Follow up post from: http://blog.randallkho.com/?p=1431
Inflation is an ever-going thing, the %percentage will just keep going. And how do we break-even our savings or earnings through various financial instruments?
Situations observed:
- People not planning their finances or do any savings
- Some would perceive that minor savings or certain Single instrument of small amount would buffer for future use
- Expenses or Luxury commitment Out Versus the ratio to savings or financial growth instruments
- Forward planning is not acknowledged by many
- Sceptical towards financial instruments
Basic solutions has to come with open minds to accept them. All to be mentioned has several considerations to consider upon: 1. Budget 2. Capital 3. Liabilities 4. Available Time to plan 5. Risk level acceptance.
#01 Fixed deposits is one of the many usual instrument people would go for, good to use when one is of close retirement age, tight capital of lump sum, people with liabilities to such when capital is required to be withdrawn should it be required with the setback of the capital taken out earlier than expected without a single cents earned from “parking” the money in them. Returns for fixed Deposit is just marginally higher than plainly saving in the bank.
#02 Stocks required certain level of risk tolerance. In this, there’s bound to be risk to be borne; such as loss of capital. One long term and patient method, investing in larger scale and stable companies that offer good dividends. (ps. still, risk exists)
#03 Endowment plans, regular or lump sum investing; or even limited term save with later maturity dates. It comes with saving terms of 5, 10, 15, 20, 25 years OR even self dictated duration. Things to note: the longer the term, the better the compounding effect (provided you have the duration in life to commit). For endowment planning, ONLY planned and affordable premium should be considered and the suitable duration of savings to be maturing at; early termination of plans would subject to loss BUT otherwise its a wonderful tool for the safe levels).
There are quite a few instruments to use BUT a whole lot of considerations to place, a wrong move in financial planning could result in a “not as good” portfolio. Speak to your financial adviser over a cup of coffee, disclose your portfolio details and discuss in depth.
Remember! Planning to not just about buying something new, but to consider instruments you have in place, how and what new instruments you need to input to make things blend into your different stages of life.
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