Tuesday, September 30, 2014

[SGX Portfolio] September 2014 Update

As mentioned previously, this will be my attempt at having a monthly update of my SGX portfolio.

Here are the current stats of the portfolio as of end September 2014.

                                                                         Lots         Average Price   Dividends Collected
Croesus Retail Trust
Saizen REIT
Asian Pay TV Trust
Lippo Malls Retail Trust
New Toyo
Chuan Hup
OUE Commercial REIT
Hock Lian Seng
Global Investments
Perennial CRT
Singapore Reinsurance

Total Cost     $6,406    
Unrealized Gains$121
Realized Gains$0.56
Dividends Collected$139.26

*Realized Gains will take into account the final net profit or loss after including transaction costs to close a long position on a security. Dividends for closed positions will be grouped under realized gains. Dividends that has been collected for positions still held (which are realized) are separately counted.

Annual income from dividends is now expected to be about $450 for a full year, but of course I collected some and miss out others. I am expecting only 1 of my counters to pay out dividends next month, and it is New Toyo.

Based on the dividends I am expected to collect, my portfolio dividend yield on cost is estimated to be about 7.2%.

I am currently working to create a watchlist that only have very fundamentally solid, dividend counters. This will reduce my future screening time and whenever there is broad market weakness, I will look for the most promising counters and purchase them on dips.

I have identified good and simple business models, but I have yet to delve deeper into the financials of most of the companies that are on my current watchlist now. The watchlist is quite big, around 70+ stocks, which comprises about 10% of the SGX listings. I am looking to trim it down a bit.

I am also looking forward to the drop in share lots from 1000 to 100, because it will enable me to have access to much more companies that used to have a very high capital requirement. However, this will only happen in Jan 2015. I will start checking the fundamentals of the companies that I look to add in my future watchlist though.

I am resisting loading up on shares even though I see some very tempting picks. Markets rarely go sideways for so long, so something is definitely happening behind the scenes.

[XMM STI ETF Investing] September 2014 Update

As mentioned previously, this will be my attempt at having a monthly update of the small portfolio that I am running for my sister and mother. The aim to have as little downside risk as possible, and maximize returns from there.

No changes to the portfolio this month, I am still playing it safe because the STI doesn't seem to offer any good entry points yet. It looks set for a correction soon, but I just feel uncomfortable buying in longer term at this level.

Here are the current stats of the portfolio as of end September 2014.

30 September 2014       Sister             Mom               Total       
Amount Contributed

30 September 2014  Stocks  BondsCashTotal
Amount Contributed

Bonds are in UOB SGD Fund Class A with 4731.82 units.

Cash is earning 2% from filling up the remainder of my OCBC 360 account.

Additional $400 was added to Cash.

1) Calculate end of month stocks / bond / cash value, update both totals
2) Times by contribution percentage to find end of month value of each contributor
3) Add in $400 to both totals
4) Recalcuate new percentage of contribution
5) Recalculate new percentage of assets

[STI Statistics] September 2014

Hi all, this is my monthly post analyzing the STI.

Feel free to send me requests for more statistics, especially if you have the raw data for me to work on. I am looking quite desperately for the old data on P/E and P/B monthly values of the STI before 2008. If anyone can get me the P/E and P/B statistics of the STI OLD from a Bloomberg terminal, that would be greatly appreciated and included.

As of 30 September 2014

STI Closing Value: 3276.74
P/E Ratio: 13.85
P/B Ratio: 1.33

Monthly Data Series from 2008

Mean P/E: 12.13
P/E Standard Deviation: 3.24

Mean P/B: 1.48
P/B Standard Deviation: 0.22

% of time when the STI is cheaper based on P/E: 70.25%
% of time when the STI is cheaper based on P/B: 24.60%


The P/E and P/B ratios are still telling conflicting stories about the index, however both ratios have come down from the previous month, which seems to have peaked in end July. The STI looks to be in a topping pattern to me.

Considering how the index has not pulled back substantially yet, I am still waiting for an opportunity to enter some long positions. Still no rush.

I am still considering constructing, adding and maintaining an STI seasonality chart, which can probably include data all the way back to 1987. I will use data from Yahoo Finance and take construction tips from this guide. I am been rather busy lately though, maybe I can work something out, at least a monthly seasonal would be interesting.

*Straits Times Index values from Yahoo Finance
** P/E and P/B Ratios from SPDR STI as a proxy

***Data Series 2008 - 2014 from Bloomberg
****Data Series 2014 from SPDR STI as a proxy
*****Probability calculated with http://stattrek.com/online-calculator/normal.aspx

Balls Deep - That's How I Roll (Part II)

Put your money where your mouth is at right? I'm a contrarian, so here we go!

Earlier this March, I took a seemingly crazy trade and went into Russian equities. I know, crazy right?

Fast forward to 3 months later, I exited my position in Russia for a nice cool 20% odd gain.

Today I just entered into another 2 seemingly stupid positions as well. Check out these 2 charts below.

These are the 5 year charts of the GDX and the RSX. Gold mining equities and Russian equities. I think the consensus is pretty clear that everyone thinks Gold is a crap and worthless asset, while Russia is going to be sanctioned to oblivion.

But oh well, buy low, sell high, right?

I purchased the unit trust proxies for these 2 ETFs and I am planning to sit on these babies for years to come or as long as it takes. Downside seems limited and upside seems plentiful, while I am just worried about the expenses eating into my capital base. It's the last day of the Phillip 0% promotion, so at least I can console myself saying that I saved 0.75% making these trades? Haha.

Screw Theory, Focus on Reality: Economics

I've been having a heated debate with my friend that started out with the HK protests that even involved the #ReturnOurCPF nonsense that is happening in Singapore.

My friend is arguing that people should be more aware about world and do something about it, rather than be selfish leeches of a prosperous society.

I am arguing that it's just human nature to not give a crap about anything else until you have your own problems sorted out, so it's not their conscious choice to sit on the sidelines and watch the world burn.

In the end, I realized that what we are arguing about was simple: Idealized Theory vs. Realistic Reality.

Of course it would be great if there was no war, poverty, disease, hate, pain or suffering. And if we were all rich. And everyone was equal. And no one is jealous. But hell, come on, is that seriously realistic at all, in any way?

One speech that I saw that helped mould my mind about the absurdness of theoretical idealized theories was a speech by a man in the British House of Commons, I think. He was arguing about working and improving the capitalist model, while arguing against the shift towards socialism. His main point? We've tried socialism before, many times, in many places. It always fails. It might not have failed yet, but it will fail. It isn't a stable structure. Capitalism however, as imperfect as it is, has been grinding along and dragging progress with it. It's not without flaws, but it is the closest thing that we have to a stable structure that moves in the correct direction.

