How Will Inflation Affect Your Long-Term Planning?

We’re all been hearing about how bad inflation is and that it’s increasing etc. But what does this actually mean and how does it have a lasting affect on our money planning?

What Is Inflation?

Simply put, inflation is when the cost of goods and living increases. Whilst some see this as a bad thing, slight inflation is good as it is a sign of a growing economy; meaning more employment, higher profits and an increase in production. But, right now, we are seeing a significant rise in inflation. In December of 2021, Singapore saw inflation hit a 9 year high of 4%.

How It Affects Us Now

This increase directly affects us, and you may have even felt a bit of a pinch. Food is a bit more expenses and energy prices seem to have gone through the roof. All of this means that your cold hard-earned cash has less spending power, essentially meaning that you cannot buy as many things with the same amount of money as you used to. What further exacerbates this problem is bank interest rates; most current accounts in Singapore have an annual interest rate of 0.05%, meaning the bank gives you that much extra each year (not a lot at all). If current inflation rate is at 4%, you are losing 3.95% of your money every year by just leaving it in your bank account! This means that whilst you are earning money, not only are things getting more expensive but you’re losing money in your bank account too!

How It Affects Our Future

As you can imagine, this situation has a massive knock-on effect for our futures. If inflation increases, or even plateaus at say about 2%, you are still losing money in your bank account. Food, housing, medicine and energy will continue to go up in price, meaning each year you will either be able to afford less, or have to spend more to keep up. Not only that, your savings will not be as powerful as it once was…so you can see how this is a problem two-fold!

How Can We Stop This?

But fear not! If we prepare now ahead of time, we can manage inflation so that it doesn’t eat away at our savings. There are a few things you can do in preparation: first, include inflation in any planning you do. Want to save up for a holiday in 5 years’ time? Inflate your ticket and hotel prices by at least 2% per annum (3% if you want to be safe). Secondly, consider using vehicles and instruments that will offer you higher returns than your current bank account- any % higher than current inflation rate will give you a positive yield, and will ensure that your savings don’t run dry. I also think it’s best to create multiple avenues for growing your money, so that if one option is not doing well, at least you have money in different areas that you can withdraw from. Lastly, do not underestimate how much different sectors will increase. Food, healthcare, housing etc. do not always follow the same trend or inflation rate. Ensure you have medical expenses covered and calculated into your long-term planning, as well as remembering that your income will not go as far in future unless you ensure there are increases.

Essentially, it is best to start planning now instead of panicking later on in life, realising that you could have prepared for inflation but didn’t. As always, it’s best to stay in-the-know, and consult a professional when it comes to your financial planning.

Why Did Crypto Crash?

  It seems that we can’t catch a break this year, markets are down, there’s a war, inflation is up, and now the value of cryptocurrency has plummeted, leaving many feeling disheartened with their investments. But, why did it happen? It’s actually a much broader picture. Let’s do a deep dive…

Inflation

  The first thing that triggered the crash was investors losing confidence in cryptocurrency and fearing the rise in inflation; inflation has been rising the past few months and apparently has not reached it’s peak yet! This is somewhat due to customer demand after the pandemic, along with Russia invading the Ukraine.

Interest Rates

  The Federal Reserve raised its benchmark interest rate by 0.75%, which has been the biggest increase since 1994. This has had a massive impact on the crypto market. Interest rates make debt more expensive and negatively affect the economic climate; it can decrease the value of asset classes, particularly stocks and of course…cryptocurrency.

Stock Market

  As I previously mentioned, the hike in interest rates and inflation has massively affected the stock market; recently the S&P 500 decline has been even worse than at the height of the pandemic, as it dropped 5.8%. All these factors indicate a global recession is coming, and usually during bear periods, higher risk assets, including crypto, take a hit.

