Friday, July 29, 2016

SAVING Money with Credit Cards

Personally, I sleep on airplanes and I travel budget, which is why I have zero care about miles cards. I'm a rebates guy and it just makes sense for me. If you travel a lot, perhaps a miles card might be better for you. I enjoy getting back cold hard cash rather than accumulating points for a trip which I might never take.

To be honest, I know very few people who are struggling with credit card debt, while I know plenty of people that don't have credit cards. Perhaps it's just my social circle, but that's my experience.

A lot, a lot, A LOT of people that I know just shun credit cards. There is a general fear of credit cards being unsafe, prone to scams and fraud, and just the general aversion to "having debt". What is so interesting is that many of my friends are in the higher educated social class who have easy access to pretty much all the banks and all their cards.

I've talked about the perks of having a credit card before (and starting your credit history), and I'm a strong proponent of smartly using your credit cards to actually lower your spending. In fact, I did a simple case study of myself from July 2014 to June 2015 with my OCBC Frank Card (before the horrible changes) and I found out that in a year, I saved about 2%, or in dollar terms $278.56 by using a credit card!

Recently, I blogged about some Android Pay lobangs that I found. I have actually gone out to use the DBS and OCBC promotions!

DBS Android Pay Promotion
DBS Spending: $41.40
DBS Android Pay Promo Rebate: $10
Total Rebate %: 24.15%

OCBC Anrdoid Pay Promotion
OCBC Spending: $187.48
OCBC Android Pay Rebate: $9.37
Total Rebate %: 5%

Guess what? This isn't even counting the normal card rebates of 0.3% on all spending, and the pretty amazing 3%/6% rebate on weekday/weekend dining with the OCBC 365 card. Much of my spending actually goes towards food, so I'm sure there's plenty more of savings to be had there.

OCBC Wow Deals Rides Promotion and Grab Promotion
Uber / Grab Spending: $41
Total Rebate: $19
Total Rebate %: 46.34%

After a late night out drinking, usually the only option left to go home is a cab. Not anymore. Instead of paying about $13 for a normal cab ride home, I open up Uber and get an UberPool ride for just $8, and that's including the surge fare! After you knock off the $5 discount from the OCBC Wow Deals, my midnight taxi fare home was just $3! Taking public transport during normal hours already costs $1.50, so it's just marginally more for a midnight taxi ride home! Sure, you sometimes share the ride with someone, but it's a small price to pay to save you a few bucks, especially if you are not in a hurry!

Summary of Credit Card promos in July
Total Spending: $269.88
Total Rebate: $38.37
Total Rebate %: 14.22%

So there you go. In the month of July, I've managed to use credit cards to spend on things that I would have spent on anyway and I've managed to save myself a nice sum of $38, or basically, a 14% discount on the usual stuff that I buy, but had promotions!

The savings from credit cards isn't mindblowing because it shouldn't be. You are already spending money on things that you would have bought anyway, which means that you have the weakest bargaining power as a consumer.

However, credit card promotions work in a beautiful way in the sense that they target all cardholders. So while the promotion might be running to convert 1st time users to a certain brand or service, if you are already a user, you stand to benefit by being in the same indistinguishable group as everybody else!

Using credit cards to help you save money doesn't work if you instead end up spending more money buying things that you would not have bought in the first place. And always, always pay off your balance in full.

I wouldn't be too surprised if the casual credit card user can end up saving a few hundred dollars within year!

Tuesday, July 26, 2016

What’s Wrong With Japan’s Economy? - Bloomberg

Personally, I think pretty much everything is wrong with Japan's economy, but why don't you let Bloomberg tell you the facts instead of me?

Here are my 2 favourite stats from the article:

In 3 years, the BOJ have expanded their balance sheet from 34.5% of GDP (which is honestly ridiculous enough to begin with) to a massive 80.6% of their GDP (and it is slowly increasing). This is very unsurprisingly to me since the BOJ is the top 10 shareholder of 90% of the Nikkei 225 and also owns 55% of their entire ETF market.

Which is of course no wonder why their Debt to GDP ratio is an eye popping 246.6%. If you're holding on to any JGBs, I wish you the best of luck. I hope that you will even get repaid, but that might mean getting back Yen that is worth a fraction of what it is today. With such massive debt, the ONLY option is devaluation.

The 3 solutions that Bloomberg proposes are silly. Japanese people are already working until such an old age and they are already paying rather high taxes (compared to many other places in Asia). This is definitely counter-intuitive to the only solution that makes sense, which is to attract and accept immigrants.

