CJH Financial Planning

It is often said that the first million is always the hardest . Assuming you are building your wealth from scratch and not raking in a six-figure monthly income like a professional footballer, you may have bills to pay, family to feed, and risks to worry about.  So how can you do it in a reasonable amount of time? The answer is simple (but not easy) - Discipline and Compound Interest . Firstly, we need to instill the discipline of "paying yourself first". This means setting aside a non-negotiable proportion of your income into investments every payday. I recommend 10-20%, but you can do more if you wish to. This money must not be touched for any purpose other than for growing it. Next, we need to choose where to invest this money, and use the effect of compounding to grow it.  As Albert Einstein said, " Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it. " The type of instrument that you invest in makes...

Think of your financial life as a sailboat, bringing you from where you are now, to where you want to go in the future. Think of the sails as higher-risk investments, as they help your boat goes fast. These may include stocks, bonds, funds, or other alternative assets. The boat (or the hull) is akin to cash and other low-risk assets like fixed deposits. They keep you safe and stable on your journey. When you have too much sail and too little boat, you are 'windsurfing'. If you have seen windsurfers in action, you will often see them capsizing as the winds topple them over due to their small base. Your boat may break before you reach your goal. On the flip side, if you have too much boat and too little sail, you are not harnessing the power of the wind. Instead, you are rowing your boat by hand. You will find yourself using lots of effort to work the oars just to move the boat a little, and certainly never getting to your destination on time. The key, therefore, is to find a goo...

  As a homeowner, our nest is our pride and joy. It is also where we have sunk in a lot of money as well. Therefore we must ensure that our most valuable asset is protected. Here are three types of insurance covers that all home owners must consider. (1) Fire Insurance Fire insurance provides coverage for damage to the building, structures, fixtures, and fittings caused by fire. This is mandatory if you have an outstanding home loan, either with HDB or with a bank. Do note that fire insurance does not cover renovation or improvements, furniture, electrical appliances, and other home contents.  (2) Home Contents Insurance Home contents insurance provides more comprehensive protection and can cover damage to renovations or improvements, home contents, and personal effects such as your watches, computers, or valuables - they can often cost more than the renovation itself. Besides damage to property caused by perils, home insurance can reimburse you for loss should there be a burg...

If one day you find yourself terminally ill and needing life support to survive, would you want your doctors to turn off the machine? Some people may prefer to go naturally and in peace, while others may not want to burden their family with a mountain of medical bills to settle. If your answer is "yes", you may consider doing an Advance Medical Directive (AMD) . An AMD is a legal document that you sign when you're still mentally sound, informing your doctor that you do not want the use of any " extraordinary life-sustaining treatment " to prolong your life in the event that you become terminally ill and unconscious. An AMD is not the same as "euthanasia", because an AMD involves stopping artificial life-sustaining support in a situation where there is no real possibility of recovery and death is imminent. It can only come into force when three doctors unanimously certify a patient's terminal illness. An AMD is a voluntary and confidential decision...

"Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” - Paul Samuelson And indeed, the stock market has turned into a casino with all the hype around "meme stocks" like GameStop, AMC, and most recently, Robinhood. However, never confuse speculation with investing. They are two totally different approaches. Speculation involves trading (buying and selling) financial instruments, usually high risk in nature, for short term gains. Speculators love price volatility and are not concerned with long term growth.  Investment involves buying and holding assets for the long run, to achieve capital gain and/or income. Investors are more concerned with the fundamentals of the company or asset that they are buying, and are more willing to ride out short-term market fluctuations. As professional financial practitioners, we advocate investing instead of speculation, simply because it works.  "The financial...

