Monthly Archives: August 2023

Time For A Financial Self-Reflection

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For someone whose job revolves around finances, it’s very easy for me to think about money on a daily basis. But for those who have other areas of expertise; are in the creative field; have a tonne of other priorities to think about; or are just not knowledgeable in this subject, planning finances can seem like an incredibly difficult feat.

How do we know that we are planning correctly? How do we check that we are on track? Do we need to change our financial planning? I’m going to give you a couple of tips on how to self-reflect when it comes to money and, if needs be, do a financial reset.

  1. Think to yourself, ‘Do I have a plan in place?’

This is one of the building blocks of financial planning; you must know what goals you hope to achieve and plan accordingly. Aim for mid- to long-term goals, as this will be easier to plan out using savings & investment instruments. Not only that, you should ensure than whatever planning you do takes into account which country you will be moving to or retiring. Different countries have different tax laws and jurisdictions, so you need to be aware of these if you want to plan your money successfully.

2. ‘Am I prepared for the unexpected?’

While this may be very bleak to think of, it is very important; life doesn’t always go as smoothly as we have planned. Any number of events can happen that can negatively effect your finances, such as a death in the family, a divorce, unexpected illness or even something as small as the fridge breaking. That’s why it’s crucial to have several safety nets in place to cushion the blow of these things impacting you and your family. You should make sure that you have an emergency fund of at least 3-6 months of spending. Not only that, you should ensure that your assets are protected with sufficient insurance, and you and your family should have a will in place for every country that you have assets.

3. ‘Do I know what I spend daily? Am I in control?’

We cannot deny, life is getting more expensive. Inflation is high, the cost of living has increased, you may feel it is more difficult to save each month. Take this time to reflect and be conscious about your spending. If this means putting all your cashflow into a spreadsheet, do so. If you need to use an app to track this, there are plenty of free ones you can use. Remember that what you are spending now will only increase over time (inflation, again!) so ask yourself, ‘Could I live like this comfortably in my retirement? Is this monthly income going to be enough?’. If the answer is no, start making tweaks to your retirement planning.

4. ‘Have I taken steps to plan for later life?’

This final point leads on from my previous one- no one wants to think about getting old but unfortunately, it is a fact of life. With old age comes extra challenges, like will your savings be enough to allow you to retire? Where and when will you retire, and is that even achievable? Not only that, who will you pass your estate on to when you leave, and have you sorted out inheritance tax? As mentioned, no one wants to think about these things, but it is good to ask yourself these tough questions every once in a while.

If you feel like all of this is too much, or you have reflected and now don’t know what to do, reach out to an advisor or a professional to help you mitigate these challenges.

Why Financial Advice is Better than DIY

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I often get asked the question, “Why should I involve a professional with my investing, when I can do it myself?”. To me, the answer is very simple, but there are lots of reasons why. The analogy I like to use is this; if you are unwell, you go and see a doctor. Especially if it’s serious, like an operation, you will go and see a surgeon. Same with a suit, if you want a suit made, very few people will sew it themselves; they will get a tailor to do it. This same logic should apply to finances and investments. Unless you are an expert, like a fund manager, financial analyst, etc, having the input of a professional is always going to be beneficial. Here are five key ways financial advice is better than DIY.

  1. Avoiding Scams

Back in 2021, I wrote an article on ‘How to Spot An Investment Scam’ (you can check it out here:

https://danielleteboul.com/2021/12/03/how-to-spot-an-investment-scam/: Why Financial Advice is Better than DIY

Investment scams are still on the rise, with many ‘investments’ offering huge returns over a short period of time. These may either be Ponzi schemes, or just a way to con you out of a lump sum of money. A professional will be able to spot an investment scam, understand the rules and regulations of the country they provide advice in, and could potentially help you save losing a lot of money.

2. Confidence in Investing

If you’re unsure how to even start planning your finances, a professional will guide you with your financial goals and objectives, and put forward an investment plan that will achieve these goals, whilst still being within your means and circumstances. They can provide you with confidence during your investment journey, supplementing their advice with knowledge and data. For example, I know many people that think they are a risk-taker and an adventurous investor. But, as soon as there is an economic downturn, such as Covid or the Russian invasion of Ukraine, they panic, and are concerned that their investment value has dropped. An advisor would be able to provide that person with the perspective they need to ignore short-term fluctuations and to take the emotion out of investing. For my article on this topic, click below:

https://danielleteboul.com/2021/05/27/how-to-take-emotion-out-of-investing/: Why Financial Advice is Better than DIY

3. Reminding You to Invest Long-Term

This links back to my first two points; normally if an investment offers amazing returns over the short-term, it’s too good to be true. Not only that, if you check on your investment every day for fluctuations, you may lose faith in your planning. Investment should be for the long-term. A lot of my clients plan for retirement; a long-term goal that is inevitable (we all have to stop working one day!). But even if you have mid- to long-term goals, your money is bound to go further than if you expect returns in one or two years. This is because investing long-term can withstand short-term fluctuations or drops in the market. Overall, the stock market has risen over the years; even with crashes like the Lehman Brothers, Covid, The Dot Com Bubble, and even The Great Depression. Your advisor will know this and encourage you to diversify and hold long-term, so that you benefit and achieve your financial goals.

