Articles

1) Sacrifice is inevitable, so choose your sacrifice wisely
There are 24 hours a day, and we must know our priorities. Start by shifting our mentality from “I can’t get all of this done” to “What am I willing to sacrifice?”. “If I only had 1 hour to do activity A or B, which would I choose? And why?”. Importantly, ask yourself about what truly matters to you. Ultimately, the value of these choices comes from the sacrifices we made.

2) Discipline provides you with Freedom
I believe this has happened to us before: Mindlessly scrolling through TikTok during a “study session” for hours only to realise that the time is up, and you haven’t achieved half of what you set out to accomplish. Here are some methods to combat this:

Firstly, using a to-do list or timeboxing our day can give us the structure we need to ensure that we are on track to completing our assignments. Always give your tasks buffers to avoid overloading and overstressing yourself and factor in break times. That way, we have something to look forward to, and the breaks become more fulfilling.

Secondly, use a calendar to schedule significant due dates and activities. Having all our tasks visible may be daunting, but there is clarity in our deliverables.

3) Learn to say “No”
For my extroverted peers, this may be the toughest. When a friend invites you for supper, or “just one round of mahjong”, you might find it extremely difficult to reject such an offer. Nonetheless, learning to say no with conviction might be the secret to unlocking more time for yourself as it achieves two things:
Firstly, people would respect your time more as they see how much you would respect your goals. Next, saying no allows us to keep on track with achieving our goals, and not let external forces derail our progress.

Keep Hustling and Stay Hungry!

Kwek Xiu Qi
Financial Services Consultant

Budgeting is key to meeting your goals

What is budgeting?
It is the process of creating a plan to spend your money. Contrary to popular belief, budgeting is not about reducing your expenditure but allocating it for various purposes (short/medium/long term needs).

1. To earn more or to save more?
Given a choice, earning more gives you more to spend rather than cutting down on your expenses. However, some of us have a slow salary increment. Therefore, to fully utilize our take-home salary, start by creating your financial safety net through budgeting. There are a lot of temptations to fight against when you start working. Without proper planning, we could easily overconsume. Therefore, while I encourage you to earn more, it is equally important to save more through budgeting for the unprecedented future.

2. Simple budgeting rules that work – 5/3/2 and 1/3 rule
Since everyone has different priorities in varied life stages, budgeting is more of an art than a science. Here are two simple budgeting rules that work for the majority:
Firstly, the 5/3/2 rule. Under this rule, we allocate 50% of our take- home income to our needs, 30% to wants, and 20% to savings (more suitable for foreigners).
Secondly, the 1/3 rule. Under this rule, we allocate 1/3 to short, medium, and long-term needs (better for locals). Above all, it is necessary to differentiate between our needs and wants since this will determine our priorities and the resources we
can free up.

3. How does my budgeting changes over time?
At various life stages, our budget could change according to our needs (e.g. family expenses) and our salaries can also increase. Ideally, we would want to keep our expenditure low. My advice for you is to review your budgeting and stay disciplined. If there is a temporal need for higher expenditure, it is possible to adjust your budget accordingly but ensure to monitor and adjust it once the
situation improves.

In conclusion, the key to proper budgeting is to have a plan and stay disciplined in monitoring it!

Zhang Xiao Yan
Financial Services Consultant

Should I bother chasing savings rates in banks?

We should seek to personalise our financial solutions.
Bank savings rates will be good for the maintenance of liquidity.
Slightly longer-term goals with a fixed date of execution can utilise fixed deposits.
But everything else should be better utilised in combinations of better returning assets.

There is never a short and sweet answer to every personal finance question – different circumstances call for personalised solutions. We could, however, categorise and have certain rules of thumb to guide us along and help us decide whether we should be enticed and attracted by bank savings rates.

The first scenario that many of us would consider is our emergency funds. We need our safety net to be as liquid as possible since that is the first pot of wealth we will tap into during any unforeseen incidents. For this, we would likely have to look towards bank interest accounts that could give us interest rates ranging from 0.05%-3.00%* depending on the conditions fulfilled.

For people with shorter term goals or liabilities that must be paid off in 2-3 years’ time, they could explore targeted rates that banks offer in fixed deposits. On the one hand, we will be locking away the sum of money that we will need at a secured 2.8%* for 2-3 years, which is beneficial for people who will benefit people who were able to prepare. In such instances, your financial planner will help to address the amount and type of fixed deposit to set aside into.

For the last group of people whose needs fit none of the above, perhaps we should not be blindly chasing saving rates in banks since there is always an upper limit as to how much the banks are able to offer. In most instances, they are not rates that could beat inflation, which then defeats the purpose of growing our wealth and in return, increasing our purchasing power.

Wrapping up, plan one’s growth of wealth appropriately. Chasing savings rates in the banks can only help us to a limited extent and the onus is on us to best optimise our portfolios, especially with the right professional advice.

