Long Term Care: No Money, How To Care?

There was a saddening article on The Sunday Times, March 8 2009. The article was about the scarcity of beds in local nursing homes. The reason is that people are flocking to subsidized homes, that it is estimated that one has to wait for 4 months to get a bed there. Ironically, there are some other available beds in other homes, but most families cannot afford them as they aren’t subsidized.

Alternatives that some families take are to check their ageing parents into nursing homes in Malaysia. While it is cheaper, the price really isn’t that encouraging too.

While it has always been the maxim to provide for our elderly parents, sometimes it’s clear to me that the cost of living makes it somewhat near impossible.

Let’s study three possible scenarios arising from the result of an ageing parent becoming disabled. The following are the simplified calculated costs (all costs of nursing homes are derived from the article mentioned):

Scenario 1 – Disabled parent checks into local nursing home
Nursing Home Cost: $1,000 to $4,000 monthly

Scenario 2 – Disabled parent checks into Malaysian nursing home
Nursing Home Cost: $450 to $1,000 monthly

Scenario 3 – One adult child stops work to look after disabled parent
Income loss of adult child: $1,200 to $3,000 monthlyCost required for adult child’s lifestyle is still required

While it is easy to conclude that Scenario 2’s cost is the lowest, not all families can accept putting their disabled and ageing parent in another country. Scenario 3 is the most ideal in the aspect of family ties, but this will literally mean a loss of income due to an adult child stopping work to look after the parent. We also must not forget that this adult child too has lifestyle costs like his/her food, bills, clothing, etc.

Most often, families are likely to choose Scenario 1, and pool resources from family members to pay for the nursing homes cost. And if they have no choice but to choose subsidized nursing homes, they may now have to wait 4 months to get a bed for their parent.

The Ministry of Health’s Eldershield plan created for CPF members is a useful idea. However, it falls short in relevance to the spectrum of the problem. By default, Eldershield insured members are entitled $400 monthly for 6 years in the event of severe disability under their terms and conditions*. This would be a far cry from the nursing home costs in Singapore. Paying out for 6 years only, also isn’t comforting enough. Another whammy is that such coverage ends when the insured reaches age 65.

However, private supplementary plans have been created to make the Eldershield coverage relevant. Using the CPF Medisave as insurance premiums, such plans can increase the monthly payout up to $2,000. The payout period can also be extended to 12 years to a lifetime.

In conclusion, the most cost effective arrangement to cater to this long term care problem is the Eldershield plus is supplementary plan. Caregivers can also pool Medisave resources to supplement the premiums, instead of needing to pool to supplement the nursing home bills. Either ways, the disabled and ageing parent remains closer to home, and yet having his/her medical needs taken care of.

* To qualify for payout for Eldershield, the insured must not be able to perform at least 3 of the following Activities of Daily Living: Washing, Dressing, Feeding, Toileting, Mobility, Transferring.

Defensive or Offensive?

I thought that financial planning can be explained a little differently.

Consider the work that I do. I help clients review their finances, adjust spending, set up insurance programs, build investment portfolios, bring dividends, bring interest rates, monitor performances, etc. These help preserve and grow money that my clients have.

I explained the above to a couple of my important clients, and asked them what they thought. Generally, they felt it was good to have such work in place. I later told them, that I coined such work as defensive financial planning.

So when there is a defensive, there has to be an opposite called offensive. Now what's offensive then?

What if I told you that an aggressive investment portfolio is not considered offensive? What if I told you that cutting down expenses by 50% is not considered offensive? What then is offensive?

I explained further that offensive means that you work on building your income, not your investment portfolios.

Here's why I said that.

All these years I discovered that clients want and have an ideal lifestyle ahead of them. However, they usually dismiss these ideals because it's just "not realistic" due to the expenses that they already have in their lives. They say these commitments cannot be reduced, despite how they try.

Fine. I mean, why reduce it? Why not earn more?

