Speaker 1: This is a C. N. A podcast
Speaker 2: in a few words, could you give us your thoughts
Speaker 2: on the following
Speaker 2: retiring in Singapore expensive but worth it by investing, definitely
Speaker 2: worth it. But you have to learn how to do
Speaker 2: it first. Financial advisors be careful about who is going
Speaker 2: to be advising you and trust. But verify versus unit trusts. Oh,
Speaker 2: for sure any day, ideal retirement amount depends on your lifestyle.
Speaker 2: In my case, excessive amounts of money. We all wish that.
Speaker 2: Thanks for joining us on money talks. I'm Sarah Khaldi.
Speaker 2: Many of you have said you want to invest but
Speaker 2: don't know how you've given us positive feedback on our
Speaker 2: first episode on the importance of investing. But we've also
Speaker 2: got questions about how to go about it. The golden
Speaker 2: rule is don't do anything you don't understand. So we've
Speaker 2: brought back David, co co founder of the smart investor.
Speaker 2: To help you understand how you should put your money
Speaker 2: to work
Speaker 2: for those of you guys who haven't heard our last
Speaker 2: chat with David, it is the first episode of this podcast.
Speaker 2: Go check it out. It talks about why we need
Speaker 2: to invest. But David, could you give us a brief
Speaker 2: recap of why we have to start thinking and planning
Speaker 2: for our retirement and not leave it to chance? Well,
Speaker 2: I think the sooner you invest, the sooner you start
Speaker 2: thinking about what is going to happen on that day
Speaker 2: when you are no longer working
Speaker 2: It is vital. And for some people, that period of
Speaker 2: time could be 30 or 40 years and for other
Speaker 2: people it could be relatively shorter. The problem is if
Speaker 2: the time that you have to start investing starts to shorten,
Speaker 2: it really means that you need to take greater risks
Speaker 2: with your money and nobody wants to take a great
Speaker 2: amount of risk. So the simple rule is, you need
Speaker 2: to know where you are today, how much money you
Speaker 2: have available to you today
Speaker 2: And what you think you will need on that day
Speaker 2: when you are no longer working and will you be
Speaker 2: able to enjoy the same lifestyle on retirement day plus
Speaker 2: one compared to retirement day -1?
Speaker 2: And what you don't want to do is to see
Speaker 2: a drastic drop in your standard of living and having
Speaker 2: to make major cutbacks simply because you no longer have
Speaker 2: a salary. So the important thing is to know where
Speaker 2: you are now, where you want to be on that
Speaker 2: day and how you are going to get there. And
Speaker 2: of course as with most things Sarah, if you are
Speaker 2: going on a journey, if you leave early, then of
Speaker 2: course you're not going to be pressured because you are
Speaker 2: worried you're not going to get
Speaker 2: to your destination on time. Just like today coming in
Speaker 2: to do this podcast with you. I left home early
Speaker 2: and so therefore I arrived 15 minutes early and that
Speaker 2: is a nice situation to be in. What you don't
Speaker 2: want to do is to be in the back of
Speaker 2: a car, telling the driver can you go faster faster
Speaker 2: please Because I have an interview at 10 30 he goes,
Speaker 2: well it's already 10 20 now. How much faster do
Speaker 2: you want me to go? And I think that really
Speaker 2: is the secret. The earlier you start, the more comfortable
Speaker 2: will be your journey.
Speaker 2: If this is all too overwhelming. David for some of
Speaker 2: our listeners, should they get an advisor to help them
Speaker 2: with investments? I'm talking about a human advisor, a person
Speaker 2: there who they can talk to, they can sit with.
Speaker 2: Is there any value in getting an advisor when technically
Speaker 2: you can do it yourself. Right. There is this wonderful
Speaker 2: thing at the moment that came about in the year
Speaker 2: 2000 Sarah. It's called the Internet
Speaker 2: and what it allows you to do is to look
Speaker 2: for free at the different kinds of experts, advice on
Speaker 2: what to do with your money. But then I must
Speaker 2: urge people trust but verify in other words, there's no
Speaker 2: reason why you shouldn't trust what a person says. But
Speaker 2: verify that that person hasn't got a hidden agenda right?
Speaker 2: There is no ulterior motive that they're not trying to
Speaker 2: make money out of you.
Speaker 2: So it is a learning process investing is simple. That
Speaker 2: rule of 100 is a good place to start. It's
Speaker 2: been around for centuries. So the rule of 100 just
Speaker 2: to recap states that you take your age minus 100.
Speaker 2: And that is the percentage of your investments you should
Speaker 2: have in stocks and shares. So on day one you
Speaker 2: are zero age, you should have 100% of your investments
Speaker 2: in the stock market
Speaker 2: As you get older then you should have less and
Speaker 2: less in the stock market and increasingly more in bonds.
Speaker 2: And by the time you get to 60, what you
Speaker 2: should be having is 40% in the stock market, 60%
Speaker 2: in bonds. It has stood the test of time and
Speaker 2: what it really says is that you should be investing
Speaker 2: your money in the stock market and you should be
Speaker 2: picking good companies. And here in Singapore we have this wonderful.
Speaker 2: organization called and we also have another wonderful organization called
Speaker 2: SGX that aims to make sure that whatever investments we choose,
Speaker 2: that they are properly regulated and they ensure that there
Speaker 2: is nobody out there who is going to be cheating you.
Speaker 2: So everything is well audited, everything is well regulated and
Speaker 2: the same for which I cannot say about other jurisdictions
Speaker 2: where they tend
Speaker 2: to fly by night in some ways. But here in Singapore,
Speaker 2: we can trust that both M. A S and S. G. X.
Speaker 2: And the other regulators are looking very closely at companies
Speaker 2: that are listed on the stock market that they're not
Speaker 2: there to cheat people and if they are cheating people,
Speaker 2: you can guarantee that they will be delisted and they
Speaker 2: will have their knuckles rapped. So what can you do
Speaker 2: should you go to an advisor, you can talk to
Speaker 2: your bank, listen to what they have to say
Speaker 2: and then talk to someone else and listen to what
Speaker 2: they have to say and
Speaker 2: make your own mind up afterwards. But I have always
Speaker 2: believed in managing my own finances, luckily I work in
Speaker 2: an industry where I can do that and I've been
Speaker 2: able to advise my own two Children about where they
Speaker 2: should be putting their money and thankfully for them. I
Speaker 2: don't charge them for my advice,
Speaker 2: but I just guide them in the right direction. And
Speaker 2: the most fascinating things there is that they know what
Speaker 2: the answer is. They know what the answer is even
Speaker 2: before I tell them and all I simply do is
Speaker 2: to give them that additional level of confidence that what
Speaker 2: they're doing is the right thing. And I think most
Speaker 2: of us know what we need to do.
Speaker 2: We mustn't listen to people who tell us, oh, go
Speaker 2: buy this share because I made 20% on this last week.
Speaker 2: So you go in and buy why is he telling
Speaker 2: you this right? Why would he want to tell you
Speaker 2: something like that? Ask yourself that question. And one of
Speaker 2: the things I've always learned is to ask the question why?
Speaker 2: All the time, Every time somebody says something I say,
Speaker 2: why
Speaker 2: and then eventually you will get to the truth. And
Speaker 2: the answer is because I want to make money from
Speaker 2: you right so never trust anybody, never take anything at
Speaker 2: face value and trust your gut because it is telling
Speaker 2: you things, what we're living in now is a very
Speaker 2: uncertain environment, inflation is rising, there is a lot of
Speaker 2: uncertainty in the market
Speaker 2: And this uncertainty started in about probably more 2008 than
Speaker 2: 2000 when huge amounts of money was pumped into the
Speaker 2: global economy. And what we're seeing now is money being
Speaker 2: withdrawn from the global economy.
Speaker 2: And so Warren Buffett once said when the tide goes
Speaker 2: out we'll know who's been swimming naked and as awful
Speaker 2: as that analogy is and it paints a really bad picture.
Speaker 2: But what really means is that people have been putting
Speaker 2: their money into certain investments that have been excessively risky
Speaker 2: and as that money comes out then what we're going
Speaker 2: to see is who is swimming naked and there will
Speaker 2: be lots of companies that will be exposed for being
Speaker 2: overly risky.
Speaker 2: We're already seeing that in cryptocurrencies and N. F. T. S.
Speaker 2: What about robo advisors, David? Is there a case for that?
Speaker 2: I think there is a case and I think there
Speaker 2: is certainly a case for making investing as simple as possible.
Speaker 2: But what robo advisors tend to do is they will
Speaker 2: just try and assess your risk profile and they will
Speaker 2: say oh David is less risk averse than Sarah. And
Speaker 2: so therefore the investments that
Speaker 2: the robo advisor will be trying to put you into
Speaker 2: our less risky investments. In the case of David, wow
Speaker 2: my goodness, this guy is off the scale in terms
Speaker 2: of his risk profile. So we can afford to put
Speaker 2: him into more risky investments because he doesn't really care right.
Speaker 2: So let's take him into NASDAQ. Let's take him into
Speaker 2: emerging markets because he can't
Speaker 2: tolerate that risk. But in the case of Sarah she
Speaker 2: is far more sensible, more scared. Well call it call
Speaker 2: it sensible and she doesn't really want to lose as
Speaker 2: much of her money. So let's recommend for her slightly
Speaker 2: less risky investment And let's recommend for her more bonds.
Speaker 2: That kind of stuff. You can buy E. T. F.
Speaker 2: In bonds. Let's put her into those and we're less
Speaker 2: likely to scare her completely witless as a result of
Speaker 2: her investment. But in the case of David, well if
Speaker 2: we give him bonds, he's going to snooze, he's going
Speaker 2: to go to sleep so he's not going to be
Speaker 2: that engage. So there's nothing wrong with robo advisors. And
Speaker 2: what I can say is that
Speaker 2: your risk profile will change over time as you become
Speaker 2: more comfortable with your investment. You will want to take
Speaker 2: on more risk. It's just a fact of nature. So
Speaker 2: you could start with robo advisors and just see how
Speaker 2: they do things and once you've learned how to do
Speaker 2: it then you don't need them anymore. You can go
Speaker 2: and do it yourself.
Speaker 2: Hi, my name is steve Lie and I'm Teresa Tang
Speaker 2: and we are the hosts of the new podcast CNN
Speaker 2: correspondent from new york to Bangkok, join us as we
Speaker 2: kick back and chat with our colleagues across the globe
Speaker 2: about the latest news developments. Look out for our weekly
Speaker 2: episodes wherever you get your podcasts.
Speaker 2: If you want to start investing yourself, Exchange traded funds
Speaker 2: are usually a popular place to start and the first
Speaker 2: step is really by going to a brokerage. Right? Absolutely, yeah.
Speaker 2: In the case of the E. T. F. It behaves
Speaker 2: like a share, it is traded like a share. And
Speaker 2: so therefore you need a brokerage in order to buy
Speaker 2: the exchange traded fund.
Speaker 2: So you need to go out and find yourself a
Speaker 2: reliable broker and there are so many here in Singapore
Speaker 2: and they will open your account for you. The account
Speaker 2: opening process these days is a lot easier than 10
Speaker 2: years ago when I first came to Singapore. The process
Speaker 2: I would say is very streamlined now and many of
Speaker 2: the brokers here will be able to open an account
Speaker 2: for you. What you need to watch. However, is the
Speaker 2: kind of fees that the broker will charge you and
Speaker 2: it does vary from one brokerage to another.
Speaker 2: And the beauty of opening the brokerage account is you
Speaker 2: can first of all start investing in the E. T. F.
Speaker 2: Then as you get a little bit braver, then you
Speaker 2: can start saying already have the E. T. F. Why
Speaker 2: don't I add a few more shares to my investment?
Speaker 2: And it is a bit like when you're riding a bicycle,
Speaker 2: when I first learned how to ride a bicycle, you
Speaker 2: had two stabilizer wheels behind you that helped you to ride.
Speaker 2: And then as you get braver, you take the stabilizers off.
Speaker 2: And that very much is the analogy with investing with
Speaker 2: exchange traded funds.
Speaker 2: And what would you say to those who are comfortable
Speaker 2: in investing in E. T. F. S. Or stocks, but
Speaker 2: are thinking twice about letting go of their money to brokerages?
Speaker 2: Like how do you pick a reliable and safe broker? Well,
Speaker 2: there are two issues there, Sarah. The first one is,
Speaker 2: is your money safe? And
Speaker 2: what you need to remember is if you put your
Speaker 2: money in with a brokerage, that money is ring fenced,
Speaker 2: it doesn't belong to the brokerage. So it's a bit
Speaker 2: like if you went and opened a trading account with dbs,
Speaker 2: the trading arm of dbs is called dbs Vickers and
Speaker 2: that is a separate entity to dbs itself. But the
Speaker 2: money that you put into dbs Vickers is ring fenced.
Speaker 2: If
Speaker 2: heaven forbid the brokerage were to go bust your money
Speaker 2: is separate, right? Your money is completely separated from the
Speaker 2: entity itself. So anything could happen to the brokerage. But
Speaker 2: your money is hypothesis stated in other words, is ring
Speaker 2: fenced and that is protected. So therefore you probably have
Speaker 2: more protection with the money that you have in shares
Speaker 2: than you would with your money in the bank because
Speaker 2: a lot of people may not know this, but there
Speaker 2: is a bank guarantee
Speaker 2: that only guarantees the amount of deposit you have with
Speaker 2: them to a certain limit. But in the case of shares,
Speaker 2: it is unlimited. So you could have a million dollars
Speaker 2: in shares, but those shares belong to you, right? And
Speaker 2: with these brokerages, is it possible to use your CPF
Speaker 2: money to invest? It really depends on the broker itself,
Speaker 2: there are preferred brokers from CPF, you'll have to sign
Speaker 2: certain forms because what they're doing is they're accessing your
Speaker 2: CPF money and so they need to be registered to
Speaker 2: access your CPF funds and then just carry on do
Speaker 2: what you do. So then you can start investing your
Speaker 2: CPF money, there is only a certain amount that you
Speaker 2: can invest in your CPF of your CPF money
Speaker 2: and there are only certain shares that you can invest
Speaker 2: with your CPF money. So what the Central provident Fund
Speaker 2: wants to do is to protect you in some way
Speaker 2: and say, don't just run off with all your CPF
Speaker 2: funds and go and buy penny stocks with it because
Speaker 2: then you'll end up with nothing.
Speaker 2: So they have a preferred list of shares that they
Speaker 2: have vetted and going back to your other point, check
Speaker 2: with your broker, if you can use your CPF funds,
Speaker 2: not all brokers can use your CPF money. What about taxes,
Speaker 2: do we need to pay taxes in any
Speaker 2: money that we make in these investments, particularly the ones
Speaker 2: we make here in Singapore and any US listed stocks,
Speaker 2: for example, because those are quite popular nowadays, if you
Speaker 2: buy and own Singapore stocks, there is no tax on dividends,
Speaker 2: there is no tax on the capital that you make,
Speaker 2: so no capital gains tax
Speaker 2: At the moment. Singapore has the rule that there is
Speaker 2: no dividend tax and there is no capital gains tax,
Speaker 2: so you don't have to worry about taxes here in Singapore.
