Posted by: Akhiat | June 26, 2012

Young Generations from Lower to Middle Income families starts their footing with debts

I did financial planning for many young gruduates over the years and really empathise with many of them on their financial difficulties in their early years and I have my fair bit of challenges in helping them getting the right insurance coverages and wealth accumulation discipline.

Many graduates from low or middle income families have to start paying study loans to the banks or to their parents CPF from day 1 they graduate. The average starting pay for a polytechnic graduate is about $1,800/mth and for a University Graduate about $2,400/mth. After CPF deduction, their take home is about $1,440 and $1,920 respectively.

For the University graduate who graduate at as old as 25 years old, he/she may start their foot with about $25,000 debts, payable over a period of about 4 years. With an interest rate of about 3.5%, their monthly  instalment will be about $560/mth. This will reduce their income to $1,360. They gives their parents roughly about $300/month and expenses about $500/month on food, transports and entertainment. They will go for occasional holiday trips of $2,000/year and probably save the rest. Their monthly positive cashflow is only about $350/mth.

After 5 years, the salary of that graduate probably increases to about $3,200/mth and its time to tie the knot. They probably have a CPFOA of about $40,000 and a cash savings of about $30,000. Their wedding package may easily comes up to $20,000, including the ring, honeymoon, photography packages, wedding banquets losses, etc. Then it will be their property. A BTO in areas such as Bedok may cost about $480,000 or those nearer to town and MRT may cost about $580,000.

Assuming the couple took a $400,000 loan after depleting their CPFOA and took up a $200,000 loan each payable over 30 years at 2.6%p.a interest rate, their monthly contribution will be $800/mth. With a $3,200 salary, their monthly CPFOA contribution is only about $700/month. which means they still have to fork out $100 of cash every month. This will also translate that this person may have so little CPF monies by the time he/she retires at 60.

Simple renovation and furnitures may easily cost an additional $25,000. This means that by the time they gets their house after marriage, they start with nearly $0 in their bank account.  And then comes the gynae checks for the wife, children expenses such as milk, diapers, infant care or domestic worker levy, etc… It eats into their cashflow in these early childhood years. As times goes, due to environmental pressure, they will send their kids for enrichment and development programs which can easily cost them $500/mth.

With the other expenses such as insurances, taxes and having to take care of their elderly parents, these people will find it hard to save consistently and retire.

I feel that the new generation is really having a hard time. The government should make housing more affordable for them and the education system less pressurising for the children. They are real challenges for them on the ground. Those from higher income families or with parental financial support do not usually face this problem and hence the cycle of the rich getting richer will just continue to spin.

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Posted by: Akhiat | June 13, 2012

Advice from Jim Rogers in todays time…

Published: Tuesday, 12 Jun 2012 | 6:55 PM ET
By: Martin Steinberg
CNBC.com
 
Jim Rogers’ advice amid all the global economic turmoil: Short stocks, consider commodities and to heck with European bailouts.

A day after the billionaire investor told CNBC that the Spanish bailout was “absurd,” he amplified on his point that letting any country go bankrupt wouldn’t be the worst thing.

“New York City went bankrupt, the world didn’t come to an end. Mississippi went bankrupt once, the world hasn’t come to an end. Detroit’s bankrupt, the world hasn’t ended,” Rogers said Tuesday on CNBC’s “Closing Bell.”

So if banks in ailing Spain and Greece go bankrupt, bondholders and bankers will lose money, he shrugged.

“What happens is you reorganize and you start over. It’s been happening for a few thousand years. There’s nothing new about it.”

Had the U.S. not let Lehman Brothers fail at the start of the 2008 recession, “we would still be suffering,” he said. “They would still be bailing out everyone in sight.”

His strategy in the event of a global selloff: Sell short.

“I’m not advocating because I’m short, but I’m short because I think there are going to be more problems in the world economy in the next year or two. That’s how you protect yourself in times like this,” he said. “What they’re doing is they’re making this situation worse.”

Why?

Because bailouts and printing money only add to the debt burden, Rogers said.

