ADI

NOVARIANTO
FINANCIAL ADVISOR
RFP / AWP / CPFP
Court of the Table 2016
Million Dollar Round Table 2009 –
2018 (Life Member)

Adi joined the financial advisory practice in Leveraging his years of experience, Adi
2007. he strongly believes in the ability of created a goals-centric, financial planning
financial planning to make a difference in methodology known as GoalsMapping. he
people's lives. This belief and his passion uses this approach to advise his clients, and
have helped him to achieve remarkable has received numerous positive
results in his journey as a financial testimonials on how his planning
consultant so far. methodology has been able to help his
clients achieve their various financial goals.
Shortly after joining, he amassed a large
clientele of professionals, expatriates and In 2024, he founded HavingFunds, a
overseas clients. To date, he has provided community that has a vision to redefine
financial advice to clients from more than financial planning.
20 countries.
In 2015, he achieved the prestigious Million
In his pursuit of knowledge to serve his Dollars Round of the Table award and was
clients better, he has also attained the ranked as the top 1% producer in his firm.
designation of ChFC /S and CLU /S by The And in 2023, she successfully completed
American College of Financial Services, and her MDRT Life Member after joining the
also holds the AEPP designation awarded financial advisory industry.
by Estate Planning Practitioners Ltd.

WHAT IS GOALSMAPPING
GoalsMapping is a process that was created to help people develop a well thought-out financial
plan that is able to accommodate many different financial goals and scenarios before arriving at
an optimal solution. Specifically, the GoalsMapping process requires you to list down all your
financial goals, and to test it against different scenarios to ensure that you are able to achieve all
your financial goals using different instruments – from bank savings and life insurance to other
investment tools. In this book, we explore the different models behind GoalsMapping. It consists
of simple financial concepts that everyone can adopt to improve their financial situation
immediately

GoalsMapper is a third party financial planning software for financial consultants. The above financial consultant is a user of
GoalsMapper and not a representative of GoalsMapper Pte Ltd.
 5
INTRODUCTION TO GOALSMAPPING

9
CHAPTER 1
THE IMPORTANCE OF SETTING GOALS

15
CHAPTER 2
AVOIDING COMMON MONEY MISTAKES

19
CHAPTER 3
MANAGING YOUR MONEY EFFECTIVELY

25
CHAPTER 4
THE COMPOUNDING EFFECT OF INTEREST

31
CHAPTER 5
CHOOSING THE RIGHT INVESTMENTS

35
CHAPTER 6
LEARNING THE RIGHT WAY TO USE DEBT

39
CHAPTER 7
DON’T FORGET ABOUT INSURANCE

43
CHAPTER 8
GOALSMAPPING: PUTTING IT ALL TOGETHER
 GoalsMapping is a detailed financial
planning process that involves listing down
all your financial goals, and testing it under
different scenarios to ensure that you
can achieve all your life’s financial goals

INTRODUCTION TO
through various life insurance, savings and
investment instruments.

GOALSMAPPING

The financial planning landscape has goals and scenarios before arriving at
changed tremendously in the last few an optimal solution. Specifically, the
decades. Today’s financial consultants GoalsMapping process requires you to
don’t just sell products, but rather focus list down all your financial goals, and to
on helping their clients to develop a test it against different scenarios to ensure
comprehensive plan to effectively manage that you are able to achieve all your
their personal finances over the long term. financial goals using different instruments
– from bank savings and life insurance to
This change has helped to improve the other investment tools.
professionalism of the industry by leaps and
bounds. As a result, more people now see Although you can never have a fool-
the importance of proper financial planning proof plan, going through the planning
and managing their personal finances in a process will definitely help you make
systematic manner. better-informed financial decisions. In
this book, we explore the different
GoalsMapping is a process that was models behind GoalsMapping. It consists
created to help people develop a well of simple financial concepts that everyone
thought-out financial plan that is able to can adopt to improve their financial
accommodate many different financial situation immediately.

GoalsMapping • 5
 But first, let’s meet our
guest stars…
WHY IS Getting low returns
The Lims are a married couple with young kids (a son

GOALSMAPPING and a daughter) and live with their grandparents. Both

have been working for close to 10 years and have regular
incomes. They have also diligently put aside money

IMPORTANT? over the years in savings accounts and fixed deposits.

While they are financially prudent, they are not generating

sufficient returns from their savings. With the low returns
they are getting from their fixed deposits, they will find it
difficult to achieve all their financial goals, which includes
saving enough for their children’s university education,
medical expenses for their aged parents, and their own
retirement. The Lims will need to make their money work
There is a lot of uncertainty in the world of your goals are reachable and which The Lims harder for them by investing for higher returns, but with
a level of risk that is acceptable to them.
today. Economic growth is not as are not; as well as highlight goals that you
predictable as it used to be, and technology might need to scale back on.
is disrupting many industries and jobs -
making life-long employment a challenge In the following chapters, you will be Caught in a debt trap
in the future. taken through the entire financial planning Tom is single adult who just started working two years ago. He graduated
process, covering key aspects such as with first class honors from his university. Unfortunately, he also has
In such an environment, planning for setting goals, managing your cashflow racked up a fair bit of credit card and personal debt rather quickly, and
your financial future has become more and the importance of insurance. We has dug himself into a financial hole. He needs to reduce the interest
important than ever. To meet your daily then round it off by seeing how each he is paying every month by paying off his most expensive loans first.
expenses, build up a buffer for unexpected of these steps fit into the overall He then needs to draw up a budget to keep his spending in check.
emergencies, and save enough to meet GoalsMapping concept. This will start him on the road towards financial freedom.
your financial goals in the long term, you
will need to come up with a comprehensive To better illustrate the concept of
plan to ensure that all your needs are met GoalsMapping and how it applies to
within the timeframe that you have set. people in different financial situations, we
have created a few fictional characters
Tom
GoalsMapping will help you reach ALL to help us on our journey of discovery. At
your financial goals through a holistic each stage, we will see how the various Not prepared for a rainy day
financial planning approach. It will also financial planning scenarios presented The Tans are newlyweds who have just bought a home. They
give you a realistic assessment of which affect their particular situation. plan to have children in the next few years. Recognising the
financial challenges ahead, they have invested in instruments
that generate higher-than-average returns to build up their
savings as quickly as possible. While this is commendable,
they have neglected to ensure that they have enough financial
protection in the event of emergencies or other unexpected
events. Failing to do so could derail their plans, and stop them
The Tans from realising their dreams.
6 • GoalsMapping GoalsMapping • 7
 1

