*Official* Shiny Things club

[allan_nalla]

Not sure if this question is appropriate here, but I hope somebody could enlighten me regarding Interest Expenses for Business.

According to IRAS, Interest expenses incurred on loans or borrowings taken to finance income-producing assets are tax-deductible (provided they are incurred wholly on the production of income).

So take for instance the following scenario:

1) Year 0: Company borrows $10k from a bank at 5% fixed interest-rate.
2) Year 1: Company pay $500 as my Interest Expense.
3) Year 1: Company earned $50k income for the year from that bank loan.

Where does the tax-deduction come into the picture and at what rate is the deduction?

Does it mean that I sort of pay (for instance) $490 as the Interest Expense for the year instead of the full $500?

I'm asking this as I'm trying to understand the concept of Cost of Debt.

Thank you.

 

[marvel.avengers.ultron]

Hi all,

http://www.morningstar.co.uk/uk/etf/snapshot/snapshot.aspx?id=0P00006PNA

The returns quoted for SPDR :

Returns
Trailing Returns 12/08/2015
YTD -10.48
3 Years Annualised -0.59
5 Years Annualised 3.41
10 Years Annualised

May I know the returns quoted is exclusive of dividends?

Also, any good websites shows up-to-date basic chart analysis, annualised returns beside morningstar?
I tried other such as yahoo finance, google finance, Bloomberg ...
Any recommendation which finance website to use?

Thank you

 

[newjersey]

which trading platform do u use?

put it under your watchlist... and it would show XD or CD.

XD : Ex Dividends : meaning without dividends, usually the price would be lower, as it does not come with the dividends bonus factor.

CD : Cum Dividends : comes with dividends, inverse / opposite of the above.

 

[The Accountant]

Not sure if this question is appropriate here, but I hope somebody could enlighten me regarding Interest Expenses for Business.

According to IRAS, Interest expenses incurred on loans or borrowings taken to finance income-producing assets are tax-deductible (provided they are incurred wholly on the production of income).

So take for instance the following scenario:

1) Year 0: Company borrows $10k from a bank at 5% fixed interest-rate.
2) Year 1: Company pay $500 as my Interest Expense.
3) Year 1: Company earned $50k income for the year from that bank loan.

Where does the tax-deduction come into the picture and at what rate is the deduction?

Does it mean that I sort of pay (for instance) $490 as the Interest Expense for the year instead of the full $500?

I'm asking this as I'm trying to understand the concept of Cost of Debt.

Thank you.

Tax deduction comes one year in arrears,when you file for income tax. The rate for company is at 17%. For this case, interest expense are fully deductible if you do not have non-income producing assets(NIPA). (if you do have any NIPA , interest expenses adjustment applies using total assets method, but that will be another huge topic).

So effectively your cost of debt is 10K * 5% = 500, then times (1- 0.17) which gives you 415. If you were to factor in time value of money, the tax saving needs to discount one year later.

 

[The Accountant]

Hi all,

http://www.morningstar.co.uk/uk/etf/snapshot/snapshot.aspx?id=0P00006PNA

The returns quoted for SPDR :

Returns
Trailing Returns 12/08/2015
YTD -10.48
3 Years Annualised -0.59
5 Years Annualised 3.41
10 Years Annualised

May I know the returns quoted is exclusive of dividends?

Also, any good websites shows up-to-date basic chart analysis, annualised returns beside morningstar?
I tried other such as yahoo finance, google finance, Bloomberg ...
Any recommendation which finance website to use?

Thank you

Morningstar total returns are inclusive of dividends. Problem is, with the uk morningstar website, the total return are measured in gbp. The chart in morningstar are not inclusive of dividends, but you can set it to measure in SGD and across different periods. You are also able to compare against others etf.

I like morningstar, they are independent reliable group of people.

Oh, the Singapore morningstar website on total return are measured in SGD. But u can only find sg listed etf there.

 

[newjersey]

I wonder if we have entered the era of USD1.0 : SGD1.4

 

[havetheveryfun]

I wonder if we have entered the era of USD1.0 : SGD1.4

According to google we have

 

[allan_nalla]

Tax deduction comes one year in arrears,when you file for income tax. The rate for company is at 17%. For this case, interest expense are fully deductible if you do not have non-income producing assets(NIPA). (if you do have any NIPA , interest expenses adjustment applies using total assets method, but that will be another huge topic).

So effectively your cost of debt is 10K * 5% = 500, then times (1- 0.17) which gives you 415. If you were to factor in time value of money, the tax saving needs to discount one year later.

Ohh. I get it now!

Thank you for your time.

 

[Bedokian]

I wonder if we have entered the era of USD1.0 : SGD1.4

During my first foray into US shares, the exchange rate was 1 to 1.44.

 

[koreanlover]

The same was probably said during the last GFC.

