1 00:00:00,000 --> 00:00:04,350 Speaker 1: money talks is brought to you by OCBC Bank. 2 00:00:06,410 --> 00:00:08,629 Speaker 1: Vasu in just a few words, could you give us 3 00:00:08,640 --> 00:00:12,889 Speaker 1: your thoughts on the following financial wellness? Very 4 00:00:12,890 --> 00:00:13,550 Speaker 2: important, 5 00:00:14,180 --> 00:00:16,060 Speaker 1: the fire movement 6 00:00:16,220 --> 00:00:17,020 Speaker 2: embrace it 7 00:00:17,360 --> 00:00:18,830 Speaker 1: side hustles 8 00:00:19,410 --> 00:00:19,739 Speaker 1: be 9 00:00:19,739 --> 00:00:21,290 Speaker 2: careful about it, 10 00:00:21,300 --> 00:00:22,410 Speaker 1: speculation 11 00:00:23,130 --> 00:00:29,180 Speaker 1: avoided investor knowledge critical thank you so much Basu. 12 00:00:45,940 --> 00:00:49,100 Speaker 1: Hi, I'm Sarah al Khaldi and this is money talks. 13 00:00:49,110 --> 00:00:53,260 Speaker 1: Ask any financial analyst what their outlook is like and 14 00:00:53,260 --> 00:00:58,920 Speaker 1: you're likely to get a discouraging forecast, elevated inflation, higher 15 00:00:58,920 --> 00:01:03,830 Speaker 1: cost of living, impending GsD increase all set against a 16 00:01:03,830 --> 00:01:07,580 Speaker 1: looming recession. So it doesn't come as a surprise that 17 00:01:07,580 --> 00:01:10,780 Speaker 1: the latest OCBC financial wellness index 18 00:01:10,800 --> 00:01:15,760 Speaker 1: indicates that Singaporeans are worst off in 2022 than the 19 00:01:15,760 --> 00:01:20,959 Speaker 1: previous year, fewer of us are saving for contingencies more 20 00:01:20,959 --> 00:01:25,069 Speaker 1: have unsecured debt and we are spending beyond our means 21 00:01:25,110 --> 00:01:28,820 Speaker 1: to help us understand what's going on behind these findings 22 00:01:28,870 --> 00:01:32,529 Speaker 1: I have with me, Vasu Menon, he's the executive director 23 00:01:32,540 --> 00:01:35,660 Speaker 1: of investment strategy at OCBC Bank. 24 00:01:36,300 --> 00:01:38,460 Speaker 1: So thank you so much for joining us here on 25 00:01:38,459 --> 00:01:39,400 Speaker 1: money talks, 26 00:01:39,410 --> 00:01:41,610 Speaker 2: my pleasure. Thank you for having me, Sarah 27 00:01:41,620 --> 00:01:46,140 Speaker 1: Well, Vasu the results from the OCBC financial wellness index? 28 00:01:46,150 --> 00:01:50,830 Speaker 1: It seems to indicate that Singaporeans are worst off financially 29 00:01:50,830 --> 00:01:55,570 Speaker 1: in 2022 than 2021. So is this because times are 30 00:01:55,570 --> 00:02:00,000 Speaker 1: tough right now or is it because people are more 31 00:02:00,000 --> 00:02:04,500 Speaker 1: excited to spend now that Covid restrictions have eased 32 00:02:04,750 --> 00:02:07,630 Speaker 2: the decline in the financial wellness index indicates that Singaporeans 33 00:02:07,640 --> 00:02:10,120 Speaker 2: are not as well off as they were last year 34 00:02:10,130 --> 00:02:11,930 Speaker 2: and I think a few reasons for that. Number one 35 00:02:11,940 --> 00:02:15,220 Speaker 2: inflation has been rising interest rates have been rising and 36 00:02:15,220 --> 00:02:18,010 Speaker 2: as consequence stock markets have also taken a beating. 37 00:02:18,240 --> 00:02:21,330 Speaker 2: So for the older generation, they face debt management issues 38 00:02:21,330 --> 00:02:24,200 Speaker 2: because of rising interest rates for the younger generation, they 39 00:02:24,200 --> 00:02:27,740 Speaker 2: suffered significant losses in the financial markets and as a consequence, 40 00:02:27,750 --> 00:02:30,899 Speaker 2: that set them back as well from a retirement planning perspective, 41 00:02:30,910 --> 00:02:34,260 Speaker 2: from an experience perspective in the markets, so that in 42 00:02:34,260 --> 00:02:39,510 Speaker 2: a nutshell explains why the index fell from 62 to 61. 43 00:02:39,800 --> 00:02:42,830 Speaker 2: But if you drill a little bit deeper, you find 44 00:02:42,830 --> 00:02:45,799 Speaker 2: that there were positives and negatives on the positive side. 45 00:02:45,810 --> 00:02:48,830 Speaker 2: You find that most people were sticking to their budget, 46 00:02:48,840 --> 00:02:52,860 Speaker 2: they were undertaking annual financial planning, which is good. They're 47 00:02:52,860 --> 00:02:55,710 Speaker 2: very aware of the tax relief schemes that were available 48 00:02:55,720 --> 00:02:58,489 Speaker 2: and they had made enough preparations to pass on their 49 00:02:58,500 --> 00:03:01,329 Speaker 2: wealth in the event of death, those are positives and 50 00:03:01,330 --> 00:03:04,269 Speaker 2: on the negative side you also find that more of 51 00:03:04,270 --> 00:03:07,740 Speaker 2: them were gambling because of tougher times, which is not 52 00:03:07,740 --> 00:03:08,380 Speaker 2: a good thing. 