18 June 2015

Insurance, Credit Cards and Investments

Mirror, mirror, on the wall
Who's the best of them all?

In the good old days before the digital age, information was such a premium. We were so dependent on information sources - i.e. brokers and agents. Information was power.

In these days of the Internet age, more and more information are increasingly made available online. In the words of Thomas Friedman, "The World is Flat". Information is now at our finger tips. Welcome to Dot.Com Part II. Can I use the term "Big Data" now? Such a cliche. All we now need is to have access to the net. Totally helpless otherwise.

Of particular value has been the appearance of aggregation platforms. Anything from merchandising of unit trust, to credit cards, to insurance. With the information galore, the humble retail investor like you and I can now compare and make personal choices. It does not guarantee that the right choices would be made - that's a separate problem.

Here's a list of some of these:

Fundsupermart. Unit trust and bonds.

WeInvest. Fixed deposits, mutual funds (i.e. unit trust) and real estates.

CompareFirst. Insurance policies.

Get.com. Credit cards.

EnjoyCompare. Credit cards, loans, travel and car insurance, broadband.

More are sprouting up. It can only be good, so long as they are legitimate businesses and information portals. I'm not guaranteeing these to be reliable in any way. So, use at your own risk please.

Now, can Watson figure out which packages make sense for me?

15 June 2015

24 Tales in the Journey to Wealth


"Financial Independence, Retire Early" (FIRE) - that seems like a wonderful catch phrase to set the flames going. What does it take to achieve this burning desire? I think it boils down to a magic number.
[1. http://lizardorealm.blogspot.sg/2015/05/light-fire-can-i-retire-now.html]


To achieve this outcome, I invest in the market, diversified across market regions, namely Asia Pacific (except Japan), global emerging markets, the US, Europe and Japan. 

Unit Trust.
I use funds from the Supplementary Retirement Scheme (SRS) and CPF OA and SA funds to invest into Unit Trust on the Fundsupermart platform. Since each year I can contribute up to to $12,750 into SRS, that is the capital injection that goes into this portfolio. This unit trust portfolio is further complemented by ETFs. Fees in Unit Trusts are relatively higher compared to ETFs, but the latter tends to be less liquid.

Singapore Stocks.
A value investment approach in dividend paying stocks can be most rewarding. I diversify across the Singapore stock market by buying a dozen stocks (or two!) to spread the risks. The wonderful part of this is that I can happily collect dividends to reinvest while waiting as well. Of late, the dividends can run into an average of $1,000 a month. This will be the means by which I intend to generate the eventual passive income for retirement. The dividends would have been more, except that I typically take up the script offer (i.e. collect more units of stocks in lieu of cash), so as to continue to build up my portfolio, and at a discount from the market value.
[2. http://lizardorealm.blogspot.sg/2015/04/my-singapore-team-of-dividend-stocks.html]

US Stocks.
Likewise, for US stocks. I invest through POEMS which hold the US stocks as a custodian account. US stocks (if you pick carefully!) have a practice of steady dividend growth. So even if you do nothing, the dividends tend to hold stead or growth with each passing year. The only problem is the 30% withholding tax on the dividends. The custodian fee that POEMS charge is quite minimal really, so that I can live with.
[3. http://lizardorealm.blogspot.sg/2015/06/my-us-team-of-dividend-stocks-2015.]

Exchange Traded Funds (ETF).
Since I already hold diversified portfolios of Singapore and US stocks, the rest of the market regions are held via ETF, which complements the Unit Trust portfolio mentioned earlier. I prefer to hold ETFs that pay out dividends - or what I refer to as an Income ETF Portfolio.


The stock portfolios are complemented by bonds and cash. While my plan was to maintain only 10% in bonds and cash (or bond-like instruments), it has typically reached 20%. In addition, I maintain 6 to 9 months worth of expenses in cash instruments.

Preference Shares and Retail Bonds
These can be bought off the SGX. The coupon payments, usually half-yearly, provides yet another income stream.
[5. http://lizardorealm.blogspot.sg/2015/01/non-convertible-preference-shares.]

