I recently went away with a friend, and then my family joined me later on, and finances (money in general) came up a lot in general conversation. I was really pleased with how open the discussions were, and I realised that not many people actually have open conversations in their day-to-day lives about money. Whilst money is seen as somewhat of a taboo to talk about, and I do agree that sometimes it is inappropriate, I do think there are some conversation topics we should normalise talking about, here are the top four money topics we should normalise!
One: Saving for a rainy day.
Actually came up quite a lot on my trip, mainly because the friend I was travelling with quit her job to take a year (or more) out to travel the world. She mentioned that quite a lot of people that she met whilst travelling were shocked and confused as to how she could afford to do that. I also commented that I experience quite a lot of the time, especially in Singapore, that if somebody loses a job, they quite quickly mention that they are unable to afford living in Singapore anymore, pack their things, and leave.
I am aware that visa situations can stop people from staying in Singapore more than a month after their visa is cancelled, but a lot of these people are on a One Pass, and if you have read my previous article, you’ll know that this pass doesn’t have so many immigration issues, and basically allows people to stay in the country even without work. So why aren’t people able to stay in the country longer than one month was they look for another job? I think it’s because many people do not save and sometimes spend beyond their means, meaning that if an emergency happens, they are not able to pay for the upfront costs.
Similarly, I think a lot of people are shocked that my friend was able to go travelling for a year, because they realised that they do not set aside enough to cover a years worth of expenses. With conscious & rigid savings of your surplus each month, and planning properly ahead, you are able to set aside for a rainy day, an emergency, or even if you want to take a break from work. Remember, you should have at least 3 to 6 months of your spending as liquid cash available.
Two: Future proofing and passing on your money.
This one might sound quite morbid, and unfortunately, it is really. But my family and I recently have experienced quite a lot of deaths, and as horrible as it is to talk about, it’s better to start talking about future planning and what happens to your finances before it’s too late. For example, my dad shared with us that one of his clients recently passed away, and being UK residents, their family were hit with a huge inheritance tax bill of 40% of the entire wealth. I commented and asked why more people don’t just take out life insurance; in the UK, we can put this into a trust, which protects it from inheritance tax, and that way, even if you have 40% of your wealth in an insurance policy, that will cover the inheritance tax bill at the end of the day. This is a lot more cost-effective than trying to put your housing into a trust, which can often mean paying a lawyer annually to maintain.
He told me that he thought that was a brilliant idea, and a really good way to inheritance tax plan, but not enough people think about it or talk about it with their family, and then unfortunately it is too late. Although in Singapore, we do not have inheritance tax, any overseas assets may be liable to whatever inheritance law is applicable in that country. Moreover, even if your assets are all in Singapore, probate can take a very long time for all the assets to be distributed correctly. Planning ahead for the worst outcome means that you can ensure that your wealth is passed quickly, so the next generation, or whoever you want it to be passed down to, and also means that your family enjoy your hard work, more than a large portion, going to the tax man!
Three: The importance of investing
My friend commented that while she was on a world cruise, she had paid for the internet package on the ship, and whilst it is expensive, I do agree that access to internet in this day and age is a must. However, I was shocked to find out that many of the people on board were not paying for internet, and we are struggling day-to-day, and even asking her to use her internet package! She had commented that it’s obvious that these people aren’t managing their finances correctly, because in a four-month cruise, during that period, you would need access to your online banking, and your investments. She also said that a few of the people on board scoffed at the idea of investments. Unfortunately, I find this very common, even today.
Investing is the only way that you can beat inflation, because most savings accounts do not beat inflation, and endowment policies and savings plans, whilst they do have a guaranteed amount, these often have incredibly high charges, and also do not beat inflation. Thinking that you are going to have a comfortable retirement without doing any savings and investing planning, is quite frankly, not a reality!
What’s more, whilst I have mentioned in the past, and I still think that you should not be checking your investments every single day, it’s important to be having regular reviews with your wealth manager, at least annually, to ensure that your financial and investment goals are still on track, and you can make any adjustments to your investments if necessary. If you are at a retirement or financial freedom stage of your life, it’s also incredibly important to plan how you are going to draw down from your investments, effectively and tax efficiently.
Four: Property
I feel like property is often shrouded in mystery, what can you buy, what can’t you buy? What kind of mortgage? What taxes are applicable and what rent should you charge? My friend has recently sold a property, and I recently closed on an apartment, so the topic of property came up quite a lot on our trip, and even more so with my family afterwards. I think it’s really important that we normalise talking about property purchase more frequently, because there seems to be a lot of misinformation out there. For example, my friend was hit with a large tax bill when she sold her property and nobody, not even her accountants, informed her about this! Many people don’t think that they can apply for a mortgage if they are an expat, which is definitely not the case. Many people don’t understand the process of buying, and how to go about finding a solicitor and so on, and I think if we open up this conversation more, there will be less chance of confusion.
To be honest, I think I have many more things in terms of finances that we should normalise discussing, but seen as I’ve been talking about these four topics a lot recently, and I have been having very productive and positive conversations, I think it’s important that we all normalise certain money conversations in the right spaces. What kind of money conversations do you think we should normalise?
I recently collaborated with Digilah on their latest innovation – “Collaborative Articles”! They bring thought leaders from 2 or more industries to jointly create a unique point of view on technology.
Their first Collaborative article by myself and Ajit Padmanabh is now live and I’m now happy to share it here! Fintech & cybersecurity are becoming increasingly crucial as more financial transactions move online. Using augmented reality and virtual reality to simplify financial literacy could greatly enhance understanding, engagement and lead to informed investment planning.
I’m happy to share the article below:
In this article Danielle (Financial Investment expert) and Ajit (AR, VR and Web 3 expert) jointly explore:
Fintech Cyber Security dos and donts
Investment education on Finance 101
Danielle’s thoughts on Fintech Cyber Security
The need for cyber security has become paramount in today’s modern age, particularly in the fintech and financial space. Being in this industry myself, I handle sensitive client data daily, and have access to their online wealth accounts; it is therefore vital that their information stays safe and inaccessible to fraudsters. Robust security measures must be in place, and I am constantly having to upgrade and refresh my skills to keep my clients safe.