53 00:03:08,610 --> 00:03:11,550 Speaker 2: They were speculating in the markets as well. I wouldn't 54 00:03:11,550 --> 00:03:14,089 Speaker 2: say this was a majority but a significant proportion 55 00:03:14,370 --> 00:03:16,320 Speaker 2: and on top of that, as you highlighted, some of 56 00:03:16,320 --> 00:03:19,570 Speaker 2: them were perhaps spending beyond their means because you see 57 00:03:19,570 --> 00:03:22,590 Speaker 2: a greater percentage of rollover credit card debt, 58 00:03:22,600 --> 00:03:25,770 Speaker 1: We'll drill down on some of those specifics later. One 59 00:03:25,770 --> 00:03:28,840 Speaker 1: thing that stood out to me in this report, we 60 00:03:28,840 --> 00:03:32,090 Speaker 1: are known to be good savers in this report. It 61 00:03:32,090 --> 00:03:35,740 Speaker 1: shows that more people are saving at least 10% of 62 00:03:35,740 --> 00:03:39,200 Speaker 1: their salary. But what's interesting is that there appears to 63 00:03:39,200 --> 00:03:40,320 Speaker 1: be the shift in what 64 00:03:40,340 --> 00:03:45,350 Speaker 1: singaporeans are saving for fewer people are saving for emergencies 65 00:03:45,360 --> 00:03:49,960 Speaker 1: or contingencies and retirement but more are saving for travel. 66 00:03:49,970 --> 00:03:53,540 Speaker 1: So do you think this is a YOLO situation where 67 00:03:53,540 --> 00:03:57,880 Speaker 1: you're trying to focus on enjoying your money? Are we 68 00:03:57,880 --> 00:04:00,300 Speaker 1: losing track of the long term here? 69 00:04:00,320 --> 00:04:03,320 Speaker 2: Well I wouldn't press the panic button just yet. As 70 00:04:03,320 --> 00:04:05,830 Speaker 2: you said, if you look at the statistics more than 90% 71 00:04:05,830 --> 00:04:06,290 Speaker 2: of saving 72 00:04:06,310 --> 00:04:09,520 Speaker 2: At least 10% of their monthly income. And if you 73 00:04:09,520 --> 00:04:12,900 Speaker 2: look at the average is the average savings rate was 30% 74 00:04:12,910 --> 00:04:15,580 Speaker 2: of monthly income which is pretty good. But as you 75 00:04:15,580 --> 00:04:19,960 Speaker 2: highlighted the amount of their savings they're allocating to investments 76 00:04:19,970 --> 00:04:22,549 Speaker 2: and things that matter in the long term like retirement 77 00:04:22,550 --> 00:04:25,260 Speaker 2: for example has declined and instead they're using that money 78 00:04:25,260 --> 00:04:28,460 Speaker 2: that is safe to go traveling and Sarah I wouldn't 79 00:04:28,460 --> 00:04:30,880 Speaker 2: press the panic button because I think in the last 80 00:04:30,890 --> 00:04:32,279 Speaker 2: 2.5 years many of us 81 00:04:32,670 --> 00:04:35,020 Speaker 2: I have lived a tough life. We have been in 82 00:04:35,020 --> 00:04:37,850 Speaker 2: some ways caged up. We've not been able to travel. 83 00:04:37,860 --> 00:04:39,110 Speaker 2: Not been able to do a lot of things that 84 00:04:39,110 --> 00:04:40,860 Speaker 2: we want to do. So you see a little bit 85 00:04:40,860 --> 00:04:44,180 Speaker 2: of revenge spending taking place is a bit of revenge 86 00:04:44,180 --> 00:04:47,500 Speaker 2: traveling taking place that's normal human behavior. So we will 87 00:04:47,500 --> 00:04:50,160 Speaker 2: have to wait and see whether this continues into 2023. 88 00:04:50,170 --> 00:04:51,800 Speaker 2: But my feeling is that people are 89 00:04:51,815 --> 00:04:53,645 Speaker 2: just dying to go out there and travel and go 90 00:04:53,645 --> 00:04:56,284 Speaker 2: to restaurants and which is why you see the airport's full, 91 00:04:56,285 --> 00:04:58,695 Speaker 2: the restaurants full. So I wouldn't press the panic button. 92 00:04:58,695 --> 00:05:01,235 Speaker 2: You see a shift but it is not such a 93 00:05:01,235 --> 00:05:04,285 Speaker 2: significant shift that it indicates a change in long term 94 00:05:04,285 --> 00:05:05,215 Speaker 2: behavior 95 00:05:05,225 --> 00:05:06,695 Speaker 1: and we have to enjoy our life 96 00:05:06,695 --> 00:05:10,955 Speaker 2: tour. Indeed what's life if you can't enjoy it. Right. Exactly. 97 00:05:11,580 --> 00:05:15,140 Speaker 1: There are different factors that are contributing to how we 98 00:05:15,140 --> 00:05:19,250 Speaker 1: are spending and saving. But another interesting points in the 99 00:05:19,250 --> 00:05:22,989 Speaker 1: report is that we are taking on more debt specifically 100 00:05:23,000 --> 00:05:27,640 Speaker 1: unsecured debt and more people are spending beyond their means. 101 00:05:27,650 --> 00:05:30,710 Speaker 1: So can you explain to us what unsecured debt is? 102 00:05:30,720 --> 00:05:34,770 Speaker 1: Is that worrying what type of spending is usually tipping 103 00:05:34,770 --> 00:05:38,870 Speaker 1: us to spend more than what we can actually afford? 104 00:05:38,885 --> 00:05:41,965 Speaker 2: You're right. Unsecured debt is something that people should worry about. 