With recessions like what we are facing, opportunities abound everywhere. The majority of the herd will be hiding, not daring to make potentially rewarding moves in their career, or strike out on business opportunities in the weekends. If you observed the streets on Valentine's Day yesterday, you would have guessed that those nice looking gentlemen selling bouquets of flowers made very handsome profits (why didn't I do that myself???!!!).

Offensive financial planning is critical, because how you save, how you spend, how you build your insurance, how you build your investments, all depend on how much you earn!

You can increase your income by weekend business opportunities, trade some commodities, provide a service to a niche market in your evenings, work hard and smart in your existing career with a definite direction and plan of growth, whatever it may be.

You don't have to desperately put on whatever armour you can find now and go to war. Begin by first visiting the library and get your hands on good books. If you'd like personal recommendations, you may drop me an email, and I'll gladly give you my choice titles. Whatever you do, your new journey of success only begins on the day you take your first step. Else, you'll probably find yourself in the same place when it's 5 years later from now.

All the best.

Rich Dad Revisited

For Christmas, I got Rich Dad, Poor Dad from my buddy at work. She thought I never read the book before... how could she...?

But it was really timely. Not too long ago, I told myself to revisit the book again. I was halfway through another great book called The Richest Man Who Ever Lived, and wanted to complete that first. After I was done with that, I ordered a copy for my buddy for her Christmas gift because I thought the contents of the book was so crucial to financial and life success. In other words, I gave her what I wanted to give, and I got what I wanted to receive.

(Marge, if you're reading this blog, from the bottom of my heart, thank you.)

I'd like to share about one paragraph from Rich Dad.

In the last chapter, I offer ten steps that I followed on the road to my financial freedom. But always remember to have fun. This is only a game. Sometimes you win and sometimes you learn. But have fun. Most people never win because they're more afraid of losing. That is why I found school so silly. In school we learn that mistakes are bad, and we are punished for making them. Yet, if you look at the way humans are designed to learn, we learn by making mistakes. We learn to walk by falling down. If we never fell down, we would never walk. The same is true for learning to ride a bike. I still have scars on my knees, but today I can ride a bike without thinking. The same is true for getting rich. Unfortunately the main reason most people are not rich is because they are terrified of losing. Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success.

-- Rich Dad, Poor Dad by Robert T Kiyosaki

Well it's not just about buying stocks, unit trusts, real estate, setting up a business, or the likes. It's just the mindset of wealth. It's not about how much money you have today that determines your wealth, neither is it about how much you will get tomorrow. I've come to learn and accept that wealth is a mindset. The amount of money is usually just the by-product of the mind that is developed.

Do I have a lot of money? No, not yet. Am I still working like a cow to pay my bills? Do I still have loans? Do I still have debt? For the last three questions asked, my answer is -- you bet! These were mistakes made from the past, which my family and I still pay the price today. But failure is really not about how many times or how bad your fall is, but how long you stay down.

I wish you a great 2009 coming up soon. Opportunities abound in times of trouble.


PS: I've found a relatively cheaper way in buying books. If you intend to buy good books, drop me a mail to find out how.

Cash Flow is King

Yep. Self-explanatory title.

Especially with the oncoming real recession hitting us real soon (nope, it has not really hit yet, unfortunately), money matters are going to be the talk of the town. If it's not already the talk of your home, you'd better do it now.

How are you working on your income? If you are likely going to face retrenchment, do you have something else in the works? Why wait till you are laid off then start looking for something else.

There are other side-income earning opportunities (I'm sorry but I can't really help very much in this area, but this fella and this fella may be able to) that you can just source about for. Or, you can work on brushing up on your skills, or take this opportunity to explore new markets for your company while the majority are curling up in fear.

That's the offensive.

And you have to take care of the defensive. Be tactful of expenditure. I am currently in the process of reducing a client's insurance portfolio premiums by 25%! When the paperwork is complete, he will save a whopping $51 a month, or $612 a year! And mind you, his new portfolio will have much more comprehensive coverage. It makes sense that this can happen, when you bought insurance plans from agents who know nothing about the insurance product market except for their own companies', and are more concerned about their commissions.

