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Investment Outlook For 2018

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After a nervous start to 2017 for investors, growth continued and the year ended on a higher note than most expected.  As we enter 2018, it’s a good time to survey the global economy and decide if our asset allocation is still appropriate.In this article I aim to address these straightforward questions:
Will there be a recession in 2018?How cautious should I be in my investment approach?Where are the investment opportunities for the year ahead?What asset classes should I overweight or underweight in my portfolio?
I will also reveal why an ox weight-guessing competition, held in 1906 at the West of England Fat Stock and Poultry Exhibition, helps us derive more useful information than individual leading economists do about the risk of imminent recession.
This is good stuff, you really should read on!
Please share this article! >> Review of Key Economic Reports Remembering the First Law of Economists, it’s a good idea to conduct a broad survey of what the ‘experts’ have to say about t…

Why You Can’t ‘Beat The Markets’

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Do take 2 minutes and watch this short video.In ‘The Wisdom of Crowds’, James Surowiecki explains how groups can be remarkably intelligent – often more so than the smartest people in them.  This is particularly relevant to the price of individual stocks, or indeed other financial assets that are efficiently traded in a broad open market.  Dimensional Fund Advisors call this ‘The Power of Markets’, and in the above video they elegantly explain why you can’t beat the market – because the price is already ‘right’ on the basis of known information and crowd wisdom.

British Expat? Here are the Huge UK Tax Benefits of an Offshore Investment Plan...

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Would you like to maximise the tax planning benefits of being a British expat abroad? Read on for a summary of some key reliefs and allowances available from the HMRC tax man…(Note: this article is relevant to British expatriates working in Singapore and other overseas locations, as well as other nationalities who may be moving to UK in the future.)Click to download this information in PDF format.
Summary of Tax Benefits of an Offshore Investment PlanUnder HMRC tax rules for ‘foreign’ investment bonds and investment-linked life policies have additional tax planning benefits compared with their domestic equivalents. The purpose of this article is to briefly highlight the most important. The content is not intended to be specific tax advice of any kind, and rules can change at any time. Everyone’s tax situation is unique and you should consult a qualified tax accountant regarding your own circumstances.5% withdrawal allowance Time apportionment reduction Top slicing relief Clustering …

Tax Free Savings Plans for Australians?

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Question: How can returning Australians (and expats moving to Australia) make MASSIVE tax savings by using offshore investment bonds and investment-linked life policy wrappers?Answer: Set it up while you’re an expat working abroad, and keep it running at least ten years (even if you go back home) for maximum tax benefits.(Note: this article is relevant to expatriate Australians working in Singapore and other overseas locations, as well as other nationalities who may be moving to Australia in the future.)Click to download a copy of this information in PDF format. Background - Repeal of Foreign Investment Fund legislationFor several years the Australian Tax Office (ATO) had very defined, and perhaps harsh, rules for how foreign insurance bonds were treated in respect of capital gains for tax residents in Australia. In effect, these tax wrappers were treated in a ‘look through’ manner and holders were liable for tax on actual gains made or at a deemed rate set by the authorities. This reg…

Why You Almost Certainly Need Critical Illness Cover

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If you have an accident and become disabled so cannot work, or are diagnosed with a serious critical illness, … how will you survive financially?How will you live? Who will take care of you?Now, it’s self-evident that if your family relies on our income, then you need life insurance.What’s not so obvious is the other types of financial protection that are available, and why you might need them. Have no dependents and think you don’t need insurance? Think again…What’s The Point of Critical Illness Cover?People are living longer. The average lifespan of men and women is steadily increasing as a result of numerous factors - healthier lifestyles, nuturitional factors, and even simple genetics. Also, of course, the incredible advances in medical fields such as diagnostices, pharmaceticals, and surgical techniques amongst many others. Diseases and conditions that two decades were a death sentence are now quite survivable.But staying alive does not necessarily mean recovery or return to work.…

Health Insurance – Key Points To Consider

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Professionals working abroad, and their families, have particular needs for health insurance. When you are away from your home country, access to quality healthcare is essential - both for emergencies and also general medical treatments that may be required from time to time. It is important to plan for the uncertainty of illness or injury, to make sure you can afford private medical care at the times you need it.If you took out health insurance back home, and haven’t checked if you’re covered when living abroad - check now!National health insurance schemes have restrictions on cover when travelling abroad - they are not designed for those planning to permanently move abroad and cover often lapses after 90 days. That’s why you’ll need to look at options available from the specialist firms that provide international cover for expatriates. There are a wide range of policies available and numerous international medical insurance institutions. Using a broker will save you time and also he…