Why fix it, when it's not broken? Instead, improve it and make it better, rather than trash it and try out something that we've experimented with many times before, and failed every single time.

Now, moving away from morality and politics, how does this relate to personal finance? I think we need to look at economics. What is your school of thought regarding economics? I was taught Keynesian economics in all my years in school, but I never found it logical to me. Instead, I had to memorize outcomes because it was never intuitive. Only about a year back when I stumbled upon the Austrian school of economics, that I really felt truly enlightened about economics. Everything makes sense, really. Give it a go, you might actually like it.

So, let me just show 4 things about Keynesian economics which just blows my mind because I seriously can't understand it at all. Maybe if you think about it too, you will question your economic school of thought.

Monday, September 29, 2014

Who's Right, Who's Wrong? Bonds or Stocks?

At the end of 2012, the global bond market was valued at roughly $100 trillion. The global stock market was valued at $55 trillion.

This makes the bond market about 65%, while stocks are 35%. The bond market is about twice as big as the stock market.

Why is this important? I didn't know the answer either, but my curiosity was piqued after seeing this chart, followed by this comment on this ZH article. The US indices were slowly killed overnight through the futures, but made an impressive bounceback, although diverging from the bond market. Will it last?

Hmmm.... what interesting food for thought. After a few searches on the web, I ended up at this interesting article from Zacks.
Despite the larger size of the bond market, the public and news media focus on the ups and downs of the stock market. Whereas bond investors hang onto their portfolios for the long term, equity investors trade in and out of stocks more frequently.
Never thinking about it before, this is a pretty valid point. It seems to me like bonds are a better barometer of what is actually going on, while stocks is a volatile proxy bouncing around. So who should we follow? An interesting question about correlations, eh?

Well, that's enough watching TV and thinking about finance for a while. I'm going to go and exercise!

Red Hot Tensions: HK Live Feed

Here is the live feed about the HK protests from Apple Daily.

US futures are going to open in 25 mins with a massive implied 1% down from Friday's close.

The HK HSI closed down a big 1.9% today and that has been affecting global markets the whole day today. The HKSE is the 5th biggest stock exchange in the world, if I am not wrong.

The tensions are literally exploding on screen as I type this. The world watches to see if China can handle this situation. From what I hear from my friends in HK, they are not going to let this issue slide so easily. They know what a slippery slope is, and they aren't going to give in without fiercely letting their voices be known.

CIMB Visa Signature: New Rebate Kid On The Block?

I saw this when I was checking out and comparing the new fixed deposit offered by SCB with CIMB. SCB is offering a pretty decent rate of 1.55% 2 year annualized returns. Comparing this to CIMB, their step-up FD for 1 year is 1.05% and for the 5 year it is 1.57%. Consider SCB if you are looking for a decent fixed deposit to park your cash!

Anyway, I digress. Let's go back to the CIMB Visa Signature card that I want to talk about.

Looking at the summary of the benefits, I picked out the key things that caught my eye:

  • Local Dining - 3.8%
  • Local Entertainment - 3.8%
  • Online Shopping - 3.8%
  • Visa Paywave - 3.8%
  • Everything else - 0.5%
  • No rebate cap
  • Rebate immediately offset in current bill
  • No annual fees for life
The catch 
- Min spend of $500 for 3.8% rebate
- Min 3 transactions of min $500 for 3.8% rebate
- Online shopping must be in foreign currency for 3.8% rebate

Honestly? This card looks like it is the BOMB! I have done a review before for the CIMB Mastercard, and this new Visa credit card just blows that card totally out of the water. The CIMB Mastercard has the 4 benefits bolded on the bottom, but now if the Visa version offers all of that, on top of additional rebates? Wow, don't even need to compare.

Now, what about the OCBC 365 or the OCBC Frank cards? While both are great and offer large rebates, I think the CIMB Visa Signature fills up a very needed missing product gap between the no-frills (POSB Go! and CIMB Mastercard) and the heavy rebates (OCBC 365 and UOB One). This card offers higher rebates than the no-frills cards if you can hit the minimum speed, but there is no pressure since the 0.5% base rebate is for sure. It is still a very decent amount.

Personally, I still use my OCBC Frank card because it is my very convenient EZ link card. I also push all my daily expenses to this card so that I can qualify for the additional 1% interest rate from the OCBC360 bank account.

However, if I wasn't so self-absorbed in the whole OCBC thing, I think that this card honestly sounds awesome. Decent sized benefits with not much commitment. Sounds good! I will going checking them out at one of their promo roadshows that is happening from Oct-Nov. Who knows what other extra stuff they might throw in to "convince" me to sign up. I am already convinced! Haha!

Back... For a Bit

Hey all, I'm back from my work trip!

Since I've gone away, I've really come to terms with my risk tolerance. Without much available access to the internet, I was not constantly worrying about how my swing trades were doing, let alone my long term investing positions!

I've been busy unpacking and slowly trying to catch up with a ton of news. Honestly, too much has happened over the past 4 days that I am not even going to bother about it and I will just instead try to pick up what is going on as I the days go by.

I was kinda sad that there was no interaction with my previous post about diversifying your insurance. Anyway, if I have time, I will call up DirectAsia and maybe the agent that called me regarding my Manulife inquiries.

I've also come across some interesting reads while catching up, so I'd thought I'd share some.

That is a graph from A Wealth of Common Sense. The subtle overtone? US markets looks dangerous. Tiho from A Short Side Of Long has charts like this as well, but hearing it comes from A Wealth of Common Sense means that even the more mainstream is starting to perk up their ears.

John Hampson from Solar Cycles yet again comes up with a beautiful list of reasons why Friday's "magical" recovery might not be so magical after all. Seems legit.

I also watched a visualization of a Santiago Capital webcast that I have talked about back in July. It's a good refresher why Keynesian economics makes no sense and why it would be prudent to at least have some precious metals allocation.

Finally, Josh Brown rightly points out how ridiculous the excesses in profit-less companies have been running extreme. South Park is a real gem, and their potshot at the Washington Redskins just makes this episode extra special to me. Be wary of IPOs. If it's a company that has to be sold to you, then hmmmm...

Anyway, heading for my health check up tomorrow! When's the last time you did yours? I think it is a good idea for me to take a quick stock of my physical health now, before I embark on a temporary mission to destroy myself through indulging in plenty of vices during my upcoming holiday!

