Money Matter$
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Can Online Insurance Savings Plans Promote Greater Financial Security Among Singaporean Women?
To provide Singaporeans easier access to insurance policies, insurers in Singapore are constantly innovating. Aiming to change the way life insurance policies are distributed, Etiqa Insurance is the first to bring insurance savings plans online with the EASY save series.
But in a country where expenses are high, and retirement planning is not a priority, how beneficial are online insurance savings plans?
Financial challenges faced by Singaporean women
Women in Singapore face various challenges in financial planning. Despite advancing in our careers, most women are still expected to take the lead when it comes to managing the household. Having multiple roles can be exhausting hence, most women forgo long-term financial planning to focus on their immediate tasks.
According to a survey of 600 moms, 75% of Singaporean mothers have not planned for their retirement. Most do not have concrete retirement plans for the future. 44% of the mothers surveyed planned to rely on their children for their retirement.
While there have been developments in pay equality across genders, Singaporean women are still paid 10% less than their male counterpart. Women tend to outlive men. These emphasise the need for women to have a well-rounded financial plan.
With these challenges in mind, Etiqa aims to help Singaporean women by making saving more convenient and transparent with the EASY save series.
Benefits of Etiqa Insurance’s EASY save series
The EASY save series includes 2 plans: eEASY save and eEASY savepro. Here are 8 key reasons you should consider them in your portfolio, especially
- Flexibility in the product offering
Clients are free to choose the right plan based on their risk tolerance and comfort level. The plans provide flexibility in the product nature, terms and premium sizes.The eEASY save is a non-participating product with guaranteed returns while the eEASY savepro is a participating product with a higher potential return. Both offer a different level of comfort and risk.
- Maturity returns offer the highest potential yields
The return at maturity is guaranteed at 2.23% p.a. for eEASY save (with upfront premium discount). For eEASY savepro, it is more than 100% capital guaranteed and has a higher projected maturity yield of 3.14% (with upfront premium discount)
- Personal protection
There is a death benefit which is equal to 105% of total premiums paid and covers throughout the policy term. On top of this, Etiqa offers a free Accidental Death Protection Booster. This complementary protection is equal to 100% of total premiums paid and covers throughout the premium term.
- Attractive capital guarantee, premium term and policy term.
eEASY save offers 114% capital guarantee while eEASY savepro offers more than 100% capital guarantee. Policyholders can choose to pay a 2-year premium term in a single (or lump sum) premium for their convenience. Policy terms are 6 and 7 years for eEASY save and saveprorespectively.
- Customisable Premiums
Premiums start at $10,000 to $100,000 for eEASY save and $5,000 to $100,000 for eEASY savepro. It is fully customisable to your needs, allowing those with a limited budget to start investing.
- Time-effective
An online insurance savings plan is a great solution for time-strapped women. It takes away the pain of face-to-face consultation with agents. Just choose the product that suits your needs best and sign up online.
- Easy to understand
Most insurance products can be complicated and full of jargons. They are challenging to comprehend. The EASY save series is simple and straightforward. The user-friendly website is a joy to navigate too.
- Potentially higher returns
eEASY savepro has higher potential yield of 3.14% p.a.. One of the reasons why Etiqa can offer such high projected yields is that online insurance savings plan cuts off intermediary costs. The online and direct business model converts what would have been commission fees for distribution cost into better returns for policyholders.
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But… I’m not familiar with Etiqa Insurance. Are they reliable?
Etiqa is a joint venture between Maybank and Ageas, an international insurance group. Maybank is 1 of the top 5 banks in Southeast Asia. The 2 companies have 50 million customers across 36 countries between them.
It is the appointed fire insurer for the Housing Development Board (HDB) since 2009. This further cements Etiqa’s reputation as it has since provided protection for over 300,000 homes. Etiqa is rated “A-“ by Fitch, a testament to its financial strength and stable outlook.
Etiqa has been in the market for more than 55 years and is recognised for the award-winning claims experience offered through the instant digital claim processing for their travel insurance. It rolled-out the automatic flight delay notification and processing service. Once a flight is delayed, clients will receive an SMS from Etiqa informing them. Once clients meet the qualifying criteria, Etiqa will automatically process the claims.
Planning for your future with online insurance saving plansThe EASY save series is the ideal solution for the modern Singaporean women who are thinking about their financial plans but pressed for time. The flexibility and variety of options between eEASY save and eEASY savepro allow them to choose what suits them the most.
NB: Abovementioned rates and product details are valid for Etiqa’s EASY save series end-of-year promotional campaign only.
- Flexibility in the product offering
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Critical Illness Plans: 5 Things You Didn’t Know Were Excluded From Traditional CI Plans
Critical illness plans are one of the most common types of health insurance policies that agents typically sell. It’s also an important health insurance policy that many consumers will purchase, either as a stand-alone plan, or as a rider tagged to a life insurance plan.
A critical illness (CI) plan provides a lump sum pay-out to policyholders in the event they are diagnosed with an illness covered under the policy. In Singapore, most traditional CI plans will cover 37 common types of critical illnesses.
However, not many people would know that policyholders have to meet the common definition of these critical illnesses before they are eligible to receive a pay-out. These are as defined by the Life Insurance Association (LIA) and it includes some exclusions. Here are 5 important definitions and exclusions that you should take careful note of.
