Please help assess my financial position

[Takodoro]

I think my current financial position is in a mess and this is affecting my life as well. In short, I feel like I am experiencing a mid-life crisis already!!!! Hopefully all the experienced bros here can help to assess my financial position and give me some sound and prudent financial advices (sorry for long thread in advance)

I am 28 years old and am currently earning around S$4.5k per month. My total personal savings atm is close to S$4k. Co-savings with my spouse is close to $63k (S$16k bank, S$45k dollardex funds, S$2k profit from dollardex funds invested since 2010 April). I have one 18 month baby and is planning for another one soon.

My monthly expenses as follow:
1) S$1k home loan (fully paid from CPF)
2) S$70 prudential endownment plan (bought during NS time)
3) S$100 Tokio Marine annuality (as disclipined savings for my baby education fund)
4) S$80 phone bill
5) S$70 SP service bill
6) S$550 paid to parents as son-duty and education repayment
7) S$600 forced saving into co-savings with spouse (as disclipined savings for emergency fund)
8) S$1.2k monthly expenses (household, transports, weekend expenses, food during work)

My co-savings monthly expenses as follow:
1) S$400 paid to in-law for baby-sitting and weekday dinner
2) S$200 baby playgroup learning

My problems are as follow:
1) No matter how much I try to save, it always seemed that I could not save enough to build up my own personal warchest. I aim to have S$1k per month as personal savings, but somehow, unexpected costs always hit me, such as baby falling sick (the last round costs me close to S$600).

2) As I plan to have a second child, the reality of cost of living in Singapore suddenly hit me. Delivery fee + gynae fee + milk costs are all going to cost a bomb!!!

3) My mother fully paid for my university fee and up till date I am still unable to fully pay her back (based on monthly payment of S$300, which is expected to be fully paid in 2015 December based on 4.75% annum interest). This means that I am contributing to her S$250 per month as her "pocket expenses" and contributing nothing to my father. I feel bad about this as S$250 is nothing in today economy.

4) Similarly, my MIL is helping to look after my baby and cooking dinner for us to da bao every day. I feel like S$400 is not enough in terms of market rate. Once again, I feel bad and this is eating into my self-esteem.

5) With a plan for second baby, I hope to buy a car for family reason. Moreover, with the lifting of loan restriction on second hand car, I feel like this is the only chance to get a car in the foreseeable future. However, the reality is that second hand car is still very expensive (when you pro-rate the depreciation over the remaining COE life, plus the unforseen maintenance fee associated with second hand car).

5a) My wife is working, but I do not wish to tap into her income for car ownership as I believe this should be a man's responsibility.

6) I am not exacty a savvy investor, and my co-savings investments principal amount are gradually build-up over the years. A quick check using dollardex tool shows my IRR as since day 1 as 2.96%. I believe this is decent, but I was hoping for closer to 5%.

6a) My co-savings investments currently consists of the following:
- S$1k First State Regional China Fund
- S$2k Franklin Templeton Global Bond Fund A MDIS
- S$1.2k Lion Global Singapore Fixed Income Investment A
- S$41k Nikon AM Shenton Short Term Bond Fund (S$)
- S$2.5k Schroder BRIC Fund

6b) I am not a speculator and believe in investing in the long-run. Hence, I seldom do switching of funds. But I believe we do need to lock-in profit every now and then with mutual funds, and this is something which I seldom do because even if I lock in the profit and switch, I do not know which fund should I switch into.

6c) I was looking to convert some of the funds into stocks, but with the current STI being way over-priced, I am not so sure.

7) I know I am super-under-insured (relying on my prudential endownment fund insurance component + NTUC income shield with rider + employment insurance + CPF dependent scheme). But I feel that my priority should be on wealth growth atm. Any additional insurance outflow will only eat into my disposable cash for investment warchest.

7a) My baby is only insured with NTUC income shield with rider. Is this even enough??


Once again, sorry for the long post as I wish to be as detailed as possible so that fellow esteemed forumers like dividend warrior is able to provide me with a detailed analysis. In summary, please save me from my mid-life crisis!!!

 

[hwmook]

1. My first advise to you, do not buy car. You will die from the cost of doing so. If you must buy then save up enough first before the price will go down as the no. of COE increase.

2. Give your parents a little more, $250 a month is really on the low side, just increase slowly.

3. Give your MIL more, $400 for baby sitting is dirt cheap + weekdays dinners. Your MIL is feeding you instead.

4. So where does your wife come into the picture? Is she earning a comparable amount as you? How much does she contribute to your co-savings?

5. Insurance is just to tip you over in case of anything goes wrong. You do not need a huge sum assured, go for term and hospitalization plans is enough. Endowment plans can skip since you are doing investment yourself.

6. Your investment returns is not good because you are storing your funds in nikko short term bond funds instead of going for higher returns fund like United SGD funds, united Asian Bond funds, eastspring investment MIP, all of which are high yield bond funds. Your equity funds are mainly BRIC and china funds which is really not too great. I would recommend SEA funds like thailand, Indonesia, Malaysia, Singapore or taiwan, s korea etc. Don't think BRIC will be doing too well in the near future. Do diversify your investment else you risk going down when a particular economy is not doing well. You can invest in ETF too if you don't really know the stocks well.

 

[PRUbombz]

Looks to me you are doing pretty well. To have a combine account of $63k is not that easy with a house of your own and a kid.

Monthly expenses as follow:
1) S$1k home loan (fully paid from CPF)
2) S$70 prudential endownment plan (bought during NS time)
3) S$100 Tokio Marine annuality (as disclipined savings for my baby education fund)
4) S$80 phone bill
5) S$70 SP service bill
6) S$550 paid to parents as son-duty and education repayment
7) S$600 forced saving into co-savings with spouse (as disclipined savings for emergency fund)
8) S$1.2k monthly expenses (household, transports, weekend expenses, food during work)

Total fixed monthly expenses here is.. $2670 cash. Assuming your monthly salary $4.5k is before cpf. After CPF is $3600. Possible saving is close to $1000. The question you have to ask yourself is where the $1000 is going every month. If its the unexpected cost, then we have to determine typically what costs are they. If its normally baby care related, I would think it should be funded from the combined account? If its luxury related, then perhaps you might want to cut down alittle? 4k personal savings is very low. But if most of the cost of living as a family is funded mostly from there, and the combined account is just growing, I think overall its healthy. End of the day, its just left pocket going to right pocket.

 

[kensg220880]

ts seems better than me coz he has a combined saving of 63k. i myself is still in debt over my house loan, renovation loan..

 

[Takodoro]

1. My first advise to you, do not buy car. You will die from the cost of doing so. If you must buy then save up enough first before the price will go down as the no. of COE increase.

2. Give your parents a little more, $250 a month is really on the low side, just increase slowly.

3. Give your MIL more, $400 for baby sitting is dirt cheap + weekdays dinners. Your MIL is feeding you instead.

4. So where does your wife come into the picture? Is she earning a comparable amount as you? How much does she contribute to your co-savings?

5. Insurance is just to tip you over in case of anything goes wrong. You do not need a huge sum assured, go for term and hospitalization plans is enough. Endowment plans can skip since you are doing investment yourself.

6. Your investment returns is not good because you are storing your funds in nikko short term bond funds instead of going for higher returns fund like United SGD funds, united Asian Bond funds, eastspring investment MIP, all of which are high yield bond funds. Your equity funds are mainly BRIC and china funds which is really not too great. I would recommend SEA funds like thailand, Indonesia, Malaysia, Singapore or taiwan, s korea etc. Don't think BRIC will be doing too well in the near future. Do diversify your investment else you risk going down when a particular economy is not doing well. You can invest in ETF too if you don't really know the stocks well.

Hey bro thanks for the reply! Ya I know I am giving little back to my parents and in-law. I was hoping to increase this amount but its kinda hard when your expenses are high. That's why I see the key is to having better investment returns.

Any recommendation for term and hospitalization? I know NTUC incomeshield is not enough and I am really skeptical to agents in general.

Is there a recommended timing into those fund that you recommended? I think the general rule of thumb is to invest when prices are low (i.e. 2008 crisis, too bad I am studying back then and have no funds). Nowadays all the pricing are so high that its kinda hard to beat the market.

 

[Takodoro]

ts seems better than me coz he has a combined saving of 63k. i myself is still in debt over my house loan, renovation loan..

Just how bad are you? I think I am already really very bad. Then how do you scrap by with your living?

 

[chaotank]

How much is your wife earning now?

Does your wife contribute to your mil? If not, get her to contribute too. (I'm assuming she is in the same income range as you)

Take your kid out of the play group. Do you remember anything when you were 18 months? Me neither. Infant education is just a huge scam ring in my opinion.

Give the $200 you saved from that to your parents. $250 is a really sad amount to be honest. Your parents deserve more than that.

