The new get-rich rules

SO WHAT IF THE economy looks like it's on the brink of another downturn?

Because this could jolly well be the year that you start your journey towards amassing an abundance of wealth.

How?

Here's the plan: an easy financial tune-up that will save you plenty of cash, and smart investment tactics to help you make loads more.

SEE WHAT YOUR BANK IS HIDING FROM YOU

Start your tune-up at where you keep by what you find.

Most recently, a technical glitch at HSBC caused its customers to be charged more than they had actually spent. Although some discrepancies were significant enough to be spotted easily, others were not.

Some banks also charge miscellaneous fees that you may not be aware of. And if you don't examine your bank statements regularly, you could miss them entirely.

Take action if you see something you don't like.

"Some institutions will throw in a freebie as a form of service recovery for mistakes they've made, or even drop monthly fees if you make certain adjustments to the way you bank," says Greg McBride, a senior banking financial analyst.

SLASH YOUR MOBILE BILLS 

Eighty per cent of mobile phone users overpay for service, says Schwark Satyavolu, co-founder of Billshrink.com (a website that analyses how you spend your money and advises you on how to save).

Not by just cents, either, but by an average of $200 a year. If you're not wedded to the latest phone - can you live without an iPhone 4S? - a no contract plan will probably save you big.

You can get unlimited phone, texting and surfing the Net for roughly $40 a month. If you can't abandon your gadget, you can at least save on texting by using free apps like Textplus, IMO and Textnow.

And don't rule out prepaid - if you're either a very light or very heavy (unlimited) user, this may be the best option for you.

Next, call your service provider. Let the company know that you've seen its competitor's ads and you're thinking about switching if you don't get a better offer. More often than not, the rep will pony up a "special promotion" to save you some bucks.

INTERROGATE YOUR CREDIT CARD 

We can never stress this enough: As long as you have credit card debt, you'll never get rich. It's a simple truth. Accept it, then do something about it.

The problem isn't really the amount you owe, but what it's standing in the way of: a downpayment on a property, your ability to invest in stocks with good ROI, a rainy day savings account.

And don't just transfer your debt from one low-rate card to the next. Eliminate it!

Take out a low-interest personal loan to clear all your credit card debts, and work to pay off that loan as quickly as possible without incurring new debt on your cards (meaning, don't even use them).

BADGER YOUR BOSS 

Okay, now that you're losing less money, it's time to bring in more.

Here's what not to do: March into your boss's office and declare: "If you won't pay me what I'm worth, I'll find a company that will."

Instead, lay the groundwork now for a big raise next year, says Deborah Kolb, a negotiation consultant.

Start by periodically reminding your boss how much you do - just drop it in the conversation.

Next, schedule a series of quick meetings to update him on the projects you're working on. Finally, six months before the next round of raises, meet with him formally.

Tell him exactly what you believe you're worth, Kolb says. Then ask him for a six-month plan, with specific goals, to take you there.

PLAY THE MARKET LIKE A PRO 

These smart investment tactics will ensure that looking at your bank balance puts a smile on your face.

Mix the risk Spread your investments across two or more funds in different sectors to guard against a single investment underperforming, says Darius McDermott, a financial analyst.

Play the long game

Smarter investors opt for drip-feed schemes known as "dollar cost averaging", where you buy "units" on a month-bymonth basis. It removes the need for a big lump sum and has good returns in volatile markets.

Watch and learn

Review your investment by comparing it every six months against a benchmark such as the STI index, says Ben Yeardsley, an international funds and wealth manager.

READ THE ESTATE SECTION 

Many Singaporeans have become instant millionaires over the past decade through real estate. But there's really no telling when the bubble may pop, given that the economy may be heading for a downturn. Yet, none of this matters.

It's still a smart investment for two reasons: First, every payment you make builds equity in the property - it's like putting money in a savings account (unlike paying for your car, which is a depreciating asset).

And, second, interest rates on housing loans are currently very low. Combine these two factors and the "real" monthly cost is half of what It seems. If the house rises in value quickly, that's icing on the cake.

