Want to retire? Start saving at 24 (08-Aug-10)

Today's ST was featuring some 'retirees' working beyond 65yrs.. because of passion, because of love of job... because of nothing to do at home... or because they need to? Reasons vary.. and what's yours? Do you see yourself working for a long long time because you love to or you need to? Do you love your job now and see yourself working with an iron rice bowl? Or do you want to plan something that is more predictable, at least financially?


The fundamentals of financial planning is to first acknowledge the fact that you want to be in a better position to determine your final destiny. Of course, there will be pple who prefer to take the 'cross the bridge when it comes', but I would take the former anytime. Why? Because all men desires a better life, and not struggle to make ends meet throughout my whole life.

How to?

1. Start saving. When I started out working, it's just money in money out without any consistent effort to keep track of savings. With excess, this money often goes out to stuff like holiday, luxury items... then followed by big ticket items like a house, wedding stuff, renovation... and for those with kids... it would be baby powder money.. education, classes... etc... so where's the excess for retirement savings? You need to force yourself to save.

2. Get yourself properly insured. Can you tell me anyone who will never be sick.. and never die? Superman also can die. Upgrade your H&S plan to a better one if you have not done so, and review your coverage to see if it's sufficient to cover yourself and your dependence. Singapore's statistics has shown that most Singaporean's coverage is only abt $50k, and that is highly under-insured. When crisis comes in the form of major illness, or death, it's not only you, but your loved ones who will be burden heavily, emotionally, if not financially. Be a responsible person to ensure you can protect or minimize the potential damange.

Key thing is, get yourself insured while you are young and healthy. Some pple want it also too late to get it.

3. Long term plan. Time is your good friend. If you do not make good friend with time, it will outrun you before you realise it. If you started working, you are in a good position to make things right for the first time. If you are half way through your career, re-think what you want for your future as you are now in a matured stage. If you are heading towards your golden generation, keep track of your existing assets and see if there's anything else within your means that is to your advantage.

Hope all these little reminders will put you on track on financial freedom. Do drop me a note or call me to review your financial portfolio. And do recommend your loved ones and friends and colleagues to me whom u think I can add value to them.

Starting early is always Prudent (06-Jun-10)

Recently, I was talking to a couple of my friends and it came to my surprise that their net worth is many times more than their peers.. that really puts me to shame even as a financial adviser. What's the big secret? It's as simple as prudent savings ever since they start to work.

What is the lifestyle of a typical working Singaporean? Let's have a simple illustration. Mr X, a young man 28yrs old, earns $3,500 as an engineer. Take home pay after CPF would be $2,800. House loan would be settled by CPF deduction automatically. Every month, he spends the following: $400 on meals, $300 on all sorts of bills (internet, mobile, PUB, SP, Town Council, etc), $300 for parents allowance, $150 on groceries. Balance is $1,650. Sounds gd isn't it? Wait... he now owes a car (w.insurance & season parking)... $900 gone.... + entertainment fee $200....+ holidaes in between... + an occasional luxury gd (e.g. iPhone?), then almost whole monthly savings wipe out.

Sounds familiar?

So how can we resolve this issue of money no enough?? Either you win toto, dump all your money on a World Cup underdog and pray hard, or the other way I can impart to you is via prudent savings in a good instrument. Says for example, we use back the same scenario of Mr X. For the same $2,800, he puts aside 15% of it to savings (somewhere), that's around $400. Balance is $2400. He spends the following: $400 on meals, $300 on all sorts of bills (internet, mobile, PUB, SP, Town Council, etc), $300 for parents allowance, $150 on groceries. The balance now $1,250. He now continues to own a car.... but maintain control on his entertainment fee and luxury items... still manageable.

What's the big difference? In the 2nd scenario, Mr X has put aside buffer for his future consumption... be in for investment account, retirement account, emergency fund account, he is definitely in a better position than before. Don't you agree?

So are you going to do something about it? Or remains status quo?

Never too early to build your nest egg (16-May-10)

Whether you want to retire in comfort or maintain a simple lifestyle, you should take retirement seriously. Yes, I do mean it. With the increase in life expectancy, as well as rishing inflation rate that runs so much faster than your bank interest rate, it's very logical to ensure your nestegg is well prepared for.

