Never too early

The Securities and Exchange Commission offers app to encourage young savers.

Financial gurus suggest planning for your future at the start of your first job in order to secure a comfortable life after retirement.

A woman walks past a sign promoting the RMF-LTF fair which ended yesterday. Retirement mutual funds and long-term equity funds are one way to encourage people, especially young adults, to make long-term savings by allowing generous tax breaks. SOMCHAI POOMLARD

The Securities and Exchange Commission (SEC) realises this and is encouraging first jobbers to build savings from the start for a safe and sound retirement.

The SEC, which regulates the securities market and protects investors, knows that getting the younger generation to put money aside for their long-term future is difficult. In order to do so, they need to make saving money more convenient to cope with their lifestyles.

To this end, the SEC has introduced applications that allow young adults to plan their financial future in an easy way through the use of smart devices such as iPhones, iPads and smartphones.

Sureerut Suradecha, director of the SEC's Financial Literacy Department, said new graduates and first jobbers usually spend all their earnings on clothes and dining out and show little concern about preparing for retirement.

"They scarcely think about retirement savings, possibly because they don't recognise the importance of doing so since retirement seems a long way away," she said.

But young people who make retirement planning a priority can amass a lot of money to enjoy their retirement. The earlier they start saving, the better, said Ms Sureerut.

"If we can encourage those who have just joined the workforce to save part of their salary, then the amount put aside won't affect their daily lives too much," she said.

Planning for retirement should start with the first baht they earn, or else they may have difficulties building up sufficient funds.

"If people begin retirement planning when they are older, it could be a big burden for some. They'll need to put aside a large amount of savings, and the money will have fewer years to accumulate," said Ms Sureerut.

To instil good savings habits among young adults, the SEC has introduced an application called Start-to-Invest that can be downloaded for free on iPhone, iPad and Android devices. Since its launch in May, the app has been a hit and downloaded more than 50,000 times.

Start-to-Invest allows people to customise their financial planning and retirement savings as well as help them figure out how much money they need to spend after retirement.

For example, a 27-year-old man decides to start saving for retirement at the age of 60 and has monthly expenditures of 20,000 baht. The app will determine a fixed reserve that fits his retirement plan, which it sets at 4.8 million baht. This amount will allow him to enjoy 20,000 baht a month until the age of 80.

"Once he has set a target, how to achieve it is another step," said Ms Sureerut.

Besides the SEC, many financial firms also offer easy-to-use financial planning tools that help to determine how much to invest and how much to keep as reserve.

For example, if the savings target is 1 million baht and 1,000 baht a month is saved plus 12% returns a year, then it will take 20 years to accumulate 1 million baht. But it will take only nine years with monthly savings of 5,000 baht.

Some insurance companies have also introduced apps to help clients plan their financial futures.

For instance, a 25-year-old first jobber may have a retirement fund of 6.43 million baht upon reaching 60 if he puts 1,000 baht a month in stocks for 35 years.

The results are based on an average 12% investment return from the stock market each year.

Despite smart apps to help people make financial decisions, investors must be aware of the risks of investment, especially in speculative stocks.

Ms Sureerut said young people generally want to get quick rich by investing heavily in the stock market. But investing there at the wrong time could incur major losses.

Before you invest, you must know what the potential risks are as well as how much money you have in order to take such risks.

For those who have earned from good investing habits for some years, private wealth management and private funds are effective tools to manage savings productively.

Ronaworn Sukrakarn, a private wealth management product specialist at Maybank Kim Eng, said private wealth management and private funds offer different conditions.

For investing via private wealth management schemes, investors would be advised by a fund manager but decide themselves which investments or stocks they want.

In general, these investors have experience and an appropriate level of knowledge.

Once the scope of investment is set _ the investors can define any combination of asset classes that best suits their risk appetites _ the fund manager can manage the investment. This type of investment is suitable for those with little time to catch up on market news.

The screenshots of the SEC’s Start-to-Invest app, which allows people to customise their financial planning and retirement savings.

About the author

Writer: Wichit Chantanusornsiri & Nuntawun Polkuamdee