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.

GOALKEEPER

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

DEFENSE

(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.

MIDFIELD

(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.

FORWARD

(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.

RESERVE

(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?

Related:
A US team of dividend stocks

Disclaimer: 
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".

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.

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.

UOB One

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 Account	Total Interest A♦	Total Interest B♦
First S$10,000	1.00%	1.50%
Next S$20,000	1.50%	2.00%
Next S$20,000	2.00%	3.33%
Above S$50,000	0.05%	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 Requirement		Purchases made with UOB One Card			Rebate Earned
Statement date		15 Aug	15 Sept	15 Oct	15 Nov
Total minimum monthly spend tiers	i	S$300	S$300	S$300	S$30
	ii.	S$800	S$800	S$800	S$80
	iii.	S$1,500	S$1,500	S$1,500	S$150
Minimum number of purchases per statement period.		3	3	3

 [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?

Light the FIRE! Can I Retire Now?

This was the first time I came across the term: FIRE (by Googirl). Or to elaborate, that's Financial Independence, Retire Early.

Quite a catchy tag line. Achieving the left gives the option to exercise the right.

I view Financial Independence as the situation when my passive income can support a desired lifestyle.

For me, it works out to be an investment portfolio of $2.5m if before age 65, or $1.8m if at statutory retirement age of 65. The reason for that difference is the additional payout from CPF Life payout by then, and because parts of my current investments are using CPF funds and Supplementary Retirement Scheme (SRS) that are locked up till age 55 (the excess beyond the minimum sum from CPF Retirement Account can be withdrawn) and statutory retirement age respectively.

Alternatively, if I strip away these, I could likewise retire on a portfolio of $1.8m anytime if they were all using fluid cash based investments. Why $1.8m? Because at a 4% dividend/coupon payout or withdrawal rate, a $1.8m portfolio would give me $72,000 per year. That's $6,000 a month. I think it's enough for my wife and I.

Howzabout $1.8m in bonds from Bonds@FSM (see Bondsupermart)? That's like 6 blocks of bonds at about $250,000 each. A bit too much for me to stomach for now. I prefer wider diversification at this accumulation stage. But it is certainly one way.

If I were nearer retirement age, it might still prove to be attractive. A yield-to-maturity of about 4% seems achievable based on the various Singapore corporate bonds presently available.

A search on Bonds@FSM based on a yield-to-maturity above 4% with a time span of above 10 years threw up 17 options. Most are familiar names from the Singapore Stock Exchange. Many of these had yield-to-maturity in the region of 5% to 7%. Obviously, there are higher risks for the higher yield end of the scale (e.g. Olam and Hyflux). And interestingly, all are "perpetuals".

Another way of thinking about above is that every $300,000 worth of bonds at 4% yield would generate $1,000 of income per month.

What's your magic number?

Related:
The Good News About Retirement

Rags to Riches, Riches to Rags

The path to rapid riches end in tatters. It's been one article like that after another in the papers. Oil pods, gold scams, distressed properties both overseas and locally.

A pity to the many who found themselves in such shoes. Was it greed or ignorance? Neither is a good excuse.

Was just talking to a friend earlier. He had invested in some "gold" scheme and has not seen his money come back. It was a $5,000 write-off for him. At least it wasn't some epic major amount and he could live with the loss. But as he said, "can't afford to keep losing like this!"

Anything exotic and unusual could be an opportunity or a scam waiting to fall victim to. Between the gain versus the loss, are you able to withstand both? When stepping into the unknown, best not to commit what one can't afford to lose. It's also called risk management.

Related:
The Allure of Gold - Treachery of the Glitter

Medishield Life - Verification & Information

Seems like we need to verify the household data for Medishield Life at this
link. It's a simple check to confirm the members of the household, contact number and e-mail.

The website at the link also has comprehensive information and calculators related to Medishield Life. The calculator can be used to provide an illustration of the payments needed for the household members for the next 5 years.

Medishield Life replaces (upgrades) the existing Medishield hospitalisation insurance scheme under CPF. This is one type of must-have insurance for every person. 

Existing private integrated shield plans (e.g. IncomeShield from NTUC Income, PruShield from Prudential, etc) are built on top of this - i.e. the private insurers provide additional coverage on top of the underlying Medishield Life.

