So doing this for a while now, I've encountered a varied range of questions from people who have taken a serious view about their finances. Out of which, 3 common questions disturbs me because it's conceptually flawed and if they plan in such a manner, it might not do their pocket any good.

1. How much do other people pay for their insurance?

Recently one of my friends commented to me that her colleague was asking around during lunch how much they paid for their insurance. What's the purpose of this question? I'm guessing this colleague doesn't want to overpay for insurance. There's an issue with this question though. Assuming there're 4 friends A, B, C, D sitting at the table with you. A says $500/month, B says $1000/month, C says $100/month and D says $300/month. Does that mean you are going to take a median and commit to your financial advisor?

What if I tell you A has an elderly mother, she needs more insurance coverage because if she dies, her mom would need the payout to sustain herself on top of all the coverage A needs for her hospitalisation and critical illness. What if B has 2 kids and she is also paying a portion of her kids' coverage on top of her own and maybe education plans? What if C also has 2 kids but because of ill advice and lack of belief in insurance, only has a hospitalisation plan with rider? What if D is paying for an expensive Wholelife policy passed down by his parents that cost $300/month and is actually under-insured?

My point is, knowing what others pay for their insurance premium doesn't help you make a decision on your own needs because each individual situation is different. If you take a median of my example above [(500+1000+100+300)/4 = 475/month], you may end up with too little or too much coverage depending on the quality of advice you get from your advisor. A good advisor to begin with wouldn't have let you start your financial planning journey with this assumption. What is important is to sit down and understand what you need covered, then see if your present affordability can cover your ideal scenario. If not, then adjust from there so that you can work towards covering your needs in the long run. Make sense?

2. Can I wait and see if I need to save for retirement or invest my money when I'm older?

Most of the time the people who asks me this question are young (below 35) and has surplus savings but not as much as my previous article where they save 80% of their income. It's simply the fear of commitment and locking up the funds. They also do not believe that they can't save their way into retirement. Frankly speaking, even if one prefers to keep all their money in a biscuit tin, it's really their prerogative. However, there's a difference between making an informed choice and a psychological decision. If you are consciously aware of the consequences but prefer to enjoy now and suffer later or because you secretly have a hidden stash of wealth somewhere, it's perfectly fine because it's your life. But if you are deciding to do nothing because you assume that your current saving rate can enable you to live the way you do now in the future, then maybe you should sit down and calculate before taking such a risk. 1 + 1 always equals to 2. Math won't lie.

The biggest problem with wait and see is the lost of time.

I generated 3 retirement plans for the same budget if they started doing something about their retirement at the ages listed. Don't ask me which insurer or which plan because every insurer has similar plans with slight differences of the projections. If I take 3 illustrations from the same insurer, the comparison is fair. What I want to illustrate is that with the same amount of money, set aside monthly, John would get a bigger retirement income compared to the rest simply because he started earlier. As much as I use an endowment instrument to illustrate this, the math would be the same if we use an investment instrument for all 3 scenarios.

Again, if you can retire doing nothing with your funds, then using financial instruments are merely an option to give you more. If you can't retire with your money sitting in the bank, then delaying simply amplifies your problem. Using financial instruments then becomes a need.

3. Can I just follow my friend and get what he/she gets?

I tell you, over the years, I'm increasingly convinced a lot of people have no interest in being rich or well-to-do. They are simply disinterested with their money. Most people are just happy to live their lives status quo and not suffer any extreme stress. Many times, people do financial planning simply to tick a checkbox that they are 'responsible' adults. Unless your friend has the same income, same bank balance, same liabilities, same age as you, same goals, it's highly unlikely that the same financial portfolio will give both of you equal benefits. If it doesn't, why would you want to copy your friend?

Take for instance, if friend A has a $500/month savings plan but did not mention she already done up her protection planning, copycat friend who also wants to take up the same $500/month savings plan (at a roadshow maybe) because savings is a good idea but has not done her protection planning might find herself short of budget when protection planning is suggested to her later. I've recently also had a referral met me because she wanted the same investment plan that my other client took up but after conversing with me, she decided on a safer option because the risk is unsuitable for her. If at the point of engagement, I was too happy that she wanted to give me business and simply transacted, she might come after me with a chopper when the market is free falling like now.

Summary

Everyone's needs is different. A proper advisory process is to help you reach your goals in the most optimal manner. As a client, your role is to highlight your needs and see if the advise is sound and commitment is comfortable. Ask questions if you don't understand. But remember this:

1. Start your planning based on your needs then adjust your budget not the other way around

2. Do not delay starting to optimize the surplus funds in your bank account to beat inflation unless you have a reasonable basis

3. Don't copy people blindly. Be curious, it's good to know what plans your friends bought and it's harmless to enquire. In fact it's good! But remember point 1.

If you are unsure how to go about your financial planning, do speak with a trusted advisor. Alternatively, you can drop me a message if you would like me to help you with it.

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Disclaimer: The content created are based on my personal opinions and may not be representative to everyone or any organisation. If you have any doubts or queries pertaining to insurance or investment, please seek professional advice from a trusted adviser in an official setting. You may also reach out to me if you do not have a present adviser using the message box under 'Let's Talk'.