Archive for the ‘Managing Wealth’ Category
Regrets Of The Dying – Bronnie Ware
I am sure some of you have read this before. It is a short article by Bronnie Ware.
“For many years I worked in palliative care. My patients were those who had gone home to die. Some incredibly special times were shared. I was with them for the last three to twelve weeks of their lives.
People grow a lot when they are faced with their own mortality. I learnt never to underestimate someone’s capacity for growth. Some changes were phenomenal. Each experienced a variety of emotions, as expected, denial, fear, anger, remorse, more denial and eventually acceptance. Every single patient found their peace before they departed though, every one of them.
When questioned about any regrets they had or anything they would do differently, common themes surfaced again and again. Here are the most common five:
1. I wish I’d had the courage to live a life true to myself, not the life others expected of me.
This was the most common regret of all. When people realise that their life is almost over and look back clearly on it, it is easy to see how many dreams have gone unfulfilled. Most people had not honoured even a half of their dreams and had to die knowing that it was due to choices they had made, or not made.
It is very important to try and honour at least some of your dreams along the way. From the moment that you lose your health, it is too late. Health brings a freedom very few realise, until they no longer have it.
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Advantages Of Investments Structured As Insurance
Over the last few years, a type of insurance policy has been gaining popularity in Singapore. Where investors have sometimes find themselves putting money into ILPs with insurance cover for investment purposes, which I have discouraged in this POST, there is a type of ILPs which is meant for investments. They are commonly called the 101 Products, Insurance Wrappers or the Portfolio Bonds in Singapore. The development of this type of policies arises from tax considerations in Europe and US, since investment returns in the policy is deemed insurance proceeds and is treated differently for taxation. A variation of this in Europe is the Private Placement Life Insurance, which generally comes in larger quantum.
Investors pay premium, regularly or a lump sum to start, into the policy which will be used in investments into funds or other financial instruments. The policy lasts for a number of years at the choice of the investor. There is also the flexibility of stopping investments and drawing funds out of the policy after a certain time period of about 1 to 2 years.
Main Features that differ from a policy for Insurance purpose: (exact details may differ with different companies’ policies)
NO insurance charges. The reason for this is because there is negligible insurance cover. The policy gives an insurance Read More…
Investing in Private Companies
Recently, I have been exposed to a different kind of investments. This is the lesser explored kind of investment as it usually involve more participation and longer search and understanding process. I was involved in several small businesses and startups, mostly in business development. I also gained knowledge of meetings involving proposals and updates from other businesses of investors who invests in businesses, from region of $50 thousand to a few hundred thousands. An associate of mine have also set up a business facilitating setting up of offshore private investment companies with wholly own some of these businesses.
This got me interested in this form of investment, investments in small businesses, not as a executive or management in the business, but as an investor seeking returns. Is it really profitable? It really depends of course, each deal is different, there are coffeeshops and IT start ups. As this is meant to be a blog entry, not a guide book, I will share some of my experiences.
Case Study – Universal Life for Estate Preservation.
In event of a death of a wealthy patriarch, his estate has to be carefully administered. 80% of the time the time a passing of a patriarch is not anticipated and his/her assets not in the ideal state to facilitate either a transfer into an estate or division among beneficiaries.
Let us take a simple example of wealth of a deceased male HNWI, Mr Seah, of age 56 as such: $4.5 million worth net investments in 4 different businesses, 2 restaurants, a trading firm and a logistics company. 2 properties worth $3 million, one of which is residence of the family, and $0.5 million in cash equivalent. However, at the time of passing, Mr Seah is actively involved in the running of 3 of these 4 companies. He had taken out a personal guarantee on $3 million dollars on capital loans, trade and credit lines in total. The banks will require either a repayment of the loans or another guarantee on the original loans. The children, 2 sons are just 22 and 25 years old and fresh out of college. Though they are fully independent, neither of them are involved in the businesses as they started working in big corporations gaining experiences and exposure. As such, it is likely that the banks will not find the personal guarantees of them sufficient. Either that or sell their residence and the other property. If no alternative is found, the estate will have to sell of parts or full of the businesses for repayment of the loan. That will be a pity, as the restaurant and the logistics company is just about to take off after running for 3 and 5 years respectively.
