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celtosaxon 02-12-2018 06:55 PM

With regard to IRA contributions not supported by earned income, I would recommend exploring all possible options for creatively supporting those contributions retroactively before volunteering payment of any penalties. Maybe they had a small amount of “sole proprietor” income for services rendered that they “forgot” to include in years past. They could then file amended returns to correct that oversight. I would look at paying penalties only as a last resort after all other options are exhausted. The IRS defines employment & earnings much more broadly than many people often realize.

BBCWatcher 02-12-2018 10:17 PM

Quote:

Originally Posted by FinalDestiny... (Post 117902499)
Hmm, I just got to know about the existence of Treasury bills, which are short term SGS bonds ? How does it usually fare against say, traditional Fixed Deposits ?

I assume you mean Singapore’s T-bills, which are auctioned quarterly. The yield is generally slightly lower than the best available 12 month fixed deposit, but T-bills in any amount are backed by the full faith and credit of the government. There’s no $50,000 or $75,000 limit on that guarantee. Early withdrawal (redemption) works a bit differently, too.

Quote:

Originally Posted by cplusplus (Post 117902711)
Hi BBCW, what do you suggest for someone who just started working and has around ~30k sitting in my multiplier account and investing $500 per month on POSB invest saver sti etf?

Well, I’d look at adding some global stocks to your investing mix, e.g. IWDA. What total monthly savings figure (including your current POSB Invest Saver flow) would you feel comfortable with?

Quote:

Originally Posted by ftpofmpo (Post 117911684)
Hi Bbcwatcher, now that personal exemption for non-resident aliens have been repealed, anyone with income originating from US will have to file US taxes with the IRS and obtain an ITIN number?

It looks like there are going to be more non-resident aliens who will need to file U.S. tax returns for tax year 2018, yes, but I don’t think there’s going to be any tax filing obligation for the “typical” NRA investor who is subject to withholding tax as long as all such tax is withheld correctly.

Quote:

Originally Posted by celtosaxon (Post 117912936)
With regard to IRA contributions not supported by earned income, I would recommend exploring all possible options for creatively supporting those contributions retroactively before volunteering payment of any penalties. Maybe they had a small amount of “sole proprietor” income for services rendered that they “forgot” to include in years past.

No, please don’t get cute. The IRS really doesn’t like cute, and your quotation marks suggest cute. Bad idea.

Without the quotation marks, i.e. a truthful filing, OK.

FinalDestiny... 05-12-2018 08:40 PM

Quote:

Originally Posted by BBCWatcher (Post 117916431)
I assume you mean Singapore’s T-bills, which are auctioned quarterly. The yield is generally slightly lower than the best available 12 month fixed deposit, but T-bills in any amount are backed by the full faith and credit of the government. There’s no $50,000 or $75,000 limit on that guarantee. Early withdrawal (redemption) works a bit differently, too.

Hmm if it is generally slightly lower than the best available 12 month fixed deposit rates, I'd assume it isn't attractive for people to place their money in T bills ? Since the strength of banks in Singapore who are offering fixed deposits are very strong, the risk of the banks defaulting on the fixed deposits is pretty low ?

BBCWatcher 05-12-2018 09:56 PM

Quote:

Originally Posted by FinalDestiny... (Post 117964682)
Hmm if it is generally slightly lower than the best available 12 month fixed deposit rates, I'd assume it isn't attractive for people to place their money in T bills ? Since the strength of banks in Singapore who are offering fixed deposits are very strong, the risk of the banks defaulting on the fixed deposits is pretty low ?

The best available 12 month fixed deposit rates aren’t available from what most people consider the strongest banks.

The other problem is that strong banks can quickly become weak banks. There were some top rated banks in terms of alleged safety shortly before the Global Financial Crisis that got very wobbly indeed.

yyhwin 05-12-2018 10:27 PM

Hey BBCwatcher, ask you something huh, if will IB close my account if my balance remains zero for many months?

@bbcwatcher

BBCWatcher 05-12-2018 10:36 PM

Quote:

Originally Posted by yyhwin (Post 117966475)
Hey BBCwatcher, ask you something huh, if will IB close my account if my balance remains zero for many months?

If it’s after the 3 month grace period, IB says they’ll close the account when the account can no longer pay its monthly minimum commission (US$25 for a balance below US$2,000). So I don’t think it’ll take “many” months.

