Broadly speaking, our life can be divided into three phases, namely our dependent years (aged 0 to 25) , our prime working years (aged 25 to 55) and our golden years (aged 55 to 85+) and do bear in mind more Singaporeans will living longer due to better healthcare and healthy lifestyles.
DEPENDENT YEARS – When we are dependent on our parents, we have no income except for the occasional part time jobs during school vacations and the Ang Pows collected during Chinese New Year and we do not have much savings in our bank accounts. But we are spending a lot on education and our personal lifestyle.
PRIME WORKING YEARS – We earn the most during this prime period and we spend a lot on our families as well as we have the ability to save. This is the best times of our lives as we are able to acquire whatever we fancy with our wealth and high income. We live an ever increasing lifestyle that commensurate with our increasing incomes. We keep upgrading our cars, our houses, going for holidays further and further away from Singapore. This is also the best years where we can save the most.
SUNSET YEARS – We have left our jobs willingly or unwillingly. No more employment income, no more bonuses but we continue to spend on our lifestyle and healthcare… As we live longer, our medical expenses will increase too. Obviously, we have nothing to save if there is no income. Others may bear with the loss of privacy and rent out their bedrooms for extra income.
Looking at this scenario, do you see a pattern here? Our prime working years is the only time that give us the ability to earn, spend and save for our sunset years. Are you saving enough? What you do now as a young person will determine how that old person will live in the sunset years! Start planning now!
Next, you have to look at the rate of return of your savings and investments. Using the financial Rule of 72, if you save your money in the bank at 2% per annum, you will need 36 years to double your money! Your $100,000 will become $200,000 in 36 years!
If you can invest your money at 8% p.a., you will double your money every 9 years! Your $100,000 will be become $1.6M in 36 years. Just by increasing the rate of return by 6%, you have a staggering difference of $1.4M. Is this amount worth the effort for you to look at it seriously?
If you are, please contact your independent financial adviser representative now or call me at 90011082.
Have a pleasant day!