Certainly, everyone would love more benefits to help tide through the difficult times, especially the middle income earners, whom many have lost their higher paying jobs to younger or foreign employees. Realistically, we have to know what we have and look ahead at how we can benefit beyond what’s directly given to us via rebates, grants or subsidies.

Employment Opportunities

Some 18,000 public sector jobs will be created. For those who have lost their jobs and recent batch of graduates searching for jobs now have more options. Mothers who may have given up their jobs to take care of children may have the option of returning to the workforce via public sector jobs.

The increased spending in Public Sector Infrastructure, development of suburban towns, sustainable development (clean energy, green transport, greening of living spaces), education and healthcare infrastructure spending also provides indirect employment for Singaporeans in these sectors.

Expenditure related to innovation is also expected to create jobs in strategic economic growth areas in Media and Digital Entertainment (MDE) as well as R&D in various high value-add industries like life-sciences and technology.

Other enhancements to current schemes for Skills Upgrading or Training, also means that more people get to keep their jobs by working less hours on Flexible Working arrangements. For those who lost their jobs, may also choose to use this time to upgrade their skills and employability, or even explore anticipated growth in the Hospitality, MDE industries and R&D roles.

Help for Lower Wage Earners

The Job Credit Scheme extended to businesses in expected to relief business owners and help save jobs for lower income earners, as it gives a 12% cash grant on the first $2,500 of an employee’s ordinary wages (not including bonuses. For income earners of less than $1,500 per month, qualifying under Workfare Income Supplement (WIS), will also receive 50% more.

For lower-income households renting, an additional month of HDB rental rebate has also been given.

Help for the Vulnerable Group

Financial Assistance for Education in the form of Short-Term Study Assistance Scheme and enhanced existing schemes will ensure that education opportunities are available for everyone. The Public Transport Fund will make available more vouchers for those who qualify (not more than $1,800 pm household income). Increases for the Public Assistance Rate and Singapore Allowance targeting at single-person households and government pensioners will receive $30 and $20 more each month respectively.

Additional funding, grants, benefits and indirect tax deductions to CCCs, ComCare, Self-Help groups and other Voluntary Welfare Organisations (VWOs) should also enable more assistance to be given to the vulnerable.

Helping Hand for Families

The doubling of GST Credits and Senior Citizens’ bonus, means that Senior Citizens staying in one or two room flats can receive as much as $1,000 and the average

Additional rebates for service and conservancy, property tax, income tax, Utilities-Save etc amount to over a thousand for most households.

For personal income taxes, you will be happy to hear that there will be a 20% rebate with a $2,000 rebate ceiling. To qualify for a full $2,000 rebate your taxable income will have to be $116,200.

Find out how much you can get by clicking the link below:

Home-Seekers

For young people thinking of starting a family, there’s great news. The additional CPF Housing Grant has been increased by another $10,000 and the income ceiling to qualify for the grant increased from $4,000 to $5,000. This means that a couple with a combined income of not more than $10,000 can now qualify for the CPF Grant.

As we pull through this period, likely to be the worst global economic decline in 60 years, let’s be thankful for whatever aid that is available but take control of our own situation, and position ourselves for growth. Opportunities are still abound if you are positive and know where to look.

Three significant changes have a lasting impact on how Financial Planning will be conducted in the future.

1. Migration of cheaper labour limiting Income Growth, threatening jobs.
2. Increasing Healthcare costs and Greying Population
3. Shorter Business Cycles due to Fast Government Intervention

This calls for a paradigm shift in traditional thinking about Financial Planning and Advising, in order to exploit the situation rather than be a victim to it.

Job Insecurity

Job Insecurity will be a certainty, with economic restructuring as a result of competition. Especially with globalization occurring at such a fast pace, one cannot assume that his job is secure or his skill is relevant in the years to come.

On a personal level, people have to constantly upgrade their skill-set to remain employable. As for financial planning, the first thing is to keep (1) an emergency fund that can last 6-12 months of expenses and (2) an opportunity fund, so as to invest in crisis in shorter business cycles.

Secondly, when implementing insurance plans, build in flexibilities to reduce monthly contributions, or even stop for a while when retrenched. This is crucial to maintain insurance coverage, as cost of healthcare is very high and rising.

Thirdly, consider building multiple streams of income, so that the dependence on employment income can be reduced over time, there is less anxiety when retrenchment comes and there is cash flow available for investing when everyone else is selling.

How can you build Multiple Streams of Income? Preview it here.

Investing Strategy – Manage Risks and Leverage

With shorter financial market cycles, there are opportunities for active asset allocation and application of leverage.

As the market rises and consequently over-heat, gradually reduce risk by moving to safer assets and reduce leverage. At appropriate troughs of the economy, gradually increase risk and employ controlled leverage based on your ability to sustain interest payments via cash flow (possibly from alternative sources).

While traditional buy-hold-rebalance according to Risk Profile, would still work on the long run, in the short run, the volatility as seen recently can easily shake the confidence of “long-term” investors with low tolerance to volatility.

Investors that do not use leverage to their benefit will also lose out to those who can appreciate the fine art of managing Good Debt.

Implication to Financial Advisers

• Build in flexibility in protection and accumulation plans, otherwise clients may have to give up their plans half-way.
• Help them build MSI through various means; this ensures they can continue their financial plans in case they lose jobs.
• Learn to advise on the use of leverage, and understand investing better, relating to the different phases of the business cycle.