4 Start a regular savings plan

When building your liquidity, look out for regular savings plans that pay higher interest rates. Examples are the OCBC Monthly Savings Account and DBS Bank's MySavings Account.

The former allows customers to set aside monthly amounts from a minimum of $50 to a maximum of $5,000. For savings below $800, the interest rate is 1.08 per cent a year. For savings from $800 to $5,000, the interest is higher - 1.48 per cent a year. The tenure is fixed at 24 months and the rate remains unchanged during the two-year period.

Customers cannot change the monthly contribution amount once it is committed, but they can save more on an ad hoc basis. For the additional amount that they save on top of their monthly commitment, they get interest of 0.8 per cent a year instead. The full amount, including the additional savings, can be withdrawn only at the end of the 24-month period.

DBS' MySavings account offers greater flexibility in terms of the monthly savings amounts and the tenure.

Customers can choose to save a minimum of $50 to a maximum of $3,000 monthly and there is no fixed tenure, so a customer can opt to save for as long as he wants.

The interest is paid monthly. For amounts between $50 and $290, the interest is 0.45 per cent a year; for $300 to $790, it is 1 per cent; for $800 to $1,490, it is 1.2 per cent; and for $1,500 to $3,000, it is 1.5 per cent.

DBS Treasures customers, or those with at least $200,000 with the bank, enjoy higher rates of 1.3 per cent, 1.4 per cent, 1.5 per cent and 1.6 per cent respectively.

But do note that there's a penalty for withdrawal.

The monthly interest on the total balance will earn the first-tier interest rate when there is a withdrawal, a failed deduction of the monthly savings amount or if the account is closed during the month.

5 Managing your debt

This has become more important with the financial turmoil, says Ms Tay.

Her advice is to avoid using credit as people tend to spend less when using cash, since cash transactions have the psychological effect of helping to curb unnecessary expenditure, compared to 'plastic' or other non-cash transactions.

In fact, use this opportunity to calculate your debt servicing ratio. This is basically a guide to how much of your take-home pay - that is gross pay less 20 per cent employee CPF contribution and personal income taxes - is used to pay debts.

Debt payments are monthly expenses that you are committed to, such as your mortgage, car loans, personal loans or even credit card debts. A healthy debt servicing ratio - derived from debt divided by income - should be 35 per cent or less.

To put it another way, out of every $1,000 of after-tax and CPF income, you should spend $350 or less in debt repayments.

If you have to spend via credit cards, adopt the habit of paying your bills in full each month. Avoid rolling over your balance and accumulating debts at a high interest rate of 24 per cent a year.

For instance, if you have a credit card bill of $10,000, the interest payable at that rate for six months will be $1,200, plus any late finance charges you may also incur.

6 Adopt a long-term view for investments

A recent study by British insurer Aviva on savings attitudes indicated that Singaporeans have a short-term outlook of five years or less when it comes to financial planning.

The insurer advised Singaporeans not to neglect their long-term savings and investment needs when faced with the current short-term economic challenges.

Another reason to take the long view regarding investments is that the current crisis may drag on longer than expected.

Also, be aware of the possibility that you may not be able to unwind quickly to avoid suffering a loss, cautions Ms Tay.

But exactly how many years constitutes a long-term view?

Using historical data, Fundsupermart worked out the probability of getting positive returns against the number of years that investors stay invested.

The findings suggest that the longer the holding period, the higher the probability of positive returns and the greater the expected return.

Says Ms Mah: 'After studying historical probabilities using the MSCI World Index, we found that the probability of positive returns increased to 100 per cent for both the 15-year and 20-year holding periods, while there was a 96.7 per cent probability of a positive return for a 10-year holding period.'

This presents a strong case for having a longer holding period of 10 to 20 years when investing in the equity market.

7 Understand your risk appetite

This means finding the optimal asset allocation that fits your risk profile.

Asset allocation is an important factor to consider when restructuring your portfolio.

Fundsupermart recommends investors who are more conservative to hold a portfolio with 80 per cent in bonds and 20 per cent in equities. On the other hand, an investor with a more balanced risk outlook should consider holding 40 per cent in bonds and 60 per cent in equities.

Last year, bond funds outperformed equity funds. Therefore, the bond proportion of your portfolio is likely to have increased, given the crash in equity markets. As a result, rebalancing the bond and equity proportions in your portfolio to the initial weighting is necessary.

For the equity portion of the portfolio, Ms Mah recommends a core and supplementary portfolio to better control risks. The larger core portion of the portfolio consists of the more broadly diversified regional equity funds (such as the United States, Japan, Europe, Asia ex-Japan and emerging markets), and the smaller supplementary portfolio consists of narrowly focused equity funds such as single-country or sector-based funds (such as Singapore, India, China and Malaysia).

While the market was booming in 2007, you may have added a few of the higher-risk emerging market equity funds.

However, now is the time to see if it is absolutely necessary to have so many of these funds in your portfolio.

If you have five funds in your supplementary portfolio made up of individual Bric, that is Brazil, Russia, India and China equity funds, you should consider either redeeming the Bric fund or some of the single-country funds. The rationale behind this is to try to consolidate your holdings.

As you boost the number of funds in your portfolio, you are likely to see overlaps between regions or sectors. You might even find that you are overly exposed to a certain region or sector.