I have not sat down and wondered why I have a new set of friends these days. Whatever happened to my old mates and buddies whom I only connect with over Facebook, without seeing them for months on end? Well, our lives have drifted off in different directions over the years as our life and family situations changed.

A trend I note of late is that many of my old friends have embraced the wonderful life of late parenthood which makes me very happy for them. Yet my own situation with a teenager who just went on his first date does not give me a lot in common by way of family activities though I do, on occasion, enjoy spending a few hours with the screaming kids demanding attention just to reminisce on life a decade ago.

I like to think that I am fortunate, to have started the parenthood journey earlier than some of my friends, some of whom may be unfortunate, though they would not like to think so, to have started to have a second time shot at the affair.

But I am lucky that I have to only worry about the legacy planning aspect once, so far with fingers crossed.

Yes, legacy planning. Something no one would really think about when the cherubic little darlings are running amok. Fortunately, from personal experience, they do wear you down a little and get uglier than when you first laid eyes on them, it will hit you one day, I believe sometime between when they are 7 to 9, that it is a venture worth considering.

Thus, I was sucked into the universal life plan, as many others are. For that is the starting point to the whole concept (as far as private banking is concerned) of legacy planning.

Unfortunately for me, I have only the privilege of the acquaintances of a billionaire and a billionaire-in-the-making in the past 6 months, to come to the realisation that it is not what legacy planning is about which is, a little late but, nonetheless, better late than never.

I have put aside US$ 1 million for the kid in the universal life plan a few years back. It is much less than what some friends have done, US$4 to 10 mio for each kid, but it is probably more than the average man on the street, I would suspect, however tempting it was then, to be told I was qualified, for my state of unnatural good health (despite the odd vices) that I could easily stretch it to a much larger quantum if I wished.

Legacy planning is not, as the media suggests, about the insurance or annuities or the bonds despite the propaganda out there and the establishments would have us to believe. “Life insurance can be considered as a supplementary component to the straight provision of assets as part of an inheritance or legacy plan. Firstly, life insurance benefits are payable without going through the court claims process, therefore allowing the beneficiary to claim the compensation amount to meet any urgent needs.”

For me, legacy planning is about building that sustainable portfolio which will preserve and grow itself, without intervention, over time. As to whether the brat deserves it, I will reserve my opinions, other than the fact that we have an obligation to the flesh and blood that we had pro-created to leave them economic benefits that will afford them the lifestyle that we made them accustomed to. (My late parenthood friends who scream in protest at this statement, whereby I will challenge them to my war cry of “Wait till they turn 14!”)

I am going to share with you some tips I learnt recently from various exchange of opinions with different folks on the subject matter.

For the ultra-rich, legacy planning does not matter, which is debatable because some billionaires often do feel insecure in their statuses.

Legacy planning is necessary for those with under $30-50 million, in my opinion, mainly because that sum will be quite commonplace with the ascension of the African, Latin American, Indian and Chinese middle class.

Legacy planning is all about “the more you make, the more you can give”, to quote a friend. And every insurance policy should  be assessed on its IRR (Internal Rate of Return). A term life insurance usually returns just 4-5% at best, if you are not already short changed in the fine print.

“If you are constantly investing, you are already legacy planning”, my friend asserted.

I think that rings true, mostly. Yes, we should set aside, at most, 0.5-5% of the portfolio for the insurance that they are constantly harping about because it does not make sense that the 4-5% returns that the insurance policy promises is, mostly, not guaranteed.

“Hidden in those policies was this potential time bomb: if the projected investment returns fail to materialize, the insurance company can make up the difference by reducing the cash value—taking money out of your cash value savings account — right down to zero, if necessary.” –Forbes

“One potential risk is that the returns from the policy may not be sufficient to cover the insurance costs and charges over the long term. Top-ups of the premium may then be needed, failing which, the policy could lapse.” –AsiaOne

I am not anti-insurance and I am grateful, daily, for the fact that I am Singaporean because the insurance company expects me to live till 82 or 83 and, besides, my agent possibly earned a nice Birkin bag from my patronage.

It is a big struggle to come to terms with the dual concepts of wealth preservation versus growing your wealth and I guess we can learn a thing or two from Warren Buffet in building a portfolio that delivers those results.

And Warren Buffet is smart enough to own an insurance company instead.