Interestingly there’s no “dormant” account status per se. If you’ve got US$1999 in the account and do nothing with it then it’ll erode at a US$25/month pace (US$300/year). At that pace it’ll take over 6 years to drain and go into automatic closure.

yyhwin 05-12-2018 10:39 PM

Quote:

Originally Posted by BBCWatcher (Post 117966617)
If it’s after the 3 month grace period, IB says they’ll close the account when the account can no longer pay its monthly minimum commission (US$25 for a balance below US$2,000). So I don’t think it’ll take “many” months.

Interestingly there’s no “dormant” account status per se. If you’ve got US$1999 in the account and do nothing with it then it’ll erode at a US$25/month pace (US$300/year). At that pace it’ll take over 6 years to drain and go into automatic closure.


Do you think i should apply the closure on my own first?
Coz i think i need another half a year or at least 1 year to invest again. :s22:

BBCWatcher 05-12-2018 10:47 PM

Quote:

Originally Posted by yyhwin (Post 117966665)
Do you think i should apply the closure on my own first?
Coz i think i need another half a year or at least 1 year to invest again. :s22:

Why don’t you just park US$2,150 at IB, and that drops the monthly minimum fee to US$10/month.

IB isn’t required to open a new account for you later, but if they do they say they’ll insist on at least US$10,000 to open. They dropped that US$10K requirement for brand new customers.

yyhwin 05-12-2018 11:37 PM

Quote:

Originally Posted by BBCWatcher (Post 117966784)
Why don’t you just park US$2,150 at IB, and that drops the monthly minimum fee to US$10/month.

IB isn’t required to open a new account for you later, but if they do they say they’ll insist on at least US$10,000 to open. They dropped that US$10K requirement for brand new customers.




That means a waste of 2150 USD. :(

BBCWatcher 06-12-2018 08:13 AM

Quote:

Originally Posted by yyhwin (Post 117967367)
That means a waste of 2150 USD. :(

No, not really. The US$2,150 could be invested in something. Maybe ERND (Irish domiciled/London traded ultrashort bond fund), assuming there's adequate trading volume to get a position at a reasonable price? ERND holds short-term investment grade corporate paper with typical maturities of about 4 months. It should manage about 2%, maybe a bit better.

fujitsu555 07-12-2018 03:42 PM

Hi BBCWatcher, my current asset allocation is:
Bonds (incl. CPF): 35%
Intl Equities: 37%
Local Equities: 28%

And it is still quite far off from the target allocation of:
Bonds (incl. CPF): 20%
Intl Equities: 60%
Local Equities: 20%

My question is: Should I still top up my CPF MA before 31 Dec to benefit from the tax relief?

Thanks!

BBCWatcher 07-12-2018 04:11 PM

Quote:

Originally Posted by fujitsu555 (Post 117993717)
My question is: Should I still top up my CPF MA before 31 Dec to benefit from the tax relief?

That's fine.

You have competing objectives in this case, but generally speaking one's portfolio allocation goal is much less important than pursuing genuinely, reliably good or better deals when you see them.

Let's suppose as a hypothetical example that your sister is imprisoned in France (random example), and you want and need to post bond and hire a lawyer to help your sister. That'll take some money, euro specifically. But to do that you'd have to dig into some assets and run afoul of your personal portfolio allocation goal. Would you help your sister? Of course you would. It's much more important.

MA plus tax relief is effectively a weirdly high yielding long-term bond (or bond-like) with a near immediate bonus coupon. And that's fine. You're certainly allowed to relax your own personal allocation goal for good cause.

And do it again in January if it makes sense, and if you have at least some visibility on how close you'll get to the CPF Annual Limit.

Portfolio allocation goals that you set for yourself are simply aim points that encapsulate how much investment risk you could prudently take for your long-term savings. If it's a reasonable goal (appropriate to your investing time horizon), it should correctly balance risk and reward. But occasionally a rewarding deal comes along that has less risk (or practically no risk). Great! Even though that opportunity doesn't meet the letter of your own personal goal, it certainly meets the spirit. So no problem, you've got good cause to make an exception.

salmonella 11-12-2018 11:01 PM

My dad is 72, and has nil in OA and SA (think these went into RA), nil in RA (think this was used to buy a private annuity) and about $37k in MA. I'm wondering how to make smarter use of the CPF accounts.