105 00:05:41,975 --> 00:05:45,724 Speaker 2: Because the interest rates on unsecured debt is fairly high. 106 00:05:45,735 --> 00:05:49,115 Speaker 2: Interest rates tend to be sometimes in the double digit range, 107 00:05:49,125 --> 00:05:51,855 Speaker 2: sometimes even more than 20%. So you're paying a lot 108 00:05:51,855 --> 00:05:56,185 Speaker 2: of interest on unsecured debt. The percentage of singaporeans who 109 00:05:56,185 --> 00:05:59,245 Speaker 2: have turned to unsecured debt is increased in 2021 that 110 00:05:59,245 --> 00:06:00,305 Speaker 2: was 24% 111 00:06:00,490 --> 00:06:03,580 Speaker 2: And I believe now it's gone up to something like 31% also. 112 00:06:03,580 --> 00:06:06,089 Speaker 2: So quite a big increase and what is worrying is 113 00:06:06,100 --> 00:06:10,110 Speaker 2: a larger percentage are also starting to express concerns about 114 00:06:10,110 --> 00:06:14,760 Speaker 2: the ability to service its debt is 31% and not 115 00:06:14,770 --> 00:06:17,670 Speaker 2: more than 50%. So the majority are still okay but 116 00:06:17,670 --> 00:06:21,030 Speaker 2: you still have a significant 31% turning to unsecured debt. 117 00:06:21,040 --> 00:06:23,690 Speaker 2: And there could be various reasons why people turn to 118 00:06:23,690 --> 00:06:25,620 Speaker 2: unsecured debt as you said for traveling. 119 00:06:25,800 --> 00:06:27,980 Speaker 2: That could be one reason why people use their credit card, 120 00:06:27,990 --> 00:06:31,430 Speaker 2: greater e commerce activity taking place. People doing a lot 121 00:06:31,430 --> 00:06:35,549 Speaker 2: more online shopping. What's worrying is fairly significant portion also 122 00:06:35,550 --> 00:06:37,469 Speaker 2: rolling over their debt. In other words just paying the 123 00:06:37,470 --> 00:06:40,630 Speaker 2: minimum some and not paying the full amount interest rates 124 00:06:40,630 --> 00:06:43,820 Speaker 2: and unsecured debt can be very high. They're like an 125 00:06:43,830 --> 00:06:46,580 Speaker 2: albatross around your neck. They can actually drag you down 126 00:06:46,580 --> 00:06:49,190 Speaker 2: and prevent you from achieving your long term goals because 127 00:06:49,190 --> 00:06:49,950 Speaker 2: you don't want to spend 128 00:06:50,110 --> 00:06:53,850 Speaker 2: The next 5, 10 years just servicing very high levels 129 00:06:53,860 --> 00:06:55,020 Speaker 2: of interest. 130 00:06:55,029 --> 00:06:57,580 Speaker 1: It sounds like this is something we should focus on 131 00:06:57,580 --> 00:07:01,710 Speaker 1: credit card debt. If that's something that's hanging over your head, 132 00:07:01,720 --> 00:07:04,450 Speaker 1: try to pay it off as much as you can 133 00:07:04,450 --> 00:07:05,460 Speaker 1: as soon as you can 134 00:07:05,470 --> 00:07:08,219 Speaker 2: precisely and you can't focus on other things like your 135 00:07:08,220 --> 00:07:12,440 Speaker 2: Children's education, your own travels, eventually your retirement planning. So 136 00:07:12,440 --> 00:07:13,460 Speaker 2: it sets you back. 137 00:07:13,470 --> 00:07:17,770 Speaker 1: Speaking of retirement planning since the pandemic, more people have 138 00:07:17,780 --> 00:07:19,680 Speaker 1: become interested in investing. 139 00:07:19,860 --> 00:07:23,370 Speaker 1: Millennials are a big part of this group as well 140 00:07:23,370 --> 00:07:27,290 Speaker 1: and in this OcBc report, it shows that fewer people 141 00:07:27,300 --> 00:07:31,260 Speaker 1: are on track with their investment goals. Can you help 142 00:07:31,260 --> 00:07:35,560 Speaker 1: us understand why this is, so is it because people 143 00:07:35,560 --> 00:07:39,140 Speaker 1: are investing in the wrong things or is it just 144 00:07:39,140 --> 00:07:43,860 Speaker 1: because it's a bad time for stock markets all around? 145 00:07:44,230 --> 00:07:46,810 Speaker 2: I think Sarah is a combination of all the things 146 00:07:46,810 --> 00:07:50,680 Speaker 2: that you mentioned. The segment of the population that was 147 00:07:50,680 --> 00:07:55,980 Speaker 2: most impacted by investments was the gen Z and millennials. 148 00:07:55,990 --> 00:08:00,720 Speaker 2: Millennials would be those born between 1980 1995 and gen 149 00:08:00,720 --> 00:08:04,860 Speaker 2: z would be those born between 1996 and 2005. They 150 00:08:04,873 --> 00:08:09,023 Speaker 2: Reported that they suffered investment losses of more than 40% 151 00:08:09,033 --> 00:08:11,843 Speaker 2: in 2022. When you break down and you look at 152 00:08:11,843 --> 00:08:14,403 Speaker 2: what they've been investing in. Some of them have gravitated 153 00:08:14,403 --> 00:08:17,443 Speaker 2: toward things like cryptocurrencies for example, and Kryptos has been 154 00:08:17,443 --> 00:08:20,083 Speaker 2: very hot and very popular with the younger generation. And 155 00:08:20,083 --> 00:08:22,753 Speaker 2: what's worrying is that despite the selloff in the crypto market, 156 00:08:22,753 --> 00:08:24,983 Speaker 2: many of them are still positive on the outlook for crypto. 