Even if there are pre-existing illnesses that such private integrated shield plans don't cover, the underlying Medishield Life will still cover those (there may be some loading from CPF).  But of course, that would be without whatever additional benefits the private plan would have provided.

Related:
Thank Goodness We Had Medical Insurance!

Bondsupermart

From Fundsupermart comes a new offering: Bondsupermart (or Bonds@FSM). Now we have another avenue to buy government and corporate bonds directly without having to go to the banks.

I like FSM's application interface. They tend to spot pretty clean and intuitive user interfaces.

I was initially pretty excited as I thought they were offering these bonds within reach of retail investors. Alas, not quite. They still require that the bonds be purchased in lots of at least 250,000 units (~$250K) per bond (typically).

So it is available to retail, but would require hefty investments to buy into. Nonetheless, it is an option. Need to understand their sales charges. These are documented on the website.

Saliva drip drip. For an investment of $250,000 at 4% (assuming yield to maturity of 4%), that's $10,000 per year. There are several perpetuals from blue chip companies.

Wish there was some way that those bonds can be retailed in lots of 10,000 units instead. I would definitely want it for my 10-20% bond component of my investment portfolio. But at $250,000 or more per pop, it's a bit over my head for now.

Related:
Singapore Savings Bond

What Do You Do If You Get Laid Off?

Last weekend, wifey and I were at a neighbourhood coffeeshop for a cuppa. This coffeeshop is always crowded on the weekends. Families having a weekend breakfast, gatherings of elderly folks having a coffee and a smoke, and the occasional individuals and couples. As it was crowded, we shared a table with another gentleman. The gentleman was enjoying his own cuppa and welcome us to join him.

It turned out to be quite an unexpected morning as he had quite an interesting story to share. He used to work as a technician at a telco earning $2,000 per month. Unfortunately, his work was outsourced and to his great disappointment, he was laid off. For months, he could not secure another decent paying job. With a family of five to feed, this was a very serious problem for his family.

He decided that some income was better than no income. So, he finally took up a job as a bus driver, earning an income of $1,200 per month (early 2000). It was tough work. He had to wake up at 3 am in the morning to get to work, where he then drove a bus for 9 to 10 hours each day. It took quite awhile for him to get used to it. Eventually he did. The pay sucked.

But that was then. Today, he said that the pay has improved dramatically, especially in recent years. Now he earns well over $3,600 a month after deducting CPF. That kind of explains the increasing cost of operations for public transportation companies.

He has a few daughters who are still at school going age. So long as he has good CPF savings, he felt he could afford to use his CPF to pay for his daughters education. So having a job that also contributed to his CPF was important for him. He was very appreciative of the safety net that CPF has provided him.

Seems like a tremendously hardworking gentleman. Somebody who embodies the spirit of earning his keeps, living within his means, responsibly bringing up and supporting his family, and an emphasis on providing for his children's education.

I like him. A nice conversation to start the morning. Great to have made his acquaintance.

A Fantastic Investment Deal at the Bank - Or Maybe Not

I received a call from a relative recently. She was at a bank. Apparently, she had a fixed deposit that had matured and she wanted to cash out. The Bank Officer had proposed that she invest the cash in a Unit Trust offering a return of 2% per month. She was pretty excited. I laughed.

Obviously it wasn't a Bank Officer. It was one of those Customer Relations Executive (CRE) pedaling investment products to the innocent individual.

At 2% a month, I told her to ask the CRE to put that down in writing and guarantee it. If it was so good, I also want. I laughed big time.

I then asked if the CRE had told her how much they charge for the sales charge. Apparently, the CRE had said that they were offering a *huge* discount, reducing from the usual 5% to *just* 3%. Come on, Fundsupermart and POEMS charge a lot less.

The relative of mine had an interesting reaction to all these. She said, "I knew it, it's a con job! Never mind, I'm keeping the money in my savings account."

Oh dear. Sigh.

A Millionaire and Yet Completely Broke

How does a multi-millionaire become a bankrupt? Time's story about Allen Iverson is instructive. Allen was a NBA basketball star who earned an income of US$145 million over a 15 years playing career. That's a shitload of income. It's almost US$10 million a year. Yet, he appears to be completely broke now. Broke. Zero.

