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From saving to investing, the evolution of personal finances

  • Saving and investing is mandatory. Saving alone is outdated.
  • 4 investment tools by levels – Employees’ Provident Fund (EPF), LTF/RMF, Mutual Fund and investing in private equities
  • Multiple Sources of Income is a new trend, which is taking place in many developed countries. It is highly likely to become a must for millennials.

The traditional concept of life cycle – work, save and retire – is no longer applicable in the modern world. Inflation rate outpaces the interest on deposits rates, leading to your cash savings becoming less value over time.

Atip Keeratipish, is a dtac employee and a leading investment blogger. The owner of Facebook fan page New Pong – Fundamental VI points out that: “You need to invest, not just save.”v2_01_1Saving and Investing – A road map to your financial security

“Before the Asian financial crisis occurred in 1997, pay raises were about 10% a year on average, while yearly bonuses of three months were standard, due mainly to 10% annual inflation rates and 13% interest rates. This was 20 years ago. Things have changed now.

The current financial landscape is not comparable with the past, while digital disruption does not guarantee you will be able to retire at age 60. What can make your financial security amid the rapid change goes to “investment”.

To be clear, if you save 1 million baht in a bank account at 1% interest rate, you will get only 10,000 baht earnings. On the contrary, if you invest the same amount of money in a mutual fund of SET50, you will earn 220,000 baht of dividends (calculation based on 2016 performance). You can see the huge difference  you could earn between saving and investing.

Don’t be hopeless, what baby boomers had was a robust economic growth, but what new generations can take advantage is “financial tools”. So what we are obliged to do is “invest”.

How much money to be allocated?

Investment starts from savings. The sooner, the better. But how much of income should you save and invest every month? Here’s a rule of thumb:

100 minus your age is the percentage of your savings going towards investment. For example, if you are aged 22, you should allocate 78% of your savings for investment. This is the idea of asset allocation by age, making a secure financial health.

When it comes to investment tools, there can be divided into 4 levels based on risk management.Asset 1-100.jpgFirst – Employee’s Provident fund (EPF)

This must be mandatory for those who work in corporate providing EPF. You must apply for EPF as much as your company allows. EPF is the safest debt instrument to invest in. Workers contribute a portion of their salaries into the fund and employers must contribute on behalf of their employee with the same amount. It is a perfect tool to build a substantial retirement corpus for investors.


As a citizen, you are obliged to pay tax. Financial investment tools like long-term equity fund (LTF) and retirement mutual fund (RMF) is a great way to get tax deductions. They both are a type of mutual fund created with the aim to promote long term investment.

Mutual Fund

MF is like LTF/RMF but its spectrum is much wider compared to them. With the connected world, investing is more extensive. You are able to invest in a selection of funds, such as SET50 fund, China-focused fund, APAC fund, technology fund and health care fund. There are a range of tools, allowing you to make money wisely under the experts’ supervision.

Investing in private equity

This stage suits for experienced investors, which contains riskier than others. It requires economic and business know-how, analysis and techniques to secure the right stock at the right price. The heart of this kind of investment is “risk management”.03_1Risk diversification

When the world is becoming more uncertain, multiple streams of income has been discussed on how to diversify risks in real life. This is one of the great keys to adapt your life the dynamic world.

We’re standing on the brink of the fourth industrial revolution that fundamentally alter the way we live, we work and relate to one another. It comes along with pain and gain.

Dating back to between 1770 and 1870 when Britain entered the era of industrialization. There was exponential growth in production through the factory system of production powered by steam-driven machinery, replacing human labor. Angry workers in Manchester smashed textile machinery, which occurred nightly. An era of digital revolution is likely to repeat the history. Labor intensive job is heavily being replaced by automated machinery. White-collar workers is being threatened by the wave of digital disruption, leading to the tensions of “human in the workforce” to become a serious issue in this transition.

When the only certainty is uncertainty, self-preparation is the most important thing you need to be aware of. There is a method to do self-evaluation on your financial health, called “Survival Ratio” – annual salary is divided by total expenses. If the result is below 1, it means you are in trouble.

So there are 2 options for improving survival ratio. First, you need to invest, creating a long-term financial return. Second, you must reduce your expenses and create another revenue stream. Earning money from more than one source is a major trend we obviously have seen in many developed countries, such as in Singapore.IMG_5294

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