For my friends in the United States and Canada, with the start of 2011 and as a Financial Planner, I would like to share a site that would be beneficial to you if you are keen in Personal Finance Tips and Budgeting – Mint.com.

This is one site that I have found most useful (but wish that there’s a similar site in Singapore too) that would help you and I to learn one important aspect in every Financial Planning – Budgeting!

Why Is Budgeting Important To You And Me?

Budgeting is one of the ways that will help us to be aware of what we spend and to cut down on the unnecessary expenses. With the amount saved, these resources can be channeled to the right financial tools and help us to achieve our (much needed and important) financial objectives – Comfortable Retirement, Better Prepared For Any Unforeseen Circumstances or Any Bigger (But More Expensive) Dreams.

What Can You Do On Mint.com?

Currently available to my friends in the United States and Canada at this time (expanding to other countries), you can use Mint.com to download your transaction history from your bank and credit card accounts. Your personal information will be kept confidential and protected under the Bank’s Internal Security.

You can also try out some of these popular tools available on the site like:

• Budget Worksheet – use this worksheet to help you track your income, expenses and a lookout for trends
• Home Budget Software – you can also make use of this free software provided to help manage your family and household budgets with ease.

Once you have provided your information, it’s time to have fun! This is one of the features that I like about Mint.com – the ability to present all the stats and details in a very nice graphical interface and easy to understand manner!

You can even see these information presented on your Smartphone – making sure that you are aware of your budgeting when you are on the go!

So if you are currently a citizen of the United States and Canada and have yet to try out Mint.com to track your income, expenses, trends and do up your budgeting, give it a try and benefit from it today!

If you are able to create a positive budget from the tools or personal finance tips from this site, something that you may not have achieve before, do drop by here again, give your comment and share with others your success story!

Have a good 2011!

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After working as a Financial Planner for the last two and a half years and being able to come across many real life situations with regards to insurance death claims – I have recently witnessed two death claims whereby

• a guy in his late 40s whom lost his dearest wife and is in a total loss and 
• another case whereby the family is with mentally handicapped children and the wife is left with no insurance monies as the hubby has never done up any insurance coverage before…

I just have this sudden feeling to blog about this…

And I will be talking about something that most of you will not be interested to talk about – Death! Death is something that is so expected and one fine day you or I will just forget how to breathe. It’s just a matter of time as well but we do not know when is that time – that’s all.

That’s why my blogging topic is with regards to something that is so expected (it will come eventually) but yet so unexpected (you do not know when it will come), and the big question is how prepared are you today? Yesterday is gone and we are still alive and this is something good and tomorrow is still something worth looking forward to.

So should really anything happen today, how prepared are you and your family?

And when I mean prepared, is not with regards as to whether you have all your friends or family members ready to take care of your funeral but rather on the financial aspect – will your sudden death be an asset or a liability to your dependents?

Will I Be A Liability To My Dependents?

If you have no idea what does it mean by dependents. Basically Dependents are people whom depend on you (or your income) for your living, e.g.

• Your parents who depend on you for their retirement or medical expenses
• Your spouse who depend on you to take care of the family daily expenses
• Your children who depend on you to provide them with an education and a dream to look forward to

And you have automatically become a liability to these people upon your demise when you

• Have outstanding credit card balance or any loans especially the home mortgage loan repayments
• Have outstanding medical bills (that you have chalked up during your treatment terms but failed to live through it)
• Not enough savings for your children to go through their education
• Have to make your Spouse work doubly hard (to start working or additional job) to take care of the family daily expenses and/or to take care of both side of parents

So, at your death bed, would you want your family members be talking all the bad stuff and the hardships you have brought upon your family or the possible good stuff like:

How Do I Become An Asset To My Dependents – In the Financial Planning Aspect?

1. Have a Medical Insurance and Critical Illness Plan to cover most of your medical bills and specialized medical treatment – leave no traces of medical bills!
2. Plan for your Parents – if they have a certain amount of daily or medical expenses, take this amount into consideration (in terms of an annual amount) and multiply by a rough guide of suriving terms for your parents (male can live till an age of 80 whereas female till an age of 88)
3. Plan for your Spouse – calculate the amount your family is spending (not counting in yours) in a month and multiply that annual amount with at least 5 years in consideration. This 5 years can help your spouse to get over your loss and to start looking forward with a new job.
4. Plan for your Children’s Education – based on your youngest child’s age and the gender (in Singapore’s context, male will be going to the University at age of 21 whereas females at the age of 19), get the remaining age to university, factor in the education inflation rate and multiply to the current education fees.
5. Plan for your Outstanding Debts – there’s such a insurance plan known as a Decreasing Term which is cheap in premium. Consolidate all your debts and plan against it. You will never go wrong!
6. Believe in Planning and Plan For It Today! Tomorrow is something worth looking towards to and still is and somehow unknown. That’s the reason why you need to start planning today!

