Tips on financial planning

1. Here are my tips on financial planning.

2. Have adequate life insurance to cover your life. Insure for 5 to 10 years of your income. This ensures that, if anything happens to you, your family will have adequate financial security.

3. Buy decreasing Term insurance over 20 or 30 years. The premium rate is affordable. It should take less than 1% of your earnings. This is better than whole life, endowment or critical illness insurance.

4. Save 10% to 15% of your salary and invest in a low cost, diversified investment fund. You can earn an attractive return over the long term. The savings can be used for emergencies (including paying medical bills) and for your long term needs (such as education for your child or for your own retirement needs).

5. Do not buy financial products (including life insurance policies) where there are high charges that is taken away from your savings.

6. You can insure your children under Medishield. It will take care of the larger bills. The smaller bills can be paid from your Medisave account, or from your savings plan.

7. Do not buy life insurance policies for your children, as they do not provide a good return (due to high charges). It is better for you to save and get a high return from your investment fund. You can use the money for their education or transfer the savings to them when they start their own family.

8. Your children can take their own life insurance policies when they start to work. At that time, they should buy low cost insurance and save in a low cost investment fund.