Do you make enough money and are you paid fairly? (AKA Do you need financial assistance or do you want it?)

Every so often, we will hear of people who say that we don't make enough money. 

Then, we might also hear of people who say we should have free education, free healthcare and the best is not have to pay for anything in Singapore.

Now, don't get me wrong, who wouldn't want to have free everything? 




In an imaginary and perfect world, perhaps, this dream would come true but until such a world is created, it would remain a dream.

Why would it remain a dream?

After all, there are people who are saying that it is possible to have free this and that. 

Once every few years like now, their voices are louder than usual.

When the Creator made this world, he made it so that we could live off the land. So, things should be free, right?





However, if we had wanted food, we would have had to hunt and gather. If we had wanted more, we would have had to work harder. 

Free? 

Free from having to pay with money, perhaps, but we would still have had to pay with time and effort.

Free? I hardly think so.

In an imaginary and perfect world, everyone would get everything for free and no one would have to pay for anything. 

In this real and imperfect world of ours, if someone is getting something for free, someone else is probably paying for it.





Really?

Things cannot be free?

So, how like that?

What to do?

Well, if we have to pay for the things we want in life and if we want to have a better life, we have to work harder and smarter. 

Our ancestors progressed from being hunters and gatherers to becoming sedentary farmers, for example. 

They spent long hours in the fields. 

They worked harder and smarter too.

Things haven't really changed.




Of course, we can talk about how some progressed to become landowners but that is the next step. 

For people who are not even contemplating working harder and smarter, that next step will remain elusive, as they remain where they are.

I understand that there are some people who genuinely have difficulties in making ends meet despite their best efforts. 

They could be physically or mentally handicapped. They could have issues at home that hampered their efforts. 

If we are a caring society, we will help these people. They might need monetary help and help should be offered.





If we are physically and mentally whole, if we do not have insurmountable problems at home, I do not think we have any good reason to complain that we don't have enough money. 

Why? 

If we want some money, go make some.

Such people don't need monetary help.

They want monetary help.

If monetary help is given to these people, they immediately become a burden to society.

1. 
A friend who was from a poor background asked if I could lend him about $800 to pay for his fees at a local polytechnic many years ago. 

Even though I wasn't making a lot of money back then, I lent him the money. 

He promptly paid me when he received his monthly salary. He is doing very well now.



2. 
Another friend who is also from a poor background asked if I could lend him $500 because he wanted to go to Hong Kong for a vacation with some friends. 

I was financially more comfortable by then and he knew I was. I rejected him. 

We are no longer friends, it seems.

I share these two examples to show how we have choices in life.

Being in Singapore, we are more fortunate than many in the world.

Overworked and underpaid? 

Then, make a change.

3.
I know a lady who was very well paid working in one of the big audit firms. She felt she was overworked and underpaid. 

I asked if conditions might be better in the other firms. She said they were all the same. 

Then, she wasn't overworked and underpaid. It was the industry norm. Her salary was easily thrice as much as mine back then!

4.
I know another lady who was relatively well paid working in one of the big law firms. She wanted shorter working hours. 

So, she took a pay cut and moved to a government statutory board. It was a trade and one she was happy with. 

If she had gone to another big law firm, conditions wouldn't have changed.

I share these two examples to show that, for most of us, if we want something, we have to give something. 




We cannot just take and not give.

At one time, I was holding two jobs. 

In fact, if I were to include a job in the informal sector of the economy, I had three jobs at one time. 

For a few years, I was working seven days a week. I am not very smart. So, I worked harder. 

I didn't have much of a social life and, I guess, I still don't. 

Mind you, I am not complaining.





Before we complain, before we ask for help, before we even ask for our CPF money to be returned to us at age 55 (which is another topic), stop and think if we are doing anything to improve our lives first. 

If we are doing something, ask if it is enough.

Related posts:
1. Do you want to be richer?
2. The very first step to becoming richer.
3. How to have a comfortable retirement?
4. How to tell if you are rich?
5. The Millionaire Next Door.

What is next for a 30 year old saving $36K a year?

On our road to financial security and financial freedom, if we are good savers, half the battle is won. If we make above average income and are able to save way more money than the average person, we could have won more than half the battle.