Whilst fintech has allowed for financial services to become more streamlined, convenient, and efficient, it has somewhat opened the floodgates for cyber-attacks and threats. Harvard Business Review reported a 20% increase in data breaches from 2022 to 2023, and this is set to increase further as the years progress. Not only does this mean we have to constantly upgrade our software and infrastructure, but human area can become a massive opportunity for cyber criminals. I truly believe that a two-pronged approach of new regulatory processes, along with using AI in cybersecurity is a dynamic tactic to tackle this ever-evolving problem.
Cyber security is now seeing the same level of regulation as every other type of security, which means that fintech companies in particular must adhere to stringent rules and procedures. Regulations such as the General Data Protection Regulation (GDPR) and the Payment Card Industry Data Security Standard (PCI DSS) must be followed. Whilst of course this is best practice to ensure that clients’ data is safe, it therefore adds an extra strain onto the company and its employees; this may lead to delayed admin processes, longer lead time for new business submission and therefore, a time delay in profit for the company. Time is money, and the longer it takes for profit to be made, it essentially means smaller margins for the company.
One way this can be tackled is with Artificial Intelligence. Whilst using manpower takes time and money (not to mention the risk of human error), AI systems can scan masses of data sets, analyse data, spot anomalies, and therefore detect possible cyber risks before they have even happened. This preventative method ensures that risks are managed efficiently, and before they become breaches, which means a safer system for the clients, and mitigates possible reputation risk for the company.
However, AI is not a final solution; with cybercriminals’ techniques ever evolving, it means that AI will have to do the same. Not only that, employees must keep re-training when new systems are introduced, to ensure that human error is kept to a minimum. Moreover, one must ensure that the third-party companies engaged to deliver this AI system, is also compliant, safe, and follows the stringent regulations set in place for fintech companies to adhere to.
But the buck doesn’t just stop with the company- clients and customers must also stay vigilant so that they don’t fall victim to cyber-crime.
For example, being able to spot a phishing email, not clicking on unknown links, and not giving out all your banking details to someone over the phone. In order for an individual to be savvy, particularly when it comes to fintech and online financial transactions, they must be aware of risks and know when and where it is appropriate to give out their financial information. If you engage a professional for your financial planning, of course you will have to make them aware of your personal details and possibly even bank details. But do take note that they should be encrypting or password-protecting any sensitive documents that are being sent to you.
Even if you are planning your finances alone, and are using platforms for your investing, be sure to do your own due diligence; ensure that the apps you are using are regulated and have secure payment systems. Do take note that most will require you to upload some form of identification, as well as declaring your tax residency. Whilst to a layman, this may seem intrusive, this is actually a sign that the platform is doing its part to adhere to compliance and regulations. If they don’t ask of these from you, it could be a sign that the platform is not regulated.
For those that plan their investing and finances alone, cybersecurity becomes an even bigger risk, as this is normally something that a large corporation would have to ensure the safety of first, but now it is being left to the individual investor. If you are considering planning your finances yourself, having basic understanding and knowledge is incredibly important.
Therefore, I often suggest that people understand four main areas before they start investing, which I will explore further in this article.
Over to my co-writer Ajit who introduces how metaverse and block chain technology will probably bring future solutions to curtail fraud in our highly susceptible finance industry.
Ajit on Fintech Cyber Security
Background
When we analyse the extent of online fraud and scams, it’s a bit bewildering! As per FTC in US, online scams tend to harm more young people than the elderly. In 2021, Gen Xers, Millennials, and Gen Z young adults (ages 18-59) were 34% more likely than older adults (ages 60 and over) to report losing money to fraud like online shopping scams as well as job scams. Most of the elderly, on the other hand, are victims of tech support calls duping them of their earnings. The median reported loss was $800 for people 70-79, and a whopping $1,500 for those 80 and over. On the other hand, the median individual reported fraud loss by people 18-59 was $500 in 2021.
As the fastest growing economy in the world, India is no stranger to online frauds. 62% of the frauds affect the age group 18-52 as per data from 2018. With robust infrastructure around UPI, this number is bound to decrease.
Blockchain Technology to the Rescue
With weakening currencies in countries like Zimbabwe and Venezuela and hackers from China and Russia, the attacks will only amplify, in the years ahead. There is an urgent need to safeguard individual financial earnings, leveraging technologies like AI and Blockchain. While they are large and independent technologies, they form a core part of the Metaverse. They are the processing as well as the security layer of the Metaverse. Many futurists have predicted that our interactions will be with digital twins of institutions and banks in the Metaverse.
Fast forward to 5 years from now and the permutations and combinations of frauds and financial losses for individuals will only amplify. The promise of Blockchain is to essentially safeguard the assets and investments of individuals as well as organizations. By utilising blockchain, banks can set up a secure and tamper-proof ledger of all financial transactions.
With real-time monitoring and instant access to transaction records across the blockchain, organizations can track and analyze transactions in real-time, allowing them to detect and prevent fraud as it occurs. The trust architected within the technology enables seamless detection.
Challenges with Emerging Technologies
As has been the scenario with any technologies when they are new, be it Television or Computers or even Gaming, new technologies take time to be accepted mainstream owing to numerous challenges. Some of the challenges with Blockchain technology are as follows.
Evolving Technology – Until a technology is adopted mainstream, the maturity of the technology is determined by its limited set of users. The technology is tested for various scenarios by the very same users. Much like the planets move across the solar system with time, in addition to their rotation and revolution, the world is ever evolving with all its volatilities, uncertainties, complexities and ambiguities. No system can be tested for robustness without the volume of usage which only comes with higher adoption. Blockchain technology needs to cross this bridge to deliver on its promises of safety, security, and robustness.
Data Privacy Concerns – The more data that’s visible to Blockchain (and AI), the more seamless the tracking of frauds. But, from a user’s perspective, it warrants sensitive data to be made available, traceable at all times. With GDPR norms in Europe as well as upcoming Data Privacy Bill in India, Blockchain as it stands today, seems to conflict with the regulations.
Energy Consumption and Infrastructure – With ESG goals being one of the focus areas across organizations and Governments, the carbon footprint recorded by emerging technologies like Blockchain and AI, with cloud-based high-compute, tends to be on the higher side. There is a need for hardware optimization to be able to leverage the technology to its potential, in an environmentally responsible way.
