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celtosaxon 19-07-2019 05:35 PM

Agree with BBCWatcher. It doesn’t get much better than Roth IRA. I’ve been failthfully maxing mine out since it first became available in 1998.

When you reach retirement, it’s important to have a diversity of income streams for tax planning purposes. Having a Roth can help reduce your tax bracket, with knock on benefits of lower (or no) taxation of Social Security, lower cost of Medicare premiums... and staying in the bottom two tax brackets means long term capital gains go tax free.

The other account that is really awesome is the HSA (if you are working in the US and have a high deductible health plan option). The HSA is the only triple tax advantaged account (income deduction, tax free gains & tax free withdrawals for medical expenses) and can even be used for medical expenses anywhere. If you aren’t able to use it up on medical it can be used like an IRA later on.



Quote:

Originally Posted by paradizreef (Post 121815040)
Any particular reasons why choosing ROTH over traditional? I am not looking at a lot of non US income post retirement. Probably just CPF + a little bit of stocks dividend (scattered over cash/srs/cpf sources)


Unfortunately I do not have this "problem"


Closecl 22-07-2019 12:42 AM

I know that you advocate DCA but considering that there could be a recession on the horizon, do you have a strategy for locking in current gains? (e.g. moving a higher proportion of your funds from equities to cash)

BBCWatcher 22-07-2019 10:47 AM

Quote:

Originally Posted by Closecl (Post 121856247)
I know that you advocate DCA but considering that there could be a recession on the horizon, do you have a strategy for locking in current gains? (e.g. moving a higher proportion of your funds from equities to cash)

A recession may or may not happen, and flip a coin whether stocks go up or go down during a recession. Yes, that's right, the available data suggest that recessions don't predict stock prices much at all.

The only adjustment is the pre-programmed one: the gradual, progressive portfolio allocation adjustments that make sense in the 7 (or up to 10 if you're particularly conservative) year period approaching retirement.

BBCWatcher 23-07-2019 11:54 AM

Vaccines are typically excellent investments, if you want to think of them that way. They help keep you healthy, productive, comfortable, and/or alive. Along those lines, I'd like to point out that U.S. health experts have upped their endorsement of HPV vaccination to prevent a range of cancers.

Right now the ideal way to get vaccinated against HPV is at age 11 to 12 and with Gardasil 9, currently the best available HPV vaccine. That's for both boys and girls. (Previous advice focused on girls and young women.) It's important to get your children vaccinated, and better now than never if they're overdue. However, health experts are now recognizing potential benefits among some men and women as late as age 45. Review the official advice then talk to your doctor if you think you're a candidate.

In other vaccine news, Shingrix is still in short supply but is an excellent vaccine for preventing shingles. It's recommended for those age 50 and older. Unfortunately Shingrix is not yet approved and available in Singapore, probably mostly due to supply issues. (There's a less effective shingles vaccine that is available.) But it has been approved throughout the developed world, and recently also in China. Shingles is caused by the same virus that causes chickenpox, the varicella-zoster virus, and it's an often painful ailment that sometimes has serious complications. Toddler/childhood vaccination against chickenpox is available in Singapore and recommended, although it's not available at polyclinics but rather at KKH, TTSH, and private clinics.

There are some vaccines in the pipeline for mosquito- and tick-borne illnesses such as Dengue and Lyme Disease. There are some TB vaccine candidates, too. And there are lots of people in Singapore who travel, so make sure you keep tabs on your vaccinations and whether you need to plug any gaps or get any boosters.

ChinoGirl 23-07-2019 07:58 PM

Thank you for sharing,BBCWatcher. Gonna make an appointment for my 6 year old’s chickenpox vaccination.

ChinoGirl 24-07-2019 07:56 AM

Hi BBCWatcher,

Could you share your thoughts on whether it is better for the elderly who are currently on ElderShield to swap their plans for the CareShield?

BBCWatcher 24-07-2019 11:21 AM

Quote:

Originally Posted by ChinoGirl (Post 121890735)
Could you share your thoughts on whether it is better for the elderly who are currently on ElderShield to swap their plans for the CareShield?

Probably, but it's too early to form a strong opinion since CSL won't be rolled out to this cohort until 2021.

dragonknightx 27-07-2019 12:04 PM

Maximizing CPF
 
Hi BBCWatcher,

If I really want to maximize CPF, do you think the following could be executed:
1. Just before reaching the age of 55yo, transfer OA to investments leaving only $20k and transfer all the SA to investments leaving only $40k
2. At 55yo, $60k from OA and SA will be transferred to RA
3. Annually top up RA with $7k for tax benefits and just before 65yo, top it all the way up until FRS.

With this approach, I wonder if at any time the OA and SA investment is returned to CPF between 55yo to 65yo, it will be autoswept into RA until RA reaches FRS. If so and this is to be avoided, then looks like the investment would need to generate minimally the same rate as OA and SA respectively.

What do you think?

