Friday, October 28, 2016

[SGX Portfolio] Goodbye PEC

Okay guys, don't laugh, it's only 200 shares. I know I'm just a small, small fish.

When I bought PEC in July 2015 at $0.41, NAV was $0.83 and EPS for the quarter was negative and for the previous 9m was just $0.004. Essentially this company was trading at 50% off book value and it had zero earnings. 

What I liked about the company was that debt was only 38%, which is not much different from the 42% now. The debt is also mostly made up of payables, and that is good debt to have. Borrowings and loans make up only 16.5% of liabilities then and has dropped to 10.8% now.

In fact, cash holdings has gone up from 22% of total assets to a very nice 38% of total assets.


So where are we at now? The P/B has moved up from 0.50 to 0.74 which is a nice increase. The increased valuation of its assets is probably due to the increase in its cash reserves which don't require haircuts for conservative valuations.

EPS is now positive at 3.2c for the quarter for 7.4c for the year. Based on the quarter, PE ratio is 5, which is definitely cheap if earnings are sustainable. Based on the year, PE ratio is 8.6, which seems like a plausible PE ratio for a company in the O&G sector.

I've sat on this bad boy and I've gotten paid $2 in dividends last year and they have declared the same amount due in late Nov.

I've decided to cash out. This was just a nibble and a play on a company with a very nice balance sheet that seemed to be dragged down because of it's industry. It was a tiny part of my portfolio, but it was nice having it around. 

Sold it on Monday at $0.645 (could have sold at $0.65 but I hesitated a little), which is a nice capital gain of 57.3% (which includes the 7.3% dividend that I am forfeiting by selling before the ex-date). Adding in the dividend collected last year boosts returns by 2.4%. Now take into the account the brokerage charges for buying and selling...

(BTW, I get the preferential brokerage fees with SCB... because I'm a baller, hence no $10 min charge.

The final profit for this investment is $48.50, which is 59.0% total returns on an initial capital of $82.20 over the course of roughly 1 year and 3 months.

That's not too shabby. Enough to drink coffee for the next month and a half. This is my second best trade after my 69% profit with Valuetronics.

But yes, I know, I'm a small player.

I'll probably be doing a review of my performance one of these days when I'm not so busy. As much as I have talked about my winners, I do have losers too and it's probably about time that I take stock of my bad apples and decide what I want to do with them. Maybe in December, so it'll be just in time for January spring cleaning!

Saturday, October 22, 2016

Sign Up Credit Cards, Get Free Money

I think y'all know me and y'all know my style. If it's not a REAL lobang, I don't anyhow say.

Last time got free house I really jio y'all. I don't think anyone took up that offer though. I don't see any of my web traffic coming from Italy.

Earlier this month I also let y'all in on the free credit report by CBS through SingSaver. I already had done it myself earlier this year and I am very pleased with my credit score.

Well the good folks at SingSaver actually are really nice and they notified me about their Shioktober credit card promotions that I might want to let readers know about. Unfortunately, I don't get anything mentioning it, but hey, it really looks like a good deal.

Personally, I have signed up for the SCB $138 cash rebate promotion just last month. I've already spent it! I'll be doing a follow up post on that in a while, but at least for SCB I can vouch that it is legit.

Actually what urged me to write about this even though the month is coming to the end is that I saw the upsized ANZ Optimum offering of $168 cash rebate (and a free luggage... but seriously, who cares about free luggages?). After tasting the forbidden fruit of the SCB $138 promotion, I myself am getting very, very tempted to sign up for the ANZ promotion. Maybe I can sign up to get back travel rebates and charge my travel expenses to it. I'd be looking at $168 + 5% off my travel expenses! Mmm... definitely something to consider, especially since I am contemplating another trip next year in March. Since the promotion is until then, I can just think about if I want to add an extra credit card into my life.

So when I thought about these cash rebates, I remembered about the SingSaver extra promotions. I actually have a friend who has been contemplating getting a more all-rounded credit card (she still uses NETS pin transactions, haha), the $100 Watsons voucher for the OCBC 365 card looked like it would be suited for her! I myself have switched to the OCBC 365 card after abandoning their Frank card.


Personally though, I would think that the "best" promotion (in the sense that the card would actually be useful, as opposed to hit-and-run promo grabbing) being offered is actually the AMEX True Cashback card. Even though I am very anal about getting my cash rebates, it actually isn't all too easy to ONLY spend in the category with good cashback. For a general purpose card, your expenses are all over the place in all different categories, The AMEX Cashback card gives 1.5% cashback with no minimum spending. Even with my Frank card, I only got 2.07% rebates and I had a minimum spending. In all FRANKNESS (ooo, a pun), I would imagine most people would be better off with the AMEX cashback card. No need to worry about minimum spendings or cashback category. The only problem is that I heard AMEX doesn't waive annual fees (just hearsay only) and that AMEX is honestly not that widely accepted.