I've talked about it before, the problem in Japan is systematic. It's not just one or two things that needs to be fix that will overhaul the country. Perhaps the most damning thing about them is also their most charming, which is their iron grip hold on their culture. Aversion to foreigners and many things foreign still run deep with many Japanese. Unfortunately, they are going to make a perfect textbook example of why a country has to adapt to globalization and the cons of not doing so.

I listened to Paul Krugman talk about Japan recently. Before, I thought that he was just an out of touch academic. Now, I can say for certain that he is completely batshit crazy. His recommendation to Japan is to have EVEN MORE STIMILUS to reach this so call "take-off" velocity, after which the country will be all hunky dory. The main argument that he has in "nothing bad has happened yet, so that means the current policy can be pushed even harder".

Madness, sheer madness. Krugman. Japan. All of them.

Monday, July 25, 2016

Singapore Savings Bond: Jul 2016 Review, Sep 2016 Preview

Hey everybody, here's my monthly post on the SSB closing and the forecast for next month. I'm trying to streamline my posts to make them more condensed and info-packed in a regular structure, so it's both easier for readers to quickly digest the article and for me to pump them out on a regular basis.

I have made a similar posts in previous months, and I think I will stick with this format.

First up is update of the subscription of the previous issue. As previously mentioned, the SSB will probably have $300 million available to be issued every month of 2016. While it is a HUGE drop from the $1,200 million that they were offering in 2015, the SSB take up rate has been... pathetic, so it makes sense to cut down on the total offer to boost up the fill rate. It looks a look less sad now.

For the July 2016 SSB, we actually see the take-up rate increase. Which makes some sense because any buyer of the June SSBs would be able to figure out with a high degree of certainty that the July issue would be better, and thus postpone their purchase of the June issue. We saw this behaviour with the Apr-May issue as well.

This month, there is no the yield curve inversion. The MAS rates continues to show strong levels of prediction to the actual SSB issue, confirming the relationship that we have identified.

Moving onto the next SSB, we use the same old-fashioned method of looking up the data from MAS and constructing the table below. As a refresher, the current month's rates are used as a proxy for the issue in 2 months time (For example: Jul 2016 rates are used for the Sep 2016 issue). Also, if you are in the first 3/4 of the current month, you application this month is for the bond that is too be issued on the 1st of next month (For example: Jul 2016 applicants will receive the Sep 2016 issue). I hope this clears up some of the confusion people have regarding the names of the issues.

I would hazard a guess of 0.88 / 0.95 / 1.35 / 1.75 as the final yields.

This upcoming issue looks set to be worst ever SSB issue on record. 10 year yields have collapsed from 2.78% by almost 100bps to settle at next month's predicted value of 1.7x%, in a short span of just 9 months! 5 year yields have also collapsed 80bps, from 2.16% to 1.3x%.

I'm not trying to predict the future, but lower long term yields is a sign that investors are more gloomy and dim about the future, hence the willingness to accept lower and lower rates for such a long time. Holding next month's issue for 10 years is the same as holding last year's Nov issue for just 7 years. That difference of 9 months is equal to 3 years of returns!

This month's issue is definitely better than the next month's issue, if your decision were really that simple and binary. So if you really want to buy some SSBs and are not sure when, it would be advisable to lock in your order today as opposed to waiting for next month's issue. But in all honesty, the differences would be very minor.

Tomorrow is the last day of applications, which closes at 9pm. It can be done through ATMs or iBanking.

I would not be applying for this month's issue, and I'm 99% I will not be applying for next month's one as well.

If you really are looking for a low-risk savings-type of investment, you may want to consider the 5 year China Life Endowment Plan that has guaranteed 2.25% returns. It's almost a whopping 90bps of difference. Of course, you ought to be very very clear about your liquidity requirements before you purchase any product that has inflexible withdrawal terms. In the end of 5 years, the returns that you would get would be almost close to 70% higher than with the SSB.

As much as I like the SSB, there are pros and cons to it, and the obvious con right now is its extremely low yield.

Thursday, July 21, 2016

GMGH's Uber Test

Kudos to BFP for writing about this. I've actually been wanting to write about this for a while since my last post when I talked about using Uber and Grab.

Although he correctly points out that a normal low-end sedan car has depreciation of around $10k a year, I am strongly against using that number as a comparison. What about road tax? Insurance? Parking? ERP? Petrol? Maintenance?

While car depreciation could be pushed down to maybe $800 a month, the incidentals that come along with it is $1200 with basic usage. But for the sake for being a conservative, let's say that you manage to get free parking, drive when there is never ERP, have super good insurance rates and your petrol lasts forever. $700 is fair then?

