8 DAYS | 71STORYJASMINE TEO PHOTO EALBERT HO8 DAYS: Part of the motivation for you to set
up The New Savvy was your family’s financial
situation. What was it like growing up?
ANNA HAOTANTO:We struggled financially and
we didn’t own a flat. Instead, we were renting. I saw
my parents make financial mistakes, like borrowing
against credit card. Everyone knows it’s not the
principal that kills you — the interest is 24 per cent
per annum and it keeps adding up. My parents didn’t
have insurance and they aren’t exactly in the best of
health, so it’s hard to get them insured and medical
expenses are very high. And since I’m the main
breadwinner of family, I wanted to make sure that the
mortgage is taken care of. When I was in SMU, our
rent kept increasing. As it is, our disposable income
was already insufficient. Our rent had increased from
$2k to $2,200 to $2,400. If you’re earning only $3k,
even a $200 is a lot ’cos you don’t have savings
and there are fixed expenses to pay. My dad wasn’t
working at that time, and my mum was a manager at
a textile company. So I’d always thought of how I could
get my family out of our situation.
How did you get from that to earning your first
million at 29?
By having a lot of discipline and a goal. I set an annual
budget, and also focused a lot on investments. I just
made sure I had enough liquidity to pay bills. Back then,
I didn’t drive and I didn’t have a lot of liabilities. I didn’t
really shop and only bought my first bag at 31 when I
had appendicitis and was on six weeks of MC and was
bored. (Laughs) It’s always about building wealth and
the first part is always the hardest. I invested most
of my money, about 80 per cent of it. I’m quite an
aggressive investor, but to be fair, I’m lucky that I had
that knowledge as part of my job.
Why is the content on TNS only targeted at
women? Are we shopping too much?
Among my group of friends and I, I’d say we’re slightly
privileged ’cos we went to university and are earning
quite well. But I heard about someone who’s in $80k
debt ’cos she kept buying branded stuff. Her story is
quite commonplace. Bad debts are increasing, with
people unable to make their credit card payments. I was
also struck by something else when I was shopping at
Topshop one day. I wanted to buy a dress that’s about
$150 and I thought that it’s a bit expensive. It’s not that
I can’t afford it, but it’s not value for money. I’m now
into conscious spending. Last time, I wouldn’t think
twice about buying a $40 dress. But now, I think about
cost per wear. When you look around, it is the 16-year-
olds who are shopping at Topshop. It made me think,
how do they have all this money? All these things made
me realise that there isn’t enough financial education
here. In Singapore, you’re supposed to be good at
Maths, English or Science, but no one teaches you how
to manage your money.
What’s the most common financial mistake that
people make?
The idea is to start early, learn, and get comfortable
with investing. Many people tend to overthink it or
procrastinate by saying that they will invest when they
have a certain sum of money. That shouldn’t be the
way. You should start early, even if it’s a small sum. It’s
scary if you start with $5k or $10k ’cos if you lose, you
lose a lot of money. But if you start small with $500
or $1k, it’s much better. No matter what, you’ll always
make mistakes. So start small and learn.
‘Small’ is subjective. It means different things to
someone who’s earning $2k and another person
who earns $7k.
You always should maintain liquidity — the golden
rule is to have six months of your monthly pay. Don’t
stretch yourself too thin. When you invest, it cannot be
something that consumes your life and makes you lose
sleep at night. It should be complementary to your life.
If you only have $2k of disposable income, don’t buy
something that’s $3k.
If I’m a first-time investor, how should I start?
Buy insurance. Not investment-linked policies, but
critical insurance and healthcare insurance. These
are about $200 but it protects you. But you should
also have a goal and plan for it. The thing people lack
is financial goals. They have career goals, such as to
become a VP; or life goals such as getting married
by 30. They don’t have goals like saving $10k by this
year. If you have that, it becomes clearer. Buy what
you’re familiar with. I don’t invest in art or wine ’cos I
don’t know much about it. I always tell people that they
should know their objectives, what they’re comfortable
with and their loss appetite, ie. how much can you
lose? If you set it at 20 per cent, then you should cut
losses at 20 per cent. The mistake people make is to
think that it’d go up again. You have to be disciplined. If
I set a target to earn 25 per cent, I’ll sell once I make
25 per cent. Of course I might not make as much as I
could have, but I’m happy with that. I’m not saying this
is the best way, but it works for me.
Three questions a financial noob should ask a
financial planner when they first meet?
Firstly, the financial advisor must plan for you and your
goals. Secondly, ask them what the maximum losses
are, and what the risks are. It could be political risks
— if you buy something in the US and if they wage war
against North Korea, what happens? Lastly, ask how
long your money would be stuck [in the plan]. A lot of
people invest without knowing they can’t take out the
money as it’s tied up for a few years.Millionaire Minds airs Tue, on Channel NewsAsia, 8.30pm.
Catch Anna on the Nov 21 ep. Catch-up episodes on http://www.
channelnewsasia.com.