ElderShield is a severe disability insurance scheme that provides monthly cash payout of $300 or $400 up to a maximum period of 5 or 6 years.
CPF members with a Medisave account will be automatically enrolled into the scheme once they reach 40 years old unless they opt-out.
In order to make a claim under this scheme, a person must lose the ability to perform at least three out of the six daily activities: Washing, Dressing, Feeding, Toileting, Mobility, Transferring.
What is CareShield Life?
In May 2018, the Ministry of Health announced that it will be introducing a mandatory insurance scheme that will enhance the existing Eldershield by 2020 for those aged between 30 and 40.
These enhancements include:
Lifetime cash payouts, for as long as the insured remain severely disabled;
Increasing payouts, starting at $600 per month in 2020 and increases annually until age 67, or when a successful claim is made, whichever is earlier;
Government subsidies to make it affordable, with no one losing coverage if they cannot pay premiums;
Premiums can be fully paid by MediSave.
Similar to Eldershield, to claim under Careshield Life, one has to lose the ability to perform at least three out of six daily living activities.
The infographic below shows 3 examples of how the claim process works.
Source: CareShieldlLife.gov.sg
Is CareShield Life coverage enough?
According to CareShield.gov.sg, 1 in 2 healthy Singaporeans aged 65 could become severely disabled in their lifetime, and may need long-term care.
Some causes of severe disability may include the following:
Worsening of chronic diseases (e.g. diabetes)
Illnesses as we age (e.g. dementia)
Severe injuries sustained from accidents (e.g. spinal cord injuries).
The question you need to ask is “Will $600 per month from CareShield Life be enough to pay for the long-term care costs of a severed disabled person”?
Let us look at the cost of rehabilitation for Sengkang Community Hospital.
The Monthly Salary of Maid in Singapore (Minimum wage) is between $450 to $570. This estimation does not include the living expenses (eg. food, utility, transport) of the maid, and extra salary for working on rest days, which could reasonably cost another $250/month. $570 + $250 = $820 per month.
From the above information, one can see why the $600 per month payment from CareShield Life may not be sufficient.
So how do you fix the problem?
A good solution is to purchase a CareShield Life supplement plan from a Private insurer to enhance your monthly payout.
The CPF Board allows Singaporeans & PRs to utilize up to $600 from Medisave Account to pay for CareShield Life supplements, so you may not need to fork out cash. Contact a financial advisor for more information.
https://sgadviser.com/wp-content/uploads/2021/09/asian-business-woman-looking-her-digital-watch-in-FM4NFV7.jpg44806720ryanhttp://sgadviser.com/wp-content/uploads/2017/06/logo-300x138.pngryan2021-10-01 00:35:292021-09-30 00:42:01CareShield Life - Should You Care?
Personal Financial Planning is the process of evaluating and improvement of one’s financial situation, through the studying of economic factors and individual choices.
It is essential to know how to save, spend, invest, and control your finances, in order to achieve financial and life goals. The reward of sound money management is an improvement in one’s standard of living and lifestyle. This is true whether you are a 20-year-old university student, a 40-year-old parent with a mortgage, or a 60-year-old thinking about retirement.
An important outcome in the planning process is the development of a personal financial plan that guides a person’s overall financial decisions. For instance, investment plans would involve asset allocation that determines the percentage of an investment portfolio to be allocated to equities, bonds, or other types of investments.
In theory, you can create your own financial plan. However, in reality, many people do not follow consistent plans in making their financial decisions. This is why many people prefer to engage professional financial planners to help them develop and implement sound financial plans, as well as monitor and review them periodically.
The financial planning process can be classified into 5 steps:
Gathering your data
Analyzing and evaluating your financial status
Developing your financial plan
Implementing the financial plan
Monitoring and review
1. Gathering your financial information
Before creating a financial plan, you must first define your own personal and financial goals, needs and priorities. It is important to determine specific and measurable objectives to provide focus and direction for the financial planning process. In order to do so, you must gather both quantitative and qualitative data. You can see some examples below.
