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BBCWatcher

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To be fair, I think my statement that the US$ funds if in Singapore would be outside the purview of IRS....
Yes, you introduced that argument, and Shiny Things also reacted to it with the consideration it deserves.

As it happens, your thinking is exactly backwards, as I’ve pointed out. If you’re acting legally but fear the IRS, then you should also at least equally fear IRAS, an even more powerful tax agency within its jurisdiction. Consequently you would prudently diversify against that particular risk (unmerited asset seizure) by avoiding concentration of wealth in one tax jurisdiction.

I — or we, since I believe Shiny Things joins me in this — simply don’t understand your thinking here since you take safety and bank fee hits to store U.S. dollars at a bank in Singapore.
 

Han Shot First

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Why would anyone want to apply for or buy NY05100N SGS bond?

When the bond is bought at auction, the bond buyer would be locked into the price of about SGD 102.68 and a cut-off yield of about 1.90%.

The US Fed is committed to increase US interest rates. So the SIBOR rate will increase. The price of the bond will go down and the yield will increase. But this does not benefit the bond buyer who has been locked in at a price of about SGD 102.68 and yield of about 1.90%.

So the potential bond buyer ought not to buy this SGS bond but invest his/her capital in other "better" financial instruments. Of course, it is a good deal for Singapore government if it sells the SGS bonds because it would borrow money at a lower interest rate in a rising interest rate environment.
 
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BBCWatcher

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So the potential bond buyer ought not to buy this SGS bond but invest his/her capital in other "better" financial instruments.
Such as what?

Are you aware that this is an auction? If investors agree with your forecast, then that’ll be a factor in the auction. Those who place competitive bids (professional bond traders) always incorporate market interest rate forecasts into their bids.
 
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Shiny Things

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When the bond is bought at auction, the bond buyer would be locked into the price of about SGD 102.68 and a cut-off yield of about 1.90%.

The US Fed is committed to increase US interest rates. So the SIBOR rate will increase. The price of the bond will go down and the yield will increase. But this does not benefit the bond buyer who has been locked in at a price of about SGD 102.68 and yield of about 1.90%..

Could be one of two reasons:
1) They think the Fed is going to hike rates slower than currently priced into the market. If that happens, this bond will go up in price and they can sell it for a profit;
2) They can't get more than 1.9% from an equivalent thing elsewhere. They can get 1.7% from a one-year SGS bond right now, so they'd need to think they can get 2.1% from an SGS in a year's time to make it worth buying the one-year SGS instead of the two-year. (Don't compare this to bank interest rates, by the way; the people buying the bulk of these bonds are buying them in multi-million-dollar clips. They're not using a Citibank Maxigain account, or thinking about the deposit insurance cap.)
 

FrostWurm

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Is there any interest income tax if we buy a US Corporate-Bond etf domiciled in the US? Was wondering if foreign investors qualify as 'portfolio interest' and are thus tax-exempt.

The expense ratios generally lower than those on the LSE.
 

BBCWatcher

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Is there any interest income tax if we buy a US Corporate-Bond etf domiciled in the US? Was wondering if foreign investors qualify as 'portfolio interest' and are thus tax-exempt.
The favorable U.S. income tax treatment of the underlying bonds (zero tax) should pass through the fund "wrapper" for non-U.S. persons, assuming the broker withholds correctly (i.e. doesn't withhold) and you have a truthful W-8BEN on file. However, as I understand it, the U.S. estate tax still applies to such funds.
 
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Hi BBC,

Thank you for all your guidance on CPF top up. I have finally found time to do a table and posted a screenshot below. Hope this can be of help to newbies like me.

Please do correct if you see anything inaccurate. Thank you.

0yJzskkl.jpg


Sent from Samsung SM-G955F using GAGT
 
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Great! Then we have better alternatives in Bonds areas :)

The favorable U.S. income tax treatment of the underlying bonds (zero tax) should pass through the fund "wrapper" for non-U.S. persons, assuming the broker withholds correctly (i.e. doesn't withhold) and you have a truthful W-8BEN on file. However, as I understand it, the U.S. estate tax still applies to such funds.
 

BBCWatcher

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Please do correct if you see anything inaccurate.
Looks good.

I’d add two more rows: OA to SA transfers, and OA repayments. I’d also add another column, which is “Best time to do.” Examples:

MA: Typically starting early in a working career, each late January (for maximum interest with tax relief), each early January (if at the BHS, to push back up to the new BHS), and/or after each withdrawal (such as MediShield Life or Integrated Shield premium withdrawals). Must have reasonable CPF Annual Limit visibility.

