It’s no secret that our investment and insurance portfolio needs to grow as we do. Every time our life changes—a new home, a family, aging, career changes—they all impact what our portfolio should look like. But as we get busy with our changing lives, we often lose track of updating our portfolios as our needs change. Here are 5 common portfolio gaps that are most common in Asia:
GAP 1: THE LIQUIDITY GAP
This is the simplest gap of all, and the one that often gets overlooked as people seek to diversify and aggressively create passive income streams or chase other opportunities. No matter what life stage you’re in, you need a significant pool of liquidity to pull from. This can be to respond to negative events, or even to strike when opportunity suddenly becomes available. Many don’t have the liquidity needed, and miss out on things as a result.
GAP 2: THE REAL ESTATE GAP
Real-estate may not be the ‘gap’ per se, but it is an apt title for this section. As the value and attractiveness of holding property in Asia cannot be understated, investors flock to new properties whenever they have a chance. However, trends do show that compared to many markets in the world, investors in Asia are much more likely to be over-invested in real-estate. Given the challenges of creating liquidity from property, we recommend seeking balance to allow you to quickly react to market or even life changes if needed.
GAP 3: THE CRITICAL ILLNESS GAP
In Asia, there is a big problem when it comes to critical illness insurance. Even in a first-rate city like Singapore, the average person is under-insured by around 80%. So should they encounter a critical illness, they will be only able to pay 20% of the bill.
GAP 4: THE RETIREMENT GAP
Asians face a unique problem that is somewhat paradoxical in nature. You see, people in Asia live longer than almost anywhere in the world. The downside? You’ll probably have to plan for more retirement years than people anywhere else in the world, too. Which means many tend to underestimate their retirement needs. People can consider investments such as target-date funds for retirement that unlock as you reach particular ages to provide you with the funds needed for a comfortable golden years.
GAP 5: THE KNOWLEDGE GAP
The most important financial gap is not the one in your bank account or wallet but in the one behind the ears. Many people take financial advice from friends, family members or things they hear at work. And it’s fine to hear that advice. But you need to be armed with your own portfolio of financial knowledge to help you understand, evaluate and decide whether or not to act on that advice. The best way you can start your knowledge journey is by talking to an expert.
We know it’s not easy to talk about money, and investments. But it’s important.
An AIA Philippines Financial Advisor like me are here to help you simplify things, think about what you want to do next, and identify areas to improve your portfolio by closing some of those financial gaps.
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