*Interest rates correct as of writing

Lin Xiao Xuan
Financial Services Consultant

What should we value most in a job?

We spend 40 hours (maybe more) at our job every week. Work takes up a lot of space in our lives. This means that the culture we find at our place of work impacts our morale, productivity, and happiness.

Spending all day ingrained in a culture that doesn’t resemble you and your core values can drain your energy and enthusiasm for your job. Even if the perks of the job are amazing, cultural issues can make those perks lose their shine.

But have you ever stopped to think about your personal work values? Employee and employer work values, not only determine work culture but also your optimal career path.

There are both intrinsic and extrinsic motivators that can make a job more fulfilling. Intrinsic motivation occurs when people engage in tasks or activities that are personally enjoyable.

The reward is intangible and comes from within the person. Extrinsic motivators are more tangible rewards and come from an outside source such as a person’s pay.

Here are some factors you should value most in your workplace:

• Good Working Conditions
• Appreciation for Work Done
• Flexibility at Work – Work-Life Balance
• Career Advancements
• Good Benefit Package
• Competitive Salary
• Effective Management

So, before you ask for that promotion or accept your next job offer, you need to be clear on the types of work values that are most important to you. Sit down, look at your intrinsic and extrinsic motivators, rank them based on your own personal values.

When you understand what you value most, finding a career and an employer that closely fits your values can increase your job satisfaction. And since work takes up much of our time, finding a right job increases our overall happiness as well.

Work takes up a lot of time in our lives. We should be more keenly aware of what motivates and drives us, both tangible and intangible.

Xenia Hea
Financial Services Consultant

What has changed 1 Year Post Grad?

Previously, I wrote an article on the “Fresh Grad Starter Pack” and this article is a follow-up one year post graduation. I am writing this article from my perspective
and observations about my batchmates.

Clarity in Cash Flow
Firstly, clarity in cash flow management. Building a good habit is crucial right from the first pay cheque. It has been a year since I graduated, and I’m pleased that most of my friends are well versed in tracking their income and expenses to prevent overspending.

Build a Comprehensive Insurance Portfolio
Secondly, build a comprehensive insurance portfolio by allocating at least 10-15% of your income to insurance. Last year post-graduation, most of my peers have gotten basic insurance settled: Life Insurance, Accident and Hospitalisation. This gives them the peace of mind to pursue other financial goals in life.

Overall, it is heartening to see how my friends have progressed through adulting. An area that could be reviewed would be the investment portfolio, especially during a volatile period now. I’m glad that more of my friends are interested to kickstart or review their investment portfolios.

Yeo Tze Hern
Financial Services Consultant

4 Key Tools That Help You Fool-Proof Your Estate Planning

Before we delve in deeper, let me first explain what estate planning is, and why it matters. Simply put, it is having a plan which ensures that the people and causes that you care deeply about receives your financial legacy in an efficient and effective manner. We may all think that we have all the time in the world to put this off, or that our family members can handle it, but we never know what tomorrow may bring, and our families having the assurance of a well-planned estate puts their minds at ease during a period of grief and bereavement. Not having an estate plan delays the distribution of assets, costing both time and money for family members to laboriously trace funds through multiple financial institutions. It may even lead to disputes between your loved ones due to ambiguity and discrepancy with your true intentions, as intestacy laws take the default distribution arrangements.

Now that I have hopefully convinced you of the importance of estate planning, let’s look at the 4 key tools.

1. Make sure that your insurance policies pay out to your nominated recipients in a timely and smooth manner. This can shorten the estate distribution process from months to within days.

2. Draft a will to express your wishes and intentions. This eliminates ambiguity and makes disputes less likely to occur.

3. Doing up a CPF nomination for your CPF monies prevents additional administrative charges and delays, ensuring that these funds are distributed quickly and without hiccups.

4. Granting a lasting power of attorney to trusted loved one(s) allows them to make decisions on your behalf, preventing personal assets from being frozen if you should unfortunately lose your mental capacity due to illness or accidents.

Shirlene Toh
Financial Services Consultant

How can I broach the topic of money with my parents?

Money is not an easy topic to talk about, however, it is necessary. Before you approach this subject with your parents, you must understand that it might be difficult and awkward for them. Some parents might even be embarrassed because they are not ready to let you guys know about their finances, and they still want you to be able to look up to them, so keep your tone open and gentle.
Regardless of what they say, take some time to empathise with them and don’t belittle or judge them for the decisions they have made in the past.

A way to begin is to ask them if there are things you can do to lighten their plates financially, such as helping out with the monthly household expenses or bills. After sharing these with you, it’ll be easier to get an idea of their financial situation. They might not be upfront with you about it, you can try to get them to open up by asking them to envision how they want their retirement to be and how you guys can get there together. Some important specifics include:

• Monthly Income
• Monthly Expenses
• Any Outstanding Loans
• CPF Account balances
• Any Savings/Investments Plans in place for Retirement

After having an idea of their financial situation, you can then work together with them and your financial advisor to plan for their golden days, restructure their portfolios, and fill in the missing gaps.

