Don’t let financial issues take over your life. Take these tips from financial experts on how to get rich faster, from saving quickly to investing cleverly.
Don’t let financial issues take over your life. Take these tips from financial experts on how to get rich faster, from saving quickly to investing cleverly.
Our experts
VINCENT TEY, executive director of Providend Limited, an independent private wealth management firm.
MICHAEL TAN, senior account manager, GYC Financial Advisory.
SIM WEIPING, professional certified coach, Executive Coach International.
ANNA HAOTANTO, director at Tera Capital, a private investment firm.
INCREASE YOUR SAVINGS QUICKLY
Need to save a lump sum quickly to buy a new car? Or looking to accrue capital to start a business? Start by setting SMART goals for each of your big-ticket expenses, says Vincent Tey, executive director of Providend, an independent private wealth management firm. That means setting targets that are Specific, Measurable, Achievable, Realistic, and within a Timeline.
When estimating how much you need for a big-ticket expense, Vincent advises adding 10 per cent more to your total target amount as a buffer. This gives you a clearer picture of how much of your income you should apportion to each expense. With your goals set, you should now work backwards from each lump sum and determine how much you need to set aside each month to save enough by the deadline. Then, use these clever saving strategies to achieve these goals.
1 TRACK YOUR SPENDING
Create a detailed income and expenditure statement, says Vincent. Categorise your expenditure into fixed and variable expenses, and diligently record and review your finances. “Review your total expenditure pattern at the end of the month,” he says. This lets you see what you tend to spend the most on. Michael Tan, senior account manager at GYC Financial Advisory, says an easy way to do this is to use an Excel spreadsheet.
2 CUT BACK
Study your finance statement and identify areas you can cut back on. Prioritise all expenses. “It’s all about choices,” says Michael. Always ask yourself whether you need something and what purpose it serves. For example, if you’re planning a family holiday, ask what you value about a trip. Is it beautiful scenery, or time spent with the kids? If it’s the latter, skip the expensive European tour and opt for a cheaper destination in South-east Asia.
Sim Weiping, a professional certified coach at Executive Coach International, says one way to scale back is to cross out three expenses at a time until there is nothing left. “The order in which you cross out items will give you a sense of what you can cut back on,” she says. You can even review your insurance plan(s) to see if there is unnecessary coverage you can cut, to save on your monthly premiums, says Vincent.
3 AVOID EMOTIONAL SPENDING
“Do you spend money on a whim or go shopping because you’ve had a bad day?” Weiping asks. “When do you usually splurge the most on things you don’t really need?” Be aware of such times so you can put a stop to unnecessary spending. “Go for a jog or make someone else’s day better. Do something that makes you feel better instead of indulging in retail therapy,” she says.
4 REDUCE YOUR CREDIT CARD LIMIT
Doing this will train you to be disciplined in your spending, says Weiping. You may not actually be pushing your credit limit, but having a lower one will make you more mindful of what you do spend on. “What’s great is that it also helps you avoid those huge credit charges when you happen to overspend,” she says. Alternatively, Vincent suggests leaving your credit card at home and using cash instead. Withdraw a predetermined amount of cash for the week and restrict yourself to that amount, says Michael.
5 AUTOMATE YOUR SAVING
It can be difficult to stick to your savings goals. Get an insurance savings plan or open a monthly savings account with your bank to force yourself to do so, says Anna Haotanto, a director at private investment firm Tera Capital. Weiping adds that you can also set up an auto transfer to a separate account meant solely for big-ticket purchases. “Most Internet banking services allow you to transfer money to another account on specified dates in the future. You can set up such transfers when you know you need to pay a big sum in the next few months. This will help you to control your spending.”
6 CREATE CONSTANT REMINDERS
Make your plans known to friends and family so they’ll not only be aware of your potential lifestyle change, but also be able to encourage you, says Vincent. He advises getting a close friend or family member who is a savvy saver to hold you accountable to your goals.
HOW TO SPEND LESS ON ELECTRICITY AND WATER
1 Set your air-conditioner on a timer. You really only need to cool the room for a few hours to sleep comfortably all night.
2 If you’re not in the room... the lights, fan, air-con, TV, radio and other appliances in there shouldn’t be switched on.
3 Fill the kitchen sink with water. Wash your dishes this way instead of under a running tap.
4 Use a mug when you brush your teeth. You’ll be amazed at how big a difference just this one thing can make to your monthly water bill.
5 Take short showers. Five minutes gets you decently clean – really!
SEVEN WAYS TO SAVE BIG ON GROCERIES
1 SHOP WITH A GROCERY LIST
Always note down what you need to buy beforehand, either on paper or on your smartphone. Having a list keeps you from buying on impulse – you don’t end up wandering the supermarket aisles and stumbling upon things you want to buy but don’t actually need.
2 ONLY SHOP WHEN YOU’RE FULL
When you shop on an empty stomach, hunger can influence what you grab from the shelves. Before you know it, you’ve ended up with bars of chocolate and packs of instant noodles you never intended to buy.
