Aging comes with many annoyances. Most come with signs and symptoms, or preventive checks from various markers could provide an early heads-up to cause some level of panic. But the most insidious types are those where NOTHING is noticed.
If one were to poke the eyeball, do we feel pain? In some movies, a person is being tortured with some scary looking object, threatening to pierce the eyeball. We feel so much pain even before it has breached. Cringe. But it seems there is no sensation to be felt on the eyeball itself?
In any case, it was a serendipitous circumstance that led wifey to pay a visit to an ophthalmologist. Turns out the amazing scanner the ophthalmologist had picked up an object floating above the retina. It looked like a UFO flying above a planet when a picture of it is taken from outer space.
Turns out she had experienced a retinal tear without detachment. No sensation whatsoever. When asked what the consequence could be, we were told, "Blindness". That sure was an absolute bummer.
The good news was, the doc could fix it. All it needed was to laser around the torn area to fuse it back. We were lucky it was detected early. All hail modern science!
And when asked when could we get it done, he said, "Immediately". Wah! One hour and with temporary blurred vision later, wifey emerged from the procedure at the hospital laser lab at the next building, all done.
Seems like it could be covered by the Integrated Shield Plus programme that wifey had too. Fully covered. And it was a breeze as the hospital admission could simply do an "E-filing". No additional information was required. Easy breezy. All hail Smart Nation and digitised government healthcare system!
Watch your fragile eyeballs!
Investment through the ages, from cradle to grave.
Showing posts with label Insurance. Show all posts
Showing posts with label Insurance. Show all posts
21 October 2019
08 July 2019
Phone Smashed in the Land of the Rising Sun II - The Outcome
So I mentioned how Wifey's phone got smashed up during our trip to Japan (Phone smashed in land of the Rising Sun). Thankful that we were reminded that this should be covered by our travel insurance. We had completely overlooked that.
Thank goodness for travel insurance!
Checking through the details, it seems the insurance we bought could cover up to a maximum claim of $500 for lost or damaged items. So we submitted a claim.
Not bad. Just received a cheque for $203. Considering that the phone is already two years old and would have depreciated in value, it was still a reasonable outcome.
Something is better than nothing right?
Thank goodness for travel insurance!
Checking through the details, it seems the insurance we bought could cover up to a maximum claim of $500 for lost or damaged items. So we submitted a claim.
Not bad. Just received a cheque for $203. Considering that the phone is already two years old and would have depreciated in value, it was still a reasonable outcome.
Something is better than nothing right?
10 June 2019
Phone Smashed in the Land of the Rising Sun
Wifey and I went to Japan for a couple of weeks, not too long ago. Hanami season and all that. Yeah. Nice. Really. Should go if you have not. Go, go, go.
Our last stop was back in Tokyo as we were flying out from Haneda to return home.
So there we were, on the last evening of our wonderful holiday, standing at that amazing crossing at Shibuya. Throngs of people, including dumbstruck tourists like us, adding to the bloody mass, er mess.
And of course, holding on to our mobile phone to take wonderful pictures for momento. [Who still use cameras these days?]
Then, all of a sudden (deja vu of primary school essays?), some random guy ran past us, bumping into my wife along the way. Shit. Literally, coz that's what wifey said.
Guy in suit. Looked like a local. He apologised. BUT DID NOT PICK UP THE PHONE THAT HAD GONE FLYING! WTF. Bloody hell.
On hindsight, I realised why you shouldn't pick up someone else's phone that you had caused to go flying.
The phone was all cracked up!! We were not laughing. Should have seen the look on wifey's face. She was damn angry with me. She couldn't get angry with the random stranger mah, coz he had run away. Haiz, time to replace her iPhone.
On a more positive note, we were reminded that we could claim damages from our travel insurance. Oh yes. Forgot all about it. And that's another story still waiting to unfold.
Our last stop was back in Tokyo as we were flying out from Haneda to return home.
So there we were, on the last evening of our wonderful holiday, standing at that amazing crossing at Shibuya. Throngs of people, including dumbstruck tourists like us, adding to the bloody mass, er mess.
Then, all of a sudden (deja vu of primary school essays?), some random guy ran past us, bumping into my wife along the way. Shit. Literally, coz that's what wifey said.
Guy in suit. Looked like a local. He apologised. BUT DID NOT PICK UP THE PHONE THAT HAD GONE FLYING! WTF. Bloody hell.
On hindsight, I realised why you shouldn't pick up someone else's phone that you had caused to go flying.
The phone was all cracked up!! We were not laughing. Should have seen the look on wifey's face. She was damn angry with me. She couldn't get angry with the random stranger mah, coz he had run away. Haiz, time to replace her iPhone.
On a more positive note, we were reminded that we could claim damages from our travel insurance. Oh yes. Forgot all about it. And that's another story still waiting to unfold.
23 May 2017
A Trip, a Fall, and a $115 Bill
My daughter is pretty enthu' about badminton. So in pursuit of her interest, she had joined her school badminton team. The twice a week night training span 3 hours each time. A typical session will see them doing all kinds of dexterity and stamina exercises before proceeding to skills training and practices. I think it's good for her.
On one such occasion recently, they were jumping over shuttlecock casings serving as makeshift obstacles. I guess her dexterity was low that day. She mistimed her jump and tripped over the casing. It toppled, and rolled onto the side. She landed on it awkwardly. That was it. Accident. Injury.
Dear oh dear. Limp limp limp.
As concerned parents, we sent her to the nearest hospital A&E. My guess was that it was nothing more than just a sprained ankle. But how to tell? Better safe than sorry.
2+ hours plodding through the hospital system of admission, triage, X-ray, seeing the doctor, getting bandaged, settling the bills and discharge, collect medicine, and LOTS (and I mean LOTS!) of waiting. Eventually done.
Fortunately, nothing more than a common sprain. Of course, her ankle was looking like an elephant trunk by then. But, not too bad. Nothing broken, nothing more serious. Relief.
The bill? Apparently $200 for the A&E services, which seemed to be inclusive everything. But there was a $85 government subsidy. So the final bill was $115.
It so happens that one of the insurance policy I had previously bought for my daughter has an add-on component that covered any injury for medical claims up to $1,000 for each accident/injury.
My insurance agent came over to collect the original receipt and took care of all the paperwork. I hope to see the cheque soon.
Guess I should put off terminating this policy. For now.
19 May 2017
Paying $1 a Day to Reap Half a Million
My son has started his National Service (NS). As he charts his journey serving that nation, progressing from boyz-to-man, it's perhaps also timely to set him on the journey to manage his personal finances.
As a national serviceman, he is entitled to sign up for the MHA/MINDEF group insurance scheme with Aviva. It is really a steal. $500,000 term insurance coverage (inclusive disability benefits) is only ~$20 per month. Enrolling onto it was easy as he doesn't even need to do the extra work of medical check ups given his NS status. We added on another $100,000 of personal accident insurance, so there's some added cost for his coverage. Renewal seems to be annual. In fact, it seems like his spouse and children can sign on to the same plan too in the future.
I did something similar for my daughter, signing her up with AIA for $505,000 term insurance and total permanent disability, plus $150,000 critical illness. Works out to under $480 a year for a 30-year term. That will cover her till age 47. Don't ask me why the odd $5,000, but it was quoted as such. It was pretty hustle free too.
I made it clear to both of them that this term insurance will not benefit them directly. After all, the only returns to be collected is upon morbidity! Rather, it is to protect their 'dependents'. In the near term, that will be us, the parents. In the longer term, their own families when they are married. And if nothing is ever collected, it's a good thing!
