Ever since the CPFB introduced a colorful pie chart of our CPF savings a few years ago, I would look forward to mine every year like a teena...
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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?
"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."
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
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
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
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."
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