Potential 50% Gain Boring Company SBS S61 Old Bus

Potential 50% Gain Boring Company: SBS S61

SBS (S61) first caught my eye in December 2018. At that time, the public transport counsel announced that fares will be going up soon. It soon lead to a 50% increase in share price at that time. An opportunity came again during COVID-19, share prices has came back to Pre-Dec 2018 levels. I will be sharing why I think there will be a potential 50% gain in this boring company.

If you are new here, please look at my disclaimer section and also my 6 Levels Wealth Karate Methodology before continuing.

Potential 50% Gain Boring Company SBS S61 Old Bus

Potential 50% Gain Boring Company SBS S61 Old Bus: Source

 

What do SBS do?

SBS is a boring business. Basically, they run the following routes in Singapore. They run basic bus services, Chinatown direct bus, services, Express bus services, Nite Owl bus services, City direct bus services, North East Line, Downtown Line, Sengkang LRT, Punggol LRT, advertisement on bus, trains, bus hubs, train station and management shop and road show space.

It is pretty much an essential services and they have a market share of 61.1% market share as a public bus operator in Singapore.

Bus services comes under the BCM (Bus Contracting Model). SBS have to obtain the license to run the bus fleet. You can see from the link that SBS has the license to run the fleet in different areas with the immediate upcoming renewal in 2021 all the way to 2026.

*As the provision of bus services now comes under the BCM, the fare revision (in Dec 2018) affects only on their rail revenue.

 

Why is it an opportunity now?

The effects were felt during circuit breaker as we were forced to be at home. We probably go to our nearest supermarkets and shopping centers. This affected bus ridership heavily and can be seen in the H1 financial report. The circuit breaker started on 7 April 2020 and ended on 1 June 2020. The circuit breaker lasted for 1 month and 3 weeks. However, this does not include any prelude and also the after effects of the circuit breaker where people were still asked to work from home if possible. After the circuit breaker, rail ridership was at about 50 per cent of what it was during the pre-pandemic period.

Potential 50% Gain Boring Company SBS S61 H1 Results

Potential 50% Gain Boring Company SBS S61 H1 Results

On the top line, revenue dropped by 14.9% as compared to the previous year. This is to be expected as most of us spent around 2 months at home during the circuit breaker. (Just think about it, are you taking more bus rides as compared to the circuit breaker period?) Therefore, I expect the Next Half Year report will show a strong growth.

Depending on how they report it 2nd Half Year, they probably will report ~75% growth of operating profits as compared to 1st Half 2020.

 

What other reasons?

SBS is in a strong cash position. As of 30 June 2020, it had short-term deposits and bank balances of $94.5 million. After accounting for borrowings of $75 million, it was in a net cash position of $19.5 million.

It pays a good and sustainable dividend yield of ~4.5%.

It is currently undervalued based on a simple discounted cashflow model.

It is a stock that is position nicely to be normalized and the public transport section remains to be disrupted.

 

Any downside?

Very simply, there is little/no growth story to this company.

Secondly, new contracts might be awarded to new competitors to create competition. Recently, Tower Transit edges out SMRT to win $1.03b Bulim and Sembawang-Yishun bus packages. Tower Transit bidded $1.03B as compared to SMRT $1.19B. Personally, I find this will become worrying if this becomes a price war. SBS and SMRT may no longer be good cash cows in future.

 

Final thoughts by Wealthdojo

Most people will not entertain any investment ideas if it doesn’t have SaaS or Data in their business model now. However, I find that there are many opportunities in good old boring businesses that are positioning themselves to recovery and SBS is one of them. If things normalised, I expect prices to return to $4 region early 2021 with an upside of 50%.

Potential 50% Gain Boring Company SBS S61 Share Price

Potential 50% Gain Boring Company SBS S61 Share Price

I think it is understood that this should not be taken as a buy/sell recommendation. Please do your own due diligence in your investment.

PS: Here is a video on an explanation of BCM.

 

Join my Telegram Channel for a tip a day! In Wealthdojo, we dedicate a small amount of time daily for learning new things. Continuous learning is one of the greatest secrets of success.

For those of you who want to turbocharge your journey, contact me at chengkokoh@gmail.com. I would like to hear from you what your experiences are currently and from there, we develop a plan specially catered just for your journey.

We wish you all the best! Stay Safe and Take Care!