CHAPTER
THE IMPORTANCE OF
SETTING GOALS
The first step of the GoalsMapping process goals on paper, you have established a
is to determine your life’s financial goals. finish line to aim for. Financial planning
This is important because you will never will then establish the fastest and most
finish a race if there is no finish line. efficient route to get there.
Likewise, you will never get to where you
want financially in life if you don’t have One approach to setting goals is the SMART
goals to reach. As such, setting your goals method. Using this method, effective goals
is a critical first stage of the financial should be Specific, Measurable, Attainable,
planning process. By putting down your Relevant, and Time-bound.

The SMART way of setting goals

SPECIFIC MEASURABLE ATTAINABLE RELEVANT TIME-BOUND

state exactly indicate the exact identify the goal must set a deadline
what you wish to dollar amount the steps be meaningful for meeting
buy/accomplish you need to necessary to or you may your goal.
with the money accomplish your reach your lose motivation
you save. goal. goal. to stick with
“ A goal properly set is halfway reached. ” your plan.

Zig Ziglar Example of SMART goal-setting:

S I plan to save for a down payment on a new car.
M I plan to save $50,000 for the down payment.
A I will reach my $50,000 goal by saving $2,000 every month from my monthly pay check.
R I have only ever owned a used car, and want to buy a new car for the first time.
T By saving $2,000 a month, I will save $50,000 in 25 months, or 2 years and 1 month.

GoalsMapping • 9
Here are four common mistakes that people 3. Failing to stick to the plan
A Holistic View of All Your Goals
make when it comes to setting their goals. You may have come up with the best
financial plan in the world, but if you
1. Setting goals that aren’t detailed enough don’t have the discipline to stick with
Your goals are not detailed enough. it, then all will be lost. This is where a
It’s not enough to say you want to live in good financial consultant can help.
a big house and drive a sports car. To A financial consultant is like a gym
know how much you need to achieve trainer who will help you follow a tough
those dreams, you have to be as specific regime. Having someone who meets
as you can when setting goals. What you regularly to help you stay on course
model of car do you want to drive? What is extremely important.
kind of home are you looking to buy? Buy Vehicle
Buy Property
And in which location? How much will 4. You’re not looking at the big picture $150,000
$1,000,000
these things cost? Only with this level of Many people focus on individual goals
detail can you come up with a financial – they want to save enough money to
plan that is realistic and workable. send their child to an Ivy League
university, or they want to buy a second Having a Child
2. Your financial plan doesn’t change home abroad. You may be able to Getting Married $200,000
along with you achieve each of these goals in isolation $50,000
Our financial situation doesn’t stay
the same throughout our lives. As
based on your income, but when you
put them together they may be Goals
Mapping
we progress in our careers or as our collectively out of your reach.
business grows, our incomes are likely
to rise. We may also get married and So if your child’s education is your top
have children. All these changes will priority, you may have to put your
affect our financial plan. As such, our holiday home on hold, or consider one
Retirement
plan has to evolve along with these in a cheaper location. Or if you want to
$1,500,000
changing circumstances. Review your drive a luxury car, then you might have
plan regularly to ensure that you are to forgo your goal of living in a landed
still on track to meet your goals, and property.
make any necessary changes if you Holidays
have veered off course. $30,000 Child’s Education
$300,000

The GoalsMapping process can offer you a holistic view of all your goals, and a
realistic plan to achieve them. Most of your life goals will revolve around money and
ensuring that you have enough of it to enjoy the quality of life that you desire. By avoiding
the mistakes above, you will have started on your journey to realising your ambitions.

10 • GoalsMapping GoalsMapping • 11
 Different Goals For
Different Folks Tom
Here’s what the financial goals of the Lims, Tans and Tom might look like.
Tom is in his late 20s and unmarried, and
seeks to upgrade his status in life and reward
himself as a hardworking professional.

Clearing liabilities
Buying a car
Starting a business
Early retirement

The Tans
The Tans are newlyweds in their early 30s
who have just bought their own home, and

The Lims are planning for their first child in a couple

of years’ time.

With both young kids and aged parents to look after, Holidays
the Lims have to be very careful about planning for the future.
Further studies
Having children
Children’s school fees
Their own retirement
Children’s university fees
Parents’ retirement
Possible upgrading of house
Their own retirement

