<v Speaker 1>to us. The details are in our episode notes. Until

0:32:34.140 --> 0:32:37.060
<v Speaker 1>next time. This is Sarah call Dean.

0:32:37.440 --> 0:32:37.670
<v Speaker 2>Mhm