# 1 Kidney Failure, Failure Of One Kidney
Kidney failure is defined as the irreversible failure of both kidneys, which requires either permanent renal dialysis or kidney transplantation. That means if only one kidney has failed, it does not constitute a critical illness (yet).
# 2 Coma, Drug & Alcohol Abuse
A coma that persists for at least 96 hours, and as a result, brain damage which causes permanent neurological deficit assessed at least 30 days after the onset of coma is considered a critical illness.
However, it’s important to note that coma resulting directly from alcohol and drug abuse are excluded from coverage.
# 3 Major Cancer, Early Stage
Many people don’t realise that early and intermediate stage of major cancers are excluded from coverage in traditional CI plans. Traditional CI plans only cover cancer during the critical stage, also sometimes known as late-stage cancer.
# 4 HIV, Consensual Sex
HIV is covered under CI plans but it’s only restricted to infection as a result of blood transfusion and occupationally-acquired HIV. In other words, HIV infections resulting from consensual sexual activity are excluded.
# 5 Liver Failure, Drug and Alcohol Abuse
Liver failure which comes as a result of drug or alcohol abuse are excluded from CI coverage.
Early-Stage Critical Illness Provides Wider Scope of Coverage, But Many Exclusions Still Stand
If you purchase an early-stage critical illness plan, you will enjoy a wider scope of coverage provided by the insurer. For example, unlike traditional CI plans that only provides a pay-out when an illness has reached “critical stage”, early-stage critical illness plan provides a pay-out during the “early stage” and “intermediate stage” of an illness.
Based on our observations, however, any illness that is a direct result of living in an irresponsible manner such as drug abuse, alcohol abuse and consensual sexual activity would still be excluded, even for early-stage critical illness plans.
The post Critical Illness Plans: 5 Things You Didn’t Know Were Excluded From Traditional CI Plans appeared first on DollarsAndSense.sg.
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5 Expensive Habits Singaporeans Should Consider Breaking in 2018
Anyone who claims they have no bad habits is lying, or at a job interview. We’ve all got some nasty little habits we’d rather nobody knew about. For some of us, it’s flicking boogers out the window. For a select few, it’s taking upskirt videos and decapitating cats.
But some habits, other than being gross or downright criminal, are also expensive. Here are five expensive habits that are costing you money, and that you should make it a resolution to break in 2018:
1. Retail therapy
You wake up on a sunny Saturday morning, and there’s no work. What are you going to do with a glorious weekend’s worth of free time? If the first thing that crosses your mind is “shopping”, you’ve got a bad habit you need to break.
Recreational shopping is one of the worst hobbies you can have, so tell yourself you’ll go cold turkey and find other activities to fill the space. Online shopping also counts as retail therapy, so if you constantly find yourself drifting to your favourite online shopping sites, block them on your browser and find other things to do online… trolling on forums or creating memes are totally free. Just saying.
2. Forgetting to pay your bills
When you fail to pay your credit card bills in full, you get slapped with very high interest that can make your initial sum quickly bloat beyond recognition. If you don’t manage to pay even the minimum sum, you also get hit with a late payment charge. Ouch.
This means you need a pretty damn good reason to not pay your bills in full and on time—like losing your life savings in an internet love scam or something equally as sordid. Forgetting is not a good reason. To make sure you never forget again, automate all your bill payments which can be made by GIRO. If you do have bills that you’re struggling to pay off, consider taking a personal loan to pay off your high interest debt and then pay that down in monthly instalments at a much lower interest rate.
3. Getting too little sleep
On any given day, we make many poor decisions. And most of these poor decisions are the result of stress and fatigue.
Let’s say you stay up till 2am surfing Facebook in bed, and as a result wake up late for work the next day. You miss the feeder bus to the MRT station, an in order to avoid being late to work, you call a Grab or Uber. Before rushing into work, you grab a coffee at the Starbucks outlet downstairs so you can stay awake throughout the day.
A lot of unnecessary stress can be avoided by adhering to a strict bedtime and practising good sleep hygiene.
4. Poor time management
Convenience is something Singaporeans are more than willing to pay for. Whether we’re spending money to have food delivered to our doorsteps, buying groceries online or paying someone to clean our homes, convenience is often more important than cost.
This intense need for convenience is often exacerbated by poor time management. When we always feel like we’re playing catch-up or there are too many things to do in a day, we’re more likely to resort to eating out instead of cooking at home, or jumping into an Uber or Grab instead of taking the train.
Improving your level of time management often leads to cost-savings. Making a meal plan and streamlining your grocery shopping process can save you from having to eat out every day, and working efficiently so you can leave work on time can reduce your reliance on Uber/Grab.
5. Continuing to pay for subscriptions you no longer use
The percentage of Singaporeans with expensive gym memberships is not representative of the number of people who actually regularly make it to the gym.
Likewise, the number of people with subscriptions to local newspapers is not representative of the number of people who actually consider them an unbiased source of news.
If you have any memberships or subscriptions you’re under-utilising, do yourself a favour and cancel them. You’ll instantly save money each and every month, while undergoing zero lifestyle changes.
The post 5 Expensive Habits Singaporeans Should Consider Breaking in 2018 appeared first on the MoneySmart blog.