Thursday, September 25, 2014

Diversify.... Your Insurance? What?!

Lately I have been devouring a ton of information regarding insurance. If you would like to read how a normal Joe thinks about insurance, you can thumb through some of my older posts:

CPF Life and Annuities
ILPs and Endowments: Investments, NOT Insurance
My Full Insurance Throwdown

So, while I was surfing the interweb for more information about insurance to read up on, I stumbled upon this article titled, "Diversify your Life Insurance". After reading it, I found some more solid advice on this topic from an article written back in 1991! Did they even have the internet back then? Haha! Lastly, a more "modern" piece from Fidelity about mixing group and individual life policies.

However, I'll just write down the key takeaways that I picked up. Feel free to comment below if you found other important points.

1) Diversification in case your insurance company fails (AIG anybody?)
2) Add additional coverage without affecting existing coverage
3) Ability to selectively choose and reduce coverage when it is no longer needed
4) Adding additional coverage on an existing coverage may be cheaper because of economics of scale
5) Mixing group and individual policies can give you the benefits of both worlds

I honestly have to say that after reading these articles and then slowly understand the reasoning behind it, it does make sense to diversify your insurance, especially if the cost of increasing coverage with your existing insurer is very close to the cost of taking up a new policy with a different insurer.

Currently for Death, TPD and CI, I am covered by the SAF Group Term Life Insurance, which I have extensively researched much earlier in the year to be pretty much the cheapest term insurance out there. Why? Probably because it is a group insurance policy and not an individual policy.

After reading the above articles, I feel that I ought to consider getting at least another individual policy to maximize my "diversification" benefit, so I actually have a list of a few products on my mind. Except for DirectAsia (which has no CI option), I looked for insurers that provide guaranteed renewability with CI.

DirectAsia (Death + TPD) - Online application, annual renewability up to age 65, 5 year premium guarantee, no frills.

Manulife ChoiceCover (Death / +TPD / +CI) - annual renewability up to age 70, no-frills.

Tokio Marine Enhanced Term (Death + TPD + TI + DD) - renew every 5/10 years until maximum coverage age of 85.

Aviva MyProtector (Death + TI / +CI / +TPD) - renew every 5/10 years until maximum coverage age of 99, optional riders, increase coverage at life events.

AXA TermProtector, AIA Secure Term Plus (Death + TI / +CI / +TPD) - renew every 5/10 years until maximum coverage age of 99 (AXA) or 85 (AIA), optional riders.

My personal opinion on these plans? Tokio Marine, AXA, AIA and Aviva are all carbon copies of pretty much the same plan. However, only Aviva has provided the option to increase coverage during a life event, while the other do not. Tokio Marine is the least flexible of the 4, since TPD has to be included. How to choose? Well, I think I should compare a AXA/AIA plan with Aviva and see if the option to increase coverage during a life event is expensive. If the difference is insignificant, then why not Aviva? If AXA/AIA is much cheaper, then I would have a problem and need to think if the option is really worth it.

For the annual renewability choices, I think Manulife offers quite a compelling choice! Perhaps Death+CI for me through Manulife? I will need to check what is the minimum sum that can be assured, as well as find out the renewal process.

(OT: Over the past 2 days, I did get calls from both TM and Manulife regarding the retirement products that I inquired about. The lady from TM doesn't seem to know anything, I feel quite dubious about her. The guy from Manulife seemed amazingly nervous, but I think I got him to calm down and he understands what I want from him. They are both working on quotes for me, which is all that I want so I can sit down and do the mathematics myself. However, I think just due to the fact that the lady from TM was so clueless, I am learning more towards the Manulife product! But I digress...)

Finally, for those people who have been shaking their head the entire post and thinking, "Why doesn't he get Whole Life insurance instead of Term Insurance? Doesn't he know he doesn't get back anything at the end?", I would kindly like to direct readers to a previous post that I wrote that deconstructs quite simply why I prefer Term Insurance. I view insurance as a form of protection, not an investment. That is why I am okay receiving nothing at the end. This is just necessary expenses for me to have piece of mind through proper protection.

I wonder what sort of insurance protection people have out there? Is this the first time you are hearing about diversification of insurance? Any simple comments about the products that I mentioned would be greatly appreciated, since it would give me personal insight about the specific product.

Anyway, probably no posts from me for a while, I am heading overseas tomorrow for a work trip! Ciao!

Wednesday, September 24, 2014

POSB Invest Saver 3.0: Coming Soon?

I previously wrote quite a detailed review on my thoughts about the POSB Invest Saver product from POSB/DBS, and before that I also wrote about a cross comparison of the 3 RSP plans offered by POSB, OCBC and Phillip.

So in my previous post, I summarized the product and highlighted some of the cons that I feel about the POSB Invest Saver product:


POSB Invest Saver is now the CLEAR winner in this RSP War.

- Easy to start (log into iBanking)
- Only 2 choices, but good choices and makes for easier decision making
- Ability to redeem partial amount of holdings
- Ease of changing monthly amount (just log into iBanking)

- Highest transaction charges of the 3 RSP providers
- Inability to choose investment date or frequency
- Investment amount is in $100 chunks
- Inability to choose dividends to be reinvested 
- Inability to add one-off capital injections (when you strike a windfall or get bonus)

I also did say that, "I have emailed them suggesting the last 3 changes though. If they do, I can honestly say that their product would be the best in the market.". 

Well, some interesting news! Last evening when I was on the way home on the MRT, I got a call on my phone. After I picked up the call, the first thought that ran through my mind was, "Oh no, someone from a bank calling me about some fishy product!"

It turns out that it was DBS contacting me about the follow up of my suggestions that I emailed them about!

I was informed by the nice lady on the other end of the line that my first 2 suggestion of dividends to be reinvested and the possibility to invest in less chunky blocks of $100 have been sent to the team in charge of the POSB Invest Saver product and they have taken down these ideas for consideration!

However, I was told that my last suggestion to have a one-off capital injection without changing the monthly GIRO plan would not be considered. They suggested instead to go onto the stock market and purchase lots from the SGX. LOL?

Well, if they really want to give away business of their brokerage services to SCB and grow the ETF AUM of the SPDR instead of their own Nikko AM, what can I say, right? (SCB will reign supreme once the SGX board lots drop to 100, and the SPDR will kill the Nikko AM STI ETF because it has much better liquidity and lower expenses) I did try explaining to her why it would be beneficial for them, but I don't really think that she understood me. Either that or she didn't really want to follow up and just wants to close this case. Haha, oh well.

