Safeguarding your finances also means shielding your financial well-being from life’s uncertainties. Ms Shen, like many others, finds reassurance through comprehensive insurance coverage. “I consulted a trusted wealth planning manager to receive professional advice tailored to my needs,” she said.
Her sister, equally prudent, also reaped the benefits of careful planning. Her health insurance covered most of her medical expenses for spinal fusion surgery, alleviating a significant financial burden.
To be well-prepared, make sure you have adequate insurance coverage in six key areas: Health, life, critical illness, mortgage, long-term care and general insurance. Together, these policies help you and your loved ones avoid financial strain during times of crisis.
Generally, it’s advisable to allocate no more than 15 per cent of your take-home pay to insurance protection. In terms of coverage, aim for a mix of policies that provides up to four times your annual income in case of unexpected illness and nine times your annual income for death or permanent disability.
To stay organised, Mr Lew utilises SGFinDex via the POSB digibank app, which brings together financial information from banks, insurers and relevant government bodies in one place. “It’s very useful having a consolidated overview, since we often have policies from different providers,” he said.
NO 3: GROW AND INVEST FOR THE FUTURE
After putting in place a robust savings and protection strategy, the next step is to make your money work harder through investments that can grow over time.
Ms Shen learned the hard way that picking stocks based on popularity isn’t always wise. “My core portfolio now includes diversified investments such as exchange-traded funds (ETFs) and unit trusts,” she said, stressing the importance of making informed decisions.
Determining your risk profile is a crucial first step in investing. Mr Lew uses the POSB digibank app to assess his risk tolerance. The app features a simple four-question assessment that helps users evaluate their financial situation and risk tolerance, ensuring they select investment products aligned with their goals and preferences.
For beginners, POSB offers options like Invest-Saver, which lets you invest a fixed amount regularly into ETFs and unit trusts. Alternatively, you could explore robo-advisors such as DBS digiPortfolio for personalised and cost-effective investment management.
A useful practice is to regularly invest at least 10 per cent of your take-home pay. Working towards having at least 50 per cent of your net worth in investments can also be a helpful indicator of how effectively your money is working for you.
“After experiencing a few financial downturns, I realised that successful investing isn’t about timing the market, but rather spending time in the market. Stay invested for the long term, diversify your portfolio and harness the power of compounding,” said Ms Shen.
NO 4: PLAN FOR YOUR RETIREMENT