Skip the car. Now's not the time to go around accumulating liabilities. Almost an extra $1k in expenses a month leh. Get it and you will be eating grass for the "convenience" of a car.

Get term insurance, at least enough to cover your mortgage so your family can have a roof over their head in case something happened to you.

And most importantly, save before you spend. Set aside that 1k you need before doing anything else. Then you won't have to worry about not having enough money for your warchest.

 

[Dividends Warrior]

Since TS mentioned my name, I feel obliged to contribute my 1 cent worth, even though I am not the best person to give advise since I am not married with kids.

Ranked in terms of importance:

1. Do NOT buy the car (until you save up much more cash)
2. Hang on to your job for dear life (no kidding)
3. Ask your wife to contribute to the investment warchest
4. Get more insurance coverage for your children

Having given these advise, I have something else to say......

In life, we make countless choices. Some of them important, some of them trivial. Getting married, buying a house and having children are super important decisions. Especially having children, because once they are born, there is no turning back. You really have to think it through and be truly honest with yourself.

I understand that you are frustrated that you dun save enough to invest. But unfortunately, that is the reality of getting married and having children as a normal salaryman. If I am married with children, my portfolio will not be the size it is today. Some people are able to slog happily 20 years just for their children, wife, car and house. Then, they hope their children will support them when they are old. But I prefer to be single, at least for now.

So TS, you have to pin your future and hopes on your children. Teach them well, make sure they grow up right.

 

[lzydata]

Perhaps TS is stressing himself out because you have the traditional mindset that the man must be the breadwinner, the man must pay for everything, a man's pride etc. In all your budgeting for expenses, insurance and investments somehow it's like your wife's income is not included at all.

These days it is hard to have all these aspirations and goals for good housing, education, parent support and retirement on only one person's income - not to mention a car. (Agree with everyone above, don't do it.) It makes sense to involve your wife and let her bear some of the burden. Isn't that what being a family is about

I mean, I don't know what your private situation is, and obviously these are delicate matters, but from your description this is what I found the most striking.

 

[mosaic1979]

Wow yours is a tough one. Most of your expenses are quite essential. If you ask me, I only got 2 suggestions. Find a job that pays you well or make sure you work your ass off and move up fast. Than make sure your money works for you.

Actually your salary at your age is not that bad, if combined with your wife should be ok with bonuses? Just that you start family at this age sure use up fast one lah.

I made sure i had a huge warchest before I settled down. And of course I made sure I didn t get tied down so early, can save more and enjoy singlehood abit more also mah. But for you no choice, cannot go back in time.

 

[iCuteCube]

My advice

#1 DO NOT BUY A CAR until you really really die die cannot live without it. The cost of living is already so high, and you are planning for another baby, please do not buy a car until you had accessed that you have the ability to support the car without affecting your lifestyle.

#2 Since you are having a joint account, why cant your wife contribute to your warchest? Is it your ego or your wife do not agree with it? I believe most couples share their income and plan wisely nowadays. Try to communicate more to understand.

#3 Alternate investment. I wouldn't really recommend UT, but you can consider to diversify some of your UT or fresh investment to Dividend stocks or REITs that pay you $$$ a few times a year, better cash flow imho. Although also have risk, but since you are 28 yo, long investment time frame, good to invest early to re-invest in the dividend to see a huge difference.

#4 I do not know what field you are in. But generally speaking for your age 28, earning $4.5k is generally decent to good range, infact should be "good" range, most people are stuck at $3k+++. Stick to your job unless you really find a better paying jobs with other aspects that you are looking for.

 

[My Little Diary 88]

why don't you approach an ifa for a proper analysis?

 

[Saj.Mahal]

I like your post

I think my current financial position is in a mess and this is affecting my life as well.

If the man wants to provide, let him lo.

You want to be on top of everything, and that's respectable. Perhaps a little idealistic for now. This means we need to prioritise. Here's your problems in order or importance to me:


1) As I plan to have a second child, the reality of cost of living in Singapore suddenly hit me. Delivery fee + gynae fee + milk costs are all going to cost a bomb!!!

Bo pian, just save.

2) Insurance

Term + Hospitalisation and you are comfortable. You can afford it.

3) My mother fully paid for my university fee and up till date I am still unable to fully pay her back (based on monthly payment of S$300, which is expected to be fully paid in 2015 December based on 4.75% annum interest). This means that I am contributing to her S$250 per month as her "pocket expenses" and contributing nothing to my father. I feel bad about this as S$250 is nothing in today economy.

