Philipp: Welcome to another episode of In Your Best interest, your personal finance podcast. I'm your host Philipp Muedder, and today we will be talking with Deborah Ho. Deborah is the regional head of the Southeast Asian business for Blackrock and Country Head of Blackrock Singapore. Blackrock is one of the world's leading providers of investment advisory and risk management solutions. Deborah is a member of the Asia-Pacific steering committee, which is the senior-most leadership body for Blackrock in APAC. A member of the Asia-Pacific EXCO, which is a general management group for the region. Globally, Deborah represents Blackrock APAC on the Human Capital Committee, which is the most senior leadership group ensuring the implementation of leadership and culture priorities of the firm. Deborah is a recognised champion for gender and cultural diversity, both within the firm and in the finance industry.
She's a global executive committee member of Blackrock's global women's initiative group. Welcome, Deborah, to the show.
Deborah: Thank you, Phillipp, a pleasure to be here.
Philipp: Yes, it's a pleasure to have you. Really excited for our discussion today. So for the listeners, we invited Deborah today; we want to talk a little bit about financial planning for women. So we talked a little bit about your background, and some of the questions we got [02:00] very interesting answers because they're always very personal for everyone, right? That I like to start off with is what was the first money lesson in your life? What is the first time you remember talking about or being in contact with money or right? Things like that.
Deborah: Sure. Well, firstly, it's a long time ago, right? And I have to be; I don't know, not even 5 years old. So both my parents worked; my mother was a teacher, so she worked outside the home. So my brother and I at the time were raised by a Cantonese nanny who really believed in financial literacy. And also basically financial resilience. Which is really interesting, because actually she couldn't read or write. But my brother and I would be in her bedroom after dinner at the back of the house, at about, I don't know 7.30pm when dinner was done. I mean, my parents were busy doing their own thing. And she would put us both in front of her little TV in her room and show us on the evening news the price of Gold and the price or the level of the stock market. And she would explain that the price of Gold is important because, in times of war, you can carry the gold and leave.
The second thing that she told me was the price of land is also important because, in Singapore, land is scarce. And if all hell breaks loose, you can plant vegetables in your land and still be able to eat. So it was always lessons about survival and how money basically is an enabler. So if you ask me about where and how I learned about money, it's through stories that she told me, about how she literally had to leave her family in China to come to Singapore, especially when her farm, in the family farm, was blighted [04:00] by a silkworm disease. So really, financial literacy and I guess independence was ingrained from a very early age for me.
Philipp: That's a super interesting story. Is that something that you still like to do? Investing in Gold or doing real estate? Is that something that interests you? Or now that you're with Blackrock, right? You went through finance. Are you more interested in the financial markets and equities or bonds?
Deborah: But Philipp, the world has changed, right? I mean, when we were talking about the story that I relate to you. Whenever I think about it, I have to tell you it's in black and white, it's not even in colour, okay. So those were the days before financial markets developed, and things had to be tangible. And you had to literally either basically hold it in your hand, or you have to feel it and touch it. Financial instruments these days are very different. I mean, they're traded on electronic exchanges, and a lot of it has to do with the intrinsic trust, that whether it's the world, or governments, or investors place in these instruments. Because you no longer hold a stock certificate in your hand, right? I mean, you basically trade it on a platform. And so I think that as the world has evolved, so have investors. And really money as an enabler, these instruments are also enablers.
Philipp: Yes, they are enablers. And I think you learned this at a very young age, which is quite good, right? Because a lot of people that I know, also friends of mine because they know I'm in the finance industry.
They also ask me, hey, what should I do with my money, right? But a lot of times I feel like in school, especially if they didn't study finance like myself. I studied finance; I always had an interest in finance, right? So I was always interested in it.
But a lot of my friends, they're engineers, [06:00] or they just did an apprenticeship after school; they didn't go to university, right? But they make good money. But they've never seen money as the enabler that you just mentioned, right? They save, but they don't necessarily invest because they're not used to it, right? I'm from Germany, also in Germany, it's very much real estate, and not much stock, right?
I think we had the numbers before, but I think it's less than 15% of the population actually invested in the stock market, compared to over 70% in the US, right. So what do you tell these people, or yes, you had it at a very young age? Like I said, you got this exposure? Hey, there's investments, there's savings, right? How do you see that?
