Tag Archives: investing

Technology & Investing

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Technology has become so integrated in our day to day lives, I believe it has totally changed the way I do business. Not only this, but it has also helped my clients in gaining more knowledge and confidence in what they are investing in. This in turn, has helped me in my business, as I believe that knowledge is key to success. I am a Personal Wealth Manager who specialises in bespoke financial planning for clients in Singapore, blending personal and professional financial advice with all-important tax planning. I wanted to share with everyone that platforms and tools I currently use to help my clients, plus some tools that the everyday investor can use to successfully plan, visualise and research your investments and finances.

FE Analytics

This online platform is a complete game-changer for me. FE Analytics is more worthwhile for financial planners, investment analysts and others in the finance space, because the subscription fee is quite substantial, but it is an invaluable tool. I use it to create portfolios for clients, review and project investments and compare their current portfolios with bespoke ones I have created for them. What I love about this platform is that it will gather global data, from companies like Bloomberg, Yahoo Finance and others of the sort, to compare key investment data points, such as performance vs. benchmark, volatility, risk and even ESG rating. Volatility and risk are an excellent thing to show to clients, as they can clearly see how erratic their investments are in comparison to their performance. In today’s ever-changing world, many of my clients are become more conscientious and circular economy-focused, so being able to show an ESG rating adds value to them.

Even though an average investor may not have access to this platform, it is important to know that every legitimate investment will have a code, which can and should be easily found on websites, such as Yahoo Finance, so that you can clearly see the funds performance, fees and charges, and have full transparency in information of the investment. If you cannot find this number, or there is no information online about your investment, this could be a red flag.

OPAL Fintech

OPAL is one digital business account for your business and financial needs. I really enjoy using this platform because it is a perfect visualisation of a person’s goals, dreams, aspirations and current situation. All I have to do is input a client’s cash flow, assets, debt, and then discuss with them their financial goals. This may be plans for retirement, saving for a property, planning for a child’s education, or even leaving a lumpsum for their family when they pass on. The OPAL algorithm will assess their current situation, factor is real-life data, such as inflation, and project how likely it is for that goal to happen. Then, it can be tweaked and adjusted, showing multiple scenarios depending on how much the client is setting aside into investments. I often feel like, because financial planning is very numbers-heavy, people can find it difficult to visualise their goals clearly. I don’t have that issue with OPAL, because the graphics and projections perfectly paint the picture for the client.

Budgeting Platforms

But what if you do not have access to these paid platforms? I would first off recommend tracking your cashflow on a monthly basis and being conscious of your assets vs. debts. There are loads of budgeting apps that you can use. For example, DBS Online Banking has an interface that illustrates your monthly inflowing cash and outgoings. If you’d like something a bit more in depth, so that you can go through these figures with a find-toothed comb, I would recommend apps like Zenmoney, Monny or Spendee; all of these (and ones similar) are free and user-friendly for the consumer. Some will consolidate your spending habits into presentable data and graphics, others will incorporate some gamification in order to encourage you to hit your spending and saving goals. There are many on the market in Singapore, and you just have to play around and find whatever works for you. I prefer to use the DBS NAV Planner paired with an Excel spreadsheet, but others may prefer the other apps mentioned here.

Stock Screener

If you are investing in individual stocks, or if your portfolio comprises of equities, you can always use stock screeners to check key analytics like the market cap, yield and sector. You can also delve further into the figures and statistics, like viewing the past 5 years performance and other metrics. You can also check company announcements and financial statements, which is perfect for those investors that like to research in depth. For Singapore stock exchange, you can use https://investors.sgx.com/stock-screener.