In conclusion, Blockchain technology will serve as the protective layer of the Metaverse and will be at the forefront of minimising frauds and innovations around it. There is a need to accelerate the adoption of the technology to ensure its robustness to enable us to face the challenges of Metaverse in time.
Over to my co-writer Danielle who simplifies investing basics and how your hard earned money can work harder for you.
Danielle on Finance 101
I have many clients and connections that I come across asking me for advice on how to get their finances in order. ‘How can we maximise what we have now, so that we can make the most of our money later?’. Of course, one of the best passive things we can do, is to invest.
Investing is the concept of allocating assets, usually money, into different financial vehicles to create a profit. The bare minimum investment should be doing is beating inflation, because over time our hard-earned money is worth less, due to the rising cost of products. Before one starts investing, it is best to have a clear strategy, and get the basics covered first. Here are a few key financial areas you should have planned for:
Build an Emergency Fund
At a glance investing may seem like an obvious choice when it comes to saving money. Why not just throw all your savings into investment if it means high returns? The answer is that investment returns are NOT guaranteed– even the safest investments come with some risk, and sometimes the lock in periods are high, or the penalty for withdrawing early is expensive. To ensure that you are not over-investing, make sure that you have an emergency savings fund that is easily accessible. That way should an emergency arise (like a large hospital bill or having to pay for car repairs), you can use your emergency money instead of jeopardising your investments.
The recommended amount you should have in your emergency fund is 3-6 months of your monthly salary. This should be a healthy buffer should the worst happen. If you already have more than that, then that’s a great time to consider investing.
2. Know How to Budget
Of course, setting aside for investment would be impossible if you didn’t know how much to set aside. That’s why organising your budget is a crucial step in your financial planning. There are many ways and methods for planning, but a good starting point would be the 50/20/30 rule:
50% of your monthly salary maximum should go on things you need to pay for: housing, bills, groceries & insurance.
30% can go on doing the things you enjoy: hobbies, drinks and travel.
20% should go into your savings: think about your long term savings and investment goals.
If you have surplus each month, you can even consider increasing this 20% to a higher proportion and allocate more into your investment goals.
3. Be Debt-Free
Before you do any investing, you should really consider paying off your debt. Having a credit card bill is fine, but having any large or bad debt will hinder you in your long-term goals. It seems counter-productive attempting to make lots of money with investments, whilst paying off lots of debt. It may be difficult paying off student debt or large loans, but you will reap the benefits in the long run when your debt isn’t eating into your assets.
4.Set Your Investment Goals
This is arguably the most important step, defining your goals. What is the reason for investing? If you are doing it out of pure greed, then your judgment will become clouded when it comes to riskier investments, and you risk losing it all. So have a long and hard think about why you want to invest. You are putting your money, that you worked hard for, somewhere that could give you high returns, or give you nothing.
Therefore, it’s best to have a long think and define some clear goals for your future. Do you want to plan for your retirement? Save for a house? Pass something on to your children? Whatever it is, decide how much you would need and by when. Most investments give better returns if you have a longer-term commitment, so it’s OK to think big. If you have no clue and are just investing for the sake of it, you will quickly lose your drive and passion for making money.
These steps may seem simple, but they really are the key to an effective investment strategy. I work with clients every day to ensure that they have budgeted correctly, serviced their debt, and built an emergency fund, and together we work together to work towards their financial goals. Many find that this is more complex than they first thought and will include tax planning and ensuring that their assets are protected. This is of course one of the added benefits of hiring a professional. If you feel that these services are something you would require, feel free to reach out at Danielle.teboul@sjpp.asia or click here.
Over to my co-writer Ajit who tells us that finance 101 is best learnt by engaging emerging technologies like AR, VR as it helps in educating about financial products to customers in a more engaging and impactful manner and to all age groups, across the economic strata.
Finance 101
Background
In its “Economic Well-Being of U.S. Households in 2022” report, the U.S. Federal Reserve System Board of Governors found that many Americans are unprepared for retirement. Twenty-eight percent indicated that they have no retirement savings, and about 31% of those not yet retired felt that their retirement savings are on track. Among those who have self-directed retirement savings, about 63% admitted to feeling low levels of confidence in making retirement decisions. Low financial literacy has left millennials—the largest share of the American workforce—unprepared for a severe financial crisis, according to research by the TIAA Institute. Even among those who report having a high knowledge of personal finance, only 19% answered questions about fundamental financial concepts correctly.
A 2021 survey by the Federal Reserve Bank of San Francisco revealed that 28% of all payments were via credit card, with only 20% being made in cash. In India this is bound to be much more skewed in favour of digital payments, with the ubiquitous presence of UPI. Given high volume of online transactions and multiple banking products for individuals, there is a need for greater financial literacy to ensure every individual makes the most of her hard-earned money.
Financial Literacy can cover short-term as well as long-term financial strategies. The key is to simulate WHAT-IF scenarios of various investment decisions and visualise their impact across years and even decades, well in advance. Today, most of this occurs in MS Excel and is largely based on linear data projections or on a logarithmic scale. Can we visualize the consequences of our financial choices with the advent of technologies like AI and machine learning (ML) models? I believe so. To top it, consider it as a visualised, gamified scenario builder in Virtual Reality (VR), the visual layer of the Metaverse.
Role of Immersive Technologies
Imagine your financial investments playing out their profit-loss cycles across decades, thanks to AI modelling. These What-if scenarios would provide greater education and retention of one’s decision-making as far as financial instruments are concerned. As newer products enter the market, a constant training to these models will ensure the What-if scenarios remain invaluable for you as in individual investor. Taking it a step further and looking at visually gamifying the entire basics of financial literacy (Finance 101), it could prove to be a powerful learning tool for students in schools and colleges as well as working professionals.
Memory retention with VR is far greater than attending lectures, videos or e-learning modules. While the learning retention is only 5 percent for lectures and 10 percent for reading, we find VR among the top 2 with a learning retention of 75 percent. VR training is only beaten by learning that happens through educating others, where the learning retention is at 90 percent.