If you own a life insurance policy with death benefit, you may choose your nominees (or beneficiaries) to inherit the insurance proceeds using one of the two types of nominations. ✏️ 𝐑𝐄𝐕𝐎𝐂𝐀𝐁𝐋𝐄 𝐍𝐎𝐌𝐈𝐍𝐀𝐓𝐈𝐎𝐍 (𝐒𝐄𝐂. 𝟒𝟗𝐌) A revocable nomination informs the insurer who to pay the insurance proceeds to, and in what proportion. You may appoint anyone as a nominee, including foreigners or legal entities such as charities, or religious organisations. As the name suggests, it can be "revoked" or terminated anytime that you wish, without permission from nominees. Nominees will only receive the death benefit , while the living benefits belong to the policyowner. Take note that if you make a Will after doing a revocable nomination, it will supersede the instructions in the nomination. ✒️ 𝐓𝐑𝐔𝐒𝐓 𝐍𝐎𝐌𝐈𝐍𝐀𝐓𝐈𝐎𝐍 (𝐒𝐄𝐂. 𝟒𝟗𝐋) A trust nomination serves the same purposes in informing the insurer who to pay to. However, you can only nominate your spouse and/...

Did you know that Critical Illness (CI) insurance was invented by a cardiologist?  Dr. Marius Barnard saw his patients fall into financial hardship after the expensive treatments. After years of garnering support from insurers, the first CI policy was launched in 1983, covering 4 illnesses: heart attack, cancer, stroke, and coronary artery surgery. Today, the number has expanded to 37, including conditions such as coma, brain tumour, kidney failure, and others.  In 2008, the first early-stage CI policy was launched and is now a common feature in all CI policies today. Based on our latest claim statistics, about 50% of CI  claims are for clients aged between 46 to 55 , and about 30% for those between 36 to 45 . As you can see, these claimants are relatively young.  The incidence rate of diseases such as heart attack and cancer among the young is on the rise. Even a super fit 29-year old professional footballer can collapse suddenly from cardiac arrest (get well soo...

  We are seeing rises in inflation across many major economies. Inflation in the United States hit 5.4% in May, the highest in 13 years. (Source: WSJ) Back home in Singapore, CPI inflation rose 2.1% in April, higher than expected. (Source: ING) Inflation has usually been seen as a bad thing; something that steals money from under our noses, like an invisible thief. However, do you know that inflation can be a good thing too? Just like a gun; inherently, it is neither good nor bad. It all depends on the intention of the user. Law enforcement officers use guns to maintain order. On the other hand, criminals use guns for undesirable activities. Inflation is defined as a general increase in prices. This affects the goods and services that we buy and use on a day-to-day basis. The Consumer Price Index (or 'CPI') tracks a basket of goods and services and compares the changes in price with the previous month/year. If you keep money in the bank, you're probably getting about 0.05% ...

  The Marshmallow Experiment In 1972, Stanford University conducted an experiment on children aged 3-4. Each kid was brought to an empty room with a marshmallow on the table in front of them. They were told that they can either have a marshmallow now or if they waited 15 minutes without giving in to the temptation, they can have 2 marshmallows. Some kids were unable to resist their temptation and ate the marshmallow in front of them. A small handful of the kids were able to stay disciplined and managed to wait out the entire 15 minutes. The Stanford researchers continued to track these kids as they grow up (they would be in their 50s today). What is astounding is the kids who practised delayed gratification are more successful in life. They had higher SAT scores, able to cope better with frustration and stress, more academically and socially competent, and generally better in a variety of life measures. A 2011 brain imaging study on the original Standford participants also showed a...

Inflation is an invisible thief. You may not see it or hear it, but slowly and surely, it is stealing your future from you. Rising prices in everything around us, from a simple plate of chicken rice to your million-dollar condominium, reduces the purchasing power of our money over time. Do you know that at an inflation rate of 2.5%, $100k saved in the bank over 20 years would only be worth about $60k! That is a 40% loss in purchasing power!  On the other hand, $100k invested in the S&P 500 (comprising the top 500 companies in the US) would have grown to $318k during the same period. There's no guarantee that you will make money from investing, but you are guaranteed to lose money by doing nothing! Long gone are the days where our grandparents stashed their hard-earned savings into biscuit tins. Banks came along, and it became commonplace to open a savings deposit account instead as they used to pay a decent interest rate.  Today, whereby interest rates are close to zero, k...