General Learning & Boosting Your Knowledge

As I mentioned at the start of my article, knowledge is power. If you don’t have a basic level of knowledge, this is quite often the blockade that is stopping you from investing, which means that your money is being eroded by inflation. You may be concerned of misinformation out there, but don’t worry, there are many great, informative platforms you can use to educate yourself. The first is Investopedia, which is essentially a Wikipedia for all things money and investing. Here you can find simple to understand financial concepts, investment terms and even information on past historical events in the finance world. The Balance is a great website that hosts a wide range of information, from which loans give the best rates, what stock market apps are easy to use, to how to discuss finances with your children. This is really a font of knowledge and a go-to for anyone who just wants to get more clued up on finance. I would of course recommend keeping yourself up-to-date with news by checking out The Financial Times, Bloomberg and CNBC, as well as other credible finance media outlets.

In this world of technology, finance and investing have become accessible to the masses; what once seemed only for the super-savvy or wealthy, is now at the click of a button to almost everyone who owns a computer or smartphone. This readily available information is not something we should shy away from; these are wonderful tools we can use to do our own due diligence and ensure that we are planning our finances and investments correctly. Technology has pushed for a need for transparency in the finance sector, so what a better time to start investing! You have all the knowledge, resources and tools to do so responsibly, and with some level of understanding. However, for those that are not as savvy, or for those that have a full schedule, you may not have the time to commit to constant research. I don’t blame you- if it wasn’t my full-time job I probably wouldn’t either! This is when you can lean on the advice of a professional, who will have all these tools at their disposal, with the added expertise and wisdom to help you navigate investing effectively in accordance with your risk tolerance and unique circumstances.

(Remember that if you are struggling to find information available online of an investment, to tread lightly, as a lack of transparency may also mean a lack of legitimacy.)

Is Volatility A Good Thing?

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You may have heard the word ‘volatility’ when referring to investments. When an investment, or market, is volatile, it means that there are great fluctuations and market disruptions. You may look at your investment one day, and it could be up by 20%, the next it may have dropped to -5%. Usually, if you hold your investment long-term, it will weather the short-term volatility, meaning that all of these ups and downs don’t matter too much, because your investment will have grown overall. A volatile investment can be a stressful one if you haven’t taken emotion out of investing. It’s always best to remember your investment goals, understand that investments work well long-term, and understand that the market will bounce back. If you haven’t read my article on ‘How To Take Emotion Out Of Investing’, you can read it here:

https://danielleteboul.com/2021/05/27/how-to-take-emotion-out-of-investing/: Is Volatility A Good Thing?

Whilst volatility is inevitable- and investments with low fluctuations are generally more conservative and may not bring as high returns- is it a good thing for us as investors? Is the possible stress of a roller-coaster market worth it? What if I invest a lump sum at the wrong time? In this article, I will deep-dive into the question…is volatility a good thing?

No-one can successfully time the market correctly every single time, especially a novice investor who has a full time job and other responsibilities, meaning they can’t sit and watch the stock market all day. Therefore, I think it’s key to remember, ‘time in the market, versus timing the market’; drip feeding smaller amounts of money over regular intervals over the long term, can often mitigate the risk of volatility. This concept of ‘dollar-cost averaging’ is a very simple yet important strategy to remember. So long as you stay the same with your investments and don’t fluctuate on your stance, you can weather the ups and downs of the market.

As I hinted to earlier, an investment that barely fluctuates, is often more conservative in its risk profile, meaning that there may be lower risk of losses, but also the returns may not be high. On the flip side, a well chosen investment that fluctuates, may mean that your investment is volatile, but on the whole rises faster. So ask yourself, would you rather have little fluctuations in your investment and possibly never reach a decent rate of return, or would you be OK with taking the risk on the volatile investment in order to access to possible higher returns?

For those that are a bit more savvy, they may be keen to buy more at a dip in the market. Although timing the market is very difficult, sometimes the market will be down for a longer period of time. For example, the dot come bubble started collapsing in 1999 and didn’t end until 2002. Can you imagine how happy you would be if you had bought Apple or Microsoft stocks during this period, when the world was losing faith in new technology, and you had held onto those stocks until now? This is a brilliant example of being a market opportunist, whilst still having long-term investment goals. This is an extreme example, but the idea still stands. If the down period of the market has been continuous for quite some time, it’s best not to hesitate. If you have the capacity to invest more, do so before the market goes up, and reap the benefits in the future.