Chengkok, Sensei of Wealthdojo.

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume

We Singaporeans worry very much for our wealth. With property prices so high and also the age of your parents catching up on them, you worry that money is not enough. When COVID-19 slammed the brakes on our economy, some of you might have been left stranded. I have friends who are in their early 30s being retrenched and others on the chopping board.

As we look for another job, we get judged that those jobs are “not good enough for us”, “we are unwilling to suffer” or “we are unwilling to be humble”. It feels like we are being spat at by potential employers and older generation that we are unwilling to work hard as compared to the previous generation. According to Today, there are 33,000 vacancies across 10 industries. Why are there still so many vacancies in this pandemic? It is not that you don’t want the job. You know that you are willing to work hard. You know that you need to earn money. Unfortunately, you worry because you wonder where this job can take you in the future. You fear that if you accept this current vacancy, you might be “stuck” in this role forever. This is because your future employer will question on the relevant of your “recent” job experience when they read your resume.

You fear that this will affect your resume and future prospects. You want your role to be of value.

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume

 

That’s right. You can’t be flipping burgers because there is a vacancy. You need a job that can be of value to your resume. That’s why you are here today. I have short-listed 13 companies that are still hiring during COVID-19. I believe these 13 companies will look good on your resume and be an accelerator in your future job prospects. Some of these companies are well known in the industry and have great growth potential in the future. I have ranked them from the most job vacancies to the least.

Enjoy and good luck! (Job numbers updated: 10-Oct-2020)

 

OCBC (301 Jobs)

OCBC has committed to hiring more than 3000 to support jobs creation drive in Singapore. The full-time roles ranges from OCBC Bank ,Bank of Singapore, OCBC Securities Pte Ltd, as well as Great Eastern Holdings. They might be hiring in batches as there are 301 jobs listings on their website now.

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume OCBC

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume OCBC

OCBC Hiring: Click Here

 

DBS (252 Jobs)

DBS has committed to hire more than 2000. DBS’s article was publish in May while OCBC’s article was posted in June. It seems like a cute competition that they are doing now with OCBC.

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume DBS

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume DBS

DBS Hiring: Click Here

 

Amazon (187 Jobs)

The beast of online shopping, cloud computing, digital streaming and artificial intelligence needs people to fuel its’ engine. While shoppe is more common in south-east Asia, amazon is taking the world by storm with it’s cloud computing technology.

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume Amazon

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume Amazon

Amazon Hiring: Click Here

 

Fairprice (125 Jobs)

Our very own local brand. Fairprice is the largest supermarket chain in Singapore. They have 100 supermarkets across the island and over 160 outlets of Cheers convenience stores island-wide. They are hiring a wide variety of talents. Do check them out.

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume Fairprice

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume Fairprice

Fairprice Hiring: Click Here

 

GovTech (103 Jobs)

As we move towards a smart nation, the government will be needing talents to spearhead technology in Singapore. TraceTogether is one example. Personally, GovTech is the “iron rice bowl for the future. We also have the cyberspace masterplan that has been announced by DPM Heng.

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume GovTech

GovTech Hiring: Click Here

 

Tiktok (97 Jobs)

Tiktok just came to our shores. The US-China tension has created some opportunities for Singapore. Bytedance (the parent company of tiktok) has decided to make Singapore the benchhead for Asia. I forsee that they will be hiring loads more people in the years ahead.

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume Tiktok

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume Tiktok

Tiktok Hiring: Click Here

 

Lazada (88 Jobs)

If you are like most Singaporeans, you probably have ordered something from Lazada during the circuit breaker period. Alibaba (the parent company of Lazada) is trying to get market share for ecommerce in South-East Area. I forsee Lazada hiring more and more because we are still scratching the surface of the e-commerce treand.

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume Lazada

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume Lazada

Lazada Hiring: Click Here

 

Tencent (84 Jobs)

This company owns Wechat which is the largest text messaging platform in China. Wechat is not only about text messaging, it is like grab, yelp, paypal, maps, airbnb, facebook, linkedin, twitter, line, messenger, skype, etsy etc combined. Let’s not even begin with how powerful this app can be. With so much going on, I can’t imagine how many manpower they will need.

