To The Moon

As a Singapore resident, I benefit from a favorable tax environment that allows me to optimize my investment strategy across both the Singapore and US stock markets.

1. Tax Benefits in Singapore

• No Capital Gains Tax: In Singapore, there is no capital gains tax, meaning profits from stock trading are fully retained. This is ideal for both long-term investments and short-term trading strategies.

• Dividend Tax Exemption: Dividends from Singapore stocks are not taxed for residents. This makes dividend-paying stocks, especially high-yield ones like Real Estate Investment Trusts (REITs), highly attractive for income-focused investors.

2. Tax Considerations for US Stocks

• 30% Withholding Tax on Dividends: US stocks come with a significant 30% withholding tax on dividends for foreign investors, which reduces the attractiveness of US dividend stocks. For example, if a stock pays a 4% dividend yield, the effective yield after tax would drop to 2.8%.

• Tax Treaty Limitations: Singapore does not have a tax treaty with the US to reduce this withholding tax, unlike some other countries.

• Focus on Capital Gains: Since dividends face heavy taxation, my US stock market strategy emphasizes capital gains through active trading.

3. Investment Strategy for Singapore Stocks

• Dividend-Focused Approach: Target high-yield dividend stocks like REITs and blue-chip companies with stable payouts. Examples include REITs such as Ascendas REIT or Mapletree Logistics Trust, which offer consistent dividend income. Utility and infrastructure companies with predictable cash flows are also good candidates.

• Long-Term Holding: The plan is to buy and hold these stocks for the long term, benefiting from compounding and reducing transaction costs. Minimal intervention helps in creating a “set it and forget it” portfolio.

• Diversification via ETFs: Singapore ETFs like the STI ETF (Straits Times Index ETF) provide diversified exposure to the local market and include high-dividend companies.

4. Investment Strategy for US Stocks

• Growth Stocks for Capital Appreciation: Focus on high-growth companies in sectors like technology (e.g., Apple), healthcare (e.g., Moderna), or green energy. Actively trade on volatility to capture short-term price swings. Avoid relying on dividends from US stocks due to the high tax impact.

• Balanced Approach to Dividend Stocks: While focusing on growth, I would still avoid purely non-dividend-paying stocks. Stocks that pay modest dividends offer a buffer during market downturns, reducing opportunity costs when prices decline.

• Index Funds for Stability: Complement active trading with ETFs like the S&P 500 ETF (SPY) for diversified exposure and reduced individual stock risk.

5. Key Factors to Monitor

• Singapore Market: Stability of dividend payouts and yields. Interest rate environment, as high rates can negatively impact REIT prices.

• US Market: Volatility and macroeconomic conditions driving growth stocks. Sector-specific trends and innovations, especially in technology and healthcare. Exchange rate fluctuations between SGD and USD, which can impact the profitability of US investments.

6. Portfolio Allocation

• Singapore Stocks and ETFs: Focus: Income generation through dividends. Allocation: A larger portion of my portfolio, given the tax advantages.

• US Stocks and ETFs: Focus: Capital growth via active trading. Allocation: A smaller portion, ensuring it complements the income-driven Singapore investments.

7. Risk Management

• Singapore Market: Diversify across industries to avoid overconcentration in REITs or specific sectors. Regularly review dividend-paying stocks to ensure sustainability of payouts.

• US Market: Avoid speculative stocks with excessive volatility.

By optimizing my approach for each market's strengths and tax implications, this dual-market strategy enables me to balance income generation and capital growth while minimizing tax liabilities and managing risks effectively.