Planning for retirement

To most people, early retirement would probably be at the age of 55. That’s when you bid goodbye to your tie, suit and briefcase and donned your polo tee and go golfing. You will travel around the world not once in a year but once every few months. That’s the dream retirement for many. Let’s take Tom, a 24 years old who has just graduated from his university. He found a job that pays him an average of $3,600 a month. He is a saver and his monthly expenses adds up to $400 a month. After CPF deduction, that would leave him with around $2,500 a month. Now Tom cracks his head and wonders what would be the best possible way to grow this $2,500 a month.

1. List down and prioritise his financial goals

Listing down his goals give him a clearer picture of what he need to achieve and how to plan for his finances. Tom has goals ranging from short to long term which he wants to achieve.

Short Term (1-5years)

1. Getting married
2. Buying a house

Mid Term (5-15years)

1. Saving for children’s expenses
2. Purchasing a family car

Long Term (>15 years)

1. Children tertiary education
2. Retirement
3. Health expenses

2. Starts budgeting

Short term goals come first and that is something that he needs to set away without taking too much risk. Let’s make the assumption that he will need to accumulate $40,000 in 5 years time to meet his short term goals. He needs to stash away $8,000 a year, not in a bank, but in higher yield assets such as the SGS government bonds or T-bills.

3. Make plans to invest the extra dollars

Many people are risk-adverse and when the word ‘investment’ is mentioned. They shun it because the older generation told them that putting away your money in the bank is the safest and best option. Wait. Best? If you want work to a 9-5 job all the way to 65, then by all means. Otherwise, make your money work harder. A general rule of thumb of investing is do a ‘110 minus your age’ stock-bond portfolio . That is to say Tom should allocate his remaining money into a 86% stocks and 14% bond portfolio. READ ALSO: How to invest in STI ETF? We can’t foresee Tom’s future whether he will be able to rise up in ranks to take home a bigger paycheck, win a lottery or whether the stocks market will go smoothly. So we have to make some assumption of all other things being equal, a 8% growth of $2,500 a month. When he turns 40 and assuming the stock market has not crashed, he would be sitting on a portfolio of close to a million dollar. He could also explore other ways such as investing in dividend yielding stocks or property to generate a passive income.

4. Re-visit his plan and make changes accordingly

As his life stages change, his income and expenses changes and he will need to revisit his strategy to see if it is in line with his retirement goal. The more Tom reduces his expenses, the earlier his retirement would be. Furthermore, as he grows older, he will need to adjust his holding in different assets to minimise the risk exposure.

5. Throwing in the towel and retire

Once Tom has reached his goal, it’s time to consolidate all his assets and starts to calculate if the money and asset he worked all his life for would be able to last him a lifetime. Most financial planners would say you can draw down at 4% – but wait, what if you live longer than expected? Mortality rate in Singapore has been increasing and with better healthcare, your money might run out while you are still around to witness the birth of your great-grandchildren. Aim for the ideal withdrawal rate that doesn’t touch the principal and you will be able to live off with passive income supplement by your CPF and other annuities. Some of you might think that to die with too much money left might be foolish but why not leave a legacy to your loved ones or people whom you care about?

Best bank accounts in Singapore

Hey folks, it’s time to wake your money up!

If you have come to this page looking for the best bank accounts in Singapore that offers the highest interest rate, look no further.

In a low interest rate environment, everyone should aim to put their savings where their money works the hardest. No doubt it cannot beat inflation, but beside being risk-free, it beats putting your money in a biscuit tin or an account that offers a paltry 0.01%.

There are 8 saving and current accounts that make it to the list. Let’s see how they match up.

1. OCBC 360 Account

One of the most popular choice among Singaporean would be the OCBC 360 Account as it offers up to 3.05% interest on your saving account.

There is a base interest of 0.05% and an additional of 3% if you fulfil 3 requirements every month: crediting your salary to the account, pay any 3 bills and spend at least $400 on OCBC credit cards.

2. Citibank InterestPlus Account

For individuals who are planning to insure and invest can look at Citibank’s InterestPlus Savings account. You can get up to 2.5% bonus interest if you meet the following criteria:

1. Insure yourself with a monthly premium of $250 for 12months or a single premium of $25,000

2. Spend $25 on Citibank Credit Card

3. Invest $250 monthly for 12 months in a Regular Saving Plan or set away $25,000 in Unit Trusts.

3. DBS Multiplier Account

Our local bank DBS has introduced a multiplier account that rewards up to 2.08% interest. This is a multi tier programme where you get higher interest after meeting the minimum required amount for regular banking. Regular banking refers to crediting your salary, shopping with their debit and credit cards, monthly installments of home loans and crediting your investment dividends from your CDP account.

For the different tiers, refer to the screengrab.

