Archive for the ‘Singapore’ Category
Singapore Sits Moodily Atop Wealth Pole
This is an article that appeared in The Business Times. We, as Singaporeans should be appreciative that we live in a wealthy and comfortable environment. Compared to the world population, which is exceedingly poor, Singaporean middle class is considered well-off.
Read the full article here.
I do understand the discontent and anxieties of the middle class too. On one hand, in monetary terms, our generation have huge salary and wealth increase from our parents’ generation, on the other hand fierce competition for space, opportunities in a small crowded island means real standard of living have not improved very much. I believe many Singaporeans dream to have a relaxed and comfortable life. However, as the situation is, the consensus view is that if a working adult does not strive doubly hard, he/she will find himself/herself at the bottom of a huge population of wealthy residents, with difficulty in purchases such as a home.
Overall, I think there needs to be a change in mentality in what Singaporean pursue in life. We have always looked to Switzerland as a country to be envious of. Perhaps, more effort should be spent thinking about how to mould a comfortable a stress free society.
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.
Of Art and Wealth
I have been meaning to write about art investments for some time. According to Merrill Lynch Global Wealth Management and Capgemini, Singapore’s millionaires are quite fond of having art as part of their investments in luxury items, at 26% of value of luxury investments. The top preference are small items: gems, watches and other jewelry.
Investments in art is not only restricted to the very wealthy. As the middle-class art buyers in wealthy Singapore grow, galleries are aiming lower, taking advantage of an art-buying boom. Growth of so called affordable art and second Affordable Art Fair is reported HERE.
I recently met a friend who started a online Art portal for emerging countries’ artists – www.artyii.com. She wrote an article for Business Times as an introduction to art investment.
Who’s Managing Your Money?
I liked this diagram by Tommy Sikes, an advisor in North Carolina at TS Financial. It illustrates the madness that sometimes goes on in the industry.
Financial Advisor Magazine has the results of a study by Cerulli Associates which tells us that in the US, advice business has hit a wall and is not replenishing the ranks with young talent.
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.
Invest Fair 2010 Experience
I went to the Invest Fair 2010 at Marina Bay Sands last Saturday. The event was jointly organised by ShareInvestor and The Business Times. My purpose there is feel the atmosphere, find out what people are after and just get a little exposure to this side of financial product sales.
As I walked in, was approached constantly by promoters speaking to me about what they are promoting. Not surprising, considering this is a free event and the exhibitors and participants paid the organizers to have a booth there. Main aim is to do promotion and sales.
Singapore Fastest Growing In The World
Singapore’s growth accelerated to a record 18.1 percent pace in the first half of 2010, spurring the currency, putting pressure on policy makers to check inflation with a stronger currency, and putting the island on course to be the fastest-growing economy in the world this year.
The government predicts GDP will rise 13 percent to 15 percent in 2010. Credit Suisse Group AG and Oversea-Chinese Banking Corp. forecasts for the island’s expansion this year range from 12.7 percent to 16.3 percent among the economists surveyed by Bloomberg.
By comparison, Goldman Sachs, BNP Paribas and Macquarie and China International Capital Corp estimates for China range from 9.5 percent to 10.1 percent in recent weeks.
Chinese Yuan Off The Peg To US Dollar
China’s shift toward a stronger exchange rate may alter the shape of the world economy’s expansion more than its speed, economists said. The currency move is likely to affect the composition of global gross domestic product rather than the growth rate
Chinese consumers might buy more as the rising yuan boosts their purchasing power, while their counterparts in the U.S. cut back on their spending as the cost of goods imported into America rises. The shift will add 0.1 percentage point to global growth this year and next, leaving the rate at about 4 percent, according to the median of 17 forecasts in a Bloomberg News survey of economists.
China’s central bank said June 19 it will increase flexibility in the yuan, marking an end to the crisis policy of pegging to the dollar.
