• Financial Planner Singapore • |
Financial Planning Singapore
Financial Planning requires more than just making sure consumers are spending within their means. Modern Singaporeans also need to come up with plans for how to save and invest money, determine which insurance policies will best fit their lifestyles and needs, and learn how to plan for meeting financial goals. The best way to get started is to find a Financial Advisor who can help, but young residents can often benefit from playing a more active role in coming up with a personal financial plan, as well. Before getting started, read on to find out What You Should Know About Financial Planning Singapore.
What Is Financial Planning?A financial plan is a document that details a consumer’s current financial situation and his or her long-term financial goals. A good plan will also contain strategies to help consumers achieve those goals. Singaporeans who want to take their financial futures seriously can hire a Financial Advisor to help them draw up a solid plan and develop strategies for sticking to it.
What Is A Financial Planner?A financial planner is someone who specializes in helping clients understand their current monetary situations and develop strategies for meeting their financial goals. Most also offer Retirement planning and Insurance planning services.
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The Benefits of Financial Planning
Few people would argue that having a financial plan isn’t absolutely necessary, yet not all consumers are on board with this trend. That’s a shame, because a solid financial plan provides a blueprint for accomplishing goals and living up to potential.
By starting with a complex analysis of their current financial situations, including income, assets, debts, and expenditures, consumers can get a better idea of where they stand. They can develop a saving and investment plan that will help them ensure that they are living within their means.
Some consumers assume that there’s no difference between routine financial planning Singapore and retirement planning, but having and following a solid plan also makes it easier to meet major financial goals throughout life. The typical Singaporean who wants to buy a home and start a family needs to budget for spending a little under $400,000 before the age of 30, but they don’t need to spend all that money at once.
Budgeting for an education, a home, a marriage, and a first child requires careful planning and investing to avoid unnecessary expenditures and unexpected debts. It’s important for consumers to start planning early if they want to meet their goals without incurring a ton of consumer debt.
Once they’ve gotten better established in their careers, consumers need to focus on retirement planning. Having a roadmap to follow makes it easier to understand and follow best practices for investment for retirement. Knowing what to expect can also motivate consumers to increase their savings and give them the peace of mind of knowing that they’ll be able to maintain a high quality of living throughout their adult lives.
By starting with a complex analysis of their current financial situations, including income, assets, debts, and expenditures, consumers can get a better idea of where they stand. They can develop a saving and investment plan that will help them ensure that they are living within their means.
Some consumers assume that there’s no difference between routine financial planning Singapore and retirement planning, but having and following a solid plan also makes it easier to meet major financial goals throughout life. The typical Singaporean who wants to buy a home and start a family needs to budget for spending a little under $400,000 before the age of 30, but they don’t need to spend all that money at once.
Budgeting for an education, a home, a marriage, and a first child requires careful planning and investing to avoid unnecessary expenditures and unexpected debts. It’s important for consumers to start planning early if they want to meet their goals without incurring a ton of consumer debt.
Once they’ve gotten better established in their careers, consumers need to focus on retirement planning. Having a roadmap to follow makes it easier to understand and follow best practices for investment for retirement. Knowing what to expect can also motivate consumers to increase their savings and give them the peace of mind of knowing that they’ll be able to maintain a high quality of living throughout their adult lives.
The Financial Planning Process
Whether consumers choose to come up with their own plans or work with a Financial Planner Singapore they trust, they’ll need to follow a similar planning process. Any good financial plan will contain a few different types of Content, but the process will always be similar. It will include three steps: an initial analysis of clients’ needs, a discussion of financial advice that would be relevant to meeting those needs, and a finalization of the financial plan that is best for the client.
Needs Analysis
During this initial step, the financial advisor will gather information from the client about his or her net worth, routine expenses, and financial goals. Clients can facilitate this portion of the planning process by bringing along lists of their assets and expenses.
Customized Financial Advice
Every consumer has different sources of income, expenses, and financial priorities. The goal of a financial planner Singapore is to offer advice that will be uniquely relevant to the client’s life, including his or her lifestyle, responsibilities, and plans.
Consider Priorities
Most young Singaporeans share similar priorities. They want to get a good education to start a worthwhile career, purchase a house, get married, and start a family. On average, the total cost of meeting these four goals by the age of 30 is close to $400,000. That may sound like a lot of money, but it’s important to consider the fact that it won’t all be paid at once.
Taking out student loans and mortgages and starting dedicated savings or investment accounts to make it easier to meet personal financial goals can help. Finding affordable personal insurance policies to cover emergencies is also a wise decision. Include monthly payments for Life Insurance, Personal Accident Insurance, Critical illness Insurance and Maternity Insurance policies in the financial plan.