How did it happen? Simple. Not living within his means. It's a lifestyle of extravagance, indulgence to the extremes, and a complete lack of prudence in financial planning. Perhaps none at all? Almost.

Luckily for him, as broke as he is now, there is a silver lining. He has a lifetime endorsement contract with Reebok for which a $30 million trust fund has been established. While he will not be able to touch that till 2030, at least thereafter, his golden years will still be taken care of. Let's hope he doesn't blow that too! It's the money he doesn't have his hands on that is going to save him. Meanwhile, he will have to figure things out and live with regrets for another 15 years.

A colleague was sharing about the mental stress his wife-to-be and him were having. They are getting married soon. Their house has come, and the wedding is coming. All seems great. I thought he was going to tell me how happy they were. Problem is, the money's gone. They have run down their cash to zero. Any additional expenses and they would be like Allen Iverson.

My advice to him was that he had better learn to live within his means. He may have to forego some of his wants and trim expenses. As he would be receiving a pay increment soon, I suggested to him - set up another bank account and keep your itchy hands off it. Henceforth, for any additional increment he gets, automatically GIRO over the pay increment to the other account. And then use that account for investments for whatever longer term needs he would have, rather to spend on immediate wants. That would effectively force him to avoid inflating his lifestyle.

I hope he finds the courage and commitment to strike that balance.

For other stories: 
Condo, Wife, Kids and a Taxi
Cashflow: A Tale of Stable Income

Singapore Savings Bond - As safe as it can be [updated]

Plenty has been said about the Singapore Savings Bond (SSB), so enough said on the general idea. We will have to wait till the second half of the year however to understand better how do we, as lay peons, go about investing into it, and if there are limits for each investor. Is this yet another Singapore-only innovation?

Interestingly, it was in fact announced during the week of the most momentous event in Singapore's history. But it probably went low key because of it. The blogging community largely also respectfully abstained from publishing during that week.

It looks like this is a manifestation of the idea previously mooted about an inflation-linked bond. Though not quite the same, it does offer semblances of it. With its pegging against the prevailing Singapore Government Securities (SGS) Bond, the current rates range from the low end of 1% to 3%. These rates would of course vary over time depending on how SGS Bonds fair. The prevailing sentiments is that bond rates are likely to go up over time as interest rates rise.

[This is not to be confused with bond "yield" which has an inverse relationship.]

While it doesn't yet hit the above 4% that I was looking for, nor was it the mechanics that I thought would materialise, still, it's a positive move forward. There is hope.

From casual chats with relatives and friends, many still do not understand. Some think it's a one-off affair, like the sale of the special series of Singtel shares when it was first publicly listed. Others, who belong to the the-government-is-out-to-con-me-no-matter-what-they-do camp viewed it as yet another scam that will take away their money. One simply asked, which bank is this?

Personally, I have yet to understand how SSB works from the government point of view. How is it self-sustainable and implemented to support the system? I would vaguely guess that it rides on the underlying SGS Bond as an implementation.

What can I use such a scheme for? Some personal views:

• The 6-month salary worth of cash reserves to deal with unexpected emergencies, assuming liquidation is straightforward and fast enough.
• Part of the 10% component of my investment portfolio that I want to keep - i.e. with a lower risk profile.
• Kids education fund as it runs into the final 5-10 years, depending on how risk adverse I am.
• A safe fund being built-up for some mid-term but uncertain intentions (e.g. buy house, car, etc), for which plans may not unfold over a 5-10 year horizon.

Some of my relatives are so risk adverse, they will never ever ever want to invest in shares and such. For them, the SSB is definitely a better solution than leaving their cash collecting flakes of particles (otherwise known as "dust") in a bank savings account and in fixed deposits.

By the way, a Central Depository (CDP) account is needed. Do you have one yet?

On a separate note, SGS Bonds (not to be confused with SSB!) can also be bought directly by retail investors through the local banks, but require $250,000 at par ($1 per unit). Alternatively, they can also be bought off the secondary markets via Fundsupermart or from the Singapore Stock Exchange in lots of 1000 units at the traded price.

p/s: We really love our Three Letter Abbreviations (TLA).

