Ask the Expert Series: Post 2020 Budget
How would the budget 2020 impact a parent? - “A Singaporean child will receive more than S$180,000 of education subsidies by the time they turn 16, including S$50,000 in government subsidies over five years when they enrol in a full-day childcare programme with an anchor operator,” Mr Heng added.
Hi mummies! I’m Hui Chin, and I’m already looking forward to be online tonight with you. I see that there are already some interesting questions posted, trust that I will do my best to respond to as many as I can. If you like, we can also connect on Instagram (@huizhen83). Speak soon!
How would budget 2020 help a parent and their child? - A further $100 cash payout for every adult Singaporean with at least one child aged 20 years and below this year.
How much do we have to save or invest now to prepare for our children’s education in 18 years’ time? Do you recommend buying a education policy for this purpose? Thanks.
Hi Jas, It's a general rule of thumb to save up around 5% of your income in preparation for our children’s university fees. Take a look at how much you already have, estimate the cost of their university, look at how much you need to have at the end of 18 years. Then access the rate of return you need and most importantly, the risk you can afford to take. Besides going to your financial advisor who can advice you of the amount required, there are easy calculators which can guide you to this. You can download PolicyPal app for free and use their calculators. Personally, I will not want to take excessive risk on investing this education fund. I'd prefer it to be guaranteed or with a very high guaranteed component. Therefore, endowment plans can meet this goal. Again, before we set aside money for children’s education, ensuring that the parents are sufficiently insured is important. The goal of education funding can be achieved only when the breadwinner(s) is healthy and employed.
What is the best way to plan for your child's education? How much should I set aside for my child's university expenses etc. How to start saving for this early?
It's a general rule of thumb to save up around 5% of your income in preparation for our children’s university fees. Take a look at how much you already have, estimate the cost of their university, look at how much you need to have at which age. Then access the rate of return you need and most importantly, the risk you can afford to take. Besides going to your financial advisor who can advice you of the amount required, there are easy calculators which can guide you to this. You can download PolicyPal app for free and use their calculators. Personally, I will not want to take excessive risk on investing this education fund. I'd prefer it to be guaranteed or with a very high guaranteed component. Therefore, endowment plans can meet this goal. Again, before we set aside money for children’s education, ensuring that the parents are sufficiently insured is important. The goal of education funding can be achieved only when the breadwinner(s) is healthy and employed.
What's the best way to save money? Eg invest in stocks, funds, keep savings account etc. And how much % do you recommend households to save?
Hi Linh, when it comes to savings, there are many ways as we save for different purpose. Savings in bank accounts are for liquidity purposes and hence as a rule of thumb, we should always have about 6 months of income as our emergency funds. However, due to the low interest rates offered by saving accounts, mid to long term needs have to be addressed by other ways which includes purchasing life/endowment policies or investing. How much risk one is able to accept will decide if one proceed with investment to grow their money or to take up endowment/retirement plans. The returns offered by endowment plans are quite low. If you’re looking for higher returns and can afford to take on more risk, go invest in ETFs or stocks. However, if you want to include an endowment plan in your investment portfolio, there are some plans which have higher guaranteed returns. These are usually plans with shorter terms, rather than those with 15- to 20 year of tenure. If one has excess cashflow to spare,
With a two month old and 4 years old, how costly are medical check up/vaccinations for young children? Does any insurance cover them?
Under the National Childhood Immunisation Programme (NCIP), there are a list of compulsory vaccinations which the baby has to go through from birth all the way till they are 18 months old. On top of those, there are another set of recommended vaccinations which are not compulsory but highly encouraged. The cost of vaccination depends on whether they are administered in the polyclinics or private clinics. The diphtheria and measles vaccinations are compulsory by law and are available for free at the local polyclinics while recommended vaccinations are highly subsidized for Singaporean newborn. In Singapore, most of the insurance does not cover the cost of these vaccinations. However, there are international health insurance which might allow one to include coverage for the cost of vaccinations (with a cap) by paying additional premiums.
What’re the type of insurances that’s recommended for family ? Eg. Health, life. Is international insurance better for expats ?
Hi Jessica, the core of financial planning speaks about protection needs before wealth accumulation. That is especially so for family with children as dependants or if any parent is a sole bread winner. Usually I will recommend that parents cover themselves appropriately for life, TPD and critical illness coverage using either term insurance (cheaper and able to cover higher sum assured with lower premiums) or whole life policies. Next will definitely be a comprehensive hospitalization plan (usually integrated shield plan with rider if eligible). By these cover, it ensures continuity for the dependants if unfortunate events occur. For the young ones, the first 2 policies I will recommend is always a hospitalization plan and a personal accident plan. In the early years of a child, they tend to be prone to falling ill or hurting themselves. While the cost doesnt seem to be an alarming one, a single hospitalization due to minor conditions could incur hefty charges. Hence, it is key to t
How to start saving up for the future? Are there any plans I can buy to start being financially stable as a young working adult?
Saving up for the future should start from our first paycheck. Before deciding on the type of plans to purchase, there are a few factors which are important for assessment. What is our current stage of life and current (or upcoming) commitments What is our medium term saving goals What is our risk profile when deciding the amount we require at a certain age (or stage of life) Based on the above, if we have upcoming commitments such as a property or a newborn, life protection policies such as a term or whole life insurance will be of utmost importance. Moreover, these policies tend to be cheaper when we get ourselves covered at younger ages. Typically, one can look at endowment plans which offer flexibility as a form of saving for a goal/retirement. Considering that buying insurance policies are lifetime and long term commitments, it is important for young adults to consider flexibility in the policy. While these flexibility might come at the expense of the returns, there ar
Since you are also in the insurance industry for more than 10 years, any financial planning advice you have for young family?
My golden rule of thumb and advice to every young family is as follow: 1. Breadwinner to be sufficiently insured. Rule of thumb is to be covered 10X of your income for life coverage and 5X of your income for income protection (critical illness). 2. Hospitalization plans for breadwinners and the children are compulsory plans to have. 3. 5% of income to be set aside for education planning 4. Review these coverage upon events such as a change in job, promotion, having a newborn, buying a new property etc