Recently married, Jonathan Lo and Alice Wong want to know how they can enjoy a debt-free retirement in future with sound financial planning now. Check out their story and find out how you can also get a money makeover.
Need a financial makeover or advice?
Planning to set up a new home? Getting married? Building an egg nest for retirement? Setting aside a sum for your children's education? Need advice?
AsiaOne has teamed up with ipac financial planning to offer a money makeover for those who want help in reaching their financial goals.
Interested? To participate in the next Money Makeover, please write to a1admin@sph.com.sg with your name, age, occupation and a brief description of the nature of your financial situation. Please include the subject heading "Money Makeover" in your email.
Also note that if selected for the makeover, you have to agree to be interviewed and photographed.
Before
Newlyweds Jonathan Lo and Alice Wong have spent all their savings on their wedding and matrimonial home. As they have limited experience in investment, they recognise that they can't reach their financial goals without help.
They wrote to AsiaOne which turned to ipac financial planning, a licensed financial advice company. Its senior vice-president Shikha Gaur met the couple over three one-hour sessions to give them a financial health makeover. The first session was to understand their background and goals.
Mr Lo, 30, is a senior executive while Ms Alice Wong, 26, is an executive working for the same organisation. Besides spending on their wedding, they also just recently bought their first flat.
They would like to have children in the near future and are concerned about the financial impact of starting a family. Ms Gaur observed that they are good savers, saving almost 30 per cent of what they earn.
Mr Lo said: "We are quite prudent but there is always that uneasy feeling wondering if our savings are enough. That's why we wrote in for this Money Makeover as we know that the advice is likely to be impartial."
They have spent all their savings to date on their flat and wedding, and are concerned about their financial future. They want to set up a solid foundation for wealth creation, and would like to make their money work harder for them as soon as possible.
Ms Guar estimated that there is an insurance shortfall of $800,000 for Ms Wong and $500,000 for Mr Lo. At their current rate, it is quite likely that their money would run out around age 62. They wish to ensure that they have a plan in place that addresses all these issues as well as work toward their goals for retirement.
"At their current rate, it is quite likely that their money would run out around age 62."
- ipac's senior vice-president Shikha Gaur, who also helped Mr Lo and Ms Wong work out their financial plan
The couple's financial health before and after the makeover:
>> Before >> After
Goals & objectives
In the short term, they would like to undertake an overseas posting to experience working abroad as well as advance their respective careers. On having children, they regard three kids as ideal. They would like to have a major holiday every two years which they estimate would cost S$5,000.
In the long term, they would like to purchase their dream condo in 10 years' time for $800,000. Of course, they need to fund their children's tertiary education at $25,000 per year over four years for each of their three children, without incurring debt. They plan to retire at age 60 and would like to spend $80,000 a year when in retirement, besides having a car and an around-the-world trip.
After: Strategies & recommendations
ipac cautioned that it is important to maintain a cash reserve of $10,000 for emergencies and cashflow. Thereafter, commence a disciplined saving strategy of $7,500 per quarter into a high growth diversified investment portfolio, that is, a portfolio that is made of 95 per cent growth assets such as shares and property with the balance in fixed interest deposits.
Jonathan Lo and Alice Wong go through their financial plans with ipac's senior vice-president Shikha Gaur. Photos/ JOEL BOH
Ms Lo and Ms Wong have to increase their savings by 25 per cent after 10 years. They should continue to maintain housing repayments via CPF, because it is better to use the additional monies to invest towards a growth strategy that delivers a higher rate of return over the medium to long term than the interest payments on debt.
They can cover their insurance shortfall with term life insurance policy. This will be inexpensive given their age and they can lock in their premium rate over the term up to retirement.
Ms Wong said: "From the ipac's patient explanation, I learnt that insurance and investment are better to be kept separate and that we need to boost our savings in the future. I guess now the next step is to find that discipline. It is important to plan early, because if you fail to plan, you have to plan to fail."
ipac is an international financial advice and investment group that has been helping clients achieve their financial and chosen lifestyle goals since its formation in Australia in 1983. Its lifestyle financial planning process is practised in Australia, Hong Kong, Singapore, Taiwan, the Philippines, New Zealand and South Africa.
