When you are my client, I want to share the inside-scoop of current financial trends, so that you can stay updated and know when to make a change. Therefore, I have decided to write you a letter every week for the best financial insights and also about the different aspects of my personal life, so that you can also get to know me better personally.
𝐖𝐚𝐬 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐇𝐚𝐫𝐝 𝐦𝐲 𝐁𝐢𝐠𝐠𝐞𝐬𝐭 𝐑𝐞𝐠𝐫𝐞𝐭?
Everyone has their own version of things they regretted not doing while they were still young. For me, I would like to think of myself as a hard worker since I was a teen, even taking on 5 part-time jobs at one point in my life. And despite having worked hard for the past 42 years, I feel that I could have worked even harder and pushed myself to go beyond the limits to achieve even greater successes when I was still young and in the early stages of my career. This could be the same for many others as well, since we are able to take on more risks and aim for bigger goals when we were younger, compared to now since I don’t have the same energy level as a fresh graduate and also have a family to look after, hence I can’t afford to make any risky decisions.
Apart from not working harder, I also regretted not working smarter. We often learn about using SMART goals in education institutions to plan but when it comes to the real world, the only way to truly know if you are improving and succeeding is by using SMARTER goals where they all stand for ‘Specific, Measurable, Achievable, Relevant, Timely, Evaluating, and Revising’. Using the same method repeatedly just because it was successful previously does not guarantee success in future implementations since the world is also changing rapidly due to innovation, digitalization and technological progress.
Likewise if you don’t act now and do something to plan out your financial future, you will also end up regretting not having done something sooner. Some tips to help you prepare for a strong financial future is to ensure that you have a portfolio to make your money work for you. With the rising cost of living and inflation, you would need to consider putting your savings into a high-yield savings account or invest it to generate a stream of passive income. Another tip would be to keep track of your own expenses and creating a monthly budget can help ensure that you are aware of your cash inflows and outflows, which can help you build up your emergency fund and clear any debt while still having money to spend. These are just 2 out of many other pieces of advice one could give to help you build a strong financial future. If you are keen to know more and start planning it out, feel free to reach out to me and I would be happy to share more over coffee.
𝗪𝗵𝗮𝘁 𝗶𝘀 𝘁𝗵𝗲 𝗿𝗼𝗹𝗲 𝗼𝗳 𝗦𝗶𝗻𝗴𝗮𝗽𝗼𝗿𝗲’𝘀 𝗦𝗼𝘃𝗲𝗿𝗲𝗶𝗴𝗻 𝗪𝗲𝗮𝗹𝘁𝗵 𝗙𝘂𝗻𝗱(𝘀)?
Sovereign Wealth Fund (SWF) refers to state-owned investment funds that are used to invest the country’s excess capital into markets or other investment platforms, for the purpose of stabilizing the country’s economy through diversification and for generating wealth for the benefit of the nation’s economy and its people. And in Singapore, the government has two SWFs, namely GIC Private Limited and Temasek Holdings, where each entity has its own distinct roles and mandates, and management teams.
For GIC, it is wholly-owned by the Singapore MOF and they manage the Government reserves, which includes surpluses that were accumulated and built up since the country’s independence. They do not own the assets but rather are paid a fee as fund managers to look after Singapore’s foreign reserves that are assigned to them to preserve and enhance the country’s international purchasing power over the long-term. Its ultimate aim is to secure the financial future of Singapore where its purpose is to be a three-in-one fund for Singapore (rainy day, stability, and an endowment fund).
Whereas for Temasek, they are an investment holding company to own and manage its assets and investments on a commercial basis. Essentially, they manage the foreign reserves of Singapore, with the aim to deliver sustainable returns over the long-term. Compared to GIC, Temasek is significantly risker due to their higher returns.
And despite both being owned by the government, the government does not have a say nor interfere with GIC and Temasek’s investment decision. If you are keen to find out more, especially on what GIC does, you can check out our previous post on ‘Who’s Touching Our CPF Money?’ to grasp an understanding about the role of GIC and our CPF monies.
𝗧𝗶𝗽𝘀 𝘁𝗼 𝗺𝗮𝘅𝗶𝗺𝗶𝘇𝗲 𝘆𝗼𝘂𝗿 𝗖𝗣𝗙 𝘀𝗮𝘃𝗶𝗻𝗴𝘀
Apart from just letting your CPF savings earn interest, like in a regular bank/savings account, there are also other ways to grow your CPF money. There are two options to consider depending on your risk appetite and tolerance.
If you are willing to take on market risks, then investing your OA monies with the CPF Investment Scheme (CPFIS) is an option to consider. You can invest your excess OA monies, which refer to any sum after having set aside $20,000 in your OA, into various financial products that are approved by the CPFIS. But you should be aware that market risks can be unpredictable so you can potentially get better returns compared to what the CPF gives or lose your capital.
However, if you are looking for something more stable and safer, then putting your OA monies into Fixed Deposits, purchasing Singapore Savings Bond (SSB) or Treasury bills (T-bills) might be what you’re looking for if you prefer a guaranteed return upon maturity or when there is a scheduled payout. However, the returns will be lesser compared to investing with CPFIS but it is 100% safer and guarantees you won’t make any losses.
