MoneyTree AsiaPac

Warren Fernandez
Sun, Apr 06, 2008
The Straits Times

It is ironic. Singaporeans who are uncomfortable with taking financial risks and who prefer to leave their cash untouched in savings deposits are in fact taking a big risk by not protecting themselves against inflation.

The continued rise in the cost of goods and services is a clear indication that inflation is creeping up on everyone and eroding the value of their money.

For instance, a movie ticket cost $1 in the early 1970s. Fast forward to today and a weekend movie outing will set you back by $10.

If you are one of those risk-averse investors whose money is mainly in bank deposits and you think you are ‘playing safe’, think again.

In the long run, your savings will actually shrink and you could become poorer, not richer, because of inflation…..

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Lorna Tan Sun, Nov 18, 2007
The Sunday Times

INFLATION could hit 5 per cent in the first quarter of next year. This would be a 25-year historic high.

Trade and Industry Minister Lim Hng Kiang told Parliament on Monday that record oil prices and higher food and transportation costs could take their toll on the Consumer Price Index (CPI).

The last time inflation hit a high level was in July 1991, when it reached 4 per cent.

The CPI has been on a steady uptrend this year: It rose 0.5 per cent in the first quarter, 1 per cent in the April-June period and 2.7 per cent in the third quarter. It is expected to rise at least 2.7 per cent for the current quarter.

Inflation and value of money

SIMPLY put, inflation is the increase in prices of goods and services over time, which means it diminishes the purchasing power of today’s dollar in the future.

While $3 buys you a cup of coffee today, you might need $4 in the future. So we end up buying less in the future with the same amount of money.

There are exceptions. Prices of electronic goods such as DVD players can go down over time because of the product cycle and economies of scale.

‘With rising inflation, if you don’t look at your investments carefully and do something about it, you will find that eventually inflation will erode your purchasing power and thus your wealth,’ said Ms Anne Tay, OCBC Bank’s vice-president of group wealth management…….

Risk-averse investorsIT STANDS to reason then that conservative investors who put their money mainly in bank deposits will eventually end up worse off.

Investing at 2 per cent while inflation is running around 4 to 5 per cent will see your wealth steadily eroded…..

Starting earlyHAVING a financial plan early on lets you take a long-term investment horizon, which is beneficial on various fronts.

‘The young are best-placed of course, as they stand to gain the most from compounding, dollar-cost averaging, investing at a lower risk level and maximising of returns over the long term’, said Mr Lim…….

Older investorsIF YOU have a shorter time horizon, common sense dictates that you shouldn’t be investing mainly in risky instruments……..

On a positive noteTHE good news is that inflation is generally not a ‘bad’ thing, as it is typically accompanied by a robust economy, which in turn results in higher incomes.

The increase in wages should be more than enough to offset the increase in the prices of goods, said Mr Tan…….

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SPEECH BY RADM (NS) LUI TUCK YEW, MINISTER OF STATE, MINISTRY OF EDUCATION, AT CITIBANK SINGAPORE’S PREVIEW OF ‘AGENT PENNY AND WILL POWER IN OPERATION FINANCE’ COMIC BOOK AND SKIT, ON MONDAY, 24 JULY 2006, 4 PM AT NTUC CENTRE AUDITORIUM
Mr Jonathan Larsen,
Country Business Manager and CEO, Citibank Singapore Ltd

Mr Brian Tucker,
Project Manager, Learning Society

Principals and Teachers

Ladies and Gentlemen

Boys and Girls
Good afternoon
Introduction

I am pleased to be here at the official preview of “Agent Penny and Will Power in Operation Finance” comic book, by Citibank and Learning Society. I understand today’s preview follows on from the very well-received “The Adventures of Agent Penny and Will Power” last year. Such innovative initiatives complement the efforts made by our schools and the Monetary Authority of Singapore to promote financial literacy among our children, and together, they create a strong message about the values of saving and budgeting.

Never Too Early to Get Started on Financial Education

2.         Instilling good money handling habits early in childhood begins a child’s life-long journey in financial education. Children who grow into adulthood without learning to appreciate the real value of money very often face the consequences later in life when they find themselves unable to manage their finances. During my time in the Navy, where I worked with young adults, I knew of a small number who succumbed to the temptation of easy credit and excessive spending, forgetting that financial independence comes with heavy responsibilities. They had to learn their lessons the hard way, through their struggle to free themselves from financial difficulty. Hence, I feel imparting such critical life-skills early is essential for preparing our children for the challenges of a constantly changing future.

