General Financial Advice You Can Rely On - Isaac Fang CFA, CFP General Financial Advice You Can Rely On - Isaac Fang CFA, CFP
AIA Pro Achiever v3 1intro
AIA Pro Achiever 3.0
February 26, 2023
SINGLIFE Flexi Life Income II 1intro
Singlife Flexi Life Income II
March 20, 2023
Show all

General Financial Advice You Can Rely On

General Financial Advice

Such general financial advice is free and non-specific enough that the financial blogsphere does not need a license to dispense. It serves as a checklist for some. It also makes clearer the distinction between general financial advice and specific financial advice, where the latter is a regulated activity that requires a license in Singapore.

  1. Save at least 10-20% of take-home income.
    • Create standing orders to transfer a specific amount to this account each payday by opening a separate savings account and automating the transfer.
  2. Have a “Save before you spend” habit.
    • This means “Income – Savings = Expenses” when budgeting.
  3. Seek to have 3-6 monthly expenses as emergency savings.
  4. Track your spending and make sure they are within your prepared budget.
  5. Maintain a healthy debt ratio of <15% (Non-mortgage debt) and <35% (Total Debt Service).
  6. Prioritize to meet all your monthly loan repayments.
  7. Pay all your credit card bills in full, on time, and avoid roll-overs.
  8. Beware “Buy Now Pay Later” schemes that potentially leads to overspending with a false sense of affordability.
  9. Reduce “wants” and buy only what you need. Bubble tea costs more than plain water.
  10. Review and seeks ways to rationalize expenses into savings for your financial goals. ie substitutes with house brands and bulk buys when items are on offer or promotions that help you save more.
  1. Understand National Insurance schemes first and account for them before purchasing insurance products.
    • Dependents’ Protection Scheme
    • Medishield Life
    • Careshield Life
    • Home Protection Scheme
  2. Focus on insurance coverage that is affordable with protection as priority especially when budget is tight. ie. Consider purchasing term insurance.
  3. Putting food on the table is an immediate concern whereas insurance is contingent on insured events. When push comes to shove, immediate concerns trump over contingent.
  4. Hospitalization coverage premiums tend to increase with age.  Consider your financial ability and choice of care in the long run.
  5. Google CPF Insurance Estimator and use the tool to calculate your protection needs, identify protection shortfalls (if any).
  6. Consider Direct Purchase Insurances (DPI) if you do not need financial advice. Lower premiums DPI are sold without financial advice.
  7. Use to compare standard types of term and whole life plans.
  8. Use the Facilitating Decision Method (FDM) to establish YOUR basis of comparison to ascertain YOUR best choice.
  9. Review your insurance coverage from time to time (ie Annually) or when you reach various milestones in life. (ie having a child)
  10. Be clear with the important protection areas you need to cover and if you are speaking to a financial advisor representative, prepare to ask questions. Moneysense website is great for resources/FAQs.
  1.  Important basics of what you should know or have in place before investing:
    • built up adequate emergency savings and 
    • allocated sufficient budget for essential expenses.
  2. Know your own risk profile. CPF Investment Scheme Self-Awareness Questionnaire (Google it) is useful.
  3. Start with low-risk investment options like Singapore Savings Bonds (SSBs), T-bills, Fixed Deposits and Topping up your CPF accounts.
  4. Spread your risk and diversify your investment portfolio by investing in different asset classes, or a diverse range of industries or countries.
  5. Investment products like Exchange Traded Funds (ETFs) provide instant diversification within a theme by investing into multiple securities.
  6. Do your own research, learn investment basics. Do not invest on rumors and fads. Consider speaking to a trusted licensed advisor for insights.
  7. Avoid highly speculative products such as cryptocurrencies, meme stocks and NFTs or be prepared to lose a substantial portion or even all your money.
  8. Deal only with regulated products and entities. Walk away from investment opportunities that appear too good to be true.
  9. Check the Financial Institutions Directory, Register of Representatives and Investor Alert List (Terms you can Google) to make sure you are dealing only with persons and entities licensed and regulated by the Monetary Authority of Singapore (MAS).
  1. Focus Your Retirement Plans on 3 areas:
    • Have enough savings and/or passive income to support your lifestyle.
    • Have a roof over your head with no outstanding debt.
    • Have adequate healthcare savings and adequate medical expenses coverage.
  2. Work out how much you need in retirement income. Resources include CPF Retirement Planner (Google it) and there are reliable calculator tools.
  3. Have adequate insurance coverage so as not to disrupt your retirement plans if the unexpected happens.
  4. It is also important to protect your retirement funds from insurable events during the accumulation phase.
  5. Adopt investment strategies/assets that align with your risk profile. Longer time horizons allow for higher risk tolerance when deciding.
  6. Approaching retirement with shorter time horizon, put your liquid assets in safe and good interest-bearing accounts ie SSB, T-Bills or CPF (RA) if after 55.
  7. Review your retirement plans regularly and adjust where necessary.
  8. Self-employed persons should make full use of CPF voluntary contributions for their future needs. Explore upskilling for new industries and full-time jobs if income stream is not reliable.
  9. Do your CPF Nomination.
  10. Get your Lasting Power of Attorney (LPA) done.

The Author is a volunteer at the Institute for Financial Literacy (IFL) at Singapore Polytechnic. Much is aligned with MoneySense which is Singapore’s national financial education program that seeks to help Singaporeans to manage their money well and make sound financial decisions on their own.

IFL is a collaboration between MoneySense and Singapore Polytechnic. Founded in 2012, IFL is the outreach arm of MoneySense and conducts free and unbiased financial education programs for the public.


%d bloggers like this: