Hosts: Jade and Deniece
Guest: Jason Ong
ABOUT THE EPISODE
In today’s episode, Jade and Deniece feature Jason as they discuss the topic “A beginner’s guide to investment”. They describe different factors to consider before investing, concepts around investing, and key investment principles.
A MILLENNIAL MESS
EPISODE 46 PODCAST SHOW NOTES
Episode Timeline:
[04:13] Meet today’s guest, Jason, a financial planner, and adviser. Deniece met Jason 2 years ago at a church cell group. He helped her during one of her challenging periods, and she also knows him through his financial planning.
[07:56] What got you so passionate about investment? After graduating with a degree in Banking and Finance and Accounting, Jason started working in a government investment firm and later moved on to a big audit firm. All through university, he had the passion to encourage people to manage their finances, starting with his housemates. He realized that there was a major gap in financial knowledge and many people were not reaching their financial goals. His curiosity about this situation ignited his interest in investments.
[10:04] The Singaporean government does not inflate the price of things, rather the citizens do; higher demand for a product will increase the price of the product. This was rampant even in the pandemic because while working from home, people felt they worked more because of the inability to go out and relax and so they indulged in heavy spending to pamper themselves. The mindset behind this is summarized as “I deserve this”.
[14:53] Most people can afford to achieve their financial goals in their lifetime especially as Singapore is one of the richest nations in the world. A lot of Singaporeans have money in CPF and in the house but feel like they don’t have a lot of disposable money. A family can own private property in Singapore just through savings if done well.
[19:33] What are some financial principles that can be followed to have a comfortable life? We need to recognize the heavy expenses that actually bring us joy and count them as Discretionary Spending. There is, however, some controversy on whether to spend first and save the rest, or the other way round. Jason believes you should pay yourself first an allowance for food and comfort, so you don’t eat into your savings.
[25:40] Is there a bridge to get rich? Rather than talk about the subjective definition of being rich, Jason prefers to address “Wealth”. “You need to define what money brings to you because money is a great servant but a terrible master” Chasing money rather than the actual value of what it can bring is a bridge that keeps getting longer. Hence it is necessary to define the objective of getting money based on the value it is targeted at. This would become the definition of “Rich” for you, and you can start working towards it.
[28:29] Are we born into financial circumstances that we cannot get out of? “Anyone can make a million dollars”; being born with a silver spoon helps but ultimately it depends on how you manage your money. A lot of people do not plan much concerning money because they believe it is wrong to think about money but money is not evil, rather, the love of money is the root of all evil. Money does not change you; it only enables you to become more of what you already were.
[37:27] To start investing, firstly you must identify your Investment Objective. Secondly, you need to recognize that everything is a trade-off. “What is the best investment? actually, there is no best investment”
[38:08] Why do people always say “don’t put your money in the bank”? This is because the interest rate in Singapore is really low. However, you still need to have access to your money through your bank so what people mean to say is “don’t put most of your money in the bank” because it is losing value every single day to inflation. The main function of the bank is to provide liquidity for easily accessible funds.
[39:56] Another important factor to consider is your Investment Horizon; how long do you want to invest for?
[40:03] Lastly, consider your Risk Profile; whether you’re a high-risk person or a low-risk person. Risk and Return go hand in hand. High Return High-Risk is correct, High-Risk High Return is not correct; this is because if you want to get a higher potential return you need to undertake higher risk, but also even if you take high risk, it does not guarantee high returns. Very often people focus on returns when they do not fully understand what risk is. When it comes to risk, it depends on the volatility of the investment, and your risk profile. The thing about risk profile is that it’s not about when the investment does well, it’s when it doesn’t do well.
[44:46] Another factor is your Investment Ability: Different investment opportunities are available, depending on how much money you have.
[45:25] Do you really need a lot of money to invest? Fortunately, these days, there is access to several investment platforms even if you want to start small by buying them on your own. The key thing is to start early, start small, and start young. "If you have less than $30,000 - $50,000 of investable assets, a change in lifestyle will put you ahead more than any investment would". Jason encourages people to invest but to start with changing their lifestyle.
[52:48] Final Investing Advice from Jason: Only invest in things you understand, if not seek expert opinion or perhaps do some homework before investing your money.
[53:44] Jason is with Aventus at Prudential, a company that creates financial solutions and offers professional advice tailored to the individual, targeted at meeting their goals and objectives. They may also implement small exercises like budgeting.
[55:00] How are financial planners different from insurance agents? The difference is that insurance agents would start with a product in mind, even though the person might not need it. Jason’s company website is www.aventus.sg