Thursday, August 18, 2016

Some Ramblings in August

Just some updates since I haven't been posting much.

Truth be told, I've actually made a few sloppy drafts about a range of topics, but I decided not to post them.

One of it was about the recent Pokemon Go craze and why people really need to stop hating on people playing this game. A lot of people have been coming out on social media shaming and hating on people playing this game. I don't know why though. Does it make them feel cool that they aren't playing this game? I see this as an inability to mind one's own business. And this can be applied to other things as well, but oh well. Sexual preference, religious preference... even dietary preference, oh gawd, I could go on and on. The world does not need your stamp of approval to function. Deal with it.

Another one is about Joseph Schooling and his Olympic gold. Honestly, it's freaking amazing and I'm really impressed and full of respect for him. However, I am deeply ashamed of how Singaporeans in general have reacted to this. "Finally, a REAL Singaporean athlete... we don't need trash FT, send them home!". Some Singaporeans can have really shallow and low level thinking. Having a first world city clearly does not equate to having world class citizens. No one can choose where they are born, much like their gender or their race, but people can and do decide to become a citizen of particular countries. Isn't that good enough? Maybe all funding in Singapore should only be given to Orang Asli if that is the argument you want to bring to the table. This level of double standard is EFFING atrocious. It's actually very sad. I hate this argument on "authenticity" because people are so deeply rooted in illogical cultural arguments. (Bonus: Super boss Idea Channel video on Organic Food, which... some might find the thought process very similar. Now, that's what I call a good intellectual discussion.)

In other news, one of my side business ideas didn't work out, although it was a very cheap and fun learning experience for me to understand a lot about running a website. Total investment is less than $100 for everything and I basically have a website to tinker and play with until it expires in a year. I'll be using it as my live platform to practice my coding and my other web ideas. But like I said, on the plus side, I could seriously become a web designer now if I wanted to. I really ought to do something about my blog layout since I probably could, but it's functional for me and I don't really see the need to yet.

My other ideas have been put on the backburner while I figure out other things. I've got 2-3 freelancing ideas, as well as an idea for a social enterprise website, but I'm just too busy and I haven't met anyone that I can partner with to run with it. Anyway, it's a social enterprise, so it's not like I'm gonna get super rich or anything doing it, but it would be nice to contribute a bit to society, or so I've heard. Without money as a motivator, shit really doesn't get done fast. It this a positive point to the capitalist argument?

However, I do have a particularly interesting idea, and that is to be a part-time drive with the taxi-alternatives (Uber / Grab). I think to a few people, this sounds very silly and ridiculous, but I take Uber often and I see plenty of drivers around my age ferrying people around. As of now, it is one of the few things to easily help people transform their free time into money.

I've also formed a more concrete personal philosophy regarding time, work and money in my life. Everyone has 24 hours a day and it's up to us to choose what we want to spend that time doing. After all the essentials (sleep, grooming, eating, etc), we are left with 2 choices - work or play. If you work, you earn money. If you play, at best, you don't spend money, but at worst, you use up money, which hopefully you gain some happiness from. Choosing the type of work is important (ability, happiness, salary, hours), but 95% of us have a full-time fixed job, in the sense that our hours and earnings are fixed. If it is a Saturday and you decide, "hey, I don't feel like sitting at home doing nothing, I feel like working and earning money instead!", what are your options? To be able to work more hours and get more salary at your full-time job is not only hard, but also slightly unconventional. The rise of Uber/Grab has actually opened a door for people who want to have a 2nd part-time job and can "work" at their own leisure.

I'm particularly busy for the next month or so at work, but after September, I am strongly considering to throw my hat into the ring and play around being a part-time driver for a while. I'm considering weekday nights and also on weekends, but it really depends on my schedule! There are also some initial investments that has to be made, like getting a quality handphone stand, car mobile phone charger and also portable dashboard cameras (I've been seeing a lot road rage and bad driving recently. There is also a lot of hate being directed against Uber/Grab drivers just going about doing their job)

On the investment front, markets are boring as shit. The US indices are just go up and my shorts are getting slaughtered. I'm back to the usual daily "margin call" call and I'm on the edge. A spike in the markets and I'm closed out. On the bright side, I'm only gambling with money that I can afford to lose, so this irrationality of the markets isn't going to make me insolvent. I still maintain that risk assets look horrible and I'm just slowly and happily building up my cash position. I've been following Lance Roberts and his argument is compelling, but whatever floats your boat. Lots of people on CNBC are looking for 2200 by year end, so yeah.

