Quotes (008-2008)

"Make sure you stay alive. The market won't die, so there's always a next time"

----- Peter Lim, the 'Remisier King'

Quotes (007-2008)

".....Our philosophy is if you look after the downside, the upside will look after itself....."

- Dr Tony Tan , Deputy Chairman of the
Government of Singapore Investment
Corporation (GIC)

Try out new ways.....upd27jan08

Recently, "Mr. Market" took a surprise turn and most investors suffered. My BFS is down 18.67% from the peak; Making a comparison between "stayer" and "switcher" strategies, the latter still maintain a 1.76% lead (net off all charges and fees).

The key theme for 2008 is the big "V"- Volatility; where speculators and investors emerge as "specu-vestors"; where long-term and short-term views can be toggled as fast as pressing "Alt"+"Tab". Nonetheless, a true long-term investor will regard such volatility as noises and sees the dips as buying opportunities into fundamentally good businesses.

Updates on how far this SGD1,000 can go until 16Dec2008 will be posted fortnightly on this blog, Labels: BFS

Date Start: 17Dec2007
NAV = 864.92 as of date 26Jan2008
Returns annualized = -72.5%
Returns to-date (since 17Dec2007) = -13.51%

-15.27% "stayer"
-13.51% "switcher"
1.76% +/-

Use GIRO to pay for HDB Season parking (free)

One of the simple and easy ways to save money for drivers is to use GIRO to pay for HDB season parking.

Pay over the counter or via AXN machines: $90.00 per month
Pay using GIRO: $88.20 per month

Tangible net savings: $1.80 per month or 2%
Intangible savings: visits to town council office (which may incur traveling time and cost).

Extrapolate over 49 months (4 years 1 month), the 50th month season parking can be considered free.

How it goes: $88.20 divided by $1.80 = 49

Well of course, the next easier thing to save this money is not owning a car! :-)

Compound Interest/ Present Value/ Future Value

FV = PV(1+i)^n

The most important basic formula for amateur investing.

Shall not re-invent the wheel. Here are a couple of links for further reading:-
1) "Maths Is Fun" version
2) No-frills calculator version
3) "Chimalogy" (Singapore lingo for "profound") version

Quotes (006-2008)

"The key to making money in stocks is not to get scared out of them."

----- Peter Lynch -----

Listen to investment ideas from experts - FREE

I have been an "addict" to this thing called podcast since Q4-2007.

I first started with using iTunes -- http://www.apple.com/itunes/ -- and these are some of the channels I subscribe to:-

(A) Investment-related topics: Bloomberg, Business Week (Market reports, Cover Stories), Fidelity Investment Insight, Fidelity Personal Finance, Mckinsey on Finance, Money Girl's Quick Tips, Money Talk Fool.co.uk, PIMCO Investment Outlook, UBS Economics, Vanguard Plain Talk on Investing.

Highly Recommended (if you have time for just ONE):
"Money Talk Fool.co.uk, seriously good with money"

Reason: It offers education, information and HUMOUR, so which means you will not fall asleep while listening to it. David Kuo, the host, is one funny guy with much investing knowledge to share. The guest speakers too offer investment insights, ideas and humour. By far, the 17Jan2008 episode is THE BEST! The guest speaker on 17Jan2008 episode, Justin Urquhart Stewart not only shares his ideas, but tells his stories with jokes that even the usual "chief joker" David is so tickled by his jokes. And, they spoke about MacDonald's "Mc-chilli" and Singapore.
Download it here (File size: 22.6MB) or click here for the main page.

It is podcasted every Thursday (UK time). Past episodes can also be downloaded one shot as MP3 files and listened to at own pace. I listen to them (repeatedly) whenever I am driving or on the MRT, and jogging.

Note: The IRA or ISA that is frequently mentioned in the podcasts is the equivalent of SRS in Singapore terms.

(B) Lifestyle-related topics: What car? Video podcast, Autocar magazine, Berry Bros & Rudd Wine podcast.

(C) Self-improvement topics: Advanced Selling Podcast.

About two weeks ago, I chanced upon www.nokiaexperience.com.sg and found the podacsting application for my Nokia E51. Now I can download some of the usual channels and new channels straight into my E51.
And, as a result, I now stop buying car magazines from news stand. Another money-saving idea!
(See my other money-saving article here)

MMF rtn vs Bank deposit rates

MMF means Money Market Fund.

This is not something new and have been propagated several times over. A $1000 savings in bank deposit rates have yielded 0.25% ($2.50) in interest for whole of 2007 (See table 1 below). The same $1000 savings, if invested in Money Market Fund (example: Phillip Money Market Fund) , would have returned about 2.26% ($22.60) for whole of 2007. What's more, there's no account opening fees, no min monthly amount to maintain and no upfront sales charge for the invested amount, but on the flipside, there's no ATM for the Money Market Fund. Withdrawal can only be done online.

Key difference between MMF & Bank deposit: Money made from bank deposit is called "interest" while money made from MMF is called "capital gain".

