Category: Tax

The difference between CFD and futures trading in Singapore

trading possibilitiesBoth CFDs and futures trading are popular investment options among retail traders in Singapore. However, while they may appear to be quite similar in their description of the nature of trade being ‘off the exchange,’ there is one key difference between these two types of financial instruments that would influence your choice on which to use. When it comes to trading derivatives in Singapore, investors are spoilt for choice.

Futures and options, both modern investment instruments worldwide, are available here. However, if you’re new to the world of investing or trading financial securities like futures, you might be confused by the difference between these two derivatives types.

This article explains a contract for difference (CFD) and discusses its risks. It also looks at future contracts and how they differ from a CFD. The article then compares the two financial instruments before concluding with some concluding remarks on which instrument is better suited for an investor given his risk profile.

What is a contract for difference?

A contract difference is a type of derivative product based on the difference between an underlying asset price and its strike price at the point of expiry. For example, if you were to buy a CFD on Apple Inc. (AAPL) with a strike price of $100 per share and AAPL stocks subsequently traded above $110 at expiry, you would be paid the difference of $10 x 100 = $1000 by your broker even though you never actually took ownership of the stock.

If, however, AAPL shares traded below $90 by expiration, then there would be no payout to you as the contract has no value since the share traded is lower than its strike price.

As mentioned earlier, CFDs are derivatives, so there is always counterparty risk involved in trading them.

What is a futures contract?

The main difference between a CFD and a future contract is that the former does not have an expiry date while the latter has. It means there is no counterparty involved in trading futures contracts, unlike in a CFD where your broker is your counterparty.

As such, futures traders are only exposed to minimal risks. This transaction usually takes place on an exchange platform that acts as the intermediary for both parties, assuring performance and payment. It does result in much-reduced counterparty risk. One example of such exchanges would be Singapore Exchange (SGX).

What is the difference between a CFD and a future?

The main difference between a contract for difference and a future contract is that the former does not have an expiry date while the latter has. It means there is no counterparty involved in trading futures contracts, unlike in a CFD where your broker is your counterparty. As such, futures traders are only exposed to minimal risks. This transaction usually takes place on an exchange platform that acts as the intermediary for both parties, assuring performance and payment. It results in much-reduced counterparty risk. One example of such exchanges would be Singapore Exchange (SGX).

In Conclusion

We hope this article has helped you better understand the main differences between futures and CFD trading. If you are looking to trade either of these products, we recommend partnering with a reputable broker who can help guide your decisions as well as provide access to research tools that will make investing in either product more profitable for you.

Be sure not to invest without understanding all the risks associated with both these types of trades before committing any money or taking on debt from margin lending services offered by brokers. With proper education and guidance, there is no reason why anyone should be apprehensive about entering into one form of derivatives trading or another.

If you are interested in investing in CFDs or futures, check out Saxo Bank CFD.

How to Invest in Hedge Funds

equity fundsHedge mutual funds are a type of mutual fund that is structured as a private limited partnership. They are classified according to the securities they invest in and the tactics they use to manage them. Hedge funds are mainly recognized for their riskier investments, which attract wealthy investors looking for higher returns, and for those who are ready to accept bigger risks.

Hedge fund performance may assist to track the status of your investments, their risks, returns, etc. Continue to the blog to know everything about hedge funds and how you can invest in them.

What Are Hedge Funds?

Hedge funds pool money from investors and invest it in securities or other investments to make a profit out of them. Well, they are not subject to the same regulations as mutual funds. And, as a result, they have more freedom to explore investments and strategies that may raise the risk of losing money. Hedge funds are only available to wealthy investors. Investors can afford the higher fees and risks associated with investing in hedge funds.

Different Types of Hedge Funds in the Market?

Well, a modern investor has a wide range of possibilities from which to pick. In this article, we’ll go over the many options open to you.

  • Domestic Hedge Funds: Domestic hedge funds are only available to investors who are taxed in the nation of origin.
  • Offshore Hedge Funds: They are funds that are founded outside of your home nation, preferably in a low-tax jurisdiction.
  • Funds of Funds: Mutual funds that invest in other hedge mutual funds rather than the specific underlying stocks are known as funds of funds.
  • Event-Driven Strategies: Mergers, acquisitions, and bankruptcies are all major corporate events that cause a lot of movement in the stock market. Hedge funds are to profit from such changes. Those events only create volatility and making leveraged bets on this volatility can result in remarkable returns.

Everything You Should Know About Before Investing in a Hedge Fund?

Let us know about some key factors to consider while investing in hedge funds. Have a look.

  • First, become a Qualified Investor as per the criteria.
  • Read the Prospectus and Other Associated Documentation for a Fund.
  • Know how to value a fund’s assets.
  • Pose Inquiries and be clear about all the things such as where your money is going, who is managing it, and how to retrieve it, etc.

How to Invest in Hedge Funds?

You must first research funds that are presently accepting new investors to invest in hedge funds. Furthermore, to find suitable hedge funds, take assistance from a financial advisor like a Hedge Fund Manager. Though there are many research tools available online also. After you’ve looked at the fund managers and investment objectives, you’ll need to contact a hedge fund and inquire about minimum investment requirements.

You’ll need to prove that you’re a qualified investor, though there is no centralized accreditation authority or an established approach available. Because each fund uses its methods to determine your standing. For that you have to give proof of your income, debts, assets, and experience through licensed third parties. Any financial institution in that case with which you have accounts, an investment advisor, or an attorney.

Should You Put Your Money in a Hedge Fund?

Hedge funds may be a good method to diversify your portfolio and hedge against market volatility. So if you qualify as an accredited investor and are ready to invest hundreds of thousands of dollars you must invest in hedge funds. You may also take help from a hedge fund manager to know more about it before investing your money into it. For the average person seeking high returns, investing in index funds that track key indexes, is a better option.

Top 5 Mistakes You Must Avoid in Your 2021 Tax Planning

plan your taxAny person’s financial objective should include tax planning. Tax planning begins when an individual starts to work and lasts almost the rest of one’s life, even after retirement.

Paying taxes is an important part of contributing to the nation’s growth, but when the government offers you the opportunity to save money on taxes, you should take advantage of it.

We’ve noticed that people often fail to look at tax planning critically and begin making tax-saving investments in a very technical manner.

Tax planning is an important aspect of our financial planning process, and careful planning will go a long way toward achieving our financial objectives. In this blog post, we’ll go through Five common mistakes to avoid when it comes to tax planning.

1. Paying taxes when not needed

A Personal Savings Allowance of £1,000 is available to all basic rate taxpayers. This ensures that the initial £1,000 of the interest from an individual’s joint savings interest is tax-free. The PSA for higher rate band taxpayers is £500 (nil for additional rate taxpayers).

Unlike in the past, building societies as well as banks will no longer deduct tax at the source (unless or until R85is signed). If an in dividual exceeds their PSA, he/she will be required to pay taxes to HMRC directly.

2. Not performing as a group

Married couples/civil partners can save money on taxes by gifting some kind of investments to their spouse whosoever pays the minimum or lower tax rate – but it must be a true gift, not just a symbolic gesture.

If you’re married or in a civil partnership and you were born on or before April 6, 1935, you might be eligible for Married Couple’s Allowance, which will help you save money on your taxes.

If you were both born after April 6, 1935, you canbe eligible for theallowance but it depends totally on your earned income.

3. Refusing to demand the Blind Person’s Allowance

If you are born blind or highly sight-impaired, or if you live in Scotland or Northern Ireland and your vision is too poor to do any job that requires eyesight, you can receive an additional £2,390 allowance.

After you’ve registered with the local authority as a blind person, call HMRC and inquire for Blind Person’s Allowance. It is not applied automatically.

