13 Aug Fun Games to Teach You About Finance and Investment – Interview with Xeo Lye Wen Song of Capital Gains LLP
Xeo is a veteran in the Singapore wealth management industry with more than 10 years of experience, he manages a team of consultants in one of the largest Financial Advisory Firm in Singapore. He is also a Certified Financial Planner® and specialized in investment advisory and asset management for high net worth individuals.
Recently, he co-authored a book named “5 Elements of Successful Investors” and the book is currently on sale in major bookstores around Singapore and Malaysia.
He co-founded Capital Gains Group, a financial game design company that aims to help people understand the complex world of finance through gaming workshops, board games and mobile applications. He is currently working on a financial card game: Wongamania, which is due to be launched in 2014.
Tell us about yourself.
I first joined the Financial Advisory industry in 2003 and was a strong believer of the buy term and invest the rest method. However, the first problem that I faced was that many working professionals were sceptical and comprehensive about the “higher risk” product as “investing the rest” requires them to invest into equities. It was only after much coaching and sharing on my part, that they overcame the stigma.
That was when I realized the reason why people do not dare to venture past the expensive endowment and investment-link products, because they perceive financial products offered beyond the traditional insurance products as high risk products.
I realized the importance of financial education and I started conducting free financial workshops in community centres, libraries, universities and corporations in 2005. However, I stopped after a few years due to my poor health and “semi retired” from public speaking and focused on creating financial games instead.
What made you to push for term insurance when you first started out? You would have earned much less commissions than your peers who sold life or endowment products. Was the income sufficient and sustainable?
The truth is the income was horrible. I once did a calculation that if I helped my clients buy term and invest the rest, it will take 8 years or more to equal the commission from selling an endowment or Investment Linked Policy. The going was tough for the first few years. But I still do it because it made a lot of sense.
Before the implementation of the FA act in 2003, if you wish to buy term and invest the rest, you will need to talk to an insurance company for a term insurance, and talk to a bank or stock broker to buy a stocks or unit trusts. With the birth of the independently operated financial advisory firms after 2003, the consultants working under the new platform will be able to bring both the insurance components and the investment components together as they are now able to give advice on both pure insurance and pure investment products.
I was influenced by the financial planning literature in US and UK and became a strong believer that insurance is a necessary evil and its cost should be kept as low as possible and investors are better off separating insurance and investment products. Little did I know that my thinking was way ahead of my time and many customer balked at the idea that they are “wasting money on a term insurance and getting nothing back”.
I agree with you that insurance and investments should be kept separate. Since it is not going to be investment-linked products, what do you invest in?
I invest in everything – equities, bonds, properties, currencies, commodities and derivatives. I use the global macro style which is closer to George Soros’ way of investing.
I will describe Global Macro as a form of Ripple Effect theory. When a droplet of water is dropped into a pool of calm water, it will create a ripple. Now imagine you have multiple droplets falling on to the same pool and the different ripples interact with each other.
A good Global Macro investor has to be familiar with how economics and each asset class work. You also have to be familiar with international economics, interest rates trends, government and trade policies and money flows. Each of these variables will have a direct and indirect effect on different asset classes and a good Global Macro investors will be able to spot these trends, based on the reflexivity of the different variables.
Do you have past trades as examples to illustrate the way you invest?
During height of the Euro crisis in 2012, I was 90% committed into Asia and almost 50% of the Asia trade into South East Asia. That position paid off handsomely.
By the first quarter of 2013, I was 50% into the US stock market having exited all of my SEA holdings and holding around 30% of the portfolio in Singapore Government Bonds.
By the mid of 2013, the Euro debt crisis reared its head again and global equities underwent a major correction. I took this opportunity and shifted the portion in the the Singapore Government Bond investments into Thailand (which was in crisis at that time) and US small capitalization stocks (which returned 20% during the next 6 months).
The overall portfolio performance was as not great as I liked, as the underperformance from Emerging Markets dragged down the overall returns of the portfolio. I was assuming that the emerging market stock markets will be lifted by strong performance in the US stock market. It didn’t happen but that’s life.
Were the Games designed to teach basics of your investment approach?
The games are designed around economic cycles and asset classes due to the demand from the public. It seems like there are very few education workshops that teach people about economics and various asset classes and my games are able to teach these in a simple and fun manners.
I have developed other games that touch on different financial topics before but they were not as popular as the current three. I also believe that understanding about economics is a very important foundation for all investors.
To quote Jim Rogers in a recent interview
“Investors, should know currencies, bonds, governments, taxes and the like – everything, In short. You have to know all that when investing in your own country, but even doubly when it’s a different country.”
I initially created the financial games to educate my clients and friends about investing, but over time, people recognize the potential of it and asked for copies to share with their friends and relatives. My little hobby became a full blown enterprise as I started getting requests from professional trainers to make use of my games in their workshops.
I recently conducted our flagship game Capital Gains Investment Game for 500 young adults in Malaysia. I have no target audience for my financial games as they were designed to be fun, such that even a 10 year old can enjoy. The objective of a game must be first and foremost “FUN” to play, before we should even talk about the education. I find that people will take the initiative to find out more about the financial concepts in the games only after they have enjoyed it, and that is where the true education start.
How many games have you designed and what are you trying to achieve with them?
I have developed 3 complete games. Capital Gains Investment Game, Rollin Gold and the upcoming Wongamania. Next year, we are looking at converting Capital Gains Investment Game into a mobile application game and maybe, work on the many games that I currently have in my pipeline that are still in their blueprint form.
The first game I designed is Capital Gains Investment Game. It is a historical investment simulation game, whereby participants have limited resources and are forced to made investment choices across 5 Asset Classes: Equities, Bonds, Properties, Gold and Cash.
They are put into an unknown period of time, between 1900 to 2014, whereby they have to accumulate a certain amount of wealth by the time the game ends.
The objective of this game is to share with the participants the importance of learning about financial history. Investors can often draw parallels in past manias and panics with some of the financial environment we see today and the best investors in the world, are often well versed in financial history. However, almost nobody teaches about financial history these days. Hopefully, this game can help investors be aware that understanding of financial history can improve their investment performance.
Rollin Gold is the second game which I designed and it focuses on financial planning. Players are given a limited amount of resources to allocate across different important needs in life such as residential housing, education, insurance, and investments. They will be challenged by positive and negative life events, whereby how they handle these life events, along with their ability to manage the scarce resources they are allocated, will determine if the player will be able to complete the game.
Wongamania, is the latest game that I published and it took me 2 years to develop. Wongamania is a table top card game that aims to teach participants about economic cycles. We all know that the economy goes through 4 phases: Recession, Recovery, Growth and Stagnation. However, very few people understand how to identify these cycles and what to do at each point of time and I hope that the participants will be able to develop an action plan for each market cycle, after they have played the game.
The game also features important market forces, like interest rates, taxes and geopolitical events, which will affect the economic cycle and this will help players understand the mechanics of some of the important economical indicators in the world. The best part about this game, is that I have participants feedback to me that they have great fun bankrupting their friends, even though they have zero knowledge about finance.
We will be launching Wongamania in Malaysia in August 2014 and hopefully, Singapore by the end of the year. Watch out for it!
Is there a sequence to play the game?
There is no actual sequence to play the games. They were actually designed independently of each other.
If someone only have time to play one game, which one will you recommend?
This is difficult as all of the games have received excellent reviews. I will say if you are looking from an educational angle, capital gains investment game is the best. If you are looking for fun and enjoyment, wongamania has the most fun and interaction among the three
Where can they get the games?
We have launched the Wongamania financial tabletop game at Malaysia in collaboration with Bursa Malaysia and the international limited edition set of Wongamania has been sold out in Malaysia. We have set up a queuing list for those who are still interested in the limited edition Wongamania, in case some of the friends and organizations who have reserved the sets decided to that they do not want to their limited edition copies.
The main edition of Wongamania will be out later during November and interested parties can send us an email at info @ capitalgainsgroup.com to pre-order the sets at a special rate. Meanwhile, we will be holding preview sessions for the public to try out Wongamania. They can check out our website for more details about the games that we conduct or check out our facebook page for more information on upcoming game events.