12 • GoalsMapping GoalsMapping • 13
 2

CHAPTER
AVOIDING COMMON
MONEY MISTAKES
After having set their goals, there are some Writing down your goals will help you
pitfalls that Tom, the Tans and the Lims determine if they are realistic, or if they are
must understand before they proceed just “dreams”. That’s the difference between
with the next steps of their financial a dream and a goal. A dream is something
planning. Not understanding these you want but may not be able to get, while
concepts is very common among people a goal is something that is within your reach
who are new to financial planning, or who if you work for it. Everyone should be setting
do not have an experienced financial goals and not dreams.
consultant advising them.
Those who look at their financial goals
When it comes to financial planning, many linearly are likely to fall into one of the
people look at reaching their goals one at following three pitfalls.
a time. Taking this linear approach means
that they save enough money to reach 1. The Debt Trap
their most immediate goal, before thinking This is the biggest pitfall of all, and the one
about the next one. that Tom finds himself in. Many people
in their twenties do not plan for the long
However, it is important that you consider all term. As such, they spend most of the
your different financial goals at the same time income they receive, especially if they
to give you a better chance of achieving all are still single and do not have any
of them. It also helps you anticipate potential family commitments.
problems that you might face in the future.
However, reality suddenly sets in when
“ You must gain control over your money When asked about setting long-term goals they decide to get married, and realise that
or the lack of it will forever control you. ” many people would say, “I never really think
so far ahead. I take things as they come.” But
they need to pay for the wedding, buy a
new house and pay for the renovations - all
this is exactly why you need to start penning at about the same time. Most newlyweds
Dave Ramsey
down all your financial goals and have a are caught off guard and end up taking up
comprehensive plan to achieve them. loans to pay for these expenses.

GoalsMapping • 15
 They convince themselves that because Just like the slaves of old, a person deep 3. Lack of Time Despite these advantages, many young
they are young and energetic, they are in debt can be trapped their whole lives This is the most common pitfall. Ask people are too focused on spending in
able to easily earn the money they need trying to get free. These people have 10 people in their fifties whether they the short-term – whether its travelling to
to repay these loans. While this may be effectively lost their financial freedom wish they had started investing earlier see the world, or paying for expensive
true, these debts usually set them behind and are unable to pursue their lives the in life, and seven of them will likely give enrichment programmes for their children.
their peers by a couple of years. Those way they would wish. you a resounding “yes!”. Starting the
who are not weighed down by debt can process earlier gives you more time to This YOLO (You Only Live Once) attitude
already start planning for their children’s To avoid being enslaved by debt, start grow your money, and maximises the towards living that many young people
education, a second property or even saving as early as you can to avoid effect of compounding interest on your adopt may be fun, but in an uncertain
their retirement. having to take on debt. The best time savings. It also gives you a buffer to world where job security is no longer
to begin is when you get your first pay recover if a severe market downturn guaranteed, it can also lead to a lot of
cheque, as this marks the biggest pay slashes your retirement savings. problems in the future.
increment you are likely to get - from
earning zero to having a regular salary. Retirement
When you have just started working, $1,000,000
your expenses will take a little while to
play catch up with your income. Take If you want to retire with
advantage of this head start! $1,000,000, it will be far
easier if you start saving at
2. Overspending 30 compared to when you
This is another painful pitfall that are 50. Interest and Time
happens to those who do not plan for must work together to
all their financial goals at once, and only Retirement
deliver the best returns.
focus on reaching the first one. Many $1,000,000
will end up spending too much on
their first goal – such as splurging on a
8% Growth
wedding because they feel they have
saved enough to afford a lavish one. wth
Gro
19X 8% Growth
Take Tom as an example : They also mistakenly believe that they Age th
“He graduated with first class honours can easily build up their savings again 65 G row
$67,634 3X Age
and as a young working graduate, he to reach future goals. However, they do $315,241
is receiving a decent income for the first not realise that they were able to save 65
time in his life. Being young and reckless, as much as they did the first time
Age Age
30
his objective is to live life to the fullest. because they were still single, and
Thus, he travels almost every month to
see the world, parties every weekend and
had no major financial commitments.
50
has fallen victim to peer pressure to buy Once they buy their first homes, the
branded goods that he doesn’t really need. mortgage become a major drain on Sidestep the pitfalls with GoalsMapping
their finances. Having a child will add The linear approach to achieving your financial goals will lead you to one of the three
After working for two years, he realises to their financial burden significantly. pitfalls highlighted above. There are only two ways to overcome this problem - either you
that he has no savings and has chalked Only then does it become apparent that have a very high earning potential that allows you to afford your goals as they come,
up significant credit card bills. It will seem their ability to save is far less than what or you need to have a robust financial plan that you stick to.
to him now that no matter how long or it used to be. To avoid overspending,
hard he works he will never be able to you need to budget for all your financial As you will see in this book, the GoalsMapping process can help you to plan far in
repay his debts. He is caught in a debt trap goals, in order to be prepared for any advance to give you the best chance of reaching all your financial goals, not just the
which he needs to get out of first before obstacles that may arise. next one on the list. It is also by far the most detailed way of financial planning, and has
he can proceed to achieve his other a high chance of working if you follow the plan diligently.
financial goals in life.”
16 • GoalsMapping GoalsMapping • 17
 3

CHAPTER
MANAGING YOUR
MONEY EFFECTIVELY
Everybody wants to get rich someday and tickets, or he could take on another job on
be able to achieve all of their financial the weekends to supplement his income.
goals. Others just need to get enough Both options are fine - either you are
money to pay off their debts and get on extremely lucky or you are prepared to put
the road to financial freedom. in your time and effort in exchange for
money. However, there’s a third option
Tom, for instance, has difficulty paying that most people neglect: Tom can make
all his expenses every month because of his money work harder for him!
his high debt burden. This will prevent him
from reaching his financial goals. He could In this chapter, we will look at how you can
try his luck every week buying lottery grow your money using the concept below.

Is your money in your left pocket or right pocket?

Right Pocket Left Pocket

“ It’s not how much money you make, Rolling Savings Liquid Savings

but how hard it works for you. ” This refers to savings This refers to
that are invested for savings that are
Robert Kiyosaki the long term at a kept liquid and
higher interest rate. can be withdrawn
at any time.

GoalsMapping • 19
There are three simple steps that will help you make your money work harder for you in
order to achieve financial success.

