Factors Affecting The Currency Exchange Rate Of Singapore

The Currency Exchange Rate is one of the most important means to quantify the country’s level of economic stability and economic health. It refers to the “rate at which one country’s currency may be converted into another”.

The market where these currencies are regularly traded is called Forex. The Forex market, the most liquid market in the world, includes all of the global currencies. There is no central marketplace for trading these currencies; however, there are financial centers in Singapore, New York, Tokyo, Zurich, London, Sydney, and Paris.

Exchange rates fluctuate regularly with diverse market factors affecting it such as inflation and government debt. If you are planning to send or receive funds from overseas, you need to be in constant lookout of the changes in the foreign exchange rates.

INFLATION RATE

A country’s inflation rate causes a change in the value of its currency. For example, if Singapore experiences high inflation, you will observe a depreciation in the Singapore Dollars (SGD). This high inflation is typically related to the higher interests rates. In contrast, if Singapore experiences low inflation, you will observe an appreciation in SGD. And the prices of the goods and services will increase at a slower rate.

The average inflation rate in Singapore from 1962 to 2016 is 2.69% – reaching its all time low of -3.10% in 1976.

This observable negative inflation or deflation is not good. It happens when the prices of the commodities fall because the supply is greater than the demand. It can ripple the economy and later lead to high unemployment, recession, and depression.

GOVERNMENT BUDGET

A government’s budget surplus or deficit have an impact to the currency exchange rate. For instance, when our government’s budget surplus is expanding, the exchange rate of SGD will grow competitive.

The financial regulatory authority and central bank of Singapore is called The Monetary Authority of Singapore (MAS). An important institution that supports the effectiveness of the interventions given by MAS is the Central Provident Fund.

INTEREST RATE

The interest rates set by the central banks influence the customers and investors. First, it affects the borrowing behavior of customers. If the economy is overheated, central banks may increase its interest rates to make borrowing more expensive and discourage people.

Second, it affects the balance between the investor’s safety of funds and the yield returns. For example, the yields for assets in SGD increases as interest rate goes up. This leads to an increased demand by investors and eventually lead to the appreciation of Singapore’s currency.

GOVERNMENT DEBT

The government debt (public debt or national debt) is the balance owed by the government. Countries with immense amounts of government debt are less likely to receive foreign investors and foreign capital. As an effect, decrease in the value of their currency exchange rate will follow.

The  is 105.6% as of 2015. This signifies the country’s ability to pay back its debt.

Image Credits: pixabay.com

Image Credits: pixabay.com

Sources: 1, 2, 3

Read More...

How To Effectively Send Money From Singapore To Overseas

Whether you are a concerned parent who needs to send money to your Singaporean child abroad or an honorable foreign worker who needs to send money back home, you must employ some strategies to remit.

The act of sending funds is called remittance. Remittance service involves the transfer of money to an individual that is a resident of another country or an individual that is temporarily staying outside of Singapore. To remit funds effectively, you must choose an appropriate type of service, determine the total cost, and confirm all the details.

SWIM THROUGH A SEA OF OPTIONS

The advancement in technology increased the options for global money transfers. To regulate this, the Monetary Authority of Singapore issues license to qualified remittance services in Singapore. You shall not engage and support the services of unlicensed people.

MoneySense advises the public to remit funds by approaching a licensed remittance agent or an established bank. Nonetheless, here are the common options to remit:

a. Cash to Cash

If your recipient does not have a bank account overseas, an ideal option is the cash-to-cash basis. In this service that is operated by Western Union and SingPost, you walk-in with the cash and let the company deliver it to the recipient of a particular destination. Since your funds will be converted to the country of choice, the service fee and exchange rates can vary.

b. Telegraphic Transfer (thru Banks)

Bank wire transfers move funds from one account to another – no matter where the other bank account is. Although this is usually the weapon of choice, it can be the most costly due to the high service fees and exchange rates. For instance, DBS Overseas Telegraphic Transfer charges about S$20. Payments made through this service usually arrive within 1-4 working days.

Please take note that some banks offer services that will let you remit online or through their Smartphone App.

c. Online Services

The most convenient option of them all is thru online money transfer services such as the renowned PayPal. Paypal enables you to send and accept moneys online without revealing all your financial information. In fact, you can send money to almost anyone with an email address or a handphone number.

