How do you invest your CPF money?

jfoo2 · Post by **jfoo2** » Sun Jul 03, 2011 12:48 am

Hello all,

I would like to ask what did most of you do with your CPF (OA) or (SA) money?

a) Unit trust?

b) Shares?

c) Gold or others?

d) Leave it in CPF to earn the 2.5% or 4% risk free interest rate?

Thanks

shazamnick · Post by **shazamnick** » Sun Jul 03, 2011 3:11 pm

i diverted some into defensive shares eg, Singtel, M1 or Starhub when the price is cheap.

Sifu said forget about UT, rather ETF is better.

Post by **Dennis Ng** » Sun Jul 03, 2011 5:09 pm

shazamnick wrote:i diverted some into defensive shares eg, Singtel, M1 or Starhub when the price is cheap.

Sifu said forget about UT, rather ETF is better.

Hi shazamnick,
agree. So I would invest into stocks (limited to max 35% under CPF rules) or ETF.

Personally, I only pay myself a basic salary of S$2,100, so I have very little CPF contribution, just enough to pay for my Housing Loan instalments.

Instead of tying up my money in CPF, I will let my companies make profits, then the companies declare dividends to me, (which I don't have to contribute CPF).

Why let companies make the profits? Becos companies in Singapore enjoy lower tax rate of only 8.5% for the first S$300,000 profits it make, while an individual making S$300,000 in Singapore pay 20% personal income tax!

Ice-Man88 · Post by **Ice-Man88** » Tue Jul 05, 2011 10:31 am

Hi Dennis,

With a basic pay of SGD $2,100, will you be able to apply for credit card in such a case? Or you have already applied for whatever credit cards you need before you embark on starting your own biz?

Thanks and best regards

kklok · Post by **kklok** » Tue Jul 05, 2011 2:15 pm

Hi Ice-Man88,

I think no issue at all as long as you can show the bank that you have money in your account. Some bank just need a Fixed Deposit collateral of minimum S$10,000.

Cheers
KK

randwick · Post by **randwick** » Tue Jul 05, 2011 3:42 pm

A company can also apply credit cards for their staff, as long as the bills are paid, banks will oblige.

Post by **Dennis Ng** » Tue Jul 05, 2011 3:58 pm

Ice-Man88 wrote:Hi Dennis,

With a basic pay of SGD $2,100, will you be able to apply for credit card in such a case? Or you have already applied for whatever credit cards you need before you embark on starting your own biz?

Thanks and best regards

Hi Ice-Man88,
banks do NOT look at my salary alone. They treat me as self-employed and will look at income based on my tax assessment for last 2 years.

So dividends received by me from my own company is also included as income (probably at 50% of actual dividends received)...similarly for any rental income a person has, also included at 50% of actual rental received.

So I have no problem applying credit cards, in fact, I don't need to apply, sometimes banks would just offer him and ask if I like to accept.

But any person self-employed for less than 2 years would have a hard time getting any Housing Loan, as banks require min 2 years of Tax Assessment for self-emloyed.

Post by **Dennis Ng** » Tue Jul 05, 2011 3:59 pm

kklok wrote:Hi Ice-Man88,

I think no issue at all as long as you can show the bank that you have money in your account. Some bank just need a Fixed Deposit collateral of minimum S$10,000.

Cheers
KK

Hi kklok,

I will never consider having to pledge money to get Credit Card, and I'm never required to do so.

jfoo2 · Post by **jfoo2** » Tue Jul 05, 2011 5:06 pm

Is dividends, director fees tax free or subject to 8.5% tax rate?

Post by **Dennis Ng** » Tue Jul 05, 2011 5:10 pm

jfoo2 wrote:Is dividends, director fees tax free or subject to 8.5% tax rate?

Hi jfoo2,
pte companies enjoy lower tax rate of 8.5% tax for profits up to S$300,000. When company declares dividends, already paid tax, no tax payable. Directors NO need to pay personal income tax on dividends.

If company declares directors' fee, directors have to pay Personal Income tax on directors' fees received.

Directors' fees is part of company's expenses. While dividends is part of company's Net Profits, after deducting expenses.

Increasing Financial Knowledge, including tax knowledge, can indeed help a person get Richer.

jfoo2 · Post by **jfoo2** » Tue Jul 05, 2011 5:22 pm

Hi Dennis,

Thanks for your reply. I asked because I started a sole proprietorship doing Internet Marketing and looking at learning how to minimize my income tax through the setup of PTE LTD.

If I can do it again, I will try to take an accounting degree instead, as it is so useful.

Post by **Dennis Ng** » Tue Jul 05, 2011 5:29 pm

jfoo2 wrote:Hi Dennis,

Thanks for your reply. I asked because I started a sole proprietorship doing Internet Marketing and looking at learning how to minimize my income tax through the setup of PTE LTD.

If I can do it again, I will try to take an accounting degree instead, as it is so useful.

Hi jfoo2,
yes, in Accountancy, we also learn about Contract Law, Business Law and Common Law, so we have better legal knowledge than most people.

Sole Proprietorship and the owner is just 1 entity, while a Pte Limited is a Legal Entity of its own, separate from the shareholders.

andy chan · Post by **andy chan** » Tue Jul 05, 2011 9:36 pm

I have always been interested to know how is it that biz owners can make money by paying less tax.
When I attended the course and Dennis simplified everything I was like

.
A real eye opener and very good education. I am sure there is more details to it but the general terms of what Dennis is already amazing.
Will try to emulate what Dennis is doing after I make my money from stocks.

It's all in the law and everything is legal.
Increasing our knowledge and applying it is really profitable.

prospered · Post by **prospered** » Tue Jul 05, 2011 11:17 pm

Hi Dennis,
ref your reply on tax saving, would like to verify if my understanding is correct:

1) for someone who is holding on to a full time job, I can actually register a pte ltd for tax reduction. By charging my daily transport expenses as business expenses, I can get tax reduction. Is this considered legal?

2) from accounting point of view, is it ok to have business expenses yet zero revenue?

Thanks

Post by **Dennis Ng** » Tue Jul 05, 2011 11:49 pm

prospered wrote:Hi Dennis,
ref your reply on tax saving, would like to verify if my understanding is correct:

1) for someone who is holding on to a full time job, I can actually register a pte ltd for tax reduction. By charging my daily transport expenses as business expenses, I can get tax reduction. Is this considered legal?

2) from accounting point of view, is it ok to have business expenses yet zero revenue?

Thanks

Hi prospered,
what is your business? If you set up a business purely for tax deduction, it is deemed Tax Evasion. Tax Evasion is illegal and you might even end up in jail.

One must differentiate business expense and personal expense, I do NOT charge any personal expense to my business, again doing so is considered tax evasion and is illegal.

Do NOT do anything illegal in Singapore.

In the first page of my seminar notes for Secrets to Making Money in Stocks Seminar, I share it is important to make money scrupulously, hope all seminar graduates do so. Never do anything that may be unscrupulous in one way or another.