If you are struggling with emotionally dealing with market volatility, you may want to consider a hands off approach and engaging professionals to do the work for you. Fund managers will be able to understand the peaks and troughs of the funds, making well-informed and educated decisions on how to rebalance your portfolio. One of the strategies they will take will be diversification, essentially not having all your eggs in one basket. If you have a portfolio of a wide-range of investments in different asset classes and geographical locations, you mitigate the risk of losing it all if something goes wrong.

For example, imagine two people have invested in the Brazilian stock market; Person A has invested 80% of their portfolio, whilst Person B has only invested 5%, whilst having a basket of stocks in other areas. Now imagine that Brazil goes into political unrest, a military coup is held, and the new leader is isolationist…the Brazilian stock market busts! Oh no! Person A has lost 80% of their investment, and who knows how much it could drop, and maybe keep dropping! Whereas Person B has only lost 5% of his portfolio. Yes, this is annoying, but not as catastrophic as Person A’s situation. And who knows, Person B may have benefited in other areas. Maybe because of the situation in Brazil, the country no longer exports raw sugar, and this causes India’s raw sugar exports to go up. This is great news for Person B, because they have also invested in Indian funds, that have benefitted from the Brazilian coup!

Whilst volatility often holds negative connotations, it is dangerous to think of it in this way. Volatility can work to our advantage, and be beneficial for us, so long as we stick to certain investment principles, such as dollar-cost averaging, taking the emotion out of investing and diversification. Not only that, if we are opportunistic about our lump sum investing, this could massively benefit us long term. As always, the key is that long-term investment strategies will be able to survive short-term market fluctuations. Here is an excellent diagram I found to demonstrate this. I hope you found this article useful, and if you did have any more questions on this topic, I would be happy to answer.

This chart shows the span between the largest average 1-year, 5-year, 10-year, and 20-year gains and losses among three key market indexes for the period 1926–2009. As you can see, short-term holdings (especially in stocks) are extremely volatile. Historically, a long-term approach has provided a much smoother ride.

Money Movies You Should Watch

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You would think that, because I think of money all day, I wouldn’t want to relax with watching a movie about money. Well, you were wrong! Because I absolutely love ‘Wall Street Movies’; they’re probably one of my favourite genres (much to my husband’s dismay because he hates them). There are so many money-related movies out there, such as Boiler Room, which I won’t be writing about here, but here is a list of some of the few I would recommend.

The Big Short (2015)

Of course I was going to write about this one; this is probably one of the most famous Wall Street movies out there, and it’s a deep dive into the US Housing Market Crisis of 2008. It follows the investors that bet against the US property market, hence the name, The Big Short. This movie can get a little complicated at times, as there are many factors and moving parts to what led up to one of the biggest financial crashes of modern times. Most of the characters portrayed are based on real people and one thing I love about this movie is the use of cameo appearances, such as Selena Gomez, Margot Robbie and Anthony Bourdain (RIP) to explain complex investment concepts into easy-to-understand analogies.

THE BIG SHORT, from left: Steve Carell, Ryan Gosling, 2015. ph: Jaap Buitendijk/©Paramount/ Courtesy Everett Collection

Rogue Trader (1999)

This movie is cool because it’s set in Singapore! This is the true story of Nick Leeson, a rising trading star in Singapore, who caused the insolvency of Bearings Bank. His whole job as a trader was to trade on behalf of the bank’s clients on the Japan Stock Exchange, and when he starts losing large sums of money, he starts to make very risky investment decisions to try and recuperate these losses. This movie does a great job at highlighting the importance of risk management; sometimes the big risks don’t pay off and the loss is insurmountable. Not only this, Leeson opens fake, unauthorised accounts and starts using those to trade. Him and his wife attempt to escape Singapore when they realise they are in legal trouble, but are caught in Frankfurt. Leeson was later deported back to Singapore and sentenced to 6 years in prison.