BBCWatcher 27-07-2019 01:24 PM

Quote:

Originally Posted by dragonknightx (Post 121943587)
If I really want to maximize CPF, do you think the following could be executed:
1. Just before reaching the age of 55yo, transfer OA to investments leaving only $20k and transfer all the SA to investments leaving only $40k
2. At 55yo, $60k from OA and SA will be transferred to RA
3. Annually top up RA with $7k for tax benefits and just before 65yo, top it all the way up until FRS.

I see what you’re trying to do there (more tax relief), but no, that doesn’t work for most people. Once your SA hits the Full Retirement Sum there’s no more tax relief on tap. Shifting SA dollars to the CPF Investment Scheme doesn’t change that.

However, the “double shielding” technique you describe works if you want to shove more cash into your RA at age 55 — up as high as the ERS — while minimizing the drawdown from both OA and SA. That means you end up with as many total CPF dollars as possible.

dragonknightx 27-07-2019 02:39 PM

Quote:

Originally Posted by BBCWatcher (Post 121944648)
I see what you’re trying to do there (more tax relief), but no, that doesn’t work for most people. Once your SA hits the Full Retirement Sum there’s no more tax relief on tap. Shifting SA dollars to the CPF Investment Scheme doesn’t change that.

However, the “double shielding” technique you describe works if you want to shove more cash into your RA at age 55 — up as high as the ERS — while minimizing the drawdown from both OA and SA. That means you end up with as many total CPF dollars as possible.

Thanks BBCWatcher.

BBCWatcher 27-07-2019 02:52 PM

Hang on a minute.... As literally written the tax rules seem to suggest you can do what you describe and qualify for tax relief. However, the tax relief isn’t worth as much as the 4%/year interest, in my view. So I think what you might want to do is to leave a $7,000 gap below the FRS with your shields in place, then make your cash top up of $7,000 for tax relief, then lower your shields. I wouldn’t stay in the CPF Investment Scheme for 10+ years on the SA side, although you might consider staying invested over on the OA side.

Interesting idea — worth trying once at age 55, I think. It just might work since for some strange reason the published tax rules don’t exclude CPFIS(SA) dollars from RA top ups. Note that you cannot get tax relief for topping up your own SA in the same tax year. I’m assuming your SA is already at or above the FRS just before your 55th birthday, and then you’re trying to collect $7,000 of tax relief via a RA top up (only) for the year when you turn 55.

isaacsayshi 29-07-2019 12:07 AM

Hi BBC,

should i invest my CPF OA and just left 20k inside? I'm thinking to put into STI ETF.

The reason being i think SA is good enough to be a bond portfolio. We should put as much equities as possible as i in my 30s.

What ya think?

Cheers

BBCWatcher 29-07-2019 08:06 AM

Quote:

Originally Posted by isaacsayshi (Post 121970054)
should i invest my CPF OA and just left 20k inside? I'm thinking to put into STI ETF.

The reason being i think SA is good enough to be a bond portfolio. We should put as much equities as possible as i in my 30s.

I think it’s a reasonable thing to do if your Special Account has reached the Full Retirement Sum (i.e. you have exhausted OA to SA transfer opportunities), you won’t be depending on your OA for housing, and you have a long enough time horizon (you do since you have roughly 30 years to go until retirement). Just bear in mind that you still want your Retirement Account to be fully funded on your 55th birthday, and preferably not predominantly or fully from your Special Account. Cash works when the time comes, of course.

jpcd89 29-07-2019 03:17 PM

Quote:

Originally Posted by BBCWatcher (Post 121783405)
IRA, no. The limit is US$6,000 per person (2019 figure, assuming you will be under 50 years of age for all of 2019). Potentially US$12,000 per couple (same year/age) if you can figure out how to get an IRA custodian to open an account for a non-resident alien spouse who has made a Section 6013(g) election and files a joint tax return.

The IRA is in addition to your 401(k). Max out your employer's matching funds into your 401(k) first, then if you can afford more drive both -- to their maximums if allowed. I suggest Roth 401(k) and Roth IRA if you plan to retire in Singapore. Some employers don't offer Roth 401(k)s, so in that case you'd max out your employer's match to a Traditional 401(k) first, then max out your Roth IRA, then your employer's Traditional 401(k), in that order.

If your earnings are "too high" to contribute to a Roth IRA then there's a workaround for that. Ask if that "problem" applies.

Hi BBCWatcher,

Will be moving with my spouse to New York early next year.
Both of us will be under the H1B1 visa, does it make sense to elect for this if we are planning to stay in the US for a maximum of 2-3 years? (Hope to have kids in Singapore). My employer will match 50% the contribution up to 5%.
Our projected annual incomes are $200k for myself and $130k for my spouse.


Thanks.

bullshitregister 29-07-2019 05:40 PM

Hi BBC,

Do you have a view on investing in Muni's? (Likely with ETFs so there is some diversification?)

I'm not sure if they are like treasuries and there is no withholding tax for foreigners, but if they are, then the higher return seems attractive.

TIA.


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