3.         In schools, financial education messages such as budgeting and saving, are taught through subjects such as Social Studies and Civics and Moral Education at the primary and secondary levels. The Ministry also provides resources and workshops to enhance teachers’ competency in financial literacy. However, additional opportunities extended by other organisations enhance our work greatly in reinforcing these messages. MAS’s MoneySENSE, for instance, has assisted about 30 schools in conducting extra-curricular activities such as interactive board games and inter-school financial literacy competitions, and the MoneySENSE roadshow has travelled to all the polytechnics to spread their message. At its closing ceremony, I was glad to see that many of these students who have attended these activities, in fact, are moving on to become “MoneySense ambassadors,” youths who will actively pass on their new skills to others in their community. However, we cannot rest on these efforts. As the benefits of a cashless society extend outwards, we will find that our young children will need these life-skills sooner rather than later. Our children will grow up in a society that is increasingly cashless. They are also likely to have access to credit earlier in life. It is thus important that we anticipate such developments and prepare for them. In my opinion, it is never too early to get started.

The Adventures of Agent Penny and Will Power in Operation Finance

4.         I am pleased therefore, to see Citibank taking the lead in promoting  financial education early in childhood. The Agent Penny comic books series was the first financial literacy initiative of its kind targeted specifically at primary schools, and its popularity testifies to its success. The creative use of an adventure comic book setting and superhero characters make for an engaging teaching tool to inspire children to start drawing up their first income and expenditure budget, and developing good money habits. I understand that Citibank and Learning Society have even tied up with our home-grown theatre group, The Necessary Stage, to create an interactive skit that will go out to schools together with the comic series. This is another appealing and fun-filled method to complement its central message.

5.          It is certainly heartening to see private sector organisations like Citibank partnering Learning Society in bringing forward such innovative learning experiences through the likes of “The Adventures of Agent Penny and Will Power” and “Agent Penny and Will Power in Operation Finance”. The private sector plays an important role in helping community organisations create opportunities for our children to develop life skills, be it in corporate sponsorships or development of innovative learning programmes.

6.         Financial literacy is a life skill, which will have lasting impact throughout our children’s lives, and it will serve them well as they join the workforce and become self-reliant individuals of society who need to make responsible personal choices about their lifestyles. As children learn about money, they also begin to grasp other broader life lessons such as goal-setting, decision-making and task responsibility.  In the long run, high levels of financial literacy will prove beneficial not just for the individual, but for the well-being of our country as a whole.

Conclusion

7.         In conclusion, it is good to see financial literacy promoted from an early age, and I encourage all primary schools to start your pupils on the right path early with the Agent Penny comic books and skit. Also, it is worth remembering that skills learnt should be practised to be retained, so let us all find opportunities in our daily lives to use the tips and lessons we learn. With that in mind, let us enjoy the preview. Thank you.

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Fri, Jul 20, 2007
The Straits Times

Let students have $500 credit card?  

YES

‘WHY not?’ This was the response of eight parents out of 40 polled, who said that in an increasingly cashless society, teenagers can be trained to use credit responsibly, starting with a credit card with a $500 limit.

After all, $500 is ‘a small sum’, said Mr Don Tan, 53, a businessman who gives his two teenage children $700 each in pocket money every month….[…]

Indeed, a Credit Bureau of Singapore study showed that the proportion of credit card holders here aged between 21 and 29 who missed at least one payment last year was 6.6 per cent, lower than the overall national average of 8.14 per cent….[…]

NO

GETTING a credit card with a $500 limit was a definite ‘no go’ for Glen Chew, 24, a student at the Singapore Management University (SMU).

‘I prefer to spend within my means, ………….

The $500 credit card, by contrast, may encourage ‘irresponsible spending’, said accountant Tan Lee Wen, 46.

Another parent, engineer Richard Teo, 48, felt the $500 card could attract mainly those who do not have a supplementary card and also may not have enough in their savings accounts……….

‘These kids would have a higher risk of default since they are clearly borrowing beyond their means,’ he said.
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Tue, Jul 31, 2007
The Straits Times 

Credit tips
IT IS never too early to pick up the right money habits. Easy credit and other inducements raise the risk that the next generation will be saddled with debt and extravagant spending habits.The country sales manager for Ipac financial planning, Mr Bill Castellas, says: ‘Debt, like savings, plays a crucial role in our lives. It is not a bad thing when managed well.

‘But managed poorly, it can result in a poor credit rating that will be used to assess your eligibility to obtain a car loan or mortgage. Establishing the right money behaviour early will make life so much easier in the future.’

Here are some tips to instill responsible habits:

• Pay the full balance every month
• Charge only what you can afford to repay
• Use credit cards only in emergencies
• Make a record of all credit card purchases
• Pay bills on time

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