6 Financial Resolutions For Every Singaporean

As I receive my annual bank statements and credit card summaries, I realize how my financial year went by. January is a fantastic time to review your financial strengths and weaknesses. Where did you fall short? Not only is it a good way to reflect on your spending habits, but it is also a good way to craft your financial goals.

Use your year-end resources to establish your financial resolutions for the year 2020!

1: IDENTIFY YOUR FINANCIAL GOALS

Several articles from Money Digest highlighted how helpful it is to determine your financial goals. Start your journey by identifying both your short-term and your long-term financial goals. Are you hoping to earn a degree or to expand your retirement fund? Do you see yourself purchasing a new flat with your spouse? Or, do you want a to lead a different career?

To illustrate your path in a detailed manner, you may create a Financial Vision Board. Take some time to think about how to achieve your financial goals this year. Consider your outlook before your plan of attack.

2: SAVE MORE MONEY

How many times have you heard about “saving more money” as a resolution? This is a common financial resolution for many Singaporeans. However, most people do not know how to start. It is recommended to be specific to increase the chances of success. Increase the percentage of your monthly income that goes into your savings.

Save at least 15% or your monthly income and increase the percentage whenever you feel more comfortable. If you are already saving 20% of your income then, you are in good place. A person who is earning S$4,000 per month can reap the benefits of having S$9,600 by the end of the year. Raising the percentage to 30% will equate to having S$14,400 by December 2020. Saving more money gets you closer to achieving your financial goals.

3: PAY OFF YOUR DEBTS IN FULL

Two years ago, MAS estimated that there are 9 million credit cards in circulation in Singapore, with Singaporeans charging an average of S$555 per card. Imagine how much these numbers have grown since? Credit card debt is rising in the country as convenience is hard to resist.

Many credit card holders enjoy the attractive benefits or the good rewards programs of several issuers. While there is nothing wrong with paying using cashless methods, you need to be responsible with paying the hefty interest rates and balances. Commit to paying the full amount of your monthly debts this 2020!

4: GROW YOUR INVESTMENTS

Aside from increasing your savings, you can make your money work for you by investing each month. There are many ways to invest your money such as putting it in high-interest savings account. This can increase your earnings by 2% per annum.

Another approach is to sign-up for investment-linked insurance policy where a portion of your premiums will be invested in specific investment funds. Review your insurance policies and ask your financial adviser about this option.

5: GO ON A CASH-ONLY DIET

You have endured the back-to-back expenses brought by the Holiday season. Chances are, your credit card got exhausted due to the year-end sales and other Christmastime delights you spent for your beloved ones.

Cushion these expenses by going on a “cash-only” diet for a few weeks or a couple of months. Begin by allocating a monthly budget based on the money you have. Give yourself a specific cash amount per week and work your way around it. Doing this will challenge your self-control and your resourcefulness.

6: AUTOMATE YOUR SAVINGS

Transform your new year enthusiasm into something productive by automating your savings. Commit to this new habit by researching on the available services of the local bank institutions. For instance, I recently came across with the UOB Stash Account.

UOB Stash Account allows you to accumulate your savings for up up to 1% p.a. interest, simply by maintaining or increasing your previous month’s Monthly Average Balance. An initial deposit of S$1,000 is needed to open the account, which is open for all. You can apply for your Stash Account and get an approval within minutes by simply going to the website. Terms and conditions apply.

Sources: 1 & 2

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Useful Schemes And Grants For Startups And SMEs

Sourcing funds as a startup business is not as easy as it seems. Focus on making sure that you set realistic and achievable goals with the help of the following schemes and grants.

#1: ANGEL INVESTORS

Believe it or not, angels are among us. These “angels” let startups and small businesses fly by providing necessary funds. Angel Investors invest money to said businesses at their seed stage despite having no proven success in their business model. In Singapore, here are some Angel Investor networks that you can tap.

BUSINESS ANGEL SCHEME (BAS)

Supervised by SPRING SEEDS, Business Angel Scheme is an equity investment scheme for Singapore-based businesses. It partners up with angel group investors to let them invest in innovative startups. SEEDS can invest up to a maximum amount of S$1.5 million! They profit by taking an equity share from the startup, which is in proportion to their investment.

