Finding the middle ground between being "insurance poor" and unprotected requires assessing real needs and choosing products that are affordable. This article introduces different types of insurance products and the role that they can play in a personal financial plan.
Buying Life Insurance
Conventional wisdom says that life insurance is sold, not purchased. In other words, some people are reluctant to discuss the importance of owning life insurance, and others are simply unaware of the need to have life insurance. Although many large companies provide life insurance as part of their benefits package, this coverage may be insufficient.
Who needs life insurance?
If there are individuals who depend on you for financial support, or if you work at home providing your family with such services as child care, cooking, and cleaning, you need life insurance. Older couples also may need life insurance to protect a surviving spouse against the possibility of the couple's retirement savings being depleted by unexpected medical expenses. And individuals with substantial assets may need life insurance to help reduce the effects of estate taxes or to transfer wealth to future generations.
How Much Insurance Do I Need?
A popular approach to buying insurance is based on income replacement. In this approach, a formula of between five and ten times your annual salary is often used to calculate how much coverage you need. Another approach is to purchase insurance based on your individual needs and preferences. The first step is to determine your unique income replacement needs.
Currently, a large portion of your income goes to taxes (insurance benefits are generally income tax free) and to support your own lifestyle. Start off by determining your net earnings after taxes. Then add up all your personal expenses such as food, clothing, magazine subscriptions, club memberships, transportation expenses, etc. The remainder represents annual income that your insurance will need to replace. You'll want a death benefit amount which, when invested, will provide income annually to cover this amount. Then, you should add to that the amounts needed to fund one-time expenses such as college tuition for your children or paying down mortgage or debt.
Income replacement for nonworking spouses is an important and often overlooked insurance need. Coverage should provide for your costs for day care, housekeeping, or nursing care. Add to this any net earnings from part-time employment.
Finally, estimate your own "final expenses" such as estate taxes, uninsured medical costs, and funeral costs.
Signed off, Andrew Ang"to a better financial future"
Thursday, July 29, 2010
Tuesday, April 27, 2010
S’poreans withdrew total of S$660m from Medisave accounts in 2009
"Singaporeans withdrew a total of S$660 million from their Medisave accounts to pay for the direct medical expenses incurred in hospitals, clinics and other healthcare facilities last year.
This was an increase from the S$590 million withdrawn in 2008.
These figures do not include withdrawals for MediShield and ElderShield premium payments which were S$745 million in 2008 and S$875 million in 2009.
52 per cent of the withdrawals in 2009 were to pay for the members’ own direct medical expenses.
The remaining withdrawals were to pay for family members: 17 per cent for spouses, 18 per cent for parents, 12 per cent for children, one per cent for grandparents and others."
News from www.yahoo.com
Signed off, Andrew Ang"to a better financial future"
This was an increase from the S$590 million withdrawn in 2008.
These figures do not include withdrawals for MediShield and ElderShield premium payments which were S$745 million in 2008 and S$875 million in 2009.
52 per cent of the withdrawals in 2009 were to pay for the members’ own direct medical expenses.
The remaining withdrawals were to pay for family members: 17 per cent for spouses, 18 per cent for parents, 12 per cent for children, one per cent for grandparents and others."
News from www.yahoo.com
Signed off, Andrew Ang"to a better financial future"
Thursday, April 22, 2010
New born vs Money in pocket
I have heard many friends who are married having diverse opinion of having children these days. Two main groups of couples mainly are being grouped into "Baby focused" and "Self enjoyment focused"
Baby Focused :
These are mainly made up of couples who either wanted to complete their family structure as young as possible or just to fulfil their parents' wishes. They usually will have their baby in their first 2 years of marriage. The question here is that how many couples in this category plan for their finances before having their children? Do they know how much they need for their child to grow up these days?
Self enjoyment focused:
These group of people are mainly looking forwards to enjoy their life as a couple and also to lead a carefree life as singles. They travel, they club and they commit into luxury items to pamper themselves. Having baby could be the last thing in their mind as they may feel that that committing money into their future is better than bring up a child who may not repay you back when they grow up. Self-centred as they may be but are they really wrong ?
Sounds familiar ?
As a financial planner, i have met many different cases of Singaporeans before and after they have a family. I would like to share that having a baby isn't as simple as what our older generations are telling us. We have to accept that in olden days, having children are basically our retirement plan. Farmers need manpower to expend their fields, businesses need children to take over. In modern days, having children is just to complete our human basics and fulfil the purpose of setting up families.