Personal Accident Insurance and health insurance help to cover unexpected injuries and illnesses, while Maternity Insurance helps to pay for the cost of complications when giving birth. Life Insurance pays out dividends to beneficiaries should the policyholder pass away unexpectedly, which can help spouses, children, and other loved ones during difficult times. Critical illness Insurance pays out lump sum when diagnosed with critical illness such as cancer and heart attack.
While saving up for emergencies and coming up with a short term investment strategy to help pay for major expenses is important, it’s equally important for Singaporean students and young professionals to have a long term investment plan in place.
Mitigating Risks with the Right Insurance Policies
Insurance policies can help investors of all ages mitigate financial risks. It takes much less of a toll on consumers’ finances to make low monthly insurance payments than to have to spend a large amount of money on unexpected health expenses, maternity expenses, and lost wages due to personal injuries and accidents. When in doubt, consumers can speak with a financial advisor about which policies are worth the money given their unique lifestyles and risks.
Finalizing a Plan
Once financial planners and their clients have discussed every aspect of the client’s financial needs and goals, it’s time to finalize a plan. By the time a client leaves the office, he or she should have a complete document that details all the steps that must be taken to reach each financial milestone, including how much to save or invest and how much spending money to expect.
Other Considerations
Financial advisors can also help clients develop monthly budgets, understand investment options, and even draw up estate plans. While it’s true that hiring a professional means incurring some extra costs, most clients find that it’s well worth the money to get help with developing a solid financial plan, managing investments, and planning for the future.
Needs Analysis
During this initial step, the financial advisor will gather information from the client about his or her net worth, routine expenses, and financial goals. Clients can facilitate this portion of the planning process by bringing along lists of their assets and expenses.
Customized Financial Advice
Every consumer has different sources of income, expenses, and financial priorities. The goal of a financial planner Singapore is to offer advice that will be uniquely relevant to the client’s life, including his or her lifestyle, responsibilities, and plans.
Consider Priorities
Most young Singaporeans share similar priorities. They want to get a good education to start a worthwhile career, purchase a house, get married, and start a family. On average, the total cost of meeting these four goals by the age of 30 is close to $400,000. That may sound like a lot of money, but it’s important to consider the fact that it won’t all be paid at once.
Taking out student loans and mortgages and starting dedicated savings or investment accounts to make it easier to meet personal financial goals can help. Finding affordable personal insurance policies to cover emergencies is also a wise decision. Include monthly payments for Life Insurance, Personal Accident Insurance, Critical illness Insurance and Maternity Insurance policies in the financial plan.
Personal Accident Insurance and health insurance help to cover unexpected injuries and illnesses, while Maternity Insurance helps to pay for the cost of complications when giving birth. Life Insurance pays out dividends to beneficiaries should the policyholder pass away unexpectedly, which can help spouses, children, and other loved ones during difficult times. Critical illness Insurance pays out lump sum when diagnosed with critical illness such as cancer and heart attack.
While saving up for emergencies and coming up with a short term investment strategy to help pay for major expenses is important, it’s equally important for Singaporean students and young professionals to have a long term investment plan in place.
Mitigating Risks with the Right Insurance Policies
Insurance policies can help investors of all ages mitigate financial risks. It takes much less of a toll on consumers’ finances to make low monthly insurance payments than to have to spend a large amount of money on unexpected health expenses, maternity expenses, and lost wages due to personal injuries and accidents. When in doubt, consumers can speak with a financial advisor about which policies are worth the money given their unique lifestyles and risks.
Finalizing a Plan
Once financial planners and their clients have discussed every aspect of the client’s financial needs and goals, it’s time to finalize a plan. By the time a client leaves the office, he or she should have a complete document that details all the steps that must be taken to reach each financial milestone, including how much to save or invest and how much spending money to expect.
Other Considerations
Financial advisors can also help clients develop monthly budgets, understand investment options, and even draw up estate plans. While it’s true that hiring a professional means incurring some extra costs, most clients find that it’s well worth the money to get help with developing a solid financial plan, managing investments, and planning for the future.
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Personal Investment for Beginners
While every financial plan should include a high-yield savings account, saving some money out of every paycheck alone won’t give most Singaporeans the kind of money they need to accomplish their financial goals on their desired timelines. Savvy consumers should also start investing at a young age. Investment for students may seem overwhelming or out of reach, but keep in mind that it’s fine to start out small. Here are a few tips for investment for beginners that might help:
Understanding Compounding Interest
Wondering why it’s so important to start saving early? It isn’t just that putting aside money for a longer period of time leads to larger savings. Compound interest also plays an integral role.
