Friday, November 17, 2017

5 Things Singaporeans Don't Know About End-Of-Life Planning

Unexpected costs can make palliative care for a loved one dauntingly expensive. Take note of these 5 points to avoid getting caught in a financial bind. No matter how long medical science extends our life, we all have to face the reaper. In the final years and months, as our loved ones await the inevitable, the last thing we want is more stress for money reasons. Hence, it’s important to prepare financially for the twilight years of our dependents and family. Here are five key things to note.
 
Insurance May Not Cover Palliative Care Equipment
Palliative care is, contrary to popular belief, not “care for those who are definitely going to die”. Palliative care can, and often is, coupled with medical treatments that continue trying to prompt recovery. That said, one factor that’s often ignored is the prohibitive cost of palliative care. For example, say the dying person would prefer to be at home (especially if the end could come at any time). This may require the rental of medical equipment, such as oxygen tanks, dialysis machines, or other devices that would usually only be available in a treatment centre or hospital. Some insurance policies, however, only cover the cost of treatment when the patient goes to a centre or hospital. The policy may not cover the rental of medical equipment for palliative care, which might mean you have to pay out of pocket. If you have a loved one who may nearing the end, and they want to spend their final days at home, speak to your financial adviser quickly. If your policy does not cover palliative care at home, you need to know early to plan for the costs.
 
Hiring a Caregiver May Not be Optional
Many families make the mistake of assuming they can care for the dying. In truth, it’s rarely as straightforward as we imagine. Certain illnesses may mean the loss of coherency, or the ability to communicate. For example, advanced stages of Alzheimer’s may mean your loved one is unable to recognise you, and may often be angry or agitated. This can be difficult to bear with day-in and day-out, over the course of several years (particularly if a sole family member is placed in charge). You also have to acknowledge your own physical limitations, if you’re the main caregiver. It’s difficult to be available around the clock; and if you’re elderly yourself, you may endanger your own health by having to lift or carry the patient. No matter how determined you are to look after the dying by yourself, budget for a caregiver just in case. Seek out agencies that specialise in this, and approach your neighbourhood community services if a private caregiver is beyond your budget (many HDB estates have volunteers from grassroots communities, who can lend a hand).
 
Medical Costs Most Certainly Will Increase Significantly
Contrary to popular belief, switching to palliative care doesn’t mean medical treatment will be cheaper. For example, patients who are in intense pain may require more expensive painkillers, and patients with multiple health problems may need a whole regimen of drugs on a daily basis. Even if medical costs do fall, they may not drop as much as you assume. You must also be prepared for situations where medical costs increase, during the last few years. For instance, a cancer patient may initially pay a lower cost, by choosing not to have chemotherapy. Later on however, they require more frequent ambulance trips, or longer hospital stays in intensive care. This can be mitigated with the correct whole life insurance policy, or even basic term insurance. Many policies pay out a lump sum for terminal illness, which will more than cover the costs; speak to a financial adviser about complementing MediShield Life with such policies.
 
Denial Can Break You Financially
This is the greatest hidden danger in end-of-life care. Studies in countries like the United States have shown that, when loved ones come down with incurable conditions or illnesses, denial is the immediate response. No matter how level-headed you usually are, the reality of such a situation can change you. Most families push for aggressive and expensive intervention, in some cases even falling for scams (e.g. fake “miracle cures” that extort tens of thousands of dollars from them). This situation is aggravated if the dying person can’t communicate, and hasn’t declared their intent. For example, if your dying parent is on life support and in a coma, should you make the decision to end their life? Doctors will carry on medical care if the dying person has not signed a Do-Not-Resuscitate (DNR) order, and if the family does not give consent to end treatment. However, every month of medical care could rack up thousands in medical bills, and even insurance benefits will eventually run out. It’s best to discuss such situations early. Families are more likely to overcome their denial, and take steps to end it if the dying patient makes their wishes known.
 
Bad Credit Can Seriously Hurt You
You’ll often find yourself confronted by unexpected costs, when caring for the dying. From emergency room visits, to flying abroad for experimental treatment, the number of unknowns and variables are staggering. Even the old rule of thumb – saving up six months of your expenses – may not suffice. For example, you may be in situations where you not only need to pay for medical treatment, but you also face permanently reduced income (e.g. you need a job that allows you more hours at home, to provide care). The chances are high that, at some point, you will need a loan from the bank. This is where previously bad behaviour, such as paying your credit cards late, could come back to haunt you. Banks are not obliged to lend you the full two to four times your monthly income for personal loans – especially if they see that you’ve applied for several large loans quite recently. What will convince them to fork out a big loan is if you’ve proven reliable, over the course of many years. There’s nothing more painful than being denied credit for a major operation, which could potentially prolong the life of your loved one. Be responsible with credit, to ensure you can get it when it’s most needed.


