Squid Game – When it comes to finances, ain’t no fun and games

Singapore has announced its plans to begin raising the retirement age next year from 62 to 63, and employers will also be required to offer to re- employment to workers as old as 68 in the same organization. This should come as no surprise as with increasing life expectancy and low fertility rates, the proportion of elderly citizens in Singapore is indeed rising rapidly, with one in five residents forecasted to be above 65 by the end of the decade.

This brings to mind the value of proactive retirement planning. Starting early is also of paramount importance as it means that investors will be able to benefit from the compounding effect of investing.

Jumping onto the bandwagon of quoting the viral Netflix Series “Squid Game” (#squidgame), we can draw 3 parallels here to give us some insights into the significance of financial planning.

For the minority of readers (as I boldly assume) who have not watched #squidgame– the biggest ever hit for Netflix if I may add – this show is set in modern- day Seoul that sees 456 deeply-indebted players being lured into playing a series of deadly survival games to win a huge sum of cash at the end of the day.

 

1. Importance of Saving

Most – if not all – of the contestants in Squid Game never did learn the art of savings. Clearly this has resulted in their dire financial situations and hence the draw for them to participate in #squidgame for the pot of gold. Saving is one of the most important financial habits that one should adopt from a young age. That said, in today’s rising inflation and low interest rate environment, savings alone are not enough – cash is no longer king. Current macro conditions are eating into the value of money and eroding your real spending power. Investors and consumers alike have realised the need to better preserve and grow their cash.

Over the past few years, here at Lion Global Investors, we have been building up our Cash Management suite; comprising a trio of funds designed to optimise liquidity in a low interest rate environment – namely our LionGlobal Money Market Fund (~0.84%* yield), LionGlobal Enhanced Liquidity Fund (~1.37%* yield) and LionGlobal Short Duration Bond Fund (~2.67%* yield). In a way, we are helping investors to make their money work harder for them and to hedge against inflation.

Source : Unsplash


2.
Have a Strategy & stick to your long-term goals

The first iconic “Red Light, Green Light” game has spawned heaps of memes on social media

– basically players are allowed to move forward only when the robotic doll (featured above) says “Green Light” and freeze during periods of “Red Light”. The goal of the game is to get across the finish line. This game has taught us that speed is not a key factor in life (or investing for this matter) – it is important to have a strategy and stay focused on our long-term goals. The first person who rushed mindlessly to the end point is also the first person to be eliminated; in fact that strategy could be fatal. At times you have to “hide” behind other players to survive.


Source: iStock

This reminds me of the performance and volatility of the Chinese stock market throughout this year. The multi-pronged regulatory measures imposed by the Chinese authorities on various sectors have upended markets and resulted in various bouts of panic selling. To this end, we believe that the Chinese government’s ultimate aim is to promote sustainable and socially responsible growth, for the common prosperity of all, that will lead to a healthier and more competitive market in the long run. For investors who are keen to participate in the long- term structural growth story of China, they can consider the LionGlobal China Growth Fund or the Lion-OCBC Securities China Leaders ETF. Slow and steady wins the race.


Source: iStock


3. Diversification

In episode 3, before the Honeycomb game, one of the players Cho Sang-woo advised his team members not to “put all your eggs in one basket”. Indeed, diversification across different asset classes, geographies and sectors helps to reduce your overall investment risk. One example will be our LionGlobal All Seasons Fund. As its name suggests, it aims to help investors weather all seasons of volatility. It is a globally diversified strategy that provides access to opportunities via both active and passive instruments with 2 underlying asset classes (equities and fixed income) and across 8 strategies. These portfolios are rebalanced every month to maintain its intended allocations, as well as to reflect changes in the market dynamics and global economic outlook.

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Comparing the TER cost for 20 years

Here’s the difference a low cost advantage makes to cost savings

Here's how much you pay

$190,272.13
Selected TER 1.00% p.a.

$99,912.57
LionGlobal All Seasons Fund 0.5% p.a.

By investing a fund with low TER

You may save $90,359.56 over 20 years based on an initial investment of $1,000,000 compared with a TER of 0.5% p.a.

It is enough to provide for a monthly expenditure of $3,000 over the next 2 years and 6 months.

Here's how much you pay

$271,950.61
Selected TER 1.50% p.a.

$99,912.57
LionGlobal All Seasons Fund 0.5% p.a.

By investing a fund with low TER

You may save $172,038.04 over 20 years based on an initial investment of $1,000,000 compared with a TER of 0.5% p.a.

It is enough to provide for a monthly expenditure of $3,000 over the next 4 years and 9 months.

Here's how much you pay

$345,744.19
Selected TER 2.00% p.a.

$99,912.57
LionGlobal All Seasons Fund 0.5% p.a.

By investing a fund with low TER

You may save $ 245,831.62 over 20 years based on an initial investment of $1,000,000 compared with a TER of 0.5% p.a.

It is enough to provide for a monthly expenditure of $3,000 over the next 6 years and 9 months.

TER (Total Expense Ratio) is the sum of various identified operating expenses charged on an ongoing basis to the fund’s assets as a percentage of the fund’s average net asset value calculated over a 12-month period at the close of the annual and semi-annual financial statements of the fund for all the p.a. tabs (1.0%, 1.5%, 2.0%).

The above scenarios are for illustration purpose only. Past performance, as well as any prediction, projection or forecast on the economy, securities market or the economic trends of the markets are not necessarily indicative of the future or likely performance of the funds. Calculations based purely on costs with no market movement or investment returns.