If you do agree the importance of the above planning and have done so today – it may not be 100% planned for but at least to a certain extent – do you think, at your death bed, will you still be complimented that you have done something good in the days that you are alive?

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There is a favorite story that Financial Planners will use to show Breadwinners the importance of Income Protection or Whole Life Protection and that will be the story of the Goose that lay the Golden Eggs.

The Background Of The Story And What You Can Relate From It In Today’s Reality

In brief and in comparison to today’s context, this story shares that there is this Special Goose (in comparison, will be similar to a Breadwinner who maintain and sustain a family and reproducing future generation) that lays a Golden Egg each day (in comparison to the Children, who is the future pillar of of the society).

This Golden Egg, in the story, has actually made the owner very rich as the owner can sell the eggs for very good profit. Thus in reality, Children are good and valuable resources to the society as they can contribute their talents and services back.

This Golden Egg also has the potential to become another Special Goose that can lay a Golden Egg. Imagine having two Special Goose producing double the Golden Eggs now. Can you see the benefits in translation to having a Breadwinner, continuing to contribute to the family and society and having the future generation to contribute as well?

The story went on that because of Greed and Foolishness, the owners wanted to become rich faster and eventually killed Special Goose, thinking that they can get all the golden eggs out for a faster profit. They realize that they were totally wrong and thus lost their current and future income stream – The Special Goose that Continue To lay the Golden Egg!

In Relation To A Proper Financial Planning

I get to see many clients who have just started their own family and I can totally agree that Children are very important and precious, especially if the child is the first-borned!

so when it comes to Financial Planning, most of these family-oriented Clients, that I have talked to, would rather start off their planning with the Child in mind, and thus forgetting the importance of their financial and emotional position in the family.

If something unforeseen should happen to these Clients, seriously, their family and even the new-borne will be affected – emotionally and financially!

But do you know that, in today’s context, should anything happen to the first-borne, these clients are affected emotionally and financially as well!

Talk about mixed feelings!

The Two Different Sides Of Financial Planning

The Proper Side

A proper Financial Planning would agree that the Client (the Special Goose) should be protected well enough in areas of Health, Critical Illness and Income Protection Insurance. Only after, should the Client concentrate on protecting the Children and the rest of the family.

In simple and logical sense, would be that should anything happen to the Client, he is protected financially by the insurance coverage and emotionally the rest of the family will not be that affected as they can be sure, at least, the Client has enough funds for medical treatment. Or to the extreme circumstance (death), the insurance claims can help to make sure that the current family lifestyle can still be maintained in the absence of the Client.

What is being discussed above is totally agreeable in a financial planning sense. But do look around you and you will agree that there is another side to it!

The Mixed Feelings Side

Many, may include you as well, are busy with work or even be making ends meet. To seriously have a Child (out of willingness or accidentally) and especially having the first child, and not to talk about having the second, involve many considerations like:

• Financially: Will your current income (including your spouse’s) be able to take care of the child and last through to the independent age? Will you have enough for a possible Second?
• Health: Work Stress has caused many to have long term illnesses like depression and such. Will this, coupled with long term medical costs, be able to ensure that you are able to take care of your child. Can your health give you a possible Second?
• Time: Most people are spending more time at work than at home with their family. Whatever spare time that’s being used for the family, is most of the time, to show to the child that the parents are still there once in a while… So do you think you have enough time for the possible Second?

Just the above few considerations, most Clients that I know of, choose to have just one Child (one and only Golden Egg) and a least possibility of a Second. Thus when it comes to Financial Planning, it just seem so fair that this only Child be given the best financial plans and whatever is left of the budget will then be considered for the Client.

Thus the mixed feeling is that, most of these Clients spend a lot of their available budget on this only Child. To them, this only Child is like their Special Goose (which can be their only) and vice versa. So you understand the irony and mixed feelings here?

So… How Then?

