A survey by OCBC reveals that most working adults are not financially prepared for retirement. That is distressing.
It is not only distressing but quite mind-boggling, too. We live in a stable economy with a well-developed financial market that has more investing choices than a McDonald’s outlet has in menu options. It couldn’t be easier to prepare for our financial futures.
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But many Singaporeans are sleepwalking into financial disaster.
Many of us need to overcome some deep-seated misconceptions about money. Simply salting away excess cash into a savings account is just not going to cut it.
But it’s not all bad news.
Thankfully, the study has found that most Singaporeans are getting some very important things right – we are saving at least a quarter of our salaries. So, we are living well below our means, which is the first important step we should be taking….
….. We can’t even think about being financially secure if we spend more than we earn and charge the rest to our credit cards. Spending next month’s paycheque today simply means that we have less to spend tomorrow.
But where we get things very badly wrong is failing to grow the money that we have put away. Around one in three people don’t know the best ways to grow their money. Many believe that investing is a form of gambling.
Investing in companies is not gambling. But actively trading in the shares of companies is no better than a trip to the casino.
Many people confuse the two activities. Trading is second-guessing whether the price of a share could be higher or lower tomorrow. Investing, however, is working out how much we can earn from an asset over the lifetime of the asset.
The two things are not the same.
Interestingly, the survey revealed that many younger Singaporeans would like to retire by the time that are in their mid-fifties, whilst older Singaporeans would like to retire at 67.
Perhaps those older Singaporeans could have retired much sooner if they had only invested their money earlier.
For young Singaporeans, their dreams of retiring earlier could become a reality. But they need to start investing their savings now, lest they turn into a fifty-something would like to retire in their mid-sixties.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.