Ideally, the best time to start planning is the moment you start work. When you have time to build your nest egg, you do not have to play catch-up. You do not have to take a higher investment risk to meet your retirement goal.

BUT, be it whether you just started working, in your prime working years, or approaching your retirement, it is important to understand your own financial status at this very moment so that you recognize how to progress from here.

No better time to save than NOW (04-Apr-10)

If u read the Sunday Times regularly, on the 'Invest; column when they interviewed any particularly guy, they like to pose this question: "Are you a spender or a saver?" The conclusion I draw, to be "rich" eventually, the answer is always the latter. (But of coz the definition of "rich" varies from one to another.)

In true blue financial planning that I am dealing with, there's only a few aspects to follow. And the most fundamental one would be TIME. The power of compounding over time is simply so powerful that it should not be ignored, but rather to be utilized to your advantage. This is why any form of savings, be it in the bank, fixed deposit, endownment, (or even property?), etc.. should be done at the earliest possible time.

This is especially important for your retirement planning many years down the road where you really want to enjoy your golden years rather than continously working for survival. Retirement planning is an important equation that requires so much knowledge in how to make use of your CPF, how to leverage on your property, etc... that's where professional financial help is needed. (Me!)

For those who really wants to have clarity how your finance would work out to be in the medium and long run, do gimme a call for a detailed analysis. Good planning is definitely better than NO planning. U agree?

Tuition Fee Hikes at 3 Universities (19-Mar-10)

Almost 10yrs ago, when my mother sponsored me to go to NUS using her CPF money, a freshie like me would not have realize the importance of money until I grown up. I remembered my course fee was around $5,000/annum, now it has balloned up to $7,000+/annum.

It's a fact, quality education in Singapore doesn't come cheap. Imagine you have a kid now, 1yr old, 20yrs down the road, just by going on a humble 3% rate of increment in course fee each year, the course fee would be $13k / annum. Multiply by a 4-year course, it would be $52k++. All these are excluding those admin fee, material fee, or even medical or law courses, or even overseas courses. Where would your child get all these money from? Your CPF, or loan from bank?

You can help reduce the burden of your child (or rather yourself), by going for a simple education plan which takes time to grow your asset in a slow, but conservative and steady manner. These are the kind of instruments you want to have low risk, and a form of guarantee to have at the end of the savings cycle. Imagine yourself saving consistently in a bank, bearing a miserable 0.125% / annum? Wait for the cow to come home.

For more information, pls do not hesitate to contact me at 9876-0237 for a more comprehensive understanding on how you plan for your kid's education.

Low-interest carrots to tempt home buyers (17-Mar-10)

Latest home-loan skirmish also sees banks speeding up their approvals

By GENEVIEVE CUA

(SINGAPORE) A skirmish of sorts has broken out on the home loans front with banks pushing down their interest rates a notch or two over the past week or so. The first volley was fired by DBS Bank and the others have responded.

This is welcome news for home owners and investors who are looking to re-price or refinance their home loans. The rates also provide a positive backdrop to the upturn in the property market. But advisers are telling clients to be prudent and watch their debt servicing ratios.

To date, it appears that Maybank is offering the most attractive loan rates in terms of variable rate loans - and not just for the first 'honeymoon' year. Maybank's package, which is based on an internal board rate, starts from 1.18 per cent for the first year and edges up to 2.28 per cent in the third year.

For those who prefer a more transparent benchmark rate - typically Sibor (Singapore interbank offered rate) or SOR (Singapore swap offer rate) - the spread over the benchmarks has plunged to 0.5 per cent. DBS uses Sibor and OCBC uses SOR.

As always, there is no free lunch. Lower rates usually come with shorter lock-in periods. Borrowers who want certainty in the rate they pay over a longer period should be prepared to pay more and be locked in for two to three years.

The big question is the direction of interest rates. The widespread expectation among home owners is that rates will head up at some point in the next year or two. Rates are currently close to their all-time lows over 10 years. Between March 2000 and 2009, the lowest points for Sibor and SOR were 0.56 and 0.54 per cent, respectively, in 2003. Today Sibor and SOR are not much higher at 0.66 and 0.42 per cent, respectively.

