and

and

so if you want to mitigate inflation on the right side you should really stay invested and have more equities in your portfolio.

so if you want to mitigate inflation on the right side you should really stay invested and have more equities in your portfolio.

But unfortunately

But unfortunately

the head understand this

the head understand this

and I always say that the heart cannot connect and that's the biggest problem with investment, right? So if you think that your heart cannot connect with your head that you need to stay invested and market just fell last last night and then you look at it and you become vegetarian and you need to get out of the market and you're not that kind that will stay invested, then you might want to put some bonds

and I always say that the heart cannot connect and that's the biggest problem with investment, right? So if you think that your heart cannot connect with your head that you need to stay invested and market just fell last last night and then you look at it and you become vegetarian and you need to get out of the market and you're not that kind that will stay invested, then you might want to put some bonds

in.

in.

You're listening to the building Financial fitness podcast to show where personal finance is about the person, not just the numbers here on BFF. We talk about how to make money your best friend so that you can have the freedom to make the most out of life. We go through the honest discussions about money so that you don't need to make the same mistakes, we demystify jargon so that no one can smoke you with complicated acronyms after all Moneys greatest value is to give us control over our time, which is truly our greatest asset. I'm your host june issue.

You're listening to the building Financial fitness podcast to show where personal finance is about the person, not just the numbers here on BFF. We talk about how to make money your best friend so that you can have the freedom to make the most out of life. We go through the honest discussions about money so that you don't need to make the same mistakes, we demystify jargon so that no one can smoke you with complicated acronyms after all Moneys greatest value is to give us control over our time, which is truly our greatest asset. I'm your host june issue.

Hey guys and welcome back to the BFF podcast today. Our topic is about how to protect your retirement from inflation and we have a special guest today, Christopher Tan who is the founder and Ceo of providence, the first fee only wealth advisory firm in Singapore. Welcome Christopher

Hey guys and welcome back to the BFF podcast today. Our topic is about how to protect your retirement from inflation and we have a special guest today, Christopher Tan who is the founder and Ceo of providence, the first fee only wealth advisory firm in Singapore. Welcome Christopher

so much for having me.

so much for having me.

It's good to finally meet you in person. So yes so Christopher is the founder of and ceo of provident provident was founded in 2001 and is Singapore's first fee only wealth advisory firm in Singapore. And like you know we talked about this earlier before recording that you are largely focusing on the more affluent families as well as experts living in Singapore.

It's good to finally meet you in person. So yes so Christopher is the founder of and ceo of provident provident was founded in 2001 and is Singapore's first fee only wealth advisory firm in Singapore. And like you know we talked about this earlier before recording that you are largely focusing on the more affluent families as well as experts living in Singapore.

It's really a pleasure having a veteran like yourself you know on the show because like I said you're clearly one of the O. G. S in the industry. So for me you know I'm very interested in exploring the adequacy of retirement especially in Singapore and especially in 2022 when we're looking at inflation rates inflation go way up, headline inflation rose to 4.1% in March 2022 compared to 3.2% in december 2021. 4% inflation expectations was only last record in december 2012 10 years ago. Even the numbers overseas that us inflation is at a 40 year high in March 2022 at 8.5% year on year. This is you know clearly not something that was seen in Singapore and for U. K. Is around 7% for the same period. Of course given

It's really a pleasure having a veteran like yourself you know on the show because like I said you're clearly one of the O. G. S in the industry. So for me you know I'm very interested in exploring the adequacy of retirement especially in Singapore and especially in 2022 when we're looking at inflation rates inflation go way up, headline inflation rose to 4.1% in March 2022 compared to 3.2% in december 2021. 4% inflation expectations was only last record in december 2012 10 years ago. Even the numbers overseas that us inflation is at a 40 year high in March 2022 at 8.5% year on year. This is you know clearly not something that was seen in Singapore and for U. K. Is around 7% for the same period. Of course given

the hiking energy private prices from recent geopolitical events. So it's no surprise that you know we as we are

the hiking energy private prices from recent geopolitical events. So it's no surprise that you know we as we are

reading the Financial times and seeing what's going on in the world like Singaporeans were also going to be thinking about what are the repercussions, right, right, so what do you think, given all the recent headlines,

reading the Financial times and seeing what's going on in the world like Singaporeans were also going to be thinking about what are the repercussions, right, right, so what do you think, given all the recent headlines,

I think firstly, I mean it's true that we are definitely feeling the inflationary pressures.

I think firstly, I mean it's true that we are definitely feeling the inflationary pressures.

I was at a hawker center just a few days ago and I realized that my favorite one time install, I mean now they're selling their very small bowl of one time with just four pieces of one ton and it's now going like $5.05 50 used to be $4

I was at a hawker center just a few days ago and I realized that my favorite one time install, I mean now they're selling their very small bowl of one time with just four pieces of one ton and it's now going like $5.05 50 used to be $4

and it used to be how many one time

and it used to be how many one time

it's the same, but they just upped the price and

it's the same, but they just upped the price and

I didn't buy it. I went back and told my wife, I cannot make myself by this because it's $1 increase and that's that's a lot. So I went to buy something else that's about the same price, but

I didn't buy it. I went back and told my wife, I cannot make myself by this because it's $1 increase and that's that's a lot. So I went to buy something else that's about the same price, but

a lot more stuff, a lot more content, a lot more things in the in that bowl. So it is true that I think we are feeling the inflationary pressure.

a lot more stuff, a lot more content, a lot more things in the in that bowl. So it is true that I think we are feeling the inflationary pressure.

I think it's also important to realize that inflation cannot go on forever because the people, the populace, they wouldn't like inflation, they would pressure the government. So the government has to do it. And after a while, you know, that's why we see all this interest rate going right and then it's going to be a business cycle thing, people will buy less inflation will drop,

I think it's also important to realize that inflation cannot go on forever because the people, the populace, they wouldn't like inflation, they would pressure the government. So the government has to do it. And after a while, you know, that's why we see all this interest rate going right and then it's going to be a business cycle thing, people will buy less inflation will drop,

you know, and then it goes back

you know, and then it goes back

to where it is again, the interest rate was well, like I said, start to come down so first of all I think we need to know that okay, yes, inflation is high but it's

to where it is again, the interest rate was well, like I said, start to come down so first of all I think we need to know that okay, yes, inflation is high but it's

temporary, it's always temporary from long time ago is always temporary.

temporary, it's always temporary from long time ago is always temporary.