2 Portfolios of ETFs - Growth vs Income [updated v2]

I was considering how I might structure a portfolio based purely on Exchange Traded Funds (ETFs) that are available on the SGX (Exchange Traded Funds - Navigating Through the Maze).

The idea was to build a portfolio that is globally diversified across market regions, complemented by a smaller percentage in alternatives like commodity, and weighted with a home bias for Singapore.

I came up with the below.


Growth Portfolio

In general, ETFs that used the full replication method are preferred over those that are synthetic. Such ETFs hold underlying stocks that are reflective of the index it is attempting to track. Synthetic ones are using other more exotic means to track the index, such as by swaps. As such, they carry additional risks.

15% US - SPDR S&P500 US$ - XD [Full replication]
15% Europe - DBXT MSEurope US$ - Reinv [Full replication]
15% Asia ex-Japan - CIMB S&P Ethical Asia Pacific - XD [Physical replication - sample]
15% GEM - Lyxor EM Mkt US$ - Reinv [Synthetic] or DBXT MSEmer US$ - Reinv [Synthetic]
5% Japan - DBXT MSJap US$ - Reinv [Full replication]

20% Singapore - Nikko AM Singapore STI ETF - XD [Full replication] or SPDR STI ETF 100 - XD [Full replication]
5% ASEAN - CIMBASEAN S$ - XD [Physical replication - sample] 
5% Commodity - Lyxor Cmdty US$ - XD [Synthetic]
5% Commodity - GLD US$ [Full replication]

Income Portfolio

However, if my aim is to have a portfolio that would give out a dividend income stream, I guess I would pick the following instead:

20% US - SPDR S&P500 US$ - XD [Full replication]
20% Europe - Lyxor Europe US$ - XD [Synthetic]
20% Asia ex-Japan - CIMB S&P Ethical Asia Pacific - XD [Physical replication - sample]
5% Japan - Lyxor Japan US$ - XD [Synthetic]

20% Singapore - Nikko AM Singapore STI ETF - XD [Full replication] or SPDR STI ETF 100 - XD [Full replication]
10% ASEAN - CIMBASEAN S$ - XD [Physical replication - sample] 
5% Commodity - Lyxor Cmdty US$ - XD [Synthetic]

In this instance, I dropped the Global Emerging Market (GEM) as there does not seem to be any that gives out dividends. There is probably difficulty to efficiently replicate the GEMs. Instead, I've substituted in an ASEAN fund as a close proxy. Likewise, Gold was also dropped.

Rebalancing

In both cases, capital top-ups and dividends received would be reinvested during the build-up years (before retirement) by buying ETFs to bring the portfolio closer to the desired ratio annually (or twice yearly).

Do these look reasonable?

Warning: Both portfolios are purely 100% in equities and resources. There are no bond components suggested and these should be considered for more risk-balanced portfolios.

[Updated: 1 May 2015:
Replaced the Lyxor Asia ETF which was a synthetic replication with CIMB S&P Ethical Asia Pacific ETF which uses partial physical replication. Both are dividend paying.]

My Singapore Team of Dividend Stocks 2015

My first 11 team of dividend shares have remained largely unchanged over the past year.

Goalkeeper

(1) OCBC remains my stalwart to guard the goalpost. An increasing interest rate environment can only benefit the banks.

Defenders

My defence is built around Real Estate Investment Trusts (REIT) in the form of (2) Capita Commercial Trust, (3) Capita Retail China Trust and (4) Mapletree Industrial Trust.  That gives me 3 REITs covering commercial, retail and industrial properties, with some exposure to China. 

My fourth defender is (5) Vicom.  a proxy play for car ownership in Singapore. It could be facing some windy resistance as there are supposedly less cars that require routine inspections over the next 3 years. But will there ever be less cars in Singapore? Not in my view. So long as there is a high level of demand for car ownership, there will be business in car inspections and Vicom is dominant in this regard.

Midfielders

Midfielders need to control the play. They have to create opportunities for offensives, and at times have to roll back to the defensive. For this, I am standing by (6) Boustead, (7) Hour Glass, (8) Kingsmen Creative and (9) SATS.

