Thursday, June 18, 2015

5 steps to improve your financial literacy knowledge

Hi everyone , Ah boy is becoming a broken tape recorder at this rate but let's continue where i left off the last time round. 

As most of us know , financial literacy levels are dipping not only in Singapore , but also worldwide. 
In this post , ah boy shall explore ways that we can bring it up!

Ah boy self coins myself ah boy as I'm much younger than many of the finance bloggers out there and as such , don't expect to see ultra chim words in my blog.


Just 5 steps to improve your understanding of financial literacy or that's how i did it la , not orthodox at all de:

1) Pick up an annual report (AR)

I recall vaguely back in 2009 i first started seeing these thick "books" with lots of pictures and stuff on my then neighbour's doorstep, he was waiting for the karang guni man i assume (then where got pdf one? LOL) , now on hindsight , i think it might be due to the financial crisis then.

I remember this one very clearly , i picked up this book in the national library by chance in the reference section lol , it was the year 2011 by then and out of a rack fell a set of keppel corp's 2010 AR onto my feet...... ya it was that drama la -.-!! I picked it up , flipped thru a couple of pages and decided , hey , why don't i read it? I chose the AR over my 金庸 martial arts novel that i was supposed to be reading btw .

Since it was the holidays then and i had time to kill , i decided to in my terms munch on the "book" , i flipped through and found 99% alien language. The stuff i understood was the simple english , then i popped by the section where accounting books were stored and picked up accounting for dummies and i cross referenced stuff from there and when i found that i didn't understand stuff , it actually stimulated my thought process and i dug into other books to gain another piece to fill the jigsaw puzzle that was in front of me. Well , i sincerely thank the fella that didn't place the "book" properly after reading it eh :p  

(Ps. if you're reading this , PM me :) one cuppa coffee on me! )


2) Accountancy (you don't need to be accounting trained to know how to break down a financial statement ah)

OK , so now you vaguely have an idea of where the company gets its money from , also you know who owns the company , but do you know how do they calculate their profits? Do you know what EBITDA mean? What about Liquidity ratios?

Ah so next part of ah boy's guide is when i went to the library to go and borrow books on accounting, from the dummy one till advanced financial reporting lol !  Ah boy tried to digest as much as i could but some things come with maturity, i shall elaborate on that more later. So when i was in Secondary 3 and my teacher started double entry in my principles of accounting class , i managed to get a few winks during those classes kekeke , come to think of it , i wasn't a very good student :p 

So yea , learning accounting and having some layman knowledge is good so that if you decide to do biz in future and someone tries to "smoke" you , burn the fella on a stake instead! Sounds good?




3) Open your EYES BIG BIG ( Not asking you to be a hamsup lou ah , aka leecher , though if you see a very attractive lady or handsome hunk for my female readers , see for 3 seconds enough la , if u see longer , i worry for your eyes LOL , later become panda eyes :p )

After i went to the first 3 months of Secondary 3 , i started to open my eyes wider. In what sense? I began to take notice of the stuff that people carried , from the rolex submariner that my physics teacher wore to what the auntie was using to pay when they were at sheng siong , their mastercard or visa card then.

(oh ya forgot to mention , sheng siong wasn't listed and in the same year , i told my dad on numerous occasions that the towkay sure will list one kekeke , and true enuf :p )

These observations helped me form a macro outlook of the economy then , i look from bottom up one , but now i look left right centre la LOL! 



Ps. i think then sheng siong tied up with diners , now also with the citibank one?

So in short , i kept my eyes peeled for companies that are listed , then was idk la , really heng or sway idk , i live in jurong so i've tons of vehicles passing by my residence daily , so out of those my eyes would usually spot those lorries and see if they are a  "pte ltd" or incorporated as a "limited or ltd" firm, till this day i still do that and yea , i know of people who say i'm anal about stuff lol , i don't like a compromise la, and till this day , i can say thankfully , i know a gem when i see one :)

4) Chat more with adults 

I'm not asking you to throw your friends aside. But just that when chatting with an adult , find out their views on personal finance and mostly the convo should roll from there .... if it doesn't just mention on XX day u went to XX bank and were Q-ing and the teller asked whether i want to open a savings acct and ask the adult should you? (Don't say ah boy don't help with the convo starters ah!)

Like back then in 2011 my dad was in the Oil and Gas industry , blue collared job , and just nice his friends are mostly from that line so sometimes he would bring me along for breakfast and i would ask his friends the O&G outlook etc. They were surprised initially that i would ask such Qns , but well , never try , never know right?



5) Take risks but don't gamble.

Some people i've met along the way think that share investments are a gamble but after explaining the rationale and the origin of shares , it became evident that either someone around them had lost big in the market or the news surrounding shares have been negative due to the financial crisis that still left a mark there.

LIMIT your investments to your comfort zone , my investment amount then was 1,000 sgd saved from my ang pow , so if i can , so can you! I told myself to go for dividend yield counters and limit my losses to 250sgd or 25% of my capital, I got back a decent 40% capital appreciation excluding dividends hehe , the amount i passed to a relative who helped me and along the way taught me to use the brokerage platform and how to check a cdp statement. Also , REFLECT upon your losses or gains, and envision what you could have done better.


RIP to that relative of mine and words can't express my thanks for his guidance la. 





Ending notes:
This post is not intended to be an  "oh ah boy is more successful and self haolian post , i'm not an ego maniac ok?"

Haha , that being said , the reason why i wrote this post is because people have asked how i started and this is my journey la , and the reason why i've not been posting is due to a close family member of mine being ill. Hopefully i can continue with more posts as she is recovering well.


Cheers
Ah Boy (Ken)