4. Standard Chartered Bonus$aver Account

With Bonus$aver account, you can get interest of 1.88% p.a when you charge $500 a month to your Bonus$aver Credit/Debit card. For those who spend at least $500 a month can consider charging them to these cards to enjoy the interest rate. Take note that the interest is only on savings up to $25,000. Any amount more than $25,000 will get 0.1% interest – the same rate applies if you cannot meet the $500 a month spending.

5. Standard Chartered e$aver Account

Currently with a limited time promotion until 31 January 2015, you are eligible for an interest rate of up to 1.35%, subject to terms and condition.

Bonus interest is awarded on the incremental average daily balance from October’s average daily balance.

6. Maybank iSAVvy Savings Account

Maybank has a similar promotion as SCB and you can get up to 1.3% interest.

For Maybank, there is a min deposit of $5,000 for incremental average daily balance to be eligible for the bonus interest rate.

7. CIMB StarSaver Accounts

CIMB offers an attractive 0.8% interest rate on their saving accounts. Min deposit is $1,000 and to be eligible for 0.8%, you just need to deposit at least $100/month. If not you will be entitled to 0.5% interest rate – not too bad.

8. ANZ Progress Saver Account

ANZ Progress Saver Account is the next on list. Customers can enjoy up to 0.70% interest rate.

Minimum initial deposit is $5,000 and to be eligible for the bonus interest, just deposit at least $500 a month.

Do i need a will to plan my estate?

Benjamin Franklin once said nothing in life is certain but only two things are: death and taxes.

In the unlikely event of your death, have you made sufficient planning so that your last wish could be fulfilled? Dying without a will, also known as intestacy, could give your family and loved ones a hard and frustrating time to sort out what you left behind. (I hope you left assets and not debts) Therefore it is crucial to make sure that you have done your estate planning when you are still around and have a sound mind.

In a survey done few years ago, 8 out of 10 Singaporeans do not have a will. This also means that the heirs belonging to this group of the population could face delay and roadblocks in getting a grant of probate from the Court.

If you do not have a will, your assets will be distributed according to the Intestate Succession Act.

The question now is whether you need a will drafted since there is law in place to distribute your assets?

You can answer this by following the checklist below:

1. First, understand the intestacy rules of distribution

There are 9 rules listed in the Intestate Succession Act (Chapter 146). The rules are distributed according to their order.

Rule	Situation	Distribution of Assets
1	You left behind surviving spouse with no issue (children) and parent	Spouse get 100%
2	You left behind surviving spouse with children	Spouse get 50%
3	You left behind surviving spouse with children	Children get 50%
4	You left behind surviving spouse and parents	Spouse get 50%, Parents get 50%
5	You left behind no spouse and children	Parents get 100%
6	You left behind no spouse, children and parents	Siblings get 100%
7	You left behind no spouse, children, parents and siblings	Grandparents get 100%
8	You left behind no spouse, children, parents, siblings and grandparents	Uncles and aunts get 100%
9	You left behind without any next-of-kin, Government get 100%

2. Ask yourself if you are agreeable to the intestacy law

After going through the list, now you need to decide if the law concur with your wish? There are people who may want to will more or less of their assets to an individual and that is when you don’t have a will, it gets tricky. For example, you may wish to distribute part of your asset to your incapacited sibling but without a will, the intestacy rules may fail to adequately provide for your needy dependant.

3. Do you have someone or an organisation in mind?

You may want to provide for your children from your previous marriage, a good friend or a charity. Without a will drafted, these group of people whom you care about will not be getting anything after you leave this world.

4. Do you have a complex and complicated family?

With the growing complexity of family structure, family relationship can get ugly over the tussle of inheritance. This can be problematic when you do not state your wish in a will. The dispute of the will and probate will likely cause stress and feud amongst your family members. Not to mention, the court and legal fees associated that could easily takes up to 5%-10% of your estate.

5. Do you have any minor children?

What happen to your children should there be no surviving spouse? The law requires the appointment of a guardian or trustee until your child reaches the legal age of 21. This person must be someone you trust to ensure your child’s financial is well taken care of. A will allows more flexibility in the appointment of the right person.

You don’t need a lawyer to draft a will and you can actually pen the will yourself. However, to proceed with caution as small mistakes could end up costing your beneficiary more in the future.

Your Ultimate Guide to Planning Your Europe Trip

In our earliest post on How to travel Europe on a shoestring budget, we talk about how you can travel to Europe without breaking the bank. Careful planning is essential and that is what this article is going to focus on.

Step 1: Prepare the things you need

Things you need:
1. Map of Europe (Google map will do fine)
2. Notebook & writing materials
3. Internet and/or travel guides
4. Credit card (For making online booking)
5. Travel Companion(s) (duh, to discuss.)