Y:
I have been highly focusing on saving money all these while, i seems to forget to grow the money.

Now that i am going to have a new home, albeit a small one. I do not want to want to put myself in a stage that i have to be consistently worrying about money. This is why i see that master AK has planned well and hope to point me in a better direction.

AK:
If you are a good saver and I think you are, that is half the battle won. like emoticon

As an investor, you have to think what kind of investor you want to be or most suitable to be. I will blog a bit about our conversation and a bit more later today.


For now, since you are a good saver, concentrate on doing it well. $3K a month means $36K a year or $360K in a decade. That is no small change.

Y:
I just wanna live and spend more time with my family, so i decided to work really hard for a number of years and save as much as i can when im still young. And right now, i think i am at the stage where i need to utilize the money i save to prepare for the next stage of my family.
 read your post of CPF SA account, so i plan to fill the SA account up when i still have the ability to do so.

just that, i am still figuring out all the STI ETF debate and reits dividend suitable for a short term investment. Personally, given i am such a "saver"-minded, i find it hard sometimes to let go of the money to invest. So i am still learning to take risk and go for whats best for me.

understand the risk of giving very specific advice as most likely Master AK will get blamed if things doesn't go as planned. I take your conversation as a sharing session, so that i can improve along the way. Thank you for taking your time to listen to me, Master AK!




Lots of money stashed away? That is a good problem!

AK:
OK, now I understand your situation and your mentality better. smile emoticon

If you are risk averse, then, risk free rates are what you should be going after. The only attractive risk free rates now are the ones we get from the CPF.


If you believe in saving money for retirement and if you believe in annuities, then, the CPF-SA is where you want to lock your money.


However, if you are not sure if you might need the money for a second property or to fund your children's tertiary education in future, then, you might want to do a voluntary contribution (VC) to your OA, SA and MA. There is no income tax relief for doing this unlike a CPF-SA top up but you will still get to enjoy pretty good risk free rates. wink emoticon


When it comes to investing, there is always some risk involved. You must be able to stomach market volatility. If you don't think you are the type, then, it might be a good idea to avoid.


If you want to try anyway, then, getting into an STI ETF through the services offered by POSB or OCBC and then putting in money regularly is probably less stressful an option.

Each one of us is different but we should be prudent and we should find our own way, a way that does the job and gives us peace of mind.

Related posts:
1. 30 years old with $150K liquid assets.
2. Greater financial well being is not beyond most of us.
3. Tea with Matthew Seah: OCBC BCIP.
4. Why should we buy a big and expensive home?
5. Get the most out of ASSI for financial security.

30 years old with $150K in liquid assets.

The Chinese have a saying that "one type of rice feeds hundred types of people". All of us are different and in many ways too.

So, I am somewhat wary of giving anyone specific advice as to what they should do in their plans for the future, especially when it has to do with growing their wealth.

I share general ideas regarding how to be prudent when it comes to personal finance matters as well as some ideas that have to do with investing in stocks and, sometimes, real estate. They are scattered throughout my blog.

I would say that before we set out on our journey, have our goals in mind. What do we want to achieve? Then, we must choose the route which we think is the most suitable for us.

To expand on the analogy, there could be a very short route available but it could be quite treacherous. Do we have the equipment and skills to take that path? There could be another route, longer but less of a thrill. Would that be a better choice?

Some might remember a blog post in which I shared my plan to retire by 45. Some might also remember how the plan was tweaked. In reality, I am sure it was tweaked more than once too.

Set goals and, with that, have plans but don't be too rigid. The only constant in life is change.

Y

Suppose you have such assets @ age 30 present:
-130k savings -20k stocks (50% bank, 50% REITS) -
less than 5k in CPF-OA, less than 5k in CPF-SA
-average monthly 3k savings (after all expenses)
How should one plan for short and long term investment goals?
short term - 1k savings to dividend stocks? long term - 1k saving per month to CPF SA account self top-up?
Would like to know how best to plan for the next 25 years! ty ty!

sorry master AK! trouble you to shed some light on investing. grin emoticon

 

Assi AK

Hi Y,

This is a difficult question to answer because it would depend on each individual's circumstances and what they want.
 