Boustead is about to break off its property business. For Hour Glass, its founders continue to buy its stock. I view that as positive. Kingsmen Creative has been doing well, expanding regionally and in Greater China. There are many MICE events and theme parks being built in the region. SATS on the end could face some issues with the airline business somewhat affected by negativity with the number of unfortunate air crashes and economic challenges.

Strikers

For the offensive play, I am looking for some excitement, in particular, growth players that may not be as yet high yielding but have the potential to go far. No change to my strikers with (10) Global Logistic Properties (GLP) and (11) Yangzijiang, giving me exposure to China, Japan and Brazil.

The poor outlook of the shipping industry could well affect Yangzijiang. Likewise, the slowdown in China could well see impacts to both. I'm normally averse to holding China plays. But I'm making an exception for Yangzijiang. It however requires some close watching.

Reserves

Nothing has therefore changed after a year to the team composition. But it looks like there could be some challenges in the performance of my first 11 in the year ahead. To mitigate, I've expanded my team by beefing up the bench strength and recruited (12) GK Goh, and (13) Keppel.

GK Goh holds a portfolio of interesting investments (more) with significant insider buying in recent months. Keppel on the other hand is my contrarian play. There is much fear in the market given its lack of new contracts and poor segment outlook in oil and gas. But with a Price-Earning ratio so low, it's too good to ignore given my long term outlook towards my investments.

Play ball! Oh wait, wrong game.

[Disclaimer: I hold all the above stocks. But this is not a recommendation to buy any of these. Do make your own assessment before investing, always. I acquired them at different times over the past five years (post Global Financial Crisis) and have benefited from their growth and reinvestment of dividend payouts since.]

Size Matters - How Much Is Enough? [updated]

Size matters. No sleazy thought please. Rather, Singapore Man of Leisure had an interesting article on Size Does Matter for Income Plays where he blogged about an investment approach to reap a $50,000 per annum income. The question he posed was, just how much capital would be needed to do this?

He offered a few possibilities and discussed the implications of: (a) $1 million at 5% yield; or (b) $500K at 10% yield. His conclusion however was to go with (c) $2 million at 5% yield. Why? Because the earlier options all hinged on the assumption that the portfolio do not diminish due to a fall in market value. So doubling up the portfolio provides a buffer in case the portfolio should collapse by 50%.

I thought maybe there's a solution to this involving less capital. I'm making an assumption from historical past that any collapse of that magnitude would likely see a recovery within 5 years. With that assumption, I could keep 5 years worth of cash at half of $50,000 (i.e. $25,000) per year, and add that to $1 million at 5% yield. So that way, even if the portfolio collapse by 50%, it would still generate $25,000, and can be topped up by another $25,000 from the safety buffer. Hence, the total portfolio needed is simply $1 million at 5% yield plus $250,000 in cash.

What say?

As an after thought ... come to think of it, with $2 million at an expenditure of $50,000 a year, that's 40 years worth of retirement budget! If one is already at age 55, I guess there's no need to invest or do anything hairy with it? The only risk is living too long, specifically, beyond age 95.

Is it that Difficult to Stay Healthy While on a Cruise?

LadyIronChef blogged about 5 easy ways to exercise while on holidays. Essentially, the calories expended in the 5 activities look like this:

Walk - 3 hrs, 405 kcal
Hike - 2 to 3 hrs, 674 to 1014 kcal
Swim - 20 min, 115 kcal
Circuit around hotel room - 7 min, 58 kcal
Dance - 2 to 3 hrs, 930 to 1395 kcal

The above made me recall about my last cruise experience on board Royal Carribean's Mariner of the Seas.

Great views and great entertainment, even if they're somewhat cabaret like. Shrek is the theme on board this ship.

As always for cruise, it was a food binge of immense proportions. Staying in a Grand Suite came with greater benefits, including the use of the VIP Lounge. That meant even more food! What's a cruise without the food?