157 00:08:24,983 --> 00:08:25,500 Speaker 2: They still think 158 00:08:25,516 --> 00:08:27,996 Speaker 2: there are opportunities in that space. So you see more 159 00:08:27,996 --> 00:08:31,466 Speaker 2: speculative activity taking place and that has resulted in losses. 160 00:08:31,466 --> 00:08:33,696 Speaker 2: And that is worrying Sarah because it is important that 161 00:08:33,696 --> 00:08:36,286 Speaker 2: the younger generation recognize the fact that you want to 162 00:08:36,285 --> 00:08:38,836 Speaker 2: minimize speculation in the market. I think you can't completely 163 00:08:38,836 --> 00:08:41,695 Speaker 2: cut off speculation important to trade the markets, but I 164 00:08:41,696 --> 00:08:44,676 Speaker 2: think most of your money should be invested with the 165 00:08:44,676 --> 00:08:49,126 Speaker 2: long term horizon and these are financial habits, investment habits 166 00:08:49,126 --> 00:08:51,716 Speaker 2: we want to inculcate in the younger generation from a 167 00:08:51,726 --> 00:08:52,809 Speaker 2: very early period. 168 00:08:52,980 --> 00:08:57,360 Speaker 2: But what happened in 2021, was that because interest rates 169 00:08:57,370 --> 00:09:01,710 Speaker 2: collapsed and the markets did very well in 2020, by 2022, 170 00:09:01,710 --> 00:09:03,890 Speaker 2: the markets were starting to struggle and people are looking 171 00:09:03,890 --> 00:09:07,690 Speaker 2: for alternatives and the younger generation looking for fast bucks alternatives. 172 00:09:07,690 --> 00:09:08,910 Speaker 2: And kryptos were popular and 173 00:09:09,110 --> 00:09:13,200 Speaker 2: many of them speculated and got badly hit and hopefully 174 00:09:13,210 --> 00:09:15,370 Speaker 2: it will be a lesson learned. It's not all doom 175 00:09:15,370 --> 00:09:17,910 Speaker 2: and gloom and going forward. It's important that they invest 176 00:09:17,920 --> 00:09:20,689 Speaker 2: their money more carefully and not speculate we are very 177 00:09:20,690 --> 00:09:22,599 Speaker 2: cautious in the crypto market. We think that there are 178 00:09:22,600 --> 00:09:25,390 Speaker 2: better opportunities, safer opportunities, risks, 179 00:09:25,405 --> 00:09:28,285 Speaker 2: moderated opportunities in other asset classes. And this is something 180 00:09:28,285 --> 00:09:31,375 Speaker 2: that we've got to work hard towards impressing on the 181 00:09:31,375 --> 00:09:33,625 Speaker 2: younger generation because they are our future and if they 182 00:09:33,625 --> 00:09:36,135 Speaker 2: get it wrong for the onset, they'll have big problems 183 00:09:36,135 --> 00:09:36,615 Speaker 2: later on. 184 00:09:36,625 --> 00:09:39,395 Speaker 1: Patients is really a virtue in this, isn't it? 185 00:09:39,395 --> 00:09:41,695 Speaker 2: Indeed, patients, patients is very, very important. 186 00:09:46,000 --> 00:09:48,650 Speaker 1: Hi, my name is steve Lie and I'm Teresa Tang 187 00:09:48,860 --> 00:09:51,239 Speaker 1: and we are the hosts of the new podcast CNN 188 00:09:51,240 --> 00:09:54,830 Speaker 1: correspondent from new york to Bangkok join us as we 189 00:09:54,830 --> 00:09:57,850 Speaker 1: kick back and chat with our colleagues across the globe 190 00:09:57,860 --> 00:10:00,920 Speaker 1: about the latest news developments look out for our weekly 191 00:10:00,920 --> 00:10:03,180 Speaker 1: episodes wherever you get your podcasts 192 00:10:07,500 --> 00:10:11,709 Speaker 1: on top of the fact that more of the young people, 193 00:10:11,710 --> 00:10:16,540 Speaker 1: millennials and gen Zs are suffering investment losses. This is 194 00:10:16,550 --> 00:10:20,400 Speaker 1: also the group that wants to build wealth as fast 195 00:10:20,410 --> 00:10:24,040 Speaker 1: as possible and retire as soon as possible. And the 196 00:10:24,040 --> 00:10:26,400 Speaker 1: report shows that specifically those in 197 00:10:26,420 --> 00:10:32,449 Speaker 1: In their 20's, do you think having unrealistic expectations about 198 00:10:32,460 --> 00:10:38,230 Speaker 1: the investment journey ahead the lifestyle that we can achieve 199 00:10:38,240 --> 00:10:42,360 Speaker 1: and the risk that we are taking on to achieve 200 00:10:42,360 --> 00:10:45,340 Speaker 1: this state of being able to retire early? 201 00:10:45,860 --> 00:10:48,400 Speaker 2: Absolutely. You got it all spot on. That was very 202 00:10:48,400 --> 00:10:50,790 Speaker 2: well summarized. And I would say that it's normal for 203 00:10:50,790 --> 00:10:54,010 Speaker 2: young people to aspire, what's life if there's no aspiration? 