Here comes Xmas and thereafter the New Year!
It is time of the year again to review our plans. How can we do better and learn from year 2016?
Count our achievements, misses, and last but not least, our blessings.
Still young, too early
Regardless of age, some of us feel young and think age is just a number. Some of us think it is still too early to plan for retirement as we have been constantly informed that we will have to work longer as we are going to live longer. All this can be true, but it can’t hurt to start planning early. Starting early is always better than being late.
Planning early is quite similar to driving. When driving, it is good to look out for the car ahead of yours. Better still, a few more cars ahead if you can. The vision and space ahead will provide you time to plan better, pace, and make your next move (within the law), with more time to react.
Having the ability to look and plan ahead is an advantage for retirement and lifestyle planning. It can never be too early. Time is a big alliance of financial planning and wealth management.
You can be more aggressive with your portfolio and go for wealth accumulation or enhancement planning. You can go on the offense and use dollar-costaveraging (DCA) to accumulate your unit of assets or funds; be it stocks and shares, unit trusts, properties or equal, and to manage your assets’ volatility. On a conservative mode, you can use time to take advantage of the time value of compounding interest, return and growth. More than one way to skin a cat if time is on your side.
Too old, too late
Again, it is like driving a car. If you notice something late, it is still not too late to make an effort to react. At least, steer clear of the trouble ahead and avoid the hazard if possible. It is never too late to start planning but your goals, objectives and plans have to be realistic.
Do not let greed get in your way. Be realistic about your expectations and be practical about your plans. Know your needs and resources before committing to your plans.
It is good to take a little less risk than we would have in our younger days. There is no need to risk more than what we are prepared to lose. Being a little more conservative can provide peace of mind.
A wealth preservation planning mode will be more suitable for a senior than a more aggressive wealth accumulation planning mode. A preservation mode has lower risk and is less volatile. It will allow you to manage your resources better. It allows you to pace your plans in line with your lifestyle. You might do well to include some of the government’s schemes available.
A wealth preservation program will allow you to manage volatility and not fear it. Set your objectives, tolerance level and tenure to manage your market volatility. Accept volatility as a fact of life, and in wealth management and investment planning.
Know what you are getting into
Be it gold, oil, forex, commodities, unit trusts, stocks, etc… It could even be on Brexit or the outcome of the US Election on 8 November. Some of these investment schemes might not be something you are familiar with, and the outcomes may be more than what you are prepared to handle.
Do not risk more than what you can afford, especially when you are not familiar with the programmes. Avoid taking on more risk than what you can handle. You have earned your rank and money to enjoy them. So, enjoy them.
Time is a scarce commodity
Time is a friend of financial planning. It is a scarce commodity for the seniors. Use it wisely and to your advantage.
Do what you are familiar with. If advice and help are needed, seek advice from a professional. Sound advice from a professional will usually cost you less than some of the “on the job” mistakes or “sink or swim” errors.
Spread out your retirement funds and map your returns
Plan wisely and do not risk more than what you can afford to lose. Besides constructing a strategically balanced portfolio according to your risk appetite, tap on some government schemes to spread your risk and return.
Use the year end’s supplementary retirement scheme (SRS) for your DCA. While spreading out your DCA investment over a time period to manage volatility, you will also be getting a tax relief on your SRS of up to $15,300 (up from $12,750 in year 2015).
A good deal just got better!
The CPF Life programme will provide you a monthly payout upon retirement from age 65 or later. There is also a risk-free return of up to 6% when you hit age 55. So it pays to enhance your CPF contribution if you have the sum to spare.
Some schemes, programmes and plans will add value to and enhance your 2017 planning for better returns. A holistic and inclusive wealth management programme will provide you with a steady stream of retirement income.
Diversification of asset classes in wealth preservation and retirement planning will reduce your risk while providing good cash flow at the same time.
Be realistic and be practical about your retirement planning
Avoid taking on more risk in your senior years, especially with financial retirement planning. Invest wisely and plan ahead so that you can cruise in your golden years and enjoy your life.
Start planning as soon as possible and have a great year ahead!
Khor Chee Kok
For queries and comments for this article, you may contact Mr Khor at email@example.com
Source: Prime Magazine Dec - Jan 2017 Issue. Reproduced with permission.
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