“What I see happening is more and more bailouts, higher and higher and higher debt,” he said. “We’re going to have a worse recession next year and 2014 because the debt is high. … In 2007 and 2008, the recession was worse because the debt was higher; 2013 and 2014, the debt is up to the ceiling. The recession is going to be worse. This is not going to be fun.”

Rogers sees oil as a good investment over the long haul.

“The price of oil may well go down for a while. China is slowing down, India is slowing down, a lot of places are slowing down,” he said. But “over a decade the price of oil is going to go through the roof. The surprise is going to be how high the price of oil stays and how high it goes. That doesn’t mean it cannot go to $70 in the meantime. But if it does, you should buy a lot of oil.”

And gold. “If it goes down, I’ll buy more,” he said.

But would he buy stocks?

“Not that I can think of,” he said. “If stocks collapsed around the world I would have to buy a lot more stocks. I would buy stocks again, but I don’t see that happening. I’m telling you, the economy is going to be bad next year. Why buy stocks in the face of something like that?”

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Posted by: Akhiat | June 6, 2012

Uniquely Singapore – Our COE

I read an article from Bloomberg today and find it interesting as this COE system is indeed uniquely Singapore.

Few interesting points noted:
* At S$86,889 ($67,000) just for a permit, the total price of a Volkswagen Passat in Singapore is about the same as the median U.S. metropolitan home.
* In Singapore, an island of 248 square miles (642 square kilometers), the number of cars climbed to a record 603,723 at the end of 2011 from 405,354 a decade earlier.
* More than a third of the 5.2 million-population is made up of foreigners and expatriate permanent residents.
* Singapore’s proportion of millionaire households was 17 percent, the highest in the world, followed by Qatar and Kuwait.
* whoever wants to drive and pay through the nose, go ahead (Song Seng Wun – CIMB Economist)

My favourite is from Chee Soon Juan, a politician demonised by our MIW who was asked to give his views:
* You’re pitting the rich against the poor, and guess who wins?” Chee said in an interview. “People with needs, and the guy who runs a small family business, are pitted against this wealthy family that’s buying a third car for the teenage son because he had just done well in his exams

***********************

By Wes Goodman – Jun 5, 2012 7:27 AM GMT+0800

Vinay Mathur gave up on buying a new car in Singapore as the cost of a permit rose to the highest in 17 years. He settled for a two-year-old BMW 3-series.

“By the time we began seriously to think of buying a car, license prices had shot up,” said Mathur, 42, referring to the so-called certificates of entitlement, which are auctioned by the city-state and used to control congestion.

At S$86,889 ($67,000) just for a permit, the total price of a Volkswagen Passat in Singapore is about the same as the median U.S. metropolitan home. A 25 percent jump in residents in seven years, coupled with the world’s highest proportion of millionaire households, has fueled a 10-fold surge in license prices over three years. The government said last week it will postpone plans to cut the number of permits available and slow traffic growth, responding to the outcry over soaring prices.

After the ruling People’s Action Party lost a by-election in the opposition-led Hougang district on May 26, Prime Minister Lee Hsien Loong reiterated a pledge to change the way the party governs a population that opinion surveys show is most concerned with issues such as high living costs and an influx of foreign residents. The PAP remained in power last year with the smallest general election victory since independence in 1965.

“The COE system is well-intended in that it does limit the traffic to some extent and pollution, but it bumps up the price of even entry-level cars to a ridiculous level,” said Mathur, a senior executive who moved to Singapore from Mumbai with his wife and young son two-and-a-half years ago. Mathur said he was entitled to an interest-free, five-year loan of S$130,000 from his company, and didn’t want to spend more than that.

Car or House?

A new 2012 Passat sedan made by Volkswagen AG (VOW), the world’s second-largest carmaker, costs about $152,000 in Singapore, including the license, according to classified ads website SGCarMart.com. The median price of a U.S. metropolitan area home is $158,100, National Association of Realtors data show.

So-called open-category permit, which can be used to buy any type of vehicle, reached S$92,010 in April, the highest since the end of 1994 when a record of S$110,500 was reached. At the latest auction May 23, the licenses went for S$86,889, compared with S$8,501 three years ago. The permits give the right to own a car for 10 years. The next auction is tomorrow.

