Dear Mr Wang,
Having been an avid reader of your blog for over 2 years now, I feel somewhat inclined to write in to you to ask for your advice. While it is common knowledge that you are in the finance industry and have made a successful life for your family and yourself, it would not have happened without sound financial planning. It is on this subject that I would like to seek your thoughts on, if you can spare the time.
As a fresh graduate, I find it hard to reconcile the fact that there is close to nothing in our education system that touches on how to prepare oneself financially for the years ahead. Now that I am out facing the world on my own, my lack of preparedness is telling especially since I have taken an issue like this for granted. It seems that the onus is upon the individual to read, source out elders and common media to seek their advice on what insurance policies to purchase, how much should one save and where should one invest one's savings, what does one do with the CPF accounts(invest, insurance?) and how is one ever going to afford a HDB flat (among other pertinent questions).
These questions are mind boggling and daunting for someone trying to make a mark in this world. My peers in the US, of the same batch not the same age due my NS obligations, are way ahead in this respect as the literature suggests that one should start such planning around the age of 22 to ensure success in the long run. Perhaps, I digress by sharing my fears with you and you would rather I come straight to the point.
My point is, what do I do? Where do I start? What do I need to know to make the S'porean system work for me to ensure that my future will be a comfortable one? I have financial advisers bombarding me with tons of insurance policies and insurance-savings plans while others are recommending unit trusts, stocks and other instruments. I have turned every single one of them away as I fear committing to something I can't grapple with. I don't think you will have the time to tell me in detail what needs to be done but I would appreciate if you could point me in the right direction. Admittedly, depending on an individual's preference, background and risk appetite, the advice doled out would be different but I am certain there are some basic tenets of financial planning that everyone should do or know about. Your thoughts .....?
You could start by listing your own financial goals and needs, and identifying which ones are most important. Then work out a plan for your most important goal/need, and put the plan into action. Repeat with the next most important goal/need.
People have different goals and needs (because their circumstances are different) and what's important to one person may not be important to you at all. For example, life insurance is important to the average parent with young kids, but it's not terribly important to a young adult with no dependents.
Also your goals and needs will change over time, so you need to review and adjust your plans periodically. Don't look for a magic formula to the question of how to manage your money. There really isn't any. Money issues are intimately linked to almost every part of your life (for example, your home, your career and your family's needs) and basically, life is too complicated to be reducible to a single magic formula.
You will need some long-term strategy, but the fact is that as the years pass, you'll probably end up revising and changing it beyond recognition. Nobody really knows what will happen, in 30 or 40 years time (to you, Singapore or the world). That doesn't mean that you shouldn't plan for retirement. It does mean that you'll keep changing your plans many times as the years pass.
In other words, life is complex and uncertain. And you just have to get comfortable with that.