In actual financial planning, it all depends on your priority and needs. I can follow the books to advice you that you need to protect yourself first before your child but if this child is your first and the last, it do make sense that your efforts on this child is well protected as well! Whatever the case, is, as long as you can understand what you are doing, whatever you decided to plan with will serve you well. The only worst case is that you do not plan for yourself or your child!

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2008 is gone and 2009 is just starting, and as a financial planner, how ready are you in terms of your Protection Planning, Medical Insurance Planning, Wealth Accumulation and Retirement Planning?

A handful of insurance terms but very much important to a better future for yourself!

Rumors are in and heavy that the year 2009 ahead would still be taxing to many people financially (lower income due to salary cut and rising unemployment rate) and emotionally (stress in maintaining their current job).

My Personal Feel And Opinion

The current economic condition is here to stay (whether you like it or not or how deeply affected you are now) and even if it’s gone, the similar situation will still happen many years later (could be another 10 to 14 years later). The only way out is getting prepared for it right before it hit you again.

Doing Your Planning And Preparation

Once you have done your planning, you will be glad to know that no matter what unforeseen circumstances may happen, you are always ready for it and you are well-prepared as well.

Worries like Emergency Funds should you be suddenly retrenched, Falling real sick and chalking up a huge medical bills at a bad economic period and having to use up all your life-long savings and depending on many others financially to get over the tough times  – thus affecting your Retirement will no longer be an issue!

How So? (A Look At Some Of My Favorite Posts To Help You Along…)

1. How It All Begins – Understanding Your Basic Financial Planning Needs
2. It’s All About Making A Start Today -Start Today, Not Tomorrow
3. Do You Believe In What You’ll Be Doing – Are You For Or Against Insurance, Questions To Ponder Whether Are You Ready For Your Retirement, Questions To Discuss For Your Survivor’s Needs Planning, Questions To Discuss For Your Critical Illness Protection
4. How To Have That First Dollar To Start Planning – Learn How To Set A Budget
5. Once You Have Done Some Planning, Here’s How To Reach A Million Dollars When You’re 65

As you can see, planning for a better future and getting prepared for the next recession are all about having a better understanding of what is needed to be done and get it done today and not tomorrow!

The Year 2009

If part of your new year’s resolutions is to have a better future or to get some financial planning done, let 2009 be the year to help you get started so!

Here’s wishing you and your family a very Happy New Year For 2009 and a very fruitful one as well!

Do continue to support this blog on getting some personal tips on how to do up a sound financial planning for yourself!

Note: If you have enjoyed my postings over the past few months or so, please do remember to either subscribe to this blog via email and get updated through your mail whenever there is a new update or to add this blog to your favorite RSS Reader and read all my latest posts as and when it is updated!

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After seeing so many Clients (both the young and the matured), do you know that most of them have no considerations and are still not prepared for Retirement? This is something alarming and should be brought to your immediate attention!

What Is Retirement?

This is the time period

• Whereby you should have stopped working (for goodness sake, after working so many years in your life)!
• Whereby you should enjoy your life to the fullest - see the world, have quality time with your loved ones, enjoy your hobby, enjoy good food (please do not just survive on bread) or anything that has been your wildest dream!
• Whereby you have not worries for money – you can have built up a Residual Income, or have Ample Savings (money being worked for you all these while)

How Long Can Your Retirement Be?

In today’s context, most Singaporeans would choose to retire at the age of 65 and with life expectancy on the rise, you and I can live to the age of 80 (for men) and to 88 (for women), and that can amount to nearly 20 years of retirement.

How Much Do You Need For Your Retirement?

There’s no standard amount, but a study has been done, and most people would prefer to have $1 million for their retirement (did I hear a waaaaa?). I know this amount can only be very much dreamed about and good to have.

But if you do need a number to make sure you are somehow near to a comfortable retirement, this is a sample calculation:

• Decide your desired Retirement Age (e.g. 65)
• Decide your desired Expiry Age (e.g. 80) (I do know of people who want to die the moment they reach 65, sigh!)
• Get the Difference of the above two, let’s call it “X”
• Based on your current income, foresee how much it will be before you retire (e.g. $5,000/month) and decide how much (%) of that last income you will like – 100% (for the best time of your life), 70% (for a rather comfortable life), 40% (for a simple life)
• Once you get that value, let’s call it “Y”, then get the product of “Y” and “X”, and this will be the amount you will need to last your Retirement.