Compound interest can be defined of the addition of interest to principal sums of deposits. Basically, investors take the interest they make on their investments, then re-invest it to accumulate more money. It applies to both savings accounts and many types of personal investments. Calculating compound interest is somewhat complicated, so instead of going through complex mathematical equations, let’s take a look at an example.
Say an investor makes a deposit of $10,000 into an account that offers 5% simple interest. The investor would earn $5,000 over the course of 10 years. If the same investor put the same $10,000 in an investment account that offered 5% annually compounded interest, he or she would earn $16,288.95. Needless to say, that’s a big difference. It’s worth finding savings or investment accounts that offer compound interest and working them into a financial plan.
- Start now. The importance of starting young cannot be overstated.
- Focus on savings percentages. They’re a better metric of portfolio performance than natural fluctuations of the stock markets.
- Set concrete short term, medium term, and long-term goals.
- Use these goals to determine time horizons, or the time the money can stay tied up in investments before it will be used. Longer time horizons usually equate to higher risk profiles.
- Diversify the portfolio to include both low-risk, short-term investments and long-term stock investments.
- Pay attention to investment expenses.
- Don’t be afraid to ask for help. Learning the basics of investment for young adults can be tough, but financial advisors are there to help.
Understanding Compounding Interest
Wondering why it’s so important to start saving early? It isn’t just that putting aside money for a longer period of time leads to larger savings. Compound interest also plays an integral role.
Compound interest can be defined of the addition of interest to principal sums of deposits. Basically, investors take the interest they make on their investments, then re-invest it to accumulate more money. It applies to both savings accounts and many types of personal investments. Calculating compound interest is somewhat complicated, so instead of going through complex mathematical equations, let’s take a look at an example.
Say an investor makes a deposit of $10,000 into an account that offers 5% simple interest. The investor would earn $5,000 over the course of 10 years. If the same investor put the same $10,000 in an investment account that offered 5% annually compounded interest, he or she would earn $16,288.95. Needless to say, that’s a big difference. It’s worth finding savings or investment accounts that offer compound interest and working them into a financial plan.
Why Everyone Needs Financial Planning In Singapore
Most people used to assume that financial plans were only for the wealthy, and unfortunately, some consumers still believe this harmful myth. In reality, every Singaporean can benefit from having a financial plan. It’s always best to get started young, so savvy investors should start planning as soon as they graduate from school, or even before they graduate. That way, they can plan for major investments like purchasing a home and starting a family while simultaneously working to pay down student debt and come up with a long term investment plan for retirement.
Since every Singaporean is different, there is no one-size-fits-all template for coming up with a financial plan. Planning to start a family? Make sure the plan includes details on investment for your kids. Prefer to stay single? There’s no need to budget for childcare expenses. The fact that every consumer’s goals are a little different is one of the driving factors behind Singaporeans’ decisions to hire financial planner Singapore.
Having a financial plan in place also allows consumers to budget for emergencies. There’s no telling when a sudden emergency expense will come up, but financial planners can help clients determine whether they could benefit from insurance policies that cover certain types of financial emergencies. Combining this risk mitigation strategy with establishing an emergency fund is the best way to plan for unforeseeable issues like vehicle breakdowns, sudden health issues, and family emergencies that require taking time off from work.
The Bottom Line
Having a financial plan helps consumers get a hold of their finances and ensure that they will be able to both meet personal financial goals and maintain a decent quality of living in the meantime. Financial planners can help clients with everything from calculating net worth and cash flow to determining what types of investments will be the best fit for their unique needs, and more. It’s best to start young, even if that means saving or investing only a small amount of money each month, but there’s never a bad time for Singaporeans to start investing in their futures.
Since every Singaporean is different, there is no one-size-fits-all template for coming up with a financial plan. Planning to start a family? Make sure the plan includes details on investment for your kids. Prefer to stay single? There’s no need to budget for childcare expenses. The fact that every consumer’s goals are a little different is one of the driving factors behind Singaporeans’ decisions to hire financial planner Singapore.
Having a financial plan in place also allows consumers to budget for emergencies. There’s no telling when a sudden emergency expense will come up, but financial planners can help clients determine whether they could benefit from insurance policies that cover certain types of financial emergencies. Combining this risk mitigation strategy with establishing an emergency fund is the best way to plan for unforeseeable issues like vehicle breakdowns, sudden health issues, and family emergencies that require taking time off from work.
The Bottom Line
Having a financial plan helps consumers get a hold of their finances and ensure that they will be able to both meet personal financial goals and maintain a decent quality of living in the meantime. Financial planners can help clients with everything from calculating net worth and cash flow to determining what types of investments will be the best fit for their unique needs, and more. It’s best to start young, even if that means saving or investing only a small amount of money each month, but there’s never a bad time for Singaporeans to start investing in their futures.
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