Litmus Test of Financial Advise

While each person or family's financial condition can be unique and different from others, I still ascribe to the litmus test that you must 'practice what u preach'

I guess when we are faced with financial planners who are 'friends' with us, a reasonable question would be to ask, "Did u also buy the very policy or investment funds that u are recommending to me"?  How about your spouse or your parents? If u can't personally buy the very policy u are selling, I'm sure if that investment return is so good, there should be some innovative ways to get around, to benefit from it

I have so far been the 'guinea pig' for my financial recommendations to my friends. I have always put my own money first to the litmus test, before suggesting it to others

Some suggestions I have put forth to some of my close friends (with some understanding of their financial conditions):

1.   Starting a OCBC savings account that pays 3% interest
2.   Starting of CIMB savings/current account that pays 0.8% interest
3.   Topping up my CPF Special Account (SA)
4.   Topping up CPF Special Account for loved ones
5.   Transferring from CPF Ordinary Account (OA) to SA
6.   Topping up the Supplementary Retirement Scheme (SRS)
7.    Long-term investments in Singapore large-cap companies (Kepcorp, Sembcorp & ST Engineering)

Bearing in mind of sensitivities, I feel that sharing is caring  :)

Insurance solely for Wealth Protection

·       Commissions-based insurance

          - Long lost friends calling you up

          - Insurance advise given might not be objective or "free"

          - Understand what is Conflict of Interests

·       Hospitalization (Medishield) insurance is a Must

          - Include private hospital insurance and/or 10% co-payment

          - Not only for yourselves but also your immediate family

          - Hospital debts are not waived, even upon death

·       Term insurance (for breadwinner) and invest the rest

·       Self insurance (old movie scene of man on death bed holding biscuit tin full of cash)

Personal Budgeting (MYOM Mind your Own Money)

·       Spend within your means or under your means

·       Start saving. 6 to 18 months of emergency monthly living expanses

·       Payoff your loans with the highest interest first

          - Credit cards (24 % p.a.)

          - Student loans (5% p.a.)

·       Big houses are "really" expenses (bank assets)

·       Cars should be a no-no unless absolutely necessary

·       50/30/20 budget (of your take-home salary)      

          - 50% goes to daily expenses

          - 30% to lifestyle wants

          - 20% remaining into savings and investments

Daily Expenses	Lifestyle Wants	Savings and Investments
Total =	Total =	Total =

·       For more frugal ones, suggest a 40/20/40 formula