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Monday, November 13, 2017

7 Common Things Singaporeans Don't Realise Are A Waste Of Money

From health supplements to single-serve consumables to cable channel packages, here are 7 common ways Singaporeans waste money. We all have impulse purchases, which we make without thinking. If we learn to control these, we would have much more cash to spend on the things that we do care about. The following items aren’t really things that we love; they’re the habitual, money-wasting purchases that we should weed out.
 
1. Bottled Water
Singapore is currently suffering from a S$134 million bottled water addiction. This is mostly because (1) we don’t like to carry water bottles, and (2) we consider it disgusting to drink from a public tap, especially when most of them are in public toilets. That causes us to end up spending S$1 to S$1.20 for bottled water, which is no different from tap water. But while S$1 may not seem like much, consider that a rising number of Singaporeans buy a bottle of water as often as twice a day. That comes to around S$60 a month, or about S$730 a year. That’s enough to fund a weekend family getaway to a nearby country.
 
2. Multi-vitamin Supplements
Medical studies have shown that multivitamins (and related vitamin supplements) do virtually nothing for your body. Even worse, some could be dangerous. In the United States, which has largely the same brands of vitamin supplements we do, studies of 54,000 different brands showed that only a third of them had any sort of safety standards. 12 per cent of them (a stunning 6,480 brands) were actually found to be dangerous, potentially increasing the takers’ risk of disease. Many of the claims made by vitamin brands, such as improving concentration or preventing loss of bone density, have been debunked. And as it turns out, you can’t “megaboost” the vitamins in your body by taking pills – once your body has enough of a particular vitamin, it will naturally reject any more; it doesn’t matter how many more pills you take.
 
3. Cable Channel Packages (Instead of Internet Streaming)
Singaporeans like to buy bundled cable TV channels, just out of laziness. It’s tedious to compare prices and shows, and half the time we have access to channels that we never watch. It’s a total waste of money, especially in an age when we have services like Netflix (just around S$15 per month). Before you buy cable television channels, ask yourself if you’d have problems watching shows on your tablet, phone, laptop, etc. instead. If services like Netflix already have the shows you want, you may be better of skipping the cable channels. (Some thrifty Singaporeans have even gotten rid of TV altogether, reasoning that all their favourite shows are on the Internet anyway).
 
4. Unnecessarily High Interest Rates
Many Singaporeans are averse to thinking about interest rates, or topics like refinancing. It’s common to hear them insist they “don’t want to deal with that stuff”. It’s a pity, because they waste tremendous amounts of money that way. For example, if you have a S$5,000 credit card debt growing at 26 per cent per annum, there’s a simple way to reduce that interest to just six per cent: You could look for a cheap personal instalment loan at six per cent per annum, borrow S$5,000 on it, and then use the money to pay off your card. Just like that, your debt has gone from 26 per cent per annum to just six per cent. With online banking, all of this can be done in a matter of minutes; but we’re often too lazy, and thus end up paying unnecessarily high interest.
 
5. Credit Card Fees
Many banks (not all) will give you fee waivers for your credit card, if you just call and request for it. Credit card annual fees range from around S$200 to several hundreds per year – but if you repay your card reliably, and you actively make use of it, many banks may not mind processing a waiver. In fact, some of them even have a specific button for it, on the call centre support system. (Other cards reward you with points or air miles for paying your annual fee. This is often at a superior exchange rate than normal, so you should definitely consider taking advantage of it.) Whether you decide to pay your fees, or to get them waived, there’s no harm in spending a few minutes to make the request. At the end of the year, that S$200+ can go toward funding your Christmas and New Year gifts.
 
6. Travel Insurance (At the Last Minute)
Travel insurance not only protects you against accidents, it can also covers trip cancellation or postponements. However, you need to have the travel insurance plan in place before such an event. For example, if you buy travel insurance today, and two weeks later your trip is cancelled due to natural disasters, you’ll be able to make a claim. But if you hadn’t bought the insurance yet, your trip would be cancelled, and the money paid for flight tickets and lodging would be a total write-off. Of course, travel insurers love it when you buy at the last minute. You see, when you buy travel insurance exactly as you’re leaving, you pay for protection you don’t use – part of your premium was meant to cover you in the event of a cancelled trip. Hence, the fiscally responsible option here is to buy travel insurance once you’ve decided to go on a trip. Consider buying an annual plan if you go for multiple trips per year.
 
7. Single-serve Consumables
Do you use a lot of jam or peanut butter? Or how about margarine? If your household makes regular use of these items, stop buying them on an ad hoc basis. In other words, don’t pop into the store to get a few whenever you need them. The prices of small or single-serve packs can be up to 50 per cent higher, when compared to buying in bulk. A good example of this is milk: the difference between 600 milliliters and a full litre can be as high as S$2.50 for some brands. If you just buy the full litre, you’re effectively getting the fourth bottle for free, as opposed to buying the smaller bottle all the time. That’s not forgetting the increased waste your household will be generating.


