What’s the weakest link(s) in your financial plan?

If you’ve watched movies cast during medieval times example, favourites such as Robin Hood, Braveheart, there will be a scene where enemies tries to take out a fortified castle. Well, here’s a clip

So what has this got to do with financial planning you ask, Well, a sound financial plan is akin to building an impregnable fortress to provide shelter to your family and protect your most precious assets from enemies of every possible kind and direction.

Well, how to go about it?

As with every building,there’s 3 major components

1. Foundation
2. Structural beams and walls
3. Roof

Foundation

It starts with a strong foundation as a building with a weak foundation will certainly fail over time.

In a financial plan, this is represented by Insurance.

To build a strong insurance foundation, there must be comprehensiveness and appropriate size.

Comprehensiveness
– because of life’s uncertainties, you can never predict what kind of curve ball life throws at you. It could be an accident, a serious illness, disability or death. Hence, the importance to secure comprehensive insurance coverage to protect against the various risks.

– for example, if one buys S$1mil in Death only cover but is afflicted with a major illness that requires significant medical cost. Resulting from this illness, one may not able to return to work and therefore loses income. Because there isn’t any cover for major illness or disability, not only is he unable to claim a single cent from his existing policy, he’s obligated to continue paying premiums…but his ability to fund the plan is already impaired due to his loss of income.

source: Guide to Health Insurance

Appropriate size
– this will depend on the size of fortress you plan to build which in turn depend on the number of loved ones and precious assets you plan to protect.
for example, a S$200k life insurance may be appropriate for a single person just starting work but no so for a married person with children, mortgage and a car.

Structural beams and walls
To hold up your fortress, it must be supported by strong beams and walls

In a financial plan, this is represented by Savings.

The ability is save is dependant on your ability to control your expenses which in turn is dependant on how you prioritise planning for your future over immediate gratification.

As your family grows and prosper, you will have to continually build and fortify your walls

Having adequate savings will allow you to

a) set aside 6 mths or more in contingency reserves
b) purchase your home and car
c) provide for your children’s tertiary education
d) build your retirement nest egg

Roof

A fortress ain’t complete without it’s roof

In a financial plan, this is represented by Investments.

To protect against natural elements such as sun, rain, hail and snow, a roof needs to be properly designed.

Similarly, Investments comes with risk and needs to be properly structured such that it’s in sync with your risk appetite whilst being able to meet your investment objective at the same time

Hire an Architect/Builder

The above concept is probably easy to understand so what will you do next? build your fortress yourself or hire an architect and builder?

As with financial plans, you can already buy insurances and investments online, at a slightly lower cost but at the expense of much of your time and you may muddle through the process due to lack of expertise.

Successful people understand that their expertise lies in their career and their time is valuable. Hence, it’s actually more economical to hire a professional financial adviser to help design the right specifications for their financial plan and assemble the appropriate financial tools so as to help them achieve their life’s financial goals.

Without proper guidance, the propensity to buy what you like to buy instead of focusing on what you need is high – that’s where things will go wrong!

For example, there’s a high tendency to buy savings and investment products when in fact, insurance is a higher priority. Striking the right balance is key. Moreover, our financial needs evolve as we move through different life stages, and our financial plans should be adjusted accordingly to remain relevant.

Other weak links

If you have followed all the above steps in building your financial plan, that’s well and good.

However, your loves ones (parents and family members) may not have benefited from the same advisory process and may therefore ended up with a less than appropriate financial plan. Should their plan ‘fail’, you might be forced to downgrade your fortress to save them.

For example, should a family member fall seriously ill and do not have an appropriate plan to address this need, who do you think they will turn to for financial support?

Another example is when your parents retire and lack the funds for their ongoing expenses. Increasing longevity is a major concern and one may underestimate the amount of funds required at retirement. By the time one realizes it, it’s probably too late.

Hence, it’s important that every family member is equipped with a sound financial plan so that they will not become a financial burden to their loved ones.

Hope the above was beneficial. To meet up for a discussion, just send me a note on the form on the right, and we’ll get in touch soon.

From Flab to Fab

Have you outgrown your clothes and dread the feeling of buying bigger sizes?

Have you been eating more and exercising less?

Planning to go on a diet or exercise program?