What lies ahead for SMEs

SINGAPORE: Caution ahead! The sign seems to what most small and medium enterprises (SMEs) in Singapore see on the horizon.

The findings of the 9th annual SME Development Survey which were shared during a conference co-sponsored by HSBC Singapore, indicated that SMEs seem more aware of the potential for another downturn and the need for financial strength.

Ms Ong Siew Kim, general manager of DP Information Group, however noted that despite the low confidence level that impacted overseas expansion, SMEs should push beyond the familiarity of the local market to seize opportunities presented by regional as well as global markets as part of their overall long term strategy.

Other findings revealed – plans to freeze new hire in the year ahead, with the proportion of SMEs reducing human capital in the year ahead doubling, as opposed to the 2010 increase in hiring activities. The report further reveals that fewer SMEs are looking to invest in staff training and development. The conclusion is backed by WDA’s training scheme Skills Programme for Upgrading and Resilience (SPUR) in November 2010 which has seen SMEs’ investment in staff training take a backset.

The survey conducted between May and August this year among some 2,504 SMEs also found that only those in the information & communications sector plan to invest in staff training, while more companies in general, intend to employ higher skilled workers as part of their manpower strategies.

Given that budgets for technology innovation and staff training are being reduced, the survey also found that expansionary expenditure like branding and advertising strategies are less important.

Caught in a lower income trap

MADAM Koh Ting Guat’s bedridden husband needs to be hooked up to an oxygen
machine to help him breathe.

She changes the ventilator tubes once a week, instead of the prescribed every
three days. That way, she reckons, the $5 pack of 50 tubes will last longer.

Such cutting of corners is not out of meanness but a lack of means.

A year ago, they were getting by as a middle-income family. She earns $2,800
a month as a shipping executive and her husband made $1,500 as a salesman.

But life threw them a curveball when he suffered a stroke, leaving him bedridden.

These days, the family makes do on her salary, with little left after paying for
their two sons’ school expenses, her husband’s medical bills, the wages of a Filipino
caregiver, utilities, transport and food.

The family has fallen into that sandwich class of low-middle income Singaporeans
who keep Acting Minister for Community Development, Youth and Sports
Chan Chun Sing awake at night.

In a media interview last week, he said that this group tend to be in jobs that are
vulnerable to being lost in the churn of economic cycles. They also tend to have
little savings to cushion the impact.

He identified them as being in the 11th to 20th percentile in terms of resident
household income, making an average of $2,681 a month. These are headed by a citizen or permanent resident, and with at least one working person.

Another set of figures, measuring individual incomes of Singaporeans, is sobering.

A joint report by the Manpower Ministry and the Department of Statistics
showed that monthly real incomes of Singaporeans at the 20th percentile grew 0.3
per cent over the decade – almost zero per cent a year.

In contrast, those in the middle saw real monthly incomes rise 1.2 per cent a
year over the same period, or 11.3 per cent over the decade.

Who are in this low-middle income group and how can they be helped?

Figures culled from various agencies show them to be mainly made up of large
families with school-going children, with the parents aged between 40 and 50. One
parent may have been recently retrenched, or they may be burdened by
heavy medical bills or in some cases, marital woes have added to their troubles.

Some may benefit from the Workfare Income Supplement Scheme, if they are
aged 35 and above and have gross monthly incomes of $1,700 or less, among other
conditions.

But apart from Ministry of Community Development, Youth and Sports
(MCYS) programmes to help with childcare costs and taking care of elderly parents,
little other help is available as they fall outside social assistance nets.

Government schemes such as Com- Care Transitions and the Work Support
Programme disqualify households with incomes above $1,500.

Those in the 1st to 10th percentile – with average monthly household incomes
of $1,400 – would qualify for benefits such as cash grants and utilities vouchers
under these programmes.

The “at risk” group in the 11th to 20th percentile, Mr Chan pointed out, form a
significant portion of the bottom third of the population. About 377,400 employed
residents aged 15 years and above earn between $2,000 and $2,999, according to labour statistics last year.

And, the minister feels, this group’s meagre savings – not more than a few
thousand dollars usually – mean they are on a dangerous keel in an increasingly uncertain global economy where a recession might be around the corner.

