Two National Days ago, I wrote an article sharing my three wishes for the country. I wrote that I wanted to see Singaporeans become more financially literate, that we appreciate, tolerate and celebrate our diversity and also that our society allows us space to fail.
Last year, as we celebrate SG50, I remained steadfast and shared once again why these issues mean so much to me.
In a flash, another 12 months went by. In her 50th year, Singapore saw an election, we saw more MRT breakdowns. We saw ourselves committing to a high speed rail project. We saw the ISIS grow from strength to strength and horrifying attacks becoming almost common occurrences in cities worldwide.
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Tonight, as we turn 51 and the nation goes into party mode, as the flags fly, the stadium roars and the night sky light up in celebratory fireworks, allow me to share some new perspectives I have gleaned over the past year.
1. Diversity of Thought, Diversity of Mind
A few weeks ago, I came across a post on Facebook. It was an observation about the state of affairs in the run up to the US Presidential elections. The writer happened to be an ex-Nominated Member of Parliament.
The author shared and explained his preference for Hilary and why he is against Trump. The claims he made are nothing new. They are what any sensible political pundit would have stated. I found myself nodding in agreement.
His final line however, had my hair standing.
All Singaporeans should think the same.
I read the line a few more times, checking for sarcasm or perhaps a misplaced punctuation that would significantly alter the meaning of it. I even re-read the entire paragraph to ensure that his meaning isn’t taken out of context.
But no. There are no two ways about it. The intentions are crystal clear. With that six words he sets out to monopolize the thought process of five million other Singaporeans. There is only one right way to think – his way; and nothing else is acceptable.
My initial disbelief turned into anger and I thought of putting across a strongly worded message. I stopped myself in time when I realized that in doing so, I am merely stooping to his level by dictating what he himself should or should not do.
Minor as the incident might be, it left a lasting impression on me. Conflicts, amongst neighbors, amongst different religious and ethnic groups, amongst countries even, arise out of intolerance and the inability to look beyond one’s own circumstances.
I really hope that despite what he has written, Mr All-Singaporeans-Should-Think-The-Same is able to see beyond his own reality and understand where people who do not think like him are coming from. Otherwise, I would be quite ashamed to admit that we have both passed through the hallowed halls of the same alma matar many years ago.
For Singapore to grow from strength to strength, the recognition and tolerance of diverse viewpoints is non-negotiable. For the third year in a row, allow me to quote Messers Chen Show Mao and George Yeo –
Because we are different, hence we are one.
2. Financial literacy
Annamaria Lusardi is the Denit Trust distinguished scholar at the George Washington University School of Business. Anna studies financial literacy. She blogs at annalusardi.blogspot. She calls her blog ‘Financial Literacy and Ignorance’. I hope the irony is not lost on you.
Amongst the studies she has done and the many papers she has written, the underlying theme remains the same – the global population is grossly lacking in terms of financial knowledge.
We ourselves have lost count of the number of times we have written about financial literacy on bigfatpurse.com. I have always believed that it is the one skill everyone ought to possess, failing which life in the modern world would be extremely difficult.
A few things happened over the previous 12 months to make me soften my stance a little.
Rise of the Robos
Robo-advisors are online wealth management systems that provide automated investment services to the masses. The first Robos came about less than a decade ago in the US. At this moment, the front runners Betterment and Wealthfront have more than USD 3 Billion in Asset Under Management (AUM) each.
Rabo-Advisors bring about a brand new way of doing things. They improve on the current offerings in the market on many accounts.
Robos charge a flat fee of anything between 0.25% to less than 1%. This is way below current industry standards. They are able to achieve this level of charges due to two reasons. First up, Robos invest in passively managed index funds rather than mutual funds or unit trusts.
Actively managed unit trusts can cost up to 3% per annum. On good years the investor dismisses this as a drop in the ocean. On bad years, the pain of paying the fund manager on top of losing money becomes unbearable. Either way, over the long run, the cost of investing eats into returns significantly.