Deborah: I think that there is a difference between saving and investing, which cannot be overemphasised. Especially in the world today, where interest rates are so low, right? And from what we've seen, whether it's post-GFC or whether it's during the pandemic, you can see that actually the liquidity in the world has never been higher, right? And so what it also means is that with interest rates being persistently low, it also has an impact on retirement funds.
It has an impact on how soon we can achieve some of the goals, the life goals that we want to have. So, for example, if you're just putting your money in the bank and expecting to accumulate enough for a down payment for a house. You know that it's going to take that much longer simply because interest rates are lower, right? And therefore I think that it is really important for everyone.
I mean as much as we learn how to swim, how to drive even. [08:00] Is to really learn how to make money work for you. And I think that one of the saddest things I find in our market these days is that there still continues to be a relative lack of trust in people who are meant to be advising us about money.
I don't think it's got primarily to do with the people who are financial advisors at all. But I just think that it's the risk-averse nature of some parts of the population. So I think that this distinction is important, and the more we do to try and educate everyone about how to manage your money to achieve a certain goal is really important.
Philipp: Yes. The goal-setting part, and then seeing progress towards that goal, helps a lot of people have a better mindset about it and focusing on that as well.
Deborah: Exactly. The other thing I was going to mention is that there's often an emotional relationship with money. And inevitably, sometimes when one makes an investment or a punt, right? I mean, there's also a difference between a punt and an investment, right? Sometimes it doesn't go so well, and then it's painful. And then, all of a sudden, people associate investment or punting with pain, right? And therefore, when you engage something, and it causes you pain, you try not to engage, right? So I think that the most important thing for me, in my journey, is to realise that you really have to be detached in terms of emotion and money, okay.
Because actually, the money doesn't love you back, I mean it's just a thing; it's just an enabler. And the better you know how to use it as a tool without a lot of emotion, the better it would be for you.
Philipp: Yes. And there's some good research; we had someone on from Stanford, [10:00] a behavioural finance economist. And she was also telling us about the problem that your losses get magnified over your gains, right?
You are so much more worried about the losses in your accounts than your gains, right? And so managing that. If you already know that that's one of the pitfalls, you really need to understand those and then try to work on them.
Deborah: Yes. I mean, having said that, though, I mean if there's one constructive emotion, if I had to, right? If I had to really associate an emotion with money, I would actually associate it with freedom.
Deborah: And I think that this is something that is much more prevalent. I think in current generations because we all want to do a lot more with our lives, right? And we're all living longer and longer. And therefore, if you've got certain milestones and certain goals in your life, and money as an enabler, it's really important to set those milestones in accordance with the level of, I would say, financial security or lifestyle that you aspire to have.
Philipp: No, absolutely. I think, and this is where we can make the switch a little bit and talk about financial planning for women, right? So you said it's about freedom; it's about giving yourself choices in life. How do you or do you have any specific tips for women?
They could be at the beginning of their career, mid-career, maybe they stay at home, maybe they're working, right? For the different scenarios, what are your usual tips and tricks that they could use?
Deborah: Well, Philipp, a couple of things to preface in a response. Firstly, I don't pretend to have all the answers, right? And I can't say that I have a completely 100% track record.
Philipp: Of course.
Deborah: But I think the beauty about being a woman is you have so many choices that are completely [12:00] acceptable to yourself and acceptable to a lot of other people, right? And therefore, in order to and avail yourself of those choices, there needs to be a certain amount of enablement. And that could potentially, in fact, that will come with financial security, right? So I mean, we've all heard about the power of compounding, okay, and it really is true. So whether you're a man or woman, you got to start young, okay. I mean, it doesn't matter how much, but we've all heard about dollar-cost averaging when it comes to investments.
And that's very true, right? Because no one can pick the tops or bottoms of markets, but also understand that the younger you are, the more, I would say, the more risk you can take, so equity-risk, right? I mean so in that way, right? I mean, I think that people should understand, especially for women, that if you want to plan retirement, let's say in 40 years' time.
