Enduring The Correction 2021

Enduring The Correction

Enduring The Correction 2021

Enduring The Correction 2021

The last few days was beginning to spook investors. Global investors are concerned about rising inflation, coupled with raising 10 year Treasury Yield. This send the S&P500 down with growth stocks taking the lead. You might have the same concerns seeing your portfolio dipped. There were many people that reached out to me. Enough of them for me to put out a message in my telegram channel.

Enduring The Correction Advice

Enduring The Correction Advice

For those of you who started investing in March 2020, this might be your first major correction / bear market (if it is coming). If you feel uncomfortable to see losses, rest assured this is very normal. No one likes to lost money.

Instead of sharing logical data of how each correction ends up higher, I have consolidated a few great quotes from investors I respect. In your wealth management journey, investment is both logical and also an emotional experience.

Enjoy the ride. Hope you find strength in these quotes.

 

“Stock prices are not business prices. The company you have invested in will not stop/pause to sell their products just because their share price dropped by a few dollars. Whether there is a correction or not, invest in quality companies/portfolios that continue to grow” – Chengkok, Founder of Wealthdojo.

 

“Unless you buy a stock at the exact bottom (which is next to impossible), you will be down at some point after you make every investment. Your success entirely depends on how dispassionate you are towards short term stock price fluctuations. Behavior matters.” – Joel Greenblatt, American hedge fund manager.

 

“I deleted my (brokerage) app from phone yesterday so (that) I don’t see again and again. I will (continue to) add money every month and wouldn’t sell a share. I have quality in my portfolio and would evaluate things in 2021 Dec whether to sell anything.” – Rajeev, Singapore Investor.

 

“In times like these, the best thing to do is to research companies… and then come away with optimism that “wow… so much growth yet to happen!” – Ser Jing, Portfolio Manager of Compounder Fund.

 

“The principles have not changed. #1 Buy great companies #2 Buy them at fair value.” – Dr Daniel Kao.

 

“Rotation is the lifeblood of any bull market.” – Ralph Acampora, Director of Technical Analysis at Prudential Securities.

 

“Market is just price movement, it is never about the whole business. Where-else the underlying asset which the company that provide the goods and services is the real deal biz to the industry.” – Singapore Investor #2.

 

Final thoughts by Wealthdojo

Once again, I would like to thank all who have contributed to the above quotes. Enjoy the ride.

 

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.

There were only two things certain in life Death and Taxes

How Much Is My Income Taxes [2021 Edition]

It is the tax season for 2021. If you had an income in 2020, filing of your income tax starts 1st March 2021. You will NEED to file it by 18 April 2021 (e-filing) or 15 April 2021 (paper filing). If you don’t, it could lead to a fine or even a court summon. Don’t say you have not been warned.

We don’t really talk about taxes in 6 Levels Wealth Karate Methodology. In a simple gist, taxes are bittersweet to me. On one hand, I don’t like to pay taxes as it is an expenses to me. On the other hand, if I pay higher taxes, it would mean that my income is higher! I’m just glad that in Singapore, we have a really attractive tax program and we pay significantly lesser taxes as compared to people in other countries. Without going too deep into that, here’s how how much to pay for your income taxes in 2021.

 

Do you need to pay taxes or not?

Yes. You only pay income taxes if your chargeable income is greater than $20,000. Some income are chargeable and some are not. Fun fact: your winning from your TOTO/4D is not a chargeable income. Check out the full list here.

If your chargeable income in 2020 is above $20,000, you will be taxed with the progressive income tax system. Singapore follows a progressive income tax system. This means that the higher your income, the more you pay in taxes. The resident tax rates are as follows.

How To Reduce My Income Taxes Resident Tax Rates

How To Reduce My Income Taxes Resident Tax Rates

However, this does not show the effective income taxes for your income. When I first saw this table, I thought that if I earn $80,000, my tax bracket would be 7% or $5,600. This is untrue.

