National Day has always been a time of patriotic celebration. For me, it tends to be patriotic reflection. This has been made more pronounced with my work travels over the past 1 and half years. Sitting here alone chilling in my Beijing hotel room having worked through yet another National Day overseas, I thought I’ll share my top 5 things I feel Singaporean investors should be thankful for this National Day.
1) Income tax regime
The best part of being a Singaporean investor is the relatively low income taxes as well as no taxes on dividends and capital gains. Taxes on employment and investment income directly affect your ability to accumulate wealth as it acts as an additional cost. Having experienced the benefits of Singapore’s income tax system, I can’t imagine living in a system that taxes you over 40% of income and having to pay taxes whenever I receive dividends or sell my investments.
What’s more, I’ve seen tax systems in China and India that are so complex and with high tax rates. Only with a tax system so simple and intuitive like Singapore’s will you be able to e-file your taxes on your own.
CPF can be a contentious issue among Singaporeans. To me, having a family member who YOLOs all his life, I see the need for the forced savings of CPF. What’s more, it’s not like they are paying you peanuts for holding your cash, with guaranteed 2.5-5% interest across your various accounts. Yes, CPF has its flaws, but its current incarnation to me provides the necessary basic layer of retirement safety for most Singaporeans, without encouraging the crutch mentality of pension systems. I’ve yet to find a better designed retirement system to date.
3) Wealth of investment options available
This may seem pretty obvious, but the countries I’ve visited sometimes struggle to have the same level of investment options available to their citizens. Ask the Chinese what a REIT is, and they’ll tell you it is a scam to swindle investors’ money on the premise of pooling funds to invest in real estate. Add to that the controls over capital outflows and you essentially can only buy stocks from the Chinese casino stock market, unless you are super rich.
Also, let’s not talk about countries with hyper inflationary economies like Venezuela and Zimbabwe or poor countries where investment options don’t really exist.
4) High level of security and low risk of disaster
This factor to me is often overlooked and taken for granted. Imagine owning a REIT with Singapore properties and every other year Singapore is hit by a tsunami or earthquake. Or owning a Singapore-based factory with constant civil unrest and strikes. The relative political and financial stability gives rise to the possibility of stable assets to invest in, and for Singaporeans to prosper.
5) SDIC’s Deposit Insurance Scheme
Another often overlooked factor. This deposit insurance is essentially the Singapore government insuring up to $50k of your bank deposits in each Singapore based bank. With ironclad AAA-rated reserves, this insurance is almost guaranteed to pay out in bank disaster scenarios. Given Singaporeans love of fixed deposits and high interest savings accounts as a form of investment, this is most welcome.
Singapore is one of the most investor friendly countries in the world, and the world has noticed. With many famous names and investors choosing to come to invest and start wealth management firms and funds here, we as Singaporeans should utilise our birthright to its fullest extent.
To all my Singaporean readers, Happy National Day! #WeAreSingapore
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