𝗥𝗲𝘀𝘁 𝗮𝘀𝘀𝘂𝗿𝗲𝗱 𝘁𝗵𝗮𝘁 𝗼𝘂𝗿 𝗖𝗣𝗙 𝗺𝗼𝗻𝗶𝗲𝘀 𝗱𝗼 𝗻𝗼𝘁 𝗴𝗼 𝘁𝗼𝘄𝗮𝗿𝗱𝘀 𝗴𝗼𝘃𝗲𝗿𝗻𝗺𝗲𝗻𝘁 𝘀𝗽𝗲𝗻𝗱𝗶𝗻𝗴
I’m sure you already know that our CPF monies in our CPF accounts can earn interest. But did you know that just like our money in our banks/savings accounts, our CPF monies also gets invested, and for this case in Special Singapore Government Securities (SSGS), which is issued and guaranteed by the Singapore government, so that we can get the interests the CPF board promises. In short, this means that the funds from the SSGS issuance, that consists of all of our CPF monies, will be pooled together with the rest of the government’s funds and deposited with MAS, which will get transferred to GIC for the purpose of long-term management and good long-term returns.
And there is also the common misconception where many people assume that in some way or another, our CPF monies are being used by the government for their expenditures. However, you can rest assured that our CPF monies that are put into the securities are not being used to fund any government expenditure since it is protected under the Government Securities Act (enacted in 1992), where the monies raised from SGS and SSGS cannot be spent.
But apart from earning interests, did you know that there are other ways where you can maximize your CPF monies? Well stay tuned for next week’s video as I will be sharing some tips on how you can utilize your CPF savings to its fullest.
𝐒𝐞𝐭𝐭𝐢𝐧𝐠 𝐮𝐩 𝐚 𝐓𝐫𝐮𝐬𝐭 𝐅𝐮𝐧𝐝 𝐚𝐧𝐝 𝐈𝐧𝐬𝐮𝐫𝐚𝐧𝐜𝐞 𝐍𝐨𝐦𝐢𝐧𝐚𝐭𝐢𝐨𝐧𝐬 𝐜𝐚𝐧 𝐠𝐢𝐯𝐞 𝐲𝐨𝐮 𝐚 𝐩𝐞𝐚𝐜𝐞 𝐨𝐟 𝐦𝐢𝐧𝐝
As promised last week, I have shown an illustration on how you can do your insurance nomination forms to the trust company of your choice to ensure that the money you have allocated to your beneficiary is received and managed by the trust. However, please note that different trust companies offer different services and thus, you would need to do your own research to find the one that is best suited for your needs. In my case, I not only have a trust fund set up with SNTC but also with a private trustee to ensure that my estate monies are being actively managed by a fund manager to ensure that the capital can outlast my special needs son’s lifespan while SNTC is there to ensure that my money is being spent wisely. By having a trust put in place, it can help ease the burden of extensive planning as it can get overwhelming if you were to do it by yourself, especially since we know that it is hard to outlive our child’s lifespan.
𝐓𝐡𝐞𝐫𝐞 𝐢𝐬 𝐬𝐨𝐦𝐞𝐭𝐡𝐢𝐧𝐠 𝐟𝐨𝐫 𝐞𝐯𝐞𝐫𝐲𝐨𝐧𝐞
I’m sure that if you’ve been following my weekly newsletters, I would have shared with you the importance and reasons for setting up a trust and doing up your insurance nominations. However, even if you have not, setting up a trust is not only for the rich! You can also have one in place should you require long-term management of your estate for your beneficiaries. Furthermore, insurance nominations are also extremely important since it can ensure that your beneficiaries get what you wish to give them efficiently and it also reduces the trouble of having to obtain legal documents for the insurance company to release the money should you not have one done.
Would you like to know more on how it is done and the types of trust available for your child with special needs? Stay tuned for the next video since I will be sharing more on how you can leave your last wishes known to ensure the financial security of your special needs dependent is taken care of.
𝐒𝐚𝐯𝐞, 𝐚𝐜𝐜𝐮𝐦𝐮𝐥𝐚𝐭𝐞 𝐚𝐧𝐝 𝐠𝐫𝐨𝐰 𝐲𝐨𝐮𝐫 𝐦𝐨𝐧𝐞𝐲.
The quote highlighted above was taken from Regina’s book on “Save Million of Dollars: Simply An Employee’s Dream or Reality”. And what I wanted to highlight was that as Regina mentioned, the important thing when it comes to accumulating wealth is how much you are able to save, how much you are able to keep, and to also grow your money depending on your investment risk profile. It doesn’t matter if you’re earning a lot or getting an average salary. What matters most is how you record your cash inflows and outflows and what you do with the liquid assets you have on hand.
*disclaimer: Please remember that past performance may not be indicative of future results.
𝐈𝐧𝐟𝐥𝐚𝐭𝐢𝐨𝐧 𝐀𝐧𝐝 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐑𝐚𝐭𝐞𝐬 𝐈𝐧𝐜𝐫𝐞𝐚𝐬𝐞 𝐓𝐨𝐠𝐞𝐭𝐡𝐞𝐫.
Many of you might think that reaching a savings of $1 million is impossible because of the rising costs of living. You might even be unsure on how to maximize your savings to ensure the best returns or are too afraid of getting into investing due to the risks it entails and the lack of experience you have. However, money sitting in the bank or you carelessly spending your money unwisely are some habits that won’t do you much good, especially for your future. In this video, I mentioned a book that was published by my client, Regina, on how you can save $1 million cash using the 3 buckets method. This is based on her personal experience that actually works, which is why I am sharing this with you so that you, too, can maximize your wealth.
Do you know what exactly these 3 bucket methods are? Let me know your guesses in the comments below or perhaps even share your own personal tips on how you save.