What is nice about PayPal transfer is that there is no minimum amount and it charges as low as 0.5%.

FIGURE OUT THE TOTAL COST

The total cost to send money is determined by the fees charged by the service provider, the daily exchange rates, and the total funds that you need to transfer. These factors can vary and fluctuate frequently. Thus, you must collect and compare these information as soon as possible.

VERIFY ALL THE TRANSACTION DETAILS

Once you determined the most economical and convenient option, you must confirm that the provider will be able to promptly deliver your money to your desired recipient. Furthermore, you must verify all the information and get everything in writing. Keep all the receipts, emails, and documents in case something goes wrong.

Sources: 1, 2, & 3

Read More...

Know The Typical Features Of Critical Illness Insurance

When you hear the term “Critical Illness Insurance”, what comes to your mind?

If you are envisioning a coverage which offers a payout when the policyholder is diagnosed with a critical illness (e.g., stroke or cancer) then, you are correct!

Critical Illness Insurance or Dread Disease Policy is a lump sum payout given in the event that the policyholder is diagnosed with one of the specific illnesses covered by the policy. It can either be sold as a stand-alone policy or a part of a main policy in life insurance or investment insurance. The guidelines and definitions of the 37 critical illnesses are predetermined by the Life Insurance Association of Singapore. This definitions are fixed across the board.

Unlike other forms of health insurance, the benefits of Critical Illness Insurance is paid out in lump sum so that the person can use it not only for medical expenses but also for other living expenses that can result from the ongoing treatment.

COMMON FEATURES

Here are some of the usual features of the Critical Illness Insurance:

1. Its premium is adjusted based on the policyholder’s age-band.

2. The policyholder is allowed to claim no more than one of the critical illnesses listed.

3. There are no restrictions on the utilization of the benefit payment.

4. The critical illness rider will be terminated once you give up the basic policy.

5. A type of health insurance (with a critical illness rider) has an expiration once the policyholder reaches a maximum age.

6. To reduce the risk of moral hazard, there is a limit on the total amount that you can purchase.

7. Upon purchasing the Critical Illness Insurance, there is a waiting period before you can make a claim.

POSSIBLE ISSUES

Given the fixed definitions of the critical illnesses as well as the common features of the Critical Illness Insurance, there are several issues that can possibly happen in different situations. For starters, the benefits can only be paid if the disease EXACTLY meets the standard definition stated by the policy.

For example: Coma is defined as…

“A coma that persists for at least 96 hours. This diagnosis must be supported by evidence of all of the following:

• No response to external stimuli for at least 96 hours;
• Life support measures are necessary to sustain life; and
• Brain damage resulting in permanent neurological deficit which must be assessed at least 30 days
after the onset of the coma.

Coma resulting directly from alcohol or drug abuse is excluded.”

In reference to the definition above, say your beloved spouse had been in a state of coma for the past 48 hours due to substance abuse and you cannot do anything about it because he is not qualified to claim the insurance payout. It will be difficult for you to fork some money at a relatively short notice.

Another issue that can happen is when two or more diseases transpire (co-morbid diseases) and you can only claim for one of it.

Image Credits: pixabay.com

Image Credits: pixabay.com

Furthermore, claiming of the benefits usually has a waiting period. If a critical illness is carried out during the waiting period then, you cannot be paid for its benefits.

Sources: 1, 2, & 3

Read More...

Details of 2016 GST Vouchers Benefits To Be Sent Out by 1 Jul 2016

GST Voucher Featured

The Ministry of Finance has announced in a press release that 1.54 million Singaporeans will receive a letter by 1 July 2016 with details on the 2016 GST Voucher Benefits (GSTV) as well as information on other Budget benefits such as Service and Conservancy Charges (S&CC) rebates, U-Save and Medisave Top-ups.

1. GST Voucher – Cash Payment

About 1.3 million eligible Singaporeans will receive up to $300 in GSTV – Cash. In addition, as announced at Budget 2016, a one-off GSTV – Cash Special Payment of up to $200 will be provided to support households amid current economic conditions.

This means that eligible GSTV recipients will receive up to $500 in cash in 2016, which will be disbursed in two payments in August 2016 and November 2016.

