Portfolio Management, Retirement, and Financial Security in Old Age

Galaxy Private Wealth Advisory’s Approach to Portfolio Management for Retirement

Question 1

Galaxy Private Wealth Advisory is one of the leading Independent Financial Adviser (IFA) firms in Singapore, with one of the most comprehensive business platforms and a highly qualified team of advisers committed to helping clients achieve their desired retirement through investments.

To help attract high net worth clients, Dylan Deng, the head of in-house investment research, developed a proprietary asset allocation strategy based on in-house projections of the expected performance of the various funds over the next 5 years. The recommended proprietary portfolios are shown in the table below:

Dylan proposes that the most appropriate portfolio should be recommended to clients given their unique risk and return objectives. Once implemented, each client’s portfolio will need to be reviewed every 3 months to analyse performance and to determine whether or not any changes to the strategic asset allocation should be made. If the client feels uncomfortable with the current target mix, an alternative portfolio may be chosen from one of the recommended portfolios. If the client feels comfortable with the current asset allocation, then the next review will be scheduled 3 months in the future.

Demonstrate the strengths and weaknesses of Galaxy Private Wealth Advisory’s approach, developed to manage client portfolios for retirement

Question 2

George Goh, aged 29, has been working as a private hire driver for the past 2 years. He has been relatively happy with his job as it offers him flexible working hours and a decent, though irregular, income. In addition, he can decide when to work hard or simply have some me-time by adjusting his driving hours on the road. George has been dating his current girlfriend, Kerine Koh, for 2 years and they have plans to get married in the next 2 years. Instead of planning for an elaborate wedding, they intend to use their savings in the next 2 years as down-payment for their 1st home. Other than the savings intended for his wedding, George has no other savings and has not given any thought to planning for retirement.

All seemed well till the emergence of the corona virus, COVID-19. George’s livelihood was seriously affected with tourism in Singapore coming to a complete standstill and the implementation of the circuit-breaker, where it was mandatory for employees of non-essential services and businesses to work from home. It was a time where very few people needed to travel anywhere and George could barely get more than 5 customers per day. All of a sudden, George’s wedding plans and plans for the future needed to be put on hold indefinitely.

In view of the impact of COVID-19 on George, formulate practical strategies for George, which when implemented, may ensure his financial security in old age. 

Question 3

(a) Terence Tan, aged 36, earned a monthly salary of $6,500. He received a total additional wages of $50,000 in 2019. Calculate Terence’s employer and employee CPF contribution payable on his additional wages. 

(b) Due to Covid-19, Terence received a 25% pay-cut in 2020 starting from January 2020. His employer however has promised him a higher additional wage component if the situation turns around in the latter half of the year. Hence, Terence expects to receive additional wages of $60,000 in 2020. Calculate Terence’s employer and employee CPF contribution payable on his additional wages if this is realised. 

(c) Tabatha, aged 33, is Terence’s wife and teaches tuition on a freelance basis. Her total income for 2019 was $29,000. Examine and calculate her CPF obligations as a selfemployed person for the year 2019.