facebookAs a financial advisor, what is the most common mistake you see people making? - Seedly
Seedly logo
Seedly logo
 
Daniel Lee

Asked on 14 Dec 2018

As a financial advisor, what is the most common mistake you see people making?

As an FA, what is the most common mistake you see people making with their personal finances? Any examples and learnings to share?

0 comments

2 answers

Answer Now

Answers (2)

Over extending their finances on a property upgrade for the sake of 'investment'.

You're exchanging guaranteed and growing retirement funds (OA) and taking on a liability (mortgage) for an investment that is not guaranteed, high quantum (sometimes 20X your income), not flexible, comes with additional fees, and strict laws, which you will die die have to service for 20 to 30 years if you want to keep the house, while exposing yourself to a fluctuating interest rate.

My advice is that your residence is not an investment. Stay in a modest home. Don't stay in a place that costs more than 7X the annual household income.

A lot of the time when it comes to property purchase, people would also buy a house bigger than their budget because they'll say they'll "figure it out" on how to afford it.

And that's just really bad.

1

Daniel Lee

Daniel Lee

14 Dec 2018

Ooh yikes, I can imagine being spread that thin already. Thanks for the tips and sharing!

Thank You!
Can you clarify
I wonder if
This is so helpful 👍
What about

Post

Loh Tat Tian

Loh Tat Tian

Level 8. Wizard

Answered on 15 Dec 2018

I see people having high expenses in shopping, food, travel and even transport.

These are foreseeable expenses which if you can control well, should be able to have a higher disposable income for investment etc. Of course, you should enjoy but not too much.

Another is overleverage to property “just because you cannot see your CPF money.” Unless the property capital gain is 8% a year, or you are getting rent from it to pay mortgage (which is still risky), try to keep it within expenses.

Insurance is also a big thing because many just spend to buy whole life policy without doing comparison with BTIR, adding too many riders to the whole life policy, and generally not in control Nor have a good copy of the coverage they have.

0

Thank You!
Can you clarify
I wonder if
This is so helpful 👍
What about

Post