The learnability and application of knowledge would become second nature for every individual, thereby raising financial literacy, exponentially. There is a need to tap into the power of this technology for a crucial knowledge capsule that’s absent in the masses. This would ensure financial stability and growth in every individual beyond the cycles of survival and existence.
In conclusion there is a need to increase financial literacy in global population and immersive technologies like VR ably powered by AI could prove to be transformative in serving this need. Technology is the biggest leveller across urban and rural communities worldwide and hence could serve as a powerful tool ushering in this much needed aspect among various facets of literacy, financial or otherwise.
Collaborating with other professionals, such as Ajit, who are in different sectors, allows us to view topics from a multi-faceted point of view, and I’m so grateful that we were able to work on this together and for Digilah to facilitate.
If you’ve read my article on ‘Money Movies You Should Watch’ (check it out below if you haven’t), you’ll have read about The Big Short. Well shortly after I wrote that article, a new movie, called Dumb Money, was available on Netflix.
Dumb Money is supposed to be like this generation’s Big Short, as it explains the story behind the GameStop short-squeeze and the controversy surrounding RobinHood and hedge funds (check out my article on RobinHood below).
Essentially back during the pandemic, lots of retail investors got behind certain stocks from companies that were basically in their flop era (think AMC, BlackBerry & GameStop), in a bid to stick it to the hedge fund fat cats.
Well, it seems like we’ve gone back in time, as a lot of these ‘meme stocks’ (aptly named because a bunch of people hyped them up on then Twitter, now X) have seen a rise over 100% in some cases, with the most popular meme stock, GameStop, rising 180% in just five days.
So why is this happening again? Believe it or not, it’s because @TheRoaringKitty, the man behind the last GameStop rally…tweeted a picture of a guy leaning forward…to me this just proves my point of a speculative asset class, but let’s investigate this story a little further.
Keith Gill, AKA Roaring Kitty, started posting his opinions on GameStop back in 2019 and made a tonne of money off of this stock when it hit a historic run. I highly encourage you to watch the movie on Netflix, as it explains the situation perfectly, but he got into a lot of trouble for possible stock manipulation and insider trading. Although the Securities and Exchange Commission released a 45-page report that acknowledged that “People may disagree about the prospects of GameStop and the other meme stocks” and did not indicate that any market manipulation had occurred, it saw the decline of meme stocks, to where most of them pretty much faded into obscurity.
His tweet, to many, signified Gill’s comeback, and over the past few days we’ve seen many X users rally behind him, and GameStop, once again. There’s even been some famous people backing Roaring Kitty & GameStop, notably Andrew Tate. I don’t know about you, but I’m not going to listen to Andrew Tate for financial advice…in fact I’m not going to listen to him for anything!
So, does this mean that we should be investing in this and other meme stocks? Is this the mother of all short-squeezes? There has been so much volatility seen in GameStop (as much as it was in 2021), that many platforms have actually halted trading on the stock, which is very reminiscent of the last time that RobinHood did this, which ended the rally, and was later discovered that it was due to RobinHood having a conflict of interest with some of the hedge funds that were shorting GameStop. Exiting a short position, which a lot of these hedge funds were forced to do, means that they had to buy the stock to exit, pushing the stock price up even further, essentially creating a cycle of pushing the stock up.
But to be honest, we haven’t seen a turnaround in AMC’s, BlackBerry’s on GameStop’s business models as of late, these still aren’t popular companies, we aren’t all going to AMC cinemas and buying BlackBerry phones all of a sudden, which leads me to think that this once again is all still quite speculative. There’s a huge gap between what these companies are trading for and where they are today, which means that we have seen a separation from the stock and the business itself.
I don’t see a repeat of the short squeeze back in 2021, mainly because there isn’t as much short interest as there was back then, mainly because short sellers are either burnt or spooked by what happened back then. Shorting is a high-risk strategy, and many short sellers probably see GameStop to be even higher risk than it was before.
In my honest opinion, market activity and volatility can get very complicated, and where there’s a lot of commentary and speculation around it, meme stocks historically haven’t been as successful as many initially thought. Many companies have experienced hype and speculation around their stock, and have since gone bankrupt, like Bed, Bath & Beyond, and WeWork. The ‘diamond in the rough’ are few and far between, and we have seen many fads in recent times, which is only exacerbated by social media and influencers; many will jump on the bandwagon of hyping up a stock for short-term gains. I would highly recommend my articles on social media & influencers and how they are detrimental to finance, because it’s scenarios like this that perfectly demonstrate my point of view.
All in all, I still stand by the fundamental concepts and principle of investing, such as knowing your risk tolerance, investing for the long-term, and taking the emotion out of investing. But what do you think?
The need for cyber security has become paramount in today’s modern age, particularly in the fintech and financial space. Being in this industry myself, I handle sensitive client data daily, and have access to their online wealth accounts; it is therefore vital that their information stays safe and inaccessible to fraudsters. Robust security measures must be in place, and I am constantly having to upgrade and refresh my skills to keep my clients safe.
Whilst fintech has allowed for financial services to become more streamlined, convenient, and efficient, it has somewhat opened the floodgates for cyber-attacks and threats. Harvard Business Review reported a 20% increase in data breaches from 2022 to 2023, and this is set to increase further as the years progress. Not only does this mean we have to constantly upgrade our software and infrastructure, but human area can become a massive opportunity for cyber criminals. I truly believe that a two-pronged approach of new regulatory processes, along with using AI in cybersecurity is a dynamic tactic to tackle this ever-evolving problem.
Cyber security is now seeing the same level of regulation as every other type of security, which means that fintech companies in particular must adhere to stringent rules and procedures. Regulations such as the General Data Protection Regulation (GDPR) and the Payment Card Industry Data Security Standard (PCI DSS) must be followed. Whilst of course this is best practice to ensure that clients’ data is safe, it therefore adds an extra strain onto the company and its employees; this may lead to delayed admin processes, longer lead time for new business submission and therefore, a time delay in profit for the company. Time is money, and the longer it takes for profit to be made, it essentially means smaller margins for the company.