So anyway, if it the future we get the options to reinvest dividends and to choose monthly giro amounts of smaller than $100 chunks, remember it might be because of your friendly neighbourhood personal finance blogger has a lot of free time and like to email people suggestions! Haha!

King Dollar, time to be dethroned?

The dollar is trading pretty much at 2014 highs, just above the mid 2013 highs and slightly higher than the mid 2012 highs. I don't know, but this move just feels too fast for me. From the longer term perspective, Market Anthropology has a good chart for me:

This is another similar chart from Trading Channels but it put the USD in a channel, rather than a triangle. The triple resistance highlighted is significant I feel, along with the overbought RSI(14), so I am really watching any further upside carefully, to see if it is sustained or looks weak.

It's been a while since I've "played" FX, but this dollar trend is just crazy parabolic. I'm trading with my "fun" money, because I feel like I need a shot of adrenaline in my life quite now. I'm selling USD/SGD at 1.2682. If the trend line is broken to the upside, I will be covering my short and looking for a re-entry short at the triple top around 90 on the DXY.

Oh nothing to see here, just being a punter here and logging in my trade. I have to say, FX is not my expertise at all, but I have been watching the dollar quite closely for a while now!

On a more practical sidenote, perhaps if you have any USD you might want to consider changing it to SGD now, the rate looks pretty good! I actually have a few USD lying around, maybe I will pay a visit to the money changer soon and "execute" a real-life short USD/SGD transaction, haha!

Tuesday, September 23, 2014

P/NAV REIT Analysis: Case study of CapitaMalls Trust

I have long wanted to do this, so here it goes.

After reading the "REIT Bible" by Ralph L. Block (Chapter 6) and also some simple slides from Green Street (see page 11 of the 2014 pdf file), I think that one of the most, if not, the most important thing about REIT investing is not to pay a significant premium over NAV.

Although I think P/NAV is probably the most important metric to use, it would of course be foolish to limit yourself to just one metric. Other metrics ought to come into play, to help you decide whether the P/NAV premium or discount observed is warranted or if there is a mispricing. Looking around at the other things under the hood, you may find that there are reasons why such REITs are constantly selling at a premium or discount, and then you can adjust your P/NAV expectations accordingly.

For example, from the Green Street picture above, you can see that healthcare REITs are always constantly trading with a premium to their NAV, about 20%, and they will fluctuate between 0% - 40% premium based on a variety of factors, such as asset quality, management, locations, etc. Currently, ParkwayLife REIT trades at 44% over premium while First REIT trades at 27% over premium. Are these crazy premiums for REITs? My personal opinion is no because they are healthcare REITs and actually quite nicely fall within the range of likely premiums, albeit with ParkwayLife at the tail end of the high side. However, a historical P/NAV analysis of these REITs might show you a time period where these REITs are trading at the lower range of their P/NAV ratio. Although this might still be a premium over regular NAV, this might actually be a bargain considering their warranted premium! So, I will attempt to look at CapitaMalls Trust using historical P/NAV.

(OT: Many investors say that rising interest rates are bad for REITs because interest rate expenses will increase and higher bond yields will also make REITs relatively more unattractive. AK have written an excellent piece on how rising interest rates would affect REITS. I agree that interest rates will affect the REITs for sure, but I think that interest rates is only 1 piece of the puzzle and the supply and demand of the real estate plays a larger part in determining the success of a REIT. Gearing, Cost of Debt and % of fixed Debt are still great metrics to consider, but should not be looked at without looking at other aspects of the REIT as well. I personally like to view REITs as a unique asset class which is affected by a different set of risks that is different from common stocks and bonds)

CapitaMalls Trust is the highest credit rated REIT on the SGX with a rating of A2 from Moody. I have written about REITs credit rating before, and so has B from A Path to Forever Financial Freedom.

Anyway, I have spent some time this weekend to finally get down to extract some data. In all honesty, I question how accurate the "price" data is, because I could only find monthly values from Reuters for the time periods really far back. Oh well, here it is anyway.

The easiest line to explain is the Orange Line, that is the historical quarterly price of the stock. Not much explanation needed I feel. That is the line we all see.

The Red line is probably a bit more interesting, and that is the underlying NAV of the stock.

The Blue line is the line that I find the most interesting, and that is the P/NAV ratio.

I think the nicest thing to look at is the pretty stable NAV movement of the stock. As you can see from the Red line, the NAV of the properties held by the stock does not fluctuate much. It did suffer a big decline during the GFC, but it has been steadily climbing, from 1.52 to 1.78 as of last quarter.

The Orange Line is a big more crazy and erratic, but that is what stock prices are like. The main point that I would like to highlight is that the stock price bounces around its NAV, the Red line.

This erratic movement of bouncing above and below the NAV is the premium and discounts that people are willing to pay, which is the P/NAV ratio, or the Blue line. Looking at the historical P/NAV, we can see what is the usual range that the stock trades in, as well as the width of the range as well, which will tell us how volatile pricing may be, which helps us look for ratio extremes.

Personal Observation: Other than the GFC period, CapitaMalls has been constantly trading over their NAV, which I think is quite warranted given that they are really the biggest and strongest brand name REIT that everyone starts out familiar with. With it's current P/NAV near the lows of its normal ratio range (1 - 1.3), excluding crisis period, I think that this might be a decent period to accumulate the best credit rating REIT available for the long term investor. Unless a crisis occurs, which would likely affect the entire industry as well, CapitaMalls actually looks attractive now although it is trading with a premium to it's NAV.

I'm not saying that this is the best way to evaluate REITs. This is just my personal train of thought if I was doing a P/NAV analysis. There are still plenty of other things to look at and consider. Many people look at dividend yield, gearing, P/FFO or P/AFFO which are all excellent metrics that give you insightful information about the REIT. However, my personal preference of a starting point when looking at a REIT is the P/NAV ratio.

I often wonder how others analyze REITs and come up with the final conclusion of choosing one stock over another. What are the metrics that you use to evaluate REITs? I would love to hear some of the things that others look out for!

Monday, September 22, 2014

CPF Life vs NTUC Annuity

After I wrote my previous post about some retirement products, it got me thinking for quite a while.

If CPF Life is so good, why not leave the maximum amount of money in CPF Life? Since CPF Life is not run for profit, it should definitely be cheaper than private plans, since the are no profit margins, right?