Step 2: Shortlisting the places in Europe you want to visit

This is going to be the most exciting and fun part of the planning. With occasional squabbles, you will spend hours researching on the best places to go with your travel companion.

Go do some research on the most travelled places and UNESCO’s world heritage sites. Use a travel guide to do your research if you have one. Otherwise, just connect to the internet and use Google.

Jot down the places you want to go in this order.
[Places of attraction] – [City], [Country]

For example,
1. Eiffel Tower – Paris, France
2. Colosseum – Rome, Italy
3. (List goes on, depending on how adventurous you are)

Mark a cross ‘X’ on the map for each destination. (I hope you don’t fill the entire map with crosses.)

Step 3: Plan your travel route

Now that you have shortlisted the places you want to go, it’s time to plan your travel route in the most efficient manner. By efficient, i mean the route that saves you the most time and resources.

Before you jump into planning the route, go search for the cheapest airfare to any of the European city that you have shortlisted first. This will be the first and your last stop of your travel plan.

There are online aggregators that compare the cheapest flight for you. For example, there are sites like SkyScanner, FareCompare, Kayak, Expedia and Zuji where you can enter your departure and return date and you get a list of flights where you can sort and filter the prices accordingly. Try to search for the cheapest return airfare. For some, there are also other factors to consider such as the quality and service of the airlines, convenience of the airport, miles point, etc. I will leave the prioritisation to you.

Once you have confirm the city to be the first and last stop. Label the cross ‘X’ with 1. I will use Amsterdam, Netherlands as an example.

Next, look for the next ‘X’ that is bordering around Amsterdam, Netherlands. By bordering, i mean connected that is not separated by land or sea. In my example, my next stop will be to visit Kölner Dom in Cologne, Germany. Mark it as 2, and follow on with the rest.

My third stop will be Museumsinsel (Museum Island) in Berlin, Germany

The rest as follows:

4th stop: Prague (Czech Republic)
5-6th stop: Vienna -> Salzburg (Austria)
7-11th stop: Venice -> Rome -> Florence -> Pisa -> Milan (Italy)
12-14th stop: Lauterbrunnen/Junfraujoch -> Zurich -> Basel (Switzerland)
15th stop: Paris (France)
16th stop: London (UK)(There is a train operated by Eurostar that takes you from Paris to London)
17th stop: Amsterdam (Netherlands) (You can take budget airline such as Ryanair or a Ferry from London to Amsterdam)

*Note: Such itinerary took me a month to travel to all the places. It was tiring but fun and satisfying to conquer all of them within one month. If you were to ask me again, i would suggest condensing the above itinerary to 10stops/4 countries tops if you can only afford anything less than one month of travel. If you can afford to be away longer, go for it!

Step 4: Get busy with the nitty gritty

Now that you have a map filled with ‘X’s and numbers. You need to work out your mode of transportation that takes you from each stop.

Europe is connected by high-speed rails and you can easily hop around country in a matter of hours.
You can purchase the Eurail Global Pass that allows you to take their high speed train.

If you are age 25 and below, good news for you! You can get the Youth Traveller Pass. It costs about €442 for a 10days travel within 2 months. Check out the latest price at their website. You can also purchase them from our local travel agency. Just call them and ask.

It is not cheap, but it beats taking a more costlier option – budget airlines. Taking rail also save you times if you travel at night and book one of their sleeper cabin.

Now you need to schedule your train’s timetable time. Eurail has a very useful timetable that allows you to check out the train arrival and departure time.

For example, a route from Amsterdam, Netherlands to Cologne, Germany.

There are a few routes with different timing and train. Some of the route requires you to change train. Make sure you pick the right one.

Note down the details of the train station and arrival timing in your notebook. You will need them later.

Step 5: Book your accommodation

Once you are done with planning for your train timing, you need to settle your accommodation. Look for
an accommodation that is situated near your railway station (if you are reaching at night) or a somewhere near the places of attraction.

There are different kind of affordable accommodation which you can consider instead of booking a hotel.
1. Backpackers/Hostels (Use Google)
2. Homestay (I’d suggest airbnb)

3. Couchsurfing (free)

You will need your credit card to make the booking.

Step 6: Prepare and print the confirmations

Your last step would be to print out all the booking confirmation, fix them onto your notebook or file. I stapled all the confirmations and maps on each pages of my notebook from day 1 to day 30 so that it won’t drop. I also download offline maps of each cities on my iPad.

Now you can skip the travel agent and save the cost on tour packages!

Here’s the final product on a map.

Drivers, 12 Fuel Saving Tips You Need to Know

If you have been driving for the past couple of decades, you would have noticed that fuel price has increased by 100% since 1991. It used to cost around a dollar for a litre of 95 Octane and now it has creep to $2.20 a litre in 2014. With increasing population, expect the road to be more congested and that’s when you see more ERP gantries, astronomical COE price and increased excise duty on fuel.