The whole point of term insurance is to replace the lost income when one dies too early, and family members are dependent on you. So it suffices to cover till one reaches financial independence. Obviously, as one builds up his/her own investment portfolios, the amount of term insurance coverage needed decreases over time. So it probably makes sense to have multiple term insurance policies, each ending at different ages. Effectively, "reducing the coverage over time".
I figure that they may want to add on another $300,000 or more when they are older, and to have term coverage that will span them till their estimated retirement age. I don't know when that will be for them, perhaps 55, 62, 65? Who knows. I shall leave that to them to figure out when they are older. The term insurance is therefore to cover the gap till it can be met or surpassed by an investment portfolio to provide the desired income for the dependents.
But for now, they can be assured that they are duly covered for $0.5m each.
Next, time to terminate their existing whole life and investment-linked policies, and free up the cash to put to better use!
As a national serviceman, he is entitled to sign up for the MHA/MINDEF group insurance scheme with Aviva. It is really a steal. $500,000 term insurance coverage (inclusive disability benefits) is only ~$20 per month. Enrolling onto it was easy as he doesn't even need to do the extra work of medical check ups given his NS status. We added on another $100,000 of personal accident insurance, so there's some added cost for his coverage. Renewal seems to be annual. In fact, it seems like his spouse and children can sign on to the same plan too in the future.
I did something similar for my daughter, signing her up with AIA for $505,000 term insurance and total permanent disability, plus $150,000 critical illness. Works out to under $480 a year for a 30-year term. That will cover her till age 47. Don't ask me why the odd $5,000, but it was quoted as such. It was pretty hustle free too.
I made it clear to both of them that this term insurance will not benefit them directly. After all, the only returns to be collected is upon morbidity! Rather, it is to protect their 'dependents'. In the near term, that will be us, the parents. In the longer term, their own families when they are married. And if nothing is ever collected, it's a good thing!
The whole point of term insurance is to replace the lost income when one dies too early, and family members are dependent on you. So it suffices to cover till one reaches financial independence. Obviously, as one builds up his/her own investment portfolios, the amount of term insurance coverage needed decreases over time. So it probably makes sense to have multiple term insurance policies, each ending at different ages. Effectively, "reducing the coverage over time".
I figure that they may want to add on another $300,000 or more when they are older, and to have term coverage that will span them till their estimated retirement age. I don't know when that will be for them, perhaps 55, 62, 65? Who knows. I shall leave that to them to figure out when they are older. The term insurance is therefore to cover the gap till it can be met or surpassed by an investment portfolio to provide the desired income for the dependents.
But for now, they can be assured that they are duly covered for $0.5m each.
Next, time to terminate their existing whole life and investment-linked policies, and free up the cash to put to better use!
08 March 2016
Mortality - Are We Well Protected?
Oh dear, oh dear. It's been one death after another ever since the start of Chinese New Year. It was a spate of half a dozen who passed on in recent weeks. In all cases, they were aged parents of friends and colleagues.
Most recently, I found out that a friend had suffered a tragic medical incident. He's in very bad shape and I fear he may not make it. As a single income family with two teenagers, it is a situation that will be of grave concern and worry.
I can totally empathise with the implications as my family is likewise dependent on me as the single bread winner, with a pair of teenagers going through the paces of education. The exact situation as my friend. It led me to ask myself, how will my family tide through should anything happen to me? *touch wood* [major wood]
A quick review suggest that with my holdings in shares and unit trusts, Supplementary Retirement Scheme investments, CPF, cash in bank accounts, and insurance upon death, it would amount to $1.7m. Would that be enough?
Assuming a 4% dividend payout with $1.7m invested, it would be $68,000 per year. Wifey has her own portfolio that is generating $6,000 worth of dividends per year. So in total, that's $74,000 of passive income per month.
The car is fully paid up, although it will eventually reach its 10-year mark within a few years. The house is almost fully paid up, with less than $50,000 principal outstanding. No other debts, beyond the monthly credit card bills. I think, $6,000 a month should be enough. Worst case, wifey may have to pick up some work to supplement.
ONE major problem though: Will wifey know how to invest that $1.7m to generate a steady and safe 4% dividend return? Got to work on that. Perhaps the simplest solution is to teach her how to buy STI ETF?
Meantime, whatever faith and beliefs you might subscribe to, wish my friend and his family well. They need all the help, physically and spiritually.
Wishing all, and especially my family and me safe, healthy and happiness in the year and years ahead. Cherish what we have.
Mortality, am once again reminded.
Most recently, I found out that a friend had suffered a tragic medical incident. He's in very bad shape and I fear he may not make it. As a single income family with two teenagers, it is a situation that will be of grave concern and worry.
I can totally empathise with the implications as my family is likewise dependent on me as the single bread winner, with a pair of teenagers going through the paces of education. The exact situation as my friend. It led me to ask myself, how will my family tide through should anything happen to me? *touch wood* [major wood]
A quick review suggest that with my holdings in shares and unit trusts, Supplementary Retirement Scheme investments, CPF, cash in bank accounts, and insurance upon death, it would amount to $1.7m. Would that be enough?
Assuming a 4% dividend payout with $1.7m invested, it would be $68,000 per year. Wifey has her own portfolio that is generating $6,000 worth of dividends per year. So in total, that's $74,000 of passive income per month.
The car is fully paid up, although it will eventually reach its 10-year mark within a few years. The house is almost fully paid up, with less than $50,000 principal outstanding. No other debts, beyond the monthly credit card bills. I think, $6,000 a month should be enough. Worst case, wifey may have to pick up some work to supplement.
ONE major problem though: Will wifey know how to invest that $1.7m to generate a steady and safe 4% dividend return? Got to work on that. Perhaps the simplest solution is to teach her how to buy STI ETF?
Meantime, whatever faith and beliefs you might subscribe to, wish my friend and his family well. They need all the help, physically and spiritually.
Wishing all, and especially my family and me safe, healthy and happiness in the year and years ahead. Cherish what we have.
Mortality, am once again reminded.
03 September 2015
Do superheroes need insurance?
Came across this from Aviva: Do Superheroes need insurance?
So do Wolverine, Batman, Spiderman, Superman and Hulk need insurance?
I think these guys need multi-million dollar insurance, seeing as how they are constantly causing lots of collateral damages. Especially the Hulk. Is there a shirt replacement insurance he can get as well? Superman might need that too? He keeps losing his suits whenever he changes into his underwear-outside outfit.
Batman and Spiderman can do with medical insurance. They seem fragile.
But I think no insurance company will want to provide any annuity scheme to them though. Pay and pay, seemingly forever. These guys live forever. CPF Life would go bankrupt with them.
I thought it was funny, yet sensible. Have a good laugh!
I think these guys need multi-million dollar insurance, seeing as how they are constantly causing lots of collateral damages. Especially the Hulk. Is there a shirt replacement insurance he can get as well? Superman might need that too? He keeps losing his suits whenever he changes into his underwear-outside outfit.
Batman and Spiderman can do with medical insurance. They seem fragile.
But I think no insurance company will want to provide any annuity scheme to them though. Pay and pay, seemingly forever. These guys live forever. CPF Life would go bankrupt with them.
I thought it was funny, yet sensible. Have a good laugh!
18 June 2015
Insurance, Credit Cards and Investments
Mirror, mirror, on the wall
Who's the best of them all?
In the good old days before the digital age, information was such a premium. We were so dependent on information sources - i.e. brokers and agents. Information was power.
In these days of the Internet age, more and more information are increasingly made available online. In the words of Thomas Friedman, "The World is Flat". Information is now at our finger tips. Welcome to Dot.Com Part II. Can I use the term "Big Data" now? Such a cliche. All we now need is to have access to the net. Totally helpless otherwise.