1. Managing your Cash Flow 2. Create Two Pockets

If you want to reach your financial You may have heard of the envelope The funds in the Right Pocket should
goals, it is critical to understand the method of budgeting from a long be reserved for financial goals that will
concept of cash flow. Simply put, time ago. This involves putting your take more than 5 years to achieve.
this is the amount of money coming monthly spending budgets for different The higher returns generated in your
in versus the money going out. expenses into separate envelopes, like Rolling Savings will also help you achieve
Managing this flow properly will a food and entertainment envelope, those goals more easily.
ensure that you do not overspend a transport envelope, a household
and save enough to reach your targets. expenses envelope and a holiday 3. Allocate and Save
There’s only two ways of increasing envelope. You are only allowed to spend Once you determine how much needs
your cash flow; 1) Increase your Income what is in the envelope and cannot top to go to the Right and Left pockets, and
or 2) Reduce your Expenses. it up until your next pay check comes. which instruments to place the funds
in, the final step is to ensure that you
If you find it difficult to save because That is a great method, except that it allocate the right amounts every month
you are spending too much every only deals with the money you need to designated accounts.
month, you have to start budgeting for to spend in the envelope. How about
your expenditure. If not, you will not the money outside the envelope that is To make sure that you stick to your plan, Take the Lims as an example:
be able to achieve your goals. This meant to be saved? it is a good idea to transfer your savings “As they try to be the best parents they
is especially true if you have just started into their respective accounts on the can be, they sign their kids up for numerous
working and have little savings. At My suggestion to that: “Put it in your same day you receive your salary. This enrichment classes. Their spending
the start of your career, there is little pockets!” is to ensure that you are not tempted decisions are based simply on their
opportunity for you to increase the to spend the money before saving it! available cashflow. As they don’t plan
amount of money coming in. However, Create two different pockets for the ahead, it will always seem like they can
you can control the money going out. money you have left over after expenses. It might be helpful to have a standing afford everything they are spending on at
The Left Pocket is for Liquid Savings, or order with your bank to help you do the moment. However, if they take a longer
An important rule to follow is to save first money that you want the flexibility of the transfers every month on salary term view of their finances, they will be
then spend, instead of the other way being able to spend at any time. These day. That way you won’t have a chance able to regularly set aside a sum of money
around. When you get your monthly are usually placed in fixed deposits to touch the money before it is saved. needed to accomplish their long term
salary, start by putting money aside first. and bank savings accounts that offer And if it happens you have excess financial goals. Adopting such planning
You are then free to spend whatever low interest rates, but is low-risk and cash savings in the Left Pocket that will then influence what they spend on in
is left over. This reduces the risk of you available at any time. These funds you might not need in the short term, the present, and perhaps lead them to
over spending each month. should be used for emergencies or for you can always transfer it to your cutting back on expenses like enrichment
expenses you expect in the next 3 to 5 Right Pocket by investing it in a higher- classes. This is why it’s important to save
years, and should be easily accessible interest instrument. first then spend.”
whenever you need it.

Meanwhile, the Right Pocket is for

money that you do not need in the Taking these three simple steps will help you be better prepared for the future. Having
short term, and want to roll forward into too much cash in your Left Pocket means that your money is not working hard
the future to generate higher returns. I call enough, while having too much cash in your Right Pocket indicates that you might not
this Rolling Savings, which are usually be prepared for emergencies or be able to reach your long-term financial goals. You
invested in higher interest-bearing need to have a good balance of cash in both pockets to ensure financial success!
instruments. These can include Unit
Trusts, Exchange Traded Funds, Insurance As such, it’s not just about budgeting for expenses but also making your money
Endowment Plans or even higher-risk work for you.
investments like stocks or bonds.
20 • GoalsMapping GoalsMapping • 21
 Getting The Cash Flowing
Using the concepts highlighted above, this is an example of how the
Lims could set up their finances in place to help themselves plan better
for their financial future.

Salary
LIQUID ROLLING
SAVINGS SAVINGS

1% 4% to 8%
Growth Growth
Rate LIVING Rate
EXPENSES
Left Right
Pocket Pocket
Medium to
Long Term Goals
Short Term Goals

1% 4% to 8%

3 to 5 years 10 to 30 years

It’s better to keep your short-term savings in a liquid Invest funds meant for longer-term use in higher
instrument that may offer lower interest rates. interests savings or investment instruments.

