KUCHING: It was crucial for children to be taught to invest beyond just saving in order to meet the rising coat of inflation.
According to HwangDBS Investment Management Bhd (HwangDBS IM) chief executive officer and executive director Teng Chee Wai children in Malaysia have not been taught to invest.
“One of the saddest things about our education is that we have never taught our children to invest but to save. I guess savings is the first step to investing but we need to teach our children that beyond just saving we need to invest,” he lamented.
“Because increasingly the interest rates of the banks are not able to meet the rising rate of inflation and if they don’t learn to invest they will not be able to grow their wealth to meet the rising rate of inflation.
“As an industry group the Federation of Investment Managers Malaysia (FIMM) is also doing its part to educate people in terms of long term investment and to know the different risks asset classes and how to invest long term.
“Unfortunately in Asia as a whole, when you talk about investments, a lot of people know only about the stock markets and most of the time it isn’t even investment it’s just capital appreciation and that’s why you can lose a lot of money because you are speculating,” he explained.
“It is a gradual process, it is something that has to be learnt over time. When I go out and talk to people I always tell them that fixed income is a long term asset and its much better than equity, it is stable and if you can invest correctly you gain. If you mix a balance between fixed income and equity, you will get higher returns at a much lower risk,” he added.
According to Teng the investment portfolio should be divided so that the risk was distributed and manageable. The ideal scenario was to split the intended investment. He cited an example of 70 per cent in a fixed income fund and 30 per cent in an equity growth fund. That would constiitute a good balance and good returns and in the long term ensuring that the investor was better off.
“The challenge of the industry is to continue to promote unit trusts and mutual funds as long term savings vehicles similar to what the insurance companies have done and not to promote it as a flavour of the month buying at an adhoc basis.
“It happens for example most invetsors bought at the peak of the market in 2007 and when 2008 and 2009 came said if you buy unit trust you lose money, of course when you have bought it at high prices. But when you invest over time you can average down or up over time and it will be okay as long as those mutual funds are well managed.
“The industry has to educate the investors on different types of assets and also about really treating mutual funds as longer term savings and not treat it as a one off investment,” said Teng.
He highlighted that another imminent issue in the industry was about keeping talent in the country. The government was doing its part by bringing talents back from offshore. The ideal situation will also be to retain what was already onshore.
“We need to first stop the floodgate of talent going out and then we can bring people in. This will result in an increase in talent within the country. On the investment side it is consistent, people are leaving and going to Singapore and Hong Kong, so far in the last four years I have lost five staff in total.
“A lot of migration is in the form of the younger generation, due to higher salary and greater exposure to the foreign markets. You must remember that Singapore and Hong Kong are financial centres, the business there tends to be more robust and the salaries are nowhere to be compared with. You find that by nature the younger ones will get attracted to all this,” he concluded.