SINGAPORE ANGEL NETWORK (SGAN)

There is a network of angel investors that invest in the later stage of the startup’s financial requirements. This network is none other than the Singapore Angel Network (SGAN). SGAN is the investment arm of Thakral Group of Companies. Interestingly, this network does not target any specific industry. This means that startups will have an equal chance of being selected. In fact, this network invests in other countries as well.

#2: ANGEL INVESTORS TAX DEDUCTION SCHEME

Be an angel! Invest in start-up companies in Singapore to receive a huge tax benefit from the Angel Investors Tax Deduction Scheme. You read that right! The Government introduced this incentive scheme to help businesses grow through their management expertise and expansions.

Valid until March 2020, angel investors can enjoy 50% tax deduction on the investment costs at the end of a two-year holding period. It is capped at S$500,000 worth of investments in each Year of Assessment.

#3: MAS FINANCIAL SECTOR TECHNOLOGY AND INNOVATION SCHEME (FSTI)

Launched by the Momentary Authority of Singapore (MAS), the Financial Sector Technology and Innovation (FSTI) scheme aims to provide support for the vibrant ecosystem of innovation. It attracts fintech companies to set up their labs, to develop solutions, and to build their technology infrastructures.

Under this is the sub scheme called FSTI-Proof of Concept. Through this sub scheme, you can receive support of up to 50-70 percent of qualifying costs capped at S$200,000 for up to 18 months.

#4: BUSINESS IMPROVEMENT FUND

Business Improvement Fund (BIF) is open to all Singapore-registered businesses with projects directed to tourism. It comes as surprise that it is run by the Singapore Tourism Board.

Eligible SME applicants can receive a funding support of a whopping 70% of qualifying costs. On the other hand, non-SME applicants can receive a funding support of up to 50% of qualifying costs.

#5: ALTERNATIVE OPTION: VENTURE CAPITALISTS

Venture Capitalists (VCs) are investors who provide capital to support small companies or to aid startup ventures. They strategically invest on businesses that will generate significant profit and experience extensive growth.

Image Credits: pixabay.com

More and more venture capitalist firms (VCF) have entered the shores of Singapore in the recent years. Exhaust your resources to familiarize yourself with the available firms, which are in lined with what your company represents.

a. SEQUOIA CAPITAL (focused on financial, healthcare, energy, mobile and internet startups)

b. 500 STARTUPS (a seed fund and startup accelerator)

c. SPH MEDIA FUND (Singapore Press Holdings’s investment arm)

d. SINGTEL INNOV8 (Singtel’s investment arm focused on digital media, internet apps, and other tech startups)

e. Life.SREDA (focused on fintech companies)

Sources: 1 & 2

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Cheap Investment Opportunities In Singapore

Many Singaporeans think that should accumulate a significant amount of wealth before investing in the stock market. Well, let me prove you wrong! You can start investing with as little as S$100.

This seemingly low amount has three investment options. Choose wisely!

OPTION #1: REGULAR SHARES SAVINGS (RSS)

Regular Shares Savings plans (RSS) are also called monthly investment plans. Your mere S$100 can turn into a stock on the Singapore Exchange (SGX) as long as you commit to it monthly. Simply open an RSS plan with one of the four leading banks in Singapore. For instance, you may choose OCBC bluechip investment or POSB Investment-Saver.

The broker for the financial firm will invest your fixed amount based on the instructions you gave. I may instruct the broker to invest to Strait Times (STI) every month or to other bluechip companies. Do your research before spending! The best part about it is that you have full control over your investment decisions. What’s more? Your instructions can be submitted online thru the bank’s platform.

OPTION #2: UNIT TRUSTS

One a scale of risk taking, you may fall under the conservative end. Fortunately for you, you can invest your money in unit trusts. Unit trust works by combining money from a set of investors. The pool of money will then be invested by a professional fund manager. The professional fund manager will have control over your investment.

Nonetheless, you must educate yourself about the type of unit trusts wish to invest in. Unit trusts can be bought for about S$100 in various local banks.

OPTION #3: ROBO-ADVISORS

The future is upon us! Investors can use robo-advisors to allocate their assets in the portfolio. Robo-advisors automatically help investors by tapping on the formulas to manage their assets.

