Capricorn effect, Golden Agriculture, CapitaMalls Asia, Raffles Education and Saizen REIT.

The mountain trekking herbivore did not disappoint as it showed its presence today, sending the STI up by 1.4%. Stock markets in Europe are also higher. "The biggest Asian markets closed higher, as investor confidence was boosted by signs that China's efforts at keeping a lid on inflation may be working....Hong Kong's Hang Seng index rose 400.60 points, or 1.7 percent, to close at 23,436.05, while the South Korean Kospi rose 19.08 points, or 0.9 percent, to finish at 2,070.80." Read article here.

Golden Agriculture moved higher to close at 82c today. Volume although higher is still quite modest. Nonetheless, the bullish crossover on the MACD, breaking out of its downtrend, is encouraging.  The OBV shows continual accumulation while the RSI shows positive momentum.  The MFI, however, has declined below 50%.  MFI is a function of price and volume and the decline reinforces the picture of negative divergence. Support for Golden Agriculture is now a band between 78c to 80c.

CapitaMalls Asia retreated from $1.95 where we find the downtrend resistance line. The counter's downtrend is intact. At the closing price of $1.91, it is supported by the 20dMA. If the support at the 20dMA were to be compromised, the low of $1.83 would be critical as a measure of whether the counter could reverse from its downtrend or go lower. I would keep an eye on the MFI. With a reduction in price and/or volume, the MFI could retest its support.

Raffles Education is rebounding in earnest. The MACD broke out of its downtrend and is rising while the MFI and RSI show positive momentum. OBV shows accumulation. Immediate resistance at 26c.  This is followed by 26.5 which is where we find the declining 50dMA. The most formidable resistance is probably provided by the 100dMA which is at 27.5c. The last time price tested the 100dMA was on 21 Sep 2010. For anyone looking to reduce exposure, selling at resistance in a downtrend is conventional wisdom.

Saizen REIT saw some buying up activity today. Volume achieved was the highest in 3 months on a white candle day. The MACD shows that momentum is positive and improving. OBV shows gradual accumulation. Immediate resistance is at 17c while 17.5c is the top of a basing process that started in April 2010. We could experience strong resistance at 17.5c if ever tested. With the next distribution in March 2011 and probable positive catalyst from the refinancing of YK Shintoku, there is more upside potential for this REIT.

STI rises 1.4% to 3,235.77 at closing.

First Real Estate Investment Trust jumped 2.1% to 72 cents, a four-week high. Singapore’s first health-care property trust said it completed the purchase of two Indonesian medical centers, boosting assets under management to $612.8 million. It said it’s aiming for a $1 billion portfolio in two to three years.

Monday, 03 January 2011

© 2011 - The Edge Singapore

SRS: E-book and a brief analysis.

UPDATE (YA 2018):
Taxpayers who make SRS contributions on or after 1 Jan 2017 should note that the overall personal income tax relief cap of $80,000 applies from YA 2018 (when the income earned in 2017 is assessed to tax).
Read: SRS INCOME TAX RELIEF.
Feb 16, 2017
See examples:
https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals--Reliefs--Expenses--Donations-/#title7



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SRS e-book

Recently, I came across a couple of blogs talking about the Supplementary Retirement Scheme (SRS). 

Over the years, whenever I talked about how I started an SRS account from the time the scheme was introduced in 2001, listeners would be incredulous. I was only 30 years old in 2001. To me, the tax benefit was too obvious to be ignored. Since 2001, I have contributed to my SRS account up to the maximum sum allowed yearly.




In a blog post on 24 Dec 2009, I mentioned that "As long as a person is paying income tax, he should start an SRS account and contribute to it yearly so that he pays less income tax (or none at all). For me, it's that simple." 

Well, it might be that simple for me but for people with many financial commitments, it might not be so. For these people, they might not have much money leftover after taking care of all their routine expenses. So, voluntary contributions to the SRS account could be difficult.

Having said this, as long as we are paying income tax, voluntary contributions to our SRS accounts should be viewed as an important part of planning for our retirement. We should try to include it in our retirement planning.






Voluntary cash contributions to the SRS account are eligible for tax relief. For some, contributing just a few thousand dollars a year could mean not having to pay any income tax. So, there is no need to contribute the maximum of S$11,475 per annum. This is the maximum allowed for Singaporeans and PRs.

Therefore, I would suggest that we look at how much of our income is taxable and to contribute to the SRS account sufficiently to become free from income tax. After all, funds in the SRS account should not be withdrawn till the statutory retirement age to avoid penalties. So, cash in hand is still better than being in the SRS account.




Of course, if our taxable income is much higher, contributing the maximum sum allowed would save us much in income tax although it might not mean being free from income tax. How much to contribute, if ability allows, therefore, depends on individual income levels.

Money in the SRS account could be used to invest for higher returns. Examples are fixed deposits, single premium insurance policies, shares, REITs, ETFs and unit trusts. SRS funds cannot be used for purchasing real estate, for example.







Upon reaching the statutory retirement age of 62, if we had been making regular contributions and investing prudently, money in our SRS accounts could be an important part of our retirement income. 50% of the funds withdrawn upon retirement would be subject to income tax. If we keep our yearly withdrawal within the non-taxable bracket which I believe is $20K, we would not even have to pay any income tax.

So, theoretically, if we had $200K or less in our SRS accounts by the time we retire, withdrawals could be non-taxable. Withdrawing the funds in ten equal portions over a period of ten years would lower the income tax payable if we had more than $200K in our SRS accounts by the time we retire.

For anyone paying income tax yearly and still wondering if the SRS is necessary, do consider the points I have made in this blog post. Financial security in our old age is one of the most important things we have to plan for in life.




UPDATE (18 July 2014):
The maximum contribution allowed for the SRS account now is $12,750 per annum.

NEW: From 2016, max contribution is $15,300.

Read Supplementary Retirement Scheme.
Updated Booklet on the SRS: HERE.

From the FAQ section on SRS in MOF's website.

Update:
"... the caps on contributions to the Supplementary Retirement Scheme will also be raised to $15,300 for Singapore citizens and permanent residents and $35,700 for foreigners."Source: The Straits Times, 23 Feb 15.

Related post: Double your income, not your income tax.

A movie: Pirates of the Caribbean 4.

I just came across this. When I watched part 3, I was wondering if there would be a part 4. I enjoyed all three parts so far and Johnny Depp is one of the best actors around. He is Captain Jack Sparrow.  I cannot imagine anyone else in the role. Part 4, I will have to watch. Enjoy the trailer: