WEBVTT - A financial storm is gathering pace: How can you be prepared? 0:00:00.000 --> 0:00:04.350 money talks is brought to you by OCBC Bank. 0:00:06.410 --> 0:00:08.629 Vasu in just a few words, could you give us 0:00:08.640 --> 0:00:12.889 your thoughts on the following financial wellness? Very 0:00:12.890 --> 0:00:13.550 important, 0:00:14.180 --> 0:00:16.060 the fire movement 0:00:16.220 --> 0:00:17.020 embrace it 0:00:17.360 --> 0:00:18.830 side hustles 0:00:19.410 --> 0:00:19.739 be 0:00:19.739 --> 0:00:21.290 careful about it, 0:00:21.300 --> 0:00:22.410 speculation 0:00:23.130 --> 0:00:29.180 avoided investor knowledge critical thank you so much Basu. 0:00:45.940 --> 0:00:49.100 Hi, I'm Sarah al Khaldi and this is money talks. 0:00:49.110 --> 0:00:53.260 Ask any financial analyst what their outlook is like and 0:00:53.260 --> 0:00:58.920 you're likely to get a discouraging forecast, elevated inflation, higher 0:00:58.920 --> 0:01:03.830 cost of living, impending GsD increase all set against a 0:01:03.830 --> 0:01:07.580 looming recession. So it doesn't come as a surprise that 0:01:07.580 --> 0:01:10.780 the latest OCBC financial wellness index 0:01:10.800 --> 0:01:15.760 indicates that Singaporeans are worst off in 2022 than the 0:01:15.760 --> 0:01:20.959 previous year, fewer of us are saving for contingencies more 0:01:20.959 --> 0:01:25.069 have unsecured debt and we are spending beyond our means 0:01:25.110 --> 0:01:28.820 to help us understand what's going on behind these findings 0:01:28.870 --> 0:01:32.529 I have with me, Vasu Menon, he's the executive director 0:01:32.540 --> 0:01:35.660 of investment strategy at OCBC Bank. 0:01:36.300 --> 0:01:38.460 So thank you so much for joining us here on 0:01:38.459 --> 0:01:39.400 money talks, 0:01:39.410 --> 0:01:41.610 my pleasure. Thank you for having me, Sarah 0:01:41.620 --> 0:01:46.140 Well, Vasu the results from the OCBC financial wellness index? 0:01:46.150 --> 0:01:50.830 It seems to indicate that Singaporeans are worst off financially 0:01:50.830 --> 0:01:55.570 in 2022 than 2021. So is this because times are 0:01:55.570 --> 0:02:00.000 tough right now or is it because people are more 0:02:00.000 --> 0:02:04.500 excited to spend now that Covid restrictions have eased 0:02:04.750 --> 0:02:07.630 the decline in the financial wellness index indicates that Singaporeans 0:02:07.640 --> 0:02:10.120 are not as well off as they were last year 0:02:10.130 --> 0:02:11.930 and I think a few reasons for that. Number one 0:02:11.940 --> 0:02:15.220 inflation has been rising interest rates have been rising and 0:02:15.220 --> 0:02:18.010 as consequence stock markets have also taken a beating. 0:02:18.240 --> 0:02:21.330 So for the older generation, they face debt management issues 0:02:21.330 --> 0:02:24.200 because of rising interest rates for the younger generation, they 0:02:24.200 --> 0:02:27.740 suffered significant losses in the financial markets and as a consequence, 0:02:27.750 --> 0:02:30.899 that set them back as well from a retirement planning perspective, 0:02:30.910 --> 0:02:34.260 from an experience perspective in the markets, so that in 0:02:34.260 --> 0:02:39.510 a nutshell explains why the index fell from 62 to 61. 0:02:39.800 --> 0:02:42.830 But if you drill a little bit deeper, you find 0:02:42.830 --> 0:02:45.799 that there were positives and negatives on the positive side. 0:02:45.810 --> 0:02:48.830 You find that most people were sticking to their budget, 0:02:48.840 --> 0:02:52.860 they were undertaking annual financial planning, which is good. They're 0:02:52.860 --> 0:02:55.710 very aware of the tax relief schemes that were available 0:02:55.720 --> 0:02:58.489 and they had made enough preparations to pass on their 0:02:58.500 --> 0:03:01.329 wealth in the event of death, those are positives and 0:03:01.330 --> 0:03:04.269 on the negative side you also find that more of 0:03:04.270 --> 0:03:07.740 them were gambling because of tougher times, which is not 0:03:07.740 --> 0:03:08.380 a good thing. 