It is a relatively new system in Singapore. Hence, there are only a few brands to choose from. For instance, you may hop to Smartly or AutoWealth. However, the latter has a minimum investment of S$3,000 while the former does not. These two platforms use different algorithms to arrive at optimal solutions. Moreover, these platforms can charge up to 1% per annum for managing your money. The fee is calculate based on the percentage of the total portfolio held in your account.

Source: dollarsandsense

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5 Top Considerations When Adding an Asset Class to Your Portfolio

Investors of any age would do well to revise their current portfolios when they take age, risk appetite, retirement goals, understanding and correlation to other assets in the portfolio into consideration.

The rise of fintech now adds alternative assets like peer-to-peer lending, cryptocurrencies and microloans to the sheer variety of investment options. No longer do investors contend with just commodities, stocks, bonds and real estate.

Investors who accept that there isn’t a one-size-fits-all solution to building a diversified portfolio stand to do better. Here are general principles on finding the asset class that’s right for each investor portfolio.

1. Age and investment horizon

Assets behave as they should when given the time to do so. For example, it’s a well known saying that stocks outperform bonds; which is more likely to be true over a longer investment horizon.

Stocks will almost certainly outperform bonds over the next 30 years, for example, as fundamental facts like inflation make this outcome the most probable. But no one knows for certain if stocks will outperform bonds next year, or the year after, especially with the current Sino-US trade war.

As such, when considering the performance of any asset class, it is important to understand that the more time you give it, the more likely the asset will perform as expected. Wealth managers may tell clients to reallocate from equities to bonds when they get older.

In general, older investors will want to favour fixed income securities, be they perps or simple annuities, while younger investors can be more aggressive. Given their longer investment horizon, younger investors can pursue long-term capital gains, and expect their assets to behave more or less planned.

2. Financial goals, risk appetite and capacity

Personal financial goals is as much about psychology as mathematics. An asset class must meet the risk appetite, or “sleeping point”, to prevent stress or impulsive moves.

For example, there may be many good reasons why cryptocurrency fits a particular investor’s portfolio. She is young, affluent, and such an investment would make up only 5% of her portfolio. But if she is risk-averse and uncomfortable with volatility, the sleepless nights and stress may outweigh the value of the asset, regardless of what the numbers suggest.

If the risk is beyond the investor’s appetite, there is also an increased likelihood that an investor will derail their long-term financial goals. A news report on falling cryptocurrency prices, for example, could set off a panic that results in offloading the asset and incurring a loss.

In general, monthly obligations, inclusive of a home mortgage and premiums for an endowment plan, should not exceed 40% of an investor’s monthly income. Any asset class that pushes beyond this limit is likely taking them past their risk capacity.

3. How the asset class fits within quantified retirement goals

When deciding to invest in an asset class, investors should have quantifiable goals and ways to measure outcomes.

For example, an investor should have a clear idea on how much they need by the age of 65 to retire, with an income replacement rate of at least 80%. Only then is information about an asset class’ historical returns useful.

Investors should also note that every asset class rises in value over time. They need to ensure the returns are sizeable and fast enough to meet quantified retirement goals.

Some examples include microloans tailored towards invoice financing for small businesses. These commit capital for terms of at most 12 months, which limits what investors can lose while ramping up returns to make up for the shorter investment horizon. Late starters with 20 years or fewer to retirement, can consider these alternatives to conventional assets, such as stocks or bonds.

4. Education and understanding of the asset

Investing in a poorly understood asset means ignoring risk appetite, as the investor tends to overestimate or underestimate the risk involved. Without proper education and understanding of the asset, there are also important subtleties within asset classes that investors may miss.

For example, investing in peer-to-peer lending is often perceived as being high risk. But this varies greatly based on the jurisdiction and platform. While China is struggling with it as a shadow banking problem, peer-to-peer lenders in Singapore and Malaysia have seen default rates of less than 1%, even lower than the default rate suffered by some commercial banks.

Many investors in Exchange Traded Funds (ETFS) may have also ignored that a partial replication ETF does not include smaller stocks by market cap. In the event of a small-cap led bull run, this can result in the ETF yielding lower returns than the benchmark.