2. Medisave Top-ups

About 425,000 Singaporeans aged 65 years and above will receive the GSTV – Medisave of up to $450 in August 2016. In addition, Singaporeans born on or before 31 December 1959 (57 years and above in 2016) and do not receive Pioneer Generation (PG) benefits will receive a Medisave top-up of up to $200 each year till 2018. The top-up for this year will also be made in August 2016.
In total:

  • A non-Pioneer aged 65 in 2016 and who is living in an HDB flat (and does not own a second property) can receive $450 of Medisave top-ups this year.

Pioneers would also be receiving their PG Medisave top-ups of $200 to $800 in July 2016. Taking both the PG Medisave and GSTV – Medisave together:

  • A Pioneer aged 70 in 2016 who is living in an HDB flat (and does not own a second property) will receive $450 of Medisave top-ups;
  • A Pioneer aged 85 in 2016 who is living in an HDB flat (and does not own a second property) will receive $1,250 of Medisave top-ups.

You can also refer to the infographic by MOF below:

GST Voucher and other Budgets MOF

More information on Assessable Income and Annual Value of Home:

To find out how much you are eligible for, you can log on to https://www.gstvoucher.gov.sg with your SingPass.

You will then see something like this:

GST Voucher Eligibility

* Remember to update your payment mode.

Details on the GSTV can be found at www.gstvoucher.gov.sg, and information on the other Budget benefits can be found at www.singaporebudget.gov.sg. If you require more information, the contact details are as follows:

gstv

Read More...

Brightest Financial Nuggets From Acclaimed Dads

A man who exercises parental care over other people and acts as a protector or a provider – that is the textbook definition of the word FATHER.

But the real nature of a father and his child is more complex than that. My father was the first person to tell me that my dreams are valid. He taught me how to deal with difficult people and to laugh at life’s problems. He worked hard to ensure that I finish my studies on exclusive institutions despite how hefty the costs were. Truly, my father is an amazing human being and I am proud to call him my DAD.

Like my dad, most of the fathers out there are great at giving advice about work, love, and money. Their advice may be clichés at times but the wisdom that they passed on often sticks with their children. So in the cheerful spirit of Father’s Day (June 19), I present you some of the brightest finance advice from experienced dads…

1. KNOW WHAT AN ASSET IS

Robert Kiyosaki, the author of Rich Dad, Poor Dad, believes that it is important to “know what an asset is, acquire them, and become rich.” Its premise is simple. To become financially independent, you must acquire income-generating assets which can pay for all your expenses. The only problem is that some people do not know how to differentiate between an asset and a liability. Instead of purchasing equities or bonds, these people purchase iPhone and MacBook.

Image Credits: pixabay.com

Image Credits: pixabay.com

2. MAKE MONEY WORK FOR YOU

David Richmond is the founder of a financial planning firm called Richmond Brothers, while his father worked in the insurance industry throughout his life. David’s dad reminded him that there are two ways to make money: to earn it or to grow it. Merely working for it and witnessing it grow can be hard as you can only work so much. This is why you must incorporate the two ways. Your hard-earned money must be saved and be able to grow with an interest.

3. WORK HARD DOING WHAT YOU LOVE

How does one begin to describe the powerhouse that is Donald Trump? For starters, he is running for United States’ 2016 Presidential election. But he is best known as a businessman and a television personality. His father, Fred Trump, was the original real estate tycoon in the family. He owned the company Trump Management Co. where Donald first worked for. Despite the “scandals” that Fred have been through in 1954, he bounced back and built affordable rental housing system in New York City.

Donald Trump was once quoted saying: “My father didn’t give me much money, but what he did give me was a good education and the simple formula for getting wealthy: Work hard doing what you love.”

4. DO NOT SWING AT EVERY PITCH

The iconic Warren Buffett once gave an advice to his son Peter Buffett about investing: “You don’t have to swing at every pitch.” It is direct yet full of substance. When investing your wealth, it is important to wait for opportunities that fit your criteria (e.g., your needs and personality). And if nothing of that sort comes along, you must wait patiently and practice perseverance.

Image Credits: pixabay.com

Image Credits: pixabay.com

Sources: 1,  2, & 3

Read More...