Using ridiculous non-real world numbers, we're looking at minimum monthly spending of $1,500 to own a car, or an annual figure close to $18,000. If we wanted to be realistic, it would be $2,200 a month for ~$26,000 a year, but let's just use these make believe numbers anyway. I give car owners massive advantage because they are going to need it. If we use real world numbers, this argument is case closed.

Personally, my average Uber/Grab ride is $13.60. But let's say we push up the numbers a bit and we throw a conservative average ride to be about $18, we're looking at 1000 rides a year!

And remember, you can take a GrabHitch ride from Tuas to Changi for $15... if you can find a driver. UberPool also exists and they can be pretty cheap.

And that's not even counting all the in-house and credit card promotions that practically just throw money at you and helps to reduce your trip costs.

1000 rides a year.... that's almost 3 rides a day. Throw in the fact that you are not obliged to use Uber/Grab for every single trip, so you can combine your travel expenses with the good ol' BMW (Bus, Walk, MRT) you can expect to have tremendous amounts of savings in the thousands if you choose not to own a car. If you own a car, you've already have sunk costs. Even if you decide to stay in for the day and do nothing, that's $50 (at the very least) that you just burnt by leaving your car in the carpark.

The more I think about it, the less it makes sense (to me) for anyone's whose livelihood does not depend on a car, to actually own a car.

You can argue about social status and conveniences, but when it comes down to the dollars and cents of it, it just doesn't add up.

Wednesday, July 20, 2016

Cost of Raising a Child in SG vs MY

Check out this infographic that compares the cost of raising a child in SG vs MY. The source article is here.

From the looks of it, the direct costs is cheaper in MY compared to SG. However, the quality of everything such as the healthcare services and education is hard to quantify and place a dollar value on. Finally, SG seems to offset much of the costs through plenty of government subsidies, which are always conveniently forgotten.

Honestly, I truly believe that having children is a very large FINANCIAL decision. As much as society and culture have endlessly preached that the end goal of humans is to grow up, spawn kids and then die, I am one of the few that stand against this line of thought. Having children is not only way to be happy, although I do acknowledge that plenty plenty of people find happiness in that. I'd probably enjoy that too, but there is absolutely nothing wrong deciding not to have children, especially if that decision stems from financial shortcomings.

There aren't nearly enough controls to ensure that potential parents are sufficiently educated before being allowed to get a kid, whereas some pet breeders don't even let you pay them for an animal if you come off as irresponsible or uneducated. That's right, I said it. In some places, it can be harder to buy a freaking dog than to pump out a baby.

Sometimes I think people just say being parents is the best thing ever because its a decision that they can't turn back, so they might as well just embrace it. Anyway, like I said, I'm not arguing for or against being a parent. My main point is that raising kids is a financial decision, and if you only approach it from an emotional viewpoint, be prepared to be very, very, very shocked.

Monday, July 18, 2016

GMGH Top 5 Tips when Living Overseas

Inspired by this Dollars & Sense post, I decided to post some of my own tips for extended overseas living / exchange students.

Top Tip #1: Buy the house brand when shopping
Think "Giant". House brand goods are usually, if not always, the cheapest choice that you can buy. When it comes to simple things like salt or bread, going with the house brand can save you a pretty penny while barely being noticeable about its quality. Actually for many items, you would actually be amazed that the supplier of the house brand good is also the supplier of another branded good as well! The main difference is that the branding and marketing costs have been totally stripped away, and that means savings for you.

(notice how there are no shelves? budget shopping!)

Top Tip #2: Shop at the budget supermarket
Since there isn't a house brand for every single item that you might need, you might end up just regularly shopping for normal branded stuff at the supermarkets and that's where this becomes important. Pretty much every country has their own tiers of supermarkets. Just like shopping at Sheng Siong instead of Jason's Market Place, the price of identical items could differ quite substantially. If I'm getting the same product either way, I prefer paying the cheaper price.

(not an actual picture of me cooking, but close enough)

Top Tip #3: Learn how to cook
I'd say that this is the TOP money saver, but it is also a skill, so it's not something that everyone can do. If it was, I'd put this as my top tip number #1! Learning how to cook can drop your food expenses MASSIVELY. I used to live in a city where there were no budget or simple casual dining options. A fast food meal would set you back $10, while a simple restaurant meal would be upwards of $20. However, cooking at home cost me an average of about $2-3 per meal!