Here are 12 fuel saving tips tips to help you save on your fuel and to manage the increasing cost of driving.

1. Check the fuel price online and the nearest petrol kiosk

If you can read this post, you probably can check the fuel price online. With internet and mobile devices, just check out websites of the four main fuel providers in Singapore. Fuel price and kiosk location are listed on the website for your convenience. Of course, don’t save the few cents a litre and spend more fuel to drive to a specific kiosk kilometres away.

2. Change your driving style

Your right foot is the answer to your fuel consumption. Every time you step on the pedal, fuel will be consumed. To save on your fuel, i’m not asking you not to step on the pedal but rather control your stepping action. For example, when you see the red light a few hundred metres away – stop accelerating and gently control your speed so that when it changes to green, your car can move off without moving from stationary position which consumes more fuel. Make sure that there is no car behind you so that you will not be hogging the road.

When moving off from stop, the same rules apply. Gently step on your accelerator to pick up speed before moving off. You are not taking part in a 100 metres run so avoid revving your engine at full throttle.

3. Use the right grade of petrol

Most car runs fine on regular 95 Octane. Don’t top off as the using a lower grade fuel may not necessary loses significant performance. The higher the number, the more resistance to knocking. David Bielo, from Scientific American’s website, dispels the myth that premium gasoline delivers better performance for standard cars on the road. You are simply paying a premium for a fuel with no added benefits.

Check your vehicle owner’s manual to find out the right one for your car.

4. Understanding car aerodynamics

Ever wonder why competitive swimmers wear swim caps? Hair increases the drag and water resistance in the water and thus reduces performance. The same can be explained for cars aerodynamics. Remove your roof racks if you have one and don’t use it to reduce drag and resistance.

5. Alternate between turning on your A/C and rolling down your Window

In hot and humid Singapore, most drivers will keep their air-con on throughout the entire journey and this reduces fuel economy by 5-10%.

Does that means you should turn off the air-con and roll down the window instead? A number of tests conducted by the Stanford University and the Society of Automotive Engineers (SAE) has found out that when on the highway, the increased drag caused by the air-resistance with the windows rolled down exceeds the efficiency of rolling up the air-con and keeping the air-con on. They recommend that you should keep your air-on if you are driving at speed above 72KM/H. Conversely, when you are at the city area, roll down your windows instead.

6. Remove loads from your car

Unnecessary items in your car add on to the weight of your car which requires more fuel to move the car. Keep those heavy items in your storeroom rather than in the boot of your car. Every 50kg shed will improve fuel economy by 1-2%.

7. Drive slower if possible

By driving slower, i don’t mean to the extent of hogging the road and turning up late for your work. Keep your speed steady and avoid driving at high speed as the car needs more energy and horsepower to propel it forward.

8. Keep your tyres inflated

Fill up your tyres to the proper level of inflation to improve fuel efficiency by 3.3%. The optimal level can be found on the user manual.

9. Maintain your car regularly

Keep your engine in good shape to reduce fuel consumption. A faulty oxygen sensor could cost you 40% increased consumption in fuel according to US EPA, whereas a dirty air filter can push up your fuel consumption by 13%.

10. Credit card rebates and membership discount

You can shave off a portion of your fuel cost if you have a credit card that offers the best rebates and discount. Make sure you find out which is the best card and the stations to go to for your regular petrol pump.

11. Choose the right car for the right purpose

You don’t need a SUV if you don’t need the space to ferry more than 4 passengers frequently and don’t do off-road driving. The large size and high ground clearance leads to poor aerodynamics and the heavier weight is going inflate your fuel cost. A standard sedan car is your best bet if you use the car for your own get around between work and home. If you cover a lot of distance in a day, a hybrid-electric car can help cut your fuel expenses as it consumes less fuel than a standard car. A recent study conducted by Ministry of Trade and Industry Singapore (MTI) has found out that the fuels saving tend to offet the premium in price paid for fuel-efficient cars.

12. Plan your trip

You may be a seasoned driver and know the road very well but the least you want to know is to find out that had been taking a longer route for all the time. If you plan your route beforehand by finding out the shortest route, you could cut down on the mileage you need to travel and thus lead to fuel saving. An updated GPS or Google Map will do the trick and with new roads and highway being added every now and then, it pays to find out if you can get to the same destination in a shorter route.

Other things to take note is to find out the traffic conditions of the route to see if there are any congestion along the route you planned to take. mapSYNQ and ONE.MOTORING provide live traffic updates to keep motorists informed of any road works, closure and diversions.

Now besides practicing the above, perhaps you should consider the most efficient way of eliminating this expenses entirely – that is to take the public mode of transport. Cut down on your carbon emission and contributes to the climate.