So then how do we cope with it while it is here right now?

So then how do we cope with it while it is here right now?

I think first of all you gotta ask yourself whether at what stage of your life you are right now,

I think first of all you gotta ask yourself whether at what stage of your life you are right now,

if you are at the stage that you are still accumulating and you are younger, you might be affected differently.

if you are at the stage that you are still accumulating and you are younger, you might be affected differently.

But you know Julius, I want to start with something that maybe it doesn't really have got to do it inflation first, I want to talk about this thing called the wealth equation on the money equation.

But you know Julius, I want to start with something that maybe it doesn't really have got to do it inflation first, I want to talk about this thing called the wealth equation on the money equation.

We all have a money equation, It starts from earning an income after we take away our savings, whatever that's left behind, we spend it, we call it expenses, that's the life, that's the left side of the money equation, the savings, if we invest it compound by returns.

We all have a money equation, It starts from earning an income after we take away our savings, whatever that's left behind, we spend it, we call it expenses, that's the life, that's the left side of the money equation, the savings, if we invest it compound by returns.

Hopefully we get to our goal. That's the right side of the money equation. The left side

Hopefully we get to our goal. That's the right side of the money equation. The left side

is the short term financial planning site, it is the site that actually will make you reach and it is the site that you have more control. The right side is the long term investment side.

is the short term financial planning site, it is the site that actually will make you reach and it is the site that you have more control. The right side is the long term investment side.

It is the site that helps you stay rich,

It is the site that helps you stay rich,

A lot of people think that investment is a side that makes you reach now, it's true for some, but for most people, the purpose of investments religious to beat inflation and help you stay reach. Unfortunately the right side, the investment side is the side that you have lesser control because you have no control over the markets. Now,

A lot of people think that investment is a side that makes you reach now, it's true for some, but for most people, the purpose of investments religious to beat inflation and help you stay reach. Unfortunately the right side, the investment side is the side that you have lesser control because you have no control over the markets. Now,

when we are in an inflationary environment, it's going to affect both sides.

when we are in an inflationary environment, it's going to affect both sides.

So for the short term financial planning side,

So for the short term financial planning side,

well, it's definitely going to affect your purchasing power if your income cannot catch up right? If your company is not at least giving you an inflation

well, it's definitely going to affect your purchasing power if your income cannot catch up right? If your company is not at least giving you an inflation

adjustment increase, That's right. Right

adjustment increase, That's right. Right

then you have a problem because you cannot catch up but you're not going to be like suffering this for 4567 years because inflation is temporary.

then you have a problem because you cannot catch up but you're not going to be like suffering this for 4567 years because inflation is temporary.

Yes, in

Yes, in

that period when by inflation is high, you lose your purchasing power. If you want to maintain the same standard of living, you may have to spend more. And what that means is that you save less. That's the left side.

that period when by inflation is high, you lose your purchasing power. If you want to maintain the same standard of living, you may have to spend more. And what that means is that you save less. That's the left side.

On the right side, inflation as we all know, it affects bonds definitely because the expectation of an interest rate increase will cause bond price to drop.

On the right side, inflation as we all know, it affects bonds definitely because the expectation of an interest rate increase will cause bond price to drop.

So we're seeing that already and in the short term inflation will also affect equities prices, right? Because people buy lesser company makes lesser profit. And so prices for right, So it affects it this way.

So we're seeing that already and in the short term inflation will also affect equities prices, right? Because people buy lesser company makes lesser profit. And so prices for right, So it affects it this way.

So then how do we mitigate it? Now, I will say that. Well, in the for the left side because it is short term, that's the side that you really want to take care of it.

So then how do we mitigate it? Now, I will say that. Well, in the for the left side because it is short term, that's the side that you really want to take care of it.

Right? So firstly you want to ensure that you are at least your income is at least catching up with inflation, right? That's the first thing.

Right? So firstly you want to ensure that you are at least your income is at least catching up with inflation, right? That's the first thing.

The second thing is if you can spend lesser,

The second thing is if you can spend lesser,

right?

right?

Because if you can do that then you are able to save more.

Because if you can do that then you are able to save more.

But if you really really cannot spend lesser,

But if you really really cannot spend lesser,

Then you just have to accept that for that period, 12 months, 24 months, you might not be able to save as much as you would like to. So that's the left side

Then you just have to accept that for that period, 12 months, 24 months, you might not be able to save as much as you would like to. So that's the left side

for the right side. Remember, it is the long term investment side.

for the right side. Remember, it is the long term investment side.

So we should never use short term information to make long term decisions. Right? So because it's your long term investments, that you really should not do anything about it.

So we should never use short term information to make long term decisions. Right? So because it's your long term investments, that you really should not do anything about it.

Now, why do I say? So,

Now, why do I say? So,

Um when I went to in preparation for this interview, I went to dig out some research and there's a research, there was a research done by dimensional fund advisors. They did a research on 23 asset classes between 1927-2020.

Um when I went to in preparation for this interview, I went to dig out some research and there's a research, there was a research done by dimensional fund advisors. They did a research on 23 asset classes between 1927-2020.

Those asset classes spans from equities, bonds, commodities, energy and all that.

Those asset classes spans from equities, bonds, commodities, energy and all that.

Now in those

Now in those

very long years,

very long years,

all the asset classes,

all the asset classes,

they had

they had

higher or above average real return, that means to say it beats inflation except for one particular asset class, which is the one year t bills.

higher or above average real return, that means to say it beats inflation except for one particular asset class, which is the one year t bills.

That's the one I mean of course we don't expect that to beat inflation. That's the only one that couldn't be inflation.

That's the one I mean of course we don't expect that to beat inflation. That's the only one that couldn't be inflation.

All the others, all the other 22 actually over that period of time actually beat

All the others, all the other 22 actually over that period of time actually beat

Inflation. And that period is very important, 1927 2020 because it covers some of the very high inflationary years like 1970, you know and all that. So what does it tell us? It tells us that

Inflation. And that period is very important, 1927 2020 because it covers some of the very high inflationary years like 1970, you know and all that. So what does it tell us? It tells us that

over the long term if you stay invested

over the long term if you stay invested

these asset class will be inflation out

these asset class will be inflation out

of interest. What were those returns for that time period after adjusting for inflation?

of interest. What were those returns for that time period after adjusting for inflation?

If I am not wrong,

If I am not wrong,

I don't have it here actually. But the inflation averages about 5.5% in the high inflation years.

I don't have it here actually. But the inflation averages about 5.5% in the high inflation years.

Well, so that means to say that you should be getting higher than that. Right?

Well, so that means to say that you should be getting higher than that. Right?

And there are of course other studies that shows that equities actually goes up in the long run in the short run can be very volatile. But equities go up in the long run and equities is a very good asset class for inflation.

And there are of course other studies that shows that equities actually goes up in the long run in the short run can be very volatile. But equities go up in the long run and equities is a very good asset class for inflation.

So if you want to mitigate inflation on the right side, you should really stay invested and have more equities in your portfolio.

So if you want to mitigate inflation on the right side, you should really stay invested and have more equities in your portfolio.

But unfortunately

But unfortunately

the head understand this

the head understand this

and I always say that the heart cannot connect and that's the biggest problem with investment right? So if you think that your heart cannot connect with your head that you need to stay invested and market just fell last last night and then you look at it and you become vegetarian and you need to get out of the market and you you're not that kind that would stay invested. Then you might want to put some bonds in.

and I always say that the heart cannot connect and that's the biggest problem with investment right? So if you think that your heart cannot connect with your head that you need to stay invested and market just fell last last night and then you look at it and you become vegetarian and you need to get out of the market and you you're not that kind that would stay invested. Then you might want to put some bonds in.

The whole purpose of bond is to moderate the fluctuations in your portfolio so that you can sit still and provide

The whole purpose of bond is to moderate the fluctuations in your portfolio so that you can sit still and provide

more peace of mind and

more peace of mind and

hopefully you can sleep better. Peace of mind is very important in in money decisions, right? But then if you do that then again there is a trade off because if you're gonna put in bonds that is going to affect

hopefully you can sleep better. Peace of mind is very important in in money decisions, right? But then if you do that then again there is a trade off because if you're gonna put in bonds that is going to affect

the returns.

the returns.

So you will still be able to beat inflation. You just will not beat inflation as well as if you had 100% equities portfolio. Right? So I've spoken a lot. I know I'm sorry but I'll just summarize and say left side.

So you will still be able to beat inflation. You just will not beat inflation as well as if you had 100% equities portfolio. Right? So I've spoken a lot. I know I'm sorry but I'll just summarize and say left side.

You can do something in short term, do do something about it,

You can do something in short term, do do something about it,

make sure your boss pays you inflation adjusted increment and then spend a bit less if you can that's the left side and don't worry about it because inflation will pass the right side.

make sure your boss pays you inflation adjusted increment and then spend a bit less if you can that's the left side and don't worry about it because inflation will pass the right side.

Oh it's a long term thing you know, so you just stay invested your money in equities if you can you cannot put some bonds in, just accept a lower return

Oh it's a long term thing you know, so you just stay invested your money in equities if you can you cannot put some bonds in, just accept a lower return

and keep the emotions out

and keep the emotions out

of it and don't watch it.

of it and don't watch it.

But it's actually great that you started off with the money equation because that gives us a basis on what we're going to talk about next. Right? So we know that inflation is a cyclical cyclical thing, right? And it affects different people differently based on where they are in life. So today I really want to address two groups of people which are the people who are pre retirement and older workers who are maybe, you know, in the stages of, you know retirement and how they can protect themselves against inflation because clearly for this group they would

But it's actually great that you started off with the money equation because that gives us a basis on what we're going to talk about next. Right? So we know that inflation is a cyclical cyclical thing, right? And it affects different people differently based on where they are in life. So today I really want to address two groups of people which are the people who are pre retirement and older workers who are maybe, you know, in the stages of, you know retirement and how they can protect themselves against inflation because clearly for this group they would

be more immediately impacted. But

be more immediately impacted. But

Let's look at the younger generation first. So let's for the for the purpose of these discussions that say the people who are under 60, the person people who can't withdraw from the CPS again.

Let's look at the younger generation first. So let's for the for the purpose of these discussions that say the people who are under 60, the person people who can't withdraw from the CPS again.

Right? So as I have said earlier on, it's just really making sure that you are more prudent. Don't get too affected by what

Right? So as I have said earlier on, it's just really making sure that you are more prudent. Don't get too affected by what

is return the headlines and we get overly worried

is return the headlines and we get overly worried

because it will pass, inflation will pass.

because it will pass, inflation will pass.

So for, right, for just for now, just make sure that you budget properly. Don't spend too much if you can write and you'll be fine. I think for most people hearing listening to this right now, they'll probably say, yeah, I just I know that things are getting more expensive, but I'm still okay, right? I'm still eating the food that I want to eat, you know, maybe I eat a bit lesser life

So for, right, for just for now, just make sure that you budget properly. Don't spend too much if you can write and you'll be fine. I think for most people hearing listening to this right now, they'll probably say, yeah, I just I know that things are getting more expensive, but I'm still okay, right? I'm still eating the food that I want to eat, you know, maybe I eat a bit lesser life

pretty much goes on.

pretty much goes on.

I think what they are more worried is actually investing, how does it affect their investments? Do they need to make any tactical changes?

I think what they are more worried is actually investing, how does it affect their investments? Do they need to make any tactical changes?

I mean, of course if you want, you can put say for example, you buy a tip right? Treasury inflation protected securities into it. But

I mean, of course if you want, you can put say for example, you buy a tip right? Treasury inflation protected securities into it. But

how much tip can you buy? Right there is tip is like an insurance

how much tip can you buy? Right there is tip is like an insurance

to ensure against inflationary pressures. Right?

to ensure against inflationary pressures. Right?

