Saturday, 21 April 2018

Are Instagram Influencers Peddling Dubious Investments?

(These investment schemes were alerted to me by some of my readers, who requested for this blog post to be written for greater awareness and that hopefully, this reaches and helps to inform more people.)

Is it legal, or ethical, for influencers to peddle and push out investment schemes in Singapore?

I've been seeing Instagram influencers pushing out investment opportunities, promoting it to their followers and asking them to direct message them for more details. As a bystander, what more a blogger who writes about personal finance, this makes me extremely uncomfortable.

Case #1: Forex Investment with capital guaranteed
+ 24% fixed returns!

Let's look at this forex investment case which a reader came to ask me about because she was keen on investing (yep, she got "influenced"). I gave her my honest opinion, which was that forex is highly volatile and extremely difficult to guarantee profits all the time, while also sharing about how most people get burnt in the forex markets (including my own dad).

A local influencer with over 100,000 followers (whose name will be unfamiliar to you guys here in Singapore, but I shall not name her) peddled this on her Instagram stories (where it disappears after 24 hours) a few months ago, and this was the exchange that took place with a reader who DM-ed her to find out more. I reproduce parts of the exchange here:

Look, I trust people I know and whom I can hold accountable if anything goes wrong.

But even if you trust an influencer (such as this recent influencer who got exposed by her client) just because you've been following her Instagram for some time, WHY WOULD YOU PARK YOUR INVESTMENT WITH AN INFLUENCER WHOM YOU DON'T EVEN KNOW PERSONALLY?!?

Do you know their address? Their full legal name and residence? If anything goes wrong and they go Missing-In-Action, how are you going to track them down? Are you simply going to file a police report based on their Instagram handle?

Just because they're famous on Instagram, does that mean you can give them your money just like that?!?

Also, note how the investment arrangement promises guaranteed capital and 24% in fixed returns.


The said influencer above eventually stopped the investment scheme because there was supposedly overwhelming demand. I can only hope those who invested with her don't live to regret it.

Case #2: Durian Investment

The one that's currently trending on Instagram is another local blogger who's currently peddling a durian investment scheme to her 100,000+ followers.

this one also, see this new GUARANTEED returns in DURIAN TREES YO!!!

She trusts her dad!

But why should you? Even if you trust this Rachell Tan whom you barely even know in real life, do you know her address, phone number, NRIC and what not, so that you can make a police report or track her down just in case anything goes wrong? Or that of her dad?

Also, trusting someone doesn't mean by extension, you trust the people they trust, whether or not they're family.

If you trust your favourite beauty blogger who's dating Joal, would you trust him?

If you trust DJ Jade Rasif, do you trust her dad?


Back to durians.

"You're set to receive $$$ sent to you via cheque every year...until 2068!"

(that's 50 years)

Wow. I'm invested in DBS stocks, which pays me dividends twice yearly and has been around since 1968, but even then DBS doesn't make promises like GUARANTEED RETURNS EVERY YEAR SENT TO YOU for the next 50 years!!!!!

Even the Singapore Savings Bonds, backed by our own government, makes no such guarantee for FIFTY years. Who knows what will happen in 50 years?!?! Do you have a crystal ball?!?!


She even tries to entice investors further by saying they can earn an "estimated SGD$44,000 PER SEEDLING"!!!!!!!!!!!!!!

Oh my goodness. Pay $1,796 for a seedling and get back $44,000?!?!? Tell me where do I sign up for this guaranteed investment!!!!!!!!


Apparently her followers are grateful to her and have made the investment... Folks, I hope you know what you're doing.


Someone tell me what does Instagram got to do with this durian investment. Creating FOMO by association fallacy (the illogical argument of irrelevant association which often appeals to emotion, suggesting that that qualities of one thing are inherently qualities of another).

To convince her followers that the investment is TOTALLY legitimate, she even shares photos of the plantation and the seedlings!


Rachell emphasizes small starting capital, low risk, long term returns + passive income...for the next 50 years!


Some concerned readers who were initially considering parking their investments with her (that is, until they saw my thoughts on the scheme yesterday on 19 April on my private Dayre) emailed me and requested for me to study the contract and investment documents that they were sent. I highlight the worrying portions here:


1. The contract makes the promise that the investor shall be paid a GUARANTEED RETURN.

2. You're signing a contract with a Malaysian company and the contract will be governed under Malaysia law. This means that if something happens to your investment, you can't fight your case out in the Singapore court.

3. Note that this guaranteed return, however, expires after FY 2023. That doesn't seem to gel with what Rachell said on her Instagram about receiving a cheque every year for the next 50 years?

4. Take note of the costs liable to you after the year 2023 if anything happens to your durian seedling. Also, you sign the contract agreeing that you cannot hold the company liable for any losses or damages due to uncontrollable factors in the next 50 years.

My readers have asked if this is legal and allowable by MAS here in Singapore. The truth is, I don't know, but I'd certainly love to hear from the Monetary Authority of Singapore (MAS) if it is legal to market such an investment scheme here in Singapore, particularly when the Singapore entity isn't even registered as an investment entity.

The last I checked, Mirach HP Management Pte Ltd is not even regulated to provide financial services (according to the MAS Financial Institutions Directory here).

5. The Singapore entity was only recently registered in March 2018, barely even a month ago.

Well, guess what? Since my original post broke on 19 April, the said influencer has taken to her Instagram to defend herself by stating that the money doesn't go to her account, and that there is a legit contract in place.

Look, even if there is a legitimate contract in place, that doesn't mean your money is safe. If the company folds, your contract is now invalid. Who will you go to for legal recourse? Your lawyer in Singapore? Wait, don't forget that your original contract alone was governed by Malaysia law, so you need to fight your case there. Good luck with that!

The other part that really made me laugh was the fact that the influencer herself doesn't seem to be able to know how to read. In my post telling people not to park their investment money with a blogger, I clearly referred to the influencer who told people to send money to her for her auto-forex trading investment scheme, not Rachell Tan.

But anyway, Rachell Tan makes it sound like she's genuinely recommending a solid investment opportunity to her readers because there's money to be made here, and she cares enough to share although she has nothing to gain from your investment!

(I'm not sure I can totally trust lifestyle influencers anymore, especially with all the flak in the past, not to mention the whole Elaine Jasmine saga that broke last weekend).

If Rachell really has nothing to gain from this, why would she put in so much effort into replying each of her followers DMs, and WHY is she sending out emails using Mirach's address?

I'll leave you to judge.

Do you think MAS needs to start regulating investment schemes / products promoted by influencers? Leave me a comment below!

With love,
Budget Babe

Friday, 13 April 2018

How to reduce your income tax in Singapore (make use of these tax reliefs and deductions!)

Back when I was still in my first job, my annual income tax was only about $200. This was based on a yearly income of $30,000, of which I saved $20,000 - read about how I did it here. (Nope, no bonuses either.)

I don't mind paying taxes as I understand and appreciate the fact that the money is channeled for the government to help the lower-income groups, as well as pay for other public goods such as our roads, education, etc.

But ever since I got headhunted to my second, and now third, job where I received a pay raise each time, my income taxes have jumped significantly and it has come to a point where I've been looking into (legal) ways to reduce paying so much. For context, my income tax jumped by over 10x, but my salary hasn't jumped 10x at all!

I've talked about how achieving financial freedom involves cutting down your expenses while looking for ways to increase your income at the same time. Income tax is definitely one area where you'd want to reduce, because Singapore's tiered income tax system is such that the more you earn, the higher percentage of taxes you'll have to pay.

For someone earning $30k a year, they only need to pay 2% of income tax, or $200.
If you earn $3,500 a month and get a 13-month bonus, you'll be looking at an annual tax of $935. If you're luckier and get more (eg. 3 months bonus), you can expect to pay $1,425.
But if you earn $80k annually (about $6k monthly with bonus), you'll be paying $3350.
If you earn $100k a year, you'll be paying over $5k...which could otherwise pay for a holiday to Europe!

While evading taxes is a crime, there are perfectly legal ways for you to reduce your income taxes. Here's some:

1. Top up your CPF account (and/or that of your parents).

I used to give my parents their monthly allowance in pure cash. However, ever since I found out about this hack, I've changed this to put the money as voluntary contributions to their CPF accounts instead. Given that my dad is already retired and my mum will soon be eligible to withdraw her funds, this approach makes a lot of sense to me as my parents still get their money, and I get to concurrently enjoy tax rebate for the same.

Since the maximum tax relief we can claim is $7000, you can also make voluntary top-ups to your CPF Special Account (SA) where it can earn attractive interest rates, and up your tax relief amount further to a maximum of $14,000.

Do it before the end of the year so you'll get the tax relief! I've blogged about this previously here as well.

2. Supplementary Retirement Scheme (SRS) relief.

If you've already maxed out your CPF tax reliefs, you can also make use of the SRS relief scheme to enjoy up to $15,300 of tax relief if you and/or your employer make contributions to your SRS account!

3. Donate to charity.

It (literally) pays to be kind!