How To Reduce My Income Taxes Effective Income Tax Rates

How To Reduce My Income Taxes Effective Income Tax Rates

If you are earning $80,000, you will be paying $3,350 in taxes which means my effective income tax rates are 4.19%. Personally, I think it is quite fair. With the same $80,000, you would be paying $23,571 or 29.46% effective income taxes in USA.

 

Is it automatic?

If you received a letter/SMS/form that tells you to file your income tax, you will have to log in and file it yourself. This sms below is one that I received from IRAS. Typically, most of my income have already be pre-filed as I’m a self-employed working with AIA.

Income Tax 2021 Filing

Income Tax 2021 Filing

 

If you received a letter/SMS/form that tells you NOT to file your income tax, you don’t have to do it. But please verify if your information is correct and accurate.

If you didn’t receive anything from IRAS, you will still need to file a tax return if your:

  • annual net business income exceeded $6,000, OR
  • annual income (inclusive of rental income) was more than $22,000 last year

 

Tax Deductibles

Since 2020 is over, you can’t really do much changes into your deductibles. You can start planning for 2021 instead. In Singapore, we have a list of deductibles given to encourage social and economic objectives such as filial piety, family formation and the advancement of skills.

Income – Deductibles = Chargeable Income

As mentioned above, you will pay taxes on your chargeable income. This means that deductibles will play a big role in the taxes you are paying.

IRAS has created a personal income relief checker to see how much deductible you are allowed. These deductible includes SRS Top Ups, CPF cash Top Ups, just to mention a few. There is a maximum of $80,000 tax reliefs.

 

Final thoughts by Wealthdojo

There were only two things certain in life Death and Taxes

There were only two things certain in life Death and Taxes

Co-incidentally, these two can be well managed by proper financial planning or using insurance tools to achieve your financial goals. This article is meant to be a general article on how to pay taxes in Singapore. If you would like to know more, just comment on this post or contact me and I would love to have a conversation with you on the above.

Stay healthy. Stay Safe and pay your taxes.

Thank you for your contribution to nation building.

 

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.

Top 3 Money Wasters At The Supermarket.

Top 3 Money Wasters At The Supermarket.

During the Lunar New Year, I was spending more time in the supermarkets to buy my Chinese New Year goodies. As I am price sensitive in nature, I cannot help but noticed that there are many items that are “extremely” marked up in the supermarket. While this article is probably going to minimally affect your Wealth Management journey, I hope this awareness can save you hundred of dollars in the future.

Top 3 Money Wasters At The Supermarket.

Top 3 Money Wasters At The Supermarket. Source

 

#1: Herbs and Spices

Herbs, Spices and Seasonings are the most common culprits. If you are like me, I tend to cook in the spur of the moment. As most of us do not really have the full set of herbs and spices at home, we head over to the supermarkets to purchase our herbs and spices which we may only use once/twice.

In the supermarket, prices of herbs and spices range between $3 to $10 from the common pepper to saffron. We probably would have bought a few of those and it was left on our shelves ever since.

Top 3 Money Wasters At The Supermarket Herbs And Spices

Top 3 Money Wasters At The Supermarket Herbs And Spices

The long story short, these spices can be easily found in the local markets such as Chong Pang Wet Market. Most of the spices are available and can be bought at $1 per packet.

Save yourself some money and head down to your local markets if you have a cooking spur.

 

#2: Pasta Sauce

If you are like me (again), the first dish we learn to cook and be impressed with ourselves is the pasta. After graduating from cooking maggie noodles, cooking pasta has a more “atas feeling” to it. Throw in some sausage now!

Similarly, pasta sauce cost between $4 to $8 a jar depending on which brand you decided on. Health aside (read the labels, they contain a lot of added sugar and salt), I learnt from a Italian chef in my travels that pasta sauce can be easily made with diced tomato, olive oil, garlic and salt. Diced tomato cost around $1 and if you are into pasta, this trick is going to save you your health and your money.

Top 3 Money Wasters At The Supermarket Pasta Sauce

Top 3 Money Wasters At The Supermarket Pasta Sauce: Source

 

#3 This Refreshing Beverage

It might be forgivable if you need to buy this overseas. But if you are in Singapore, drinkable water is everywhere. I know it is for convenience that people just take water off the shelves. All it takes is your water bottle and you can bring whatever you need out. Some shopping malls (like NEX) do have water coolers for you to top up.