However, the Frank card was in conjunction with my OCBC 360 account, so even though I only got a slightly better cashback than the 1.5%, I did get bonus interest on my entire bank balance and that is actually quite substantial. You really have to consider your own situation and what other products you have access to. Then you will be able to find a strategy that maximizes your cashback, bank interest and hopefully overall returns in regards to your current savings and monthly spending.

Don't be afraid to use credit cards. Credit cards can actually help you save money. Just look at how I saved $38 in July purely from taking advantage of promotions offered through my credit cards. If you count in the base cash rebates and also the bonus interest I get on my bank balances, you would be very surprised by how much money you are LOSING by not using credit cards.

I'm being really serious here. Banks are literally paying you to use credit cards. And as long as you use them smartly, you're going to end up paying less by using your credit cards. So why not?

There's only 1 golden rule to credit cards. Always, always pay off your balance due in full.

Wednesday, October 19, 2016

GMGH's DBS / POSB Cashback Bonus Review

After reading this post by Budget Babe, I decided to check out the DBS/POSB Cashback Bonus Programme.



Honestly, it looked promising at first, until I read the finer details and used the calculator to find out my estimated cashback. I was not impressed.

First off - eligibility.

The requirement of jumping through 3 out of 5 hoops is actually not as easy as one would like. Although Mothership and their sponsored post positioned this programme to be "since you're doing it anyway..." in reality, I would imagine that most people do not qualify naturally to be in their programme.

1.1 Salary Credit.
You need to credit a MINIMUM of $2,500 to your account. If you reverse engineer this amount and take into account CPF contributions, your gross salary has to be at least $3,125. Not something everyone can do. I know grads that don't touch the $3k level.

1.2 Credit Card Spending
Okay, the good thing is that they don't mention a specific minimum. This means that just charging $1 a month ought to qualify as a single transaction. The downside is that it has to be a credit card, and not the debit card that all of us have. That's 1 extra card to maintain in your life for no good reason, especially since the bank promotions extend to the debt cards as well.

1.3 Home Loans
Meh. DBS only has a market share of the loan market of about 25%. Good for you if you're that 1 in 4. If you're not, I don't think refinancing with DBS just for this cashback would be worth it, but do your math. Maybe it is.

1.4 Insurance
If you buy your insurance through the bank, you're already being screwed. There is no back-dating, so this only applies to new policies. And this is a key point: Only the premiums for the first 12 months will be recognized.

1.5 Investments.
Again, if you buy your unit trusts through the bank, you're already being screwed. Same thing, no back-dating of investments. Same thing, it's only recognized for the first 12 months. This is ONLY worth doing if you've been planning to start with POSB Invest Saver and have been lazy to begin. It's a good encouragement to get you to finally do something that you've been wanting to already do. However, for people who have no idea about investing and want to start just to chalk up a tick in this category, it is not advisable to buy something you don't know.

So, straight off the bat, qualifying for the insurance portion is out unless you're crazy. The investment portion through Invest Saver is only good for 12 months and if you haven't started and was already planning to. The loan portion excludes 75% of people. The salary is probably doable, but it should not be assumed that everyone can do it. The only really easy hoop to jump through is the credit card spending hoop, and that's a shitty hoop that just complicates your life.

Now, let's talk about the "Cashback".

If you're going to GIRO your salary into your account, getting a shitty 0.3% OF THE SALARY AMOUNT just doesn't cut it DBS/POSB.

OCBC gives 1.25% on balances up to $60,000 with $2,000 salary credit.
BOC gives 1.25% on balances up to $60,000 with $2,000 salary credit.
SCB gives 1% on balances up to $100,000 with $3,000 salary credit.
CIMB gives you 1% on balances up to $50,000 without doing anything at all.

I'm sorry DBS/POSB, but why the hell would anyone credit their salary to DBS/POSB for this shitty 0.3% on the salary amount? It is so much easier to open up an OCBC/BOC account and deposit your salary and get 1.25% on their whole balance (as opposed to only the salary amount), or have zero stress at all and just normal bank transfer to CIMB and get 1%.

The credit card 0.3% cashback is very lame. The normal DBS/POSB debit cards give you 0.3% cashback with no limits.

The 3% for home loans caps at $30, which means the optimum and maximum loan amount is $1000. Still, money is money and this is the only cashback reward that I actually like.

Insurance is bullshit and if you buy it, you cannot be saved. 10% cashback also not enough.

The 3% for the investments is all right, especially if like I said, you were already planning to do it from the start. It's a good cashback amount and you're probably making while the bank is losing money on this, but that's why its limited to just 12 months.

Review Summary

This cashback programme is shit.

Unless you already have a home loan with DBS and already credit more than $2,500 of your salary to your DBS/POSB account, you're not going to meet the eligibility. If you do, then spend on something once a month of your credit card and you're good to go.

