1. Insurance
Most people are under-insured. But one should also be careful not to be over-insured or to be overpaying for insurance. Some time back, I wrote about one of the cheaper if not cheapest insurance plan in town. It is NTUC's i-term insurance. I don't work for NTUC so I can't vouch for this plan. Neither do I own this insurance plan. But looking at the rates, it definitely looks like one of the cheaper insurance options around.
Another cheap insurance plan one could consider (if you are a national serviceman or woman) is the SAF Group Term Insurance plan. Just recently, Aviva has increased the maximum coverage from $600,000 to $1million. Another thing I like about this group term plan is that it gives rebates. I am currently covered under this plan and am considering whether to increase my coverage.
I also wrote about whether one is ready to take charge of one's healthcare costs and you might want to consider reading it especially if you are a Singaporean.
Of course, before you dive in and go out shopping for an insurance policy, I must caveat that everyone has to do their due diligence. In fact, during one of the polls conducted on this blog, the poll results indicated that many people considered insurance products as toxic investments. Of course, there is nothing scientific in the way I conducted the poll and it is just the opinion of readers. I also recommend the following articles on insurance:
- Can You Trust Your Financial Planner?
- Surrendering Insurance Policies?
- AIA Insurance Agent Scam
- Beware of this Insurance Agent
2. Invest
Of course, besides saving up your annual bonus, one could also chose to invest it in instruments that could potentially give you a higher return than the interests rates offered by banks (can someone remind me again what is the interest rates banks are offering again?)
Most readers should know that I invest mainly for income with capital gains as a secondary goal. To understand a little more about income investing, I would refer you to some of the previous articles that I have written:
- High Dividend Yield Stocks
- Real Estate Investment Trusts (REITs)
- Canadian Royalty Trusts (Canroys) - do note that this article was written before the tax changes kicked in.
- Rental Property
- Investing in Bonds
For myself, I am looking at a few stocks that pay good dividends. On my current watchlist are Sabana REIT, Saizen REIT, Ascott REIT, Far East Hospitality Trust, Lippo Malls Indonesian Retail Trust, SingTel, Capitaland, United Engineers.
3. Pay off Your Debts
This is self-explanatory. If you have credit card debt, you should be paying that off before even thinking of investing. The interest rates on any outstanding credit card bills is just too high to justify you not paying off that debt first.
For others, you might want to consider making pre-payments or full redemptions of other outstanding loans (e.g. auto loan, mortgages).
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