Besides having to bid for certificates at auctions that are held every two weeks, Singaporeans also pay registration fees and taxes that can amount to 150 percent of the market value of a vehicle, according to the Land Transport Authority website.

Delayed Cuts

In Singapore, an island of 248 square miles (642 square kilometers), the number of cars climbed to a record 603,723 at the end of 2011 from 405,354 a decade earlier. To limit congestion and pollution, the government had planned to reduce the growth of the vehicle pool from 1.5 percent annually to 0.5 percent starting in August.

That rate will instead be reduced to 1 percent in August, and then to 0.5 percent in February, the Land Transport Authority said last week on its website. Efforts to undo an oversupply of licenses in prior years will also be delayed for a year. The measures will increase the monthly supply of permits by 17 percent, or about 656, according to the authority.

“The government help might ease the pressure,” said Lynette Tan, a stocks analyst at DMG & Partners in Singapore. “I don’t think prices will plummet.”

Inflation Pressure

Transportation costs pushed Singapore’s inflation rate to 5.4 percent in April, the most this year, government figures show. The goverment said more than a week ago inflation will remain elevated in the next few months, and Prime Minister Lee said in his May Day speech that the No. 1 concern among union leaders is the cost of living.

“We must make a special effort for the low-wage workers, because they are the ones most affected by competition, by inflation,” according to a text of the speech. “We will continue to monitor inflation very closely to see when something more needs to be done, we will be ready to act.”

In the past year, Lee’s government has also introduced stricter immigration policies, imposed higher taxes on property purchases for foreigners and cut ministerial pay. Worker income in the island-state has risen 12 percent in five years after accounting for inflation, Lee said.

More than a third of the 5.2 million-population is made up of foreigners and expatriate permanent residents. Singapore’s unemployment rate averaged 2 percent last year, a 14-year low. Singapore was ranked as the Asian city with the best quality of life, according to a Mercer report in November.

Confident Buyers

Job security has made people more willing to buy cars, helping drive prices higher, said Song Seng Wun, an economist at CIMB Research Pte in Singapore.

“There’s a certain degree of speculation,” Song said. “Due to the COE, you can make money by buying a car and selling it one year later. In most other countries, we’d say a car is a depreciating asset.”

Song said he takes trains and buses, and “whoever wants to drive and pay through the nose, go ahead.”

Michael Gomez, who is 30 and works in Singapore’s banking district, said his permit has appreciated so much that he’s planning to sell it and downgrade to a cheaper car.

Gomez bought a 2009 BMW a year ago for S$145,000. The car is now worth about S$135,000, he said.

“The actual depreciation on the car should be about S$20,000, but I’ve only lost 10 grand” because of the appreciation of the permit, he said. “I’m getting a good price. If I downgrade, then I will save money.”

The government should amend the permit system because it favors the rich, Chee Soon Juan, head of the opposition Singapore Democratic Party, said before last week’s announcement.

Singapore’s millionaire households expanded 14 percent last year, according to a study by the Boston Consulting Group published May 31. Singapore’s proportion of millionaire households was 17 percent, the highest in the world, followed by Qatar and Kuwait, the study showed.

“You’re pitting the rich against the poor, and guess who wins?” Chee said in an interview. “People with needs, and the guy who runs a small family business, are pitted against this wealthy family that’s buying a third car for the teenage son because he had just done well in his exams.”

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Posted in Current Affairs

Posted by: Akhiat | February 23, 2012

Maintaining good relationship with your partner

I received a book mark recently from a friend who worship in City Harvest Church. The book mark wrote about some of the little things that we can do for our partner. Just like to take this time to share some of these points with you…