SA: Prioritize after MA, in late January (for maximum interest with tax relief).

RA: Late in the calendar month you turn 55, and then in late January thereafter as the ERS increases.

OA to SA: As soon as you determine some portion of your OA is not needed for housing.

OA repayment: To consider starting at about age 52.

“All Three”: Late in any month, preferably in late January, and generally attractive from age 50 onward with MA pegged at the BHS. Must have reasonable CPF Annual Limit visibility.
 
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Hi BBC,

Thank you. Let me add below and repost the screenshot.

Looks good.

I’d add two more rows: OA to SA transfers, and OA repayments. I’d also add another column, which is “Best time to do.” Examples:

MA: Typically starting early in a working career, each late January (for maximum interest with tax relief), each early January (if at the BHS, to push back up to the new BHS), and/or after each withdrawal (such as MediShield Life or Integrated Shield premium withdrawals). Must have reasonable CPF Annual Limit visibility.

SA: Prioritize after MA, in late January (for maximum interest with tax relief).

RA: Late in the calendar month you turn 55, and then in late January thereafter as the ERS increases.

OA to SA: As soon as you determine some portion of your OA is not needed for housing.

OA repayment: To consider starting at about age 52.

“All Three”: Late in any month, preferably in late January, and generally attractive from age 50 onward with MA pegged at the BHS. Must have reasonable CPF Annual Limit visibility.
 
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Hi BBC,

On a separate topic, since you have lived long enough in both US and Singapore, what would be the major differences you observe between these 2 countries? What factors would you consider when deciding whether to migrate from one country to another?

I know it is a very broad question. Apologies that I do not have a more detailed question to ask. However, I hope we can drill down from there.

Thank you, BBC!
 
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MA: Typically starting early in a working career, each late January (for maximum interest with tax relief), each early January (if at the BHS, to push back up to the new BHS), and/or after each withdrawal (such as MediShield Life or Integrated Shield premium withdrawals). Must have reasonable CPF Annual Limit visibility.

Hi BBC, a question here on "each late January (for maximum interest with tax relief)" vs "each early January (if at the BHS, to push back up to the new BHS)". What is the rationale here for late vs early Jan?

SA: Prioritize after MA, in late January (for maximum interest with tax relief).

Yup! MA is to be prioritized since the mandatory contribution will be closer to CPF annual limit as working years increase.

RA: Late in the calendar month you turn 55, and then in late January thereafter as the ERS increases.

I assume that ERS increase is announced and effective in Jan? The top up should be in the month that the ERS increases become effective, right?


“All Three”: Late in any month, preferably in late January, and generally attractive from age 50 onward with MA pegged at the BHS. Must have reasonable CPF Annual Limit visibility.

Another question on why "MA pegged at the BHS" is an factor here. If MA is at BHS, more money will be contributed to SA or OA (If SA is at FRS). The effect is about the same whether the fund is in SA or MA. Or is it because if MA is no at BHS, we should prioritize MA top up?
 

BBCWatcher

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On a separate topic, since you have lived long enough in both US and Singapore, what would be the major differences you observe between these 2 countries? What factors would you consider when deciding whether to migrate from one country to another?

I know it is a very broad question.
Yes, that is a broad question.

Humans aren't too dissimilar around our planet, but there are a few differences between those two particular countries. The United States is the third largest country in land area and the largest national economy in the world. It's almost incomprehensibly bigger than Singapore. Chances are, no matter what you're into, it's available in the United States, usually with lots of fellow travelers. The sheer diversity of experiences is incredible, perhaps even overwhelming.

Along with that bigness comes some insularity, although that's changing. For example, in 1994 about 10% of Americans had passports. Now the percentage is over 40%.

There's more violent crime in the United States than in Singapore, but Singapore's violent crime rate is particularly globally low. However, crime rates have fallen a lot in the U.S. Yes, there are some well publicized mass shootings in the U.S., and the gun manufacturers (and their lobby) deserve much of the blame. But it's still a pretty safe place that's generally still getting safer.

The so-called "Obamacare" reforms represented a major improvement in the U.S. healthcare system, including for immigrants. Unfortunately, one major party wants to go backwards. It'll take another election or two to get back to sanity. If you have (and hang onto, which isn't always easy) employer-provided medical insurance, or qualify for Medicare (at age 65 and after at least 10 years of payroll contributions), you're in pretty good shape. So far Obamacare is remarkably robust, but it won't be truly nailed down and improved without a party change.

