Cai Jin

The SkillsFuture way to be financially savvy

It offers opportunity to apply life-long learning model, become better investors

The Government is spearheading a big drive to promote life-long learning.

In January, more than two million Singaporeans, aged 25 and above, were given $500 each in SkillsFuture credit which they can use to pay for courses such as learning a foreign language or even cooking. The Government will also top up the credit, which does not expire, periodically.

In June, it upped the ante, with the newly established National Silver Academy (NSA) rolling out short courses and other ad hoc learning opportunities for people aged 50 and above.

One big incentive for these older people to go back to their books is that they can have half of their course fees subsidised, subject to a cap of $500 per course. They can even use the SkillsFuture credit to pay for some of the courses.

They might find like-minded soul mates while participating in such courses, which will hopefully help them to become better investors... Yet, one question which ought to be asked is: What is the likelihood that they will further whatever rudimentary financial education they may be getting from such courses.

To top it all off, and to ensure that Singaporeans can develop to their fullest potential throughout their lives, a new statutory board is being set up to coordinate the national SkillsFuture movement.

As a financial writer who spends a lot of time promoting investor education, I find all these developments very exciting.

Sure, one objective of SkillsFuture is to enable all Singaporeans to take advantage of the wide range of training opportunities being made available to them in order to maximise their employability.

But the myriad courses on offer also include subjects that will equip them with basic financial management. This is useful material not taught in school and which they would usually have to pick up on their own when they start working.

Glancing through the National Silver Academy website (, I spotted courses offering training in subjects such as retirement planning and financial budgeting.

Since most people are not very financially literate and do not manage their savings actively to maximise their returns, these courses offer useful ideas on financial management to those who are not working, or are on the verge of retirement.

They might find like-minded soul mates while participating in such courses, which will hopefully help them to become better investors. The knowledge they gain will help them to hold more meaningful conversations with their financial advisers on how to invest funds wisely, rather than blindly follow whatever advice they have been given.

Yet, one question which ought to be asked is: What is the likelihood that they will further whatever rudimentary financial education they may be getting from such courses.

Time and again, we are reminded of the complexities of the financial products we are dealing with when we are confronted by instances of people suffering big losses on investments they know next to nothing about because they are lured by a promise of a return much higher than the negligible interest they are getting on their bank deposits.

Some will recall that eight years ago, the front page of this newspaper featured an old woman in tears after losing her life savings investing in Lehman Brothers minibonds - a toxic derivative product which she had mistakenly believed to be a top-grade investment bond.

That product maimed almost 10,000 retail investors who had invested a total of $520 million when the US investment bank collapsed in September 2008.

In the clean-up that followed, banks selling such complicated investment products to their customers are required to do a "customer knowledge assessment" to ensure that these products make investments appropriate to those buying.

But the upshot of these increased regulations is also to put investment products, which may contain derivatives, out of the reach of retail investors in the stock market, even though Lehman minibonds were not listed on the bourse here. Investors can trade them only if they are assessed by their brokers to have the necessary financial knowledge and experience.

Those who do not qualify have to go through a special programme on the Singapore Exchange (SGX) website and complete an online test before they are allowed to trade.

The safeguards have investors' interests at heart, and since they were implemented nearly four years ago, there hasn't been a big financial catastrophe affecting retail investors involving derivative products.

But investors find the test a killjoy and this, some say, is the reason for the appetite for products such as SGX-listed structured warrants souring in a big way.

Now that SkillsFuture looks set to become part and parcel of our lives, surely it is time to examine how the safeguards governing the trading of structured products for retail investors can be tweaked to encourage Singaporeans to gain a deeper understanding of the complex financial products they come into contact with.

In this respect, it is interesting to see what the NSA has been doing: It lists courses on its website offering "exam-free modules" from programmes drawn from polytechnics, universities and educational institutes.

This enables older people to take up the modules alongside students of these institutions - but without the need to take the exam in order to earn a diploma or a degree.

In the same way that the NSA has been popularising learning among older Singaporeans by offering exam-free modules, market regulators can ditch the test they now use in assessing an investor's suitability to trade a derivative product in favour of him attending courses to increase his understanding of such investments.

This is in view of the huge number of courses organised by the SGX Academy covering subjects such as stock technical analysis and portfolio management, as well as products such as bonds and structured warrants.

The courses are designed for financial professionals but there is no reason why they can't be modified to broaden their appeal to the investing public. A further attraction is the growing number of courses where participants can use their SkillsFuture credit to make payment.

Given the increasing importance Singaporeans now attach to growing their passive income, there is every likelihood that such courses will become more and more popular.

More than 20 years ago when I was a stock market dealer for a brief period, it was compulsory for me to attend an options course as part of my training. I did not become an expert in options trading after that but it equipped me with useful knowledge of the futures market.

The wonderful thing about the options course was that there was no exam to take. That took the stress out of the learning process for me.

After leaving school, it is unlikely that a person would want to cope with the pressure of exam, or even a simple quiz, if he doesn't have to. Simply by spending time and effort in attending a course, he is already showing serious commitment. Isn't that what lifelong learning is all about?

•Goh Eng Yeow will be giving a talk, Stock Market Outlook: Gain Or Pain, at library@orchard at 7pm on Friday. Admission is free.

A version of this article appeared in the print edition of The Straits Times on August 22, 2016, with the headline 'The SkillsFuture way to be financially savvy'. Subscribe