Mr Andy Lim, 33, will not bow to or be beaten in the battle against inflation.

“Inflation is insidious,” he says.

That’s why he has been investing since he turned 21. He started with savings from his pocket money and part-time jobs.

For more than a decade, he has been regularly putting aside up to 30 per cent of his monthly income from working in the medical device sector into investments.

“You don’t feel the effects (of inflation) until much later, when you realise that prices of things have been going up – while your money in the bank has stayed stagnant. It might be the same amount, but it’s worth less now.”

Last month, the Ministry of Trade and Industry (MTI) and Monetary Authority of Singapore (MAS) reported that Singapore’s core inflation – which excludes accommodation and private transport costs – had climbed to 2.4 per cent year on year in January, the highest since September 2012.

Then there is the hike in goods and services tax (GST) from seven per cent to eight per cent from January 2023, followed by a further increase to nine per cent in 2024, announced in Budget 2022.

The ongoing Russia-Ukraine conflict has also led to a steep rise in the price of oil, bringing a sharp hike in petrol prices to about $3 a litre for most of last week, according to data from the Consumers Association of Singapore's pump price tracker Fuel Kaki. Regular prices fell below the $3 mark on Thursday, following a drop in the price of crude oil.

The knock-on effects will impact the cost of everything from food to transport to utilities.

How did Mr Lim come to be so prescient?

“I first learnt about the concept of inflation in junior college while studying economics,” he says.

“However, the real-world implications of inflation didn’t occur to me until I had a talk with a financial advisor, who charted out the value of my money over time. This shocked me into taking action.

“Investing helps me to at least keep ahead of inflation,” says Mr Lim. “And in the future, hopefully my investments will have grown enough to let me live comfortably when I retire.”


Making their money work

Like Mr Lim, more Singaporeans are turning to investments to maintain, or even grow, the value of their dollar as a hedge against inflation.

The UOB ASEAN Consumer Sentiment Study in November 2021 showed that 38 per cent of consumers surveyed were putting more money into investments in the past six months, an increase of eight per cent from the year before.

Investment firm Franklin Templeton’s 2021 Singapore Next-Gen Investor survey also found that investments were one of the top five expenses for Singaporeans aged between 18 and 35. About 66 per cent indicated that their top goal for investing is financial freedom.

Mr Lim’s investment journey was not easy when he first started.

“I was completely new (at investing). My parents could not give me any advice because they themselves did not invest. There were a million questions and no one to guide me.”

He spent weeks researching before making his first investment. “I was extremely nervous because I only had a little bit of cash, and I felt like I could not afford to make a mistake,” says Mr Lim, who is now married and has no children.

His uncertainty then is still relevant for many today.

Ms Jacquelyn Tan, Head of Group Personal Financial Services, UOB, notes that while more people are keen to invest, some hesitate because they believe they cannot afford to invest, or have not set aside enough funds to do so.

“Another barrier is their perceived lack of knowledge, or the perception that investing is complicated and only for the financially savvy,” she says.


Making it simple to invest

But, with technology, this need not be so. “We have invested in digital solutions such as SimpleInvest so we can empower our customers with different investment backgrounds, objectives and risk appetites to invest in a way that suits them, right at their fingertips,” says Ms Tan.

The SimpleInvest solution allows investors to invest with amounts starting from $100. They can find explanations of the benefits and risks, fund performance and the fund managers’ strategy within the UOB TMRW app.

“Close to 90 per cent of our customers using SimpleInvest are new to unit trust products, and we see them making monthly investments of $1,500 on average,” shares Ms Tan.

About a third of UOB’s SimpleInvest customers have also started a regular investment plan.

Investors would have to monitor their holdings and measure their performance. “Even seasoned investors may find it challenging to navigate fast-moving market cycles and digest the vast amount of information out there,” says Ms Tan.

With SimpleInvest, this is taken care of by professional asset managers from UOB’s asset management arm. They evaluate the risks of the portfolios and adjust them accordingly as the tides shift.

Seasoned investors can also choose their own unit trusts to invest in. These unit trusts are curated by UOB and are conveniently categorised into Core and Megatrend solutions.

Core solutions tend to be less volatile and help to mitigate risk, while Megatrend solutions help investors to capture the market opportunity of long-term trends that can shape the future economic landscape.


Beginner’s guide to investing

Those who are new to investing should consider their risk appetite, time horizon and investment objectives.

They should also practise dollar cost averaging – a strategy that involves investing a fixed amount at regular intervals, says Ms Jacquelyn Tan, Head of Group Personal Financial Services, UOB.

“This is particularly useful because it helps you take a disciplined approach to investing, instead of making impulsive or emotional decisions based on market conditions,” says Ms Tan.

A common recommendation is to invest about 20 per cent of one's salary each month.

To start investing, newcomers can choose from three fund portfolios on SimpleInvest to fit their needs. These portfolios are created and managed by UOB Asset Management (UOBAM), with help from artificial intelligence-assisted data.


The Future of Finance is a series that explores how digital solutions can empower individuals and businesses, creating a smarter, more sustainable world.

This article was originally published on The Straits Times and was written by Michael Chang, Content STudio.


Source: The Straits Times © SPH Media Limited. Permission required for reproduction