0:03:08.610 --> 0:03:11.550 They were speculating in the markets as well. I wouldn't 0:03:11.550 --> 0:03:14.089 say this was a majority but a significant proportion 0:03:14.370 --> 0:03:16.320 and on top of that, as you highlighted, some of 0:03:16.320 --> 0:03:19.570 them were perhaps spending beyond their means because you see 0:03:19.570 --> 0:03:22.590 a greater percentage of rollover credit card debt, 0:03:22.600 --> 0:03:25.770 We'll drill down on some of those specifics later. One 0:03:25.770 --> 0:03:28.840 thing that stood out to me in this report, we 0:03:28.840 --> 0:03:32.090 are known to be good savers in this report. It 0:03:32.090 --> 0:03:35.740 shows that more people are saving at least 10% of 0:03:35.740 --> 0:03:39.200 their salary. But what's interesting is that there appears to 0:03:39.200 --> 0:03:40.320 be the shift in what 0:03:40.340 --> 0:03:45.350 singaporeans are saving for fewer people are saving for emergencies 0:03:45.360 --> 0:03:49.960 or contingencies and retirement but more are saving for travel. 0:03:49.970 --> 0:03:53.540 So do you think this is a YOLO situation where 0:03:53.540 --> 0:03:57.880 you're trying to focus on enjoying your money? Are we 0:03:57.880 --> 0:04:00.300 losing track of the long term here? 0:04:00.320 --> 0:04:03.320 Well I wouldn't press the panic button just yet. As 0:04:03.320 --> 0:04:05.830 you said, if you look at the statistics more than 90% 0:04:05.830 --> 0:04:06.290 of saving 0:04:06.310 --> 0:04:09.520 At least 10% of their monthly income. And if you 0:04:09.520 --> 0:04:12.900 look at the average is the average savings rate was 30% 0:04:12.910 --> 0:04:15.580 of monthly income which is pretty good. But as you 0:04:15.580 --> 0:04:19.960 highlighted the amount of their savings they're allocating to investments 0:04:19.970 --> 0:04:22.549 and things that matter in the long term like retirement 0:04:22.550 --> 0:04:25.260 for example has declined and instead they're using that money 0:04:25.260 --> 0:04:28.460 that is safe to go traveling and Sarah I wouldn't 0:04:28.460 --> 0:04:30.880 press the panic button because I think in the last 0:04:30.890 --> 0:04:32.279 2.5 years many of us 0:04:32.670 --> 0:04:35.020 I have lived a tough life. We have been in 0:04:35.020 --> 0:04:37.850 some ways caged up. We've not been able to travel. 0:04:37.860 --> 0:04:39.110 Not been able to do a lot of things that 0:04:39.110 --> 0:04:40.860 we want to do. So you see a little bit 0:04:40.860 --> 0:04:44.180 of revenge spending taking place is a bit of revenge 0:04:44.180 --> 0:04:47.500 traveling taking place that's normal human behavior. So we will 0:04:47.500 --> 0:04:50.160 have to wait and see whether this continues into 2023. 0:04:50.170 --> 0:04:51.800 But my feeling is that people are 0:04:51.815 --> 0:04:53.645 just dying to go out there and travel and go 0:04:53.645 --> 0:04:56.284 to restaurants and which is why you see the airport's full, 0:04:56.285 --> 0:04:58.695 the restaurants full. So I wouldn't press the panic button. 0:04:58.695 --> 0:05:01.235 You see a shift but it is not such a 0:05:01.235 --> 0:05:04.285 significant shift that it indicates a change in long term 0:05:04.285 --> 0:05:05.215 behavior 0:05:05.225 --> 0:05:06.695 and we have to enjoy our life 0:05:06.695 --> 0:05:10.955 tour. Indeed what's life if you can't enjoy it. Right. Exactly. 0:05:11.580 --> 0:05:15.140 There are different factors that are contributing to how we 0:05:15.140 --> 0:05:19.250 are spending and saving. But another interesting points in the 0:05:19.250 --> 0:05:22.989 report is that we are taking on more debt specifically 0:05:23.000 --> 0:05:27.640 unsecured debt and more people are spending beyond their means. 0:05:27.650 --> 0:05:30.710 So can you explain to us what unsecured debt is? 0:05:30.720 --> 0:05:34.770 Is that worrying what type of spending is usually tipping 0:05:34.770 --> 0:05:38.870 us to spend more than what we can actually afford? 