Alvin Liew, economist at Standard Chartered Bank, says the 3 month Sibor rate could stay below one per cent over the next two years, in line with the bank's expectations for USD Libor.

'Moderate loan demand and ample SGD liquidity will also help to keep rates low. While we believe there is a possibility that the Fed would increase further the discount rate spread over the Federal Funds Target Rate (FFTR), this should be viewed as a continuation of financial market normalisation, and not signalling any change in the FFTR until late 2011.'

OCBC's head of treasury research and strategy Selena Ling says any upward rate movement is likely to be 'quite gradual'. 'The liquidity story is still intact, and none of the central banks are really talking about aggressive tightening.'

Sibor reflects the interest rate that a bank charges another for the excess SGD it does not need. It is influenced by US interest rates and domestic loan demand, says Mr Liew.

SOR, on the other hand, includes bank funding costs. It is typically slightly higher than Sibor; but the last few months have seen SOR fall below Sibor. While most banks peg their benchmark rates to 3 or 12 month rates, Citi is even giving customers a choice of one month Sibor.

Mortgage adviser Patrick Tan of Morgan Mortgage International is advising home owners not to leap too quickly into a long fixed rate contract as the differential in servicing costs between a floating and fixed package can be substantial. 'Even if the variable Sibor or SOR rate does move up, it will not move up too much or too quickly unless we see an inflationary scenario in our economy.'

Fixed rate packages start at about 1.25 per cent for Stanchart, but only for one year. The second year moves to a Sibor-plus rate. OCBC and Citi's two-year fixed rate are currently at 1.88 per cent per annum, with a two-year lock-in.

DBS says its fixed rate packages remain 'very popular' with about 60 per cent of customers opting for them. Says a spokesman: 'The response is not surprising as they were designed specifically to give home owners both the certainty in repayments over three years, and the flexibility to make partial repayments. The flexibility is usually not found in fixed rate packages.'

Dennis Khoo, Stanchart's general manager (retail banking products) says: 'We continue to see a balanced demand for both fixed and floating rate (packages).'

Citi said it continues to offer an interest offset feature where deposits in the offset account earn an interest which can be offset by up to 70 per cent against the loan rate. Says Vibha Coburn, Citi business director for secured finance: 'Our packages are tailored to our customers' needs... and we advise customers to take a long term perspective when planning their home loans, rather than go for the lowest price points.

Meanwhile, banks have also speeded up loan approvals. DBS says more than 50 per cent of loan clients get their loans approved with an offer letter within the same day.

Stanchart says it offers 'approval in principle' within 15 minutes at showflats, which it says is a first. A spokesman says: 'This way customers know how much they can afford to borrow without over-leveraging.' In-principle approval is based on basic information such as monthly ncome and other financial commitments. Final approval is subject to necessary documentation.

Providend's head of financial planning Eddy Cheong is advising clients to follow the prudent path. 'For a start, do your budgeting and know your limits. Don't assume interest rates will stay this low. Make sure you can still afford the loan if interest rates go up to 3 to 4 per cent.' The annual debt repayment over annual salary ratio should ideally be less than 35 per cent. Anything above 45 per cent is seen as excessive, he says.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Love Me, Love my Money Habits (14-Feb-10)

It's true. Money can affect a relationship when the issue of bread and butter comes into the picture. We cannot live purely on love as illustrated in TV drama. Disagreements and conflicts on money issues rank high among couples, along with in-laws and work stress.

And of coz, it is better to argue about having too much money to spend, rather than quarrel on where to find money to put food on the table. Imagine one day, one of your spouse loses his/her job, or when an unexpected hospital bill pops in, all without your preparation, I am quite sure life will never be the same. The article highlights the myth of financial issues that you should not be ignorant of.

Long term financial planning helps you in this area but helping you to prepare for unexpected crisis in terms of potential high hospital bill, or loss of income due to death, disability, or even critical illness. As for unemployment, and retrenchment, this is something you have to keep yourself economical valuable.