1. If I were to contribute cash into his RA, I can get tax relief for up to $7k. What can I do with this contribution?

2. Any way to use the OA / SA as a high yielding account that he can withdraw from?

If he deposits 100k into all three accounts, I think ~ 80+% goes into the MA, and the remainding ~ 20% goes into OA and SA. The 20% that goes into OA and SA would attract the usual 2.5% / 4% interest (possibly adding 1% for 1st 60k and another 1% for being over 55). Does this portion become that high yielding piggy bank?

As for the ~ 80% that goes into the MA, $13k would be used to hit the BHS of $49800 for his cohort, and the remaining ~ $67k would overflow into the RA... This seems to be go back towards question 1... what can he do with his RA

brown56 11-12-2018 11:30 PM

Hi BBCWatcher,

I got 20 to 30k in a US Citibank Account. Instead of letting it idling, I am thinking of transferring back to Singapore so that I can better utilise the $. I read Transferwise is one possible means. A direct transfer between USA Citi and Sg Citi is another method, however I will be subjected to the bank unfavorable forex. Do you know of any other more cost effective way of transferring back the USD to SGD?

Opening an investment account to buy US stocks for the long term is another possible use of the USD. However, I am still finding the best account to open while I am physically in Singapore.

Thank you in advance for the advice.

BBCWatcher 12-12-2018 06:29 AM

Quote:

Originally Posted by salmonella (Post 118062996)
1. If I were to contribute cash into his RA, I can get tax relief for up to $7k. What can I do with this contribution?

You cannot do anything. It becomes his RA savings, which is what you want of course.

Yes, you’re eligible for tax relief of up to $7,000 now (top up credited this month, December) and another $7,000 in January. Also, if you have any siblings/your father’s other children (for example) who can get some tax relief, they can do the same thing. (And how you all agree to fund those contributions is up to you all, but it’s a good idea to claim as much tax relief across the family as possible.)

You and any other tax relief-qualified family members would be doing this to bolster his retirement income, of course. And it’s the best deal you’re going to find to do that.

Quote:

2. Any way to use the OA / SA as a high yielding account that he can withdraw from?
To some extent. There’s a CPF Annual Limit that must be respected ($37,740) when making this “all three account” top up (CPF Form VC/1 or equivalent). If he’s not working and nobody has made any MediSave or “all three” contributions yet for 2018, then the full $37,740 limit is available this year (December, if you don’t delay too long) then another in January (assuming no further top ups that would bust the Annual Limit). There’s no tax relief, but between December and January you could get up to $75,480 pushed into his SA, OA, and MA accounts.

And there’s the rub, because some of these dollars would likely flow into his MA, which is in decent shape already. His MA cap would have been set on his 65th birthday about 7 years ago (2011) I think, so let me take a look at that.... $41,000 I think, but this worked a bit differently under the old system. That’d be something he should confirm with CPF.

That’s still pretty good, though. This sort of top up will flow into all three accounts according to the regular allocation percentages for his age. The portion flowing into MA will likely boost him back to his cap, and so some portion of that should spill over into his SA. SA and OA funds (in that order) are available for “on demand” withdrawal and earn an attractive interest rate. Yes, he might be able to qualify for some more bonus interest since it appears he still has some room below $60,000 across his accounts, the minimum needed to qualify for maximum bonus interest.

Maybe your MediSave cap figure is correct, but please check that. It might be $41,000 or something different.

....And then you ask a good question: would any of these “all three” top up dollars then flow into his RA? I’m guessing not since his MA got pretty high and he already put his RA into some private annuity somehow, which would seem to imply he hit his set aside under the old plan (or might be able to opt out now). Are you sure it’s a private annuity, though? Did he opt into CPF LIFE? That’d be consistent with what he’s seeing. You/he can certainly test the “all three” top up and see how it flows by making a $20 “all three” top-up right now (December 12 as I write this), to see how it flows into his accounts. If you use PayNow QR then it should be credited within 24 hours or so, and you can see the results pretty quickly. Then you still have enough time to decide what you’d like to do for the rest. (Also ask CPF, of course, but this is something you can trial rather easily to get some reasonable assurance the results will be as you/he wish.)


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