But

But

it's like

it's like

how much can you buy and how long should you buy now? Let me explain

how much can you buy and how long should you buy now? Let me explain

the best time to buy insurance

the best time to buy insurance

is before you need to go to hospital. So if you can predict

is before you need to go to hospital. So if you can predict

and God speaks to you and you can predict tomorrow going to hospital today. You should buy your insurance right? Maximum R. O. I. Because you only pay one day premium and you claim already. Right.

and God speaks to you and you can predict tomorrow going to hospital today. You should buy your insurance right? Maximum R. O. I. Because you only pay one day premium and you claim already. Right.

But we don't do that. We buy insurance way ahead from the time the baby comes out your insurance agent and say bye now, bye now, bye. While you are healthy. Right? And as long as you are healthy and don't go to hospital, you are losing money in the premium. You're just buying peace of mind. Right? It's the same with tape.

But we don't do that. We buy insurance way ahead from the time the baby comes out your insurance agent and say bye now, bye now, bye. While you are healthy. Right? And as long as you are healthy and don't go to hospital, you are losing money in the premium. You're just buying peace of mind. Right? It's the same with tape.

Right? When are you going to expect inflation to go up? So if you buy it very very early and it doesn't go up

Right? When are you going to expect inflation to go up? So if you buy it very very early and it doesn't go up

tip has a cost and it's going to eat into the returns of your overall portfolio. Right?

tip has a cost and it's going to eat into the returns of your overall portfolio. Right?

And if you are so good and you can expect that inflation shot you by now but nobody can actually nobody can. Right. So I'll say well in a way tip sounds good

And if you are so good and you can expect that inflation shot you by now but nobody can actually nobody can. Right. So I'll say well in a way tip sounds good

but it's not easy to execute.

but it's not easy to execute.

Don't trouble yourself with that. If you look at history, you realize that equities is going to go up and down all the time. But in 100 years of history it has gone up the SPP 500. Show us that in the long run. Right?

Don't trouble yourself with that. If you look at history, you realize that equities is going to go up and down all the time. But in 100 years of history it has gone up the SPP 500. Show us that in the long run. Right?

So then don't worry about it, don't worry about your investment. Just keep on putting

So then don't worry about it, don't worry about your investment. Just keep on putting

if inflation is causing equities to come down for a moment by a bit if you have some money and then go to sleep and don't worry about it, it's not going to inflation is not going to hurt your long term investment return.

if inflation is causing equities to come down for a moment by a bit if you have some money and then go to sleep and don't worry about it, it's not going to inflation is not going to hurt your long term investment return.

Got it. So general advice is to just write it out and not so much about it. That's right. And on the short term side you're saying practicing prudent

Got it. So general advice is to just write it out and not so much about it. That's right. And on the short term side you're saying practicing prudent

budgeting, prudent spend lesser if you need to do

budgeting, prudent spend lesser if you need to do

you see, I mean, you know we're both staying in Singapore and I mean I have actually seen that you know, ever since the covid social distancing measures have opened up to see the strong's of queues everywhere,

you see, I mean, you know we're both staying in Singapore and I mean I have actually seen that you know, ever since the covid social distancing measures have opened up to see the strong's of queues everywhere,

everywhere,

everywhere,

huge, huge does this, you know there's this element of revenge spending.

huge, huge does this, you know there's this element of revenge spending.

So when you see when you see that, what do you think? You know when you say that you know the advice is to be prudent. You know headlines are saying that inflation is going up be prudent.

So when you see when you see that, what do you think? You know when you say that you know the advice is to be prudent. You know headlines are saying that inflation is going up be prudent.

But does this

But does this

link with what you're seeing?

link with what you're seeing?

Not at all. I mean whatever we are seeing right now is you

Not at all. I mean whatever we are seeing right now is you

look very well,

look very well,

okay, I am very realistic. Right? So whatever we are discussing right now, a lot of its theoretical right, okay, you should do this. You should not spend so much

okay, I am very realistic. Right? So whatever we are discussing right now, a lot of its theoretical right, okay, you should do this. You should not spend so much

spending is also an emotional thing. It's

spending is also an emotional thing. It's

very important.

very important.

Okay. I know there's this thing like a fire movement, you know my biggest problem. Fire movement is that

Okay. I know there's this thing like a fire movement, you know my biggest problem. Fire movement is that

we think that

we think that

We have a contract with God I worked very hard. I save all my money and I'm gonna retire 35 and then I'm gonna live on that money and I'm gonna be happily ever after.

We have a contract with God I worked very hard. I save all my money and I'm gonna retire 35 and then I'm gonna live on that money and I'm gonna be happily ever after.

But we don't know how long we're going to live

But we don't know how long we're going to live

exactly which

exactly which

ties into drawing down towards the end of life. But at end of life, nobody can tell unless

ties into drawing down towards the end of life. But at end of life, nobody can tell unless

you're

you're

exactly right. Right. So,

exactly right. Right. So,

so that's the thing, right? If we save and then suddenly just before we retire we die, we have not lived right? So it's the same right now people are spending

so that's the thing, right? If we save and then suddenly just before we retire we die, we have not lived right? So it's the same right now people are spending

rightfully So I mean they have not been spending for the last two years.

rightfully So I mean they have not been spending for the last two years.

I my office in Duck Stonehill,

I my office in Duck Stonehill,

plenty of nice restaurants drinking places in the past before covid on monday,

plenty of nice restaurants drinking places in the past before covid on monday,

nobody is around its record now, even on monday people are thinking that the government may change their rules tomorrow. I better come and drink myself silly before they close down. Right. And I think it's fine because they can afford it as long as you can afford it. And even if you decide that I'm just going to save lesser this year,

nobody is around its record now, even on monday people are thinking that the government may change their rules tomorrow. I better come and drink myself silly before they close down. Right. And I think it's fine because they can afford it as long as you can afford it. And even if you decide that I'm just going to save lesser this year,

I've been saving so much the last two years already. I want to save I need my social life back. It makes me healthier. It makes me happier. Isn't that what money is for? So I'll say yes, theoretically yes inflationary environment safe if you can,

I've been saving so much the last two years already. I want to save I need my social life back. It makes me healthier. It makes me happier. Isn't that what money is for? So I'll say yes, theoretically yes inflationary environment safe if you can,

but I think you need a life so if you want to spend a bit more you can afford it.

but I think you need a life so if you want to spend a bit more you can afford it.

Yeah,

Yeah,

got it.

got it.