Yes, I’m sure some of us have experienced the above…while a few have done something about it, others are still procrastinating…that’s understandable as it takes tremendous motivation, discipline and effort to stick to a fitness regime to get back into shape.

For those who have gone ahead to improve their physical health, well done and do keep it up lest muscle atrophy set in again.

For the others, buying a gym membership and not using it or having the mindset of “perhaps tomorrow” will be cold comfort and will unfortunately not propel you to where you want to be, wouldn’t you agree?

 

So what has the above got to do with financial planning?

Just like exercising to get fit, your financial plans need to be regularly updated to fit your current lifestyle and financial needs. Also, being disciplined in carrying out the plan mapped out by your financial adviser will certainly help in meeting your financial goals.

for example, as you grow from an individual with single needs to marriage and to starting a family, your financial needs will change in tandem and it’s best to update your plans to protect your interest and those of your loved ones.

Not having your financial plans updated will be akin to wearing clothes when you were in your teens. Most will probably not fit you anymore nor the style….not cool.

But some of you may say “Gilbert, it takes so much effort and financial resources to  get things done which is why I prefer to procrastinate“.

Well, I can appreciate that but procrastinate for how much longer?

How will that improve your situation by doing nothing in the meantime?

What happens if you realize that you need to file a claim and have cold sweat not knowing whether you have a plan that insures the event or that can cover it adequately?

Soon approaching your retirement age and finding out that you don’t have enough time to grow your retirement nest egg?

Realizing your investment portfolio has taken a hit during a market downturn as you didn’t respond to your adviser’s recommendation to rebalance your portfolio.

All of us have the same 24 hours of time and limited financial resources, thus how we prioritise these resources to better our future will separate the have and have-nots. Which segment would you like to belong to?

To get started on your financial fitness program, hire a financial coach today (yours truly at your service)!

“Most people do not plan to fail but simply fail to plan” It’s a personal choice. Take charge of your financial life TODAY!!

 

Safe Journeys with NTUC Enhanced PreX plan

Going on a vacation?

It’s undoubtedly the top past time for busy working Singaporeans whenever we can can afford it or have time for.

A good vacation can involve much time involved in planning especially for free and easy multi-week vacations across Europe, U.S.A or Japan and can amount easily to a tidy five figure sum.

Now with your plans all finalized, leave applied and approved, flight and accommodations all paid, what’s next? Insure it of course!

ntuc-enhanced-prex-plan

Insurance is often an after thought or not consciously incorporated in one’s travel plan when it should, shouldn’t it? After all, what happens if the travel agency closes down before you travel (I’m sure you’ve read such horror stories in the papers)? What if a close family member falls ill and you need to cancel your trip? lose your passport or have your money stolen? lost luggage? fall ill and require hospitalization? and the list of possibilities goes on…and your vacation can turn out to be a real nightmare.

In such circumstances, you’ll be glad that you had bought a travel policy to insure against these and more. After all, the cost of insuring is insignificant relative to the cost of your vacation and the amount of time and effort put into planning, so the only logical decision is to get insured, isn’t it?

So now that you’ve decided to secure a travel policy, next question is, does it cover my pre-existing medical conditions?

Most insurers will not cover pre-existing medical conditions which means that if you have high blood pressure and you suffered a stroke whilst overseas and need emergency hospitalisation or medical evacuation back to Singapore, sadly you’re on your own…well until now.

An insurer has just launched a travel policy that will cover your pre-existing medical conditions, thereby giving you greater security and peace of mind. However, it comes with a caveat – there’s 50% co-payment or lower insured limits for certain benefits, and comes at a higher premium of course.

Notwithstanding, it’s an excellent option that is now available when previously there was none.

To find out more, just drop me a note on the right and we’ll get in touch soon.

ntuc-enhanced-pre-ex-travel-insurance

travel-insurance_singapore

 

 

 

Look at investing in property?

Property_investment

Rental yields are falling…will this sway Singaporean’s ‘lust’ for investment property?

In my client discussions, property investment is often one of the topics raised.