Be Bold but Agile, just like the Tiger (14-Feb-10)

Coming to the new Tiger Year, how should you proceed to invest in the market? Being through the economic crisis and recession, alot of investors have learnt their lesson well. Emotions play so much a factor in how you invest that you sometimes fight a losing battle, do you have this feeling that the moment you enter the stock market, the tide turns against you automatically?

The dollar-cost averaging is not a silly theory, in fact, it is one of the most fundamental theory that works if you are not a daily trader. Most "experts" will claim the Tiger year will be a volatile year with some sharp pull-backs and periods of turbulence, but that should not keep you on the side line. Those who miss out on the opportunity early last year would have sigh alot during the bull-run.

NTUC Income recently launched a campaign called "Get Rich Slowly", true to a certain extent, provided you have stay invested in proper champion funds with the right adviser looking after your portfolio on a regular basis.

For those keen to start their investment, or upsize their portfolio, do give me a call @ 9876-0237 anytime.

Higher Medisave to pay for Long-Term Treatment (29-Jan 2010)

"As the longevity of Singaporeans increases, the likelihood of us falling ill for a longer period in our lives increases as well"

With the ever increase in medical cost over time, the Medisave in your CPF account may not be sufficient through your lifetime. Depending on your working lifespan as at now, it could range anything from $5k to perhaps $30k? One big operation or surgery can easily wipe out your Medisave savings in one shot, if you know the market rate for hospital bill.

This is why it is so critical to upgrade your existing MediShield plan to a privatised "as-charged" plan so that you are able to minimize your H&S bills. Many of my clients have taken that extra step to ensure this, have you done so? Do not under-estimate how medical bills can eat into your financial plans. You may be in the pink of health right now, but can you guarantee that you will be healthy forever even if you eat well or exercise regularly? I can't.

If you are keen to protect yourself and your family from facing any medical financial crisis, pls ring me to find out more. I cannot prevent you from getting sick, but I can help cushion you financially if you use the right instruments to help yourself.

Most of the economic articles I read tend to give a positive outlook on the year 2010. Why? I guess it's simply because many companies have learnt their lesson during this crisis and have improved their strategies in how they do business. Alot of companines should be out in the woods, and should be back into profitable territory.

My sentiments followed these articles, but my personal feel is that the climb would not as sharp as the V-shape recovery in 2009 as the steam has to rest somewhere. As an IFA, we still firmly believe on a dollar-cost averaging concept, meaning to stay invested and do it on a regularly basis so that you would end up on a reasonable position when market shift in either direction. In the long run, you will stand to profit from economic run, verified by historical data.

If you are still standing outside the fence playing a waiting game, what's the trigger point? Wait for the market to run up and sigh, or wait for the market to decline and say 'heng ah...'. So wat's next?

Were your investment hit badly by the 2007~2008 crisis? What was your reaction? Pull out of the market and monitor from the side, stay invested, or put in more investment? Probably there are so many articles and books saying that the smart ones became millionaires, or even billionaires, during crisis.

As Warren Buffet said: "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." But unfortunately, not many of us think like Buffett, or to put it bluntly, many of us cannot afford to behave like Buffet.

As an independent financial adviser, we aimed to bring our clients to a bigger picture. We cannot make you rich overnight, but we can plan out a systematic plan (a combination of short/medium/long term) to ensure you can ride out the waves and reach your targets in a certain time frame. Isn't that wonderful? If you do not have a plan in place.. and simply live day by day, save month by month, are you confident of reaching your goal?

In this article, the author shared with us how the different age groups can react in order to meet your retirement nest egg. If you wish to put your thoughts into action, pls do not hesitate to call me at 9876-0237 to have a coffee discussion over it~

Don't Fall for the Lure (29-Dec-09)

Most of us would at some point of time being approached by our financial advisers to invest your hard-earned CPF money into Unit Trust investment. Absolutely nothing wrong with that, but it can be disastrous if you end up with an unscrupulous one.

