I am partially disabled - able to work part time but not full-time due to a severe injury. How should I best allocate my finances (insurance, investments)? - Seedly
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Anonymous

Asked on 17 Dec 2019

I am partially disabled - able to work part time but not full-time due to a severe injury. How should I best allocate my finances (insurance, investments)?

Hi, I am a 32/f living in Singapore. 5 years ago, I was severely injured by a chiropractor (neck nerve injury), was bedridden for 6 months and have not recovered fully in spite of working very hard on my recovery the last 5 years.

You can consider me disabled as I can only work part-time for the foreseeable future.

Help with financial and insurance planning please?

Savings: 700k in assets (all cash, recently liquidated stock portfolio)

Insurance: hospitalization, ILP

Thanks!

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Hi anon,

I am so sorry to hear of your situation, but reading the other answers and your responses as well, it looks like legal recourse is out of the picture.

The big picture stays the same: Build income streams, and keep liquidity as a buffer.

Income streams have two forms: Guaranteed and Variable.

On the Guaranteed side, it's really about annuities. Stable, guaranteed income streams for a period of time, or even for life. They form the bedrock of your portfolio to deal with basic living expenses. CPF Life is one of the best there is, so if you can work part time, do ensure that you get CPF contributions. As long as you contribute to CPF, you'll have a decent amount when you turn 55. Private annuities can be used as an inflation hedge or to complement.

For Variable, you have stocks, ETFs, UTs. All carry risks, without any guarantee of dividend, but their yield will be higher. The finer details can be very lengthy to talk about, so I won't elaborate here. The trade off, as always, is risk. Volatility can and will cause emotions to run high, so if you are good at managing that, you can allocate a higher proportion to Variable asset classes.

Get a good mix of both in your portfolio (start with a 50/50 split first and adjust in accordance with your preferences), keep a year worth of rainy day funds, and keep spare cash as a warchest to leverage on opportunities.

Keep the hospitalization. The ILP has to be kept too at the moment, since you are very unlikely to be able to get a policy in future as long as there is medical underwriting involved.

However, don't give up hope! Medical advances may mean that your situation could be reversed years down the road. I wish you all the best!

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Daryl Liao, Fti
Daryl Liao, Fti
Level 7. Grand Master
Answered on 20 Dec 2019

You may consider allocating 20-30% to annuities for stability.

Another 30-40% to fixed income assets such as bonds or reits.

If cashflow isn't an issue can consider some into growth Stocks as well!

This would address some cash flow issues and yet make sure your portfolio grows at a reasonable rate.

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Question Poster

22 Dec 2019

Thank you, appreciate the thoughts toward portfolio allocation. Might you happen to have any specific recommendations for annuities or bonds?
Daryl Liao, Fti
Daryl Liao, Fti

22 Dec 2019

Please don't mention it. I sincerely hope you pull through this tough period. I would say most important thing is to keep all your insurance policies as you may not be eligible to get other plans moving forward. I'm afraid i am outdated with the annuities in the market but a key point would be to get those with high guaranteed payout to avoid surprises. The yield for bonds seems to be pretty low and in your situation, getting low risk rating ones would be more prudent. Anything you may Facebook msg me but do note I wont be able to sell you any product. Best of luck!
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Hi Anon, so sorry to hear what you went through, I hope you sued and received compensation for your injury and his negligence.

Regarding finances, what you want now is income. Perpetual passive income streams, with low volatility so you don't have to manage.

But first, I'll top up medisave and leave a year's worth of expenses for emergencies.

I'd go for a moderately conservative dividend paying portfolio and aim for a 3-4% dividend income with inflation adjustments. If you withdraw 2+k/mth, this money can last 60 years till you're 92.

For insurance, I'd keep your Hospitalization plan 100%.

If you're prudent and manage your money well, you'll probably never need to work again. And it'll be your choice if you would want to.