Often, when I cautioned my clients over the risks, emotions tend to override rationality. Such risk include :-

– low rental yields Vs a projected 4% yield for Endowment plans
– hassle in tenant managment Vs endowments that are hassle free
– buying at a high in the property cycle = potential losses if one is forced to sell at the wrong time
– being over leveraged
– risk of interest rate hikes and it’s adverse effect on one’s cashflow especially in an over leveraged situation
– sacrificing other more important financial priorities (child education, insurance protection and retirement planning) just to buy a property

property index chart

A lesson that has always stuck in my mind was the Asian financial crisis in 1997-1999 – a very painful period in Singapore’s history. This period was marked by financial turmoil where many lost their jobs, faced investment losses as markets plunged, the property market went into a deep slump and interest rates spiked. The stars were aligned for a prolonged crisis.

I was working as a banker in the corporate lending business at that time. When the crisis hit, I become a debt collector overnight to salvage back the bank’s loan as companies we lent to became increasingly distressed. Also had the unpleasant task of winding up companies and going after the director’s personal assets.

Will this be repeated? Who knows but it’s better to play it safe than sorry especially if you don’t have deep pockets and have dependents to care for. Job security is also never a given.

With our government dead set on bringing prices down + strict loan requirements, being patient in your purchase should bring benefits.

http://www.straitstimes.com/business/property/home-rents-falling-but-yields-not-plunging-yet

Wealth success formula

If a genius like Einstein claims that compound interest is the eighth wonder of the world, should we embrace it or reject it?

If you feel that your money is not growing fast enough, read on….

http://www.businessinsider.sg/amazing-power-of-compound-interest-2014-7/#.VsxvOxjon7Q

wealth-management_singapore

Harnessing the law of compounding interest is THE most important aspect in wealth accumulation. There are only 4 parameters to apply in order to maximize your wealth accumulation potential:-

  1. how early in life you start saving/investing
  • the earlier you start, the better

2.  how long you save for

  • the longer you contribute towards your savings or investment plan, the better

3. amount of regular contribution towards your accumulation plan

  • the higher your contribution amount, the better

4. rate of return

  • the higher the rate of return, the better

Sounds easy enough isn’t it? Then why are Singaporeans having difficulty in achieving their accumulation objectives?

http://www.straitstimes.com/singapore/majority-of-singaporeans-unprepared-for-retirement-survey

investment-planning_singapore

Let’s examine some possible reasons :-

  • low savings due to lifestyle choices (choosing Wants over Needs) or over commitment to home and car purchase
  • starting late in life on your saving/investment plan due to procrastination or fear of commitment
  • not sticking to the accumulation plan long enough – accumulation is a marathon, not a sprint
  • not contributing enough resources towards your accumulation plan – You reap what you sow.
  • playing it too safe by keeping too much money in the bank at low interest rates, allowing inflation to erode your spending power over time

singapore-financial-plan

Successful wealth accumulation requires prudent spending, starting early, contribute the best you can afford, stay the course and be prepared to take calculated risks.

More importantly, take ACTION to better your financial future…you only have One Chance to accumulated for your child’s education and your retirement! Once time has passed, it can NEVER be regained so wait no further.

To re-quote Einstein :-

“Compound interest is the eighth wonder of the world. He who understands TAKES ACTION AND APPLIES it, earns it Achieves financial success … he who doesn’t … pays for it.”

To secure your plan for wealth accumulation or develop a holistic financial plan, just send me an email on the right and we’ll get in touch soon.




Till then

Live life to the Fullest, without Regrets!

 

Children and their financial impact on us

Just came across a few interesting articles and thought of sharing with you all

http://www.greatdeals.com.sg/2012/09/26/infographic-cost-of-a-child/

http://dollarsandsense.sg/the-cost-of-raising-a-child-in-singapore-explained-for-the-average-singaporean/

http://www.sgmoneymatters.com/much-cost-raise-child-singapore/

Starting a family in Singapore and bringing up your children entails much financial responsibility and the best way forward to secure your child’s financial future without breaking the bank is by starting with making the right financial choices.

If you’re keen to explore how you can give your children a head start in life without breaking your retirement nest egg, just  connect with me on the right and we’ll get in touch soon.

Live life to the Fullest, without Regrets!

Can you afford to Procrastinate?

Have you wondered why

1. our govt came up with CPF, dependant protection, home protection schemes & CPF Life?

