Financial Planning Made Easy

As the old adage goes, if you fail to plan, you plan to fail. So, it goes to show how important planning  is if you want to reach your financial goals. I think no one wants to depend on social assistance when we reach our sunset years.

So, how do you make sure you avoid these financial woes?

1) Pay Yourself First
For a start, you should open several bank accounts for various purposes so that you can preset GIRO amounts to be transferred to your savings and spending accounts. This will result in discipline to save which is sometimes lacking in most people. Afraid that your yearly overseas trip or that designer bag is going to blow your budget? You can set aside an amount every month to a "special treat" account with which you can dip into for your overseas vacation or extravagant purchases and make sure you don't have to touch other accounts. A rule of thumb is to make sure you save at least 20% of your income and to keep 6 months of expenses as an emergency fund.

2) Pay off Debts
You should list down all your debts and start prioritising and paying off those that incur the highest interest. For housing loans with low interest, if you are able to make investments which can exceed the interest that you incurring on the loan, you should go ahead to do that and earn the spread.

3) Buy Insurance
Make sure you are adequately covered especially if you have dependents so that they do not have to suffer unnecessary financial hardship if the unforeseen happens. For this, you can purchase a term life insurance. The cheapest in the market would be the SAF Aviva Term Life policy available to NSMen and their spouses. Maximum coverage is S$1m. Everyone needs a hospitalisation and surgical (H&S) insurance due to increasing medical costs. At a minimum, a basic MediShield plan should be considered. The Singapore government is trying to come up with MediShield Life which will cover Singaporeans for life. The premiums will definitely increase with this change for younger Singaporeans but this will ensure that elderly SIngaporeans enjoy affordable coverage.

4) Live within / below your means
It might be tough for some people but for those who can do it, the delayed gratification can save you from rude shocks like retrenchment, family emergencies. In this age of consumerism, this may be easier said than done but those who can do it will definitely have the last laugh.

5) Make Investments
Rule of 72 states that you can double your money in 7 years if your investments yield 10% or 10 years if your investments yield 7%. If you are not the financial saavy type, you can always invest in low cost ETFs in the market. That is what Warren Buffett instructed his wife to do if the Oracle of Omaha is no longer around. Remember the Rules of Investment of the Man - Rule #1 : Do not lose any money; Rule #2: Refer to Rule #1.

6) Have a Clear Financial Goal
Make use of tools on the CPF website and MoneySense website to help you. Assess how much you need after retirement and calculate how much you need your nest egg to grow to. That way, you will not be too far off in terms of your goals.

7) Make your Will
And finally, in order to be clear on the distribution of your estate upon your demise, you should consult with your lawyers to draft your will. You can also do it yourself but the risk is that the will might be ineffective or invalid in the eyes of the law. Costs are S$200 onwards depending on the complexity. Do be reminded that CPF funds, joint tenancy property, insurance and joint accounts are not included. In the case of CPF funds and insurance, you need to nominate your beneficiary whereas for joint tenancy property and joint accounts, it goes to the surviving owner.

DBS Multiplier Programme

DBS is offering $150 cash to all eligible customers who open a DBS Multiplier Account between 24 May to 30 June 2014 and deposit in S$50,000 of fresh funds by 31 July 2014.

The DBS Multiplier Programme is aimed at rewarding customers for consolidating their banking needs with DBS. You can earn interests up to 2.08% per year on the first S$50,000 of your savings (or S$1,040 per year) if any or all of these add up to at least S$7,500 per month:
1. Your Salary is credited to a DBS / POSB account
2. Your Credit Card spendings with DBS / POSB Credit Cards
3. Your Home Loan from DBS / POSB
4. Your Investment Dividends are credited to a DBS / POSB account

Total Monthly Cashflow           Higher Interest Rate (p.a.)
S$7,500 to < S$10,000                   0.98%
S$10,000 to <S$12,500                  1.28%
S$12,500 to <S$15,000                  1.48%
S$15,000 to <S$20,000                  1.68%
S$20,000 and above                       2.08%

Things to note are:
1. Fall below fee of S$5 will be charged if average daily balance falls below S$10,000
2. Early closure fees of S$30 if account is closed within 6 months
3. No lock-in period

The target customers of DBS for this product are mainly those who high credit card spenders, investment savvy folks or have home loans with DBS to fulfil the basic criteria set. As compared to the OCBC360 account which is catered more for the man in the street, this is somehow less attractive due to its tiered interest and more stringent criteria.

Please refer to the website for more details.

Update @ 5 July 2014
Receive S$150 credited to your account if you open a DBS Multiplier Account between 1 July till 8 Aug and deposit S$50,000 of fresh funds to your account by 31 Aug 2014.