204 00:10:54,020 --> 00:10:56,680 Speaker 2: These people in their twenties, they're looking out over the 205 00:10:56,679 --> 00:10:58,619 Speaker 2: next 30 40 years, they've got a very long runway 206 00:10:58,620 --> 00:10:59,809 Speaker 2: and they want to aspire. They want to make sure 207 00:10:59,809 --> 00:11:02,339 Speaker 2: that they build up their wealth quickly for retirement. But 208 00:11:02,340 --> 00:11:03,310 Speaker 2: I think the danger 209 00:11:03,325 --> 00:11:08,205 Speaker 2: of thinking about building a world too quickly is that 210 00:11:08,215 --> 00:11:11,105 Speaker 2: you then take the wrong turns. You try and look 211 00:11:11,105 --> 00:11:15,035 Speaker 2: for fast track avenues, you speculate in the market, you 212 00:11:15,035 --> 00:11:18,615 Speaker 2: gamble the markets and therefore you could end up suffering losses, 213 00:11:18,615 --> 00:11:20,785 Speaker 2: significant losses in the short term. That could really 214 00:11:21,090 --> 00:11:24,330 Speaker 2: then your finances and dental you mentally as well. Because 215 00:11:24,330 --> 00:11:27,719 Speaker 2: history shows that when people suffer big losses, they give up, 216 00:11:27,730 --> 00:11:30,350 Speaker 2: they stop the journey, they give up and they say, look, 217 00:11:30,360 --> 00:11:32,500 Speaker 2: we'll just drift along in life and we don't want 218 00:11:32,500 --> 00:11:34,830 Speaker 2: that sort of behavior. I think it's important for them 219 00:11:34,830 --> 00:11:38,260 Speaker 2: to get the investment journey right and get their aspirations 220 00:11:38,260 --> 00:11:39,890 Speaker 2: right as well. And as you highlighted, 221 00:11:40,090 --> 00:11:42,469 Speaker 2: many of them want to retire comfortably. They have a 222 00:11:42,470 --> 00:11:44,860 Speaker 2: certain goal in mind. They want to lead a good 223 00:11:44,870 --> 00:11:47,840 Speaker 2: life when they're older, retirement goals have elevated. People have 224 00:11:47,840 --> 00:11:52,140 Speaker 2: now chosen pricier retirement lifestyles, but when we speak to them, 225 00:11:52,150 --> 00:11:56,340 Speaker 2: we also recognize that many of them have fallen short 226 00:11:56,350 --> 00:11:58,720 Speaker 2: in terms of their planning for retirement. While they've, 227 00:11:58,730 --> 00:12:02,429 Speaker 2: For example, need $5,000 to retire comfortably. What they're planning 228 00:12:02,429 --> 00:12:06,030 Speaker 2: for is only perhaps 3,005 or 3000. There's a gap, 229 00:12:06,040 --> 00:12:09,050 Speaker 2: they're not addressing the gap sufficiently and more needs to 230 00:12:09,050 --> 00:12:12,040 Speaker 2: be done for them to address the gap or reduce 231 00:12:12,040 --> 00:12:16,360 Speaker 2: their expectations and their lifestyle choices. So reality is not 232 00:12:16,360 --> 00:12:20,319 Speaker 2: completely struck. And hopefully in time many of them will 233 00:12:20,320 --> 00:12:22,670 Speaker 2: recognize the fact that they've got to make adjustments 234 00:12:22,990 --> 00:12:26,690 Speaker 1: and make adjustments in terms of skills to write and 235 00:12:26,690 --> 00:12:29,720 Speaker 1: knowledge in how you handle your finances and how you 236 00:12:29,720 --> 00:12:31,860 Speaker 1: handle these investments. And it's not just about 237 00:12:32,030 --> 00:12:35,610 Speaker 1: striking lottery and getting a lot of money all at 238 00:12:35,610 --> 00:12:36,150 Speaker 1: once 239 00:12:36,160 --> 00:12:39,270 Speaker 2: precisely. I think it's perfectly okay to have what we 240 00:12:39,270 --> 00:12:42,200 Speaker 2: call technical positions in the market. In other words, to 241 00:12:42,210 --> 00:12:45,229 Speaker 2: trade in the markets to some extent, speculate in the market, 242 00:12:45,240 --> 00:12:48,670 Speaker 2: it's not possible to completely eradicate this human behavior. We 243 00:12:48,670 --> 00:12:51,090 Speaker 2: look for excitement, but we have to draw a distinction 244 00:12:51,090 --> 00:12:55,349 Speaker 2: between excitement and investment. Excitement is when you want to 245 00:12:55,350 --> 00:13:00,170 Speaker 2: get your adrenaline pumping investment is a patient long term 246 00:13:00,170 --> 00:13:00,729 Speaker 2: journey 247 00:13:00,929 --> 00:13:04,250 Speaker 2: And you want to have most of your money strategically allocated. 248 00:13:04,260 --> 00:13:06,610 Speaker 2: So you've got tactical asset allocation in what we call it, 249 00:13:06,620 --> 00:13:09,380 Speaker 2: strategic asset allocation, things that you invest over the next 250 00:13:09,380 --> 00:13:10,439 Speaker 2: five years, 10 years. 251 00:13:10,600 --> 00:13:14,370 Speaker 2: It's like in some ways weight watching Sarah failed in 252 00:13:14,370 --> 00:13:17,540 Speaker 2: my journey to lose weight because I keep looking at 253 00:13:17,540 --> 00:13:20,580 Speaker 2: the weighing scale every other day, right? And if you 254 00:13:20,580 --> 00:13:22,390 Speaker 2: keep doing that, you're not going to succeed. You've got 255 00:13:22,390 --> 00:13:24,640 Speaker 2: to be patient work on your objectives. Don't look at 256 00:13:24,640 --> 00:13:26,630 Speaker 2: the scale every day and eventually get there. So you 257 00:13:26,630 --> 00:13:29,270 Speaker 2: set a target similarly for investments, you set a five year, 258 00:13:29,280 --> 00:13:31,360 Speaker 2: 10 year target and you work towards it 259 00:13:31,385 --> 00:13:33,765 