My friend suggested that I give financial planning talk to couples when they get married. I said that it would be too late. I have to give the financial planning talk to students before they leave school or university and start to work.
Here are the key points:
a) Save 50% of your earnings for the future. You can count your CPF as savings, so you only need to save 15%. You should repay your study loan or other borrowings early.
b) Keep your savings in liquid form, e.g. in a bank account . Do not worry about investing it yet.
c) Buy Medisheld to cover medical expenses and Personal Accident insurance to cover accidents.
When you are ready to invest the savings, choose a money market fund or exchange traded fund (ETF) where the expenses are low. Do not buy a life insurance policy yet, as it is rigid and gives a poor return (due to high expenses). Do not talk to an insurance agent (including your friend) at this time. Do not buy any structured product or investment product sold by a marketing person.
Read my book on Practical Guide on Financial Planning or join FISCA (Financial Services Consumer Association). You can think about investing later on, after you have been educated about the financial products.
Tan Kin Lian
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