Money, money, money!

Sav­ings, in­vest­ment, re­tire­ment plan­ning and insurance ex­perts share their top tips to help you start 2014 on the right fi­nan­cial note.

Simply Her (Singapore) - - Beauty News - BY CH­ERYL LEONG

IN­VEST­MENT

OUR EX­PERT: Abraham Lum, client in­vest­ment spe­cial­ist from Fund­su­per­mart.

You may al­ready have made some in­vest­ments, but th­ese three tips will help you go fur­ther: 1 DON’T TREAT YOUR FUND LIKE A “GOLDEN GOOSE” Some in­vestors judge a fund solely by its past per­for­mance, bank­ing on po­ten­tial re­turns with­out look­ing at the risks, says Abraham. “For in­stance, if a fund achieved a 10 per cent gain last year, they ex­pect to see sim­i­lar re­turns this year. But if mar­kets fluc­tu­ate, the fund may not do as well. Then they get stressed and start mak­ing er­ratic in­vest­ment de­ci­sions – buy­ing one mo­ment, sell­ing the next – that can af­fect their en­tire port­fo­lio.” 2 NEVER IN­VEST MONEY YOU’VE SET ASIDE FOR FU­TURE USE This means cash you’ve saved up for fam­ily hol­i­days, home loan re­pay­ments or funds for your kids’ ed­u­ca­tion. “The more you can’t af­ford to lose that pool of cash, the more stress­ful your in­vest­ment jour­ney be­comes,” says Abraham. Money for in­vest­ments should be cash you’re pre­pared to lose.

A good way to stretch your money is to “in­vest in tranches – split up your funds into batches so you can in­vest each time the mar­ket dips,” Abraham sug­gests. “For ex­am­ple, if you have $50,000, you can have batches of $10,000 each.” 3 PLAN IN­VEST­MENTS WITHIN YOUR RISK TOL­ER­ANCE Con­ser­va­tive in­vestors can fo­cus on bonds or fixed-in­come in­vest­ments, which give an av­er­age of two to three per cent re­turn on in­vest­ment. Th­ese fluc­tu­ate less than stocks (also known as eq­ui­ties) and high-yield bonds, which may give you re­turns of five per cent or more, but are a lot riskier.

Abraham says: “If you can’t stom­ach mar­ket fluc­tu­a­tions, you’ll end up ex­it­ing your in­vest­ments too early – and with losses.” He rec­om­mends a hold­ing pe­riod – the length of time for which you hang on to your in­vest­ments – of three to five years for global or re­gional funds. Or, de­cide what amount of loss you can live with, be­fore sell­ing or switch­ing to another fund, he adds.

INSURANCE

OUR EX­PERT: Lilian Ng, se­nior ex­ec­u­tive fi­nan­cial plan­ner from AXA Life Insurance.

Avoid buy­ing too many insurance poli­cies you can’t af­ford. Here are the top three plans ev­ery woman should have: 1 AN AS-CHARGED GUAR­AN­TEED RE­NEW­ABLE MED­I­CAL INSURANCE PLAN Most ba­sic med­i­cal insurance plans cover hos­pi­tal­i­sa­tion and sur­gi­cal fees. But not all plans are as-charged or guar­an­teed re­new­able. Lilian ex­plains: “An as-charged plan means you can claim the full amount charged by the hos­pi­tal – there is no need for co-pay­ment on your part; guar­an­teed re­new­able means you are not ex­cluded from claim­ing for hos­pi­tal fees in­curred, should you be hos­pi­talised for a re­cur­ring con­di­tion.”

For ex­am­ple, you were hos­pi­talised for dengue fever two years ago, and have just been ad­mit­ted again. If your med­i­cal insurance plan isn’t guar­an­teed re­new­able, you won’t be able to re­cover your med­i­cal ex­penses. Guar­an­teed re­new­able plans ex­clude cer­tain pre-ex­ist­ing con­di­tions, so Lilian rec­om­mends that you get this as early as pos­si­ble.

2 AN EARLY STAGE CRIT­I­CAL ILL­NESS AND CAN­CER MAN­AGE­MENT PLAN Ac­cord­ing to Sin­ga­pore sta­tis­tics, 14 peo­ple die of can­cer ev­ery day. Among the dif­fer­ent can­cers, breast can­cer is the top killer of women. But most med­i­cal insurance plans with crit­i­cal ill­ness cov­er­age don’t cover you for the early stages of a disease.

“The def­i­ni­tion of ‘can­cer’ that al­lows for cov­er­age is that it has to be ma­lig­nant and spread­ing. But those who have just con­tracted it, or whose can­cer cells are be­nign and not spread­ing, won’t be cov­ered for their med­i­cal ex­penses.