I cannot answer in specifics but I have blogged about what fresh grads or young working adults might want to look at first. The blog posts are found in the right side bar of my blog.

 

I would say that prudent personal finance comes before investing and with plenty of savings, you seem to have done that well. smile emoticon

 

Then, we have to consider your personality. That would help determine if you might want to invest mostly for income or mostly for growth, for example.

Basically, understand yourself and understand your motivations and you will know where your money should go. This will help you avoid regrets. Peace of mind is priceless. smile emoticon

Assi AK

What I have done in my blog is to share my journey which includes sharing my motivations and my methods.

I invest mostly for income. I have done fairly well. However, this is not to say that this is the method for everyone. I am not dogmatic.

You are welcome to read my blog and see if what I do gels with what you would like to have. If it does, then, you could possibly do something similar. Cherry pick. wink emoticon

All the best on your journey. smile
 

So, spend some time to think of what you want in your life if you have not done so yet and see if what you are doing now will help you achieve your goals.

We probably can't get it absolutely right but having a plan and being realistic enough to recognise the need to change along the way will help us get it approximately right.

Honestly, that is good enough.

Related posts:
1. Have a plan, your own plan.
2. To retire by age 45, have a plan. (My goal, my plan.)
3. Blog posts in "Reads for undergrads and fresh grads" in the right side bar.
4. A conversation on the CPF and investing in stocks.
5. How to grow my wealth as I approach 40 years of age?

Real life lessons in matters regarding insurance.

This might sound familiar to some of us but I am more interested in sharing this with readers who have yet to buy insurance products or who are thinking of buying insurance products soon. Be careful.





Reader says...

Thank you so much for reading my email. More thank yous for the advice. 

I have a cousin who sold a whole life insurance to my dad (when he was 40+) for sum assured of $60,000 with CI rider. 

The monthly premium is $208 and my dad will have to pay the premiums until he turns 88 yrs old. 

Back then, I was only 20 and still studying. When my parents mentioned to this cousin (already resigned from AIA years ago), how they are going to pay as they most likely won't be working in their 70s and 80s, the cousin replied, "Your children can help to pay." Unknowingly or rather without consent, my sisters and I were in debt. 

Before purchasing the AIA whole life insurance, the cousin knew my dad had another whole life insurance with NTUC for sum assured of $25,000. 

The thing that pains me was that my cousin was starting out as an insurance agent, sales target became the motive.

Don't ask why. You just buy.

If I had the knowledge then, I would have questioned my cousin for not recommending a term insurance instead. 

For example, term insurance for sum assured of $50,000 or $100,000 until he is 70 or 75. Then the NTUC whole life ($25,000) will cover until 99 years of age. 

Of course, her commission will not be as much. Then again, what is the primary role of a financial planner?

Now my dad is 61 yrs old, I'm trying to convince my dad to cancel this AIA whole life insurance (yearly expense of $2500) and purchase a term insurance of $50,000 for the coverage period of 10 or 15 years.

Another case was my husband's brother who became a Manulife insurance agent and sold him an ILP. He has since resigned. 

In order to meet his sales target, he paid the premiums on behalf on my husband who was still in university that time. 

Now, when we reviewed this ILP policy, a total of $8000 premiums paid but the surrender value was only $5000. I told him that out of nowhere, you have lost $3000 within 5 years. 







Could have been better to put it in a bank let inflation erode or go for a holiday, which has at least some form of "payback". 

Although we felt very heart pain, at least it is a good lesson for both of us. If don't know, don't any how buy =p

Sorry for the ranting. These two cases are the best lessons learnt. 

I wish to have a good week and great health to write more posts. :) hehe 

Taken on a trip to Hong Kong:
The giant Buddha in Ngong Ping.

AK says...

I am quite happy to read your emails which put a smile on my face. :)

I am sorry but not surprised to hear of your dad and husbands' experience. 

My parents also had similar experience and the policies were all sold to them by relatives and friends. -.-"

With regards to your dad's case, unless he still has dependents, he doesn't even have to buy a term life policy till age 70 or 75. 






I don't know if you read my blog post on how I advised my dad to terminate his whole life policy because he no longer has dependents. 

We, his children, are all grown up and making our own money.

So, your dad could consider terminating his whole life policies and his cash flow will improve. 