Planning for SRS YA2008 can go hand-in-hand with MMF.
See http://www.waynekoh.com/2008/01/pace-your-srs.html

Table 1
======
Interest Rates of Banks and Finance Companies (Monthly)
Jan 2007 to Jan 2008

Period Bank Fixed Deposits 3 Months Bank Fixed Deposits 6 Months Bank Fixed Deposits 12 Months Banks Saving Deposits Finance Companies Savings Deposits 2007 Jan 0.57 0.67 0.87 0.25 0.33 Feb 0.57 0.67 0.87 0.25 0.33 Mar 0.56 0.67 0.87 0.25 0.33 Apr 0.53 0.64 0.85 0.25 0.33 May 0.52 0.62 0.83 0.25 0.33 Jun 0.51 0.62 0.83 0.25 0.33 Jul 0.51 0.62 0.84 0.25 0.33 Aug 0.52 0.63 0.84 0.25 0.33 Sep 0.53 0.64 0.85 0.25 0.33 Oct 0.51 0.62 0.84 0.25 0.33 Nov 0.51 0.62 0.83 0.25 0.33 Dec 0.51 0.62 0.83 0.25 --

Source: www.mas.gov.sg financial databases

Quotes (005-2008)

“The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark.”

----- Michelangelo -----

"Retirement means death, don't stop working" not applicable to all people

I agree with MM Lee's words that everyone should strive to work for life, and would like to add that everyone shoud strive to work for life in a work/ job/ career (whatever you call it) that one loves and enjoys. However, I do not agree fully with MM Lee's speech (transcript published on StraitsTimes.com) as this involves more than just whether one can retire and yet supposedly work (happily) in post-retirement years and not out of a "no-money-no-choice-but-to-work" situation.

I see Singapore's ageing problems as a serious one. This is not something new. I see the retiring workforce of tomorrow to be broadly segmented into two main groups: (1) retirees in the "brains group" and (2) retirees in the "hands group". I would associate "brains group" to the positions of management and C-level positions and the bulk of menial job/ positions (for example, cleaners) as the "hands group".

For people within the "brains group", it is their years of management experience and wisdom (or we just call it "brain power") that make them valuable and thus able to further contribute back to the organization they supposedly retired from not long ago. Two good examples are MM Lee and SM Goh. They still carry on their work as if they never retired. Retirees from this band are still highly valued for their "brain juices" and hence organizations are willing to pay for the value.

On the other hand, we have the retirees from the "hands group", whom have no years of management experience and wisdom (or "brain power") to shout about, and to make it worse, their physical capabilities are far less valueable (not to mention, tradeable) than their younger counterparts who are willing to get lower pays. Unless these retirees lower their salary expectations, employers see no economic sense to re-employ them. Even if they do, the pay is hugely discounted.

For me, I choose never to retire as I look forward to my work/ job/ career (whatever you call it) every single day. I would like to encourage every Singaporean to take responsibility for their financial well-being and stride nicely into the golden years with the choice to retire at own's will and yet choose to work in post-retirement years at own's will as well. And not facing a "no-money-no-choice-but-to-work" situation.

To conclude, I would like to end by adding Jim Fox's quote: "Find a job you love and you'll never have to work a day in your life.” and "retire early" (while getting paid).

Quotes (004-2008)

Find a job you love and you'll never have to work a day in your life

-----Jim Fox-----

Quotes (003-2008)

RULE #1 -- Don't Lose Money

RULE #2 -- Don't Forget Rule #1

-----Warren Buffett's two rules for investing-----

Quotes (002-2008)

Bulls Make Money, Bears Make Money, Pigs Get Slaughtered.
----- James J. Cramer

Trying out new ways....

Recently I am trying out a new way to trade UTs for higher returns. (note: key word here is "trying", so I cannot be conculsive that this technique works perfect at this moment). And because it is still at a "trying" stage, the demo amount is only SGD1,000.

Updates on how far this SGD1,000 can go until 16Dec2008 will be posted fortnightly on this blog, Labels: BFS

Date Start: 17Dec2007
NAV = 1063.47 as of date 11Jan2008
Returns annualized = 137.2%
Returns to-date (since 17Dec2007) = 6.35%

4.19% "stayer"
6.35% "switcher"
2.16% +/-

Quotes (001-2008)

“Both optimists and pessimists contribute to our society. The optimist invents the airplane and the pessimist the parachute.”
-----G. B. Stern quotes (British novelist)

Note from a Remisier

U.S Benchmark Indices -Major Support Levels Alert-

Dear Clients,

I like to highlight that after the brutal sell-off last week (31Dec07~ 04Jan08), it is imperative to draw to your attention that a further 3~6months consolidation period may surface on the equity market should U.S benchmark indices' respective major support levels (see below) be breached decisively over the next few weeks. It is advisable to start considering alternative investment avenues (S'pore Government Treasury Bills, Money Market Funds, Bond Funds etc), should these indices' price levels fail to hold indefinitely.

