tag:blogger.com,1999:blog-13777388357823221042024-03-12T20:37:39.838-07:00Singapore Blue ChipsA financial BLOG written by a DIY investor covering Singapore blue chips, dividend stocks, financial education, corporate news, money saving tips, book reviews and my journey to financial freedom. Currently managing a personal portfolio of more than SGD $1,000,000, I aspire to have an average cash flow of minimum $10,000 per month either through realised capital gains or dividends.Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.comBlogger200125tag:blogger.com,1999:blog-1377738835782322104.post-43558538654888530202020-05-22T23:57:00.001-07:002020-05-31T18:45:50.023-07:00Savings account with higher than FD interest till June 2020 (first 100k to 200k) <div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">1M SOR rates has turned negative (<a href="https://www.businesstimes.com.sg/banking-finance/singapore-sees-negative-rates-creep-in-with-flush-liquidity">https://www.businesstimes.com.sg/banking-finance/singapore-sees-negative-rates-creep-in-with-flush-liquidity</a>). The latest Tbills auction closed near zero yield. As monetary base expand across the developed countries, savers are penalised as the printing of money force down the price and value of money. </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Looking at the current environment, some banks provide above average deposit rates:</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Hong Leong Bank first 200k = 1.5975% </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">CIMB first 100k = 1.43% </span><span style="font-family: "arial" , "helvetica" , sans-serif;">(not stated valid till when)</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">RHB High Yield first 100k = 1.4125% (not stated valid till when)</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Maybank Isavvy first 200k = 1.3%</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">SCB Esaver first 200k = 0.7% (till July)</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Out of the 4 malaysian banks, I have 3 accounts with them. They do need a lot of patience to work with. HL bank does not even have a banking app (if you downloaded one, its the Malaysia's version). Maybank is actually the best among them in terms of online banking, recently improved interface sees them assimilating to our local banking digital expectations. </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">As local banks with huge liquidity from locals and foreign funds are unlikely to match their rates, savers unfortunately have to put up with some inconvenience of having multiple accounts with sometimes frustrating digital banking experience.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Hong Leong Bank does not even provide estatements. You need to pay then to generate a statement of account standing. I do not think it will cultivate any customer loyalty as deposit rates becomes commoditized - ie the highest rates take all. But given the rates are higher than all new mortgages rates now, unfortunately, we would have to take it, even if there is no internet banking!</span></div>
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<br /><div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com0tag:blogger.com,1999:blog-1377738835782322104.post-87836150961441201302020-04-11T03:09:00.000-07:002020-05-15T19:44:55.438-07:00Setting aside a war chest of $500,000<br />
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It feels good to be able to work from home. </div>
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Bloomberg
terminal at finger tips with Netflix at the background. </div>
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The recent bear market provides a good opportunity for long
term investors. I would gradually deploy the funds over the course of possibly
6 months to 1 year. It is hard to see where the bottom is. On one hand, the
bulls are saying the Trillion dollars worth of stimulus will find its way to
financial markets and raise the value of stocks. The bears are saying the
recession will be worse than GFC and it doesn’t make sense for the market to
just drop 20%. </div>
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I don’t know. </div>
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Buy when there are dips. My war chest are placed in HL bank @ 1.98% and Maybank @ 1.75%. I believe this 2 banks offer the highest no lock in rates. </div>
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<br /><div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com0tag:blogger.com,1999:blog-1377738835782322104.post-80264620856417540772020-01-20T17:02:00.001-08:002020-01-21T05:48:06.404-08:00Do not buy insurance savings plan to save for retirement. Save 300k by reading this!<div style="text-align: justify;">
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<span lang="EN-SG" style="background-color: #cfe2f3; color: #212529; font-family: "cambria" , "serif"; font-size: 12pt; line-height: 115%;">There
are many endowment plans and single premium plan marketed by insurance
companies. One of them works this way. <o:p></o:p></span></div>
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<span lang="EN-SG" style="background-color: #cfe2f3; color: #212529; font-family: "cambria" , "serif"; font-size: 12pt; line-height: 115%;">You pay
$1M upfront and 5 years (60 months) later, you will receive income for
life. The income is about 42k a year. After 5 years, your principal is guaranteed.
Apparently, it is selling like hot cakes as people like guaranteed products. <o:p></o:p></span></div>
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<span lang="EN-SG" style="background-color: #cfe2f3; color: #212529; font-family: "cambria" , "serif"; font-size: 12pt; line-height: 115%;">To me it
is plain silly because there are like a billion alternative investments equally
safe and more liquid.<o:p></o:p></span></div>
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<span lang="EN-SG" style="background-color: #cfe2f3; color: #212529; font-family: "cambria" , "serif"; font-size: 12pt; line-height: 115%;">For
example, you can buy a portfolio of Unit Trust. First State Dividend Advantage,
Schroder Asian Income, First State Bridge, Schroder Asian Income etc. They are
not the best but surely can generate 5% pa or more and pays you dividend
straight away upon investing. <o:p></o:p></span><br />
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<span lang="EN-SG" style="background-color: #cfe2f3; color: #212529; font-family: "cambria" , "serif"; font-size: 12pt; line-height: 115%;">Or simply invest in infinity series world equity funds. Expense ratio of 0.4% only. </span></div>
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<span lang="EN-SG" style="background-color: #cfe2f3; color: #212529; font-family: "cambria" , "serif"; font-size: 12pt; line-height: 115%;">You can
buy 4 different bonds of different tenure. For example SPH 3.2 2030, Wingtai
3.68 2030. Or today's IPO Shangril 3.5% 2030 bond. </span></div>
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<span lang="EN-SG" style="background-color: #cfe2f3; color: #212529; font-family: "cambria" , "serif"; font-size: 12pt; line-height: 115%;">If you
still think it is risky, then buy STI ETF! It pays you at least 3% a year of
dividends! I do not think the 3 banks + Singtel will go belly up in 10 years
since they form majority of the STI ETF. <o:p></o:p></span></div>
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<span lang="EN-SG" style="background-color: #cfe2f3; color: #212529; font-family: "cambria" , "serif"; font-size: 12pt; line-height: 115%;">After 10
years, the insurance plan would have paid you 42k x 5 years = 210k + 1M
capital. <o:p></o:p></span></div>
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<span lang="EN-SG" style="background-color: #cfe2f3; color: #212529; font-family: "cambria" , "serif"; font-size: 12pt; line-height: 115%;">STI returns assuming 3% dividend and 2% capital gains (cash out) would have become 1.5M after 10 years.
Similar so for your Unit Trust portfolio, assuming 5% dividends and 0 capital
appreciation. <o:p></o:p></span></div>
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<span lang="EN-SG" style="background-color: #cfe2f3; color: #212529; font-family: "cambria" , "serif"; font-size: 12pt; line-height: 115%;">Your SPH
+ Wingtai + Shangrila bond portfolio would have become 1.35M assuming your coupons are
reinvested at 0%. I am not even talking about decent perps (since your
insurance is in perpetuity right?!) like SPH 4.5 perp, UBS 4.85 perp, Ascott
3.88 perp, Mapletree 3.95 perp, wingtai 4.48 perp, FPL 4.38 perp. <o:p></o:p></span></div>
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<span lang="EN-SG" style="background-color: #cfe2f3; color: #212529; font-family: "cambria" , "serif"; font-size: 12pt; line-height: 115%;">Why buy
something, receive guaranteed negative returns for first 5 years, poor liquidity, pay
interest for 5 years with no cash flow return (banks provide financing) and
then get sub par returns thereafter?<o:p></o:p></span></div>
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<span lang="EN-SG" style="background-color: #cfe2f3; color: #212529; font-family: "cambria" , "serif"; font-size: 12pt; line-height: 115%;">If you
are supporting your insurance agent, relationship managers, IFAs because of
their excellent service, then give them money directly instead of compromising
your returns! </span></div>
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<span lang="EN-SG" style="background-color: #cfe2f3; color: #212529; font-family: "cambria" , "serif"; font-size: 12pt; line-height: 115%;">Effectively, you are foregoing almost 300k or 30% of your returns
over 10 years! <o:p></o:p></span></div>
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<span lang="EN-SG" style="background-color: #cfe2f3; color: #212529; font-family: "cambria" , "serif"; font-size: 12pt; line-height: 115%;">Are
their service and advice worth 300k? They probably make 10k commission from
your 1M only. If they are from banks, the revenue works out to be 2k commission to them. Please,
give them 11k from your pocket instead. Everyone will be happier. <o:p></o:p></span></div>
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<div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com1tag:blogger.com,1999:blog-1377738835782322104.post-64261358828689002162020-01-02T07:09:00.000-08:002020-01-02T07:09:54.126-08:00Miles or cash back? An opportunity cost perspective<br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">I used to
be a 100% cash back credit card chaser as it is hassle free and cash is always
better than a captive currency like miles.</span></div>
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<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Recently, I
have been reading quite a bit on miles blogs. Apparently, there is strong
interest in chasing the miles to redeem for premium flights. But do they
actually make sense? The value per miles as advocated by some blogs is 1.9
cents per mile. Hence even paying 2% admin fees to buy miles make sense for
some. <o:p></o:p></span></span></div>
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<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">I would
probably value it at no more than ~1.57 cents, which I will illustrate simply
below, base on my personal circumstance. <o:p></o:p></span></span></div>
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<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">As I spend
3k per month, I usually split up 2k on UOB one card (5%) cash back and 1k on
OCBC 365 cash back card (averages 3.5% or so). For simplicity, the cash back I
get back is roughly $135 per month. This works out to be 4.5% blended spending cash
back. <o:p></o:p></span></span></div>
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<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">If I were
to spend it on miles, I probably would apportion my spending on 3 cards: $1k UOB
Visa pay wave (4 miles), Maybank horizon (3.2 miles) $1k, miscellaneous $1k
spending on UOB privi miles card @ 1.4 miles/dollar earn rate. I can earn
approximately 8600 miles monthly. <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
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<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Hence the
opportunity cost to earn the miles is to give up cash back of $135 which works
out to be 1.57 cents per miles. The true opportunity cost should be even higher
since cash is paid frequently <span style="mso-spacerun: yes;"> </span>to offset
bills and miles can expire (or even devalued). <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
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<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">The
attractive part of miles redemption is that business class tickets actually
cost roughly only 30%-70% of outright purchase price when redeemed using miles.