Then there are also those things that you spend on. Robert Kiyosaki calls them doodads, meaning things that are desirable to buy, but aren't really helping you financially. That could be the car that you bought because of the low COE, but didn't really need. That could be the condominium that you are thinking of buying, even though if it means squeezing your CPF dry for the next few years unless you get a raise (... unless you get a raise??). Or simply those snacks you buy from the supermarket and food stalls, and cigarettes and beer, where you can save on not taking, because it's not only good for your wallet, but your health too.

Recessions are usually good to force out all those unnecessary expenditures that we carelessly lavish on, and also a motivating factor to create income and improve your work.

Know that "cash is king" is not entirely correct. You must have cash flowing in -- not just sitting around looking pretty -- thus cash flow is more important.

Turning your passion into your profession

I thought this was an interesting article.



The maker of the iPhone game, Steve Demeter, made $250,000 from his iPhone puzzle game called Trism, that he quit his day job to set up a development studio.

Another person I read about, Anthony Borelli, became successful in affiliate marketing after much attempts, and now enjoys a lot of time with his family, and now a millionaire.

If you followed my blog long enough, Yaro Starak shouldn't be a strange name to you. He's another successful entrepreneur. Even before his professional blogging days, he already had considerable successes on the internet.

How about The Terminator-turned-Governor of California, Arnold Schwarzenegger? Did you know that even before he was Conan The Barbarian (his breakthrough movie), he was already a millionaire business man?

All these men transformed their passion for something into a lucrative income earning career. It can be from a passion in making computer games, to simply a passion in building businesses (particularly in restauranting, isn't it, Governor Schwarzeneggar?). I began mine in an accidental passion in financial planning years ago, and I sure have more than one passion, but I'll have to take it one at a time. At least I've got started too. What about you?

In the older days, work is HARD work. You don't sweat, you don't bleed, you don't get paid. Long gone are those days. Even if you sweat and bleed yourself dry today, you still get laid off. Employers cannot hold up their own businesses. The risk is sometimes only an hierarchy difference. If you have got what it takes to run a business, why not do it yourself?

If you read beyond the gloom and doom in the newspapers, you will find some articles here and there about some unique group of people who are pursuing their dreams particularly right at this moment! At this global slump? Yes! And I agree with them 100% that there is no better time than this!

What could be your passion that can be transformed into a career? It sure takes a lot of planning, a lot of attempts, and a lot of failure. It may cost you a lot of money too. But if you desire to break through but choose to not move, the failure will be permanent and guaranteed.

Or maybe for some, it's simply just injecting more passion into the work you are already in.

I'll leave you today with a quote from the late Abraham Lincoln, who knows better than most people what it is like to fail over and over and over and over again. He said, "My greatest concern is not whether you have failed, but whether you are content with your failure."

It may be better to postpone your plans

It is finally publicized today on the papers that the Integrated Resort (IR) at Marina Bay cannot be completed on time. I personally think it is a good idea for them.

On one hand, there are datelines to meet, on the other hand, I'd rather the dateline is not met than to have a shoddy completion. You don't want the floors to give way after you strike a winning-7 on your jackpot machine (I'm more concerned of the safety of the people. For the record, I am against gambling).

A few days ago, I was having a conversation with a client. He intended to purchase a flat in less than a year. Half a year ago, he invested his CPF money with an insurance agent (no, not me) expecting to grow his money to an amount that can help him pay the downpayment for his flat in a year's expectation.

He definitely didn't expect the market to take a turn down. As of today, he probably lost 40-50% of his investments. A few days ago, he asks me if he should terminate the policy.

I asked him if he does that, how does that help him with his goal in buying a house in less than a year. He suggested to me to help him set up a portfolio that can help reach that goal.

I had to tell him that's not gonna work.

