Are we really saving the earth during Earth Hour?

I was watching the news on TV for the past two days, one of it being the report on "Earth Hour", where people around the world switch off lights for one hour to create awareness on enery consumption and conservation. In one of the interviews with the participants (they are secondary school students, I believe) in Singapore, it can be clearly seen that while they switch off the lights, they are using glow sticks during the lights-off hour.

We know that glow sticks are made of plastic and chemicals and most importantly, not renewable. Are we not slapping ourselves in the face (of saving Earth and yet causing harm to it at the same time, after the "lights-off party")?

Here is an article that I found on the internet that mirrors my thoughts:-
http://www.thestar.com/SpecialSections/EarthHour/article/404659

I recall we had a Live Earth Concert not too long ago, and I do not think we have become more environmentally friendly (as a whole) after that concert. Al Gore and some of the singers (for example, Madonna) were probably the good "by-products" out of the publicity stunt or fad.

I believe we have more to do than just superficial declaration of saving the earth. Saving the earth must be cultivated as a way of life that people adopt and adapt to it.

The question remains:- Are we merely doing things for the sake of doing them?

Hospitalization and Surgical (Shield Plan) Insurance

As a continuation to my earlier "As-charged" article, I went on to develop a spreadsheet that is capable of calculating the possible costs of financing a Shield Plan (example of calculation here is for Private Hospital Ward A) that would be needed by someone age 65 now and presumably live til age 85.

The estimated cost (CPF Medisave) would be about $16,800 for most Shield plans (this is so as MOH has capped the annual withdrawal limit at $800). The net present value @4% would be about $11,672.

On the cash portion, the estimated average cost would be $87,629 (cost of shield plan rider and the excess portion which is non-CPF-Medisave-payable). The net present value @4% would be $50,344.

So there appears to be an imbalance in the above equation. In the example above, CPF Medisave can only finance about 16% of the total Shield plan cost. I am wondering if the Ministry of Health can look into easing the $800 cap limit to a level that not only achieves a balance between the CPF Medisave and out-of-pocket cash, but also in the process, help Singaporeans to utilize the CPF-Medisave for the Shield plan that will divert risk of possibly higher medical costs (in the future) to insurance companies.

My next article will be targeted at ways to prepare funding for Shield Plan (65 to 85 years old).
Stay tuned.

Quotes (014-2008)

“Planning is bringing the future into the present so that you can do something about it now”

----- Alan Lakein -----

Reference: Compund Interest/ Present Value/ Future Value

Try out new ways.....upd24Mar2008

Date Start: 1Jan2008 (re-based)
NAV = $4481.85 as of date 24Mar2008
Returns annualized = -38.2%
Returns to-date (since 1Jan2008) = -10.36%

Drip in new money (Part 2)

In my earlier blog "Drip in new money" on 7Mar2008, I mentioned "internal rate of return" or IRR in short, and hence decided to delve into the feasibility of dripping in new money into a savings account versus an investment tool versus long-term inflation.

Background:-
a) Money is dripping in at $100 per month into an investment portfolio (upfront sales charge capped at 2.5%) over 1 to 30 years;
b) Savings deposit interest is assumed at 1.0% per annum throughout;
c) Long-term inflation is assumed at 3.0% per annum throughout.

Findings:-
a) IRR for savings deposit at 1.0% per annum annualized returns is 0.51% at best over 30 years;
b) IRR for an investment portfolio at 8.0% per annum annualized returns is 4.56% per annum over 30 years;
c) IRR (an investment portfolio at 8.0% per annum) at end of second year of investing would have "overtaken" inflation at 3% by a slight 0.02%.
d) IRR for a 15%-per-annum portfolio over 10 years would have netted 7.76% per annum (more than double of inflation).

