Every person should build up an emergency fund of 6 months of earnings. If you earn $5,000 a month, the emergency fund should be $30,000. This fund should be invested in a liquid form, e.g. keep in the bank account, fixed deposit, money market fund or invested in short term bonds. The return is low, but it is more important to have the flexibility to withdraw the savings in an emergency, without any loss.
This emergency fund is needed to meet your cash needs during unemployment, unexpected medical bills or other emergencies. If you have an emergency fund, you will not have to borrow money on your credit card and incur 24% in interest charges.
This tip is important for young people. You should build up the emergency fund early. Do not spend all of your income away. Put aside savings for this emergency fund. It may mean that you should not buy your car or pay too much for your flat.
Tan Kin Lian
This emergency fund is needed to meet your cash needs during unemployment, unexpected medical bills or other emergencies. If you have an emergency fund, you will not have to borrow money on your credit card and incur 24% in interest charges.
This tip is important for young people. You should build up the emergency fund early. Do not spend all of your income away. Put aside savings for this emergency fund. It may mean that you should not buy your car or pay too much for your flat.
Tan Kin Lian
7 comments:
You don't have to cancel or borrow from life insurance cash value and pay hefty interest too.
If you have this 'insurance' you don't need the rubbish feature you find in one critical illness product that has this feature that
defers (not waived) 6 months of the premium if you are out of job. In such a situation stop paying premium doesn't help but money does and is much needed. Eventual cancellation of this CI policy will happen if you don't have an emergency fund.So, do the right thing and don't fall for those dubious features touted by salesmen who will screw up your financial well being.
An emergency fund is KING of insurance.
The Insider
We expect a global recession, which will affect Singapore. Some Singaporeans will lose their jobs and be retrenched. An emergency fund is important to meet your expenses during this period. Try to avoid borrowing on credit card, due to the high interest rate.
See where you can borrow, e.g. life insurance policy. You can also terminate your life insurance policy and get its cash value, but you need to buy life or accident insurance first to provide the protection.
Never borrow from life insurance..you only condemned yourself further because that policy will soon die of suffocation from ah long san high interest rate.
Terminate it but get insured first.
hi evening Mr Tan, this is the most important fund of all funds especially in retrenchment, sick or when you are out of job. Without this emergency fund, all your financial plans will come to a stand still. This is must be in place before any insurance, investment, savings etc.
did you know the insurance agents don't recommend that? You know one local company's agents will tell to buy their limited payment critical illness wholelife because it has a retrenchment benefit ? Isn't this salesmen talk?
Planning requires the adviser to advise clients setting aside 6 months of salary for emergency.This is planning with the clients' interest but salesmen don't. Why? If they do ask their customers to set aside the emergency fund they feel the clients may not have the money to buy their usual expensive products, right? You see, conflict of interest is always at the centre of the deal and salesmen put their own interest first. Despicable , isn't it? As the above says the agents can substitute his whole life product with 6 month premium waiver retrenchment benefit for the emergency fund.They don't plan but peddle. This is the problem MAS should resolve by banning commission, the root of all evils committed by insurance agents.
Emergency fund will run out while you hunt for a replacement job.
Better to get yourself skilled to take on a another type of job the while you still have the money to fund your class.
In the meantime, don;t fall for those quick profits seminars.
Post a Comment