Phew! 2009 has been a rough year for many and there are many valuable lessons that one can learn from and apply to in 2010.
And some of these which I personally feel that it’s worthy to keep in mind at all times:
- It’s wise to be more knowledgeable in what you are investing – nothing is safe till you know the risks involved.
- It’s always good to diversify – not just your investment portfolios. Big companies with many years of history may just go bust overnight so do not put all your nest eggs into just one basket. In other words, it’s okay to have the same type of insurance plan with other companies. You need it too!
- Not everybody will tell the truth – learn to listen and ask good questions and to put the feedbacks or answers down in writing (do verify after the writing)
- What “goes down in March” will “come up in August” – this is an investment lesson or experience that I have personally went through. A unit trust that went real down in March 2009 (also the time when many people choose to sell off) climbed back up in August 2009 (and it was higher than the normal times). So do not follow what other average people do, learn to differentiate and understands from within.
- Not all are down during the recession – many stock prices are down but not all and it’s evident in the property market (especially in Singapore) and in the prices of Gold (have you seen how it climb at the last few months of 2009). What this mean to all of us is that we need to understand how the financial market really work – relationship between various investment options like Equities, Commodities, Properties and Cash.
- Take good care of your health. 2009 is the year that many people are concerned about their financial health but they are unable to get the insurance that they need. Common illnesses: Hypertension, High Cholesterol and Diabetes!
So will the new year in place, have you set aside some of your resolutions to start and improve on your financial planning?
If not, how about getting some pointers and guidelines from this blog?
For Newborns And Children Starting School (Kindergarten or Primary School)
- A good start to plan well would be to look into a Private Medical Insurance Plan (payable with your CPF Medisave) with the “As Charged” features. This special group is easily prone to common diseases like fever, food poisoning, colic and sudden attack of rashes and asthma or even small accidents. Being thoughtful parents, most of the time, will be direct admission to a hospital. Medical bills are usually small for this kind of treatment and Medical Insurance has this deductible portion which make it quite hard to claim – therefore if your budget allows, do throw in the Rider (payable with cash)
- Next, as mentioned that this special group has the tendency to meet with small accidents and such incidents do not usually require hospitalization – so to take care of such, get a Personal Accident Plan and if you are worried about diseases like Hand, Foot and Mouth (HFM), there’s such a plan called the Personal Accident Infectious Diseases Plan.
- Get a Whole Life Critical Illnesses Plan (with profit). Main reason – it’s cheap to get them in when they are young. And with most such plan offering limited premium term, it’s manageable by many parents. If you have a really tight budget or concern for higher coverage, coupled the coverage with a Term Insurance or Group Term Insurance.
- Focus more on University Planning. University Education is very costly in Singapore and it’s even more when it’s overseas. Planning for this can be done with either an Endowment Plan or Regular Investment Plan.
- Let this Special Group learn the importance of Compounding. This is one important financial skill.
For The Young And Aspiring (Starting Work)
- Emergency Fund. Learn to set aside at least 6 months of your current income at any times.
- Learn the skill of budgeting. Monitoring your daily expenses and income will help you to go a long way.
- A Private Medical Insurance Plan. Upgrade the coverage (to either “A ward” or “Private Hospital) or do consider adding in Riders to enhance the coverage – if your parents have not done so for you as a child.
- A Personal Accident Plan to cover yourself while you are out. You will never know.
- Travel Insurance if you need to travel overseas for work or just for a holiday. Food poisoning cases have been on the rise.
- Additional Whole Life Critical Illnesses coverage or Term Insurance. This is to enhance your coverage till your retirement or to cover any existing loans especially for some – study loan and tuition loan.
- Savings/Investment Plan – discipline yourself by setting aside 10% of your bring-home income into a regular saving plan. This is for your retirement and to help you achieve your dreams – expensive and long holiday, luxurious items like car.
For Those Settling Down And Starting A Family
- Enhance your medical insurance coverage. Look into a private medical insurance plan and the riders.
- For critical illnesses coverage – look more into a term or group term insurance. Settling down and starting a family has its high cost.
- For extra protection if you have gotten a property and a mortgage loan. Look into a Mortgage Reducing Term Insurance, the premium is cheaper as compared to a Term insurance.
- For the Bread-Winner(s) – do consider getting a Disability Insurance to protect up to 75% of your regular income should you meet with any illnesses that render you unable to work in your professional field.
- Travel Insurance if you and your family travel overseas for holiday.
- Savings Plan – in the form of Single Premium Savings Plan and/or Regular Savings Plan. You need the money for your retirement.
- Property investing – Property is a good hedge against inflation. Proper planning and investing can help to get you another regular income through rental or sale.
- Look into your health – this is the time where most working adults will start suffering from Hypertension (work stress induced), High Cholesterols (those good food) and Diabetes (sweet stuffs perk you up but kill you in the long run). Start to exercise, go for regular health screening and have a balanced diet.
For Those Who Are Going Into Retirement
- Make sure your medical insurance plan are there. You do not wish to have any sudden illnesses to take away your lifelong savings
- Property Investing – invest to get a regular rental income for your retirement
- Annuity – if you have done your savings plan well, by time of your retirement, you should have a certain lump sum of money for this planning. An annuity will give you an income for life.
- Take care of your health. Go for regular walks, light exercises, see the world or take up a new hobby.
There you go! A brief guideline to help you financially plan well ahead in 2010. If you feel that you are tight in all areas, learn how to budget first. Once you have done this well, you will have no issues planning for the future. Lastly, do it! Wanting to do it in the mind is not the same as actually doing it. Doing it will produce results.
Have a great 2010 ahead!