FD means For Dumbasses

if i can qualify for the higher interest rates with the hy accounts easily without much inconveniences, i go for it (eg. ocbc 365, uob one, scb bonus saver, etc)

 

for all my excess cash liquidity, it goes into money market funds.

 

FDs make sense only if you think the banks are going to fail so you try to stay under the SDIC limit.

 

to be honest, that's really stupid thinking, but then again, most people are shit at evaluating risks and will overpay for safety (outcome? lower returns due to higher costs)

you can say that FDIC saved depositors at SVB, but sg banks are not like us banks.

there are only 2 cases in which i think FDs are not an idiot decision

#1 you are using it to clock in AUM requirements (eg. to qualify and retain prioirty banking status) and all the other bank offerings are shit (they usually are shit), and you are liquid enough that it doesnt bother you

#2 you are using the FD as a collateral to get a credit card

a lot of people don't know that you can do #2, which is especially useful for retired or self employed people with no income / cpf statements to prove income. for the opportunity cost of locking up some liquidity in an FD, you get a credit card that sort of functions like a weird debit card

basically, the FD as collateral replaces your credit limit

$100k FD? $100k credit limit

bottom line: FDs are only for old folks

MMFs are more liquid with higher yield

and those are the only 2 things that should matter 

next comes in the new age "FD" aimed at youngsters

i dont want to single out products, but things like syfe cash+ guaranteed

it solves 1 issue (closing the spread, which increases returns), but removes both of the above possible edge case benefits of using an FD, since the FD is not with a card-issuing bank and obviously money not within the bank does not count towards AUM. they might be better than regular bank FDs, but i still think MMFs are better

its actually damn sad how underutilized money markey funds are in singapore

its ironic, since in the us, MMFs are considered LESS RISKY than bank (fixed) deposits

why is because FD risk is the bank balance sheet risk (for excess about deposit insurance), while MMFs can be risk-free grade if the MMF invests in tbills

but then again, this just goes to show how poor the level of financial education is in singapore

i feel too many people are scared by the "you could lose money on it though" disclaimer

if the fact that price of MMFs *COULD* go down, and that fact scares you

you gonna have a lot of other things to be scared about in life, you humji kia

 

at the end of the day, your money your choice

but i just want you to know, it's a bad choice

straight to the point about Tax Deductions

since it is year end, i see a lot of influenzas talking about tax deductions

from my pov, it is just content generation

there's pretty much only 2 things for you to take action to increase your tax deductions:

1a) CPF contribution to self ($8k)
1b) CPF contribution to family member ($8k)

2) SRS contribution ($15.3k)

everything else that people talk about are not really things that you need to do. you either qualify for them or you don't, and they are typically a 1-time update with IRAS to make sure those deductions are correctly added in

here are 2 simple takes i have about tax deduction

#1 if you don't pay (much) tax, you don't need to aim for tax deductions

2% and 3.5% bracket, don't even bother

7% and 11.5%, borderline. are you committed to investing for retirement with this money?

15% and up, ya, makes sense to reduce your taxes

#2 SRS makes more sense to me, since it is more accessible

SRS can be withdrawn with a penalty, but 95% back if you really need it is better than 0% back.

in an extreme situation where you lose your job, eating the 5% penalty but accessing SRS funds in an emergency scenario may be the best option for you. in this scenario, the 100% tax liability of the withdrawn SRS funds doesn't really matter, since you can just calculate your SRS withdrawal and decide for yourself which tax bracket you want to end up in for that year.

the final thing to note is that tax relief is capped at $80,000.

for the year of 2023 (YA2024), my forecasted deduction is just over $70k.

paying taxes is a happy problem - it means you made money

wish you a happy new year and i hope you have the happy problem of paying taxes and having a happy time trying to figure out how to legally reduce your tax burden

first post

i have been thinking about blogging for a while now.

if there's something you want to do, just do right?

worst case, if i feel that it sucks, i'll just stop blogging.