I'm on the lookout for medium quantum long-term investments now. I want to move away from the classical financial instruments and diversify into something like property or a business. In Singapore, all you get to choose is from $1000 unit trusts, or $500k studio apartments with almost nothing in between. I know of people buying overseas properties and when they shared the details, it honestly does sound very lucrative. $100k for an overseas property does sound very do-able, but like I said before, I don't really like the idea of being the sole owner and landlord of a property. Higher rewards, but a lot higher risks and that doesn't appeal to me very strongly. I would actually like to be a silent partner in a business. I provide capital, some oversight, strategic direction and I take a cut of the profits. Something more hands-off. Any ideas? I know people that might be interested even if I am not. Send me an email!

Turning to the local property market, the market looks to me in a permanent lull, on the verge of breaking down. The properties that I am eyeing have either not budged at all (with also near-zero transactions), while others are in a bidding war with other owners in the same development. Prices for that particular development is down almost 10% since 2 years ago with just a handful of transactions in between. I've seen the same listings month after month. Not sure if the agents have changed, but the pictures are the same. The owners there must be tearing their hair out not being able to rent or sell.

In fact, I've been waiting so long that the range of options that I was initially looking at has expanded since I've accumulated more money and I can consider more expensive options. I'm still looking for convenience and I'm willing to fork out a pretty penny for that. I've some candidates for that. Convenience with a view is hard to come by, but I've found a particular development that seems interesting, but will require more research.

However, I do feel that the time is coming, so I'm going to start gearing up my property skills in a few months time, perhaps after the bulk of my work is done for the year.

Leisure-wise, I've only had 1 holiday this year so far! That solo trip to Japan was insanely awesome and I am quite yearning for another trip soon! I've sort of begun my preparations by setting out the dates, but I've yet to confirm the direction of my travel, so I can't book my flight tickets yet! This is a problem because I see that ticket prices are inching up, slowly but surely (unrelated but, GMGH's Travel Tips!). Anyway, I'm planning to have a mega long trip next year over the early CNY holidays to make up for the lack of travelling this year. I'm still researching my itinerary and I'm contacting friends who are there to let them know that I'll be dropping by. I am expecting it to be a pretty epic trip for me!

So there you go, I haven't been posting much because I've quite a lot of things on my plate these days. I still have plenty of drafts with good post ideas, so hopefully I can pump out a few good articles in the coming weeks. Like I said though, I'd probably be quite a bit more free in a month or so. However, if the markets start to get interesting again, expect me to be back and commenting on it!

Thursday, August 11, 2016

[SGX Portfolio] May-Jun-Jul 2016 Update

It's been a while, and I've been so busy and lazy, but I've finally updated my SGX portfolio.

As mentioned previously, this will be my attempt at having a monthly update of my SGX portfolio. I have also updated that page to include the historical growth of my portfolio. I find it personally encouraging to know I've come so far from where I started. Hopefully other people may be inspired and also decided to embark on their financial journey.
"The journey of a million miles begins with a single step"
Anyway, here are the current stats of the portfolio as of end Jul 2016.

Total Cost    $25,318.90     
Unrealized Gains-$2,399.43
Accumulated Dividends $1,889.39
Realized Gains$1,023.75

*Total Cost is initial purchase cost of the current portfolio
*Unrealized Gains represents the unrealized capital gains on securities still held in the portfolio
*Accumulated Dividends is the total of all dividends collected thus far

*Realized Gains will only take into account the final net capital gain or loss after including transaction costs to close a long position on a security. 

Let's start with what probably everyone is thinking about. WHY DO YOU STILL HAVE SO MANY COUNTERS? With the change to SCB's minimum commission, I have played my Hail Mary card and surprisingly, I think it might actually work. I might have "priority banking" status without actually having that $200k balance. Unfortunately though, this is not something that everyone can do, so I guess I'm thankful for the connections I have. Don't ask, because I won't tell. I have yet to execute any trades since the revised rates to check if I am indeed able to trade with no minimum commission.

So far, I've only sold off counters (before the change in fees) and I have yet to accumulate anything. Nothing really is calling out to me yet, so I'm just waiting around and observing how the market is going. I had decided to trim off some of my smaller position. I was going to continue selling away all my shares with a value under $300, but of course now I might not have to.