War Dogs (2016)

This movie is one of my favourites and is so underrated! It’s finance-adjacent, but I wanted to include it in this list because I think it perfectly shows how greed can blur the lines of morals. This true story follows two arms dealers on their journey from being small fish, to closing on a US Military contract of $300 million. I won’t spoil too much about this film, because I don’t think it’s as heavily watched as other films on this list, but this story involves a lot of forged documents, repackaging illegal ammunition to pass them off as legitimate, and smuggling guns across hostile boarders. It’s so funny, gripping and interesting, and it almost makes you think, ‘If given the opportunity, would I be capable of doing something like this?’. Of course, this all backfires on the pair and the following FBI investigation and legal proceedings are interesting, too, and you almost end up feeling sorry for this pair, at least I do.

Wall Street (1987)

The quintessential Wall Street movie (duh). I think this movie convinced a lot of people to become traders, even though it highlights people on Wall Street were cheating and breaking the rules in order to make a lot of money. One thing to take note is that this movie contains a lot of trading jargon and in depth investment talk, so maybe it’s best to watch some of the others, such as The Big Short, first. I really like these older movies that show how investments and trading was executed before digitalisation; the brokers actually had to call someone on the New York Stock Exchange to make the trade, whereas now it’s all online. It’s interesting to note that inside trading is not allowed; generally traders are not allowed to make investment decisions that they know will benefit them, if it isn’t public knowledge. Bud, one of the main characters in the film, does not disclose this insider information- very illegal. This is a great watch, a true classic.

American Psycho (2000)

Ok, hear me out, I know this is more of a thriller, and it doesn’t talk too much about finance, but everyone interested in money and investment should watch this movie. And yes, I also know it’s a bit of a bro-movie, but I think it’s great. Christian Bale plays a wealthy investment banker who is…you guessed it…a psychopath. This film shows how toxic and removed from reality the finance world can be. We’ve all probably seen the business card scene; I think this perfectly depicts how disconnected some of these people are; they care so much about these business-related things, and not so much on the real, human things. If you haven’t, please watch this movie.

The Wolf Of Wall Street (2013)

The ultimate ‘Finance Bro’ movie. This is the story of Jordan Belfort, a massive scammer who lost a lot of money for a lot of people. It shows the sketchy and shady side of Wall Street, showing how some brokerages didn’t care if their clients made money, because they made money off of transaction fees. It also shows how easy it was back in the 80s and 90s to sell someone a junk bond (low grade bonds) or penny stocks, by over amplifying the gain and not speaking about the risk. This of course wouldn’t be allowed to do now, and especially in Singapore, there are a lot of regulations in place. Jordan Belfort’s company, Stratton Oakmont, is a perfect example of a pump-and-dump scheme; the company artificially inflated the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Once you look past all the bro-stuff in this movie, it’s great.

There a tonne of other movies that I haven’t put on this list, including a Wall Street sequel decades later: Wall Street: Money Never Sleeps, but if I carry on writing about all these movies, I’d be here all day, and some of them I’ve yet to watch! On top of finance movies, I love watching documentaries about finance and investment events, so let me know if you’d like me to write a list of these!

What Does AI Mean For Investors?

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For the past year, all I have been hearing about is Artificial Intelligence. It really has become a hot topic; how it may put some out of jobs, but increases productivity for others. And I have to admit, it has helped me a lot with some of my content planning and marketing strategies. An interesting topic now being talked a lot is how AI will change the face of investing. Will it make things easier, or will some of its pitfalls pose as an issue to the avid investor? Of course, like everything with investing, there are risks and benefits to weigh up. So let’s discuss these here today.