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume Tencent

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume Tencent

Tencent Hiring: Click Here

 

SEA (80 Jobs)

This company that is Singapore based is the darling stock for 2020. They are the parent company for shopee and have been taking the stock market by storm due to their growth potential in the real market. They have committed 500 Jobs For Singaporeans.

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume SEA

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume SEA

SEA Hiring: Click Here

 

AIA (65 + 500 Jobs)

AIA has been in around for a century and still going strong. They have committed 500 jobs for Singaporeans as reported by CNA. This insurance company needs no introduction as they have been protecting the lives of Singaporeans for more than 100 years. Not one to be borne by legacies, AIA has strived from strength to strength by adopting many digital solutions to prepare them for the next era.

Current 65 jobs are for corporate positions. 500 are for the financial services.

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume AIA

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume AIA

AIA Corporate: Click Here

If you wish to consider being in financial services, click here.

 

Rakuten (50 Jobs)

Rakuten is a Japanese electronic commerce and online retailing company based in Tokyo. It is also trying to enter into the South East market. The strongest appeal for Rakuten (in my opinion) is the cashback feature. I like their mission which is to contribute to society by creating value through innovation and entrepreneurship. If that resonates with you, 50 slots left.

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume Rakuten

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume Rakuten

Rakuten Hiring: https://www.linkedin.com/jobs/rakuten-jobs/?originalSubdomain=sg

 

Razer (33 Jobs)

This company is another of Singapore’s pride. Razer Inc. is a Singaporean–American multinational technology company that designs, develops, and sells consumer electronics, financial services, and gaming hardware. They started with selling high-end computer gaming mouse.

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume Razer

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume Razer

Raser Hiring: Click Here

 

Tesla (10 Jobs)

As Singapore progress into a cleaner city, we might see electronic vehicles on our shores really soon. Tesla has already hinted they are coming to Singapore. As one of the most speculative companies in the world, I can imagine they will need manpower to power Elon’s dreams and mission.

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume Tesla

13 Companies Hiring During COVID-19 That Will Look Good On Your Resume Tesla

Tesla Hiring: Click Here or Here

 

Final Thoughts By Wealthdojo

I hope this compilation can help you to boost your resume. Some of these companies are positioned to be the heavyweights of the next generation and be sure to position yourself with them. If you are looking for an alternative career type, please look forward to our next article.

Join my Telegram Channel for a tip a day! In Wealthdojo, we dedicate a small amount of time daily for learning new things. Continuous learning is one of the greatest secrets of success.

For those of you who want to turbocharge your journey, contact me at chengkokoh@gmail.com. I would like to hear from you what your experiences are currently and from there, we develop a plan specially catered just for your journey.

We wish you all the best! Stay Safe and Take Care!

Chengkok, Sensei of Wealthdojo.

How to be free from the burden of university debt

How to be free from the burden of university debt?

You made it! You have made it either through the grueling A-levels or becoming the very best of your polytechnic cohort. We welcome you to the top 23% of students in Singapore. We also welcome you into the Wealth Management world of debt.

This article is jointly written with one of the finest young man I have met: Frugal Youth Invests.

 

The World Of Debt

How to be free from the burden of university debt

How to be free from the burden of university debt (Source: Lenpezo)

University will be shell shocked for you. Especially, for Junior Colleague buddies out there. Your teachers won’t be chasing you for homework. You will decide what modules to study. You will have to do everything yourself. In the next 4 years, your financial life will be deciding on textbooks to buy, how to printing your lecture notes, how to save time and money from transportation, what kind of food to eat in school and perhaps how to survive in your student hostel. Once you finished the 4 years, you will graduate with a $30,000 loan which you have to pay off.

 

My University Financial Journey

I graduated from Nanyang Technological University in 2013 with a Bachelor of Science (Major in Mathematics and Economics). Coming from a humble family, I decided to complete my university in 3.5years (instead of 4 years) so that I can save on one semester of tuition fees. I want to share with you the cost of my university life so that you can be prepared when the time comes.

On average I take between 5 to 7 modules a semester (I was chionging modules). This would mean that you would have taken at least 35 to 42 modules in your university life. Each module would be run for 13 weeks which means there would be 13 sets of notes to be printed. 