5. A low correlation to other assets in the portfolio

Before introducing a new asset class, it is best to confirm that there is a low correlation to other assets in the portfolio. Strong correlations might mean a lack of diversification.

For example, an investor who already owns commercial retail properties might reconsider investing in a commercial Real Estate Investment Trust (REIT) that is heavy on malls. A downturn in the retail industry would impact both the REIT and real estate.

The correct mix of assets varies for each individual. But as a near-universal principle, investors should avoid banking too heavily on the same interlinked group of assets. A qualified wealth manager should be consulted on the right mix for each portfolio.

Looking beyond conventional assets

For a truly diversified portfolio, investors should think of asset classes beyond stocks, bonds and real estate. The emergence of fintech has given rise to peer-to-peer loans and microloans which offer unprecedented opportunities for high growth in a low interest rate environment.

Some new asset classes are also structured in a way to mitigate risks found in conventional assets, such as long maturity periods, opaque structures, and high initial cash outlays.

By taking various factors into serious consideration, investors of any age would do well to revise their current portfolios and look for new alternatives that can complement or replace older asset classes.

About the contributor

X.Y. Ng is VP, Brand and Digital at Validus Capital, a leading growth-financing fintech platform that connects accredited investors with growing SMEs across Southeast Asia.

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You will need a trading plan to trade properly

For most rookie traders, it is more important to make profits from the trades. Unfortunately, they do not care for a proper trading plan. They do not understand the importance of executing a trade properly. There are a lot of necessary aspects of proper trading approaches. Just to name a few, you will need proper risk management, market analysis, entry and exit points for the trades. Without a proper plan made with all of the setups and instruments, the traders cannot execute a proper trade. Few individuals may not favor the time it will take to improvise a proper trading plan. Other than trying to improvise the trading plan, it is not possible to cope up with the market conditions. Therefore, you can barely manage any decent profits from the trades.

To improve your senses on the trading plans, we are bringing this article. There will be discussions made based on improvising your trading edge and mindset. The following will contain some segments to let you know about a proper trading plan. You will just need to practice and improvise with demo trading system.

Use every trade setups properly

A solid trade will be executed when the traders have proper trade setups. With risk management policy, you will set the lots and leverage. When the ordering process is done, it will refer the stop-loss and take-profit. To use those setups properly, the traders also need to do a proper market analysis. The supports and resistances are important for the stop-loss and take-profit. To use proper supports and resistances zones, it is necessary to improvise your technical market analysis. To a novice mind, it may be hard to analyze the historical data and create a proper market analysis plan. For those novice traders, there is no other way for the traders to improve their skill with practice.

From time to time, you will improve your edge with proper trade setups. You will just need the interest in the credentials of a winning trade. And always make sure to learn the details of Forex trading Singapore before you consider trading as your fulltime profession.

Improve the market analysis

In the last segment, we mentioned the technical market analysis. The real market analysis does not end only with technical analysis. There is fundamental analysis too. It is needed to understand the possible market condition. The traders will get an idea of possible price movement. Using the news on price driving catalysts, the traders need to assess the situations of the markets. The concept of price correlation is also prominent for those traders who trade with multiple currency pairs. Based on the fundamental analysis, the traders need to use technical skills. To be clear the fundamental analysis is skeptical and the technical analysis is there to testify the possible price change. If you can combine them optimally, the trades will get a proper position sizing.

From there, the executions of the trades will bring a decent profit very easily. Even with a sudden change in the price shift, the trades will not lose too much money. The stop-loss and take-profit will be there to help to close the trades properly.

Test your plans out before executing

Every trade setups and skills needed to be tested with a demo trading account. As there is no hard cash needed to execute demo trades, you can lose uncountable trades. The traders need to use this feature to improve their trading plans. If there is a plan being made, it has to be implemented with a demo trade. Even your market analysis skills need to be tested with the demo trade executions. That way, the live trades will be solid with proper plans. Also, the traders will improvise their trading edge without losing their own money.

Simple plans like using a demo trading account can help the traders to cross the survival stage. It will not take the traders long to manage consistent profits from the trades. If you start from a simple trade setup and grow your plans, it will be very efficient for your business.

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