Asked by Anonymous

Should I buy insurance first, or invest first, with my current amount of money that I have $10k? I think I have a few policies paid by my parents, which should I factor in first?

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  • Clarence Chua
    Clarence Chua, Financial Planning Specialist at Prudential Assurance Singapore
    Top Contributor

    Top Contributor (Apr)

    Level 6. Master
    Answered on 23 Apr 2019

    You should always get your insurance set up first. Because of the unknown that can happen.

    A simple way to set up your priorities for finance in order is a CSI concept. (Coverage, Savings, investment.)

    Let’s say something happens in one year time, 1k into insurance can give you 500k. Even if you were to put 10k into investment, you will need 500x or 5000% in return to get the 500k.

    Set up a firm foundation then build your tower. 👍🏻

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  • Brandan Chen
    Brandan Chen, Financial Planner at Manulife Singapore
    Level 5. Genius
    Answered on 23 Apr 2019

    Always INSURANCE first because insurance forms the baseline of any form of financial planning.

    Like what Hariz mentioned, make sure that your parents did purchase health insurance for you!

    Thereafter, speak to a financial advisor that is abe to consolidate all your policies to show you the coverage that you have. From there, make sure you are adequately covered for ECI (1-2x annual income) and CI (3 - 5X annual income)

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  • HC Tang
    HC Tang, Financial Enthusiast, Budgeting at The Society
    Level 8. Wizard
    Answered on 21 Apr 2019

    Insurance first (Defence first) because it's your basic protections, after that only go offence (investment).

    Find out from your parents what's the policy they bought for you, get the details from the agent.

    Follow this guide to sort out the insurance. https://blog.seedly.sg/working-adults-what-are-the-key-insurance-policies-you-should-get-in-singapore/

    Next, read this: https://blog.seedly.sg/age-risk-profile-investment-to-hold/

    and more at Seedly investment blog page to learn more before you start: https://blog.seedly.sg/category/investing/basics-of-investing/page/4/

    All the best :)

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  • Andrew Fong
    Andrew Fong, Associate Partner at St. James's Place Wealth Management
    Level 3. Wonderkid
    Answered on 23 Apr 2019

    3 stages of Financial Planning:

    1) Manage your cash flow & establish an emergency fund

    2) Protect yourself against financial risk (Insurance)

    3) Invest a portion of your monthly surplus

    It has to be in this order. It doesn't make sense otherwise.

    Regarding the policies that your parents may have taken up for you. Check on what these are. In my opinion, if these policies are endowments they do not count as protection against financial risks as they are designed as saving tools.

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  • Hariz Arthur Maloy
    Hariz Arthur Maloy, Independent Financial Advisor at Promiseland Independent
    Top Contributor

    Top Contributor (Apr)

    Level 7. Grand Master
    Answered on 21 Apr 2019

    Insurance always comes first.

    At least get your hospitalization plan settled and purchase CI cover for about 5X of your annual income as coverage.

    Then only invest after setting aside 6 months of your expenses behind as emergency cash.

    Comments (2)
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    • William Ng
      How do we determine the CI coverage? Let’s say someone is at the last stage of cancer.
      22 Apr 2019
    • Hariz Arthur Maloy
      CI coverage should be around 5X their annual income. This is for replacing the income loss due to inability to work. For treatment, your hospitalization plan should cover about 90% of all costs.
      22 Apr 2019