Speaker 2: Unfortunately if you buy shares in other jurisdictions, then there
Speaker 2: may be withholding tax and in the case of the
Speaker 2: US there is a 30% withholding tax on dividends paid,
Speaker 2: but there is no capital gains tax. So each jurisdiction
Speaker 2: is different
Speaker 2: in Hong kong. If you buy Hong kong listed shares,
Speaker 2: there is no tax, but if you buy chinese companies
Speaker 2: that are listed in Hong kong, there is a withholding
Speaker 2: tax on dividends and if you buy japanese shares that
Speaker 2: are listed in Hong kong, there is a withholding tax,
Speaker 2: so it is different for different jurisdictions. If you buy
Speaker 2: Malaysian shares, there is no capital gain
Speaker 2: tax, but if you own reits in Malaysia, there is
Speaker 2: withholding tax on the income portion of the distributions that
Speaker 2: they pay. So there are different rules for different jurisdictions,
Speaker 2: but if you stick to the simple Singapore stocks, no
Speaker 2: tax on dividends, no capital gains tax unless you buy
Speaker 2: through a company, then it's different rules altogether. But for
Speaker 2: individuals keep it simple by Singapore stocks and then you
Speaker 2: don't have to pay tax on any money you make
Speaker 2: and you don't have to pay tax on any income
Speaker 2: that you earn from dividends. Some people get caught up
Speaker 2: in the fees, get caught up in possible taxes in
Speaker 2: overseas listed instruments.
Speaker 2: How do you ensure that you don't lose out on
Speaker 2: having to pay all these fees in the end, after
Speaker 2: all the gains that you have? Well, unfortunately if there
Speaker 2: are taxes on dividends, then the taxes will already be
Speaker 2: deducted before it is actually paid to you here in Singapore.
Speaker 2: So if I was buying shares in Microsoft or Apple
Speaker 2: or one of those companies and they pay a dividend,
Speaker 2: The US government will already deduct the 30% withholding tax.
Speaker 2: And then what remains is then credited to your account
Speaker 2: over here. So if taxes already taken care of, so
Speaker 2: you don't have to worry too much about that. But
Speaker 2: you talk about fees and you talk about charges, there
Speaker 2: is one thing
Speaker 2: that investors should be aware of when they are using
Speaker 2: a brokerage, which is the kind of information that the
Speaker 2: broker is able to give you. What I'm talking about
Speaker 2: is the data that is available. Data is a very
Speaker 2: precious commodity. And different brokerages will give you a certain
Speaker 2: level of data. And I'm not talking about trading data,
Speaker 2: I'm talking about financial data on the companies that you
Speaker 2: are interested in.
Speaker 2: You want to know how the company has performed financially,
Speaker 2: has it been making profits? And those kind of things
Speaker 2: are probably more important to me as an investor than
Speaker 2: it is to a trader. A trader just wants to
Speaker 2: see the price chart and how it's going up, how
Speaker 2: it's going down. But in my case, I want to
Speaker 2: have a look at the history of the company. I
Speaker 2: want to go back as far as possible
Speaker 2: and say, how did this company perform in terms of
Speaker 2: its profit performance? What is this balance sheet look like?
Speaker 2: And different brokers will have different levels of regularity in
Speaker 2: terms of the information that they give you. So what
Speaker 2: you're paying for in certain cases is that data, that
Speaker 2: information that is available
Speaker 2: and how you go about analyzing the company. Thank you
Speaker 2: so much David for giving us insights into how to
Speaker 2: go about starting our investment journey and where to go
Speaker 2: really to start buying and putting our money into investments.
Speaker 2: Thanks for your time. You're welcome and start today. Yes, thanks.
Speaker 2: We hope you enjoyed this episode of money talks the
Speaker 2: team behind this podcast is Jacqueline chan Joanne chan Danieli
Speaker 2: and Christina robert. You've got a refreshed slate of audio
Speaker 2: material you can listen to on your commute or your workout,
Speaker 2: go to the c. N. A website or app, look
Speaker 2: for the listen button and subscribe to the podcast you like.
Speaker 2: If you have thoughts, ideas or even Sawyer's you'd like
Speaker 2: to share. Please write to us. The details are in
Speaker 2: our episode notes. Until next time. This is Sarah al Khaldi.