(not very advisable, but whatever, #yolo)

Top Tip #4: Figure out the cheapest and most convenient mode of transport for you
Even in Singapore, some people don't do this right. Taxis can be insane. Buying single-use tickets can be absurdly expensive too. I've found that buying bundled tickets, metro passes and yes, even buying a bicycle has managed to save me tremendous amounts of money. When I had to commute to school, I figured out that buying a bicycle turned out to be much cheaper than taking the tram to school, which was still quite a far walk away and it's schedule was not always reliable.

(why does my roomie like hanging out on my bed?)

Top Tip #5: Get a roommate (or a few!)
It is definitely a compromise to live with other people, but there are direct and indirect monetary benefits. Straight off the bat, your rent is definitely lower than getting a studio apartment on your own. Your fixed utilities bills are shared (think internet / wifi) and maybe even other household expenses too (groceries like cooking oil, or household essentials like soap). Economics of scale come into play here too, so you can end up buying certain goods in volume and benefit from the bulk discount.

Whether you're going to be an expat, a graduate student, an exchange student or even someone who is just having an extended stay overseas, I think these are major money saving tips that can really stretch your dollars without being too much of an inconvenience in your life.

Do you have any top tips to share?

Sunday, July 17, 2016

Best Financial Game App So Far

Unfortunately for you Apple and iPhone lovers, this is only available for Android. Not saying that there is a relationship, but I've noticed that the demographics of Apple supporters tends to be a lot more discretionary with their spending compared to their Android counterparts.

Anyway, I was feeling bored the other day and I was browsing through the Google Play Store when I stumbled upon this game.

It's a rather simple turn-based game that tries to simulate reality and present you with choices to make in order to achieve financial success.

I played the game and I was done in 2 days, but I thoroughly enjoyed it and there are actually plenty of very good learning points that were driven in hard by this game:

  • Pay off your credit card debts first
  • Never have too little cash on hand (always have an emergency fund / buffer)
  • Having kids are a HUGE financial burden
  • Don't jump at the first investment that comes your way, evaluate it well before deciding
  • Even if an investment is good, don't invest if you don't have enough capital
  • Borrowing money to invest is generally a bad idea (leverage)
  • Investing in real estate is usually one of the worst investments (risk of no tenants)
  • If you lose your job, getting a lower paying job is better than no job!

What I really, really enjoy about the game is that the goal is pretty simple: Slowly acquiring passive income so that your passive income exceeds all your expenses.

While being a salaried employee definitely covers the expenses for most people, amassing tons of money in the game doesn't help you win. You need to smartly choose what sort of passive income stream to buy, and convert your current bank balance to a recurring passive income. Too many people in the real world feel safe and happy by having a large bank balance, but they don't look at their income / expenses and realize that their expenses can drain their bank account really quick if they don't have income coming in. And for most people, they only have 1 major source of income (their jobs).

This game really pushes the idea to people that you ought to have multiple streams of income to diversify your risks (risks of getting fired or a pay cut, risk of investment failure) so that you can be financially successful.

The game has 5 different levels, in increasing order of difficulty:

Level 1: Financial Survival
Level 2: Financial Stability
Level 3: Financial Security
Level 4: Financial Freedom
Level 5: Financial Wealth

Although the different levels sound pretty good, it's just a difficulty grading. I suppose if you wanted to apply it to real life, you probably could.

For Financial Survival, you need to make enough income to cover your basic expenses of rent, utilities, transport, insurance and food.

For Financial Stability, you'd want to add in an emergency fund to give you a buffer to ride out any volatile times. You can slowly upgrade your lifestyle from the bare necessities to the basics.

For Financial Security, you are being supplemented by other income streams, and you have the necessary skills to be able to do other jobs to cover the income shortfall if you are ever retrenched.

For Financial Freedom, you enjoy your comfortable level of lifestyle even without a job, which you may choose to do, or not.

For Financial Wealth, you can very comfortably live a premium and luxurious lifestyle without any worries.

Personally, I suppose I am somewhere between being Financially Stable and Secure. I don't go for the cheapest or most budget options all the time (though, many times I live and love the #budgetlife). I do have a sizable emergency fund. I also do have investments that rake in money for me every month, however those investments are not nearly enough and are rather undiversified. I definitely have the skills to take on other jobs, and since my personal expenses are low, I could suffer a huge pay cut and I would still be comfortably surviving, though perhaps not growing well or improving my financial position as quickly as I would like.

I think I will be in this phase of Financial Security for quite a long time until I can manage to invest enough money into multiple streams (or taps) of income that it completely covers my expenses of a comfortable lifestyle. Perhaps in 10 years?

So, do you guys have any good financial games to recommend? Have you tried this game before? Where do you think you stand by my rather arability classification of the different levels?