High Yields Were Promo Rates

  Many crypto platforms, such as Celcuis, offered returns of 18% and some platforms even more. These rates of returns are even higher than that of the stock market and could not be sustained year upon year for a long period of time- some were merely promo offers to get their platform some buzz and traction. Many people thought that this was a risk-free yield…definitely not the case! That 18% had to come from somewhere, essentially a borrower, and when more people want to gain these returns instead of borrow…that’s when problems arise.

Energy Crisis

  I’ve already mentioned the Russian-Ukraine crisis but the knock-on effects of the energy crisis have taken its toll on crypto too. If you’ve read my previous articles on cryptocurrency and the environment, you’ll know that mining crypto coins uses up a hell of a lot of energy. The cost of electricity has massively gone up since the Russian sanctions were put in place, meaning that it costs a lot to mine coins. This lowers the profit margins of the cryptocurrencies, depreciating their value.

In Summary

  To summarise, it was not just cryptocurrency that took a hit during this period; global markets are down, and many people are feeling the pinch. Rising living costs often leaves less disposable income for other things, including investment. But remember, historically bear markets (when the market is down) last on average for about 12 months, whereas a bull market on average lasts for 2.7 years…so the good times are mostly longer than the bad.

  One thing to remember is that cryptocurrency is unregulated and financial authorities cannot step in if anything goes wrong. This makes it a higher risk investment; remember that before you invest.

Tax Relief For Foreigners

It’s tax filing season, and a lot of expats here in Singapore don’t know that they’re eligible to certain tax reliefs. Today I’ll be talking about how you can legally save on your taxes in Singapore. Just a disclaimer, My job isn’t tax planning, I’m a financial consultant, but these are some things that I do and have researched, that you can put into practice. And of course, this is just for Singapore. I know about some tax laws in other countries but I’ll just be talking about Singapore today.

I want to do a quick overview of the tax system in Singapore, tax reliefs available here and a bit of an example of SRS savings. So you may be shocked as to how many expats are in Singapore. It’s actually approximately 1.68 Million. So quite a lot, but 1 in 8 lost their job in 2020. While job security is a worry to most of us, at least Singapore is doing quite well when it comes to dealing with Covid. And unemployment rate is definitely not as high as other countries during this crisis. There are also many affluent citizens and residents here. Tax, whilst low in Singapore, can still take away a large chunk of your salary.

For tax in Singapore, the amount you pay is broken down into various brackets. Singapore is seen as one of the top first world countries for having low tax, it’s somewhat of a tax haven, but you can see that if you are in the higher income bracket, for example $200k and above, your tax for the year is quite substantial.

So, how can we legally minimise the amount of tax we are paying each year?

There are several things that can give you tax relief. This may appeal more to those that plan on staying here long term, or even longer than just a couple of years, as all these reliefs add up in the long run.

The first and easiest tax relief you can get is employment relief. This is automatically calculated into your tax and is capped at $1,000 for below 55. And then it goes up depending on age bracket.

Next is life insurance relief. If you have any insurance policies from an insurance company in Singapore, you are entitled to a relief of maximum $5,000 per tax year, provided the insurance is for yourself, and is not an accident or hospital policy, or a pure investment policy. This relief can be filed at the end of the tax year under e-filing.

If you have anyone here with you on a dependent pass and they’re not working, you can claim for tax relief. You are entitled to claim $2,000 for spouse, $4,000 for child and $9,000 for a parent on a DP.

To me, this is the most effective way to save on taxes. SRS scheme is great because not only does it offer you tax relief, but you can also make use of the money inside and grow that money for a retirement plan. And, what’s great is it’s available to expats, it’s actually more flexible for expats. Singaporeans can put $15,300 into SRS each year and expats can put $35,700. Just note that if you want to put this maximum amount in, you have to go to the bank and declare that you’re a foreigner.

Everything inside this account is eligible for tax relief, which is done automatically. After the retirement age, you can make withdrawals from this account penalty free. Before that, there’s a 5% charge. The great thing about SRS is after the retirement age, anything that you withdraw from the account, only 50% of it is taxable.