Speaker 2: and not keep looking at the markets at every twist 260 00:13:33,765 --> 00:13:35,735 Speaker 2: and turn. You make a decision. I think those are 261 00:13:35,735 --> 00:13:38,165 Speaker 2: things that the young generation have to learn that it 262 00:13:38,165 --> 00:13:41,824 Speaker 2: requires patience. It requires careful selection of what you buy. 263 00:13:41,835 --> 00:13:45,595 Speaker 2: Look at the fundamentals, do your research. If you get 264 00:13:45,595 --> 00:13:47,944 Speaker 2: your grounding right, learn how to do that research and 265 00:13:47,945 --> 00:13:50,765 Speaker 2: do the research. It's a bit of hard work, but 266 00:13:50,775 --> 00:13:52,170 Speaker 2: it needs to be done to prevent 267 00:13:52,670 --> 00:13:55,260 Speaker 2: big losses and setbacks early in life. 268 00:13:55,270 --> 00:13:57,959 Speaker 1: Yeah, that's right. Like you said about weight watching it's 269 00:13:57,960 --> 00:14:01,170 Speaker 1: also not just about losing weight and how much weight 270 00:14:01,170 --> 00:14:04,340 Speaker 1: you lost, but your overall health, right? It's the same 271 00:14:04,340 --> 00:14:05,800 Speaker 1: thing with finances, 272 00:14:05,809 --> 00:14:06,380 Speaker 2: not just 273 00:14:06,380 --> 00:14:09,730 Speaker 1: how much money you have in the bank, but how 274 00:14:09,730 --> 00:14:15,080 Speaker 1: healthy your financial position is with your spending investment and 275 00:14:15,095 --> 00:14:16,515 Speaker 1: everything. 276 00:14:16,515 --> 00:14:17,835 Speaker 2: So it's not good enough to look at your budget 277 00:14:17,835 --> 00:14:20,114 Speaker 2: and say, look, I'm spending within my means. But the 278 00:14:20,115 --> 00:14:22,645 Speaker 2: question is, even though you're spending within your means, are 279 00:14:22,645 --> 00:14:26,295 Speaker 2: you investing your savings prudently? Are you making sure that 280 00:14:26,295 --> 00:14:28,085 Speaker 2: you're growing your savings so that you have enough money 281 00:14:28,085 --> 00:14:31,765 Speaker 2: for your kids, university education for your retirement? So it's 282 00:14:31,775 --> 00:14:34,165 Speaker 2: a lot more holistic and you can't just look at 283 00:14:34,175 --> 00:14:36,295 Speaker 2: one aspect of financial planning, you've got to take a 284 00:14:36,295 --> 00:14:37,505 Speaker 2: holistic approach. 285 00:14:37,740 --> 00:14:42,310 Speaker 1: Yeah. The OCBC report also talks about seniors and it 286 00:14:42,310 --> 00:14:48,320 Speaker 1: points out that more seniors are speculating excessively, presumably to 287 00:14:48,330 --> 00:14:50,900 Speaker 1: build wealth in a short amount of time. And they're 288 00:14:50,900 --> 00:14:56,050 Speaker 1: particularly vulnerable because they would have amassed some savings throughout 289 00:14:56,060 --> 00:14:58,250 Speaker 1: the years. But if they lose them, 290 00:14:58,450 --> 00:15:00,930 Speaker 1: they don't have a whole lot of time to try 291 00:15:00,930 --> 00:15:03,830 Speaker 1: to make that money back and they need it sooner 292 00:15:03,830 --> 00:15:08,210 Speaker 1: than most other people. So what are the reasons behind this? 293 00:15:08,210 --> 00:15:11,580 Speaker 1: And can you give us examples of the excessive speculation 294 00:15:11,580 --> 00:15:14,290 Speaker 1: that you're seeing in the elderly group? 295 00:15:14,630 --> 00:15:18,510 Speaker 2: One reason why elderly perhaps speculating a bit more on 296 00:15:18,510 --> 00:15:20,980 Speaker 2: the markets is because I think it's been a tough year, 297 00:15:20,990 --> 00:15:24,320 Speaker 2: 2022 has been a tough year. It has resulted in 298 00:15:24,320 --> 00:15:27,240 Speaker 2: losses in the equity markets and the bond markets as 299 00:15:27,240 --> 00:15:29,710 Speaker 2: well and many of the elderly may have also invested 300 00:15:29,710 --> 00:15:31,550 Speaker 2: in the bond markets and the bond markets have also 301 00:15:31,550 --> 00:15:33,650 Speaker 2: taken a very bad hit. Many of them are saying, 302 00:15:33,660 --> 00:15:34,790 Speaker 2: I've been set back 303 00:15:35,070 --> 00:15:38,270 Speaker 2: And my runway is a lot shorter and I need 304 00:15:38,270 --> 00:15:42,360 Speaker 2: to get in back there in the markets. Look for 305 00:15:42,370 --> 00:15:45,060 Speaker 2: that one or two stocks or investment that's going to 306 00:15:45,060 --> 00:15:47,859 Speaker 2: make up all the losses have suffered in 2022. And 307 00:15:47,870 --> 00:15:49,890 Speaker 2: my guess is that some of them may even put 308 00:15:49,890 --> 00:15:52,740 Speaker 2: their money into crypto. I don't have concrete evidence but 309 00:15:52,750 --> 00:15:56,170 Speaker 2: tech stocks, for example, have been very popular China-related stocks, 310 00:15:56,170 --> 00:15:57,450 Speaker 2: for example, have been very popular 311 00:15:57,470 --> 00:15:59,710 Speaker 2: With the investors and these are some of the areas 312 00:15:59,710 --> 00:16:03,000 Speaker 2: which have seen a big selloff going forward. It's important 313 00:16:03,010 --> 00:16:06,060 Speaker 2: for them to get back to what they originally should 314 00:16:06,060 --> 00:16:08,820 Speaker 2: be doing for older person. You should be adopting a 315 00:16:08,820 --> 00:16:12,720 Speaker 2: more conservative approach. You have a shorter runway, more conservative approach. 