Thursday, May 11, 2006
Persuade with power: Planning your financial health
Attention and Need
64-42-8. Well these are not numbers for 4D – there are 5 digits and no, they are not for TOTO either. The first number is out of range. These are some statistics that has emerged from a global survey covering 21000 adults in 20 countries including 1000 Singaporeans.
64% or six out of ten Singaporeans believe they should bear their own retirement costs. Yet 42% or 4 out of ten have not even started any retirement saving. Only 8% have saved specifically for retirement in the past year.
Why this alarming disparity between desire and action? There may be many compelling reasons. But I believe a chief factor points to a lack of a proper financial plan. Today I will give some insight on how a financial plan can be easily done.
Satisfaction – How?
There is nothing daunting about doing a financial plan. You just need to ask yourself two questions: What you perceive as our future needs and what is your savings plan.
Needs may include buying a car or a house, saving for a holiday, a wedding or your kids’ education, protecting against contingencies, illnesses or mishaps; and most importantly, building your cozy retirement nest.
Then on the other side of the equation, you take stock of your current savings, investments and your planned level of savings and see where that leads you. If savings are adequate for your needs, congratulations! If not, you either scale down your expectations or increase your level of savings to close the gap.
Sounds simple right? Now if you have trouble working out the two streams of savings and outgo, no fear – you don’t have to grapple with the intricacies of financial mathematics or complex spreadsheets. There are many websites with dummy-proof step-by-step financial calculators to assist you in the feat. An example would be NTUC Income’s financial planner www.income.com.sg/fplan. Another more neutral example would be the CPF website’s Retirement planner.
For those who prefer human interaction, you can also ring any financial advisor. Again some numbers 67881111 Income’s hotline. I know people are generally wary of salesmen especially in insurance – and that includes me! But they do provide a useful service. Furthermore, as competent or aspiring toastmasters, you would have no fear in being out-talked!
Visualization – Why or Why not?
So you may ask, ‘If financial planning is so easy, why isn’t it done more extensively?’
Well the common excuses may be:
1. Mr. Big-earner may say ‘I earn enough. I have enough money stashed away. I have no financial worries.’
That’s great! But let me remind you that financial planning is not only for yourself but for your dependents. Protection for your loss of income is like protecting the breadwinner or the goose that lays the golden egg. Protection against critical illness is just as vital as 1 in 4 Singaporeans is at risk of cancer, stroke and heart attack. Don’t forget about rising medical bills - even if your employer provides coverage. You never know when you may be axed. Hence besides retirement saving, insurance is a key pillar of holistic financial planning
2. Mr. Young Man may say ‘I am too young to do financial planning’ or ‘I have so little money I might as well not do any planning’.
Retirement may seem a long way off. But with longer lifespan averaging age 79 currently, it's never too early to start planning for a lifetime income. In fact, the earlier you start, the more you achieve. If cash is short, all the more you should re-look at your expenditure and divide your pie wisely. Start small and progress to larger goals over time. Delay instant gratification for long-term satisfaction. So it’s never too early to start the ball rolling.
3. Then Mr. Skeptic may say, “Financial plans are of no use. What is the use of planning when income and outgo changes split-second in this uncertain world”
I tend to agree with the first part of the views held. Plans are of no use if you don’t carry them through. You need suitable investments. On that, you should pick large, well diversified funds with low expense charges that suit your risk appetite. You also need adequate insurance cover.
My advice is to select comprehensive and flexible plans that can be tailored for you and your whole family’s needs. Needless to say, NTUC Income has all these products.
As for the fast-changing world, yes life is uncertain but having a plan gives you direction and beats having no plans. The key issue is not to leave the plan STATIC. There should be regular reviews at least once a year or whenever circumstances change. So the answer to managing uncertainty is to have a dynamic plan acted upon and updated regularly.
4. Lastly one may say ‘I have no time to do financial planning’, ‘It is too difficult’. Simply go to these websites or seek advisors’ help. It would be a breeze.
Action:
Financial planning is a valuable tool that helps you achieve your life goals and long-term financial well-being. If you have yet to make your financial plan, ponder no further - start on one now. If you have done one, great! Do remember to review it. Just enter any of these websites and click away. Or use your fingers and punch a few numbers to reach your trusted advisor.
Never let inertia, procrastination or pure apathy deter you from this critical task.
Make your financial plan AND carry it through! And you’d be on your way to make those financial dreams come true!