Of particular value has been the appearance of aggregation platforms. Anything from merchandising of unit trust, to credit cards, to insurance. With the information galore, the humble retail investor like you and I can now compare and make personal choices. It does not guarantee that the right choices would be made - that's a separate problem.
Here's a list of some of these:
Fundsupermart. Unit trust and bonds.
WeInvest. Fixed deposits, mutual funds (i.e. unit trust) and real estates.
CompareFirst. Insurance policies.
Get.com. Credit cards.
EnjoyCompare. Credit cards, loans, travel and car insurance, broadband.
More are sprouting up. It can only be good, so long as they are legitimate businesses and information portals. I'm not guaranteeing these to be reliable in any way. So, use at your own risk please.
Now, can Watson figure out which packages make sense for me?
Who's the best of them all?
In the good old days before the digital age, information was such a premium. We were so dependent on information sources - i.e. brokers and agents. Information was power.
In these days of the Internet age, more and more information are increasingly made available online. In the words of Thomas Friedman, "The World is Flat". Information is now at our finger tips. Welcome to Dot.Com Part II. Can I use the term "Big Data" now? Such a cliche. All we now need is to have access to the net. Totally helpless otherwise.
Of particular value has been the appearance of aggregation platforms. Anything from merchandising of unit trust, to credit cards, to insurance. With the information galore, the humble retail investor like you and I can now compare and make personal choices. It does not guarantee that the right choices would be made - that's a separate problem.
Here's a list of some of these:
Fundsupermart. Unit trust and bonds.
WeInvest. Fixed deposits, mutual funds (i.e. unit trust) and real estates.
CompareFirst. Insurance policies.
Get.com. Credit cards.
EnjoyCompare. Credit cards, loans, travel and car insurance, broadband.
More are sprouting up. It can only be good, so long as they are legitimate businesses and information portals. I'm not guaranteeing these to be reliable in any way. So, use at your own risk please.
Now, can Watson figure out which packages make sense for me?
15 June 2015
24 Tales in the Journey to Wealth
RETIREMENT
"Financial Independence, Retire Early" (FIRE) - that seems like a wonderful catch phrase to set the flames going. What does it take to achieve this burning desire? I think it boils down to a magic number.
[1. http://lizardorealm.blogspot.sg/2015/05/light-fire-can-i-retire-now.html]
STOCKS
Singapore Savings Bond.
This offering from the Singapore Government will be available to retail investor soon. While not a inflation-linked bond, it has some semblance of it. I will most certainly park some of my cash components here. That will serve as an emergency buffer that can be cashed out if needed.
[7. http://lizardorealm.blogspot.sg/2015/04/singapore-savings-bond-as-safe-as-it.html]
Central Provident Fund (CPF).
The compulsory savings into CPF actually is another bond component, offering steady and fairly risk-free growth. The only problem is the lock-in. The lock-in becomes less of a worry for someone like me who is reaching the half-century mark. CPF funds has serveed many useful purposes thus far, especially to fund housing (used), support the kids' education (an option not yet used), or invested into stock or unit trust funds if I prefer to take more risks.
[8. http://lizardorealm.blogspot.sg/2015/02/a-great-retirement-offer-from-cpf.html]
Even as the investment portfolios are being built up, it is also worthwhile to examine options to reduce 'leakages'.
Supplementary Retirement Scheme (SRS).
Taxation is such a killer, especially at higher incomes. One sure way to reduce the tax burden is to contribute to the SRS (and invest the money sitting in SRS!).
[10. http://lizardorealm.blogspot.sg/2015/02/one-way-to-avoid-paying-more-tax-srs.html]
Donations.
And if you have a charitable heart, donation is another way of reducing the tax burden while doing some good deeds.
[11. http://lizardorealm.blogspot.sg/2015/02/another-way-to-avoid-paying-more-tax.html]
Credit Cards.
Some people view credit cards as an evil thing. But used wisely, it can actually help reduce our expenses.
[12. http://lizardorealm.blogspot.sg/2015/06/4-credit-cards-with-great-cashbacks-and.html]
EXOTICS & ALTERNATIVES
There are many exotic options and alternatives to grow that investment pie. But be very careful! Perhaps, it suffices to keep things simple.
Crowdfunding.
A recent trend has been the growth of crowd-funding platforms. These have arrived on our shores, offering the lure of 12% returns or more. In reality, they are even more risky than junk bonds. I am keeping this in view for now.
[13. http://lizardorealm.blogspot.sg/2015/02/moolahsense-embarks-on-new-fundraising.html]
Starting a Business.
This requires more careful considerations. I'm not quite ready for that leap.
[14. http://lizardorealm.blogspot.sg/2015/01/running-cafes-as-business-owner.html]
Exciting Bank Offers.
This is an oxymoron. With the exception of the aforementioned special savings accounts, what can they offer that can do better than all the self-help options mentioned earlier given their exorbitant charges?
[16. http://lizardorealm.blogspot.sg/2015/05/a-fantastic-investment-deal-at-bank-or.html]
STAY HEALTHY
Be Healthy.
Most importantly, is to stay healthy. What's the point of an early retirement, if one is in bade health? Or worse, expired early!
[17. http://lizardorealm.blogspot.sg/2014/07/investing-and-dieting-wealth-and-health.html]
Medical Insurance.
But we can never be certain of good health. So medical insurance is a must in my view. Without this, all the savings and investments can be easily wiped out in no time. Sometimes, we really have to spend money to save money.
[18. http://lizardorealm.blogspot.sg/2015/04/thank-goodness-we-had-medical-insurance.html]
Staying Healthy on Cruise.
One can still enjoy life, even while on a food binge on a cruise. It's not that difficulty to stay healthy, really.
[19. http://lizardorealm.blogspot.sg/2015/04/not-too-difficult-to-stay-healthy-on.html]
ANTHOLOGY OF DISASTERS
Con Jobs.
These are just plentiful and are happening everyday. Always worth repeating the mantra, "if it sounds too good to be true, it probably is too good to be true". Greed is our greatest enemy. And the enemy is that person in the mirror.
[20. http://lizardorealm.blogspot.sg/2015/05/rags-to-riches-riches-to-rags.html]
[21. http://lizardorealm.blogspot.sg/2015/02/the-allure-of-gold-treachery-of-glitter.html]
Job Loss.
This can really be painful and disastrous. A family unit that has multiple wage earner helps diversify the risk. But for the single-income family, there really isn't any room. Best to move on and deal with the realities.
[22. http://lizardorealm.blogspot.sg/2015/05/what-do-you-do-if-you-get-laid-off.html]
Extravagance.
A lifestyle of living beyond one's means is a sure road to disaster. Live within your means. What you can't save isn't yours.
[23. http://lizardorealm.blogspot.sg/2015/05/a-millionaire-and-yet-completely-broke.html]
Careless Decisions.
Sometimes, we will make bad decisions and lose money. Hopefully, this doesn't happen too often and too painfully.
[24. http://lizardorealm.blogspot.sg/2015/06/sumiko-tans-money-no-enough.html]
--
"Good health, great wealth!"
Or should it be, "Good wealth, great health!"
"Financial Independence, Retire Early" (FIRE) - that seems like a wonderful catch phrase to set the flames going. What does it take to achieve this burning desire? I think it boils down to a magic number.
[1. http://lizardorealm.blogspot.sg/2015/05/light-fire-can-i-retire-now.html]
STOCKS
To achieve this outcome, I invest in the market, diversified across market regions, namely Asia Pacific (except Japan), global emerging markets, the US, Europe and Japan.
Unit Trust.