316 00:16:12,730 --> 00:16:14,680 Speaker 2: It's not too late. Changes have to be made. But 317 00:16:14,680 --> 00:16:17,510 Speaker 2: my guess is that 2022 is an exceptional year. Many 318 00:16:17,510 --> 00:16:18,790 Speaker 2: of them are just looking to make up for their 319 00:16:18,790 --> 00:16:19,910 Speaker 2: losses in a quick way. 320 00:16:19,920 --> 00:16:23,110 Speaker 1: Do you think we are seeing a case of people 321 00:16:23,120 --> 00:16:27,020 Speaker 1: concentrating their money too much in 322 00:16:27,160 --> 00:16:32,489 Speaker 1: maybe a few stocks or in very small amounts of 323 00:16:32,500 --> 00:16:36,670 Speaker 1: investments versus trying to spread them out so that when 324 00:16:36,670 --> 00:16:40,050 Speaker 1: times are tough, everything doesn't tax so bad. 325 00:16:40,060 --> 00:16:43,300 Speaker 2: I've been in the wealth management industry for 34 years. 326 00:16:43,310 --> 00:16:47,260 Speaker 2: In the early days, diversification was not a popular word, 327 00:16:47,270 --> 00:16:50,290 Speaker 2: people believe in taking concentrated bets. But over the last 328 00:16:50,290 --> 00:16:52,600 Speaker 2: 34 years I've seen a big change in behavior 329 00:16:52,810 --> 00:16:56,210 Speaker 2: investor education has improved quite a lot. You can see 330 00:16:56,210 --> 00:16:59,450 Speaker 2: now that investors understand the importance of diversification a lot 331 00:16:59,450 --> 00:17:02,340 Speaker 2: more than before. But at the same time, I think 332 00:17:02,340 --> 00:17:04,229 Speaker 2: what has changed in the last couple of years is 333 00:17:04,230 --> 00:17:06,930 Speaker 2: that because of covid and because a lot of stocks 334 00:17:06,930 --> 00:17:09,159 Speaker 2: and the market will hit down very badly in 2020 335 00:17:09,160 --> 00:17:12,550 Speaker 2: and then saw huge run up because of ultra loose 336 00:17:12,550 --> 00:17:14,130 Speaker 2: monetary policy from the Federal Reserve. 337 00:17:14,380 --> 00:17:18,830 Speaker 2: That resulted in exceptional, super high returns in some areas 338 00:17:18,840 --> 00:17:22,020 Speaker 2: like technology, for example, even some china related stocks and 339 00:17:22,020 --> 00:17:25,730 Speaker 2: that resulted in some of them actually getting caught into 340 00:17:25,740 --> 00:17:29,400 Speaker 2: the speculation and the excesses and hoping to make very 341 00:17:29,400 --> 00:17:32,389 Speaker 2: quick returns. It is the sign of the times, I 342 00:17:32,390 --> 00:17:34,700 Speaker 2: think the ultra loose monetary policy of the Federal Reserve 343 00:17:34,710 --> 00:17:37,909 Speaker 2: boosted markets in an exceptional way. People thought this would 344 00:17:37,910 --> 00:17:39,820 Speaker 2: go on forever. They jumped into space 345 00:17:40,020 --> 00:17:43,800 Speaker 2: areas without diversification, they let their guard down. And some 346 00:17:43,800 --> 00:17:47,139 Speaker 2: of them moved away from diversification towards taking concentrated bets 347 00:17:47,140 --> 00:17:49,859 Speaker 2: and they got hit quite badly. So it is not 348 00:17:49,880 --> 00:17:52,710 Speaker 2: a long term change in behavior I think by and large. 349 00:17:52,710 --> 00:17:55,570 Speaker 2: My feeling is that most investors still appreciate the importance 350 00:17:55,570 --> 00:17:58,430 Speaker 2: of diversification because the statistics show that there's still a 351 00:17:58,430 --> 00:18:01,470 Speaker 2: lot of cash sitting in the banking system on the sidelines. 352 00:18:01,470 --> 00:18:03,590 Speaker 2: So investors, some of them have been burned. 353 00:18:03,810 --> 00:18:05,450 Speaker 2: But many of them still have a lot of cash, 354 00:18:05,450 --> 00:18:07,790 Speaker 2: which means they've been fairly conservative as well. 355 00:18:07,800 --> 00:18:11,760 Speaker 1: We keep hearing about how our recession is coming our 356 00:18:11,760 --> 00:18:16,179 Speaker 1: way vasu what should singaporeans do in terms of our 357 00:18:16,180 --> 00:18:18,949 Speaker 1: spending habits to prepare for this. 358 00:18:18,960 --> 00:18:22,960 Speaker 2: No, easy answer. Sarah. I wish I had a magical 359 00:18:22,960 --> 00:18:26,090 Speaker 2: pill to solve the problem. But really it's going back 360 00:18:26,090 --> 00:18:26,520 Speaker 2: to 361 00:18:27,060 --> 00:18:31,889 Speaker 2: Budgeting, looking at your income versus your expenses and making 362 00:18:31,890 --> 00:18:35,120 Speaker 2: sure that you are in positive cash flow. In