Monday, September 01, 2014

Is it a "waste of yourself" to be caught up in investing?

I think financial education is a must in this world. It's not even an option. Everything (almost) transacts in monetary terms, so without a working knowledge of money, you'll be severely disadvantaged in this world that you're currently living in.

But even though it's a necessity, it doesn't mean everyone needs to be an expert in it. There are different levels of involvement. Essentially, if you're not interested in financial stuff, you just need to know enough not to make big mistakes. If you're more interested in dollars and cents, then you get more involved in perhaps actively choosing your insurance or managing your funds to reap a better return.

That's my new CASIO calculator, by the way.

There are a few components of financial education that we should all know a little about:

1. Personal finance - credit cards, savings, needs and wants, budgeting, tax etc

2. Insurance - the difference types like whole, term, endowment, ILP, accident, H&S, disability income, annuity, mortgage and car insurance

3. Investments - bonds, stocks, retirement funds like CPF, commodities etc

As mentioned, you really don't need to know everything in detailed, because at best, these are just chapter topics. Take for example - stocks. There are huge write ups about the different methods of valuating stocks, from technical analysis to fundamental analysis. If you delve into fundamental analysis, you also need a crash course on accounts to know what is happening. Then you need to read into sector/industry analysis and many reports on the individual companies and their competitors. If you're into technical analysis, there are various time frames you need to learn, the different indicators and their respective signals and whether they are lagging or forward looking. No wonder it's so daunting for beginners to pick up. Where do you start? What do you need to know?

Imagine a person with zero working knowledge of these stuff. They will be at the mercy of someone who knows better and acts in his own self interest. You can't blame regulatory board only for making huge financial mistakes because you trust others. You must also shine the light of blame on yourself for not taking the time and effort to find out more. I made a huge mistake when I bought a huge chunk of whole life very early in my twenties. It sucked up a lot of my cash, possibly not even giving me enough coverage. But it's that very act of stupidity on my part that made me want to learn more about financial stuff. This lead to that, and soon, I began to learn more about insurance because it's really another aspect of financial education. It's a costly mistake on my part (I've since reduced the coverage of that whole life and thus reduced the premium) but in a way, my lack of knowledge made me a susceptible victim to any one who is more knowledgeable and wants to earn my money.

So when a student from the sociology department asked a panel of speakers in the first Young and Savvy seminar on Aug 22nd this year, about whether it's a "waste of yourself" to be caught up with the idea of investing just because everyone else seems to say it's important, I thought that he hit a very important question.

The Young and Savvy series of talks is organised by The Straits Times with presenting sponsor, Frank by OCBC. Note the sponsor is a credit card by a bank.

Just because you're not interested in something doesn't make that something less important to life. I think investing, which is but a component of financial education, is as important to life as swimming. You might not need to swim for your life everyday, but when you do, you'd better know how. It's a shame that our education system does not have a major component of financial education even though it's so important to life. Things might be a little better now though, I must admit. At least this gap is recognised and steps are taken to incorporate more of these life skills into their curriculum, albeit in the form of extra curricular seminars or workshops. It'll be great joy to tutor someone in financial education in the future, I must confess.

But learning need not be formal. Most of us learn though informal channels anyway. Educational institutions should just be a place where we learn how to learn. Engineering, the course I major in, is really a good place to learn how to learn because you learn enough about everything so that you can pick it up yourself. In my 4 years, apart from the heavy stuff in engineering itself, I've learnt a little about accounting, sociology, communication skills, microbiology, economics and computing. No small feat. If you want to find out more, you can just pick up a book, or google it and learn. I'm sure there are more formal courses online, free or otherwise, that enables you to pick enough stuff so that you won't feel so daunted learning them yourself.

So start now. Read some blogs. Read some books. Enroll into some courses and learn the skill that is so essential for modern life now and reap the benefits far into the future.


Singapore Man of Leisure said...


I just had a thought (now that's a rarity)!

What's the purpose of education again?

Is it not so that one can think for oneself? Seek verification where needed? Know our limitations and seek counsel from the right people?

I am not sure more "formal" financial education can help...

We just have to ask those who studied Business Finance - can make good financial decisions on the corporate level, but is a total mess on the personal finance side.

What gives?

Or how to explain those of our parent's generation who never got formal financial education and no internet, and yet have managed their finances well?

What's the secret sauce?

la papillion said...


Good question. If you've the ans to what's the secret sauce, you'll make it rich :)

I agree that more formal education might not help. It's just not possible to make a horse drink even if u place the water right at the mouth. Maybe that's a hint of the secret sauce. You need the motivation or the reason to integrate things before u can apply.

Maybe those who never had formal education nor the vast resources of the Internet had something more powerful. They need to succeed, either because the other options are intolerable, or that their family is dependent on them.

The worst thing u can do to rob a person is really his reason or motivation to succeed. U can do this by giving him lots of money, ironically. Robbing by giving money haha

Singapore Man of Leisure said...


It's the thirst isn't?

No wonder in Korean dramas, they say those who are thirsty should go dig their wells ;)

la papillion said...


I think so. At least that's the reason for me. It also sort of explains why I've seen many students who have rich and powerful parents, but doesn't seem to want to do their best in what they are doing.

Maybe in giving their kids what the parents did not have in their own childhood, they forgot to give their kids what they had - hunger for success.

Not easy to be a self made man. A lot of factors conspire to bring you down.

Createwealth8888 said...

May be those rich kids future average earning already exceeds our continuous struggle to put in our best.


Siew Mun said...

Thirst and financial education are the key ingredients in the modern society of investing.
I recalled my late father thirst for financial sucess and hence his thirst to educate himself. He spends hours using hand and paper to chart out the stocks and recording stock price. He struggled to read financial report w a P4 education.
Now I aim to educate my children in financial management and investment.

la papillion said...

Hi bro8888,

Perhaps, perhaps. But it always bugs me what if they could have done a lot more, haha

la papillion said...

Hi Siew mun,

It's a good thing to educate the next generation about finance. It need not have to be about investing, even though that's one of the components.

Can you share with us how you've educated your children, and what you intend to introduce them to investment?

Siew Mun said...

My wife and I talked about our stock investment in front of the children. We explained the power of compound interest and REITs. My eldest daughter 16, pick up the lessons. She started off by asking my wife to buy 1 lot of Starhill REIT. She was taken in by the quarterly DPU. I reinforce her learning by giving a dollar for each dollar of DPU she gets.

la papillion said...

Hi Siew mun,

Thanks for sharing :) it's a good practice to reward a dollar for each dollar earned :) well done!