Quantitative Data
Personal and family profile such as name, gender, date of birth, age, smoking status, marital status, job, information of spouse and dependents, etc.
Assets and liabilities including CPF
Cash inflows and outflows
Insurance policy information
Employee benefits
Current investments
Business information (if you are a business owner)
Copies of wills and trusts
Qualitative Data
Goal and objectives
State of Health
Career expectations
Interest and hobbies
Anticipated changes in lifestyle
Investment experience and preferences
Risk-tolerance
Money values
Family relationships
Current and projected economic conditions
Other planning assumptions
In the planning process, certain reasonable personal and economic assumptions need to be considered. These assumptions may include:
Personal assumptions
Retirement age
Life expectancy
Income needs
Risk factors
Time horizon
Special needs
Economic assumptions
Inflation rate
Investment returns
Tax rates
2. Analyzing and evaluating your financial status
After gathering all the information available, you need to assess your financial situation and determine the probability of reaching the stated objectives by continuing your present activities. To help the analysis, you can engage a financial planner to prepare a statement of financial position, a current cash flow statement, and if appropriate, a projection of future cash flows. Or if you decide to do it yourself, you may find a free online retirement planning calculator, or investment goal calculator to help you derive your numbers.
Careful analysis and evaluation are critical to the financial planning process, because they form the foundation for determining the strengths and weaknesses of the your financial situation and current course of action. As everyone has limited resources, it is important to prioritize certain needs over others.
Common problems faced when assessing financial needs and objectives:
Sacrificing long-term needs to meet short-terms needs. This is partially because instruments like insurance or certain investment products, are often used to meet long-term objectives. The rewards for such instruments may take many years to materialize. In contrast, short-term instruments are easy to appreciate, because they can provide returns in a shorter time-frame.
You may concentrate on achieving certain personal desires (which you may perceive to be essential needs, but it might not be the case) at the expense of other real needs.
If you have a large estate and/or many beneficiaries, it may be necessary to engage a team of professionals (which may include lawyers, accountants, financial planners, property agents, and investment brokers) to help you in the financial planning process.
What is a Financial Plan?
A financial plan is a document containing a person’s current financial situation and long-term financial goals, including methods to achieve those goals. A financial plan may be created by yourself, or with the help of a professional financial planner.
3. Developing your financial plan
After completing steps 1 and 2, you may discover that you have difficulty achieving some of your stated needs, priorities, and goals. If so, it is recommended that you develop a financial plan to improve the probability of reaching them.
There is no fixed template for a financial plan. It can be an independent action, or a combination of actions which may need to be implemented collectively. Your financial plan may include your retirement strategy, risk management, long-term investment plan, estate plan, and more.
Critical Factors to consider when developing your financial plan, may include:
Advantages and disadvantages
Personal and economic assumptions
Risks and/or time sensitivity
4. Implementing the financial plan
Next you need to look into products or services that reasonably address your needs. They must be suitable to your current financial situation, and consistent with your needs, priorities, and goals. If you are doing it yourself, you can find them by researching online. The downside is you’ll probably spend a lot of time on product or service comparison.
Alternatively, you can consult a financial planner, who will use his or her professional judgment in selecting the products and services that are your interest. Different practitioners may have different opinions, and it is important that you choose someone who is professional, reliable, and trustworthy.
5. Monitoring and review
Last but not the least, you must monitor and review your financial plan periodically. Modifications may be required, if there are changes the following:
Changes in personal circumstances
Are there any changes in your job/income status?
Are there any changes in your health status?
Are there any changes in your family? (eg. birth of a child, marriage/divorce)
Are there any changes in your assets/liabilities (eg. purchased a new property, car, shares, etc)
Changes in external environment
Are there any changes in the economic and market sphere? Should I consider making a fund switch (for Investment-linked Plans)?
Are there any changes in laws, rules and regulations like CPF rules, tax laws?
Product related matters
Is the products you have still relevant to your needs?