Yr CPF-OA account is earning you 2.5%p.a. (at the moment) while your CPF-SA is earning 4.0%p.a. (at the moment). Looking at the long term, as an IFA, I would also advise you to park some of your CPF-OA account into some good funds to enable your money to work harder for you. But before you invest, make sure yourself as a consumer knows what you are buying into.

Understand what kind of risks and returns you are exposed to. If someone offers you risk-free product with high returns, definitely something is very fishy. Remember, there is no free lunch in this world.

Key to Unit Trust investment is constantly reviewing with your reliable financial adviser and going forward with a strategy. If in doubt, pls contact me at 9876-0237 straight away.

Memories are Forever (03-Dec-09)

Happened to come across a meaningful article in 'Mind Your Body' section in today's paper and liked to share with you. A few important lines:

"Who does not know that cancer is a terrible illness & that many succumb and die from it? One in four Singaporeans will die from cancer""

"She had never smoked and had advanced stage lung cancer with brain metastases"

"However, most patients do not die from the cancer per se. Infection, especially chest inefection, is a very common cause of death"

"Death is always and certainly inevitable"

No, I am not a medical doctor here telling you how to take care of your health and avoid cancer and other illness. The moral of the story is that, IF something really unfortunate happen to you, or to the people around you, would you be ready to tackle it? Psychologically wise, perhaps never will be. BUT financially wise, this is something you can prepare while you are still healthy & in the right state of mind.

Have you got yourself a good hospital & surgical plans to limit your medical bills?

You have some insurance policies, but is it sufficient to cover all your potential liabilities?

Do you plan to leave a legacy behind if one day death occurs, be it naturally or not.

If you have many question marks & not knowing the answers, why not seek professional help and use the right instruments to solve your problems?

Probably some of you will brush this topic aside and think that everyday is a peaceful day. But I leave the decision to you. This morning, it perturbs me to read abt the 5-year old little child being killed instantly when crossing the road. Because yesterday I also had a near accident when a reckless van driver cut into my lane from a side road. CMI.

Don't Expect Interest Rates to Rise: Experts (23-Nov-09)

If you think your money is safe inside the bank, wrong. Without you knowing it, your savings mught just get eaten up by inflation silently. Savings account earned an average of 0.22%/annum in January 2009, before holding at just 0.16% from July to last month.

If your intention is to preserve the value of money, there are many options available outside the bank. Do approach me @ 9876-0237 to help you understand what other instruments are available to make your money work harder for u.

Insurance in a Time of Uncertainty (08-Nov 09)

How many of you have heard of Robert Kiyosaki's theory on "Why the Rich Gets Richer"? One method is to stay ahead, think bigger, and come out with a better plan. Key word is planning. What we all have on our hand is the same comodity called 'time'. No matter what you are doing now, time is ticking away. So do you want to make use of time to better use?

http://sg.promo.yahoo.com/managingyourmoney/expert?blogid=expert&postid=1&viewPost=1

In this article by Mr. Ben Fok, the CEO of Grandtag Financial Consultancy, and my former lecturer for my CFP course, he again highlighted on the usage of insurance as one of the tools for proper wealth management.

"The virtues of life insurance are obvious. By paying a premium to the insurer, I get to enjoy the coverage as it will step in to meet its obligations should anything untoward happen to me. Most importantly I know that all of my family's financial needs are well taken care of."

I am quite sure most of you will have some insurance policies stored in your cupboards (collecting dust), thinking: "Enough liao lar... don't waste money on further policies... spend spend spend only..."

From my professional point of view, it simply boils down to whether you are having sufficient coverage, and whether you are using the proper instruments to achieve your objectives in the first place.

Of course, you can choose to procastinate the process and pray hard that nothing will happen to you. But just look at the news and people around you, are you financially strong enough to absorb that kind of unforeseen risk? Can you imagine yourself losing that kind of regular income overnight due to accident.. or critical illness...or... ?

Nobody fails to plan, only plans to fail.

Do contact me @ 9876-0237 if you seriously wish to take a strong step to establish your financial goals and objectives.

Four Insurance Plans are All you need (25-Oct-09)

In this article, they highlighted the key coverages that an average person should have to have a comprehensive array of protection. Unless u are the invincible Wolverine or Superman, maybe then you do not need it.