If you have based on that $5,000 per month (that’s $60,000 per year) therefore a 15 years of retirement can easily bring you:

• $900,000 for the best time of your life
• $630,000 for a rather comfortable life
• $360,000 for a simple life

Question is, will you have any amount of savings or residual income that can bring you near to the amount above?

If not, what would you do today to start preparing yourself for your retirement (please… no negative thinking)?

Some Questions To Ponder If You Should Start Planning

• Do you think your current assets (savings account, stocks, shares, unit trusts, properties) are enough for your retirement?
• Do you think these will be enough to meet your retirement needs (daily living and lifestyle)?
• If these are not enough, how do you plan to go about meeting the shortfall that you have (start saving or investing?)?
• What are the “standbys” should you be unable to retire (even at the simplest) as planned?

Some Questions To Ask How You Will Feel

• How would you feel if yu were unable to retire as planned?
• What would be the consequences if the provision you have is not enough?
• Can you or do you want to depend on your children (or your parents, if they are still around) for financial support during your retirement?
• How would you and your other half cope if you are unable to support your basic needs?

These are some of the considerations that you need to make and to consider for your retirement planning. Once you have decided an age to retire, it’s a good time as well to start looking into areas to help make sure that you are ready for your Retirement!

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Nobody likes to talk about Death or the idea of being Permanent Disabled. But Death will eventually come knocking on your door when you are the least prepared. So are the chances of being Disabled.

You can be single at this moment of reading this post but you may have your dependents like your Parents.

Or you can be just starting your family or you can be already having your two little “monsters” (children) tearing you upside down but nonetheless, seeing them growing up is always a joyous moment.

While so… how prepared are you in terms of your Survivor’s Needs Planning? And what we mean by Survivor’s Needs Planning are as such, when you suddenly forgot to breathe tomorrow but still being able to:

• (if you are single) Take care of your Parents financially for the rest of their lives
• (if you just start a family) Take care of your Spouse or the mortgage loans for your new house
• (if you have children) Take care of your Spouse, your children till they are independent and their university education

all this and even more without affecting their current lifestyle with you still around!

Therefore you need to ask yourself the following questions and see how prepared you are in terms of your Survivor’s Needs Planning.

Questions To Assess Your Current Situation

• In the event of your premature death, how much do you think your family would need to maintain their current standard of living?
• How long do you wish to provide for your loved ones? (do you have enough as of now?)
• What amount do you think would cost your family to meet the last expenses in the event of your premature death? (please think at least $10k to $15k)
• What plans do you have in place currently to meet this concern? (please do not depend too much on what your company is offering)
• Do you personally think these provisions are sufficient for your loved ones?

Questions To Assess If You Will Face Any Problems

• What would you think is the total financial loss to your family when you are gone?
• How would your family cope financially (does your spouse need to work now and neglect the children)?
• To whom could they turn to for financial help? (do you think this kind of help is permanent?)
• Would your family members be adequately provided for in the event of your demise? (How Long?)
• How long do you think your family would be able to maintain their current standard of living (after depending so much on your income) if you are no longer around?

Questions To Assess If Anyone Around You Will Be Affected

• Who would have suffered most financially? Your Parents, Your Spouse or Your Children?
• What impact (financially and emotionally) would your absence have on your family in the event of your premature death?
• Where do you want your family to live in the event of your death?
• What would happen to your other half or your children if you are no longer around to provide for them?
• If you had died last night, what would have happened to your loved ones?

Questions To Assess If You Are Ready For A Solution

• How would you feel if your parents, your spouse and children are financially independent in the event of your absence?
• What benefits do you see if you are able to cater to your Survivor’s Needs Planning?
• What would your other half and children think of you then? Happy that you have planned for them or Angry that you just leave them alone to fend for themselves?

If you have never thought of asking yourself these questions, this will be a good time. Starting now is never too late as long as you are willing to commit.

Remember that planning for your Survivor’s Needs with an insurance plan is not just paying your Financial Advisor a commission but rather that your small commitment (premium) today will set you and your family to be more financially independent tomorrow.

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In my field of doing financial planning with clients, one of my duties is to have a discussion with me asking questions (on the emotional side) and have the clients realized the importance of doing a financial planning.

One of the area that you need to look into is on your Critical Illness Protection.

Many people may be just relying on their Medisave and Medishield Schemes to pay the costs of their medical treatment (the number #1 killer in Singapore is Cancer). However, you should know that Medisave and Medishield have their daily limits and the available quantum may just be not enough to pay for the cost of prolonged hospital treatment or a major surgery.