Is your coverage still sufficient, or do I need to add a rider, or buy a new plan?
Are there any new products in the market, that can better cater to your needs?
Unfortunately, most people do not have the discipline to do this consistently, which is why they prefer to engage professional financial planners to help them. A financial planner can help you establish a client file, and a system for periodic review and revision.
https://sgadviser.com/wp-content/uploads/2021/09/image-of-smiling-couple-using-cellphone-and-making-3ZQGDWG.jpg53047952ryanhttp://sgadviser.com/wp-content/uploads/2017/06/logo-300x138.pngryan2021-09-01 00:27:482021-09-30 00:41:24How to Create Your Own Financial Plan
Life Cycle Investing is the process of adjusting the investment portfolio to suit the changes in one’s life objectives as they pass through different life phases.
Life Cycle investing generally advocates the concept of reducing risk and emphasizing income as one ages.
The 4 Life Cycle phases are:
Accumulation – Age 20s to early 30s
Saving – Age early 30s to mid 40s
Pre-retirement – Age mid 40s to late 50s
Retirement – Age Late 50s onwards
There are several factors which will affect the choice of investment assets throughout the life cycle phases:
Age – Younger investors tend to have higher risk tolerance than their older counterparts. This is because if they incur any losses on their investments, they have more time and opportunities to recoup it.
Funding – The stability of the sources of income will affect the type of investment assets. A person with multiple sources of income is more likely to be able to adopt a higher risk portfolio, without an immediate need for liquidity.
Family Commitments – Obligations like having to provide education fund for young children, or financial support to aging parents, will mean that current income and preservation of capital would be of great importance.
Debt – Someone with low gearing and high liquidity will have a bigger appetite for a riskier portfolio, as compared to a highly geared person with deteriorating liquidity ratio.
Investment Experience – A seasoned investor will usually have an appetite for a higher risk portfolio, given their familiarity with different investment vehicles and the risks involved. In contrast, a novice investor should avoid committing large sum of savings into high-risk investments. This is because any huge losses incurred early on, will have a detrimental effect on building an effective long-term investment program.
Risk Tolerance – Rational investors are typically risk aversive or at best risk tolerant. They will not accept high-risk investments, unless they are compensated proportionately by higher returns.
Portfolio Objectives – The assets of the portfolio should be selected, according to the objectives of the portfolio (growth, income or capital preservation). High-risk assets at one end of the risk profile continuum would better serve a growth objective while a capital preservation objective can be achieved by the low risk secured assets.
During these 4 phases, the investor must:
Assess and select investment vehicles that are suitable for their risk tolerance
Actively monitor the investment portfolio’s performance
Periodically review their investment portfolio to account for changes in their financial status, risk profile, and changes in the general economic environment
Assess the impact of inflation on the client’s retirement funding requirements
The table below is a general guide to the suggested investment allocation percentages throughout the 4 phases of the life cycle.
Life cycle Phases
Age
Low Risk, Income
Medium Risk, Growth/Income
High Risk, Growth
Accumulation
20s to early 30s
10% to 30%
40% to 60%
20% to 40%
Saving
Early 30s to mid 40s
20% to 40%
40% to 60%
10% to 30%
Pre-Retirement
Mid 40s to late 50s
30% to 50%
30% to 50%
10% to 20%
Retirement
Late 50s onwards
40% to 80%
20% to 40%
5% to 15%
Throughout the life cycle phases, individuals have different financial goals. These can be categorized into:
Short-term, high priority goals (eg. wedding banquet, first home, children’s education)
Long-term, high priority goals (eg. long-term investment, second property, retirement)
Once you listed down your financial goals, you will be in a better position to assess your own life cycle phase and the corresponding needs and concerns.
https://sgadviser.com/wp-content/uploads/2021/09/asian-family-shopping-online-with-tablet-and-credi-7ACL7X3.jpg44806720ryanhttp://sgadviser.com/wp-content/uploads/2017/06/logo-300x138.pngryan2021-08-01 00:17:382021-09-30 00:22:26What is Life Cycle Investing?
