Sunday 17 July 2022

Millennials around the world are becoming huge savers but is saving sufficient?

As the pandemic savaged through the world in 2019 and 2020, many millennials realised the importance of saving and having an emergency fund as job security was gone for certain sectors. Some in the tourism sector could not even foresee any form of recovery as lockdowns were imposed and travelling became so tedious and almost impossible.


At that time, passive income and investing became popular as the market was being propped up by people working from home or not working and receiving stimulus checks from the government. Saving and investing was how some managed to multiply their net worth. Of course, there were losers as well. The investing craze was also propelled by companies that gamified investing and introduced “commission-free” trades.

Going into 2022, so many more uncertain and depressing news are happening from the Russia-Ukraine war to China’s lockdowns, food supply and security issues coupled with inflation for everything from food to gas to electricity. 2022 is going to be challenging and we can see many individuals strapping their belts and preparing to spend less as prices goes up and uncertainty increases. We can also see many companies having layoffs and restructuring to have a better balance sheet.

Is saving enough?

If you asked me before 2022, I would say it might be sufficient (depending on your spending habits) however entering into 2022 with prices being up everywhere, I would say saving is a huge first step but investing based on your risk appetite and goals are equally important to ensure your money does not deflate in value over time unless your income really far outweighs your expenditure by a huge proportion. With Singapore facing a fresh chicken import ban from Malaysia recently, it has exposed the vulnerability of Singapore as chicken now does come with a premium and many stores having to close temporarily or make changes to the source to continue operations.

Of course, investing is a luxury as it means you have disposable cash left after paying for bills and necessities, including having an emergency fund. If you are already saving a portion of your salary, congratulations, that is already something to be proud of. I would say based on my circle of friends and family, saving is necessary and everyone does save on a monthly basis after getting their salary and we are privileged to be able to do so. But we all know that our money in the bank is deflating in value so a portion of it should be put to work.

Investing in volatile times

During times of uncertainty, it is exceptionally difficult to press that buy button as media outlets and social media paint a gloomy outlook and to be honest, the situation now is really a tough nut to crack. We all know that the Fed is trying to bring down prices of assets so that people will feel pain when looking at their portfolio leading them to spend less. This will allow supplies in stores to build up over time as demand lowers and shop owners will need to sell their items at a lower price to clear out inventory but as we face more supply issues, inflation just doesn’t seem to budge. Hence we can see that people are predicting that the FED will be more aggressive in raising the interest rate to curb inflation.

I read a book recently called, “Just Keep Buying” by Nick Maggiulli and it is a book that really brought me back to the basics of why I started investing, as I have wasted so money in the last few months trying to speculate and just not sticking to the principles I set for myself. Besides revisiting the basics purpose of why I am investing my money, the book provides an insight and data to back why time in the market beats timing the market.

Investing in volatile times for me will be less screen time as the media post eye-catching and sensational headlines to catch your eyes and that might not necessarily be the best for your portfolio if you are planning for a long term approach like me. So I do choose not to be affected by the recurring depressing news on all time lows, instead I have borrowed a few books from the library and started reading up. It helps me understand the different situations and how the markets eventually will recover although everyone always says,”This time is different”. Of course, I do feel that this time is different as the situation we are facing affects the world and the middle class and working class are most affected as wages do not keep up with inflation and job security is threatened as inflation goes beyond the roof. But if the world ends, I guess my portfolio would be the least of my worries.

Anyway, time really flies and I have to admit I haven’t been maximising my time but a break is nice after some time. There have been a lot of distractions recently from my personal life as well as the markets as crypto markets are filled with liquidations and 3 digits ETH and Bitcoin has fallen below $18,000. These are prices I entered in at when I first started, I entered BTC when it was $18,000 and when ETH was $500, prices in USD. What is different is that it was an upward market at that time where everyone was talking about the adoption and good news. This time round, lesser people are taking about crypto and more so about the dropping prices and liquidations taking place. It is scary thinking about all the events happening and people talking about stagflation, to just keep buying feels funny too as people would doubt your choices but it’s after all your money so you should learn to handle it yourself.

I am hoping to churn out more articles of course depending if I can have more ideas, videos on the Youtube channels might take a pause as they do require so much more effort but quarterly portfolio updates will still be uploaded as that’s the least I can do for me to look back and hear my voice haha. Hoping that this tough environment goes past soon in the meantime, save and survive!

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  1. I must say that unless you have a high-flying career or a rich family background, you just have to work hard & work smart. And create breaks for yourself by proactively volunteering for projects & asking for good increments if you've done well for the year, & looking out for opportunities where salary is 20+% higher.

    Save as much as possible, live below your means, and DCA consistently into proven broad index like S&P 500 or MSCI World. DCA-ing a portion into blue chip S-reits over many years is also a good idea (with dividend re-investing).

    It's fun to try out flavour-of-the-month stuff like cryptos, 10+ P/S profitless tech, meme stocks etc. But know that these are mainly sentiment driven. When the psychology changes, prices can drop like a stone.

    Even for someone young with a high risk appetite & a safe good paying job e.g. civil servant, I think 20% of portfolio on cost-basis is the most that should be utilised. 10% or 5% will be more appropriate for most people. And you should bank your capital quickly, and take partial profits along the way.

    Otherwise just budget $1/week for Toto. $52 per year for hope lol!

    1. Haha, really like the ending. But yup, I love your comment, lots of gems especially saving as much as you can, living below your means and DCA. Nice to try out new stuff once in awhile as well although I have been burned. Appreciate your comment:)

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