It is almost similar to earning a premium flight ticket discount coupon by
using miles card. <o:p></o:p></span></span></div>
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<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">For
instance Sin-HCM-Sin business class ticket costs $1075 or 43k miles (opportunity
cost $675 cash back from spending. 37% discount on ticket).<o:p></o:p></span></span></div>
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<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Business
class ticket Sin-HK-Sin route costs $1800 but or 61,000 miles (opportunity cost
$958 cash back, 46% discount on ticket). <o:p></o:p></span></span></div>
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<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">The further
the distance, the more value is derived from miles. Sin-Auk-Sin cost $5800 or
124,000 miles (opportunity cost $1947 cash back, 66.4% discount on ticket). <span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
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<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="mso-spacerun: yes;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">It is
actually uncomfortable for me to abandon cash back card altogether and earn
delay gratification on business class travel. However, given that I am unwilling
to pay for business class tickets, I would probably give miles cards a try. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Signs up
are probably much faster to earn then spending. Hence, I am likely keeping my
UOB one card for the 5% cash back but earning miles sign up bonuses to kick
start the discounted business class travels. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Hence I
applied for the SCB X card 100k miles for a start. That actually costs me $700
annual fee + $300 opportunity cost of using 5% cash back card = 1k. Hence my
miles cost me 1 cent/mile. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">In summary,
it means that miles should be valued base on the cash back you give up (opportunity
costs) and not on the advertised rates on blogs (base on the cost of business
class travel – you wouldn’t spend cash on the tickets anyway).<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Redeem
miles on business class travel make some sense otherwise just stick to cash
back cards to earn the cash and pay for economy class tickets. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">It is
possible to stick to 1 card for cash back (eg if spending is around $900/mth
stick to OCBC/Citi cash back; $2,000/mth stick to UOB one card). <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">For miles
chasers, a lot more planning is required on which card to use in order to
stretch the miles rate.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">You shouldn’t
accumulate miles on your own and your partner should preferably share your
obsession in chasing miles. <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="mso-spacerun: yes;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">A hybrid
approach will stretch your dollars more; using miles card that earn 3.2-4 miles
per dollar targeted spend; general spending to earn 3%-5% cash back is
preferred over 1.4-1.5 general spending miles. <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="mso-spacerun: yes;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-SG" style="mso-ansi-language: EN-SG;"><span style="font-family: "arial" , "helvetica" , sans-serif;">It makes
life a bit more fun, brains a lot more thinking to use a miles card! <o:p></o:p></span></span></div>
<div style="text-align: justify;">
<br /></div>
<div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com0tag:blogger.com,1999:blog-1377738835782322104.post-33922948328565004202019-12-28T20:33:00.000-08:002019-12-28T20:35:26.464-08:00Random reflections on my spending <span style="font-size: 12pt; text-align: justify;">Been awhile since I blogged, in fact more than a year! The initial
rationale of having a finance blog in 2008 was to detail my decisions on
spending and investing to provide a platform for reflection.</span><br />
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
<span lang="EN-SG" style="line-height: 115%;"></span><br />
<div style="text-align: justify;">
<span lang="EN-SG" style="line-height: 115%;"><span style="font-size: 12pt;">As I progressed in my career, the
probability of financial independence</span><span style="font-size: 12pt;"> becomes more certain. Admittedly I became over
confident that my decisions on spending are right; up to a point along the way
it became ostentatious and losing myself. Buying branded goods, driving luxury
cars, watches, hotel membership on dining, 6 travelling trips a year (just to
maximise the free 24 priority pass lounge visits – every trip I can utilise 4,
2 in SG, 2 overseas) became a way of life.</span></span></div>
<span lang="EN-SG" style="line-height: 115%;">
</span>
<div style="text-align: justify;">
<span lang="EN-SG" style="line-height: 115%;"><span style="font-size: 12pt;"><br /></span></span></div>
<span lang="EN-SG" style="line-height: 115%;">
</span><span lang="EN-SG" style="font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;"> </span><span style="font-size: 12pt;">This is no good. This is not me.</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span lang="EN-SG" style="font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">Where did the initial child like ambition of early retirement and simple
life disappear?</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span lang="EN-SG" style="font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">Slowly, I started to declutter goods that I bought for the purpose of _____.
As I struggled to fill in the blanks, phrases like “showing I can afford”, “keeping
my image”, “keeping up with my peers” appeared at first instance.</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span lang="EN-SG" style="font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">Quite retarded reasons.</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span lang="EN-SG" style="font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">Fortunately, I have managed to declutter some. 2 years ago, I signed up
for the AIA vitality and discovered that by wearing a fitness watch, I am able
to earn $10 grocery vouchers weekly, discounted movie tickets monthly and
yearly $150 cash rebate. The perks are more than sufficient for me to wear any other
watches that do not pay me weekly cash!</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span lang="EN-SG" style="font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">3 years ago, I was at the cross road to change my vehicle. It was
extremely tempting. Back then, I was driving a 2.5L luxury car and finances
allowed me to continue driving one. It didn’t help when peers were changing to
nicer rides. I test drove Jaguar, Mercedes, BMW, Lexus, Infiniti. Porsche was
very close on my list as well. After all, a colleague who was earning lesser
than me could buy one as well. I can stretch my budget to 20k a year
depreciation cost right?</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span lang="EN-SG" style="font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">Fortunately, good sense prevailed. I evaluated the decision
economically. I only wanted a car slightly better ( in terms of size, design,
performance) than a bread and butter (point A to B) car like Toyota Altis or
Honda City with slightly higher depreciation cost. </span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span style="background: white; font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; font-size: 12pt; line-height: 115%;">I
managed to buy a 1.6L humble continental ride that comes with only 6 speed gear
box, all around sensors, memory seats, 4 doors (keyless entry), leather seats,
Apple car play, reverse camera, 18 inch sport rims and free 1 year insurance cap
at 1.5k</span><span style="background-color: transparent;">. The dealer also provided 5 years warranty and servicing further
reducing my cost of ownership till 2022.</span></div>
<div style="text-align: justify;">
<span style="background-color: transparent;"><br /></span></div>
</span><span style="background: white; font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">The
depreciation on straight line basis worked out to be $10k/year, cheaper than a
camry of around $12k/year then.</span></div>
</span><br />
<div style="height: 0px;">
<span style="background: white; font-size: 12pt; line-height: 115%;"></span><br />
<div class="separator" style="clear: both; text-align: center;">
</div>
<span style="background: white; font-size: 12pt; line-height: 115%;">
</span>x</div>
<span style="background: white; font-size: 12pt; line-height: 115%;">
</span>
<div style="text-align: justify;">
<span style="background: white; font-size: 12pt; line-height: 115%;"><span style="font-size: 12pt;"><br /></span></span></div>
<span style="background: white; font-size: 12pt; line-height: 115%;">
</span><span style="background: white; font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">So far
it has not given me any problems other than being a “laughing stock” amongst my
peers.</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span style="background: white; font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">“Car
already so expensive in Singapore, it is stupid to buy an expensive one and not
enjoy it!”</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span style="background: white; font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">“No
resale value one!”</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span style="background: white; font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">“Kiam
kanna!”</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span style="background: white; font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">These
are some of the remarks made by peers. Living with it saved me at least $5k a
year. I think I can live with it.</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span style="background: white; font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">My main
cost of living is housing, transport, travel and food. For housing, as my
property is in the money, in a way I am living for free. This is because I am
able to cash out upon sale of my property and all payments made for the house
from day 1 will be paid back to me. I can subsequently invest the money to
generate an income to compensate rent or simply buy another HDB and fully pay
off with my CPF balance.</span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://1.bp.blogspot.com/-on4FAqBreB4/XggnXSfMqgI/AAAAAAAAAp4/Ra_Ky_48apww_gePzFd-FAivy1-0Vj8ygCLcBGAsYHQ/s1600/house%2Bequity.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="648" data-original-width="1152" height="180" src="https://1.bp.blogspot.com/-on4FAqBreB4/XggnXSfMqgI/AAAAAAAAAp4/Ra_Ky_48apww_gePzFd-FAivy1-0Vj8ygCLcBGAsYHQ/s320/house%2Bequity.jpg" width="320" /></a></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span style="background: white; font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">I am actually
contemplating to sell my house for a resale HDB in order to live even more
simply. Of course more objections from people around me living in landed and
condos:</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span style="background: white; font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">“What
for? Save the money and not spend it belongs to the bank!”</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span style="background: white; font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;"> </span><span style="font-size: 12pt;">“I have not seen anyone getting rich buying a
resale HDB.”</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;">It may not happen eventually, as I am comfortable at my place right now. </span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span style="background: white; font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">Although I
rarely use the gym, pool and have never booked the common facilities. </span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;">The things I
like (and not available in a new resale HDBs) are sheltered underground
parking, kitchen built-in rubbish chute, nice lifts with aircon lobby, balcony
(for plants and clothes drying) and my low entry purchase price (on hindsight).
Moreover, the monthly maintenance of $300 is about $150 more than a comparable
HDB (after accounting for parking). I will probably end up spending $150 on
gym/pool facilities if I live in HDB hence the savings are insignificant.</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span style="background: white; font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">For
food I am spending approximately $1.5k a month on it. This works out to be $50/day.