4. Not paying attention to tax code

A tax code indicates your employer the amount of your tax-free pay; the rest is taxed. The tax authorities will notify you on a regular basis to clarify about the creation of code.

Check that you’ve been given the right kind of allowances, pensions or other type of incomes shown are accurate, and that everything you don’t understand has been clarified.

5. Not paying on time

As a taxpayer you need to complete tax-filing for the current year so, you must complete it by October 31st, or by January 31st if you complete it electronically. Each tax year, the tax should be payable by the 31st of January.

If an individual miss or exceeds the deadline, you’ll be hit with a £100 penalty right away, with higher fines coming in another three months.

Key advantages of tax planning

Tax planning techniques are often used to assist a company in achieving its financial and business objectives. Tax planning has advantages for both large and small companies, and it plays a significant role in:

• The smooth running of the financial planning process is facilitated by tax planning.

• Collection of taxes on time decreases legal wrangling.

• Tax planning allows taxable profits to be channelled into a variety of investment plans.

• Taking advantage of all available tax reliefs, grants and credits

• You will save money by managing your taxes.

• Corporate tax planning allows them to contribute to our country’s economic development.

• Helps to maintain economic stability

Winding up

Nowadays, taxes for companies, firms, and the self-employed individuals are a little more difficult because they can’t be deducted on a pay-as-you-earn basis like they are for employees. This is where a tax accountant’s services become extremely valuable.

A tax accountant who is professionally licenced and trained will assist you in organising your financial statements and calculating your tax bill so that you always pay the correct amount of tax.

Tax advisors will also assist you in developing and implementing a tax policy that will help you avoid paying excessive taxes in the future.

You shouldn’t underestimate the value of having a tax accountant on your side, whether you run a big organization or are a self-employed sole trader.

Sophia is a full-time financial writer at experlu. she is a passionate blogger and love to share her knowledge on various subject. Content created by Experlu– are loved, shared & can be found all over the internet on high authority platforms.

What Services Are Provided By The Accounting Firms In New Zealand?

keep your accounts intactLike every accounting firm, the accounting firms in New Zealand incorporate the duty of auditing bank statements, accounting consultancy services and bookkeeping. These services are performed by companies who have their own accounting firms compared to the other normal accounting industries. New Zealand compared to many other international competitors around the world from the USA which serves the 80% of the Fortune 500 in the world. But for the accounting firms in NZ, they are not making a bad mark themselves as statistical reports say. The accounting firm Auckland serves as the main hub for all these accounting firms in NZ, serving important clients worldwide too.

What Separates The Accounting Firms From New Zealand From All Over The World?

These accounting firms look at 2 factors, ensuring that their clients make money and at the same they should make money too. But how do negotiate this win-win situation on the table for both the parties? Simple, pure professionalism. The USA has dominated the market in landing the big money clients, but what has stopped New Zealand from doing the same? Nothing! Advancement in technology over the years has enabled these firms to organically expand their business across international borders. How? Time to find out.

New Zealand Takes In Account All The Accounts

NZ accounting firms take in all of its resources, capital, the trained and professional human resources, henceforth they employ it all into their industry with the objective of catching and bringing in more clients, serving them to the best of their interests. This is what is provided on the table.

1. Monitoring & Controlling Business Risk Management

What is the risk here? Obviously the factor of considering that businesses can enter into a situation where there is a huge account of risks. This is why they hire accounting firms to stay beyond the curve. How do they make that happen? By using data and analytics. This is how they monitor what is happening on the charts, how they are performing and how are there competitors performing, hence this enables these firms to give them a blueprint based on predictive insight and what step to take next avoiding all those risk obstacles. Through this you are also telling your clients the consumer behaviour outcome and through this businesses with full awareness know how to optimize their business.

