There is a formula for success, and once you have discovered it, it’s only natural to double down on it. Weeks become months and months become years. The more successful you become, the more money you accumulate. “As long as I make more money than I can spend, I will be in the black, I’m good! ”
For the very few, you are on the bullet train of life, moving from a better standard of living to a better quality of life. You start to measure things differently, and time becomes your new currency.
And because time is now the new currency, you start to value it and pour meaningful experiences into your time, accelerating the passage of time even more.
Akin to being a passenger on a speeding bullet train, the scenery at a distance might not appear to be moving much, but if you look at what is just out the window, things are simply zooming past. One person might have a few bullet trains to manage, from one’s own professional life, personal life, children, health, spirituality and so on. It’s very challenging for a person to manage multiple bullet trains while being on one of them.
That’s why trains are not managed from trains, they are managed from the control station. Professionals who are trained and committed to ensuring that all the trains move at their optimal speeds while ensuring that the trains call on the stations on time.
Like how the speed of the train blurs what is in the foreground, successful people are victims of blind spots that are caused by the velocity of their lives. In this piece, we hope to enlighten you on some of the common blind spots successful people fail to see when they are tied up with growing their careers or businesses.
Properties as Inheritance. One for Each.
While many of us never had the privilege of receiving valuable real estate as inheritance, we feel a sense of achievement when we are able to bequeath our children properties of their own.
However, there are a few potential train derailments in the internal narrative successful people have. The properties are often valued differently and are in different locations. Properties are one of the most non-liquid investments and are tied intimately to the economy. Your children might not be able to live in those properties. The allocation of the properties might not suit their needs or the needs of their spouses. They might not realize the financial value of the properties or the rental value due to a lack of expertise. This gift may even pose an obstacle when it comes to purchasing their next "Cinderella" property which they have always wanted.
Furthermore, owning more property would mean your child needs to pay additional taxes on their subsequent properties. 17% on the second property and 25% on the third and beyond.
It’s important to look at your investment portfolio holistically as you develop your forward strategy.
The government will distribute my assets fairly. Imagination vs Reality.
When it comes to inheritance, there is always a plan. It’s either, our plan or someone else’s plan. In the absence of a written will, there is a process where your estate will be distributed to your beneficiaries. As most of us only have one opportunity to distribute our assets posthumously, we might not be familiar with how the distribution will play out once we have let go of the steering wheel.
We are all familiar with the story of Cinderella. Despite being born into a wealthy family with two loving parents, she ended up a penniless servant to her stepmother and stepsisters. Why? When her mother passed on, Cinderella’s mother’s share of the estate went to her father. And when he remarried, her stepmother now had a legal claim to the estate. Once Cinderalla’s biological father passed away, her stepmother inherited the entire estate, bypassing her completely. This entire process is legal and is according to the “default” distribution plan.
It's worthwhile to speak to an estate planning specialist who is equipped with the right knowledge to guide you through the various permutations, specifically to suit your specific circumstance and dynamic.
Most people are alright to have their spouse claim their estate, but that would also mean that the next person the surviving spouse marries will have a claim to it as well.
Now that is a blind spot that most successful people who are moving too quickly through life might miss.
Term policies have the best leverage. Living under an Umbrella. (Blind Optimism)
Umbrellas are great when you are out in the open and there is a sudden downpour, and you need to get somewhere nearby on foot.
Term policies are cheaper and offer policyholders a way to enjoy a bigger bang for their buck, dollar to coverage wise. However, there is one important assumption. The assumption is that the policyholder will be able to service the premium until the point where they need to make a claim.
Term policies are great for your younger years when you have children and you are taking risks to establish yourself. During those short years where you have more obligations and not so many resources to cover all the bases, term policies are a lifesaver.
But, how many of us would like to be paying monthly term policy premiums at 70 or 80 years old? During those years, we might already have stopped generating an active income, and the chance that we might have a lapsed payment increases. One missed payment could render all the decades of term policy payments to nought.
Why rent a policy when you can own one? Once you are done paying the premium, the coverage will extend indefinitely, and in some cases, you are even able to pass down the payout as part of your estate.
You seek protection from the elements under a roof that you own, instead of living under an umbrella. Use the right tool, for the right job.
It’s okay to not know where to start
Everyone has their area of speciality. A doctor specialises in saving lives, a chef prepares delicious meals and the right financial advisor will represent your interest and help you see your potential financial planning blind spots.
You keep your focus on your winning formula of success and let the right advisor help you make your money work harder and better for you. With early measures taken to manage your wealth sans blind spots, your lifetime of success will be protected and your legacy secured.