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Question Poster

18 Dec 2019

Hi, Thank you very much. Unfortunately, I only started a legal case too close to my limitation period (3 years) and had some issues with lawyers. In the end, it was more worth it to cut the case, than continue to pursue and potentially sink hundreds of thousands in legal fees. I am at peace with this decision as I did the right thing to focus on my health so I could at least recover partially. I really appreciate your sound advice. Is thre some way I can speak to you further?
Hariz Arthur Maloy
Hariz Arthur Maloy

18 Dec 2019

That sucks. But I'm glad you're at peace. Rather not be stressed anymore and do what we can. And I'm glad to hear that. You may email me at [email protected] or message me on Facebook. :)
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Choon Yuan Chan
Choon Yuan Chan
Level 9. God of Wisdom
Answered on 19 Dec 2019

In my opnion, dedicating more to investments will be better for you. This is because due to your condition, a lot of insurance providers will be providing exclusions into their policies specially to you. Hence besides the usual health medical insurance which youalready have, past life insurances should suffice.

Focus on the large stock portfoilo you have and try to let it generate passive income for you

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Lee Jiahui
Lee Jiahui
Level 6. Master
Answered on 18 Dec 2019

If you are seeking investments, why did you liquidate your stocks? Are you asking what type of investments? Or what type of allocation? Or what type of stocks? Or what?

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Question Poster

19 Dec 2019

Thank you for your suggestions. I really like the idea of a large cash buffer. I agree that capital protection is very important. However, given that my income will not be growing much and I am still aiming to grow my wealth, this strategy does not seem to support my hopes to still increase my wealth. If I end up with 150k in a stock portfolio that averages 8-10%, that will be only max 15k of growth a year.
Lee Jiahui
Lee Jiahui

19 Dec 2019

Cash in king when opportunity arises. You have your full sum at disposal, not just the 150k emergency fund. Market corrections/crashes typically last 14 months. The immediate cash is merely to capitalise on timing. Good luck searching for the strategy that suits you.
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Hi,

I think for your situation, defensive stock portfolio would help you in the future.

Firstly, You will have to set aside some cash for annual expenses.

You can consider stock investment to generate some passive income. You can check out local dividend stocks/REITs that can give you 4-6% dividend yield and park your money there.

Of course, dont invest everything that you have and reserve some bullets to buy more during stock dips.

You will be very well off in the future!

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Question Poster

22 Dec 2019

Thank you for your thoughts. What I am afraid of is that if I invest in dividend stocks, when the market is down, the stocks will fail to pay dividends and I lose my income. Do you know if this happens? Thanks
Bibiana
Bibiana

22 Dec 2019

I don't think so! The share price drop may not have anything to do with the dividends that the company is able to pay. See, if VICOM's share price may drop during a recession, but they are still earning the same amount of profits hence they are still able to pay dividends to you!
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VC
Vicki Chng
Level 6. Master
Answered on 19 Dec 2019

You should firstly consider how much you need for your living expenses (particularly big ticket items such as medical care and housing). Whatever is left over can be put into a low risk portfolio comprising govt bonds (e.g. SSB, A35 etf) and safe blue-chip income producing stocks or an equity etf

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Bibiana
Bibiana
Level 7. Grand Master
Answered on 22 Dec 2019

I am not from the insurance side, but speaking strictly to investments, there are some REITs and healthy dividends companies in Singapore wihch you may consider!

The key is to invest small, get to see the quarterly incomes then decide to allocate more.

I guess it is also crucial to get advice from trusted professionals!

I pray and hope for your speedy recovery!

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Firstly, one of the most important things to do is to have a complete understanding of your existing insurance portfolio. Through this process, it allows us to understand the coverage that we have, any financial gap, as well as to find out whether we are overpaying for our insurance policies. I have highlighted the rest of the reasons here: https://www.blog.pzl.sg/why-every-client-needs-an-insurance-policy-summary/

Next, we need to have a complete understanding on our cashflow. Through this process, we will understand our earning ability and spending habit. Here is a guide to help you: https://www.blog.pzl.sg/understanding-your-personal-cash-flow/

At this point, we will be clear of two things:

  1. The type of insurance policies that we have and need

  2. Your earning ability and expenses over time

Now, we need to have a further insight on your injury and its associated medical expenses over time. Thereupon, we will plan your savings, which will revolve around your recovery as our core goal.