Of course, he will probably be receiving a lump sum payment as well which he could use for a holiday or something else he has been thinking of doing. 

He should enjoy his golden years and not worry about paying for an insurance policy that has outlived its purpose. :)








The truth is nobody cares more about our money than we do.

Related posts:
1. Should I terminate an expensive ILP from a friend?
2. A true story about life insurance and grapes.
3. Consider terminating whole life insurance policies.
4. AK responds to Sumiko Tan's expensive lesson.
5. MediShield Life, free medical insurance and hospitalisation?

Saizen REIT: TKs.

When I was a soldier in the Singapore Armed Forces, I learned a Hokkien phrase with the abbreviation "TK". It was one of those inane things that I picked up during those two and a half years that somehow got stuck in my mind. If you don't know what the abbreviation is, here is a hint: It has to do with size and a part of the male anatomy. OK, no more.

Anyway, today, I replied to an email from a reader about TKs. However, these are TKs of a very different nature. These are the TKs of the Japanese business world.

Hi AK,

I am currently trying to understand more about Saizen Reit, a stock that you happen to own. Hence, I would like to ask if you could share with me the structure of the REIT. I was reading their annual report and I could not understand the jargon.

Can you kindly explain about what is the relationship between Saizen and the TK operators because I do not understand who actually owns the properties. Thanks in advance for your help. 

I am a noobie trying to learn more about this Reit and I got confused by its structure.

Warm Regards,

KF

Hi KF,

The TK structure is one way foreigners can invest in Japanese real estate. It is a typical Japanese real estate investment structure, in fact. The TK or Tokumei kumiai is a legally binding contract.

So, when we buy into Saizen REIT, we are buying into a foreign investor that has a stake in these TKs. Saizen REIT has contributed money to the TKs and has the right to share in the profits but Saizen REIT is not allowed to run the TKs. This is why there are TK operators who are actually the local operational managers in Japan.

In case you are wondering, Saizen REIT is entitled to 97% of the profits generated by the TKs.

The investors own the assets in the TK, not the TK operators. Saizen REIT has invested money and they own the assets.

Best wishes,
AK

OK, I think I am going to have some rice and "tau kee" stewed in soya sauce for lunch.

See the TK? ;p



Related posts:
1. Deeply undervalued but is it a BUY for you?
2. Saizen REIT: Still a good investment for income?

A money tree, a candy store and some eggs in a basket.

A friend just congratulated me on my purchases made earlier this week in the stock market.

He said:

"You were like a kid in a candy store."

I said:

"Nope, I was an adult in a candy store."

He asked:

"Got difference meh?"

I said:

"Yup, a kid would not have the money to buy like I did. A kid would probably have enough money to buy one type of candy but I bought a variety."

I hope my friend got the messages I was trying to share and didn't think that I was trying to show off.

1. Money doesn't grow on trees. For most of us, to have money for investments, we need to save money from our earned income and, later on, save the passive income generated by our investments.

2. Avoid concentration risk unless we are very sure about the investment choice. As most of us are "know nothing investors", it is a good idea not to put all our eggs in one basket. This is sensible not only in the stock market but in other forms of investments too.

Remember,
"Putting all your money in a single investment to have the income it generates cover all your household expenses exposes you to concentration risks."
From:
What would I do if I had $750,000 to invest with?

  

Related posts:

1. Wealth is attracted or repelled by habits.

"As my blog becomes more popular, it disturbs me that people think that I am some investment guru. Of course, I am not. I might be a bigger retail investor than most of my readers but I think that is where the difference mostly ends."

2. Concentrate or diversify?
"You have, however, rightly pointed out one of the weaknesses of such a strategy, especially if our funds are limited."

Is my insurance agent friend scaring me? (MediShield Life, free medical insurance and hospitalisation?)

UPDATED (26 DEC 16):
Reader:
"Recently, my friend who got into insurance gave me his sales pitch about how Medishield Life is inadequate..."
AK: 
"Well, you said it was a sales pitch. ;)
If we are OK with staying in Class C and B2 wards, Medishield Life is enough. This is a fact."

Medishield Life is inadequate if we wish to stay in Class B2 or A wards. For these, consider getting a private shield plan which could be free too.




