Investing for the long-term future
The first step to securing your long-term future is to secure your short-term future. This happens by creating an emergency fund to cover for any unexpected costs that arise, including paying for broken essential household appliances, losing a job or having a medical emergency. It is recommended that you have between six months and 12 months of your monthly expenses set aside as your emergency savings.
After setting this aside, you need to start saving for the long-term. This means making your money work for you by investing it. While your savings will typically pay you a meagre interest return, your investments are meant to significantly compound over time. There are a number of investments that you can pick from, including stocks, bonds, savings products and even commodities.
What you eventually invest in depends on the kind of risk that you want to take and corresponding returns that you want to earn. AIA Smart Pro Saver is an endowment plan that delivers potentially attractive returns while providing protection at the same time. This savings plan gives you the flexibility to pay off your premiums within five years, while continuing to enjoy coverage as well as receiving your lump sum payout after 10 years.
In addition, should an accidental death occur, your family will receive 101% payout of the total premiums paid plus bonuses.
You can also consider growing your savings with other savings products, such as AIA Smart Wealth Builder, which provides policyholders with a 100% capital guarantee after the 15th policy year, insurance protection against death, total and permanent disability and terminal illness, as well as offer you the flexibility to accumulate savings up to age 125.
Moreover, you continue to retain the flexibility to pay for the policy within 5, 10, 15 or 20 years, and still be able to withdraw your savings to pay for key goals, such as your child’s education or your own retirement, if your require.
When investing in stocks and bonds, you need to consider the risk-return trade-off as they are investments that carry risks, and with it, the chance of losing your returns and/or principal amount.
How much you invest will be a function of how much you are able to save each month. Again, rather than attaching a specific figure that you need to have invested by the time you turn 35, you should just strive to maximise this amount. This is primarily because each of you will earn a different amount, climb the corporate ladder at a different pace and have to increase your monthly expenses at varying times in your lives.