Enough nagging.

Top 3 Money Wasters At The Supermarket Water

Top 3 Money Wasters At The Supermarket Water. Source.

Final thoughts by Wealthdojo

Save yourself some money. There are more things you can do with the money that you have saved. You can either impact the next generation, accumulate your emergency funds or the good old self care.

We wish you a Happy Lunar New Year!

 

 

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.

What To Do With Your Children's Hong Bao Money

What To Do With Your Children’s Hong Bao Money?

Happy Lunar New Year! Wishing everyone here good health and may your wealth multiply in the years to come. Hopefully, the last 4 days have been one where you have been giving/receiving or your child has been receiving hongbao. One common question that I go from parents with regards to financial planning is what they should do with the money. Most of them are keeping it for their children as emergency funds. This is a good initiative. That being said, is this an opportunity to share money lessons with your children?

What To Do With Your Children's Hong Bao Money

What To Do With Your Children’s Hong Bao Money (Source)

 

Your intention sets the tone

What do you want your child to learn from receiving the hongbao? Is it gratitude? Is it charity? Is it spending? Is it emergency funds? Your intention sets your child’s tone. By default, people will stick to the easiest thing of all: Not doing anything. This is precisely why most parents are keeping their children’s money as emergency funds. (PS: I’m not saying that emergency funds is a bad thing. It is also important.)

However, as the child do not have much ownership of the funds, they do not really learn from that concept. To them, it is their parents are keeping their money for them.

So what can you do this year to inspire your children to take charge of their money. This may or may not be applicable and felt by you depending on your relationship with money. Here are some suggestions.

 

Happiness of Spending Money

Wait a minute. A finance blog asking me to spend money? Yes. It came to my attention that “saving money” or “spending money” has became such a pain for people. As our education on money commonly involves parents screaming at us to save money (or that they don’t have money), it has become very hard for some people to spend mentality. Each time you spend, you will feel a pinch when you see your bank balance drop. That’s commonly known as the poverty or scarcity mindset. Eventually, you might grow up with enough money in your bank but feeling miserable that you don’t have enough.

What To Do With Your Children's Hong Bao Money Spend It

What To Do With Your Children’s Hong Bao Money Spend It

As parents, one of the best thing you can do for them is let them buy something that they have already wanted for a long time. Take 20%, $30 or whatever amount (be reasonable) in their hongbao money and bring them to the shopping center. Let them buy whatever they want. Let them feel the happiness of what money can buy. You will be surprised that some children will buy books, stationaries and of course toys. You can take this chance to introduce to them the 4 Quadrants Shopping Guide.

Let them take charge of their finances, the earlier they do, the more responsible they will become.

 

Delayed Gratification

To balance it up with spending, delayed gratification is next. A simple game you can play with your children is called The Marshmallow Test. I won’t explain too much here. Wait this hilarious video on how children wrestle with waiting to eat a marshmallow in hopes of a bigger prize (more marshmallows).

In finance, the timeline would be longer than this test. The intention is to get the children to save their hongbao money for a longer period of time so that they can get back more at a certain age. This could be done by a simple endowment plan or just Singapore Government Bonds that matures after a set period. When they receive the money after xx years, you can calculate with them (do it with them) how much they have put in and compare it to how much they have received. This can be done with your financial advisor.

 

Investing Lessons

This opens up many lessons for young children. You can share with them about volatility, about index (example if you invests in a Country ETF), about companies (example: when apple makes money, you “make” money too), about value or about growth.

One of the easiest way is to invest in companies that they already know. For illustration, my example will be SBS Transits.

Disclaimer: Not a buy/sell recommendation here.

For children, they probably will be familiar with certain products such as the IPhone, Bus services, Netflix etc. When you invest their money (they can only open a brokerage account when they are 18) for them, they get to see if their money grows in terms of capital appreciation or dividends. You can consider investing for them once a year as a dollar cost averaging approach for them to build up their portfolio.

