Don’t let recession ruin your financial plan

How to Recession-Proof your Savings

As the long-awaited end of the pandemic draws nigh, ‘normal life’ edges ever closer but nobody knows if the economy will follow. With personal finances on the line, many regard market uncertainties with trepidation, watchful for signs of hope that their savings will withstand the times. Floundering economy or otherwise, here’s where foresight can win you precious financial security in every climate.

What does financial security mean nowadays?

Financial security is more than just about the numbers, but a matter of confidence in being able to afford your lifestyle, regardless of circumstance. In general, a secure savings strategy should comprise assets of varying exposure, some of which intended to maximise your upside potential – meaning to increase the chances of a growth in value. Others should minimise your downside risk, curbing losses through guaranteed capital and protection. In such overcast weather, the latter can deliver the assurance that your savings and the lives of all who depend on you are secure.

Here’s what we mean.

Purchase safe haven assets

Safe haven assets refer to securities that can retain or grow in value during times of economic instability. A notable example is gold, being that its value is independent of any government or currency. Defensive stocks – issued by companies providing essential products and services like healthcare and utilities – may also perform better in times of catastrophe than most other securities. Naturally, these assets do not promise immunity from disaster, but can add helpful diversity to your portfolio in a challenging financial climate.

Maintain a robust emergency fund

A healthy emergency fund should be among your key defenses in an economic downturn. These savings are meant to bolster the impact of unexpected events on your finances, such as retrenchment, while giving you and your loved ones enough time to find your footing again. As a general rule, your emergency savings should be equal to between 3 and 6 months of your income, in cash or with otherwise high liquidity.

ELASTIQ, a whole life insurance savings plan at Tiq by Etiqa Insurance, offers secure and flexible insurance savings with top-ups anytime and withdrawals without penalty after just 90 days. This attractive option helps you grow your savings with a high guaranteed crediting rate, while creating separation between your emergency fund and other savings. Such separation can enforce financial discipline crucial to an exhaustive financial plan.

Trust in fixed deposits

In a thriving economy, fixed deposits may not seem a worthwhile allocation of your funds, but the perspective shifts in times of crisis. The returns on fixed deposits, while conservative in broader comparisons, offer welcome assurance of stable profit in moments where other securities are performing worse or even incurring losses. Contrary to popular belief, you can withdraw money from a fixed deposit. Although this can mean earning less interest and taking on additional risk, the additional source of liquidity can help you keep your head above rising waters.

Insurance savings plans

Besides ELASTIQ, the market offers other insurance savings options to help you reach both long- and short-term goals. Many insurance savings plans guarantee your capital at maturity along with other benefits, potentially including guaranteed and non-guaranteed bonuses. When saving with life goals in mind, choose a plan that matures in time for you to meet each milestone.

For instance, Tiq 3-Year Endowment Plan matures in just 3 years with a single premium payment, and guarantees maturity returns at a high crediting rate of 2.10% p.a. Meanwhile, plan for the more distant future with the help of plans like eEASY save V, promising higher guaranteed returns of 2.68% p.a. for the first 6 years. There’s something for everyone.

Similar to fixed deposits, insurance savings plans that guarantee returns serve as firm foundations in turbulent times and can keep your financial plan intact and progressing healthily, no matter the uncertainty. This goes double when it comes to saving for your children’s education or your retirement – there can be no compromise and only the most steadfast of savings strategies will do.

Stay vigilant

Now nearly in the wake of COVID-19, it seems impossible that anyone could foresee the destruction this global catastrophe would bring. It is at times like these that those prepared for the worst nonetheless enjoy peace of mind, just as you will with a portfolio built to endure. For the present, our hearts go out to a world recovering slowly from disaster, with the poignant lessons of yesterday and hope for a better tomorrow.

End

Information is accurate as at 12 May 2020. This policy is underwritten by Etiqa Insurance Pte. Ltd. (Company Reg. No. 201331905K). Protected up to specified limits by SDIC. As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid. You should seek advice from a financial adviser before deciding to purchase the policy. If you choose not to seek advice, you should consider if the policy is suitable for you. This advertisement has not been reviewed by the Monetary Authority of Singapore.

Tiq by Etiqa Insurance Pte. Ltd.

A digital insurance channel that embraces changes to provide simple and convenient protection, Tiq’s mission is to make insurance transparent and accessible, inspiring you today to be prepared for life’s surprises and inevitabilities, while empowering you to “Live Unlimited” and take control of your tomorrow.

With a shared vision to change the paradigm of insurance and reshape customer experience, Etiqa created the strong foundation for Tiq. Because life never stops changing, Etiqa never stops progressing. A licensed life and general insurance company registered in the Republic of Singapore and regulated by the Monetary Authority of Singapore, Etiqa is governed by the Insurance Act and has been providing insurance solutions since 1961. It is 69% owned by Maybank, Southeast Asia’s fourth largest banking group, with more than 22 million customers in 20 countries; and 31% owned by Ageas, an international insurance group with 33 million customers across 16 countries.

Discover the full range of Tiq online insurance plans here.