THE Covid-19 pandemic has uncovered the importance of savings as a buffer for emergencies.

Sufficient savings will complement the social safety net, especially for those who receive little to no aid from the government.

Ideally, this should also be accompanied by life and medical insurances to create a personal safety net.

In recent years, the development new products have lowered the barriers to saving and investment by providing more options. This is mainly due to the advent of financial technology (fintech).

Continuous improvement in financial literacy is also crucial to encourage saving and better financial management and investment decisions.

More products 

Recent years have seen the introduction of savings and investment products, such as the MAE app, which lets you earn daily interest on your savings, calculate your monthly expenses, and even invest in funds.

The e-Know Your Customer system offers low entry fees and investment products that can be tailored to various risk appetites.

Fintech can cater to previously underserved segments such as those who were not investing.

In response to the competition from fintech, traditional financial institutions are taking steps to make it more convenient to invest in financial products such as fixed deposits, funds, and even foreign currencies.

The aim of savings and investments is to achieve better personal financial management to face any income shocks.

As people still need to spend on food and leisure, more savings and investments at the micro-level are unlikely to have a large impact on domestic demand (consumption of goods and services, =a major component of GDP growth).

Better financial literacy

There is a need to improve the financial literacy of the people, especially university students, who need to learn how to manage their money and plan for their future.

It is good to have stock-exchange, insurance and fund companies go to campuses to teach tertiary students about financial products and how to use them.

Financial management courses could also be set up in universities while experts in financial planning, trading, fund management, insurance, and will writing could be invited as speakers. – January 2, 2023.

* Nick Tan Beng Teong graduated with Bachelor of Economics at University of Malaya. A member of Agora Society, Tan believes in policy reforms in order to build a better nation.