Wednesday, July 13, 2016

How My Pet Rocks Are Doing

I know that actually the majority of the financial community here do not believe in precious metals like Gold or Silver to be an investment. It's just considered completely off-topic discussion that deviates from the usual and anticipated analysis of IPOs and local companies. Really, no one cares about gold or silver.

I can hardly blame them, there are things about precious metals that does not make it the ideal investment to some.

There is a cost to own it (storage, safekeeping).
It isn't easy to buy or sell (liquidity and transcation costs).
And of course, it doesn't produce any cash flow or give birth to baby gold (or silver) bars.

The part about cash flow is the thing that bugs most people. No earnings, no yield, how can that be an investment? Of course, without earnings or yield, how would some of the fundamentalists apply FA to determine the value of the asset? It doesn't sound like an investment if it doesn't produce anything, right?

Then again, looking at the negative yields in the sovereign bonds of many developed countries and then tell me that it is an investment while gold isn't. Hey, gold just sits there, but those bonds actually have a negative yield. If gold can't be considered an investment, are those bonds then considered an anti-investment? Pray tell, are negative yield bonds considered an investment?

Honestly though, there are plenty of fundamental reasons to hold precious metals, but they don't conform to what the fundamental analyst has been taught at his $888 stock analysis course. For 2 reasons. First, it's not a stock. Second, those aren't real courses. HAHA. Okay I kid. Not everyone is so free or have the access or patience to self-teach. It's like learning a language. Do you need to attend a class and complete it with a certificate to be considered a speaker? Do you need to attend a stock analysis course to analyze stocks? There's some deep stuff for you to think about regarding authority and authenticity, boom.

Whatever the case, I believe that if you can sell something later and it is worth more than what you bought it for (note that I am completely omitting the price, because as long as you can purchase more real goods in the future, that's considered a positive investment to me), it can be considered an investment.

Even with the recent declines in the market, I'm still up plenty on a cost basis. On a sell basis, just knock down a few % for transaction costs. They are still showing a pretty return. I've talked about the BSP before, and I legit do think it's a decent way to accumulate physical precious metals. I walk the talk and I own these products, and I own enough to take physical delivery of my gold and silver. Maybe not everything, but enough for delivery does give you a baseline of just how much I've personally sunk into these products.

It's not a surprise that Silver is overperforming. I think anyone who is looking at precious metals as just another form of investment as opposed to the susceptible biased eyes of a gold bug, it has always been obvious that Silver has been setting up to be a great investment, and would out perform gold.

Of course, needless to say, gold miners would provide semi-leverage like returns over precious metals themselves. If I didn't say what the fund was and what assets they invest in, I'm sure many of you would be interested to know. Now that you know that it was a gold miners fund, would you even consider it? I think many would not even bother touching it. To each their own, I suppose.

I've recently wrote what I've been thinking about the precious metals space. I even talked about my positioning. Which, yes, precious metals makes up the bulk of my holdings.

Although you can never have enough of a good investment, I don't feel regretful that I didn't buy even more of my precious metals related investments when they were at lows. I've always been a buyer, especially on their most ugly days (since apparently, "averaging down" is a sucker's strategy), but I don't buy them on leverage and I have always been prepared that it could go down even lower, or that it would take a long time to show profits.

I'm not trying to convince you that you should hop into the precious metals bandwagon, because honestly I don't really care. But, I am sharing this because I think that there is story about perspective and bias to be told here. The typical retail investor restricts themselves with the selection of investment options for no particular reasons at all. INSURANCE (wtf), fixed deposits, structured deposits, unit trusts, retail bonds, local SGX stocks and... private property. Maybe that might be enough or even too much for most people, but it isn't enough for me. I want to be able to search out the best investment opportunities and be able to take action on them.

Anyway, I'm just saying that yes, it is possible to make money with precious metals. Just because it is unfamiliar or non-traditional doesn't mean that you should avoid it. Actually, to me, it would seem that there would be largest opportunity because of the steep learning curve. Are there risks to this, or even other types of alternative / non-traditional investments like perference shares, or even modern day crowdfunding? Yes, of course there are. There are plenty of risks everywhere and in every asset.

Being an investor is about being able to evaluate risks - their severity and probability - and then deciding if they are willing to assume those risks for the possibility of future returns, which they must once again evaluate if those returns are realistic and likely.

I have got to say, it irks me that most (better) investors can realize and understand that returns are on a probability distribution and are not static. Yet when it comes to risk, many assume that risks are static, such as the severity (drawdown) and the odds of it. Wake up sweetpeas. Risk ain't static either.