Understand that in that 40-year bucket, you actually can take risk in terms of the instrument risk, as well as the liquidity risk, right? So basically, understand that you can take more risks when you're young, and also you can really save yourself a lot of heartache by investing a little bit every month.
Deborah: The second thing is to understand that there will be certain things in life that I think for women, we aspire to. So maybe I'll take myself in as an example. So I think that growing up, I kind of knew what I wanted in my life. Which I think has its plus and minuses, right? I mean, pluses is because you think that you don't have a lot of uncertainty, or you've kind of like planned the uncertainty away, that's actually not true, it never happens like that, right? And so I knew that by 30 I would be married; [14:00] I mean, this is like in the old days, right?
I mean, you'd be married. I married my childhood sweetheart; we'd have some children. I continue to be working; I would have owned a property by then. But then, in hindsight, I realise now that that's actually not right for everybody, and I don't think everybody should compel themselves to that aspiration either.
However, what that also meant is, it also meant that I planned quite carefully in terms of how I wanted to manage money. And realised that earlier on my career, I could take more risk. And so yes, we leveraged, and we bought our first property when we were like 25 years old or something, right?
Deborah: So I think that in various stages of our lives, if you've got certain plans and understand that, it doesn't always have to work out. But I think that we plan according to those things, it's really important.
And the other thing is also like there will be times in our lives where you might want to step off in terms of a career or pursue something else, or go back to school and learn. Again, that requires some degree of financial empowerment to be able to do that.
Philipp: And good planning right, if you plan proactively, you can have those things. So that's why we always, Freddy and myself, we always try to tell people just plan just in case, right? So you can save for your kids' education, early on when they're just born.
Deborah: That's right.
Philipp: Even if they don't go to university, you still plan for it, right? The money is not gone. You can still use the money for other use cases. But it takes a lot of stress away, plus it puts that habit into place, right? You just have a habit.
Deborah: Yes. And I mean the other thing is also like, I mean even if you have this intention of investing for your children. I would say be discerning in terms of where you put your money, right?
I mean, there's no shortage of financial instruments [16:00] these days that one can look at. But I would say be very mindful of the fees and how much you're paying away, particularly in this low interest rate environment.
Philipp: Yes, because one thing that we always say also is the fees are the one thing that you can control in investments, right? The markets will do their own thing over the long run, they should move up and right, but fees you can actually control.
If you're paying a 5% sales charge and a 3% ongoing fee, versus 0.08% or 0.4% in ongoing fees, that's a big difference, right? Huge. And I always show the graph right of what the fees actually compound to be, which people underestimate for a long time.
Like they think about like, oh, I have waited too long, or I saved only this much. Fees big difference, especially on a 30-year time horizon, right? That's the difference of going to a nice vacation in retirement or staying at home; it makes big differences.
Philipp: Yes. But Deborah, you mentioned you got married, you bought a house, your first property at 25, right? How do you manage your finances with your spouse? Because I think we get this question quite a bit a lot, right? I always explain how I do it with my wife; we might do it very differently from you.
But I think it's always a really interesting question because users tend to, from different geographies, tend to... In the US, people are very open about money. I feel like I lived there for 12 years. Whereas in Germany and in Asia, very opposite. It's very much more like let's not talk about money so much.
But I think being a financial advisor before StashAway for a long time, I worked a lot with families. And I've seen so many times where money became a big issue and ultimately led to bad outcomes for the family. [18:00] So, I always like to hear from people and learn a little bit from them of how they do it and what's their success in terms of managing the finances.
Deborah: You know I think that there are a few things that should be discussed ahead of time, right? So before we literally like to sign on the dotted line, there's some practical issues that need to be ironed out, right? I mean, I know it sounds quite unemotional, but there are certain things that we need to talk about.
So whether it's about how many children you plan to have, or what is the basis of a relationship, right? I mean, through time, right? I mean in various parts of the world. Women basically stayed at home, and they did a great deal of unpaid work. These days, there are some amount of unpaid work that women do as well.
But I think in my case, what we did was we established right from the start that it was going to be a very partnership-driven marriage, okay. In the sense that we both have a tremendous amount of respect for each other in whatever we did. So my husband used to trade FX, I used to sell bonds.
