17 July 2011

The Importance of Personal Finance

Recently I met a few cases where couples went to hospital at the age of 50-60 years old. It becomes very common that middle age people admitted to hospital to due various reasons. It could be due to healthy reason or incident reason. Hence, personal finance plays a very important role for those who are in the middle age. Below are my suggestions to middle age people:

  1. Purchase a term insurance that covers 36 critical illness as well as permanent disability. The amount should be at least 5x of your annual income. It can ensure that you leave a certain amount to your dependents.
  2. Purchase a medical card. For Singaporean, although you have the medishield, but my suggestion to you is to upgrade medishield to better insurance policy so that it can cover better range. For Malaysian, you definitely need to purchase it as you will reduce the risk for admitted to hospital for either operations or medical purpose.
  3. Save at least 6 months of monthly expense in emergency fund. It can be in the form of fixed deposit or money market fund or even REITs for aggressive people (3 days to redeem).
  4. Investing is the key part for better retiring life. You have to set aside at least 10% of your savings in long term investment fund. 
  5. Better educate yourself in personal finance. It can help you to reduce tax payable by legal way, as well as tax planning for your next generation. 

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