World Precision is a good example. I bought it and sold it at the same price, but for the the 18 months that I have held it, it has paid me dividends. My total returns (slight capital loss + dividends) is a very decent 23.6%! Of course, the amount is so small and fractional, but I like how even my small positions can do well. (which gives me encouragement to continue taking small positions on good opportunities, rather than only focusing fire on big positions)

Food Empire which I've held for almost a year nett me 36.36%.
Frencken for about 1.5 years has got me 22.57%.
CNMC Goldmine had multiple purchases, but the total return was 36.73%. I felt that I sold this one way too soon, considering that price had spiked to almost 0.61 and it is at about 50c now (I sold at around 0.30).

Although they all seem like small positions, this $570.41 capital used managed to give me back $747.89 is less than 2 years. That's a total return of 31%. Still small peanuts to some though, but it is a meaningful amount to me, especially if it was just sitting in my bank earning 0.05%. That would have been just $0.43 in interest.

With all of these small sells, I've reduced my capital investment and added to my realized gains. Profits from selling positions and dividends received are realized gains because they can never be lost back into the market. They are happily sitting in your bank account.

Overall, including dividends and realized gains, my portfolio is actually up 2%! My annualized IRR is about 1.44%, which makes this a very volatile and risky way to earn fixed deposit-like returns. However, considering that the STI is still under 2900, I think my portfolio isn't doing too badly. Plus, the upside from where my account is sitting at now doesn't look that bad.

Annual income from dividends is now expected to be about $1598 for a full year, (taking into account Keppel's cut) but of course I collected some and missed out on others by not owning them the entire period. That brings the expected monthly income to $133.17 and daily income to be $4.38.

Based on the dividends I am expected to collect, my portfolio dividend yield on cost is estimated to be about 6.31%. I have taken the lower bound estimate for most of my counters, so it is quite possible to have surprises to the upside. My portfolio yield is rather stable around 6% now, since new additions are generally on the upper end based on their individual yield history.

Comparing the current trailing 12 months to 1 year ago, my dividends has gone up from $557 to $1332. Of course, a year ago I only had $14,000 capital in the market. My portfolio has gone up, and so has my dividends. Not a big surprise, but it's nice to see progress. Who know's what will be my trailing 12 month's dividend next year? Hopefully, more!

In the coming months I still expect the Singapore stock market to continue to perform poorly. My current strategy is to just brace myself and incrementally add on oversold opportunities. If my thesis is right, there are going to be plenty more opportunities in the coming months. I remain heavily in cash.

What drives me with the sharing of my SGX portfolio is to show people an example of how one can work towards their dreams - with discipline and hard work.

Rome wasn't built in one day. Everybody has to start somewhere.

Where are you heading?

Friday, August 5, 2016

The (pre-warned) Cracks Emerging In Obamacare

Wow, check that out.

Obamacare premiums are going to surge 13-54% in 2017 although US inflation rate is... 1%.

Fantastic. I just love Obama and Obamacare, don't you? /sarc (No, I hate Obamacare and I think it is one of the biggest dumb policy ever implemented)

As big of a proponent I am for capitalism, I do recognize that some socialism projects can be a positive to society if crafted and executed correctly (I'm a big fan of Workfare). Obamacare is a perfect example of a horrible crafted and executed socialism project that probably set back the country in medical care access and affordability than progress it.

It ain't rocket science why it wouldn't work. I refuse to explain it because I know it would be an insult to all of my readers' intelligence.

Oh, but wait wait wait! Doesn't Singapore also face RISING HEALTHCARE COSTS? We hear that in the media all the time, right? Doesn't your insurance agent tell you that too?

In all honesty, I do believe that healthcare costs are increasing, but so is the quality of the care as well. Perhaps it's just me and I've only experienced my adult life in this period of low/negative inflation, but so far that is not something that I have personally experience, and there's stats to back me up.

I've pulled out CPI stats from SingStat and guess what I found for healthcare? Since Jan 2014 and Jun 2016, healthcare costs has increased a massive... 0.7%. And no, that number is NOT annualised. That is the absolute increase over the past 30 months. Runaway healthcare inflation? I think not.

Now, one rebuttal that I expect to hear is that the CPI stats are not reflective of "real life" medical costs (ie. your medical bill). To that, please flip to page 39 and we shall see that the categories that are being covered are... very broad based. They even include spectacles and contacts for our very myopic society. Yes, hospitalization fees are counted. Yes, health insurance is counted. You think they don't count all these things meh?