More recently, a wider spread of bonds can also be bought through Fundsupermart. Aside from the few retail bonds, the majority will require hefty $250,000+ investments. Something beyond my reach and need for now, so it's something to keep in view as a future option. As an income stream, perpetual bonds can be quite attractive.
[6. http://lizardorealm.blogspot.sg/2015/05/bondsupermart.html]

Singapore Savings Bond.
This offering from the Singapore Government will be available to retail investor soon. While not a inflation-linked bond, it has some semblance of it. I will most certainly park some of my cash components here. That will serve as an emergency buffer that can be cashed out if needed.
[7. http://lizardorealm.blogspot.sg/2015/04/singapore-savings-bond-as-safe-as-it.html]

Central Provident Fund (CPF).
The compulsory savings into CPF actually is another bond component, offering steady and fairly risk-free growth. The only problem is the lock-in. The lock-in becomes less of a worry for someone like me who is reaching the half-century mark. CPF funds has serveed many useful purposes thus far, especially to fund housing (used), support the kids' education (an option not yet used), or invested into stock or unit trust funds if I prefer to take more risks.
[8. http://lizardorealm.blogspot.sg/2015/02/a-great-retirement-offer-from-cpf.html]

Bank Savings Accounts.
Even the traditional banks can offer interesting saving accounts with higher interest rates. But a bit of acrobatics need to be done. This is the other component of my cash funds.
[9. http://lizardorealm.blogspot.sg/2015/06/how-can-we-stretch-interest-on-our-bank.html]


Even as the investment portfolios are being built up, it is also worthwhile to examine options to reduce 'leakages'.

Supplementary Retirement Scheme (SRS).
Taxation is such a killer, especially at higher incomes. One sure way to reduce the tax burden is to contribute to the SRS (and invest the money sitting in SRS!).
[10. http://lizardorealm.blogspot.sg/2015/02/one-way-to-avoid-paying-more-tax-srs.html]

And if you have a charitable heart, donation is another way of reducing the tax burden while doing some good deeds.
[11. http://lizardorealm.blogspot.sg/2015/02/another-way-to-avoid-paying-more-tax.html]

Credit Cards.
Some people view credit cards as an evil thing. But used wisely, it can actually help reduce our expenses.
[12. http://lizardorealm.blogspot.sg/2015/06/4-credit-cards-with-great-cashbacks-and.html]


There are many exotic options and alternatives to grow that investment pie. But be very careful! Perhaps, it suffices to keep things simple.

A recent trend has been the growth of crowd-funding platforms. These have arrived on our shores, offering the lure of 12% returns or more. In reality, they are even more risky than junk bonds. I am keeping this in view for now.
[13. http://lizardorealm.blogspot.sg/2015/02/moolahsense-embarks-on-new-fundraising.html]

Starting a Business.
This requires more careful considerations. I'm not quite ready for that leap.
[14. http://lizardorealm.blogspot.sg/2015/01/running-cafes-as-business-owner.html]

One could wait for an inheritance, if there is any to be had! But I wouldn't bet on this.
[15. http://lizardorealm.blogspot.sg/2014/12/20-years-and-200000-mothers-savings.html]

Exciting Bank Offers.
This is an oxymoron. With the exception of the aforementioned special savings accounts, what can they offer that can do better than all the self-help options mentioned earlier given their exorbitant charges?
[16. http://lizardorealm.blogspot.sg/2015/05/a-fantastic-investment-deal-at-bank-or.html]


Be Healthy.
Most importantly, is to stay healthy. What's the point of an early retirement, if one is in bade health? Or worse, expired early!
[17. http://lizardorealm.blogspot.sg/2014/07/investing-and-dieting-wealth-and-health.html]

Medical Insurance.
But we can never be certain of good health. So medical insurance is a must in my view. Without this, all the savings and investments can be easily wiped out in no time. Sometimes, we really have to spend money to save money.
[18. http://lizardorealm.blogspot.sg/2015/04/thank-goodness-we-had-medical-insurance.html]

Staying Healthy on Cruise.
One can still enjoy life, even while on a food binge on a cruise. It's not that difficulty to stay healthy, really.
[19. http://lizardorealm.blogspot.sg/2015/04/not-too-difficult-to-stay-healthy-on.html]