 

Textbooks

Typically, we are encouraged to buy a textbook as a recommended read. You can choose not to buy but you will definitely feel there is a feeling of “missing out”.  I remember the first book that I had to buy was Calculus, John Steward, 6th Edition. A new book cost around $200+ and a used book cost around $100. Some of the tutorial questions are from the textbook so it is a must that we have some access to that textbook. This soon became one of the most expensive investment in my university days. On average, I would spend between $500 to $600 per semester on books. In total, that would mean $3500 to $4200 in my entire university life. 

Printing

Printing costs varies a lot. To save money, my default printing was 4 slides on 1 page, double sized to “optimize” my writing space and also my eyesight. It cost me easily $100 per semester. Total cost over 4 years: $700. You can save printing cost if you wish to read the notes on your IPAD/Computer etc. Personally, it is easier for me to study when I print the notes out. 

Transportation

If you have lessons every single day, you would need to go to university. I used the concession pass in my university days. It cost $90/month. Total cost over 4 years: $4320 . 

Food and beverages

Food cost varies as well depending on what you eat and how many meals you eat in school. I typically have 1 to 2 meals in school. Assuming that each meal cost $6. It cost $180/month. Total cost over 4 years: $8640.

Student Hostel

If you are staying in a student hostel, per-person-per-month basis for a single room or a twin-sharing room ranges from S$265 – S$605. Let’s take the average cost of $435 for calculation. If you stay in a hall for the entire university life, it will cost $20,880. I had the opportunity to stay in the hostel for 4 semesters (2 years out of the 4). 

University Fees

I paid $20,034 for 3.5 years of my university education. If I were to complete my university in 4 years, the cost will be around $24,000.

 

In total, you would have spent around $60,000 based on the above estimates.

On average, your “survival” running cost (minus the university fees) will be $800 to $1100 per month depending on your choices that you make

How to be free from the burden of university debt oh man

How to be free from the burden of university debt: oh man

Your University Self Reliance Fund

The reason you are still reading this is because you want to be self-reliance and be independent. You want to make money for yourself so that your parents will not be burdened by your expenditure. Frugal Youth Invests will be talking about VES and STC schemes in National Service that you can take after your ORD. I will be sharing with be a personal one on how I survived and thrived during university financially.

How to be free from the burden of university debt self reliance

How to be free from the burden of university debt self reliance

Voluntary Extension of Service (VES)

Voluntary Extension of Service (VES) is a scheme where servicemen can extend their service immediately upon ORD on a voluntary basis to meet organisation need if necessary, for a period not exceeding 9 months. Such examples of organisation need include completing Special Project Work or to finish overseeing a batch of trainees as an instructor. 

For NSFs who decide to VES, they will continue to receive the same benefits accorded to all NSFs. Personnel who VES will be paid NS allowance for the extended period, receive the same medical benefits and be eligible for 14 days of annual leave per calendar year, pro-rated by the duration of extended service (rounded up to count as a full day). 

For personnel extending their service, they are serving in the capacity of an Operationally Ready National Servicemen, thus it counts towards servicemen’s ORNS but not as a high key in camp training. As an ORNS, personnel will be eligible for recognition accorded to NSmen, such as NSmen tax relief, in which during any assessment period when the personnel is serving VES, he will be eligible for a higher quantum of tax relief. 

NSFs who are keen to volunteer their service beyond their ORD should inform the units of their intent verbally, in writing or email. Application for VES should start at least one month in advance of the NSF’s ORD. Personnel on VES can choose to end their voluntary period of extension before the intended due date. Personnel will have to inform their Personnel Management Centres in writing at least one month in advance, and serve a notice of one month. 

 

Short Term Contract (STC)

Similar to the intention of VES where it allows units to meet organisational needs, Short Term Contract (STC) allows units to temporarily fill a position to meet organisation needs. In light of the current uncertainty and unfavourable job market, STC is a safe, stable and short term employment for NSFs who are about to ORD and looking for employment. With this scheme, servicemen can earn a regular salary and receive medical benefits accorded to a regular.  

Even though STC is open to all vocations, it is up to the unit to decide to allow STC on a particular vocation. For example, STC is usually not open to Admin Support Assistance vocation as the resources are not scarce compared to other combat vocations. 