Insurance is typically a form of risk transfer. If you happen NOT to claim from it, good for you. These premiums will serve as a form of savings in the long run (depending on which kind of policies). If you happen to claim from it, also good for you, meaning that u are using a small sum of money to 'exchange' for a bigger sum of money. No matter how I look at it, it's a win-win situation.

As a professional IFA, the priorities I would offer to my clients would be:

1) Medical Coverage

- Medical costs in Singapore have been rising more rapidly that the inflation rate. If you think your basic Medishield or company H&S plans are sufficient, think again. There are better plans out there to ensure your bill is controlled to a certain level.

2) Death / Total & Permanent Disability cover

- Nothing can compensate for the death of a loved one, but if the financial aspect is well taken care of, it makes things a little more bearable. This is especially true for people with alot of dependents like a non-working spouse, small children, or even elderly parents.

3) Critical Illness cover

- If you think u are not the unlucky one, think again, and again. From statistics, I think the chances are higher that tio-ing your weekly Toto. No doubt the H&S plans are covered majority of the "in-hospital" expenses, there are other expenses that would not be taken care of... e.g. specialized drugs, well-chair, maid, etc. And critically, it is supposed to replace your income for a reasonable span if well planned.

4) Disability cover

- This is meant to ensure a monthly income payout if you cannot perform your primary occupation because of an injury, accident or any illness. A very simple illustration would be say... an engineer who lost the use of his legs in a car accident. He would be unable to claim from the Critical Illness coverage, but would be entitled to a disability cover (+ perhaps an accident plan).

Do not undermine the importance of insurance. You perhaps just need a good adviser to explain to you the objectives behind each coverage. With proper protection, then you would be well on your way to your other aspects of wealth management.

Retire With S$1 Million – even if you haven’t started to save (22-Oct 09)

By Stephanie Thng, Funds Supermart

Start saving early and it could make a world of difference to your retirement plans. Time is your best friend as you will find in this story. Here, we assume five individuals at different stages of their life, from those earning at entry-level, to those close to retirement age. All aim to achieve a monthly income of S$2,500 during their retirement years from age 62 to 82. We also taken into account that the inflation rate stands at 3% per annum, meaning that the general cost of goods and services rises by that amount each year.

Further, we assume that whatever the investors save during their pre-retirement days will earn 8% annually. After they hit the age of 62, we assume that the return on their savings drops to 4% per annum as they take less risk in their investments. This simple illustration does not take into account your other financial needs, such as whether you have planned for your insurance needs (life or term insurance, mortgage insurance, health and hospitalization plans).

If You're 25
Savings: S$0
Monthly Salary: S$2,500
Rate of Increase in Wages: 3% p.a.
Number of Months in Bonus: 2 months
Housing Loan: Not Required
What You Need to Save per Month for the next 37 years: S$158.30

Planning for your retirement when you are 25 years old may seem a bit far-fetched. But the benefits of starting early cannot be underestimated. Assuming that a person starts working at 25 with a salary of S$2,500, you would need to save S$158.30 per month to ensure that your retirement income can stand at S$2,500 per month during your retirement days, which we assume will run from the age of 62 all the way to 82. Even with no savings to start with, having a regular savings plan (RSP) may be a good way to start planning. An RSP would ensure that you have the discipline to force yourself to invest – there is little room for excuses! Very often, we may be tempted to use up our savings for a travel trip or to purchase that dream car. And even for those who believe in the merits of investing, they may not have the discipline of investing regularly because they feel it is not the "right" time to invest. This could be especially true when markets are going through a bull run and some may feel that it is too expensive to go into markets. An RSP is a disciplined way to ensure that you will invest no matter markets are up, down or sideways.