If you are curious to know what is Medisave and Medishield all about, here is a list of useful links:

• List of Benefits and Limits Of Medishield (a .pdf file)
• Explore everything you need to know for your Medisave and Medishield
  

As such, you may need to have other source of funds to help pay for this kind of medical expenses – both for you and your immediate family members.

Another reason is that unlike death, being stricken with a Critical Illness may present to you a long-term financial strain. Think of this, beside being have to endure a significant initial and ongoing costs of treatment, you (as an income earner) will need to have some form of protection against the issue of a loss of income as you will probably by unable to work during this prolonged period of recuperation.

Therefore are you ready to understand more of yourself in terms of Critical Illness Protection, to really see if you need to start planning or to enhance?

Questions To Assess Your Current Situation

• Do you have any standby plans for the possibility of striking a major illnesses like Cancer or Heart Attack?
• What do you think it would cost for medical treatment or if you do have Cancer?
• What amount do you think is appropriate as a good start off in terms of getting a coverage against Critical Illness?
• How much would your family need to tie them over the difficult period (when you are unable to work) during your diagnosis/treatment?
• Think hard and think well, is any insurer currently covering you for critical illness?

Questions To Assess If You Will Face Any Problems

• What difficulties would you face in your career if you were to contract any major illnesses?
• Can you and your family cope with the medical bills?
• Where would you find the money to maintain the on-going medical bills?

Questions To Assess If Anyone Around You Will Be Affected

• What diffculties would you face in your career and your family if you were to contract any major illnesses?
• How would you feel if you were a “Financial” burden to your family?
• What could possibly happen to your family if you were really a “Financial” Burden?

Questions To Assess If You Are Ready For A Solution

• How would you feel if you were still able to provide for your family in the event of any unforseen health mishap?
• How would your family think of you then?
• What Difference would that make to you and your family having being able to protect them from any financial hardships?
• What benefits do you see if you are able to cater to your Critical Illness Planning?
• What would your other half and children think of you then?

If any of the above questions do a strike a chord in you and you feel a certain numb inside you, it’s really time to speak to a Financial Advisor to do a proper planning for your Critical Illness Protection.

Do remember that Insurance Companies will only take in your risk when you are still a Healthy Person.

You can also save more premiums when you get your protection early.

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How Totally True… If you are offended by the title because I do not know you at all… Sad to know is that, this is really the case happening in the world – You’re Broke Today Because You Want To Be!

This view was evident after a small chat with a Client and reading a book by Larry Winget: You’re Broke Because You Want to Be: How to Stop Getting By and Start Getting Ahead

My Chat With A “Poor” Client

The CPF Board has recently raised the premiums for the Medishield Plan (a medical insurance plan) and the raised premiums also mean that the benefits have also increased.

The Premium for the Medishield Plan is basically very low and affordable for every (almost) Singaporeans but very sad to say is that this Client is unable to afford it…

As we chat on… tears were on the edge of her eyes… and she was also saying that she still owed her tv license fees, utilites bill and phone bills for the last 2 months. She would rather forgo this medical coverage and suffer at home (if she is down with any major illnesses) than rather not to be able to service the rest of the bills.

She was there… asking me for some advice… But a brief description of this Client is that she does not really look that poor as she was having some gold jewelleries and jade on (still… I am not in a position to assess her financial status). I suggested asking her family to help (she is alone and not married), asking her to seek some financial help with the government (she has her pride and will not do so) and I was really in a loss at that moment!!

All I can say is that both her bills and having some medical insurance are important and that these two areas must be looked in as soon as possible.

Then I ask her whether has she done any financial planning (setting aside some savings, buying some insurance) before in her life? She answered no. And she further replied that she has never considered this area before in her life because she feels that it’s not important. Whatever she has earned in her life is already spent. Not a single penny in her bank account.

My deepfelt sympathy for her… And I wished all the best for her!

My First Two Advices From Larry Winget’s You’re Broke Because You Want to Be: How to Stop Getting By and Start Getting Ahead

I managed to get hold of this book today and after reading the first chapters, I felt totally agreeable with the book title and the first two advices that Larry Winget shared.

First Advice: The Real Secret! What you think about, talk about, and get off your a** and do something about comes about.

This advice totally shake myself off and set me thinking.

Many a times, you and I do want to do something good for ourselves and we set goals like to lose weight, to start a savings program, to buy some life insurance and etc.