0:05:38.885 --> 0:05:41.965 You're right. Unsecured debt is something that people should worry about. 0:05:41.975 --> 0:05:45.724 Because the interest rates on unsecured debt is fairly high. 0:05:45.735 --> 0:05:49.115 Interest rates tend to be sometimes in the double digit range, 0:05:49.125 --> 0:05:51.855 sometimes even more than 20%. So you're paying a lot 0:05:51.855 --> 0:05:56.185 of interest on unsecured debt. The percentage of singaporeans who 0:05:56.185 --> 0:05:59.245 have turned to unsecured debt is increased in 2021 that 0:05:59.245 --> 0:06:00.305 was 24% 0:06:00.490 --> 0:06:03.580 And I believe now it's gone up to something like 31% also. 0:06:03.580 --> 0:06:06.089 So quite a big increase and what is worrying is 0:06:06.100 --> 0:06:10.110 a larger percentage are also starting to express concerns about 0:06:10.110 --> 0:06:14.760 the ability to service its debt is 31% and not 0:06:14.770 --> 0:06:17.670 more than 50%. So the majority are still okay but 0:06:17.670 --> 0:06:21.030 you still have a significant 31% turning to unsecured debt. 0:06:21.040 --> 0:06:23.690 And there could be various reasons why people turn to 0:06:23.690 --> 0:06:25.620 unsecured debt as you said for traveling. 0:06:25.800 --> 0:06:27.980 That could be one reason why people use their credit card, 0:06:27.990 --> 0:06:31.430 greater e commerce activity taking place. People doing a lot 0:06:31.430 --> 0:06:35.549 more online shopping. What's worrying is fairly significant portion also 0:06:35.550 --> 0:06:37.469 rolling over their debt. In other words just paying the 0:06:37.470 --> 0:06:40.630 minimum some and not paying the full amount interest rates 0:06:40.630 --> 0:06:43.820 and unsecured debt can be very high. They're like an 0:06:43.830 --> 0:06:46.580 albatross around your neck. They can actually drag you down 0:06:46.580 --> 0:06:49.190 and prevent you from achieving your long term goals because 0:06:49.190 --> 0:06:49.950 you don't want to spend 0:06:50.110 --> 0:06:53.850 The next 5, 10 years just servicing very high levels 0:06:53.860 --> 0:06:55.020 of interest. 0:06:55.029 --> 0:06:57.580 It sounds like this is something we should focus on 0:06:57.580 --> 0:07:01.710 credit card debt. If that's something that's hanging over your head, 0:07:01.720 --> 0:07:04.450 try to pay it off as much as you can 0:07:04.450 --> 0:07:05.460 as soon as you can 0:07:05.470 --> 0:07:08.219 precisely and you can't focus on other things like your 0:07:08.220 --> 0:07:12.440 Children's education, your own travels, eventually your retirement planning. So 0:07:12.440 --> 0:07:13.460 it sets you back. 0:07:13.470 --> 0:07:17.770 Speaking of retirement planning since the pandemic, more people have 0:07:17.780 --> 0:07:19.680 become interested in investing. 0:07:19.860 --> 0:07:23.370 Millennials are a big part of this group as well 0:07:23.370 --> 0:07:27.290 and in this OcBc report, it shows that fewer people 0:07:27.300 --> 0:07:31.260 are on track with their investment goals. Can you help 0:07:31.260 --> 0:07:35.560 us understand why this is, so is it because people 0:07:35.560 --> 0:07:39.140 are investing in the wrong things or is it just 0:07:39.140 --> 0:07:43.860 because it's a bad time for stock markets all around? 0:07:44.230 --> 0:07:46.810 I think Sarah is a combination of all the things 0:07:46.810 --> 0:07:50.680 that you mentioned. The segment of the population that was 0:07:50.680 --> 0:07:55.980 most impacted by investments was the gen Z and millennials. 