Andrea Heng, host:
We talked about how things are so volatile in today’s climate. What would you advise in terms of what we can do with (our CPF) to feel a bit more safe, a bit more secure? You have a Triple C rule. Tell us more about that.
Christopher Tan, CEO of Providend:
I actually believe that for the vast majority of Singaporeans, if you don’t like market risks, have no experience investing and don’t think you have the knowledge to invest, you don’t really have to.
It may sound a bit controversial, but I believe that as opposed to (chasing) the five C’s, the three Cs are perhaps more conservative and more doable.
The first C is cash flow management. Make sure you always have surplus. Make sure you spend below your means. (It means) that if you earn $1 and can spend $1, you choose to spend maybe 50 or 30 cents.
You don’t have to keep up with the Joneses … and with the surplus, you (can then) optimise it, by putting it into higher-yielding accounts, like high-interest rate accounts, Treasury Bills (T-bills), or Singapore Savings Bonds (SSBs). That’s cash flow management. That’s key.
The second C is coverage management. Make sure that you are suitably covered. Buy all the necessary insurance. And as I have said for a long time, buy as much as you need, but pay as little as you can. You don’t need to spend a lot of money on insurance (but) you can still get yourself adequately covered.
Andrea:
More doesn’t always mean better.
Christopher:
In fact, more always means bad when it comes to insurance. Especially when you pay more premiums, it usually means bad.
The third C is something we’ve talked a lot about in this episode, and that is CPF management. Take care of your CPF, it’s your real money. Buy a house that you can afford. Don’t overspend, because if you buy a house you cannot afford, you’ll zerorise your Ordinary Account, and then you won’t have enough left for retirement. But if you take care of your CPF, your CPF will take care of you. I sound like a CPF Board officer, but it’s true.
If you take care of your CPF, you should have a nice, steady sum at retirement that will provide you for the rest of your life.
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