But what did we actually do? You and I (I am guilty for this as well) still continue to go for those high fat content “diet” or those money meant to be set aside for our savings plan and life insurance – are the money in the form of a new pair of shoes or a new tech gadget, and we just assure ourselves that we’ll start our planning soon!

What you can learn from this first advice is that, if you do know something that’s really important to you, you should get it down with action and make sure it’s completed before any other issues. Plain thinking and talking about it will not get things done.

Second Advice: You will never change until you first become uncomfortable

Just think about this, we are very comfortable with everything in our lives. Putting the losing weight as a classic example, we may be “overweight” today because we enjoy those high Carbo meals and those nice taste that come with it… We are comfortable with these meals.

If we do want to lose weight today, you and I have to put in actions like eating more vegetables (they just taste so plain, but we do know that it’s good for helping us to lose weight) or doing more exercises (which is more comfortable – lying on your bed or sweating out there? I will definitely choose the bed!).

It’s the same for your Savings, Medical Insurance and Life Protection Plan as well. Putting aside some money for this planning in a long term or to go for better food or those new pair of shoes that’s having a mega sales or the latest gadgets in a short term – which is more comfortable?

As you can see, all good things that need to happen comes with a price and this price is called Uncomfortable. And you can never change for the better until you have first become uncomfortable!

In Conclusion

Follow this two advices closely! If you are keen to know how to start getting ahead with your life and not to suffer when you are old, you should consider getting your hands on Larry Winget’s You’re Broke Because You Want to Be: How to Stop Getting By and Start Getting Ahead

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Financial Planning Tip #4 is to settle your basic Financial Planning needs before even talking about specialist financial services like taxation advice and investment management.

What Are Your Basic Financial Planning Needs?

If you do not know what they are and their priority, there is a simple model for you to remember, as you can refer to the picture below:

Financial Planning is like building a house

So how can you refer to the simple house model above?

Below any of your dream house can be built, you have to have the foundation set up first. So in this case, it will be in terms of your planning for your

1. Life Protection for Critical Illness and Disability
2. Health Insurance for huge Medical Bills

Why are they important?

Before you can have your luxurious interior design, furniture and such, you have to set up the foundation, the whole structure of the house, the fixtures and fittings first. These are of the highest importance to ensure the stability of the house. The initial cost for setting up these are high and you have to set aside huge amount of commitment before you get to enjoy the rest of the house later.

Therefore the same principle applies to Life Protection and Health Insurance. These two areas are of the highest importance. You can have the highest paid job or the most rewarding business but you have to be physically alive and healthy in order to enjoy all the benefits (moving up the scale to retirement, savings, dreams & ambitions and achievements).

Your Health Has An Impact On Your Financial Planning

If you are healthy, the money you have set aside in terms of your Life Protection and Health Insurance will be protecting the rest of your money that’s for working harder for you (retirement and savings)

If you do become unhealthy, the money you have set aside initially will be multiplied to many times and if you have done the planning properly, these multiplied money will be enough to help

• Take care of your current income or business for the next 5-10 years
• Help to minimize the impact of medical cost
• Worse cases (in your absence) will be ensuring that your family has enough resources to continue their lifestyle

while you slowly nurse yourself back to good health and without affecting your lifelong savings and dreams.

Making Money Work Harder For You

After taking care of the Life Protection and Health Insurance, the next two areas of basic financial planning will be on your

3. Retirement Planning (like Annuity Planning) and
4. Savings (Regular Investment Savings)

Many people just think that they need to work hard in their current job, put all their savings into a local bank with savings interest rate of 0.25% per year.

With current inflation averaging around 5%, your bank interest rate is not able to catch up with the increase in prices.

This means you are actually short-changed and you have to find other resources to make up for a comfortable retirement or to really an expensive dreams!

That is why you need to do some planning for your retirement and putting some commitment into a regular savings or investment plan.

If you can do only one area, the priority will be by doing regular savings into a plan that generate a higher interest rate - you are making your money work harder for you and you get to combat against inflation – you get to achieve your dreams easier and you get to have more to set aside for your retirement.

When your lifelong savings are intact, and your savings plan are in place, you will get to see that you have enough money that you can use for retirement – a period that you are not working at all! You can therefore ensure that you can still continue to live your current lifestyle during your retirement period, the plus point is that you do not need to work anymore!

Therefore do you see the importance of having a good savings plan that will help to supplement your retirement planning?