Major Support level for Benchmark U.S Indices:
Dow Jones Industrial -- 12,714 ~ 12, 824
Nasdaq Composite -- 2,490 ~ 2,535
New York SE Composite -- 9,377 ~ 9,421
S&P500 -- 1,405 ~ 1,409.5

(Click on above image to view a larger image)

Having forewarn such negative possibilities to the U.S Stock markets, significant amount of foreign investment funds are stilll invested in Emerging markets like China, India, Brazil etc (as reflected in the Foreign Exchange Reserves in these countries, given their double digits GDP growth, and Huge Trade Surpluses over the last couple of years). This could well be only the beginning of this trend, and hence South-East Asia as a continent may well be benefitting from the continue outflow of funds from western european and u.s equity markets into these regions (e.g. Price/Earnings of Asia-Excluding Japan still trend below that of its western peers) .

Investing CPF-OA before and after 1Apr2008

From 1st Jan 2008, the first SGD60,000 of your combined CPf balances (up to SGD20,000 from CPF-OA) earns an extra 1% interest. Click the thumbnail below for a cartoonised explanation.

With that in mind, here is my approach towards investing CPF-OA:-


Assuming Mr A has SGD40,000 in his CPF-OA as of 1Jan2008 and wants to invest in CPFIS approved funds. Let's say he is a Balanced Risk investor (i.e 50% Cash/ Bonds & 50% Equities).

Before 1April2008, Mr A can invest based on the following allocation:-
Risk Profile: Balanced
Allocation (Generic):
i) Cash/ Fixed Income/ Bond Funds = 50% (SGD20k)
ii) Equities Funds = 50% (SGD20k)






After 1April2008, Mr A can invest based on the following allocation:-
Risk Profile: Balanced
Allocation :
i) (No choice but to) Leave in CPF-OA (3.5% p.a guaranteed) = 50% (SGD20k) (treat it as Fixed Income)

ii) Equities Funds = 50% (SGD20k)




In both scenarios, the risk profile is still balanced. It is therefore important to view your investible monies as a whole when planning your investments.


note: The example above is made using a straightforward assumption and does not take into consideration other situations such as servicing house mortgage payment using CPF-OA.

Pace your SRS

Just like running a race, it is good to know how far you have run versus how much time you have got left to complete the race.

The "race" distance: Contribution cap

• The SRS contribution cap for a Singaporean or a SPR is SGD11,475, calculated as 15% x 17 x SGD4,500 CPF monthly salary ceiling.


• The SRS contribution cap for a foreigner is SGD26,775, calculated as 35% x 17 x SGD4,500 CPF monthly salary ceiling.

Example of how to "pace your SRS" savings:-
1) Profile: Singaporean & SPR with monthly salary SGD3000

Suggestion: keep aside min 10% (max SGD1,043.18) of SGD3,000 = SGD300 into "money market fund"; In Nov 2008, calculate your esimated income for entire year of 2008 including Dec 2008, and calculate your YA2008 taxes using IRAS's spreadsheet calculator. (link to be given after IRAS has it uploaded)

It will probably look like this:

2) Profile: Foreigner with monthly salary SGD6000

Suggestion: keep aside min 15% (max SGD2,434.09) of SGD6,000 = SGD900 into "money market fund"; In Nov 2008, calculate your esimated income for entire year of 2008 including Dec 2008, and calculate your YA2008 taxes using IRAS's spreadsheet calculator. (link to be given after IRAS has it uploaded)

It will probably look like this:

Email me for details. :-)

..............Extract from www.mof.gov.sg..............
Q2: Is MOF conducting educational sessions on the scheme?

A: The SRS is for the private sector to drive. As financial institutions market SRS products to the public, they will also familiarise the public with SRS. MOF will not be involved.

..............Extract from www.mof.gov.sg..............

Start planning to pay less taxes for YA2008 NOW!

First, let's exammine the benefits of SRS:-
a) Tax deferment until retirement (tax-free); if you feel that your personal income tax is "too high", then consider setting up a SRS to defer these taxes.
Refer to my previous blog for details:
http://www.waynekoh.com/2007/12/zerolise-or-reduce-your-tax-using-srs.html

b) See it as a "2nd CPF", in these days and probably into the future years, retirement amount required would be higher; Let's say you need SGD1.0 mil for a **comfortable retirement (most people below 40 years as of now), and CPF minimum sum scheme only caters for SGD120k, you would be potentially facing a 88% shortage in your reitrement years if you rely solely on CPF for retirement. Can you drink 88% less coffee or can you eat 88% less during retirement years? But really, do you want to have 88% less?
**comfortable means same standard of living as compared to pre-retirement days.

c) Combining (a)+(b)= Pay less taxes and compound your 2nd CPF
A sum of SGD6000 contributed annually into SRS will get the following sums at the following compounding return rates:-

Email me for the calculation spreadsheet.

In the year 2008, it may be wise to start planning your srs right from the beginning. The biggest "enemy" is of course, procrastination.

..............Extract from www.mof.gov.sg..............
Q2: Is MOF conducting educational sessions on the scheme?

A: The SRS is for the private sector to drive. As financial institutions market SRS products to the public, they will also familiarise the public with SRS. MOF will not be involved.

..............Extract from www.mof.gov.sg..............

My Portfolio (1 Jan2008)

23% - Stocks (Direct stock picking)
46% - Unit Trusts (Equities funds, Bond Funds etc)
31% - Un-invested (stay in cash- waiting for action)