Insurance Savings Plan Zurich vista review

If you read in the papers on every sunday, you will see plentiful of articles on investment, savings and insurance.
On insurance; There are many types of plans available, the main point is to understand what best suits your needs in long term.

For me,  main reason for insurance is to provide coverage in event of any illness or death. I do not want to burden my loved ones.
Next, I want a plan where I can see long term appreciation where I can get back my savings eventually once my children are old enough to make a living for themselves.

I came across this product which I find interesting and would like to share with all. Below is the link;
http://zo.sg/zurich-vista-review.jpg

For people that has join the workforce, you will start accumalating money, it is to your advantage to start savings early, get an insurance savings plan and start planning for the future.

Do not spend all of the salary, keep some money for the monthly insurance premiums.

As you are working hard, remember to invest for long term.

The key word is compounding your savings. With proper products chosen, you can create wealth through compounding your investment returns.

In life, we need to be far sighted but also ensure we enjoy life as we grow.

At the same time, it is always good to be prepared for emergency cases, thus the need for insurance.

When I first started working in 2001, I did not have a clue on what I want and what I need, the insurance plans I bought were mainly to support my friends or at some point, my ex- girlfriend.

Back then there was hardly any like minded people sharing their investment/personal finance/insurance knowledge.

Fast forward to 2014; there is so much information! People should make full use of such information to be better educated or updated.

This Vista plan provide insurance, savings and investment. It fits all of the important elements in a well rounded plan.

What surprise me on this plan is the flexbillity portion, I think this feature is quite useful,  do check it out.

HDB or EC?

In year 2012, we saw the many launches of EC (Executive condominiums) and many HDBs. Coincidentally, it was the year where I needed to make a choice to buy either of the type of property. I had to make a tough decision back then and finally I decided to choose the type of property which best suits me.

Below are the highlights and lowlights which affected my decision.

HDB Singapore is one of the most popular form of housing in our tiny island. 80% of the residents stay in a HDB. Only Singaporean couples or Singaporean with PR spouse are entitled to apply HDB. The income ceiling cap is 10,000SGD for per household. Singaporeans are also entitled to apply with their parents but these are subjected to other guidelines. There are BTOs and resale HDB. Below are the factors which I had considered:

Pros for BTO
1. HDB is selling at a subsidized price.
2. You get a brand new place and at a brand new lease
3. Wide variety of launches in different areas to choose from every 2 months
4. You get to apply HDB loan which is capped at 2.6% interest for 20 or 30 years.
6. No need to come out with cash upfront,you can get 90% loan and use CPF for first downpayment.
7. You can either sell or rent it out 5 years after you have occupied the place.

Cons for BTO
1. Long wait for completion of construction
2. The chances of getting a good queue is slim
3. Need to wait total of 8 years inorder to sell or rent.

Pros for HDB Resale
1. Immediate occupation
2. Get to choose your choice of location and floor
3. Shorter timespan to rent or sell

Cons for HDB Resale
1. COV
2. Need cash upfront for renovation and agent fees
3. Flats are older and they are already selling at a premium price compared to BTO.

Executive Condominiums (EC) are the hybrid type of private property where it cater for the sandwich class of Singaporeans who earns a monthly income of 12,000$. (for now). Singaporeans can sell them to whoever after 10 years once it becomes privatized.

Pros for EC
1. Better lifestyle
2. Higher capital appreciation
3. Becomes privatized after 10 years

Cons for EC
1. Not in ideal location. (Mainly in Woodlands, Sembawang, Punggol and other far places)
2. Long wait for completion
3. Need to take private bank loans
4. Need to pay monthly maintenance fees
5. More stress to pay
6. Need to pay CASH upfront for downpayment
7. Some of them come with bad layout.

I had set my mind on buying one of the EC launch in Punggol initially, but after considering the factors of location, school, amenities,convenience to work and to parents/in-laws, plus the ideal to slog to pay the house;Everyone needed to have an income monthly inorder to sustain the mortgage. Finally, I decided to drop the idea for EC.
In the end, after 4 attempts, I manage to get my very own BTO in a central location. I am thankful to be able to get my first HDB. In the next 3 years while waiting for completion, I can plan my finances and also be at ease knowing that we will able to live more comfortably without having to worry about mortgage payments.