I've always believed in contributing to charity to help those who are less well-off than us. After all, I come from a family whose parents couldn't even afford to send me to university, and I benefited from the university scholarship (generously funded by alumni) which allowed me to pursue my studies, so I'm extremely familiar with the struggles of not having enough money.

Because of my background, I have a soft spot towards donating to bursaries and other funds for needy students.

Aside from helping those who need it, the additional good news is, you can claim 250% in tax deductions based on the amount you donated!

4. Claim tax relief for supporting dependent or handicapped grandparents / parents / siblings / spouse.

If you have or parents, living with you who are older than 55 and earn no more than $4,000 annually, you can also claim up to $9,000 tax relief for supporting them (or up to $14,000 if they're handicapped, in which case the income requirement doesn't quite apply). But if you have siblings who are claiming for the same, you'll need to split that evenly with them. There are also tax reliefs if your grandparents stay with you.

Unfortunately this scheme doesn't apply to me since my mom is still working and my dad only just retired recently, so his annual income still exceeds $4000 for this year, but I'll be able to claim this soon next time!

If you're supporting a handicapped spouse or sibling, you can also claim up to $5,500 of tax relief.

5. For married spouses, claim NSman Self Relief.

Husbands can claim up to $5,000 if they're a key appointment holder (or up to $3,000 if they're not but served reservist), while their wives can claim $750 tax relief.

6. For parents, claim Parenthood Tax Rebate / Qualifying Child Relief / Working Mother's Child Relief / Foreign Maid Levy Relief

It seems like the government is really encouraging us to have kids, as they're giving out a lot of tax subsidies for those who do!

On your first child, you can claim $5,000 of Parenthood Tax Rebate. If you have 2 kids, add on another $10,000 for your second child. Or, if you're like my cousin with 3 children (or more), you can add on $20,000 more for each subsequent child! This works out to a significant total of $35,000 of tax rebates if you have 3 children and make the maximum claims for them!

Under the Qualifying Child Relief, you can also claim up to $4,000 per child if your offspring is younger than 16 years of age or studying full-time.
Tip: the spouse with the higher income should be the one claiming for this, as it could probably reduce his/her taxes by a larger margin!

For mothers who are working and handling dual roles (mad respect to you women), you can claim 15% of your earned income in tax reliefs for your first child, 20% for your second, and 25% for each child if you have 3 kids or more! Do note that the total cap for QCR and WMCR is $50,000 per child, but that's already a lot of tax deductions (and making me think twice about whether we should aim to have 2, or 3 kids!)

If you're hiring a domestic helper at home, you can also claim twice the amount of foreign maid levy paid for a maximum of one foreign maid last year against your earned income.

7. For landlords, claim tax deductions on rental expenses.

Saving up to 15% of your gross rent or actual rental expenses incurred can be quite significantly, while protecting your (somewhat) passive rental income earned!

Worked Example

Thus, by using the (applicable) methods above, a working mom (under 55 years old) who earns $6k a month with a 13-month bonus, yet has 2 children and lives with her retired parent who's helping to care for her kids, can get away with paying NO income tax, instead of the original $3,210!

*Assumes the following parameters:

That's a whopping $3,210 saved in taxes (which you can then use to fund a holiday abroad, or other expenses) as long as you make full use of the reliefs available!

(I haven't even factored in Parenthood Tax Rebate - which should be $25k in this worked example - and already this mom doesn't need to pay a single cent of taxes lol!)

And that, my dear, is how you can legally get away with paying ZERO taxes in Singapore.

As your income rises (the moment you get any pay raise, commissions or bonuses), you'll soon realise that your income taxes rise disproportionately and you could be paying a huge chunk if you aren't savvy about the various relief schemes available for you to tap on. Considering how much you'll have to pay otherwise, this is where saving on your taxes become increasingly important!

However, do also bear in mind that there is a cap of $80k on the amount of tax reliefs you can claim. You can also calculate your income taxes and reliefs here on the IRAS income tax calculator.

Looking at the schemes available, wouldn't it make sense for the husbands to be stay-at-home dads while the mothers go out to work? :P (since there isn't a working fathers child relief scheme). If you want to reduce your income taxes, having kids will definitely help!

At any rate, just don't try to avoid paying taxes as the Singapore government now considers that as a predicate to anti-money laundering! That involves personal and even criminal liability, so just be a good citizen and pay your income taxes. But be a smart citizen so you can get away with paying less, or even none at all ;)

Public Service Announcement (PSA): Remember to file your income taxes by April 18, 2018 :) and don't forget to make use of these tax reliefs and deductions that I've just shared!

With love,

Note: This post was written in conjunction with IRAS, and all infographics shared here are rightfully credited to them!