SingSaver.com.sgSingapore's #1 personal finance comparison platform by transaction volume, provides consumers with timely money insights and aggregates the latest credit card offers and up-to-date personal loan deals.

Tuesday, August 29, 2017

Is Investing The Same As Gambling?

There are plenty of myths about investing, among which is the comparison between investing and gambling. Here’s why they are nothing like each other. There are plenty of misconceptions about investing, but the most overused comparison is between investing and gambling. This is far from correct, as the comparison finds only one element (risk), and declares the two to be similar. Here’s why proper investing is not like gambling.

The Confusion Between Investing, Speculating, and Gambling
There are two main types of investors in Singapore. There are investors who put their money on an asset for the long term, such as people who buy index funds and hold on for 15 to 20 years. Then there are traders: investors who aim to buy low and sell high, to see a return as quickly as possible. There’s also a third type of “investor”, who is more properly called a speculator. These types put money on small chances, such as funding a start-up, in the hopes that they will see big rewards. Intelligent speculators are aware that they’ll lose money most of the time, but all it takes is one big payoff to make it all worthwhile. Which of these are like gambling? The one that comes closest is speculating, but even then, none of them is truly like gambling. Here’s why:

    Proper investing skews the odds toward you in ways gambling never will
    Gambling is almost always a zero-sum game
    Investing is only like gambling if you treat it as such


Proper Investing Skews the Odds Toward You in Ways Gambling Never Will
A well-understood rule of gambling is that “the house always wins”. The longer you gamble – be it at a jackpot machine or a Poker table – the more you tend to lose to the casino. The odds have been calculated to skew things in their favour. With proper investing – especially long term investing in blue chips or index funds – the opposite is true. There is a historical precedent for stock prices and property prices to rise in the long run: while it may not be true next year, it will almost certainly be true over 15 or 20 years. For example, look at Singapore’s property asset prices since 1976: While this doesn’t completely remove the possibility of a loss, it does mean the odds are skewed in your favour. In a casino, time is on the casino’s side. But when you’re a long term investor, time is on your side instead.

Gambling is Almost Always a Zero-Sum Game
When you gamble, the outcome always involves a winner and a loser. For you to win, the casino – or another player – has to lose. This isn’t always the case when it comes to investing*. Say you invest in a property that’s worth S$1.2 million. By the time you’ve paid it off  25 years later, its value has appreciated to S$1.7 million. The extra S$500,000 isn’t a “loss” to other property investors – you haven’t taken it from them, it’s grown as a result of the overall economy/property market becoming more developed. The same goes for assets like stocks, which grow in value as the company develops. When you gamble however, the winner’s gains always come from the loser. For the casino to win, you have to lose, and vice versa. The problem with zero-sum games is that, in the long run, one player tends to walk away with almost everything, whereas the majority of players will walk away with a loss (observe the typical Poker table, or jackpot session). *Some forms of high-risk trading, such as options trading, may be zero-sum games. But these are not typically available to lay investors.

Investing is Only Like Gambling if You Treat it as Such
There is a way for investing to become gambling, and that’s if you treat it as such. If you decide to buy and sell stocks based on “intuition”, or superstitions (e.g. the stock price matches your car’s license plate), then it indeed becomes a form of gambling. What sets investing apart is that the odds can be in your favour, if you make reasoned decisions. This means properly diversifying your assets, learning to read the fundamentals of a company before buying its stock, and being disciplined enough to follow a system.

But What About Speculating?
Speculating is not like gambling, because it is even less predictable than gambling. When you gamble, the risks are known. For example, if you are playing Blackjack, you know the main risk is going over 21, or that the dealer will have a number higher than you. As such, you can develop systems to deal with those risks: if you draw an 18, you should stand. If you draw a nine, you need to hit, and so forth. When it comes to speculating, the real world introduces so many variables that such systems are hard to develop. The start-up you invest in may turn out to be a scam, the land you bought in Nicaragua may be re-zoned as a garbage dump, and your investments in a developing country may be void as a result of a civil war. You may know some of the probable risks, but there are too many others for you to account for all of them. While expert gamblers can tell you the odds of a round, such as “10 to 1” or “47 per cent”, most speculators honestly don’t know how their investments will turn out. Their “game” is governed by fewer rules, and encompasses too many possibilities. That’s why speculating is only ever done by investors who can afford the losses. A billionaire, for example, might place two per cent of her portfolio in a company that might create the next Facebook, or might go bust in two weeks with nothing to show for it.


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