Just checked my savings accounts and realised that bank rates have dropped yet again. POSB's My Savings Account used to have interest rates of 0.45% - 1.5% p.a. Effective 2nd March, the rates were dropped to 0.4% - 0.6%!. Regular savings accounts that used to yield 0.25% now yield only 0.125%, half of the previous rate. SGD fixed deposit rates are now between 0.175% and 0.7%. With these rates, we might as well keep our cash in Milo tins under our beds.
It's bad enough that the rates were already so low, now they've lowered it even more. It also seems that it's back to business for their loans departments because I've started to hear complaints from my friends about banks calling them up to sell them loans and credit cards again (something that almost completely stopped happening since December). Looks like Singapore's banks are flush with cash after everyone went into power save mode when the economy tanked and they're looking to make that cash go out and do some work.
The bad news isn't over yet, though. I'm still hearing news of lay-offs and reduced work weeks. It's gonna be a long while before it's business as usual again.
Rates of all POSB/DBS deposit accounts here.
Saturday, April 4, 2009
Monday, March 9, 2009
10 Steps to Increasing Your Net Worth
1. Increase retirement savings (and defer/reduce income tax payouts)
Depending on your income level, this can be a huge bonus. By reducing your taxable income for the year, not only are you taxed for a lesser amount, it's also possible that you drop a tier into a lower tax rate tier. There are two ways to do this in Singapore:
i) extra CPF contributions
ii) opening an SRS account
For both options, you are only taxed on the contributions when making withdrawals. You will also only be taxed for 50% of the amount withdrawn according to the tax rate at the time of withdrawal.
2. Reduce alcohol consumption
Alcoholic drinks are basically empty calories. You get almost no nutritional value from them, and whatever little you get can be obtained from other cheaper sources of nutrition. Yes, I've read the reports on how moderate amounts of red wine improves cardiovascular health, but seriously, 30mins of running (which is free, by the way) will do the same. Besides avoiding waste, you know those photos your friends post on Facebook? The unflattering ones with you looking half-drunk and red-faced? You'll be avoiding those too.
3. Pay yourself first
Put money away into an account separate from the one you usually use for all your transactions. Set it up so that a fixed amount is automatically transferred from your salary account into this account and make it difficult to withdraw money from this account by refusing an ATM card for it. This way you save on the yearly ATM card fee and since the money is slightly more difficult to access you'll be more likely to keep it in the account rather than to spend it.
4. Stop adding to your debt
Always pay your credit card bills in full.With credit card debt interest rates at 24% p.a., the last thing you want to do is to keep adding to it. Letting you pay a minimum amount every month is the bank's way of luring you into debt so that they can make more. Always remember, the bank is not your friend. They are in it to make money, yours if possible. Don't let them.
5. Use the 3 month rule for big ticket items
The urge to buy an expensive new toy strikes me often. A new cellphone, bag, etc. Whenever I start thinking of buying a new shiny gizmo or accessory, I tell myself to wait 3 months. Usually, after a couple of weeks the urge wanes. The longer I wait the less desirable the item seems.
6. Don't spend to impress others
A lot of people spend money because of peer pressure. Don't succumb to it and you'll find your purse a lot fatter. Most expenses stemming from needing others' approval are usually unnecessary. If your friends need you to spend like they do, they're not very good friends afterall.
7. Take advantage of your local library
Let's face it. Most of the books we read, we only read once. After that, it sits gathering dust on the bookshelf. If you're like me and read a few books a month, buying (especially if new) can really put a dent in your finances. So why bother buying and keeping when you can get the same value by visiting your local library once in a while? Save trees, save money, borrow books.
8. Re-evaluate your need for all those subscriptions
I love magazines. I used to subscribe to a couple of magazines and derived as much pleasure from collecting every single issue as I did from reading them. However, thanks to being really busy at work, I found that I only read a portion of the magazines that were delivered to me. So I stopped subscribing to them. At the same time I became more reliant on the internet for articles and information and found that I wasn't missing out by ending my subscriptions. I still buy the occasional copy off the newsstand, but only if that particular issue covers a subject I'm particularly interested in.