New Companies & Products Will Emerge

Let’s talk about the bigger picture first. With new technology comes new business opportunities, and with this comes new investment opportunities. During COVID, a lot of people invested in healthcare, pharmaceuticals and mask manufacturing companies. We also saw a boom in e-commerce and online platforms. People were spending more time online, and more time buying products online, hence, tech equities saw quite a growth during this period. This may be similar with AI; with new companies and technology popping up, investors will want a piece of that pie. Not only that, other companies and industries may thrive with AI; start-ups will minimal manpower, may find that they can increase their bandwidth for production, all with the use of AI. Industrial, travel & leisure and consumer services may see a great shift from man power to roles automated by AI. One thing to be aware of is that the use of AI means that companies can be more experimental with their products and business models, because if they fail, it won’t be as high of a loss to them. So beware not to invest in some exciting trial or business experiment that may not pull through.

Well-Known Brands Over Small Successes

When it comes to AI, I think it is smart to think about how this technology will benefit large, well established companies, instead of thinking about the AI companies themselves. Companies like Google, Amazon and Microsoft all are huge well-known companies. They have a good track record, and whilst past performance is not indicative of future performance, we know that these companies have the resources and infrastructure to implement and blend AI with their current business models, meaning that we may see a positive growth, because they are using AI.

This Is a Long-Term Thing

Like anything that is development, or indeed with investing, we should look at this long-term. Hopefully AI will be here to stay, helping us in all aspects of our work and life. We are still in the infancy stages of AI, and I look forward to see how it will develop in future. All investments should be looked at with a long-term horizon, not just jumping on the band-wagon of a short-term fad. Hence why I think it’s important to consider the longevity of the companies you are investing in.

Investment Platforms

We already have robo-advisors when it comes to investing; you can open an app, answer a few questions and the app will suggest a portfolio for you to invest in. JP Morgan has already applied to trademark an IndexGPT and is developing a ChatGPT-like software for selecting investments for their customers.

Betterment was the first robo-advisor launched in 2008, with the purpose of rebalancing assets within target date funds to help manage passive, buy-and-hold investments through an online interface. This wasn’t new technology, but now most robo-advisors use passive indexing strategies using various algorithms to optimise. These have not replaced human advisors. Most high net worth investors seek the professional advice of an actual human, because active strategies, if done correctly, can out-perform passive ones. Not only that, human advisors can give advice when it comes to take, repatriation, and take into consideration personal matters when it comes to their planning.

It seems that the new ChatGPT-esque developments coming up may affect robo and human advisors in a few ways; this new technology will be able to create models and analyses that robo-advisors can’t, and would take a while for human advisors to do. AI can analyse and process masses of financial data, from over the years and geographical locations, a huge feet for an individual, do create robust reports that take into account the nuances of financials and the market. This has already led to models, such as the BloombergGPT model, already outperforming other models and benchmarks.

Human Interaction

It seems that, for now at least, there will still be a need for real life financial advisors- people enjoy socialising with other people, and that goes the same in business. Building the trust between client and advisor is so important and invaluable, that cannot be done with a robot or an AI chatbot. I think that this sentiment will continue, especially with financial planning. For now, AI cannot understand your current situation with home-life and family, your personality, or get excited about your future goals with you. Actually, all these are key elements of creating that financial roadmap for your future.

Artificial Intelligence is exciting, and it’s here to stay, and will only develop more over time. Always with investing, it is important to stay educated, but not get wrapped up in the hype. Weigh up the pros and cons, understand your own risk tolerance and look at your investment strategy for the long-run.

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?

What Should Expats Take Note of Before They Move To Singapore?

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When I first moved to Singapore, I didn’t really know much about the landscape here in terms of living and working. I had only visited the country via transit, so Changi airport was all I knew! Of course, the reason I chose to move to Singapore was because the pay was a lot higher than what I can get in the UK. However, I wish I did understand things before I moved here so I could make more of an informed decision. So, I’ve come up with this list, hopefully I can help some newbies who are considering to move here. 