If You're 35
Scenario 1
Savings: S$0
Monthly Salary: S$6,000
Rate of Increase in Wages: 3% p.a.
Number of Months in Bonus: 2 months
Housing Loan: S$800 per month over 30 years
What You Need to Save per Month for the next 27 years: S$666.57

Scenario 2
Savings: S$40,000 (earning 1% p.a.)
Monthly Salary: S$6,000
Rate of Increase in Wages: 3% p.a.
Number of Months in Bonus: 2 months
Housing Loan: S$800 per month over 30 years
What You Need to Save per Month for the next 27 years: S$620.73

At the age of 35, the monthly salary is assumed to have risen to S$6,000. But being able to afford an expensive lifestyle has meant that there are no savings in the bank account, and now you have a housing loan to deal with. While things do not look very bright, it is not too late. Save S$666.57 per month and you could ensure that you have S$2,500 every month during your retirement days.

If You're 45
Scenario 1
Savings: S$0
Monthly Salary: S$8,000
Rate of Increase in Wages: 3% p.a.
Number of Months in Bonus: 2 months
Housing Loan: S$800 per month over 20 years
What You Need to Save per Month for the next 17 years: S$1692.34

Scenerio 2
Savings: S$40,000 (earning 1% p.a.)
Monthly Salary: S$8,000
Rate of Increase in Wages: 3% p.a.
Number of Months in Bonus: 2 months
Housing Loan: S$800 per month over 20 years
What You Need to Save per Month for the next 17 years: S$1582.63

At the age of 45, things will get tougher if no plans have been made yet for retirement. After all, the time horizon till the retirement age of 62 is less than 20 years. Assuming that there are no savings in the savings account, you would need to save S$1692.34 per month. And even with savings of S$40,000, you would still need to save S$1,582.63 per month.

If You're 55
Scenario 1
Savings: S$0
Monthly Salary: S$10,000
Rate of Increase in Wages: 3% p.a.
Number of Months in Bonus: 2 months
What You Need to Save per Month for the next 7 years: S$5319.54

Scenario 2
Savings: S$40,000 (earning 1% p.a.)
Monthly Salary: S$10,000
Rate of Increase in Wages: 3% p.a.
Number of Months in Bonus: 2 months
What You Need to Save per Month for the next 7 years: S$4937.02

The lesson is to start early. The later you drag your retirement planning, the higher the cost. You would need to save over S$5,000 per month (over half your salary) from the age of 55 to 62 to ensure that you have S$2,500 per month during your retirement days.

POSB Invest SingGrowth Account

Today I was queuing up at POSB settling some stuff, then just happily flipped through their pamphlets that were within my reach.

First one, one telling people how to manage their money. Very good, very in line with what I am doing at the moment, helping pple to ensure that they are well insured and putting their money hard at work.

Second one, ah-huh, the famous 'POSB Invest SingGrowth Account' that was published quite prominently in the newspaper. I always wanted to find out more about this plan, thinking how is it possible that it can give so good interest rates. After reading, then I realized how difficult it was to achieve the kind of interest rate they were promoting.

Features:
1. Guaranteed return of full principal at maturity or upon Specified Redemption Event (unless banks totally collapsed)
2. The minimum interest over 5 yrs would be 2.78+1.08+1.18++1.28+1.38 = 7.70%. Over 5 yrs, it will work out to be 1.54%

Here comes the interesting part:
3. The Specified Redemption Event occurs when the Return of each Share is at or above 15% on a Fixing Date. What a clause??!!! Why do I say that? It simply means for the Bonus Payout to occur,

ALL 4 of the shares (Singapore Telecom, UOB, SPH, SembCorp) MUST achieve more than 15% ROR. If any one of them fails to do so, NO bonus payout!

Mathematically speaking, assuming these variables are independently related, the probability of the equation would be:
P(Share X achieveing >15% ROR) = 0.5 (to put it very optimistic)
P(ALL shares achieving >15% ROR) = 0.5 x 0.5 x 0.5 x 0.5 = 0.0625!

It would be far off to put your money in a simple short term endownment plan which generates more than 1.54%/annum. Or if you are interested to know more about instruments to make your money grow harder, contact me anytime.

Lessons from Get-Rich Courses (05-Oct-09)

As you flipped through the papers everyday, without fail, you will find some 'gurus' claiming to be able to help you make LOTS of money with little knowledge or NO knowledge to start with. Either with options, forex, eBay, courses, etc.

