Tuesday, December 6, 2016

Just Contributed More Money To SRS Account

I just contributed another lump sum of monies to my SRS account. There are good reasons for me to do so since I get to enjoy tax reliefs and will end up paying less taxes for the next year.

I figure that I have contributed about $10000 and upwards so far this year to my SRS account. There is a cap to how much relief I can claim so I will probably max that out by end this year ( which really does not give me much time!).

I have also maxed out my CPF minimum sum top up by contributing $7000.

Good tax reliefs so why not?

Sunday, December 4, 2016

Interest Income for November 2016

Really need to get into habit of recording down my dividends and interest income. As some of you might be aware, I have been relying on banks promotional interest rates or bonus interest to get higher rates for my savings account.

For November 2016, I managed to get $179 from my OCBC360 account. Not bad if you ask me.

Wednesday, November 30, 2016

How Much CPF is Deducted from Salary

Ask around and you will be surprised that not many people actually know how much money is deducted from their salary for contribution to their CPF account.

The CPF salary ceiling in 2016 is $6000. This means that only the first $6000 you earn in a month attracts CPF contributions. For an employee below age 55, it will mean a total of 20% of $6000 is deducted from his gross salary for CPF. The amount deducted is therefore $1200.

Employers contribute 17% and that translates to $1020.

So the CPF deducted from one's gross salary is $1200 while the employer contributes $1020 (assuming one earns $6000 or more a month).

Tuesday, November 29, 2016

How Much is Registered Mail in Singapore

Registered mail in Singapore is offered by Singpost  if it's basically a sign-for on delivery service that requires the recipient to sign an acknowledgement slip before getting the mail.

The mail will be delivered to the address and if nobody is home, a slip of paper informs that the postman had been there and the mail is waiting for collection at some post office.

In Singapore, registered mail will cost an additional $2.24 over the normal mail delivery price. The weight limit is also capped at 2kg.

Sunday, November 6, 2016

Time to Top Up CPF and SRS

Cannot believe that the year is almost coming to a close. Anyway, it is the time of the year to stay putting my finances in order again. And one of those tasks is taking what available spare cash I have to top up my CPF Special Account under the retirement sum top up scheme. Just maxed it out to $7000 since that is the max I can claim tax relief for.

The next step will be to top up my own SRS account as well as my wife's CPF account. All these helps to reduce the taxes that I need to pay. If you all me, I think it is almost a no-brainer that this should be one of the basic steps in retirement planning in Singapore.

Thursday, July 7, 2016

5 Ways to Save Money on Your Airbnb Booking

Airbnb is great for budget holidays outside Singapore until the unexpected costs come creeping in. Airbnb is a lifesaver when it comes to budget holidays. With hotels charging typically S$200+ per night or more in major cities, most of us can’t afford longer stays if not for renting. And if you’re racking up miles, there are a number of air miles credit cards that will give you points for making Airbnb bookings. Stay in an Airbnb apartment a one or two week often enough, and those points might mean a free flight ticket to a whole other location. All that aside, do watch out for some unexpected costs. Keep these under control and Airbnb will be an extraordinary budget tool for vacations:

1. Huge Transport Costs from Not Checking the Address

Even if the landlord doesn’t disclose the exact address, be sure to ask for a few local landmarks or the name of the neighbourhood. Remember that in large cities, you can rack up monstrous transport costs if you’re staying in a far-flung corner of the city. If you’re staying New York for example, there’s no point finding a cheap rental unit in the Bronx at S$90 a night, and then realising you need to waste an hour on a train ride or pay S$12+ for a cab to central Manhattan. Over a week, you’ll spend as much as you would on a more central apartment, and lose time besides. A simple way around this is to ask the host how much it costs to get to different places from the residence you’re staying in.

2. No Wi-Fi

If you’re on a working trip and you need the Internet to function, be sure to clarify that your host has wi-fi access. Otherwise, you will be spending a lot of money at cafes with wi-fi (you need to buy endless cups of coffee to justify sitting there), or probably over S$100 to get a prepaid, unlimited data plan. That’s assuming such an option exists wherever you’re going.

3. Cash Deposits

Some landlords will set a cash deposit as a term. As far as possible, avoid these people. Find someone else to rent from, unless you are truly desperate and don’t mind the possibility of never seeing the deposit again. Putting down a cash deposit means you have to leave when the landlord is around, to get your deposit back. If you leave and later try to get your deposit by mail or wire, good luck; you’re dependent on the good nature of the landlord. Some landlords will also make up excuses to deduct from your deposit, by citing “damages” or “losses”. The amount of the deposit and the involvement of a foreign jurisdiction will make it hard for you to fight for the money back.

4. An Absent Host

A lot of unexpected costs creep up when the host is absent. For example, what if you’re in London in December (i.e. in winter) and the heater system breaks? Or what if, due to theft or absent-mindedness, you misplace the keys and the host is far away in Hong Kong? These little accidents can cost hundreds or thousands of dollars, as they typically mean you will end up in a hotel. So if you can get used to the company, go for a hosted apartment.