So what can we do with the money inside the account? Well, seen as the interest rate in an SRS account is about 0.05%, I would recommend putting it somewhere where it can grow more, so, if you leave Singapore or you decide to retire here, you’ve got a huge lump sum waiting for you. As you can imagine, if you are putting the maximum amount each year into SRS, you can have a very good pot of cash at the end.

How does all of this look in terms of tax savings each year? Let’s take for example, a man on an EP who earns $250,000 a year. Say he claims $900 in tax on expenses. His original amount he should be paying on tax is $29,829.50

But let’s say he utilises all these tax reliefs he is eligible to, he will save about $10,547 per year on tax.

So you can see, this is a very substantial amount. SRS will give him a tax relief alone of $6.8k.

Here’s an example for someone on $100,000 a year. With all these tax reliefs, there a 4 and a half thousand dollar saving. Just on SRS alone that’s $3271 of savings.

Filing your taxes is so easy to do on the IRAS website, and with SRS being automatically calculated into your tax relief, all you really have to do is input your various other relief schemes. I think SRS in particular, is an excellent way for expats to plan for long term goals, such as retirement, whilst minimizing tax.

The Financial Impact of Russia’s Invasion of Ukraine

On the 24th February 2022, President Vladimir Putin announced a military operation in eastern Ukraine. Minutes later, missiles began to hit across the country, including its capital, Kyiv. Whilst I am seldom political on this page, I wanted to write on this topic, as there are massive global implications to this war. Already we have seen many world powers speak out against Russia, with sanctions being put in place, causing the Russian Ruble to plummet by 30% against the US Dollar.

  What implications will the war and the sanctions have on our global economy? Let’s take a look at a few.

Geopolitical Shock

As the whole world reacts to the conflict, and with more and more countries supporting Ukraine (the EU in particular), we have seen bans on flight paths to Russia, SWIFT being sanctioned and Russians being unable to access their bank accounts. We have yet to see fully how China will react but it has signalled a willingness to help Russia. If Beijing responds in a malign way, i.e., using this as an opportunity to go into Taiwan, geopolitical tensions are sure to grow further.

  When Russia invaded Ukraine, we saw the markets sharply drop, but it definitely could have been more extreme, and we actually saw markets bounce back trading to above what it was before the conflict started. Last week, the S&P 500 index logged its first correction in nearly two years, meaning it dropped more than 10% from its recent peak; and even though there was uncertainty about what was going to happen next, the US stock market bounced back quickly. Certainly, NATO and the EU’s response has stopped the market from freefalling.

  Do note, when investments start to tank, investors are tempted to sell and cut their losses. Don’t do this- a major reaction like this is more likely to hurt you more in the long run. The stock market is volatile, it is a part of investing…do not panic.

Energy

  Gas is a large commodity for Russia, and many European countries rely on Russia’s energy supply through vital pipelines. Sanctions on Russia may hinder these countries importing gas. We saw a surge in oil prices last Wednesday; Brent crude futures rose by more than $8, touching a peak of $113.02 a barrel, the highest since June 2014, before easing to $111.53, up by $6.56 or 6.3 per cent by 0950 GMT.

Food Supplies

Not only is crude oil affected, edible oil is too; Ukraine is a huge sunflower oil supplier and if the conflict continues, importers will struggle to replace supplies. Not only that, Ukraine and Russia combined account for 30% of the World’s export of wheat and 19% corn (the two countries also account for 80% of sunflower oil exports!). This means that these food supplies could be hindered, cut off and become incredibly expensive. And this is not the only price that has been driven up. Over the past month, inflation in Europe has jumped to 5.8%, and this conflict could send prices even higher.

Auto

This sector is set to be hit hard by the war; semiconductor sales to Russia are now banned, oil prices have gone up and Ukraine is home to many companies that manufacture car parts. Already we have seen Volkswagen have to close one of its plants in Germany, due to the knock-on effect of Ukraine’s part on its supply chain.