2. Smooth & Optimized Transactions

This is when you are enabling your business to get their money out from the customer pockets into their pockets in an efficient streamline system. Online billing systems and n transaction systems are overlooked, where the firms can circumnavigate the best way to integrate their cash flows.

3. Analyzed Risk Outcomes & Future Planning Based On Consumer Behavior

In order to integrate the consistent flow of the businesses, the NZ accounting firms take into consideration the risk and exposure it can take from all sides, predicted and analyzed through charts and monitors. This allows CFOs or CEOs to take proper informed decisions on what step to take next keeping the predictable outcomes produced by the firms, keeping in factor market behavior.

Should You Invest In Money Back Plans or Endowment Policies?

get your moneyChoosing a life insurance plan is always a difficult task as there are a plethora of insurance products available. Apart from various other life insurance products, two traditional life insurance plans in which many of us get confused is money back plan and endowment plan. People could not find out whether they should go for the best endowment policy or opt for a money back plan. Well to overcome this confusion we are here discussing the basic difference between these two plans:

Money Back Plan and Endowment Plan – An Overview

Both money back and endowment plans are there in the market for quite a long time, but people are not sure which to select as most of them could not find out the basic difference between the two.

Even though both the plans are life insurance cum savings plans, but there is a slight difference between both of these. This slight difference lies in their survival benefits. The survival benefit that endowment plan pays upon maturity of the policy includes the sum assured as well as a bonus. On the other hand, the money back policy pays out the survival benefit usually as a fixed percentage of the sum assured at regular time intervals during the tenure of the policy. However, in case of money back policy the remaining sum assured with bonuses are paid to the insured upon maturity of the policy. In case of demise of the policyholder, both money back and endowment plans pay the sum assured to the nominee of the policy.

In this way, both these plans are savings plans, but the money back plans are there to fulfill the short term goals of the policyholder as they payout at regular intervals.While endowment plans provide a huge sum assured upon maturity of the policy.

Let us look at the fundamental difference between these two through the following table:

Factor to Consider Money Back Plans Endowment Plans
Benefits The insured gets a % of sum assured at a specific time interval and the remaining sum assured is given with bonuses at the maturity of the policy if the insured survives the plan term. The specified sum assured as well as all the applicable bonuses are given at the time of policy’s maturity if the policyholder survives the policy term.
Death Benefit Both the plans pay the sum assured as well as applicable bonuses on the death of the policyholder if he/she dies during the policy term.

Basically, money back plan pays out regular income after a regular interval and most of the times it is 5 years. Generally, for a policy of 20 years, the survival benefit that a policyholder gets becomes 120% of the total sum assured.

Policy Year’s End Survival Benefit As % of Basic Sum Assured of the Plan
5 years 20%
10 years 20%
15 years 20%
20 years 60% + Vested Bonus
Total Benefit = 120%

Which policy is better?

If the aim a person behind purchasing a policy is to fulfill his/her short term goals and get some money after a regular interval, the money back plans are best for them. There are much money back plans available online and one can purchase the best money back policy according to his/her requirements.

However, if one’s aim of the investment is to accumulate large corpus and get it at the time of maturity of the policy, then selecting an endowment plan is recommended. In this way, it is entirely choice of a policyholder to decide which plan is best suited for him/her. There are many endowment plans also available and to select the best one must know his/her requirements first.

One should always remember that it is the personal expectation and requirements of an individual that should be kept in mind before selecting a plan as investment and life cover.

Summing It Up!

Before selecting any of the plans out of these two policies, it is suggested to check an individual’s objective of investment and his/her expectations from it. One way to do this is to compare different policies on the bases of its inclusions, benefits, and rider benefits provided in it. See an individual’s expectation with that plan. If both match then finalizing that plan can be taken into consideration. One can compare different policies of money back plans and endowment plan online with the help of a good insurance web aggregator. Last but not least, both these plans are good investment plans and it is just the requirement of an individual from the policy. So, do not hesitate, just understand the inclusions of your plan and enjoy the benefits.