For those of you would like to have something simpler, consider investing into country ETF like the STI Index, China ETF or S&P500. When the particular country does well, they are able to see the value of their investment grow as well. Similarly, do consider a dollar cost averaging approach for your children and invite them to ask questions. This is a great opportunity to for your children to learn about investing either with yourself or your trusted financial advisor.

What To Do With Your Children's Hong Bao Money Investing

What To Do With Your Children’s Hong Bao Money Investing (Source)

Final thoughts by Wealthdojo

I cannot imagine how much of a head start your children will have if they start learn these money lessons as some adults take decades to learn these. Let me know what you guys think in the comments below.

We wish you a Happy Lunar New Year!

 

 

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.

Why I Sold SBS S61

Why I Sold SBS S61

This certainly did not age well. Previously, I wrote about Potential 50% Gain Boring Company: SBS S61. I had full optimism that this overlooked company would recover back to it’s usual level by finishing 2020 with a good 2H results. I was wrong.

Below are my learning lessons and the reasons why I have sold.

I remain ground on my principle of Wealth Management and will explain the reasons of doing so.

 

What Happened In Oct 2020?

I read about the 1H results for SBS (S61). I felt that during 1H of the financial reporting, bus ridership was heavily. This is due to the circuit breaker which started on 7 April 2020 and ended on 1 June 2020. The circuit breaker lasted for 1 month and 3 weeks. I believed that close to 30% of the revenue was “lost” because of that circuit breaker (1 months and 3 weeks out of 6 months).

Why I Sold SBS S61

Why I Sold SBS S61

As we continue to progress after Oct 2020, more and more people are starting to leave their house to work and explore. This can be felt as I personally took the public transport. The crowd was back and it did not slow. I was somewhat excited to see the improvement of revenue in the 2H.

I believed there would be revenue recovery, share price recovery and also a short term opportunistic play.

 

SBS Full 2020 Financial Report

Why I Sold SBS S61 2H Report

Why I Sold SBS S61 2H Report

When the day finally arrived, I was terribly mistaken. Revenue for 1H is $603,225. Full year 2020 revenue is $1,230,947. This means that revenue for 2H is $627,722. Revenue for 1H and 2H is roughly the same. This would mean that even with the circuit breaker, 1H ridership for the first 4 months is roughly equals to the entire ridership for 2H. I cannot imagine how pack the MRT or buses were before the circuit breaker.

Looking at the top line only, it will take sometime for “normality” to happen again. I have underestimated the WFH culture. (I can’t explain the packed MRT/Buses though. Does this mean it used to be worse?).

Why I Sold SBS S61 2020 Dividends

Why I Sold SBS S61 2020 Dividends

SBS is also issuing dividends for shareholders. This will happen if the motion is approved by the Shareholders at the Twenty-Eighth Annual General Meeting of the Company to be held on 29 April 2021 and will be payable on 19 May 2021. I have my questions on the dividends. Currently, SBS is “profitable” after the JSS grant. I felt that the dividend was just a transfer of grant from the government to the shareholders (no matter how low the dividends are).

 

Why I Sold SBS S61

I sold SBS S61 with a slight profit. I entered the position with a short term opportunistic play mindset. However, as it didn’t turn out as per expected, I exited the position.

I’m also not looking for a dividend play counter. At the current level, it is giving around 2% dividend yield which is not attractive.

There is limited growth play to this industry. With new players coming in, the position of SBS might be shaken in future.

“Normality” may happen in 2021 as more and more people start to go back to work. However, I’m not willing to wait for that to happen as I believe there are better investment opportunities out there.

 

Final thoughts by Wealthdojo

I think I learn is that the investment mindset. “Buy on fundamentals, sell on fundamentals”. “Buy on momentum, sell on momentum”. The problem comes when you “Buy on momentum, but then hold on fundamentals” when you start making a lost. I can never further emphases on the investment mindset that one should adopt when approaching the market.

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

 

 

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.