I use funds from the Supplementary Retirement Scheme (SRS) and CPF OA and SA funds to invest into Unit Trust on the Fundsupermart platform. Since each year I can contribute up to to $12,750 into SRS, that is the capital injection that goes into this portfolio. This unit trust portfolio is further complemented by ETFs. Fees in Unit Trusts are relatively higher compared to ETFs, but the latter tends to be less liquid.
Singapore Stocks.
A value investment approach in dividend paying stocks can be most rewarding. I diversify across the Singapore stock market by buying a dozen stocks (or two!) to spread the risks. The wonderful part of this is that I can happily collect dividends to reinvest while waiting as well. Of late, the dividends can run into an average of $1,000 a month. This will be the means by which I intend to generate the eventual passive income for retirement. The dividends would have been more, except that I typically take up the script offer (i.e. collect more units of stocks in lieu of cash), so as to continue to build up my portfolio, and at a discount from the market value.
[2. http://lizardorealm.blogspot.sg/2015/04/my-singapore-team-of-dividend-stocks.html]
US Stocks.
Likewise, for US stocks. I invest through POEMS which hold the US stocks as a custodian account. US stocks (if you pick carefully!) have a practice of steady dividend growth. So even if you do nothing, the dividends tend to hold stead or growth with each passing year. The only problem is the 30% withholding tax on the dividends. The custodian fee that POEMS charge is quite minimal really, so that I can live with.
[3. http://lizardorealm.blogspot.sg/2015/06/my-us-team-of-dividend-stocks-2015.]
Exchange Traded Funds (ETF).
Since I already hold diversified portfolios of Singapore and US stocks, the rest of the market regions are held via ETF, which complements the Unit Trust portfolio mentioned earlier. I prefer to hold ETFs that pay out dividends - or what I refer to as an Income ETF Portfolio.
Exchange Traded Funds (ETF).
Since I already hold diversified portfolios of Singapore and US stocks, the rest of the market regions are held via ETF, which complements the Unit Trust portfolio mentioned earlier. I prefer to hold ETFs that pay out dividends - or what I refer to as an Income ETF Portfolio.
BONDS
The stock portfolios are complemented by bonds and cash. While my plan was to maintain only 10% in bonds and cash (or bond-like instruments), it has typically reached 20%. In addition, I maintain 6 to 9 months worth of expenses in cash instruments.
Preference Shares and Retail Bonds.
These can be bought off the SGX. The coupon payments, usually half-yearly, provides yet another income stream.
[5. http://lizardorealm.blogspot.sg/2015/01/non-convertible-preference-shares.]
Bondsupermart.
More recently, a wider spread of bonds can also be bought through Fundsupermart. Aside from the few retail bonds, the majority will require hefty $250,000+ investments. Something beyond my reach and need for now, so it's something to keep in view as a future option. As an income stream, perpetual bonds can be quite attractive.
[6. http://lizardorealm.blogspot.sg/2015/05/bondsupermart.html]Bondsupermart.
More recently, a wider spread of bonds can also be bought through Fundsupermart. Aside from the few retail bonds, the majority will require hefty $250,000+ investments. Something beyond my reach and need for now, so it's something to keep in view as a future option. As an income stream, perpetual bonds can be quite attractive.
Singapore Savings Bond.
This offering from the Singapore Government will be available to retail investor soon. While not a inflation-linked bond, it has some semblance of it. I will most certainly park some of my cash components here. That will serve as an emergency buffer that can be cashed out if needed.
[7. http://lizardorealm.blogspot.sg/2015/04/singapore-savings-bond-as-safe-as-it.html]
Central Provident Fund (CPF).
The compulsory savings into CPF actually is another bond component, offering steady and fairly risk-free growth. The only problem is the lock-in. The lock-in becomes less of a worry for someone like me who is reaching the half-century mark. CPF funds has serveed many useful purposes thus far, especially to fund housing (used), support the kids' education (an option not yet used), or invested into stock or unit trust funds if I prefer to take more risks.
[8. http://lizardorealm.blogspot.sg/2015/02/a-great-retirement-offer-from-cpf.html]
Bank Savings Accounts.
Even the traditional banks can offer interesting saving accounts with higher interest rates. But a bit of acrobatics need to be done. This is the other component of my cash funds.
[9. http://lizardorealm.blogspot.sg/2015/06/how-can-we-stretch-interest-on-our-bank.html]
Even the traditional banks can offer interesting saving accounts with higher interest rates. But a bit of acrobatics need to be done. This is the other component of my cash funds.
[9. http://lizardorealm.blogspot.sg/2015/06/how-can-we-stretch-interest-on-our-bank.html]
MAXIMISING SAVINGS, REDUCING EXPENSES
Even as the investment portfolios are being built up, it is also worthwhile to examine options to reduce 'leakages'.
Taxation is such a killer, especially at higher incomes. One sure way to reduce the tax burden is to contribute to the SRS (and invest the money sitting in SRS!).
[10. http://lizardorealm.blogspot.sg/2015/02/one-way-to-avoid-paying-more-tax-srs.html]
Donations.
And if you have a charitable heart, donation is another way of reducing the tax burden while doing some good deeds.
[11. http://lizardorealm.blogspot.sg/2015/02/another-way-to-avoid-paying-more-tax.html]
Some people view credit cards as an evil thing. But used wisely, it can actually help reduce our expenses.
[12. http://lizardorealm.blogspot.sg/2015/06/4-credit-cards-with-great-cashbacks-and.html]
EXOTICS & ALTERNATIVES
There are many exotic options and alternatives to grow that investment pie. But be very careful! Perhaps, it suffices to keep things simple.
Crowdfunding.
A recent trend has been the growth of crowd-funding platforms. These have arrived on our shores, offering the lure of 12% returns or more. In reality, they are even more risky than junk bonds. I am keeping this in view for now.
[13. http://lizardorealm.blogspot.sg/2015/02/moolahsense-embarks-on-new-fundraising.html]
Starting a Business.
This requires more careful considerations. I'm not quite ready for that leap.
[14. http://lizardorealm.blogspot.sg/2015/01/running-cafes-as-business-owner.html]
Inheritance.
One could wait for an inheritance, if there is any to be had! But I wouldn't bet on this.
[15. http://lizardorealm.blogspot.sg/2014/12/20-years-and-200000-mothers-savings.html]
One could wait for an inheritance, if there is any to be had! But I wouldn't bet on this.
[15. http://lizardorealm.blogspot.sg/2014/12/20-years-and-200000-mothers-savings.html]
This is an oxymoron. With the exception of the aforementioned special savings accounts, what can they offer that can do better than all the self-help options mentioned earlier given their exorbitant charges?
[16. http://lizardorealm.blogspot.sg/2015/05/a-fantastic-investment-deal-at-bank-or.html]
STAY HEALTHY
Be Healthy.
Most importantly, is to stay healthy. What's the point of an early retirement, if one is in bade health? Or worse, expired early!
[17. http://lizardorealm.blogspot.sg/2014/07/investing-and-dieting-wealth-and-health.html]
Medical Insurance.
But we can never be certain of good health. So medical insurance is a must in my view. Without this, all the savings and investments can be easily wiped out in no time. Sometimes, we really have to spend money to save money.
[18. http://lizardorealm.blogspot.sg/2015/04/thank-goodness-we-had-medical-insurance.html]
Staying Healthy on Cruise.
One can still enjoy life, even while on a food binge on a cruise. It's not that difficulty to stay healthy, really.
[19. http://lizardorealm.blogspot.sg/2015/04/not-too-difficult-to-stay-healthy-on.html]
ANTHOLOGY OF DISASTERS
Con Jobs.