3 USE A BASKET, NOT A SHOPPING CART
Lugging a heavy basket around is a pain, which is why it deters you from buying more than you need. Unless you are buying big items such as boxes of tissue, or big bottles of drinks, aim to fit all of your shopping into one basket. This helps to limit your spending.
4 BUY HOUSE BRAND ITEMS
You won’t be compromising on product quality. Supermarket house-brand items are cheaper than name-brand items not because they are inferior, but because manufacturers save on advertising and other intermediary costs and can then pass on these savings to consumers.
5 SIGN UP FOR A WAREHOUSE CLUB MEMBERSHIP
The members-only Warehouse Club by Fairprice, located at 1 Joo Koon Circle, promises discounts of roughly 20 per cent on products that come in bulk, compared to what’s usually carried in supermarkets. For example, cornflakes may be sold in 1.7kg bags rather than 300g boxes. Membership costs $50 a year, and enables you to make bulk buys in the form of value packs to save on groceries and household essentials – particularly nonperishable goods like detergent and toilet paper.
6 USE CREDIT CARDS THAT OFFER REBATES
Many credit card companies have tie-ups with major supermarkets in Singapore. For example, the UOB Delight Card gives you up to 8 per cent cash rebates at Cold Storage and Giant, and offers special discounts on selected items. Find out which credit card offers the best fit for your needs. Note that some cards offer reward points and other benefits like free delivery for online purchases.
7 FREEZE YOUR FOOD
Reduce wastage by freezing fresh produce so it can be kept longer. Raw fruits and vegetables can last up to a year when frozen, and meat can be kept for three to six months in the freezer. Prepare meals in bulk and freeze them in portions to be reheated. For some inspiration, turn to our Food section for recipes you can cook, freeze, and reheat later on.
INVEST FOR THE FUTURE
Scrimping and saving alone will not give you financial security. “Compounding, or earning from an investment, has the power to convert a small amount of savings into a bigger and more comfortable retirement value,” Anna says. No amount is too small to start investing with, as long as you always put aside enough money as an emergency fund, says Michael.
1BUY AN EXCHANGETRADED FUND (ETF)
“For a start, you can consider buying an exchange-traded fund (ETF),” suggests Anna. An ETF is a financial product that is traded on stock exchanges, like regular stocks. When you purchase an ETF, you invest in a basket of various underlying assets at a go – without having to manage each investment yourself.
ETFs own various assets, such as bonds, foreign currencies, gold or oil futures, and divides them into shares that you can buy. “One of the ETFs you can consider as your first investment is The Straits Times Index (STI),” says Anna. “STI is a blue chip index of the top 30 companies listed on the Singapore Stock Exchange (SGX).”
A blue chip is a stock in a major company that will reliably turn a profit regardless of the wider economic climate, so your risk of making a loss is low. One of the key benefits of STI’s ETF is that you can own shares in the top 30 stocks in the SGX at a lower cost than if you purchase individual stocks.
2 GO FOR A COMBINATION
Look for income-yielding investment vehicles such as bonds, dividend stocks, dividend paying mutual funds, and even rental income. These promise earnings with minimal risk at the end of a given time period, unlike stocks that fluctuate in price and may result in substantial losses. Anna says: “A combination of ETFs, mutual funds, Singapore Savings Bonds and blue chip stocks is good for a healthy, diverse portfolio.”
3 ESSENTIAL THINGS TO CONSIDER
Whatever vehicle you choose, make sure the investment strategies are in line with your investment objectives. Unless you have a high tolerance for risk, stick to these conservative instruments, says Michael. If you are considering more aggressive or risky options that may have a higher growth rate, you must be prepared to make losses.
Another consideration is whether you can afford to set aside your investments for a long period of time. If you do not need liquidity and can put this money into “cold storage” for several years, Michael says you can take on higher risks and ride out the volatility of the market, meaning that even if the value of your shares falls, you can hold on to them until the market recovers. This works only if your total assets are enough for you to do without this sum of money.
ANOTHER WAY TO GROW YOUR MONEY
China Life Savereward 101 endowment plans by China Life Insurance, in either Singapore dollars or Chinese yuan, can help boost your savings.
• In Singapore dollars: This five-year endowment plan guarantees 100 per cent capital upon maturity and an annual guaranteed mature yield of 2.25 per cent. You can also avoid the hassle of medical underwriting with a fussfree application process. You only need to pay premiums for three years to receive a lump sum maturity payout at the end of five years.
• In Yuan: Earn an attractive guaranteed 3.62 per cent per annum maturity yield on top of 100 per cent guaranteed capital with this five-year endowment plan, which allows you to diversify your investment portfolio with Chinese currency.
From Oct 1, 2016, the Chinese yuan will become the fifth currency to be included in the International Monetary Fund’s (IMF) Special Drawing Rights basket. This is a selection of currencies that is used and traded widely in the global economy. So you might want to consider buying a plan in yuan for higher potential returns – if the currency appreciates at policy maturity.
