To be Financial Literacy

Today I had the opportunity to educate my younger brother on financial literacy, which was not taught to us in our education. He had no idea about investing for income or for retirement. He only know that he need to save for rainy days. Just like a normal person, he put his savings into a normal saving account which earn a peanut interest annually. So I bring up the question to him, does he know that how much interest is he getting annually? How much interest will he be getting in his CPF account etc? To my surprise, he did not know how much interest is payable to his Ordinary, Special and Medisave in his CPF account. He only know his CPF account grow faster than his saving account. I almost fainted.

So as an elder brother to him, it is my responsibility to share with him some financial literacy. I told him how does CPF works and why the money grow so faster than his saving account. I share with him how he can replicate what his CPF account is giving him by investing on STI ETF. If a beginner like him who do not know anything about investment, my advice is to invest on STI ETF. The dividend yield for STI ETF give him about 3.5% annually which is way better performance than his saving account or the ordinary account in CPF.

After today sharing with him, I am glad that he is very positive toward investing for income. He know that by putting his saving in a saving account will not be enough for his retirement. The next step is for him to digest what I had shared with him today and then open a trading account and start investing for income.

It was not his fault for not knowing how to manage his own finance. We were not taught in school and the peers that he mixed with does not invest as well. We often heard from our parents that investment will burn our finger and it is true on what they say. If we do not know anything about investment and we went in blindly, obviously we will get burnt. However, if we read more and learn more, we can better prepare ourselves to be financial literacy. The reward is priceless if we can master this. I will end this post by sharing one of the famous quote from Warren Buffett.