These are just plentiful and are happening everyday. Always worth repeating the mantra, "if it sounds too good to be true, it probably is too good to be true". Greed is our greatest enemy. And the enemy is that person in the mirror.
[20. http://lizardorealm.blogspot.sg/2015/05/rags-to-riches-riches-to-rags.html]
[21. http://lizardorealm.blogspot.sg/2015/02/the-allure-of-gold-treachery-of-glitter.html]
Job Loss.
This can really be painful and disastrous. A family unit that has multiple wage earner helps diversify the risk. But for the single-income family, there really isn't any room. Best to move on and deal with the realities.
[22. http://lizardorealm.blogspot.sg/2015/05/what-do-you-do-if-you-get-laid-off.html]
Extravagance.
A lifestyle of living beyond one's means is a sure road to disaster. Live within your means. What you can't save isn't yours.
[23. http://lizardorealm.blogspot.sg/2015/05/a-millionaire-and-yet-completely-broke.html]
Careless Decisions.
Sometimes, we will make bad decisions and lose money. Hopefully, this doesn't happen too often and too painfully.
[24. http://lizardorealm.blogspot.sg/2015/06/sumiko-tans-money-no-enough.html]
--
"Good health, great wealth!"
Or should it be, "Good wealth, great health!"
25 May 2015
Medishield Life - Verification & Information
Seems like we need to verify the household data for Medishield Life at this
link. It's a simple check to confirm the members of the household, contact number and e-mail.
The website at the link also has comprehensive information and calculators related to Medishield Life. The calculator can be used to provide an illustration of the payments needed for the household members for the next 5 years.
Medishield Life replaces (upgrades) the existing Medishield hospitalisation insurance scheme under CPF. This is one type of must-have insurance for every person.
Existing private integrated shield plans (e.g. IncomeShield from NTUC Income, PruShield from Prudential, etc) are built on top of this - i.e. the private insurers provide additional coverage on top of the underlying Medishield Life.
Even if there are pre-existing illnesses that such private integrated shield plans don't cover, the underlying Medishield Life will still cover those (there may be some loading from CPF). But of course, that would be without whatever additional benefits the private plan would have provided.
Related:
Thank Goodness We Had Medical Insurance!
link. It's a simple check to confirm the members of the household, contact number and e-mail.
The website at the link also has comprehensive information and calculators related to Medishield Life. The calculator can be used to provide an illustration of the payments needed for the household members for the next 5 years.
Medishield Life replaces (upgrades) the existing Medishield hospitalisation insurance scheme under CPF. This is one type of must-have insurance for every person.
Existing private integrated shield plans (e.g. IncomeShield from NTUC Income, PruShield from Prudential, etc) are built on top of this - i.e. the private insurers provide additional coverage on top of the underlying Medishield Life.
Even if there are pre-existing illnesses that such private integrated shield plans don't cover, the underlying Medishield Life will still cover those (there may be some loading from CPF). But of course, that would be without whatever additional benefits the private plan would have provided.
Related:
Thank Goodness We Had Medical Insurance!
14 April 2015
Thank Goodness we had Medical Insurance!
Over the past year, my wifey experienced a muscular injury which seriously affected her quality of life. After struggling for a year, and weeks of therapies, the specialist recommended that she undergo a keyhole surgery to fix the problem.
We decided to go ahead with it. The sufferings had gone on long enough. The surgery took place late one evening and required an overnight stay at the hospital for the anesthesia to wear off. I drank quite a bit of coffee while waiting. Coffee Bean was a beneficiary.
Guess how much was the bill? $14,000+!
No doubt it was for an A class ward and would surely have been cheaper had it been a C ward. After deducting the Medishield component, the co-payment part worked out to be $4,500+. That's still quite a hefty sum!
Fortunately, I had placed my wife on a Medishield and Medishield+ type of plan with a private insurer. So even the co-payment part was fully covered. In the end, the total amount we had to cough up was $zero. This included the medications and follow up treatments.
The annual payment for the two policies was $786 a year. Looks like we have recouped almost 18 years of payments with just one surgery. Not that we really wanted to "profit" in this manner. Regardless, it goes to show how important it is to have hospitalisation and surgery insurance.
Are you covered yet?
p/s: Can I claim for the coffee too?
And if you're really hardcore, here's how the procedure looks like (*ouch*): Rotator Cuff Repair
We decided to go ahead with it. The sufferings had gone on long enough. The surgery took place late one evening and required an overnight stay at the hospital for the anesthesia to wear off. I drank quite a bit of coffee while waiting. Coffee Bean was a beneficiary.
Guess how much was the bill? $14,000+!
No doubt it was for an A class ward and would surely have been cheaper had it been a C ward. After deducting the Medishield component, the co-payment part worked out to be $4,500+. That's still quite a hefty sum!
Fortunately, I had placed my wife on a Medishield and Medishield+ type of plan with a private insurer. So even the co-payment part was fully covered. In the end, the total amount we had to cough up was $zero. This included the medications and follow up treatments.
The annual payment for the two policies was $786 a year. Looks like we have recouped almost 18 years of payments with just one surgery. Not that we really wanted to "profit" in this manner. Regardless, it goes to show how important it is to have hospitalisation and surgery insurance.
Are you covered yet?
p/s: Can I claim for the coffee too?
And if you're really hardcore, here's how the procedure looks like (*ouch*): Rotator Cuff Repair
27 August 2014
Endowment Plans for Child Education
DIYInsurance published an article recently comparing several Child Education Endowment Plans (see 4 Endowment Plans Specially Designed for Your Child's Education). Plans seem logical and helpful to provide the financial support for education at different points of a child's typical education profile. The scheme from NTUC offer additional supplements upon entering the first year of each level progressed. Good plans I think for those who prefer to completely outsource their financial needs (a.k.a. financially challenged?).
But the one thing that struck me was that all the plans are projected at internal rates of return of below 4%. I have also recently examined all my existing insurance plans and came to a similar conclusion as well (see Can Insurance Policies Return Better Than 4%?).
4% is also the current interest rate for CPF-SA/MA.
4% seems to be a magic number - i.e. a risk free rate.
Hard to appreciate why I would want to place my money giving return of <4% when I would probably be better of buying say the STI ETF? For that matter, a good soccer team of SGX stocks would probably do as well (My World Cup Team (of Dividend Value Stocks). Of course, these do come with risks.
But the one thing that struck me was that all the plans are projected at internal rates of return of below 4%. I have also recently examined all my existing insurance plans and came to a similar conclusion as well (see Can Insurance Policies Return Better Than 4%?).
4% is also the current interest rate for CPF-SA/MA.
4% seems to be a magic number - i.e. a risk free rate.
Hard to appreciate why I would want to place my money giving return of <4% when I would probably be better of buying say the STI ETF? For that matter, a good soccer team of SGX stocks would probably do as well (My World Cup Team (of Dividend Value Stocks). Of course, these do come with risks.
19 August 2014
Buying Term Insurance Direct
Looks like the means to buy Term Insurance directly online will soon be a reality. Alf wondered why he should be feeling excited about this? He had started work not long ago and barely had enough savings left at the end of each month as it is. It was very hard for him to be thinking about paying money for something where there will not be any return if he didn't die! What's the point he wondered?
Over lunch, he bounced this subject off with his colleagues and gathered some interesting insights. The various views he gathered were as follows:
One of his colleagues, Roy, met his insurance agent over lunch just a week ago and had asked his insurance friend, Melvin, this very same question. In particular, Roy had asked Melvin how this would affect his insurance sales?
