3 things your future self will thank you for
If you could travel through time like Lee Je-Hoon’s character in Tomorrow, With You, would your future self appreciate you for the wise financial decisions, or would he or she lament over your folly? Do you see yourself making headlines as a jet-setting octogenarian, or struggling just to make ends meet?
Here are three things you can do to prepare for the future.
Start saving and investing in your twenties
According to a DBS-Manulife survey, on average, Singaporeans plan to retire at the age of 61. But the mean age for those who started planning for retirement was 38 years old. That leaves only 23 years to save up for the golden years.
If you’re in your twenties and reading this, listen up. You have a longer runway to save and to start investing, thanks to compound interest. It is also easier to save in your twenties when you have fewer spending commitments, as compared to your thirties and forties when family, housing and health matters take priority.
“But I’m past my twenties, is it too late?” you may be asking. As a Chinese proverb goes: “The best time to plant a tree was 20 years ago. The second-best time is now.”
Invest your time well
Retiring from work doesn’t mean you should stop learning. Why not set aside some time and money to learn something new that will keep your mind and body active even in the future?
One good way is to tap on “skills upgrading”, the buzzword of the day. The reality is that only those who manage to keep themselves relevant stand a higher chance in the future workforce. The Singapore Government encourages all adults to prioritise learning and upgrading, having introduced the SkillsFuture initiative in 2015. All eligible Singaporean adults get S$500 opening credits that can be used to subsidise courses.
Other than keeping your work skills up-to-date, you could also pick up something new that you are passionate about.
Have contingency plans in place
Unexpected life events or situations may catch you off guard, and the best protection you can have against these is to plan for them. Insurance can be that safety harness for your financial well-being in times of need – protecting yourself, your loved ones, and even your property and belongings.
Prudent investment into a diversified portfolio is another method of protecting your financial health. Start considering which insurance products or investment opportunities you can tap on to secure your future. If you begin early, it can be a lot more affordable than you think.
While saving a portion of your monthly pay is a good habit, simply squirreling away funds will likely be insufficient as interest rates are generally lower than inflation rates (currently at 2%). Nor should you build wealth only within a single investment category. For example, single-mindedly investing in properties may leave you vulnerable during any market downturns, or when you need a sudden injection of funds. Build diverse sources of income instead, which can help to ensure a stable retirement.
There are many avenues for you to read up on the different ways to build a financial portfolio. You can also speak with a financial advisor to work out your financial goals.