I figured my daily food intake was in the region of 3,000 kcal. Maybe more. I could be in denial. Since my Basal Metabolic Rate was in the region of 2,000 kcal, that meant I had to exercise away 1,000 kcal per day. No small feat to achieve given that I only averaged 200 kcal on a normal working day, and perhaps closer to 500 kcal a day on weekends.

Turns out, it wasn't too difficult to accomplish on board the cruise ship. An hour per day in the gym clocked about 500 kcal. Walking to restaurants for meals and to various entertainments from the bow to the stern, and from the stern to the bow of the ship several times each day meant that I also clocked more than 10,000 steps per day. That works out to another 500 kcal or so. It's a lot of serious walking. There, 1,000 kcal a day expended to shed the excess.

No net weight gain. Pays to stay healthy. Exercise away for the good life.

Great health, good wealth! Enjoy your next cruise.

4 Financial Options in 4 Months

It's only been 4 months since the start of the year. But if one were to reflect back, it seems like a roaring year with lots of significant changes affecting our personal financial options.

Consider:

• Reduction of lot size for shares from 1000 to 100. So some of the high value shares become accessible.
• Changes to CPF. Interest rates to go up.
• Singapore Savings Bond. Comparatively risk-free bond for the conservative.
• Review of ETF (related: Navigating ETFs) so that more ETFs can be invested by entry level investors.

Seems progressive.

Thank Goodness we had Medical Insurance!

Over the past year, my wifey experienced a muscular injury which seriously affected her quality of life. After struggling for a year, and weeks of therapies, the specialist recommended that she undergo a keyhole surgery to fix the problem.

We decided to go ahead with it. The sufferings had gone on long enough. The surgery took place late one evening and required an overnight stay at the hospital for the anesthesia to wear off. I drank quite a bit of coffee while waiting. Coffee Bean was a beneficiary.

Guess how much was the bill? $14,000+!

No doubt it was for an A class ward and would surely have been cheaper had it been a C ward. After deducting the Medishield component, the co-payment part worked out to be $4,500+. That's still quite a hefty sum!

Fortunately, I had placed my wife on a Medishield and Medishield+ type of plan with a private insurer. So even the co-payment part was fully covered. In the end, the total amount we had to cough up was $zero. This included the medications and follow up treatments.

The annual payment for the two policies was $786 a year. Looks like we have recouped almost 18 years of payments with just one surgery. Not that we really wanted to "profit" in this manner. Regardless, it goes to show how important it is to have hospitalisation and surgery insurance.

Are you covered yet?

p/s: Can I claim for the coffee too?

And if you're really hardcore, here's how the procedure looks like (*ouch*): Rotator Cuff Repair

Ready, Aim, TARGET!

A Path to Financial Freedom posted an article on Psychology in Crisis and Herd Investing. Worth a read.

I pretty much prefer to buy a share of a company if I have a reasonable idea why the company will likely be viable as a business for the longer term. For instance, it sells essential products (or products with a brand) that are consumed at an increasing rate as the world (its customers) develops.

One such company I was watching was Target. Wifey and I have personally visited their stores and have always preferred to shop at Target than most other retail stores. Many of the rest tends to feel messy, disorganised.

But Target was having a really bad time at one point. Its credit card business was hacked into and created a huge problem with its customers. Its expansion into Canada was running into trouble. It seems there are significant differences in the shopping habit of Canadians compares to the Americans, and likewise with the supply chain. It didn't help that Walmart had already set foot on Canadian soil much earlier and had established its presence.

I kind of felt that the credit card thing was really a transient problem. It would eventually blow over. The Canadian thing was something else. It would continue to bleed unless Target found a way to turn things around. The alternative of course was what eventually happened. They exited from the pains. That's when I decided it was the right point to buy.

Over the past months, the shares in Target has risen several tens of percentage points. It has been a good buy.

Is this a Cigar Butt situation that Warren Buffet speaks of? I don't think so. There is life beyond that one puff. Target remains as my midfielder in My US Team of Growth/Dividend Stocks.

Play ball!

So What? Is it Worth Buying a Stock with a Lot of Cash?

ValueEdge had an interesting post on the The Art of So What?