4. Providing Something Tax Beneficial

Wealth and tax go hand-in-hand, and a lot of expats will require tax advice or need a tax-efficient investment. If you think about it, it’s pointless in doing an investment that eventually you will have to pay a hefty sum of tax on, and navigating tax is often confusing, time-consuming and possibly costly. Instead of trying to do it yourself, wasting time and possibly money, a professional can offer tax-efficient solutions, advise you on tax reliefs you are eligible for, and connect you with experts for more tricky tax situations. All of this means that you are saving time and also your investment is growing in the most tax-efficient way possible.

For my article on what tax relief you may be eligible for in Singapore, check out this link:

https://danielleteboul.com/2022/04/04/tax-relief-for-foreigners/: Why Financial Advice is Better than DIY

5. Tailoring and Reviewing

Going back to my initial analogy, when you get a suit made, a tailor will do it for you. If you need alterations, a tailor will also help you with this. This is the same with a financial professional; they will tailor a bespoke financial plan for you. Investing is not one-size-fits-all. Just because your friend is doing a certain investment, doesn’t mean it is the right thing for you. A professional will match your goals, lifestyle and personality with a suitable investment plan, and will tweak and make adjustments along the way. Financial planning is a process, one that may change throughout your life, so a financial professional will review regularly to make sure that you are on track.

Why Should Expats Open an SRS Account?

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Half the year has already gone and it’ll be December before you know it. Therefore, I think now is a good time to start tax planning and looking into topping up your SRS account. In this article, I will be giving a brief overview of SRS, and why I believe it is an effective retirement and tax planning tool for expats in Singapore.

What is an SRS?

SRS stands for ‘Supplementary Retirement Scheme’, which you can think of as similar to CPF, with added benefits. This voluntary scheme is open to foreigners and locals, whereby anything inside this account is eligible for tax relief. In my opinion, not only is this a great way for saving for retirement, but it’s also one of the most effective ways to enjoy tax relief. There are a few other ways that expats can claim on their tax each year, such as life insurance relief, dependants relief and charitable donations. However, none seem to make a dent into tax savings as much as SRS.

You can open an SRS account with one of these three banks: DBS, UOB & OCBC. Opening the account itself is very simple and can be done via internet banking. In just five minutes, you can set up an account and deposit a maximum of $15,300 per year. However, this cap of $15,300 is just for PRs and citizens. If you want to increase your limit to the foreigner’s limit of $35,700, make an appointment at your bank and complete the relevant tax declaration form; you will then be able to add up to $37,500 into your SRS each year (provided you declare at the bank every subsequent year).

As of now, you can make penalty-free withdrawals from age 63, over a ten year period. But, take note, this number does change, so the longer you take to open your SRS account, the higher the retirement age may be. This account is for retirement, hence the long lock-in. However, not to worry, if you do wish to withdraw some money early, you may do so, it will just be taxable and a 5% penalty fee will apply. One thing that is good if you’re a foreigner and need to leave the country, is that you can withdraw in full penalty free, so long as your SRS account has been open for ten years.

Why is it good for foreigners?

One of the main benefits of SRS is the tax relief. Any monies that you deposit into this account is eligible for tax relief. You can check how much the savings are for someone of your income, you can download the tax calculator from the IRAS website. For those in the higher tax brackets, moving the maximum amount into SRS each year can knock a substantial amount off their tax bill, sometimes in the thousands.

Not only that, any withdrawal at or after the retirement age (over a ten year period) is only 50% taxable. This may not seem good, but remember that spreading out your withdrawals, instead of withdrawing lumpsum, will maximise your tax savings. Moreover, income of $20,000 or below is not taxable in Singapore; meaning that if you withdraw $40,000 a year from your SRS account, only 50% of that is taxable, which means that $20,000 would be taxable and the tax payable would be nil. Remembering key information like this will make your tax planning more robust.

Do remember that keeping your money in an SRS bank account only has an interest rate of about 0.05%, and we know that this is not going to keep up with inflation and may render your long-term savings useless. So what you can do is move your SRS money into approved investment vehicles. This means that you can still enjoy your yearly tax relief, the 50% taxable withdrawals, all while having your money grow better than bank rates, achieving you even higher returns with less tax!

We all know that investment is important, especially during times of high interest rate and inflation. The only way we are going to be able to survive retirement is if we plan and invest properly, instead of leaving it all in a bank account. SRS allows you to do that, whilst enjoying tax relief, now and in the future. And with the ability of opening an account with just $1, what’s stopping you?