You should not think of taking up insurance or investments through the bank. If you want to buy insurance, DPI is the cheaper way to go. The amount you save will be much much much much much much much much more than the shitty 3% premium rebate which you only get for 12 months. If you want to invest in unit trusts, do it through Phillips where the sales charge is either 0.75% or 0%. It's like having a permanent rebate from the banks' usual 3% charge.

In all honesty, if you qualify for this programme, it's most likely because of your $2,500 salary credit. In that case, you're an idiot for being in this programme instead of opening accounts with OCBC/BOC/CIMB and getting a higher interest on your entire balance instead of just a rebate on your salary.

The main beneficiaries of this programme are DBS/POSB staff who are forced to credit their salary into their accounts. LOL.

Much of the talk is about how this programme gives you cashback without you having to do much. However, if you're going to sign up for this programme and jump through some hoops, you're honestly MUCH better off going to other banks that will give you much better interest for your banking relationship with them.

Bottomline: this is a bullshit programme and it ticks me off that DBS/POSB thinks that pop-art graphics and a cheesy marketing campaign will make up for their crappy product offering. Attention to millennials being targetted: if you fall for this, you're beyond hope. This programme is actually almost insulting.

DBS/POSB is already behind the curve by having such a ridiculous Multiplier programme which close to no normal people can qualify for. Now they are trying to trick unsuspecting people with this cashback hocus-pocus to retain customers - who should by right, if they are smart, be migrating in droves to all the other much better product offerings by other banks.

Pull the plug on this shitty programme or beef it up so that it's actually something worth getting. Give interest on the whole balance if the salary credit requirement is hit. Give a proper cashback or rebate to actually encourage credit card usage, as opposed to cannibalizing on your own debit cards. Upsize your home loan rebates to get people with higher mortgages (and thus, higher opportunity cost) to refinance with you. Don't limit your insurance and investment rebates to just the first 12 month. Adjust your investment rebate because 3% for Invest Saver is just silly and loss making. No worries DBS team, all this consultation is on the house.

Personally, I think DBS/POSB is pretty shit. I only use them because of their ATM network and for random promotions that they sometimes have. I legit have less than $1,000 in my bank account with them, and even then I feel like I'm holding too much cash with them.

Honestly, I would love banks to come at me to publicize their new products. But with shit like this, no amount of shine will turn it to gold. I can't recommend this programme to anyone because it is not something that I think anyone should be participating in.

Please correct me if I'm wrong, but I haven't seen such a bad programme since the Multiplier Programme, which is coincidentally (or not) also by DBS.

Monday, October 17, 2016

Schoolber: School Kids' Uber?

Is this the best arguments against young parents who insist that THEY MUST HAVE A CAR?


This Today article is really quite informative about the services offered by Schoolber. (link to their website, not much info though)

In all honesty, the price and the value is very attractive. Let me just list the pros and cons that I can think off from the top of my head:

Pros
Don't need to own a car
Don't need to have a licence
Don't need to wake up
Don't need to drive to school and back
Driver is also a parent with their own kid in the vehicle (safety aspect)
Similar price to a school bus, but shorter travel time for your kid
Kid can make new friends

Cons
You don't get to have bonding time with your kid while they sleep in your vehicle

Honestly, the pros and cons are pretty obvious. On top of the convenience and affordability aspect of this service, they also have real-time tracking and pick-up / drop-off notifications for concerned (kaypoh) parents.

Prices are set between $100 to $200 a month, which I think is way, way, way more affordable than buying you own car and wasting time to be your kid's personal chauffeur. Of course, some parents think that this is the most important thing that they do for their kid (as opposed to guiding them through life and preparing them to be functional adults in our society) and will shun this idea of sticking their kids with other people.

In that case, those parents should be drivers, hahaha. Especially if the kids that you pick up happen to be in the same or nearby block, it's almost no extra hassle to ferry an extra body to school to defray your costs of car ownership a bit. If this was the situation and a parent did not do it, it's the same as throwing away free money.

Personally, I'm sold on this idea. I like it how that this app is a semi-clone. It's building up on an original idea, but adding specific essential features and reaching out to the right people. They've already got so many interested parties, so I really hope that they take off.

"GMGH Jr, you better wake up on time in the morning, get dressed and take your schoolber to school. If I wake up and I don't see a notification that you were picked up and dropped off at school, I'm going to cut off the 4G from your smartphone!"

Seriously, the reasons to own a car is dropping more and more, day by day. In today's world, you can already schedule trips in advance, summon vehicles on demand, get groceries delivered to you and now you can send your kid to school. Seriously, other than using it to attract gold diggers, what use for a car is there today that hasn't already been fulfilled?