 

The Traditional Part Time (4 out of 5 friends gave tuition)

I was funding my lifestyle by giving tuition. I was charging $30/hour for mathematics tuition for secondary school and $50/hour for mathematics/economics tuition for junior college. It was not easy getting tuition right at the start. A typical lesson plan for the students would be a 2 hours session a week. This would mean 8 hours a month. Doing the math, you will be rewarded $240 per student that you have in a secondary school. To “survive” in university, you might need to take 3 to 4 students. You probably need to give tuition during weekends. 

Some of my friends were doing part-time work at restaurants. Their pay would be on average $7/hour. To survive, you have to work 100hours/month or 25 hours/week or 4hours/day. 

It is not hard to imagine that most of us ended up giving tuition during our university days. 

I also had the opportunity to work at a local bank in a tele-sales role. Inclusive of CPF, I was paid around $3000++/month (which is quite attractive for a person in his 20s). This employment helped me fund my university fees. Of course, I had good financial budgeting knowledge and I did not YOLO my pay away.

In the current market, some part time employment opportunities that one can look for will be food delivery riders, temperature screener, clerical, digital marketing blog posts or packer related jobs which pay at an average rate.  

 

Final Thoughts By Frugal Youth Invest

Before discussing whether to choose between VES or STC, one must understand that due to cohort equality, personnel who ORD in November as they were enlisted in January, will not be allowed to disrupt for further studies. This means that they have at least 8 months before starting on Uni. This gives them a lot of time to find employment outside. However, in this unfavorable job market, it might be difficult for NSFs to look for meaningful jobs outside. 

We understand that the majority of NSFs find their allowance meagre and really want to get out of the Army as soon as they ORD. However, if a NSF does not mind the regimentation of the Army, one should consider short term employment through STC if their unit offers based on their vocation. This is because STC is a safe, stable and short term employment during times of uncertainty. In addition, it offers a regular salary, which is higher than any part time job salary, and personnel will receive medical benefits accorded to a regular. 

As for VES, there is not much of an incentive to volunteer to extend service as one is paid NSF allowance. It will definitely be a turn off for some who are already complaining about the meagre allowance and wanting to get out of the Army as soon as they ORD. Therefore, this leaves us to take on either STC or part time employment outside. 

I believe that the question to ask about deciding between part time employment and STC is how meaningful can either path be? For example, when choosing STC, STC is meaningful and worth a try because one can continue to contribute to national security and roles like being an instructor can be meaningful as one will feel a sense of accomplishment after seeing his trainees graduate from the course and be competent in his vocation. I think that it is very difficult to replicate such a contribution and sense of accomplishment working part time outside. 

That being said, it does not mean that working part time outside is not of any value, but it is what kind of job that one is looking for that matters. I do not see any value in working as a food delivery rider or temperature screener in terms of personal development. What can one achieve at the end of the day other than earning money? Does one pick up new skills that will aid them for their studies or will it build one’s portfolio or resume for scholarship or full time job in the future? 

I think these are some questions to think about when deciding between part time employment and STC. It is really what each individual would want to achieve at the end of the day and this article is merely guiding the decision making process. 

 

Final Thoughts by Wealthdojo

Once again, congratulations for reading thus far. I believe you are responsible person and I wish you all the luck. The journey ahead seems like a scary one and I want assure you that you will definitely get through it. Although it seems overwhelming, I want to assure you that you will learn and discover many things about yourself. Your choices will ultimately be part of your youth.

Whichever self reliance funding that you choose, believe in yourself and enjoy this part of your youth.

Special thanks for Frugal Youth Invests. Thank you for your special appearance. Wishing you all the best too!

 

Join my Telegram Channel for a tip a day! In Wealthdojo, we dedicate a small amount of time daily for learning new things. Continuous learning is one of the greatest secrets of success.

For those of you who want to turbocharge your journey, contact me at chengkokoh@gmail.com. I would like to hear from you what your experiences are currently and from there, we develop a plan specially catered just for your journey.

We wish you all the best! Stay Safe and Take Care!

Chengkok, Sensei of Wealthdojo.

3 things you need to know about SRS if you plan to leave Singapore

3 things you need to know about SRS if you plan to leave Singapore

It is the Supplementary Retirement Scheme (SRS) contribution season. If you are 40 and above, do check out my previous post on the 5 things you need to know about SRS. Interestingly, someone emailed me on my 6 Level Wealth Karate System Page to ask about what will happen to their SRS account if they leave Singapore.

