Contemplating US
Wild or Domesticated
So I thought, ok why not talk about this a bit more.
I'll talk about a number of points brought up, and my own feelings and analysis.
This is talking about the opportunity to get a US Green card specifically versus remaining just purely an SG citizen.
I'm also looking at this 50-60 years into the future. Cos I'm 38 and by 88-98, well... I'd prob be dead so...
For me, I ask myself 2 important questions.
- Is this issue important?
- Is this issue important TO ME? ie, will I be personally impacted?
1) The political future of SG vs US
The political future of SG is always shaky. We expect the elites to run the country.
The response to COVID, our social harmony, national defense, etc.
It has been good enough. Will this continue to be good enough in future?
What if there are changes in government? What if there is a Trump in SG?
BUT, there is an interesting question. What if, a political party loses in SG and refuses to step down.
Would Singaporeans protest? Or go about with their daily lives and just ignore it? They still have bills to pay, HDB mortgage to service, car loans to pay, etc...
Will Singaporean life be disrupted like in HK?
Personally, I doubt it will happen. I believe Singaporeans will go about their daily lives.
I think it would depend on how the issue built up. Has social cohesion broken down? Or is it just a political issue?
Yes this issue is important.
And this issue is important to me. A Trump type of politician in SG who promotes divisiveness will really destroy SG where we are staying in a small city.
The political future of US... is questionable.
Trump has shown that the controls aren't as strong as believed. The controls of power are split up. But Trump managed to conquer a number of them. This round he failed.
But it also begs the question. Could someone else succeed in future?
So, yes this is important.
BUT... this may or may not be important to me.
Staying in a big country, it's easier to ignore the top level issues of the country. If I stay in Texas, then I might just live my own life with minimal impact.
But there is always the possibility of large scale social unrest. The US has a history of war and violence. And they have guns.
2) The economic future of SG vs US
US has 330 million people, who mindlessly consume.
People will want to sell to US, at least in the next 50+ years.
US has high levels of innovation.
The education system is not great. There are a lot of homeless and poor.
There are also a lot struggling with debt issues.
SG is a small country with no natural resources.
It needs to try to stay relevant to excel.
For me, I believe that the next 50 years for SG might be a struggle.
However, that isn't to say that Singapore will crumble economically.
It's not like Singapore is just a sitting duck. The likes of Tencent, Alibaba, Ray Dalio setting up shop in SG is testament to their confidence in SG.
SG is not China, it's not HK.
After what happened to HK. SG could be positioned to benefit from it.
A neutral bridge between east and west.
Singapore will never be able to beat the likes of Shanghai, Beijing, Shenzhen.
But it will probably still be a big player in the SEA region.
There is a low probability for SG to end up like Thailand, Malaysia, Indonesia, economically.
The main question for US or SG is...
Is the economic future important?
Yes, I think it's important enough.
US will still be strong economically.
SG will be likely strong enough economically within the region at least.
BUT, is this any problem for me?
I don't think so. The thing is we aren't really significantly impacted by country economics.
If we invest in a global portfolio, save, live frugally, we can live very good lives in the US or SG.
Even if SG becomes less competitive in future. As long as we live in a safe society, it is good enough.
That's the thing about a capitalistic society and being financially independent.
3) Tax
Staying in SG, we will have my wife's income tax.
No investment type taxes.
In US, my wife will get income tax. No amount of tax planning is going to remove that.
So that's a given.
There are also investment type taxes. Taxes on dividend, and capital gains when realized.
Yes, there's potential to do tax planning and incorporate a company, etc.
I've looked into it.
The estimated cost of tax planning OR paying taxes is around 1.5% of networth per year.
It's about the same for our networth level. We aren't talking about $100 million where there's significant economies of scale to do the tax planning.
So the cost of the Green card is an estimated 1.5% of networth per year of holding the Green card.
There is a leaving tax. If I surrender the Green card, it is treated as if I sold all my investments and I realize all my capital gains. This also happens if I incorporated a company. As long as I have control of the investments, I am liable for it.
I mean... we are still talking about the legal way right?
So if I choose to hold the Green card for 10 years, then I will pay estimated 10 years worth of 1.5%.
Estimated 1.5% of ALL investments, including the HDB.
If I hold it forever, then I pay 1.5% forever.
