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  • Calvin Yeo { Hi Patricia, yes I do realize that as I have been really busy!! Will be holding a talk to discuss my portfolio with my ex students tomorrow so will put ... } – Sep 22, 11:05 AM
  • Calvin Yeo { Hi SY, I just double checked, only $155k gets transferred to RA, the rest of your OA and SA will stay as it is. } – Sep 22, 11:04 AM
  • Calvin Yeo { Hi sw, yes that's correct. But it will be at a different rate. See http://mycpf.cp f.gov.sg/Member s/Gen-Info/Con- Rates/ContriRa. htm } – Sep 22, 11:02 AM
  • Patricia { hello Calvin you have stopped updating your investment portfolio for us (readers) to have a peek..now that share prices has gone north, I find it challenging to buy into any ... } – Aug 28, 6:30 AM
  • SY { Let's say in a scenerio as follows: Age: 54 OA: 150K SA: 150K At age 55, OA and SA will close down and 300K will be transferred to RA to ... } – Aug 27, 11:58 AM
  • sw { Hi,if continue working after 55, the monthly cpf contribution will go to OA,MA and SPA . } – Aug 27, 1:42 AM
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Comments on Straits Times Article Singaporeans Start Earlier In Saving For Retirement

According to the Straits Times article, Singaporeans tend to start saving earlier for retirement. That’s a good sign and I have met many young people who are already thinking about planning for retirement. However, more than 50% find that they are not on track to meet their financial goals.

That’s alarming as even though they start saving early, they are still unable to meet their financial goals. It could be due to various reasons.

 

1. Insufficient Savings Set Aside From Income

Insufficient savings is one of the main reason for being unable to meet financial goals. Even though they claim to be saving, they could still be undersaving relative to their gross income levels. Overspending or undisciplined use of credit can contribute to insufficient savings. At least 10% of gross income is recommended to be saved annually.

 

2. Poor Risk Management

A major disease or accident can lay waste to any savings plan if the risk is not managed appropriately. Private medishield plans are necessary to cover the inadequacy of the basic medishield plans. Life insurance coverage requirements should be calculated carefully to ensure that the dependents will not have financial problems. It is highly recommended to separate insurance from investments to reduce the cash outflow. Term policies are also cost effective ways of ensuring sufficient coverage.

 

3. Failure to Invest or Insufficient Investment Returns

The survey further reports that “to achieve their financial goals, 51 per cent of Singaporeans aim to save on a regular basis, while 48 per cent plan to cut down on their spending, but only 31 per cent of those polled will purchase an investment product.”

With only 30% of those polled willing to invest, the other 70% will have their cash depreciating in value over time. Many people underestimate the impact of inflation on their savings. It reduces the purchasing power of money over time as expenses get more expensive and the effect becomes magnified over time. It is also important to learn how to invest smartly as most savings products out there do not have very good returns.

 

To learn how much you need to save and how to invest, do join us at our upcoming Investing For Passive Income Basic Course!

 

For more information, you may be interested in:

Investing For Passive Income Basic Course Singapore 13th April 2013 Saturday

Investing For Passive Income Basic Course March 2013 Singapore

Comments on Straits Times Article $900k Singapore child

White Paper on Population What It Means For Investments

Thoughts on Straits Times Article Is Monetary Policy Enough to Fight Inflation In Singapore?

4 Responses to “Comments on Straits Times Article Singaporeans Start Earlier In Saving For Retirement”

  1. Hi, what do you think of index investing? Do you think over a long period, it will have good returns?

    • Hi Anon, it’s a good way to diversify if you are not keen to analyze individual stocks. However, if you have the ability to do FA well, you should be able to outperform the market through value investing. STI ETF alone can give possible returns above 6% p.a. if held over the long run.

      Indexes can also be used as a proxy to certain markets such as CSI300 for China, TOPIX for Japan etc. I have seen people who’s portfolios simply consist of ETFs of indexes. However, it is easier to do it in the US as the ETF market is far more developed there.

  2. Thank you so much for sharing your knowledge and views! Good to hear from someone experienced and so willing to share.

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