1. SHOW INTEREST in what you partner says by making eye contact, drawing near to listen
2. SMILE WARMLY AT ONE ANOTHER in key moments, locking eyes for 5 seconds.
3. PHYSICALLY TOUCH your partner before getting out of the bed in the morning and before going to sleep.
4. EXPRESS AFFECTION with hugs, touching, holding hands, embracing, etc. during the day.
5. GIVE 20-SECONDS HUGS regularly to your partner.
6. GIVE YOUR PARTNER A 5 OR 10 SECONDS KISS regularly to your partner
7. LOOK WARMLY INTO YOUR PARTNER EYES for a few seconds before and after a kiss.
8. MASSAGE YOUR PARTNER FEET and look warmly into their eyes.
9. TALK ABOUT A TRAIT YOU LIKE about your partner when both of you are present with family/friends.
10. SEND A “I’M THINKING OF YOU” MESSAGE via text/email regularly
11. LISTEN EMPATHICALLY WHEN YOUR PARTNER VENTS without giving advice, and validate their feelings.
12. SAY “THANK YOU” IN A WAY THAT MAKES YOUR PARTNER FEEL SPECIAL AND APPRECIATED.

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Posted by: Akhiat | February 16, 2012

Singaporeans dying away from home?

Read the below recently from
http://sg.news.yahoo.com/blogs/singaporescene/singaporeans-dying-away-home-134247626.html

that touches on the high cost of retirement in Singaporea and the importances of having a Long Term Care insurance to ensure that an insurance plan can take over when we cannot take care of ourselves anymore…

By Andrew Loh

It doesn’t hit home until you’re standing there, eyes fixed on the old man of 87-years old. He is no longer cognisant of his surroundings, I am told. His ability to register familiar faces and places is no longer as keen as before. He can barely recognise his own son who is standing beside me at the side of his bed on the day we paid him a visit.

First a boat-builder — during the Japanese occupation — and later a plumber, his hands were the only means by which he made a living and raised a family. Now, with children all grown up with families of their own, he is bedridden, immobile and has to be cared for in a nursing home. Alzheimer’s has set in, along with Parkinson’s and coronary heart problems.

His son and daughters, in their 30s and 40s, try their best to provide the care he needs. They had him at home in the beginning but as his needs grew, they had no choice but to put him in a nursing home. It was no longer viable or practical for the siblings to provide the special care he required.

The costs of caring for the elderly

So in 2007, they decided to seek the services of a nursing home.

Several months ago, they were told that their father had had a fall in the home. On further probing they realised that the home had not been totally truthful about how this had happened. They were initially told that the incident took place at about 6 or 7pm. The family was informed at 8pm. However, they later discovered that it had actually happened at 2pm. They were upset that it took the home 6 hours to inform them.

In the meantime, the family was having problems paying for their father’s stay in the home. It came to more than S$2,000 a month. Further enquiries with other homes revealed that they were all fully booked. In any case, they were not much cheaper either. In addition, the siblings too had to provide care for their mother who is wheelchair-bound and suffers from various ailments as well. The family was at its wits’ end.

They finally had to consider the one thing they never thought they would have to — to place their father in a nursing home abroad as it would relieve the financial burden in caring for both parents.

After a search of the Internet for nursing homes in Johor Baru (JB) in Malaysia, they shortlisted several and finally decided on one. The siblings paid a visit to the home earlier this year and made the decision to place their father there.

It would cut their financial obligations by some 60 percent, not an insignificant amount for the siblings who aren’t financially well-off.

Children have to make a hard choice

“No one wants to have their father in a nursing home abroad,” the son tells me, his voice quivering. “But we have no choice. The costs in Singapore are just too much for us.”

The consolation he and his sisters take from this is that the home is set in a quiet neighbourhood, in landed properties which are converted to homes, giving a certain familial warmth to the elderly residents. It is located about 40 minutes by taxi from central JB. The staff there too are friendly and compassionate.

When the son enquired about making bank transfers so that payments could be made on time, the person in charge, Ms Suraya (not her real name), of the home repeatedly tells him not to worry. “It doesn’t mean that you have to pay on the date we agreed on. It is okay if you are one or two weeks late. It is okay,” she tells him. Such compassion gives the family some peace of mind.

We were told that in recent months, more Singaporeans have made enquiries with the home. “The main reason is the cost,” Ms Suraya says. “But also the recent case of abuse in a nursing home in Singapore has raised concerns among Singaporeans.” She was referring to the Nightingale nursing home at Braddell Road where the staff were discovered mistreating a resident there. The JB home currently has 20 Singaporean residents. Demand has been so strong that it is planning to open a new center in the coming months.

