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Personal Financial Planning, Fourth Edition

Book Description

If you are like most people, you may desire to achieve many financial goals such as owning assets, saving money for emergency purposes, protecting yourself and your loved ones with insurance, and many more. Nonetheless, achieving these goals with limited resources can be challenging, especially given the complexity of modern financial markets. In this fourth and latest edition, Personal Financial Planning expands on the important skill of financial planning, covering more topics than before. This volume is designed to help you formulate financial goals and develop specific financial plans to achieve your goals. Topics covered in this volume include the benefits of personal financial planning, financial planning tools, managing credit, insurance planning, income tax planning, retirement planning, and personal financial risk management, among others. The authors are professionals with many years of experience in the field, and key terms and concepts are explained in a fuss-free manner with clear and relevant examples.
This book is suitable for a wide range of audiences, including polytechnic students, undergraduates, MBA students, and those pursuing the Chartered Financial Analyst (CFA) and Chartered Financial Planning (CFP) qualifications as well as financial planners and advisers in banks, insurance and stock broking firms.

Table of Contents

  1. Title Page
  2. Copyright Page
  3. Dedication Page
  4. Contents
  5. About the Authors
  6. Preface
  7. 1. Personal Financial Planning
    1. Introduction
    2. Need for Personal Financial Planning
    3. Personal Financial Planning Process
    4. Rewards of Planning
    5. The Planning Environment
    6. Personal Income
    7. Conclusion
  8. 2. Personal Financial Statements
    1. Introduction
    2. Balance Sheet
    3. Income and Expenditure Statement
    4. Cash Budget
    5. Financial Ratios
    6. Conclusion
  9. 3. Time Value of Money
    1. Introduction
    2. Present and Future Values of a Single Payment
    3. Present and Future Values of Annuities
    4. Present and Future Values of Growing Annuities
    5. Applications of the Time Value of Money
    6. Conclusion
  10. 4. Liquid Assets Management
    1. Introduction
    2. Purpose of Keeping Liquid Assets
    3. Types of Liquid Assets
    4. Computing Interest Earned
    5. Deposit Insurance
    6. Managing Liquid Assets
    7. Tax Status of Interest Income
    8. Inflation Risk
    9. Choosing a Bank
    10. Conclusion
  11. 5. Credit Management
    1. Introduction
    2. Principles of Good Credit Management
    3. Types of Credit
    4. Amount to Borrow
    5. Application for Credit
    6. Choosing a Loan
    7. Computing Finance Charges for Single-payment Loans
    8. Computing Finance Charges for Instalment Loans
    9. Using Effective Interest to Compare Instalment Loans
    10. Computing Loan Instalments when Interest Rates are Changing
    11. Capital Repayment
    12. Choosing between Fixed-rate and Variable-rate Loans
    13. Re-pricing of Loans
    14. Major Providers of Credit
    15. Conclusion
  12. 6. Credit Cards
    1. Introduction
    2. Types of Credit Cards
    3. How Bank Credit Cards Work
    4. Applying for a Credit Card
    5. Finance Charges of Credit Cards
    6. Using Credit Cards Wisely
    7. Conclusion
  13. 7. Buying and Owning a Car
    1. Introduction
    2. Checklist for a Car Purchase
    3. Factors that Affect the Price of a Car
    4. Negotiating with Car Dealers
    5. Financing your Car
    6. Leasing or Buying a Car
    7. When to Replace an Old Car
    8. Extending the Life of a Car beyond 10 Years
    9. Conclusion
    10. Appendix 7
  14. 8. Risk Profiling and Asset Allocation
    1. Introduction