How to pay yourself first

How to Pay Yourself First

Whether you're creating a budget, spending your latest paycheck or paying off old debts, it's all too easy to overlook your need for savings. If this sounds familiar, it may be time to rethink your priorities and tweak your spending habits accordingly. You should be your own top financial priority. Pay yourself first by putting aside a set amount of money or a set percentage of your paycheck before you pay bills or spend any money.

The best way to do this is to automate the routine. If you never see the money in your paycheck, you probably won't miss it. Set up one or more automated deductions from your paycheck. Deductions may go towards an individual retirement account, a company retirement plan or your personal savings account.

It's best to start early. This gives you the maximum number of years to save up and helps you form the habit early. Then when you need money, you know you'll be protected.

To start, no amount is too small. If you're worried about having enough money left for rent, debt payments and other financial obligations, start by setting aside just 1 percent of each paycheck. But don't just stick with a low percentage.

Once you feel comfortable that you have enough money left to spend, slowly increase the percentage or amount. And when you get a raise or bonus, commit to saving a portion of this extra income. Eventually, you could be saving a fourth of your income — or more — without even noticing it's missing from your paycheck.

Paying yourself first is an especially useful strategy for people who frequently find they have no money left from their last paychecks but can't account for where it all went. Most likely, it isn't all going towards rent, gas and groceries. A large portion of it may be going towards shopping, entertainment and other nonessentials.

If you have this problem, it's not all bad. It probably means that you tend to adjust naturally to whatever budget you have. If you get a raise or a large bonus, you'll spend it all. But if you have a bad month financially, you'll make do with whatever money you have.

So by automatically carving out a portion of your paycheck before you have a chance to spend it, you'll reduce the temptation to use your entire paycheck. You'll naturally form a fund for an emergency, a vacation or retirement. And once you start the habit, you're likely to stick with it and establish your financial future as a priority avoiding future pains such as debt settlement. It won't create any extra work for you or put a strain on your budget.

Housing matters

Being a parent has taken up lots of time and energy, it is indeed refreshing to have the time to blog when one has a family. This month has been eventful, first I got some guy from Channelnewsaia inviting me to attend their programs about middle class struggles, then I got to know that my ballot for the september sale of balance flat was unsuccessful.

I had been waiting patiently since last septamber for my chance to finally own my very first property. While waiting for the so call appointment at hdb in march (should there be units available for selection base on the racial quota), I applied for a BTO at punggol; my queue number was even worse and thus I missed out the punggol BTO flat exercise.

I had mixed feelings about missing out the queenstown sale of balance flat exercise as the sale quantum is in the range of $5xxk yet you get blocked view and low floor units. The only good point is that I can move in right away and it is in a prime area. But for applicants that had bought them earlier, they had paid only $3xxk which is way much cheaper. Missing out on this means that I have to compete with the many Singaporeans during the next HBD sale launches.

Thoughts ran through my mind should I consider a EC instead, reason being the chances of getting one is virtually 100% for a first timer, you get facilities and the grant. My wife also speaks about upgrading oneself which made me rethink my next step. I also had concerns that should we delay in our purchase later, we might eventually exceed the hdb ceiling income and not be able to quality for hdb or even EC.

Buying a EC now would had disrupted my financial plans. I would need to cash out my stocks at a slight loss, buying one would also require me to top up cash in the monthly mortgage payment. It will not be a very huge financial burden monthly, but the thought of servicing the Overall interest/loan turns me off abit. I was not quite ready to join in the first lane of rat race for my EC.

I had a discussion with my wife and we both decide to try for the HDB while we can. First, it will be cheaper and we can clear the loan faster, secondly, we can use the extra cash we have for family holidays and stuff. I promise that we will still live in a condominium later no matter what, but that is when we have generated enough passive income and we wont have to slog for the property.

Middle Class struggles in Singapore

The Middle Class really struggles in Singapore. I am not sure the exact income group to really categorized as one, but I believe among me and my peers, most of us belong to this class.  This post is not to complain about life being in the middle class, but to look at the common reality of life in Singapore.

Growing up, we are told to study hard, get good grades and you will do well in your career. If you do so-so or what we call moderately well, then as years passes by, you realised you belong to the one of the many in Singapore who continues to slog for a living or Middle Class. How come the schools here do not teach us about financial freedom ? How come there are no subjects about personal finance management in classes? Why is that Nobody told us that we need to be in the upperclass so that we will not be stuck in the rat race?

Average Singaporeans burn a hole in the pocket after their marriage, burn another hole when they get their first flat or property, burn another hole when they have kids. After so many holes, there are none left for retirement.

I had tea with a good friend today, he told me life is a struggle in Singapore, he belongs to the middleclass. After many failed attempts to apply for a HDB and getting fed up, they bought a executive condominium. Why?
They wanted to consider buying a resale HDB, but with them living around Clementi area, all the COVs being extremely high, they decided it is silly to pay for such a premium.

Their combined income had exceeded the ceiling inorder to buy a flat direct from HDB. Both had to used up a huge chunk of their cash to pay for the downpayment for the EC.

With the young baby growing up, they had to buy insurance coverages and endowment policies for the kid's future education. After paying for their monthly properties mortgages and insurances fees, in addition to the daily expenses, they have little left to save for retirement or even investment.

My friend is very thrifty by nature, but circumstances made him to commit himself to this situation. Stuck in the middles class, both need to continue to work inorder to supplement all the expenses. Now they are slowly trying to save up and continue to be thrifty.

The Singapore Government always encourages people to pro-create on Television news or on papers. All of the government officials belongs to the upper class.

You slowly start to understand the term "Talk is cheap" once you step into the middle class.

Personal finance - Car Management

Many years ago, I was debating with a good friend how much we needed to earn before we can afford to buy a car. The amount came to 3,000SGD. However, after much deliberation, I realised the amount is greatly insufficient.

I always wanted to get my own car since I started work, images of sports car was always on my mind. I dreaded the long journey to work on a bus and the need to wake up early.

Having a car back then was a "plus point" to look good in front of chicks and is a sense of personal achievement.

Looking back now, I think it was a matter of going through a phase in life where you just wanted something new.

I got my car 8 years ago and I am still driving the same car, I must say I am the rare breed to continue driving a car for so long and not succumb to the need to have the continental car for comfort and "status".

Some of the pointers I learnt on car management:

1. Get a reliable car that is fuel economical.
2. Go for cars that requires minimal maintenance.
3. The bigger your car, the more road tax you have to pay to Government
4. Buy a car if your job is able to supplement the expenses.
5. Do a cash flow management before you buy a car so as to ensure you have sufficient cash flow on other expenses.
6. Always be prepared to pay "fines" as every average car owner contributes this to the Government no matter what. Need to cater for spare cash for this.
7. If you drink and drive, there might be a risk your car depreciates at a faster rate.
8. Set aside a sum for car maintenance and do more thorough maintenance during the first few years.
9. There is a need to change tyres every few years or based on your mileage, this is a re-accruing cost and tyres can be costly.
10. A driver will always experience tyre burst or other malfunction, be prepared to spend extra on adhoc basis.
11. Try to pay cash for your car if possible.
12. Have ways to offload your car easily should there be a need to relocate or when your company offers you a car.
13. Do not listen to over trade offers on cars
14. Learn to say no to car salesman.
15. Buy cars with a higher OMV.
16. If you buy continental cars, be prepared to spend excessively on maintenance.
17. Cars are a liability unless you rent it out.

Does good education guarantee success in life?

Many parents are putting in savings or endowment plans to plan for their children's education. The estimated cost of a tertiary degree education is expected to be double or triple in 20 years time. Singaporeans being the kiasu lot will want their kids to have the finest education in top schools and many often do volunteer work to ensure they get higher chances of enrolment.

When I first started out work after completing my national service, I had only a diploma and always tell myself I needed to upgrade, the main reason was I thought that by upgrading myself, I can ask for a better salary with a degree.

Over years of working and going through what I saw, I come to a conclusion that with a good education does not necessarily guarantee success, unless if you are in the government sector and a civil servant.