CareShield Life – Should You Care?
Financial PlanningWhat is ElderShield?
ElderShield is a severe disability insurance scheme that provides monthly cash payout of $300 or $400 up to a maximum period of 5 or 6 years.
CPF members with a Medisave account will be automatically enrolled into the scheme once they reach 40 years old unless they opt-out.
In order to make a claim under this scheme, a person must lose the ability to perform at least three out of the six daily activities: Washing, Dressing, Feeding, Toileting, Mobility, Transferring.
What is CareShield Life?
In May 2018, the Ministry of Health announced that it will be introducing a mandatory insurance scheme that will enhance the existing Eldershield by 2020 for those aged between 30 and 40.
These enhancements include:
Similar to Eldershield, to claim under Careshield Life, one has to lose the ability to perform at least three out of six daily living activities.
The infographic below shows 3 examples of how the claim process works.
Source: CareShieldlLife.gov.sg
Is CareShield Life coverage enough?
According to CareShield.gov.sg, 1 in 2 healthy Singaporeans aged 65 could become severely disabled in their lifetime, and may need long-term care.
Some causes of severe disability may include the following:
The question you need to ask is “Will $600 per month from CareShield Life be enough to pay for the long-term care costs of a severed disabled person”?
Let us look at the cost of rehabilitation for Sengkang Community Hospital.
Source: Singhealth.com.sg
As you can see, the estimated average daily hospital bill size (with Government Subsidy) for rehabilitation is between $144 to $401 per day.
Using the lowest range of $144 per day x 30 days = $4,320 per month. This amount is already 7.2 times that of the Careshield Life monthly payout.
Moreover, it may also be necessary to hire a helper or maid to care for the disabled person once he or she is discharged.
The table below shows the estimated monthly salary of a maid in Singapore according to MSIG.
Source: MSIG.com.sg
The Monthly Salary of Maid in Singapore (Minimum wage) is between $450 to $570. This estimation does not include the living expenses (eg. food, utility, transport) of the maid, and extra salary for working on rest days, which could reasonably cost another $250/month. $570 + $250 = $820 per month.
From the above information, one can see why the $600 per month payment from CareShield Life may not be sufficient.
So how do you fix the problem?
A good solution is to purchase a CareShield Life supplement plan from a Private insurer to enhance your monthly payout.
The CPF Board allows Singaporeans & PRs to utilize up to $600 from Medisave Account to pay for CareShield Life supplements, so you may not need to fork out cash. Contact a financial advisor for more information.
How to Create Your Own Financial Plan
Financial PlanningPersonal Financial Planning is the process of evaluating and improvement of one’s financial situation, through the studying of economic factors and individual choices.
It is essential to know how to save, spend, invest, and control your finances, in order to achieve financial and life goals. The reward of sound money management is an improvement in one’s standard of living and lifestyle. This is true whether you are a 20-year-old university student, a 40-year-old parent with a mortgage, or a 60-year-old thinking about retirement.
An important outcome in the planning process is the development of a personal financial plan that guides a person’s overall financial decisions. For instance, investment plans would involve asset allocation that determines the percentage of an investment portfolio to be allocated to equities, bonds, or other types of investments.
In theory, you can create your own financial plan. However, in reality, many people do not follow consistent plans in making their financial decisions. This is why many people prefer to engage professional financial planners to help them develop and implement sound financial plans, as well as monitor and review them periodically.
The financial planning process can be classified into 5 steps:
1. Gathering your financial information
Before creating a financial plan, you must first define your own personal and financial goals, needs and priorities. It is important to determine specific and measurable objectives to provide focus and direction for the financial planning process. In order to do so, you must gather both quantitative and qualitative data. You can see some examples below.
