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Community Leaders worry about seniors' lack of financial savvy

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RISING concern over seniors' lack of financial literacy came to the fore at a dialogue between Malay- Muslim community leaders, Parliament Speaker Halimah Yacob and Parliamentary Secretary Muhammad Faishal Ibrahim.

The topic dominated yesterday's two-hour session. The concern stems in part from recently announced policy changes to the Lease Buyback and CPF schemes that pave the way for lump-sum payouts to seniors to help meet their retirement needs.

The 60 leaders of Malay-Muslim organisations who took part in the dialogue expressed concern that these changes would also leave seniors more vulnerable to scams, as well as pressure from family members for loans and to find other uses for their savings.

The participants noted investment plans and get-rich-quick schemes targeted at seniors who had received a cash boost from downsizing or selling their flats, but who lacked financial savvy.

Both Madam Halimah and Dr Faishal agreed there were grounds for concern. They cited cases they had come across.

One involved an old man who had sold his flat at his daughter's suggestion and used some of the money to help her buy a car, but who was forced out of her house and into an old folks' home after they fell out.

Madam Halimah said: "What the Prime Minister said (in his National Day Rally speech) is very true: If it is possible, don't sell your house... Look at the other options - renting out or lease buyback - those are better options."

The participants also lamented that attendance at financial literacy talks was poor, even when the sessions were heavily subsidised or free.

17 things debt-free, financially happy people do
  • Debt-free people keep close track of personal finances. They monitor how much they earn, how much they save and how much they invest.
  • Those without debt live on less than they make. This, in turn, enables them to put money aside for buying a house, retirement or emergencies.
  • Debt-free people think twice before buying something, which allows them to make smarter decisions. Long-term thinking about spending can also prevent impulse purchases.
  • To get rid of debt, ask for help whether it is lower interest rates or forgiveness for late payment. If you know someone who has met a financial milestone you admire, don't be afraid to ask how.
  • Another common trait debt-free people have is saving money. Make it a habit to put some money into the bank account on a regular basis, just like you pay the rent every month. Adding even small amounts will give you more financial freedom later.
  • Setting a specific goal for saving money is also important as this helps you know what you are striving for.
  • You should learn how to say no to avoid sitting on a mountain of debt. Saying no to smaller expenses can add up to big savings. Host a potluck dinner instead of eating out at posh restaurant.
  • To free yourself from debt, value experiences more than snatching stuff only to catch up with the latest trend. Think about whether you would be better off working late and buying stuff by sacrificing valuable time with your family.
  • Financially-independent people plan each step carefully. They also tackle the problems along the way rationally and systematically before moving on to the next step in their game plan.
  • Financial freedom comes to those who know their limits, and choose not to overspend on things they cannot afford. They avoid debt at all costs and ensure they always have enough money for their long-term financial plan at the end of the month.
  • Not only do they ensure all their credit debts are paid for on time, financially happy people also refrain from spending on credit at all.
  • One can be rich one day and bankrupt the next.
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Financial problems can occur overnight and debt-free people are aware of it. To prevent themselves from sinking into quick sand when troubles arise, they plan for unforeseen circumstances with savings, insurance and other cash reserves.
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<br>This way, they can also have peace of mind over their financial situation as they know they are always prepared for a crisis to hit.
  • Greed can be a dangerous thing, especially if it causes you to aim for greater fortunes in spite of what you already have. <br><br> Financially-happy people count their blessings and don't complain about not having more.
  • Rational shopping is hard for many people who are not financially happy. When you have clear financial goals in mind, you will be less likely to spend on impulse.
  • Before signing up for a loan, deal or purchase, financially savvy people read up on all the alternatives and consequences of the contract first. By doing this, they ensure they get the best deal there is and mimimise their debt risk.
  • Although life might not turn out exactly the way you planned, planning for your retirement ensures you have enough for the later years.<br><br>
Retirement planning needs to start as early as possible so you can work towards your goals one step at a time.
  • Financially-free people are not put down by setbacks. By being optimistic, they manage to plan rationally to find their way out of every financially-trying situation.

Mr Suhaimi Salleh, president of the Prophet Muhammad's Birthday Memorial Scholarship Fund Board, said Malays make up only 5 per cent of attendees at many such courses, even those held at community clubs in estates with a high proportion of them.

The situation is similar with the Indian-Muslim community, said Mr Raja Mohamad, president of the Singapore Kadayanallur Muslim League, adding that those who do not turn up are often the most vulnerable.

Madam Halimah said the Pioneer Generation Joint Committee, which she chairs, is prepared to organise such financial literacy courses two or three times a year.

She would also pass the feedback received from the community leaders to the Ministry of Finance.

6 ways to be a savvy investor
  • Market conditions are unpredictable so a company that has done well in the past may not do well in the future.
  • Nicholas says: “You should at least read the company’s quarterly or half-yearly reports to keep abreast of its current business situation.” This takes time, but it’s basic research that every investor should do.
  • Ordinary investors won’t have access to some markets and those operating in different time zones may be hard to monitor.
  • To determine your investment portfolio ratio, deduct your age from 100. For example, if you’re 30, you should invest 70 per cent of your money in equities and 30 per cent in bonds.
  • “The younger you are, the more time you have to invest, so you can afford to take more risks,” suggests Vikrant Pandey, associate director at UOB Kay Hian Research. The numbers will change as you age, to reflect your falling risk appetite.
  • Anne elaborates: “Markets in Europe are not fully opened up, so you can’t just go online to purchase their stocks; you also won’t have the ground experience to react in a timely manner to market fluctuations.”
  • Your investment portfolio must take into account changing lifestyle needs, says Andrew Chow, head of research at UOB Kay Hian Research.
  • “If you’re planning to buy a house in three years, you can’t afford to lose your capital. Even if you’ve always been an aggressive investor, you may need to switch to more stable investment instruments, like bonds, to balance out your investment risk.”
  • “You’re in the right time zone and place to respond quickly to market conditions,” says Andrew. You won’t have to worry about currency movements either.
  • Before you invest in a company, Nicholas advises that you check the Investor Alert List – a watch list issued by the Monetary Authority of Singapore (MAS) – to notify investors of companies that are not regulated or licensed by the MAS.

She said the suggestion to enhance financial literacy education for seniors was "very useful" and "obviously comes from the deep concern that there is a need to encourage prudence in the management of their money".

Another issue that came up was health care. Dr Faishal, who is with the Health Ministry, said people must play their part in keeping healthy.

He said he was glad that at a recent Malay wedding he went to, there was salad and plain water offered alongside nasi briyani for more health-conscious guests.

"We should encourage more of that," he said.

yanliang@sph.com.sg


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