22 • GoalsMapping GoalsMapping • 23
 4

CHAPTER
THE COMPOUNDING EFFECT
OF INTEREST
In this chapter, we explore ways of generating use it to achieve financial success, so that
sufficient returns from your savings, which we wouldn’t have to work anymore. While
is an important aspect of reaching your magic wands like the kind Harry Potter
financial goals. Essentially, this is related to uses don’t really exist, there is something
what you need to do with the money in your similar that can make a big difference to
Right Pocket, which we talked about in the your financial situation. The wand I’m
previous chapter. talking about looks like this: “%”, and is called
interest; and in order to cast a spell using it,
Let’s take the Tans as an example. They feel you have to say the magic word: “Time”.
that they are very careful with their money.
They set aside $1,000 every month, which When you put interest and time together, you
is 10% of their total income, and have a conjure up a spell called “compounding”,
strict budget for spending. They also buy which will help you grow your money at
sufficient insurance to cover any medical an exponential rate and bring you closer
emergencies for their family members, and to your financial goals. Albert Einstein once
feel that they have set realistic goals. said, “Compound interest is the eighth
wonder of the world. He who understands it,
Yet, after calculating how much they will earns it... He who doesn’t, pays it.”
need to reach their financial goals, the Tans
are surprised to learn from their financial To get the most out of this magical spell
consultant that what they are currently called compounding, you need start
saving is not enough to fill their right and left investing your excess funds as early as
pockets (see previous chapter). you can. Here are three important tips to
follow if you want to use compounding
This is mainly because they are not interest to your advantage.
“ Twenty years from now you will be more generating high enough returns from their
disappointed by the things that you didn’t savings. Wouldn’t it be great if the Tans had
a magic wand they could just wave and
1. Time is your Ally
You can’t get what you want using the
do than by the ones you did do. ” get the returns they desired? interest “wand” alone. It has to be given
time to work its magic. If you set aside
Mark Twain If you could only use the wand once, what $100 for 20 years earning an interest
spell would you cast? Most of us would rate of 10% per annum, your initial
GoalsMapping • 25
 investment would grow to $672 at the end 2. Close your Eyes Doing this will reverse the compounding Firstly, many of us hear of investors
of the period. But if you decided to take There is one key reason why people spell you have cast and make it harder boasting about how they have made
the money out after 10 years, your capital lose money when they invest: they panic to achieve your financial goals. The a lot of money with such short-term
would only have grown to $259. when the market crashes and sell off trick is, then, to close your eyes after you trading strategies. They shout about
their investments at a loss. With proper have waved your wand and don’t open it on social media or on their own
Doubling the number of years that financial planning this can be avoided, them till the spell has done its work. blogs. Some even write books about
your investment compounds increases because your funds for investments it. So we start to believe that it must
its growth from 2.5 times to 6.7 times. would have been allocated for the long In March 2000, the Nasdaq stock be easy to profit from trading because
This exponential growth is why staying term. This means you will not sell even if exchange index climbed to a peak of that’s what everyone is saying. But
invested for longer is important. there is a big drop in the market. 5,133 points, before plunging almost you only hear about these victories
80 per cent in the next 30 months. because no one ever shouts about
As such, you need to start investing as Most people understand the need to Those who sold during this period would how they lost all their savings
early as you can and be patient. This stay invested for the long term whether have made heavy losses. However, the speculating on the market!
will help you maximise your returns. So the market goes up or down. market recovered after that and today
once you have set aside your money Unfortunately we are also swayed by the index stands at almost 7,000 points. Another reason why some people
for long-term investments, don’t touch emotions, which means some of us believe trading is a sure thing is due to
it until you really need it; such as for will panic when there is a market More recently in 2008, global markets a concept known as “recency”. If you
your retirement. To do this effectively, downturn or high volatility. Most crashed after the collapse of U.S have just started to invest and the past
it is essential that you come up with people’s first reaction when the market investment bank Lehman Brothers few years has been a bull market,
a proper financial plan before you crashes is: “I need to sell now and cut sparked the Global Financial Crisis. The you will think that markets will always
start investing. my losses!” S&P 500 stock index fell some 46 per go up because that has been your
cent from September 2008 to March experience. But more experienced
2009. Those who did not panic and investors will know that it doesn’t
held on to their investments would always work this way. Markets also
have profited handsomely. The S&P go through bad patches, such as
surpassed its all-time high six years following the Lehman Brothers collapse
later and went on to register one of in 2008.
the longest bull runs in history.
As such, trying to time the market to
3. Don’t be Greedy make a quick buck is very risky. So the
Investment markets are volatile and last tip when using the magic wand is
the market gurus will always tell you to not to be greedy. Only set aside money
take advantage of market movements for investments that you want to grow
to buy low and sell high. Many people for the long term. Then, let those
listen to this advice because of greed. investments do their work regardless
They want to plough all their money of what happens to the market in
into timing the market to maximise the short-term. Do not speculate
their profits quickly. People end up with with money you can’t afford to lose.
the false impression that it is easy to Remember, patience is critical when it
make money from short-term trading comes to investing.
for two main reasons.

As you can see, time is the most important factor in growing your money. However, you
also need to set aside savings for your short term goals and emergencies. To effectively
balance short-term needs with long-term savings, you need to map out your financial
goals first, and then allocate your savings to the right goals.

26 • GoalsMapping GoalsMapping • 27
 With a total investment of $240,000 over 20 years

MONTHLY TIME INTERESTS RETIREMENT TOTAL

SAVINGS FRAME P.A. NEST EGG GROWTH

$1,000 20 yrs 1% $265,561 10.7%

Waving the Magic Wand of Interest

$1,000 20 yrs 2% $294,796 22.9%
The Tans need to generate higher
returns from their investments if
they want to attain their financial
goals. This is how much more
they could have earned by simply
$1,000 20 yrs 4% $366,774 52.8%
switching to a higher yielding
instrument, with little added risk.

$1,000 20 yrs 8% $589,020 145.4%

An investment with higher interest rate can yield

significantly higher returns over time.

28 • GoalsMapping GoalsMapping • 29
 5

CHAPTER
CHOOSING THE
RIGHT INVESTMENTS
In the last chapter, we spoke about the There is no such thing as a free lunch when
“Magic Wand” of interest that can help it comes to investing your money. As an
you attain financial freedom faster. In this investor, what you need to do is strike the
chapter, we will talk about how to choose right balance of risk, return and liquidity in
the right investments to help you reach order to grow your assets over time. Here
your financial goals. are three key considerations when deciding
what investments to put your money in.
Ask anyone what they want in an investment
and they are likely to tell you: “Low risk, 1. Measuring risk correctly
high liquidity and maximum returns”. But if One common investing mistake is to
someone actually offers you an investment measure risk by the probability of a
like that, my suggestion is that you run the negative event happening. A better
other way as fast as you can, because measure of risk is the extent of “damage”
chances are it’s a scam. a negative event can cause if it happens,
and not the probability of whether that
Many investors fall into the trap of following event will actually happen.
what others are doing, even if it does
not make sense. This herd mentality is Let’s take bungee jumping as an example.
what causes a lot of people to make bad Between 1986 and 2002, only 18 reported
financial decisions. What drives the herd fatalities have resulted from this activity.
instinct is often the fear of missing out on The chances of having an accident from
what appears to be a profitable investment bungee jumping is 1:500,000.
idea. This is what happened during the Dot
“ How many millionaires do you know Com stock bubble of the late 1990s and Based on these statistics, would you classify
who have become wealthy by investing early 2000s, when people simply piled into
tech stocks even though the fundamentals
bungee-jumping as low-risk? Practically,
we measure risk by the potential damage
in savings accounts? I rest my case. ” did not justify the valuations of these that can happen to the bungee jumper
companies. Why did they do it? Because if something goes wrong (which in this
Robert G. Allen everyone else was. case would probably be death), thus

