As a long serving fan of Arsenal I was shouting for the Gunners on Sunday, but had a grudging respect for the Leyton team, and have to say they earned their place at the Emirates. Of course being British I love the underdog, even if my own teams victory is at stake, and how lovely it would have been to see United go down against Crawley.
Sadly the time difference in Singapore means that only the most ardent fans get to see the late UK games and Arsenal seem to always be the team with the latest kick off. A bit more consideration for your Asian following please.
Sunday, February 20, 2011
Wednesday, February 16, 2011
Financial Training for 2011, little and often
If you have ever read the book 'Rich Dad, Poor Dad', you will appreciate the concept of every little helps when it comes to accumulating wealth. If you have not read the book it is a good read and worth the hour or so it takes to go through it.
The main principle of needing to accumulate wealth for a secure future later in life is lost on many expatriates. We live a life of freedom, freedom from over bearing taxes, and freedom from state intervention. This sadly though had a major downside, and that is lack of discipline.
Take Australia for example, high rates of tax, and as I experienced on our family Christmas there, an extreemly expensive place to live. However, the state imposes a compulsory pension contribution, or Super Annuation, which all earners subscribe to. Companies and the government help with contributions and the average Australian can be secure in the knowledge that there is a pot waiting for them on retirement. Of course it's not perfect and there are many flaws, but it's something that we in Singapore on Employment Passes don't have.
I have met clients who have been in Singapore for 15 years, generally aged between 45 and 55, with either minimal or zero wealth. As they have been non resident in their home country they have not paid any taxes, or national insurances and have thus not accumulated any pension benefit. The average 55 year old who would like to retire at 65 on $50,000 a year (which does not go far in Singapore by the way!) would need to put aside in the region of $6,000 a month to achieve the necessary pension fund, his 35 year old self would have needed to put away only $800 a month. It's an old story expounded by many a financial adviser, but with good reason.
But back to the topic on hand, what is the principle of accumulating wealth. Quite simply to create wealth is extreemly difficult. Putting aside 20% of your lifetime earnings gives the average person 6 years of their average salary - say around $1,000,000 for the average employee. Invest that money wisely and it could be worth 2 or 3 times that, but it still won't give you enough to open an account at a Private Bank.
Wealth is generally accumulated by large capital injections, the sale of a house, business, profit share payments as well as high risk, high return investments. Any of these could create liquidity problems as they are not short term, as bankers are now experiecing with bonus payments, or property owners in the UK with negative equity or a stagnant market understand.
This should not preclude however the principle of little and often. Saving dollars here and there does soon add up. Smokers who quit would now save over $4,000 a year if they quit their pack a day habit. Taking the bus and not the taxi in Singapore could save you over $7,000 a year. Over a working lifetime you accumulate over $300,000 on these two savings alone.
Of course I understand we can't live like hermits but one of the good things which has emerged out of the recession is a humbling of peoples spending habits, the excesses of 5 years ago seem to have slowed. Businesses cut their costs 3 years ago and are now reaping the rewards and declaring profits, the individual consumer was slower to react though and will only now perhaps begin to feel the effects of reducing spending and debts.
What can be done in Singapore then to accumulate wealth. Best advice is to have some discipline. My major gripe on the available accumulation plans in Singapore is that they are too flexible. It's also the feature clients demand the most. In my opinion this is completely wrong. There should be an incentive for individuals to save money into plans which don't allow redemptions and encashment, because plans will only work if you continue to invest into them (see my comments earlier regards the 55 and 35 year old savings amounts). A plan is of no use what so ever if you stop paying in and take the money out.
Whatever happens, whether it goes under the mattress or into a structured plan, it's vital that expatriates wake up to the reality that if they don't look after themselves, nobody else is going to do it for them.
The main principle of needing to accumulate wealth for a secure future later in life is lost on many expatriates. We live a life of freedom, freedom from over bearing taxes, and freedom from state intervention. This sadly though had a major downside, and that is lack of discipline.
Take Australia for example, high rates of tax, and as I experienced on our family Christmas there, an extreemly expensive place to live. However, the state imposes a compulsory pension contribution, or Super Annuation, which all earners subscribe to. Companies and the government help with contributions and the average Australian can be secure in the knowledge that there is a pot waiting for them on retirement. Of course it's not perfect and there are many flaws, but it's something that we in Singapore on Employment Passes don't have.
I have met clients who have been in Singapore for 15 years, generally aged between 45 and 55, with either minimal or zero wealth. As they have been non resident in their home country they have not paid any taxes, or national insurances and have thus not accumulated any pension benefit. The average 55 year old who would like to retire at 65 on $50,000 a year (which does not go far in Singapore by the way!) would need to put aside in the region of $6,000 a month to achieve the necessary pension fund, his 35 year old self would have needed to put away only $800 a month. It's an old story expounded by many a financial adviser, but with good reason.
But back to the topic on hand, what is the principle of accumulating wealth. Quite simply to create wealth is extreemly difficult. Putting aside 20% of your lifetime earnings gives the average person 6 years of their average salary - say around $1,000,000 for the average employee. Invest that money wisely and it could be worth 2 or 3 times that, but it still won't give you enough to open an account at a Private Bank.
Wealth is generally accumulated by large capital injections, the sale of a house, business, profit share payments as well as high risk, high return investments. Any of these could create liquidity problems as they are not short term, as bankers are now experiecing with bonus payments, or property owners in the UK with negative equity or a stagnant market understand.
This should not preclude however the principle of little and often. Saving dollars here and there does soon add up. Smokers who quit would now save over $4,000 a year if they quit their pack a day habit. Taking the bus and not the taxi in Singapore could save you over $7,000 a year. Over a working lifetime you accumulate over $300,000 on these two savings alone.
Of course I understand we can't live like hermits but one of the good things which has emerged out of the recession is a humbling of peoples spending habits, the excesses of 5 years ago seem to have slowed. Businesses cut their costs 3 years ago and are now reaping the rewards and declaring profits, the individual consumer was slower to react though and will only now perhaps begin to feel the effects of reducing spending and debts.
What can be done in Singapore then to accumulate wealth. Best advice is to have some discipline. My major gripe on the available accumulation plans in Singapore is that they are too flexible. It's also the feature clients demand the most. In my opinion this is completely wrong. There should be an incentive for individuals to save money into plans which don't allow redemptions and encashment, because plans will only work if you continue to invest into them (see my comments earlier regards the 55 and 35 year old savings amounts). A plan is of no use what so ever if you stop paying in and take the money out.
Whatever happens, whether it goes under the mattress or into a structured plan, it's vital that expatriates wake up to the reality that if they don't look after themselves, nobody else is going to do it for them.
Tuesday, February 8, 2011
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