As we took our leave of the home, another elderly resident waves at us. “Young people like you, good,” he said, pointing his finger at us. “Old people like us, no good anymore.” It was something he keeps repeating during the next few minutes we conversed with him.

On the next bed beside his was a Malaysian, who is no older than 55. “I am Malaysian but I had been working many years in Singapore,” he said. “My children all were born in Singapore and are still there.” He recently had an accident which broke several of his hip bones. When we asked why he was there and not with his children in Singapore, he said they could not afford the cost of putting him in a nursing home in Singapore.

The government should help ease the burden

As we left them and the home, I wonder how many Singaporeans — after having served and contributed to the country — would end up in homes such as this one abroad simply because they would not be able to afford to stay in nursing homes in their own country.

It is just not right that our elderly, in what should be their golden years, are subjected to this indignity, to be cast aside or forced out of the land they were born in, grew up in and worked for and contributed to, through no fault of their own or their families’ — with the prospect of returning home only when they have breathed their last.

With almost a million Singaporeans projected to be above 65-years old in 2030, it is incumbent upon the government to seriously look into this matter and not let our elderly be subject to such unconscionable indignity when they are no longer “economically active.”

There is a responsibility for a government to care for those who no longer can, and to extend help to families who are burdened in such circumstances.

Our elderly should not have to seek shelter in a foreign land.

They are as much a part of us as those who are rich, economically active or young. Our country should not and must not abandon them to another country. It is our responsibility and we must not shirk this.

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Posted by: Akhiat | February 12, 2012

Why are the frontier markets such as Vietnam and middle east fund underperforming the rest like global and Asia?

I posted a question to Fundsupermart recently and below was the answer as of why Frontier markets such as Middle East and Vietnam are not doing well over the years since 2008 when other regions are outperforming … They were quick to give me  a reply within a day.

http://www.facebook.com/fundsupermart.singapore

• Different issues facing both areas, political instability/social unrest in the Middle East has hurt investor confidence; Vietnam has been plagued by a persistent trade deficit which has required a series of currency devaluations to boost its competitiveness; on the other hand, inflat…ion remains a huge issue

• In addition, frontier markets are generally more difficult for global fund managers to access primarily due to a lack of liquidity; many global funds avoid investing in less liquid markets as a result

• That being said, the performance of underlying markets in the Middle East and Africa region can differ significantly as there are different drivers for each underlying market; as an example, Egypt’s benchmark Hermes index is 20% higher YTD (in SGD terms, as of 9 Feb 12), while Saudi Arabia’s Tadawul All-Share index is only 2.3% higher this year; Kuwait’s SE Weighed index has done -3.5% in 2012 so far

• Nevertheless, we note that valuations for key Middle East markets like Saudi Arabia remain rather undemanding, with the market trading at 11.4X 2012 estimated earnings (as of 9 Feb 12), while Vietnam’s Ho Chi Minh index trades at just 8.6X this year’s estimated earnings

• Investors may wish to note that weakness of the Vietnamese dong may be an issue; the dong has depreciated over -35% against the SGD over the past five years

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Posted by: Akhiat | May 30, 2011

Blog Temporarily ceased. No new articles allowed

Dear all,

I’d stopped writing for quite sometime due to some of our new company’s policies. All website or blogs maintained by advisers have to be approved by the company regardless if the FA firm is named or un-named as long as wealth planning issues are discussed. Every future new blog postings must be also approved by the compliance team.

I am also not supposed to receive any leads or enquiries from the blog as it will constitute that this blog is meant to solicit business and cannot be regarded as a personal blog. If I have intention to get any referrals from this blog, then all my previous postings have to be reviewed and future articles have to go through checks to be approved.

i.e, If I am to write a personal blog, this blog must not mention any financial matters that can interest anyone to ask about the topic.
If I am to write a blog with mention of financial matters that can interest anyone, then all my articles will need scrunitisation and future articles need to be compliance approved.