In 2004, I had a ex-colleague who has 2 degrees and was studying for a master. After working with him for 1 year, he was let go due to poor performance, this was at a MNC. In 2011 while at another company, I came to know he was let go again due to similar reasons.

One of my friend, paid good money to earn himself a degree at top 10 university in the world. Ever since he graduated, he had not stayed a job long enough and is now working for a job that does not require any degree qualification.

My colleague, he was a top student at a local University and has a masters degree and is now studying for a MBA. After working for more than 5 years at a private MNC, his wife;who only has a diploma is currently earning more than him.

On the other hand, I look at my army friend, a secondary school dropout, but he is running his own logistic business and easily earning more than 120K$ per year. My property agent friend of mine, only has O levels, but he is earning 6 figures annual income and has a few properties to his name.

Couple of years back, I accidentally came across a few candidates interviews forms at my ex-company, many applicants had degrees and with relevant working experience, I came to realise how competitive the workforce over here is. Almost everyone has a degree nowadays.

However, if you have a high education and end up in any government job, most chances you should be doing fine, unless you happen to do something bad and get "condemn".

I went through my PSLE and O levels with satisfactory results, I ended up at a polytechnic where I hated what I studied. Although it took me a while longer to complete the course, I did not regret taking the course, reason being this diploma has opened doors on many careers for me. Now that I have a degree, I did not have a chance to utilise it unless I switch to another job.

Having a good education does not necessarily guarantee success in your work life. A good working attitude and having passion in your job is essential to drive success. Joining the right company is also very important. If a accountant joins a small firm, very likely his or her salary will not match the bigger companies. When it comes to the real working world, no one will compare your school results, its about meeting your KPIs and results, results results.

But nonetheless, a good education is sill important to have a head start in your career. If I had not gotten my diploma, I would not have the opportunity to work for so many wonderful different companies.

Last but not the least, having financial literacy is important. There is no point being a doctor or a director but yet you do not know how to understand and control your own finances.

For myself, I will plan to continue to pursue my further studies if time permits next year. Let's hope the government give out more educational goodies in the coming week.

New work year and First blog articles being re-published

The start of my dragon work year has been super tiring and eventful, I can't believe I had to work overtime continuously daily ever since I have a baby. Thank god for the confinement nanny here and her presence has indeed helped to lower our burden at home.

Work is work, I have no complaints. But I am starting to realise I had simply no energy to do anything else after work. Maybe it has been awhile since I had worked so late that often. (salesman should not be working so late!) Stress level at work is not helping thanks to some unnecessary problems caused by my ex-manager. I tried to apply the 80/20 rule on my job, but even after with that, my energy level just cannot cope.

I need to start finding time to work out. Hopefully it will boost my energy level. I will need to ensure I stay healthy during these period and has decided to stop my other active income channels for now (like estate agent). Being batman instead of superman is good enough for now.

Luckily there is still passive investment through stocks to generate that much needed extra income. I will be receiving my Suntec reit and CDL trust dividends this month.

This week has been very eventful too as two of my articles are being re-published on http://nextinsight.net/
NextInsight, a hub for serious investors is co-founded by Leong Chan Teik, a former Straits Times senior correspondent, and Kathy Zhang, founder and MD of Financial PR. Both are very well respected and had achieved several successful milestones in their careers.

I am very surprised they took interest in my articles as I had only started blogging only since last October.
It is deeply honoured and I hope I can continue to contribute more meaningful articles moving forward. Hopefully my blogging can also start to make some tea money for me soon.

Financial matters for 2012

A couple of years back, I used to envy people driving that Lexus luxury car and was so tempted to get one for myself, I told my friends I will get one of those as my next car, a rich man son's friend of mine even encouraged me to get one as he said this might enhanced my image in my part time real estate agent job.

Fast forward to 2012, I am thankful I did not succumb to my "wants" and made the silly mistake of buying the car, I am already contented admiring the car on my blog's avatar for now. If I had purchased the car, monthly car loan installments might be in the range from near to 1K$ per month or more. I look at my upcoming bills for this month, confinement nanny (3400$), hospital delivery and Gynea charges (6000++$), confinement food (1000$) and cord blood banking fees (2000$). Having to foot all these bills at one go is already a challenge since I only started back regular savings last year, I cannot imagine if I still need to service the high car loan and yet have some many expenses to foot.