Well, I sought out to do an apples to apples comparison between CPF Life (Basic) and NTUC's Annuity product.

So the above 2 pictures show what would be the payout based on $100,000 at the age of 65. But which one is better? Well, let's deconstruct it a little bit.

CPF Life Basic is based on projections based on 3.75% interest rate and will pay out $616 based on that. If the higher 4.25% project rate is used, the payout would be $667.

NTUC has a guaranteed portion of $490 and a non-guaranteed portion of $107 using a projection rate of 4.75%.

Wow. So even if CPF uses a lower projection rate of 4.25% instead of 4.75% used by NTUC, CPF will payout more for almost the first decade. I think that the non-guaranteed portion of the NTUC annuity is much much too optimistic. So, comparing monthly payout amounts, CPF Life pays out more initially, but may be overtaken by NTUC perhaps 10 years down the road.

However, a HUGE factor to consider is that CPF Life still has a death benefit portion to it. This portion remains a very substantial even when someone is into their 80s!

Personally, I think a relatively conservative retirement planning decision might be to NOT pledge your house to reduce your MS required, and instead keep the maximum amount in there and allow it to be converted to your CPF Life plan of choice.

Knowing the difference between CPF Life and private annuities, I think some people would even want to contribute more into the CPF Life plan and increase my monthly payouts and final bequest! But alas, it is not allowed. You can only have your CPF Life maxed out to the MS.

Personally, I think I will try and aim to do that. On top of aiming for the maximum payout from CPF Life, I am also currently exploring other retirement annuity products that can be added on top of my future CPF Life payouts to provide me with a very comfortable base for the rest of my life.

Above and beyond the basics, I would depend on the rest of my portfolio to generate me income in the form of dividends and coupons. I hope that this would be a decent enough sum too, then I can really enjoy my retirement. It is so far away, but it is not something that I am dreading, because I know that my future self will definitely be happy with my current self!

Is thinking about CPF Life and other lifelong payment products being a bit too conservative? I know it is a very safe and risk-adverse strategy, but it is a bit comforting to know that a large portion of your basics will always be met. I kind of view this strategy as paying off a house in full. Of course if you buy it with a loan, you can invest the rest of the money and pocket the spread between returns and the interest rate on your loan. However, a piece of mind does come along knowing that you fully own your house. A penny for your thoughts?

Do All The Little Things Add Up?

See my obiang coin boxes?

My M&M container is full of coins, so I have been putting them into my frog coin box. My mother bought me this coin box from Daiso for my birthday a few years ago, and I have been faithfully using it to help me keep my loose change. The plastic container is full of super old coins that my mother passed to me since she knew I was going to change my coins.

In the past, I would save up my coins and donate all of them to charity every year during Flag day, when I was part of the hundreds of annoying people asking for donations on the street. Since I saved up a lot of my own coins, I would put the coins in my own tin and also give some coins to some of my friends for encouragement. Having a few coins to jingle around in your tin definitely helps people with the confidence to ask for donations.

However, these days since I no longer volunteer for Flag days, I don't save up my coins specifically to unload them on donation day. Instead, whenever I go out and I see students asking for donations, I will always empty my loose change that I have, or remember to walk back the same way after I have some change.

But most days there aren't donations being asked. After I come back from lunch hour, I always will have some loose change. When I sit down, the coins roll out of my pocket and I find it very annoying. So at work, I have another coin box which my sister bought for me on a previous birthday, and that is slowly accumulating loose change too.

Anyway, 2 weeks ago I went down to the Singapore Mint at Somerset to deposit my loose coins. If you have never done this before, it is really fun, trust me.

Guess how much I got back in the end?


I think that's not bad! This is about a year's worth of coins, I did this same routine about the same time last year too, but I think I had about $80 worth of coins then.

Anyway, this is a prime example of how I think the little things can add up over time. Be it squirreling away savings every month, to having discipline to invest according to a plan, and even down to the small things like dropping a few coins in your coin box every day. I honestly don't believe in people suddenly becoming rich, that is just for the lucky or extremely talented, which I know I am neither. Instead, I believe in getting rich, slowly. Not quite glamorous to hear, right? Oh well!

Saturday, September 20, 2014

Why I Try To Avoid Debt

After reading this post by B from A Path to Financial Freedom Forever, I thought that I should explore and find some empirical reasons why I think that debt can be quite scary. It's always good to come across things that make you question why you are doing something in the first place. It helps keep your strategy sharp and allows you to better recognize the pitfalls that could appear as well.

Intuitively, it should make sense for leveraged companies to do better, especially since, as B rightly points out, cost of debt is much lower than equity. Debt used well is a very good tool in the toolkit that a companies management have to play around with. Empirically, the M-M principle backs up the claim as well.

Anyway, my first advice regarding debt comes actually from the famous Mr. Peter Lynch. I watched this a few months ago, and I really found some good nuggets of wisdom from him. (this is actually an awesome video, you should watch the whole things!)

 24.50 - 25.00
I learnt this very early... this might be a breakthrough for some people: It is very hard to go bankrupt if you don't have any debt. It's tricky. Some people can approach that. It is a real achievement.
Doing a quick search on Google with permutations of the words "low high debt outperform underperfom", I found a paper in 2010, that showed that the lowest decile of companies in terms of debt generally outperformed the market. The trend that they showed is that (excluding tech companies), most companies perform worse when they have more debt.

Strangely, the full data set including the tech companies showed that the highest debted companies performed very well too!

I actually find it strange to see data that shows that companies with more debt aren't performing progressively better than ones with no debt as the deciles move up. Lower overall cost of capital, leveraging for more returns, how is that possible for lower overall returns? Even from executing simple trades on margin, we know that leverage can amplify returns. Of course, we all also know from common sense that too much leverage is quite dangerous and risky. From the Jacques Lussier book that I read, the reason why more leverage isn't necessarily better, is because it destroys and skews your risk-reward ratio. Although minimal at low debt levels, the more debt that is piled on, the more downside risk is being adding, much faster than the upside risk. However, the book does support that it can be good to use some leverage still.

Another book that I read, Investing in REITs, Chapter 8, had the author explicitly admit that he does not know why REITs tend to have gearing at around 40%. His own views that was gearing does not significantly improve returns and he is indifferent to gearing levels below that of 40%. However, he does say that higher gearing (over 55%) can be a cause of concern.

Perhaps (but I am not sure, I can only speculate), not all companies are good allocators of capital.