Saturday, October 15, 2016

Some Bank Metrics

Was just thinking of comparing the local banks, but this time round it was just a quick one as opposed to a slightly more detailed one that I did 2 years ago.


DBS has the best CET 1 ratio, Basel III requires 7% by 2019, so no problem, all is good here. However, compared to some other banks that I happened to stumble upon, their CET 1 levels is nothing extraordinary.

Leverage Ratio (LERA) is pretty modest at between 7-8%, which implies a leverage of 12-14X. I think that this is actually pretty conservative, so that's a good thing to have.

Loan Coverage Ratio (LCR) for all banks are over 100%, but it's interesting to note that UOB is at 167%. Is this because they have a slightly higher NPL ratio?

CASA ratio is somewhat related to NIM because a higher CASA ratio usually means a higher NIM. It's not surprising that DBS has the highest CASA ratio by a stretch.

Notice how I left out any valuation metrics? There is nothing comparing to the current stock price! However, I think leaving out valuation metrics can be good for this phase because it helps you identify which company is the objectively better one. Of the 3, I have personal preference towards OCBC and then DBS.

Of course, once you add in the valuation element, you might find that the relatively higher or lower prices skew your decisions, which is because you are now having to decide how much certain factors are valued to you and if you are willing to pay for a better position, or are willing to be paid for a less favourable position.

Investors don't make money by choosing the best stocks with no regards for its price and valuation. They make money by weighing valuations against fundamentals and deciding if the risks are worth it - and that might be avoiding good, but expensive stocks, or that might be from buying bad, but cheap stocks.

Of course the idea situation is to buy a company with great fundamentals that is at cheap valuations, but... opportunities like that don't happen too often, I'd reckon.

Friday, October 14, 2016

Hyflux: The Morning After

You drank too much and got into bed with a pretty looking lady.

Now you have a hangover, your butt hurts and she kinds of looks like a he.

What the hell happened?

Back in May, the Hyflux 6% retail perp news came in hot and heavy. Retail investors immediately got wet hearing such a high coupon. What's better than a 6% coupon bond? A 6% coupon PERPETUAL bond! Yay! Buy all the bonds! So shiok and juicy, don't need to think twice.... right?


Well, it didn't smell too good to me, especially since I've noticed their previous pattern of issue perps. Chut pattern more than badminton. Minister Sim Ann would be shaking her head.


I did a post and I made a case against taking up this perpetual issue. One of the things that I did highlight is my strong speculation that this issue is merely to pay back another maturing perp bond. Fast forward 1 month from then, and looky looky. They did exactly just that and redeemed their 4.8% perp bond. It's like I can see the future.


Since then and now, there has been a few developments.

Share price has dropped 16% from $0.56 to $0.47 as of today.
Revenue is still stagnant, while profit has dropped even more.
Debt to asset has improved from 60% to 52%, but nothing is an indication that it is a new trend.

More importantly, bond prices have gone from 100 par to 96 in such a short time.

Honestly, that is not a very good indication at all. I think a lot of retail investors are feeling pissed. Let's assume that the 3% semi annual coupon is being valued at 100%, that means the actual bond price without the accrued interest is more along the lines of 93 once it pays out its coupon next month. A 4% loss for a 6 month investment is not very comforting, especially when people were expecting at least a 3% profit. That's an expectation gap of 7%!

Honestly, the better investment would actually be their 6% preference shares. While it has had a strong track record since it's 2011 listing, perhaps its investors are suddenly realizing that everything in Hyflux isn't all rainbows and unicorns anymore. From consistently maintaining value over 101, it has since plunged in August and it is pretty much trading at its low of 94.6. This translates to a yield of 6.325%, instead of the previous yield just 2 years ago at 5.6%! A bonus is that Hyflux has a time bomb on this preference share because it has until Apr 2018 to redeem it, if not it will step up to 8%.

Hyflux is playing a dangerous game of ring around the rosies with investors, using 1 issue to redeem another issue due for step-up. From the looks of it to me, this isn't a one-off occasion, it is their modus operandi.

It seems like the smart way to be playing this and not getting face-ripped like other investors is to choose issues based on their earliest redemption date. Of course comparing the 6% perp bond and the 6% pref shares, the perf shares are much much more attractive due to their lower price, higher yield and earlier call date. It's definitely worth a consideration if you're willing to take on the risks that Hyflux has and are looking for a decent short term flip. At least within 1.5 years you would know if your gamble was a fruitful one. Potential gain in 1.5 years is approximately 15% if it works out. Not too shabby actually.

The reward is there, but the risks has to be further analyzed before the conclusion can be made that this is a gamble worthwhile due to it's hopefully high probability of success. I will probably be doing some expanded research on this over the weekend or soon. There really isn't a rush. If I enter Hyflux, I'd definitely be posting about it.

