Year of the Dragon: A time for reflection and setting goals

THIS Chinese New Year marks the Year of the Dragon. According to Chinese culture, it is a time that is widely associated with good fortune, longevity, and nobility. Those born in the Year of the Dragon are believed to possess intelligence, wisdom, charisma, strength, and ambition.

Even today, many are still timing their childbearing to coincide with “auspicious” years. The dragon year in 1976 saw a baby boom among Chinese in Singapore, as well as many societies with large Chinese subpopulations. Echoing this, research from the National University of Singapore estimates that Singaporean Chinese births increase by 9.3 per cent in dragon years.

Families looking to welcome a new bundle of joy this year face more challenges compared to those in previous dragon years. We live in a time of geopolitical and economic uncertainty, compounded by rising costs of living, including an increase in the goods and services tax (GST) to 9 per cent. Higher daily expenses may eat into our savings, which in turn makes it more difficult to achieve our financial goals.

Making our wealth work harder for us

We have come a long way from the days of keeping our money in metal tins. Many are looking for ways to accumulate wealth other than maintaining a bank account and collecting interest, as this is no longer enough to meet our financial goals.

Our recent study found that most Singaporeans build their wealth for financial security and protection, followed by personal lifestyle goals, providing a good life for their family, and then intergenerational wealth creation. With the costs of raising a child estimated to be within six figures for the first 18 years, having enough wealth to ensure that everyone, including new additions to the family, has enough capital for their needs is essential.

Having financial security spells assurance that one has the means to cover essential expenses, handle unforeseen financial challenges, and achieve long-term goals without undue stress. It means having a strong financial foundation for weathering economic uncertainties, meeting financial obligations and enjoying a desired lifestyle, ultimately fostering a sense of confidence and control over one’s financial future.

Against the backdrop of rising inflation and prices, allocating resources wisely, actively seeking investment opportunities and avenues that outpace inflation, are essential strategies to mitigate the effects of living expenses and enhance overall financial resilience.

Leaving a legacy

Chinese New Year is traditionally a time for reflection. During this period, individuals and families usually take the opportunity to reflect on the past year’s achievements, challenges and personal growth.

As we make plans for the upcoming year, perhaps it is also a good time to start thinking beyond our short-term goals, such as the legacy we want to leave behind. Many are already starting to think about how they can ensure the next generation can enjoy the fruits of their labour, and what they can do for their juniors through succession planning.

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While conversations around wealth transfer can be considered a taboo topic, especially in Asian countries, they are a step towards financial stability in the long run, and reduce tension when it comes to a time of transition. Succession planning is also a good chance for us to pass on family values to our next generation, while also ensuring that our loved ones will be able to live comfortably.

Research shows that globally, by 2030, the wealthy will be transferring about US$2.5 trillion in assets to the next generation. However, in Singapore, succession planning is not talked about enough, possibly as many feel that their assets are more secure in their own hands within their own control, despite knowing that it makes sense to pass wealth on in their lifetime.

We found that only 29 per cent of Singaporeans have started transferring wealth to the next generation, while half of Singaporeans haven’t, or do not believe in having a wealth transfer plan.

However, we also notice that many are starting to consider starting the succession process earlier, with 39 per cent of Singaporeans believing that wealth transfer should take place when a family member has retired, more than when a family member is deceased (30 per cent).

We see this as a positive sign, as planning ahead ensures not only that families are able to explore options for asset division, but also eliminate a potential source of stress for family members and reduce the chances of hasty decision-making in unexpected circumstances.

Achieving financial ambitions not that complex

Many think that financial planning is only for the wealthy. Not so.

Here in Singapore, one of the world’s most expensive cities to live in, many are grappling with allocating available capital they have on hand between investments, saving, and spending, as well as balancing the needs of their dependent family members with their own.

Seeking financial advice as early as possible – even when we are just beginning our wealth journey – can help us, regardless of our level of wealth.

Compared to figuring it out ourselves, speaking with a trusted financial adviser can help us map out our goals clearly, and identify potential gaps, to ensure that our wealth accumulation plan aligns with our values and risk appetite. Opportunities can also be identified for us to accumulate wealth – and also to broach with loved ones the sometimes touchy topic of succession planning.

Whether you are collecting red packets or giving them, this Chinese New Year is a good time for us to think about our financial well-being, and how we can continue to improve the sense of security for ourselves and our loved ones, in order to live comfortably and also leave a positive legacy.

The writer is managing director, Asia, at St James’s Place