GoalsMapping • 31
 we would definitely consider bungee- losing money if need to withdraw 3. Adopting the right liquidity mindset
jumping as a high-risk sport. your money at short notice. Many people want their investments to even increase their investments, during
be highly liquid. While this may not be market downturns. Adopting the right
The same applies to investing. The low Instead, you should invest only your an unreasonable request, it does mindset towards liquidity is important
probability of a blue chip stock going medium to long-term savings for higher indicate that such people may not be when it comes to achieving your
bust doesn’t mean that it is a low risk risk investments like bonds and stocks. long-term investors. They want the financial goals.
investment. Rather you should consider As these risky investments have a higher option of withdrawing their money at
how this event would impact your chance of declining in value in the short short notice, even if this means making Let’s say you have savings that you
finances. With this in mind, the only way term, they should be held for a longer a loss. need in the medium term, you should
to mitigate your investment risk is not period to give them time to recover in the consider an investment vehicle that is
to pick a stock or bond that you feel event of a market correction. After all, More often than not, these are the both low-risk and liquid. If you do not
confident about, but rather to diversify history has shown that what goes down ones who stop contributing to their need the savings in the medium term,
your assets so that in the event that you tends to go up, eventually. To compensate investments, and withdraw their capital then putting it into a longer-term
make 10 wrong choices, you have another you for taking more risk, however, these at a loss when there’s a huge market investment with higher risk is acceptable.
10 right ones to lessen the impact. investments should also potentially offer correction. In contrast, the people who For such long-term investments, liquidity
the highest returns in the long term, actually benefit from market corrections is no longer a consideration as you do
This is also true in the case of property compared to other types of investments. are the ones who continue to hold, and not need the money in the short term.
investments. If you choose to invest in
a property because you think its price Getting the Right Mix of Investments
will rise significantly and plough your The Lims have a mix of medium-term and Typical Portfolio
life savings into it, this is very risky. long-term financial goals they need to save Short/Medium Term Long Term
for. In the medium-term they are looking
Another way to measure your risk
exposure is to calculate the value of your
to upgrade to a bigger house, while in the
longer term they need to save enough for
2% to 4% 4% to 8%
investments relative to your total net their children’s university education and
worth. Let’s say your total net worth is their retirement.
BONDS
$1,000,000 and 80% of that is invested
60% EQUITIES
into shares. That would make you
extremely susceptible to losses during a
To meet these goals, this is what their
portfolio of investments might look like: EQUITIES 80%
huge stock market correction.

2. Identifying the time frame for your

20% CASH BONDS
investments
While we seek diversification to mitigate
20 %
20%
the risk in our investments, we must also
be aware of the important role that time
plays in choosing the right instruments.
Thus, the first step in deciding what to
invest in will depend on what you need LOW RISK HIGH RISK
Lower returns, more liquidity Higer returns
the money for.
The above portfolios are for illustrative purposes only and not meant as investment advice.
For instance, if you need funds in the Please speak with a professional financial adviser for recommendations regarding your investment portfolio.
near future, avoid high-risk investments
that have a high chance of losing money
over the short term. In fact, the savings From these considerations, it becomes clear why GoalsMapping is an effective
you need in the short term should always approach to help you understand your financial goals and set up a systematic way
be kept in liquid and low risk instruments, to achieve them. By going through the process, it becomes easier for you to decide
like bank savings and fixed deposits. what instruments you should consider for your investment portfolio.
This will reduce the chance of you
32 • GoalsMapping GoalsMapping • 33
 6

CHAPTER
LEARNING THE RIGHT WAY
TO USE DEBT
Having a huge amount of debt forces come up. This could be starting or investing
you to be a slave to your money. Bogged in a business, or taking a sabbatical from
down with repayments, you will not be your job to avoid burn-out. You will be
able to achieve what you want in life. unable to pursue such opportunities if
What’s more, the possibility of you losing your money is tied up paying off loans.
your job – and hence be unable to service
your debts – will constantly weigh on your Having said that, is there a situation when
mind. In this chapter, we will look at how taking on debt makes sense? The answer
proper financial planning can help you is a resounding “Yes!”. There is a positive
avoid taking up excessive debt. side of debt known as leverage. One good
example of leverage is when you buy
There is a psychological aspect to a property.
borrowing money that you must be aware
of. When you fund a goal through debt for Say you pay a 20% down payment for a
the first time, it gives you a false sense of $1 million property (which works out
confidence that you can keep borrowing to $200,000 in cash) and borrow the
money to achieve your future goals. This remaining 80% (or $800,000). If your
is especially true for younger people like property’s value increases by 20% to
Tom, who believe that they have their $1.2 million, your actual gain from this
whole career ahead of them to earn the investment is almost 100%, because you
money they need to repay their loans. had only used $200,000 of your own cash.
(Do note that you have to take into
However, as your debt level builds up, account other costs like stamp duty
“ Every time you borrow money, you will soon realise that this is not a and interests expenses to arrive at your
you’re robbing your future self. ” sustainable way of managing your money.
At some point, most of your income will
net gain).

