- Singapore GDP -6.3% in 2008Q3 {What to do now}

Singapore GDP -6.3% in 2008Q3 {What to do now}

Written by Wilfred Ling

Friday, 10 October 2008

Singapore's GDP contracted by 6.3% in Q3 this year. See article: Singapore, in Recession, Ends Currency Gain Policy. In the meantime, Mr. Lim Swee Say the Secretary General of NTUC says Singaporeans must be prepared for retrenchments and pay cut. See article: Labour chief says retrenchments likely if global downturn continues

What to do in recession? Here are my comments:

(1) First priority: Ensure your job is secure. Do not switch job unnecessarily. Be contended with the current pay. If pay is cut, just be contented with it.

(2) Second priority: Ensure sufficient emergency cash - say 6 to 12 months of cash. Ensure this cash is secure, do not invest it. Perhaps put it in Singapore Treasury for maximum safety. Emergency cash is meant to meet normal family expenses if job is lost.

(3) Third priority: Because emergency cash cannot be used for huge liability arising out of medical and critical illnesses, leverage your capital by gaining excess to larger capital base through insurance. Thus ensure sufficient medical coverage because large hospital bill and critical illness will surely exceed emergency cash very quickly.

(4) Fourth priority: The market is sliding downward quickly. It has been sliding in anticipation for recession. It is tempting to buy investment since it is so "low".

a) However, do not sign up for lock-in style regular investment plan such as Regular Premium ILP because you cannot stop it when you loss your job. Stopping such RP ILP could incur high penalty. Liquidating it before maturity can incur very huge losses
b) Do not invest lump sum as well because the market is too volatile.
c) Employ simple regular saving plan (RSP) into investment with no exit charges.

(5) Fifth priority: Upgrade yourself in education/training so as to be ready to ride the wave when economy recovers.

Comments

Add New

RSS