Sunday, April 22, 2012

Singapore dollar - Bane of Online Entrepreneurs.

MAS is taking a policy of strengthening the Singapore dollar to fight inflation. This means that if you run a web business and earn in US dollars, you're very likely to experience a downwards swing in earnings if you convert it back to Singapore dollars.

This reflects one of the many uncertainties of running an online business.

At first, these so called entrepreneurs think that they can earn in USD and spend in SGD, the underestimate the power of Singaporeans who are more than happy to save for their future and strengthen their currency in the future.

 Of course, a smart online entrepreneur can do better if they bring geo-arbitrage to it's ultimate logical conclusion.

 It is definitely possible for a Singaporean with a savings of about $20,000 to settle down comfortably in a place like Thailand and pay minimal rent to see through their online businesses.

 Here's a dream combination if you are single and have weak family ties :

 a) Invest in SGD 

I can't emphasize enough that our low tax regime makes investing in SGD real estate assets an almost sure winner. Some REITs continue to yield over 8% and does not generate any taxes beyond the first 18% deducted at the company level.

b) Spend in MYR/THB

 Find a place to stay where the cost of living is about 40% less than Singapore. Johore Bahru and Phuket comes into mind but you need to blend in with the locals so that you will not be singled out by criminals.

c) Work and earn in Dubai or Aussie dollar. 

 IMHO, the best places to work should be friendly to foreigners and have a lot of natural resources such that the currency has a strong correlation with gold/oil.

So the best combination out there is probably some Malaysian Dude with a Singaporean PR who invests in the Singapore markets, works in an oil company and now stationed in Abi Dhabi and has a family in palatial mansion in Johore Bahru.

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