  1. Flights

Of course, if a company is willing to relocate you over here, then they should try and cover some of the moving costs. When I first accepted my job offer, my company did in fact offer to reimburse my flight ticket. However, this was not enough to cover the full flight cost. If I remember correctly, I had to book with a budget airline direct from London; there are no direct flights from Birmingham, so that was an extra hassle for me to try and travel down there. We all know they’re a lot more expensive than they were pre-Covid, so look out and make sure that your company’s reimbursement is sufficient to cover these inflated flight costs!

2. Housing Costs

I’ve written a few articles now regarding how expensive housing has gotten in Singapore. In fact, a couple of days after I broke my last article, the government raised the additional stamp duty for foreigners from 30% to 60%! Not only that, rental has skyrocketed over the past year or so; so even though your salary might be higher here than your home country, your outgoings might be a lot more too. If you are offered a package that covers some or all of your rental costs, then I think that is ideal! Rental costs are the bulk of my outgoing expenditures each month.

3. Insurance 

I know I always go on about this, but it’s very important! I spend a lot of my personal insurance each month. When I first arrived in Singapore, my previous company gave me an allowance of $200 annually to cover insurance…let me tell you now, this is not enough. This only covered a fraction of the very basic hospital & accident insurance I purchased, let alone the additional life & critical illness insurance I later purchased. If a company offers an allowance to purchase insurance, make sure it’s at least in the thousand dollar range. But ideally, a company should provide you with a corporate insurance plan, that way you may have an opportunity to be covered for GP, specialist and dental, coverage that is normally not claimable on a personal insurance plan. Also, it’s good to know that it is mandatory for companies to provide foreigners on work permits and S passes with insurance coverage.

4. Annual Leave

I didn’t factor in how important this was when I accepted a job offer. In my previous company, when I was an English teacher, I enjoyed a lot of days off, because of school holidays et cetera. The tuition centre simply refused to open, meaning that we were unable to work. However, these days off went over our 14 days annual leave, meaning that we actually had to pay back the company the days that we did not work! This basically ate away into our bonuses. I wish I’d have found a better offer that didn’t absorb our days off in lieu this way!

5. Shares & Taxes

A lot of companies offer shares as part of their incentive. I think this is a great idea, as you basically have access to stocks (maybe even blue chips) that you wouldn’t normally have access to. However, a word of caution- and this has happened a few times with my clients; IRAS will tax you on these shares even if you haven’t cashed them out. Quite often, you are taxed when the shares are doing well and price high, then, the shares may plummet, especially during this economic uncertainty. So, you may be taxed on assets that are actually a lot higher than their current value! This could push you into different tax brackets altogether, meaning that your tax for that year will be quite costly!

6. Education Costs

As a foreigner, it is often incredibly difficult to get your child into a local school, they have to take several exams on a syllabus that they probably are not familiar with. So, for most expats in Singapore, their kids have to go to international schools. The fees for these schools can be very pricey, easily $50,000 or even more a year for some! So, factor this in before you make the move. Ideally, you can find a package that will cover some of these educational costs for you.

7. Dependent’s Pass

A lot of foreigners here are in fact trailing spouses, following their husband or wife for work. In the past, this was not so much of an issue, but over Covid, the government made it a rule that those on a dependent pass could not get a letter of consent to work. This means that if you are on a dependent pass, you may have to work remotely for your previous company overseas, or simply not at all. I do know some who have set up their own company to bypass this, but then another problem arises in having to hire a local and pay their CPF, regardless of how well your business is doing.

Some argue that Singapore is becoming less attractive for foreigners to live and work. I don’t necessarily agree with this statement, however, I think it’s key that you know all of these things to look out for and make an informed decision.

Is It Worth Buying a Property in SG if You’re an Expat?

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I think about this question a lot, as we all know the rental rates in Singapore have skyrocketed recently, and it pains me to pay more for rent than what some of my local colleagues pay for their monthly mortgage instalments. So I often think whether it is worth buying a property as a foreigner. However, there are many restrictions and extra costs involved are often put expat off buying property. Or, we can only buy private condominiums or landed property if it is in Sentosa. HDBs are completely out of the question, which, of course the more affordable option.