9. Take advantage of retailers who appreciate brand loyalty
Many retailers have frequent shopper programmes that require a small joining fee. If you frequently purchase from a particular brand, it often helps to participate in these programmes for extra savings. Some programmes even offer discounts from multiple retailers, which would mean even more savings, but only if you already purchase regularly from them. If you don't, purposely cultivating the habit will only mean extra spending and not savings. So, do this only with brands or shops your patronise on a regular basis.
10. Fill up those jam jars
I have a set amount of cash that I withdraw from the ATM every month. This cash covers most daily expenses for the whole month and I've found that this is a very easy way to limit spending. I also have old jam jars that I place next to my main door. Every other day or so, I empty all the coins I have into these jars. This way, I save an extra residual amount every month. This may not seem like much, but after a while it really adds up.
Naturally, you'll want to wash and dry those jam jars first. :)
These steps may seem pretty straightforward and simple, but if you're not used to it can be a lot of adjusting to make them habitual. Steps #1, #3 and #4 especially can be difficult if you're not used to carving out portions of your pay packet to put away on a regular basis or have the habit of paying the minimum on your credit card bills. Just keep reminding yourself that you net worth is increasing and every dollar brings you closer to your financial goals.
Depending on your income level, this can be a huge bonus. By reducing your taxable income for the year, not only are you taxed for a lesser amount, it's also possible that you drop a tier into a lower tax rate tier. There are two ways to do this in Singapore:
i) extra CPF contributions
ii) opening an SRS account
For both options, you are only taxed on the contributions when making withdrawals. You will also only be taxed for 50% of the amount withdrawn according to the tax rate at the time of withdrawal.
2. Reduce alcohol consumption
Alcoholic drinks are basically empty calories. You get almost no nutritional value from them, and whatever little you get can be obtained from other cheaper sources of nutrition. Yes, I've read the reports on how moderate amounts of red wine improves cardiovascular health, but seriously, 30mins of running (which is free, by the way) will do the same. Besides avoiding waste, you know those photos your friends post on Facebook? The unflattering ones with you looking half-drunk and red-faced? You'll be avoiding those too.
3. Pay yourself first
Put money away into an account separate from the one you usually use for all your transactions. Set it up so that a fixed amount is automatically transferred from your salary account into this account and make it difficult to withdraw money from this account by refusing an ATM card for it. This way you save on the yearly ATM card fee and since the money is slightly more difficult to access you'll be more likely to keep it in the account rather than to spend it.
4. Stop adding to your debt
Always pay your credit card bills in full.With credit card debt interest rates at 24% p.a., the last thing you want to do is to keep adding to it. Letting you pay a minimum amount every month is the bank's way of luring you into debt so that they can make more. Always remember, the bank is not your friend. They are in it to make money, yours if possible. Don't let them.
5. Use the 3 month rule for big ticket items
The urge to buy an expensive new toy strikes me often. A new cellphone, bag, etc. Whenever I start thinking of buying a new shiny gizmo or accessory, I tell myself to wait 3 months. Usually, after a couple of weeks the urge wanes. The longer I wait the less desirable the item seems.
6. Don't spend to impress others
A lot of people spend money because of peer pressure. Don't succumb to it and you'll find your purse a lot fatter. Most expenses stemming from needing others' approval are usually unnecessary. If your friends need you to spend like they do, they're not very good friends afterall.
7. Take advantage of your local library
Let's face it. Most of the books we read, we only read once. After that, it sits gathering dust on the bookshelf. If you're like me and read a few books a month, buying (especially if new) can really put a dent in your finances. So why bother buying and keeping when you can get the same value by visiting your local library once in a while? Save trees, save money, borrow books.