Confidence In The Market

Already we have seen how the war has affected many sectors and sent certain stocks plummeting- and this may want investors and individuals in general to become more cautious with their money. Some may react by saving more and spending less, leading to slower economic growth. People’s confidence will vastly depend on how long the invasion goes on for, and businesses that rely of Russia’s supply chain, such as electronics and automobiles, can be gravely affected.

Will There Be A Further Crash?

  For the last six US-involved wars, the stock market rose in the 10 years following the breakout of war. The Gulf War saw the market rise 500% over a 10-year period. If the entire stock market was to crash in every country it would mean that no businesses anywhere made any profit, and I think we can all agree this would mean that humanity was in a pretty dire situation, with larger problems than just the economy. It’s very difficult to predict what will happen next to the stock market, and we only have public knowledge to base our assumptions off of. If your investing horizon is long, the best thing you can do during times of crisis is to hold tight and keep investing as usual. The stock market has historically always bounced back, and you’ll be rewarded for keeping your reactions in check.

Whatever happens, all we can do is wait and see. Support in anyway you can. Check in with anyone affected by the war, and let us all pray this ends soon.

Singapore Expat Money Myths

I’ve had a lot of discussion with people in Singapore, expats and locals, and there seems to be a lot of rumours about what foreigners can and can’t do with their money here. Whilst Singapore is one of the most heavily regulated countries, it is still a financial hub for a reason. So I’m here to bust some of the most common money myths…

Myth: Expats are not eligible for tax relief schemes in Singapore

Fact: There are many tax reliefs that foreigners that are living and working in Singapore can claim. Many expats think that, because they are employed by a company, their tax is fixed to their salary bracket. This is a common misconception. First of all, if an expat has their spouse, children and parents living here with them as dependents, they can claim relief on their taxes. You may also be eligible for a tax relief if you have employed a foreign domestic worker. Not only that, you can also claim business expenses and life insurance relief with IRAS. For insurance policies, anything that has a death benefit (under your name for yourself or your spouse), is eligible for a maximum of $5,000 per year. Do note though, that insurance through your company, or hospital insurance is not applicable.

  SRS is also a great way of utilising tax relief. A foreigner can contribute a maximum of $35,700 into a Supplementary Retirement Scheme. This account can be used to invest for retirement, and upon withdrawal only 50% is taxable. Everything inside the account is eligible for tax relief. You bank will automatically inform IRAS.

Myth: Expats can’t buy local insurance plans, so their medical insurance is expensive

Fact: Expats can buy local plans, and they can be approximately 4 times cheaper than international plans. A lot of foreigners don’t know that local hospital plans (known as Integrated Shield Plans) are available for them; the only difference is that locals can use their Medisave account to pay for this, we just have to pay in full. But this often works out to be a lot cheaper than international plans, that cover all countries- the cover is more than sufficient and it is often not necessary to have a plan that covers all countries, as that’s what travel insurance is for.

Myth: Expats can’t buy property in Singapore

Fact: Foreigners can buy condos (all over Singapore) and landed properties (in Sentosa). We can’t buy HDBs or landed (not in Sentosa) and expats have to pay Additional Stamp Buyers Duty of 30%, but it is not impossible for foreigners to get on the property ladder here. Some nationals, such as those from the US, are even exempt from paying Additional Stamp Buyers Duty! Foreigners, contrary to popular belief, can even get a bank loan for this housing.

Myth: It’s difficult for expats to invest in Singapore

Fact: Not only is it easy, it’s extremely beneficial. Because expats don’t have CPF, starting an investment plan here is a great way to make your money go further. Singapore is a financial hub, not just for Singaporeans, but for the whole world! And with it being highly regulated, it means that investing in financial institutions is a robust and less-risky way of handling your money. The Singapore dollar is strong, and your investments here can be managed even if you want to move abroad, including withdrawal.

Myth: Insurance is for Singapore only

Fact: Life insurance can be paid out to expats even if they leave Singapore. This goes for accident, disability and critical illnesses too. Sometimes, our health deteriorates even if we’re no longer in the hospital, affecting our ability to earn an income and support our families. That’s why insurance policies in Singapore are there for you for life, wherever you go.