One way this can be tackled is with Artificial Intelligence. Whilst using manpower takes time and money (not to mention the risk of human error), AI systems can scan masses of data sets, analyse data, spot anomalies, and therefore detect possible cyber risks before they have even happened. This preventative method ensures that risks are managed efficiently, and before they become breaches, which means a safer system for the clients, and mitigates possible reputation risk for the company.
However, AI is not a final solution; with cybercriminals’ techniques ever evolving, it means that AI will have to do the same. Not only that, employees must keep re-training when new systems are introduced, to ensure that human error is kept to a minimum. Moreover, one must ensure that the third-party companies engaged to deliver this AI system, is also compliant, safe, and follows the stringent regulations set in place for fintech companies to adhere to.
But the buck doesn’t just stop with the company- clients and customers must also stay vigilant so that they don’t fall victim to cyber-crime. For example, being able to spot a phishing email, not clicking on unknown links, and not giving out all your banking details to someone over the phone. In order for an individual to be savvy, particularly when it comes to fintech and online financial transactions, they must be aware of risks and know when and where it is appropriate to give out their financial information. If you engage a professional for your financial planning, of course you will have to make them aware of your personal details and possibly even bank details. But do take note that they should be encrypting or password-protecting any sensitive documents that are being sent to you.
Even if you are planning your finances alone, and are using platforms for your investing, be sure to do your own due diligence; ensure that the apps you are using are regulated and have secure payment systems. Do take note that most will require you to upload some form of identification, as well as declaring your tax residency. Whilst to a layman, this may seem intrusive, this is actually a sign that the platform is doing its part to adhere to compliance and regulations. If they don’t ask of these from you, it could be a sign that the platform is not regulated.
For those that plan their investing and finances alone, cybersecurity becomes an even bigger risk, as this is normally something that a large corporation would have to ensure the safety of first, but now it is being left to the individual investor. If you are considering planning your finances yourself, having basic understanding and knowledge is incredibly important. Therefore, I often suggest that people understand four main areas before they start investing, which I will explore further in this article.
Finance 101
I have many clients and connections that I come across asking me for advice on how to get their finances in order. ‘How can we maximise what we have now, so that we can make the most of our money later?’. Of course, one of the best passive things we can do, is to invest.
Investing is the concept of allocating assets, usually money, into different financial vehicles to create a profit. The bare minimum investment should be doing is beating inflation, because over time our hard-earned money is worth less, due to the rising cost of products. Before one starts investing, it is best to have a clear strategy, and get the basics covered first. Here are a few key financial areas you should have planned for:
Build an Emergency Fund
At a glance investing may seem like an obvious choice when it comes to saving money. Why not just throw all your savings into investment if it means high returns? The answer is that investment returns are NOT guaranteed- even the safest investments come with some risk, and sometimes the lock in periods are high, or the penalty for withdrawing early is expensive. To ensure that you are not over-investing, make sure that you have an emergency savings fund that is easily accessible. That way should an emergency arise (like a large hospital bill or having to pay for car repairs), you can use your emergency money instead of jeopardising your investments.
The recommended amount you should have in your emergency fund is 3-6 months of your monthly salary. This should be a healthy buffer should the worst happen. If you already have more than that, then that’s a great time to consider investing.
2. Know How to Budget
Of course, setting aside for investment would be impossible if you didn’t know how much to set aside. That’s why organising your budget is a crucial step in your financial planning. There are many ways and methods for planning, but a good starting point would be the 50/20/30 rule:
50% of your monthly salary maximum should go on things you need to pay for: housing, bills, groceries & insurance.
30% can go on doing the things you enjoy: hobbies, drinks and travel.
20% should go into your savings: think about your long term savings and investment goals.
If you have surplus each month, you can even consider increasing this 20% to a higher proportion, and allocate more into your investment goals.
3. Be Debt-Free
Before you do any investing, you should really consider paying off your debt. Having a credit card bill is fine, but having any large or bad debt will hinder you in your long-term goals. It seems counter-productive attempting to make lots of money with investments, whilst paying off lots of debt. It may be difficult paying off student debt or large loans, but you will reap the benefits in the long run when your debt isn’t eating into your assets.
4.Set Your Investment Goals
This is arguably the most important step, defining your goals. What is the reason for investing? If you are doing it out of pure greed, then your judgment will become clouded when it comes to riskier investments and you risk losing it all. So have a long and hard think about why you want to invest. You are putting your money, that you worked hard for, somewhere that could give you high returns, or give you nothing. Therefore, it’s best to have a long think and define some clear goals for your future. Do you want to plan for your retirement? Save for a house? Pass something on to your children? Whatever it is, decide how much you would need and by when. Most investments give better returns if you have a longer-term commitment, so it’s OK to think big. If you have no clue and are just investing for the sake of it, you will quickly lose your drive and passion for making money.
These steps may seem simple, but they really are the key to an effective investment strategy. I work with clients every day to ensure that they have budgeted correctly, serviced their debt and built an emergency fund, and together we work together to work towards their financial goals. Many find that this is more complex than they first thought and will include tax planning and ensuring that their assets are protected. This is of course one of the added benefits of hiring a professional. If you feel that these services are something you would require, feel free to reach out at via my contact page!
For Brits, the most recent Spring Budget announcement was incredibly important, as it gave us some very key and drastic updates for tax and spending. Essentially, Chancellor Jeremy Hunt aimed to deliver lower taxes, encourage investment and improve public services. Although the elections may affect this announcement, it’s still very important for Brits, particularly those abroad, to be aware of. Martin at Spice Taxation (Company Registration No. 202133724G), has written a very in depth piece on the Spring Budget. It’s incredibly useful to hear the views of a professional tax expert, and Martin has been kind enough for me to share his thoughts here. Of course, I myself am not a UK Tax expert, so I often seek the help of professionals, such as Martin, to help me and my clients with their tax planning when necessary.
Below is Spice Taxation’s write up on the matter.
Our Thoughts on the Spring Budget – 6th March 2024 The Most Important Budget for Expatriates since 2010
“Over the years I have discovered that I am just not very good at predicting Budgets. Speculation is always rife about what a Chancellor might do in face of this and that economic and political situation, but mostly the actual announcements just tend to underwhelm and disappoint. Maybe I just crave excitement!
