IFL Webinar On Financial Planning – 06 Sep 2017
The basics of Financial Planning includes Cash Management, Debt Management, Insurance Planning, Retirement Planning and Investment Planning and Legacy Planning. For a start, we would like to encourage you to check out our e-learning videos on Making Sense of your Money.
Remember the acronym: F.B.I. (Financial Goals, Budget, Intentional – Automation, Advice)
Set goals: This is a first step and a very important tip, especially when you are starting out, because it can be overwhelming when you do not know exactly what you want to do. It does not matter if you are saving for a vacation, to start a family, for a down payment for your property or even retirement―what does that actually look like? Then you can work backwards from there to find out what you need to do with your finances to achieve your goals.
Prioritize: We only have so much money to work with, and we want to do lots of things, but we may not be able to do them all right now. When you prioritize, you can be certain that you want to be able to accomplish the goals that are closest to your heart.
Budget: I presumed that many of us hates this word because this is where we think of cutting our expenses and tightening our belts. But a budget is just about being mindful about your money and spending less than you make―and that’s where the savings are. And really, budgeting is the only way to move forward financially, because you increase your savings and then you can reach those goals.
Automation: Once you know what you can save, that’s what you want to automate every month. It’s one of the oldest tips in the book, but automating your savings (like a bill) is really important when you start saving. Because when money comes in, you don’t even miss it anymore. And then the next thing you know―there’s your money for your downpayment.
Advice: Get unbiased advice for your financial plan from a competent financial planner professional. This way, you can have someone take a look at the whole financial picture and make sure that you have a good strategy so you can reach your goals efficiently.
Question 3: What do I need to get started with financial planning? Are financial consultants compulsory?
Financial Goals, Budget, Intentional Action – Automate, Advice.
For people who do not have the expertise or time to plan on their own, working with a financial adviser can be a way to obtain expert advice. It is important to make a good decision about whether to hire a competent financial adviser whom you can trust or not.
Financial Planning is a process that sets you on a course toward accomplishing your life goals through the proper management of your financial affairs. Financial planning is more than budgeting and cutting back. The right financial plan balances what you need and want today with the personal goals you have for the future.
For people who do not have the expertise or time to select investments on their own, working with a financial adviser can be a way of obtaining expert advice. It is important to make a good decision about whether to hire a financial adviser or not. Results may vary tremendously.
While MAS requires advisers to suggest suitable products, it does not require advisers to take a “fiduciary” role and put customers’ interests first or do what’s best for the client. It’s important to realise, then, that some advisers may be biased towards their own interests rather than yours.
In cases where investors have the expertise, time and inclination to manage on their own, they can usually manage well on their own. If you do not have the expertise, time and inclination to invest well, though, hiring a financial adviser/financial planner who puts your interest first can be beneficial.
a. What are your qualifications?
b. What are your experiences?
c. What kind of services do you provide?
d. What is your approach?
e. How are you compensated?
f. Are there any references whom you can check with?
g. How can I be certain that you will not put your interests before mine?
h. Are you willing to put this commitment in writing?
INSURANCE AND OTHER QUESTIONS
Essentially, it is important for members to try to meet their Full Retirement Sum (FRS) for their cohort so that they can meet their basic retirement needs. It is $166,000 now and will increase by 3% till 2020. We would like to encourage you to check out our e-learning videos on Managing CPF Money For Your Retirement.
Question 2: What percentage of income is recommended to be the portion for insurance? Insurance as in protection plan.
Question 3: What are the differences between early stage critical illness and critical illness insurance? How to decide?
As early critical illness plan are rather expensive, a way to mitigate this is to have a normal critical illness coverage and a comprehensive H&S plan to ensure that the hospitalisation bills are covered as you may still be gainfully employed given that it is not in the advanced stage. If it is in the advanced stage, there will be a payout to help you with your expenses as you are unlikely to continue to work.
Should the early critical illness fit your budget, you can consider getting it. It is important to seek the financial advisor whom you trust so that you can make an informed decision eventually.
Question 4: Money Management Framework - Separate 'Buckets' vs 'One Bucket' - How to develop both, switch between each other and gel everything together?
It is not necessary to introduce separate buckets if one bucket is all you need, assuming you have a balanced mix of investments and rebalanced it over time. The amount you need is determined by selling portion of the units from this mix. The one bucket concept is based on a systematic withdrawal strategy and it is easier to manage.
Question 7: Should I upgrade my income shield or retain what I have since I have some medical condition. Knowing that my premium will be loaded and the medical condition will be excluded?
Question 8: As I have fully paid my standard eldershield plan, should I buy an eldershield supplement?
If you wish to have higher severe disability insurance coverage (e.g. higher payouts and/or longer payout period), you can consider buying ElderShield Supplements offered by the three appointed private insurers. The premiums of ElderShield Supplements can also be paid using your Medisave savings, up to a limit of $600 per year per insured person.
Pay off loans with the highest interest first.
Pay off loans with lowest amounts first. This might give you a psychological boost.
Approach Credit Counselling Singapore – Helping individuals with unsecured debts through education, credit counselling and debt management programmes.