Welcome to the real world where we live in. Where the stock market is at all time highs, bonds are at near zero yields and gold is the best performing major asset year to date. (GLD 24.6% vs TLT 16.3% vs SPY 3.8%). How's that for all you stawk lovers?

Friday, July 8, 2016

GMGH loves Uber and Grab, and maybe you should too

I have tasted the forbidden fruit, and now I am hooked.

I have used both Uber and Grab (henceforth known as taxi-alts) sign up promotions and that made my 1st few trips insanely cheap. I have used GrabTaxi before, but I realized that it is still pretty darn expensive. It's an expensive taxi booking app, but at least it lets you get a taxi fast.

There's plenty of choices when it comes to using Uber and Grab, but I'll just share with you guys how I use it. I have just 5 scenarios to think about, so life is rather easy for me.

Booking a trip in advance
GrabHitch: This allows you to set a date, time, pick up and drop off locations and it will also display the place. Once you agree to it, this "job" gets posted for drivers to decide to take it up. GrabHitch is the cheapest way to get around, but it isn't easy to get a "job" filled. Also, it does not work well if you need a ride on-demand. It only works well if you are... booking a trip in advance. Duh.

Late night home
UberPool / UberX: Honestly, in the middle of the night, the odds of sharing a ride with someone is really low, and this could knock off about 25% of your fare. If you're not keen on sharing a ride, UberX is still a good option even with the latent 1.5x surge because night trips are pretty speedy and with low traffic, so you get home quickly, and therefore, cheaply.

Peak hour travelling
GrabCar: The thing that I really like about GrabCar is that the price is set before you decide on a ride. This means that for long travel times, GrabCar would be cheaper because even if you're stuck in traffic for an hour, the cost of the ride is the same.

General day-time commute
UberPool / UberX / GrabCar: UberPool is my top choice if you're not going anywhere in a rush, but let's face it, if you're taking a taxi-alt instead of public transport, you're probably in a rush, right? If it's for convenience while still being on a budget, UberPool should be your go-to choice. If you're in a rush and you need to get somewhere, then I'd put UberX slightly ahead of GrabCar because I feel that there are more UberX drivers out there, so you'll be picked up faster. Of course, if you look at your map and a GrabCar is just beside you, you can go for that as well. I'm quite indifferent to both during this time.

GrabTaxi: Personally, I'm not too happy to give this option, but there are times when there are really no drivers available and if you are in a rush, you might have no choice but to pony up for your poor time management. GrabTaxis are pretty much normal taxis with a booking fee, but the benefit is that many cabbies are using it, so it is quite easy to get someone to pick you up. This is pretty essential if you're in a rush and in a ulu place and can't do a roadside flag down.


I've seen many many articles about the true "cost" of car ownership in Singapore. Screw all the big and bombastic numbers, statistics are only meaningful if they can be compared to something else. We need to compare the costs by month.

Real world realistic estimates puts the cost of car ownership of an entry level model at $2,200 a month, everything all-in. (source 1, 2)

Real world public transport estimate MAXES out at $120 per month, which is the price of the monthly concession (source 1, 2). I am pretty confident that many people spend less than that.

Previous taxi estimates assumes $44 a work day as your work commute, so this comes out to about $1000 a month. However, with GrabHitch/UberPool/GrabCar/UberX, getting from from Punggol to the CBD is a lot less expensive than what you think. GrabHitch is $12 (+negotiate ERP, usually absorbed), UberPool is $14, UberX is $18 and GrabCar is $22.  If I take the average estimate to be $40 a day (which is slightly on the high side), we come up with close to $900 a month. I think that it would be possible for people who plan well in advance to keep their rides under $30 a day, which means that the cost is actually closer to $700 a month instead.

The nice thing about Uber and Grab are that these apps are always having a promotion, so you could capitalize on that. I think that every few weeks there's a new promo here or there that dangles free or discounted rides, and that of course helps in bringing down costs - but in a happy-surprise kind of way, as opposed to a consistent flat discount.

Being able to pay by credit card, track your expenditure and also have driver's and trip info are all extra small things that you realize are great to have to your traditional taxi rides. Just the other day I left my keys in my Uber. Through the app, I managed to call the driver within 5 minutes and got my belongings returned back to me. It was an awesome experience. It would have been disastrous if I was in a normal taxi.

I have to admit that I was slightly skeptical, but open-minded to these apps at first, but I've recently been won over from my own personal use and also hearing very positive stories from friends. I know someone that just scrapped their 2nd hand car and resorted to Uber/Grab as an interim measure. That measure has now turned into his permanent mode of transport.

