Tuesday, November 29, 2016

Getting Insurance Advice Without An Insurance Agent with Selfcheck

Have you heard that technological advancement will disrupt the financial advisory industry? We can now buy property without a property agent through an app. How about getting a Selfcheck on your insurance needs online? Now it is possible with a new digital “adviser” on DIYInsurance.

Insurance is a tricky maze where most people are confused on what they actually need. Who can we trust to give us the most unemotional advise without any sales talk or hard selling? Feeling pressured to buy any insurance is not the way to go. We have the right to really think about what we need without any hard selling.

With a digital "adviser", all the hard selling, and the pressure to buy are all gone. We can now assess our own insurance needs at the comfort of our homes, making decisions with a clear mind without any distractions.

How Selfcheck works?

I've tried out this selfcheck and I would say I'm quite impressed at how easy it is to use and the quality of the recommendations which are given. I don't even need to spend 1 hour of my time to listen to sales talk. All it takes is just 5-10 mins to key in my personal data and then the system calculates my insurance needs and recommends the best insurance plan comparing various companies in the market. If you did not know, DIYInsurance is also an insurance comparison web portal.

My Selfcheck results

I tried to key in my details and got some results which I'm quite happy about. Here's how simple it is to do a selfcheck and the results which I got:

First, they will ask for some personal details such as your name, date of birth and annual income

After which, there will be some questions on assessing our financial needs and health.

Thirdly, will be some basic questions on our employment status and expectations

And lastly, the results are generated out

For my protection needs, the digital adviser recommended 4 main insurance:
  1. Death
  2. Critical Illness
  3. Disability Income
  4. Healthcare
If you realise, all the recommendations are for insurance needs only. There are no savings plans, endowment or investment link policies involved. This is in line with what I believe that insurance should just be for insurance coverage and not be complicated with savings or investment. I don't have to pay high fees to save and invest when I can do it myself at very low fees. 

Honest advise and trusted service

Talking about fees, in case you did not know, DIYInsurance staff are not commission based which is very different from normal insurance advisers out there. They are all salaried base which means they do not get extra money from recommending any insurance plans you do not need. 

However, the quality of service still maintains the same. There is a dedicated adviser assigned to each person and in the event of a claim, they can approach their adviser to process it. They also have a Client Service Management team to help on any needs which you may have. 

Save on your insurance?

Because of the selfcheck digital adviser platform, processes become more efficient which allows DIYInsurance to pass on greater cost savings to their clients. They are increasing the rebate of agent’s commissions from 30% to 50% back to you. This is a straight 50% cost savings on the commissions which is paid to the company. As mentioned before, DIYInsurance staff are salaried so the commissions are actually paid to the company like a referral fee which all other insurance companies pay to their agent too.

As what I understand from them, the commission rebates are not just for 1 year, they are for as long as the insurer pays them (usually 3-6 years along). This is really a good initiative from them to pass cost savings to their clients.

DIYInsurance is MAS licensed since 2003 and is a trusted place to be insured. I've personally interacted with their staff before and know that they really want to serve people well. Try out the new selfcheck digital adviser and see for yourself the new era of financial advisory.

This article was written in collaboration with DIYInsurance. All views expressed in the article are the independent opinions of sgyounginvestment.blogspot.sg

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Thursday, November 24, 2016

A New Era With A New US President - How Will The Future Change?

As we all have heard, Donald Trump's winning the US presidential election was quite a shock to most people. It was a shock because people are afraid he will do drastic changes to policies affecting trade around the world which causes instability.

Just last week, President Obama backs off Pacific trade deal vote effort, which is known to us as the Trans-Pacific Partnership or TPP. This is an important trade deal and if it does not come true, it could be a big set back. In October this year, PM Lee warns of harm to US' standing if TPP isn't ratified. The TPP, co-founded by Singapore, aims to create a giant free-trade zone and give the 12 countries access to 800 million consumers, representing one-third of global trade. It is a key thrust of the US' foreign policy in Asia aimed at balancing China's rising influence in the Asia-Pacific. There have been lots of talks during the APEC summit in Peru where details are still being sorted out for the trade pact.

There are many questions to how the world will change. In particular for us in Singapore, how will it affect us? Singapore is a small country and we have depended on trade to survive for the longest time now. If trade is affected, some jobs in Singapore may be lost. We may find ourselves unemployable as jobs we are familiar with begin to disappear.

LinkedIn published a report on the most in-demand skills in 2017 globally. It was quite interesting to see what kind of jobs are in demand now and you'll be surprised a lot are in fairly new areas.

