(Post 83/week 68)Learning investing/trading together part 16: Practical Guide On Financial Planning (By Tan Kin Lian) part 2

Continuing on from part 1 here...

11.Good Financial Products

• Criteria for good financial products: transparent, fair charges and value for money
• Product traded on an exchange such as stocks are transparent and available to all, you can either be a buyer or seller
• Invest in renown company stocks that have high volume transaction per day, avoid fund or stock has less than $100 million in asset
• Once again...avoid insurance saving plan!
• Stay away from any complex product that you do not understand!

12.A financial adviser

• Contrarily to the book, Simply, just avoid them or find a trusted financial advisor (or DIY yourself,there are many information about various product on bank websites, there is no need for a financial adviser)

13.How to deal with inflation

• Simply put, earn more money(1001 way to do this!)

14.Planning at a later stage

• Start saving early

15.Higher commitments

• Allocate your saving and expenses according to your income(see part 2:Start a financial plan here)

16.Investing on your own

• Before investing in the stock markets, you should be aware of the following risks:
• Poor performance of invested company
• Failure to take up right issues
• High expenses of trading
• Bad timing decisions

• Trading in shares requires a close knowledge of the market, most of the individual investors like you and me do not have the time or resources to monitor the market, that is our disadvantages against a large fund
• Investment research information is more readily available to large fund, they are able to act quickly to take advantage of the news.


• On the other hand, our advantages are that we are able to hold on our stocks throughout the bad times, large fund have to consistently make a profit and show results to shareholders
• We may end up selling at a low price or buying at a high price due to the delay in getting relevant information

• When a company makes a right issue, new shares are available for a discount, existing shares are diluted and drop in value
• Hence, avoid companies that have a habit of making rights issue regularly

• Don't rely on an investment tip

• In a bull market, investor make a profit by buying shares
• In a bear market, investors sell their shares

17.Cost of term insurance

• Get one of this,I got one under the SAF Aviva
• Term insurance will pay out after a person death

18.Cost of health insurance

• Get one of health insurance

19.Cost of life insurance

• Also, get one of life insurance

20.The fun of gambling

• Don't start gambling, simple as that, unless its new year!

Will continue the next part here!

(Post 82/week 66)Learning investing/trading together part 15: Practical Guide On Financial Planning (By Tan Kin Lian)

This is one of the earliest finance books that I borrow from the library, it is simple and easy to read and give a brief introduction to the different aspect of finance such as stock and insurance. Hence, I wanted to share this book with you guys.

This post will only cover the key point throughout the book if you would like to read in-depth do borrow or buy the book:)

A brief synopsis

• Contain practical point on financial planning for young people and retirees
• The need for saving, investment, and insurance

1.Overview

• Start financial planning early
• A student should avoid making commitments to a life policy unless they can afford it
• A life policy is a bad form of saving for any person with irregular income, as they may not able to make a continuous commitment and would opt to cancel the life policy, which generally comes with a penalty

2.Allocate your earning

• Income allocation for most people(For current expenses:50%,For housing:25%,Save for the future:25%)
• Income allocation for people with lower income or 3 or more dependent(For current expenses:60%,For housing:20%,Save for the future:20%)
• It is important for young people to prioritize clearing their debt first e.g study loan, wedding loans, renovation loans, car loans
• People should generally save about 6 to 12 month of their personal salary, which is to be used for emergency

3.Meet current expenses

• Current expenses include the following(Food,transport,utilities,telephone,entertainment,household appliances,interest on borrowings)

4.Cost of borrowings

• Debt occur due to the following reasons(house, car, furniture, unemployment, unexpected illness)
• Avoid credit cards due to the hefty interest

5. Buy a home

• Do not over commit
• Do consider transacting with the seller directly when purchasing a property

6. Save for future needs

• Saving are mainly used for retirement, unemployment, insurance, medical expense, education
• Simply, Save as much as you can