As someone that drives and someone that can navigate the public transport system well, I love that taxi-alts exist. For the daily commuter that has a special occasion, it offers a cheaper, simpler, easier way to get a ride to where you want to go compared to trying to flag down a taxi. For a driver, it offers a cheaper and lazier way compared to owning, maintaining and driving a vehicle.

Of course, the convenience of owning your own car is awesome, but that convenience costs $1300 a month. This doesn't take into account the many many hours that you will save for yourself by NOT driving, maintaining, washing, pumping petrol, paying road tax, renewing insurance, topping up your cashcard for ERP, etc etc.... All that time saved can be spent sleeping, reading or doing other stuff!

Honestly, the way that I look at it, with the massive rate of under-utilization of private cars currently, low-cost taxi-alts are here to stay for a very, very long time. Blame people that buy cars and use it twice a day. As much as I'd like to own a car from an emotional point of view, the logical side of me cannot defeat the argument that owning a car is not only more expensive, but also more tiring and inconvenient.

An extra hour of snoozing on my daily commute to work instead of facing the roads with idiotic drivers? Or paying up a premium to have a better "quality of life" by not squeezing with the morning traffic and getting to commute in relative comfort? Sign me up!

The arguments to own a private car is getting weaker and weaker each day. The only argument left is convenience, but how much are you willing to pay for it?

LOBANG: If you have an OCBC card, you can get $5 off your next taxi rides if you reserve a deal on the OCBC app!

Wednesday, July 6, 2016

Japan and the Yen

First off, don't get me wrong, I love Japan. I went there for the first time on a solo holiday earlier this year and it was amazing. The people are friendly to (non-China) tourists, the culture is unique and distinct and the country and city works pretty amazingly.

As much as I enjoy Japan, I can't help but cringe at it implodes itself financially.

Japan has a MASSIVE problem with debt, which is no wonder why they have been slipping in credit worthiness. Their only 2 options are inflating away their debt (through inflation or currency devaluation) and outright default.

Which is batshit insane because their policy works directly opposite from each other. To have inflation and a falling currency is desirable, but they want rates low. Think about that for more than 5 seconds and you realize that it just doesn't make sense.

They have publicly forced the hand of lower rates by going officially negative. The rest of the curve has followed suit.

Yet the government still engages in stimulation to boost up asset prices, in what I would assume as an attempt to place a put on risky assets and get people to stop sitting on their money and rotate out of bonds. And also to flood the markets with cash and devalue the Yen. J-REITs are at the point of ridiculous valuations now.

Which would then mean that... rates would rise? And they would screw up their debt repayments.

It all doesn't make sense to me. It's crazy.

However, I have made a feeble attempt to make sense to all this madness previously, and my conclusion is that simply the Yen would HAVE to appreciate in the near term, while its long term outlook is very unpromising. I wouldn't be surprised that by the time the global bloodbath is over (which apparently nobody else seems to think so, except me), the Yen could possibly go back into the 70s, and which point, it would make a fantastic short while it slowly dissolves into the oblivion.

On the bright side, it seems that I picked pretty much one of the best times ever to go to Japan for a holiday. Compared to then, I'd probably be having to pay 15% more (looking at the SGD/JPY). As much as I'd like to go back to Japan again to explore other areas, who knows when the currency would be favourable again and entice me to go!

Sunday, July 3, 2016

Endowment Plans Are Not All Bad

As much as I am against Insurance Savings Plans, I do admit that sometimes I am too harsh and also sweeping to write them all off as shit products. There are times when they do have some use to them.

I just want to be clear that before the Singapore Savings Bonds came out, endowment plans were actually a rather good alternative to people who want to eek out more yield for than cash and have the time, instead of just rolling over fixed deposits annually.

For someone with a 5 year time-frame, finding a place to park that money that will rewarded adequately for that long period of time, but also with some safety is not easy to find.

Structured products can give you higher returns at a longer lock in rate, but there is not always a guarantee on the capital, let alone the returns!

Fixed deposits are safe, but since they are being rolled over every year, they would generally offer lower rates. You're not really capitalizing on the extended time period that you have to work with.

So here comes in endowments / investment savings plans. And there must be a distinction made between good and bad products. This article by SG Money Matters really resonated with me, highlighting the differences between "good" and "bad" endowment plans.

Generally speaking, good endowment products have very similar common characteristics:

  • Guaranteed capital protection
  • Guaranteed returns
  • Relatively shorter durations

The key and most important thing is the limited tranche. It's a good deal because it is limited. If you're getting one of those common, normal, generic plans that you can waltz in and buy anytime, more often than not, it's going to suck. The limited tranche is important, because what it means is that they have found a very good and juicy opportunity, which of course has a limitation in total investment amount. If the tranche is limited, more often than not, it's a good indication that you might be in for a good deal.

