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


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.

– 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


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.