Here are the hottest, most in-demand skills around the globe according to LinkedIn:

1. Cloud and Distributed Computing

2. Statistical Analysis and Data Mining

3. Web Architecture and Development Framework

4. Middleware and Integration Software

5. User Interface Design

6. Network and Information Security

7. Mobile Development

8. Data Presentation

9. SEO/SEM Marketing

10. Storage Systems and Management

From what I see, the jobs that are in demand have changed quite a lot from the past. Most of the skills are not even taught in our traditional schools which we graduated from. I understand why cloud computing and statistical analysis are at the top. These 2 skills are very important for the future technologies which will be the forefront of what is to come globally.

Even in Singapore, we are embarking on many technology changes to increase productivity and also the smart nation project. The recent forming of the Government Technology Agency of Singapore (GovTech) also shows how serious the government is in future technologies.

More data analysts will be needed as we will have more data in the future in our super connected world. Data is a resource which can be used to generate new business and profits and economic growth for the country. Cloud computing will change how we do business as hardware becomes virtualised in the cloud.

The labour movement in Singapore, NTUC, leveraging on its extended network of partners, also announced that they will set up a new unit next year to identify work opportunities of the future to help better match workers to up-and-coming jobs. The first five sectors they will start pilot projects in by 2019 are financial services, infocomm technology and media, precision engineering, healthcare and education. This seems to send a signal that these sectors will see increased demand in Singapore for the many years to come and that workers should continue to upskill to remain relevant and future ready. 

Singapore's non oil domestic exports sinks 12 percent in October as reported just last week. This is not good news for the Singapore's economy as US is more likely to shrink trade further. I've never been through a bad recession in my life since I started working. The closest was the European sovereign debt crisis which was averted because help was rendered out to the few troubled nations. I've heard of people being retrenched and even hear from my colleagues that my company freeze annual increments and decrease bonus payouts when times were bad back then.

Are you ready for the new era? Are your skills ready for the future? In this dynamic economic climate, it bodes well to ask yourself if you are adequately prepared for technological disruptions that might take away your job.

This article was written in collaboration with the National Trade Union Congress. All views expressed in the article are the independent opinions of sgyounginvestment.blogspot.sg

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Monday, November 21, 2016

Comparing The Best Credit Cards In Singapore - Receive additional $30 worth of GV or NTUC Vouchers When You Apply For These Credit Cards

Credit cards seem to be very common now in Singapore where we can use this as a payment choice almost every where. Credit cards can also be destructive but it is advantageous to those who know how to use it wisely.

As we all know, credit cards have many rewards system and it can be confusing which is a better choice. I personally love cash back options on credit cards which means every dollar I spend, I get a certain % credited back into my bank account or the card itself to use it for other transactions. I even used my card to pay for my university course fees and got a few hundred dollars in cashback.

Regardless if you're going out on a date, watching movies, eating out, buying groceries, travelling, shopping or buying things online, there is always a card which will reward you for your existing spending. This can help to offset some of your expenses.

Singsaver helps us compare and see which are the best credit cards available. And for a limited time only, they will be giving away $30* Golden Village or NTUC vouchers when you apply for any of the credit cards now through my blog. Promotion valid for a limited time only. See instructions below on how to get the additional vouchers.

Let's look at some of the best cards below:

Best Cashback Cards

ANZ Optimum World MasterCard Credit Card (5% cashback)

($30 GV or NTUC vouchers when you apply in December 2016)

This card gives you 5% cash back on your chosen category per calendar quarter - Dining, Travel, Shopping, Groceries and 1% cashback on all other retail spend. There is no minimum spend required but a minimum of $10 per transaction to earn cash rebate.

This card seems to be a good deal but it is only available for those who earn an annual income of $80,000 or more. If you earn that salary, it is definitely a good card to have. There is also a Online Exclusive until March 17: Up to $168 Cash Rebate + 28” Luggage.

American Express True Cashback Card

($30 GV or NTUC vouchers when you apply in December 2016)

If you do not earn a high income like $80,000 a year, there are still cards which you can get to give you cash back. The American Express True Cashback Card just needs a minimum income of $30,000 and gives 3% cash back for the first 6 months on any spending. There is no minimum spending too. After 6 months, the cash back is 1,5% on any spend. This to me is quite flexible and quite a good way to save on some expenses.

To me, this is the best card for cash back with no strings attached and no minimum spending. You will also get $100 Starbucks card + $30 GV or NTUC vouchers

Best Deal For Dining  

OCBC 365 Credit Card

($30 GV or NTUC vouchers when you apply in December 2016)

Thinking of going out for a weekday or weekend meal? OCBC 365 credit card gives you 6% cashback on weekend dining and 3% cashback on weekday or overseas dining. What's more, it gives 3% cashback on groceries at supermarkets island-wide, recurring telco bills, and all online shopping.