A bullet train cannot be controlled autonomously simply because it is going way too fast and the faster it travels, the blurrier the surrounding appears. Hence these trains require a train controller that ensures the train arrives in the right locations efficiently, and on time. Just like how we may be too occupied with our occupations, it is understandable for you to have less time to manage, or much less understand how you can efficiently have your money outwork you. Leave it to the professionals. We too, should have a train controller that can direct multiple bullet trains, in this case our finances, to their allocated destinations with no disruptions.
The success wealth blindspot is a concept that simplifies the complexity of financial planning and clarifies the common misconceptions that most people perceive of the so-called ‘ideal wealth management’ that created blindspots. In the process of cleaning up a garden, missing out a single bunch of weeds can significantly affect the growth rate of the other plants and nutrients it absorbs until the weed is removed. Similarly as to how you may miss out certain key areas that can affect your finances, hire a professional finance advisor to save the trouble. Have them help you amend the gaps and to have the wealth you have worked so hard for to work, if not harder for you.
Objectively, what we aim to achieve is to have our accumulated wealth work harder for you and cover all necessary areas that lead to a secured,stable and happy future for your family. Hence a successful wealth management can be measured according to three categories. Having a good balance of Accumulation, Reservation and Distribution.
Owning many properties benefits my children’s future
Properties are seen as a good form of investment as it provides a good cash flow from rentals every month. But is having your child inheriting these properties in the future going to give them the same, if not more benefits?
Theoretically, carnivorous lions can still eat vegetables but the problem is that they cannot thrive on vegetables. It restricts them from having the optimal nutrients they require to catch other prey. Passing your properties to your children is like handing a bowl of salad to a lion. Properties have low illiquidity, which means you cannot directly receive cash to buy your meals. Furthermore, owning a property would be equivalent to your child needing to pay additional taxes for their subsequent properties. 17% for the second property and 25% for the subsequent others.
Inheritance is a conversation that needs to be discussed with your benefactors.
- Are they suitable for their needs?
- Would a more liquid asset be preferred?
- How will the property be managed in the long term?
If such questions are not properly clarified, passing down your assets will not provide benefits but fuel future problems between family members. Which links to the next common blindspot.
My assets will be distributed equally to my family by default
Slicing a circular cake is easy. Everyone is more likely to get an equal share. But what about a heart shaped cake? People would imagine that with 3 properties for example, naturally your partner and two kids will receive one property each. However, without a proper will written, your properties will be distributed according to the law, in which 50% of your assets will go to your partner while the other 50% will be split evenly amongst your children upon your passing. This arrangement can still be widely accepted by most families. But the problem appears when your partner unexpectedly passes on, leaving the entire family's assets to just your children. Your parents will not receive any shares as no trustees were assigned in the process. To make matters seem worse, legally, your benefactors must be of legal age to receive the inheritance. Until then, your family’s assets will be kept away by the bank, leaving your underaged children penniless.
Hence this highlights the importance of writing a will early to prevent such catastrophes from occurring. Engage a lawyer to draft out a will for your future plans. Wills can always be amended over time, hence you do not have to dwell over your current decisions but more importantly focus on what’s more urgent, which is to legalise a will and a trustee for your funds in times of unexpected situations.
Term policies as a pillar for your life insurance
Persevering funds for rainy days are a necessity. Especially when it comes to insurance, would you want to rent or own a policy that belongs to you for life? Term policies have a term period that may last anywhere from a year to 30 years. But would you want to still be paying your premiums at 80 years old? Although Term policies are generally cheaper than whole life policies that will only be terminated upon passing or cancellation, most people are willing to pay slightly more over the years so as to clear their premiums and fully enjoy the benefits of their policies throughout their golden years.
And because term policies are based on a term period, they should serve as a booster for your existing other policies. If you were to rent a private plane, renting a parachute is still acceptable. But when you are about to purchase a private plane for life, do you want to rent or buy a parachute for the long term? Firstly, the quality of a rented parachute can never be as premium as the one you own. Secondly, will this rented parachute always be there even in times of emergency?
Therefore term policies should not be used as the pillar to support your life insurances as in the long run, a whole life policy would not only be more cost effective but readily available for you in times of emergency.
It’s okay to not know where to start
Everyone has their area of speciality. A doctor specialises in saving lives, a chef fills stomachs and a banker gives insightful advice to help people with their finances. You should focus on your occupation and leave your finances to a private banker to ensure the money you have worked so hard to work, if not harder for you. With early measures taken to manage your wealth, you are investing in a happy and healthy future for your family.
Click here to watch: Success Wealth Blindspot