I do know that by picking up the skill of cooking I am able to keep food
expense to $500 a month. It is something I would definitely explore as I move
towards early retirement. However at the moment, I still quite enjoy the daily restaurants
dining.</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span style="background: white; font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">In
fact, I do try to dine at odd hours where possible where there are 1 for 1
deals in town and neighborhood areas. Some credit cards also allow 50% off
dining which fits my budget and taste buds comfortably.</span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><br /></span></div>
</span><span style="background: white; font-size: 12pt; line-height: 115%;"><div style="text-align: justify;">
<span style="font-size: 12pt;">Some random
rants! I think I need to blog more or I will just have endless to say in 1
post!</span></div>
</span><br />
<div class="MsoNormal">
<o:p></o:p></div>
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<div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com0tag:blogger.com,1999:blog-1377738835782322104.post-78401982278221869072018-06-08T20:30:00.000-07:002018-06-08T20:39:10.478-07:00Rent or Buy House In Singapore?<br />
<span style="font-family: "arial" , "helvetica" , sans-serif; font-size: large;">As I reach MOP for my house, I face 2 choices: To cash out and rent or to buy (another one). Conventional wisdom (or culture) states that we should always buy, otherwise we are subsidising the landlord. This mindset is especially prevalent in Singapore where house ownership is more than 90%; public housing is highly subsidised and housing instalments are paid for via CPF. <br /><br />Due to the CPF restrictions, many people feel that they are not paying for housing as it is paid for via CPF contributions. This reasoning is flawed as CPF can be cashed out at age 55 and pays a respectable 2.5% risk free rate. If we were to ignore mental accounting and view CPF as really our own money, the tendency of owning a home may differ substantially. <br /><br />Let's breakdown the cost of my home ownership and determine if it makes sense to rent or buy. <br /><br />Owning a home (calculations exclude utilities) <br /><br />20% Downpayment for a 1.2M private property: SGD 240k (add 10k for basic renovation to round up to 250k) <br /><br />Yearly interest payable base on 2% (long term rate) approximately = 960k x 2% = SGD 19,200. I am assuming interest rates rising gradually but the principal is reduced hence yearly interest paid works out to be 19,200. It is hard to forecast the total interest paid but let's just simplfy it to SGD 19k. <br /><br />Yearly maintainence: SGD 4000 <br /><br />Property tax: $400 <br /><br />Spending on servicing of aircon, repair/change appliances - $600 <br /><br />Hence per annum, the cost of maintaining a 1.2M home for own stay is $24,000. <br /><br />I am not factoring monthly instalments (of $3500) as the principal paid is your own money and can be recouped upon sale of property. <br /><br />They key deciding factor is whether you can generate enough returns on the SGD 250k downpayment such that renting makes more sense to buying. <br /><br />Assuming a 5 year investment horizon (on non leverage basis), a 250k investment if lucky enough, can generate a 5% return or 12,500 per annum return. If we were to be risk adverse and purchase the 4.35% Astrea 4 bond, assuming a buy price of 102, redemption of 100 at year 5, total return is 49375 or 3.95% (assuming interest accumulated reinvests at 0%). <br /><br />The base case scenario will be to park the funds idle in CPF at 2.5% and thus earning $6250 interest per year. <br /><br />Looking at the calculations, the cost of owning a 1.2M home works out to be <br /><br />Opportunity costs (6,250 to 12,500)+ Interest 19,000 + Tax, servicing, maintenance 5,000 = $30,250 to $36,500 <br /><br />Renting the same house works out to be $2,500 - $3,000 per month assuming it is either a 2BR in suburbs or 3BR in further flung places. <br /><br />How do we make a property purchase decision if we are indifferent to buy or rent? I think a key differentiator will be a person's investment ability. <br /><br />For a person who can generate 10% P.A on 250k, it is intuitive selection for him to rent and invest the rest. However, not many people I know (myself included) can invest at that rate (especially when equities markets are at record highs). <br /><br />The selection is much easier (no brainer actually) when the person is deciding whether to purchase or rent a HDB. HDB is highly subsidised (and conditional, not everyone can buy) and cost probably just 2.5k/month to rent a 4 room flat (in central areas). The interest cost is halved and home ownership expenses works out only to be less than 20k including opportunity costs. (Renovation costs more for HDB flat though). <br /><br />(I am not factoring utilities or other expenses which need to be paid if one were to rent as well) <br /><br />Furthermore, buying a home provide you with an option (up to lease expiry) to hedge against housing/rental inflation as long as you continue servicing your mortgage. It comes with a piece of mind that you own the place and not be at the mercy of landlords when markets are rising. However, it places a unnoticed strain on retirement income due to constant depletion of CPF savings. <br /><br />So how? Rent or buy? <br /><br />For people who choose to stay in HDB, buying makes perfect financial sense. <br /><br />For people who are at the cross roads between renting and buying private property, take note that renting is akin to shorting the property market - you borrow a house, pays interest (rental on it) while waiting for housing markets to come down. If it comes down, you can buy for instance at 10% discount from current levels thus profiting $120k savings (10% of 1.2M). The rental you have paid eg 5 years x 30k = 150k; Add on the 250k returns of 3.95% = 49,375, the difference is SGD 19,375. Not too bad since the future savings on the original 1.2M property is compounded over the long term (on purchase). <br /><br />It is not an easy decision to buy or rent, long or short. If we are in the middle of a financial crisis, it is an easy decision to rent (a year) first, buy later. Since rental is low and home prices will continue to fall. However at current juncture where there are no foreseeable crisis on the horizon, shorting the housing market may not yield positive return over next 5 years. There is always the risk that investment on the initial 250k goes sour or markets run flat or higher for another 10 years. Then one would have to continue renting for even long period to ride out the market. <br /><br />In summary: <br /><br />Buy HDB is always better than renting if you can <br /><br />Rent private housing only if you can invest and earn at least 4%-5% P.A on your downpayment + reno budget <br /><br />Buy private housing if market is trending upwards and be prepared to rent at least 5 years if one is timing entry into the property market. This is to provide the runway to allow cash investments to reap their intended returns while waiting for housing markets to show signs of bottoming. <br /><br />That said, refer to my blog post in 2013 on HDBs. I think I am fairly accurate here. <a href="https://sgbluechip.blogspot.com/2013/01/hdb-prices-will-come-down-because-1.html">https://sgbluechip.blogspot.com/2013/01/hdb-prices-will-come-down-because-1.html</a></span><div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com2tag:blogger.com,1999:blog-1377738835782322104.post-45172553443070523572016-03-07T04:53:00.001-08:002018-06-08T20:32:23.958-07:00Knowing my willingness and ability to take risk<span style="font-family: Arial, Helvetica, sans-serif; font-size: large;">In finance world, willingness and ability to take risk belong to 2 different concepts. Willingness to take risk refers to one’s character, education, investment experience, culture and even religion. <br /><br />For instance, many colleagues around me are high income earners. However, they only invest in time deposits as they are either conservative, have poor experience in investment or simply cannot invest due to religious constrains. They are unwilling to take risk for mainly emotional reasons. <br /><br />On the other hand, ability to take risk refers to quantifiable criteria like level of wealth, investment horizon, liquidity preferences and investment objectives. A investor with $5M in his account will most likely not hesitate to invest $250k into a high yield bond. His ability to take risk comes from his ability to lose (more) compared to the investor with a much lower level of wealth. <br /><br />Similarly with a lower liquidity preference and longer time horizon; investors are recognised as having higher ability to take risk and hence often advised to invest in riskier asset classes to enhance returns. <br /><br />In a bullish market, investors’ ability to take risk increase dramatically as their wealth increase in tandem with the rising market; the euphoria sets in, reinforcing their positive experience and thus raising their willingness to take higher risk. Unfortunately, all bull markets will eventually lead to high levels of speculation towards the end cycle of bull markets. For instance, the China market rallied more than 50% within 1 year of mutual fund investment. I took profit then, realising close to a 50% gain as seen below due to the unsustainable yearly returns. <br /><br /><a href="https://4.bp.blogspot.com/-exjrlP3mCy0/Vt133W5Kn0I/AAAAAAAAAkw/bY34oUh7FXU/s1600/china%2Bfocus.jpg"><img border="0" src="https://4.bp.blogspot.com/-exjrlP3mCy0/Vt133W5Kn0I/AAAAAAAAAkw/bY34oUh7FXU/s400/china%2Bfocus.jpg" /></a><br /><br />Vice versa, a falling market will always lead to lower stock trading volume as investors become poorer and reduce their ability and willingness (due to poor experience) to buy risk assets. <br /><br />However, the above definitions are purely academic. Ability and willingness to take risk, really, is subjective and varies for an investor sometimes even at different times of a day!<br /><br />Nobody truly knows their willingness and ability to take risk until going through at least one bull and bear market cycle. Suitability tests on investments are just a rough gauge at best to determine one’s risk profile. <br /><br />This is the same concept for inflation figures. Our official figure for inflation is between 2%-4% over the past few years. However, the inflation figure is only true for us if we consume products in the exact same composition of the basket of goods used to calculate inflation. <br /><br />In reality, every one’s inflation figure is subjective; by the same token, every individual’s risk profile is unique and cannot be measured using standard questionnaires. <br /><br />The current bear market is into its 11th month. Till date I have reinvested all the dividends (for funds) and traded bank bonds (which have rallied due to risk aversion) to higher yielding bonds. At times, I do have regrets of not selling EVERYTHING at the peak (who doesn't!) and purchasing now instead. However, every bear market I experience will only reinforce my mindset to stomach risk, enhancing my willingness to take risk. It also serves as a test of my current portfolio's Value at Risk and its ability to resist market shocks like now. In fact I have a better idea of how my portfolio will behave during stressful market conditions. <br /><br />Thus, in order to maximise your return on investment given your risk profile, stay invested in bear markets and lime me, you will know yourself better on your ability and willingness to take risk! </span><div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com1tag:blogger.com,1999:blog-1377738835782322104.post-16489808528880890502015-04-12T05:36:00.001-07:002015-04-12T05:40:16.126-07:00Modest Gain in my Unit Trust Portfolio<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">I seldom keep track of my Unit Trust portfolio as I have spent extensive time to construct it at the onset. It is engineered to pay monthly dividends as a form of consistent profit taking and ideally, the $600k portfolio should be paying 5% dividends and having 0% growth. It was constructed with a balance portfolio in mind, diversified between equities and fixed income; invested across different currencies, geographies and having negative correlation with different asset classes such as US treasuries, equities and soft currencies. </span></div>
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<a href="http://2.bp.blogspot.com/-nxPUgG8PsK4/VSpmxghgHeI/AAAAAAAAAkM/pco_3R60BBw/s1600/inv%2Bpic.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://2.bp.blogspot.com/-nxPUgG8PsK4/VSpmxghgHeI/AAAAAAAAAkM/pco_3R60BBw/s1600/inv%2Bpic.jpg" height="195" width="320" /></a></div>
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<span style="color: blue; font-family: Georgia, Times New Roman, serif;"><br /></span></div>
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<span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">By and large, the portfolio exhibits low volatility month on month basis. I am actually please to see negative positions as this means that there are some form of negative correlation within the funds. I will be worried if everything is positive (or negative!). </span></div>
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<span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">The investment horizon for the Unit Trust portfolio is for extended period and rebalancing is not required (ie selling underperformers and buying more winners) as I ignore market noises and continue to receive the monthly dividends. I will opt for dividends reinvestment should a bear market comes. </span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">The Unit Trust portfolio excludes my CPF and SRS funds. I still hold a concentrated portfolio of Singapore equities comprising of 12 stocks. </span></div>
<span style="color: blue; font-family: Georgia, Times New Roman, serif;"><br /></span><div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com0tag:blogger.com,1999:blog-1377738835782322104.post-22047917138271623112015-01-28T04:49:00.001-08:002016-03-04T03:52:22.315-08:00Good bye textbooks.. <div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US"><span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;">Today my
maid was clearing my room and asked whether she could (finally) clear my unwanted
texts, files and notes I have not touched for years. I gladly agreed. <o:p></o:p></span></span></div>
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<a href="http://4.bp.blogspot.com/-e7Xgg95KAGI/VMjZpJqyl8I/AAAAAAAAAjk/KFcQfyIvecw/s1600/photo%2B2.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" src="https://4.bp.blogspot.com/-e7Xgg95KAGI/VMjZpJqyl8I/AAAAAAAAAjk/KFcQfyIvecw/s1600/photo%2B2.JPG" width="320" /></a></div>
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<span lang="EN-US"><span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;">I used to
have the habit of keeping ALL my textbooks religiously for fear that I may need
them if I ever meet an unsolvable problem at work. My belief was shattered as