Not enough cashback? Furthermore, there is up to 23.9% and 18.3% of fuel savings all year round at Caltex and Esso stations, respectively plus 5% cashback on petrol on all other petrol stations. This sounds good for all drivers out there who have to pump petrol frequently.

Best Deal For Shopping

Standard Chartered SingPost Platinum Visa Credit Card

(With $138 instant cashback + $30 GV or NTUC vouchers when you apply in December 2016)

Lastly, how can we miss out cashback on shopping. This is good news for ladies but not only that, for guys who do make purchases online too, you can also get cashback for every online purchases such as air tickets, movie tickets etc.

The Standard Chartered SingPost Platinum Visa Credit Card gives 7% cashback on online purchases and 2% cashback on selected groceries. Just charge a min of S$600 to your card within that statement cycle. I saw that they are also giving out $138 cashback for new customers.

Want to get some cashback and more?

Applying for credit cards can be a good thing as long as we know what we are doing. Problems only come when we overspend without thinking of the consequences. For those who knows what they are doing, credit card is a good tool to earn some cashback and save some money. I've been using it for this purpose all these while.

Besides the above mentioned cards, you can also compare and apply for any credit card of your choice. Apart from getting cashback, you will also get additional GV or NTUC vouchers if you sign up for a credit card and follow the instructions below:

Steps on how to redeem your GV or NTUC vouchers

You can simply refer to this page here and follow the steps to apply for the credit card of your choice and redeem the additional vouchers. It simple, just 3 steps to apply for your card.

Remember you should fill in this last page after applying for your credit card to get the additional vouchers:

Personally, I would be applying for the American Express True Cashback Card which has good cashback with no strings attached. I can also get the $40 Starbucks card and the various $70 worth of vouchers. Sounds like a good deal to me.

Credit Bureau Singapore also provides credit report for individuals like us to know where we stand in the world of credit. This is important as banks look into the report when evaluating if we can take on more loans or if we are eligible for credit cards. Look out for the next post where I will share how we can get a free credit report for ourselves.

*This is not a sponsored post
*Disclaimer: The vouchers or any promotions are awarded on approval basis only. Singsaver or the individual banks reserve the rights to reject any approval on their own discretion. Please read terms and conditions carefully to redeem the promotions.

Tuesday, November 1, 2016

Tips For Refinancing Our Home Loans

Home loans... this is a major part for a property owner in Singapore. If you had bought a private property, you can only take a bank loan whereas for a HDB property, we can choose between a bank loan or a loan from HDB. 

Bank loans are structured in a way where if we do not refinance regularly, we will lose out on a lot of cost savings and end up paying more for our housing loan instalment. Many banks do not reveal that to you. It is like credit cards where they give you waiver of annual fees for first few years and start charging you later if you do not realise it. Some are smart enough to call in and cancel the card or request the fees to be waived. Others will end up paying the extra fees unknowingly.

How does bank loan work? 

For every loan package, there is a spread applied to the interest rate. If it is a sibor package, it will be something like "sibor + 0.8%". I've talked to many people before and some don't realise the rate that they are paying now is just temporary. Most of the time, after a few years (likely 2-3 years), the spread will increase. Instead of  0.8%, the spread increases to 1.2%. Some can even increase as much as 1% which is a significant amount on our loan installment. It will be a shock when we realise we have to pay a few hundred or thousands more per month later. 

Here are some tips on refinancing and when we should do it:

You should refinance as early as 6 months before lock in expires

Refinancing should not be done only when we see an increase in our loan instalment after the spread increases. We should refinance and get a better package even before our lock in expires. Yes this can be done and it can be done as early as 6 months before. 

The reason to refinance before lock in expires is simple. The minimum notice period for refinancing is 3 months which means if we only refinance after our lock in period expires, where the loan instalment will be higher, we will be stuck with the high interest rates for at least 3 months. 3 months can be a few thousand dollars paid in extra by then. 

The different variable rates to choose from

For loan packages, there are both fixed and variable rates. For variable rates, there are different options to choose from again. This is the confusing part for many people and sometimes I have to explain for quite awhile before people can understand the options available. 

For variable rates, there are mainly 3 types:
  1. Bank's board rate
  2. Sibor/SOR rate
  3. Fixed deposit mortgage rate
As mentioned earlier, for home loans, there is a spread. For variable rates, it will be pegged to either one of the above variable factors. Thus, it can be either "board rate + 0.8%" or "sibor + 0.8%" or "fixed deposit mortgage rate + 0.8%". 