And for that older generation now we're kind of shifting the argument or the discussion to people who are over 60, the people who are maybe already in retirement and actually for some of them are most of the statistically possibly with less income earning opportunities

And for that older generation now we're kind of shifting the argument or the discussion to people who are over 60, the people who are maybe already in retirement and actually for some of them are most of the statistically possibly with less income earning opportunities

And there's an age where the medical expenses start coming in and medical inflation in Singapore is actually really, really high. It's 10% it's even more than what we are talking about the average basket kind of inflation.

And there's an age where the medical expenses start coming in and medical inflation in Singapore is actually really, really high. It's 10% it's even more than what we are talking about the average basket kind of inflation.

So apart from keeping a budget, what would be your advice to this

So apart from keeping a budget, what would be your advice to this

group?

group?

Yeah,

Yeah,

I mean I hope they have planned. Well right, because if they have not planned well and there is no more income coming in. Unfortunately the most viable solution is just to budget and spend less. I mean that's the only way because you're not gonna have an income to catch up with inflation

I mean I hope they have planned. Well right, because if they have not planned well and there is no more income coming in. Unfortunately the most viable solution is just to budget and spend less. I mean that's the only way because you're not gonna have an income to catch up with inflation

and you have got limited amount of money set aside. So really there's nothing else you can do except to budget. Right?

and you have got limited amount of money set aside. So really there's nothing else you can do except to budget. Right?

But what we do for, I'm gonna explain what we do for pre retirees to plan for their retirement. Right. So we use this methodology which we developed called retire. Well basically it is a process um is a way actually that we integrate all our client's assets

But what we do for, I'm gonna explain what we do for pre retirees to plan for their retirement. Right. So we use this methodology which we developed called retire. Well basically it is a process um is a way actually that we integrate all our client's assets

at retirement things such as properties CPF bonds, endowment plans that they may have bought equities and all that into a spending plan. And this spending plan does three things for the retiree. The first thing it will do is that

at retirement things such as properties CPF bonds, endowment plans that they may have bought equities and all that into a spending plan. And this spending plan does three things for the retiree. The first thing it will do is that

During the cash flow planning part we already adjusted inflation for it now. What do I mean? Right, so for example, I'll say, Okay who knows how much do you need in your retiring years at different stage of life and you may say that okay, between 60-65, I want 5000 a month.

During the cash flow planning part we already adjusted inflation for it now. What do I mean? Right, so for example, I'll say, Okay who knows how much do you need in your retiring years at different stage of life and you may say that okay, between 60-65, I want 5000 a month.

Between 65-70, I want 7000 a month. So you may have different cash flow needs at different stage of your

Between 65-70, I want 7000 a month. So you may have different cash flow needs at different stage of your

retirement. Right. We will always adjust all those cash flow by inflation. Right? So let's say it's 3%

retirement. Right. We will always adjust all those cash flow by inflation. Right? So let's say it's 3%

Just by 3% we calculate the capital, you need to give you that cash flow. So the planning site has really taken into consideration inflation. The second thing that methodology will do is that we are going to spread your assets into what we call different buckets.

Just by 3% we calculate the capital, you need to give you that cash flow. So the planning site has really taken into consideration inflation. The second thing that methodology will do is that we are going to spread your assets into what we call different buckets.

Well the fact is retiree is not going to spend the entire capital in the first five years. Right? So monies that you need immediately for the first five years usually put into cash or very low risk instruments such as short term duration bonds,

Well the fact is retiree is not going to spend the entire capital in the first five years. Right? So monies that you need immediately for the first five years usually put into cash or very low risk instruments such as short term duration bonds,

liquid

liquid

liquid very safe. Not going not going to be very much affected by the volunteer of the market

liquid very safe. Not going not going to be very much affected by the volunteer of the market

now. So that's the part that okay if you think that you want to cope with inflation budget, that part spend a bit lesser you wanna put some tips in that's fine. Right? Money is that you don't need immediately

now. So that's the part that okay if you think that you want to cope with inflation budget, that part spend a bit lesser you wanna put some tips in that's fine. Right? Money is that you don't need immediately

In the next 5, 10, years you can start to put more equities in because remember equities is a good instrument that will outpace inflation. Right? So you put a bit of money into equities that you will not need this money in the next 5 10-20 years. Right.

In the next 5, 10, years you can start to put more equities in because remember equities is a good instrument that will outpace inflation. Right? So you put a bit of money into equities that you will not need this money in the next 5 10-20 years. Right.

So that's what we do is budgeting

So that's what we do is budgeting

now. The third thing this spending plan would do is

now. The third thing this spending plan would do is

well we could be wrong. The inflation adjustment that we calculated could be much higher than our assumption the returns that we use could be lower than what we planned for. So what we do is then we have another thing what we call a reserve bucket,

well we could be wrong. The inflation adjustment that we calculated could be much higher than our assumption the returns that we use could be lower than what we planned for. So what we do is then we have another thing what we call a reserve bucket,

right? And the reserve bucket

right? And the reserve bucket

is for you to tap in

is for you to tap in

when in an inflationary year or when your returns are bad and you really still want to spend the same amount or more. For whatever reason

when in an inflationary year or when your returns are bad and you really still want to spend the same amount or more. For whatever reason

you make an intentional decision to get the money out from the reserve park. It

you make an intentional decision to get the money out from the reserve park. It

basically the contingency plan.

basically the contingency plan.

That's right, that's right. It's a bit like the way our government manages reserves. Right? Right. Of course

That's right, that's right. It's a bit like the way our government manages reserves. Right? Right. Of course

the tricky part is really about how much you put in reserves and how much do you actually put in the real investment market because the more you put in reserve, the lesser you have to spend. So that's the balance. But

the tricky part is really about how much you put in reserves and how much do you actually put in the real investment market because the more you put in reserve, the lesser you have to spend. So that's the balance. But

also if a retiree, if you're very near retirement and you're thinking I'm gonna retire, I'm afraid. I'm worried about inflation, you might want to think about planning this way, right? And if you plan this way, it's not, there's nothing that's foolproof. But I think you have a better chance to mitigate inflation

also if a retiree, if you're very near retirement and you're thinking I'm gonna retire, I'm afraid. I'm worried about inflation, you might want to think about planning this way, right? And if you plan this way, it's not, there's nothing that's foolproof. But I think you have a better chance to mitigate inflation

and still live the lifestyle that you want to live regardless of our market situation.

and still live the lifestyle that you want to live regardless of our market situation.