Essential Considerations When Choosing Life Insurance

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There are several different types of insurance, and if you download the LIA Guide To Life Insurance you will see Singapore-licenced products described such as Whole of Life, Universal Life and Term Life.A key feature for international professionals is portability - meaning that once the policy is in place, your coverage will stay in place pretty much wherever you live in the future.For expatriates and local professionals in Singapore, a common and popular form of life insurance (for insurance not investment purposes) is Term Insurance.Term InsuranceTerm insurance pays out a fixed sum on the death of the life assured. A term insurance policy provides life cover for a certain period of time, e.g. 20 years, so long as the premiums are paid regularly (usually monthly or annually).A term insurance policy for life cover only usually has a fixed premium due, which is guaranteed not to rise in the future as you get older.A term insurance policy does not accrue any cash-in value. At the expiry…

Double Check Your Life Insurance NOW!

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If you have a spouse or family that is dependent on your income, then you need life insurance.Many professionals have some form of life insurance provided by their employer - called ‘death in service’ benefit. This might have a payout value of typically between 3 to 4 times salary.The problem is, because that sounds initially like a lot of money, many of us don’t bother to work out the actual amount of life cover we need.Moreover, we might not properly understand the terms of our employers insurance - does it apply at weekends? Holiday? What happens if I leave my job?When I sit down with clients to find out what is the true level of life insurance needed, it’s not uncommon to discover that perhaps 10 to 12 times salary should be the basic minimum.If you are an expat with life cover issued back in your home country - check your policy! Many onshore life insurance policies will not provide cover once you move abroad; in which case, your monthly premium payments are wasted.Working out th…

Understanding Compound and Annualised Growth

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Across fund manager houses, there is little standardisation of how performance figures are presented on fact sheets. Percentage returns are usually presented as either (i) discrete (or calendar) annual, (ii) cumulative (for example a total return figure for 3 years or 5 years) or (iii) annualised (the equivalent annualised return for a period such as 3 or 5 years, sometimes called compound annual return).This tutorial shows you how to convert from discrete annual performance figures, to cumulative or annualised figures, over a period of your choice.As an example, we’ll look at some USD fund performance data presented in an October 2010 factsheet.The performance data are presented to us in a very clear way, but may not be the complete picture we are looking for. The table directly above shows the discrete annual returns - ie. net of fees the fund delivered 7.46% in 2009, -4.90% in 2008, 9.82% in 2007, etc.But let’s suppose you ask yourself (or your advisor) “What was the total growth f…

Future Value Calculation and the Rule of 72

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Getting down and dirty with the CAGR formulaThe BasicsLet’s say you have an asset worth $100 now, and you want to find out what it’s value will be in 5 years if it grows at a rate of 10% per annum and interest is compounded.The equation is simple. The asset’s future value (FV) and present value (PV) are related as follows:$$FV = PV\times(1+i)^n$$where i is the rate of interest and n is the number of periods. In our example:
$$FV = $100\times(1+0.10)^5 = $161.051$$
Here the total growth over the 5 years FV/PV is 161.051/100 = 1.61051 . This gives us the total cumulative return r.
$${FV \over PV} = (1+i)^n = 1+r$$
Or expressed in percentage terms:
$$r = [(1+i)^n - 1] \times 100$$ (equation A). In our example, (1.61051-1) x 100 = 61.051%.If we rewrite the future value calculation to solve for i:$$i = \left[FV \over PV\right] ^{1/n} - 1$$ (equation B), then substituting in for r and in percentage terms:$$i = [ (1+r)^{1/n} - 1 ] \times 100$$(equation C). Note that equations marked A and C are quite …

The Role of Property in Long Term Financial Planning

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Often we may start by buying a home to live in; it makes more sense to pay our own mortgage rather than rent a place and pay the landlord’s mortgage. ‘Getting on the rungs of the property ladder’ is common priority for many young couples. However with rising job mobility and larger sums needed for initial deposits, many people are rightly delaying a property purchase for a few years, rather than taking on financial obligations that would affect flexibility in the growth stages of a career.Property is an important asset class that should form part of our long term savings & investment strategy. However, matters such as home ownership are a personal and sometimes emotive subject. I make a point never to underestimate the sentimental factors that come to bear when I work with clients in this area. People often make financial decisions with an emotional bias, and this is seen nowhere more profoundly than with property.Your home in retirementIn the long run, most of us should plan to o…