The problem many of us face today isn’t financial illiteracy but information overload. And that’s when things can get messy.

We sit down with Joanne Lai, Senior Advisory Group Partner of ACTS Advisory Group, to go back to the basic principles of financial management.

Joanne previously shared with us her career journey and how she was ready to quit in her first year on the job, but how passion and purpose kept her going.

Here, she shares 3 things to be cautious about, and another 3 tips for young investors.

1. Don’t be unrealistic

Just because you’ve seen a guy on YouTube make it rich, you could suddenly feel like throwing away what is realistically achievable.

“They’d tell me, ‘YouTube has got this 10-minute explanation, you just tell me in two minutes,’” observes Joanne, sharing the encounters she has had with clients.

The danger about such videos is that it entices viewers to follow suit despite there being no way of verifying the claims made.

Joanne believes the root cause of these desires is instant gratification.

But at the end of the day, there’s no way to cheat around core principles such as money, interest and time, or MIT for short.

“If you have seed money, but you don’t have time to let it grow, you’re asking me to do magic,” she says. “There’s no such thing as a financial shortcut.”

2. Don’t follow blindly

Once, Joanne ran an experiment.

She got her friends to read a financial advice book where the author claimed to have predicted financial crises that happened in the past. 

The more her friends read the book, the more afraid they became as rumours started going around that the market was going to crash.

The truth is, after more research, Joanne discovered that the author himself didn’t invest well and that his claims were exaggerated so that he could sell his book.

“I asked my friends if they checked the source and they said ‘no’ because the book was given by me so they thought the source was good,” shares Joanne.

Key lesson: Checking our sources is a practice we should always adopt.

3. Don’t be driven by fear

The hardest part of investing is actually emotions because it has got to do with our hard-earned money, Joanne points out.

Fear is contagious, but so is everything else. If we have to choose an emotion, why not choose the better emotion than the worst?

Simplifying it into an acronym, Joanne outlines the ABCs of Activating Events, Behaviour and Consequence.

Your behaviour that’s reacting to the activating event has consequences. You can’t control the situation — but you can control how you react to the situation, which will result in very different outcomes.

Acknowledging that keeping our emotions in check is easier said than done, she suggests the following.

“When you’re worried or stressed, take deep breaths, exercise, keep your mind alert and try to find data points to help to support rational thinking.”

Do also reflect on these 3 Vs

1. Valuables

These are different for everyone. To some people, they would think of money in the bank. For others, their house.

“I must save up until I have that amount for my first house, my first…” explains Joanne. 

Valuables are then things people have or they hope to attain.

2. Values

Likening it to Google Maps, Joanne elaborates.

“How do I get to my destination? I can take the bus, MRT… Do I want to get there fast, regardless of methods, or by following the right principles?”

People who are truly rich actually value values more than valuables, she noted. Because they are not only are able to gain money but also keep it.

After all, what’s the point of getting rich through illegal means, but ultimately end up getting into trouble with the law?

3. Value

“What’s the value of money? To some people, it’s just a number. To some people, it represents that they can show off. To some people, it’s the quality of life,” says Joanne.

For Joanne, it is about being able to honour God with the things she has.

“Through my life, people must see God and not see me. So even if I have more, I want to be able to bless. When I have more, I want to do more.”

Turning the question back to readers, Joanne asks: “Why do you need this money? Why do you need to be rich so fast? The why is actually more important than what or how.”

Among the 3 Vs, turns out that value is actually the most important in terms of financial literacy.

There is no one plan to rule them all when it comes to growing your finances.

However, having financial management principles in place can anchor and guide your decision-making process.

No matter what kind of strategies you adopt, why not take some time to review your financial management principles?

Disclaimer: The content is not intended as a recommendation to purchase or invest or as a substitute for professional financial advice. Always seek the advice of your financial advisor, do your own research and assess affiliated risks.

  1. What is the value of wealth to you?
  2. How have your life experiences shaped the way you think about money?
  3. What are some principles you would like to stick to when it comes to managing your finances?