Me & My Money: Life Goals

Plan differently with OCBC Life Goals

OCBC's Ms Tan Siew Lee says there is always room to reassess one's financial situation in relation to key life goals.
OCBC's Ms Tan Siew Lee says there is always room to reassess one's financial situation in relation to key life goals.

MS TAN SIEW LEE, HEAD OF WEALTH MANAGEMENT SINGAPORE, OCBC BANK

Retirement is not an option for Mr Quan, not while he remains passionate about growing his business. Even if the option were on the table, he believes his relatively simple lifestyle should not be a huge financial strain.

By and large, it seems Mr Quan has his financial planning in order. His family has comprehensive insurance coverage, and funding for his children's education is more or less covered by educational endowment plans bought when his kids were very young. He has also greatly benefited from investing in stocks during the depths of the past two crises and has since seen his investment funds grow substantially in the subsequent market upswing.

A combination of business and investment savvy as well as early and judicious planning has greatly improved his financial standing. Nevertheless, there is always room to reassess your financial situation in relation to key life goals and objectives.

OCBC Life Goals offer a holistic and structured goal planning approach that balances your changing needs and ambitions to ensure you are on track to reaching your goals. Let's look at some key considerations for Mr Quan's future financial planning.

UNDERSTANDING HIS GOALS

While Mr Quan may not have set his sights on retirement in the near future, it is still worthwhile to plan for this life stage.

The first step would be to understand the type of retirement he would like and calculate all the associated costs to make this a reality. Having a comprehensive retirement plan in place could go a long way towards providing peace of mind as he pursues his passions.

As Mr Quan continues to amass more wealth with the steady expansion of his business, legacy planning will likely become an important focus for financial planning. This could be an important exercise to account for his growing base of assets and address key issues of distribution.

On a more practical basis, he should consider having a will to have his wishes executed accordingly. Without a will, he will be leaving it to the Intestate Succession Act for distribution of all his assets. This means his wife is to inherit 50 per cent of his assets, and both his children are to equally inherit the remaining 50 per cent.

The somewhat financially introspective nature of life goal planning could also help uncover other financial needs and objectives that he may have missed or not addressed adequately.

 

WORKING TOWARDS HIS GOALS

The next step would be to construct a diversified retirement portfolio that is completely ring-fenced from other financial needs. Mr Quan should rely on this portfolio to provide a steady stream of income at retirement.

Indeed, his contrarian style of investing in stocks at the depths of market crises over the past two decades has served him rather well. However, as demands of his business grow, he may not have the time to monitor financial markets and take advantage of fleeting opportunities. In this case, he could find himself in a position where his business becomes a primary source of funds for his retirement.

A diversified portfolio of investments across multiple asset classes, regional exposures and investment strategies could go some way towards reducing potential over-reliance on the returns from his business to support his personal goals.

REVIEW HIS PROGRESS REGULARLY

Ultimately, goal planning should not be static - it should evolve with time as circumstances change. Mr Quan should continue to take stock and review his financial situation on a fairly regular basis.

One area for regular review should be insurance. Our protection needs tend to change with time, and what we thought was adequate protection before need not be the case in the present day. With his children growing up, he can review his protection needs in order to ensure adequate coverage in the various aspects of his present life stage.

This will ensure that should unforeseen events arise, for example, premature death, disabilities or critical illnesses, it will not deplete the money that he has painstakingly saved and invested for him and his family.

At OCBC Bank, we are here to help our customers on this journey for the long term. We believe in conducting annual reviews with customers to ensure they remain on track to achieving their goals.

A version of this article appeared in the print edition of The Sunday Times on November 19, 2017, with the headline 'Plan differently with OCBC Life Goals'. Print Edition | Subscribe