Having lines of credit allows companies to make the most of opportunities and capitalize on good deals. On the flipside, it might also encourage people to bite off more than they can chew. Interest expenses will become a recurring expense regardless if the investment succeeds or flops.

Just like how some debt is good you, individuals who are good capital allocators know how to use credit cards well. Example: free financing (amount due is payable next month) and extras (rebates and rewards). For companies, I think that examples of good liabilities to have are trade payables and deferred tax liabilities.

I think that choosing to invest in companies based on debt levels is more based on preference and style rather than facts, since the jury is not out yet that shows clear evidence that different debt levels would give different returns. To say across the board that one should avoid companies with debt is too big of a generalization. The same way it is to say that companies with no debts are great investments. Perhaps a better way of saying it is, it depends on the situation on a case by case basis.

That being said, if I do see a good company that is going to take up debt, that will definitely not stop me from considering them. As long as I can feel that what they are doing is taking advantage of a good situation, I will quite gladly continue holding on to them. Many companies do ramp up their debt doing opportunate times, then slowly pay it down back to healthy levels. 

Anyway, it is just my personal belief that, as Peter Lynch said, that it is very hard for companies with no debt to go bankrupt. So although very low debt companies may (intuitively) not give as much returns as their more leveraged counterparts, I feel safer and more comfortable owning them as a business. Value, quality, shareholder yield and financial strength are just my personal pick of factors that I choose to invest based on.

Going Overseas: The Extra 5 Things You Might Want To Do Before You Leave

Anyway, for people who don't know, I am preparing to go travelling very soon! Next week I am going overseas for a work trip and the week after that I'll be going for a short vacation away!

So, today on my lazy Saturday, I've been doing personal errands and preparing for my trip. It suddenly occurred to me that there are actually quite a few things that you should do before a trip. Of course, they definitely are not compulsory, but these are just some of the things that I do when I prepare for a trip myself. I just thought I would share it since I it is still fresh in my mind!

1. Print out all documents regarding plane tickets, hotel (hostel) bookings, tour bookings, email correspondences.

Usually you would only encounter problems like this if you go to areas that are not developed, or if you picked a really cheap accommodation / package. I think having a physical copies of your bookings makes the whole process easier. If there is a language barrier, sometimes this helps too. It takes 5 minutes to search your email and print out your document. Never worry about forgetting the address of your hotel or wondering which terminal you should go to again!

2. Dump an online softcopy of all your travel itineries, as well as important information such as passport, passport photo, I/C and any else into your Dropbox.

This might be a bit extreme, but in case of getting your belongings stolen or you lose your physical/original copies, you can always log onto the internet and retrieve that information that you need. Very very handy if you need that information when making foreign police reports or going to embassies and consulates to make official documents. All it takes is just 15 minutes and you're set for life! Scan and upload an your documents, you will feel extremely at ease, trust me!

3. Activate your credit and debit cards for overseas usage

Although I know that most people like to have cash on hand, both local and the foreign currency, I think it is always prudent to have a Plan B in case you run out of money. You won't be able to get the good FX rates that are quite nice in Singapore, and many areas lack money changers, so the only source of money you might be able to draw from is the ATM network. When I was travelling in Europe, I visited a money changer just once, and the rate that I got was so bad! After that, everywhere I went I just withdrew the local currency directly from the ATMs if I had to. There is a small charge, but it is largely quite fair and for the convenience, it is hard to complain!

4. Notify the government (Men only)

As Singaporean males, we have our duty. So do notify the SAF if you are going overseas for more than 14 days. I am sure the government will postpone any activities and wait for your return, haha.

5. Apply for travel insurance

Of course, this is purely based on preference and comfort. I have written about this before. My short summary to this: If you can afford it, get it. If you can't afford it, then you must strong belief in yourself to safely navigate yourself back to Singapore.

There are other basic things that you ought to do before leaving for an overseas trip, like packing your luggage, changing foreign currency and of course, applying for leave way in advance. However, those are the things that people are really good at doing. The ones above? Maybe not so much. Hopefully you find some of my suggestions useful!

Friday, September 19, 2014

CPF Life and Annuities: Some thoughts and some interesting products

I came across this article by Wilfred Ling from The IFA On Duty and it is about the difference between the 2 CPF Life plans.

The quick summary for most people? Don't go with the default Standard plan. Instead choose the Basic plan.

The Standard plan pays out more, while the Basic pays less but leaves a bigger bequeath. Basically, if you think you're going to leave really long and/or you have no dependents, the Standard plan is for you.

If you have any dependents, pick the Basic plan. Make sure you don't go to the default plan!

So that got me thinking about retirement and annuities. Yes, I am only 24 years old. Why am I thinking about retirement? Beats me. I will just think about it anyway. If I get it all figured out now at the age of 24, I can live at peace with myself knowing that I know exactly what to do, when to do it and how I should do it. A day of planning today will be worth years of time in the future. I worry if my mind will still be as sharp when I get older, haha.

So while I was reading about his CPF Life comparison, I casually found another page where he was comparing single premium retirement products. I find his analysis very thorough and his comparison points very relevant. Longevity risk is the biggest risk that retirees will face, which is why it should be removed and annuities are seeked. I agree with his conclusion that the NTUC annuity is a good one. It is the most basic and simple annuity there is, which makes it very easy to deconstruct and compare.

Browsing around some more, I found another comparison that he did between Tokio Marine's Retirement Paycheck and PurGolden Income and a few other retirement products. Conclusion? They do not meet the test because they fail in protecting against longevity risk.

GE has annuity products but only for customers who are nearing retirement. Aviva, AXA and Prudential has no annuity options.

I have found 5 other products by Manulife and Tokio Marine which I find interesting.

Manulife I-Gen (Brochure)- 10 years of premiums, lifetime coupons of 2% guaranteed and 1.87% non-guaranteed, reinvest at 3% rate, death benefit (+ bonus if any) and no medical underwriting, ages 0-60

Manulife 3G (Brochure)- 10 years of premiums, lifetime coupons of 2% guaranteed and 1.87% non-guaranteed, reinvest at 3%, reinvest at 3% rate, death, TPD, terminal illness benefit (+ bonus if any), medical underwriting needed, ages 0-60

TM Retirement PaycheckLife - 5/10/15 years of premiums, lifetime payments starts at age 55/60/65 with guaranteed and non-guaranteed portion, reducing death benefit, can reinvest at an unknown rate, can add optional riders (cancer), no medical underwriting

TM Retirement GIO - 5/10/15 years of premiums, lifetime payments starts at age 55/60/65 with guaranteed and non-guaranteed portion, death benefit (+ bonus if any) , can reinvest at an unknown rate, no medical underwriting

TM Infinite VIP - lump sum single premium, lifetime coupons of 1.5% guaranteed and 3.0% non-guaranteed, immediate 80% surrender benefit that increases to 100% at year 10, death benefit of 105% from year 5 onwards, no medical underwriting, ages 1-70
*The minimum single premium amount is S$133,350 (for a total monthly cash benefit of S$500 )

Personally, I like these 5 products because they offer a lifetime of payments. Even though I am quite a hands-on investor and I understand that the gains to be had in the market can be much higher, I think annuities and even preference shares and perpetual bonds can have a useful role to play in an investor's toolkit. So as much as I don't like most of the products that come out of insurance companies, I do recognize that different products have their different uses and they are catering for the needs of different people.