As for now, all I can hope for is that Hyflux investors lose their nerves and force my hand by driving prices down to levels too attractive for me to resist, and for Hyflux to improve their fundamentals so that the risk of my possible investment failure gets lower. It doesn't seem like this kind of thing happens in tandem, but you never know.

But of all the unknowns out there, one thing is for sure - I'm happy I ain't an equity investor of Hyflux. If you still are, I congratulate you for having the stones to sit through a 67% stock price decline over the past 5 years.

Thursday, October 13, 2016

Another Reason to be wary of the REIT ETF

Honestly, I really like REITs as an asset class, so for me to not get behind the new REIT ETF really ought to say something about why I am hesitant.

One thing to note is the heavy geographic concentration of Australian assets which makes up more than 50% of the ETF index construction. Exposure to the Australian property sector and the AUD will be significant to say the least.

I really don't think that Australian property has a bright future going forward. In fact, I think that it is gloomy. Hella gloomy.

I've talked about it in 2015.

I've talked about it also earlier in 2016.

Interest only mortgages is just insane to me, yet it's a thing in Australia. Not only is it a thing, but it made up 50% of all new mortgages back when I talked about it. Who knows what the figures are like now.

Acting Man has come up with a whole article about the madness in the "Australian property bubble". I quite agree that it is a property bubble.

Nation wide, price to rent ratio is a staggering 27. That means the rental yield (calculated by taking the inverse) is a pathetic 3.7%.

The median multiple of a house is now 8 times annual income.

Household debt to income is at all time highs.

This is about as obvious as it gets guys.

I'm looking forward to a cheaper ozzie in the near future. Plans for a proper aussie holiday and perhaps prospecting on some serverely distressed assets in the tier 1 cities might be in the cards if they relax their rules to allow foreign property buyers to save their property market from collapsing inwards. However, I doubt it.

On the plus side, the data is more for residential property, but I can assure you that Australian bubble vision is not contained to just residential property.

Tuesday, October 11, 2016

GMGH Insurance Review 2016

This post is partly inspired by the latest post by AK about a jobless guy stuck with $30k of annual insurance premiums, as a follow up to my first post in 2015 that was inspired by Derek, and also something related to what reader SH has emailed me about.

In September 2015, my spreadsheet was sort of organized, but in a kind of haphazard sort of way. The information is there, but I thought I could do better.

My 2015 insurance policies

Since then, my friend actually gave me a template that she used when working through her insurance needs with her agent. I modified the template a bit and updated it with my policies and premiums, and viola, there we go! (best opened into a new tab or into another screen for reference)

My updated 2016 insurance policies

I am very happy when I look at my insurance overview and see that I have no policies that have cash value and my only policies which last my lifetime is my H&S insurance. This follows my personal view on insurance very well and I am happy that I have modeled my actual policies to be line with my views.

Since then and now, my insurance premiums have effectively doubled (108% increase), but I'm not complaining about it, and you're going to see why.

Annually, my insurance burden is $1550.20. However, a portion of it can be paid by CPF OA (DPS) and CPF MA (Integrated Shield Plan). After taking out the CPF portion, the cash portion is $1141.20, which works out to be a monthly burden of about $95.10. That's about $100 a month.

Some people might say that $100 is not cheap on an absolute basis, which I agree. I used to pay less than $50 a month, while I know quite a few people my age paying $300-600 a month, and of course others like that man that wrote to AK paying in excess of $1000 a month.

So if my insurance premiums have doubled, why am I okay about that? Well, my coverage has EXPLODED!


My death / TPD coverage has increased by 4.6x.
My CI coverage has increased by 4x.
My early CI coverage has increased by 2x.
My PA coverage has increased by 2.6x

An interesting thing to note about the personal accident policy by Aviva is that it is now an independent policy, as opposed to be tagged onto the death/TPD policy that covered SA + $25,000. I always found that weird and unnecessarily confusing. It's nicer and cleaner to me that each insurance policy is distinct. I really dislike bundle pricing when I might be paying for something that I might no necessarily want.

Although looking at my insurance coverage now, the AXA DPI that I bought looks expensive and unnecessary, especially since the death and TPD premiums by the MHA group insurance is very low, this actually is a perfect supplement because the AXA DPI allows me to add on Critical Illness coverage and this covers until age 65. In the later years, the MHA CI premiums become really really expensive, so I am planning to drop coverage halfway and just rely on the AXA DPI rider for my critical illness coverage.

At first look, I'm sure the reaction of many people is "WA LAO WHY SO MUCH?". In all honesty, I do know that I am not only over-insured, I am grossly over-insured.

However, the funny thing about insurance is that if you're over-insured, that's fine, as long as you can afford it. You just pay more premiums for additional coverage that isn't essential, but it is a bonus to have. And that's what I'm doing.

The problem comes when you do it the other way around, when you are under-insured. You end up being a burden to your dependents, and that isn't something that I would like.