Linking these two areas to the House Model, if you have done it well, you have done up your foundations, which will enable you to be able to create a roof over it and your dream house is nicely done up!

Imagine all the luxurious interior design and facilities you can put in there!

In Summary

Your Basic Financial Planning is like Building A House. You have to settle and ensure you have enough planning for your Life Protection and Health Insurance – this is to take care of the impacts should your health turns to the worse.

After you have done so, you have to start planning for your retirement with a good regular savings plan in place. This will help to take care of the effects of inflations, make your money work harder and definitely help you to achieve your dreams faster!

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My colleagues and I were having a short discussion today and the topic of “Buy Term And Invest The Difference” strike us and we were asking each other the trend of most people coming to us in terms of getting a protection plan and/or a savings/investment plan.

And this is what we are noticing…

Buying Term Insurance

With the economic crisis and the fall of a “Mountain”, everyone is picking up the idea of picking up the buying term insurance because:

• Firstly for a low premium, you are getting a higher sum assured as compared to a whole life plan with cash value but lower sum assured.
• Secondly in such crisis, should there be any potential fall of a giant again, the impact of terminating (which is not recommended) a term plan as compared to a whole life is lesser. If your Whole Life Plan has not even break even yet, and you decide to give the plan up, you are losing money at least 5-6 times more as compared to money spent in a term insurance.

Because of the current crisis, many people started to appreciate the benefits of a term insurance.

Investing The Difference

When we introduce the concept of getting a term insurance, we’ll also recommend our clients to invest the difference (the remaining premium after taking account the difference of the premium that should have gone into a whole life plan and instead a term plan) into an investment-linked fund.

Especially with the current market situation, with the fund prices going down and down, this is the best time to park your lump sum money or using the dollar cost averaging concept to go into monthly investment to chalk up all the units. The benefits are that:

• For Lump Sum Investment

You buy into the low fund prices and once the economy picks up in a few years, you break even faster and going into profits faster as compared to normal time.

• For Dollar Cost Averaging

You chalk up more units now with the same dollar in good times. With the market going down for the next years, you can be sure of getting lots of units on hand to be released for faster profit when the economy picks up.

If you understand the above concepts well enough, you are a true believer of “Buy Term and Invest The Difference”. You will be one of those who will be successful enough for a very good retirement and also to really achieve whatever dreams and goals you want in life.

But What We Are Actually Noticing, Hurt Us!

We are happy that people are noticing the benefits of a term insurance but when it comes to investing the difference… Instead of seeing people trying to gain from the low fund prices we are noticing (that’s hurting):

Those Who Are Already With Some Investments

Fund prices are going down, which means for those who have some investments already, should actually pump in more money. But rather, we are seeing clients’ heart going down and head shaking harder, trying hard to convince themselves to continue with the investments. Those, who are weak-heartened, would rather suffer the loss and terminate their plan.

Let me give you a good scenario why this is a good time to pump in more money when the fund prices are low:

Imagine that you bought into a fund at $2 and in order to profit, you need the fund prices to be above $2. When the market goes down to $1 and you buy into it with the same initial amount, the average of the two fund prices is $1.50. So should the market decide to bounce back to $2 – you are already in profit of $0.50.

Those Who Are Deciding Whether To Go Into Investments

When the fund prices are low, it is always the best time to go into the funds. First and foremost, we are not talking about individual stocks of any company but rather a fund that consists of many different stocks.

But the clients that we manage to talk to, are skeptical of the market and personally feel that the market will hit rock bottom and every companies will crash. Therefore they are hesitant to go into investments.

My advice is to actually study what does your desired fund consists of and decide for yourself the possibility of having more than 50% of the companies going bust. Only then will the funds hit rock bottom.

So are these people trying to wait for the current low fund prices to rise up, remain stable for the next few years before going in and just enjoy the smallest profit whereas those go in at the low and exit at the high enjoy the biggest profit?!

How About Endowment Saving Plans?

With the fall of the “Mountain”, many, not all the people, are skeptical of the other companies. Many would rather wait for the whole saga to blow over, calm down and remain peaceful before committing. And based on our experience, this may take up to a many months or even a few years.

In Summary

If Savings and Investing are important factors in your personal financial planning, which should be started as early as possible but because of the many economic factors that are hindering you, you decide not to go ahead but wait. By the time you are ready, how old will you be? Do you have enough time to let time make your money work harder? You decide…

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