----------------------
FREE? Yes, it is possible.

Now, if you are a regular reader of my blog, you would know that I blog about the importance of having H&S insurance coverage. 

We can budget for the annual premium of a H&S policy more easily than budgeting for the cost of hospitalisation if it should happen.

Yes, who knows how much any visit to the hospital might cost?

What if we were able to budget for the cost of hospitalisation? What? Is AK going to reveal some secret of the century?

Well, it might seem magical but it really isn't.

Remember how I shared how we could get free medical insurance in Singapore? Yes, it is another magical non-magical thing.

So, how could we budget for the cost of hospitalisation?








The answer is quite simple. Get a rider!

Some of you might remember that I blogged about this before. With a rider I purchased for my H&S policy, the maximum that I would have to pay in any year in case I should be hospitalised is $3,000 and not a penny more.

So, not only do I know how much I would have to pay for my H&S insurance coverage each year. I also know the maximum amount I might have to pay in each year in case I stayed at a hospital.

This knowledge gives peace of mind.

Now, what about not having to pay anything at all? What? Am I going to talk about getting free H&S coverage again?

No, no. I mean what about having the H&S policy and rider pay for everything in case we should be hospitalised? 

Yes, what about not even having to pay a single cent in case we should be hospitalised?





Well, here is a conversation I had recently with a reader:

• L
  
  
  

  Been a follower of your blog for years but only recently I found out you have a Facebook account too. Wanted to seek your opinion on the NTUC income shield. After reading your post on H&S insurance, I am also looking at getting the assist rider plus with 10% co pay but cap at 3k. But I can't decide between advantage and preferred. Is it necessary to get the preferred over advantage? If you do not mind sharing, I guess you get the preferred plan? tongue emoticon

  
  
• 

  
  

  Assi AK
  

  I got the Preferred Plan because I want to have options. smile emoticon

  
  

  It is not a need. It is a want. ;p
  

• L
  

  haha thanks AK for being so truthful with me. There is a new rider called Assist Rider that covers 100% instead of the rider plus that co pay 10% cap at 3k. Wonder what is your views on this and why you didn't change to the new rider? Its a little more expensive than the rider plus but can downgrade next time without penalty to rider plus when older and premium higher.. i am wondering did i miss out any catch to this and why master AK didn't upgrade to this rider tongue emoticon
• Sorry AK, should be the other way round. plus rider is the one cover 100% while rider assist is the co pay 10% cap at 3k tongue emoticon

  
  
• 

  
  

  Assi AK
  

  For me, getting well insured for H&S is about having options that I would like to have and also knowing the absolute maximum sum that I might have to pay in any given year.

  
  

  The Assist Rider does that for me. So, I don't see the need to upgrade the rider for me.

  
  

  I see the upgraded rider more as a want and not a need when paying a max of $3K a year for H&S is not going cripple my personal finances.

  
  

  However, the rider is cheaper when we are younger and gets progressively dearer as we age just like the H&S policy. So, for younger people, it might make sense to get the plus rider and later downgrade to the assist rider when they are stronger financially. When they are older, that is when the riders become more expensive too.

We need H&S coverage but do we need more than the soon to be launched Medishield Life? If we would like to have more than Medishield Life, do we need a rider?

Apart from considering what we need and what we want, we should always consider our situations and the options available to decide what is best for us. Only we have the answers.

Finally, please read the documents and be very clear what we are buying before we sign on the dotted line.

C

I don't want buy something later end up can't claim

Assi AK

Be very careful before signing any document... Read carefully

C

Sometime your agent only said this is this after that some sign on the dot never read

Assi AK

Must read...

 

C

Sometime don't understand the chim word

Assi AK

Check dictionary...

Remember, no one cares more about our money than we do. Similarly, no one cares more about what we are buying than we do. 

If we care enough to know exactly what we are buying, we should care enough to check carefully before signing on the dotted line.

Although more enlightened companies might not say this but we should assume that it is always a case of Caveat Emptor or "let the buyer beware."






Find out more about MediShield Life: here.

Source: Ministry of Health.

Related posts:
1. How to get free medical insurance?
2. Enhanced Incomeshield for my mom.
3. Do you know if your parents have H&S coverage?