Doesn't matter if I give up the Green card halfway, I'll still realize all the tax as long as the investments are under our name or under our control via a company or trust.
There is a way to minimize tax. It's just not worth it at lower networth. I think maybe $3 million will start to be worth the effort of administrating tax planning.
Is this important?
No, not really, it's not really a big issue. All Americans live with it.
But it is important for me.
Cos I have the option to not have to bother about worldwide taxes, if I don't take the Green card, then that's the end of the story.
4) Overall Finances
When I first left my work, I did my calculations based on SG prices, no investment taxes, etc.
Imagine, I may be calculating 5% returns, then if I move to US with US tax, my returns drop to 3.5%.
It's a big difference.
We aren't struggling in either US or SG. But why would I want to pay additional taxes unnecessarily?
5) Lifestyle
Our lifestyle in US and SG are pretty similar. We are simple people. We don't spend much or go out a lot.
We do go out, but it's not as much as most people.
I would say the cost of living in Houston vs SG, is around the same, if we take into account medical insurance.
Most things in Houston are cheaper than in SG. But insurance is an estimated US$400 per person per month.
There's a lot of entertainment in US. We can go out, drive around, drive to east coast, west coast, mountains, lakes, etc...
BUT, there's a lot of crime. Everyday in Houston, someone is robbed, shot, etc. EVERYDAY.
Houston is around the size of SG. With a similar population of 6 million.
It's not particularly unsafe as long as I avoid certain places at certain times.
But it's still not SG.
I joked with my friend.
SG is easy to die as a country compared to the US.
But as a citizen of US, it's easier to die as compared to a citizen of SG.
And of course in US, I don't have family and friends.
Closing
You see, the thing is, there are a lot of things which annoy me in SG.
There are also a lot of things which annoy me in the US.
BUT, most of these don't impact me. Truthfully, a lot of things aren't my problem.
We think, "Oh we can do this better, or that better."
Or "SG is becoming less competitive"
We think stuff like that...
But... how many of us are really impacted by it personally?
Yes there will be Singaporeans who are impacted by it. But for folks who are FI, or frugal, investing, saving, etc... many of us aren't impacted by it.
IF I choose to stay in the US, paying 1.5% of networth for the privilege to stay in the US is fine.
The problem is, I'm not sure. And paying 1.5% per year for an option is expensive.
Especially if I'm not staying in the US.
Example if I get the Green card and go back to Singapore for 2 years.
Not to mention I have to maintain the Green card and I can't stay away from US for super long periods of time.
Then I ask myself. What difference does it make if I'm Singaporean who bought a Thailand or Malaysian retirement visa? It's a long term stay visa.
Thailand or Malaysia might not be stable politically or economically. But for those who are financially stable in these countries, they don't really have issues.
Is there any difference if SG isn't as competitive as the past? I don't believe SG will suddenly disappear or crumble and fall into social unrest.
So why am I paying 1.5% per annum for the Green card option?
Am I not already sufficiently mobile? Financially mobile?
We aren't really talking about a zombie apocalypse where we need to have a bunker and food and weapon stores. Then US would be great for such a scenario.
Which is why I've been thinking about this quite a lot.
It's an expensive option. Do I really need it? Why do I need it? Good to have? There's lots of things good to have, is this critical enough?
What so bad about SG? It's not going to suddenly disappear. It's not going to just deteriorate economically suddenly overnight.
From a survival point of view, it makes more sense to retain a SG citizenship and maximize financial mobility. The Green card would only be a drag on returns. Maybe have multiple bank accounts in a few countries and have methods to transfer assets between countries, or safe deposit boxes with some gold coins. There really isn't a need to obtain a Green card.
Even if I believe (which I don't) that SG could be past it's prime, it still could be a good place to stay as an individual. Provided that the individual has sufficient financial stability.
Things may get more challenging for citizens. But I believe Singapore has the ability to continue to do well economically. The wealth gap may just widen, and as long as you're on the right side of the gap. Then there really isn't much issue right?
Note: I'm not saying that I'm rich. I'm saying, for those who are financially stable, with ample networth, there are options available. And staying in SG really wouldn't be much of a struggle.
So is getting a Green card really necessary?
Doesn't seem like it, IF I'm able to make myself more financially mobile.
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