Sim Jit-Vern

17/01/2024

𝗕𝗶𝘁𝗰𝗼𝗶𝗻 𝗘𝗧𝗙𝘀

The US Securities and Exchange Commission (SEC) has approved the first US-listed ETF to track Bitcoin last week. In response, Singapore's MAS has come out to say that it is not offered to retail investors in Singapore.

It is available in overseas markets but MAS has asked investors to "exercise extreme caution" and reiterated its view that "trading in cryptocurrencies is highly volatile and speculative in nature".

In the coming months, there will be measures to tighten crypto regulations for Singapore retail investors.

In my view, cryptocurrencies can be a good alternative asset to supplement the core investments that we already have. It is a high risk instrument for sure, hence we need to be wise with our allocation into this asset.

For context, Bitcoin's price dropped 73% within one year from its peak in Nov 2021. It did bounce back within the next 12 months, posting a 111% increase, but the yearly rate of return over the 2 years stands at -26% p.a. So while the opportunity is there, do perform your due diligence before exposing your hard-earned money into this instrument.

People who choose to trade Bitcoin exchange-traded funds (ETFs) in overseas markets "must exercise extreme caution", says the Monetary Authority of Singapore.

11/01/2024

𝗠𝗼𝗻𝗲𝘆 𝗧𝗮𝗹𝗸𝘀 𝗣𝗼𝗱𝗰𝗮𝘀𝘁

This 25-minute podcast touches on interest rates and inflation given the US Federal Reserve's plans to cut interest rates in 2024.

Eddy Loh, CIO of Maybank Group Wealth Management, was invited to give his views. I found his explanations very clear and easy to digest.

Something for you to listen to during your daily commute.

Some key points:

📌 High interest rates are good for depositors, not so good for borrowers. Low interest rates give the opposite effect.

📌 Hiking interest rates is a way to curb inflation by making people think twice before spending. However, doing it too aggressively can cause a slowdown in the economy or a recession.

📌 Similarly, dropping interest rates too aggressively could drive inflation up again, bringing us back to square one.

📌 The upcoming drop in interest rates should show a positive effect on growth equities and investment grade bonds.

📌 Short-term guaranteed instruments still give a decent yield. However, consider also that after the maturity of these instruments, the markets might have become expensive compared to what they are now.

The US Federal Reserve hiked interest rates four times in 2023 and at least three cuts are expected this year. How do fluctuating interest rates affect our expenses and investments? Eddy Loh, Chief Investment Officer of Maybank Group Wealth Management gives an overview of 2024.

04/01/2024

𝗟𝗮𝘁𝗲𝘀𝘁 𝗦𝗦𝗕 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁

The latest SSB offering is giving a rate of 2.81% p.a. if you hold for 10 years. It has dropped significantly from the previous tranche, responding to the impending interest rate cuts by the Fed.

The "golden moment" for high-yielding risk-free instruments is slowly coming to an end.

Singapore Savings Bonds (SSB) provide you with a simple and low-cost way to generate safe returns. Read our comprehensive guide to SSB to find out if they are worth considering for your investment portfolio.

30/12/2023

From 1st Jan 2024, the CPF ordinary wage ceiling will be raised to $6.8k from $6.3k currently. (It was $6k before 1st Sept this year)

This means that CPF contributions to your account (both yours and your employer's) will be based on $6.8k.

If your monthly gross income is above $6.3k, this means that your take-home pay will be reduced slightly, but on the flip side, your employer will be contributing more to your CPF.

This ceiling will gradually increase to $8k on 1st Jan 2026.

Find out about the changes to the CPF salary ceilings from 1 September 2023.

26/12/2023

With the traditional 5Cs becoming more accessible to more people, we now seek other things like career fulfilment, autonomy, and being part of something bigger.

Something to ponder about in our journey towards the golden years. Beyond having our retirement funds set up, what else do we want to live our best after we retire?

Is it a sense of purpose we want? Is it a cohesive and well-connected family? Is it a supportive community?

Let's not wait until we reach our old age to figure these out. These things do not happen overnight and require our effort to build.

Increasingly, Singaporeans aspire for career fulfilment, building community and family bonds and enjoying more lifestyle choices.

22/12/2023

Falling yields for government bonds but they are still paying higher than most FDs. Still a good proposition to park cash for short term needs.

Latest SSB is paying 3.07% p.a. for 10 years holding.

For longer term needs, one can look into CPF or SRS schemes carrying lower investment risk which can get you more than 4% p.a. This is provided you can lock it up for future needs.

20/12/2023

"The most important step toward achieving financial freedom is to take time to establish what your ideal financial life looks like."

Nowadays, you can find many resources, instructions, ideas, and offers to help you with your financial journey. A large proportion of those resources have merits (though I have to admit there's a small percentage which looks more like detrimental advice).