For bank's board rate, this is the most NOT transparent among the 3 types. The bank can change the rate as and when they want and then tell you your loan instalment will be higher the next month. There is no way we can check or see the rate for this. 

For sibor/sor rates, it is transparent and all banks follow the same rate. However, the rate can change quite a lot base on historical figures. It was as high as 8% in 1987, 7%+ in 1998 and almost 4% in 2007. Every financial crisis causes the sibor to fluctuate quite badly. 

For the fixed deposit mortgage rate, this is a relatively new type as compared to the bank's board rate or sibor/sor rate. This is also a transparent rate as it is pegged to the fixed deposit rate and we can see the rate published on the website of that particular bank. Many people are sometimes confused that this is a fixed rate. It is not a fixed rate. This rate is also less volatile as compared to the sibor based on historical figures. In any case, increasing the fixed deposit rate does not benefit the bank as it is also a cost to them.

Fixed rates only for short period of time

If your loan is on fixed rates, do not believe that your rate is fixed forever. There is no such thing as a long term fixed rate which means if you want fixed rates for longer term, you should refinance regularly. Most fixed rates are for 2-3 years with some extending to 5 years but that's about it so far from what I have seen among all the banks in Singapore. 

Once your fixed rate ends, it will revert to a variable rate so it is better to refinance to get fixed rates again. 

Should I switch from HDB loan to bank loan?

So far, we have discussed mostly on bank loans. If you're on HDB loan, the interest is 2.6% whereas if we switch to bank loans currently, it can be as low as 1%. However, switching to bank loans will have a huge consequence. The main issue is we would not be able to switch back to HDB loan once we go over to bank loans. 

HDB loans, although it is higher at 2.6%, but it is liken to a long term fixed rate as the rate has not changed for a long time. If we want more stability, we should stay on HDB loan.

However, if our loan is left about 5-10 years, we can consider switching to bank loan to take advantage of lower interest rates and not worry too much since the loan is going to end soon. 

What are the fees for refinancing?

Refinancing is not free. There are fees involved which we should take note of. However, if our loan amount is high, the banks will always give cash rebates or subsidies to cover most of the fees. 

The fees for refinancing are as follow:
  1. Valuation fees
  2. Legal fees
  3. Mortgage stamp duty 
In most cases, cash rebates and subsidies can cover most of the cost which means we only need to pay less than a few hundred. Do note that all fees can be paid by CPF so no cash is needed as long as we have enough in our CPF Ordinary account. 

Where to get the best loan package for refinancing?

If you would like to find out more about refinancing and get the best rate for your home loan, fill in this form below and I'll get back to you on the best rate:
I will also be giving out vouchers as below for every confirmed case:

Loan amount $200K-$300K: 

$20 CapitaLand or NTUC Vouchers

Loan Amount $300K-$500K: 
$40 CapitaLand or NTUC Vouchers

Loan Amount $500K-$800K: 
$60 CapitaLand or NTUC Vouchers

Loan Amount above $800K: 
$80 CapitaLand or NTUC Vouchers

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Thursday, October 27, 2016

How you can save 24% of your tax, legally!

Source: CPF's website

- Written By Byte Sized Investment

Slightly more than half the year has gone and it is about time to review my annual financial plan. This is usually the time to consider budgets, cashflow and some tax planning for the remaining months of the year.

So recently, I made a trip to CPF office to find out more details on how I could enjoy some tax relief, and at the same time, boost my retirement funds.

Before we proceed, let’s take a quick look at what CPF actually is.

What is CPF?

Central Provident Fund, CPF in short, is a compulsory savings plan for working Singaporeans and Permanent Residents (PR), primarily to fund their retirement. It could also be used for healthcare, education, and housing needs. Both employers and employees contribute a mandated amount to the employee’s CPF retirement fund, where it grows and earns interest between 2.5% to 5%.

#For CPF members above age 55, they can earn up to 6% per annum on their retirement balances! You can find out more on the interest rates here.

The 4 CPF accounts are as follows:

1. Ordinary Account (OA) – for housing, pay for CPF insurance, investment and education.
2. Special Account (SA) – for old age and investment in retirement-related financial products. Interest for CPF SA  4-5% per annum.
3. Medisave Account (MA) – for hospitalisation and approved medical insurance.
4. Retirement Account (RA) – created when one turns 55 using the savings in OA and SA. It is set up to meet basic needs during old age.

#The Special, Medisave and Retirement Account are simplified to be known as SMRA.

What does the government do with the money?