How true is that? Personally I attended a Wealth Mentors seminar and an eBay seminar before, simply just to satisfy my curiousity on what these 'gurus' are claiming. Blah blah blah.. they say this good lar.. that one se-bei-ho lar... at the end of the day, ask you to sign up for their 4-digit figure course, then throw a little gimmick by saying give you $X discount off lar...

It was interesting to hear what they have to offer, but too difficult to part with my precious money. Perhaps that if you are diligent enough to follow their 'guidance', you can make big, JUST like them. But being a typical skeptical Singaporean, we still do not believe money can be made so easily. So back to our daily lives and jobs....

As an IFA, we believe in another concept. Working hard for your money is the right thing to do, but making your money work harder for you, is even the 'right-ter' thing to do! Make sure that whatever insurance policies you had bought, whatever investment you had made, are done systematically and with the correct objectives in mind.

If you have doubts on what is your current financial status, do gimme a ring. I will be there to guide you with my professional knowledge in financial planning.

Property agents to be regulated (05-Oct-09)

THE Government is moving quickly on a plan to regulate real estate agents in the wake of growing calls to improve the standards of the industry.

The Straits Times understands that an independent body will be set up and chaired by a neutral party appointed by the Government. It will also house a dispute resolution centre to mediate between agents and consumers.

Key agency bosses, industry associations and individual agents have already met with Government officials to discuss the reforms.

The proposals, which could be made public in the next month or two,will likely require that agents sit a compulsory exam and that all accredited agents be monitored through a central database run by this independent body.

This will mean that errant agents will no longer be able to switch agencies easily, as they can now. Currently, agents fired from an agency for dodgy activity can just switch to another firm.

There are also suggestions that agents will have to buy indemnity insurance protecting customers for losses resulting from negligent or unethical conduct.

While the Government has in the past maintained that the industry should self-regulate, it has decided to step in due to an increasing number of complaints against rogue agents, which has occurred in tandem with Singapore’s property market boom.

In February, for example, a couple successfully sued ERA Realty Network over its agents’ conduct. The agents, who have since resigned from ERA, had made a profit from ‘flipping’ an apartment they were supposed to sell for the couple.

The Consumers Association of Singapore (Case) received 1,100 real estate-related complaints last year, 1,113 in 2007 and 991 in 2006. This year, it received 619 complaints from January to August.

Case executive director Seah Seng Choon told The Straits Times this week that the proposed measures were long overdue.

‘There is a need to ensure a proper standard of practice so there aren’t abuses in the industry,’ he said.

Mr Seah is pleased that a central dispute resolution centre will be set up to help consumers and agents settle rows.

Although a clearer picture of the proposed reforms has emerged, two big questions remain: Are agents going to be individually licensed, and who else will be involved in running the independent body?

There are now two industry bodies – the Singapore Accredited Estate Agencies (SAEA) and the Institute of Estate Agents (IEA)- but it is not compulsory for agents to join either. While both associations are involved in the review process, discussions are ongoing as to their specific role in the independent body.

Industry observers note that some of the associations’ existing functions may become redundant in light of the new regulatory framework.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that ideally, agency bosses, many of whom advise the current industry bodies, should not be involved in this new independent body, as they might resist the reforms or have a conflict of interest.

‘The priority now is to put in place a system that can permanently remove errant agents from the industry so they think twice about behaving unethically,’ he said.

Agency heads say they fully support the suggested reforms.

‘Even if it involves more work for agency bosses like myself, I don’t mind so long it makes our industry more professional and disciplined,’ said C&H Realty managing director Albert Lu.

Mr Lu is one of many who back the idea of licensing not just agencies but individual agents.

‘They are the ones doing the transactions, so they should be made accountable for their actions,’ he said.

Knight Frank agent Peter Tan, 40, said it was a good idea to have a compulsory exam ‘to give clients confidence that agents know their stuff’.

But it remains to be seen how effective the new accreditation will be, he said.

‘It’s the right initiative. But there are many agents who resort to unethical conduct because it’s quite a tough business. We’ll have to see if it is enough to deter such behaviour.’

Public consultation on the proposed reforms is due to begin this month with the findings due by December.

Source : Straits Times – 5 Oct 2009