over the past decade, nothing of such happened. </span></span></div>
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<span lang="EN-US"><span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US"><span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;">No wonder I do not see any
plumber or air con technician bringing along their work manual to my home! The
notes and text I have “saved up” no longer serve any purpose other than giving
me lift to nostalgia lane. Over the years I have accumulated a lot of books but
not knowledge; a lot of information but not intelligence; learnt a lot of case
studies but not actionable plans. Are they worth keeping if they no longer
serve the purpose of education? <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US"><span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></span></div>
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<span lang="EN-US"><span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;">I am a firm
believer that the purpose of education is to fill an empty mind to an open one;
thus I would gladly trade them for a cleaner room. <o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></span></div>
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<span lang="EN-US"><span style="color: blue;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Finally, I
have more breathing space to fill up an open mind! </span><o:p></o:p></span></span></div>
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<div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com2tag:blogger.com,1999:blog-1377738835782322104.post-89249763209735686612015-01-16T05:14:00.000-08:002018-06-08T20:34:29.222-07:00SBC predictions: Elections will be this year 2015 (2H), BEAR market after. <span style="font-family: Arial, Helvetica, sans-serif; font-size: large;">In my course of work, I am rewarded directly how accurate I read the future. If I get it right, clients make money and I am rewarded with trading fees.<br /><br />Often, I base my decision on a combination of logic, pattern observation and intuition. Sometimes the trend are extremely obvious, eg we should be buying USD or HKD ever since there are talks from the Fed to hike rates last year; we should have been (and still) borrow in Eur, in which the interest rates is below 1% and buying into higher yielding assets like USD or good grade SGD bonds. When Capitaland issued a new 10 year bond paying 3.8% (reduced from initial price guidance of low 4%), everyone who has money should have bought it, as banks are willing to lend at least 70% of the purchase price and your outlay is only $75,000 for a $250,000 nominal value bond excluding fees. Today the bond trades above 102 bid. The upside in H shares look extremely glaring with good banks like ICBC, ABC, BOC (and many more), trading dividend yield of 7% with PE ratios of 5. Warren Buffet has made a comment that this is as good as money on the ground. Just pick it up. It was a no brainer that SIA and other airlines will benefit hugely from the massive oil correction; local banks will benefit as interest rates are expected to go up (3 years ago till now) etc.<br /><br /><br />I thoroughly enjoy the satisfaction that comes with monetary reward when I am proven right at work. Sometimes I do get it wrong as well. For instance, I did not expect HK gaming stocks to take a 40% hit within a short span of 6 months, oil to correct more than 50% or CHF will be rallying 30% last night. Good quality china property bonds are still paying more than 7% coupons but yet trading less than 95 and many more. I don’t get it wrong often, but sometimes not expecting an event means getting a forecast wrong due to the ripple effect of events. That’s life. <br /><br /><br />Today let me make a free forecast on the timing of Singapore elections. Again, I have a 50% chance of getting it right, if its not this year, it will be next. However, it is more likely to be this year, after National Day and PM rally for the following reasons:<br /><br />The SG50 is an elaborated celebration. I rarely follow what it is about, but it seems to have propaganda to let Singaporeans have a euphoric feel on our past achievements and be ecstatic about the future.<br /><br />Mediacorp channel 8 shows are advertising blatantly in their drama on the pioneer generation cards and other excellent policies the government has administered. Ministers are attending talk/interview shows on TV frequently!<br /><br />Mediacorp is 100% Temasek subsidiary.<br /><br />There will be more COE supply from Feb 2015 onwards, alleviating our cost of car ownership.<br /><br />The earlier the elections, the better for the ruling party. Less youngsters turn 21 to vote against them (if you have been reading SMRT feeback and The Real Singapore on Facebook), while more elder generation are alive to vote for their favourite elites.<br /><br />The bull market started in 2009 March, it is in the 6th year and we all know we are nearer to the next bear than an extended bull. Will the ruling party want to take the risk of having an election where there is a financial crisis, where unemployment will be higher and less votes for them?<br /><br />Revamp of IPPT and RT this year. This will please many reservists, including myself. I will only need to pay a fine if I do not attend IPPT after elections this year. Good job for that. I appreciate the grace period.<br /><br /><br />Low oil prices will mean inflation will be lower this year, giving MAS more leeway to weaken SGD and this will be a boost to our GDP as we are 300% dependent on exports. Oil prices will not stay low forever anyway. Many countries need it to be at US$100 to balance their social budgets.<br /><br />What’s the use of predicting? It is useful for me as I can have a view of what will happen this year and plan my investments or even my career according to my central view of the world.<br /><br />I used to work in a civil service and I could not stand the hypocrisy of incapable people playing politics to hide their incompetence. Though I have seen many good people in mediocre roles (myself included! Haa!) who on hindsight could achieve much more if they have worked in the private sector. Yet the environment was so stifling and many doubted themselves thus not daring to venture out of their familiar zones but stayed in the old place, suffering. In 2009, I made a prediction that the markets will definitely turn around sooner than later; studied a masters in finance then and started a junior role in banking while studying part time. Today I have enjoyed a good 5 years in banking and grown my personal investment to a 7 figure sum, pretty much in tandem with the bull market. Hence I am a firm believer that everyone should have some form of predictions that will aid them in earning their first and subsequent pot of gold.<br /><br /><br />Back to my predictions; look at the return on STI on the following election years<br /><br /><br />2 Jan1997 general election, STI contracted from 2449 (2 Jan 1996)- 2216 (3 Jan 1997), loss of 9.5%. 1.5 years later, STI hit 856 in August 1998.<br /><br />3 Nov 2001 general election, STI contracted from 1952 (3 Nov 2000) - 1341 (1 Nov 2001), loss of 31%. STI was nearly at the bottom then but 1.5 years later, on 1 April 2003 STI fell to 1281.<br /><br />6 May 2006 general election, STI rose from 2161 (6 May 2005) – 2632 (2 May 2006), gained of 21.8%. The bull market saw STI at 3805 in Oct 2007. 2 years after elections, STI fell to 1594 in Feb 2009.<br /><br />7 May 2011 general election, STI rose from 2752 (7 May 2011) – 3099 (2 May 2011), gained of 12.6%. STI is around 3300 now.<br /><br />If my prediction that 2015 Sept is the elections, by past 4 patterns, it seems that STI will always be lower after elections, meaning a bear market will occur. There are no visible patterns on whether STI will hit higher before elections.<br /><br />Be careful of your investments, after elections.</span><div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com3tag:blogger.com,1999:blog-1377738835782322104.post-8149876527053180402014-09-02T05:29:00.000-07:002014-09-02T05:29:04.358-07:00Annuity plans are just a function of compounded interest benefits<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">Today I read
an annuity benefit illustration on a brochure:<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">40 year old
male contributes 24,200 yearly for 5 years. <o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">At age 65,
he receives $2,000 per month (non-guaranteed) till 85 with a lump sum maturity
of $72,000 (non-guaranteed). </span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">Hence the total potential return is $552,000.<o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">The insurer
has a track record of meeting its projection. Hence for simplicity sake, let’s
assume above are guaranteed returns.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
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<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">At the
onset, it sounds extremely attractive to me. I can have an income to complement
my CPF life of about $1,200 per month and about $2,000 a month I will be able
to retire comfortably assuming inflation is at 0%!<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">However, as
a discerning citizen, I tried to replicate using a balance funds portfolio of
unit trust. </span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">Assume I purchase a balance equity fund of Fixed income + Equity.
The fund is likely to be able to meet its 4.5% payout and at the same time at
least maintain its NAV. <o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">The 40 year
old male contributes 24,200 per year for 5 years. Let’s assume a 3% return at
0% sales charge for the first 5 years. </span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">5 Years later, he would receive $128,481.<o:p></o:p></span></span></div>
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<br /></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">Using the
128,481, he invests for the long term at 4.5% per annum for the next 20 years. </span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">He would receive $309,859.<o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">Thereafter
at 65, he elects to pay himself 9% P.A and he would receive $27,887.31 yearly
and after 20 years he would still receive $127,573.20, which was roughly the
amount he started at age 45. <o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
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<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">The
difference? </span></span></div>
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<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">If he outsourced his retirement planning to an annuity product, he
receives $552,000. If he does it himself diligently, he may receive $685,319 or
more, assuming his investment average return is no more than 4.5% per annum. </span></span></div>
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<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">That’s
a huge $133,319 difference!<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">On top of
that, the DIY route allows flexibility to bring forward the pay cheque if
required and still get a better return. There is no early termination charges
neither is there insurance coverage though. <o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">So what
does this exercise mean? To me, it means the following<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">- Most
Singaporeans are rich. They can afford to earn $133,319 lesser over the long
term. Singaporeans are not bothered with retirement planning and putting the
blame on others for having to work past retirement age. This is why the market is
filled with so many retirement products that earn no more than 5% on projection
basis and yet selling like hot cakes. <o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">- The
effects of compounding has been used repeatedly by annuity companies to give
seemingly huge returns at a paltry investment return rate of less than 5%.<o:p></o:p></span></span></div>
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<br /></div>
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<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<br />
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">- Consider
instead to contribute to SRS and CPF special account instead while investing
for the long term and enjoy the benefits of compounding instead of trying to
buy 1-2 products and call retirement planning a day.</span><o:p></o:p></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">- The present value of money must always be considered and discount back to present value in order to make sense of the projections you are looking at. In reality, SGD 1M at 45 years from now at 4% inflation rate is really only worth $171,200. That's probably a 2 room flat future value with a lease of 99 years. Hence receiving $28,000 yearly 45 years later is only $4793 or no more than $400 a month! </span></span></div>
<div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com4tag:blogger.com,1999:blog-1377738835782322104.post-17780561559922192542014-07-01T19:30:00.000-07:002014-07-01T19:30:20.641-07:00My thoughts on CPF minimum sum, retirement and risk hedging<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;"><span style="color: blue;">If you were to receive $155,000 and
asked to stop working for 5 years, would you agree? How about stop working for
10 years?</span></span></div>
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</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;"><span style="color: blue;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">I have written articles on
retirement and income investing long enough to know that one can never solely rely
on CPF for retirement. The main reason is because majority of CPF savings are
often used to fund your home purchase, the OA account usually has very little left
to be set aside for retirement. Hence more often than not, the minimum sum is
usually what is left after property usage. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">Using myself as a case study, I can
work out on how much CPF is to be used for housing<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">I have paid about 720k for a property.
<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">Assuming a 2.5% interest rate
averaged for my home loan, I would have paid a total of $815,000 base on my
current loan quantum and a loan of 30 years tenure. The total usage from CPF
would be $923,000, inclusive of the 15% downpayment from CPF. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">At a hypothetical combined monthly income
of $12,000, 20% to OA contribution (averaged over the working life); at the end
of 30 years, nothing is left in the OA account. It is likely that I would have
met the required minimum sum (at that point of time) with little excess.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">The monthly payouts of CPF life
provides about $1200 if the minimum sum is met. I believe for a comfortable
lifestyle, at least $4,000 monthly (in today dollars) is required in Singapore.
