134 Liquid emergency fund—case for a coma person

Liquid emergency fund—case for a coma person	紧急基金—昏迷患者的个案
Mr Y, a sole breadwinner, suffered a stroke recently. After a few operations, he is now in coma state. His family has put him into a care center. At the moment, his family cannot claim any insurance, provident funds, socso because a medical report is needed. It can take quite some time for the report. In the meantime, the family needs cash for daily expenses and Mr Y's medical and caregiver's expenses.	家庭经济支柱的Y先生不幸发生中风。经过几轮的手术后，如今陷入昏迷状态。他的家里人把他安置在护理中心。在医生开出医药报告之先，他的家里人暂时不能索赔任何保险、公积金或工作险。等待医药报告旷日费时。家里人目前必须解决的是生活费以及Y先生的医药费的看护费。
This is where we see the importance of liquid emergency fund. In wealth planning, we always talk of putting aside at least 6 months of cash for emergency fund. In this case, 6 months buffer can provide enough time for family to adjust emotions, lifestyle, look for jobs, waiting for report and various claims.	这就让我们看到紧急基金的重要。在理财规划里，一般建议存取6个月的现金作为紧急基金。在这个个案里，6个月的备用基金刚刚好足够让家里人调整心情、生活方式、找工作、等待报告以及各项索赔。
Where can we keep the emergency fund? The first place is certainly some money in joint name savings account with ATM facility. Bank is the safest to keep money and ATM is the most convenience method to make withdrawal. However, make sure the ATM card is available and the pin is known to the spouse. The amount is probably 1-3 months expenses.	备用基金该存放于何处呢？首先可以是有提款卡的联名储蓄户头。银行是存钱的最安全场所，而提款卡是最方便的提款方式。当然必须确保找得到提款卡，配偶也知道密码。这里的数目可以介于1-3个月的费用。
Second could be a joint name fixed deposits account. Fixed deposit provides higher interest rate and easy withdrawal. The amount is perhaps 3-6 (or up to 9-12) months expenses, with different tenures.	其次是联名的定期存款户头。定存可以给予较高的利息，也相对容易取款。这里的数额可以介于3-6（甚至9-12）个月的费用。最好可以有不同的期限。
Third option could be a living trust. If the family has some assets that provides regular incomes (e.g. rentals from properties), they can move those assets into a living trust and structure that the trust will payout certain amount of money monthly. This type of trust can also protect those assets in case of insolvency.	第三的方法是设立生前信托。若是家族拥有若干可提供固定收入的资产（如产业租金收入）的话，家族可以考虑用该些资产来设立生前信托，让信托把租金收入每月给出一笔固定收入。这类的信托还可解决资产因破产而被冻结或拍卖。
Fourth options can be an endowment plan that pays out annual income. Endowment plan normally will pay out some money either by the end of first year, or maybe after 6 or 10 years depending on the term. The catch is if the premium has not been fully paid, the family still need to service the premium until they get the medical report.	第四可以通过储蓄保险的每年派出。根据所买的保险种类而定，储蓄保险可能会在隔年或者6、或者10年后每年派出钱。这里必须小心的是如果保费还没完全缴清，家里人还是必须暂时缴付保费直到医药报告出笼为止。
Fifth is keeping some money at home. I think most people practice this, although we all know it is not the safest. Most won't keep much money at home anyway.	第五就是收点钱在家里。虽然我们知道这不是最安全的做法，我想这是大多数人还是会做的事。其实一般人也不会收太多钱在家吧。
How then do you plan your emergency fund?	你如何规划你的紧急基金呢？

083 Foreign Currency Account (Foreign Currency Current Account)

Introduction	介绍	Pengenalan
Ever since our investors can start investing using foreign currencies (previous post), I have been studying banks' Foreign Currency Account (FCA). This is because new injection & future redemption in foreign currencies must be done through FCA.	自从知道顾客可以用其他货币来投资基金后，我就一直在研究各家银行的外币户头。这是因为投资款以及将来的赎回款都必须通过外币户头过账。	Semenjak tahu behawa pelabur boleh melabur menggunakan matawang asing, saya mula kaji Foreign Currency Account (FCA) setiap bank. Ini disebabkan segala pelaburan dan penebusan harus dilakukan melalui FCA.
Comparison of FCA	外币户头比较	Perbandingan FCA
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Maybank CIMB RHB Public Hong Leong Min Deposit USD1,000 or equivalent (for individuals) ? USD1,000.00 or its equivalent for individuals USD1,000 or its equivalent in other foreign currencies is required $5,000 AUD / SGD Transaction charges USD4.00 - - USD1.06 RM10.60 or its equivalent Reproduction of Statements for Foreign Currency Current Account for period up to 1 year - RM10.60 (upfront) RM2.12 (additional page) - - Hong Leong Reproduction of Statements for Foreign Currency Current Account for period exceeding 1 year - RM31.80 (upfront) RM2.12 (additional page) - - Hong Leong Handling fee for debit/credit entries (excluding transfers/placements into Foreign Currency Fixed Deposit accounts & rectification entries) - USD2.12 or RM equivalent per entry - USD1.06 Hong Leong Service charge / Account Maintenance Fee - USD10.60 or RM equivalent half yearly - USD21-20 (or its equivalent in RM) per annum per customer RM31.80 or its equivalent every half year ( June & December)* Withdrawal in foreign currency? No At certain branch only ? No No
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017. MYR vs SGD vs USD: (4) UT Story

After looking at the FD rate, I want to explore into unit trust investments in Singapore. Now, I must admit I do not know about the unit trusts in Singapore. So, I have to refer to one of Phillip Capital's investment product in Singapore - Phillip Global Wrap Account Dwrap Ute (PGWS Dwrap Ute).