    2. Asset Allocation
    3. Steps in Asset Allocation
    4. Risk Profiling
    5. Conclusion
  15. 9. Investments
    1. Introduction
    2. Investment Instruments
    3. Return on Investment
    4. Risks of Investments
    5. Trade-off between Return and Risk
    6. Diversification of Risk
    7. Asset Allocation
    8. How Much to Invest
    9. Steps in Investing
    10. Dealing with External Economic Shocks
    11. Common Pitfalls of Investing
    12. Conclusion
    13. Appendix 9: Useful Questions to ask Prior to Investing in an Asset
  16. 10. Personal Risk Management
    1. Introduction
    2. Risk Management Process
    3. Types of Personal Risks
    4. Investment Risks
    5. Cash-Flow Risks
    6. Income Risks
    7. Conclusion
  17. 11. Financial Advisers
    1. Introduction
    2. Types of Financial Advisers
    3. Regulation of Financial Advisers
    4. Responsibilities of Financial Advisers
    5. Products and Services of Financial Advisers
    6. The Financial Advisory Process
    7. Remuneration of Financial Advisers
    8. Choosing Your Financial Adviser
    9. Transacting with Financial Advisers
    10. Conflict Resolution with Financial Advisers
    11. Conclusion
    12. Appendix 11A: CMFAS Examination
    13. Appendix 11B: MAS Mystery Shopping Survey of 2006
    14. Appendix 11C: Questions for Consumers to Ask Financial Advisers
  18. 12. Life Insurance
    1. Introduction
    2. What is Life Insurance?
    3. Benefits of Life Insurance
    4. Types of Life Insurance Policies
    5. Choosing an Insurance Policy
    6. How Much to Insure
    7. Shopping for a Life Insurance Policy
    8. Conclusion
    9. Appendix 12A: Basic Insurance Terms
    10. Appendix 12B: Life Insurance Provisions
  19. 13. Income Tax Planning
    1. Introduction
    2. Objective of Income Tax Planning
    3. Singapore’s Tax System
    4. Tax Residence Status
    5. Calculating Your Tax Payable
    6. Tax Implications for Investors
    7. Strategies for Minimising Income Taxes
    8. Filing Tax Returns and Paying Taxes
    9. Conclusion
    10. Appendix 13A: Personal Reliefs
  20. 14. Planning for Tertiary Education
    1. Introduction
    2. Value of Tertiary Education
    3. Cost of Tertiary Education
    4. College Planning
    5. Investing for Tertiary Education
    6. Scholarships and Bursaries
    7. Education Loans
    8. Conclusion
  21. 15. Retirement Planning
    1. Introduction
    2. Importance of Retirement Planning
    3. Steps in Retirement Planning
    4. Investing for Retirement
    5. CPF Investment for Retirement
    6. Pitfalls in Retirement Planning
    7. Case Study on Retirement Planning
    8. CPF Minimum Sum Scheme
    9. Investing the Minimum Sum
    10. Supplementary Retirement Scheme (SRS)
    11. Conclusion
  22. 16. Central Provident Fund (CPF)
    1. Introduction
    2. CPF Contributions
    3. Health Care
    4. Central Provident Fund Investment Scheme (CPFIS)
    5. Eligibility
    6. CPFIS-OA and CPFIS-SA
    7. Investible Funds
    8. Accounts to Open
    9. Investing Your CPF Savings
    10. Selling Your Investments
    11. Tax Issues
    12. Closing Your CPF Investment Account
    13. Release of Investment Holdings at Retirement Age
    14. Conclusion
  23. 17. Estate Planning
    1. Introduction
    2. Why Do Individuals Avoid Estate Planning?
    3. Goal of Estate Planning
    4. Strategies in Estate Planning
    5. Steps in Estate Planning
    6. Methods for Transferring Assets upon Death
    7. Writing a Will
    8. Trusts
    9. Problems with Lack of Estate Planning
    10. Conclusion
  24. 18. Case Studies on Financial Planning
    1. Introduction
    2. Case 1: Financial Planning for Singles
    3. Case 2: Financial Planning for Young Couples
    4. Case 3: Financial Planning for Mature Couples
    5. Conclusion
  25. Index