This is only about $130 a day. Hence, there is a shortfall of $2,800. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">$2,800 can be easily achieved using
a portfolio of $500,000. Hence it is extremely important to create a portfolio
of recurring income. The larger the portfolio, the easier it is to create
cashflow and the less reliant on CPF minimum sum. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">Buying a home within my means also
help to stem cashflow out from my income and portfolio and rely completely on
CPF funds for monthly installments as long as I am working. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">I am also mindful the following risk
that would derail my retirement planning:<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">- health risks that early terminates
my working life<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">- interest rate risks that wipe out
my CPF account prematurely before my loan tenure ends and I have to cough out
cash for monthly repayment<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">- career risk in which I lose my job
in the event of a mistake, complain or economic downturn<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">- portfolio risk in which a global
economic downturn wipes out all my gains and my portfolio drops 50% which
triggers a margin call to top up funds.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">Strategies to hedge against the
above risks:<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">Health Risk: Purchasing various
health term insurance to provide payouts and hospital bill coverage upon
illness<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">Interest rate risk: Invest my excess
CPF funds at higher rate of return while keeping $20,000 in my CPF OA to earn
the additional 3.5% interest and paying the monthly installment at current 1% mortgage
interest rate. I am prepared to redeem a significant portion of the loan when
interest rates move above 2.5%. Hence I chose a floating rate home loan with no
lock in and flexibility to switch to a fixed tenure loan<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">Career Risk: Invest in my career by
constantly upgrading through studying (just completed my postgraduate), reading
and meeting with professionals within the industry to ensure I am up to scratch
with my cohort<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;"><br /></span></span></div>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">Portfolio risk: Continue to take
profit on my portfolio (through monthly dividends) while we are still enjoying
the ride up and continue to pay down my portfolio loan using my dividends and
monthly income.</span><o:p></o:p></span></div>
<div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com0tag:blogger.com,1999:blog-1377738835782322104.post-70982096512327929732014-06-07T00:54:00.000-07:002014-06-07T00:54:46.607-07:00My unit trust portfolio<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="color: blue; font-family: Georgia, Times New Roman, serif;">Throughout my
investment journey I learned the importance of diversification and dividend
investing. Diversification hedges against single stock/bonds mishap and over
confidence in one company; dividend provides the psycological consolation of
recurring income from my investments. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="color: blue; font-family: Georgia, Times New Roman, serif;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="color: blue; font-family: Georgia, Times New Roman, serif;">Last year after much deliberation, I
liquidated part of my stocks portfolio and purchased unit trust in order to
diversify the systemic risk. I still hold a good number of blue chips like DBS,
SGX CAMBRIDGE, OUE, Semb Corp Industries but I decided that no matter how
diversified I am in local stocks, I am subjected to political and country
risks. If one day the PAP is ousted from power, our stock market may take a
severe beating. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="color: blue; font-family: Georgia, Times New Roman, serif;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="color: blue; font-family: Georgia, Times New Roman, serif;">Last year, I pledged my stocks for a credit line with my then
bank at 1.05% interest. Hence the unit trust you see below are partially funded
by cash, ie 300k and partially borrowed.</span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-GRv4lfwa-O4/U5LEjgpddxI/AAAAAAAAAho/VEzfinLLatc/s1600/UT+portfolio.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://2.bp.blogspot.com/-GRv4lfwa-O4/U5LEjgpddxI/AAAAAAAAAho/VEzfinLLatc/s1600/UT+portfolio.jpg" height="280" width="400" /></a></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;">I chose dividend
payout for all my funds (with exception of USD bond funds) as I usually
reinvest them at my discretion when markets are down. The markets are in a
staggered uptrend mode. By opting for dividend payout in cash instead of
reinvestments, I am forcing the fund managers to take profit on a monthly basis
for me. There is no point for me to reinvest and keep buying higher. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;">After 1 year, the
total dividends I have received is approximately $30,000. The capital loss on
my funds works out to be 9,900. Hence the net return is 3.2%. Moreover, I
incurred a interest cost of about $3150. Hence the return works out to be
2.76%. However, if you calculate base on my initial capital of $300,000, my leveraged
yield works out to be 5.65%, if I liquidate everything on Monday. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;">At current market,
I intend to hold the unit trust portfolio for the long term, possibly till
retirement. The whole purpose to construct a leveraged unit trust portfolio is
to lock in the contract for low interest rates (1.05%) and use the dividends to
repay the loan. Technically, the loan can be repaid in about 10 years time
assuming dividends remain constant. I can repay the loan anytime if I sell off
my stocks anyway. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;">I still have about
$300,000 “debt headroom” to draw down and capitalise on any market opportunity
that may appear. Eg, the stock market crash 20%, I can utilise $100,000 to pick
up deeply discounted stocks at low interest rates while waiting for recovery,
the dividend yield will be able to pay for the interest accured. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;">Is it possible to
replicate this strategy? Yes and no. I bought most of the unit trust from
fundsupermart and transferred to the bank I was previously working. The
interest rate was granted at staff rate and if you walk in to any bank for such
service, be prepared for at least 1.6% loan rates and 2% sales charge. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;">The good thing
about buying unit trust for dividend is the payment is usually prompt and gains
are not taxable. This serves as good income if I am out of job but if I am
gainfully employed, the dividends will pay for the loan and interest while
buffing up my credit limit to draw down in the event there is a market crisis.
I will opt for dividends reinvestment scheme if any unit trust fall below 10%
from my initial purchase price. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;">At low interest
rates environment which in my view will continue for several years, borrowing
money to spend/invest is the best way to hedge against zero interest rates
environment. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;">My investment
portfolio has grown significantly from the leverage. Including CPF and SRS
funds, I have about 1M invested already. My cash stock dividends and trading
gains works out to be about $20,000 a year which in totality brings me $4,000
passive income a month. I will work towards a 5 figure passive income in order
to have a more comfortable life ahead. Still slightly away from the 50% mark, I
shall persevere. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif;">Do follow Sg Blue
Chip on my investment journey. </span></span><span lang="EN-US"><o:p></o:p></span></div>
<div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com0tag:blogger.com,1999:blog-1377738835782322104.post-90287304756841190582013-05-24T18:14:00.004-07:002018-06-08T18:04:01.669-07:00Good savings from SRS and CPF voluntary contribution<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif;">It is the time of the year to pay income tax. The company owners are happy to receive dividends instead of income as they are tax a maximum of 18% at corporate level. The income I receive from REITs and listed company has already been taxed at source. Hence, I do not benefit from the corporate tax structure. For ordinary middle income Singaporeans like you and me, we can contribute to SRS and CPF (special account) to save a little on tax.</span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif;">I have completed my last module last year for my postgraduate course, which means I do not enjoy tax relief on course fees this year onwards.</span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif;">It is a struggle to decide if I should be saving into my SRS and CPF SA account. It is upfront savings VS long term locked-in decision. However, I decided to contribute the maximum as I forsee myself living beyond 62 and the funds will be invested in unit trust and enjoy 4% risk free rate from CPF respectively. </span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif;">I did a rough calculation and by voluntary contribution of $19,750 to both my retirement accounts, I saved 4.9% upfront or $968 tax after rebates. I personally think it is an excellent way to save retirement money. Given that many people stash aside money to endowment plans (with nominal coverage), by contributing funds to SRS and CPF, I will be earning at least and average of 4.5% P.A, which is likely to be better than most endowment funds in the market. </span></div>
<br />
<div class="separator" style="clear: both; text-align: center;">
</div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif;">It is extremely important to invest your SRS funds instead of leaving it idle. For me, I am treating my SRS and CPF funds as "bonds" allocation, cash funds as equities allocation. Hence, I am mainly investing retirement funds in bonds (sounds silly, but target returns of 4.5% is to outperform endowment plans benchmark), which will double by the time I withdraw them. Don't forget, I start off with 4.9% upfront savings gains! </span></div>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-BjCIpgOgwtg/UaAPeok4QYI/AAAAAAAAAeo/obmZLQ4K4m0/s1600/SRS+1.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="30" src="https://1.bp.blogspot.com/-BjCIpgOgwtg/UaAPeok4QYI/AAAAAAAAAeo/obmZLQ4K4m0/s400/SRS+1.jpg" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">0% sales charge from IFast</td></tr>
</tbody></table>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-xUdJ_7WVreE/UaAPkpB6RYI/AAAAAAAAAew/VXta79VrxKE/s1600/srs+2.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="6" src="https://4.bp.blogspot.com/-xUdJ_7WVreE/UaAPkpB6RYI/AAAAAAAAAew/VXta79VrxKE/s400/srs+2.jpg" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Decent performing bond fund after 6M</td></tr>
</tbody></table>
<br /><div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com0tag:blogger.com,1999:blog-1377738835782322104.post-9884414385297280552013-05-07T02:55:00.003-07:002013-05-07T02:56:10.195-07:00What happened to my Sembcorp put option trade I did in March?<br />
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">After
entering the trade on my ELN for SCI, my initial outlay for 11,000 shares was
54,604.28. It was converted to shares, instead of just earning the option premium. Just after it went XD, I sold it at $5.02, settlement amount was
$55,107.73. Hence capital gain was about $500. I am also entitled the $0.15 per
share dividend, which works out to be $1650. Hence the total gain was $2,150.
In percentage terms, my gain was 3.9% over 1 month. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">Given the
current rising/range trading markets, I will be looking to invest into more
ELNs to be given the opportunity to add blue chips into my portfolio at a lower
market price.</span><o:p></o:p></span></div>
<div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com1tag:blogger.com,1999:blog-1377738835782322104.post-83309396017669142292013-04-15T02:41:00.000-07:002013-04-15T02:41:15.390-07:00SPH CRASHED 5.65% IN ONE DAY<br />
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">Fortunately
I closed my entire SPH position in one day when it reached $4.47. It is facing
the stark fact that it is a sunset/declining industry, inching its demise
towards paperless age. The REIT story was a nice opportunity to exit at a modest profit. Will it materialize? Perhaps not in the next 6 months. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">I have
since reinvested the proceeds in unit trust, oil and gas, utilities sector and embarked on
portfolio financing by pledging all my shares and unit trust to a bank. By end
of May, I should be able to gear my portfolio to about $800,000 at 1.05% preferential
lending rate given by my company.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US"><span style="color: blue; font-family: Georgia, Times New Roman, serif; font-size: large;">By then, my
monthly passive income should reach $3,000 per month after accounting for interest
costs and net yield on my capital will be at least 8% P.A.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US"><span style="color: blue;"><span style="font-family: Georgia, Times New Roman, serif; font-size: large;">Stay tuned
for my updates.</span> </span><o:p></o:p></span></div>
<div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com5tag:blogger.com,1999:blog-1377738835782322104.post-72094930519159760632013-03-13T14:57:00.000-07:002013-03-13T15:01:33.519-07:00Sold off all my SPH at $4.47! <div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif;">
</span><span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;"><span style="font-size: large;">I sold off
my SPH at almost 5 years high of $4.47 pocketing a nice profit and the
dividends since 2007. I received about 6% dividends every year while sitting of
paper losses of between 100,000 to 10,000. It was a difficult period to hold on
to such a stock with very limited upside. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;"><span style="font-size: large;">During the
Lehman brother crisis, the generous dividends gave me strength to buy ARA,
Fortune Reit, Parkway Life, Starhill Reit, Lippo Malls, Cambridge, OUE etc,
while all these counters have gave me nice dividends and I eventually sold off
for a profit, SPH was always below my purchase price when it cut dividends in
2008 after Sky Eleven profits was fully recognized. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;"><span style="font-size: large;">Currently I
am back with more than $200,000 cash and waiting to reinvest SPH and the
markets when valuations are lower.<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;"><span style="font-size: large;">One of the
lessons I learnt investing in SPH is diversification. Previously, I have loaded
49,000 shares or almost $213,000 in a single stock. This goes against the
principles of diversification and when markets tanked, no matter how defensive a
stock is, it is going to go down as well.<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;"><span style="font-size: large;">I should
have switched out of SPH into higher capital gains stocks like Capitaland, UOB
or even STI ETF when markets were gloomy in 2009. However, I held on to it and
waited almost 4 years to realize a modest gain. Although on an annualized basis,
I have about 6% returns, the downside risk I have taken did not justify the
modest return I was receiving. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;"><span style="font-size: large;">Going
forward, I will redeploy my proceeds into at least another 5-10 Singapore blue
chips to diversify my dividend streams and market risk. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;"><span style="font-size: large;">My targeted
returns will be higher now, given I have more experience in the markets. I aim
to achieve at least 7% returns from my SPH proceeds going forward.<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;"><span style="font-size: large;">The first
trade I did was to sell a put option for Sembcorp Industries (SCI). The option
premium was 7.84% over 1M. My conversion price is $4.9960 (97% of current
trading price).<o:p></o:p></span></span></span></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://3.bp.blogspot.com/-6SpjtiyQA8o/UUD1yRvRglI/AAAAAAAAAd8/tW6-NbL-0LU/s1600/1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="187" src="http://3.bp.blogspot.com/-6SpjtiyQA8o/UUD1yRvRglI/AAAAAAAAAd8/tW6-NbL-0LU/s320/1.jpg" width="320" /></a></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;"><span style="font-size: large;">If on 23<sup>rd</sup>
April, SCI is at $4.9960 or lower, I will receive 11,000 shares. However, as my
settlement amount is $54,604.28 (after adjusting for option premium), my effective price to buy SCI is $4.964. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;"><span style="font-size: large;">If I do not
get the shares, I will receive $352 interest. The shares will go XD on 29<sup>th</sup>
April. Hence if capital were to be converted to shares, I will be assured of $0.15
dividends. I do not mind holding SCI for the long term. The only drawback is
the low ~3% dividend yield. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;"><span style="font-size: large;">I will be
looking to invest in put options to aim buying lower than trading prices of stocks.