Got it. And we also talked about the different risks when it comes to retirement, right? So can we talk a little bit about that, the first one is really longevity risk and really, you know, we have seen life spans increasing, um we're actually seeing a lot of people passed the centenarian mark right there going above 100. So I was talking to you know a friend who was in and he was just saying like you know what the anti that you know that I used to take care of that still life, you know, 103 years and still like very okay, you know, so you know previously when we look at financial models, any kind of financial planning, there's always assumptions that you put in the model with regards to inflation, what is your assume inflation,

Got it. And we also talked about the different risks when it comes to retirement, right? So can we talk a little bit about that, the first one is really longevity risk and really, you know, we have seen life spans increasing, um we're actually seeing a lot of people passed the centenarian mark right there going above 100. So I was talking to you know a friend who was in and he was just saying like you know what the anti that you know that I used to take care of that still life, you know, 103 years and still like very okay, you know, so you know previously when we look at financial models, any kind of financial planning, there's always assumptions that you put in the model with regards to inflation, what is your assume inflation,

what's your assume expenses? And then really the biggest thing is how many more years do you have left? And if that meant that years left, right, all of a sudden increases

what's your assume expenses? And then really the biggest thing is how many more years do you have left? And if that meant that years left, right, all of a sudden increases

From 30 to 50, that vastly changes how much you're going to draw down a month each month?

From 30 to 50, that vastly changes how much you're going to draw down a month each month?

Yeah, longevity risk is a problem and we all know that you know Singapore, we always want to be number one and very soon we'll be number one, we're going to be the fastest aging society in the

Yeah, longevity risk is a problem and we all know that you know Singapore, we always want to be number one and very soon we'll be number one, we're going to be the fastest aging society in the

world. We are indeed going that way. Yes,

world. We are indeed going that way. Yes,

so you talk about the recent retirement, Yes, firstly is longevity risk is something that we really need to plan for in our retirement plan,

so you talk about the recent retirement, Yes, firstly is longevity risk is something that we really need to plan for in our retirement plan,

how do we tangibly plan for it?

how do we tangibly plan for it?

Okay, There are few things you can do,

Okay, There are few things you can do,

Firstly, you can plan from the cash flow planning perspective right? You want to make sure that? Well what I explained earlier on in the buckets, right? We have a bucket right at the end that will grow the money and you won't need this money until 25 years later. And

Firstly, you can plan from the cash flow planning perspective right? You want to make sure that? Well what I explained earlier on in the buckets, right? We have a bucket right at the end that will grow the money and you won't need this money until 25 years later. And

If the plan goes according to the way we want it, you should die 85,

If the plan goes according to the way we want it, you should die 85,

Okay if you don't die 85 then you're a bad client. No, I'm just kidding. But because it's a plan right? You're not following the plan is 85 but okay lets you don't die a

Okay if you don't die 85 then you're a bad client. No, I'm just kidding. But because it's a plan right? You're not following the plan is 85 but okay lets you don't die a

little bit. But

little bit. But

Yes, the last bucket is supposed to have grown to a significant amount for you to still tap on even if you live beyond 100. That's one.

Yes, the last bucket is supposed to have grown to a significant amount for you to still tap on even if you live beyond 100. That's one.

So that so that contingency is really that

So that so that contingency is really that

yes, so that's the contingency.

yes, so that's the contingency.

But then there is a second way, practically speaking that we can put in

But then there is a second way, practically speaking that we can put in

Um instruments that is able to hatch against longevity. Res energy is one of them right? In Singapore. The best energy is our CPF life right between you and your spouse. If you're married, both of you can have about $4,000 every month until you pass away. And that's

Um instruments that is able to hatch against longevity. Res energy is one of them right? In Singapore. The best energy is our CPF life right between you and your spouse. If you're married, both of you can have about $4,000 every month until you pass away. And that's

not a lot but based

not a lot but based

on the escalating plan or which

on the escalating plan or which

one

one

that's based on the either basic or standard plan and that's based on each of them putting in the E. R. S. Enhanced retirement some right? So every month from 65 onwards you get about $2000 as a couple. You get 5000

that's based on the either basic or standard plan and that's based on each of them putting in the E. R. S. Enhanced retirement some right? So every month from 65 onwards you get about $2000 as a couple. You get 5000

that's going to form the

that's going to form the

space, right? And it's reliable as long as the Singapore government

space, right? And it's reliable as long as the Singapore government

Don't collapse or doesn't collapse and you could have $4,000 for life. So that's one thing you can do if that's not enough for you nowadays, insurance company they sell retirement complaints. I don't really like retirement complaints. I don't really like to use insurance for investing our savings

Don't collapse or doesn't collapse and you could have $4,000 for life. So that's one thing you can do if that's not enough for you nowadays, insurance company they sell retirement complaints. I don't really like retirement complaints. I don't really like to use insurance for investing our savings

because the returns are not exciting. But if you want to Hatch longevity risk, retirement income plan can be useful, right? And of course if you have got capital you can buy bonds because bonds the coupon will pay but the capital is always there. Right?

because the returns are not exciting. But if you want to Hatch longevity risk, retirement income plan can be useful, right? And of course if you have got capital you can buy bonds because bonds the coupon will pay but the capital is always there. Right?

So these are some of the instruments you can use

So these are some of the instruments you can use

um to hatch longevity risk. But it's really

um to hatch longevity risk. But it's really

not just one way like I mentioned, there's also the cash flow planning way which I explained. Contingency.

not just one way like I mentioned, there's also the cash flow planning way which I explained. Contingency.

Yes.

Yes.

Yeah.

Yeah.

So that's the first race really longevity. And then of course we have the second race inflation risk. We should talk about the third race is what we call investment risk. And specifically for retiree is this thing called sequence of return risk which is you invest in something then you want to consume you want to sell but the markets are falling so if you sell

So that's the first race really longevity. And then of course we have the second race inflation risk. We should talk about the third race is what we call investment risk. And specifically for retiree is this thing called sequence of return risk which is you invest in something then you want to consume you want to sell but the markets are falling so if you sell

And consumes the double whammy, your capital run out faster than it's supposed to. Right? And the 4th race?

