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Financial Planning in Singapore
Living in a new country and confronting your new financial position can be an incredibly daunting task. Expats that move to Singapore typically earn more money than they do in their home country, and pay less tax. However, before people move here they have been used to obligatory pension payments, be it employer-driven or a monthly compulsory state pension contribution, tax deduction at source, and in a lot of cases, public funded healthcare.
But what happens when you don’t have all these things imposed upon you, which are designed to help you, your families, and your future selves? In Singapore you should theoretically have more disposable income, but with no obvious forced savings to help pay for your future, what are you doing to save money? Or are you just spending the majority of it?
Ultimately, the decision is yours to make.
As a Financial planner, when I meet new clients (some of whom have actually lived offshore for a number of years), I find that many have not even started to look at putting some form of basic financial planning in place in Singapore, and systematically, have little savings in comparison to the income that they earn. Amazingly, most expats haven’t even put money aside to pay their tax bill at the end of the year, with the blasé excuse, “Oh I’ll pay it next year on a monthly basis so I don’t have to worry about that now!”
This attitude sort of defeats the object of moving here right? “I am going to move to Singapore for 5-10 years, save a load of cash and return home and buy a house”. When the expat dream eventually does come to an end, unfortunately all that some people leave with is a Sunday brunch habit and a penchant for weekends to Bali…but not a whole lot else to show for their all their hard work.
Without sounding like a party pooper, although the cost of living is generally higher than most peoples’ country of domicile, the truth here is that most people can be saving more money than they are. And they if they aren’t saving for their future at all then they really need to start. Becoming accustomed to the lifestyle here is great, but tucking some money aside for a rainy day, is ultimately what you are going to need to pay for your properties and your retirement. If you don’t, you could leave Singapore with little more than just some good memories.
It seems that moving here and enjoying new friends and nice condos does affect peoples’ spending behaviour. It is normal that moving to a dream location can be looked at as a dream holiday, but if you want to extend that holiday into your retirement, then something has to give!
Luckily, in my opinion, Singapore is one of the easiest jurisdictions to start saving money in a tax efficient manner. The financial services industry is well regulated, the banking system efficient, and depending on your nationality, disposable income and future plans, there are a plethora of interesting options available to expats here.
The hardest part is actually taking the time to sit with a pen and paper and writing all the things that you want to achieve financially whilst you are offshore. Buying a property, planning for retirement, and growing your savings to do so are common goals. Often it is best to break down your financial goals into short and medium/long-term goals. For example:
- Building up an emergency fund
- Ensuring that your current savings and on going investments are tax efficient
- Consulting a professional to ensure that your life insurance is valid whilst you live offshore, and if you have none, how would you survive if you got ill, or how would your family cope financially if you passed away?
- Looking at becoming a Permanent Resident in Singapore
- Growing any cash in the bank at least in line with inflation (food inflation in Singapore has increased by 0.8% year to date already)
- Making a multi-jurisdictional will to protect your assets both here and in your home country
- Having structures in place to allow for your dependents to be passed on as much of your assets without a huge IHT bill
Medium/long term goals
- Having a sufficient retirement income to sustain a happy and comfortable lifestyle in later life
- Saving up for a wedding
- Buying a property here either to retire in or for investment
- Paying for your child’s education
All the above can look like a mountain to climb. But it’s important to list them in order of what’s important to you, and work through them step by step. A priority for you may not be important for someone else in exactly the same position.
If you’re thinking about building an investment portfolio, saving some money or buying a property, a financial planner could recommend savings, investment and protection strategies based on your current situation, your plans for the future and your goals in life.
About the Expert
Suf Zumla used to run a commodities trading floor in London. Now he works in Singapore as a financial planner at AAM Advisory, specialising in lump sum investments, general savings, pensions and retirement planning.
Contact Suf at firstname.lastname@example.org for more information.
The views expressed in this article are those of the author and do not necessarily reflect the views of AAM Advisory Pte Ltd. This article should not be construed as an offer, solicitation of an offer, or a recommendation to transact in any products (including funds, stocks) mentioned herein. The information does not take into account the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a licensed financial adviser regarding the suitability of the investment product before making a commitment to purchase the investment product. Past performance is not necessarily indicative of future performance. Any prediction, projection, or forecast on the economy, securities markets or the economic trends of the markets is not necessarily indicative of the future performance.