What Should I Do With My Ang Baos?

Recently, I asked readers for their views on what should I do with my annual bonus.  This was really triggered by reading the newspapers and learning that most Singaporeans actually intend to spend their annual bonuses instead of saving it.

Since the Lunar New Year is upon us, I am sure many readers are still in the privileged group (i.e. unmarried) and are still entitled to collect red packets (or what we commonly call as Ang Baos in Mandarin).  Again, I post the same question:  What will you do with the money in your red packet?  

Or for those of you who are no longer entitled to collect red packets, what do you wish that the receivers of your red packets will use the money for?

At the same time, I will like to wish all readers a Happy Lunar New Year!

Retirement Age and Retirement Planning

As soon as we settle into working life we start to look forward to retirement - that great day when we can leave work for the last time and be free to enjoy our golden years. For most people, this happens at the birthday after you reach the government retirement age. Some people are lucky enough to have the financial security they need for early retirement.  In either case, some form of  retirement planning will be required.  Retirement planning basically involves finding out the age that you will retire at and working towards saving enough money so that you will be able to live comfortably without drawing a salary when retirement comes.

The Retirement Age Act

In Singapore, the Retirement Age Act determines the minimum age of retirement. A person can currently retire the day before their 62nd birthday. This may change in the future, and as the average population ages the retirement age is likely to increase like it has in other countries. In some parts of Europe the retirement age is as high as 67 currently.

Employment Contracts

The employer should give the employee advance notice of their retirement unless their employment contract explicitly specifies it. It is also unnecessary for the employer to give any retirement benefit unless it is in the contract.

Employers do not have to retire an employee once they reach retirement age. If both are happy, then they can continue to work for as long as the employee remains fit and able to perform their duties.

Wage Reductions

To help companies in Singapore continue to employee older people, it is legal for them to reduce the wages of employees over the age of 60. This can be a straight salary reduction, or a reduction in any other employee-related costs such as bonus, benefits and pension contributions.

This can lead to experienced people losing up to 10% of their salary as soon as they celebrate their sixtieth birthday. Luckily, employers cannot just base the reduction on age alone, but must take into account other reasonable factors. These can include the employee’s ability to perform their duties fully as they age.

It is important to remember that the 10% is a maximum reduction and can be taken off in one chunk or in several smaller deductions. This allows the employer to effect a gradual reduction to the employee’s salary over a period of time.

Working after Retirement Age of 62

The Singapore Retirement Act does not allow for compulsory retirement at the age of 62, and neither does it stop anyone continuing to work beyond that age if they want to. Anyone who wants to continue working should arrange it with their employer. Re-employment after age 62 is also probably going to be a norm in the future.

Other Exceptions

Some fixed-term employment contracts are immune from the Retirement Act. People on these contracts can continue to work as normal and then retire at the end of the contract. A notification exists to the Retirement Act that specifies which people are exempt.

Conclusion

Retirement usually marks the end of your "paid" working life, and for many people it is something to look forward to. Others love work and try to continue working for as long as they possibly can. Whatever your views, it is important to know the laws in your country concerning retirement so that you know what are the likely scenarios (e.g. pay cut)  when it is your time to retire.

"How to retire in Singapore?" is perhaps a question that is often on people's minds.  For some people, it might even involve drastic moves like moving to a cheaper country to retire (read: Retire in Philippines).  Well, if you are interested, you can also read some of my thoughts about retirement and let me know what you think.

Land Banking Investment Risks

[Photo credits: Image by kwerfeldein]

Land banking is an investment scheme where someone buys a piece of land and sells it later for a profit. Sometimes they divide the land into a number of smaller plots and sell each one to generate a profit. The investor can hold the rights to the land for a short time and make a quick profit or hold the position for years before selling the land.

Often the plot is a piece of pristine land that is agricultural in nature, but it can also be former industrial land which might be contaminated. If the landowner is able to get building permission to develop or rezone the land,  it will increase the value of the land, and they can make a profit by selling it to a building developer. Sometimes the land is completely undeveloped and it might be possible to use it for farming.

Advantages of Land Banking

One of the great advantages of land banking over other kinds of investment is this:  the investor owns something that physically exists. This is different to stock and commodity traders who own a certificate, a piece of the business which is not really tangible to certain people or in other more complex finance instruments, they are just "numbers on a computer". Land banking thus often appeals to a different kind of investor who like the idea that their investment is actually a tangible asset.

Problems with Land Banking

I have written previously to beware about land banking, primarily because it is often an unregulated investment in many countries.  In a previous poll that I did on this blog, respondents also felt that land banking was one of the more toxic investments around.   Most people in Singapore are also probably aware of the case surrounding Profitable Plots which was involved in land banking.