2. newborns are automatically covered upon birth under Medishield?

3. Medishield Life will be made compulsory?

4. Eldershield is an opt-out rather than an opt-in plan?

5. motor insurance is a pre-requisite to car ownership?

6. maid insurance is a pre-requisite to hiring a maid?

7. home insurance is a pre-requisite to taking up a bank loan?

The above measures are meant to provide basic protection and accumulation of wealth for retirement so why must our govt step in to legislate these requirements? Won’t we be able to do these ourselves?

Sadly for the majority, if left to our own devices, will either not know what’s required to be done OR be in denial and refuse to do it OR understand that it has to be done but procrastinate on it.

I mean, who likes to put money into insurance or think about unfortunate events that can potentially befall on themselves and their family? or lock up significant amounts of money to save up for retirement when this money can bring immediate satisfaction and enjoyment now by buying the material things we so desire?

Well, that’s why our govt has to play the role to set the minimum basic requirements…but if you allow the govt to be your financial planner, then I’m afraid what you’ll end up with will be very basic benefits. Our Govt now has plans to raise the employment age and introduced reverse mortgages for asset rich, cash tight citizens….would you like to sign up for that?

financial_advise-singapore

Our Financial Attitude

By conventional wisdom, here’s most people’s financial equation

Income – Expenses (Living + House + car) = Savings, of which a small portion can be deployed for financial planning

For the financially successful, their financial equation may be

Income – amt set aside for financial planning = Expenses (Living + House + car)

The difference between both equations is in how much financial planning is prioritized (valued) over current lifestyle choices.

Which financial equation would you like to employ in your life?

finance_singapore

Undeniably, our attitude towards financial planning is the single most facilitator or obstacle in achieving our financial goals.

Let’s examine further

At your workplace, would you prefer to work with an employer who looks after your welfare by providing you adequate employee benefits and a pension plan for your retirement? I’m sure you would.

In a similar fashion as the head of the household, how should you be taking care of your dependent’s (spouse and children) financial needs and aspirations so that they too feel loved and cared by you?

Again at the workplace, are you rewarded for anticipating problems and designing preemptive solutions to address them, meeting KPIs and deadlines on your projects? I’m sure you are.

In a similar fashion as the head of the household, there could be a lack of accountability or financial reward to carry out your responsibilities. Hence, do you chose to procrastinate or deny the need to plan financially or should you take proactive steps to secure the financial plans to address your family’s protection, child education and retirement needs? If you don’t take the lead, who will?

Why not employ the same work attitude that has made you successful in your career, into your family’s financial plan as well? Then you’ll be truly successful – holistically.

health-insurance_singapore

Cost of Procrastination

A. On insurance protection
Life-insurance_singapore

Would you prefer to pay pennies now, or dollars later?

B. On Wealth accumulation (Child education & retirement)

Wealth_management_singapore

The above is neither a religion that you have to believe in nor science fiction but rather realities that we face in life. The sooner we step up to the plate, the better it will be for you and your loved ones.

Hope the above was useful. To get in touch, just send me an email on the right and we’ll get in touch soon.

Till then…
Live life to the Fullest, without Regrets!

Mind the GAP!

Have you taken a subway in UK or the MRT in S’pore?

If you have, you would have noticed signs & floor markings cautioning you to “Mind the Gap” between the boarding platform and the arriving train to prevent any mishaps. In spite of the warnings, unfortunate incidents have occurred where individuals actually fell onto the track or had their limbs trapped in the gap. Hence, it’s best to heed the warnings or ignore them at one’s peril, wouldn’t you agree?

Similarly, in the context of financial planning, one might have financial planning gaps in the following areas :-
1. Insurance planning
2. Child education planning
3. Retirement planning (wealth management)
4. Estate planning

Not adequately addressing these financial gaps can expose one and one’s family to serious consequences.

Such examples would be:-
– financial distress caused by loss of income due to illness and accidents
– burdened by large medical bills
– not having sufficient resources to provide the best education for one’s child
– not having adequate resources to outlast your retirement or live the retirement lifestyle you desire
– leaving an inadequate estate to your loved ones (e.g loss of a breadwinner may force the surviving spouse to take a second job in order to support the family)

But how would one be able to identify where their gaps are, the size of the gaps, how best to prioritize one’s resources to address the gaps and what’s the best way to close up the gaps?