<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;"><span style="font-size: large;">Take note
that as I am working in the derivatives industry, I am paying virtually no
spread for my stocks/derivatives investment. For normal retail folks, the maximum interest
you are able to receive is actually 3%-4% instead of 7.84%. My colleagues will
not want to take in your trade at 0.64% spread (or about $20) to broker an option
trade. <span style="mso-spacerun: yes;"> I do not wish to disclose my current company as well. </span></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;"><span style="font-size: large;"><span style="mso-spacerun: yes;"> </span>Stay tuned on my investment journey.</span> <o:p></o:p></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif;">
</span></div>
<div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com9tag:blogger.com,1999:blog-1377738835782322104.post-13420474885780178612013-03-09T17:41:00.001-08:002013-03-10T00:44:15.034-08:003 Bedroom or 3 Bedroom Dual Key<br />
<blockquote type="cite">
<div style="text-align: justify;">
<span style="color: blue;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;">The dual key unit costs $975,000, which is about $250,000 more than the unit I bought. I was struggling whether to spend that $250,000 for the unit for investment. However I decided against it, not due to affordability issue, but rather value principles. </span></span></span></div>
</blockquote>
<br />
<blockquote type="cite">
<div style="text-align: justify;">
<span style="color: blue;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;">The dual key unit costs $250k more compared to 3BR, $300,000 more than a 2BR. Hence buyers are paying more than 1,000 psf for the 250 square feet studio. This costs the same as buying private condominium studios. </span></span></span></div>
</blockquote>
<blockquote type="cite">
<br />
<div style="text-align: justify;">
<span style="color: blue;"><br /></span><span style="color: blue;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;">If Topiary appreciates, likely because of good rental demand, then dual keys unit makes perfect sense. But we won't know till 3 years later. Another alternative is to buy 3BR, if rental is good, the 3BR will appreciate to possibly about 1M. By then I can gear up back to 80%, get the additional cash out to buy another studio for rental investment. Meanwhile I can save the down payment, stamp duties, interest costs for shares investments.</span></span></span></div>
</blockquote>
<blockquote type="cite">
<div style="text-align: justify;">
<span style="color: blue;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;">Hypothetically, for my case, I bought at ~700k, loan ~560k. If valuation goes up to 1M, I will gear up back to 80%, which is 800k, less outstanding loan about 500k then and CPF used which is 15% or 105k + accrued interest + instalments to date using CPF. I still may have about 200k cash left over for a down payment for a full sized studio. </span></span></span></div>
</blockquote>
<blockquote type="cite">
<br />
<div style="text-align: justify;">
<span style="color: blue;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;">If rental is lousy, it means in the first place the dual key unit was a poor bet. </span></span></span></div>
</blockquote>
<blockquote type="cite">
<br />
<div style="text-align: justify;">
<span style="color: blue;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;">Dual key makes sense only when the property is completed and rental income is evident, especially if its near mrt. For my case, it may be a tad risky after some consideration. Who is the target segment of tenants? Professionals earning $5,000 a month? Are they willing to cramp in a hotel sized property? If rental is at most $1,500 monthly, it will take about 14 years to break even, the $250,000 studio unit. If I were to compare it to a 2 BR, the breakeven period will be even longer at 17 years. This is because the composition of the dual key unit is a 2 Bedroom + 1 Studio. Hence I will be staying in the 2 BR unit and renting out the studio. I have not even taken account into agent fees, utility bills of tenants (since I am effectively renting a room out), property taxes, wear and tear repair etc.</span></span></span></div>
</blockquote>
<blockquote type="cite">
<br />
<div style="text-align: justify;">
<span style="color: blue;"><br /></span><span style="color: blue;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;">Topiary 3BR single key is a safer bet at the price buyers are paying and also ensures a more comfortable monthly repayment schedule. It is the Chinese saying of being defensive if you take a step back but allows you to be offensive if market is in your favour. </span></span></span></div>
</blockquote>
<blockquote type="cite">
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">Of course my quality of life, from a space perspective will be better since my living space is bigger with single key 3BR than a dual key unit! </span></div>
</blockquote>
<div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com0tag:blogger.com,1999:blog-1377738835782322104.post-18283542942634494352013-03-09T03:58:00.004-08:002013-03-09T17:42:34.491-08:00Finally bought a property! (Part 3) <span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">Then, we chanced upon Topiary, which
looked very far off on the Singapore Map near Sengkang, along Fernvale and Yio
Chu Kang Road. <o:p></o:p></span></span></span></span><br />
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">It is not within 5 minutes to walk
to Fernvale LRT. It is a good 15 minutes. We walked over to Greenwich, which
has a cold storage and a number of nice restaurants. The nearest MRT was
Buangkok 3km away, followed by Yio Chu Kang, a 10 minutes drive away. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">Clearly, the location was not the
best. However, we noticed that new condo developments just across the road were
selling for at least $1100 PSF. Even older developments can be rent out at
about $3,000 for 1000 square feet condominium. There were not many condominiums
in that area, being a new estate, but at seletar area, there are many landed
properties, similar to Kembangan, Siglap area. <span style="mso-spacerun: yes;"> </span>The area gives me a nostalgic feel, with
Holland Village as a similar feel (before MRT was up then). I am likely to
drive and continue to drive hence dropping off my wife then at MRT station in
the morning will alleviate her transport woes. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-FzImVhV9Lsw/UTsjJZ3DhzI/AAAAAAAAAdk/lyiCN8YZBas/s1600/1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="105" src="http://2.bp.blogspot.com/-FzImVhV9Lsw/UTsjJZ3DhzI/AAAAAAAAAdk/lyiCN8YZBas/s400/1.jpg" width="400" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://3.bp.blogspot.com/-1mSaA2dG8EM/UTsjYh9RIYI/AAAAAAAAAds/pnWY-V5Bx74/s1600/2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="80" src="http://3.bp.blogspot.com/-1mSaA2dG8EM/UTsjYh9RIYI/AAAAAAAAAds/pnWY-V5Bx74/s400/2.jpg" width="400" /></a></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">The pricing was reasonable. On
average, they are selling for $730 PSF. The unit I am eyeing for, a 21<sup>st</sup>
level pool facing 3 Bedroom unit is selling for $716,000 for 915 square feet.
This works out to be $783 PSF before grant. As our income is at $12,000, we are
eligible for deferred $10,000 grant when my fiancée becomes citizen. This will
further reduce our cost to $772 PSF.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">Assuming ECs will trade at a 15%
discount to nearby similar age properties, there is at least a $100 PSF upside
for Topiary. This allows me to floor my downside risk of purchasing market at
current levels. Assuming I am able to rent out my condo after 5 years at
$2800/month, my gross yield will be 4.76% after grant, before interest costs.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">My cash portfolio of stocks
generates at least $20,000 per annum of dividends returns, which can comfortably
cover the monthly installment of the purchase.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">This allows me to continue my cash
investments and not be afraid of losing my job. At most I become a tuition
teacher, taxi driver or full time blogger; I will not lose the condo over my
head. Both my wife and I can work in a $2,500 job and still afford the monthly installments
without touching our retirement nest egg. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">My CPF investments can continue as
well as I am only utilizing $60,000 from my OA account for the down payment and
stamp duty, the rest shared with my partner. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">The
calculations are as follows:<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">5% cash =
$35,800 <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">15% CPF = $107,400<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">3% Stamp
Duty - $5400 = $16,000<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">Total = $159,200<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">Loan = $573,000<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">Monthly
installment base on 2.5% = $2,270.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">Risks:<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">We are
actually buying at the peak of the property cycle. I must be prepared for a 20%
downside for my property. Hence, I am likely to liquidate my property counters
to avoid taking double layered risks.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">My partner
and I have about 3 years more before we move in. We need to ensure that we can
wait till then and not break up before marriage or we will lose 20% of the
property price.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">There are
at least 2 more sites reserved for ECs, thus limiting upside for Topiary. I do
hope that developers bid higher prices for the land so as to translate to
higher selling prices.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">The next
post will be on why we chose a 3 Bedroom instead of a 3 Bedroom dual key and
forgo the potential for rental when Topiary is just minutes away from the
Seletar Aerospace hub. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<br /><div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com4tag:blogger.com,1999:blog-1377738835782322104.post-48851895776545873362013-03-09T01:47:00.000-08:002013-03-09T17:45:50.626-08:00Finally bought a property! (Part 2)<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">Upon deciding to purchase Riversail,
I brought my family members, fiancée, colleagues to view my chosen unit. They
all feel it is a good buy, given current market situation. My fiancée who started work 6 years ago also said she could contribute some money for our future
(be it for own stay or investment). All the better, then I will include her in
the mortgagor as well. We did our sums and financing was extremely comfortable; she
has about $70,000 CPF and $20,000 cash to contribute, I can cover the rest plus
monthly installments till property is completed and ready to move in. It will
be a tenancy in common 40%-60% arrangement. <o:p></o:p></span></span></span></span></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">We place a cheque with the agent and
chose the highest floor unit. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">However, if it is not meant to be
yours, it will not be. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">One morning I woke up and went to
the IRAS website. I realized that because my fiancée is a PR, we are subjected
to pay ABSD of 5%, even though I am a Singaporean. This pissed me off big time.
