Basic money management, financial planning and investing are three key elements of personal finance that are important for every individual. However, we also acknowledge finance is not sexy and something every Singaporean relish learning.
Rather than bore you with a lecture about why you should be empowering yourself through personal finance, we will just dive straight into four types of investments that we think all Singaporeans should have as part of their portfolios.
1. A Savings Accounts That Pays Great Interests
Are you still making 0.05% per annum in your saving account? If the answer is “yes”, then you my friend are making far less than what we think is acceptable.
Both the UOB One Account and the OCBC 360 Account allow you to earn interests upward of 2% per annum simply by doing everyday stuff such as crediting your monthly salary into the respective accounts, and spending a minimum of $500 per month on the credit card.
If you have $50,000 of savings in these accounts, you can easily earn about $100 per month (or $1,200 per annum) from the interest that is being paid on the amount saved.
If you don’t already have such an account, you should seriously consider whether the problem lies with you, and your unwillingness to act even when money is being offered to you at no-risk, rather than how complicated personal finance is.
2. A Private Hospitalisation Plan For You And Your Children
With Medishield Life kicking in from 1st November onwards, all Singaporeans would automatically have basic health insurance coverage. That is good to know.
For those who are able to afford, what’s even better is having private integrated shield plan that covers you for higher-class wards in government or private hospitals. It is reasonable because at a younger age, you should not expect to pay more than a few hundred each year for the premium, which by the way, can be deducted from your Medisave Account.
Don’t forget to insure your children as well. By insuring them from a young age, you ensure that the insurance company would need to continue providing renewal and coverage even if any conditions develop as they grow older. More importantly, in the event of any hospitalisation, the insurance company would cover the hospital bill.
A recent example to illustrate this would be a nephew of mine recently being hospitalised due to a seizure. It was 1-night of hospitalisation at a government hospital (A Class) with the bill coming up to close to $1,000. The full amount was claimed.
3. A Term Insurance
If you have children or elderly parents depending on you in any way, you should be buying some term coverage.
People buy term insurance with the hope that they never have to claim for it. However, in the unfortunate circumstance that something does indeed happen, it is good to at least know that our family will be provided for to help them tide over the difficult period.
Term insurance coverage does not cost much. Excluding the cost of any rider, you can expect to pay about $300 per year for a $300,000 coverage spanning over 30 years from the age of 30. That’s a reasonable amount to pay for some peace of mind in life.
4. A BTO Flat
We have never met anyone who felt that his or her Build To Order (BTO) flat was a bad “investment.”
BTO flats almost always provide an appreciation in price for their respective owners after the 5-year minimum occupancy period. To be fair, it is not a sure thing. However, history has shown that most people wouldn’t go wrong when they buy an HDB flat, especially when it’s from HDB.
Even if you don’t think an HDB flat should be considered as an “investment”, or that the appreciation in price is not something that you can bank in on, staying in your own home feels a lot better and makes much more sense financially than renting a home, especially in the long run.
What are some absolute must-have in your personal portfolio? Share with us your comments on Facebook today.