CPF monies are invested in Special Singapore Government Securities (SSGS) that are issued and guaranteed by the Singapore Government through Monetary Authority of Singapore (MAS). The proceeds from the SSGS, owned by MAS, are then managed by the fund manager: Government of Singapore Investment Corporation, more commonly known as GIC. GIC invest the proceeds on behalf of MAS. With the returns from investment, MAS pays the interest on the SSGS to CPF board.

Tax Relief

One can reduce up to $14,000 of his taxable income if he were to do a $7,000 cash top up into his CPF SA and another $7,000 combined to his loved ones’ CPF SA (parents and spouse). This means it reduces his taxable income by $14,000. Let’s put some context to these numbers.

According to data provided by Ministry of Manpower (MOM), the median gross monthly income is at S$3,949, and including 13th month bonus, this translates to S$51,337 annually. This is the amount that our example 28-years old Joe is earning a year in the private sector.

Joe would receive a total of $1,000 and $10,258 of tax relief from earned income* and CPF contributions** (to know more about how to reduce your tax, visit IRAS deductions for individuals here, click here to calculate CPF Contributions). His taxable income would be $40,079, and he would pay taxes of $555.53 for the assessment year of 2017.

However, should Joe choose to transfer $7,000 cash into his CPF SA, he will reduce his taxable income by $7,000, to $33,079 instead of $40,079. Joe would then instead pay $307.77 in taxes. This is a 65% decrease in taxes paid.

If Joe does another cash transfer of $7,000 to his wife and/or parents, he will further reduce the chargeable income by another $7,000, to $26,079. He will pay $121.58 in tax. That’s a 78% tax savings!

Of course, for someone who earns the median income of $51,000 a year, to have up to $7,000 transferred into CPF SA would leave Joe cash-poor as he has to juggle the remaining $34,079 (~$2,800/month), net of CPF contributions, to settle housing and car loans, insurance, food, utility, entertainment, living expenses etc. The $7,000 top up into CPF SA can only be drawn after age 55. For a breadwinner like Joe, cashflow might be a challenge. The savings on tax might not outweigh the need for cash, especially during emergencies.

Let’s explore the effects on Jack, similarly 28 years of age, who earns an average income of $6,000 a month. Working in the private sector, let’s assume Jack’s annual salary package including the 13th month would be $78,000.

Jack would receive a total reduction of $1,000 and $15,600 from his taxable income due to earned income and CPF contributions. His taxable income would be $61,400, and he would pay taxes of $2,048 for the assessment year of 2017. But Jack being financially savvier, planned his cashflow and finances well, and he can afford to transfer $7,000 cash into his CPF SA, lowering his chargeable income to $54,400 instead. Thus Jack pays $1,558 in taxes, a saving of almost $500 or 24% in tax!

Comparing the opportunity costs

Putting $7,000 into his CPF SA would leave him with around $62,400 annually ($5,200/month) after deduction from the CPF contributions for his living expenses. If Jack’s annual expenses are below $62,400, whatever income left sits in the bank earning a measly 0.05% interest. At the same time, Jack has to pay the additional $500 in tax. On the flip side, if he does this CPF cash top up, he would not only save $500, his cash top up in CPF would earn him an additional 4% interest, or $280 the next year. That is a $780 opportunity cost, 11% of $7,000!

Hence, if the $7,000 cash top up does not put too much strain on Jack’s cashflow and finances, doing this top up seems worthwhile.

This tax savings is significant.

At age 28, Jack will continue to work at least another 34 years till he reaches the official retirement age at 62. Assume his pay stays stagnant, the tax savings of $500 a year would result in $17,000 after 34 years!

As our tax is progressive, where the low income earners pay as little as 2% to no tax and the high income earners pay up to 22% to the government in tax, a person who climbs the corporate ladder would have increasing income, thereby incurring a higher proportion of tax compared to when he was much younger. In some cases, I estimated that the tax savings could be up to $21,000 in 34 years.
Anyway, this notion isn’t new, a famous blogger (AK71), who earns more than $165,000 from dividends a year, had been advocating it a long time.

Well, if you think a 24% or a $17,000 tax savings is little, wait till you see how much returns you could gain over the years with the additional $7,000 cash contributions you made.

*Deduction from Earned Income. Earned Income refers to the taxable earned income from employment, pension, trade, business, profession or vocation less allowable expenses. The amount of relief is based on your age and taxable earned income in the assessment year. For non-handicapped employees below age 55, the deduction of taxable income is up to $1,000. For more information, click here.

 **Deduction from CPF Contribution. Your portion (not the employer’s) of mandatory CPF contributions counts towards a reduction in taxable income.For every $1 you contribute to CPF, your taxable income is reduced by $1. For more information on the CPF contribution relief click here. To calculate how much CPF you will be contributing, click here.