Manulife I-Gen vs 3G: The only difference is if you want TPD/CI insurance built-into your product. If you do, then medical underwriting is needed.

TM Retirement PaycheckLife vs GIO: The difference to me is based on a few factors:
Surrendering Flexibility: GIO allows surrendering, while PaycheckLife does not
Final death benefit: GIO has a guaranteed death benefit + bonus while PaycheckLife is reducing
Optional riders: PaycheckLife has optional riders, while GIO does not

TM Infinite VIP seems exactly like Manulife I-Gen to me, with some slight differences:
Surrendering Flexibility: TM allows surrendering, while Manulife does not
Coupon Payments: TM starts from 5th policy year, while Manulife starts from 10th
Premium Payment: TM is single lump sum, while Manulife is over 10 years

One of the things that I found interesting was Tokio Marine's interpretation that having multiple sources of income will help ensure a stable retirement.

Although I am young, I like the thought of having CPF Life payments, along with an annuity plan that pays out a guaranteed and non-guaranteed portion lifetime coupon payments, and finally dividend/coupon income from my investment portfolio. These different streams of income can really provide a robust retirement plan that offers you peace of mind knowing that the downside risk is very low, while opportunities to participate in the upside is still present.

Against my common sense and better judgement, I have went on to both Manulife and Tokio Marine websites and voluntarily handed over my contact information to them. I hope this doesn't come back and haunt me. On the bright side, fingers crossed for a young and pretty agent to work out the numbers with me!

Silver KA-BOOM! Down 3.5%!

Word on the street is that liquidation of PMs are happening to fund $BABA purchases! Hilarious? I think so too, haha!

Silver is now at 4 YEAR LOWS!

Buy low, sell high!

Silver breached the 18.20 level which I thought would hold as support, since it was last year's low. Will there be opportunities to buy lower? Perhaps. $15 USD looks to be a good price target based on technicals. However, buying most asset classes on dips seems like a pretty sound strategy to me, especially with regards to accumulation.

I have happily increased my position in Silver! Silver has been a lot more volatile than Gold lately, especially to the downside these days. Although I think although both are good investments, Silver might be the better investment for now. Check out the Gold/Silver ratio, it just spiked because of this drop, and near 5 year highs!

I have quite strong holding power with regards to these purchases, so I will be fine if I am stuck holding onto my holdings for many many months and years!

Thursday, September 18, 2014

POSB Invest Saver 2.0: New and Improved? Example Included

POSB Invest Saver is the Regular Savings Plan (RSP) that is unique to POSB and DBS customers.

I have blogged about my take on the 3 different mainstream RSP plans: "RSP Warz: POSB vs OCBC vs Phillip". The quick summary about the 3 offerings is that your monthly investment amount ought to drive your decision. Low investment amounts should go to POSB, mid range amounts should go to OCBC, while higher investment amounts should go to Phillip.

Well, since then, some things have actually changed!

1. POSB Invest Saver now offers Nikko AM STI ETF and ABF Bond ETF

Now, THIS is what I really have been waiting for. Being able to diversify your portfolio by adding in the ABF Bond ETF is an excellent idea I feel. Investors are now able to make more cookie-cutter portfolios, like the traditional 60/40 portfio.

2. Partial Redemption of units now possible

One of the main gripes that I had concerning the POSB Invest Saver plan that I wrote about in my previous post was that they only offered redemption on your entire holdings. It was not possible to liquidate just portions of your holdings. Now it is possible!


POSB Invest Saver is now the CLEAR winner in this RSP War.

- Easy to start (log into iBanking)
- Only 2 choices, but good choices and makes for easier decision making
- Ability to redeem partial amount of holdings
- Ease of changing monthly amount (just log into iBanking)

- Highest transaction charges of the 3 RSP providers
- Inability to choose investment date or frequency
- Investment amount is in $100 chunks
- Inability to choose dividends to be reinvested
- Inability to add one-off capital injections (when you strike a windfall or get bonus)

Of the cons, I must admit that they are minor gripes. By fixing the other cons, administrative costs will probably skyrocket and transaction costs wouldn't be able to come down as well. Nothing is perfect. I have emailed them suggesting the last 3 changes though. If they do, I can honestly say that their product would be the best in the market. Even I would consider squirrelling away a small sum every month and treat it as an uncorrelated strategy.

I think that this POSB Invest Saver is the perfect plan for people looking for hassle-free long term investing. Couple this with cheap term insurance and you would have just created your own ILP with much lower costs and extremely high flexibility regarding investment allocation choice and even monthly investment amounts. ILPs horrible products and I do not like them.

This product does specifically well by catering to anyone who doesn't want to go learn the more complex details of how the stock market works, but understands that they should be investing their money to enhance their returns over a long-term period. The low quantum of outlay and the hassle-free process of signing up is really a good stepping stone to introduce those that want to start their investment journey without the stressful feeling like that any mistake they make is irreversible.

Who knows, perhaps with this RSP plan in force and slowly accumulating assets for you, you will build up a huge amount of financial assets that can realistically pay out 3% of it's value at retirement.

Bonus Examples

Imagine this:
You just turned 24 today.
You signed up for POSB Invest Saver.
You decide to contribute $100 to the STI ETF and $100 to the Bond ETF every month
When you are 30, you start contributing $200 a month to each ($400 a month total)
When you are 40, you start contributing $300 a month to each ($600 a month total)
When you are 50, you start contributing $400 a month to each ($800 a month total)
At 55, you stop and you look at the final value of your accumulated savings.
With a 50/50 allocation, the market went up 4% per annum.
Your total contribution of $190k is now worth $310k.
Doing absolutely nothing, you will receive about $9000 worth of dividends/coupons every year.
That works out to $750 worth of dividends/coupons every month.
You shit your pants.