So let’s take a deep dive into whether it is worth an expat buying a property here.

One thing that does bring some foreign investors into buying property. Here is how stable and strongly Singapore dollar is. Even during the pandemic, the Singapore dollar continues to be stable, unlike some currencies in Europe and the US.  Last year, in 2022, foreign buyers made up 22.4% of all condominium sales in Singapore. This was quite a shock to me when I found this out, because Additional Buyer’s Stamp Duty (ABSD) for foreigners is at a staggering 30%! 

For example if I was buying a condo, as an expat, at S$1M my total Buyer’s Stamp Duty would be $24,600. Then my ABSD would be $50,000. So in total my costs for this condo would be $1,074,600! That’s a lot of extra cash to put down. And this isn’t even taking into account legal fees and other admin costs!

(Note that if you’re from the States, Iceland, Liechtenstein, Norway, or Switzerland, you don’t have to pay ABSD!)

In a lot of other countries, it’s very popular to flip your properties as a form of side income, or to do as a full-time business i.e., buying a property and selling it very quickly for a profit.

But in Singapore, if you plan to sell your home within the first three years of purchase, you will have to pay Seller Stamp Duty (SSD), which is 12% in the first year, 8% in the second and 4% in the third, so I think twice if you want to start being a home, flipper in Singapore! Your business may not be as lucrative as you think. 

Now, I think that a lot of expats don’t know in Singapore, is that we can actually apply for mortgages, normally with no issues. Usually the ratio is 75%, but can be as low as 55%. Do take note that the cash down payment is usually anywhere between 5% to 10%. However, although it doesn’t sound too bad, remember that interests are not exactly in our favour right now; you’re looking at our interest rate of about 3.65% – 4.25%, which means that if you are wanting to purchase $1 million property, your mortgage repayments could easily be around $7000 a month.

Looking at these numbers, I can look at it from both sides of the coin; this mortgage repayment is what a lot of people are paying as their monthly rental in Singapore. So if you are planning to stay in Singapore long-term, it’s actually a good investment because the property belongs to you, it’s not like you’re lining the pockets of a landlord by paying this in rent. But, if you’re only here short-term, perhaps it’s best just to suck up the large rental amount! 

The last thing I want to talk about, is the longevity of your home in Singapore. Unlike many other countries, whereby when you buy the property, it is yours forever, and you can use it as an ancestral property to pass down to your children et cetera, this may not be the case in Singapore. Most properties here are 99 year lease, including a lot of condos. Looking at PropertyGuru, it’s very difficult to find condos nowadays that are freehold. What I mean by this, is that it is owned by the buyer for life; it can be passed down generation to generation. If the property is a 99 year lease, then in theory, it has to be given back to the government after the 99 years is up. Not only does this mean that the property cannot be passed down multiple generations, but it also means that as a property becomes older, it can often lose its value, because buyers in the market know that at some point, it will have to be returned to the government. In my opinion, this is one of the reasons why a lot of expats are put off buying in Singapore. But now we see a lot more countries adopting this concept, especially with over population. And to be honest, I don’t think I would want to give my future generations an old dilapidated apartment, anyway. The buildings here are not like back at home, where they can last for hundreds of years, so to me, this is not much of an issue. If anything, I think it encourages the property market. It means that once the three years & SSD is up, you can sell your property and get a new one and upgrade.

So it’s kind of like a long-term flipping process. Instead of staying in one property that may become very rundown.

If I were to conclude on my thoughts as to whether it’s worth a foreigner buying a property here in Singapore, there are a few things. I do think it is worthwhile if they are planning on staying long time in Singapore, also because in future this could look good on their PR application as they are already rooted in Singapore. Moreover, I always think it’s good to be paying for your own asset, instead of paying rent to a landlord! And with rentals being crazy prices right now, it works out to be more cost-effective if you are going to be staying here in the long run, even with the additional taxes and stamp duty. However, if you’re wanting to use it as an investment property, and don’t really have intentions of staying long-term in Singapore, then it may be a better idea to look for properties elsewhere. Nearby Southeast Asian countries have less regulations in terms of the costing for foreigners, and the properties are larger and much more affordable, meaning you can turn that into a nice passive income for rental.