A better idea is for him to keep his current investment, because even if he draws it out now, it doesn't help at all. I think he should calculate how much he really needs for the house, and try to work backwards how much he needs to put today, and how long it takes. He should work on the time frame and the contribution he needs to set aside to reach that amount, and decide if he will do that. He should consider to push his house purchase further away instead of rush in, only to end up in bigger debt, and tight cash flow.

While not everything should be delayed, some things that can be delayed, then it'd better be. Like the analogy of not having the floor in the IR to give way, you don't want your finances to give way just because you chose not to secure the foundations before inviting your guests (your family!) to come in.

I made this mistake myself years ago. I can vouch that postponement is usually the better option.

How are you feeling?

Seriously. How are you feeling about financial services?

The market is giving us all a huge whipping. AIG's recent drama left many insurance policyholders skeptical and worried of the stability of insurance companies. Mortgage giants like Freddie and Fannie, and huge financial institutions like Lehman Brothers, do prove that indeed there is no such thing as certainty of existence just because you are a big company, or backed by the government.

Indeed, how is this affecting you about financial planning? Is there no other way? Is hiding money in your Milo tin effective? Is inflation really an issue to you, or do you actually admit that you have no idea what it is about?

Yes, it's scary. I admit it. It is scary.

Do you still see light in the darkness? Please, I'd really like to know how you feel.

A very blissful morning

I had a wonderful morning today.

For a change, I asked a client out for breakfast. There was no other purpose of meeting, like reviewing his financial plans, but just to find out how he is doing. It's not new to me, just that I almost never (if not, never) meet a client on weekends unless it is extremely urgent.

This wasn't the first time I had breakfast with this client on a Saturday either (except the other time really had work involved), and this isn't the first time I met him dressed in casual attire, but today is the first time I met him being just me. Not Financial Advisor me, but just me.

The things we spoke about were not new either. He talked about his work, his girlfriend, his parents, his aspirations, and I talked about my family, my God, my work, my aspirations. But today was really completely different.

After 2 hours at McDonald's, we said goodbye, and I decided to head to a nearby shopping centre which I have not been for a long time. I took my time wandering about, marvelling at the huge change of shops in there, and even more marvelling at those shops who were still there since I was a kid.

I had no thought about my work or personal life troubles. My mind was entirely on a holiday.

I was curious about almost everything I saw. I stopped by at shops and peered into the windows. I browsed at books and bought 2. I was warm and friendly to the people working in the shops, and I had little or no agenda to anything and everything I did.

I was amazed at a small CD shop in the shopping centre that sold albums I never thought I'd ever see again. I didn't have any intent to buy any, but I was on free mode, and just took my time browsing without fear of being embarrassed of taking up the shop's space. The shop owner was watching a Claire Danes movie on TV, and I decided to head home fast to catch the rest of it.

Lunch was packed and I headed home by bus (wife took the car for the day). The house was peaceful and I folded my legs on the sofa and watched the Claire Danes movie - Shopgirl - while occasionally reading the book I bought and munching my lunch. I spoke to myself about my views about the show, and laughed heartily at light moments.

Yes, today's entry has little, or not at all, anything about financial planning. In fact, the only thing about financial planning I want to speak about is, wealth is not just about the money you have. Instead, wealth is a state of mind. I have read about and met men with lots of money and having the most miserable lives that you can possibly imagine. I have read about families with money just enough to pay the bills, but they are so blissful and filled with love. As far as I am concerned, the "poor" family is far wealthier than that rich man.

Today's episode had nothing to do with money, but the state of mind that I was blessed with. Even without thoughts of money, I sure felt like the most blessed man in the whole wide world. Monday will come whereby my mind refocuses on the technical aspects of managing my clients' money. The middle of the month will come when the mailbox is flooded with bills to pay again. But till the day that I can look at all these with lesser concern about what the money I have can do, I sure think it's wiser to count my blessings of what God gives me today -- even if it's just a blissful state of mind.

You should too.

I don't like to be broke

Who does?

Income comes home, then the bills come, and before you know it, a chunk of your salary disappears.

Why are we spending on these things?

