Date: September 26, 2009
26 September 2009
President, NTU-IIC, Mr Melvin Tan,
Mr Anthony Teo
Ladies & Gentlemen
Thank you for inviting me to this function. I always enjoy meeting you all.
Life 40 years ago was simple. We basically had to plan three important investments –human capital investment, personal well-being investment, and spiritual well-being investment.
Human capital development basically refers to our education. We had to answer this simple question “What kind of job do we want to do in the future? Do we want to be an accountant, a civil servant, or an engineer?” If our answer is “I don’t know”, then we know that the government will give us an answer.
Personal well-being refers to our family. The Chinese has a saying “Cheng Jia Li Ye”, or build your family and then your career. From what I understand, Chinese believed that a man should first form their family before building their career because it is the family which will motivate the man to work hard. I, of course, wasted no time to develop my personal well-being early in my university and found my wife before I graduated. I had been well rewarded. Of course, if you didn’t find a wife then, then the government will help you through SDU.
Spiritual well-being refers to finding our faith. Spiritual well-being helps us to find our direction when we are lost and give us strength when we are down. I have found my faith when I was young and it had helped me a lot for many years.
What about financial investments? We had three simple risk free investments at that time – bank deposits, CPF, and most importantly HDB flat. There was pension scheme during my time and therefore we only needed to work hard and stay long enough in the company to get our retirement benefit. Investing in stocks, bonds and especially commodities were distant concepts during those days.
It was only in 1993 that the notion of buying stocks started to get popular. The popularity of investing in stock market was of course started by the listing of Singtel. Singtel’s listing gave many Singaporeans who became shareholders’ that time a simple notion about investing in the stock market – getting rich in the stock market is easier than buying 4D.
We were never properly educated on investment. Many investors learnt their investment knowledge from their stock brokers and by observing the “teletext”. In fact, they relied mainly on brokers for advice and recommendations. The end results of this process, many investors saw the stock market as another “race course” and relied mainly on methods like value investing and technical analysis to punt the market.
Returns were always what investors looked out for in any investment venture. Risk, on the other hand, was an abstract concept that could be ignored as long as the returns were high. The idea of diversification was often ridiculed as attempts by poor academics to proof their importance.
Alas, the combination of greed and ignorance reared its ugly head with the collapse of Lehman Brothers Inc. The hard earned savings of many retires were lost as the Lehman Brothers’ minibond went into default. It was shocking to hear that many investors had put almost all their hard earned savings into minibond because they were attracted by the returns and were unaware of the risks. Greed and ignorance are a dangerous mix.
Unfortunately, the world today is much more complicated than 40 years ago. Not only do you need to plan the three investments I mentioned, you also need to plan your financial future because jobs are no longer stable, CPFs are no longer sufficient for retirement, and cost of living will go higher. Getting your money to work hard for you is important as it will help you live better as you grow old.
However, when you do decide to make your money work, your plans are further complicated by the numerous products and investment strategies choices. You need to know which strategy best fits you and which products best fit the chosen strategy. Not an easy feat.
This is where I am hearten to know that there is a group of students trying to make a difference and this group of students can be found in the NTU Investment Interactive Club. Your mission to promote financial literacy and investment knowledge among students is important not just within your community but also to the society as a whole. Promoting financial literacy to students will help reduce the chances of your generation making bad investment decisions. Hopefully, this generation can also help educate the older generation over time to also be more financially savvy.
Most of You will be entering the work force in due course upon your graduation, perhaps holding influential positions. I would therefore leave with you a thought. In formulating corporate policies, you will have to seriously consider on whether your company is engaged in corporate social responsibilities (CSR). The need for companies to embrace CSR is fast gaining importance globally. The UN-backed Principles for Responsible Investment (PRI), aims to help investors integrate consideration of Environmental, Social and Governance (ESG) issues into investment decision-making and ownership practices and thereby improve long-term returns to beneficial owners and stakeholders.
Your vision of striving “Towards a Knowledgeable Investing Student Population” must encompass CSR. It is the future of our human race.
Finally, I would like to congratulate this investment club for achieving its 10th anniversary this year. You had done 10 years of great job and we look forward to your 10 more years of achievements. SIAS will support you along the way.