3 Things to Consider When Levelling Up Your Financial Planning Skills

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Financial Planning

Saving money. Looking for the best savings interest rate. Clearing credit debt. Setting budgets. Many make it their primary focus to first find ways to save money and get their finances together. But what’s next?

Brandan Chen

Financial Planner

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The next best step to consider is building on it with other ways to protect your wealth. But don’t just dive right in without the right know-how! Here are 3 areas to watch out for when levelling up your financial planning skills:

#1 – Inflation

#1 – Inflation

There’s no way to sugarcoat this, but inflation is truly one of the greatest threats to a person’s savings. In 2018 alone, core inflation rose to 1.7% from 2017’s 1.5%1. What if we were to go further back?

From 1975 till 2019, food inflation has increased by an average of 1.94%2. Even international rice prices are expected to increase due to greater consumption, while domestic rice prices have already gone up by 3.6% in the third quarter of 2018 – compared with the same period a year ago3.

How do we ensure that the amount we’re paying today can still get us the same item 10 years on? Do we grow it aggressively to make up for losses?

There are many ways to inflation-proof your savings. An important aspect to find out now is what method of safeguarding your money you’re most suited for. And that’s an answer that will depend on the way you live, earn, spend and manage your finances.

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#2 – Investment

#2 – Investment

Search ‘investing’ online and approximately 1,840,000,000 results come up. It’s a popular word and an even more popular way of growing one’s wealth. But not many of us are aware of the factors and risks involved. So before you get carried away by someone’s ‘high-performing stock’ and bet your last dollar on it – do yourself a favour by taking a step back, for there are plenty of questions to ask before jumping on the bandwagon.

For starters, how well do you understand the company you plan on investing in? What’s your risk tolerance? When should you buy and sell? Will you be able to deal with losses?

Financial markets are dynamic, but they are equally complex. To navigate your way, it’s best that you speak to a financial consultant to help answer some of these questions. Here are some real-life examples on how a financial consultant would be able to help.

#3 – Retirement

#3 – Retirement

Ah, retirement. Many of us have a love-hate relationship with this. We love it for all the scenes that movies have long painted: big homes and golden sunsets. But hate it for all that was left out: the saving up for three-quarters of our life and planning for our dependents? Well, retirement is inevitable. So you might as well start learning how to balance your dreams and reality today.

Before you do, first understand the 3 biggest mistakes made in retirement planning. For starters, many of us tend to overestimate the time we have to plan for it. But keep in mind that no matter what life stage you’re at, it’s never too early or too late to start building your nest egg. Secondly, some underestimate their needs and expenses during retirement. And lastly, for those with insurance plans in place – failing to review them regularly – for as times change, so will you and your financial needs.

And with that comes a whole other plethora of questions. Do you have other retirement income sources other than CPF savings? What type of retirement savings do you have? Do you want to secure your loved ones’ financial future even after you’re gone? These might sound serious and daunting now, but it’s absolutely crucial that you start thinking and planning for them today.

Strengthening Financial Planning

Financial planning is a continuous process. That’s why it’s important to regularly assess if you’re on the right path towards your financial goals. Effective financial planning isn’t just about foresight of your future, but the ability to evaluate your strengths, weaknesses, risks and habits objectively.

Disclaimer:

These insurance products are underwritten by Manulife (Singapore) Pte. Ltd. (Reg. No. 198002116D). This advertisement has not been reviewed by the Monetary Authority of Singapore. Buying a life insurance policy is a long-term commitment. There may be high costs involved if you terminate the policy early, and your policy's surrender value (if any) may be zero or less than the total premiums paid. Buying health insurance products that are unsuitable for you may affect your ability to finance your future healthcare needs. This advertisement is for your information only and does not consider your specific investment objectives, financial situation or needs. It is not a contract of insurance and is not intended as an offer or recommendation to purchase the plan. You can find the full terms and conditions, details, and exclusions for the mentioned insurance product(s) in the policy contract.

This policy is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the LIA or SDIC web-sites (www.lia.org.sg or www.sdic.org.sg).

We recommend that you seek advice from a Manulife Financial Consultant or its Appointed Distributors before making a commitment to purchase a policy.

Content Sources
1 - Cost of living in Singapore: Slow overall inflation but some pressure points:
https://www.channelnewsasia.com/news/singapore/cost-of-living-in-singapore-slow-inflation-some-price-pressures-11199680
2 - Trading Economics, Singapore Food Inflation:
https://tradingeconomics.com/singapore/food-inflation
3 - On the up: Electricity and gas bills, petrol, food prices for 2018 and 2019:
https://www.todayonline.com/singapore/electricity-and-gas-bills-petrol-food-prices-2018-and-next-year