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5 More Things You Should Do in 2018 to Improve Your Finances
Was “save more money” on your to-do list in 2017? If so, it’s probably still going to be there in 2018.
Coming up with very specific, easy-to-satisfy resolutions (transfer $x to a savings account at the beginning of every month) is a lot more effective than inventing a big, vague one you have no idea how to fulfil (like “become a billionaire”).
So here are five simple things you should commit to doing in 2018 that will put you in better financial health.
Cancel credit cards you no longer use
The world of credit cards is a fickle one. One day, your favourite credit card is rewarding you with 8% cashback on everything you could possibly buy. The next day, they’ve revamped their entire benefits programme, slapped on a minimum spending requirement that’s more than you earn in a month, and the card is now even less useful than those coasters you received from your Secret Santa at the office.
If a card no longer serves your purposes, cancel it immediately. You might think there’s no harm in letting it lie innocuously in your wallet. But the longer you let that piece of plastic stick around, the more likely you are to get charged annual fees unknowingly (and even pay them, if you’re paying by Interbank GIRO) or fall prey to credit card fraud.
Search for new credit cards to sign up for
Just as your formerly favourite credit cards may no longer be useful to you, new ones will have been released or modified, and might now be perfect for your current spending habits.
The New Year is a great time to retire those cards you no longer use, and sign up for news ones that are going to be your go-to cards for 2018.
So look through MoneySmart’s credit card guides to find the best credit cards for shopping, dining, entertainment, groceries, online shopping, cash back, air miles, rewards and petrol.
Check that you’re properly insured
If you’ve already got some form of insurance, you probably bought your policies years ago. In 2018, it’s time to review your insurance policies to see if they’re still serving you well, and to make sure you’re adequately insured based on where you are in life right now.
For instance, as a young working adult, you might already have purchased medical insurance. But if you are now slightly less young, married and expecting your first child, you should definitely be considering life insurance as well. If you’ve never properly compared your current health insurance plan with offerings from other companies, you can now do so easily right here on MoneySmart.
Check if it’s time to refinance your home loan
If it’s been a few years since you signed up for your home loan, it’s likely your interest rate is no longer very competitive. Refinancing your home loan means switching to a loan with a more attractive interest rate, thereby saving you money.
Will 2018 will be the year you should refinance your home loan? Use MoneySmart’s refinancing wizard to find out.
Consolidate your bank accounts
Over the years, you might have opened various bank accounts and later abandoned them, leaving a bit of money in each so you wouldn’t have to pay fall-below fees.
This year, it’s time to consolidate all your bank accounts. That means you’ll be withdrawing the cash in all the accounts you no longer wish to keep, closing those accounts and depositing the money in the one(s) you want to continue using.
But which bank account should you be using? For the bulk of your cash savings, it’s a good idea to look for a high interest savings account that rewards you a bit more for storing your cash in there.
If this is not an account you should be withdrawing money from (some high interest savings accounts will reward you more handsomely if you don’t make withdrawals), you’ll want to maintain a second account that offers access to a decent distribution of ATM machines.
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Effects of Inflation and Steps to Protect Yourself
- What is inflation?
Inflation is the term used for general price rises in the economy. It is the rate at which, on a general basis, the prices of goods and services rise. Deflation, on the other hand, is the rate at which prices and services fall.
Central banks have the job of managing the level of inflation in the national economy – they attempt to prevent high inflation and high deflation levels to help maintain a stable and productive economy. The majority of countries’ central banks will aim to maintain an inflation rate of between 2% and 3% a year.
- What are the effects of inflation? How does inflation affect us?
Inflation and price rises can also be thought of as a deterioration of the spending power of your money. For example, if a can of Coke costs a dollar and if the annual inflation rate is 4% then in a year the price of the same can of Coke will be $1.04. This means your money is going less far in all areas of spending.
- Why is inflation important indicator?
Because of these factors, inflation is an important part of the economy’s ability to function and grow. Economic progress and development can occur with deflation. Normally, inflation happens if there is an excess of money in the economic system – this drives prices up.
It is important to keep inflation in mind when managing your household income, wealth and assets. If the rate of growth on these things is at or above inflation, then your financial status is at least being maintained. However, if the rate of growth on your income, wealth and assets is below inflation, your financial value is being eroded over time.
A common example of when the value is eroded is to do with wages. In some nations, minimum wages will rise, but at a rate below inflation – this means the average income can purchase fewer goods than before. Prices are rising at a faster rate than income levels, and people are worse off.
This is why it is important to understand what inflation is, and how to protect yourself and your investments from inflationary pressures. The goal is to maintain the purchasing power of your money and the value of your portfolio of investments. By applying the following three methods, you can help protect against inflation.
- 3 ways to protect yourself against inflation
Method 1 – Investing in the stock market
Investing in stocks can be an effective tool against inflation. Although many people think investing in the stock market is complicated and risky owning equities can help protect the value of your portfolio.
The main idea behind investing in the stock market is that the value of your stock will be pulled upward with the price increases of inflation. As prices rise, businesses will be able to sell services and goods at higher prices. This will lead to higher revenues and profits for the company and a higher share price for you as an investor in that company’s stock. To benefit from this movement you can pick stocks from industries and sectors that perform especially well during inflationary periods.