“New plans for early stage crit­i­cal ill­ness and can­cer man­age­ment, like AXA’s 360° Can­cer Care, pro­vide pro­tec­tion and cov­er­age from the mo­ment you’re di­ag­nosed, right through your treat­ment and re­ha­bil­i­ta­tion,” says Lilian. 3 LIFE PRO­TEC­TION WITH CRIT­I­CAL ILL­NESS PLAN Many types of life insurance plans are avail­able, but more women are go­ing for the ‘whole life, lim­ited term’ life plan. “This means that you pay for a lim­ited term – 10, 15, 20 or 25 years – but still get life­time pro­tec­tion.

“When women quit their jobs to stay home with their kids, or re­tire com­pletely, they may no longer have the earn­ing power to af­ford their insurance pay­ments. So while premi­ums are higher, most women opt for this type of plan be­cause they can see them­selves work­ing for the next 10 to 20 years, then by the time they re­tire, they are done pay­ing for their life insurance premi­ums, yet are cov­ered for life,” says Lilian.

“Most med­i­cal insurance plans with crit­i­cal ill­ness cov­er­age don’t cover you for the early stages of a disease.”

RE­TIRE­MENT PLAN­NING

OUR EX­PERT: Ho Lee Yen, chief mar­ket­ing of­fi­cer from AIA Sin­ga­pore.

It is wor­ry­ing that two out of five Sin­ga­pore­ans have not set aside a sin­gle cent for re­tire­ment, says Lee Yen. She shares three ways to make re­tire­ment plan­ning eas­ier: 1 START TO­DAY Ask your­self th­ese ques­tions to kick­start your plan­ning: a) When do you in­tend to re­tire? This helps you de­ter­mine the num­ber of years left to save for re­tire­ment. b) What is your de­sired re­tire­ment life­style? This tells you how much you’ll need to live on each month. c) How long do you ex­pect to live af­ter re­tir­ing? About half of Sin­ga­pore­ans aged 65 to­day are ex­pected to live be­yond 85, with women ex­pected to live longer – 23.3 years af­ter re­tire­ment com­pared with 18.5 years for men. So we need enough sav­ings for a longer pe­riod. 2 GROW YOUR SAV­INGS PRU­DENTLY Opt for in­vest­ment-linked plans (ILPs) that com­bine life insurance and in­vest­ment, and which start from as lit­tle as $100 a month. “ILPs are a good way to help your money grow as they have the flex­i­bil­ity to vary the level of pro­tec­tion and in­vest­ment. When your chil­dren are no longer fi­nan­cially de­pen­dent on you, you can in­crease the level of in­vest­ment to po­ten­tially earn higher re­turns for your re­tire­ment,” says Lee Yen. 3 STAY HEALTHY Main­tain­ing your health is the best way to com­bat higher med­i­cal costs that will eat into your re­tire­ment sav­ings, says Lee Yen. “Re­view your health insurance cov­er­age reg­u­larly to avoid fi­nan­cial strain in your golden years – the older you get, the more health care you’ll re­quire.”

SAV­INGS

OUR EX­PERT: Tok Geok Peng, se­nior vice-pres­i­dent of con­sumer de­posits at DBS Bank.

Sav­ings are the first and most im­por­tant step to en­sur­ing your fi­nan­cial well-be­ing. Here’s how to make man­ag­ing your cash flow less painful: 1 PUT ASIDE 20 PER CENT OF YOUR MONTHLY IN­COME IN A SEP­A­RATE AC­COUNT “Get a sav­ings ac­count that au­to­mat­i­cally deducts an amount monthly to ac­cu­mu­late your sav­ings sys­tem­at­i­cally. Some of­fer great re­wards, like our Mysav­ings prod­uct, which of­fers tiered in­ter­est rates to en­cour­age peo­ple to save,” says Geok Peng. 2 LOOK OUT FOR WAYS TO SAVE AS YOU SPEND Take ad­van­tage of credit card pro­mo­tions. Use your credit or debit card – within rea­son – to earn those cash re­bates or get dis­counts. Keep tabs on where to earn points or en­joy dis­counts, or at least make it a habit to ask restau­rant or re­tail staff about pro­mo­tions be­fore you pay up.

“I rely a lot on mo­bile apps to keep track of re­tail or din­ing pro­mo­tions for my cards. The DBS Re­wards app also lets me redeem re­ward points at mer­chants in­stantly in­stead of wait­ing for vouch­ers to be sent to me,” says Geok Peng. 3 BE PROAC­TIVE WITH YOUR SAV­INGS Geok Peng says: “When you’ve set aside six months of daily ex­penses for emer­gen­cies, don’t leave ex­cess funds in your bank ac­count. In­vest them to­wards ma­jor goals such as your child’s ed­u­ca­tion or your re­tire­ment.”

It’s the best way to make your money work harder for you.

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