Guarantee capital protection would seem like a no-brainer that ought to be offered on all these plans. While many plans do offer this, it should not be taken for granted that your plan is one with guaranteed capital protection.

Guarantee returns is something that has to be very very very well understood. They could offer guaranteed returns, but un-guaranteed capital protection, so you could still overall make a loss. They could also only offer partial guaranteed returns, which would mean that your actual returns might be far less than your "projected" returns.

I do make a concession that if a product is capital guaranteed and there is a small minimum guaranteed returns, it could be a rather decent product that could potentially give you more rewards, if you are willing to accept a less than optimal final outcome.

Finally, most of these investment saving plans usually have a shorter tenure. By my guess, it's usually under 7 years. This means that you don't have to lock in your money for years and years to get a simple and cheap savings tool.

A decent endowment product that I've seen is the China Life SaveReward 101, which is a 5-year, 2.25% endowment plan. While 2.25% might seem like chump change to you, it is guarantee for both capital and returns. Compare that to this month's SSB and you get a 5 year return of just 1.64%.

So is the SSB the superior safe investment for savers? Not necessarily. For risk-adverse people, they must be aware that there are more than just 1 way to earn returns on your cash which isn't rolling over fixed deposits. All you have to do is to keep your eyes and ears peeled for good offers, and then to analyze these offers objectively to see if such a product matches your own investment goals.

Not all endowment plans are bad deals. But you know and I both know it. Most are.

Friday, July 1, 2016

In Gold, I Trust 2016

For long time readers, most of you would know that I'm quite the gold bug - which by today's loose definition, means anyone that actually owns investment-grade gold.

Although quite a lot of the markets have actually recovered from the BREXIT shock, unsurprisingly, one of the strong performers post BREXIT has been precious metals. It was not too long ago when gold was trading in the $1050s and people were expecting support failure at $1000 and that we plunge below that.

(chart from BullionStar)

Just before and after BREXIT, gold in GBP popped 19% on the day. Yes, madness. However, from the trough of late 2015, it's actually crazy how Gold has increased by 40% in just about 6 short months.

Personally for me, my pet rock holdings available for sale is +18%. If you count in the selling costs involved, it drops to about 13%. However, that transaction costs has always been a known factor, and that is just the price to be paid to be able to grab your pet rock and run.

My gold unit trusts unfortunately is only up 20%. I had to take an unexpected hit when one of the funds was closing down and the switching period was very.... ill-timed. However, up 20% is still pretty good for the start.

As for my personal stash, I would make a quick 10% if I offloaded it in the market today. However, this is my zombie-apocalypse emergency stash, so it's probably going to the grave with me.

Although it has been a while, I am rather pleased with these promising returns. Mind you, this has been the worst gold bear markets in history, and now we seem to just be coming out of it. You can see for yourself from this slightly outdated chart marking the final troughs.

Well, what this means to me is that the risk/reward for investing in Gold or Silver is very high. If investing in barbaric pet rocks make you sick, perhaps consider this the relationship between debt and gold, and Gold's ability to protect in currency crisis.

I don't know if this is the start of the bull market, but Phillip Capital seem to think so with their latest report.

As always, Incrementum Funds have come out with a massive document that covers all things gold. If you're a serious precious metals investor, or if you really want to know more about gold, then this is a MUST READ.

My take on Gold or precious metals is rather simple, and it is pretty much the same as other assets as well: The more ugly and unattractive something is, the more interested I am to be an owner. And gold has been performing horribly in the recent years, which makes it look amazing to me.

That's just how I roll though, balls deep.

If you asked me what's my biggest position right now, the answer would be gold. And I am happy to be in the company of serious investing legends like Druckenmiller and others (I can't seem to find the source page that were showing the who's who in the investing world and their massive gold positioning).

Anyway, the plan is to closely monitor the market and to see how things go. From what I'm seeing now, I'm still hoping for a big pullback and correction to flush out all the weakhands and speculators, and then I'll probably load up my final haul. If anything, I might have too much exposure in gold.

As usual, when the time is right, I'd be placing my orders to BullionStar either for them to store my BSP or for me to arrange a self-collection a few days later.

Full disclosure: If you enter BullionStar through my site, and you buy anything, I get a small commission.

Whether you buy at BullionStar directly or enter from my site, the price you pay does not change. The only difference is whether I get a cut for referring customers or not.

My personal precious metals investments are stored with BullionStar and I pay the same fees as any other regular customer.