I've mentioned before the power of compounding. If we're not convinced by the sheer mathematical simplicity of compounding interests, here are some reasons why it may not be bad for us:
0 Comments
Disclaimer: This is entirely my own opinion, and I am not a trained financial consultant/ adviser. If you want me to recommend you one, I have some friends who would love to render professional financial advice.
There's a rule of thumb that life insurance that we should have at least 5 to 10 times our annual income as coverage. It's a simple formula and it generally works (assuming our expenses are lesser than our income). However, there are some situations where we may have to take a different approach. Of course each of these alternate methods are also rough estimates. Stay at Home Parent If there's a stay at home parent, the approach cannot be based on annual income would be zero. And nothing times nothing is nothing. Instead, we should approach how much to get based on this approach. Should one parent pass on while the children are still at home, then the other parent will have to hire someone to cover the work that the stay at home parent had done. Add up how much all those services will cost on an annual basis and multiply it by the number of years before the children will be independent (I am thinking 25 years old). For example: (1)$36,000 (annual cost) x 20 (youngest child is 5) = $720,000. (2) $36,000 (annual cost) x 10 (youngest child is 15) = $360,000. This rule also works if there are not stay at home parents. Because when one parent dies, the other has to essentially pay for the cost to care for the children. This is more important when the kids are young versus those who have older children. Nearing Retirement As we near retirement, our costs have gone down (hopefully). We may not need so much money should our spouse passes on. Further, the premiums tends to go up in our 50s and 60s. It may be time to consider reducing our insurance coverage, especially if we have built a substantial retirement war chest. Insurance is always hedge against catastrophic loss, it's not an investment strategy. If we had planned our investments well, by the time we're in our late 50s we should not need such a huge hedge as we would have quite a sum set aside. Singles Insurance is a hedge against loss. If you have no dependents then there are no future costs to cover. No spouse, no children. If our parents and siblings are adequately covered themselves, then there really is no "loss" to hedge against. So what is the life insurance for? There are other insurance you should consider like integrated shield plans (hospitalisation plan) or disability income insurance. These may be better than life insurance. Although there is some argument on getting some critical illness coverage. The question is whether we should get whole life or term insurance. My own personal plan: I got a mix of the two 60% whole life and 40% term. I figured as I got older I would give up the term as my kids would have grown up and left the nest. And by then I would have finished paying for my whole life insurance (all scheduled to end before I hit 55), which will give me more money to invest in the last mile before retirement. I don't really have a magic number, it's just what I think the best proportion is for my needs. (Inspiration Source) It's a very simple concept that our lifestyle choices makes a big difference in our savings:
Our savings plan beyond putting money aside will help put some money aside or even buying STI ETF every month for a certain sum can be helped greatly by small lifestyle choices like switching the coffee we drink or packing our own lunch or deciding to stop watching EPL. Essentially, part of our retirement planning should include lifestyle changes if we are trying to accumulate even more money (whether to save or invest). (Inspiration source) Mr Buffett has 3 characteristics that he believes make for successful investing:
Disclaimer: This is entirely my own opinion, and I am not a trained financial consultant/ adviser. If you want me to recommend you one, I have some friends who would love to render professional financial advice.
I have mentioned many times before why buying a property costs a lot more than we think. Plus, current rental yields are squishy despite high sale prices. Here are ways to invest in real estate without buying a property:
Here are some pretty good reasons why maybe not buying a property is better for some :
(Inspiration source 1, Inspiration source 2) Negotiation is taught in business schools and law colleges like it's some skill that is requires rigorous training. Truth is all of us negotiate all the time. Every single one of us can negotiate and do so all the time. Here are some things to remember when we negotiate:
(Inspiration Source) I have a close friend who is 40-plus and singe. It really got me thinking as to how this person would take care of his/her future when he/she gets older. One of the issues is if he/she cannot make decisions for himself/herself any more .
For singles who figure they are unlikely to get married at any point in their lives, creating a Lasting Power of Attorney is even more of an imperative than those who are married, or who have children. The issue is that people with spouses and children may have other persons, who medical professionals can turn to, make decisions for them when they are incapacitated or who have the ability to manage their money, via joint accounts, or who can pay for bills first. Singles, especially those without tight-knit family connections, will face huge problems should they become mentally incapacitated. One way to get around it is to create a trust such that it may act while you are mentally incapacitated. That will require drafting of a trust instrument for such an eventuality. It will also mean hiring a professional trustee to handle your affairs. However, another way, which is more cost effective, is to create a Lasting Power of Attorney. You have to find a person ("donee") whom you trust to manage your finances and personal welfare. It can be the same person or two different persons, one for your finances and another for your personal welfare. You can also have more than one donee to care for each of these areas. If you don't have much money or very complex instructions, you only need to fill up Form 1 and pay $50 to have it registered. The real issue is finding a person that you trust to care for your welfare and your money. It could be a close friend, or perhaps a relative (i.e. a cousin or a niece/nephew). Convincing that person to handle your affairs should you become mentally incapacitated is another issue. Also just explaining the concept of a Lasting Power of Attorney could be a hassle too. But it should be done. Especially if you are single and not likely to marry. Something to really think about, otherwise all that prudent saving and investing will come to naught if no one can care for you and your money at the most critical moment. (Inspiration source) Just to share this article from Business Insider on where to go for online courses on:
All important skills for life and the workplace. |
AuthorLate 30s. Dad. Thinking about life, family, work, and retirement. Sharing those thoughts with others Categories
All
Archives
May 2018
|