Quantitative Data
Qualitative Data
In the planning process, certain reasonable personal and economic assumptions need to be considered. These assumptions may include:
2. Analyzing and evaluating your financial status
After gathering all the information available, you need to assess your financial situation and determine the probability of reaching the stated objectives by continuing your present activities. To help the analysis, you can engage a financial planner to prepare a statement of financial position, a current cash flow statement, and if appropriate, a projection of future cash flows. Or if you decide to do it yourself, you may find a free online retirement planning calculator, or investment goal calculator to help you derive your numbers.
Careful analysis and evaluation are critical to the financial planning process, because they form the foundation for determining the strengths and weaknesses of the your financial situation and current course of action. As everyone has limited resources, it is important to prioritize certain needs over others.
Common problems faced when assessing financial needs and objectives:
What is a Financial Plan?
A financial plan is a document containing a person’s current financial situation and long-term financial goals, including methods to achieve those goals. A financial plan may be created by yourself, or with the help of a professional financial planner.
3. Developing your financial plan
After completing steps 1 and 2, you may discover that you have difficulty achieving some of your stated needs, priorities, and goals. If so, it is recommended that you develop a financial plan to improve the probability of reaching them.
There is no fixed template for a financial plan. It can be an independent action, or a combination of actions which may need to be implemented collectively. Your financial plan may include your retirement strategy, risk management, long-term investment plan, estate plan, and more.
Critical Factors to consider when developing your financial plan, may include:
4. Implementing the financial plan
Next you need to look into products or services that reasonably address your needs. They must be suitable to your current financial situation, and consistent with your needs, priorities, and goals. If you are doing it yourself, you can find them by researching online. The downside is you’ll probably spend a lot of time on product or service comparison.
Alternatively, you can consult a financial planner, who will use his or her professional judgment in selecting the products and services that are your interest. Different practitioners may have different opinions, and it is important that you choose someone who is professional, reliable, and trustworthy.
5. Monitoring and review
Last but not the least, you must monitor and review your financial plan periodically. Modifications may be required, if there are changes the following:
Unfortunately, most people do not have the discipline to do this consistently, which is why they prefer to engage professional financial planners to help them. A financial planner can help you establish a client file, and a system for periodic review and revision.
What is Life Cycle Investing?
InvestmentLife Cycle Investing is the process of adjusting the investment portfolio to suit the changes in one’s life objectives as they pass through different life phases.
Life Cycle investing generally advocates the concept of reducing risk and emphasizing income as one ages.
The 4 Life Cycle phases are:
There are several factors which will affect the choice of investment assets throughout the life cycle phases:
Age – Younger investors tend to have higher risk tolerance than their older counterparts. This is because if they incur any losses on their investments, they have more time and opportunities to recoup it.
Funding – The stability of the sources of income will affect the type of investment assets. A person with multiple sources of income is more likely to be able to adopt a higher risk portfolio, without an immediate need for liquidity.
Family Commitments – Obligations like having to provide education fund for young children, or financial support to aging parents, will mean that current income and preservation of capital would be of great importance.
Debt – Someone with low gearing and high liquidity will have a bigger appetite for a riskier portfolio, as compared to a highly geared person with deteriorating liquidity ratio.
Investment Experience – A seasoned investor will usually have an appetite for a higher risk portfolio, given their familiarity with different investment vehicles and the risks involved. In contrast, a novice investor should avoid committing large sum of savings into high-risk investments. This is because any huge losses incurred early on, will have a detrimental effect on building an effective long-term investment program.
Risk Tolerance – Rational investors are typically risk aversive or at best risk tolerant. They will not accept high-risk investments, unless they are compensated proportionately by higher returns.
Portfolio Objectives – The assets of the portfolio should be selected, according to the objectives of the portfolio (growth, income or capital preservation). High-risk assets at one end of the risk profile continuum would better serve a growth objective while a capital preservation objective can be achieved by the low risk secured assets.
During these 4 phases, the investor must:
The table below is a general guide to the suggested investment allocation percentages throughout the 4 phases of the life cycle.
Throughout the life cycle phases, individuals have different financial goals. These can be categorized into:
Once you listed down your financial goals, you will be in a better position to assess your own life cycle phase and the corresponding needs and concerns.