5. Water, Toilet Paper, and Other Critical Amenities

Some Airbnb units come to you completely bare: no water (in some countries bottled water may be a necessity), no toilet paper, no food in the fridge, etc. If you are used to hotels, this may catch you off-guard; and your first night will be spent buying toiletries, stocking the fridge, and other essentials. Factor the cost of these into your trip, when comparing prices. If you really hate wasting time and money on these things, and the price difference is not too great, a cheap hotel may be better.

 [This article was kindly provided by SingSaver.com.sg]


Wednesday, July 6, 2016

MAS makes saving for retirement easier

The average Singaporean can now get corporate bonds for their retirement portfolio, which yield better returns than a fixed deposit. In a little-noticed Business Times page, it was reported that the Monetary Authority of Singapore (MAS) now allows retail investors to buy corporate bonds. The average Singaporean doesn’t know much about these, so it was ignored. But what you should realise is that financial planning for retirement became much easier now that you can purchase corporate bonds.



What is a Corporate Bond Anyway?

Companies need capital to run. Before they can start manufacturing, for example, they need to hire employees, buy factory equipment, and find warehouse space. There are two ways a company can get capital. The first is to sell shares in the company, and that’s what the stock market is about. However, they cannot sell too many shares, as they would lose ownership of the company to the shareholders. The second way is through debt (borrowing). Instead of getting money from a bank, a company can choose to borrow by issuing a bond. The bond is a promise to pay back the bond-holder a given sum, at a certain time. In return for loaning this money, the bondholder also gets paid interest, in the form of a coupon.

Why Are Corporate Bonds in Singapore a Big Deal?

Investment grade bonds (bonds issued by big companies that are highly unlikely to fail) are a favourite asset for older investors, for reasons we will describe below. Bonds can be an excellent alternative to just keeping your money in a bank. The interest rate in a corporate bond is much higher than that of any bank account (it’s easy to get five per cent per annum). Unlike stocks, the income they provide does not fluctuate. The company must pay you back, regardless of how well or how poorly they performed that year. For the longest time however, corporate bonds were the province of the rich. Many of these bonds require upward of S$200,000, which the average Singaporean could never afford.This has always been a little unfair, as it means richer people have access to a retirement asset that regular people don’t. Today however, MAS has a new system that makes it easier for corporations to sell bonds to the average Singaporean (retail investors), while still keeping us relatively safe from risks. Pretty soon, we may see corporate bonds that are available for just S$1,000 and up.

How Do You Get Money Out of a Bond?

The only bond types available to retail investors will be vanilla bonds. This is how they work: Say you buy a bond with a par value of S$1,000, and the coupon (interest rate) is five per cent. The bond is for five years. This means you will get five per cent of S$1,000 (S$50) a year for five years, after which you will be paid the par value (S$1,000). In essence, you are loaning the company S$1,000 now, and getting back S$1,250 in five years. Note that the coupon is often paid semi-annually. In the above example, you might get S$25 every six months. If you were to use a fixed deposit, with a typical interest rate of 0.8 per cent, then at the five years your S$1,000 will only grow to around S$1,035.

Why Are Bonds Great for Retirees and Older Investors?

Unlike mutual funds or picking stocks, bonds provide a reliable fixed income stream. Shares do not always pay out dividends, as it depends on how well the company is performing. Likewise, mutual funds have volatile returns. As we get older, it becomes more important to focus on protecting our wealth instead of growing it. Bonds are one of the most important ways to do this, and many financial advisors will rebalance a portfolio to include more bonds than stocks after retirement. On the flip side, note that most financial advisors do not recommend heavy use of vanilla bonds for younger investors, who are in their 20s. This is because vanilla bonds may not cope with the rate of inflation, and the returns are low compared to stocks.



But Are Corporate Bonds Safe?

Under the new MAS framework, the bonds are only available to the public after they have been bought by institutional investors (e.g. an insurance company) or other accredited investors for six months. This means that more professional investors will take the initial risk to determine if it’s safe. The bonds available to the public are also investment grade bonds. They are rated and tested by Credit Rating Agencies (CRAs), and are not speculative in nature (what we call “junk bonds”). That said, there are two main risks inherent in bonds. The first is inflation rate risk. S$500 today is worth much less than S$500 in the year 2050, as the cost of goods always rises. But because the payout and par value of a vanilla bond do not change, they do not rise with inflation. You may not be making enough money to provide for your retirement if you just rely on bonds. The second risk is default risk. There is a chance that the bond-issuer may go bankrupt, or be unable to fulfill its loan repayments. The chances of this happening are small when it comes to investment grade bonds, far less than one per cent. Investment grade bonds tend to come from large, well-established companies. Also, a bondholder is in a safer position than a shareholder. If the bond-issuer declares bankruptcy and is liquidated (which means all its assets are sold off), bondholders are paid before shareholders. Overall, the low risk posed by investment grade corporate bonds, coupled with an interest rate that beats the banks, will be of interest to older investors. Once the new bonds start filling the market, it may be a good idea to call your financial advisor and ask about them.

 [Article from SingSaver.com.sg]

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