Every month (or day), our expenses go out in exchange of items or services to fuel our everyday lifestyle. Assuming the equation of our income and expenses square of (meaning the expenses are not higher than the income), what we spend on for our lifestyle depends on the amount we earn.

Some people ask me how to best save their money so that they can up their lifestyle. Sometimes it's the car they want. Sometimes it's the new baby. Well there is only so much you can do by having all those savings plans, endowment plans, savings accounts, etc. But the true answer to the solution is to raise your income.

How?

If you're employed, be a better employee, get promoted, get a raise, or get a better job. If you're in business, bring it to breakthrough profit. If you're in sales, sell more, make better commissions. If you don't have a job, get one. If you can't get a job, do a business or something.

Whatever you do, don't live everyday and work everyday complaining of low cash flow. Go do something about it.

For the restless hearts that so desire to break free from this rut, this may be a good path to look at. I've screened it somewhat already. Doesn't appear to be one of those dodgy I'm-secretly-gonna-sell-you-my-$1,000-pakage kind of site.

The "Retard" - Part 2

The school teacher made a farewell speech to the graduating class. At that point, the boy walked sadly down the school hall, for he had just flunk English and Math. He was thinking of dropping out of summer school, because, being labelled educable mentally retarded, it's very seldom anyone of that category completed school.

Just as he walked past the assembly hall, the boy heard the teacher say to the graduating class, "... if just one of you will believe, the world will be a better place, just because you came this way."

The class gave him a standing ovation, and a realization set into the boy.

Later, the teacher headed to his car in the parking lot, and the boy ran up from behind him.

"Mr Washington?" he called.

Mr Washington, the teacher, turned around and said, "Yes?"

"Do you remember me, Mr Washington? I'm Leslie. My brother is Wesley. We're twins - Leslie and Wesley. My momma works in the school canteen."

Mr Washington replied, "N... no, I don't remember you."

"You said to me," Leslie continued, "'Someone's opinion of you does not have to become your reality.' Do you remember me now, Sir? I was waiting on McArthur."

Mr Washington thought for a moment and replied, "Y-yes. You're one of the Brown twins."

"The speech you gave in the hall," Leslie said, "Was that speech for me, Mr Washington?"

Mr Washington was confused, "That speech was for the senior. You are a junior, Mr Brown."

"But it sounded like you were talking to me," Leslie shook, "Were you talking to me, Mr Washington?"

"I was talking to everybody, Mr Brown."

"Do you think I could make my momma proud, Mr Washington?" Leslie asked eagerly.

"It's possible, Mr Brown."

"But... but what about the fact that I don't have good grades, and I'm not as fast as everybody?"

"It just means you have to work harder, Mr Brown," and Mr Washington turned around to walk away.

"Mr Washington!" Leslie called out.

The young teacher turned around, "What do you want now?"

"Uh... I... uh..." Leslie shifted from side to side, face starting to glow with a look of determination and eagerness, "I'm the one, Mr Washington. Remember my name. I'm Mrs Mammie Brown's baby boy. I'm the one. Someday, you're going to hear about me."

Today, Mr Les Brown is a reknown motivational speaker. Before that, he was in politics and also had a career in radio deejaying. Les Brown now owns a multi-million dollar business in America.

What happened before that was that Mr Washington indeed saw Les Brown on the news on a legislature that he had proposed, and he called Les Brown and they started catching up.

"So you're the one, aren't you?" Mr Washington said, "But you were so crazy."

Les Brown replied to his beloved mentor, "Yes, I'm crazy, but I'm rich now!"


It all begins with the belief that we can get there to the goals that we want. The how, we'll figure that along the way.

A comforting truth

"Every adversity, every failure, every heartache carries with it the seed of an equal or greater benefit." - Napoleon Hill

Whatever you're in now - poor investments returns, problems with your insurance company, problems with your family, low in cash, sucky job, etc - remember this truthful saying by Napoleon Hill. Look for that light in the dark, or that loving hand that can and will lead you through.