The person who had the last laugh was the guy would bought at $3.18 vs the other guy who was so paralyzed he didn't buy anything at all.

The current market state does remind me a little bit of the GFC (just a little bit) in that those that use the TA to predict the bottom or turning point will miss, while those that use FA will get decent returns even though they didn't predict the exact bottom.

Yeah nibbled a little.
Avg price now 3.33 for ES3.

 

[IronMac]

I wonder if we have entered the era of USD1.0 : SGD1.4

There's talk of SGD1.45 to USD.

 

[reinphd]

Yeah nibbled a little.
Avg price now 3.33 for ES3.

every cent averaged down is a potential for a cent of gain

 

[marvel.avengers.ultron]

Yeah nibbled a little.
Avg price now 3.33 for ES3.

My average price is much higher since I started investing two months back whereby I bought ES3 near it peak.

But remember what shiny shared:
1) Do DCA consistently periodically , although you have bought some during the market high, you would buy more during the market low.
(Do not try to time the market unnecessary unless you have very good TA skills which i do not have)

2) Have a long term investment horizon: hold your ES3 for more than 10 years or even more, beside some adjustment periodically from time to time to your 110-age criteria in equities.
In this way, you would be able to ride through the ups and downs of the market.

Cheers XD

 

[slackerz]

My average price is much higher since I started investing two months back whereby I bought ES3 near it peak.

But remember what shiny shared:
1) Do DCA consistently periodically , although you have bought some during the market high, you would buy more during the market low.
(Do not try to time the market unnecessary unless you have very good TA skills which i do not have)

2) Have a long term investment horizon: hold your ES3 for more than 10 years or even more, beside some adjustment periodically from time to time to your 110-age criteria in equities.
In this way, you would be able to ride through the ups and downs of the market.

Cheers XD

my strategy is to load it when its always near its 52 week low

 

[reinphd]

My average price is much higher since I started investing two months back whereby I bought ES3 near it peak.

But remember what shiny shared:
1) Do DCA consistently periodically , although you have bought some during the market high, you would buy more during the market low.
(Do not try to time the market unnecessary unless you have very good TA skills which i do not have)

2) Have a long term investment horizon: hold your ES3 for more than 10 years or even more, beside some adjustment periodically from time to time to your 110-age criteria in equities.
In this way, you would be able to ride through the ups and downs of the market.

Cheers XD

Please also don't forget the dividend you are getting from time to time. They can start from a few bucks to hundreds to thousands and to tens of thousands. Reinvest and repeat

Sent from Samsung SM-G900F using GAGT

 

[Perisher]

my strategy is to load it when its always near its 52 week low

Haha, then you should have plenty of chances this year... it keep reaching lower.

 

[marvel.avengers.ultron]

Haha, then you should have plenty of chances this year... it keep reaching lower.

I am interested to find out some of the reasons that make you say so

Sent from Hard Truth using GAGT

 

[Perisher]

I am interested to find out some of the reasons that make you say so

You are right, STI hasn't been that disastrous this past 52wk.
Ha, I have the impression it was going down for a long 3 months already, but yet it's nowhere near 52wk low till well recently.

https://sg.finance.yahoo.com/echarts?s=^STI#symbol=^STI;range=1y

 

[Shiny Things]

My average price is much higher since I started investing two months back whereby I bought ES3 near it peak.

But remember what shiny shared:
1) Do DCA consistently periodically , although you have bought some during the market high, you would buy more during the market low.
(Do not try to time the market unnecessary unless you have very good TA skills which i do not have)

Yep, this is the idea. If you were buying 1000 shares a month of ES3 at $3.50, you're now buying 1100 shares a month at $3.10. (That's a nice little bonus of dollar-cost averaging - you actually end up beating the average, because you buy more shares when the price is lower).

And don't forget diversification. If you're a SGD investor, you'll have cleaned up on overseas stocks over the last couple of months: and over the last year, IWDA's up a couple of percent (mostly from reinvested dividends), but you'll have made more like 15% because the USD has strengthened so much against the SGD. It's not all bad news - it's never all bad news. There are always strong markets and weak markets.

 

[nicholasmong]

Luxembourg:XETRA

Question - Is withholding tax on capital gains/dividends imposed based on:
1. Fund Domicile
2. Exchange location
3. Both the above

Example: DXET (EUR) on Xetra (IBIS).
Reason I'm asking is cos' compared to XESC (GBX) on LSE, the above sees much higher trading value/volumes. The base currency for the ETF is in EUR. Noticed I can FXCONV EUR.SGD on IBKR direct.

Should I trade XESC (GBX), I need to perform USD.SGD > GBP.USD (2x FXCONV). I believe each transaction is $2.77? Thoughts please.

Also, my thinking is where possible, trade in the ETF's original base currency where available. Is this misguided?