A popular and effective example is commodities and commodity stocks – including companies involved in oil, grains and metals extraction and supply. These companies have stronger pricing power during periods of inflation – meaning that the prices of these goods items will more likely rise in periods of inflation as compared to other sectors.
However, this is not always simple as sometimes businesses will face increasing costs from the price rises in the economy. Revenues may rise, but if costs also rise at the same rate, there will no benefit to bottom line profits for these companies and no benefit to your investment.
The best option is to find stocks that will experience gains but also have histories of strong profitability – healthcare is a good example. Also keep an eye out for dividends when looking to protect against inflation – they can help add value to your portfolio of investments when returns in other areas are being eroded.
Method 2 – Property
Buying a home is a good idea to protect against inflation. Investing in the real estate market can reap the rewards if carried out correctly and with the required research. The primary goal when protecting against inflation is buying a home rather than dabbling in the property market.
Focusing on home ownership is a stable source of value compared to investing in property for a short term opportunity and should be viewed as a long-term investment – for at least 2 or 3 years. This allows enough time for the value of the house to increase. As you pay off your mortgage, you own a larger and larger share of the home until you own the entire place – usually over the course of 20-30 years.
Then, you have a debt-free asset in your portfolio which will continue to rise in value over time. Home prices, similarly to land values, rise annually, typically in line with inflation. Although there are bubbles and slumps in the market as a long-term holding, you will see gains in value. The value of homes has grown in line or above inflation historically over the long term, and this investment will be protected from inflationary pressures. This is a better choice than just keeping money in the bank in a savings account – which by the time you retire will not have grown in value as fast and may even have lost value.
Method 3 – Self Investment
One of the best ways to protect against inflation and other uncertainties in our future is to invest in ourselves. This means to work on putting yourself in a position to increase your present and future earnings potential.
For example, education is a great choice. New skills can add value to you and help you achieve a promotion or expand your business. Education also works for recession protection. In an economic downturn, you will be in a better position to protect your income stream. This can be the most controllable method of protecting against inflation. With investments, you are never 100 percent aware of in control of the performance and factors involved. However, with yourself, you can control how much effort you put into your endeavours and subsequently the rewards to be gained. It is an easy and immediate boost to your potential. Boost your future earnings by investing in yourself and help protect against inflation.
Inflationary pressures can be managed as long as you identify the risks you may be facing. Ignoring this issue will only hurt your value and investments in the long term, and it is important that this risk is addressed head on.
Do proper planning today.
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Life insurance: Buy what you really need
The payout from a life insurance policy is basically designed to give your dependents enough money to live on when you are gone.
Many people have, however, come to see whole life insurance as an investment. Other investments can earn you more, so it is better to look at all your options as you plan your financial future.
“The purpose of life insurance,” as financial advisory firm Kiplinger explains it, “is to allow your family members to pay the bills and live their lives as planned despite your absence.”
Whether you need life insurance really depends on your stage in life. If you are 20-something with no dependents and few obligations, for example, you may not need a life insurance policy.
On the other hand, if you are the sole breadwinner in a family with young children and do not have any savings, you clearly need life insurance. You should plan to buy life insurance if family or others depend on your income.
FIGURE OUT HOW MUCH YOU NEED
If you decide you need life insurance, the next step is to decide how much money the policy should provide.
The Life Insurance Association of Singapore says that you should aim to have about 11 times your annual earnings as a basic life cover.
However, Kiplinger notes that standard formulas such as buying coverage equal to a multiple of your annual income are “inadequate shortcuts”. What you should do instead is to figure out how much your family needs.
Start by calculating how much you spend each month, and multiply that amount by the number of months until your children or family members become independent.
Add on the amount needed to pay off debts such as a mortgage or other loans. Then, figure out how much you want to save for your children’s education or other important expenses. Add these categories together and you will have an estimate of how much you need.
If your family expects to spend S$3,000 a month for the 15 years until your children become independent, and needs S$100,000 for your children’s education as well as S$150,000 to pay off a mortgage, for example, you would need about S$790,000.
You should also total up your savings, your balance in your Central Provident Fund account, your spouse’s salary and other income to see how much your dependents have in order to cover those expenses. The difference between your family’s financial needs and the money that is available will be about how much life insurance to buy.
GETTING THE RIGHT INSURANCE PLAN
As you start to look for a life insurance policy, realise that there are generally two types. A “whole life” or “universal life” insurance policy continues at a fixed rate for as long as you pay your premiums, gives you a cash value that can increase over time, and pays out a fixed sum after your death.
Whole life insurance is far more expensive than term insurance because of its cash value. A term life insurance policy, on the other hand, pays a fixed amount if you are gone and has no cash value, which results in a far lower cost. You can buy term insurance for a duration such as 10 or 20 years, with the term often depending on when your children will become independent.
National financial education programme Moneysense explains that although whole life insurance policies are often marketed as being designed to meet retirement or investment purposes, they are unlike savings deposits where you expect to get back the amount you saved.
Instead, the guaranteed cash value of an insurance product may be less than the total premiums paid. “Part of your premiums will pay for insurance protection while the rest is invested,” according to Moneysense. “You should consider term insurance if all you want is life insurance coverage.”
INVESTING THE DIFFERENCE
Indeed, you may build a bigger next egg for retirement if you buy a term insurance policy and invest the difference.