8. Re-evaluate your need for all those subscriptions
I love magazines. I used to subscribe to a couple of magazines and derived as much pleasure from collecting every single issue as I did from reading them. However, thanks to being really busy at work, I found that I only read a portion of the magazines that were delivered to me. So I stopped subscribing to them. At the same time I became more reliant on the internet for articles and information and found that I wasn't missing out by ending my subscriptions. I still buy the occasional copy off the newsstand, but only if that particular issue covers a subject I'm particularly interested in.
9. Take advantage of retailers who appreciate brand loyalty
Many retailers have frequent shopper programmes that require a small joining fee. If you frequently purchase from a particular brand, it often helps to participate in these programmes for extra savings. Some programmes even offer discounts from multiple retailers, which would mean even more savings, but only if you already purchase regularly from them. If you don't, purposely cultivating the habit will only mean extra spending and not savings. So, do this only with brands or shops your patronise on a regular basis.
10. Fill up those jam jars
I have a set amount of cash that I withdraw from the ATM every month. This cash covers most daily expenses for the whole month and I've found that this is a very easy way to limit spending. I also have old jam jars that I place next to my main door. Every other day or so, I empty all the coins I have into these jars. This way, I save an extra residual amount every month. This may not seem like much, but after a while it really adds up.
Naturally, you'll want to wash and dry those jam jars first. :)
These steps may seem pretty straightforward and simple, but if you're not used to it can be a lot of adjusting to make them habitual. Steps #1, #3 and #4 especially can be difficult if you're not used to carving out portions of your pay packet to put away on a regular basis or have the habit of paying the minimum on your credit card bills. Just keep reminding yourself that you net worth is increasing and every dollar brings you closer to your financial goals.
Sunday, November 30, 2008
To Spend or Not to Spend
So the economy is in limbo. 6 weeks ago the STI drop to it's lowest close since 2003 (1600.28 on 24th Oct), light crude is now USD55/barrel (as of the 28th) and SM Goh is encouraging Singaporeans to keep indulging themselves:
Of course, there's the caveat of "If you have sufficient savings and can afford to spend..". I wonder how many people do actually have sufficient savings AND can afford to spend. How does one define sufficient savings, anyway? 3 months of living expenses socked away in easy to access accounts? 6 months? A year? Many Singaporeans live on credit anyway, so maybe it's not something to worry about. As long as the line of credit is there, they can still spend. But what about that impending retrenchment? As long as my job's there I'm fine, but what happens if my company decides that my "services are no longer required"?
By a conservative estimate, I've got about 8 months worth of living expenses tucked away just in case I'm given the boot at work. I've no debt and I pay my insurance premiums on a yearly basis and those are only next due in May next year. My only big recurring cost is my rent. If I were to really stretch it, I guess I could probably survive for a year on what I've got saved so far. Despite all this, I still don't consider this sufficient savings for me to be able to go out and indulge myself. Why? Because for all SM Goh's encouragement, he can't guarantee that I'll still have my job this time next year. Because Singapore's economy is highly dependent on the global economy unlike some other countries, where it's more self-contained. Because the guys I work for are in the red with no rescue or turnaround in sight. If anything, I wish I could afford to save more.
Not everyone agrees that encouraging spending is the right thing to do now, though. Came across this post on Consumerism Commentary that discusses the issue from an American perspective.
I think regardless of how the economy is going, we just need to be responsible for our own finances. Job security fluctuates, as do prices and economies. We just have to take care of ourselves and be prepared for anything.
Mr Goh added that although many are now concerned about costs, Singaporeans should not save excessively.
"If all of us go into a power save mode, then the economy will really go into a recession! This is what economists called the Paradox of Thrift. If you have sufficient savings and can afford to spend, you should continue to spend on life's little pleasures.
"Take your family to the movies, shop, dine out at restaurants and hawker centres, go for your regular foot massage, indulge yourself at a spa, take a taxi, donate to charity and so on.