Robos are cheap also because as their name suggests, they are but an online platform designed to operate with minimal human intervention. Unlike the traditional advisory model where client meets advisor, advisor prepares a plan, client approves and signs on the line, Robos bring the entire process online. There is no cap to the number of clients they can acquire.
Harnessing technology, Robo-advisors bring about a much more efficient way to invest. While they have not found their ways to our shores yet, I am confident that the wait will not be long.
After the budget was published in April this year, I wrote a piece on Liberal Paternalism. The term stems from Richard Thaler and Cass Sustein’s book ‘Nudge’.
Liberal paternalism is about choices people make. Choices about government, choices about health and lifestyle and choices about finances. Everyday life choices.
The liberal aspect lies in allowing people the liberty to make their own choices. Yet in doing so many stakeholders especially government bodies understand that people do not make rational and effective choices all the time.
Paternalism kicks in to restrict or guide people’s choices towards one that will benefit themselves and bring no harm to the society at large. A classic example is that of a cafe displaying healthy fruit at eye level while sinful desserts are kept on the bottom shelf. This simple act goes a long way in nudging consumers towards a healthier diet.
In that earlier article, I shared how government policies are advanced through the use of incentives (and disincentives). Cash contributions for parents to be, and the myriad of stamp duties awaiting property sellers are but a few examples to encourage more children and discourage property speculation.
It is also in the government’s interest to ensure that its citizens have enough to retire. An aging population places a strain on the workforce. An aging population that is able to support itself with minimal assistance remains a pipe dream for many societies around the world.
One way to achieve that is to ensure that the entire population is financially savvy. Not only that, every single citizen would have put in place a retirement plan and see it out religiously.
The relatively easier route would be to ‘nudge’ the population towards good financial health.
We have seen the implementation of the Singapore Savings Bond in September 2015. I wrote that the SSB is probably the closest it can get to a free lunch in the investing world. Just last week, the CPF Board announced the Lifetime Retirement Investment Scheme in a bid to help turn around the fortunes of investors utilising their CPF funds.
I have no doubt that there will be more policies and schemes to allow investors access to higher yielding, lower risk instruments in time to come.
While I still think that financial literacy is the numbero uno skill for the modern man and woman, I am more inclined to believe that with the developments both in Singapore and worldwide, the is a chance that someone who has absolutely no interest and no inkling of finance can get through life by following the pre-determined default options ’nudged’ out for him or her.
It may not be now, but that day will not be too far off.
The Space to Fail
On almost all accounts, we are an extremely successful country. Success comes with a price. The price we are paying for our success now is that we do not know and we can no longer tolerate failure.
I have shared that my kids are growing up fast (way too fast!). I wish them great success in everything they choose to embark on. But, I also wish for them the space to fail. Should they fail, they must not see themselves as failures forever. Failure is but an essential milestone in the learning process. They must have the courage to pick themselves up and have the fortitude to fail again.
The previous years I ask that society gives them that space, to not ostracise them, to be supportive and understanding. This year I ask the same.
In writing this article, I went into a pensive mood. Birthdays are an opportunity to look forward and dream big, they are also a chance for one to reflect and think through the past twelve months. All this talk about failing prompted me to look back and examine my own successes and failures over the past twelve months.
I cannot recall a recent failure.
Instead of going out and jumping for joy, I immediately arrived at a stark realisation. The opposite of not failing is not, success. Not failing could simply mean not trying, or not trying hard enough. Someone who is contented with status quo will be unfamiliar with failure. In order to even go near failure, we need to have the courage to try.
And as we grow, and as our nation grows, the price of failure becomes higher and higher. The desire to innovate and try something new diminishes because there is just too much to lose. That sounds like a sure and steady way towards a nation’s downfall. #toldyoualreadypensivemood
Happy Birthday Singapore!
On this day, I wish Singapore a very happy 51st. I wish her health and wealth. I also wish upon her a population tolerant of differing views, one that is financially literate and independent. I wish Singapore a people that never stops trying, never stops striving and one that is never afraid of failure.
Happy Birthday Singapore!
image: ndp.org, stocktrader, innovationmanagement