I will need time to adjust. I have to remove my name, contacts as well as any links that people will know who I am before I can post my next article.

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Posted by: Akhiat | April 17, 2011

Habits of a Successful Adviser

I hope any advisers who wants to be a good and honest will be encouraged by what I wrote below and strive to be better in your respective career. The items mentioned below are more sales related but the professionalism are assumed to be also in place. I’ll also be adopting these habits to better myself. Enjoy…

Habit 1 – Always be positive
* Your client reflect you, if you smile, so will yr client
* Magnify the good, justify and combat the bad
* use client relationship management programs
* Focus on the good things, everyday is a good day, if you wake up.
* Make it your job to make you client happy

Habit 2 – Run client updated regularly
* Activity is the source of new business
* No prospect or suspect = no opportunity
* Be there when yr client is ready to buy not just when you are ready to sell
* Dr Wendy Evans System of client monitoring

Habit 3 – Seek referral everywhere
* Establish a referral process
* Practice your approach
* Let them know what you will be doing for their referral. Don’t always presume that they don’t give you.
* Eg – I help people retire with dignity, to protect their family (Elevator conversation – What do you do?)
* If you don’t tell them, its like looking at a woman in a dark room
* Include a reward system, psychological reprecrocity
* Don’t stop asking, Practicing by role playing
* Referral Card, Testimonial request after closure of sales

Habit 4 – Network till it hurts
* Schools, sport associations, service clubs, business conferences, etc

Habit 5 – Mine the diamonds in client base
* What % of your revenue is from existing clients
* Profitability from existing clients

Habit 6 – Set goals, plan and do it
* Know your stats – appt to plan to sales, etc…
* If you know, you will have a better idea of what a phone call means to you. How much $$ each call is meant to you.
* Set a target
* Plan your activity. Client updates, networking, referrals
* Keep results religiously – Measure what you do
* Do what you say you going to do

Habit 7 – Get someone else to do the paperwork
* High producers have help
* You make money seeing clients
* Make a balance of 3-2 ratio of time taken to see clients to doing paperwork
* Your focus should be how many people you meet. Determine which brings you more money

Habit 8 – Have a ticket in the game
* Do more and different than other people
* Try involve different things with new ways to grow your business
* Work night when others don’t, work weekend if others don’t, go networking when you wish to go home
* Make that extra 5 phonecalls

***************

One advice given to me by another Guru is that “Financial Advice” needs to be persuaded to the people.  Those who wake up remembering that they must plan are largely those with plenty of time who will do all the research for the DIY solutions. Many of them will squeeze financial adviser dry with hundred and one questions and expect not to pay anything in return. I think we have to be selective on the people we serve as well as we will not hope to meet those who will eventually negotiate with us on why we can’t give lower rates than DollarDex, SAF Group Term, Major Illnesses and Disability Income, ETFs and Capitalmall Bonds and just took up Incomeshield Plan Basic and you are stuck with him/her for life.

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Posted in Personal Thoughts

Posted by: Akhiat | April 4, 2011

An insurance portfolio that makes my blood boil.

I was at one point wondering if Financial Advisers in Singapore are helping people or they are helping themselves by exploiting the people. I have been compiling portfolios over the years and I seldom come across a portfolio which in my opinion, proper… I’ll like to show one classic example on the type of portfolio that I frequently compiled. I’m sure that this supposedly IFA is making a very good income by such planning for his clients…

(Ps: I’m not saying that all Financial Advisers are bad. I am far from perfect either. However I have an interesting observation which is “Many(not all) of the Star Performers sell plans like those below” and they are termed “Successful” by the company, industry and public) Those who spend time analysing and thinking what best for clients cannot even hit sales quota for promotion or even earn a simple “Senior” title to his namecard, regardless of how much experiences he/she has. They are also treated like dirt by the company because they are likely not the one who brings in the big money.