Melvin was apparently not too perturbed. He recounted a recent experience. His client had bought a hospitalisation plan from him seven years ago. Unfortunately, the client suffered a stroke recently and was hospitalised. In the process, his doctor told him that his ECG showed that he had in fact suffered a stroke before, and this wasn't the first time. It came as quite a shock to his client. Unfortunately, the doctor would not be able to tell him when the last incident occurred. And this became the crux of a problem!
Because of this past history of a prior stroke, the insurance company rejected his client's claim for this latest hospitalisation! The issue was whether the prior stroke had occurred before he took up the policy, or after. Seems the onus was on the client to show proof. The client wasn't aware of any incident before and was very perplexed.
Melvin asked Roy how would he feel if this had happened to Roy. Roy felt that he would be very upset and would probably have terminated his policy there and then!
"Precisely!" said Melvin. He went on to relate that his client had not done any medical check-up throughout this time, and could not produce any evidence to show proof that he was healthy at the point that he took up the insurance policy.
Melvin said that as he probed further, he found out that his client had gone for his National Service medical check-up in the year after he took up the policy. The check-up included an ECG. Hope! He was able to help his client obtain his medical record from MINDEF which showed that he was totally healthy then. With that, Melvin was able to help his client secure approval from the insurance company. So it ended on a happy note. Or perhaps not, since his client still had to recover from the stroke anyway. But at least, the medical costs had been alleviated.
The point, as Melvin related to Roy, was that if one was to buy direct, the client would be very much on his own and would not have the benefit of an experienced insurance agent to advise him/her. Melvin felt that there was a role for the insurance agent to provide value add services. He feared that as the new scheme kicked in, there would be many people who would not realise the importance of making the necessary declarations, and ill equipped to deal with claims downstream. They would face frustration and disappointment when faced with difficulties like this.
Alf wondered very hard as he pondered this story that Roy had shared with him. In his head however, the phrase "buy term, invest the rest" was nonetheless rolling through his thoughts.
Over lunch, he bounced this subject off with his colleagues and gathered some interesting insights. The various views he gathered were as follows:
- Waste of money, because no returns.
- It's your beneficiary who will gain, not you.
- The insurance is only to protect your dependents, in case anything happen to you; and only if they are dependent on you for the lost income.
- It's best to start term insurance early, the rates are low, and will remain so.
- It's best to start term insurance early, while you're healthy; else there will be exclusions or become more expensive due to loading.
- You don't need the term insurance when you have sufficient retirement funds and income.
- You would still need a hospitalisation and surgery insurance; term doesn't cover those. [Didn't die, was saved, but hospitalisation is expensive! Duh.]
- You would still need complementary insurance for critical illnesses [Dying slowly, likely will eventually die! But meanwhile ... sheesh.]
One of his colleagues, Roy, met his insurance agent over lunch just a week ago and had asked his insurance friend, Melvin, this very same question. In particular, Roy had asked Melvin how this would affect his insurance sales?
Melvin was apparently not too perturbed. He recounted a recent experience. His client had bought a hospitalisation plan from him seven years ago. Unfortunately, the client suffered a stroke recently and was hospitalised. In the process, his doctor told him that his ECG showed that he had in fact suffered a stroke before, and this wasn't the first time. It came as quite a shock to his client. Unfortunately, the doctor would not be able to tell him when the last incident occurred. And this became the crux of a problem!
Because of this past history of a prior stroke, the insurance company rejected his client's claim for this latest hospitalisation! The issue was whether the prior stroke had occurred before he took up the policy, or after. Seems the onus was on the client to show proof. The client wasn't aware of any incident before and was very perplexed.
Melvin asked Roy how would he feel if this had happened to Roy. Roy felt that he would be very upset and would probably have terminated his policy there and then!
"Precisely!" said Melvin. He went on to relate that his client had not done any medical check-up throughout this time, and could not produce any evidence to show proof that he was healthy at the point that he took up the insurance policy.
Melvin said that as he probed further, he found out that his client had gone for his National Service medical check-up in the year after he took up the policy. The check-up included an ECG. Hope! He was able to help his client obtain his medical record from MINDEF which showed that he was totally healthy then. With that, Melvin was able to help his client secure approval from the insurance company. So it ended on a happy note. Or perhaps not, since his client still had to recover from the stroke anyway. But at least, the medical costs had been alleviated.
The point, as Melvin related to Roy, was that if one was to buy direct, the client would be very much on his own and would not have the benefit of an experienced insurance agent to advise him/her. Melvin felt that there was a role for the insurance agent to provide value add services. He feared that as the new scheme kicked in, there would be many people who would not realise the importance of making the necessary declarations, and ill equipped to deal with claims downstream. They would face frustration and disappointment when faced with difficulties like this.
Alf wondered very hard as he pondered this story that Roy had shared with him. In his head however, the phrase "buy term, invest the rest" was nonetheless rolling through his thoughts.
28 July 2014
Can Insurance Policies Return Better Than 4%?
It's always great to have a weekend extended by a public holiday. It gave me time to update the records of all my insurance policies and do a bit of a review.
These policies include whole life, endowment, investment and unit trust linked policies. The policies vary in terms of payment terms and involved cash, CPF-OA and CPF-SA. You can see that I pretty much bought about anything in my foolish younger days.
I discovered that out of 11 policies from 3 different insurance companies, only one is projected to exceed a return that is greater than 4%. Even for that one case, it barely crossed the 4% threshold with a marginal difference. One might even say, "statistically insignificant". And it remains a projection with some way to go before 'maturity'.
It's pretty apparent that the whole foray has been one long and massive failure. Might as well have fed the money into CPF-SA.
Of course, part of the payments went to the insurance coverage and I have in some sense benefited. I'm most grateful that I'm alive of course. But considering the sub-4% performance, it still leaves a bitter taste.
In all fairness, I do have to say that the insurance policies were a good start for me nonetheless. At least I had these to start off with to begin the journey to financial independence. It was only past my fourth decade that I started seriously learning about investment and hence discovering the many alternatives that could generate better than the miserly 4% returns.
Onward to better returns!
p/s: Have you analysed yours?
20 July 2014
A $29,000 Problem to Financial Freedom
Surrender or Wait for Death
Well, we did it. Or she did it rather. My wife decided to surrender her only whole life insurance policy. We concluded that there was really no value in her owning such a policy when there's really no need to have such a sum to protect either myself or the kids.
As a housewife, why is there still a need for her to own this insurance policy? No point waiting for "till death do us part for" the returns from this policy.
The insurance agent was nifty and processed it in due course. The cheque for $29,000+ came in within a week, and is now safely deposited.
A Matter of Choices
Next question, what to do with it? Memories of the squandered $million$ case that went down the tube came to mind. Of course, this is several magnitude less of a problem. A happy problem in fact.
- Leave it in the bank savings account - build up the emergency fund, low interest rate, but risk free?
- Contribute to her CPF Medisave account to bring it to the the limit, earn 4% returns at the same time, but locked in?
- Buy more dividend yielding stocks on SGX, accept the risks of volatility?
- Buy Unit Trust to diversify globally, accept the leakage from annual charges?
- Buy ETFs to diversift globally, accept the risk of poor liquidity?
What would you do? For now, my wife says, she wants to see the sum appear on her savings account first. Feels *shiok* first mah.
Either way, that's also a few hundred dollars (avoidance from not having to pay the monthly insurance) freed up to do other things with. Invest that sum too?
Related:
Whole Life Insurance - A Good Deal or a Dead Deal?
Well, we did it. Or she did it rather. My wife decided to surrender her only whole life insurance policy. We concluded that there was really no value in her owning such a policy when there's really no need to have such a sum to protect either myself or the kids.
As a housewife, why is there still a need for her to own this insurance policy? No point waiting for "till death do us part for" the returns from this policy.