7.Invest your savings

• Invest your savings for the long term and aim to achieve a yield that is 4% per annum, 2% higher than inflation
• To achieve this yield, you have to invest in equities, you can read all about my  post on the boglehead portfolio here or my investment project updates here
• If you trade,prepare for a high transaction cost
• Avoid structure investment products, such as capital guaranteed products, capital protected products, credit linked notes,equity-linked notes, dual currency investments, life insurance saving policies(especially this!!) and land banking products
• Most of these products are design by the financial institution and the commision that is taken by your savings are used to pay for creating, marketing and administering the product and the profit margin
• Equity generally has an annual return of 5 to 8%  and has high volatility
• Property fund has an annual return of 5 to 8%  and has high volatility
• Bond fund has an annual return of 2 to 3%  and has low to medium volatility
• Fixed deposit has an annual return of 1 to 2%  and has low volatility

8. Use of savings before retirement

• Savings are to be used for purposes such as education, unemployment, disability, unexpected expenses or  insurance

9.Use of saving after retirement

• Can consider investing into CPF Life Annuity, it has an imputed interest rate of 3.75% to 4.25%, 
• Some advantages of CPF Life...
• Provides the security of a lifetime income
• The Government gives a bonus of $4,000 for people who join the scheme
• Its interest rate of 3.75% to 4.25%, is higher than other low-risk bonds

10.Insuring your risk

• Consider getting insurance for premature death, medical expenses, disability, and personal accident...All other types of insurance, just avoid it!

Will continue part 2 here!

(Post 81/week 64)Learning investing/trading together part 14:How to set up POSB/DBS invest saver(regular saving plan)

Recently, lots of people have PM me asking on POSB invest saver, how to purchase etc. So, I thought it would be useful if I write a guide on how to purchase stock using POSB invest saver. 

So here is a step by step guide on how to purchase a stock on POSB invest saver(Do comment below if you need any help though)

Step 1)Log into the DBS I banking website
Step 2)Click on invest tab and click on more investment service(Black circle)

Step 3) You will reach this page


Step 4) Scroll down and select Set up or update unit trust Regular savings plan(RSP)(Red circle)

Step 5)You will Probably be asked to enter your SMS 6 digit pin number at this time

Step 6)After entering your sms 6 digit pin number, you will arrive at this page below.

Step 7)Select regular saving plan(red circle)

Step 8)After selecting regular savings plan, you will arrive at this page below

Step 9)Select your investment account and click search(red circle)

Step 10)After selecting search, you will arrive at this page below. Next, Select the RSP setup(black circle)

*Note: Most of you will probably arrive at a different kind of page if you are not sure of the next step do message on me on the blog or on the facebook post

Step 11)Or after you have click the search button as in step 9, you will probably be brought to a page rather similar to this

I will explain the various term as shown above below

Fund name:ABF SINGAPORE BOND INDEX or STI ETF only(choose one)

• For more information on ABF, do refer to this post

• For more information on STI ETF, do refer to this post

Day of Debit:The day where the monthly investment amount is deducted from your bank to purchase either ABF SINGAPORE BOND INDEX or STI ETF

Gross Sales Charge:1%, 

• If your monthly investment amount is $100, the gross sales charge every month will be $1 which is 1% of your monthly investment amount of $100.

Minimum monthly investment amount:$100

• The Minimum monthly investment amount for POSB invest saver is $100

Monthly investment amount

• Your choice of month investment amount, it could be e.g $ 100, $200 or even $300

Debiting Account

• The bank account that the money will be deducted from

Country of birth

• Singapore, of course:)

Step 12)The term and condition page will appear,click agree(red circle)

Step 13)You will be brought to the verify details page, click submit(black circle)

This is where I will stop, if I continue to click submit I will be setting up a new regular saving plan.

For more information on the regular saving plan, do read my Jan 2019 regular saving plan update here

If you need any help, do comment on the blog, thank you!