**************

* Young Lady – 27 yrs old executive earning around $3+k/mth
* May have plan for marriage and getting a property in the near term
* In order not to get myself in trouble by posting this, I’d deleted many columns, including the insurer’s and policy names…


I do not expect her to get anything from me but I just gave my views…

*************
Risk Management
You are currently spending around $3,860/yr on Risk Management including ILP riders and Whole Life.
* The Insurance premium looks reasonable and kept within 10% of your income but this will keep increasing as the riders for your ILP gets higher yearly with your age. The premium can be quite amazing after 20-25 years down the road.
* This portfolio have not factored any form of disability Income coverage, Accidents and Hospitalisation coverage, which seems missing.
* In my opinion, you are on the high side for Critical Illnesses and I will prefer that you have lower Life Coverage to free up more for term and  investments.

Wealth Accumulation
You are currently putting in around $13,315/yr on Wealth Accumulations.
* This amount is probably nearly 35% of your current take-home pay.
* Your Endowments are too long (all 25 years) and a bit too many based on your current income
* Your investments happens to be those with too high cost
* Your accumulation will get lesser over time when insurance premium for ILP increases. It is very hard to track your investment when you tag insurance with it.
* You are certainly a good saver and I commend you for it but you probably met an adviser (IFA) who cared for his own interest more than yours.
* I would have recommend a different strategy for you if I am your adviser…

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Posted in Financial Planning, Insurance, Personal Thoughts

Posted by: Akhiat | March 9, 2011

Woman and Financial Planning

It is the 100th anniversary of the International Women’s Day today and I like to write a bit more about woman on this special Day. 

I always feel that woman is a very special creature. My observation is that they are a very hardworking, determined and meticulous when we compare them to man. I also admire their spirit in going through the ordeal of child bearing and motherhood. In today’s society, they also carry the burden of bringing additional income for the betterment of the family.
 
 In term of Financial Planning, woman tends to have some disadvantages compared to the men. I will like to share some of my observations with you.

Longer Life Expectancy and keep rising
Based on statistics, Singapore men are expected to call to the Lord at the age of 77 whereas women at 82. The life expectancy age is expected to increase further and 88 to 90 can be of no surprise in future. Taking Japan and Hong Kong as reference, it seems that the Life Expectancy of Men do not rise as fast as Women and hence the gap will gets wider. When L.E of women get to 88 one day, men’s L.E probably may probably remain at only 81. (5 years widens to 7 years)

Longer Period living without Spouse
Women also generally marries men who are older and hence they might be expected to live without their husband for probably as long as 5 to 10 years. These years can be their twilight years and they need to live by themselves. It is hence crucial that they have Hospitalisation and Long Term Care insurances as well as enough savings to last them through.

Slowing Corporate Ladder Climb during Career Peak
My experiences with many of my clients gave me the impression that income level of women are generally higher compared to men before having children but once the 2nd child arrived, their mentality changes slightly to lean towards the family. They slow down their career climb and spend more time with the children. Some, who couldn’t cope with work and family, will stop working for as long as 5 to 10 years, just to focus on coaching their children. It may be difficult for them to resume the employment after a long gap.

Divorces and Singlehoods
Women today are more independent and frequently have a stronger say in term of finances than the men. With such independence, they will also demand more from men towards the family. With more demands, it may result in a mismatch of requirements the women asked from men. This eventually causes more separations and divorces in an urbanised society like Singapore. Marriage failures are inevitably taken into consideration in woman’s financial planning. Under the Women Charter, they are most likely the custodian for the children on divorces and there is no guarantee they can get sufficient alimony to take care for the children. There are also more single women now compared to 10-20 years ago which means another set of financial planning requirements.

Woman are better investor?
Having said all the negative points on woman, I have a good one for you. According to a behavioral finance study conducted by Terrance Odean (professor at University of California), it concludes that men’s overconfidence and hyper active trading actually results in lower investment returns as compared to women. As a result, women turn over their portfolios an average of 53% a year; while men’s portfolios turnover at a rate of 77% a year. This excessive trading leads to lower performance. Here’s what Odean found: married women actually get better returns than men — 1.4 percentage points better, and single women did even better — 2.3 percentage points a year over single men.

To conclude, I just like to encourage woman to plan way ahead and be more disciplined and conscious towards financial planning than the men. You have a bigger reason to do it than men.

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