However, this commitment brings discipline and financial issues. If any of these are lacking, you are bringing a lot of problems into your own life.
A very simple calculation of the cost of a child can be breakdown into below;
1. $40000 tertiary education(provide is local uni)
2. $800/mth (maid expenses for minimum 10years) = $96000
3. $400/mth (minimum living expenses for next 20 years) = $96000
4. $400/mth (other expenses e.g. diapers initial years , tuition during teenage years, such expense have to estimate at around 15years) = $72000
Grand total = $304000
Stunned by the figure above ? That's only for 1 child.
Good news is that you can pay the above liability by installment.
Bad news is that you cannot run away from this liability.
3 most important basics to plan for a family:
1. Review your personal financial commitment and goals
Be practical , ladies may have to give up their Prada bags , guys may have to bring beers back home instead. Ask yourselves , are you willing to set aside minimum $1500 a month for your child ?
2. Hospital medical insurance and personal accident insurance for children
The above 2 policies is a must buy for all parents as under my care of parents , 90% have some form of claims for their children in the policies above.
3.Savings for children tertiary education
You like it or not, this amount of money have to be set aside for your children. Unless you tell yourself that your children education is not your problem (why bring the baby to earth then?) , you have to plan for it. Setting aside inside your bank can be the worse decision you may make as you may be tempted to spend it and the interest rate is not going to help you at all. Let higher interest ease your burden to save for your future.
To summaries, having children is afterall a good thing. However, adequet planning must be done to get yourself prepared for the commitment behind the enjoyment.
Signed off, Andrew Ang
"to a better financial future"
Baby Focused :
These are mainly made up of couples who either wanted to complete their family structure as young as possible or just to fulfil their parents' wishes. They usually will have their baby in their first 2 years of marriage. The question here is that how many couples in this category plan for their finances before having their children? Do they know how much they need for their child to grow up these days?
Self enjoyment focused:
These group of people are mainly looking forwards to enjoy their life as a couple and also to lead a carefree life as singles. They travel, they club and they commit into luxury items to pamper themselves. Having baby could be the last thing in their mind as they may feel that that committing money into their future is better than bring up a child who may not repay you back when they grow up. Self-centred as they may be but are they really wrong ?
Sounds familiar ?
As a financial planner, i have met many different cases of Singaporeans before and after they have a family. I would like to share that having a baby isn't as simple as what our older generations are telling us. We have to accept that in olden days, having children are basically our retirement plan. Farmers need manpower to expend their fields, businesses need children to take over. In modern days, having children is just to complete our human basics and fulfil the purpose of setting up families.
However, this commitment brings discipline and financial issues. If any of these are lacking, you are bringing a lot of problems into your own life.
A very simple calculation of the cost of a child can be breakdown into below;
1. $40000 tertiary education(provide is local uni)
2. $800/mth (maid expenses for minimum 10years) = $96000
3. $400/mth (minimum living expenses for next 20 years) = $96000
4. $400/mth (other expenses e.g. diapers initial years , tuition during teenage years, such expense have to estimate at around 15years) = $72000
Grand total = $304000
Stunned by the figure above ? That's only for 1 child.
Good news is that you can pay the above liability by installment.
Bad news is that you cannot run away from this liability.
3 most important basics to plan for a family:
1. Review your personal financial commitment and goals
Be practical , ladies may have to give up their Prada bags , guys may have to bring beers back home instead. Ask yourselves , are you willing to set aside minimum $1500 a month for your child ?
2. Hospital medical insurance and personal accident insurance for children
The above 2 policies is a must buy for all parents as under my care of parents , 90% have some form of claims for their children in the policies above.
3.Savings for children tertiary education
You like it or not, this amount of money have to be set aside for your children. Unless you tell yourself that your children education is not your problem (why bring the baby to earth then?) , you have to plan for it. Setting aside inside your bank can be the worse decision you may make as you may be tempted to spend it and the interest rate is not going to help you at all. Let higher interest ease your burden to save for your future.
To summaries, having children is afterall a good thing. However, adequet planning must be done to get yourself prepared for the commitment behind the enjoyment.
Signed off, Andrew Ang
"to a better financial future"
Monday, April 5, 2010
Filing your income tax YA2010?
