Put all your chips on proper financial education, say experts



MORE should be done to equip youths with the proper knowledge on how to handle their finances.

One reason is because it’s now easier for young people to be exposed to wrong information on financial matters, says independent financial adviser Yap Ming Hui.

While most people know gambling is wrong, he worries that some youths may fall into the grey area of speculating activities, disguised as investments.

“For example, some offer investments into certain precious metals, aside from gold, like lithium or technology stocks.

“Some claim they can make 300% to 500% of their capital within one month.

“Such schemes appear like investments. Some operators package it with high returns but very high level investments with loans.

“This is a grey area which is disguised as an investment that can be a big trap to young people, ” Yap says, adding that there are high chances of losing a lot of money.

He observes that there are many advertisements on YouTube and social media by young men and girls in their 20s, claiming to be successful in achieving 100% returns from the stock market.

“Some say they have earned a fortune from trading in cryptocurrency and are offering to teach others on how to do the same.

“As youths spend a lot of time online, especially during the movement control order, it is easier to be bombarded with such information.

“However, as enticing the offer may be, most of these financial ‘gurus’ are not licensed and not properly qualified to advise clients.

“So there is nothing holding them back from promising such attractive returns, ” Yap explains.

Stressing there is nothing wrong in growing extra money through investments, he says it should be done with proper personal finance knowledge and education.

But unfortunately, Yap says such proper investments with realistic returns may not seem as attractive to youths, compared to those advertised.

To minimise losses from investments with risks, he advises people to only invest the amount they are willing to lose.

“Young people should limit investments with risks at 10% of their total investment assets, ” he adds.

Total investment assets are tangible or intangible items obtained for producing extra income such as mutual funds, stocks, bonds, real estate and retirement savings accounts.

By capping the amount to 10%, Yap says people would learn from their experience but still be able to bounce back if they lose the sum, instead of having to refinance themselves after losing everything they have, or falling into debt.

Yap advises people to have good financial habits and planning especially during the current hard times.

“While you are still earning income, budget what you spend and calculate how much emergency funds you need, ” he says, adding that people should try to have at least six months to a year’s worth of emergency funds.

Professor of Economics at Sunway University Business School Dr Yeah Kim Leng says parents should be involved in inculcating financial discipline and extolling the virtue of savings in children.

“Financial education should also be part of the living skills curriculum in schools.

“Colleges and universities could also promote financial literacy as part of extra-curricular training for all students, ” he says.

Dr Yeah said while the economic recovery is weaker than expected due to the MCO 3.0 and Covid-19 spike, it remains on track but slower and uneven.

“We will see more differences in the economic and financial impact on firms, businesses, households and individuals.

“Should the virus infection rate remain high and the national vaccination programme fail to reach the 80% target by year end, we may be looking at the first half of 2022 to regain pre-pandemic stability, ” he foresees.

It is not surprising to find more financially distressed households and individuals due to retrenchments, wage cuts and debt-servicing problems too.

“The financial distress is particularly acute for those who are highly indebted and have meagre savings.

“Those who are unable to reduce spending or cut back on lavish lifestyles are also at high risk of defaulting on their loans from formal or informal creditors, ” he adds.

He urges those encountering loan payment problems to seek the assistance of the Credit Counselling and Debt Management Agency (AKPK).

Over the past 15 years, AKPK has helped nearly 1.2 million individuals through financial advisory services.

“Out of that number, more than 330,000 have participated in debt management programmes. “Nearly 34,000 of those in such programmes have graduated, settling a total outstanding amount of over RM1.5bil, ” the agency says in a statement.

For more information on AKPK’s services, visit https://services.akpk.org.my or https://www.akpk.org.my