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5 Financial Mistakes Most Regret Committing

>> Saturday, May 31, 2014

After meeting and planning for so many people, I start to find that a common pattern was forming. Many a times, they comment regrettably making some kind of financial mistakes. So, here are the 5 most often heard ones.

#1 I regret not having a budget
This is no surprise. Budgeting is such an important life skill and yet it is not taught in any school in Singapore while I was growing up. We learn how to differentiate, sin/cos/tan, Pythagoras theorem, etc by age 16. But know absolutely nothing on how to manage money properly. In addition, I am also quite certain, many school teachers know very little on this subject as well.

#2 I regret not having an emergency fund
Without a proper budget to save, it would be very challenging to build an emergency fund. I was also astonished when some even mentioned that they could resort to borrowing if the need arises. No wonder the concept of insurance seems so repulsive when this basic concept of an emergency fund to insure against the unforeseen is not even present.

#3 I regret the kind of spending lifestyle
It is only after the fact that regrets sets in. At the initial stage, many would desire the instant gratification, without much consideration of the consequences. After some time, most realize that keeping up with the Jones, chasing the latest fads and trends amount to nothing. This unsustainable spending for the sake of “face” – the lavish wedding, luxurious honeymoon, upgrading cars, latest gadgets & fashion, etc was pretty much pointless.

#4 I regret not investing appropriately
They are mainly divided into 2 groups. First, those who regret not investing at all, and see their savings and income not keep up with inflation. Second, those who invest but not appropriately, sometimes taking ill advise from others to invest and ultimately suffered a substantial loss. It is important to learn about investing to invest appropriately as one should take ownership of one’s own investments. Moreover, learn early to start investing at an early stage.

#5 I regret not taking up health insurance early
When one is healthy, the thought of falling ill would have been very remote. Hence, the concern of having coverage is the least of concerns. Usually, it is only when a health screening or pain sets in and the diagnosis require medical attention, before reality sets in. By that time, it may be too late to take up any health insurance. Some may even think that the employers group insurance is sufficient, only to realize near retirement that they will not be working and covered forever.

I feel fortunate to have heard these points at a young age and can learn from others. I share this in a hope that others will not commit the same mistakes.


Top 3 Savings Account In Singapore

>> Saturday, April 19, 2014

As the competition for deposits heats up among the banks, it seems the consumer is the one benefiting from it. Based solely on the criteria of advertised interest rates and not taking into consideration banking hours, availability of ATMs, service level, etc.
Number 1: OCBC recently launched the 360 Account that pays up to 3.05% interest on up to $50,000 deposited provided the required criteria are met. Firstly, crediting a salary of more than $2,000 into the account. Secondly, paying any 3 separate bills. Thirdly, spending at least $400 on any OCBC credit card. All of which seems reasonable to achieve. I am sold on it and April will be my first month to see if it indeed lives up to the hype as promised.
Number 2: A similar account is the BonusSaver from SCB. However, the criterion for that account was more challenging and less attractive. It pays 1.88% interest on up to $25,000 deposited, provided at least $500 is spent on the credit card. Personally, I closed it after 6 months as it was not suitable for me.

Number 3: Lastly, the best savings account that pays 0.8% interest with minimal conditions is still CIMB StarSaver Which is even higher than some banks’ fixed deposit rates.

There are a couple of others that advertise rates like 2.014% from POSB and 2.5% from Citibank, but the terms and conditions are very different. Like it only applies on the incremental amount and for a limited period only.

Do note, of course, that interest rates are all quoted per annum basis. In case some are dreaming it is too good to be true.
Anyone has any better to share?



What Do You Do With Your Children Ang Bao Money?

>> Thursday, March 6, 2014

It is the Lunar New Year and it is Chinese custom to give red packets (or Ang Bao) with money to children during this festival.

What do parents usually do with this money collected? Most usually squirrel it away with no particular objective in mind. This often results in it being spent on rewards for the children when doing well academically in future.

A pleasant goal proposed was to use it to fund their future university education fees. This gives parents’ a focus and also Children to take some ownership of their own future. But is it even possible for the Ang Bao money to be sufficient?

Making some assumptions and working out the figures:

NUS annual fees according to their website are $7,650 for the average course of study.
Assuming an average course is 3 years = $22,950 total fees.
Assuming education inflation of 3% for 20 years = about $40,000.
Assuming a rate of return at 8% over 20 years = about $800 monthly required.
Based on my own market research, the average Ang Bao received discounting parents’ contribution is about $300.

Hence, if each parent makes up the reminder $500 by forking out $250 each, that makes the goal of achieving the education funding, provided all the assumptions pan out.

Gong Xi Fa Cai! And may everyone Ma Shang You Qian!




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To promote the education of individuals for the need to have a healthy lifestyle and wealth management through proper financial planning, particularly in investments.

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