The good thing is that this problem, like many problems in life, is easily solved by throwing money at it. If you can afford paying to be over-insured, it is fine and there isn't anything too bad about it. Sure, it isn't optimal, but it isn't like your extra $100 is going to make a significant difference in your life. However, if you're barely scrapping by, you'd want to make sure that your insurance coverage covers or exceeds your needs. You also have to review very often because you don't want to be in a situation where you are wasting premiums on unnecessary coverage, or to be under-insured.

In all honesty, this actually applies to whole life insurance as well. As much as I am against whole life insurance, if it is something that you can afford to have, why not? Just pay 4 times more premiums for the same amount of coverage during the necessary years, and then just be committed to paying premiums every month until you die. Is it optimal? Hell no. Is it a problem if you have money? If you can afford it, no, then it is not a problem. Plenty of problems go away by throwing money at it. However, like I said, not everyone has enough money to throw at all their problems and this is why it becomes prudent to manage your cash flow. When the monthly cash flow commitment to this beast becomes crippling and overbearing, you would be extremely regretful about this decision. Sadly, there isn't a painless way to solve that problem once you get stuck in it. Perhaps the only way is to "repo" away your insurance and get a slightly better return of capital as opposed to the surrender value option. But that's a different story for a different post.

Anyway, back to the topic of me. I am pretty happy with the new MHA insurance which is drastically reducing insurance costs to an already super cheap insurance option. Honestly, any "financial advisor" out there that fails to mention this insurance is a jack off and is just fucked up. If you've noticed, I've toned down my language in recent months, but it is really important and necessary to highlight this emphasis. Don't blindly trust financial advisors, ESPECIALLY IF THEY ARE YOUR FRIENDS. Instead, why not trust GMGH, your friendly neighbourhood financial advisor? (it's just a joke, click the link). You probably don't need maximum coverage and it shouldn't be your sole and primary insurance policy, but it should be owned by every eligible person. It is not a comprehensive solution, but it is disgustingly cheap that if you DON'T get it, you're already a sucker.

With my current coverage, I'm happy that I'm paying chump change to have a level of insurance coverage that is borderline disgusting and excessive. Buy a product with coverage like this through one of your agent-friends and I can guaran-damn-tee you that the first product they show you will have premiums of at least $1000 a month.

I'll probably do another review of my insurance next year or once I complete my next health check-up. I've becoming more and more appreciative to the fact that I actually am pretty healthy and it is something to be thankful for. All this insurances are just... insurances. I hope I never had to pull out these policies.

And that is exactly how insurance should be like. Something you wish you never had to use, as opposed to something that you are hoping to "strike". This isn't 4D or TOTO and I really wish people would stop treating it like that.

Monday, October 10, 2016

Thoughts on the New REIT ETF

In case you haven't heard the news, Phillip is going to list a dual currency REIT ETF on the SGX.

Quick points to note:

  • dual listed in USD and SGD
  • total expense ratio: 0.65% pa
  • dividends paids semi annually
  • dividend forecasted at 5.2%
  • P/B Ratio at 1.17
  • currently made up of 30 REITs from 3 countries
  • 70% representation of the APAC ex Japan REITs by market cap

The idea of a REIT ETF is something that I've ever mentioned back in Jan 2015. Funny enough, this was mentioned at the 2015 REIT Symposium and again in 2016, but it looks like the REIT ETF is quite different from what industry experts were expecting (SG-REIT 20 Index).

Personally, I'm a big fan of REITs. I don't think that they are the best asset class ever, but I think that as an asset class, they suit me as an investor really well. I understand how it works, I've done my research on them and I've my own metrics that I use to help me evaluate them. It just suits me, but like I said, I don't think that they are objectively the best asset class and it really depends on your style and preferences as an investor.

I've done my own study, which compares dropping $1m into a local property or into REITs and my personal conclusion is that as long as the property invested is unlevered, it is more attractive to invest in REITs. Of course, you can get a loan for 200-400% and then buy other / bigger properties, but I don't think that it is a fair comparison to me because the risks are also getting upsized. The idea of having a liability bigger than the asset you just purchased as an investment just doesn't go down well with me, which I why I assumed just straight up cash investing as my baseline to compare. 
I am assuming it's a one-time lump sum investment, something that doesn't require additional cash injections. Something that maybe a 55 year old planning for retirement might want to consider. Both will appear as $1 mil assets in my portfolio and will require a $1 mil capital outlay. So while "leverage" is different, I'm trying to compare bang-for-your-buck. - GMGH (Jan 2015)
I know that Singaporeans love properties and owning plenty of them, but after what I've found out for myself, I don't think I'd do that. As a purely financial investment, REITs is quite clearly the superior investment vehicle to me. If you want to compare it with loans and leverage, by all means. But it is paramount to know that once you start using leverage, the risk / reward ratio gets skewed and you're also putting yourself at the risk of negative equity, which is not possible with REITs.