If you could make a 4.75% guaranteed investment, would you do it? Channel your co-savings investment money here. Show your wife this is a smart move.

4) I believe this is decent, but I was hoping for closer to 5%.

That’s surely achievable.

4b) I am not a speculator and believe in investing in the long-run. Hence, I seldom do switching of funds. But I believe we do need to lock-in profit every now and then with mutual funds, and this is something which I seldom do because even if I lock in the profit and switch, I do not know which fund should I switch into.

Some banks and insurance companies have independent third parties to help you with this.

4c) I was looking to convert some of the funds into stocks, but with the current STI being way over-priced, I am not so sure.

Time is on your side, don't fret too much over market timing that you come to a standstill. SG market tends to come down a little in Apr / May. Read, Ask, attend some free seminars and ask more. This is not within your comfort zone, so, portion out a percentage and take your first step.

*) Similarly, my MIL is helping to look after my baby and cooking dinner for us to da bao every day. I feel like S$400 is not enough in terms of market rate. Once again, I feel bad and this is eating into my self-esteem.

I don't really think either party will be happy if this arrangement is purely transactional. Invest more in small gestures and gifts to show your appreciation.

*) With a plan for second baby, I hope to buy a car for family reason. Moreover, with the lifting of loan restriction on second hand car, I feel like this is the only chance to get a car in the foreseeable future. However, the reality is that second hand car is still very expensive (when you pro-rate the depreciation over the remaining COE life, plus the unforseen maintenance fee associated with second hand car).

Buy if you feel you can afford, don’t if it makes you lose sleep. Last weekend of the 60day lift may offer some better discounts. If not, election year may offer surprises. If not, buy when you can afford.

*) My wife is working, but I do not wish to tap into her income for car ownership as I believe this should be a man's responsibility.

Cool.

*) No matter how much I try to save, it always seemed that I could not save enough to build up my own personal warchest. I aim to have S$1k per month as personal savings, but somehow, unexpected costs always hit me, such as baby falling sick (the last round costs me close to S$600).

This is not a problem. You are already saving what you can. Still not satisfied? Try finding another income stream.

A little late so I hope I didn't make many mistakes replying you. Cheers

 

[hwmook]

why don't you approach an ifa for a proper analysis?

Bad advise, most IFA are crap. They are only interested to get your money. My mum and brother are 2 victims already.

 

[GenuineSeller]

Since TS mentioned my name, I feel obliged to contribute my 1 cent worth, even though I am not the best person to give advise since I am not married with kids.

Ranked in terms of importance:

1. Do NOT buy the car (until you save up much more cash)
2. Hang on to your job for dear life (no kidding)
3. Ask your wife to contribute to the investment warchest
4. Get more insurance coverage for your children

I disagree with point 4. Parents should get more insurance coverage for themselves first before getting more for child/children...... for childen, H&S is needed though. If something were to happen TS NOW (touch wood), what will happen to his kid/s and family? Term or Group term is pretty affordable.... should go get at least $200K with Critical illness coverage. Eg, NTUC Luv plan.

 

[kebinu]

You are having problems, but I'll coin them as happy problems. Everyone, including both richs and poors, will have their individual problems. I'll share only my concept base on what you have posted here, nothing detail yet, just concepts.

Solution to your problems.
1. Base on your current expenses, you will have $930 left, it's not hitting $1,000 at all. Nevertheless, why do you want to have $1000 monthly as warchest?

The $600 baby cost will be considered as unexpected cost.

2. Assuming we ignore all these "fixed" cost for delivery etc, let's just look at the monthly cost. With another $700+++ for 2nd child, you will start to have negative cash flow. (I will not touch 2nd child for the rest of this post)

3. Don't have to feel bad. Money is not everything in a healthy relationship. I believe your parents would rather you do better, spend more time with them than giving them a bit more money monthly. If they have their income and have enough to spend, your money can be saved for better use.

4. Again, don't feel bad. Spend time with them, don't forget them if you do well in future.

5. An affordable car like picanto can cost less than $1,000 monthly. You have to look out for cars with real low depreciation. They can be cheaper, but they are still in good condition. For example, I am driving a MRS which will costs less than $7,000 annual depreciation.

5a. Then you gotta suck it up, be happier with what you have, or for less or earn more money.

6. You know, you will do better with index tracking stock like STI ETF in the past 2 years, of course this is base on hind sight. When stock drops, funds won't do much better (except for the bond type).

It's not a good time to switch now imo.

7. Your insurance for the family is not enough.

Overall, your analysis of your problem will be totally different from mine. Please allow me to share.