Con Jobs.
These are just plentiful and are happening everyday. Always worth repeating the mantra, "if it sounds too good to be true, it probably is too good to be true". Greed is our greatest enemy. And the enemy is that person in the mirror.
[20. http://lizardorealm.blogspot.sg/2015/05/rags-to-riches-riches-to-rags.html]
[21. http://lizardorealm.blogspot.sg/2015/02/the-allure-of-gold-treachery-of-glitter.html]

Job Loss.
This can really be painful and disastrous. A family unit that has multiple wage earner helps diversify the risk. But for the single-income family, there really isn't any room. Best to move on and deal with the realities.
[22. http://lizardorealm.blogspot.sg/2015/05/what-do-you-do-if-you-get-laid-off.html]

A lifestyle of living beyond one's means is a sure road to disaster. Live within your means. What you can't save isn't yours.
[23. http://lizardorealm.blogspot.sg/2015/05/a-millionaire-and-yet-completely-broke.html]

Careless Decisions.
Sometimes, we will make bad decisions and lose money. Hopefully, this doesn't happen too often and too painfully.
[24. http://lizardorealm.blogspot.sg/2015/06/sumiko-tans-money-no-enough.html]

"Good health, great wealth!"
Or should it be, "Good wealth, great health!"

10 June 2015

Sumiko Tan's "Money No Enough"

Among the journalists whose articles I greatly enjoy reading in The Sunday Times are Sumiko Tan and Teh Hooi Ling. I've always found Sumiko's reflections and musings of her everyday life amusing, and Hooi Ling's financial commentaries insightful. Alas, Hooi Ling had left the papers and gone into fund management as the Head of Research and Executive Director at Aggregate Asset Management. A loss for the public, but great for her.

Anyway, seems Sumiko Tan really wasted her money. Poor thing. She got a really raw deal for a "retirement" plan that would have given paltry returns of 2.38%, and then decided not to go ahead with it only after the "free look period" had past. Oh dear.

Source: The Sunday Times, 7 Jun 2015.

Doesn't look like she is ready for her retirement either, although she did mention she has some insurance and shares. I hope those are enough for her retirement. Her lifestyle shouldn't have been that expensive given that she has no children and she married really, really late.

I think she needs to make friends with Teh Hooi Ling. *grin* Wishing her all the best regardless.

Light the FIRE! Can I retire now?
Golden Harvests for Golden Years

07 June 2015

My US Team of Dividend Stocks 2015

Like my Singapore Team (of dividend stocks), Team USA has been giving good returns. Below figures are the annualised Internal Rates of Return (IRR) for my investments in these US stocks, inclusive dividends. IRRs would have been even better if not for the 30% withholding tax on the dividends.


(1) Berkshire Hathaway-B (9.5%). Warren Buffet and Charlie Munger. Need to say more? Several of below companies are also held by Berkshire.


(2) Johnson & Johnson (15.6%). Household products for healthcare and beauty.
(3) Proctor & Gamble (7.3%). Household products - toiletries, diapers, etc. We consume plenty of their products without realising it.
(4) Exxon Mobil (16.0%). Big oil. Almost everything that moves need it. 
(5) Anheuser Busch (20.6%). Beer and theme parks. But it's mostly beer. Addiction.


(6) Wells Fargo (26.0%). Big Bank USA. Essential function for a working economy.
(7) McDonalds (9.8%). Junk food USA. Kids just love it, dunno why. Struggling of late from menu complexity, and competition from more fashionable competitors.
(8) Walmart (-1.7%). Low cost supermarket and departmental store. Has mass market appeal for the price conscious.
(9) Union Pacific (12.5%). Railways and long haul cargo via land.


(10) IBM (4.5%). Information technology - Big Data and Data Analytics. Buzzwords of the decade. Still waiting for Dr Watson to make an impact.

(11) Philip Morris (15.0%). Cigarettes. Global addiction, big time.


(12) Chevron (0.6%). Another big oil, similar to but smaller than Exxon Mobil.

(13) Target (29.1%). Another departmental store, similar to Walmart. I prefer to shop at Target though.

Interesting contrasts over the performance of Walmart compared to Target, and likewise between Exxon and Chevron. Big oil has of course suffered in recent months. But perhaps gradual recovery in sight. Sounds like an opportunity to continue buying more. Target has done better as I bought at its throes of poor performance over its Canadian fiasco which it subsequently exited.

