My parents saved a lot for their children, yes, includes me as their eldest son too. Both were educators who dedicated their working lives to their students and a huge chunk of their bank savings to their children. When I started my first job, they asked me to save. They have bought insurance for me, thus my role is just to save more money so that my future is secure. For many years, Fixed Deposit (FD) was my best friend. I calculated what my salary would be when I reach 30 and when I reach 40 as well as what’s the final pay like just before I retire. It’s actually pretty good because I think I work pretty hard and increments as well as promotions to me can be considered above average. One day, I became interested in the stock market. I read more about it and as I read more, I learnt more. Then, share market became my second love, financially. However, everything became clearer to me when I bought my first property. After buying it, I realised that the property price increases EVERY year, even if slowly and when I compared it to my Fixed Deposit, I thought, ‘I better stop so much FD’ and start to buy one more property. More people were moving to cities and it’s called urbanisation and this urbanisation is not stopping anytime soon because Malaysia’s population continue to be YOUNG! Not too young which does not help but young enough to continue the growth.
Today, I read an article online about demographics shifts, especially rapid urbanisation. According to Bank Negara Malaysia (BNM) Governor, Tan Sri Zeti Akhtar Aziz, Asia’s urban population is projected to grow to 56% in 2030 from 43% in 2010 and rise further to 64 per cent in 2050. This will fuel the growth of mega cities with populations exceeding 10 million. Well, Greater KL may be considered one huge one coming soon where 10 million population is concerned. For these economies to continue growing, balanced growth is important and individuals must be equipped to adjust to new economic, financial and social realities that they will be facing. Lacking in awareness of different types of financial products would contribute to low level of confidence and poor knowledge of how products work. In the end, these individuals would be excluded from the complex and technology driven financial systems. Looking at the crisis that has happened, effective consumer protection frameworks would serve to protect the individual from excessive risks and this in turn would protect the financial systems from systemic risks.
What she is saying is that individuals who do not know much about the financial products yesterday may be okay but moving forward, financial knowledge is extremely important especially when these financial systems become ever more complex and technological driven. My father used to buy and sell shares by calling to his remisier. Today, a smartphone is all you need. There used to be just a few funds to select from when you are buying unit trust. It’s either high risk, medium risk or low risk. Today, you better know a bit about the funds before you buy. Property was never thought of as a form of investment. It was more like, if I have a home, I can grow my family and I do not need to rent. Today, when you look at all the rich businessmen, property is one form of investment that they will always have. If you really are afraid of properties, then REIT is available. Basically, how your life would be in the future depends not on what you do today but it depends on what you invest today. I believe career is very important but beyond that we must understand that if we intend to do as what our parents did long time ago, it may no longer be enough. Question is, are we ready for this financial journey?
written on 6 Nov 2014
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