other words, 363 00:18:35,119 --> 00:18:38,280 Speaker 2: you're not spending beyond your means, making sure that you 364 00:18:38,280 --> 00:18:41,700 Speaker 2: set aside at least at least 10% of your monthly 365 00:18:41,700 --> 00:18:44,510 Speaker 2: income in the form of savings, making sure that you 366 00:18:44,510 --> 00:18:48,110 Speaker 2: at least have perhaps 12 months of your income set 367 00:18:48,109 --> 00:18:48,449 Speaker 2: aside 368 00:18:48,470 --> 00:18:52,859 Speaker 2: in an emergency fund for contingencies. Because if a recession hits, 369 00:18:52,869 --> 00:18:54,980 Speaker 2: you may lose your job, you may have to tap 370 00:18:54,990 --> 00:18:58,430 Speaker 2: into that emergency fund to keep you going. I think 371 00:18:58,440 --> 00:19:01,750 Speaker 2: to distinguish between wants and needs. This is the time. 372 00:19:01,750 --> 00:19:03,700 Speaker 2: And you've got to be more careful. Of course we 373 00:19:03,700 --> 00:19:07,140 Speaker 2: all want things. Nothing wrong with that. But I think 374 00:19:07,140 --> 00:19:08,980 Speaker 2: given the signs of the times, given the fact that 375 00:19:08,980 --> 00:19:09,879 Speaker 2: there could be a recession, 376 00:19:10,050 --> 00:19:14,109 Speaker 2: Be more careful with spending on non discretionary items, it's 377 00:19:14,109 --> 00:19:16,629 Speaker 2: fine to spend on essential. So I think it's really 378 00:19:16,630 --> 00:19:19,490 Speaker 2: going down to granular details and telling yourself you've got 379 00:19:19,490 --> 00:19:21,740 Speaker 2: to have more discipline and cut back on things that 380 00:19:21,740 --> 00:19:23,650 Speaker 2: you don't really need. But the most important thing is 381 00:19:23,650 --> 00:19:26,710 Speaker 2: make sure that you have set aside at least 12 382 00:19:26,710 --> 00:19:29,470 Speaker 2: months of your income in an emergency fund that you 383 00:19:29,470 --> 00:19:33,629 Speaker 2: can tap on in the unfortunate event you lose your job. 384 00:19:33,640 --> 00:19:37,040 Speaker 1: What final advice or one thing that singaporeans should do 385 00:19:37,040 --> 00:19:38,930 Speaker 1: in the next six months. 386 00:19:39,430 --> 00:19:42,220 Speaker 2: I think in the next six months it's important for 387 00:19:42,230 --> 00:19:46,200 Speaker 2: a lot of singaporeans to look at their emergency funds. 388 00:19:46,210 --> 00:19:48,630 Speaker 2: Make sure you set aside this emergency fund. I just 389 00:19:48,630 --> 00:19:53,399 Speaker 2: spoke about the study shows that 54% have set aside 390 00:19:53,400 --> 00:19:56,980 Speaker 2: six months of their monthly income in this so called 391 00:19:56,980 --> 00:19:57,869 Speaker 2: emergency fund, 392 00:19:58,359 --> 00:20:02,560 Speaker 2: But only 48% have set aside enough money in their 393 00:20:02,570 --> 00:20:05,150 Speaker 2: emergency fund to keep them going for 12 months. If 394 00:20:05,150 --> 00:20:07,149 Speaker 2: you look at the numbers on the flip side, it 395 00:20:07,150 --> 00:20:10,859 Speaker 2: also means that more than 50% of Singaporeans have not 396 00:20:10,869 --> 00:20:13,600 Speaker 2: set aside in the emergency funds to tide them over 397 00:20:13,600 --> 00:20:16,370 Speaker 2: in the event of recession. So be sure to set 398 00:20:16,369 --> 00:20:18,359 Speaker 2: aside more money in the emergency fund. 399 00:20:18,540 --> 00:20:21,680 Speaker 2: It's very, very crucial because during a storm, you need 400 00:20:21,680 --> 00:20:23,580 Speaker 2: to depend on that fund to keep you going. 401 00:20:23,590 --> 00:20:26,620 Speaker 1: It looks like it's time to tighten our belts and 402 00:20:26,619 --> 00:20:29,890 Speaker 1: cut down on non essential spending and really, really look 403 00:20:29,900 --> 00:20:33,629 Speaker 1: how we are spending and investing. Thanks so much for 404 00:20:33,630 --> 00:20:35,500 Speaker 1: your insights today. Vasu The 405 00:20:35,500 --> 00:20:37,109 Speaker 2: pleasure is mine Sarah. Thanks for having me on 406 00:20:37,109 --> 00:20:37,680 Speaker 1: the show 407 00:20:39,600 --> 00:20:43,100 Speaker 1: and thank you to our listeners. If you've enjoyed money talks, 408 00:20:43,100 --> 00:20:47,010 Speaker 1: do follow us on Apple podcasts or Spotify, if you 409 00:20:47,010 --> 00:20:49,540 Speaker 1: like what you hear, do rate us or better still 410 00:20:49,609 --> 00:20:52,180 Speaker 1: leave us a review. If you have a topic you're 411 00:20:52,190 --> 00:20:55,810 Speaker 1: interested to hear about or have feedback write to us 412 00:20:55,820 --> 00:20:59,070 Speaker 1: at C n A podcasts at mediacorp dot com dot 413 00:20:59,070 --> 00:21:03,100 Speaker 1: S G. The team behind Money talks is Joanne, chan Jacqueline, 414 00:21:03,100 --> 00:21:06,340 Speaker 1: chan Danieli Christina robert. And I'm Sarah called in. 415 00:21:09,240 --> 00:21:13,540 Speaker 1: Money talks is brought to you by OcBc Bank.