"This way, we keep the economy going. In fact, I would say when times are a little slow, you could get the best bargain," the senior minister said.
- Channel News Asia, 6th Nov
Of course, there's the caveat of "If you have sufficient savings and can afford to spend..". I wonder how many people do actually have sufficient savings AND can afford to spend. How does one define sufficient savings, anyway? 3 months of living expenses socked away in easy to access accounts? 6 months? A year? Many Singaporeans live on credit anyway, so maybe it's not something to worry about. As long as the line of credit is there, they can still spend. But what about that impending retrenchment? As long as my job's there I'm fine, but what happens if my company decides that my "services are no longer required"?
By a conservative estimate, I've got about 8 months worth of living expenses tucked away just in case I'm given the boot at work. I've no debt and I pay my insurance premiums on a yearly basis and those are only next due in May next year. My only big recurring cost is my rent. If I were to really stretch it, I guess I could probably survive for a year on what I've got saved so far. Despite all this, I still don't consider this sufficient savings for me to be able to go out and indulge myself. Why? Because for all SM Goh's encouragement, he can't guarantee that I'll still have my job this time next year. Because Singapore's economy is highly dependent on the global economy unlike some other countries, where it's more self-contained. Because the guys I work for are in the red with no rescue or turnaround in sight. If anything, I wish I could afford to save more.
Not everyone agrees that encouraging spending is the right thing to do now, though. Came across this post on Consumerism Commentary that discusses the issue from an American perspective.
Sometimes it seems as if we’re working at cross-purposes with our best interests. We’re watching a struggle born of reduced economic activity while intentionally reducing our own spending. If you look at it on that level, it appears as if we’re intentionally punching ourselves in the gut. If you view it from a broader perspective, however, it’s clear that there is no tension between economization and a stronger economy. If anything, more responsible personal money management is exactly what our economy needs.
I think regardless of how the economy is going, we just need to be responsible for our own finances. Job security fluctuates, as do prices and economies. We just have to take care of ourselves and be prepared for anything.
Saturday, September 27, 2008
Would a Recession Really be a Bad Thing? (And the Agriculture Guys Got it Right)
Came across this interesting commentary on Hong Kong's The Standard. This guy doesn't think that a recession is such a bad idea. In fact, in his opinion, it's part of life:
I have very vague memories of science classes in school but I remember learning about crop rotation. Now, I am hopeless with plants. But the reason why this has stayed with me for so long is because the concept behind crop rotation is a universal one. It's the simple fact that nothing lasts forever. This is why companies with the most staying power are those that have managed to find ways to diversify their products and services, e.g., GE and Siemens. Not only do these companies add to their portfolio, they also constantly reassess their business directions and are not afraid of jettisoning small parcels of their companies to streamline their business model. Case in point, last year GE sold off its plastics division to SABIC and Siemens sold off Siemens VDO to Continental.
In more pressing times, some companies have also successfully reinvented themselves to pursue directions completely different from earlier paths. One of these companies is Motorola. Granted they currently suck pretty bad, Motorola used to be a Fortune 50 company (it's dropped to Fortune 100 now). This telecoms giant actually started out by making car batteries. What a segue, huh? BMW used to make airplane engines (in this case they were forced to stop making them, but hey, you can't fault where this has led them) and the name 3M Company comes from the company's original name, "Minnesota Mining and Manufacturing Company". DuPont, the chemical giant, first made gun powder.
Investing gurus always talk of diversifying. These companies prove that this sound advice. Now, if only I had enough eggs to fill many different baskets. :)
This is probably the first article I've read that takes a level-headed look at our current situation. No doubt there are people who would be ruined by a recession, and they do have my sympathies, but recessions are part of a very real economic cycle. Nothing stays the same forever and that's why we have to look at sustainability."Fluctuations in the economy are normal and natural. Even in the primitive, Biblical economy, "seven years of plenty were followed by seven years of famine."
