Financial Planning Tips for People in the 40s Your challenges are tough, your commitments are heavy. Family expenses, kids and their education, ageing parents, car loans, housing loans, career security, holiday expenses, etc. Its like running a business where balancing expenses, revenue and cash reserves is both a science and art. Here are some pointers to help you achieve financial freedom: 1. Segregate your income and build a reserve fund Plan and save up for expensive items that you need to replace, eg. car. Same goes for annual expenses such as family holidays. Put the money is a separate account so you wont touch them. Establish an emergency fund that will last you and your family for 6 to 10 months in case you lose your job. Do not use this fund for purchases and top up into this fund when you have cash to spare. It can act as your retirement fund in future. 2. Reduce your debts Reduce and eliminate that debt so you can invest and let your money work harder for you. If you have credit card debts, see if you can find something at lower interest rates. Housing loan is another area that you can look into. Compare the rates youre paying against what various banks are offering and do the necessary. 3. Maximise the potential of your investments Most Singaporeans like to invest in property and stocks. While property is a heavy investment that requires substantial outlay and time to harvest, you can look into how your other investments are doing. Evaluate your risk profile and look into various avenues of investments. Rebalance your portfolio and chop off those that are non-performing at least once a year. Channel those funds into instruments that can bring maximise your profit. 4. Insure your family If you havent done so, look into it. Insufficient coverage can result in your funds and investments being gobbled up if the unfortunate happens. A good way to measure the amount of insurance required is to look at the amount that you need to provide for your financial commitments, children, spouse, parents over the number of years you need to support them. You should also look into income continuation should anything happens to you. 5. Make plans for retirement Start thinking about the lifestyle you want to have and plan towards that direction. I will be making a post to touch on this in the near future. Till then, peace! Best regards, Lim Jyh Ren, Ernest Financial Advisor
Posted on: Tue, 05 Nov 2013 22:50:02 +0000