BigFatPurse - Living A Life of Abundance | Investment, Personal Finance and Success

Trading Report Card – Aug 10

Alvin — Fri, 03 Sep 2010 03:30:52 +0000

Time flies. August seems like a fast month for me. There were also a lot of changes going on with my investment capital, focus and brokers.

Let’s talk about brokers first. I have closed my MFGlobal account as the capital was no longer segregated from their operating account. I shift all the capital to POEMS. I also have another forex account with CityIndex which I eventually closed too as I was looking into an account to trade both stocks and forex. T3B recently got in Kinetic Securities from Australia to offer accounts to us. I must say they are offering what we wanted and these are the reasons why I like them:

Segregated account (a must)
Nice platform interface that tells you commission, margins, interests etc. Basically the cost of getting into the trade
Many order types but I mainly use stop orders and if done (not many brokers have if done orders)
Good range of stocks
Easy to edit buy and sell orders
Trade both stocks and forex (commodities too)
Can assess stocks database without data charges (unlike MFGlobal which you need to pay for live data to even display stocks lists)
Nice courteous staff

Of course there is a bad thing about Kinetic. They are based in Australia so I have to Telegrahic Transfer my money to Australia. And dear DBS does not allow me to TT SGD to Australia. So I have to suffer 2 exchange rates conversion. It costs me around S$300! The good news is that they will be setting up a Singapore Branch and a Trust bank account here. So it is better to wait for them to come.

As the POEMS CFD does not allow me to place stop orders out of market trading hours, I find it hard to trade. I tend to enter later (at higher price) and sell later (at lower price). Hence, I decided to use the capital to buy stocks with cash. Especially I just attended Dennis’s “Secrets to Making in Stocks“, I would want to allocate some capital to invest in stocks using fundamental analysis. I still have one live counter left with POEMS CFD which would eventually be closed out (not shown in table).

HL Asia is one good example that I could not get out in time because of not being able to place a stop order. It just dropped away from my desired exit price, which could have triggered if I have a stop order in place.

Looks like a bad month huh? Somehow I did not feel sad about the losses. I have gathered alot of confidence to make money over the long run, and this loss is temporary. It seems like I have detached myself from money and it makes my trading decisions easy to execute. So what gave me the confidence? I attended Teacher Keane’s mass gathering in end Jul where one thing struck me – backtesting. I have done some backtesting on the T3B system and I think I have found the problem with my trading. I was “three feet short of gold”. I know you don’t get what I mean, I shall post the summary of the gathering (I owe you 2 as there were 2 gatherings since I posted the first one) and the backtesting results. Stay tune!

There are no forex trades for Aug as I was patiently waiting for EUR/USD to show a buy signal.

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Major Changes Announced by Singapore Government on Property Market

Alvin — Tue, 31 Aug 2010 13:20:54 +0000

Here’s an important update on the new property rules in Singapore. Written by Dennis Ng, founder of housingloan.sg and masteryourfinance.com:

After the National Day Rally speech by Prime Minister Lee Hsien Loong on 29 Aug 2010, today Ministry of National Development and HDB announced some measures on the property market. To summarise, the changes are as follows:

#1. Increase the holding period for imposition of Seller’s Stamp Duty (SSD) from the current one year to three years. This is on a step-down basis, ie. Sell within 1 year, 100% of SSD is payable. Sell within 2 years, 2/3 of SSD is payable, sell within 3 years, 1/3 of the SSD is payable. Sell after 3 years, no SSD payable.

Note: If Option to Purchase is exercised on 30 Aug 2010 or later, you’re affected.

#2. For property buyers who already have one or more outstanding housing loans at the time of the new Property purchase:

Increase the minimum cash payment from 5% to 10% of the valuation limit; and Decrease the Loan-to-Value (LTV) limit for housing loans granted by financial institutions regulated by MAS to these buyers from the current 80% to 70%. Thus, if you have an existing property that is fully paid, and have no outstanding Housing Loan, if you buy a property, you might still get 80% financing.

Note: Above measures on the Cash Downpayment and 70% Financing Limit apply to all property purchase with Date of Option to Purchase dated 30 Aug or later.

#3. Changes to Purchasers of non-subsidised flats and Resale HDB Flats.

Note: * Resale flat bought without CPF housing grant. The MOP will be computed from the effective date of purchase of the non-subsidised flats.

Measures announced by HDB on 30 Aug 2010:

Allow households earning between $8,000 and $10,000, to buy new DBSS flats with a $30,000 CPF Housing Grant;
Increase the supply of new flats, Design, Build and Sell Scheme (DBSS) flats, and Executive Condominiums (EC);
Shorten the completion time of Build-To-Order (BTO) flats;
Increase the Minimum Occupation Period (MOP) for non-subsidised flats to 5 years; and

Disallow concurrent ownership of both HDB flats and private residential properties within the MOP.

#4. Anyone who owns a Private Property CANNOT purchase a HDB flat, whether New or Resale. If you own a Private Property and purchase a HDB Resale Flat, you need to sell off your Private Property within 6 months.

Note: This will help ensure that buyers purchase HDB flats only when they have the intent of staying in it for long term and ensure equitable treatment for all HDB flat lessees during their MOP. Ownership of private properties by HDB lessees will be allowed after the MOP.

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Starhill Global REIT – Fundamental Analysis

Alvin — Tue, 31 Aug 2010 02:30:03 +0000

Starhill Global REIT invests in retail space at prime location. Based on her 2009 annual report, there are 10 properties in the portfolio. Locally, the REIT has Ngee Ann City (27.33%) and Wisma Atria (74.23%). 7 of the properties are in Tokyo and 1 in Chengdu. They just acquired David Jones Building in Perth and intend to acquire 2 prime retail space in Kuala Lumpur. A rights issue was underwritten in 2009 to raised cash. See what the executive Chairman said:

“In 2009, Starhill Global REIT successfully raised S$337.3 million through a fully-underwritten and renounceable 1-for-1 rights issue. The fund-raising exercise was carried out from a position of financial strength and with a long-term strategic perspective, to achieve the REIT’s three-pronged objectives of paring down debt, asset enhancement and seizing attractive acquisition opportunities… As a further reflection of the Starhill Global REIT’s resilience, the REIT was able to seize opportunities to boost its portfolio with more asset gems overseas at attractive capitalisation rates resulting from the global economic slump. We seized the opportunity to acquire the David Jones Building in Perth at the trough of the Australian property cycle and entered into a heads of agreement for Starhill Gallery and Lot 10, two high quality malls in Kuala Lumpur’s ‘golden triangle’, the city’s premier shopping, entertainment and business district. These proposed acquisitions will grow Starhill Global REIT’s total portfolio size to S$2.5 billion [S$2 billion as of 31 Dec 2009] and further transform the REIT into an investment platform for prime retail/commercial properties in Singapore and overseas whilst concurrently moderating geographical concentration risks. Our acquisition of the David Jones Building was completed in January 2010 and the property is expected to contribute to the Starhill Global REIT’s revenue for the 2010 financial year.”

Financial Figures

Net Asset Value per share is S$0.82. Closing price since time of writing is S$0.565. Hence, the price to book ratio is 0.69, or 31% discount.
To be strict, let’s just consider the value of the 2 Singapore properties and cash at hand for Net Tangible Asset (NTA) value. The NTA per share would be S$0.665 which is still higher than the current stock price.
Debt to asset ratio is 31.4% (healthy for a REIT)
The dividend yield is around 7.24%

Looks good to me. I’ll queue for it (update: just got in at $0.57).

Disclaimer: This is not an investment advice or an invitation to invest in the above mentioned stock. It is about sharing my perspective.

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Review: Secrets to Making Money in Stocks Seminar

Alvin — Sat, 28 Aug 2010 10:30:50 +0000

This is a 2-day seminar conducted by Dennis Ng. The experience I have in stock investing was mainly trading and I took up this course because it offers to build my arsenal in the stock market with fundamental analysis.

The lesson began with the bonus material – investing into gold and silver. In recent years, gold and silver prices have gone up significantly to deserve attention from the retail investors. It was so popular that there are businesses that claim to pay interest on the gold you buy. Gold is a negative yielding asset and it does not pay interest. I don’t mean to play down gold. Do not get me wrong. Dennis advised us to buy gold and silver as an insurance and allocate some percentage of our capital to gold and silver to hedge against inflation or stagflation. Here are 2 posts to see how to buy gold and silver.

Fundamental Analysis

Starting the course proper, we were taught to create our own income and expense statement, as well as the balance sheet. Thereafter we calculated some important ratios to assess our financial health. It is easier to understand these financial calculations based on personal experiences and context. The point to be made was that companies and businesses use similar statements and balance sheets to report their finances. And the ratios are what we can use to determine the financial health of the companies.

Holding power is one of the key principle being emphasized and hence, having a sum of “just in case” fund is crucial to ensure you are not financially troubled when the stock prices dip. Dennis’s investment horizon is 2 to 5 years.

The type of stocks that Dennis look at are stocks with market cap of less than S$50 million to under S$100 million. These are considered small cap stocks and one of the reasons given was that Fund Managers are not able to invest in. Secondly, these are stocks that are targets for invisiable hands to move them.

There are several strategies taught in the course. You can just be expert in one area to make money from stocks.

1) Cum Dividends (CD) and Excluding Dividends (XD) – CD means you will receive dividends if you buy the stocks now while XD means dividends have been given out. There is a golden time for you to buy to make capital gains (not dividends).

2) Bonus Issue and Stock Splits – Bonus issue is good piece of news as only companies making money can issue bonus shares. When bonus issue or stock splits is announced, there is a way to make money from it too.

3) Rights Issue – Rishts issue is for company to raise funds from existing shareholders by offering new shares at a discount to market price. There is also a golden time for you to capitalise on this company announcement.

4) Invisible hands – This is one of the key concepts emphasized during the course. Dennis termed this as the tipping point for his stock investing journey. It was only he knew about this concept that he began making money from the stock market. He was lucky to learn this from his shifu as it wasn’t taught in any books. Only if you are able to identify invisible hands in action, then you can get on the same side with them. Only this way you can buy low and sell high.

5) REIT – There are 3 ratios to evaluate a REIT. These 3 criteria are sufficient to buy a good REIT stock. REIT are easy to understand business and are less volatile than stocks. It allows investors to hold diverse portfolio of properties with small amount of money.

6) Financials – Financial institutions basically deal with money and hence there is an effective way to value whether a financial stock is undervalued or expensive.

7) Warren Buffett & Philip Fisher investment methods - We were taught how to use the combined teachings of these 2 gurus how to evaluate businesses.

Technical Analysis

Dennis engaged his long time friend to teach the session on technical analysis. He does not buy or sell stocks strictly based on charts but he does use it to gauge the market sentiment. It is still important to use the chart to look at a long term picture, to discern if the market is toppish or if a particular stock is reasonably priced. It is a combination of fundamental analysis, technical analysis and market cycle investing that form his investment style.

It is also from the charts that he can identify the invisible hands. Price can be faked but volume cannot be faked.

Cycle Investing

Another “aha” moment was the discovery of the investment clock. The investment clock was invented by Trevor Greetham but Dennis adapted it for his own use, which is simpler to understand. It gives us additional clues to whether the market is topping and what should we position ourselves for the next phase of economic cycle.

Dennis understands the financial statements do not reveal everything and he shares his personal lessons so that we can avoid them. He described 8 warning signals in financial reports, 4 common tricks done by companies and 6 non-financial warning signs. When the stocks that we hold have one or more of the warning signs, we should re-evaluate our position and sell before things go wrong.

At the last part of the course, we were given financial statements and charts of companies to apply what we have learned to select winning stocks. We were also given the chance to buy Traded Endowment Policies (TEP) if we think the stocks are overpriced and would like to keep our money in TEP, since it is not correlated with the stock market. This practical session is useful as it forces us to run through the concepts in our mind and explain to our group mates why we select certain stocks. We also punched numbers to calculate the relevant ratios for the stocks. It really consolidated our learning altogether.

Throughout the course, he quoted stocks to illustrate his concepts and how they are still undervalued. It was up to us if we want to invest in them after the course. I have bought into BreadTalk and will also look at other potential stocks to invest. I have aportioned half of my capital to fundamental analysis and the other half to trading. (Please do not take this as investment advice, do your due dilligence!)

Contact me if you are interested to attend the course. I maybe able to get you a special price.

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Investment Clock by Trevor Greetham

Alvin — Tue, 24 Aug 2010 14:30:19 +0000

Trevor Greetham developed the “Investment Clock” concept while at Merrill Lynch. In 2006, he was appointed as Asset Allocation Director at Fidelity. He practised this investment clock as a strategy as a portfolio manager for Multi-Asset Strategic Fund.

But what is this investment clock concept about? Below is a depiction (taken from Fidelity website)

How it works?

Investment clock hinges on cycle investing, where it is believed that different asset class will outperform one another depending on the economic condition or cycle. For example, Hence, by allocating your capitals accordingly becomes a strategy to position yourself favorably for profits.

There are 4 key stages of economic cycle (as shown in the picture above):

Stagflation – Growth has slowed and inflation remains high = Cash is king!
Reflation – Interest rates lowered = bond price increase (due to invesrse relationship)
Recovery – Growth period = stocks!
Overheat – Growth has peaked and Inflation high = commodities!

To look at it in a time based chart (picture from Fidelity, for illustration):

Cycle Investing

The red line indicates growth while the blue dotted line indicates inflation. Remember the stock market crash in 2008? The clock prompts you to sell and convert cash in 2007, get ready to buy bonds in 2008 and stocks in Mar 2009.

To use the clock, you just need to identify the stage of the cycle that we are in currently, and then position appropriately with the asset class for the next stage. Remember, there is a lag time for asset class to realised it’s value. This means that after you identify the current stage, you would need to buy assets from the next stage. By the time you wait for the next stage to come, it will be too late.

Does it work?

The Multi-Asset Strategic Fund ran by Greetham has not been performing. The fund has annual returns of 4.91% since 2007 (fund incepted in 2006). I believe it is due to the restrictions that he faced as a fund manager such that he is not able to exercise his concept fully. For example, mutual fund has to stay invested for a large percentage of the capital despite knowing that he has to mainly stay in cash as prompted by the clock that the market overheated in 2007-8 period. As stated by Fidelity, “The Tactical Asset Allocation has precise constraints and the guidance is for growth assets to be up to 100% of the fund (from 75% in the benchmark) while maintaining a minimum investment of no lower than 65%, and for defensive assets to arrive maximum to 35% (from 25% in the benchmark).” In addition, he may not be able to reap maximum profits from commodities, as commodities are derivatives and funds like this may not be able to participate. Hence, the result can be greatly affected. I would think his concept would perform better as a hedge fund.

What time is it?

This must be a question you have now. According to Greetham, we are actually in stagflation period (as opposed to the illustrative example above by Fidelity). Although stocks may have recovered to an extent, he thinks that we are actually not in the recovery period as the economic indicators have not shown that. He sees the growth is still declining and interest rates are falling too. It is hence still in a stagflation period. If he is right, he expects a double dip recession, meaning stocks will fall to a low again. For more details, see the Aug 10 update from him.

The concept is sound and it makes sense. I believe it does serve as a good guide for an investor to put the focus in the right sector or asset class at an appropriate time. What I mean is to use the clock for further investigative work. Example, if the clock is suggesting inflation is rising soon and you are going to look into commodities. But what commodities? Agricultural? Metals? Energy? You would need to examine further. The clock serves as a good guide at the macro level. The micro level has to be worked out by yourself. This is an example of a top-down approach to investing.

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Review: How to Save and Accumulate One Million Dollars Seminar

Alvin — Sun, 22 Aug 2010 09:54:15 +0000

I attended the above mentioned seminar on 14 Aug 10. Why do I attend seminars? Because I want to get new perspectives and learn things that will bring me nearer to my goals. Some people may think that it is a waste of money but I think it is a waste only if you attend with a closed mind or did not take any actions after the course. I also believe in paying for seminars. This is because you learn better and will be more attentive in class when you have parted your money. You will make sure you take back your money’s worth. It is just like hiring a gym trainer. The trainer will watch you train and probably give you guidance and encouragement. The outcome of the training will be better because you tend to work harder after paying the money. Hence, do not be stingy when it comes to learning and education. Just make sure you get back more value than what you paid for. I must say this seminar falls in this category. You may just realize you don’t know what you don’t know.

The seminar began by talking about mindset which Dennis said that it is the foremost step to riches. He go on further saying that many people want to be millionaires but only few succeed. Those who gave up do not have a BIG enough WHY. You are your greatest obstacle to wealth or anything you want in life. Ask yourself, why do you want to be rich. When you have a compelling reason, you will take action and change your situation. He also said that no other seminars or books can help you if you do not have a BIG WHY.

Having a complete financial plan is analogous to building a soccer team. We need defenders, midfielders and strikers. Defence is about building an emergency fund and getting proper insurance. He noticed many Singaporeans are overpaying their insurance premiums and yet inadequately covered. There are 2 very important types of insurance that everyone should have. Buying what one needs should be the basis of insurance. He also gave tips on what to look out for when comparing insurance policies among companies. I must admit I was clueless in what to look out for. But now I would be able to select policies that are bang for bucks!

Midfield relates to the ability to save. He emphasized this is a foundation of wealth. All financially successful people are able to save. Saving is a proof that we value money and it serves as capital for investments.

Strikers are those who score goals. We need to grow our money faster than inflation so that our purchasing power does not get eroded. This is an area that Dennis shared extensively. He has 5 personal secrets to investing, which helped him to make his first million. He showed us alternative investments that have no correlation to the stock market, so that you can still gain while the stock market goes down. He also shared the common pitfalls in investing, where some people may not even know they committed them. I am a good example, as I made one of the mistakes without me realising.

Dennis also gave warning to some of the probable scams out there and advised us to stay away from them. He shared real stories of people who lost money as much as 900k. With regard to financial gurus and successful people, he shared the best strategies from George Soros, Warren Buffett, Benjamin Graham, Robert Kiyosaki, Napoleon Hill, Jim Rogers and Oei Hong Leong.

Finally, he went in depth on debt management, how to use debts to grow wealth in a safe way. As the founder of housingloansg, he is a guru in housing loans. He gave deep insights in leveraging the power of housing loans. A very powerful tool to increase wealth tremendously in my opinion. He emphasized that the RICH employ good debts to grow wealth while the POOR worry and try to repay good debts. This is one of the most important concepts that I have learned from Dennis. If I am rich, applying this will make me richer!

As you can see, the seminar is very complete in every area of your personal finance. How much value do you think you will get out of this? It is unfair to judge the seminar solely on my words. You have to attend to feel the inspiration that Dennis is giving. It is like watching soccer in the stadium. The atmosphere is different. Humans are emotional beings and we need stimulation to be fully engaged in the learning process and effectively “download” the sound concepts into our minds. Contact me if you are interested to learn more about the seminar.

Here’s a video of the feedback from some of the graduates:

Another part:

These are the seminar contents:

What are the Secrets to Success
What are Secrets of the Rich and why do the Rich gets Richer
What are the Mindset of the Rich and Poor?
How to have a Blue Print for Financial Success?
How to win the Financial Game and get out of the Rat Race in real life?
How to avoid the pitfalls of investing?
How to Increase Returns and Reduce Risks?
How to have Maximum Coverage and Minimum Premiums? (P.S. Your Insurance agents might not want you to learn this knowledge)
What are the 3 steps to wealth
What are the things that Dennis disagrees with Robert Kiyosaki?
3 Keys to Stock Investing
How to get the most from your unit trust? (P.S. Your financial planner might not want you to learn this knowledge)
How to set a budget for buying a house?
Property vs stocks, which is better and what are the differences?
Why does the Rich take housing loans even when they have the money?
Learn how to get richer by using good debts wisely
How to get cash out of property without selling your property?
Learn about investment vehicles that offers more than 5% annual returns that is not affected by the stock market volatility
Learn how market cycle investing reduces risk and increases profit over 200%

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Your Greatest Asset

Alvin — Wed, 18 Aug 2010 13:07:17 +0000

What is your greatest asset? Not your house. Not your car. Not even your $1 Billion dollars (assuming you have). Your greatest asset is located between your ears. Yes, it is your mind.

Why is the mind or our ability to think our greatest asset? Now is the period of Youth Olympics so let’s talk about sportsman/sportswoman. My friend was telling me how impressed he was by China’s weightlifter Tian Yuan. She competed in the 48kg woman weightlifting category and at one point lifted 105kg, 2 times her weight! Do you think her greatest contribution to her success is her physical body? I do not think so. It is her mind that created this reality. She believes she can do it and therefore she did. Like what Bruce Lee says, “the successful warrior is the average man, with laser-like focus”. All successful sportsmen and sportswomen have very strong minds, that enable them to overcome physical limitations and win medals. They should be seen as having great mind power instead of physical power.

If you still think physical prowess is important, I shall pose a question to you. Why did humans dominate the Earth when obviously we are not physically the fastest or strongest among the animals? Why not the bears that are stronger than us dominate the world? Why not the cheetahs that are faster than us dominate Earth? Simply because we have the ability to think. The ability to harness the power of the mind is going to be the key to your success. It was our ancestors who began to use the mind to overcome our physical limitations and survive against stronger animals. Overtime, this trait of thinking get passed on to generations and generations as more humans survived. The amount of mind power also increase as we utilise it even more. This is how we compounded this edge over other living organism in this Earth. If this is our edge, aren’t you interested to maximise the use of your mind? Don’t you want to understand it better and make it work for you?

Always remember we need to create an image or an idea in our mind before it will turn into reality in the physical world. The weapons that were created by our cavemen ancestors are products of thoughts. The buildings and bridges that were built are also the products of our thoughts. Hence, you must accept reality is a product of your thought. Do you think about money everyday? Or do you think about the LACK of money? Most of us focus on the LACK. If we worry and focus on LACK, we will never do anything to change our way of doing things. Our thoughts control our behaviour and eventually our results. You think you have total control of your behaviour? The answer is no. Do you control your breathing, heart beat and every function of your organs? No! Your subconscious mind does it. You would be surprised your behaviour is largely determined by your subconscious mind. The stronger the habit, the stronger your subconscious mind is controlling it (wonder why is it so hard for you to save?). Many of us wonder why we always get the same results, say lack of money. Because we always think about LACK! Our subconscious mind will tell us to behave in a way that we will LACK money. We will tend to spend on the latest gadget or whatever item we desire as long as we have some money. If you do not change your thoughts, you can never change your reality.

If you always think the way you always think, you will do what you always do. And if you do what you always do, you will get what you always get. What do you need to change first? I hope you get it.

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Sakae Holdings – Fundamental Analysis

Alvin — Sun, 15 Aug 2010 13:20:59 +0000

I like sashimi. Sakae is an affordable Japanese restuarant to go to. It has become a name that is synonomous with Jap food and sushi. Let’s take a look how their stocks fare.