Imagine if the ethnic Chinese community in Singapore were to become 50% of the population (and falling) rather than >70%, and you have a rough idea of the roots of the social angst in the United States right now. The United States will very soon become a majority-minority country, and that's exciting and wonderful. The diversity is a major national strength. However, there are some people who don't like these demographic changes, much like some of their ancestors didn't like slavery. So it's one of the few countries that has ever elected a member of a racial minority as its national leader, twice, and then the same country elected (with millions fewer votes -- that's another oddity) Donald Trump. Now that's a special country! :s22:

Attitudes are changing quickly. For example, the LGBT community has made and continues to make enormous strides in civil rights and acceptance, and same sex marriage is officially recognized everywhere in the United States. Most people have absolutely no problem with this, and those that still do are dying off. As another example, marijuana legalization is quite popular, and I think it's only a matter of time before the United States follows in Canada's national footsteps. Marijuana is already legal at the state level in many places, with more states to follow in this 2018 election cycle. Federal legalization is really necessary to make it work, though.

The U.S. economy is rather strong at the moment, so it's a pretty good time to be in the labor market there. The late 1990s were better in that respect, but it's pretty good right now.

I'll stop there for now.
 

BBCWatcher

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Hi BBC, a question here on "each late January (for maximum interest with tax relief)" vs "each early January (if at the BHS, to push back up to the new BHS)". What is the rationale here for late vs early Jan?
When chasing the new BHS, it's best to top up your MA before the January payroll contribution hits. Other top-ups can wait until late in the month.

Yup! MA is to be prioritized since the mandatory contribution will be closer to CPF annual limit as working years increase.
That's right, and also because MA can be useful at any/every age.

I assume that ERS increase is announced and effective in Jan? The top up should be in the month that the ERS increases become effective, right?
Yes, it increases on January 1, or at least that'll be true for the next few years.

Another question on why "MA pegged at the BHS" is an factor here. If MA is at BHS, more money will be contributed to SA or OA (If SA is at FRS). The effect is about the same whether the fund is in SA or MA. Or is it because if MA is no at BHS, we should prioritize MA top up?
If MA is pegged at the BHS, and assuming the Retirement Account is funded, then an "all three" top-up can all be withdrawn at age 55+. In other words, CPF turns into an interesting little piggybank at that point, where you can deposit up to $37,740 per year, earn a lovely interest rate (>2.5% blended rate), and withdraw funds whenever you wish. If your MA is not pegged to the BHS it's still a pretty nice deal, but some portion of your "all three" top-up will flow into your MA.

As an aside, the Medisave Account can be a pretty decent bequest vehicle, if that's your goal.
 

zuppeur

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suppose my SA and MA have reached FRS/BHS.
if i were to do a VC of 37,740 into my CPF. will the VC deposit be distribute across 3 acct? will there be any overflow to OA?
 

BBCWatcher

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suppose my SA and MA have reached FRS/BHS.
if i were to do a VC of 37,740 into my CPF. will the VC deposit be distribute across 3 acct? will there be any overflow to OA?
First of all, you might not be able to top up $37,740. That’ll depend on whether you have any other contributions that year against your CPF Annual Limit. Or, more precisely, you might be able to make the top up, but any overage will be returned to you, eventually, and without interest.

OK, that potential problem aside, if your Medisave Account has reached the Basic Healthcare Sum and if your Special Account has reached the Full Retirement Sum then the MA and OA portions will flow into OA and the SA portion will still flow into SA. The split depends on the normal allocation percentages for your age.
 

henrylbh

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Please go take this CPF "discussion" to any number of dedicated CPF threads, including this one.

When chasing the new BHS, it's best to top up your MA before the January payroll contribution hits. Other top-ups can wait until late in the month.


That's right, and also because MA can be useful at any/every age.


Yes, it increases on January 1, or at least that'll be true for the next few years.


If MA is pegged at the BHS, and assuming the Retirement Account is funded, then an "all three" top-up can all be withdrawn at age 55+. In other words, CPF turns into an interesting little piggybank at that point, where you can deposit up to $37,740 per year, earn a lovely interest rate (>2.5% blended rate), and withdraw funds whenever you wish. If your MA is not pegged to the BHS it's still a pretty nice deal, but some portion of your "all three" top-up will flow into your MA.

As an aside, the Medisave Account can be a pretty decent bequest vehicle, if that's your goal.

Can't hold your horses :s13::s13::s13:
 
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