However, all that changed with Jeremy Hunt’s Budget on 6th March. It is likely to be the last Conservative Party Budget before the next General Election – an election which the Labour Party is widely expected to win. So, it remains to be seen how many of the announcements will find their way onto the Statute books if Labour does win. That aside, it really was an exciting Budget which promises a lot of change, much of it positive.
For much of the speech, it felt like a ‘normal budget’ with a plethora of announcements about regional incentives, funding initiatives, levelling up grants, subsidies and tax breaks for the arts etc. However, there was also a number of genuinely eye-catching and important announcements which are also relevant to expatriates.
First of all, Jeremy Hunt announced a further reduction in National Insurance paid by employees and the self-employed of 2%, from 6th April 2024. For employees, this will reduce from 10% to 8% and for the Self-Employed from 8% to 6%. For those returning to the UK, this will be welcome news.
Secondly, he announced the intention to introduce a new Individual Savings Account – the UK ISA, with an annual subscription allowance of GBP 5,000, in addition to the existing threshold of GBP 20,000. This new ISA would hold British-only assets – equities listed on the four recognised UK stock exchanges, UK corporate bonds and gilts and collectives. This will be good for UK resident savers.
Third, there were a few property tax announcements which came as a surprise:
o The marginal rate of Capital Gains Tax on the sale of residential property will reduce from 28% to 24% from 6th April 2024. This is intended to help stimulate the property market. The basic rate will remain at 18%. This is good for anyone selling, gifting or assigning an interest in UK residential property from that date.
o Multiple Dwellings Relief for Stamp Duty Land Tax is being abolished from 1st June 2024 – this was a relief that allowed you to take the average purchase price for SDLT purposes where at least two properties were being purchased in a single transaction.
o Furnished Holiday Letting status is to be abolished from 6th April 2025, with some anti-forestalling provisions which came into effect on 6th March 2024.
o The geographical scope of Agricultural Property Relief and Woodlands Relief (two Inheritance Tax incentives) will be limited to assets situated in the UK only from 6th April 2024 – those situated in the Crown Dependencies and the EEA will lose their IHT protected status.
Fourth, the VAT registration threshold will rise to GBP 90,000 from 6th April 2024, an increase of GBP 5,000, which will be welcome news for small businesses.
However, perhaps the biggest and most barnstorming announcement was the abolition of ‘non-dom’ status from 6th April 2025. The Conservative Party has been a staunch defender of the ‘non-domiciled regime’ over many years, so it was something of a surprise to see them adopt an avowed Labour Party policy. Stealing their thunder no doubt. It is a very major announcement that will impact many people.
In a nutshell, the Government plans to delink a person’s ‘domicile status’ from their UK tax outcomes, and move to a residence-based set of incentives. Consultation documents are yet to be published, but the main features of the new system will be to:
– Abolish the ‘remittance basis of taxation’ for UK resident ‘non-doms’.
– Replace it with an opt-in system that will allow, seemingly anyone – including, presumably, British nationals – to exempt their non-UK incomes and gains from UK tax for the first four years of UK residence, provided that they have been continuously non-resident for at least the 10 previous years.
– Exempt from tax the remittance of these non-UK income and gains to the UK, which will be hugely simplifying in the long run.
– Retain Overseas Workday Relief for qualifying individuals for the first 3 tax years of residence.
– Apply world-wide taxation for all individuals from the 5th year of residence in the UK.
– Introduce a thoughtful set of transitional reliefs for certain ‘non-doms’ who are already resident in the UK
– Switch away from a ‘domicile based’ system of Inheritance Tax to a residence-based system, whereby qualifying individuals switch to IHT on world-wide assets only after 10 years of residence.
Keep anyone who leaves the UK within IHT for 10 further years, which presumably also will apply to British Expatriates too. UK assets remain within Inheritance Tax at all times, regardless of residence.
We are missing a lot of technical detail here which should be answered by the Consultation Documents that the Government will be publishing shortly. So watch this space! However, whilst I have many more questions than answers at the moment, at first sight the main impacts appear to be the following:
a) Tax planning for relocation to the UK is likely to change quite a bit and these proposals could amount to a generous tax break for returning British expatriates.
b) They will also make Inheritance Tax planning potentially a lot simpler and not so reliant on subjective judgments about where a person is domiciled.
c) It might possibly result in an exemption from Inheritance Tax for a swathe of non-resident British expatriates who have already been non-resident for at least 10 years, which would be quite a result!
I am going out on a limb a little by saying that it appears the proposals will also apply to those we currently regard as ‘domiciled’ in the UK. However, surely that is the point – it is switch away from a tax system where a person’s domicile was the deciding factor, to a tax system where the deciding factor is driven by residence. This potentially bodes extremely well for British expatriates. If this Budget does turn out to be the Conservative Party’s fiscal swansong, it is perhaps fitting that its period of Government will be bookended by a commitment to enshrine in law a statutory test for residence in 2010 at the start, and a set of announcements that displace domicile with a new regime based on that very residence test at the end. Mastering the Statutory Residence Test is clearly going to be more and more important. Beyond this, all tax rates, thresholds and allowances for Personal Tax remain frozen, as do the rates for Corporation Tax. The dividend allowance will fall to GBP 500 from 6th April 2024 and the Capital Gains Tax Annual Exemption will fall to GBP 3,000 from the same date. Class 2 and Class 3 voluntary National Insurance Contribution rates will remain unchanged at GBP 3.45 per week and GBP 17.45 per week respectively, and the New State Pension will rise to GBP 221.20 per week (of GBP 11,502.40 per year) from 6th April 2024.”
If you would like to discuss your own circumstances in confidence or would like to be on the subscriber list for Spice Taxation’s new dedicated coverage of these breaking developments, please contact Martin at martin@spicetaxation.com or by sending a Whatsapp to +65 96650019.
I’d like to thank Martin at Spice Taxation for allowing me to share this information with my readers. I am sure that this will help many of you plan your finances in relation to UK tax.
Even though we’ve all heard the phrase, ‘if it’s too good to be true, it probably is’, there are many that will choose to ignore red flags in the hope that this is not the case. This is true even in investment- if fact, I have written many articles on risk tolerance vs reward, and investment scams (I’ll link below). But it seems that investment scams are not a new thing, and even the smartest person could still fall for them! Did you know that even Sir Isaac Newton, the man who discovered gravity, fell for an investment scam!