0:07:55.990 --> 0:08:00.720 Millennials would be those born between 1980 1995 and gen 0:08:00.720 --> 0:08:04.860 z would be those born between 1996 and 2005. They 0:08:04.873 --> 0:08:09.023 Reported that they suffered investment losses of more than 40% 0:08:09.033 --> 0:08:11.843 in 2022. When you break down and you look at 0:08:11.843 --> 0:08:14.403 what they've been investing in. Some of them have gravitated 0:08:14.403 --> 0:08:17.443 toward things like cryptocurrencies for example, and Kryptos has been 0:08:17.443 --> 0:08:20.083 very hot and very popular with the younger generation. And 0:08:20.083 --> 0:08:22.753 what's worrying is that despite the selloff in the crypto market, 0:08:22.753 --> 0:08:24.983 many of them are still positive on the outlook for crypto. 0:08:24.983 --> 0:08:25.500 They still think 0:08:25.516 --> 0:08:27.996 there are opportunities in that space. So you see more 0:08:27.996 --> 0:08:31.466 speculative activity taking place and that has resulted in losses. 0:08:31.466 --> 0:08:33.696 And that is worrying Sarah because it is important that 0:08:33.696 --> 0:08:36.286 the younger generation recognize the fact that you want to 0:08:36.285 --> 0:08:38.836 minimize speculation in the market. I think you can't completely 0:08:38.836 --> 0:08:41.695 cut off speculation important to trade the markets, but I 0:08:41.696 --> 0:08:44.676 think most of your money should be invested with the 0:08:44.676 --> 0:08:49.126 long term horizon and these are financial habits, investment habits 0:08:49.126 --> 0:08:51.716 we want to inculcate in the younger generation from a 0:08:51.726 --> 0:08:52.809 very early period. 0:08:52.980 --> 0:08:57.360 But what happened in 2021, was that because interest rates 0:08:57.370 --> 0:09:01.710 collapsed and the markets did very well in 2020, by 2022, 0:09:01.710 --> 0:09:03.890 the markets were starting to struggle and people are looking 0:09:03.890 --> 0:09:07.690 for alternatives and the younger generation looking for fast bucks alternatives. 0:09:07.690 --> 0:09:08.910 And kryptos were popular and 0:09:09.110 --> 0:09:13.200 many of them speculated and got badly hit and hopefully 0:09:13.210 --> 0:09:15.370 it will be a lesson learned. It's not all doom 0:09:15.370 --> 0:09:17.910 and gloom and going forward. It's important that they invest 0:09:17.920 --> 0:09:20.689 their money more carefully and not speculate we are very 0:09:20.690 --> 0:09:22.599 cautious in the crypto market. We think that there are 0:09:22.600 --> 0:09:25.390 better opportunities, safer opportunities, risks, 0:09:25.405 --> 0:09:28.285 moderated opportunities in other asset classes. And this is something 0:09:28.285 --> 0:09:31.375 that we've got to work hard towards impressing on the 0:09:31.375 --> 0:09:33.625 younger generation because they are our future and if they 0:09:33.625 --> 0:09:36.135 get it wrong for the onset, they'll have big problems 0:09:36.135 --> 0:09:36.615 later on. 0:09:36.625 --> 0:09:39.395 Patients is really a virtue in this, isn't it? 0:09:39.395 --> 0:09:41.695 Indeed, patients, patients is very, very important. 0:09:46.000 --> 0:09:48.650 Hi, my name is steve Lie and I'm Teresa Tang 0:09:48.860 --> 0:09:51.239 and we are the hosts of the new podcast CNN 0:09:51.240 --> 0:09:54.830 correspondent from new york to Bangkok join us as we 0:09:54.830 --> 0:09:57.850 kick back and chat with our colleagues across the globe 0:09:57.860 --> 0:10:00.920 about the latest news developments look out for our weekly 0:10:00.920 --> 0:10:03.180 episodes wherever you get your podcasts 0:10:07.500 --> 0:10:11.709 on top of the fact that more of the young people, 0:10:11.710 --> 0:10:16.540 millennials and gen Zs are suffering investment losses. This is 0:10:16.550 --> 0:10:20.400 also the group that wants to build wealth as fast 0:10:20.410 --> 0:10:24.040 as possible and retire as soon as possible. And the 0:10:24.040 --> 0:10:26.400 report shows that specifically those in 0:10:26.420 --> 0:10:32.449 In their 20's, do you think having unrealistic expectations about 0:10:32.460 --> 0:10:38.230 the investment journey ahead the lifestyle that we can achieve 0:10:38.240 --> 0:10:42.360 and the risk that we are taking on to achieve 0:10:42.360 --> 0:10:45.340 this state of being able to retire early? 