Many of the companies derive much of their revenues from the global market and continue to thrive, in general. Don't think there will be any significant changes I need to make to this team.

I'm keenly watching a few players to bring on board. Maybe Disney and Visa?

A US team of dividend stocks

By no means a suggestion to buy any of these stocks. I bought them at different times and have owned most of them for a few years as my approach is generally one of "buy and hold".

02 June 2015

Boustead Project - Is this multi-bagger for real?

Boustead is one of the key players on my team of dividends stock. Recently on 24 Apr 2015, it spawned off a new player called Boustead Projects by introducing this stock on the SGX issued like a dividend from Boustead. Believe the technical term is "distribution of shares in specie". So it's a new specie! Hah.

As a result, I'm now a shareholder of Boustead Projects as well. The new units were issued at a value of 15.47 cents per share (Boustead Investor Central - Dividend History). Fascinatingly, its value seems to be at 90 cents now (as on 29 May 2015). It's dropping though.

That's 5.8 times its starting value (a 5-bagger), or a return of 482%! What gives?

Will it drop back to its starting value? Or is this where it should be valued at?

[Updated 7 Jun 2015]

As Raymond K subsequently shared, the distribution in specie was 3 shares of Boustead Project for 10 shares of Boustead. So, each share of Boustead Projects should in fact be valued at $0.516. So it's not a 5-bagger, but is closer to being a 2-bagger.

01 June 2015

How Can We Stretch the Interest on our Bank Savings Accounts?

DBS Multiplier

A year ago (has it been that long already?), I came across the DBS Multiplier Account that offers the opportunity for higher interest rates (~2%) from savings. A year since, I've maxed out that account. My salary, dividends and POSB/DBS credit card bills are transacted with my POSB/DBS accounts. So they all count.

I've been earning good monthly interests on the $50,000 in that account.  Any sum beyond that $50,000 however will only earn the pittance savings interest rate.


The UOB One Account

More recently, I came across a similar offer from UOB marketed as the UOB One Account. It is a checking account as well. A minimum balance of $500 is required, else it incurs monthly charges. The wonderful thing is, it ties in with the UOB One Visa Card as well. This is a Visa Card that I already actively use (4 Ways to Reduce Spendings).

It offers two sets of rates which are tiered. In Case A, the rates are offered for card spendings of a minimum of $500 per month. It progresses on to Case B if on top of Case A, there is either (a) crediting of salary into this account, or (b) there are 3 GIRO transactions to it.

UOB One Visa Card

Account Balance in your UOB One AccountTotal Interest ATotal Interest B
First S$10,0001.00%1.50%
Next S$20,0001.50%2.00%
Next S$20,0002.00%3.33%
Above S$50,0000.05%0.05%
  [Source: UOB website]

I figured I ought to be able to able progress to Case B since I already typically spend more than $500 on my UOB One Visa Card, and it shouldn't be too difficult to set up three GIRO transactions to it as well.

Min RequirementPurchases made with UOB One CardRebate Earned
Statement date15 Aug15 Sept15 Oct15 Nov
Total minimum monthly spend tiersiS$300S$300S$300S$30
Minimum number of purchases per statement period.333
 [Source: UOB website]

In fact, as illustrated in the above example, the UOB One Visa Card itself comes with up to 3.33% rebate on credit card bills so as long as the monthly spending threshold is met for all 3 months of that quarter, with at least 3 transactions per month.

Opening An Account

I happened to past by a UOB Branch last week. It was surprisingly empty. So I decided to walk in and open up an account. After getting a service ticket, I was immediately served by a friendly (they usually are) Customer Service Officer. I told you it was empty!

I got my account setup within 30 minutes. All I needed was my NRIC Identity Card and $500. Perhaps it was simplified because I am already an existing UOB customer - I already have their ATM card, Internet Banking account and the UOB One Visa credit card. Quite a breeze.

Savings & Spendings Benefits

If I successfully max this out, it would generate $150 + $400 + $666 = $1,216 a year on a capital of $50,000. An effective interest rate of 2.4%. That's $100+ a month.

And if also spend $1,500 per month on the UOB One Visa Card, that would be a total rebate of $150 x 4 = $600. That's another $50 per month.

Onward to build up the second tranche of $50,000 cash savings!

p/s: Are there better deals worth the while?