I hope that has dispelled some major money myths for all the expats out there. Have you experienced any other money myths you found out to be false?

How To Spot An Investment Scam

I know of a lot of people who are very apprehensive or sceptical when it comes to investing; and a lot of the time this is due to the fact that they feel that it’s really a minefield out there- they are afraid of being scammed or losing all their money in a fake investment. So, what are some red flags to look out for? How can we spot an investment scam? Here are some things to look out for…

  • Guaranteed Profits

To me, this is THE MOST obvious and biggest red flag. Any ethical and licensed professional will tell you that all investments come with some risk. If you’ve read my previous articles, you will know that investments can and should be based on your own risk tolerance, and investment returns are never guaranteed. If an investment promises you guaranteed profits (usually at a high rate of return)…it’s most likely a scam.

  • Ridiculously High Returns, Usually In Short Periods Of Time

Ah, the second most obvious red flag. If someone tells you that your investment will make you high returns in a short period of time (like 40% a month), and that you have to get in or get out quick- it’s most likely too good to be true. Fixed deposits give returns of say 3%, endowments at about 3-4%, mutual funds can be around the 8% mark, and even stocks can give you average returns of 12%, all of which is on an annual basis. So this just shows how ridiculous and preposterous such returns on a monthly basis can be.

I always let my clients know that investments are long-term commitments, so if you want a ‘get rich quick scheme’, you are more likely to fall into the hands of a Ponzi scheme. What is a Ponzi scheme? This investment fraud model works by a person offering their first investors high returns on their initial investment. Then, they find new investors and give their money to the original investor, making it seem like their investment has legitimately grown. This continues by recruiting new investors to fund the old ones, whilst lining the scammers pocket with the excess. Once the scammer is unable to find new investors, the scam dries up, and the whole thing crashes. This is similar to a Pyramid scheme (more like a web than a pyramid), that promises quick returns. Those who are involved are incredibly vulnerable of losing it all.

  • They Use Telegram Or WhatsApp

Another, less obvious red flag is if you are given very little information about the investment or company themselves, but you are then added to various ‘investment group chats’, with people from different countries all discussing how the investment is going. Maybe there are members of the group that are hyping up the investment, encouraging those to buy more shares. Chances are they are using a ‘Pump and Dump’ method, whereby an individual drives up the price of an investment by encouraging others to buy, driving the price up. That person then sells, earning loads, and the overall investment crashes, causing everyone else to lose out.

  • Unwillingness to Explain Investment Strategies or Methods

If someone tells you that they have managed to obtain riches and live a life of luxury due to an investment, but are unwilling to share with you a concrete strategy for how to invest, chances are it’s not real. They may have rented the luxury items they flash, or their lifestyle is not as amazing as it seems. They use buzz words and generic concepts, instead of legitimate financial methods. They may promote high risk trading strategies, such as crypto or forex, without explaining the massive risk these can of investments entail, essentially convincing you to gamble with your money.

  • They Are Not Licensed

If all else fails, check whether the individual is licensed. In Singapore, financials are heavily regulated. Financial institutions should be regulated by the Monetary Authority of Singapore, and we have to have an RNF code that allows us to practice our business. In Singapore, there are very many regulations against foreign investors purchasing investment plans, to prevent money laundering, and professionals are not allowed to solicit advice unless it is in Singapore. Everything is also heavily documented; there is a lot of paperwork that is involved in Singapore investments. So, if someone promises you something quick and simple, with no paperwork and overseas transfer, or is unwilling to share they license code or business info…you guessed it…it’s a scam.

All in all, the age-old phrase, ‘it’s too good to be true’ is definitely the case when it comes to investments. If something is really going to make someone rich, quick, without little to no knowledge or effort, everyone would be doing it and we’d all be loaded, which clearly is not the case. The truth is, in Singapore, we have a very well-off population. And how do they get like this? By trusting professionals and financial institutions with their money, and using financial methods like dollar cost-averaging and holding long-term. If it ain’t broke, don’t fix it- be weary of new companies or investments that promise you the world with little to no credentials to back it up.  