I recall an encounter once where my boss was running through a proposal with his boss. His boss then said, "So?" After providing a response, he was again asked, "So?" And this went on for five more times. It wasn't asked in a malicious way. It was a matter of fact, trying to dig deeper into the subject. Finally, having dug in five levels deep, he then went on to analyse the issue strategically. Fascinating to say the least.

Sometime back, I came across an analyst report about a stock. It said that the cash and equivalent that a company had was greater than the market value of the company (i.e. number of shares x price of the shares). And so it came up with a target price for the company. I bought into the idea.

The company in question was however not doing well. Its business was bleeding. The cash that was talked about soon disappeared as its operating expenses sucked away all the cash. Within a few months, it had lost half its value, and the cash was gone.

I should have asked "So?" a few more times.

Lesson learnt: It's the business that matters.

Nationhood and What Singapore Means to Me

This has been a week where nationhood has shed new meaning and interpretation in Singapore's history. In one week, the value system of what it means to be a Singaporean has come to the fore.

From the 63 year old uncle looking fit and trim in in his Temasek Green National Service uniform, to the uncle and his stiff salute of respect and farewell, to the Singapore Armed Forces (SAF) Service Chiefs conducting vigil in full military regalia, to the businessmen who took the initiative to provide water and food, to the SAF quietly working through the night to set up tentages at Padang, to the long and patient queues from all walks, to the wonderful rendition of "Home" by our foreign friends from St John's College of Cambridge - these were the images. The outpouring of feelings were emotional and touching. Tears shed were a plenty, not once, not twice, but many times.

The remarks and comments from Statesmen past and present have poured in. From US, China, India, Australia, New Zealand and our ASEAN neighbours among the many. More significantly I felt were the remarks of those who have passed through Singapore some time in their lives, whether Singaporeans or not, who now lived overseas. The remarks were universal. All the spiel of political stiffness and supposed "oppression" espoused by many Western press were never supported by any of these views.

A friend quipped that this past week has done more good for National Education than 20 years' attempt at doing so. I so agree. It is not just the stories on national TV and press. It is also the many stories we hear from the veterans of that age, sharing their true feelings of living through that generation. Emotive, real. It is also the expressions on social media. Has any suggested that Singapore has been worse off? Few and far. It has been history coming alive for all of us.

Meritocracy, multi-racial harmony, democracy, equality and the rule of law. These are the make-ups of what forms Singapore. One that has benefited from a government that is prepared to think long term, making the necessary decisions and not the expedient, and that follows through on the commitments. Within this week alone, we have seen the exemplification of the level of efficiency and response of the government agencies. Would I want it otherwise?

SG50. Hurrah Lee Kuan Yew. This is the legacy you have left behind. The nation salutes you! My family and I, thank you.

SG50 - Celebrating the Year with the Nation II

[An update of a previous post]

It is the 50th year of Singapore's independence. That's half a century of nation building. It's quite an achievement to have come so far.

Bloomberg recently listed the Top 100 ideas of the century and "Singapore" was strangely listed as one of those ideas!

At #71, Bloomberg highlighted Singapore's growth of 1356% in GDP per capital over that 50 years while the world grew 146% and the US at 96%. World #1 in ease of doing business, #2 in shipping container traffic per capita, #2 in global competitiveness, #4 in financial centre, #3 in science scores, #2 in maths score and #3 in reading scores. Fascinating.

I guess there is much to be thankful for, even as we deal with new challenges moving forward, re-calibrating from a growth-at-all-cost model to one that seeks to find the right balance.

So let's celebrate SG50 with the nation. I came across a few offers for this year long celebrations. I thought I might start collecting the list of offers for reference. Here goes ...

Pan Pacific Hotel. Staycation package with breakfast and S$50 credits thrown in. Take in the night scenery and explore around Marina Bay?

Wildlife Reserves Singapore. For the price of one usual ticket, residents can sign up for Feather Friends Membership to visit Jurong Bird Park for a year unlimited. That's a lot of bird watching.

With the recent declaration by the President of the Friday before 9 Aug 15 as a public holiday, there are now many more offers for the National Day Long Weekend (post is by New Age Pregnancy blog). Check it out.

Seems like a lot more people exploring taking a short 4-day vacation over that week. Kind of miss the point. But to each his/her own. 爽就好。

Greatly welcome any information to add to the list.