In this article, we will talk about 3 potential scenarios (i) if you are a foreigner and continue to stay in Singapore (you should!) (ii) if you are a foreigner but decide to leave Singapore (iii) if you are local and intend to retire in overseas (Thailand, Phuket, you name it).

3 things you need to know about SRS if you plan to leave Singapore

3 things you need to know about SRS if you plan to leave Singapore: Don’t leave =(

I’m a Singaporean and proud to be one. Singapore is a wonderful country. You should not leave =). Unfortunately, I do meet people who love Singapore but have no choice but to leave because they were asked to relocate to another country. Anyway, let’s set the context for the SRS. Most people will probably be concerned if it is worth it to contribute to their SRS when long term stay in Singapore is not confirm. We will touching on that.

I would also need to point out the withdrawal tax concession and the 5% early withdrawal penalty.

 

SRS Early Withdrawal Penalty (Local and Foreigner)

Withdrawal after retirement age (current age 62): You can start making penalty-free withdrawal from your SRS account. You will only be taxed 50% of the amount you withdraw for the calendar year.

Withdrawal before retirement age (current age 62): Although you can make withdrawal from your SRS account at any time that you want, you will be subjected to a penalty of 5% of the amount withdrawn. In addition, the full amount withdrawn will also be subject to income tax.

There are other special circumstances which we will not be going into detail (Death/Medical Grounds/Bankrupt)

 

SRS Additional Withdrawal Criteria (Foreigner)

As a foreigner, you can withdraw your SRS monies without the 5% penalty if you meet the following criteria:

(i) a foreigner for a continuous period of at least 10 years preceding the date of withdrawal.
(ii) one lump sum after maintaining your SRS account for at least 10 years from the date of your first contribution.

For such withdrawal, you will be taxed 50% of the withdrawal amount.

After understanding the above criteria, let’s consider a the few scenario that might happen to you.

 

Case #1: Foreigner and continue to stay in Singapore

James is a foreigner who is staying in Singapore for many years. When I first met James, he told me that he really love Singapore. He likes the sunny weather, he likes the hawker food (his favourite is chicken rice) and also a father of 2 beautiful young children.

He has an intention to stay in Singapore to raise his family.

James contributes to his SRS account every year. This is because as a foreigner, he does not have CPF contribution. By contributing to the SRS, he is able to reduce his taxable income, save on taxes and also save for retirement.

James is 45 this year and he is plan to contribute the full $35,700 into his SRS every year. He makes around $160,000 a year. Assuming no other personal tax deduction.

Without SRS: James pays $13,950 of taxes that year.

With SRS: James pays $8,595 of taxes that year. (His chargeable income is $160,000 – $35,700)

In total, he saves $5,355 worth of taxes that year. He also saves $35,7000 in his SRS which he can use to invest for his retirement.

In 10 years time, he save a total of $53,550 worth of taxes. At the same time, he would have accumulated nearly $481,462 if he decides to invest his monies in his SRS assuming it grows at 4%. He can decide if he wants to withdraw the lump sum.

If he does so, he have to pay 50% taxes on withdrawal amount. Let’s assume he does not have any income that year. He will be taxed on $241,000 (50% of $481,462). He pays a tax of $28,945. He saves about $24,605 ($53,550-$28,945) if he contributes to SRS. In this case, he benefits from this.

However, James may not want to do this at all. At age 55, he is still young and most likely have a good income, saving or investment to depend on if he does proper wealth management. James is a happy man.

3 things you need to know about SRS if you plan to leave Singapore happy family

3 things you need to know about SRS if you plan to leave Singapore happy family

 

Case #2: Foreigner and decides to leave Singapore

In an unfortunate case where you have to leave Singapore, there are some strategies that you might want to consider for the SRS. I met Lucy a few years back. Lucy has been in Singapore for 3 years now but have not contributed to her SRS. She’s working in an MNC in Singapore and earns around $160,000. She fears that the economic downturn will affect her job opportunities in Singapore and asked to be returned to her country. This has been escalated due to COVID-19. Similarly, if she contributes $35,700 to her SRS, these are her numbers.

Without SRS: Lucy pays $13,950 of taxes that year.

With SRS: Lucy pays $8,595 of taxes that year. (Her chargeable income is $160,000 – $35,700)

In total, she saves $5,355 worth of taxes that year. She also saves $35,7000 in her SRS which she can use to invest for her retirement.