And consumes the double whammy, your capital run out faster than it's supposed to. Right? And the 4th race?

His overspending risk,

His overspending risk,

Do

Do

you see that happen often?

you see that happen often?

I think in Singapore not. So I think generally singaporeans are quite prudent. Yeah, But but the studies the older generation, right? The younger generation, I'm not sure maybe they feel like it. I really want to spend a lot. So the fear is you spend a lot in the earlier stage of your retirement,

I think in Singapore not. So I think generally singaporeans are quite prudent. Yeah, But but the studies the older generation, right? The younger generation, I'm not sure maybe they feel like it. I really want to spend a lot. So the fear is you spend a lot in the earlier stage of your retirement,

living not enough for later,

living not enough for later,

but it's easy to manage that just budget,

but it's easy to manage that just budget,

right? And the last race is really health care is it's not so much the risk of falling sake. We will forsake it is the risk of not being able to cope with high medical expenses.

right? And the last race is really health care is it's not so much the risk of falling sake. We will forsake it is the risk of not being able to cope with high medical expenses.

Yes. And that's the most debilitating, right? Because you're dealing with

Yes. And that's the most debilitating, right? Because you're dealing with

you know, survival or battling an illness and then having to worry about hefty hospital bills. And I think we've seen that with a lot of, you know, like facebook sharing, social media sharing.

you know, survival or battling an illness and then having to worry about hefty hospital bills. And I think we've seen that with a lot of, you know, like facebook sharing, social media sharing.

You know, people complaining about insurance companies are paying them what they expected. So I think this is actually the most painful risk in my opinion.

You know, people complaining about insurance companies are paying them what they expected. So I think this is actually the most painful risk in my opinion.

Yeah. And if you don't plan for it well, you may recover but then your retirement is completely destroyed because you don't have enough money, right? So

Yeah. And if you don't plan for it well, you may recover but then your retirement is completely destroyed because you don't have enough money, right? So

that

that

part needs to be planned. Well, but it's not difficult to,

part needs to be planned. Well, but it's not difficult to,

I mean mitigate healthcare race because you just make sure you buy the necessary insurance if you have the money to buy. Yeah.

I mean mitigate healthcare race because you just make sure you buy the necessary insurance if you have the money to buy. Yeah.

But yes when you look at the, let's say the lower income market um what would your advice be? Apart from buying the requisite insurance

But yes when you look at the, let's say the lower income market um what would your advice be? Apart from buying the requisite insurance

insurance doesn't have to be very expensive if you know how to buy it. I think the biggest problem in Singapore is that a lot of singaporeans we buy the wrong type of insurance.

insurance doesn't have to be very expensive if you know how to buy it. I think the biggest problem in Singapore is that a lot of singaporeans we buy the wrong type of insurance.

We spent a lot of money paying premiums and yet we are not effectively covered. I've been talking about this since 20 years ago. Right? And

We spent a lot of money paying premiums and yet we are not effectively covered. I've been talking about this since 20 years ago. Right? And

in fact I think at one point it was much hated for saying that because I think sometimes as an industry we sell people insurance that are expensive but doesn't do the job.

in fact I think at one point it was much hated for saying that because I think sometimes as an industry we sell people insurance that are expensive but doesn't do the job.

So for singaporeans

So for singaporeans

at the most basic level. If you're not a high income earner at the most basic level we all have medical life.

at the most basic level. If you're not a high income earner at the most basic level we all have medical life.

As long as your healthcare expectation is that of a. b. two and c. one

As long as your healthcare expectation is that of a. b. two and c. one

you should be fine. That's right. So if you keep expectation will be to see what your medicine safe with medical life. And even if these two can't help you have Medicare right? That should take care. No. Singaporeans actually can say that they cannot go to the hospital. It wouldn't be

you should be fine. That's right. So if you keep expectation will be to see what your medicine safe with medical life. And even if these two can't help you have Medicare right? That should take care. No. Singaporeans actually can say that they cannot go to the hospital. It wouldn't be

right as long as you manage your healthcare expectation.

right as long as you manage your healthcare expectation.

So if your life is not enough for you,

So if your life is not enough for you,

you are financially able to upgrade and we all know just go and buy the I. P. The integrated plan. You can have a choice of whether you buy a plan that is suitable for B one ward, a ward, private hospital.

you are financially able to upgrade and we all know just go and buy the I. P. The integrated plan. You can have a choice of whether you buy a plan that is suitable for B one ward, a ward, private hospital.

The big thing about that is that it gives you a choice of doctors really Beyond the Lobster Laksa.

The big thing about that is that it gives you a choice of doctors really Beyond the Lobster Laksa.

I don't know whether you know this Lobster lobster joke but

I don't know whether you know this Lobster lobster joke but

isn't that the food that you get in

isn't that the food that you get in

Covina Covina? So they only have, they serve lobster lobster so beyond the Lobster Laksa and beyond the room and all that. The key thing about I PS it gives you a choice of your doctors. Right? So that's important. So if you can upgrade that

Covina Covina? So they only have, they serve lobster lobster so beyond the Lobster Laksa and beyond the room and all that. The key thing about I PS it gives you a choice of your doctors. Right? So that's important. So if you can upgrade that

it's very important. Especially even for the people that we love.

it's very important. Especially even for the people that we love.

Right? If my mother is sick

Right? If my mother is sick

my father is sick. I always want that. I always want the option. I mean I may be able to say it's okay for me but I want the option for my loved ones. Right? And I mean financially if you find that you can't afford it, you don't have to upgrade to the highest plan. At least upgrade to a B one word plan. Yes. You still need to be at the government hospital.

my father is sick. I always want that. I always want the option. I mean I may be able to say it's okay for me but I want the option for my loved ones. Right? And I mean financially if you find that you can't afford it, you don't have to upgrade to the highest plan. At least upgrade to a B one word plan. Yes. You still need to be at the government hospital.

But at least you have a choice of doctors. Even in the government

But at least you have a choice of doctors. Even in the government

hospital. Of

hospital. Of

course financially you're able to then you go and buy the best plan that you can go to Maui. You can go to Gleneagles

course financially you're able to then you go and buy the best plan that you can go to Maui. You can go to Gleneagles

when it comes to the course. So it's important. Yeah.

when it comes to the course. So it's important. Yeah.