And so we were very practical about things. So in years because obviously, in those days, investment banking, a lot of your compensation comes through bonuses, so we would calibrate every January.
So if let's say he made twice the money I made, then he would have to contribute the corresponding amount into our joint account, and we would also have our own money that we would manage, right? I mean, we would have the same approach when it came to investing for retirement.
And so that I think not just helped [20:00] us financially, but it also established a much of an equal footing if you can call that in our marriage. There were years when I took off to have because of the kids and all that. I mean, I wanted to spend some time with them.
So I took 2 years off, and during that time, we also came to an agreement that my husband would say, and I would agree that X amount of what he made basically was credited into my account because of the work that I did to support him and the family.
And because he was very, I would say, conscious about not wanting me to feel bad, the money would be credited into my account, and it wasn't like he came home and gave me a stack of cash, right? Because I know for a lot of women, not having your own financial independence was a big blocker.
It was an emotional burden, and we just wanted to make sure that didn't happen to us. So I think it's important to have all these discussions upfront. I mean, it gets a little bit difficult if you're further down the road. But I don't think that it is impossible; I think it really depends on the relationship that you have.
Philipp: Yes, absolutely. I think you made a good point there. Because I remember vividly from my grandparents, that my grandma always had a separate jar, or like she always had some money somewhere that's when I like I wanted something, and she's like don't tell your grandpa, but like here's some money.
So I do agree, so for me and my wife, we always talked about money from the beginning, right? So yes, we always said, hey, this is how we're doing it, and we actually use the same system coincidentally that you use as well. But it was also [22:00] because I was a financial advisor before I met my wife, so I also learned all the bad things from clients that they were going through. So I always like this is not what I wanted to do, right? I'm also a counsellor to them.
So what I want to do is the best possible way for myself, right? So I think that's a very great way of managing finances. So our listeners will really appreciate that I think, and also approaching the topic with their partner is super important. The other thing Deborah, that I do want to touch on is finances for your children.
We touched a little bit on saving for college, but what I want to get to is often not talked about so much, is how do you teach your kids about finance, and how do you teach them about maybe they get an allowance, a weekly allowance, right?
Should they spend the full allowance on candy or toys right? Versus saving for something bigger. How do you do it with your children?
Deborah: So I remembered when they were very young, we didn't really start with, let's say like here's a piggy bank, right? We talked about choices, right? I mean, now, with X number of years of school, that these are called opportunity costs, right? So you understand that you don't necessarily have it all, all the time, right?
So I think that we started with this whole concept of having to make a choice, right? And then, later on, I guess when they were older, and we got allowances and things like that. I mean, basically showed them examples and real-life examples. So whether it is incorporating it into the math that they did, and so obviously when they started to learn about whether it's plus, minus, multiplication, divide or percentages.
One could basically translate it back [24:00] into daily life, right? And one of the earliest things that we did instil in them is again, right? I mean time-value, right? I mean, obviously, we don't tell them about option value, time decay, and things like that, right? But basically, tell them that look, you're only like 10 years old, and let's say you live up to like 80 years old, okay. That's 70 years, okay. So let me show you what $10 compounded at this rate will mean in 70 years' time.
So obviously, we started with very simple ideas, but we incorporated, as you say, into daily life. So I mean, the children are really smart, right? I mean when they go with my aunt to the market to buy vegetables, when they come back my aunt will say okay, so you wanted this bowl of noodles, it costs aunty $3.50.
So that means that I didn't get to buy these vegetables, and we're not going to have vegetables for dinner. So in a way to equate choices that they made, with let's say the sacrifice on the other side if you know what I mean.
Philipp: Yes, absolutely. But you said in the beginning obviously something really important with the low interest rate environment, saving is important, building a savings habit is the first thing, right? But then how do you teach kids the investment part? Are there also ways that you have done it or not yet?
Deborah: Yes, absolutely right. I mean, so I think in terms of concepts because financial news is all around us. And before long, they're going to ask you, I mean, what is the stock market, right? And in a way, I guess it's these periods that we speak about, let's say, a company, right?
I mean, when you need to grow your company, and you don't have enough money, what do you do, right? I mean [26:00] and teaching them the difference between owing money, okay, and selling a part of your money, right? So loans/bonds okay, versus equities, you see.