What if Lucy were to leave Singapore? Her fears are valid. It would mean that $35,700 would be stuck in her SRS. What if she leaves Singapore AND really needs the money? In this unfortunate situation, she will have to pay a 5% penalty and also be taxed on 100% of the withdrawal amount. This can be avoided if Lucy plans using the 6 Level Wealth Karate System.

Ideally, she can wait for 10 years from her first contribution to avoid the penalty and be taxed on 50% of the lump sum.

3 things you need to know about SRS if you plan to leave Singapore Sad Woman

3 things you need to know about SRS if you plan to leave Singapore: I don’t want to go

 

Case #3: Local but wants to retire overseas

This has been a dream of many Singaporeans. Andrew has been working in Singapore all his life and contributes to his SRS account regularly. He has been telling his colleagues about his retirement which is happening in a few years time. He dreams that he will be able to retire in Thailand. He enjoys Thai food a lot and can’t wake to wake up on the beach of Phuket every day for the rest of his life.

3 things you need to know about SRS if you plan to leave Singapore Phuket

3 things you need to know about SRS if you plan to leave Singapore Phuket

We are in the midst of checking if SRS will be taxed differently due to the change of tax residency. We will update this article accordingly.

Update: SRS will be taxed according to tax residency and it depends on the following factors.

3 things you need to know about SRS if you plan to leave Singapore Tax Resident

3 things you need to know about SRS if you plan to leave Singapore Tax Resident

Final Thoughts

Please check in with your tax advisors for the above strategies. We also note that the rulings change from time to time so we want to be mindful about that.

Whether you are a local or a foreigner, it make sense to contribute to SRS (as discussed in the previous article). I will be talking about what to invest in using your SRS in the next article. Stay tune.

 

Join my Telegram Channel for a tip a day! In Wealthdojo, we dedicate a small amount of time daily for learning new things. Continuous learning is one of the greatest secrets of success.

For those of you who want to turbocharge your journey, contact me at chengkokoh@gmail.com. I would like to hear from you what your experiences are currently and from there, we develop a plan specially catered just for your journey.

We wish you all the best! Stay Safe and Take Care!

Chengkok, Sensei of Wealthdojo.

5 things you need to know about SRS when you are 40 and older

5 things you need to know about SRS when you are 40 and older

During the end of the year, the topic of Supplementary Retirement Scheme (SRS) and Central Provident Fund (CPF) contributions will become frequently searched topics for wealth management. This is because for every additional dollar contributed, we might pay lesser in taxes. If you are 40 and older, this article is for you. We are going to talk about taxes, retirement and worse case situations.

5 things you need to know about SRS when you are 40 and older

5 things you need to know about SRS when you are 40 and older

 

#1 Quick Summary of SRS

SRS is a voluntary program started in 2001 to help individual (local and foreigners) to save more money for retirement. You are eligible for tax reliefs by contribution to SRS subjected to the cap of the personal income tax relief (currently $80,000). There is also a maximum that you can contribute to SRS (currently $15,300 for Singapore Citizens and Permanent Residents; and $35,700 for foreigners).

For example, I earn $100,000. I contribute $15,000 into my SRS. My taxable income will now be $85,000 (assuming I have not hit the cap of the personal income tax relief).

Your returns in the SRS account will be tax-free and 50% of the withdrawals from SRS are taxable at retirement.

Your contributions must be made before the 31 Dec of the year to quality (hence, the interest at the end of the year).

You can make withdrawals on or after the statutory retirement age (currently at 62) for you to enjoy penalty free withdrawals. Withdrawals are made in a 10 years window.

For investments in life annuities, the 10-year withdrawal period does not apply. So long as you continue to receive your annuity streams in perpetuity, 50% of the annual stream will be subject to tax.

A 5% penalty will be imposed for early withdrawals.

For more information about withdrawals, head over to IRAS withdrawals to understand more.

 

#2 The Best Case Scenario

The best case scenario is to have $400,000 in your SRS account at the age of 62 and you are not working by then. We assume that we will be drawing out $40,000 evenly over the next 10 years. Since 50% of the amount withdrawn will be taxable, the taxable income is $20,000 (assuming no other income). At $20,000, there is no income tax payable.

This rigid best case scenario creates a conundrum because it creates a happy problem that you have ALOT MORE than $400,000 due to excellent investment returns AND you still have a well paying job by then.