Like any other form of investment, the price of land can go down as well as up. If the piece of land contains industrial contamination or can never get permission for development then it becomes effectively worthless.

Another problem with land banking is that a number of unscrupulous people have used it as a way to defraud people. They buy a plot of cheap land and then produce fake documents that make it look like it is worth more than it actually is and sell it on to unsuspecting investors. The rogue land bankers just vanish with the money leaving the investors with a worthless tract of land.

Locations of the Land

Land bankers can, in theory, invest in land anywhere in the world. However, some countries have laws that prevent non-nationals from owning land. If you are considering investing in land it is important to consult a lawyer who is an expert in the laws where you are buying the land. This will help to prevent any legal problems surprising you in the future.

Environmental Issues

In some areas of the world, virgin land is being taken and cleared to become agricultural land. This virgin land is often some way from existing agricultural land and infrastructure making it cheap to purchase. The investor can then hold the rights on the land until the infrastructure moves closer to it. At this point, they can rent it out to farmers or sell it for a profit. It might also be that the land is in an area suitable for mining and the investor buys the land in the hope to sell it to a mining company. In either case, the government could decide that the land lies within a protected area

Buyers Beware

Land banking is one way for people to invest and actually have the feeling of owning something tangible. It can be a great way to make money, but it is also a risky business. Anyone considering this should probably get legal advice first and only risk money that they can afford to lose.

What Should I Do With My Annual Bonus?

The Sunday newspaper carried an article on how people were intending to spend their annual bonuses.  While most have or were planning to spend it on holidays, clothes and IT gadgets, others were thinking about saving or investing a part of it.

The article got me thinking on what I ought to do with my annual bonus.  Currently, it is seating in the bank and I realised that it is not being put to good use.  One idea that I have been toying with is to pay off my car loan which is still outstanding.  The idea of being a little closer to being debt free is just so appealing right now.  By paying off my car loan, I will just be left with my housing mortgage loan.

Another idea will be to invest that sum of money in a mixture of REITs as well as monthly dividend stocks like Gamco Global Gold & Natural Resources Trust (GGN).  This will serve as a passive income flow for me.

For REITs, I am choosing between Suntec REIT, Sabana REIT and LMIR Trust.

Any ideas or suggestions from anyone?

Investing in Silver

Since man first discovered silver, it has been an object of desire for both its value and its use as a form of money. This usually means that investing in silver gives a good long-term return to the investment.  Not too long ago, I wrote about buying silver in Singapore, how I was buying more silver (for collection purposes) and also some of my broader investment thoughts for 2012.  Of course, I warn readers not to take what I write as any form of personal finance advice.

[Picture credits to digitalmoneyworld]

The Silver Market

The market for silver is not as big as the gold market, but is still worth an estimated $15 billion annually. Traditionally, the price of silver tracks the price of gold. The ratio was set by United States law at 1:15 in 1792, but price increases in both metals meant that the gold/silver ratio rose to over 1:60 in 2009. The price of silver has continued to rise and reached record levels in 2011, with the average price reaching $41.20 for one troy ounce.

Like most commodities, silver trades on a market with traders buying and selling the metal to make a profit. The London silver bullion market is one of the main places where it trades. Another is iShares.

Silver in Banks

In some countries investors can walk into a bank and buy silver bullion over the counter. This can then be taken home and stored in a safe or kept in a safe deposit box in the bank. It is even possible to store your silver in allocated or unallocated storage with a bank or dealer to keep it safe.

Silver comes in a variety of bars, including:
* 1000 oz troy bars (31 kg)
* 100 oz troy bars (3.11 kg)
* 1 kg bars
* 10 oz try bars (311 g)
* 1 oz troy bars (31.1 g)
* Odd weight bars

The most popular bars are the 100 oz troy, with popular brands including Engelhard and Johnson Matthey. The branded bars are usually worth more than unbranded or odd weight bars.

Investing in Silver

Silver can be both a long-term and short-term investment. In the short-term, investors can trade silver for a profit in the same way as any other commodity by always aiming to buy low and sell high. Market fluctuations can give profits on each trade, but also losses meaning that this can be a risky investment as one needs to know how to time the market (something I admit I am totally not good at!)

Over the longer term, the price of silver has generally risen, with a sharp rise over the last few years. This is great news for anyone that owned silver before 2005, but not so good for anyone thinking of investing now. Of course the market price could continue to rise, but nobody knows for sure and it could fall back down to earlier levels.

Over the past few years, investing in silver has been a great way to make money. The price has increased by eight times in 11 years and doubled since last year, but that does not mean that it is guaranteed to continue that way so never risk any money that you cannot afford to lose.

You might also be interested in reading the recent article on Investing in Gold.

