Yvonne Lim

Why I want to be covered for Early CI

Most of the young adults who have asked me about life insurance knows that I am a believer of Early Critical Illnesses (Early CI) coverage – especially for certain profiles of people. I happen to be one because

I am young and am just started out
I am a self employed (your working profile)
I would want to recover in style

Young
I believe early CI coverage to be important for young adults because we are all just starting out in our lives. During this stage, we are working hard to achieve our dreams and goals – making sure we will be able to pursue our needs and wants at some point in the future- get married, own our own property, start a business, travel, etc. At this stage, most young adults also probably do not have much (yet). Likely $30k- $90k (of your own money) if you have only been working for less than 3 years.

If you were to fall ill at this point, your goals would likely be disrupted- savings come to a standstill and existing savings may be depleted in the course of recovery. For this reason, I believe in early critical illness coverage. Because falling ill is bad enough without having my future goals mucked up too. So yes, I want someone (whoever/whatever it is) to give me a lump sum of money to protect my plans.

Self Employed
Having a healthy physical and mental being is of utmost importance to me as a self employed, more so as I am in the advisory line where being present is well, a prerequisite. If I were to be ill for an extended period of time, I know I would want to (will have to) hire another personal assistant so that I can direct my energy to the most important parts of the job. This would then be an additional out of pocket cost to me.

Hence, your job benefits and your role in the firm would influence your need to be covered for this early CI. Beyond the workplace, it is also ideal to consider the family – how likely would you incur additional cost for the family if you fall ill? Or on the other hand, how much are you able to (or want to) rely on the family in such an event?

Recover in style
Early CI is often not life-threatening upon detection and optimistically, most would recover from such an event. Through the course my work, some of my clients have shared their personal stories with me about how they themselves or a party of their family faced an event like this and recovered… so it got me thinking about how I would want to celebrate the recovery: simple enough, a crazy holiday for everyone. My treat.

All in all, this is why I believe in having early CI coverage for myself.. The above factors may not stay relevant forever but at this moment, something’s backing me up

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The Solution

There are many different vehicles to use to receive early critical illness coverage. Self insurance aside, there are term plans and whole life plans. Plans that require you to pay for as long as you wish to receive the coverage, and those that require you to pay only a certain number of years. There are insurers which follow unique definitions of critical illnesses, and others which follow the standard definition. Some give an additional coverage for special stated illnesses, others that don’t. At the end of the day, all we need to do is to find one that is suitable for ourselves.

Global Investment Trends Report

Just read this article on the Sunday Times about Singaporeans becoming more bullish about investing (this means that people are more willing and confident about investing).

These findings came from a recent poll by Schroders Asset Management Firm (2014 Schroders Global Investment Trends Report) and below are stats based on those polled here (sg):

1 in 3 are looking to invest more than $100,000 this year
58% will invest their spare disposable income, higher than the global average of 48%
81% will invest in equities, up from the 73% last year (16% are looking at bonds, 19% are considering precious metals investment while only 6% is considering property, in response to the cooling measures set in place)
For those who are not familiar, equity means stocks (ownership interest), while bond is a debt instrument whereby investor loan money to a company/government at a fixed interest rate (loan interest).
Many people perceive bonds as ‘safer’ investment instrument because historically, bond prices fluctuate less than stock price. However, this is a general perception. Different instruments carry different types of risks)
Hence, it appears to be true that investors are more confident of investing that a year ago.
The poll also shows that only 5% of repondents has time horizon of more than 10 years.
This is really interesting for me because unless you are already 70, you will definitely have 2 goals with time horizons of more than 10 years – Continue reading Global Investment Trends Report

What Kind of Saver are you?

I came across an interesting article about the 8 different types of people who accumulate money, and how it is likely that we each have a dominant profile. I guess I can incorporate this into my advisory work moving forth!

October 19, 2010

By Richard Barrington| MoneyRates.com Senior Financial Analyst, CFA

The paper-clip saver. These are people who build their savings rates by never throwing anything out that they might possibly need again. If you see someone saving gift wrap to re-use, don’t look down your nose at them — they may have healthier savings accounts than the average American.

The master negotiator. The master negotiator loves to bargain, and saves money one haggle at a time. People who are good at this tend to do it second nature, for big and small purchases alike. When it comes to those big purchases, haggling is a skill that can really make a significant difference. If negotiating doesn’t come naturally to you, try not to look at it as an embarrassment. Instead, look at it the way the master negotiator does — almost as a game.

The singles hitter. This is a person who has committed to the slow-and-steady approach to saving. They put a little aside every paycheck, and succeed at saving because they follow a consistent course over a long period of time. Continue reading What Kind of Saver are you?

Cash is Prince, Cash Flow is King

Recently, a friend was referred to me for financial planning and it was an easy session because he already knew what he had to do- to first stop drinking (alcohol) so much, because he had other goals that he wants to pursue.
Here’s a breakdown on his cash flow (income allocation).

At the moment, he has $7k in savings and no investment. so honestly, you don’t need a financial planner to figure the following out

The downsides of his situation:

Not enough cash (Low liquidity/emergency cash)
Not investing enough
Not saving enough
Lack stability

It’s a zero sum game so there’s no magic to this. He will have to save more and likely from all his casual drinking sessions. It’s not gonna be a fast transition to financial freedom – he will have to first develop healthier cash flow management habits, and then gradually get into a healthier financial situation.

The upsides of his situation:

No liabilities
Dependents do not require his support at the moment.
Earns a decent income (he just started working not too long ago)

This is the edge of being an young adult. If you are lucky, you are not bogged down by any loans and your commitment to others (dependents) would still be minimal. So basically, you already have the ticket to fly – to start a business, explore opportunities, do something/anything crazy.
But very often, this comes with prerequisites, you need to have the confidence to embark on the above. That is, a basic level of financial stability is required before you get the ticket to the opportunities out in the world. After all, living on bread and water to pursue a dream is unlikely what you would choose to do, over a long-term basis.

And most importantly, as the old (cliche) saying goes, Cash is Prince, Cash Flow is King. Regardless of what you embark on, cash flow management could be one of the first and most important skill to acquire.

For the young adults, it’s really fairly simple (simple, not easy)

Know your future intentions and what you want to do with your life.
Work out the numbers and direct your saving efforts towards your intentions/goals
Choose the right vehicles.
For myself, I generally save for short term goals and invest for longer term goals. There are plenty of vehicles out in the market. Choose one that works for you.
Stick to it. That is, save first, spend what’s left.
Continue to enjoy life

That’s all folks, for my fellow young adults out there.

Spending: focus on what matters

1) Spending more during a sale

It is not gender specific. Really. Both men and women make impulsive purchase and this happens more often during sale & discount, and especially when people feel that they are getting something for Free (Hurray!). But by the time you are done with shopping, you probably only really wanted 6 of the 10 items you have purchased. Discount? What discount?

So the next time you see a big red sign stating One for One, avoid it unless you actually really want it. Or you may end up with TWO tops that you hate and which would simply take up space in your wardrobe.

2) Spending more, on something that you do not actually want.

More than once, I have met with almost death stares when I order bottled drinking water or willingly pay for water at restaurants.
Afterall, why would anyone pay for something that is ‘free’? So within that short few seconds of being told that water costs money, some of us would feel dissatisfied and go through a new round of decision-making; “WHAT? why should I pay for water? I’d rather pay for a proper drink. That’s fairer.” and to finally ordering a drink which we may not necessarily want, but which we are comfortable in paying for.

That is, we end up spending more on something that we do not actually want.

So really, if you are not the owner of the restaurant, try not to be too affected by their margins. Focus on what matters: know what you want and is willing to pay for it. And when this is clear, you will know exactly what to buy when the sale is going on.