 

#3 The “Worse Case” Scenario

Suppose you are 30 year old today and contribute the maximum of $15,300 into the SRS account every year until age of 62. If your ROI is 20%, you would have $31 million in your SRS account. You would have to withdraw around $3 million yearly and be subjected to the highest income bracket.

If we manage our expectations and have a reasonable ROI of 5%, you would have $1.2 million in your SRS account. In this case, you would have to withdraw roughly $120,000 yearly. If you are still working and at the peak of your career getting a good income, you will be possibly subjected to a highest income bracket.

The “worse case” is to have really good investment skills and still be working by then. However, I feel this as a “happy” problem to have.

 

#4 What if I’m just a normal human being?

$1.2 million sounds big and you might not even be sure you will still have a job then at 62. Most of my client ask me what if they are a normal human being, how does SRS still make sense to a layman?

Firstly, we have to start with the question of contribution. How much should you make a year before SRS contributions make sense?

5 things you need to know about SRS when you are 40 and older income tax contribution

5 things you need to know about SRS when you are 40 and older: income tax contribution

SRS is a tax planning tool. Hence, it is important to know at which chargeable income bracket (after CPF contribution, tax relief) will it make sense for us to contribute to SRS.

Personally, SRS contribution will start to make sense after the $80,000 chargeable income bracket. Any other income after the $80,000 is subjected to a tax rate of 11.5%. Hence, I find it reasonable to contribute to SRS unless I can find an investment instrument that can give me 11.5% easily. Of course, there are other reasons as well.

#4.1 Tax Savings

To give an example, Amy earns $120,000 annually (after all personal tax relief).

Without SRS, she pays $7950 on taxes.

With SRS, her chargeable income becomes $104,700. She now pays $6190 on taxes.

She saves $1760. (which is a probably an extra month of family expenses)

However, in a situation where by you need liquidity for big purchases such as down-payment for a property, you might want to skip this year’s contribution. The balance of liquidity and tax saving should be taken into consideration.

#4.2 Emergency Funds

If you already have money in your SRS and have a URGENT need for cash, you can still withdrawal from SRS with a 5% penalty instead of having it locked up like the CPF. Of course, we ideally do not want to withdraw from our SRS. However, in an event of a unforeseen circumstances, the funds are still available.

 

#5 Then why after age 40?

I’m assuming that after age 40, it is likely that our income is more than $80,000. Plus, we might need liquidity for housing/renovation/marriage/children purposes before that. There is also an (irrational) fear is that if we contribute too early, we might compound it too much by then.

Hence, 40 years is ideal because there will be possible substantial tax saving, not having a liquidity issue and also closer to retirement age (lesser compounding period).

A potential solution to the “worse case” scenario is to get an annuity (but you will still be effectively taxed on half the annuity’s payouts every year).

 

#6onus How should you open a SRS account?

To open a SRS account, simply go to the 3 SRS operators (DBS/POSB, UOB & OCBC) website and you can do it online. You can register an account with any of them. There is little difference which bank you choose because you can invest in SRS approved assets from any institutions.

OCBC SRS Account

UOB SRS Account

DBS SRS Account

I suggest that you wait until the end of the year before applying. Typically, there are promotions to open a SRS account at the end of the year. On a side note, I’m don’t think there will be a promotion this year (2020) due to the COVID-19 situation. The banks have also been reducing their benefits this year.

5 things you need to know about SRS when you are 40 and older OCBC Promotion

5 things you need to know about SRS when you are 40 and older OCBC Promotion 2017

 

Final Thoughts

I believe that SRS is a great tax saving tool for you if you are 40 and above. Your contribution might save your family one month worth of household expenses. When we are younger, it is important to balance tax-saving and liquidity. Upon retirement, SRS can  provide a source of income for us in addition to possibly rental, dividends etc.

 

 

Join my Telegram Channel for a tip a day! In Wealthdojo, we dedicate a small amount of time daily for learning new things. Continuous learning is one of the greatest secrets of success.

For those of you who want to turbocharge your journey, contact me at chengkokoh@gmail.com. I would like to hear from you what your experiences are currently and from there, we develop a plan specially catered just for your journey.

We wish you all the best! Stay Safe and Take Care!

Chengkok, Sensei of Wealthdojo.