An example of a bubble many investors bought into…
In the early 1700’s, Sir Isaac Newton lost £20,000 in the South Sea Bubble- this amount would now be worth approximately £4,000,000 today! The ironic thing is that he had actually sold his shares in 1713 at a profit, but then was lured back in and lost it all when it bankrupted Georgian London in 1720.
The South Sea Bubble was a pyramid-scheme backed by the government, at the dawn of fiat currency. The Bank of Scotland had issued the first ever paper bank notes back in 1695, which Newton was a great advocate for. He had previously ran the Royal Mint, and he felt that the Mint could never keep up with the demand for producing coins to keep up with the growing economy.
Naturally, many during this period were suspicious of paper money, because it could be easily forged and had no intrinsic value, and Newton fell privy to many con artists and forged notes, in which he made it one of his missions to seek justice for.
But what was the South Sea Bubble and how did Sir Isaac Newton, one of the world’s most intelligent thinkers, fall for it? At the start of the 18th Century, the British Government’s debt was huge. To ease this burden, the government created the South Sea Company, by requiring investors to exchange their government debt holdings for South Sea stock. Much like ‘pump and dump schemes’ that we know of today, the company’s directors grossly inflated stories and hyped up the company so much that new investors saw impressive returns, such as Newton, whose first investment grew by 100%. It was at this point that he sold his stock, happy with his profit.
However, as the stock continued to rise, Newton became envious of those who were still invested. He became so envious, in fact, that he bought into the stock again, and put a larger amount of his wealth towards it. The South Sea Company achieved very little in terms of growth and in September 1720, the bubble finally burst, rendering many of its investors bankrupt.
What Can We Learn From This?
Although Sir Isaac Newton was more intelligent than most, he still made many common human errors. The first is FOMO (fear of missing out), which isn’t just applicable for not going out to the party; he saw everyone else enjoying the continued profits and felt that he shouldn’t have cashed out early. Herd mentality was another human error- quite often people will want to follow the crowd, and invest in an asset class because ‘everyone is talking about it’ or ‘everyone else is doing it’ (NFTs & Crypto ring a bell anyone?). He quite obviously ignored the red flags and practised ‘selective hearing’- remember this man co-created calculus; he should have known that the numbers weren’t adding up and this was a bubble soon to burst, but he ignored the warning signs.
The most fatal flaw arguably, was greed. People become excited at the thought of making money quickly, and unfortunately this is a driving factor in people making poor investment decisions. He did not take the emotion out of investing, and succumbed to greed. If you can put your emotions aside, you can actually become a better investor than Sir Isaac Newton.
For expats that have been Singapore for a while, like myself, I’m sure that you have noticed that there has been a change in how easy it is to obtain employment, passes or visas to work here in Singapore. Particularly, a couple of years ago, the rules around Dependants Passes were changed, meaning that dependants of those on Employment Passes could no longer get a Letter of Consent to work. This was devastating for many, meaning that, as soon as their spouses contract ended, or Employment pass was due for renewal, they too had to quit their jobs, rendering them a stay at home spouse. The only way around this, which I know many have taken up, was to set up their own business and either get themselves an Employment Pass, or a Letter of Consent to work.
However, this comes with many challenges, such as business costs, and the need to hire a local above a certain salary. I can understand why many chose to leave Singapore during this time, because a dual-income household is obviously going to be better than one in most circumstances.
But now there is a new pass that allows for flexibility and means that dependants can work, just like Dependants Passes used to be! This is the One Pass, or the Overseas Networks and Expertise Pass. I thought it would be a great opportunity to write about this pass, some of the requirements, and the application process, because most people I know are not even aware about this pass.
What Is A One Pass?
This pass is very similar to a PEP, or Personalised Employment Pass, with some extra added benefits. You can either apply for yourself, or get your company to apply for you, and has a longer duration than a PEP, of five years. The good thing about the One Pass though, is that it has subsequent renewals, also for five years. Of course, there is certain criteria that needs to be followed, such as a fixed monthly salary of at least $30,000 for the last 12 months or have been offered a job in Singapore by their future employer for at least $30,000 a month. There are special considerations, which I will come onto later, but this is the main route to be eligible for this pass.
Those on a One Pass are not restrained by the Compass and Fair Consideration Framework Advertising requirements, meaning that you don’t have to wait for the job to be posted for a certain amount of time and do not have to fill out the self assessment tool based on your age, experience, et cetera like you do for Employment passes. Flexibility is a massive bonus for this pass, meaning that you can work for multiple companies at any one time, and your pass or visa is not tied down to your employment in Singapore. This also means that if you change jobs, you don’t need to reapply for this pass.
Special Considerations
As I previously mentioned, there are ways that you can qualify to outstanding achievements, meaning that you don’t necessarily have to earn a minimum of $30,000 a month. If you have made outstanding achievements in either sports, arts and culture, or academia and research, the salary criteria will be waived. Of course, this is subject to individual review by MOM and other necessary agencies.
What if I Set Up a Company?
Of course, if you want to set up a company, and under the One Pass, you can do so, but many will say that it is very unlikely that you will be receiving $30,000 a month salary from a new business! That’s okay, because the renewal criteria for this pass allows leeway for this. If you’ve started and are running a company in Singapore, you need to employ at least five locals, and they need to be earning at least $5000 a month, your One Pass will be renewed under this criteria instead of the $30,000 a month.
Family
Family members independence were one of the main reasons I decided to write this article because this will allow you to continue to have a dual-income household, without your spouse having to search for their own Employment Pass or S Pass. Your spouse may have a Dependants Pass with a Letter of Consent to work in Singapore under the One Pass. This is great for not only the spouse, but also employers because those on a Letter of Consent do not have to meet S pass or E pass quotas and their salary can be a bit more flexible. It also means that you can get a Long-Term Visit Pass for parents, step children, and even common-law spouses. Of course, if you have children of your own, it’s no issue putting them on a Dependants Pass.