“You think I have savings now? If strike lottery tomorrow, yes,” said Madam
Koh.

She is thinking of taking on a second job to supplement her income. In the
meantime, scrimping and saving is all she can do. She is cutting back even on treatments for her husband.

Acupuncture treatments, for example, have been cut from thrice to twice weekly, saving $100.

“If a downturn really happens, I might have to sell this flat and move in with my
parents in Pasir Ris,” said Madam Koh of their four-room Sengkang flat.

Like many in their bracket, she and herhusband have only secondary education.
Singaporeans in this rung hold jobs such as technicians, security guards and in the service industry.

Top of their wish-lists: financial help from the Government when they hit dire
straits, or utility and transport vouchers, especially if a downturn occurs.

For Mr S. Ahmad, 55, his household is “already in a recession”.

A diabetic, he was a freelance travel agent earning about $1,000 a month until
June last year, when his right foot suddenly became swollen. He has been going for operations and follow-up treatment since. After insurance claims and government subsidies, he still has had to paymore than $10,000 in medical bills.

Now, his 25-year-old son, an optometrist earning about $2,500 monthly, is the
family’s sole breadwinner.

Adding further strain on Mr Ahmad’s finances are a $680 monthly housing loan instalment and another two young children who are still in school.

And as Mr Ahmad did not have the $1,000 advance to pay for a machine to
vacuum the pus from his foot last year, the infection spread upwards to his knee.

More medical treatments, bills and stress followed.

“I just have to borrow money from friends, what can I do?” he said resignedly in an interview in his Pasir Ris flat.

“I’m just living by the day.”

His 53-year-old housewife may resort to making kueh and selling it from home to raise funds, he said.

Another Singaporean trying to make ends meet is Mr Haron Ajit, 51.

He was a logistics supervisor until he suffered a stroke in June. His 21-year-old daughter is now the family’s sole breadwinner,earning about $2,500 from her nursing job. He has two sons – one in Secondary 4 and the other in Primary 1.

Mr Haron said: “We’re financially very tight now because of my condition.”

Apart from help to deal with medical expenses, social workers say some in the
low-middle income group also seek assistance for family problems like divorce, or after they lose their jobs.

Mr Hindran Maniam, a counsellor at Rotary Family Service Centre in Clementi,said: “They ask for counselling for problems like family violence, taking care of elderly parents, or communication issues with children.”

One middle-income wife, for instance,went for counselling at Fei Yue Family
Service Centre in Yew Tee after she discovered her husband had an affair. She was contemplating divorce, but was held back by fear that it would affect the household income.

Retrenchments are not a problem yet but Ms Florence Lim, the director of Covenant
Family Service Centre in Hougang,expects such cases to surface if the global economy drags Singapore down.

Industry veterans say the best way to help the low-middle income group is to raise
the upper limit for ComCare programmes to about $2,000 to $2,500.

This would open up qualifying for more benefits such as medical assistance,rental and utilities vouchers, and monthly cash grants.

Ms Lim, a social worker for three decades,said: “Why not also look at their net income after Central Provident Fund deductions,rather than gross household income,in deciding eligibility?”

This would widen the pool of those eligible,especially with rising living costs.

The Government could give slightly smaller ComCare subsidies to the low-middle income bracket compared to those at the bottom rung, Ms Rachel Lee, head of Fei Yue Family Service Centre and a social worker for 19 years, mooted.

Getting these workers to upgrade their skills so they can get jobs that are less susceptible to being wiped out by economic cycles was another popular suggestion,
but there are problems with that route.

“These people need money from work. Who’s going to feed their families when they go for training for those few months?” said Ms Lim.

She said CDCs do give a few hundred dollars a month to help these individuals during say the quantum should be higher.

Short-term assistance for about threemonths to help them tide over a difficult situation would also work well, said North East District Mayor Teo Ser Luck.

Mr Teo, whose district has been helping residents who do not qualify for Com-Care through its local scheme, said: “You have to be there when they need you.

That’s what this safety net is about – covering the cracks.”