The biggest shortcoming of my stats that I have to admit is that my dataset is small. I haven't been able to find stats going further back, although I am pretty sure they do exist. I'm just kinda lazy to search very hard. My current effort for searching for more data is about 7/10. More than average, but not maximum effort.

That said, I think that my point is still relevant. Core inflation is up 1.1% over the past 30 months while healthcare lags it and is only up 0.7%. Which, by all means could be considered as negligible in the short term.

My healthcare costs is increasing because of my AGE and not because of inflation. It's simple logic. Older people have more medical needs. If you are comparing medical costs right now as a 40 year old to back 20 years ago when you were a PES A fighting fit soldier, I really don't think that is a good comparison. Of course your medical costs would have gone up. But as a result of your age, not because hospitals are out to fleece you.

I'm always glad to be living in Singapore where medical costs are not out of whack. Medical costs take up a HUGE chunk of American's salary and we pay a fraction of it while enjoying high standards as well. Is cheap and good possible? If the USA is our comparison, then yes, it does seem so.

Thursday, August 4, 2016

New CPF Changes

I gotta admit, I only found out about this yesterday after reading Uncle CW8888's blog post about it. I went to search google and I found these articles by the MSM (CNA and ST), but I couldn't find any more in-depth details anywhere else.

Then I woke up today and I saw Kyith's post on it, which is just awesome! It is very detailed and I think it is the best resource about this new CPF Life scheme out there (so far)! He also talks about the LRIS. I think he gave very good and reasonable insights about both of these things.

Since Kyith has already done such a good job, I'm not going to talk about the mechanics and the specifics of it. If you want to know more, just head out and get overwhelmed by the amount of info that he provided! I'll just give my thoughts.

CPF Life Escalating Plan

Personally, I think that this is a very good development to include this escalating option. The thing only improvement that I can think of? Is to have an option with low bequest. Many naysayers of the CPF Life scheme have continually complained about the level payouts and the lack of any inflation-pegged or escalating payouts. Well, now they finally got what they've asked for, but somehow I don't know if this would really turn the tide for most people.

Basically, when it comes for people deciding on which CPF Life plan to make, they should only have to make 2 decisions:

1. Low/No or High bequest for their beneficiaries
2. Level or Escalating payments

For people who have no beneficiaries (FYI, you don't need to be single to have no beneficiaries. You can also be single and have beneficiaries, like a charity), choosing the option for a larger bequest makes no sense at all. What need do you have of the money after you have passed away? In that case, you would choose the option with the lower bequest, and hence, a higher payout rate.

Next, people should decide if they want level or escalating payments. The benefit of level payments is of course simplicity, and predictability. I say simplicity as a benefit, although in many cases in finance, it can be a bad thing. Simplicity is good because it helps people fully understand the choice that they are making and allows them be at peace with the outcome - whether it is favourable or not. Choosing an option that you have absolute certainty over is quite comforting for most people, especially if the alternative is something that is complex and beyond your understanding.

Of course, simplicity does not make a product better. It just makes it easier for the purchaser to understand. Predictable payments can be a good thing too, especially if much of the expenses are fixed and perhaps frozen from increasing. The higher initial payment of the level plan may also work out better for some people if they do not predict that they will live very long. Perhaps they have certain medical problems. That said, if you think you are going to live long and prosperous, the answer is obvious - take the escalating payments.

For people with no beneficiaries (relatives, charities, etc), the answer is simple. Choose the option with no bequest.

For people with beneficiaries, the choice becomes slightly more complicated. Level or escalating? I believe the deciding factors are made up of matching expenses to payouts, and also personal expectations of longevity.

Lifetime Retirement Investment Scheme

For the LRIS scheme, I also do think that it is a positive development, although the take up rate may not be a good as what the G hope for. In fact, I think they ought to scrape the CPF-IS (OA/SA) or at least plan to phase it out so that current investors have ample time to exit and switch over.

Having low-cost, stream-lined choice of funds is a good thing in my opinion. Firstly, the costs of many funds are just too damn high. Secondly, I think many investors get decision paralysis when they look at the huge number of funds that they can choose to invest in! It isn't a wonder why many people end up choosing very strange funds and end up with poor performance.

However, like what Kyith points out, although the returns are higher, taking into the account the high risk-free rate of the CPF SA account, it would be leaping from almost fortress-like safety into the wild volatility of the world's markets just to make a few extra percentage points. It just might not be enticing enough to get people on board this LRIS scheme.

Personally, I have 2 suggestions for the LRIS which I think could improve it.

Firstly, have a lock-in period for LRIS, and possibly reward the lock-in commitment. The rewards of the lock-in period could be a variety of things. For example, maybe waive off fund fees for the lock-in period? Or perhaps a 10 year lock-in period (means unable to sell the LRIS fund units back to the CPF account) can give guaranteed capital return of... 10%? Essentially, the G would be taking a bet that the fund would be able to generate at least about 1% a year, and if not, they would be willing to top up the shortfall. If the funds that they decide to include can't even make 10% after a period of 10 years, then they really have a problem in selecting funds. Honestly, it might seem unfair to regular retail investors like you and me who have to take the full blow of the markets and sometimes swallow losses, but if the G really believes in long-term, passively managed and low-cost investing and wants to push people in that direction with their risk-free CPF monies, I think they need to offer a bit of an incentive, instead of only trimming down fund expense rates. No downside, only upside. Something like the SSB, but for CPF monies and for equities.

Secondly, it would be to allow SRS funds the same access to these LRIS funds. I like to think of SRS investors as a very similar investor of those with CPF IS-OA/SA. The money is locked away for a long time, but for the benefit of possibly withdrawing at a penalty, there is zero guaranteed returns. In fact, the SRS investor would be very hyped if they were able to also invest into the LRIS funds! LRIS is in line with the SRS since they are geared towards long-term retirement investing, so there is a very good match investment objectives and investment timeframe. Also, the zero risk-free returns means that the returns of the LRIS funds would be very well received. It is definitely a more natural progression to move such money into funds compared to moving CPF monies that are earning a good risk-free rate into funds. By letting SRS investors in, LRIS funds would also get more capital and hopefully that means that they can be run more efficiently and cheaper!

Personally, as derange and crazy about risk-taking as I am (my investments in Gold miners and Russia would like to say hello!), I am not tempted to use my CPF monies and invest in the LRIS. To me, I feel that the risk-free amount in the SA is disgustingly high and I prefer to view my CPF as the bond portion of my portfolio - the portion where I am risk-adverse. For my risk-seeking thrills and investments, I would be using my cash or SRS money for it. Really, the main key difference is the risk-free rate the different cash is able to get. Why give up 4% interest to make 6%? It is much better in my opinion to leave that 4% as is, and use the money getting 0.05% (local bank savings deposit rate) and aim for 6% instead.

However, for people with long time frames and are unable to invest outside of CPF (no savings, cash flow), it is possible to outperform, but it does come with risks. I think that the risks are misplaced,


In all honesty, I think that CPF is one of the best things about being Singaporean. I know a lot of people who would disagree with me, hate it and think it's a giant scam, but whatever floats their boat. Many of the older generation who have faithfully contributed to their CPF and are in retirement are happy with their outcome, while those who try to contribute as little as possible are feeling like they don't have enough to get by. Perhaps it is merely a coincidence. But it is probably not.

Sometimes I wonder if people really understand what the CPF is for. It's for personal retirement. It is not a government tax to eat into your salary. It's forced savings, because frankly, too many people are too incapable of saving for their own future.

Wednesday, August 3, 2016

Free 5 Year Passion Membership and 20% Cashback!

Thanks for CNA, I was reading an article about POSB and spotted this promotion going on.

Basically, you just go onto their website and apply for this debit card and you will get 5 years of Passion membership free!

How much is this 5 year membership worth? Usual price is $15, but now it's $12. Of course, through this tie-up, it is free!

This is perfect for me because I've actually been thinking about signing up as a Passion member so that I can use their water venture facilities! Rental rate for adult members are half of the non-member rate! Just a session would probably cover the cost of getting a PA membership!

On top of this membership bonus, they are also offering $10 cashback when you spend $100 within the first month. If you apply through ibanking or through special roadshows, this $10 amount becomes $20 instead!

What this effectively means is that if you sign up for the card online (which is the easiest way actually), you will be getting a huge 20% off your $100 spending, as long as you can do it within the first month!

Just like the DBS Android Pay promotion, I'll be trying to hit this $100 limit, after that I'll just use it as my PA membership card.

Time to sign up for my own card then! SHIOK RIGHT?