0:10:45.860 --> 0:10:48.400 Absolutely. You got it all spot on. That was very 0:10:48.400 --> 0:10:50.790 well summarized. And I would say that it's normal for 0:10:50.790 --> 0:10:54.010 young people to aspire, what's life if there's no aspiration? 0:10:54.020 --> 0:10:56.680 These people in their twenties, they're looking out over the 0:10:56.679 --> 0:10:58.619 next 30 40 years, they've got a very long runway 0:10:58.620 --> 0:10:59.809 and they want to aspire. They want to make sure 0:10:59.809 --> 0:11:02.339 that they build up their wealth quickly for retirement. But 0:11:02.340 --> 0:11:03.310 I think the danger 0:11:03.325 --> 0:11:08.205 of thinking about building a world too quickly is that 0:11:08.215 --> 0:11:11.105 you then take the wrong turns. You try and look 0:11:11.105 --> 0:11:15.035 for fast track avenues, you speculate in the market, you 0:11:15.035 --> 0:11:18.615 gamble the markets and therefore you could end up suffering losses, 0:11:18.615 --> 0:11:20.785 significant losses in the short term. That could really 0:11:21.090 --> 0:11:24.330 then your finances and dental you mentally as well. Because 0:11:24.330 --> 0:11:27.719 history shows that when people suffer big losses, they give up, 0:11:27.730 --> 0:11:30.350 they stop the journey, they give up and they say, look, 0:11:30.360 --> 0:11:32.500 we'll just drift along in life and we don't want 0:11:32.500 --> 0:11:34.830 that sort of behavior. I think it's important for them 0:11:34.830 --> 0:11:38.260 to get the investment journey right and get their aspirations 0:11:38.260 --> 0:11:39.890 right as well. And as you highlighted, 0:11:40.090 --> 0:11:42.469 many of them want to retire comfortably. They have a 0:11:42.470 --> 0:11:44.860 certain goal in mind. They want to lead a good 0:11:44.870 --> 0:11:47.840 life when they're older, retirement goals have elevated. People have 0:11:47.840 --> 0:11:52.140 now chosen pricier retirement lifestyles, but when we speak to them, 0:11:52.150 --> 0:11:56.340 we also recognize that many of them have fallen short 0:11:56.350 --> 0:11:58.720 in terms of their planning for retirement. While they've, 0:11:58.730 --> 0:12:02.429 For example, need $5,000 to retire comfortably. What they're planning 0:12:02.429 --> 0:12:06.030 for is only perhaps 3,005 or 3000. There's a gap, 0:12:06.040 --> 0:12:09.050 they're not addressing the gap sufficiently and more needs to 0:12:09.050 --> 0:12:12.040 be done for them to address the gap or reduce 0:12:12.040 --> 0:12:16.360 their expectations and their lifestyle choices. So reality is not 0:12:16.360 --> 0:12:20.319 completely struck. And hopefully in time many of them will 0:12:20.320 --> 0:12:22.670 recognize the fact that they've got to make adjustments 0:12:22.990 --> 0:12:26.690 and make adjustments in terms of skills to write and 0:12:26.690 --> 0:12:29.720 knowledge in how you handle your finances and how you 0:12:29.720 --> 0:12:31.860 handle these investments. And it's not just about 0:12:32.030 --> 0:12:35.610 striking lottery and getting a lot of money all at 0:12:35.610 --> 0:12:36.150 once 0:12:36.160 --> 0:12:39.270 precisely. I think it's perfectly okay to have what we 0:12:39.270 --> 0:12:42.200 call technical positions in the market. In other words, to 0:12:42.210 --> 0:12:45.229 trade in the markets to some extent, speculate in the market, 0:12:45.240 --> 0:12:48.670 it's not possible to completely eradicate this human behavior. We 0:12:48.670 --> 0:12:51.090 look for excitement, but we have to draw a distinction 0:12:51.090 --> 0:12:55.349 between excitement and investment. Excitement is when you want to 0:12:55.350 --> 0:13:00.170 get your adrenaline pumping investment is a patient long term 0:13:00.170 --> 0:13:00.729 journey 0:13:00.929 --> 0:13:04.250 And you want to have most of your money strategically allocated. 0:13:04.260 --> 0:13:06.610 So you've got tactical asset allocation in what we call it, 0:13:06.620 --> 0:13:09.380 strategic asset allocation, things that you invest over the next 0:13:09.380 --> 0:13:10.439 five years, 10 years. 