The best idea is the one that most suits your personal preferences and requirements. Therefore, it is important to first discover the life that we truly want to lead, not only when we are financially free, but also the life that we want to lead in the present.

This article presents some useful questions to ask yourself in the discovery process.

The most important step towards achieving financial freedom is to take time to establish what your ideal financial life looks like so that each decision has a purpose.

18/12/2023

𝗧𝗼𝘄𝗮𝗿𝗱𝘀 𝗡𝗲𝘁-𝗭𝗲𝗿𝗼

First sustainability report card for the public sector.

The government expects emissions to rise and peak around 2025 as more public infrastructure projects are completed.

Emissions are then expected to reduce and stay on track with the public sector goal of reaching net-zero around 2045.

Heartening to know the public sector is taking bold initiatives to inch closer to this goal.

Stopping provision of bottled water might affect the manufacturers' revenue, but perhaps it will trigger the invention of a more sustainable way of containing water for meetings and events.

Totally support setting aircon at 25 deg, it's cool enough for a comfortable indoor environment.

Carbon emissions fell but electricity and water usage went up in the government's first sustainability report card for the public sector.

15/12/2023

𝗘𝗳𝗳𝗲𝗰𝘁𝗶𝘃𝗲 𝗗𝗲𝗰𝘂𝗺𝘂𝗹𝗮𝘁𝗶𝗼𝗻 - 𝗛𝗼𝘄 𝗱𝗼 𝘄𝗲 𝘀𝘄𝗶𝘁𝗰𝗵 𝗳𝗿𝗼𝗺 𝗯𝗲𝗶𝗻𝗴 𝗮 𝘀𝗮𝘃𝗲𝗿 𝘁𝗼 𝗮 𝘀𝗽𝗲𝗻𝗱𝗲𝗿

Lorna Tan, Head of Financial Literacy Training, DBS Bank, answers all our questions on spending our retirement funds wisely, also known as decumulation.

Found this from Let’s Talk CPF podcast. Have a listen. Alternatively, you can download the written transcript from the same link.

I personally like the part where she speaks about having 4 pots for providing income in retirement.

1) Decumulation - Draw down until depleted
2) Preservation - Collect cashflows while keeping capital intact
3) Growth - Long term for potential higher returns
4) Legacy - Assets for distribution for loves ones

The base for all these is to leverage on maximize the use of CPF's schemes and features.

We have spent most of our lives saving for retirement. But when retirement draws near, many of us do not know where and how to start enjoying the fruits of our labour. At what age should we start spending our retirement funds? Should we draw down from our CPF account first? How can our retirement ne...

14/12/2023

The Fed has decided to keep the interest rates unchanged. The decision reflects a balanced approach to ensure stability while keeping an eye on economic growth.

The attention now shifts to the timing of interest rate cuts in the next few years. It will be fascinating to observe how this impacts borrowing, spending and investments moving forward.

The Federal Reserve left interest rates unchanged on Wednesday and U.S. central bank chief Jerome Powell said the historic tightening of monetary policy is likely over as inflation falls faster than expected and with a discussion of cuts in borrowing costs coming "into view."

13/12/2023

𝐂𝐏𝐅 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐑𝐚𝐭𝐞 𝐟𝐨𝐫 𝐒𝐌𝐑𝐀𝐬 𝐭𝐨 𝐈𝐧𝐜𝐫𝐞𝐚𝐬𝐞 𝐭𝐨 𝟒.𝟎𝟖% 𝐩.𝐚. 𝐟𝐨𝐫 𝐐𝟏 𝟐𝟎𝟐𝟒

The Central Provident Fund (CPF) is set to witness a change in the interest rate for the Special, Medisave, and Retirement accounts in the first quarter of 2024. The CPF Board announced that the interest rate for the accounts will be raised to 4.08% per annum. This adjustment marks an important development for CPF members, offering a more attractive return on their savings.

This increment in interest rate aims to provide CPF members with higher returns on their savings, especially in the Special Account, which is designed to help individuals save for retirement and investments in retirement-related financial products. The adjustment to 4.08% p.a. reflects the current economic conditions and financial market dynamics, presenting CPF members with an opportunity to grow their savings more effectively.

It's essential for CPF members to consider this change when planning their finances. With this increase, members can potentially see their savings grow at a faster rate, contributing positively to their long-term financial security. Individuals should consult financial experts or utilize CPF's available resources to understand the options available and the tradeoffs.

The CPF Board's decision to raise the interest rate for the Special Account underscores their commitment to help Singaporeans secure a financially stable future. It reinforces the CPF's role as a cornerstone of Singapore's social security system, empowering individuals to plan and save for retirement efficiently.

Stay tuned for further updates and insights on finance-related matters to make informed decisions about your financial future.

The Basic Healthcare Sum will be raised to $71,500, from $68,500, for those under 65 years old. Read more at straitstimes.com.