So I think that telling them or rather teaching them this through stories is a really good example. I mean one of the things that, a ritual that we've had in our family since they were very young, which I would highly recommend for young parents, right? Is it doesn't matter how articulate or whether they can speak in complete sentences? But at least like 3 times a week when we have dinner together or a meal. The whole family has to talk about “3 plus 3 minus”. 3 good things that happen to you today, and 3 bad things that happen to you today. And everyone has to do it, including me, my husband, the grandma.
And inevitably, I'll talk about work, and then they'd be curious, and then they'll ask questions, right? And that, to me, are teaching moments that you can relate in your daily life to the questions that your children are asking you.
Deborah: And eventually, I think the stories themselves will educate the children in a way.
Philipp: That's very interesting. And I have a couple of friends who have done it also through products that the kids like to use, right? They learn about equities. Oh, you like Disney+, you watch shows on Disney+, how does Disney+ get financed?
Or like how does a movie get made, right? But you can also earn part of that company, right? So if the company does well. So like teaching them about that, that's always, I don't have children yet. But a lot of my friends do, and that's how they started to do it now.
Deborah: That's right. And so, in a way, right, I mean it's not like putting it in a box like this is a difficult topic that you learn in school. [28:00] But really, it's all around us; it's just part of daily life.
Philipp: Yes, absolutely. Thank you for sharing that Deborah, I think that would be super interesting. Then one last thing that I want to ask you is we talked about talking with your spouse about investments; we talked about children learning about investments.
One other thing that's always dear to my heart is when it comes to a financial plan B almost, right? So because not all things go well all the time.
And I felt, so I gave now about over 200 financial planning seminars here in Singapore, in Southeast Asia. And every time I ask one question, say how many of you have a will in place, for example? And it will be less than 10%, it doesn't matter how many people were in the crowd.
It's less than 10%, and then there's probably 30% who say they're thinking about it, right? Or they thought about it, but they never have time to get to it, right? I always tell them, hey, it's actually quite important, especially if you have children and things like that. But they always said, oh, Philipp, you don't understand, it's such a difficult topic to breach with our parents, right?
So talk about with your elders, because it's not a nice topic to talk about, right? My parents, I'm the worst candidate here, because I tell my parents every year at Christmas when I go back to Germany to do it, and they still not do it. Because my dad's oh, I'm 63, right? I still have time, but I said we have our own business, right?
You need to like, and we all know, people who have someone passed away, and their kids are not speaking to each other anymore, right? I always give that example to make it real. Like hey, just talk about, do you have any suggestions for people to breach that topic with their family at all?
Deborah: You know I think that the generations are hard, right? I mean, I think that people have their own preconceived, and again emotional attachments to such things. The way I see it is, it's [30:00] something I'm doing for my children, something I'm doing for people I love, right? Because I would not want them to go through anguish, any more anguish than they're going through if something were to happen to me.
And especially for families where you worry about special needs children, that's even more important, right? Because you don't know what kind of social safety net, the country or the society might provide to that child.
So really, it's redirecting that purpose, right? I mean, I don't think of it as well, I'm doing a will, and it's a pain in the ass because I've got so much assets. But really, I think what would motivate a person is doing it for people that you care about, and that's the way I see it. Making it easy for them.
Philipp: Yes, that makes perfect sense. So thank you for answering that. And then, to wrap it up, Deborah, I know we're running out of time. But what is one, and there were already many of them, so I will mention them to everyone again after the show. But what is one of the key takeaways that you'd like to give the audience as a parting gift for today on managing their finances or managing their money?
Deborah: Well, I guess it's better to do something than nothing at all and just do it regularly.
Philipp: Yes, great, thanks. We talked about this habit thing today quite a bit, and I think hopefully that's the one takeaway people take away because it's super important, and the earlier, the better.
Philipp: Deborah, thank you so much for being here today. We really appreciate your time, and it was a great conversation and looking forward to speaking and seeing you again soon.
Deborah: Absolutely, thank you, Philipp.
In this episode, Deborah Ho shares how she learnt the value of money from a young age and how it’s impacted the way she manages her family finances.
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