Simple ways to achieve financial calm
Set aside enough savings to cover a minimum of three to six months of expenses. Having extra funds can give you peace of mind by providing a safety net for emergencies.
Build an emergency fund
Draft up your will and make your CPF nomination early, and update it as you go through different life stages. By doing so, you can be assured that your assets and CPF savings will be distributed according to your wishes in the event of your passing.
Put your affairs in order
Investing will generally help you generate better returns than savings in a bank, but invest only in products that you understand and are suitable for your needs, risk profile and circumstances. For short-term goals, consider Singapore Savings Bonds, Treasury bills and fixed deposits. For long-term goals, consider diversified exchange-traded funds and unit trusts.
If you do not wish to take risks, grow the savings in your CPF accounts by making cash top-ups or by transferring funds from your Ordinary Account – which offers an interest rate of 2.5 per cent per annum – to your Special or Retirement Accounts1 to enjoy a higher interest rate of 4 per cent to 6 per cent per annum1.
Invest your money wisely
All Singaporeans are covered under the country’s basic national health insurance scheme MediShield Life, which offers protection from large hospitalisation bills.
However, it can be important to consider obtaining additional insurance coverage for critical illness (four times your annual income), death, as well as total and permanent disability (nine times your annual income). This helps make up for the loss of income and supports the needs of your dependants during a challenging time.
Do consider the long-term affordability of additional insurance, as premiums of private insurance can increase significantly with age. Being adequately covered for the unexpected, and ensuring you can afford it in the long run, will protect the nest egg you worked hard to accumulate.
Obtain adequate insurance coverage
Improve your financial health with the following tips from MoneySense, Singapore’s national financial education programme:
1 Members aged 55 and above earn up to 6 per cent interest on the first $30,000 (capped at $20,000 for Ordinary Account) of their combined CPF balances, and up to 5 per cent on the next $30,000 (capped at $20,000 for Ordinary Account).