The connected fields of education and finance can feel daunting for parents. With rising costs and a myriad of decisions to make, expert advice can illuminate the path. Adelina Koh, Associate Director at Finexis Advisory, draws from over 20 years of experience in financial planning to share her evolving perspectives and actionable insights for families.
A Shift in Financial Planning
Adelina reflects on how her approach to financial planning has transformed over the years. Initially focused on technical solutions to address financial gaps, she now prioritises helping clients emotionally connect with their goals.
“Perfect love casts out fear,” she shares. By encouraging clients to imagine various scenarios for their loved ones—whether related to illness, job changes, or retrenchment—Adelina helps them plan not just for emergencies but also for freedom and choice. Liquidity is another critical factor she emphasises. “It doesn’t matter how rich or poor a person is if there is no liquidity in their assets when they stop working,” she says.
This holistic approach ensures families are prepared for life’s uncertainties while maintaining flexibility for future opportunities.
Image from iStock
Start Early, Stay Realistic
The rising costs of education are a pressing concern for many parents. Adelina advises starting as early as possible to break down long-term goals into manageable steps.
Quoting the wisdom of Laozi, she says, “A journey of a thousand miles begins with a single step.” Setting aside savings early can significantly reduce the financial burden later. For parents who begin late, managing expectations becomes essential. “It’s okay for children to work towards their own goals too, instead of parents sacrificing their retirement,” Adelina notes.
Strategies for Rising University Costs
University fees have seen sharp inflation, with annual increases of 5-10%. Adelina encourages parents to consider higher-risk investment options with longer time frames to maximise returns. For those looking at overseas education, she highlights more affordable alternatives beyond traditional destinations like the UK and USA. “Japan, Germany, and Holland offer quality education at a fraction of the cost,” she suggests.
For local education, she recommends exploring CPF Ordinary Account (OA) as a resource but cautions against using it in a way that might jeopardise retirement plans.
Finding the Right Fit for Investment Insurance
When building an education fund, parents must weigh affordability, risk tolerance, and financial needs. Adelina stresses the importance of clarifying goals:
- Target Sum – How much do you aim to save?
- Time Frame – What’s the timeline for your goal?
- Risk Tolerance – How much volatility can you manage?
Additionally, parents should scrutinise insurance plan charges, fund performance, and whether the product allows flexibility like rebalancing or switching. Importantly, she advises setting aside emergency cash before locking funds into such plans.
Catch Up! Starting Late Isn’t the End
For parents who feel they’ve missed the ideal savings window, Adelina offers hope. “You can still catch up by taking on higher-risk investments or allocating larger sums now,” she says. Procrastination, however, compounds the challenge, making immediate action crucial.
Insurance Misconceptions
Misconceptions about insurance coverage can leave families vulnerable. One common myth is assuming that government hospitals suffice for all treatments. Adelina recounts a client who faced significant out-of-pocket expenses for private kidney dialysis due to waitlists and limited hospital plan coverage.
She also highlights the evolving landscape of critical illness and disability coverage. With new regulations like the Cancer Drug List (CDL) limiting shield plan coverage, families must plan for additional costs. “Critical illness payouts aren’t just for income replacement anymore,” she explains. They now need to cover gaps in treatment expenses.
Furthermore, new disability plans address diverse needs, from dementia care to income replacement for those unable to work in their profession due to mental illness or accidents.
Proactive Planning for a Secure Future
Adelina’s insights underscore the importance of proactive financial planning. From building an education fund to safeguarding against unexpected challenges, her advice centres on preparation and adaptability. For parents, the key takeaway is clear: start early, stay informed, and be flexible in your strategies to secure a bright future for your family.
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