Why Should Expats Invest In Singapore?

This question often comes up a lot. A lot of expats don’t even know if they can invest in Singapore, let alone if they should. Locals and PRs are automatically enrolled into CPF, which they can use to pay for medical, housing and have money set aside for retirement. Because us expats do not have access to this, I would encourage expats to start setting aside money for these areas; we already know how expensive medical can be (which can be tackled with insurance), and buying property is costly wherever you are, and we all need to set aside for when we retire (the earlier the better!) Investing helps to beat the rising cost of goods and services; you can usually estimate inflation at 2%, so in order to make sure your cash doesn’t lose buying power, you need to beat this rate. With a current account in Singapore gaining interest of 0.05%, you’re actually losing money by keeping it there.

But why invest in Singapore if we’re not from here? I’m going to list a few reasons why expats should invest in Singapore.

Singapore As A Business Hub

Singapore joined the ASEAN Economic Community on the very last day of 2015, and since then investors and business people alike have viewed Singapore as a safe and efficient entry point into South East Asia. Not only is our geographical location very advantageous, our technology and infrastructure is highly advanced in comparison to neighbouring countries. It is the world’s busiest port and a top location for investments in the Asia Pacific region. Singapore is often number 1 in many business surveys:

  • #1 Best business environment in the Asia Pacific and the world: Business Environment Rankings (BER) 2019, The Economist Intelligence Unit
  • #1 in the Asia Pacific and #5 in the world for Best global innovation: Global Innovation Index 2018
  • #1 in achieving human capital (knowledge, skills, and health) in the world: Human Capital Index 2019, World Bank

All these accolades prove that Singapore is a credible and reliable country for people to invest; most of the globe’s largest companies have a base here, and are very successful, so this is a good indication for individuals that this is the place to invest.

Stable Economy

This goes hand in hand with another great reason to invest in Singapore- our economy. Singapore has arguably the World’s most stable economy, with no foreign debt and a consistent positive surplus. As of last year, the Monetary Authority of Singapore owns over US$270 Billion in assets, and Singapore dollars are backed by gold, silver and other assets (unlike other fiat currencies that are no longer backed by gold), meaning that Singapore’s dollar is one of the most stable. The MAS (Monetary Authority of Singapore) regulates foreign exchange rates, keeping it stable.

 This is in great contrast to neighbouring countries’ currencies, like two of the weakest in the world, Vietnamese Dong and Indonesia Rupiah. Internal and external conflicts, civil unrest and clashes, incorrect economic decisions of the government and dependence on raw materials cause further instability.

Imagine going for a coffee one day, it costs $2, the next it costs $10 and the day after it costs $5…does that sound like fun? Of course not- it’s not ideal to invest in a currency that changes on such a regular basis, especially if you want to exchange it into another currency.

For example, trading between Australian Dollars to Great British Pounds, Japanese Yen, US Dollars or Euro is often incredibly volatile (some of the highest volatility in the world), so do you really want to keep losing money every time you convert or transfer?!

Regulations

The government and laws that this country implements, give business people and investors peace of mind when they park their money here; anti-corruption laws are heavily enforced, and the MAS ensures that entities must hold licenses to engage in fund management activities. That means that if you invest in something that is regulated by MAS, you have no risk of this company being a cowboy, blowing all your assets of being part of some Ponzi Scheme. So long as they are regulated, you are guaranteed transparency, anti-money laundering and no dodgy dealings. This is a great safety net for first-time investors to know about.

Tax Benefits

Many countries heavily tax investments and overseas residents. Singapore is involved in many tax treaties and avoids double taxation where possible. Capital Gains on investments from financial institutions are not taxed (unlike in countries such as India and Australia) and there are tax reliefs available to foreigners, especially if you’re investing and using things like an SRS account.