You decide, "Hey, I'm 55, I still want to work until I'm 65".
You stop funding your POSB Invest Saver, but you leave your assets there.
At 65, you finally stop and you look at the final value of your accumulated savings.
Your total contribution of $190k is now worth $470k.
Doing absolutely nothing, you will receive about $14000 worth of dividends/coupons every year.
That works out to $1150 worth of dividends/coupons every month.
You shit your pants.

The End.

In the above example, I used 4% long term average rate of return. I also assumed 3% payout rate from final portfolio value at the end. The only flaw in my example is the reinvesting of dividends/coupons since they are paid out and not reinvested. However, this is just a plausible scenario of having saving up a decent amount can amass a very respectable nest egg.

Thoughts on POSB Invest Saver? Would tell your friends to explore this product if they asked you about investing?

How I Buy My Flight Tickets

Good news people, I am finally going on a well-deserved holiday soon! The last holiday I took was to Hong Kong back in May of this year. While many of my friends went on fabulous trips throughout the summer months of June and July, I have been quite busy with work the whole year actually. Oh well, here's not the place to complain about work, but rather make other jealous by announcing my holiday plans!

Just like for my Hong Kong trip, I used Skyscanner to shop around for cheap flights and help me do comparisons. Although Kayak actually has a better platform (better user interface, more options, multi-city planning, price trends), I am still very pleased with using Skyscanner. Perhaps I am a bit biased since I have been using Skyscanner since 2012 and it has been my best friend helping me plan my overseas trips even back then.

One of the things that I like about Skyscanner is the fact that they generate prices in real-time. Even if websites display a certain price, they already know how the taxes and charges add up for each site so that the amount that they display is really the final net amount to be paid.

The picture above is a good example. It went over to hit 8 different websites to generate immediate quotes with the same flight itinerary and then suggested the cheapest one.

However, unlucky me, but Travelgenio and Travel2Be are both the same companies and they had a major flaw with their website:

Yup, their website couldn't process my name because my surname was invalid. I guess that's what happens if you're born Chinese with a short last name!

I couldn't figure out how to change the currency of ebookers, and since I didn't want to pay in pounds sterling, I didn't bother to try to check out.

I finally struck it gold with Expedia! I breezed through my booking pretty quick. I am quite happy with them.

Anyway, my tips for booking cheap flights:
1) Plan early (better feel of the prices, as well as opportunities if a promotional deal is offered)
2) Book early (flights booked between 1-2 months before departure are usually cheaper)
3) Compare compare compare
a) airlines (sometimes mid-tier carriers are cheaper than budgets because they don't charge for baggage)
b) timings (very early morning, noon and late afternoon flights are usually cheaper)
c) days (arriving before the weekend is cheaper, and avoiding Sundays for depature)
4) Discounts (use discounts, coupons or rebates)

Using my OCBC Frank card, I should be getting back a 6% rebate, which is about $20 off from my next credit card bill!

Anyway, I will still be around for the rest the of the month, I have a ton of work to finish up before I leave for my holiday. Just when work is slowly getting more relaxed and I am about to go for a holiday, does the market start to look very exciting.

Tuesday, September 16, 2014

Today Very Red Hor

I'm now drinking kopi while waiting for a friend for dinner and I decided to take a sneak peek at how some of the stocks on my watch list is doing. Looks like National Day, everything so red! 

I think there's definitely some hurt going on in the market, specifically because of the FOMC happenings later tonight. Taper Tantrum 2.0?

I am in the view that quite a few markets are due for a correction, but who knows the future? Maybe a Great Singapore Sale is coming to a stock exchange near you? I shall continue to sit back, lim kopi and watch watch see see.

Monday, September 15, 2014

How Does SCB Handle Foreign Currency Dividends?

I never bought equities with any other broker other than Standard Chartered, so I don't know how the CDP account works actually. However, I would like to share my experience using SCB as my equity broker.

Until now, I have received dividends from 2 of the counters that I own. They are Lippo Malls and Singapore Shipping Corp.

For both counters, the dividend amount was directly credited into my trading account the next trading day after the pay date.

For example:
Singapore Shipping Corp: Pay date was 18 Aug, SCB credited my account on 19 Aug
Lippo Malls Retail Trust: Pay date was 29 Aug, SCB credited my account on 1 Sep

One of the things that I have always been curious about is, what if the dividends declared was not in SGD?

I did call up SCB about to ask about this before. I don't think the guy was very sure what he was talking about. Anyway, he said that dividends will be credited to your trading account if you have another one in the foreign currency (FCY). If you don't, then it will be credited to a normal FCY bank account if you have one. If you don't have one, you will get a cheque for the FCY amount from SCB through the mail, which SCB can glady encash for you, with a standard FX charge.

I can now confirm that this is not true!

Another counter of mine that went XD has reached pay date, and the dividends declared was in USD. The counter that I am talking about is CDW Holdings, which was one of my first few purchases (brief rationale for purchase).

Pay date was 12 Sep and dividends declared was 0.005 USD per share. This translate to $5 USD for each 1000 share lot.

When I checked my account today, I was surprised to find it credited with $6.26 SGD! (Yes, I only bought 1 lot because I wanted to test the treatment of foreign dividends first!)

Apparently SCB will credit the FCY dividends into your SGD trading account after applying a minimal FX charge. By my calculation, the currency conversion took a 1% bite out of the dividends I was to receive.

1% charge for a hassle free way of handling your FX dividends is a good price that I am willing to pay! This means that I don't need to go down to the bank to try and cash in a $5 USD cheque.

Personally, I am extremely pleased with the online equity trading services provided by SCB. Their platform might not be the prettiest, but it is simple and does what you need it to do. With the small amount of money that I have put in, I have built up a pretty simple and diverisifed portfolio of defensive value stocks. If I had done the same number of transactions on any other platform, the minimum commission charge would kill me.

I think that SCB is the perfect broker for investors that are starting out because of the zero minimum commission. Add in the fact that they are no-frills and handle your dividends very well, I give them bonus points for that. And finally, when shares drop too 100 per lot next year, I wonder which platform will be the ONLY platform worth going to? I foresee capitulation among all the brokers to come up with a brokerage model like SCB.

On a side note, CDW is trading conservatively 20% below it's NAV. Cash they have on hand is a huge ass amount of 87% of net assets. I have to say this counter is still quite attractive! However, looks like broad market weakness will pull all the boats down in the near future. I shall be waiting to see how things go.