With all that said, you would imagine that I'd be loving this idea and jumping on the bandwagon to promote this product, right?

Actually, as interesting as I see it, I think I'd just be watching how it all turns out, especially with how they handle rights issues and dividends. I'm also going to be looking out for the liquidity on this issue, because as most people should know, the SGX has pretty thin liquidity, and this goes especially so for dual-listings.

I'm still more than happy to selectively include and exclude REITs from my watchlist and also buy them individually, instead of being forced to buy them as a bundle (allowing me to buy distressed one and sell exuberant ones). I suppose that for the average person, this is a pretty good way to get exposure to REITs, but for people who are looking something a bit more advanced, this might not do the trick.

Anyway, this is an ETF. It isn't a stock, so a "successful" IPO is not going to blast off and create massive capital gains. It's just going to track the returns of the REITs in its index. And that also means that it could very well drop below IPO prices if all its underlyings perform poorly in the future (something which I expect to happen).

My plan of attack is to just wait and see. I don't see any need to rush into this.

Saturday, October 8, 2016

Time For a UK Holiday Soon?

I know it might sound ridiculous to some people, but I have planned my holidays based on currency exchange rates before.

I went to Japan when the SGD/JPY was at 85, and now it is a 75. It doesn't seem like much, but that's actually translates to me to about a 12% discount for my whole holiday on everything that I spend! It was a good holiday, but if things continue the way that they are going right now, a weak Yen for happy holiday makers will be back in the back within a few years time.


Even before the Brexit trigger (click here for my lengthy piece on it), the pound has been slipping. I remember back in 2014 and 2015 I was mulling over the decision to go into broad based foreign ETFs as a a lazy way to get international exposure and to be diversified. One of the things that put me off was actually the GBP/SGD exchange rate. I had gone to research about the benefits of investing in GBP, but I discovered something else instead. Did you know that the GBP/SGD rate used to be 8.6? And now we're at 1.7.

Maybe I'm biased, but if you ask me, I think that we still continue to strengthen against most of the currencies around the world. I'm almost certain that we will reach parity with the USD sometime in the next decade. Doing the same for the GBP wouldn't be too far away from that too.

Anyway, with the GBP at very attractive rates compared to the SGD, it does seem a lot more attractive to head over to the UK and have a nice holiday. I did enjoy my visits to the UK, so I'd be happy to go back again and see more! If you've been itching to go to London, now might be one of the best opportunities for you to go!

Friday, October 7, 2016

Getting Ready To Back Up The Truck for 2016....

In a week, Silver has plunged about 10%, the biggest drop in the past 42 weeks. Hubba hubba.

If you buying things that have plunged recently turns you on, then this might just do the trick.


I did say on 29 Sep that I am looking for another plunge of Silver to $17, but actually to elaborate, I was expecting it to be $17.XX, or just below the $18 mark. However, we're making good way toward the $17 mark and I'm not complaining if the thing that I want to buy more of becomes cheaper and cheaper, heh.

Of course with this recent plunge in prices, my precious metals aren't doing as good as before, but that's okay with me because I think that this trade in precious metals still has a looooooong way to go. I'm not expecting to sell off my positions anytime soon. Maybe in a few years?

As some of you might know, I am very bullish on precious metals, particularly in the value of gold relative to fiat currencies, but more of the relative value of silver to that of gold. I'm looking to add to my annual collection of Silver American Eagles and both Gold and Silver Canadian Maples, as well as stack a bit of RCM 10 oz bars. I've got my mind set on a rough amount already, but if prices get too attractive, I might not be able to control myself and I might end up getting a little bit more, haha.

Honestly, I'm ready to pull the trigger at these prices. I'm just sizing up the market. I do think that I'd be placing my order within the next 1 or 2 weeks, so perhaps that's something to look forward to if you're a gold bug.

Precious metals has been a painful trade. But if you're not leveraged you do have the luxury of time. If you have analyzed the fundamentals to be attractive, you would also know that the rewards are massive compared to the risks (of which most of it has disappeared because of the drop in prices). Another thing that you'd also know is compared to history, the trajectory of gold has almost never gone so far south for so long. So either this situation is ripe for some mathematical mean reversal (and gains if you're long), or we really have transitioned into a "new normal". I don't think so, but that is something to ponder about.

Thursday, October 6, 2016

Eatigo: Model Business Idea For the Future

Have you heard of eatigo?

If you haven't, I really think that you should check it out.


It's idea is simple, but ingenious.

Some restaurants are empty at certain time of the days. Or some restaurants are emptier than usual because of some situational event. With fixed overheads like rental, staff costs, utilities and also inventory of food to clear, an empty table represents revenue being losts AND fixed costs making up a larger part of the total business costs.