Investing In Gold

Gold is one of the most valuable and desirable substances known to man. For many years it has been a status symbol as well as a form of currency since the days before money. It is also the most popular material for making jewellery, with roughly half of all gold being used in this way.

Gold Price


For many years, the price of gold was a relative standard for currencies around the world. This started to change in the 1970s when the value of the US dollar stopped being linked to the price of gold and finished in 2000 when the Swiss Franc was the last currency to remove the link.

Like all commodities, it is possible to treat gold as a short-term and long-term investment. Over hours, days or weeks, the fluctuation in the price of gold on an exchange allows traders to buy and sell for hopefully a profit. With luck or skill, a gold trader can buy some gold at a low price, sell it at a higher price and buy more when the price drops. Repeating the process allows an investor to make a lot of money, but if it goes wrong they could make a loss on each trade.

Historically, the price of gold has risen at a steady rate making it a great safe investment. In fact, during the recent financial crisis many people turned to gold as an alternative way of saving. This is a relatively safe way of investing in gold, but still leaves you with the problem of finding somewhere to keep it safe. Most experts recommend that gold is a rainy day investment, like an insurance policy that should be kept until you absolutely need to sell.

Gold Coins/ Bullion


Another way to invest in gold is gold bullion coins. These cost slightly more than the spot price of gold, but are easier to buy, trade and store than larger pieces. Typical sizes include 1/10oz, 1/4oz, 1/2oz and 1oz. The governments of the UK, USA, Canada, China and most other major world powers mint these coins, so they are very reputable.

Mining Stocks or Close Ended Funds


Apart from investing in physical gold itself, one can also invest in the mining companies that are involved in gold production.  There are also certain funds that invest in various mining stocks.  One of these close ended funds is Gamco Global Gold & Natural Resources Trust which pays out a monthly dividend.  If you have been reading and following this blog, you probably know that I have loaded up on GGN just recently..


Storing Gold

Many major banks will store gold for customers, as will specialized gold exchanges and trading houses. You can even walk in to some banks and hand over your money in exchange for a gold ingot. Once you have carried this heavy bar home, you need somewhere secure to store it. If you do not have anywhere secure enough then most banks will have a vault that you can use for a fee.

Every major bank and most of the governments in the world store gold. Since the start of the economic woes in 2007, the world banks have become net buyers of gold which shows just how great an investment it really is.

This desire for gold and its scarcity and it being difficult to obtain means that it should continue to keep its value, but like anything the price of gold is not immune to market fluctuations and could even crash.

Retire in Philippines

7107 islands of heaven; that is what you’ll find if you go to the Philippines.

Expat’s from all over the world are taking their hard earned money to the beautiful island paradise of Philippines to enjoy an early retirement at a place where they can afford to live and be treated like Kings and Queens. Talk about retirement planning!

The long, golden sand beaches stretch for miles and miles around island after island. Cruising between them with your own boat for a week or two to explore a new hidden place in paradise along with your spouse, partner or entire family that you brought with you when you made what most likely will be the best decision of your life.

The South China Sea is home to the Philippines, a tropical paradise that can boast hot and humid weather 24 hours a day for 365 days of the year. Along with the amazing weather, the quality of life when you have a normal retirement payout every month is excellent. Before making this life changing decision there are several things you have to consider.

First of all, you have to think about where you’re going to live and how much you want to pay for it. The most expensive place in the Philippines by far is Manila. If you go to some of the regions outside or to remote islands you can find houses, apartments and bungalows for a lot less than in the large city of Manila. You can get accommodation from P10,000 per month all the way up to P50,000. 10,000 Philippine Pesos is around 220 USD.

The second biggest expense you’ll have is your utilities. That means water, electricity, phone etc. All of the things that will keep your house up and running and that will keep you nice and comfortable in your own little paradise. Your average cost for all your utilities will end up on average around P8,000.

Food and groceries is essential for anyone’s living and it is exactly the same in the Philippines. Now you can go down two roads, you either go for locally and nationally produced food or you go for imported food. Now the imported food will be at a higher cost, still, nowhere near the amounts you were paying at home. If you go for the local food you can save even more money. Budget about P30,000 for a single month if you’re not living by yourself.

Now we’re going to get to the luxuries that you can afford to have when you move to the Philippines if you have a decent budget. Two major ones are a personal driver and a maid. You can get a personal driver for between P3.000 and P5.000 a month, so under 100 USD! All you have to do is make sure you provide food during the day and a vehicle for them to drive in if they don’t have one. A maid is even cheaper than that. For about P2.000 every month you can have a maid doing all the work around the house that you never felt like doing or downright hated.

Taking all these things in to account, the Philippines is an amazing please to settle down after your hard years of working. Spend your money wisely and live the rest of your life being treated as a King or Queen.

Only in the Philippines.

[This article was written by a resident of the Phillipines.]