I spent 2.5 years in NS and just because I am not married and want to get an unsubsidized
private property, I have to pay 5% additional stamp duty? If we factor the
usual 3%, we have to cough out almost $57,000 as taxes to the government! This
is an excess of $39,000 in cash to the government. We were quite upset as this
is no way to treat a SIngapore citizen, who refused to buy subsidise housing
meant for more needy Singaporeans but will be treated as a PR instead. It is
not about whether we can afford the condo unit, but rather whether we are
willing to pay the tax that is a deadweight loss to us and society. It creates
no value to anyone except the government.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">We decide to retrieve back our
cheque and look elsewhere for better valued properties. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">We rationalised that since government wants
to tax us, we will go the conventional way to enjoy subsidies on housing by
leveraging my Singaporean identity and pink IC.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">We were not keen at BTO, since the
locations are poor and construction takes forever to complete. 2017 for the
earliest in non mature estate. I will be a old man by then. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">We went to look at the Design Build
Sell Scheme at Parkland Residences, which was marketing almost $700,000 for a 2<sup>nd</sup>
level 5 room flat. We decided that DBSS stands for Don’t Be So Silly (DBSS). It
is simply not worth the premium when your competitors are just BTOs and by
paying a little more, you will be able to get a similar location but smaller
sized Executive Condominium (EC).<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">We went to look at Heron Bay, which
left only west sun facing units and low levels dual key 3 bedroom units. The
finishing was decent, but the leftover units did not excite us enough to even
stay more than 10 minutes at the showflat. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">We went over to 1 Canberra. The
showflat was already there for about 1 year. Most of the units are west sun
facing. If you choose units that are not facing the west, your balcony view
will be blocked partially by the unit that covers your west sun. The layout of
the condo development was extremely packed, possibly constrained by the small and trapezium
shaped land.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">Prices are not cheap, selling for
750 PSF with eight courtyards beside selling for 810 PSF. It does not seem to
be of value and capital appreciation will be capped by the full condo beside 1
Canberra. The nearest eatery is koufu a good 10 minutes walk away. <span style="mso-spacerun: yes;"> </span>There was some defects in the showroom, which
we were appalled, given that even a showroom can have defects, we have little
confidence in the actual delivery of the unit. The developer is from China,
which has little track record in Singapore. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">We decided to focus on looking for
EC, given the subsidies by government and cheaper PSF would allow us to
purchase a unit comfortable and not rush into marriage till 2-3 years later. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">The next post will talk about our
purchase of EC. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com2tag:blogger.com,1999:blog-1377738835782322104.post-28251171171721304872013-03-08T13:43:00.000-08:002013-03-08T13:43:44.365-08:00Finally bought a property! (Part 1)<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">The next few posts will document my
journey to search for a value property and the thinking process, dilemma I had
during the hunt.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">The first property showroom I went
was Riversail near upper Serangoon Cresent. It was a private condominium developed by
Allgreen. The property was about 3KM from where I am staying. I like the
property for several reasons.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">- Near to my current home. I am
familiar with surroundings such as Hougang Mall, Buangkok, Compass point, Nex,
Kovan heartland mall.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">- Next to park connector that allows cycling
to punggol and kallang.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">- Efficient internal layout, with
very little wastage space. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">- Separate living and dining area
instead of having to split your living room to dining and living into half. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">- Decent pricing of $850 PSF. A 2+
study 915 square feet unit will cost on average $778k. Assuming a modest rental
of $2,800 a month, gross yield is 4.3%.Even if rental is $2,500 monthly, gross
yield is 3.86% P.A.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">- Downpayment of 5% cash will cost
only $39,000, the rest 15% of $117k can be paid by CPF since I am a first
timer. It is extremely affordable. Monthly installments will be about $2,150
@1.5% interest; $2,460 @ 2.5% interest and $2,800 @ 3.5% interest. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">- The furnishings are excellent for
a mass market condominium. It comes with marble flooring, marble wall (hotel
standard) in the master bedroom toilet, build-in fridge, shoe rack (outside your
unit), branded kitchen appliances. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">- Choice units are available and not
released yet. I can place a blank cheque and be almost assured to secure my
high floor 2+study pool view unit.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">- Free 2 years shutter bus service to
Hougang MRT was available upon TOP, which looks attractive to my fiancée who
doesn’t drive.<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">- Nearby Executive Condominiums (EC)
like Heron Bay are selling on average $750 PSF. Just by paying about $100 PSF
higher, or about 100k more, I will not be subjected to HDB complex binding
rules and regulations. Even completed ECs (park green) are selling for $800 PSF
when it is already 10 years old. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">Cons of the project<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">- Too many units of 900+<o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">- Many condominiums under
construction, Austville was sold at about $700 PSF, boathouse residences at $900
PSF, Heron Bay at $750 PSF, BTOs and DBSS projects can be seen under
construction. It will definitely affect the traffic, rental yield, living
quality, resale value of Riversail, in time to come. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">However, the main purpose of
purchasing a property is to ensure I have a roof over my head when my
parents pass on and the current HDB is dividend among my 2 siblings. Hence, my
consideration is for own stay rather than investment. Even if I were to sell
off 1-2 years upon TOP, it will be of good value given that boathouse
residences are selling for above $900 PSF, the ECs and HDB projects cannot be
sold until 5 years after TOP. <o:p></o:p></span></span></span></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://3.bp.blogspot.com/-CrMC6n46Wc0/UTpbUF92-tI/AAAAAAAAAdE/aQlKR9meQtA/s1600/mrt_systemMap_TSL.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"></a> </div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;">Despite benefits outweighing the
cons, I did not purchase Riversail and purchased another one 3.5KM away. <o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="color: blue;"><span style="mso-spacerun: yes;"> </span>It will be explained in the next post. <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com2tag:blogger.com,1999:blog-1377738835782322104.post-28506784229029085152013-02-10T07:03:00.001-08:002013-02-10T07:07:33.191-08:006.9M population? I don't believe... <span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">I do not follow a
lot on the ranting of increasing our population to 6.9M. The existing infrastructure
have their own constrains to be able to cope with another 1.5M of population.
Look at our expressways. If we were to widen the roads, it will cut into
temples, homes, pavements. Our main MRT stations are already near to maximum
capacity. How much more can they transport? Our cars are already very
expensive. Must cars be so expensive that it is only a privilege for the wealthy? <span style="mso-spacerun: yes;"> </span></span></span></span></div>
<div style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;"><span style="mso-spacerun: yes;"></span></span></span></span> </div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">The fundamental
argument for population growth is to improve the quality of life for
Singaporeans. But what I have experience for the past 5 years of
rapidly increasing population is a perpetual downward trend to poorer quality
of life. </span><br />
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/-AEGqJcgQKh0/URe2LA00LWI/AAAAAAAAAc0/2qU0IYcU2s4/s1600/1.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="225" src="http://3.bp.blogspot.com/-AEGqJcgQKh0/URe2LA00LWI/AAAAAAAAAc0/2qU0IYcU2s4/s400/1.jpg" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">So many people, almost no space to put them in my BLOG!</td></tr>
</tbody></table>
<div style="text-align: justify; text-justify: inter-ideograph;">
<o:p><span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;"> </span></o:p></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div style="text-align: justify; text-justify: inter-ideograph;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">In a nutshell, we
have experienced a 1M growth in population in less than a decade, but I do not
see my quality of life improving. Instead, I have to work longer hours as the
work market becomes more competitive. I have to handle difficult foreign
talents as they demand higher work quality from Singaporeans. Everyday unhappy
Singaporeans lament on the increase in population that led to the increase in
property prices.</span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div style="text-align: justify; text-justify: inter-ideograph;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">I bought my car at
$46,000 when I was earning $46,000 per annum. Today, I earn $100,000 a year,
but a similar car cost $140,000. Is my life better?</span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div style="text-align: justify; text-justify: inter-ideograph;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">Back in the same
year, an EC at La Casa costs 450k. Today a 5 Room BTO easily cost $450k as
well. Is this an improvement in quality of life?</span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><br />
<div style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">If population growth
clearly had not improved my life, why would I believe it will improve in
future? <span style="mso-spacerun: yes;"> </span></span></span></span></div>
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span><div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com7tag:blogger.com,1999:blog-1377738835782322104.post-90976191728687616132013-02-10T00:13:00.002-08:002013-02-10T00:14:12.031-08:00A Visit To #1 Loft at Geylang <span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">Few days
ago I passed by a condo showroom about 400M away from Mountbatten MRT. I was curious
about the climate of sales in new launches and decided to pop in. <o:p></o:p></span></span></span></span><br />
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">As usual,
the actual location of the development was not at the showflat but about 1km
away at Geylang Lorong 24. <o:p></o:p></span></span></span></span></div>
<span style="color: blue;"></span><span style="color: blue;"></span><br />
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://2.bp.blogspot.com/-n9o7ei2ZnYU/URdS7rS4HFI/AAAAAAAAAcE/QEnpM9Hx8Wo/s1600/1.2.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><span style="color: blue;"><img border="0" height="240" src="http://2.bp.blogspot.com/-n9o7ei2ZnYU/URdS7rS4HFI/AAAAAAAAAcE/QEnpM9Hx8Wo/s320/1.2.jpg" width="320" /></span></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="color: blue;">Nice bed that matches with decor</span></td></tr>
</tbody></table>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">There were
only 2 prospective buyers in that afternoon (including me) in the showroom. The
agent was very warm, telling me it is a 5 minute walk to Mountbatten MRT and
Aljuned MRT stations. He added Geylang Lorong 24 is left with 1-2 brothels
which will be “phased out” when the rest of the apartments (at least another 3
boutique residential developments) are completed. <o:p></o:p></span></span></span></span></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-9r0DYYSR1L4/URdS-m2GHGI/AAAAAAAAAcU/Ng2W6wBfiQo/s1600/3.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><span style="color: blue;"><img border="0" height="240" src="http://4.bp.blogspot.com/-9r0DYYSR1L4/URdS-m2GHGI/AAAAAAAAAcU/Ng2W6wBfiQo/s320/3.jpg" width="320" /></span></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="color: blue;">Decent bathroom</span></td></tr>
</tbody></table>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">The
showflat was tastefully done up, the selling points of this development are as
follows:<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/-4MX8N_E_jJY/URdS57QvqzI/AAAAAAAAAb8/P3_9PjtG4OU/s1600/1.1.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="320" src="http://3.bp.blogspot.com/-4MX8N_E_jJY/URdS57QvqzI/AAAAAAAAAb8/P3_9PjtG4OU/s320/1.1.jpg" width="240" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">The loft does allow privacy between 2 levels</td></tr>
</tbody></table>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Calibri;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif; font-size: large;">- Cheap
financing. The list price of a 1 bedroom unit is about 780k, or about $1392
PSF (560 sq ft build up area). Buyers need to pay 5% cash, 5% CPF. The
developer will pay for you 78k upon completion and you can take up a 80% loan
from UOB or Singapura Finance. This means I only need to pay $39k cash and $39k
CPF, developer will pay remaining 78k cash for me!!! Effectively, I am
obtaining a 90% loan! Innovative!</span> <o:p></o:p></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue;">
</span></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://2.bp.blogspot.com/-HSOAo83xctE/URdS7woh4BI/AAAAAAAAAcM/1zd38U6QmQw/s1600/1.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="320" src="http://2.bp.blogspot.com/-HSOAo83xctE/URdS7woh4BI/AAAAAAAAAcM/1zd38U6QmQw/s320/1.jpg" width="240" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Staircase up the Master Bedroom </td></tr>
</tbody></table>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">- Ability
to convert 1 bedroom to 2 separate bedrooms. The showroom displayed a typical 1
bedroom layout. The master bedroom is on the 2<sup>nd</sup> floor with balcony,
the living room comes with additional bathroom. The living
room can be converted to a bedroom after adding a door, with a common kitchen
with washer cum dryer. You can rent out to 2 singles! <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Calibri;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif; font-size: large;">- High
investment yield. Assuming you rent out each “room” to 2 singles with near service
apartment facilities, you probably can rent to them at $1600-$1700 each. After
deducting utilities, maintenance, housekeeping, broadband, taxes and agent
fees, you could possibly receive about $2,600 monthly.</span> <o:p></o:p></span></span></span></div>
<span style="color: blue;">
</span><br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">Factor
interest costs of 1.5% of loan ($624k) = $9360 per</span> <span style="color: blue;">year<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">Return on
initial investment= (2.6k x 12 months)-$9360 / ($72k + $18k Stamp duty + $3k
Legal fees) = 23.5% per annum<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">Given the
attractive investment yield, I decided to pay a site visit to Geylang Lorong
24. Some observations:<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">- There
were at least 3 operational brothels. One of them was in between enbloc terrace
houses. Hence, there is a likelihood your condo has a brothel beside it.<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Calibri;"><span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">- <span style="mso-spacerun: yes;"> </span>There were MANY PRCs men sitting on the
pavement.</span> <o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">- There
were at least 2 budget hotels in a side road at the end.<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">- The road
along Geylang 24 is narrow, not suitable for drivers as you are likely to be stuck
outside your house, inside your car when all the other developments are
completed.<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">-
#1 loft is definitely not suitable for families with children, but rather for individuals/ couples
and prostitutes operating their own online vice.<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">- Aljuned
MRT is a good 10 minute walk away, Mountbatten MRT is much further as you have
to cross an overhead bridge, cut through pine close HDB, about 15 minutes walk
away. This is accurate for my leisure walking speed. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Calibri;"><span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">I am
impressed by the low capital outlay and financial innovation of the developer.