These are just my opinion is but what do you think about buying a property in Singapore as a foreigner? 

What Is Going On With The Banks In The US?

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It’s been all over the news over the past couple of weeks that it’s not good news for certain banks in America, particularly Silicon Valley Bank, which announced its bankruptcy last Friday. Well this may not affect us directly, it’s very good to know what happened and of course why.

Silicon Valley Bank catered to many tech investors in the US, hence the name. It was taken over by federal regulators on Friday, leading to the largest bank sale in the US since the global financial crisis of 2008. Following this bank’s collapse, was New York’s Signature Bank on Sunday also collapsing, for different reasons due to its exposure to the crypto market. As you can imagine, the news of these led to a bank run last week, where depositors rushed to withdraw all their deposits from the bank. This inevitably led to the bond market swinging wildly, but why did this happen in the first place?

Like the age old saying, what must go up, must come down, and this is true in this situation. Catering to mainly tech developers and companies, Silicon Valley Bank boomed during Covid, deposits totaling over US$100 billion. Then, in 2021, when interest rates hit a record low, this bank invested billions of dollars into US Treasury bonds. Whilst bonds are generally safer investments, with steady gains, they only pay out in full if held to the maturity date. This poses a risk to bond investors if interest rates rise.

Lo and behold, we all know what happened-interest rates went up. This meant that Silicon Valley Bank had to sell at a loss. Not only was this a problem but it happened to come along with the whole tech sector bubble apparently bursting! We’ve all heard in the news and experienced friends, colleagues and family members possibly losing their jobs in the tech sector. Tech companies have been increasingly withdrawing their money from the bank. In order to comply with these withdrawals, SVB had to sell its bond holdings, at the loss of US$1.8 billion. Not only that, SVB also announced that it would be selling more of its shares, a hint that they require more cash! This shook its customers, causing even more people to withdraw from the bank.

On Thursday, customers at this bank try to withdraw 42 billion USD in deposits and the banks shares dropped more than 60%. By Friday, it was all over the Silicon Valley Bank.

While not all banks are in this niche of only catering to tech companies, this did spark concern about the banking sector, especially when the second bank, New York’s Signature Bank, collapsed on Sunday. This actually has had a knock on effect to more traditional banks; JP Morgan is down more than 7%, with Wells Fargo and Bank of America down more than 15%. Many bank analysts have stressed that there is no liquidity crunch facing the banking industry and that, it is more so a human fear that has gripped the market, and a self-fulfilling prophecy has been played out.

Luckily, those that had ties with the banks that have gone bankrupt, will have full access to their deposits, even those that exceed the limit of FDIC insurance. So at least there is some relief there for their customers.

President Biden remarked that the banking system is safe, but the markets did react strongly on Monday; we saw the US stock exchange go up and down with immense volatility over the course of the day. Not only that, government bonds yielded lower than expected. But the main thing that we must look out for is whether this will have any effect to the Fed’s decision next week…

The Federal reserve will meet next week to discuss whether it will raise its benchmark interest rates yet again. The rising interest rates have helped to slow inflation, but it has also devalued bonds and has somewhat led to the collapse of banks such as SVB. Hopefully, the Fed realises that if it continues to rise interest rates, more banks could fall victim. This might put the Fed under some pressure to ease the increases.

What does this mean for us in Asia? Well, luckily we may not be directly affected. For me personally, I see this as an opportunity to go into bonds when they are at a low. Generally, when equities are down, bonds are up. We have seen equities go down for Long time in the market now, which I hope means that bonds, after this little blip, will continue to go up. Of course, I cannot predict the market but I always see these kinds of situations as a great opportunity!