From there, we will work out a sustainable budget that helps you with your immediate expenditure, as well as to diversify and build layers of passive income stream to supplement your part-time income while maintaining liquidity. This process require an in-depth understanding about yourself and how you see yourself in the future.

If you need my professional advice on how I work with my clients, drop me a coffee invite: https://www.work.pzl.sg/#coffee

In any case, do not overwork your body and please take care of your health!

Here is everything about me and what I do best.

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Question Poster

18 Dec 2019

Thank you very much for this. This is helpful.
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Jonathan Chia Guangrong
Jonathan Chia Guangrong, Fund Manager at JCG Fund
Level 9. God of Wisdom
Answered on 22 Dec 2019

Sorry to hear about your situation. It's great to be at peace with what happened and move on.

I agree with the others that having a large cash buffer will be important for you given that you are working part time and with your condition. As a suggestion, you may consider dividing the rest into a couple of portfolios:

  1. Instruments with guaranteed and semi guaranteed yield. Fixed income (ssb), strong s-reits and other high yielding blue chips.

  2. High growth portfolio. From what I read in the comments you seem to be interested in something more than 8-10% (do correct me if I'm wrong) to grow your wealth. To achieve this you may need either guidance from a mentor or extensive research with trial and error. Not sure about your health condition and whether you can get through a weekend workshop without difficulty but I believe that finding a mentor who can align with your financial goal will help you achieve desire to grow wealth faster.

Hope this helps and all the best.

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Question Poster

23 Dec 2019

Thank you very much, Jonathan. Your specific recommendations of Aims APAC and Mapletree NAC as well as Keppel DC REIT are useful - at least I have a starting point to explore. Thank you. It seems that annuities and CPF (although this will have to wait until I retire) are the most common "safe" bets I have been told...
Jonathan Chia Guangrong
Jonathan Chia Guangrong

23 Dec 2019

No worries, glad to help. Please do your own due diligence on the mentioned stocks to see if they suit your own goals before initiating any positions on them.
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Cedric Jamie Soh
Cedric Jamie Soh, Director at Seniorcare.com.sg
Level 9. God of Wisdom
Answered on 20 Dec 2019

I will prefer a dividend portfolio that provides quarterly or even monthly cash returns from the stocks, REITS or indices return.

Go for local dividend stocks and local REITS for the long term. They provide a better stable returns than other instruments in the long run. I would prefer US stocks myself, but I think you will be more comfortable with dividend stocks in SGD.

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Question Poster

22 Dec 2019

Hello, thank you very much for your suggestions. I would like to ask if these returns are stable through downturns and market crashes? That is one of my key concerns .
Cedric Jamie Soh
Cedric Jamie Soh

22 Dec 2019

In the long run, you will be better off (more than 10 years) with such stocks. if u want very stable, u need to go for utilities and blue chip stocks :D
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N
Ninja
Level 7. Grand Master
Answered on 19 Dec 2019

Why did you not sue the chiropractor?

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Question Poster

22 Dec 2019

I did. the case did not end well. my lawyer refused to give me time sheets when I asked several times for them, eventually revealed that costs were not being fairly charged, risk of legal fees going sky high were too much compared to how much I could claim. overall downside was higher than upside.
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Lim Chun Long Jimmy
Lim Chun Long Jimmy
Level 6. Master
Answered on 18 Dec 2019

I know of someone who could help you with your financial planning based on your situation. PM me if you're keen.

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Question Poster

22 Dec 2019

Thanks. who might that be?
Lim Chun Long Jimmy
Lim Chun Long Jimmy

22 Dec 2019

You may email me at [email protected] or leave me a Facebook message to follow up.
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