A 35-year-old male could pay about S$360 a year for a 15-year S$500,000 term insurance policy, according to an evaluation at the CompareFirst website, while a similar whole life policy could cost S$7,888 per year. Although the cash “surrender value” of a whole life policy could be above S$118,000 after 15 years, investing the difference of S$7,528 per year and earning 5 per cent could give you more than S$168,000.
Even though you have equal insurance protection and could save more with term insurance, Professor Emeritus David Babbel from the Wharton School in the United States cautions that many people do not save the difference. More often, they spend it.
Only if a consumer has the self-control to invest the difference, he suggests, would buying term insurance be the best choice.Setting up automatic monthly savings via the Giro banking service could also help overcome the issue. It is easy to be lulled into buying whole life insurance, because many people do so and it sounds like an investment with the cash value component. It is more important, though, to decide what you really need and buy the type of life insurance that fits your own situation.
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Ways to use CPF money besides taking a punt on shares
Last year, people who put some of their Central Provident Fund (CPF) savings in shares or unit trusts earned returns far higher than CPF interest rates. Even though it may seem attractive to use your CPF money to buy shares, it is important to dig deeper before using them for other investments. What exactly are your investment options?
Compared to time deposits that top out at about 1.25 per cent, individuals may earn a lot more from their CPF accounts.
Interest on money in the Ordinary Account (OA) pay 2.5 per cent per year, while funds in the Special Account (SA), Medisave Account and Retirement Account may earn an even higher rate of 4 per cent or more.
The CPF Investment Scheme (CPFIS) allows you to put OA and SA funds in unit trusts, insurance products, annuities, Singapore government bonds, shares, exchange-traded funds (ETFs), property funds, corporate bonds, gold products and other investments. Some of these options have earned more in recent years.
Making such investments is easy. Simply open a CPF Investment Account with DBS, OCBC or UOB to invest your OA funds, or make investments directly with SA funds. You may then invest your CPF money through banks, insurance companies, brokerage firms or fund management companies.
The returns on some of these investments over the past few years have indeed been good. In the year ending September 2017, the most recent data, CPFIS funds delivered average returns of 13 per cent. Over the past three years, CPFIS-linked funds rose an even higher 19 per cent. Those returns make 2.5 per cent look meagre.
LONGER-TERM RETURNS NOT SO POSITIVE
Probe a bit more, though, and the picture is not quite as good.
For one, longer-term investment results for CPFIS investors are not so positive.
Recent full-year data from CPF shows that although 78 per cent of CPFIS-OA investors made more than 2.5 per cent in 2016, only 49 per cent made more over the previous two years.
As one example, gains of 18.6 per cent in the Aberdeen Asian Smaller Companies Fund over the past year were overshadowed by returns of just 1.68 per cent over the past three years.
Look further back and the results are even more dismal.
Deputy Prime Minister Tharman Shanmugaratnam said in September 2016 that over the previous 10 years, more than 80 per cent of people who invested through CPFIS would have been better off leaving their money in the CPF Ordinary Account. Even worse, he said that 45 per cent of investors lost money due to factors including “behavioural biases in investment” and higher fees.
Investors should also realise that costs for CPFIS investments can be high. CPF data shows that annual expenses for unit trusts range from about 0.3 per cent to about 3 per cent, for instance, and there can be upfront fees as well.
SHIFTING THE ACCOUNT BALANCE
While the high returns over the past year may look great, the longer-term results raise questions about what to do.
If you are a beginning investor or not confident of investing on your own, it may be better to take advice from CPF, which suggests leaving your money in your CPF account and earning risk-free interest. You could end up better than 80 per cent of CPFIS investors.
Even if you take that advice, there are still ways to increase your return.
One is to use funds from your disposable income or savings rather than money from your CPF account to pay your mortgage.
Mortgage interest rates remain low, so you can pay about 1.46 per cent on your loan and make 2.5 per cent or more if you leave your money in CPF.
If you are under 55, also consider shifting some of your OA funds into your SA. Although you won’t be able to use the SA money to pay for your mortgage, you can increase your returns for more of your money from 2.5 per cent to 4 per cent.
If you do decide to invest in shares or other investments, consider using your savings first before touching your CPF account.
With interest rates so low at banks, investing excess savings rather than using money from CPF may be better.
THINK LONG TERM
If you are experienced enough to invest via CPFIS, the key is to be prudent with your retirement money.
You will want to do better than CPF, so you will need to find investments that consistently generate more than 4 per cent, in good times and bad.
If you invest in shares, consider selecting long-established companies that are stable and consistently pay good dividends.
If you want a basket of shares, consider choosing a lower-cost ETF with a good track record rather than a costlier unit trust.
When you see shares returning nearly 20 per cent per year and CPF paying only 2.5 per cent, it is tempting to move your retirement money into CPFIS and buy shares or ETFs.
Rather than being tempted by short-term results, look at better ways to use your funds and consider ways to protect your hard-earned CPF money rather than losing it.
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Marriage – Financial Win, Lose or Draw?
As recent as a couple of centuries ago, marriage was considered a simple economic transaction. Dowry was paid and the bride from then on belonged to the groom, who took care of her. Nowadays marriage in our society is a loving consensual union between two people; however, economic implications of tying the knot still rustle around in the background.