Broad Long Term Strategy
No one can get the markets truly right. Back a few months ago, things are looking calm. Global recovery is slowing, but markets are growing less volatile for a couple of months in May to July. This all changed in a matter of days around start of August. I will not go into the events for this post but focus on what I felt is an important long term wealth building mentality.
“Buy Low Sell High”
A lot of investors ends up buying high, selling low. Are you one of them? Did you sell of your investments meant for long term retirement, children’s education, or accumulation purpose in the last 2 weeks?
I’m not saying it is wrong to sell, but you must assess your reasons. Lets take a look at the following charts.
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Interesting Thoughts About Dollar Cost Averaging
I am not going to discuss the basics of Dollar Cost Averaging, I believe readers can find out about the concept quite easily on the Internet. Just going to display some interesting facts and graphs.
More about interest rates, inflation and investment instruments.
A few days ago I posted on how interest rates and inflation have been affecting investors and savers. One day later, on Friday, DBS announced that it will be slashing what it pays savers. Business Times Article
Effective Oct 15, interest rates for its POSB savings account will be pared to 0.1 per cent from 0.125 per cent for small savers. The next higher rate of 0.25 per cent, all savings accounts – POSB and DBS – will require a minimum of $100,001, double the existing $50,001. For balances above $1 million, DBS will pay 0.275 per cent for all savings accounts.
DBS autosave, which is the current account, will continue to earn the highest interest rates. Balances will have to be above $250,000 to earn 0.325 per cent, current balances above $100,000 earn 0.325 per cent. Remaining balances above $1 million will earn a princely 0.35 per cent.
DBS, the nation’s largest bank, has been struggling with record low interest rates which eats into its profit margins. The benchmark three-month Sibor or wholesale lending rate has been hitting new lows last month. It has slid to 0.50501 per cent from a week ago, and down from 0.51889 per cent on Sept 13 – the lowest in at least 23 years.
Also recently, Lorna Tan wrote an article Straits Times “How to make your money work harder.” In the article, she suggested 4 instruments, Structured deposits, Bonds, Bond Funds and Stocks with dividend yields.
Low interest rates hurts retirees, savers.
Global Financial Crisis of 2007-08 has brought about changes that affected lives of common people. Interest rates are at 1% or below in most developed countries, and there seems to be little prospect of their rising soon. The futures market believes that American rates will still be below 1% in July 2012 while Fed has pledged to keep “exceptionally low . . . for an extended period.”
In Singapore, interest rates have dropped in tandem with US dollar interest rates. While much less drastic than a 5% to 1% for US dollar, fixed deposit interest rates dropped from 3% to about 1%. However, the problem is that inflation in developing countries like Singapore are higher than developed countries. Singapore’s inflation is expected to be 3-4% this year. The Monetary Authority of Singapore keeps inflation in check through exchange rate policy but does not control interest rates. Advance explanation found here and here.
How does low interest rates in the many economies affect the world and life in Singapore? Here are a few effects.
The Role Of Property In Your Asset Allocation
Property is a significant source and store of wealth for affluent individuals around the world, a major allocation for their capital and, in many cases, a source of huge pleasure and enjoyment. It is a long-term investment that offers the potential for income, capital gains and a hedge against inflation. The optimal asset mix for an asset allocation for a wealthy client usually includes real estate properties, specific businesses, various equity and bonds.
Save on Income Tax with Supplementary Retirement Scheme!
Take avantage of Supplementary Retirement Scheme (SRS) and save on income tax like a lot of other middle aged Singaporeans. SRS was established to encourage individuals to save for their retirement by offering tax incentives. SRS is open to all Singaporeans, Singapore Permanent Residents and foreigners.
Benefits
Besides having a larger pool of savings upon retirement, members can also claim tax relief for contributions made to the SRS. Investments and gains in the SRS are tax free.
Tax will be payable only when SRS savings are withdrawn. Only 50% of the sum withdrawn will be subject to tax. Withdrawals may also be staggered over 10 years to enjoy greater tax savings.