The insurance agent was nifty and processed it in due course. The cheque for $29,000+ came in within a week, and is now safely deposited.
A Matter of Choices
Next question, what to do with it? Memories of the squandered $million$ case that went down the tube came to mind. Of course, this is several magnitude less of a problem. A happy problem in fact.
- Leave it in the bank savings account - build up the emergency fund, low interest rate, but risk free?
- Contribute to her CPF Medisave account to bring it to the the limit, earn 4% returns at the same time, but locked in?
- Buy more dividend yielding stocks on SGX, accept the risks of volatility?
- Buy Unit Trust to diversify globally, accept the leakage from annual charges?
- Buy ETFs to diversift globally, accept the risk of poor liquidity?
What would you do? For now, my wife says, she wants to see the sum appear on her savings account first. Feels *shiok* first mah.
Either way, that's also a few hundred dollars (avoidance from not having to pay the monthly insurance) freed up to do other things with. Invest that sum too?
Related:
Whole Life Insurance - A Good Deal or a Dead Deal?
30 June 2014
Whole Life Insurance - a good deal or a dead deal?
According to the latest projection from the insurer (as checked from its online portal), the projected surrender value at age 65 is $85,099. This includes both the guaranteed and non-guaranteed components.
I worked through the maths and the Internal Rate of Return (IRR) worked out to be 3.97%.
Its cash value, if the policy was surrendered now, is estimated to be $29,810. Suppose she cashed out this sum and invest at a 6.5% return, and she continued to contribute the annual sum $613.80 to this investment, she could achieve an IRR at age 65 of 4.9% for a sum of $112,503.
At 5% returns, the IRR would be 4.12%, $89,009.
At 6% returns, the IRR would be 4.64%, $104,058.
At 7% returns, the IRR would be 5.15%, $121,624.
At 8% returns, the IRR would be 5.65%, $142,108.
At 9% returns, the IRR would be 6.15%, $165,968.
At 10% returns, the IRR would be 6.63%, $193,730.
My assessment is that 6% to 9% investment return is in fact achievable with a well considered dividend-yielding value investment in SGX shares. Not unlike my fantasy soccer team.
The possibility of generating $104,058 to $165,968 by the time she is age 65, and yielding dividends of 4% would imply a passive income in the range of $4,162 to $6,639 per year. That's $347 to $553 per month.
Worth considering?
27 June 2014
DIY Insurance - Buy Term and Invest the Rest
An often said advice about investing for retirement is to simply "buy term and invest the rest", rather than buying lots of endowments, insurance-linked policies and what not. The idea is to buy term insurance for protection, and invest the rest for retirement income (Bahamas anyone? Or Onsen in Hokkaido?). I do agree with this notion, provided that one is prepared to gain some appreciation about investment first. Else, one may in fact be better off going with those insurance based policies to fund protection and retirement.
Doing It Yourself
There is a portal recently started by Providend (Christopher Tan) for DIY Insurance. It offers price comparisons of insurance plans from various insurance companies. Pretty nifty. Although, the big ones like Prudential and AI are clearly absent.
I gave it a go and tried two profiles to examine how much the term insurance would cost.
20 Year Old
For a person at age 20, male, non-smoker. for a sum assured of $200,000 for death and total permanent disability, the annual premiums from various companies like AXA, NTUC Income and Tokio Marine were in the range of $294 to $315.
That seems doable for a young adult with a reasonable starting salary. For a fresh graduate or diploma holder (which is about 40-60% of each cohort), that would probably represent 10-15% of his basic salary.
Why would a young, presumably single person, need to buy such insurance? Well, it would be to provide a level of protection for one's dependents. Who might these dependents be? Could be parents, wife, and children. But more importantly, I feel that it is important to secure and have such a protection in place while one is still healthy and insurable - i.e. there are no exclusions or loading to the cost of insurance due to any pre-existing illness.
The challenge is, would a young person at this tender starting stage of his career, withstand the idea that 10% of his salary goes into an insurance for which there are no returns to be expected? The only return is only when one 'kaputs' - hits the jackpot to for early entry to the Pearly Gates! Touch wood. But this is insurance in the truest sense. Dealing with the unexpected.
45 Year Old
For a person at age 45, male, non-smoker, for a sum insured of $200,000 for death and total permanent disability, the annual premiums from various companies like AXA, Aviva, NTUC Income, Manulife and Tokio Marine were in the range of $728 to $916.
As one reaches this age, it would probably become more apparent why such a form of insurance is indeed desirable. There is now family to seriously worry about. Probably a few kids and schooling. Unfortunately, it is just as likely that by this age, one would be facing various illnesses and other complications - hypertension, diabetes, prior surgery, slip disc, etc.
From the above example, a $800,000 protection would amount to under $4,000 of annual premiums. As it is, I am paying an average of $2,000 a month on average, to achieve the equivalent protection, with investment components projected to achieve a return of $750,000 by age 62. That's $24,000 per year!
Regrets and Realisation
I would have been better of paying the $4,000 in annual premiums for the term life insurance coverage of $800,000 and take the remaining $20,000 to invest. As it is, I've been achieving an internal rate of return of 20% for the last few years of investment. Realistically though, I am only expecting 6.5% over the longer term. Regardless, I do believe that I would have generated a far better rate of return than what I'm actually getting now from the endowment and ILP insurance plans.
Had I understood this better when I was young, the premium would only have been even lower, at $1,200 a year, for the term life insurance coverage of $800,000. Wow! Missed opportunities. Quite an opportunity cost.
Over time, as one's investment grows, the need for term insurance actually will taper down since the investment component will make up the shortfall. As the kids come of age and starts working, one only need to protect the spouse. And when the whole investment portfolio has reached the point of financial independence, there is no longer a need for any term insurance coverage even.
With that, my take is that I should have bought term insurances with different timelines. If I could wind back the clock, this is what I would have done:
Age 24 - started work - buy $200,000 term for 30 years (ending age 54)
Age 27 - married - buy another $200,000 term for 30 years (ending age 57)
Age 30 - 1st child (boy) born - buy another $200,000 term for 25 years (ending age 55)
Age 32 - 2nd child (girl) born - buy another $200,000 term for 23 years (ending age 55; girl doesn't need to serve NS, so it's 2 years less)
Amount may have to be more, depending on the lifestyle to maintain. But the idea is to provide enough coverage with each additional dependent, and to cover the kids only until they start working. They ought to be making a living and contribute to the family right?
It would be really silly for a person to hold a term insurance when one is no longer working. After all, the protection is to deal with loss of income isn't it?
And as one ages and builds up an investment portfolio, the term insurance is only to make up for the shortfall to achieve financial independence for the spouse. The math is really simple, though a spreadsheet would certainly be a big help.
In Conclusion
Buy term, and invest the rest!
And oh yes, maintain a hospitalisation/medical insurance! Looking forward to clarity on the enhancements to the CPF Medishield scheme.
Caveat: The figures are illustrative and may differ depending on individual conditions.
p/s: I am not an insurance agent nor a financial advisor. This is purely my personal opinion and hindsight views for my personal and family's considerations.
Doing It Yourself
There is a portal recently started by Providend (Christopher Tan) for DIY Insurance. It offers price comparisons of insurance plans from various insurance companies. Pretty nifty. Although, the big ones like Prudential and AI are clearly absent.
I gave it a go and tried two profiles to examine how much the term insurance would cost.
20 Year Old
For a person at age 20, male, non-smoker. for a sum assured of $200,000 for death and total permanent disability, the annual premiums from various companies like AXA, NTUC Income and Tokio Marine were in the range of $294 to $315.
