With COVID-19 postponing holiday plans and limiting your social activities, you may find yourself with more spare cash than usual. While it may be tempting to spend this unexpected money now, adopting a more strategic approach could give rewards in the long run. Here are top tips for what to do with your surplus funds so you can enjoy sweeter rewards in the future:
Top up your CPF account
Rather than leaving your savings to sit in a bank account with minimal growth opportunities, top up your CPF account and reap the rewards of high interest rates. You can save up to S$37,7401 annually, benefiting from an interest rate of up to 6% (depending on your age2). Money set aside here can be used for your future self to enjoy as you can make partial withdrawals as soon as you turn 55. The earlier you start making CPF top-ups, the longer runway your money will have to grow through compound interest, where you earn interest on interest. This, in turn, will make it easier to accumulate wealth – especially if you’re hoping to retire early.
Turn to investing
Regularly saving money for your retirement is a great habit, however, a savings pot alone may not be enough to sustain the lifestyle you and your family are used to. An investment portfolio could be a means to a source of passive income that keeps money coming in even when you’ve stopped working. Check out Singlife’s Grow, a digital Investment-Linked Plan (ILP) with three portfolios, which you can start with as little as S$1,000. It’s managed by professionals at Aberdeen Standard Investments, so you don’t have to be an expert to invest. And with no lock-in period, you can withdraw your money if you decide it’s not for you. What’s more, the portfolios are diversified so you needn’t worry about putting all your eggs in one basket.
Normalise finance chats
Talking to friends about money isn't always the most comfortable, however, it may be the very thing that’ll improve your finances. You may be surprised by what they know and how they’re planning for retirement and it’s a chance to motivate and learn from each other. When you discuss investment portfolios for instance, you’ll be able to understand your own risk profile better and make more informed decisions. Use these chats to share information on interesting products and programmes with each other, and don’t forget to take advantage of referral opportunities to unlock rewards. Under Singlife’s Member Get Member programme, Singlife Visa Debit Card holders will earn up to S$35 for every new friend referred, who successfully signs up for the card.
Ensure your insurance coverage keeps up with you
Everyone’s situation is different and your insurance policies should adequately cover your risks at every stage of your life. Start a spreadsheet with details of all your insurance policies in one place, and periodically return to this list to ensure you have the right level of protection. Consider boosting your coverage when you cross key milestones like having a child or when you decide to buy a bigger property. Be sure to evaluate return rates, bonuses and special features to ensure you get the best deal.
Be realistic about the retirement you want
Track your current monthly spending for an idea of how much you’ll need in future to maintain your lifestyle. Aside from basic expenses like food, transportation and healthcare, factor your expenses for activities you’d like to do in later life, be it regular holidays abroad or helping to support your family. Once you stop earning, you’ll be fully dependent on your savings, so you’ll want to set aside enough for the long haul. Online retirement calculators from reliable and trusted sources can help determine if your current savings plan will help you reach the amount you need for your desired retirement lifestyle, and they can show you how much money you’ll be able to extract on a monthly basis.
Taking control of your finances doesn’t have to be complicated. If you’re uncertain about where to start, have a #NoObligations chat with a financial adviser representative who’ll be able to guide you towards making your money work harder for you.
You’ll find details on Singlife’s Grow and Member Get Member programme on the Singlife app, so download it today to start making your money work harder for you.
1 Current limit as of October 2021
2 Up to first $60,000 for age below 55 and $30,000 for age above 55.