The current price of Sakae Holdings share is S$0.200. In 2009, the earnings per share is S$0.023. This gives a P/E ratio of less than 10, 8.7 to be exact. Pretty attractive huh?

Next we’ll look at the debt to asset ratio. The total debts in 2009 is S$26.769M while the total assets is S$47.024M. Hence, the debt to asset ratio is about 57%. Not bad either.

How about the consistency of the profits over the past 5 years? See the chart below:

If you noticed, 2008 is a weird year. Sakae actually went into negative. The reason? Building a new headquarters at Paya Lebar area. Here is the notes from the annual report:

“a loan of $5,190,000 (2007: $Nil). The loan was raised during the year to finance the construction of the new operational headquarters at Tai Seng Drive, which is pledged to secure for the loan. The loan carries interest at 1.25% per annum over the bank’s prevailing Cost of Funds or variation at the Bank’s discretion. Repayment commences throughout the period of the construction stage till issuance of Temporary Occupation Permit (“TOP”) or up to 24 months from date of first drawdown, whichever is earlier, interest is to be serviced monthly commencing 1 month from date of first drawdown (“interest servicing period). Thereafter, the loan shall be converted into a 10 year term loan subject to bank’s prevailing rate and terms and conditions mutually agreed. The 10 year term loan shall be paid over 120 monthly instalments. The first instalment comprising principal and interest shall commence 1 month form conversion from the interest sevicing period or 1 month after the issuance of TOP or September 30, 2010, whichever is earliest. As a consequence of the Group’s financial performance during the year, there is a breach of financial covenants relating to the construction loan and no waiver or rectification of the breach has been obtained before the year end. Accordingly, the carrying amount of the loan that has become repayable on demand, is classified as a current liability as at year end. Subsequent to the year end and before this set of financial statements are authorised for issue, management has obtained a temporary waiver from the bank regarding the breach until December 31, 2009.”

Would a brand new headquarters bring in more revenue or profits to the company? I am not that confident. We all know that 2008 is the crisis year. Maybe it was the cheapest time to build an office.

Have Sakae repay the loan? The answer is no. Based on the 2009 report, the non-current liabilities in bank loans have increased from 0 (2008) to S$8.343M. The loan for the building was simply converted to a 10 year loan after TOP in May 2009.

Moreover, the net cash flow from operating activities have not improved after the economic crisis in 2008. S$7.652M (2006) to S$8.344M (2007) to S$1.852M (2008) to S$2.876 (2009).

Is it a good buy? I am not comfortable with the earnings from it’s operating business and I feel that the headquarters may not be crucial to create a positive boost to the company’s earnings.

Disclaimer: This is not investment advice. I am just sharing my analysis.

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You cannot afford to delay your retirement savings

Alvin — Fri, 13 Aug 2010 13:14:49 +0000

Dennis Ng, founder of housingloansg.com and masteryourfinance.com wrote an article for MyPaper on 11 Aug 10. I have translated it into English here. For the mandarin version, pls refer to the attached pdf file: 为退休准备，不能延迟了

“I’m still young, why worry about retirement?” This is a rather common answer. Do you have the same thinking?

Suppose you are 30 years old now and intend to retire at age 60. Given that the average life expectancy is about 80 years old, you would have about 30 years to accumulate wealth and live the rest of the 20 years without working.

30 years is a short time and you better start to build your retirement fund. You must remember the mantra, “you are the young person that can take care of yourself at old age”.

Nowadays, Singaporeans are mostly having 1 or 2 children. Given that the standard of living will increase in the future, it is getting harder for our children to survive and take care of us when we turn old. It is not sensible to depend on our government too. Hence, the best way is to prepare now, so that we can enjoy our old age without worries.

2 common errors for retirement planning

Procastination – If you start to save $600 every month from 30 years old, and grow your money at 6% every year, you would have a fortune of $600,000 at age 60. If you start from 45 years old, you would need $2060 every month to grow to the same amount of $600,000! This is the price of starting late!