In my work with my clients, my role will be to guide them through the process and help them obtain the answers to the above questions. Finally, by implementing the financial plan recommendations, I’m confident that they will achieve greater peace of mind knowing that they have done their up most best to close up their financial gaps in order to protect theirs and their family’s long term interest.

If surplus financial resources are available, why leave things to chance?

The choice is either to pay a small price today to address one’s financial gaps or potentially face a significantly higher price later on in life due to inadequate planning
Indeed, how well we can overcome the financial hurdles in life often depends on the choices we make today….and there’s no better time to plan than Now.

To seek advise on the above or to refer a friend, just email me on the right side and we’ll get in touch soon.

Till then…
Live life to the Fullest, without Regrets!

How sturdy is your insurance umbrella?

How sturdy is your insurance umbrella?

Health-insurance-singapore

If there’s a puncture on your car tyre, will you get it fixed?

Insurance-planning-singapore

If there’s a hole in the roof of your home, will you get it patched up?

financial-advise-singapore

If there’s a hole in your umbrella, will you continue to use it?

In all the above situations, I’m sure you’ll do something to rectify it and with a sense of urgency as well, wouldn’t you?

In the area of protection planning for you and your family, I often charaterize it as an insurance umbrella – one that will serve and protect you and your family in the following situations:-
– premature Death
– Disability and resulting loss of income
– Critical Illnesses and resulting loss of income

Your insurance umbrella is only as strong as it’s weakest link and that I feel is in the area of disability protection due to a lack of awareness by the public. It presents a gapping hole in your insurance umbrella which most people are unaware of or not adequately addressed yet.

This is a major area of concern because it can potentially wipe out one’s lifetime savings in a short span of time if one is financially unprepared for it. Its impact on the family will be both financially and emotionally draining, so why not do something now to insure against it?

Disability_insurance_singapore

Disability protection can be addressed through a combination of the following plans:-

1. Disability income plan
– serves to replace up to 75% of your monthly salary in the event of disability and resulting loss of income

2. Medishield type hospital plans
– serves to reimburse hospitalisation and surgical expenses

3. Eldershield and Eldershield supplements
– serves to provide a steam of cash benefits in the event one is disabled and requires long term care e.g hire a maid, nurse, nursing home, rehabilitation expenses etc

4. Personal accident plans

Hope the above was useful. To seek adequate and comprehensive protection, just send me an email on the right and we’ll get in touch soon.

Till then…
Live life to the Fullest, without Regrets!

For the things we so loved….

Do these pictures evoke a strong emotional response or desire to own one?

If it does, you’re perfectly normal as we’re naturally attracted to things of beauty and the desire to look successful and live the ‘Good Life’.

Thus, it’s not surprising that in spite of rising cost of living, escalating home and car prices, there appears to be no shortage of buyers. Is this a reflection of the deep pockets of Singaporeans, demand/supply mismatch, foreign demand driving up prices or are people simply over leveraging themselves?

Well, it’s probably a combination of the above factors but what is probably most worrying is if individuals are overstretching themselves to purchase these material stuff before they can well afford it or acquire these at the expense of other more important financial planning objectives such as:-

1. Insurance planning
2. Child Education planning
3. Retirement planning

http://www.todayonline.com/business/rising-household-debt-worries-singapore-central-bank#inside

Hence, is our govt doing the right thing in reining in personal debt through

1. 8 rounds of property cooling measures – so many that it can make your head spin
http://www.property-singapore.sg/singapore-property-measures.html

2. imposing financing restrictions on motor vehicle loans
http://www.mas.gov.sg/news-and-publications/press-releases/2013/mas-imposes-financing-restrictions-on-motorvehicle-loans.aspx

Well, having seen what happened during our last Asian financial crisis in 2007-09 where interest rates rose, asset values plummet and jobs were lost (a triple whammy situation), and that we’ve still in the midst of the ongoing global crisis, some financial prudence is certainly warranted.

To seek a second opinion on your financial plan, just end me an email on the right and we’ll get in touch soon

Till then…
Live life to the Fullest, without Regrets!