So when it comes to medical planning,

So when it comes to medical planning,

well I'll say that in a medical crisis right, there are two financial impact.

well I'll say that in a medical crisis right, there are two financial impact.

The first financial impact is a loss of income.

The first financial impact is a loss of income.

The second financial impact is increased medical expenses.

The second financial impact is increased medical expenses.

Right? So

Right? So

the loss of income only affects you. If you are not retired you are still working now. How do you actually take care of that?

the loss of income only affects you. If you are not retired you are still working now. How do you actually take care of that?

Just buy a cheap low cost term insurance that gives you critical illness coverage. If I'm down with cancer

Just buy a cheap low cost term insurance that gives you critical illness coverage. If I'm down with cancer

get a lump sum

get a lump sum

It should be able to take care of my income for the next 3-4 years. A term plan is not expensive

It should be able to take care of my income for the next 3-4 years. A term plan is not expensive

for the increased medical expenses side by a good

for the increased medical expenses side by a good

I p. Like I said it's suitable for you

I p. Like I said it's suitable for you

right? And if you want an option for alternative treatment like traditional chinese medicine

right? And if you want an option for alternative treatment like traditional chinese medicine

By a critical illness plan you can buy a whole life because you need to protect your medical expenses for entire life. So by a small hole life maybe 100,000 you know just to pay Chinese sins and all that. And if you want to take care of your medical expenses associated with severe disability, we all have casual life just by a supplement

By a critical illness plan you can buy a whole life because you need to protect your medical expenses for entire life. So by a small hole life maybe 100,000 you know just to pay Chinese sins and all that. And if you want to take care of your medical expenses associated with severe disability, we all have casual life just by a supplement

to take care of it.

to take care of it.

For retirees is the same. Just that for retirees you're not so much afraid of loss of income

For retirees is the same. Just that for retirees you're not so much afraid of loss of income

because you're not earning an income anyway. Right? So if you're down and you cannot work, you're not working anyway. So don't worry about buying insurance for replacement of income for retirees. Just buy insurance to take care of medical expenses. So it goes back to buying good hospitalization and surgical plan like an I. P.

because you're not earning an income anyway. Right? So if you're down and you cannot work, you're not working anyway. So don't worry about buying insurance for replacement of income for retirees. Just buy insurance to take care of medical expenses. So it goes back to buying good hospitalization and surgical plan like an I. P.

Buy a whole life critical illness,

Buy a whole life critical illness,

Small 100,050,000 to pay traditional medicine, alternative care

Small 100,050,000 to pay traditional medicine, alternative care

and then by your casual life or elder shield supplement whichever if you want to up that coverage for severe disability.

and then by your casual life or elder shield supplement whichever if you want to up that coverage for severe disability.

So basically being quite targeted on buying specific products and not buying a blanket kind of product.

So basically being quite targeted on buying specific products and not buying a blanket kind of product.

Yeah, I've got this passion for talking to people about insurance because I find that

Yeah, I've got this passion for talking to people about insurance because I find that

we are we really can get ourselves very sufficiently covered

we are we really can get ourselves very sufficiently covered

without having to spend so much in premiums, living enough to invest for the future and living enough to live a life now. I

without having to spend so much in premiums, living enough to invest for the future and living enough to live a life now. I

think that's great. And I think that you actually shared a lot of very useful advice not just for the retiree crowd, which is a group that provident focuses on but now on the younger crowd as well.

think that's great. And I think that you actually shared a lot of very useful advice not just for the retiree crowd, which is a group that provident focuses on but now on the younger crowd as well.

So for those who are interested, where can they find you?

So for those who are interested, where can they find you?

You can find your website that's the best place to find us because I think our website will tell you the kind of work that we do our process, you know and all that. And if you find that the work that we do can be useful for you. There's also a contact form that you can contact us. So our website is www dot provident dot com.

You can find your website that's the best place to find us because I think our website will tell you the kind of work that we do our process, you know and all that. And if you find that the work that we do can be useful for you. There's also a contact form that you can contact us. So our website is www dot provident dot com.

Great. Now included in the show notes as well, so that they can click through. Thank you so much Christopher for being on. It's a pleasure having you. You know, it's great meeting you and then if there's any questions we have insurance or you know,

Great. Now included in the show notes as well, so that they can click through. Thank you so much Christopher for being on. It's a pleasure having you. You know, it's great meeting you and then if there's any questions we have insurance or you know,

We're the best, definitely we'll catch up for that proper wanton that is, you know, value for money not increased by $1.

We're the best, definitely we'll catch up for that proper wanton that is, you know, value for money not increased by $1.

Thank you again. And with that we'll see you the next time. Thank you

Thank you again. And with that we'll see you the next time. Thank you

many thanks as well to all of you out there for tuning in. This has been a fantastic conversation and we would definitely love to hear what you think about it. If you would like to get in touch with us, you can reach out to us through the email podcast at me listen dot S G or at my instagram at misfit pie.

many thanks as well to all of you out there for tuning in. This has been a fantastic conversation and we would definitely love to hear what you think about it. If you would like to get in touch with us, you can reach out to us through the email podcast at me listen dot S G or at my instagram at misfit pie.

Aside from that, if you enjoy what you're listening to and want to hear more, please help to spread and grow the show by subscribing on me listen or apple podcast or by following on Spotify or wherever you listen to your podcast. Finally, the building Financial fitness podcast is an original production from Mediacorp and recorded at skate live studios. The pod powered by audio technical and city music episode production is done by june issue with editing and support by Danny Cody and Garrett Fernandez, once again, I'm your host and BFF juniors you until the next time.

Aside from that, if you enjoy what you're listening to and want to hear more, please help to spread and grow the show by subscribing on me listen or apple podcast or by following on Spotify or wherever you listen to your podcast. Finally, the building Financial fitness podcast is an original production from Mediacorp and recorded at skate live studios. The pod powered by audio technical and city music episode production is done by june issue with editing and support by Danny Cody and Garrett Fernandez, once again, I'm your host and BFF juniors you until the next time.