Anonymous
And insurance too
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Hi! Great question! Thank you for asking. I
There isn’t a hard rule or number to peg onto how much you should be saving, investing, and spending, but a generic one for Singaporeans would ideally look something like this:
50% - Savings & Investments
40% - Personal Expenses
10% - Insurance (Term, Accident, Hospitalization, Critical Illness, etc)
Now I know there are a lot of articles out there pushing for the 80-20 rule (20% savings and investments), but hear me out for a little while.
In this day and age, it gets harder to save due to increased lifestyle expectations and with all these temptations around us – the social pressure and expectation of drinking, dining out, travelling often, spending on branded goods – it’s easy to let our hard-earned dollars to slip through our fingers. By setting aside 80% of your net income (after CPF) into expenses, you’re allowing yourself to PAY MORE TO OTHERS (and happily do so) instead of paying yourself MOST, instead of paying yourself FIRST.
You worked hard for this money, you should deserve most of it!
There’s another reason why I would suggest 50% instead of the usual 20%. In our lifetime, we have multiple short term goals and one giant goal that looms larger and larger with each passing day: RETIREMENT.
This entire allocation of 50% shouldn’t be set aside for one goal (e.g wedding), or some vague financial goal you don’t know when you’ll ever reach. Out of the 50% set aside for savings and investments, a larger portion should go into short term goals while the smaller portion would go into long term goals.
A good financial planner takes into account your goals and current financial standing before recommending an appropriate budget and investments/savings products to help you meet your goals as best you can.
The investment and insurance products should be selected to meet the various financial goals in your life, as well as protect you in events of uncertainty or unfortunate events.
As an Associate Wealth Planner, I take pride in being able to serve my clients this way by providing holistic financial planning solutions. Feel free to reach out if you have more questions.
Cherie Tan
Representing Prudential Assurance Company Singapore (Pte) Ltd Reg. No. 199002477Z
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Hariz Arthur Maloy
03 Apr 2019
Independent Financial Advisor at Promiseland Independent
After setting aside your emergency expense. You should try to invest minimally 20% of your income. T...
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Hello! There are various ways to determine how much you should allocate to invesmtent.
1) Working backwards from the amount you want
You will need to decide how much you want to save then decide on how much you want to invest. From there, you should be able to work backwards to determine the amount to dave.
2) Invest the money that you have left after emergency fund.
The emergency fund usually contains 6 months of your income. Once you have managed to save this amount, you should then proceed to invest with the rest of your savings.
3) Fixed ratios
This approach is rahter traditional whereby you will fix ratios to save and invest. An estimated percentage to work with would be saving 20% of your salary and 15% on investing.
Hopw this helps!