Sunday 4 December 2022

Are you stressed about your finances since the interest rate hikes started?

With interest rates still increasing although it might not be as aggressive, debts and loans repayments have increased at a rapid pace as the interest rates are being adjusted meaning repayments are higher than they were when interest rates were low. Couple that with layoffs and people being worried if they will be the next one to be axed, the stress on finances and job security can be heavy.

 Even for fresh graduates, the job openings are not as many and budgets are also comparatively smaller than 1 year ago especially so for tech companies as they will try to cut costs and increase the productivity with a smaller pool of staff. A recent article from Straits Times covered an OCBC survey and found that debt stress levels are up for Singaporeans as investment returns fall but Singaporeans are not saving enough for crises.

Survey results

The OCBC survey was done in August with 2,182 working adults between the ages of 21 and 65. It found that Singaporeans are strong savers but they were usually saving up for discretionary expenses like travelling. Investments returns are also falling as we enter a volatile market and earnings are falling for companies as inflation and interest rates are up.

Although the sample size is rather small but the age range is rather wide meaning so we can gather more insights from it. It was found that debt stress levels has increased as about a third of respondents (31 per cent) took on more unsecured debts such as credit card debts, education loans and renovation loans, up from 24% in 2021. There were some concerning findings as well.

  • As mortgage rates pushed to as high as 4.5%, 40% of respondents faced difficulties paying their housing loans now and more of them said that they would have to sell or downgrade their homes to repay their loans (8%, compared with 6% in 2021).
  • OCBC said those who had HDB flat and not private property were slightly more stressed over their home loan, with 42% facing difficulties versus 36% for private property owners.
  • Singaporeans are not saving enough for emergencies as 20% had not accumulated six months of their current salary.
  • The survey also found that more Singaporeans were allocating their savings to discretionary expenses such as travel as post-pandemic measures have opened up travelling.
  • More individuals have also incurred investment losses and plan to take on more risk to get higher returns. The older groups tended to speculate more in futures, currencies and structured investment products. younger respondents – Gen Zs and millennials in their 20s and 30s (about two in five of the respondents) – continued to turn to cryptocurrencies to build their retirement funds despite losing 40 per cent on average from such investments.

Overall thoughts

With the results from the survey, I would say that it is concerning regarding the emergency funds not being build up for some individuals and the other is that some individuals are taking on more risks on their investments in order to “make back the losses”. To be honest, I did lose quite a bit in the LUNA/UST crash that happened around May 2022, however since then, I have limited my risks and pivot towards “safer” (depending how you see it) counters.

For example, I am now just getting DCA-ing a small amount into ETH and BTC, more into ETH each month. I am not at the moment buying any other cryptocurrencies. I think after the recent crash, we can see how strong BTC and ETH has been holding up especially so after FTX news came up. ETH has been a huge component of my crypto portfolio but I am comfortable with my current exposure so I am not rushing to build it up as I want to still have stocks to be the main proportion. I am also now using Gemini to purchase and then immediately transferring them to my cold wallet.

Even for my stocks portfolio, I have reduced my buying into Tesla and am pivoting more into index ETFs. Tesla and all my index ETFs are about 50/50 but I am hoping to bring up my index ETFs proportion to higher than Tesla considering that Tesla price volatility is extreme these days due to Elon Musk and Twitter. Also, the overall outlook for 2023 is not looking good as people are expecting to tighten their belts as interest rate might remain high affecting many. So just really small amounts to buy Tesla and a larger amount into index ETFs. Mainly, I am moving off riskier assets and of course, trying to follow Warren Buffett’s rule to “Never lose money” so although I have lost some, trying hard not to lose more hahaha.

In terms of allocating expenses to travelling, I feel this is something that is good to do and have especially so when you are young and considering the “lost years” due to the pandemic, travelling is no longer taken for granted hence once the borders opened, I believe many have been saving to revenge travel and shop. As long as you are not overspending and stretching yourself, I think expenses for travelling is all right.

Interest rates are not really affecting me as I currently have no mortgage or debts although I have heard crazy stories where mortgages of about $2000 plus per month has risen to $4000 plus per month considering that the interest rate used to be around 2% and now is slightly above 4% depending on what type and where you get your loans from. It is crazy to have your mortgage almost double hence those who have got a property beyond what they could might struggle and so Kevin (turtleinvestor)’s advice on a home loan sounds so important in times like these.

Job security is very crucial to me at the moment as the tech industry is facing layoffs and I think 2023 will prove to be tough as there will be more depending on how earnings are. Cost cutting is definitely going to be happening more frequently as interests rates remain high. We shall see how everything goes. This suddenly became a really long article. Goodbye and happy December!


  1. I think there is a misconception here. Interest rate double does not equate to monthly instalments doubling, as portion of the monthly instalment is principal repayment and not the interest component. So far i have not seen mortgage monthly payment doubling in reality.

    1. Yea, a misconception on my end, I read this story here and so it kinda formed the basis for my explanation