9 May 2006
64-42-8. Well these are not numbers for 4D – there are 5 digits and no, they are not for TOTO either. The first number is out of range. These are some statistics that has emerged from a global survey covering 21000 adults in 20 countries including 1000 Singaporeans.
64% or six out of ten Singaporeans believe they should bear their own retirement costs. Yet 42% or 4 out of ten have not even started any retirement saving. Only 8% have saved specifically for retirement in the past year.
Why this alarming disparity between desire and action? There may be many compelling reasons. But I believe a chief factor points to a lack of a proper financial plan. Today I will give some insight on how a financial plan can be easily done.
Satisfaction – How?
There is nothing daunting about doing a financial plan. You just need to ask yourself two questions: What you perceive as our future needs and what is your savings plan.
Needs may include buying a car or a house, saving for a holiday, a wedding or your kids’ education, protecting against contingencies, illnesses or mishaps; and most importantly, building your cozy retirement nest.
Then on the other side of the equation, you take stock of your current savings, investments and your planned level of savings and see where that leads you. If savings are adequate for your needs, congratulations! If not, you either scale down your expectations or increase your level of savings to close the gap.
Sounds simple right? Now if you have trouble working out the two streams of savings and outgo, no fear – you don’t have to grapple with the intricacies of financial mathematics or complex spreadsheets. There are many websites with dummy-proof step-by-step financial calculators to assist you in the feat. An example would be NTUC Income’s financial planner www.income.com.sg/fplan. Another more neutral example would be the CPF website’s Retirement planner.
For those who prefer human interaction, you can also ring any financial advisor. Again some numbers 67881111 Income’s hotline. I know people are generally wary of salesmen especially in insurance – and that includes me! But they do provide a useful service. Furthermore, as competent or aspiring toastmasters, you would have no fear in being out-talked!
Visualization – Why or Why not?
So you may ask, ‘If financial planning is so easy, why isn’t it done more extensively?’
Well the common excuses may be:
1. Mr. Big-earner may say ‘I earn enough. I have enough money stashed away. I have no financial worries.’
That’s great! But let me remind you that financial planning is not only for yourself but for your dependents. Protection for your loss of income is like protecting the breadwinner or the goose that lays the golden egg. Protection against critical illness is just as vital as 1 in 4 Singaporeans is at risk of cancer, stroke and heart attack. Don’t forget about rising medical bills - even if your employer provides coverage. You never know when you may be axed. Hence besides retirement saving, insurance is a key pillar of holistic financial planning
2. Mr. Young Man may say ‘I am too young to do financial planning’ or ‘I have so little money I might as well not do any planning’.
Retirement may seem a long way off. But with longer lifespan averaging age 79 currently, it's never too early to start planning for a lifetime income. In fact, the earlier you start, the more you achieve. If cash is short, all the more you should re-look at your expenditure and divide your pie wisely. Start small and progress to larger goals over time. Delay instant gratification for long-term satisfaction. So it’s never too early to start the ball rolling.
3. Then Mr. Skeptic may say, “Financial plans are of no use. What is the use of planning when income and outgo changes split-second in this uncertain world”
I tend to agree with the first part of the views held. Plans are of no use if you don’t carry them through. You need suitable investments. On that, you should pick large, well diversified funds with low expense charges that suit your risk appetite. You also need adequate insurance cover.
My advice is to select comprehensive and flexible plans that can be tailored for you and your whole family’s needs. Needless to say, NTUC Income has all these products.
As for the fast-changing world, yes life is uncertain but having a plan gives you direction and beats having no plans. The key issue is not to leave the plan STATIC. There should be regular reviews at least once a year or whenever circumstances change. So the answer to managing uncertainty is to have a dynamic plan acted upon and updated regularly.
4. Lastly one may say ‘I have no time to do financial planning’, ‘It is too difficult’. Simply go to these websites or seek advisors’ help. It would be a breeze.
Action:
Financial planning is a valuable tool that helps you achieve your life goals and long-term financial well-being. If you have yet to make your financial plan, ponder no further - start on one now. If you have done one, great! Do remember to review it. Just enter any of these websites and click away. Or use your fingers and punch a few numbers to reach your trusted advisor.
Never let inertia, procrastination or pure apathy deter you from this critical task.
Make your financial plan AND carry it through! And you’d be on your way to make those financial dreams come true!
9 May 2006
# posted by CME @ 10:07 PM 