0:13:10.600 --> 0:13:14.370 It's like in some ways weight watching Sarah failed in 0:13:14.370 --> 0:13:17.540 my journey to lose weight because I keep looking at 0:13:17.540 --> 0:13:20.580 the weighing scale every other day, right? And if you 0:13:20.580 --> 0:13:22.390 keep doing that, you're not going to succeed. You've got 0:13:22.390 --> 0:13:24.640 to be patient work on your objectives. Don't look at 0:13:24.640 --> 0:13:26.630 the scale every day and eventually get there. So you 0:13:26.630 --> 0:13:29.270 set a target similarly for investments, you set a five year, 0:13:29.280 --> 0:13:31.360 10 year target and you work towards it 0:13:31.385 --> 0:13:33.765 and not keep looking at the markets at every twist 0:13:33.765 --> 0:13:35.735 and turn. You make a decision. I think those are 0:13:35.735 --> 0:13:38.165 things that the young generation have to learn that it 0:13:38.165 --> 0:13:41.824 requires patience. It requires careful selection of what you buy. 0:13:41.835 --> 0:13:45.595 Look at the fundamentals, do your research. If you get 0:13:45.595 --> 0:13:47.944 your grounding right, learn how to do that research and 0:13:47.945 --> 0:13:50.765 do the research. It's a bit of hard work, but 0:13:50.775 --> 0:13:52.170 it needs to be done to prevent 0:13:52.670 --> 0:13:55.260 big losses and setbacks early in life. 0:13:55.270 --> 0:13:57.959 Yeah, that's right. Like you said about weight watching it's 0:13:57.960 --> 0:14:01.170 also not just about losing weight and how much weight 0:14:01.170 --> 0:14:04.340 you lost, but your overall health, right? It's the same 0:14:04.340 --> 0:14:05.800 thing with finances, 0:14:05.809 --> 0:14:06.380 not just 0:14:06.380 --> 0:14:09.730 how much money you have in the bank, but how 0:14:09.730 --> 0:14:15.080 healthy your financial position is with your spending investment and 0:14:15.095 --> 0:14:16.515 everything. 0:14:16.515 --> 0:14:17.835 So it's not good enough to look at your budget 0:14:17.835 --> 0:14:20.114 and say, look, I'm spending within my means. But the 0:14:20.115 --> 0:14:22.645 question is, even though you're spending within your means, are 0:14:22.645 --> 0:14:26.295 you investing your savings prudently? Are you making sure that 0:14:26.295 --> 0:14:28.085 you're growing your savings so that you have enough money 0:14:28.085 --> 0:14:31.765 for your kids, university education for your retirement? So it's 0:14:31.775 --> 0:14:34.165 a lot more holistic and you can't just look at 0:14:34.175 --> 0:14:36.295 one aspect of financial planning, you've got to take a 0:14:36.295 --> 0:14:37.505 holistic approach. 0:14:37.740 --> 0:14:42.310 Yeah. The OCBC report also talks about seniors and it 0:14:42.310 --> 0:14:48.320 points out that more seniors are speculating excessively, presumably to 0:14:48.330 --> 0:14:50.900 build wealth in a short amount of time. And they're 0:14:50.900 --> 0:14:56.050 particularly vulnerable because they would have amassed some savings throughout 0:14:56.060 --> 0:14:58.250 the years. But if they lose them, 0:14:58.450 --> 0:15:00.930 they don't have a whole lot of time to try 0:15:00.930 --> 0:15:03.830 to make that money back and they need it sooner 0:15:03.830 --> 0:15:08.210 than most other people. So what are the reasons behind this? 0:15:08.210 --> 0:15:11.580 And can you give us examples of the excessive speculation 0:15:11.580 --> 0:15:14.290 that you're seeing in the elderly group? 