As a business owner, you'd want to keep your fixed costs low. For the F&B business, that actually means having a very good turnover of clients. Your service staff and cooks get paid the same hourly rate at 12 noon and at 2pm, although the workload at the 2 times can be very big. Idle time and empty tables is NOT good. If you could offer a 50% discount right now and get customers fill up your restaurant in 30 mins, would you do it?

As a consumer, you like to eat out at nice places every once in a while. As good as hawker food is, sometimes you just don't feel like entering the wild jungle during meal times and fighting for seats in the heat. However, you can't eat out all the time - that would break the bank.

Ta-da. Eatigo!

Eatigo matches empty tables with empty stomachs. That's their tagline and I think it is amazing. How it works is that restaurants with excess capacity can allow consumers to book a table. Depending on how full the restaurant is, discounts for that booking can be from 10% and all the way up to 50%!

The restaurant gets full and it is fully utilizing its resources. A restaurant that has crowds draw in more crowds. Few things in Singapore are scarier than an empty restaurant.

The consumer gets to eat out and for a great deal.

It's a win-win situation.

-------------------------------------------------------------------

Personally, I've only heard of eatigo just recently, but I'm super sold on their value proposition. I actually went to try them out last night and I got 40% off! Honestly, even with 40% off, the restaurant was still half empty, but I was just surprised to even see people in the restaurant at 9.30pm. Late night dinner owls? It didn't seem like anyone else was using the app though! Between me and my friend, we got 2 mid-priced mains and shared an appetizer for the cost of a low-priced main each! Total dining cost? $15 nett, inclusive of the service charge and GST. Not bad for a very filling meal!

I really do like their business idea. Matching empty tables with empty stomachs. This is brilliant. If you think about it, their business model is exactly like Uber or Airbnb. Perhaps we can add eatigo to the list below if it takes off. "Company that feeds tons of people, has no food".


There really is something about this kind of business model that allows it to have so much success on an international level.

You are the owner of a fixed asset. (car / house / restaurant)
Your asset is not being fully utilized. (non-driving hours / no tenant / empty tables)
Your asset is ready to be further utilized.
Company comes in to convert that under-utilization into money (Uber / Airbnb / eatigo)
You have an increase in revenue.
Adopters of the company are happy paying to use your under-utilized excess.
Overall, less wastage and increased efficiency of the asset.

Fixed asset owner wins. Consumer wins. Company wins.

It's a win-win-win situation that is very hard to create and find. Which is why those that manage to do so are so successful. I've said it before and I'd say it again, the future is in the crowd and these sort of business ideas effectively makes use of the crowd to create value for all stakeholders. I am very impressed by these kind of business models because they are sustainable if managed and run correctly.

After looking at this, I realize why so many traditional business ideas fail. Instead of matching and bridging demand and supply, many businesses try to CREATE demand that wasn't there, to buy their products or services.

I'm going to re-evaluate my business ideas that I have on the drawing board and figure out which of my ideas most easily supply products/services to willing customers with an existing demand for it, rather than try to create a demand for something that people didn't even know they needed.

Tuesday, October 4, 2016

Free Credit Report!!!

I've a good lobang for all of y'all out there... FREE CREDIT REPORT!

Until 31st Dec 2016, you can go to SingSaver and access your credit report for free, which is the legit credit report generated by Credit Bureau Singapore.


They had this free credit report back in June, and I took advantage of it to check out my credit report. I had actually almost bought the credit report because I wanted to have a look at my credit standing, so it was just great timing that I could access for free.

By the way, my credit score was PERFECT!

So what's your credit score like?

One of the clearest indication of getting the basics right in personal finances is managing your credit card debt well. That's the one major minefield that if you've managed to successfully navigate, gives you pretty good odds on succeeding on the other areas of managing your personal finances.

Monday, October 3, 2016

Be Like Trump, Don't Pay Taxes

(Source: WSJ)

Hello, paying taxes and lots of it is not something to be proud of.

I agree with presidential nominee Donald Trump when he retorted to Hilary's point that he doesn't pay taxes with "Well, that makes me smart".

Not paying taxes IS NOT tax evasion, so please don't jump to conclusions.

There are plenty of legal ways to reduce your tax burden. I repeat, LEGAL WAYS. If you're too lazy to figure out how to do that, well then that's your own damn problem for paying taxes that you weren't liable for / could have reduced through deductions or reliefs.


Unlike the USA, the Singapore tax code is very clear, clean and simple. There isn't too many ways for a high income earner to come in at a tax rate lower than a low income earner. Other than CPF Cash Top Up and SRS contribution, there is little wiggle room to add more relief. For deductions, there is the Angel Investors scheme and the usual sole prop / partnership business expenses.

Paying low or no taxes is definitely something to be proud of if you can manage to do so in the legal way.

Does that make Trump smart (at least about his personal taxes)? In my books, yes.