Planning ahead can help make these transitions in their lives easier, both financially and emotionally.

Sherrill Gan
Financial Services Consultant

Pitfalls for retirement planning

Retirement may feel distant for most of us who have just graduated.

Although many young adults understand the advantage of planning for their retirement early, retirement life may still be too “abstract” as they could not imagine how exactly it will be like. To make better retirement plans as a fresh graduate, here are two major pitfalls to avoid.

Planning for too little
According to the OCBC Financial Wellness Index 2021, 81% of the respondents underestimate the amount they need for their desired lifestyle. Among them, millennials born between the 1980s to late 1990s fared the worst by underestimating their retirement sum by almost 50%. Having talked to many responsible young adults who are prudent in their spending, I know many of them advocate for simplicity when it comes to retirement. Some felt that they won’t have the energy to do much when they are older, while others are willing to settle for a minimalistic lifestyle.

These are valid considerations, but they did not realise that when we are older, we have very few choices if we end up planning for too little. Therefore, it is important to give ourselves more leeway when planning instead of settling for the minimum since the start.

Lack of consistency and review
In the same survey done by OCBC, while some people did make retirement plans for themselves, half of them are not on track with their retirement plans. People who contribute to their retirement plans more regularly are more likely to be on track. Along with concepts such as compound interest, it is not surprising that consistency plays an essential role in ensuring that we achieve our retirement goals. Once we make our retirement plan, we should be reviewing it regularly at different junctures in life. This is to ensure that we are able to make necessary adjustments to our plans if there are any changes in our financial situation or our
desired retirement lifestyle.

With limited choices to earn an income when we are older, it makes it much more important for us to plan with realistic expectations instead of short-changing ourselves by planning for too little. Furthermore, consistent effort and regular review should be done to ensure that we are on the right track!

Zhang Ruo Lin
Financial Services Consultant

Words of wisdom for those who are investing

Investing can be exciting, but if done wrong, can be detrimental. A lesson I learnt when I first began my investment journey without much knowledge, following the advice of my friends to invest in various stocks with ‘high growth potential’. As a result, I suffered close to 80% losses in my portfolio. Hence, here are 3 words of wisdom for those who wish to begin their investing journey.

1. Never chase returns
Though the idea of high returns might seem attractive, it always comes with a risk. Investments do not just go up in a straight line. With the possibility of gaining 20% returns also comes with the risk of your asset dropping beyond 20%. In this current economic downturn, many stocks that soared in the past 2 years, such as Zoom, are now down 70-80% from their all-time highs.

2. Time in the market beats timing the market
Not about how much you put in, but when you start investing. The Rule of 72 is an important formula used to calculate how long it’ll take for an investment to double in value, based on any given rate of return. By staying invested, we are able to ride out the short-term volatilities in the market, and take advantage of the effect of compounding.

3. Risk versus Volatility
Quoted from Warren Buffett, “Risk comes from not knowing what you are doing”. Many of us have this misconception that volatility = risk. Investing is volatile, where prices of any asset fluctuate over time. Risk refers to the probability of losing your capital, and this happens when you do not have the right knowledge or information before buying various stocks.

All in all, only invest in what you understand. Every bit goes a long way in your accumulation journey, for your goals.

Mervyn Lee
Financial Services Consultant

Things I wish I knew when I was an Undergrad

Undergraduate life is tough.

It is the period where you will make important decisions for your career, on top of juggling multiple commitments.

While there isn’t one true way to live out your university life, these are 3 crucial things that I wish I knew more when I was still an undergraduate.

Focus on developing high income skill sets
You are your greatest investment I see a lot of friends, spend over 15 hours every week overanalyzing their investment portfolio to get that extra 5% on their investments during their university days.

However, most of us do not have a large sum of money to begin with when we are young. An extra 5% on a small $1,000 investment is only $50 gain in a year. But an extra 15 hours invested into uplevelling your skill sets that help secure better career opportunities in the future, could possibly result in an extra $500- $1000 more guaranteed pay above your peers every month!

Embrace Failure positively
Oftentimes, I see many of my friends beat themselves over their grades. Or over a failed internship offer.

Remember that the outcome is NOT your self-worth. And only through failures can we learn to be a much better person.

Enjoy the journey
Join a club or an interest group that you can share your greatest passions with! Society often romanticizes hustling and any time not directed towards improving yourself is unproductive time.

But happiness is more than just your success. It is the sum of your experiences, your growth and joy you can share with the community that matters to you.

Focus on growing your character, your experiences, and your skills when you are
an undergraduate, which will eventually positively manifest into greater career and relationship success down the road!

Kenny Ng
Financial Services Consultant