No ‘real’ savings – Almost 99% of the people will say that they have savings. But is it true? Based on my observation, most people would spend their monthly salary on necessities like food, clothes, travel etc. The remaining money, if any, would be saved. If required, the surplus from previous months would be withdrawn to meet spending needs. Hence, the truth is that this “money” cannot be considered as savings, but simply an emergency fund. It is also not wise to practice consumptive savings, saying that you are saving for a holiday trip at the end of the year. The correct way to save is to really set aside money consistently, and only use it during retirement.

3 common errors for saving

Save too little – Many people save around $100-200 per month. This is not sufficient if we want to retire at 50, and living a decent lifestyle (travel once a year and eat out once a week). If you save $200/month for 30 years at 6% growth per year, you would only have $200,000.

Start too late – When we are in our 20s, we save for marriage and children. In our 30s, we save for our children’s education. It is only when our children are much older, we begin to start saving for retirement. By this time, we are likely to be in 50s. Even if we begin at 40s, we may have to risk our savings for higher yielding investment to meet our financial goal. If not managed properly, we may even lose our savings.

Playing it too safe or too risky – If you keep our money in the bank, the interests paid are not sufficient to beat inflation. Hence, your money is actually shrinking. On the other hand, if you do not know how to invest but just went ahead playing the stock market, you are likely to lose a lot of money. There is a product in the market that has capital guarantee and yet giving returns around 4-8% per year. It is known as UK Endowment Policy. Recently, it has become more attractive as UK pounds is at its 30-year low against Singapore dollar. Hence, you should choose such products that are safe and provide decent returns.

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Money and Happiness

Alvin — Tue, 10 Aug 2010 12:20:42 +0000

In the afterword of “All the Money In the World“, Peter Bernstein and Annalyn Swan inquired the frequently asked question, “Does it make millionaires and billionaires happy – or at least happier?” They quoted Daniel Gilbert ’s book, “Stumbling on Happiness” – “economists and psychologists have spent decades studying the relation between wealth and happiness, and they have generally concluded that wealth increases human happiness when it lifts people out of abject poverty and into the middle class buy that it does little to increase happiness thereafter. Americans who earn $50,000 per year are much happier than those who earn $10,000 per year, but Americans who earn $5 million per year are not much happier than those who earn $100,000 per year.” The authors went on further, “Once you’ve bought your way beyond hunger, sickness, fear, and fatigue, writes Gilbert, “the rest of your money is an increasingly useless pile of paper.”"

I share the same perspective as Gilbert and I have articulated in the previous post. Money makes a big difference when you are having problem meeting your basic needs. The satisfaction derived from money suffers dimishing returns thereafter.

The co-authors also quoted some of the billionaires/millionaires about money and happiness:

“A happy person with money is probably happier, and an unhappy person with money is never happy. Money is not going to fix it. At least that’s what my mother used to tell me – and it’s true.” – T. Boone Pickens

“Money may not make you happy, but it makes life more convenient. And it puts us in the position to help poor people.” – Kavitark Ram Shriram

“All the studies suggest that riches bring happiness, but only for a moment. I read one study that found that the only surefire thing that leads to happiness, except maybe doing something for other people, was to dance.” – Nelson Aldrich Jr

“Right after my company got successful, as a young man I met some of the wealthiest people in the world and found that they were such unhappy, lonely people. Howard Hughes, for example, was a recluse when he was helping with the work we did on the POWs. But he would never ever surface. I learned that money and happiness are unrelated.” – Ross Perot

“I measure my success by how often I’m smiling. If I wake up smiling and looking forward to the day, then I’m successful. That’s how I felt when I was dirt-poor and with five roommates and how I feel today. Money can’t make you happy, but it sure can make your life a lot easier. If you were happy without money, it’s easy to be ecstatic with it!” – Mark Cuban

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