The latest Dwrap Ute report is dated Oct 2014.

I want to use the funds in the report as reference investment, and see their results.
Aberdeen Pacific Equity Market
Fidelity Global Consumer Industries
Fidelity Indonesia
First State Regional China
First State Dividend Advantage
Franklin US Opportunities

The repor only shows return for 3 years only. So, I will refer to MorningStar Singapore to see their long-term performance.

Aberdeen Pacific Equity Market

Fidelity Global Consumer Industries

Fidelity Indonesia

First State Regional China

First State Dividend Advantage

Franklin US Opportunities

As we can see, all the funds can give 10-years annualized return of more than 8%. Looks like we can hedge inflation using uni trust.

Let's put things together.
Inflation rate:- 3%
Currency appreciation:- 1.54%
FD rate:- 0.75%
Unit trust:- 8%

I mentioned that I am not familiar with unit trust in Singapore, and I can't go there to buy one. So for me, investing through PGWA Dwrap Ute seems like the only viable way.

Now, do we dump all money in PGWA Dwrap Ute since it can beat inflation. No! We have to perform asset allocation based on risk appetite. A combination of cash and unit trust, or other investments, are advisable. The combination needs to be adjusted according to the distance of goal objective. The nearer it is to goal, the more conservative the combination to be.

Agree?

016. MYR vs SGD vs USD: (3) FD Story

016. MYR vs SGD vs USD: (3) FD Story

After knowing money sitting in savings account cannot beat inflation rate in Singapore, I want to look at Fixed Deposit (FD) rate. Again, we get some info from Trading Economics.

It seems like FD rate in Singapore has been quite low, especially after 2008. The mean shows c.1.5% but I think it is unrealistic becasue of the recent lows. Let's take a mean after 2008.

The mean rate is about c.0.3%. Let's look at the banks' rates now.

We can see rates for different bank are quite far to each other. The highest is merely 0.75%. (Malaysian will never imagine FD to pay only 0.75%.)

Let's put things together.
Inflation rate:- 3%
Currency appreciation:- 1.54%
FD rate:- 0.75%

Apparently, FD alone cannot beat inflation.

015. MYR vs SGD vs USD: (2) Inflation Story

015. MYR vs SGD vs USD: (2) Inflation Story

In my last blog, I have calculated SGD is appreciating against MYR in the rate of 1.54%. So, let's say I decided to put some money in SGD. I have to decide where to put it.

Obviously, I must have a investment that can beat inflation rate in Singapore. How much is the inflation rate there?

The chart is taken from Trading Economics. Inflation rate in Singapore, for the past ten years, range from -1% to c.8%. The mean is about 3%.

Clearly 1.54% in currency appreciation in currency cannot beat inflation rate of 3%. So, the money cannot be sitting in savings account.

To make the money work harder, other investments are needed. We need to look at Fixed Deposits, unit trusts, stocks and perhaps alternative investments. Agree?

014. MYR vs SGD vs USD: (1) Currency Story

014. MYR vs SGD vs USD: (1) Currency Story

How much has MYR perform against SGD and/or USD? Local are complaining about falling MYR.

Let's see how much it has depreciated / appreciated against SGD and USD.

Charts are from www.xe.com.

MYR vs SGD

We can see from the chart that it was about MYR2.30 to SGD1.00 ten years ago. Today it is MYR2.68 to SGD1.00. So, MYR is depreciated against SGD. But how much? Let's use a financial calculator to calculated the annual rate.

PV = -2.30

FV = 2.68

n = 10

i = 1.54%

An annual inflated rate of 1.54% only.



MYR vs USD

It was MYR3.80 to an USD ten years ago. Today it is MYR3.63 against an USD. So, MYR is not depreciating against USD? If we consider the rate before the current spike, it was MYR3.16 to USD1.00. Let's use financial calculator to calculate the appreciation again.

PV = -3.80
FV = 3.63
n = 10
i = -0.46

If we take the rate before spike:-
PV = -3.80
FV = 3.16
n = 10
i = -1.83

We can see MYR is appreciating against USD.

Let's try to see SGD vs USD.

So, we can see USD is depreciating against SGD.

SGD is a stronger currency?

The fact is we do not know which currency will perform better in the future. As a responsible parents, you might want to plan your children's education fund not in local currency only. It is wise to put some money in SGD and / or USD. Agree?