Me blOg

Yuying, in Aus, the first 1 or 2 consultations are usually free of charge and obligation. The first thing they talk to you about is usually income protection. I believe our situations are quite similar in the sense that we don't have our own family, no (home) mortgage, no investments... And since we don't have any investments or house or car, our biggest asset is our income. So it makes sense to some sort of income protection, which essentially is a form of insurance. You'll get paid by the insurance company if you can't work due to an accident. I'll explain more later why this is very important.

In my case, he gave me some homework to do before our second meeting. He asked me to work out how much I earned and how much I spent in a month. If you've done Finance 101 before, it's called a balance sheet, hehe. And hopefully you're earning more than you spend. He also asked me what my financial goals were. I put down quite a few things, like retiring at the age of 45-50 having an income similar to pre-retirement income level, having a holiday every year, dining out twice a week, buying a property in a year's time. He then sat down with me and showed me how it was possible to achieve all of the goals, hahaha. That's one of the reasons you see them 'cos it forces you to put down what you have in mind in writing and prioritise them. If you're disciplined enough, you can probably do it without any help from them. But I'm not.

Once you've worked out your balance sheet, they can help you work towards your achievable goals, say you want a million dollars by the time you retire (yes, it's achievable). There are 3 main asset classes you can invest in: shares, properties and cash (term/fixed deposit). They should be able explain the risk and return associated with each of them. In general, the greater the return, the higher the risk. Shares are generally considered riskier than properties, which in turn are considered riskier than cash. The opposite is true for returns. Shares generally offer higher return than properties and cash, in that order, over a long period. The keywords here are over a long period and regular contributions. That's where income protection comes in. You can protect up to 75% of your income for around $50/month (in Aus, probably cheaper in S'pore). If you can't work due to a major health problem or an accident, you'll still be able to invest using your insurance payout.

If you're really interested, you should get a book or two (preferably more) books on investments and start reading them. All of them will tell you the things that I just said, and more. Don't think of it as a daunting task. In fact, it can be quite interesting as it opens up a whole new world about how money works. You can email me if you wanna find out more so that I can write to you directly and others won't get bored, hahaha.