Singapore ranks as one of the most expensive cities in the world to live and work in, and the cost of living only keeps rising. This trend will likely continue as Singapore offers an excellent standard of living for expats fortunate enough to work and live there.
Singapore also offers stability and security for expats and their families, which few other places in the world can match. It has world-class health facilities and quality schools that offer different choices for parents.
Singapore's downside is that it is small, and the expensive cost of living can make it hard to save while you are there. However, Singapore offers world-class banking and investment solutions and has a tax system that is fair and not too high compared to other similar countries.
One of the other negative factors about life in Singapore for most expats is the high-pressure work environment. This is part of the culture of Singapore and can often lead to stress, poor health, and 'burnout' if not careful.
Singapore can be a real financial benefit to most expats and offer a great quality of life if well managed. However, this does not come without careful financial planning, as it is important to understand that for nearly all expats, their time in Singapore will be finite.
Every Expat is Unique
This may sound cliché, but the reality is that we are all unique. Singapore is a melting pot of different cultures, nationalities, and religions. This means our financial situations and goals will also differ, meaning specialist financial advice must be considered to account for each person's different circumstances.
Considering this, we need to consider what solutions and products best meet our unique circumstances. Will these be local Singaporean products, or would we be better off with international solutions or solutions from the country where we intend to retire?
This is a complex area in which you cannot find easy answers on Google, and ideally, it is worth investing in a coaching session with an independent financial advisor (IFA). In Singapore, it is crucial to understand that most financial products, like savings plans or insurance, are sold by "tied agents" working for one insurance company.
These tied agents are paid a commission for selling products, so it is unlikely that the products they offer will achieve the financial goals expats have in Singapore in the short or long term. These products are also very unlikely to be the best solution for an expat, as when you leave Singapore and need to stop or cash them in, you are likely to have high exit charges.
What is the solution?
Once we understand that we are all unique and our time in Singapore is finite, we can understand why, for most expats, booking a session with an IFA is money well spent. Picking a suitable IFA can be an issue, and there are various factors to consider:
Does he/she have the knowledge, qualifications, and experience to understand your unique circumstances?
Can he/she provide references to clients like you who have benefitted from his/her services?
Does your IFA have the personal characteristics to make you feel comfortable dealing with them? Ideally, you may want this to be a long-term relationship where you can discuss your financial journey with them from time to time.
How can an IFA provide you with value for money in Singapore and later in life?
While Singapore is an attractive destination for investing, saving, and banking, these products may not be the best solution for an expat with a finite time in the country.
Even though tax is reasonable in Singapore, expats may have better tax planning opportunities based on where they intend to work next and when they retire. Without being able to discuss this with an IFA who understands your situation, including future financial plans, you will likely miss out on these tax planning opportunities.
With the world changing rapidly, working in a high-paced, stressful environment makes it challenging to find time to manage your investments to get the optimum benefit from them.
Are your existing investments best placed to benefit from the new opportunities created by technology, AI, and crypto, and are these investments suitable for you?
Suppose you are nearing the end of your time in Singapore and getting towards retirement. Have you positioned your investments to reduce risk yet still generate the returns you need to ensure you have enough income in retirement?
Summary
With Singapore being well-regulated, almost all expats will likely be well-covered with life and medical insurance. Areas that are often neglected include things like writing a Will and managing assets outside of Singapore.
Ensuring you have a Will while living in Singapore is critical, and discussing this with an IFA who understands your goals and future plans is also critical to ensuring your Will is done correctly.
Ultimately, for almost all expats in Singapore, our time will be temporary, as only some of us will retire there. Chatting with an IFA who understands the opportunities and issues expats face in Singapore, plus understands your longer-term goals and can relate to them through qualifications and experience, will be key for most expats in setting up the plans that will give them the most significant benefit.
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