Looks Good On PR Application

This point might be very appealing for some; Permanent Residency. For those trying to obtain PR, this can really work in your favour. While the scoring process is shrouded in mystery, we know that financial ties to the country are big bonus points on the application. If you have invested in Singapore, with a financial institution, it shows that you are dedicated to growing your wealth here, and achieving your long-term financial goals in Singapore. Note that it doesn’t have to be a large sum, even if you’re regularly contributing small amounts, this is great too.

Can Be Accessed Anywhere

One of the main questions I hear when I’m planning investments in SG is, “What if I move back to my home country? Will I still be able to access my money?”. The simple answer is yes; whatever money you have invested in Singapore belongs to you, regardless to where you are. Top up or withdraw with ease whilst abroad. This, paired with the strong and stable currency, means that if you move abroad later, you may also see the upside potential to your SGD going further in a different country. Win-win!

I do think that there are many more reasons why investing in Singapore is an excellent idea for expats, but that’s for another day. For more information on SRS, PR Applications and how investments work in Singapore, feel free to contact me using the comment section, or by scanning the QR code below.

Make Your Money Green As Well As Your Lifestyle!

I think it’s safe to say that a lot of people are concerned about climate change; over the past few years we’ve seen very obvious and drastic changes to our ecosystems that it almost too blatant to ignore…flooding, wildfires, mass extinctions…all of these have a negative impact on our environment.

Many of us try to do our part (recycling, using less plastic, swapping disposable for reusable), but what about our money? Money is green in colour, but is it by nature? If you have read my previous articles about cryptocurrency, you know that I am a bit apprehensive of investing in this type of asset because of the environmental implications. According to Digiconomist, a single Bitcoin transaction has, on average, a carbon footprint of 549.74 kgCO2 – the equivalent to 91,624 hours of watching YouTube. And of course, people are also concerned with industries such as gas, coal and oil, and would prefer not to invest their money in these kinds of industries.

 Companies themselves seem to be moving further away from unsustainable processes. Singapore was the first South-East Asian country to introduce carbon tax in 2019. The country has plans to increase the levy at faster rates, to tackle Singapore’s growing concern with climate change.

“We think it’s necessary so as to put the right incentive for industries and for companies to look at the way they’re making things and the way they’re producing things,”, Grace Fu, Minister for Sustainability and the Environment, commented.

This is all great news, and is an exciting future for Singapore on its journey to become greener. Companies and industries are sure to follow suit, so how can we ensure that our money and investments do so also, whilst still maintaining a positive portfolio?

The first thing you can do is invest in green power investments; there are plenty of industries utilising wind power, hydro power and even solar power, which you can invest in. Water energy seems to be the go-to for sustainability, so why not invest in energy producers with notable hydropower in their portfolios, such as PG&E and Brookfield Renewable Partners. Today, projects such as China’s massive Three Gorges Dam can supply electricity to between 70 million and 80 million households. According to the International Renewable Energy Agency (IRENA), hydropower is the most cost-efficient means of generating electricity, so this is a lucrative and exciting tech to invest in. China is also the leader in wind energy right now, so if this kind of renewable energy interests you, check out General Electric or Vestas Wind Systems.

Prevention is also key when moving forward to create a greener world, so you may want to look at companies in waste management, green transportation or even pollution controls. These companies aim to minimise the affect humans’ inevitable impact have on the environment, and are going to be around for a long time. We are always looking for new ways to minimise our carbon footprint, be it minimising car emissions, reducing greenhouse gas emissions from power plants or improving recycling facilities.

So We Should Stop Investing In Oil And Gas?

This is not a black and white topic, there are many things to take note of with oil and gas industries. While oil and gas is not sustainable, environmental policies, like the tax I mentioned before, it has pushed large oil and gas companies to move further in this direction. Many investment managers prioritise green funds, causing oil and gas companies to improve their business models to be greener. Look at their business models, it is easy to see that some are greener than others. In fact, several large oil companies are among the global leaders in promoting a tax on greenhouse gases and investing in energy sources that will help the world transition away from oil. Choosing the firms with the best environmental records and practices is another way of looking at green investments.

I’m not the biggest expert when it comes to green energy, but I would like to think that I am doing my part for the environment. It’s very simple to make small changes in your portfolio to make it greener, and I wouldn’t even rush to withdraw anything in oil and gas, and these companies offer sustainable investment returns, and are improving their business models to be more environmentally friendly.

Investment vs Insurance- Which is More Important?

Whether we like it or not, when we become adults, we have to start thinking about our personal finances and planning our future. For those who have not been taught about finances (I know pretty much none of us learnt this in school), planning finances could be a daunting task. The words ‘investment’ and ‘insurance’ often fill people with dread; is it a scam? Why should I spend my money on that? Do I need it?

The long and short of it is, both are important and you need both. But is one more important than the other? Let’s look at both and see for ourselves.

There are lots of kinds of insurance products but they all cover one thing- loss. The whole point of insurance is that it covers us if something goes wrong. This may be a hospitalisation, a disability, an illness, or some other kind of liability that would set us back financially. It is meant for protection; protecting us from the adverse effects of not being able to work or financial hardships. Many people think that planning for these things, such as death or disability, is a morbid topic and a worst-case scenario. But good health is never guaranteed, and it’s always best to get these things sorted before it’s too late. Insurance products also become more expensive as you get older, so it’s best to start early, so that these payments don’t interfere with any of your future life stages like purchasing a house or sending your kids to school.

Investing is all about growing money for our future- we can either plan for a passive income stream, so that we don’t have to rely on work so much. Or, we can plan for capital gains, so that we have a nice chunk of money when we want it. The idea of making money with not necessarily putting too much effort in (check out my articles about passive investing), is an attractive one. And, if we make all this money, why do we even need insurance?

Unfortunately, the truth of the matter is, it is unwise to have one without the other; investment increases our upsides, but insurance protects our downside. If you invest without being insured, you run the risk of losing it all should you fall sick or become hospitalised (also, can I just say, it’s very naïve to think you will stay healthy forever), especially if your investments are not enough to pay for your bills. If you just insure yourself without investing, you are selling yourself short, only planning for the bad things that can happen, and not planning for the good times ahead. It also means that you may have to constantly work and never be able to retire. Neither insurance nor investments will work on their own; you need to plan and review both in order to be financially successful.

A very important thing to take note of is that investments take a long time to accumulate, especially if you cannot set aside a lot of money to invest. Insurance policies cover you pretty much as soon as you get them. So, it’s always important to sort your insurance out first; once you are protected you can focus on growing your money.

But do remember that investing and insurance is never fixed and one-size-fits all. You need to constantly review your finances in order to keep up with your changing needs!

What Happens If I Leave My Money In The Bank?

Money saved is money earned…right? Not necessarily in the long run. Rising inflation rates can mean that you’re actually losing money by leaving it in your bank account.

If we take my DBS account as an example; the interest rate is a lousy 0.05%. The average rate of inflation in Singapore is projected to increase to 2%. In theory, if I leave $100,000 in my bank account for 5 years, I will have $100,250 after interest. However, this amount of money will have lost buying power. In theory, my money in 5 years will actually be worth $90,622; I will have lost $9,378 just by leaving my money alone! (It has a negative rate of -1.95% when inflation is taken into account.)

While inflation shows an upward trend in the economy, it can be a massive hindrance to our bank accounts! So what do we do? There are a couple of ways to take action today! The first one is to find a savings account that offers you a higher interest rate. Some offer 2%-3%.

The second and most effective way is to put your money in instruments that will get you a much higher rate of return. This is why I feel that investing is key; even if you find something that yields a conservative 4%, your $100,000 in 5 years would be $121,665.

I will be writing about in a future article the benefits of different investment instruments.

Hindsight is bitter sweet; it’s very easy to sit back and relax and leave your money alone…but you will regret it in the long run.