*Produced by SilverKris for Prudential*
It’s been over a year since the pandemic ravaged Singapore’s economy. International borders shut, tourist numbers plummeted; many businesses were forced to retrench workers; and virtually all sectors of the economy were affected by the two-month-long circuit breaker exercise.
This uncertain state of affairs prompted many Singaporeans to review their personal finances. Plenty of investors poured into the stock market, purchasing equities, parking their money in bonds or taking up unit trusts. Some signed up for additional savings or retirement plans. A few decided to invest in property. And many reviewed their health- and life-insurance coverage to ensure that their loved ones would be appropriately covered should anything happen to them.
Yet many Singaporeans still haven’t taken stock of their financial situations. Despite the amount of information available out there, many myths about managing your wealth still exist. Read on as we dispel some of the most predominant misconceptions and suggest ways to grow and enhance your financial portfolio starting today.
Myth 1: Wealth planning means amassing cash assets
When it comes to financial planning, cash isn’t necessarily king. While squirrelling away money into a savings account presents a viable option for growing your wealth, there are many other investment strategies that can offer better returns. What’s more, most local banks steeply cut their interest rates on savings accounts in 2020 in response to the dour global economic climate. Individuals may consider exploring insurance savings plans and investment-linked insurance plans, both of which are offered by Prudential. Not sure how to start? A qualified financial planner can help you discover the right product for your situation.
Myth 2: Wealth planning requires high-paying jobs and big savings
Many believe that in order to start investing in financial products, you need to have a high-paying job that allows you to first accumulate a sizeable chunk of savings. But that couldn’t be further from the case. As the old adage goes, every dollar counts: instead of letting your money languish away in the bank making minimal returns, investing a small amount each month in financial-planning products can actually help grow your wealth at the beginning of your career. Besides making you more financially savvy from an early age, investing young will also give you a longer runway to take advantage of compound interest – a factor that will ultimately lead to greater returns.
Myth 3: Affluent Singaporeans are experts at wealth planning
Think affluent people have it all figured out when it comes to money? Think again. While the number of wealthy individuals in Singapore is growing at a rapid pace, many are not adequately insured against personal, financial and business risks. According to recent studies, a whopping 70% of affluent Singaporeans focus their financial-planning efforts on growing their wealth, while only 46% are focused on protecting their wealth. This means that even the most affluent individuals are potentially one critical illness, accident or retrenchment away from causing a significant dent in their savings if not worse. No matter the size of your income or your savings plans, a wealth protection plan is important and can be implemented through a combination of critical illness, life insurance and other policies, safeguarding you against most unforeseen contingencies.
Myth 4: Homes and businesses are ideal assets to pass down as inheritance
An estimated 81% of affluent Singaporeans intend to pass their wealth down to their children. Yet only 12% have a watertight plan in place for a smooth transition. For example, many have a significant portion of their wealth locked up in properties or businesses – assets that can be tricky to liquidate when the need arises. Hence, beneficiaries of such inheritances may not have sufficient liquid assets if they have to pay off outstanding liabilities: such as personal guarantees, taxes or loans. This can negatively impact the value of the estate and disrupt the smooth transfer of assets. Life-insurance policies offer an ideal alternative or complement to property and business assets. Given their instant liquidity, you and your family can avoid having to sell off assets and can also manage estate taxes and other costs. Prudential offers many whole-of-life protection products, such as the PRULive Vantage Achiever Primer, that allow you to grow your wealth during your lifetime, as well as offer a legacy plan either to your family or to your business.
Myth 5: Loans are the only way to pay for life’s big responsibilities
In addition to enjoying life’s many pleasures, affluent Singaporeans anticipate a number of large expenses and responsibilities during their lifetimes. Many have young children who will head to college in 10 or so years, and an estimated 84% already cover many of their aging parents’ recurring costs. Others still plan on dream purchases and projects in the future, such as homes, cars and even year-long sabbaticals. A basic savings strategy, no matter how aggressive, is unlikely to be adequate without careful, long-term financial planning that can help grow your savings. Prudential’s enormously flexible savings plans allow you to choose short-term plans with high monthly premiums for goals in the near future, or long-term plans with low monthly premiums for goals in the distant future – whichever you choose, products such as the the PRUActive Saver II protect your capital investment and pay out a lump sum upon plan maturity.
Myth 6: Longer lifespans mean less wealth to pass down
Singaporeans are living longer than ever before. According to the latest data by Singapore’s Department of Statistics, the average life expectancy of a Singaporean at birth rose to 83.6 years in 2019, compared with 75.3 years in 1990. While it may be tempting to think that a longer life expectancy means that you’ll have less wealth to pass down to younger generations, proper financial planning and investing in retirement savings insurance plans can help prepare you for the expenses of your golden years. Prudential offers a range of products to cater to this need, including those that offer a steady cumulative monthly income once you hit the retirement age. Make an appointment with a Prudential financial consultant to choose the right plan for you.
To connect with a qualified financial consultant and begin your wealth-planning journey today, visit Prudential‘s website.