Here are the financial pros and cons of which any potential spouse must be aware:
Finance For Couples Pro #1: Joint salaries means higher earnings at the same time that shared expenses go down.
Assuming that both you and your partner are earning, marrying each other should improve your chances of wealth-building. Consequently, a married-couple household can accumulate wealth more quickly than a single-person household.
A higher combined income can also help you and your partner qualify more easily for a mortgage, car loan or business loan.
Finance For Couples Con #1: Your dream wedding can be expensive.
Of course, a fancy wedding ceremony is not essential. Nonetheless, many Singaporeans opt to save up and spend big for their dream wedding. A civil wedding with the appropriate license from the Registry of Marriage (ROM) can save you and your groom a lot of money.
The combined costs of your coveted wedding gown, tux, engagement rings, wedding bands, flowers, wedding ceremony, photo shoot, reception, banquet and honeymoon can really set you back financially. The SG Young Investment blog estimates the cost of a typical wedding and honeymoon in Singapore to be around SGD 43,000 to SGD 56,000, while the Dollars and Sense website puts the cost at somewhere between SGD 44,000 to SGD 90,000!
Finance For Couples Pro #2: Marriage may encourage financial consciousness.
If you are the only one involved and affected by your financial decisions, it is much easier to slack off and ignore your finances. However, when there are two of you, you and your partner may each feel a bit more pressure to be financially conscious. An irresponsible financial move will adversely affect not only you, but also the person you love most.
As such, marriage can effectively encourage financial accountability. In the best of all possible worlds, you would want to take care of your spouse – and that includes his financial well-being.
Finance For Couples Con #2: Marriage may promote financial stress.
While marrying can encourage financial accountability, even a good partnership can elicit financial stress. This may be especially true if one of you is a saver and the other is a spender. If you do not set realistic spending boundaries from the very start of your marriage, differences in financial behaviour can lead to discord, disagreements and even divorce. As such, financial planning is crucial to maintaining harmony in your marriage.
Finance For Couples Pro #3: You become eligible for a variety of federal benefits.
In Singapore, married couples may be entitled to quite a number of benefits through the Marriage and Parenthood Package. According to the National Population and Talent Division, the government prioritises the encouragement of marriage and parenthood through a broad range of measures from housing schemes to baby bonus packets and childcare options.
The Housing and Development Board (HDB), for example, has increased the supply of Built-to-Order or BTO flats in the country. Married couples can be first in line for these HDB BTOs and Sale of Balance flats They can rent HDB flats at discounted rates while waiting for their own properties to be ready for occupancy. There are also various CPF housing grants available, such as the Family Grant and Additional CPF Housing Grant, that married couples can apply for so as to more easily afford public housing.
If you are married, you are also allowed to claim several relief positions to reduce your taxes. You can claim a spouse relief of up to SGD 2,000 provided that your partner’s annual income did not exceed SGD 4,000 in the previous year. You can also claim a handicapped spouse relief of up to SGD 5,500.
Finance For Couples Pro #4: You can take advantage of spousal company benefits.
A lot of employers in Singapore will allow your husband to participate in health coverage through your existing plan. This can be especially useful if your employer-sponsored health insurance is better than his, or if your husband is freelancing or unemployed. There are also other benefits like health management and employee discounts that your partner may access through your company.
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Ways to boost your savings without skimping
Saving seems hard. Whether it be mortgage bills or paying for groceries, gadgets and travel, there is always more to buy.
To reduce your spending and start saving without making your life too difficult, take the following steps to better manage your money.
PLAN SMART
First, plan and monitor your spending. Planning starts with preparing a budget, which will include income such as your salary and expenses that range from 87 cents for bus fare to a new iPhone or more.
Track your spending by writing everything down.
Review your bank accounts every month and compare your spending against your budget. Using apps such as Seedly can make it even easier to track your progress by syncing with your bank or credit card transactions and categorising your spending.
If your spending exceeds your budget, consider how to make changes.
Your review may show you are spending more than expected on certain types of activities, and you can do less without changing your lifestyle much.
You may also find automatic payments listed on your bank account for services you no longer need, and stopping payments for them can reduce your expenses a lot.
If you review your unit trusts or insurance policies, you may find that you are paying more than 1 per cent per year in fees. You can reduce your costs for new or existing investments by switching to lower-cost funds or exchange-traded funds (ETFs).
Planning in advance and monitoring your spending can, then, reduce your costs.
SHOP SMART
Next, use cards and mobile applications for discounts, and buy the right products. If you shop smarter, you can put money aside without skimping — and you may even enjoy a better lifestyle with higher quality food or gadgets and clothes.
There are a surprising number of mobile phone apps, for instance, that can help you save 50 per cent or more on everything from restaurant bills to gadgets.
Choose a restaurant from Eatigo or Fave to get discounts on your meals, buy through Shopback to save up to 30 per cent on your purchases, look for Uber or Grab promotions at TaxiBot, and consider using AirFrov or EZBuy to order items from overseas.
While you need to be careful to select the right services, and there are limitations on where you can buy, these and a multitude of other apps can reduce your costs significantly.
You may also use a credit card to get rebates. Using the right card can get you an 8 per cent discount on groceries, for instance, or 10 per cent for online shopping or 8 per cent in restaurants.