The agent claimed that this project is by SC Global, but I couldn’t find any
links between SC Global and #1 Loft. In fact, I have never heard of this
developer.</span> <o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">The high
yield comes with high risks. Interest rates may go up. Once it hits 3.5% and if
you can only rent out at $2,000 a month, you will be running a loss after all
expenses. You need to make the assumptions that it is always rentable and
interest rates remain low to commit to this investment.</span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">Majority of
the 80 units are 1 bedders. 3 bedders come with 4 bathrooms so you can even
convert the living room into another bedroom. What kind of
tenants are the developers asking the buyers to target? <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-7OvFMUi4tfE/URdS-q8DGHI/AAAAAAAAAcY/oQURFWcIMys/s1600/2.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><span style="color: blue;"><img border="0" height="320" src="http://1.bp.blogspot.com/-7OvFMUi4tfE/URdS-q8DGHI/AAAAAAAAAcY/oQURFWcIMys/s320/2.jpg" width="240" /></span></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="color: blue;">Notice you can build a door to split this living room to become a bedroom</span></td></tr>
</tbody></table>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">Given
current market, it is fairly difficult to achieve 7% consistent returns on
investments. A 23.5% P.A investment seems extremely attractive, especially for
a single like me who do not mind staying anywhere that is convenient. However,
the PSF price seems so high that there is little room for capital appreciation.
Unless the project is selling below $900 PSF, there is little margin of safety
given the inertia of existing brothel houses and budget hotels. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">Would you
buy this project? <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="color: blue;">SBC wouldn’t.
<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<br />
<div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com3tag:blogger.com,1999:blog-1377738835782322104.post-38782555807826319582013-02-04T04:36:00.000-08:002013-02-04T04:45:25.812-08:00Beware of BID and ASK Spread for Cars!<div style="text-align: justify;">
<span style="color: blue;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">Lately out
of curiosity, I decided to check out the value of my 7 year old Japanese car. A
search at sgcarmart revealed that the same make/model/year cars would have
asking prices of between $20,000 to $25,000 depending on mileage and month of
registration. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">I bought
this car in 2006 for $46,000<span style="mso-spacerun: yes;"> </span>(no loan)
and the car has a residual value in 2016 of $6,000. This means the average
depreciation over 10 years is $4,000 yearly, assuming a straight line
depreciation accounting. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">However, if
I can sell my car at $22,000 now (lower end of asking prices), my average depreciation
will be ($46,000-$22,000)/7 years =$3429. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">This means
that I should sell my car now, as if I have held to “maturity”, my depreciation
will be at a much higher rate of $4,000 per year! <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">According
to straight line depreciation of $4,000 per year, my car should be worth only
$46,000 – ($4,000 depreciation x 7 years) = $18,000. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">This
calculation is similar to bonds valuation. We should be selling above PAR value
since bonds will eventually move towards PAR value when it nears to maturity.
However, the switch should be to another similar or higher yielding asset class
to mitigate the opportunity costs.<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">Similarly,
what should I switch to, if I were to sell my car now? Logically, I should use
the bond valuation concept of comparing it with a 7 year old car. A search on
the “car runs” showed similar Japanese/Korean makes, which doesn’t appeal to
me, given that I will only be incurring transactional costs without having real
benefit.<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">A 7 year
old BMW 523i (2500CC) caught my eye. It has a residual value of $25,000,
relatively low mileage of 90,000KM and costs $58,000. If I were to trade in my
car for $22,000, I will only need to cough out $36,000 to drive for 3 years and
receive $25,000 back in 2016. I will be $11,000 poorer (or $3666 additional
costs yearly) in exchange for the experience to be a BMW 523i owner. <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></span></span></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://2.bp.blogspot.com/-mpHZbKaRlDc/UQ-qYPv_wBI/AAAAAAAAAbs/YTymfji4q78/s1600/1.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><span style="font-family: Georgia, "Times New Roman", serif; font-size: large;"><img border="0" height="240" src="http://2.bp.blogspot.com/-mpHZbKaRlDc/UQ-qYPv_wBI/AAAAAAAAAbs/YTymfji4q78/s400/1.jpg" width="400" /></span></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-family: Georgia, "Times New Roman", serif; font-size: large;">Wow, so cheap after trade in!</span></td></tr>
</tbody></table>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-mpHZbKaRlDc/UQ-qYPv_wBI/AAAAAAAAAbs/YTymfji4q78/s1600/1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-family: Georgia, "Times New Roman", serif; font-size: large;"></span></a> </div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">The allure
of it sounds too good to be true. I decided to call the 2<sup>nd</sup> hand
firm to find out more.<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">The car
dealer is willing to offer what was stated on the sgcarmart website. However,
they are only willing to take in $14,000 for my car. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">This does
not make sense to me. Even if there is a bid and offer spread, it should not be up
to 44% {(25k-14k)/25k}<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">Imagine if
I have to sell DBS at $9 (when it is trading for $15) to buy UOB at $19 which
is trading at $19 on the same exchange (sgcarmart).<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">The dealer
explained to me the last transacted price for similar cars of my ride was 20k.
No one would offer higher than that and they need to earn a mark up (aka brokerage
fee).<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">The high
costs totally puts me off. My calculation will tangent off significantly if I
were really to trade in my ride for 14k. My depreciation would be 4570 yearly
(a 15% increase) and the cost of owning a BMW for the next 3 years will
increase to 19k instead of the original expected 11k. 72% increase!! <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">It is not
the 8k that matters (to me), but it goes against my principle of value, market
efficiency and fairness. Why would I want to allow middle man to rip me off
just because I have a 2<sup>nd</sup> hand car to trade in? Why are car dealers “exempted”
from transactional costs (whereby they can sell near asking prices) and I must
sell my own car 40% below THEIR asking prices?!! <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">Technically
speaking, I can sell my car on my own first (at 20k-22k) and buy whichever car
I fancy thereafter to avoid the hefty “bid ask” spread. This is similar to
buying unit trust from fundsupermart at 0% and later transferring out to another
service provider (free of charge) to avoid the quarterly platform fees at one
and sales charge at another. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;">But this is
too much of a hassle and I rather wait for my ride to be scrapped before
shopping for a new/used car 3 years later. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: Georgia, "Times New Roman", serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-family: Calibri;"><span style="color: blue;"><span style="font-family: Georgia, "Times New Roman", serif;"><span style="font-size: large;"><span style="mso-spacerun: yes;"> </span>Notice I analyse general purchase of daily
consumer products using frameworks for financial asset classes. This has been
my thinking logic for many things and has helped me save/avoid costly
decisions.</span></span> <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p><span style="color: blue; font-family: Calibri;"> </span></o:p></span></div>
<div style="text-align: justify;">
<span style="color: blue;">
</span></div>
<div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com0tag:blogger.com,1999:blog-1377738835782322104.post-46915158723805558142013-01-19T04:41:00.001-08:002018-06-08T20:39:50.002-07:00HDB prices will come down because<div style="text-align: justify;">
</div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: large;">1) Genuine HDB upgraders to private
homes will have higher incentive to sell their HDB now. They can save 7%-10%
(for PRs) on stamp duties and possibly obtain the full 80% loan of the
valuation of private properties. (Though most HDB owners who buy 2<sup>nd</sup>
home for investments are likely to have fully paid off their HDB mortgage.) <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<br />
<span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: large;">2) PRs can no longer sublet their
HDB homes and they are likely to sell off their HDB in time to come as it is no
longer a viable investment vehicle for them. This creates a larger supply of
resale HDB in the market, creating downward price pressure. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="margin: 0cm 0cm 10pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="color: blue;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: large;">3) The current market has fears of
increasing population with limited housing. The government has time and again
reassured the market with its ample supply of housing pipeline. Most HDBs
transacted at high prices are relatively old, some above 20 years old. Technically,
aging homes should depreciate accordingly as their lease shortens, however, due
to mismatched supply and demand by policies, it has appreciated, going against
economics principles. This phenomenon will revert to classical economics when
supply and demand reaches the equilibrium. Again, this point to lower HDB
prices in time to come.<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="line-height: normal; margin: 0cm 0cm 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span style="color: blue;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: large;"><span lang="EN-US" style="mso-ansi-language: EN-US;">4) </span><span style="mso-bidi-font-family: Helvetica;">MAS has set a Mortgage Servicing Ratio (MSR)
limit of 30% for loans granted by MAS-regulated financial institutions for the
purchase of HDB flats. This means that financing has been tightened on HDB
resale purchasers and they may not even qualify for the loan after paying hefty
COVs. For instance, a couple earning 8,000 a month on 30 years loan can qualify
a maximum of $534,000 loan and HDB valuation of $667,000. If they are above 35
years old, their loan tenure will be shortened, lowering their loan quantum.
Hence COV are likely to come down due to stricter financing rules for HDB.
Interest rates have to be assumed at 3.5% when calculating MSR. This policy
will hit large, pricey HDB homes. <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="line-height: normal; margin: 0cm 0cm 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
</div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="line-height: normal; margin: 0cm 0cm 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span style="mso-bidi-font-family: Helvetica;"><span style="color: blue;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: large;">5) Private
property owners who have bought new homes in 2011 onwards should not be expecting
much capital appreciation on their properties, since many developers are
offering lower prices now. Property as an investment vehicle will lose it shine
as rental starts to fall gradually and vacancies start to increase. A Singaporean
property owner who buys another 1M property will have to cough out almost 100k
in stamp duties. Assuming a 3% rental yield, the breakeven period is at least 3.5
years! A PR will have to cough out almost 130k in stamp duties, with breakeven
period of 4.5 years! This does not factor into the rental decline and vacancies
risk. Property tax, agent fees, income tax on rental income will continue to
eat into the returns of investors yield. Hence, attractiveness of private property
as an alternative investment will decline significantly. The correlation of
private (non landed) properties to HDB is 0.9. This means that decline in
private property prices will have a 90% impact on HDB. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;">
</span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;">
</span><br />
<span style="color: blue; font-family: "georgia"; font-size: large;"></span><br /></div>
<div class="MsoNormal" style="line-height: normal; margin: 0cm 0cm 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span style="mso-bidi-font-family: Helvetica;"><span style="color: blue;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: large;">Conclusion<o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;"></span><br /></div>
<div class="MsoNormal" style="line-height: normal; margin: 0cm 0cm 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span style="mso-bidi-font-family: Helvetica;"><o:p><span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;"></span></o:p></span><br /></div>
<div class="MsoNormal" style="line-height: normal; margin: 0cm 0cm 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span style="mso-bidi-font-family: Helvetica;"><span style="color: blue;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: large;">With
massive supply of properties in the HDB and private market coming into the
market from this year to 2015, aspiring home investors should wait for cooling
measures to be lifted before entering the market to invest in properties. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;">
</span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="line-height: normal; margin: 0cm 0cm 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span style="mso-bidi-font-family: Helvetica;"><span style="color: blue;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: large;">Home
seekers should wait at least 6 months for reality to sink into their heads to
lower their asking prices before entering into the resale property market. <o:p></o:p></span></span></span></span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;">
</span></div>
<div style="text-align: justify;">
<span style="color: blue; font-family: "georgia" , "times new roman" , serif; font-size: large;">
</span></div>
<div class="MsoNormal" style="line-height: normal; margin: 0cm 0cm 0pt; mso-layout-grid-align: none; text-align: justify;">
<span style="mso-bidi-font-family: Helvetica;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: large;"><span style="color: blue;">Overpriced new launches will see developers dangling more discounts,
stamp duty rebates, rental guarantee, furniture vouchers, tour packages and
other innovative packages to move sales. In this situation, the late bird will
get the best deals.</span> <o:p></o:p></span></span></span></div>
<div style="text-align: justify;">
</div>
<div class="blogger-post-footer">Singapore Blue Chips Investments</div>Sgbluechiphttp://www.blogger.com/profile/18070778039656838451noreply@blogger.com0