0:15:14.630 --> 0:15:18.510 One reason why elderly perhaps speculating a bit more on 0:15:18.510 --> 0:15:20.980 the markets is because I think it's been a tough year, 0:15:20.990 --> 0:15:24.320 2022 has been a tough year. It has resulted in 0:15:24.320 --> 0:15:27.240 losses in the equity markets and the bond markets as 0:15:27.240 --> 0:15:29.710 well and many of the elderly may have also invested 0:15:29.710 --> 0:15:31.550 in the bond markets and the bond markets have also 0:15:31.550 --> 0:15:33.650 taken a very bad hit. Many of them are saying, 0:15:33.660 --> 0:15:34.790 I've been set back 0:15:35.070 --> 0:15:38.270 And my runway is a lot shorter and I need 0:15:38.270 --> 0:15:42.360 to get in back there in the markets. Look for 0:15:42.370 --> 0:15:45.060 that one or two stocks or investment that's going to 0:15:45.060 --> 0:15:47.859 make up all the losses have suffered in 2022. And 0:15:47.870 --> 0:15:49.890 my guess is that some of them may even put 0:15:49.890 --> 0:15:52.740 their money into crypto. I don't have concrete evidence but 0:15:52.750 --> 0:15:56.170 tech stocks, for example, have been very popular China-related stocks, 0:15:56.170 --> 0:15:57.450 for example, have been very popular 0:15:57.470 --> 0:15:59.710 With the investors and these are some of the areas 0:15:59.710 --> 0:16:03.000 which have seen a big selloff going forward. It's important 0:16:03.010 --> 0:16:06.060 for them to get back to what they originally should 0:16:06.060 --> 0:16:08.820 be doing for older person. You should be adopting a 0:16:08.820 --> 0:16:12.720 more conservative approach. You have a shorter runway, more conservative approach. 0:16:12.730 --> 0:16:14.680 It's not too late. Changes have to be made. But 0:16:14.680 --> 0:16:17.510 my guess is that 2022 is an exceptional year. Many 0:16:17.510 --> 0:16:18.790 of them are just looking to make up for their 0:16:18.790 --> 0:16:19.910 losses in a quick way. 0:16:19.920 --> 0:16:23.110 Do you think we are seeing a case of people 0:16:23.120 --> 0:16:27.020 concentrating their money too much in 0:16:27.160 --> 0:16:32.489 maybe a few stocks or in very small amounts of 0:16:32.500 --> 0:16:36.670 investments versus trying to spread them out so that when 0:16:36.670 --> 0:16:40.050 times are tough, everything doesn't tax so bad. 0:16:40.060 --> 0:16:43.300 I've been in the wealth management industry for 34 years. 0:16:43.310 --> 0:16:47.260 In the early days, diversification was not a popular word, 0:16:47.270 --> 0:16:50.290 people believe in taking concentrated bets. But over the last 0:16:50.290 --> 0:16:52.600 34 years I've seen a big change in behavior 0:16:52.810 --> 0:16:56.210 investor education has improved quite a lot. You can see 0:16:56.210 --> 0:16:59.450 now that investors understand the importance of diversification a lot 0:16:59.450 --> 0:17:02.340 more than before. But at the same time, I think 0:17:02.340 --> 0:17:04.229 what has changed in the last couple of years is 0:17:04.230 --> 0:17:06.930 that because of covid and because a lot of stocks 0:17:06.930 --> 0:17:09.159 and the market will hit down very badly in 2020 0:17:09.160 --> 0:17:12.550 and then saw huge run up because of ultra loose 0:17:12.550 --> 0:17:14.130 monetary policy from the Federal Reserve. 0:17:14.380 --> 0:17:18.830 That resulted in exceptional, super high returns in some areas 0:17:18.840 --> 0:17:22.020 like technology, for example, even some china related stocks and 0:17:22.020 --> 0:17:25.730 that resulted in some of them actually getting caught into 0:17:25.740 --> 0:17:29.400 the speculation and the excesses and hoping to make very 0:17:29.400 --> 0:17:32.389 quick returns. It is the sign of the times, I 0:17:32.390 --> 0:17:34.700 think the ultra loose monetary policy of the Federal Reserve 0:17:34.710 --> 0:17:37.909 boosted markets in an exceptional way. People thought this would 0:17:37.910 --> 0:17:39.820 go on forever. They jumped into space 0:17:40.020 --> 0:17:43.800 areas without diversification, they let their guard down. And some 0:17:43.800 --> 0:17:47.139 of them moved away from diversification towards taking concentrated bets 0:17:47.140 --> 0:17:49.859 and they got hit quite badly. So it is not 0:17:49.880 --> 0:17:52.710 a long term change in behavior I think by and large. 