Please refer to the website for more details.

Bank of China Multi-Currency Savings Account Promotion

From 6 June for a limited period only, depositors with fresh funds of at least S$20,000 get to enjoy up to 1.375% p.a. promotional interest rates and receive bonus interest upfront.

For deposit amounts of S$20,000 to S$49,999, prevailing interest rates (0.35% p.a.) plus bonus interest rates (0.90% p.a.) are 1.25% p.a.

For deposit amounts of S$50,000 to S$99,999, prevailing interest rates (0.4% p.a.) plus bonus interest rates (0.90% p.a.) are 1.3% p.a.

For deposit amounts of S$100,000 and above, prevailing interest rates (0.475% p.a.)  plus bonus interest rates (0.90% p.a.) are 1.375% p.a.

Do note that funds will be earmarked for 12 months and BOC will deduct the bonus interest paid upfront if there are any premature withdrawals.

Please refer to the website for more details.

HSBC CNY Time Deposits

HSBC is offering 2.0% p.a. for 1-month tenor and 2.4% p.a. for 3-month tenor for offshore CNY time deposits (Placement amounts from RMB 250,000 to RMB 5,000,000). Offer is valid till 30 June 2014 for HSBC Premier and Advance customers only.

Please visit website for more details.

OCBC 360 Account

Starting sometime in April this year, OCBC has revamped its 360 savings account making it more attractive and easier to understand for depositors in a bid to increase its market share in preparation for the rising interest rate environment.

There are 3 conditions to be met to get up to 3.05% per year on a maximum deposit balance of S$50,000. That will mean S$1,525 of interest per year or S$127 per month which is great given that this is extremely low risk and not forgetting that OCBC is twice ranked by Bloomberg as the World's Safest Bank in 2011 and 2012. It is now World no. 2 in 2013 after Qatar National Bank.

So, how does it work? You can earn 0.05% per year base interest for account balances of up to S$200,000 or base interest of 0.15% per year on balances above S$200,000.

Bonus interest of extra 1% per year can be earned each when you do all or any of the following:
When you
1. Credit your salary every month by GIRO of at least S$2,000 - at the bank site, there is actually a weblink with an email already drafted addressed to your HR to change the banking instructions. You just need to include your 360 account no. It is that easy.
2. Pay any 3 bills every month either through internet banking or GIRO
3. Spend at least S$400 on your OCBC Credit Cards every month - you need to be the Principal Cardmember and the Primary Account Holder for the 360 account

With conditions that are quite easy to achieve, I believe that OCBC will be a big winner with this product. The other similar products DBS multiplier and Stanchart Bonus Saver will have a tougher time attracting deposits.

Please refer to the website for more details.

Standard Chartered Bonus$aver Current Account Promotion

Standard Chartered Bank is very aggressive in its acquisition of new depositors and is holding frequent roadshows at Plaza Singapura and other shopping malls in Singapore to promote its Bonus$aver account by giving away sign gifts to new customers. The current promotion runs from 1 June to 31 Aug 2014.

Depending on whether you sign up online or at a branch, you can walk away with a Fitbit Flex / American Tourister Luggage with minimum deposit of $3,000 or a Samsung Galaxy Tab 3 / American Tourister Luggage and $100 CashBack with minimum deposit of $50,000.

You just need to spend a minimum of S$500 per month on your Bonus$aver card and you will be rewarded with 1.88% p.a. on the first S$25,000 of your account balance or S$470 per year.

Not bad for a current account. First cheque book is free and subsequent ones are chargeable at S$15 each. Another point to note is that a minimum daily balance of S$3,000 is required. Otherwise, a fall below fee of S$5 will be charged.

Please refer to website for more details.

CIMB StarSaver Account

CIMB is probably paying one of the highest interest rates of 0.8% p.a. on current account balances. The only conditions are a minimum initial deposit of S$5,000 and that you need to put in an incremental balance of at least S$500 every month for the 0.8% to apply on your entire balance. For amounts less than S$500, you still get to enjoy 0.5% p.a. If you decided to put in a lump sum, say $20,000, CIMB will automatically convert it into equal portions for you and allow you to enjoy the 0.8% p.a. from the first dollar.

There is no need to fulfil multiple conditions to enjoy the higher savings rate and with the FAST (Fast and Secure Transfer), funds can be transferred from other participating banks within seconds.

Some features that I find attractive are:
1. Free cheque book
2. Convenience of Internet banking
3. No fall below fee
4. No lock-in period

Please refer to the website for more details.