Nathan W. Morris go towards servicing your borrowings So in this case, borrowing the $800,000 to
rather than chasing your dreams and goals. help finance the purchase of the property
makes sense because you are able to
Being free of debt also means being able to make a profit that you would not have
take advantage of opportunities when they been able to if you didn’t take on this debt.

GoalsMapping • 35
So how do you decide if you are in a debt is higher than the interest that the Know Your Debt
trap or if you are leveraging effectively? investment is offering. This is the list of loans that Tom has taken on. Can you tell which is good and which is bad?
To help you along, here are three golden Which are the ones he should pay off first?
rules to ensure you leverage effectively In most cases, you will usually not
with good debt and stay away from pay off your home loan early even if you
harmful bad debt. have excess cash as the interest rate is
low, and you should be able to invest
1. Never borrow money to spend it on the money in a security that can give you
something that you can live without a higher return. Which loan should he clear first?
Before you consider a debt option, explore
other alternatives first. Do you really Do take note also that if the interest
need the item that you are borrowing rate on a loan goes up (for example,
money to purchase? If it’s not that if it is based on a floating rate), a Good
urgent, it is probably better to save up Debt can become a Bad Debt. LOAN LOAN TOTAL
for it and avoid taking a loan. INTERESTS TERM
AMOUNT TYPE REPAYMENT
3. The asset you purchase should have a
2. Differentiate between Good Debt and good chance of appreciating in value
Bad Debt Leveraging only works if the asset you
Study
Good and Bad Debt is differentiated
by what your savings is doing for you.
are buying with borrowed funds goes up
in value. A smart investor only borrows
$30,000 Loan 4.5% 5 yrs $33,557.40
Let’s say you keep all your money in if they can make enough returns to
a normal savings account at an interest more than cover the loan and interest
rate of 0.05% per annum (p.a.). Any payments; leaving them with a profit.
Personal
debt that has an interest rate higher
than 0.05% p.a. is considered a Bad However, you need to be mindful that
$40,000 Loan 6% 5 yrs $46,398.60
Debt. However, if you have invested there is no such thing as a sure gain
your money into a dividend portfolio investment, and there is always a
that pays 4% p.a., taking a loan that risk that the asset doesn’t appreciate Mortgage
charges 2% p.a. can be considered
to be a Good Debt.
in value. $300,000 Loan 2.5% 20 yrs $381,530.40
Higher risk investments have the
To put it another way; assume you have potential to offer high returns, but the
Credit
$100,000 in excess cash and you can
choose to either clear an outstanding
opposite can also hold true. The higher
risk means there is a greater chance
$20,000 Card 24% 3 yrs $28,247.76
loan or to invest the funds. Following that you might make a loss. As such,
the concept of Good Debt, Bad Debt, you have to be careful in selecting the
you will only pay off the loan if the assets that you are leveraging to
interest rate you are being charged invest in. Clear the debt with the highest interest rate.

36 • GoalsMapping GoalsMapping • 37
 7

CHAPTER
DON’T FORGET ABOUT
INSURANCE
Imagine that you woke up one morning Most of us understand the importance
and found your house on fire. If you only of insurance as a form of protection,
had enough time to grab one of these whether against death, illness or medical
three things before you ran out of the emergencies. The question here is why
house, which would you pick? are there still so many people who are
reluctant to buy this protection.
1. A briefcase containing $100,000 in cash
There are usually three key reasons why
2. A bag of golden eggs worth $200,000 people find it so hard to comprehend the
importance of insurance.
3. A goose that lays golden eggs
1. We believe that nothing bad will ever
You’ve probably heard some version of happen to us
this story before. And chances are, you Nobody likes to imagine that bad
would choose to escape the burning things will happen to them. Instead,
house with the goose. The moral of this we convince ourselves that if we lead
story is the thing that will continue to a healthy lifestyle by exercising regularly
make you more money over the long and eating a balanced diet, we will not
term is the most precious. fall sick.

To put it another way, losing your family’s However, disability and illness can strike
sole breadwinner will be far more anyone randomly, regardless of how
devastating than say, losing thousands healthy or fit they are. For instance, just
“ If a child, a spouse, a life partner, or a of dollars on an investment. The because you don’t smoke doesn’t mean
parent depends on you and your income, investment loss is a one-time affair,
but losing the breadwinner jeopardises
you are immune from getting lung cancer.

you need life insurance. ” your family’s long-term financial future.

Suze Orman

GoalsMapping • 39
 Insurance protects the people around
If you are the family’s main breadwinner,
covering yourself in the event of a
and benefits of a particular model
before deciding to purchase it. However,
you during rainy days. It’s better to have
premature death is not a luxury, but this is not possible with insurance, as this umbrella when your family needs it.
rather an act of responsibility. While the you will not be able to “enjoy” the
risk of premature death might be benefits of the cash that is paid out by
extremely low, you still want the peace the policy until something happens.
of mind that your loved ones will be
financially supported if it does happen. That’s why most people only start
thinking about insurance when
2. There’s no point in buying anything something unfortunate happens to a
that we do not intend to use friend or loved one, and start to look
Would you ever buy a car and not ever for options to protect themselves
drive it? It’s perfectly understandable from the same thing happening.
that we would only spend money on
the things that we intend to use. The Importance of Protection
The Tans have not factored in insurance
However, the logic behind insurance into their financial planning. As it does
is that we are paying for something not generate much returns, they don’t
that we hope we will never have to use. see the benefit of it in helping them
That increases our resistance towards reach their financial goals. As they are
getting a policy. The truth is, insurance still young and healthy, they also don’t
is meant to be useless until you need foresee having a use for it. However,
it. If you don’t buy it now, you won’t have just one emergency can wipe out their
a chance to do so when it eventually savings. By using insurance, they only
becomes something extremely useful. need to use a small portion of their
income to cover for the potential loss of
3. We are not able to see, feel or touch the income for many years.
benefits of insurance
When you want to buy a mobile phone,
you can physically observe the features

GoalsMapping can help you visualise the impact of unfortunate events and how it
impacts their families. This helps people to see the importance of protection and get
them started on the journey of life insurance as early as possible.