Emergency Fund:
You have to understand what is emergency fund. People say putting 6 months of salary or expenses to take care of "unexpected" events. I may say that is a bit too much. What is expected or what is unexpected? Why is it necessary to have forced saving into funds, into savings, into warchest for DIY investment and everywhere?

Insurance:
You want to focus on wealth. You have to take care of the downside (remember about taking care of downside for everything later). You will need more insurance.

Hospital plan + riders for everyone in family. If on budget, go for restructure hospital only. You can save ~50% on premium. (nothing wrong going to restructure hospital anyway)

More downside is accident, critical illness to anyone in your family. IMO, get term plan for the next 25-30 years, which will be enough to cover you for your child to be steady on his/her own. These term plan aren't expensive. $200 monthly will be enough to have decent coverage of $200-$300k. If possible, get a comprehensive coverage which is comprehensive (covers lots of scenarios, low cost, high sum assured). $200 monthly is actually enough.

Wealth accumulation:
After taking care of insurance, you have to look at your income. You are currently earning $4,500 monthly. I believe it will be possible to have a 2nd steam of income. Need ideas? Look to your passion, look at demand, look at what you can supply and match them. It's not as hard as you think. No time or no energy may just be an excuse.

Enhancement:
You are putting a lot into various funds, which is not a bad thing. Do you know you can get better returns by doing some simple investment like dividend investing? If you know you won't be touching the money for many years to come, you can go ahead, why not? Capital appreciation stock? Why not? With age of deleveraging coming, these defensive stock will be in demand.

Speculation:
Hear say many people get burnt. They are gambiling. With a good trading system in place, it is possible to get passive income from trading.

Overall, don't feel bad that you cannot contribute enough to your and wife's parents. If you feel bad, do something about it. You can do much better. Many of my friends are having more than a source of income now. You just have to do it.

What are you waiting for now? Looking for someone who have been there and guiding you?

 

[ralliart_ray]

This is an interesting thread and made me self-reflect. TS, I am almost in the same shoes as you, just that I am 2years older. Really caught in this bad rat race.

 

[hhanzorion]

I see Financial Advisor/consultant giving advises that does not putting themselves in the shoe of the client, instead, trying to look for sales opportunity.

Future is for those who have planned for.

You are a salary employee.
The only way to the problem, cut spending.
Discipline in your spending.
If you have to do it, u have to do it.

 

[ralliart_ray]

You are a salary employee.
The only way to the problem, cut spending.
Discipline in your spending.
If you have to do it, u have to do it.

Another way is to earn more.

 

[kebinu]

I see Financial Advisor/consultant giving advises that does not putting themselves in the shoe of the client, instead, trying to look for sales opportunity.

Future is for those who have planned for.

You are a salary employee.
The only way to the problem, cut spending.
Discipline in your spending.
If you have to do it, u have to do it.

Seeking alternate income, why not?

Never say never. Nothing is impossible.

I have spoken to a number of people. For every suggestion I made, I am always thrown back with THIS IS WHY I CANNOT.

Let’s see, I can understand it is hard to quit our current employment to do. Why we don’t try doing it as a second source of income?

***I’m getting tired, going to list out all the points and take my nap soon. HA***

By doing it as a second source of income, there is 0 risk of a lower income. We get additional!

You may tell me that you have no time. If I were to look at everyone’s routine, there are many things which you don’t have to do. For example, watching TV. It is 1 of the most useless activity to spend time on (though I catch HK drama every night. LOL) Just focus on doing something more constructive for now, do a little sacrifice. You will be rewarded with time and money later for you.

You may tell me that you are tired. We will never feel tired for doing our passion. Mahjong players will play mahjong no matter how tired they are. They will, in fact, feel energtic while pa mahjong.

This is a little page done by my friend, Esther Chia. I don’t know the actual reason why she did this, but I will assume that she wants a bit of more income, want to help other parents to source for cute little things for their kids (she has 2 boys now) at a good price as well as getting some of the items for her boys.

Let me give another example. A friend of my friend. He loves mahjong. He knows that mahjong can be tiring sometimes because we have to “wash” the tiles. Therefore, there is some demand for an automatic mahjong table. He sees the demand, he gives the supply. He found his supplier, he started his website, he worked together with a few furniture shops (giving them commission) for a win win situation for all. After doing some ground work, he is now just waiting for business to come in. How much work has he done? He sees the demand, source for supply, website, some marketing, approaching furniture shops –> enjoy the reward.