5 stages of the financial journey
Understanding 5 stages of the financial journey to know how much need to retire in Singapore
Before you can start your retirement planning and calculating how much we need to retire in Singapore, you need to know at which stage is your finances at currently?
We go through different stages in life as our objectives and commitments changes. It is actually the same for your financial journey. It is important to know current which stage of your financial journey you are in so you can make a better financial decision.
A lot of time, we are blinded by greed and fear hence we have forgotten our goals and objectives. This would then eliminate the unnecessary risk that you are taking.
1st stage- The very beginning, we are talking about wealth protection. Where your income is being protected in the event of death, disability, and illness. The need for wealth protection increased especially your commitment and liabilities increased. Wealth protection plans/policies are one of worst tools for wealth accumulation hence it is not an investment policy neither it is a savings policy.
In other words, you only “earn” from these wealth protection plans/policies if something bad occurs. Meaning you should not be allocating of your money in this area neglecting other areas of your personal finance.
2nd stage – At this stage of time, you are trying to grow your wealth and accumulate to reach your financial goals. Like kids education, buying 2nd property or even retirement. Time is relatively on your side hence you can look at investment like equity where you can the time horizon to hold it during bad times. Having said that, I cannot stress the importance of having the diversified portfolio to suit your needs, objectives and of course, matches your risk profile. Alot of times, people are taking risk unknownly in the instrument they are invested in.
3rd stage- This is the point where most of you are at, where you have accumulated a certain pot of funds and what you need is strategic capital allocation using various asset classes to optimize returns and minimize risk to make sure every dollar is stretched. This is also the stage where your portfolio should be optimised, making sure that every dollar that you had worked for is used in the right place. Retirement planning also happened in this stage where you are planning for the next phrase of your life.
Retirement planning Singapore may be confusing and it is very common not know where to start. You can find out more over about retirement planning here:
- How retirement blueprint helps one of my clients retire 5 years earlier than expected
- How to plan for retirement in Singapore ( 3 things you can’t do without)
- Retirement Planning: Tips On Making Full Use Of Your CPF
- Smart Retirement Planning Tips
- Retirement Planning Singapore: CPF LIFE (3 Things To Know)
4th stage- This stage is where you are retired or semi-retired, where you need to have assets that can generate income for you and at the same time preserve your pot. This is also the stage where you get to enjoy the fruits that you sow. Most of the time, people got stuck at the 3rd stage of their finance journey where they failed to optimise their portfolio hence using up their resources once their active income stops. If wealth preservation and distribution is something of importance to you, then strategic asset allocation must be done in order for you to make full use of every dollar.
5th stage- this stage is where you have settled your retirement and you want to plan out your legacy. You will need strategic legacy enhancement, business continuation or even inter-generational wealth transfer.
It is not only the rich ones need to make plans for their wealth distribution. In fact, you have a role to play in preserving and distributing the assets that we have earned through our hard work.
If you seriously want to transform your financial future, you need to have absolute clarity of where you are currently now and where you want to be 10-20 years.
Talk to me and together we will strategise on how we can get there systemically.