40 • GoalsMapping GoalsMapping • 41
 8

CHAPTER
GOALSMAPPING:
PUTTING IT ALL TOGETHER
In the previous chapters we have touched cash flow effectively, take advantage of
on the various key aspects of financial the compounding effect of interest, find
planning and how GoalsMapping can the right balance of risk and returns, and
help you in each area. In this final chapter, have adequate insurance coverage so your
we will put together everything we have plans are not derailed by an emergency.
learnt so far to map out your road to
financial success! It is important to understand that all your
goals are connected, as you only have a
The most essential part of the journey limited amount of financial resources to
starts with setting the right financial goals. achieve them. If you must own a big car,
As with most important ventures in life, then you might have to settle for a smaller
planning is key to success. When it comes house, for instance. Likewise, if you plan to
to managing your money, planning at the send your kids overseas to study, then you
very beginning of the process is critical might have to do without a car. Hence, it is
because the goals that you choose will be important to take the time to put together
the basis for the whole financial planning a holistic plan of your financial goals. Only
process. What assets you decide to invest then can you start with the rest of the
in and the specific products you eventually journey. If you have a family, it is important
buy will be determined by those goals that you do this together with your spouse.
- whether it’s how much you need for
retirement or at what age you hope to Here are the steps needed to effectively
retire at. use GoalsMapping:

“ It takes as much energy The GoalsMapping process aims to align 1. Identify your financial resources
to wish as it does to plan. ” your savings and cash flow with the goals
you want to achieve. It will involve all
Whether you are the Tans, Lims or Tom,
everyone’s financial situation is different.
Eleanor Roosevelt the steps of the financial planning process Income potential and spending habits
that we have explored in the earlier differ from one person to another. So
chapters. You will need to have a clear vision the first step is to calculate and identify
of what your goals are, manage your what your available financial resources

GoalsMapping • 43
 are. This will help you determine it, or find alternatives to help you achieve jeopardising your lifestyle today or your well prepared and are able to withstand
exactly how much can you save every this goal. That said, as your income short-term goals. the impact.
year towards reaching your long- and ability to save changes, your
term financial goals. financial goals can change accordingly 4. Use the power of compounding to 6. Follow through with your Plan
too. That’s the reason why it’s important your advantage Coming up with a good plan is key to
The aim of this step is to find out to review your goals every year. Once you have completed the allocation, successfully managing your finances,
how much funds you can realistically you will realise that keeping your savings but it is only a starting point. Carrying
allocate for the future. If you already 3. Identify the shortfall to reach your long in the bank will not get you very far out the plan and making sure you stick
have some existing investment assets term goals towards achieving your goals. And to it to the end is just as critical. It is easy
that can be used to achieve your goals, After you have identified your financial if you can’t make adjustments to the to plan, but taking action is the more
do list them down separately. During resources and mapped out all your time frame to achieve these goals, challenging task. Most of us may not
this phase, you can also identify areas financial goals, the next step is to or cut your expenses any further, the have the discipline to stay on track. It is
where you can cut down on your identify the shortfall to reach your long- only thing you can do is to increase very important that you regularly review
spending in order to save more money term goals. the returns that you receive from your plan with your financial consultant
for the future. your investments. This step requires as your financial situation changes.
The idea here is to plan for all your you to find the right investment
2. Map out your financial goals financial goals simultaneously instead instruments to grow your savings to the Just as a gym trainer would remind
Goals is at the heart of this process. of one at a time. After you have desired level within the timeframe set. you to keep up with the required
Most importantly, you have to put a calculated the shortfall, it’s time to number of repetitions of a particular
price to each of the goals that you allocate a portion of your surplus to 5. Test the resilience of your plan in the exercise, a financial consultant’s job is
want to achieve in life. You should start your future. As you start allocating, you event of emergencies to ensure that you remain committed
writing down the goals in chronological should also look at your existing Once you have completed the process, to saving for your financial goals.
order, starting from the nearest one. investments and decide when you the last step is to test if your plan is Having these regular checks will help
As you write down each goal, check if would like to liquidate them to help you resilient enough to cope with different you to stay on track and not veer too
it’s within your means by looking at reach your goals. types of scenarios. For example, in the much from your original plan. And if you
your available financial resources. event of retrenchment or disability, do do have to deviate from the plan due
You will realise that it’s much harder to you have enough emergency funds to unforeseen circumstances, checking
The rule is that you have to plan your achieve your goals if you take a linear or insurance coverage to cover your on your financial goals will help you
goals based on affordability and your approach to financial planning, as expenses? Test it out and ensure that to understand what else you have to do
current financial circumstances. For you might end up overspending on an whatever life throws at you, you are to get back on the right path.
instance, if your financial resources are earlier goal, and hence not be able to
not sufficient for you to buy a landed achieve the next one. However, with
property in the next three years, then a complete picture of all your financial Whatever your situation is, following the process laid out in this book will help you
you should either extend the timeframe, goals, you can allocate the right amount take a big step towards realising all your financial goals – whether its buying a new
reduce the amount of cash needed for for your long-term goals, without house or saving for retirement. All the best to your GoalsMapping journey today!
And have fun planning for your future!

44 • GoalsMapping GoalsMapping • 45
NOTES