What you buy makes a difference, too. At the supermarket, for example, consider buying house brands such as Gourmet at FairPrice or Essential at Cold Storage rather than well-known names. The quality of house brands can be high, and costs are lower. A recent study by market research firm Nielsen showed that nearly 60 per cent of consumers here consider house brands as good alternatives to name brands.
CONSERVE SMART
Finally, whether you strongly support reducing climate change or not, lead an environment-friendly lifestyle anyway. Along with protecting the earth, it saves you money.
Use cloth napkins and reusable water bottles rather than disposable ones, for instance.
Replace traditional light bulbs with compact fluorescent lights or LED bulbs that use about 30 per cent less energy.
Turn down the temperature on your water heater and install a low-flow shower head to reduce your electricity and water bills.
Whenever you leave a room, turn off the lights and fan or air-conditioner. The National Enviornment Agency offers this tip: If you use an air-conditioner, set the temperature at about 25ËšC and you could save up to S$25 a year for every degree you raise in the temperature setting.
Reduce, reuse and recycle: Even though it takes willpower to refrain from buying items that are not really necessary, when you do succeed, it translates into greater savings and you even get more space at home by reducing clutter.
Recycling efforts can be in the form of buying and selling items on e-marketplaces such as Carousell or more specialised sites such as Refash, saving money on your buys as well as making money from your used items.
PUT THE SAVINGS TO BETTER USE
After you make these changes to your spending habits and find that you have more savings, consider putting the extra money into a separate bank account to accumulate funds for your retirement or children’s education or other goals.
Some banks offer investment-savings plans, such as POSB Invest-Saver or UOB Regular Investment Savings Plan, where you may apply for automatic transfers through Giro every month to have your money go to investments in shares or bonds. OCBC Frank even has a plan called “Saving Goals”, mini-accounts that you can use to stash away your money and not use it until you release it.
It’s easy to think you don’t have enough money to save or that you will need to cut back too much in order to save. In reality, though, small changes can make a big difference, allow you to live very comfortably and still save.
What makes the most difference is managing your expenses and exercising self-control so that you shop smart and stop buying pricier goods you do not really need. By making small changes in lifestyle and saving a little more, you may reach your financial goals faster and live more comfortably.
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Singapore Savings Bond (SSB) offers 2.31% per year interest rate when you invest this March
You probably should consider vesting in Singapore Savings Bond (SSB) if you have been waiting out for the best rates.
According to the official site, the average return per year will be 2.31% when you hold out until the tenth year. That means a $10,000 investment will yield $12,340 in 10 years.
Do keep in mind, however, that the interest rate is only 1.42% if you decide to hold out for only 1 year, lower than in February.
You can apply through ATM or Internet Banking through UOB, OCBC or POSB/DBS with a minimum of $500 and up to $100,000. Application period closes at 9pm on 26 March. Results will be available after 3pm on 27 March 2018.
SSB is backed by Singapore government and is available to all Singaporeans.
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Under the advertising rules, which took effect on 1 November 2011, licensed moneylenders are only permitted to advertise only through these three channels:
(a) business or consumer directories (in print or online media);
(b) websites belonging to the moneylender; and
(c) advertisements placed within or on the exterior of the moneylender’s business premises.Therefore those moneylenders that you see advertising via Google Adwords and Facebook Ads, are mostly unlicensed moneylenders aka loan sharks, and you should avoid them at all cost.
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I forgot to mention that DO TAKE NOTE: The maximum interest rate moneylenders can charge is only 4% per month, and a fee not exceeding 10% of the principal of the loan when a loan is granted. Nothing more nothing less.
Be careful out there, don't get swindled and pay more interest than normal.
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4 Ways You Are Using Your Credit Card Points Wrong
What drives customers to credit cards? A 2017 JD Powers survey reports that 50% of respondents suggested that the primary reason they acquired their card is for cashback while another 37% based their decision on rewards programme. But if we’re all signing up for credit cards to maximize our points, rebates and miles, are we all following up on that? Or are we improvising along the way? Although the concept of credit card points as “free money” makes it easy to overlook your own credit card strategies, consumers can leave money on the table by failing to take advantage of every benefit offered by their credit cards. Here are a few ways credit card users are using their points wrong—and what they can do to fix it.
1. Ignoring Your Credit Card’s Own Policies
Do you know how many points you get for specific purchases on your card—or do you use it absentmindedly, letting points accrue automatically? A lot of credit cards in Singapore tend to offer a "multiplier" rewards where you can receive 4x to 10x more points per S$1 spent on a specific category of expenditures like online shopping, groceries or dining. Therefore, it is possible to use 2 to 3 credit cards to truly maximise the amount of rewards you can earn by rotating through them depending on how you are spending your money.
For example, you could use a card like Citi Cash Back Card that provides 8% rebate on groceries and dining to earn rewards on food purchases, while using a different card like HSBC Revolution Card to earn higher rewards on shopping and entertainment. However, if you use only one card of those cards for every thing, you may be leaving more points on the table than you imagined. For those who want to concentrate their rewards and spending only on one card, it may be worthwhile to consider a flat-rate card like DBS Altitude Card that provide the same amount of rewards on every dollar you spend regardless of the spending category.