The above findings thus further reinforce the importance of "it's about time in the market, not timing the market". In addition, it pays to have patience and discipline to spread the investing amount over time. Spreading the investing amount over time also reduces the need for, and/or risk of market timing. (Disclaimer: reducing risk of market timing does not guarantee a profit nor does it protect against a loss). Click the thumbnails below for the table and chart.

Nevertheless, a good portfolio does not happen by chance, and needs to be carefully crafted (selection and asset allocation) and fine-tuned via constant rebalancing.

Conclusion: In order to beat long-term inflation of 3% per annum without the risk of market timing, one needs to invest :-
i) a minimum of 15 years in a 6%-per-annum-returns-portfolio; or
ii) a minimum of 5 years in a 7%-per-annum-returns-portfolio; or
iii) a minimum of 2 years in a 8%-per-annum-returns-portfolio, and so on....

Hence, the money is made in the waiting or rather, "dripping"....

Quotes (013-2008)

"One dollar of passive income today is worth two dollars of active income tomorrow."

----- Simon Chan Yung Fung -----

Quotes (012-2008)

".....investors should be glad of the fact, since pessimism drives down prices to truly attractive levels....."

----- Warren Buffett, 1997 Chairman's Letter, BERKSHIRE HATHAWAY INC. -----

Quotes (011-2008)

"90% of the people in the stock market, professionals and amateurs alike, simply haven't done enough homework."

-----William J. O'Neil-----

Try out new ways.....upd10Mar2008

Date Start: 1Jan2008 (re-based)
NAV = $4684.80 as of date 10Mar2008
Returns annualized = -29.5%
Returns to-date (since 1Jan2008) = -6.30%

Drip in new money

Had the pleasure to attend a presentation-talk on investment outlook and financial planning given by Justin Urquhart Stewart who was in Singapore 2 weeks ago.

The impressionable stuff has to be this line (besides his quirky stand-up-comedy-talk-show style of explaining usually difficult-to-understand financial terms):

"Drip in new money"

"Drip in new money" is essentially, the softer way of saying "Dollar-cost-averaging". It does make sense and I now prefer to use "drip in new money" when explaining about the advantages of the latter.

Imagine this: An initial investment of $1,000 followed by 25 years of $100-per-month contribution, coupled with an annualized compounded returns of 10% per annum.

The total capital invested would have been $31,000.

The total portfolio size at the end of 25 years would have been about $130,000. A handsome capital gain of $99,000! The internal rate of return (IRR) would be 5.93%.

With the current highly volatile markets in play, it makes even more sense to be in the market all the time, not fully invested, but the "drip in new money" way. Along the way, with the right amount of rebalancing and tweaking, the money will certainly roll in waves in the future.

Invest in your own lunch (or dinner)

Caught this piece of interesting news over one of the podcast channels on 27Feb2008. In Vermont, USA, one restaurant owner almost call it quits but the restaurant was saved by a group of 40 customers who pumped in US$1000 each to help in the restaurant's expansion plan. Note that the restaurant owner's decision to possibly fold up was not due to lack of business, but the incapability to expand. (p.s: if the food is good, then management must be the problem?).

In return, the "customers-investors" got meal coupons that probably could last quite a while to consume. The "coupons" (literally) are however, not guaranteed. i.e if the restaurant closes before the "customers-investors" consume their coupons, it would be a definite loss. But then again, if news get aournd, the pick-up in the business is a sure thing.
==> Download the mp3 podcast here:-
http://podcastdownload.npr.org/anon.npr-podcasts/podcast/
1095/24948288/npr_24948288.mp3
(copy the link if the direct link is not working)

I am just wondering if our local folks in Singapore would actually be such "entrepreneurial" and at the same time, have that community spirit to support their favourite Cha-Kway-Tiao stall, prawn-noodle stall, rojak stall or mee rebus stall?

Location, location, location

I used to think that this phrase "Location, location, location" came from Donald Trump. But after searching for it on Google, I could not find anything that traced who said this phrase. If anyone knows, please drop me a line. Thanks!