I expect to see my savings greatly reduced after this month on these expenses. Coming months ahead, I am expected to get our first 4 room flat direct from HDB, another round of huge expense on renovation and furnishes come to my mind. Ever since marriage I wanted to be the alpha male, to me it is guys' responsibility to bring food to the table and I believe it is my duty to service all expenses. But after looking at my bank account now and being realistic about it, I have limitations to continue to foot all the bills, unless I sell my stock holdings.  I chatted to my wife and we came to a conclusion we will need to tap on her savings for the housing expenses ahead. Her habit of regular savings has helped me and I start to really see the need to have more savings and be frugal.

I can breathe a little easier now and can now continue to focus on our retirement plans. One of my new target now is also to save up as much cash as possible so that I can use it to pay up my next car in 2 years time. (not a Lexus but a second hand car). It is a challenge but I think it is feasible if one is frugal and disciplined.
With the sale of my company's stock options and external income coming in soon. I should be in a better cash flow position by March. I am thankful I will not need to sell any of my stock holdings this time.
Sometimes, two is better than one when it comes to financial matters.

Personal finance 2 - spending habits

I must admit I am not overly qualified to write this, but I would like to share my own personal experience on spending habits and hope that people will also come to realise the importance of good spending habits.

I grew up during the era where there was a silly trend for youngsters to wear branded clothing. I have to put part of blame on my friend back then as he was really a bad influence. Peer pressure got over me. I remembered bringing my father to pay for my Armani clothes and Trussardi jeans. Back then my father was doing pretty well in his businesses and he bought them for me although with much grumbling. He did not really set a good example to me on proper spending habits as well since he was always changing luxury cars and spent lavishly.

When I started out to work, I still had the tendency to go for branded goods, I told myself that the better quality justifies it and it can last longer (I still think they do even now). Over the years I had purchased branded items for belt, watch, shoes, wallet, sunglasses , bags and pen. I grew my earning power gradually over the years and did not contol my spending.

I used to spend 450$ on a pair of shoes, I own a Cartier pen and Prada sunglasses. I even bought myself a Rolex watch in 2006 as my good friend got one too. My spending did not stopped on material items, I even invested in grooming myself by signing up for facial packages which probably could had cost 2 lots of Keppel Corp shares easily.  Although there were no big regrets in spending to pamper myself with the facial packages. ( now wherever I go , auntie or uncles still call me xiao di due to my youthful looks ), I realised that I was spending my money in a very wasteful manner. Luckily I did not end up with any credit card debts like my other friend, he had asked me to be his guarantor for credit loan but I instinctively said no as he could not control his spending.

Things started to change once I got to know my wife, after observing my wife's spending habit and the way she values her money, I felt terribly guilty. I tell myself that I need to be frugal like her. Myself being a Man yet I spent more than her. My journey to achieving positive finance also allowed me to open up my eyes. The needs and wants are clearly defined now once I have a target to reach. There are more important task like saving money for our future house, baby and retirement. Now is not the time to spend, it is time to save and be frugal so that I can enjoy a better life 10 - 20 years on.

Nowadays, I would rather spend money to buy stocks that will generate income/ capital gains than spend money on material things. I still spend to sayang my wife now and then, but I make sure that it is within my budget.

There is a need to cultivate good spending habits from young, we need to set a good example to our children on the way we spend our money, having financial literacy education is also essential, separate the needs and wants while young and understand and appreciate the need to be frugal.

Controlling your spending habits is part of positive personal finance and also related to the journey to financial freedom.

Tips on how to control spending:
1. Set up a budget for monthly expenses
2. Ask yourself if it is a need or want on every purchase
3. Delay spending and spent more time to consider if one should really buy that big purchase items
4. Learn to say NO to sales people
5. Envy and stop there, learn not be influence by peer pressure
6. Cut down on number of credit cards and minimise credit limit
7. Always remind yourself that you do not want to end up old and poor. So start to spend wisely and save!