That seems doable for a young adult with a reasonable starting salary. For a fresh graduate or diploma holder (which is about 40-60% of each cohort), that would probably represent 10-15% of his basic salary.
Why would a young, presumably single person, need to buy such insurance? Well, it would be to provide a level of protection for one's dependents. Who might these dependents be? Could be parents, wife, and children. But more importantly, I feel that it is important to secure and have such a protection in place while one is still healthy and insurable - i.e. there are no exclusions or loading to the cost of insurance due to any pre-existing illness.
The challenge is, would a young person at this tender starting stage of his career, withstand the idea that 10% of his salary goes into an insurance for which there are no returns to be expected? The only return is only when one 'kaputs' - hits the jackpot to for early entry to the Pearly Gates! Touch wood. But this is insurance in the truest sense. Dealing with the unexpected.
45 Year Old
For a person at age 45, male, non-smoker, for a sum insured of $200,000 for death and total permanent disability, the annual premiums from various companies like AXA, Aviva, NTUC Income, Manulife and Tokio Marine were in the range of $728 to $916.
As one reaches this age, it would probably become more apparent why such a form of insurance is indeed desirable. There is now family to seriously worry about. Probably a few kids and schooling. Unfortunately, it is just as likely that by this age, one would be facing various illnesses and other complications - hypertension, diabetes, prior surgery, slip disc, etc.
From the above example, a $800,000 protection would amount to under $4,000 of annual premiums. As it is, I am paying an average of $2,000 a month on average, to achieve the equivalent protection, with investment components projected to achieve a return of $750,000 by age 62. That's $24,000 per year!
Regrets and Realisation
I would have been better of paying the $4,000 in annual premiums for the term life insurance coverage of $800,000 and take the remaining $20,000 to invest. As it is, I've been achieving an internal rate of return of 20% for the last few years of investment. Realistically though, I am only expecting 6.5% over the longer term. Regardless, I do believe that I would have generated a far better rate of return than what I'm actually getting now from the endowment and ILP insurance plans.
Had I understood this better when I was young, the premium would only have been even lower, at $1,200 a year, for the term life insurance coverage of $800,000. Wow! Missed opportunities. Quite an opportunity cost.
Over time, as one's investment grows, the need for term insurance actually will taper down since the investment component will make up the shortfall. As the kids come of age and starts working, one only need to protect the spouse. And when the whole investment portfolio has reached the point of financial independence, there is no longer a need for any term insurance coverage even.
With that, my take is that I should have bought term insurances with different timelines. If I could wind back the clock, this is what I would have done:
Age 24 - started work - buy $200,000 term for 30 years (ending age 54)
Age 27 - married - buy another $200,000 term for 30 years (ending age 57)
Age 30 - 1st child (boy) born - buy another $200,000 term for 25 years (ending age 55)
Age 32 - 2nd child (girl) born - buy another $200,000 term for 23 years (ending age 55; girl doesn't need to serve NS, so it's 2 years less)
Amount may have to be more, depending on the lifestyle to maintain. But the idea is to provide enough coverage with each additional dependent, and to cover the kids only until they start working. They ought to be making a living and contribute to the family right?
It would be really silly for a person to hold a term insurance when one is no longer working. After all, the protection is to deal with loss of income isn't it?
And as one ages and builds up an investment portfolio, the term insurance is only to make up for the shortfall to achieve financial independence for the spouse. The math is really simple, though a spreadsheet would certainly be a big help.
In Conclusion
Buy term, and invest the rest!
And oh yes, maintain a hospitalisation/medical insurance! Looking forward to clarity on the enhancements to the CPF Medishield scheme.
Caveat: The figures are illustrative and may differ depending on individual conditions.
p/s: I am not an insurance agent nor a financial advisor. This is purely my personal opinion and hindsight views for my personal and family's considerations.
02 June 2013
Consult your stock broker
Totally Useless Advice #1
Was watching an episode related to investment recently, and came across a most useless piece of information. The question posed was on what stock to pick at this point in time (in the Singapore market). The advise was to refer to a stock broker. What crap!
Totally Useless Advice #2
Then there was another question regarding generating income from stocks. The reply was to buy blue chip stocks to get good dividend income stream. Rubbish once again!
Totally Useless Advice #3
And here's another one: How should one go about building a retirement income. The answer: buy annuities. No prize for guessing the occupation of the lady giving this piece of advice.
Can we have a better show please!? We're getting horrendous investment advice from TV. Had a more positive impression from past episodes. But this one really irritated the heck out of me.
[Venting]
27 March 2013
Annuity Plans for Recurring Retirement Income
Annuity plans offered by various insurance companies:
http://www.income.com.sg/insurance/Annuity/index.asp
http://www.aia.com.sg/en/individuals/pro..._plan.html
http://www.aviva.com.sg/retirement/for-i...ement.html
http://www.axalife.com.sg/retirement/retire-happy
An alternative approach to provide a regular income stream during retirement. This could be used to augment (a) payout from CPF Life, (b) dividend income stream from stocks, and (c) coupon payouts from bonds.
Acknowledgment: Information was sourced from a post at ValueBuddies.
14 September 2010
Where lies the portal to wealth?
Having figured out the investment target, where then are the investment avenues? Here are some suggested/useful sites:
SRS (Supplementary Retirement Scheme)
Reduces tax burden, deferring it into the future. Meantime, the SRS funds should be invested. Else, the interest returns would be a pittance.
CPF (CPF Online)
If you fancy topping up your own CPF or your spouse/parents, so as to reduce taxation. Meanwhile, the contributions would be earning risk-free returns from CPF.
Unit Trust (Fundsupermart, DollarDex, POEMS)
Online portals for unit trust investments. The front load fees are usually far lower than what you would end up paying if you were to do so from Banks or Insurance companies (e.g. Insurance Linked Policies (ILP)).
SGS Bonds (SGS Bonds at Fundsupermart)
Buying and selling of SGS bonds from the secondary markets.
Insurance (NTUC Income, AIA, Prudential)
Details of your insurance policies. Most would generate the estimated returns (guaranteed, non-guaranteed).
CDP (Central Depository)
If you're going to trade shares on the Singapore Stock Exchange (SGX), you would need to open up a CDP account. This account holds the records of your shareholdings (scripless).
Shares (POEMS, ...)
There are many online brokerage for trading in shares, Non-Convertible Preferences Shares, Exchange Traded Funds (ETF), warrants, and numerous exotic derivatives. POEMS is just one of many such online portals.
SRS (Supplementary Retirement Scheme)
Reduces tax burden, deferring it into the future. Meantime, the SRS funds should be invested. Else, the interest returns would be a pittance.
CPF (CPF Online)
If you fancy topping up your own CPF or your spouse/parents, so as to reduce taxation. Meanwhile, the contributions would be earning risk-free returns from CPF.
Unit Trust (Fundsupermart, DollarDex, POEMS)
Online portals for unit trust investments. The front load fees are usually far lower than what you would end up paying if you were to do so from Banks or Insurance companies (e.g. Insurance Linked Policies (ILP)).
SGS Bonds (SGS Bonds at Fundsupermart)
Buying and selling of SGS bonds from the secondary markets.
Insurance (NTUC Income, AIA, Prudential)
Details of your insurance policies. Most would generate the estimated returns (guaranteed, non-guaranteed).
CDP (Central Depository)
If you're going to trade shares on the Singapore Stock Exchange (SGX), you would need to open up a CDP account. This account holds the records of your shareholdings (scripless).
Shares (POEMS, ...)
There are many online brokerage for trading in shares, Non-Convertible Preferences Shares, Exchange Traded Funds (ETF), warrants, and numerous exotic derivatives. POEMS is just one of many such online portals.
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