0:17:52.710 --> 0:17:55.570 My feeling is that most investors still appreciate the importance 0:17:55.570 --> 0:17:58.430 of diversification because the statistics show that there's still a 0:17:58.430 --> 0:18:01.470 lot of cash sitting in the banking system on the sidelines. 0:18:01.470 --> 0:18:03.590 So investors, some of them have been burned. 0:18:03.810 --> 0:18:05.450 But many of them still have a lot of cash, 0:18:05.450 --> 0:18:07.790 which means they've been fairly conservative as well. 0:18:07.800 --> 0:18:11.760 We keep hearing about how our recession is coming our 0:18:11.760 --> 0:18:16.179 way vasu what should singaporeans do in terms of our 0:18:16.180 --> 0:18:18.949 spending habits to prepare for this. 0:18:18.960 --> 0:18:22.960 No, easy answer. Sarah. I wish I had a magical 0:18:22.960 --> 0:18:26.090 pill to solve the problem. But really it's going back 0:18:26.090 --> 0:18:26.520 to 0:18:27.060 --> 0:18:31.889 Budgeting, looking at your income versus your expenses and making 0:18:31.890 --> 0:18:35.120 sure that you are in positive cash flow. In other words, 0:18:35.119 --> 0:18:38.280 you're not spending beyond your means, making sure that you 0:18:38.280 --> 0:18:41.700 set aside at least at least 10% of your monthly 0:18:41.700 --> 0:18:44.510 income in the form of savings, making sure that you 0:18:44.510 --> 0:18:48.110 at least have perhaps 12 months of your income set 0:18:48.109 --> 0:18:48.449 aside 0:18:48.470 --> 0:18:52.859 in an emergency fund for contingencies. Because if a recession hits, 0:18:52.869 --> 0:18:54.980 you may lose your job, you may have to tap 0:18:54.990 --> 0:18:58.430 into that emergency fund to keep you going. I think 0:18:58.440 --> 0:19:01.750 to distinguish between wants and needs. This is the time. 0:19:01.750 --> 0:19:03.700 And you've got to be more careful. Of course we 0:19:03.700 --> 0:19:07.140 all want things. Nothing wrong with that. But I think 0:19:07.140 --> 0:19:08.980 given the signs of the times, given the fact that 0:19:08.980 --> 0:19:09.879 there could be a recession, 0:19:10.050 --> 0:19:14.109 Be more careful with spending on non discretionary items, it's 0:19:14.109 --> 0:19:16.629 fine to spend on essential. So I think it's really 0:19:16.630 --> 0:19:19.490 going down to granular details and telling yourself you've got 0:19:19.490 --> 0:19:21.740 to have more discipline and cut back on things that 0:19:21.740 --> 0:19:23.650 you don't really need. But the most important thing is 0:19:23.650 --> 0:19:26.710 make sure that you have set aside at least 12 0:19:26.710 --> 0:19:29.470 months of your income in an emergency fund that you 0:19:29.470 --> 0:19:33.629 can tap on in the unfortunate event you lose your job. 0:19:33.640 --> 0:19:37.040 What final advice or one thing that singaporeans should do 0:19:37.040 --> 0:19:38.930 in the next six months. 0:19:39.430 --> 0:19:42.220 I think in the next six months it's important for 0:19:42.230 --> 0:19:46.200 a lot of singaporeans to look at their emergency funds. 0:19:46.210 --> 0:19:48.630 Make sure you set aside this emergency fund. I just 0:19:48.630 --> 0:19:53.399 spoke about the study shows that 54% have set aside 0:19:53.400 --> 0:19:56.980 six months of their monthly income in this so called 0:19:56.980 --> 0:19:57.869 emergency fund, 0:19:58.359 --> 0:20:02.560 But only 48% have set aside enough money in their 0:20:02.570 --> 0:20:05.150 emergency fund to keep them going for 12 months. If 0:20:05.150 --> 0:20:07.149 you look at the numbers on the flip side, it 0:20:07.150 --> 0:20:10.859 also means that more than 50% of Singaporeans have not 0:20:10.869 --> 0:20:13.600 set aside in the emergency funds to tide them over 0:20:13.600 --> 0:20:16.370 in the event of recession. So be sure to set 0:20:16.369 --> 0:20:18.359 aside more money in the emergency fund. 0:20:18.540 --> 0:20:21.680 It's very, very crucial because during a storm, you need 0:20:21.680 --> 0:20:23.580 to depend on that fund to keep you going. 0:20:23.590 --> 0:20:26.620