For Asian equities, Indonesia and Hong Kong are the best places to get in. Hong Kong is doing extremely well because mainland Chinese investors can invest in Hong Kong stocks. With the flush of cash, there would be more money to invest.

Thailand despite its political uncertainties is still the cheapest bourse in Asia. The price-to-earning ratio is quite low. Utilities, oil and gas, and financial sectors are some of the sectors to go into in Thailand.

To get into these markets, you could choose the ETF or unit trust, unless you are able to tap into their markets. You could find out more information from www.sgx.com/etf.

Sarah Tan – SingaporeProfit.com

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One BT reporter wrote an article about investing in October and exiting in July. If I had read this book earlier, I would have exited in July, since I made more than 10% with my investments, only to lose almost 20% before currently recovering. I would have missed the turbulent times. The market is extremely volatile right now, and there are still quite a lot of fall out, yet with the news that the US Federal Reserve is cutting key interest rates, there is a big chance that the market will rally.

As an additional source of income, you cannot expect money to roll in without putting hard work analysing the stocks. Some of the China unit trusts increased by 30% in a month! This is ridiculously high. I wonder how long this can be sustained. Any comments?

Sarah Tan – SingaporeProfit.com

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However, I think there is a way to lay your hands on this huge luxury market apart from buying the items. There is a Deusche Börse World Luxury index that tracks 20 luxury stocks, and another lifestyle index by Merrill Lynch which tracks 50 such stocks according to Fortune.

Over the past five years, some luxury brands stocks have risen multiple times. Coach for example had made a huge whopping return of 824%, and Porsche had made 369% in the stocks price. 

The only problem when finance companies announce these to the whole world, it may have been too late to stick your fingers into the pie, since the market may have peaked. Well, I think I would rather put $3000 into a LVMH stock than get a similar LV bag that may go out of fashion in a season, and see the money grow.

Sarah Tan – SingaporeProfit.com

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You can sign up at the website and admission is free. It is organised by http://www.shareinvestor.com/. Its website offers quite a lot of informative research on various tools and companies.

Anybody planning to go?

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Let’s take a look at how income tax is calculated. For example, your chargeable income is $50000. It used to be $40000 the previous year. Tax on the first $40000 is $900. The additional $10000 is $850. Total income tax will be $1750. By earning $10000 more, you have to pay double the income tax of previous year.

If you put $10000 into the SRS, you could save $850 if your chargeable income is ($50000-$10000=$40000) or $1400 ($90000-$10000=$8000).

For those in a lower income tax group, $10000 may seem like a big sum. There is a lot we can do with $10000. To take this amount out, it can be rather tough for some of us. Besides, one of the disadvantages of SRS is we will not be able to touch the money until retirement. With a lower income, $10000 is a lot to fork out a year.

The good thing about SRS is we can use the money in SRS to invest. If you are currently buying unit trusts and stocks, the money in SRS can be used to invest. Your proceeds will go into SRS. This will certainly overcome the paltry returns on interest rates provided by SRS banks.

In my original computation of investing $11,475 a year (the maximum amount we can contribute to SRS), by investing SRS in an index fund which could give returns of 12% a year, the sum becomes a mind boggling $3.45 million. (3,445,397.77). Even if you have to pay income tax on $344000 a year (the money has to be withdrawn in 10 years), you will probably pay about $45000 in taxes and still have lots more left.

Now, what if you had just willingly paid the extra money in income tax?
Let’s assume you never had a pay rise, so you have chargeable income of $50000 every year. The additional $850, if invested in an ETF that returns 12% a year, will become $255,214.65. This means, you can potentially lose $255k if you don’t reduce your tax. And since most of us have the potential to earn more each year, there is a greater potential loss!

Gosh! I’m going to open a SRS account next week. There are three banks where we can open an SRS account with – DBS, UOB and OCBC.

Sarah Tan – SingaporeProfit.com

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