What is taxable?
Annuity (recurring annual payments)
Business income
Charge (alimony/maintenance payments)
Dividends
Employment income: Salary, bonus, directors, commission & other employment income
Employment income: Gains from exercise of stock options
Employment income: Retrenchment and retirement benefits
Estate/Trust income
Gains from sale of property, shares & financial instruments
Income received from overseas
Interest
Pension
Rent & Net Annual Value (NAV) from property
Royalty
Winnings (Toto, 4D...)
Withdrawal from Supplementary Retirement Scheme (SRS)
Ref: http://www.iras.gov.sg/irasHome/page.aspx?id=108
What Deductions can i file to save tax?
1.Expenses:
Employment expenses
Rental & Net Annual Value (NAV) expenses
Donations
2.Reliefs:
Course fees relief
CPF cash top-up relief
CPF/provident fund relief: For employees only
CPF/provident fund relief: For self-employed/employee who is also self-employed
Earned income relief
Foreign maid levy relief
Grandparent caregiver relief
Handicapped brother/sister relief
Life insurance relief
NSman (self/wife/parent) relief
Parent/handicapped parent relief
Qualifying/handicapped child relief
Supplementary Retirement Scheme (SRS) relief
Spouse/handicapped spouse relief NEW!
Working mother's child relief
3.Rebates:
Parenthood tax rebate
One-off personal tax rebate (for YA 2009)
Ref: http://www.iras.gov.sg/irasHome/page.aspx?id=110
to a better financial future
Annuity (recurring annual payments)
Business income
Charge (alimony/maintenance payments)
Dividends
Employment income: Salary, bonus, directors, commission & other employment income
Employment income: Gains from exercise of stock options
Employment income: Retrenchment and retirement benefits
Estate/Trust income
Gains from sale of property, shares & financial instruments
Income received from overseas
Interest
Pension
Rent & Net Annual Value (NAV) from property
Royalty
Winnings (Toto, 4D...)
Withdrawal from Supplementary Retirement Scheme (SRS)
Ref: http://www.iras.gov.sg/irasHome/page.aspx?id=108
What Deductions can i file to save tax?
1.Expenses:
Employment expenses
Rental & Net Annual Value (NAV) expenses
Donations
2.Reliefs:
Course fees relief
CPF cash top-up relief
CPF/provident fund relief: For employees only
CPF/provident fund relief: For self-employed/employee who is also self-employed
Earned income relief
Foreign maid levy relief
Grandparent caregiver relief
Handicapped brother/sister relief
Life insurance relief
NSman (self/wife/parent) relief
Parent/handicapped parent relief
Qualifying/handicapped child relief
Supplementary Retirement Scheme (SRS) relief
Spouse/handicapped spouse relief NEW!
Working mother's child relief
3.Rebates:
Parenthood tax rebate
One-off personal tax rebate (for YA 2009)
Ref: http://www.iras.gov.sg/irasHome/page.aspx?id=110
to a better financial future
Wednesday, March 31, 2010
Do you want CPFIS to be taken out of your rights ?
I recently read a post in Yahoo regarding a Singaporean complaining to CPF board about his lost of SGD$350,000 in stock market using his CPF-OA funds. My immediate reaction to this piece of news is suprise and an equally irk feeling arose inside me. I felt that this particular person is like a child wimping to his mother when he soiled his diapers. This particular complain is simply an act of irresponsibility unless you are just a child.
Just in case if you are reading this article and do not understand what is CPFIS , it simply means CPF investment scheme. Singaporeans are able to use our ordinary account to invest a maximum of 35% into SG stock market, 100% into Unit trust market. However, SG government has since impose a regulation last year to have a minimum of $20000 before Singaporeans can invest the excess inside the account.
With this in mind, that Singaporean could possibly have minimum SGD$1million inside that account of his before he decided to invest SGD $350,000 into the stock market.
My take is that whichever investment we take, it include risk. We place our money in Minibonds which is suppose to be 'safe' , we place our trust in paying SGD $30 000 into our 3 years University education , just to name a few. I think taking responsibility into our act is particularly important . Although when we lose our investment we will feel sour about it, we should try to learn from this experience and get the best out the lesson.
"to a better financial future"
Just in case if you are reading this article and do not understand what is CPFIS , it simply means CPF investment scheme. Singaporeans are able to use our ordinary account to invest a maximum of 35% into SG stock market, 100% into Unit trust market. However, SG government has since impose a regulation last year to have a minimum of $20000 before Singaporeans can invest the excess inside the account.
With this in mind, that Singaporean could possibly have minimum SGD$1million inside that account of his before he decided to invest SGD $350,000 into the stock market.
My take is that whichever investment we take, it include risk. We place our money in Minibonds which is suppose to be 'safe' , we place our trust in paying SGD $30 000 into our 3 years University education , just to name a few. I think taking responsibility into our act is particularly important . Although when we lose our investment we will feel sour about it, we should try to learn from this experience and get the best out the lesson.
"to a better financial future"
Sunday, August 2, 2009
credit card debt ??
i was speaking to a client of mine last friday and got to know she is in a $5k credit card debt. I was thinking and wondering why Singaporeans is into credit card debt these days. Is it discipline ??
While i was listening to radio this morning, i overheard an advertisement about electrical appliances promotion with 0% installment loan to purchase those items available. I was thinking inside me if such a method of sales beneficial for consumers ? If i am the merchant, i would gladly jump into this option of sales as it will broaden my scope of prospect able to buy my goods. However, such a way to purchase items have caused consumers to have $1k of monthly installment for the next 2-3 years minimum. Once you about to clear one item, another item came up and you cant seem to clear the installment off your card.
This is probably the main reason why Singaporeans mainly pay minimum on their credit cards and allow credit card to charge them interest . Will Singaporeans ever get to retire ??? Are we dropping ourselves into American credit crunch trap ? However, on the contrary, news reported that Singaporean asset to liability are actually improving over the years. Maybe i have not have a lot of friends being the 5 figure income earners yet.
In a nutshell, its not how much we earn but how much we save for our future. Pride has certainly drive our emotions to make some senseless financial decisions which led us to financial un-freedom.
to a better financial future
While i was listening to radio this morning, i overheard an advertisement about electrical appliances promotion with 0% installment loan to purchase those items available. I was thinking inside me if such a method of sales beneficial for consumers ? If i am the merchant, i would gladly jump into this option of sales as it will broaden my scope of prospect able to buy my goods. However, such a way to purchase items have caused consumers to have $1k of monthly installment for the next 2-3 years minimum. Once you about to clear one item, another item came up and you cant seem to clear the installment off your card.
This is probably the main reason why Singaporeans mainly pay minimum on their credit cards and allow credit card to charge them interest . Will Singaporeans ever get to retire ??? Are we dropping ourselves into American credit crunch trap ? However, on the contrary, news reported that Singaporean asset to liability are actually improving over the years. Maybe i have not have a lot of friends being the 5 figure income earners yet.
In a nutshell, its not how much we earn but how much we save for our future. Pride has certainly drive our emotions to make some senseless financial decisions which led us to financial un-freedom.
to a better financial future
Wednesday, July 29, 2009
Cool off wednesday
Time : 10pm
Mood : nil
A cool off wednesday which finally ended a few days of mad rush of people buying stocks which spur the prices up . I rated the graphs of serveral stocks to be Paraboric. It means that the line of the graph looks as if it is ready to move into a vertical line which do not make sense in money market. These lines usually indicate the market has come to the point where down side is greater than it going further up.
Several graphs i have seen in the evening so far have shown signs of moving a few more days of down before another wave of rally resumes.
Stay tuned
SG stocks i am holding:
Kep Corp
SPH
F&N
Nico Steel
LKH
SG stock just sold:
SPC
SGX
SG stock i am aiming:
NOL
Parkway Holdings
to a better financial future
Mood : nil
A cool off wednesday which finally ended a few days of mad rush of people buying stocks which spur the prices up . I rated the graphs of serveral stocks to be Paraboric. It means that the line of the graph looks as if it is ready to move into a vertical line which do not make sense in money market. These lines usually indicate the market has come to the point where down side is greater than it going further up.
Several graphs i have seen in the evening so far have shown signs of moving a few more days of down before another wave of rally resumes.
Stay tuned
SG stocks i am holding:
Kep Corp
SPH
F&N
Nico Steel
LKH
SG stock just sold:
SPC
SGX
SG stock i am aiming:
NOL
Parkway Holdings
to a better financial future
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