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What Singapore’s COVID-19 Response Taught Us About Savings and Reserves

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  "It never rains but it pours" This idiom perfectly describes the COVID-19 situation which hit the world badly at the beginning of the year. Fast forward the months, and we are now in December, a year from the initial outbreak of the novel coronavirus. In March 2020, the World Health Organisation announced COVID-19 as a pandemic, leading to many countries locking down their economies, barring their citizens from leaving their homes other than for essential services, and grinding international travel to a halt. Singapore, the tiny city-state, was not spared. With a tiny domestic market and an economy that is highly dependent on import and export, Singapore’s Ministry of Trade and Industry (MTI) projects that the economy will be shrinking between 6% to 6.5% this year. Drawing from Past Reserves It is reasonable to say that the economic impact would probably have been much worse, if not for the 4 sets of stimulus packages (“Budgets”) to help businesses and individuals w

Don't Spend Money On Things You Don't Need This Black Friday

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Today is Black Friday and there’s many irresistible discounts everywhere. It is probably the best time of the year to buy something you have been eyeing for a while or stock up on necessities and consumables (skincare anyone?). However, unbeknownst to many, this one-day frenzy also creates a psychological effect known as the scarcity mentality . We are afraid to lose out on the  too-good-to-miss deals and make purchase decisions much more loosely than normal. This can influence us to buy unnecessary stuff that we might not even give a second look on any other day. Buying a $100 on a 20% discount is not saving you $20; it’s spending you $80! In the end, we spend more than we save.  So don’t be unconsciously led to waste your hard-earned money on things you don’t need, or already own too much of. Practise responsible consumerism; buy only what you need. Consider giving away or donating your stuff before buying new ones. That way, you prevent the clutter from piling up, freeing yourself f

8 Tips To Help You Be On F.I.R.E

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In case you haven't heard of the F.I.R.E movement 🔥 🔥 🔥 , it is spreading like wildfire worldwide right now. For the uninitiated, F.I.R.E stands for Financial Independence, Retire Early . Many have dreamt of retiring early and enjoying the rest of their lives sipping a cocktail on the Bahamas. But dreaming alone isn't going to make it happen - you need to TAKE ACTION! It's hard, but life will be so sweet once you get there. Here are 8 tips to help you get fired up (pun intended 😆 ). #1 - Start saving aggressively I have seen F.I.R.E. advocates saving between 30% to 60% of their income. The more you save, the more you can invest and grow your wealth! #2 - Cut unnecessary spending Live like a minimalist (check out The Minimalists ). Practise delayed gratification - do you really need that Apple Watch now? A dollar that you don't spend is an extra dollar that can be invested to make more money. #3 - Have multiple sources of income Don't depend solely on your salar

Credit Ratings of Life Insurers in Singapore 2020

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This is a follow-up from a post 3 years ago , where I compiled the credit ratings of the life insurers in Singapore, to have an idea of the differences in terms of their credit worthiness. Flawed Assumption People often think that life insurers and the policies they issue are homogeneous (the same), and often compare benefit illustrations as if two companies are going to make the exact same amount of profits, exact same amount of investment returns, have the exact same amount of business operating costs, and et cetera. How far away from the truth that flawed assumption can be.  Every life insurer holds a different asset mix in their insurance funds, and have different profits/returns/costs. Even their shareholders may demand a different dividend rate on their shares. Therefore it is not surprising that life insurers with larger assets and bigger operations in Singapore tend to be the ones rated higher by Standard and Poors (S&P), one of the foremost rating agency in the wo

Is Your Critical Illness Insurance Enough? Here's 4 Steps to Find Out.

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Critical Illness (CI) insurance - most of us have it. And many think that they have sufficient coverage. Besides, who in the right mind would want to sit down with a financial planner and talk about diseases such as cancer, heart attack, stroke, or kidney failure befalling upon us and our family?  Why people don’t buy enough CI insurance  When I meet clients in their twenties, a common response is that they are fit and healthy and nothing will happen to them.  When it comes to clients in their thirties, they would justify that they have housing and family commitments and they would prefer to focus on those at the moment. And since they are still relatively young, CI insurance is not an important priority yet.  When clients in their forties come and see me, they come with sincerity and recognise that illness is fast becoming more of a possibility — they see their friends getting this-and-that. That worries them. However their age is higher now, and so are their insuranc

Financial Planning Is Not About Buying Insurance Policies

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Today a business friend asked me if there is any way to insure her parents, who are in their late 70s, against medical costs. I told her that unfortunately the policies at my disposal have a maximum entry age of 75, and therefore I’m not able to provide cover for them. However I advised her on a viable alternative, that is “self-insurance”. I asked if she has any other siblings and she replied yes. I then went on to suggest that from now on, she and her siblings should start contributing some money into a medical fund for their parents, and this pool of money becomes an “insurance fund” for them. Coupled with Medishield Life as well as their Medisave funds, this approach should help to alleviate most of the medical costs. Suddenly I can see an imaginary light bulb lit up in her mind — an “a-ha” moment! She said that if each sibling contribute $200 monthly, it seems like this is a do-able strategy. Financial planning isn’t always about buying more insurance policies. Sometimes

Credit Ratings of Insurers in Singapore 2017

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I got curious about the different credit ratings across Singapore's life insurer and started to compile the data. Here is the result of my curiosity. Standard and Poors (S&P) is one of the top three credit rating agencies in the world (alongside Fitch and Moody's) and their opinion is highly regarded in the financial and economic world. The ratings are a reflection of S&P's opinion on how likely a company is able to meet its financial obligations. In the context of insurance companies, that means the policy payouts and cash values. To give a better perspective of the credit worthiness, all three local banks (DBS, UOB, OCBC) are rated AA- ( http://www.straitstimes.com/business/banking/dbs-ocbc-uob-get-aa-credit-rating-from-sp ). In the case of the latest entrant in the market (FWD Singapore), it's apparent that their credit rating is way lower than the other more established brands.  (Note that FWD's rating is by Fitch, which runs on an equivalent sca