2. Minimizing the Value of Your Points by Opting for Cash
Many rewards credit cards in Singapore tend to offer some form of points redemption mechanism that allows customers to convert their points into different things like cash vouchers or miles. However, you should carefully choose how to redeem your points because it can have a meaningful impact on the value of your rewards points. In general, you can often stretch your dollar by opting to redeem your points for credit card miles rewards. For example, the average conversion rate of a point across banks was about S$0.29 per 100 points for cash vouchers (including vouchers for specific merchants), while travel related redemptions (i.e. miles and vacation vouchers) were worth about S$0.40 per 100 points (assuming that 1 mile is worth S$0.01), a difference of 33%. Miles can also be worth even more when redeemed for long haul flights or business class tickets.
Unless cash back rewards are your chief priority, you should think twice before using your credit card points to justify using your points for a random shopping spree or online purchases. In many cases, a credit card will reward you with more miles than the cash equivalent of those same miles, a trend we also observed in rewards credit cards in the US where airlines have also struck deals with banks to attract more customers.
3. Paying with Cash or Debit Cards
Paying with cash or debit card can be a great thing when trying to manage a budget. But if debt management isn't a problem for you, there’s no reason you can’t put big purchases on a card. This is especially important in Singapore, where both credit card rewards and credit card fees charged to merchants tend to be higher than most other countries in the world. For example, top cards in Singapore tend to yield more than 3% to 5% in rewards, while top cards in the US yield around 2%. Since you mostly pay the same price regardless of your mode of payment, you would be leaving a lot of money on the table by paying with cash instead of a credit card.
4. Signing Up for a Credit Card Just for the Bonuses
With most credit card users reporting that rewards programs are high on their list of priorities for credit cards, it can be easy to get caught up in the mania of choosing those credit card programs that offer the most value upon signing up. However, credit card churning can be a very dangerous and counter-productive exercise unless done extremely carefully. Some expert credit card churners are adept at maintaining a high credit score while utilizing a variety of registration bonuses, but requires a relatively high level of monthly spending spread across multiple cards, a strategy that is difficult for many to replicate.
When you sign up for a credit card, you should make sure to include a number of variables in your research: whether there are minimum spending requirements to worry about, how much annual fee you are going to have to incur, and whether you can afford to meet these requirements without leaving an unpaid balance at the end of the month.
Using Credit Card Points the Right Way
With the above in mind, how should most consumers utilize their points? It starts with planning. Understanding your individual goals as they relate to your credit card use will give you a leg up. Study your own credit cards and understand where you’ll find the greatest impact in your purchases (for example, do you get more points for grocery purchases?) and redemption (will you have opportunities redeem your miles to travel?). Even “free money” should not be treated lightly.
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3 Pieces of Questionable Wealth Advice From Fengshui Masters, and What You Should Be Doing Instead
If the rumours are to be believed, Singapore was built using feng shui principles. Everything from that octagon on our $1 coins to the direction in which the Singapore Flyer rotates (looks like that wasn’t enough to save it from bankruptcy, though) has been recommended by feng shui masters.
Whether you think feng shui is the answer to your life’s problems or on the same level of credibility as Scientology, there is some pretty bogus advice that is being dispensed by so-called feng shui masters, such as the following.
Deposit money on an auspicious day
On the 4th of February this year, did you queue up to deposit money into your bank account while dressed in red, looking like an ang bao yourself? According to fengshui masters, that day, Li Chun, was an auspicious day to deposit money.
But now a bunch of other fengshui masters have stepped in to say that depositing money on Li Chun “doesn’t work”. Pfft. We could have told you that.
You can deposit money on the most auspicious day of the year, but that won’t do squat if you’re depositing it into any old bank account.
You should be depositing your money into a high interest savings account that will slow the erosion by inflation of the value of your cash.
Display a pineapple in your home
Pineapples, while not the most romantic-looking of fruits, have been designated by feng shui masters as a symbol of wealth.
As a result, displaying a pineapple in a prominent place, such as your dining table, is said to bring wealth luck. Yes, an actual pineapple, not those red paper lanterns that look like them.
Sorry to break it to you, but you can buy a plantation worth of pineapples to scatter around the house every single day, and it will do nothing for your wealth.
Eating the pineapples, on the other hand, might be more beneficial. Pineapples are chock-full of vitamins and minerals such as Vitamin C, Vitamin B6 and beta-carotene.
And you know what they say: falling sick is expensive in Singapore, so health = wealth.
Scatter coins all over your desk
Feng shui masters seem to think that if you see money everywhere, that money will somehow multiply. That’s why some masters advise that you scatter coins all over your desk at work to promote an inflow of wealth.
Despite what Master Wong/Chan/Lim says, a desk that’s cluttered with coins is probably not the most conducive working environment. And if you do a lousy job at work, good luck getting rich, save in exceptional circumstances like striking Toto.
Instead of doing the coin-scattering thing, you should concentrate on making your workspace as conducive to concentration and efficiency as possible.
So equip your desk with headphones if you work in a noisy or, worse, open plan office and need to block out sound in order to concentrate.
If clutter is making it hard to find your documents, invest in some files and organisers.
And if long hours at work are giving you back problems (it happens to all of us at some point), invest (or get your employer to do so) in a good office chair with proper back support.
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Hello! Thanks for posting this. You've got some really good points about using your credit card. Though I doubt any of the Fengshui (or whatever it's called) stuff would work if unless you find a job and actually work.