Thing to Take Note
There are some key differences between this pass and Employment passes, Personalised Employment passes, Entre or Tech passes. For example, Entre, Tech and Employment passes may only be valid for one to 2 years, with Personal Employment passes normally being valid for three years. Of course, the One Pass is mainly targeted at high-income earners, such as executives who have a long track record in that industry, or outstanding individuals in arts and culture, sports, science and technology, or academic research.
Personalised Employment passes require a minimum salary of $22,500; this isn’t too much of a large gap between the One Pass at $30,000, but of course it can be seen as a very large jump if you are on an Employment pass. This path offers many flexibility options that regular Employment passes don’t, meaning that you are not tied to one employer, you can work freelance or work for multiple companies at one time, including starting your own business. This is very similar to a Personalised Employment Pass, but you cannot renew a Personalised Employment Pass.
Why is it Good?
The best thing about the One Pass in my opinion is definitely the Dependants passes for spouses.
In my opinion, this will encourage high-income earners to move to Singapore because they do not have to think about their spouse having to be a stay at home partner if that’s not what they want. I have known many people to leave Singapore because their husband or wife cannot find a job here that will give them an SPass or EPass . This completely takes away that stress and means that those on a one pass can make a smooth transition to Singapore and have a dual income whilst residing here!
I hope you found this useful, by no means am I a recruitment or visa specialist, but I know many people that have gone through this route. If you’re interested in finding out more have any specific questions, feel free to reach out!
A recent study by the Ministry of External Affairs Consular Services showed that NRIs (non-resident Indians) make up 24% of Singapore’s ‘non-resident’ population, which is currently at 1.4 million. Even though this group is referred to as ‘non-resident’, they are living and working as professionals in Singapore. This means that they are not considered as tax residents in India. Many of my clients come from this demographic, and as such, I felt it would be best to share some of the topics we discuss, namely, what they can do whilst they are living and working in Singapore to make the most of their time here.
Saving
I will admit that Indian bank accounts have great interest rates- general public interest rates can be as good as 7.85% per year, and this often puts many NRIs off saving or even investing in Singapore, because they feel that the rate of return is low in comparison. However, there are many factors that have to be considered, which I believe makes Singapore a good place to build wealth. The first is that the Singapore Dollar is a stable currency. INR continues to depreciate against SGD by 3-4% per annum, with an inflation rate of 5.69%, meaning that rupees purchasing power will become less and less as the years go on, meaning that saving in INR and Indian bank accounts may not be as beneficial in the long run. The SGD is among one of the few stable and most traded currencies globally. It is regarded as a safe haven asset that also hedges against currency risk.
Not only that, the Singapore banking system is not only safe but simple; the Monetary Authority of Singapore esures tight regulations, but it doesn’t mean more bureaucracy. It is quite simple to transfer money around or even overseas from Singapore. This is in contrast to India, where there are still a lot of tedious processes in place, especially when it comes to selling a property as an NRI, or moving money out of the country.
2. Tax Relief Opportunities
This may be one of the most attractive reasons for NRIs to plan their finances in Singapore. There are many different kinds of taxes in India, whether that be direct or indirect. Direct taxes include things like income tax, capital gains tax or gift tax, with indirect tax including customs duty, value-added tax and service tax. This tax-heavy system can eat into your bank interest rate or your investment rate of return. In Singapore we have no capital gains tax, low income tax in comparison to other countries, and lots of tax reliefs, such as the SRS scheme (check out my articles on this topic here https://danielleteboul.com/2023/08/10/why-should-expats-open-an-srs-account/).
Speaking of capital gains tax and SRS accounts; there are many great investment opportunities here in Singapore. For example, in India, offshore funds are restricted. This means that many clients I encounter have excellent domestic portfolios (and don’t get me wrong, India is one of the champions of emerging markets, so it’s a must in someone’s portfolio!) but it is not diversified in terms of geographical location. Not only does that increase your investment risk, but it also means that you as an NRI are only having a small piece of the pie. In Singapore, so long as it is regulated and approved by MAS, you are not restricted to the funds you have. You can have access to regional, global, US, European, emerging market funds. And all of this is incredibly convenient, flexible and cost-effective. It’s pretty much the best of both worlds because you have the safety of Singapore, with the unlimited upside potential of global assets.
4. Being Of NRI Status
Being an NRI definitely has more perks than being a tax paying resident in India, such as all the previous things I have mentioned. Not only that, it means that whilst you are an NRI, you do not have to pay taxes on foreign investment or gifts received from relatives. This of course changes when you are back to being a tax paying Indian resident, with 20% tax on foreign capital gains. This is why it is crucial to make the most of your NRI status whilst you are earning in SGD. Ideally, you can build up a nice pool of assets and savings whilst overseas, and then once you retire or settle down in India, you can plan your finances accordingly following Indian tax ruling. The fact is that not every Indian will get the chance to become and NRI, and the Indian government has allowed many concessions for NRIs living and working overseas, to encourage globalisation. It is best to make the most of being an NRI, enjoying the stable and strong currency of SG, whilst enjoying offshore investment returns.
At the end of the day, we cannot avoid tax, and with many NRIs (60%) still preferring to retire in India, tax is inevitable. But, there is a window where this doesn’t have to be the case. Singapore is a capital gains haven! Why would you pass up on that opportunity!
Only one week after I posted about all the elections in 2024 and what this could mean for global geopolitics, Taiwan has elected Dr William Lai as their president.
This may make things difficult, as Lai has vowed to protect Taiwan from China’s aggression. Xi Jinping has labelled Lai as a troublemaker and obviously would not want Lai to threaten his One China policy. Moreover, tensions have risen after the US congratulated Taiwan on the result- something that China claims goes against the US’s unofficial relationship with Taiwan.
Washington also used phrases like ‘diplomacy’, ‘partnership’ and ‘shared interest and values’, which has of course annoyed Beijing even more. The relationship between Lai and Xi Jinping is so bad that William Lai is not allowed to travel to Mainland China or Hong Kong! The two have not been in communication since 2016. Will this mean that China will increase its economic pressure on Taiwan? Will they threaten military force like they did in 2022? Whatever will happen, it’s clear that tensions will surely rise, as Lai is pro Taiwanese independence.
Of course, the result of the US election will greatly affect China and Taiwan, also, so we will monitor closely as the situation unfolds.
Investing for Singapore Expats 