Despite this, at least since the 1930s, fluctuations have been thought of as "a bad thing."
Accordingly, governments have sought to prevent them. The essential reason why fluctuations have been thought to be bad is that recessions are wasteful. As the economy dips below its maximum output, there is a loss of production compared to what could have been.
Labor and machines lie idle, and incomes and spending fall.
If you are a fully paid-up member of the anti-growth brigade, such reductions could be viewed as a good thing: less greed and consumption, less pressure on the environment, and more scope for increased importance to be attached to non-material values."
I have very vague memories of science classes in school but I remember learning about crop rotation. Now, I am hopeless with plants. But the reason why this has stayed with me for so long is because the concept behind crop rotation is a universal one. It's the simple fact that nothing lasts forever. This is why companies with the most staying power are those that have managed to find ways to diversify their products and services, e.g., GE and Siemens. Not only do these companies add to their portfolio, they also constantly reassess their business directions and are not afraid of jettisoning small parcels of their companies to streamline their business model. Case in point, last year GE sold off its plastics division to SABIC and Siemens sold off Siemens VDO to Continental.
In more pressing times, some companies have also successfully reinvented themselves to pursue directions completely different from earlier paths. One of these companies is Motorola. Granted they currently suck pretty bad, Motorola used to be a Fortune 50 company (it's dropped to Fortune 100 now). This telecoms giant actually started out by making car batteries. What a segue, huh? BMW used to make airplane engines (in this case they were forced to stop making them, but hey, you can't fault where this has led them) and the name 3M Company comes from the company's original name, "Minnesota Mining and Manufacturing Company". DuPont, the chemical giant, first made gun powder.
Investing gurus always talk of diversifying. These companies prove that this sound advice. Now, if only I had enough eggs to fill many different baskets. :)
Wednesday, September 24, 2008
From the Buffet Table: 10 Ways to Get Rich
Came across this interesting article from PARADE Magazine. It lists 10 snippets of advice from the world's richest man, Warren Buffet. The article uses examples from Mr. Buffet's life to emphasize points, providing insightful glimpses into the life of one of the world's greatest investors.
The 10 points listed are:
Plenty of food for thought. For me, I think #4 would be something to really keep in mind. I have a tendency to get really excited and jump head first into things before really thinking about what I'm really doing or hoping to accomplish. It probably comes from my very bad habit of figuring things out as I go along, as opposed to figuring it all out and planning properly before I start.
A couple of the points also contradict each other, e.g., being persistent vs. knowing when to quit. It's hard to tell when to quit sometimes, since it's human nature to hope that things will get better. On the flip side, when things are going badly, fighting the urge to throw in the towel is pretty hard too. The most pertinent piece of advice, in my humble opinion, would be to assess the risks. This is applicable to just about every serious decision from picking a college major to accepting/making a marriage proposal.
The 10 points listed are:
- Reinvest your profits
- Be willing to be different
- Never suck your thumb
- Spell out the deal before your start
- Watch small expenses
- Limit what you borrow
- Be persistent
- Know when to quit
- Assess the risks
- Know what success really means
Plenty of food for thought. For me, I think #4 would be something to really keep in mind. I have a tendency to get really excited and jump head first into things before really thinking about what I'm really doing or hoping to accomplish. It probably comes from my very bad habit of figuring things out as I go along, as opposed to figuring it all out and planning properly before I start.
A couple of the points also contradict each other, e.g., being persistent vs. knowing when to quit. It's hard to tell when to quit sometimes, since it's human nature to hope that things will get better. On the flip side, when things are going badly, fighting the urge to throw in the towel is pretty hard too. The most pertinent piece of advice, in my humble opinion, would be to assess the risks. This is applicable to just about every serious decision from picking a college major to accepting/making a marriage proposal.
Subscribe to:
Posts (Atom)
