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Building a firm financial foundation for the future

We often hear people say that they’d like to retire early so they can enjoy life while they are young. However, many people find it difficult to do so, especially if they are responsible for young children, elderly parents or want to upkeep a lifestyle they are used to.

We often hear people say that they’d like to retire early so they can enjoy life while they are young. However, many people find it difficult to do so, especially if they are responsible for young children, elderly parents or want to upkeep a lifestyle they are used to.

While it can be challenging to set aside money for your retirement needs, you’ll find that starting early will be beneficial in the long run.

A timely start for a reduced load

Starting early means you get to set aside a smaller amount of money each month since you have more time to save for your retirement.

Secondly, you’ll be able to take advantage of the compounding effects of interest for deposits and investments to grow your savings. The longer you save, the more money you accumulate.

This is one of several positive steps that Ms Leong took to meet her retirement goal. Her parents gave her a headstart by getting her an endowment plan when she was 18. She built on that foundation by taking over the plan and adding other plans when she was able to afford it.

Building a broader base

Ms Leong has bought additional plans that will help her address her long-term needs, like healthcare plans that cover accidents and illnesses. She has also made unit trust investments and bought an overseas property. Diversifying her portfolio helps ensure that she doesn’t place all her eggs in one basket. It also offers her protection should the unfortunate occur.

However, we caution the average Singaporean against investing in overseas properties as these investments are less liquid and the returns are not always certain.

Providing for parents

Our relationship manager analysed Ms Leong’s financial needs and found that she is on track to meeting her key retirement goal — to have the flexibility to retire at the age of 55. This wasn’t surprising as she started saving early and was able to build on this foundation by growing her portfolio gradually.

However, Ms Leong is concerned about her parents’ health as well. To lessen her worries, she could consider factoring her parents’ healthcare plans into her savings plan. Should anything untoward happen, she will be able to provide for them and still leave her nest egg intact.

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