24 August 2012

Condo, wife, kids and a taxi

Earlier this evening, I hopped onto a cab home as I typical do each evening.  I had a fascinating ride in the Mercedes Cab and an even more engaging conversation with the taxi driver.  He seemed young and educated.  He did not look like the typical taxi driver. 

He was a chatty fellow and volunteered that his wife was a housewife and he had three kids to feed.  I congratulated him for achieving above the national benchmark. 

Fascinatingly, he was working as a Senior Engineer in an electronics manufacturing company on weekdays. Driving the taxi was his weekend job.  It seemed like he already had a well paying job as a professional engineer.  Why then was he driving a taxi?  I've heard of professionals who had lost their jobs in times of poor economic conditions and turned to taxi driving as a last resort.  But this certainly wasn't the case here.

To my further surprise, he said he was living in a condo.  Now highly curious, I asked him why he was driving a cab given that he was living in a condo and was a professional engineer?  To which, he said, "That's precisely the reason!". 
Apparently, in order to meet the lifestyle demand of a singe income family, a condo (someplace at Marine Parade) and a family of four dependents, he was working weekdays as a professional engineer.  The taxi income was to supplement his regular salary.  He drove on Fridays and Saturdays nights.  As an added benefit, he then had the Mercedes for his family weekend activities on Sundays.  Not bad.

It must be tough living such a busy lifestyle working six days a week to sustain the lifestyle that he had.  But it was apparently one he had come to terms with.  He seemed jovial and happy.

He had an interesting view on economics too.  He said that ever since the two Integrated Resorts opened, taxi business had picked up significantly.  Elaborating, he said that Singapore used to receive about 7 million visitors a year.  But eversince the Integrated Resorts opened for operations, the number of tourists had increased to 10 million a year.  Therefore, the demand for taxis had similar increased.  Taxi drivers were therefore earning 50% more than they used to.  It was quite a eureka moment for me.

I thought I already had enough surprises from this interesting gentleman.  But there was more.  When asked how much he could make as a two-nights-a-week taxi driver, he shared that he was making an average of $500 per weekend.  And that was after deducting all his taxi operating expenses!  He was making an additional $2,000 a month just driving about eight nights. 

Fascinating insights from a taxi ride.  What a wonderful Friday!  I hope you have the opportunity of meeting this jovial Mercedes taxi driver one day too.

01 August 2012

Delisting of Cerebos

More bad news as far as I'm concerned.  First it was Meiban.  Then it was Adampak.  Now, it's Cerebos.  Sigh.  While in all cases I have or will be making a tidy profit from the delisting offer that were way above what I paid for these shares, I am in no way celebrating. 

Each of these companies have been giving out consistent dividends and I have benefited from these passive income (which were re-invested).  So I have benefiited both ways in terms of appreciation and dividend income.

They have been consistent sources of regular income that I am going to miss.  The loss opportunity of the future income stream is going to be sorely missed.  Au revoir!

29 June 2012

Insinc with the times

Here's a great money saving deal which is a no brainer for all who travel on the MRT on weekdays prior to peak hours:  Go sign up at http://www.insinc.com/ and participate in their decongestion programme. 

You can take the MRT anytime as you wish, but you would receive more credits when taking the MRT during the pre-congestion hours.  These credits can then be 'spun' for possible rewards.  It's a snake-and-ladder game that generates prizes if you land on some lucky spots.

Thus far, I've received prizes ranging from $1 to $50 in the past few months which I've redeemed from AXS machines to credit into my MRT card.

Have fun decongesting, and learn about the carbon footprint avoidance you're also contributing to as well.

10 April 2012

Gentings Perpetual Subordinated Capital Securities @ 5.125% + 1% (after 2022)

Ah, finally, another opportunity! 

Gentings is offering Perpetual Bonds at a rate of 5.125%.  After 10 years (18 Oct 2022), if not redeemed, the rate increases to 6.125% thereafter.  The perpetual bond is recallable/reedemable in 2017 (5 years).  Minimum subscription to its IPO is $5,000, and in increments of $1,000.  Distribution is twice yearly on 18 Apr and 18 Oct.

There are many risks involved and one should check out the prospectus in detail.  From my perspective, it sounds like a reasonable deal, so long as Gentings doesn't fold over the next 20 years.  Would have been even better if the rates were higher!  One can only wish.

03 January 2012

Capita Mall Asia Bonds (5 + 5 years)

Capita Mall Asia (CMA) is first off the block, offering a 10-year bond for the first 5 years at an interest rate of 3.8%, with pay outs on 12 Jan and 12 Jul each year, and callable in part or in full after 12 Jan 2017.  If not called, the interest will increase to 4.5% for the next 5 years, maturing on 12 Jan 2022.

Applications are open from 3 Jan 2012, 2 pm to 9 Jan 2012, 2 pm, at a minimum of $2,000 and in increments of $1,000.

Not eligible under CPF Investment Scheme and Supplementary Retirement Scheme.

Details at SGX Website

01 January 2012

A Year of Retail Bonds and Preference Shares

It's 1 Jan 2012, and morphing shortly to the Year of the Dragon.

News seem to suggest that there will be a sprinkling of companies raising funds through Retail Bonds and perhaps Preference Shares.  Chances are good as credits are likely to be tight.  So this is one avenue for companies to secure credit.  Hopefully, these will be priced at more exciting levels, offering above 4% annual pay out?

I keep seeing comparisons that people make between the yield of REITs, comparing against bond coupon rates, and similarly, preference shares.  However, there is a big difference involved concerning the principal amount.  In the case of REITs, the yield is dependent on the current stock value of the REIT, so it will fluctuate.  In contrast, the coupon and dividend payment of bonds and preference shares are based on the original face value (or par value) and is not dependent on the trading value of the bond/preference-shares.

To illustrate, if the REIT was priced at $1.00 per share, a 5% dividend  would give $0.05 per share.  In the following year, if the REIT collapses to $0.50 per share, a 5% dividend would give only $0.025 per share.  For the REIT to continue giving out the same amount of $0.05 per share, it would have to pay out a dividend of 10%.  Whether the later is possible depends on its business revenue generated.

In contrast, a bond would be priced at $1.00 per unit.  If it has a 5% coupon payout, one gets $0.05 per unit every year until maturity, where the bond is then redeemed by the issuer at the original capital of $1.00 per unit.  The coupon payout does not fluctuate.  On the secondary trading market, the bond would be trading at values, and that does fluctuate.  But that does not affect the coupon payout.  It only has an impact if one needs to sell it off before maturity.

It is similar for preference shares.  For non-cumulative preference shares, the difference would be that there may be no payout if the underlying stock does not as well.  So it's important that such companies are well managed and have a consistent history of always paying out.  In the case of cumulative preference shares, any payout missed in one year gets carried over to the next - i.e. cumulative.  Some of the preference shares are "perpetual", and may never be redeemed.
[SGX List of Preference Shares]

The Toto special for New Year is estimated at $3 million.  If one was to win this sum, and invest the winnings in a series of bonds and preference shares (diversification!) that gives an average of 4% coupon/dividends, that's $120,000 per year perpetually!  Not bad. 

One can dream.  Buy a ticket today for that HOPE - a four letter word. 

Disclaimer: Winning is not guaranteed. *grin*  Happy New Year 2012!