You may also be interested in this:
Time for Businesses to Celebrate (Singapore Business Review)

Another One Bites the Dust - Olam B180129 6.75%

Olam B180129 was a bond that gave out 6.75% per year that was supposed to mature on 29 Jan 2018. Olam has done an early redemption.  There goes another good deal.  Sigh.

Looks like either Olam is in better financial shape or it is now able to secure a cheaper financial package to replace this bond.

Another Way to Avoid Paying More Tax - The Act of Giving

Previously, drawing upon the latest budget announcements (2015), I shared about One Way to Avoid Paying More Tax. There is yet another interesting way to avoid paying more tax come 2016, and this involves Giving from the Heart.

The tax deductible for donations to recognised charity organisations will be increased from 250% to 300% for donations in this Jubilee year. For subsequent years till the end of 2018, the deductible will revert to 250%.

Suppose I were to donate $1,000. The tax deductible at 300% would be $3,000. If my tax bracket is at 19.5%, that would be $585 of tax avoided. Looking at it from another angle, I would effectively be spending only a net amount of only $415 to give $1,000 to charitable causes.

Want to start giving now? Try SG Gives.

The nice thing is that these recognised charities automatically update IRAS. So there is no need to make specific declarations to claim these deductibles in our income tax submissions. It is so seamless. Effortless. Efficient.

Related:
One Way to Avoid Paying More Tax
Giving from the Heart
Giving Back to Society - SG Gives

One Way to Avoid Paying More Tax - SRS Adjustments from 1 Jan 2016

According to the latest budget announcements, the personal income tax will go up by as much as +2% for the higher income brackets. At the same time, the Supplementary Retirement Scheme (SRS) contribution limit would be raised from $12,750 to $15,300 for Singapore citizens and PR with effect from 1 Jan 2016. For foreigners, the corresponding SRS contribution limit would be raised from $29,750 to $35,700 (they do not have CPF contributions).

Supposing that with the new taxation levels, my tax bracket is at 19.5% (i.e. taxable income above $240,000). By maxing out my SRS contribution at $15,300, this amount would be deducted from my taxable income. As such, I would be making a tax avoidance of 19.5% x $15,300 = $2,983.50. That's enough for another short holiday!

Guess it's also one way to offset the increase of tax. I wonder if anybody is going to tell their bosses this year, "Boss, don't pay me more this year!"

Previously:
An Excursion on SRS, Deferred Taxation
Maximising Returns with Minimal Risks - for the ultra conservative investor
Start of 2015 - Time for Some Tax Avoidance

Lunar New Year - A Flurry of Ang Pows

It's the Lunar New Year, the time of the year when coffee shops are closed, fast food restaurants are crowded, as are all the fancy restaurants. Calories intake are up. And stocks are stable, only because the market is closed. For that matter, all the markets are closed too!

What does one eat during New Year? Maybe that one buffet orgy at wherever it is you're at. Steamboat, "lo hei", pastries a plenty. All it takes is one meal a day and I've consumed all the intake that I should be consuming.

But that's not what I wanted to talk about. What I wanted to talk about are the "Ang Pows". Every year, my wife and I faithfully give out Ang Pows, as is the tradition and practice from eons. In turn, my kids receive theirs from the married elders. Each year, what they receive add up to tidy sums. What does one do with all that money?

I guess there are three main options:

1.  The parents 'chiong gong' (confiscate) the sum received in exchange for what they've given out.

2.  The kids keep the money and squander it away. Samsung S5 or iPhone 6 perhaps?

3. The parents invest the sum for the kids' future.

I opt for the last. The only sum they keep and spend as they wish are the Ang Pows we gave them.

Happy New Year!

OCBC Capital 3.93% NCPS to be Redeemed

There goes another NCPS. OCBC's 3.93% NCPS is being redeemed at par value. Trading will stop on 27 Feb 2015, and proceeds would be paid on 20 Mar 2015.

Related:
Non-Convertible Preference Shares

MoolahSense Embarks on a New Fundraising Campaign

Looks like MoolahSense is getting its 2nd fund raising deal going. This was the headline in their e-mail to its members:

School Expanding into the Region.
Invest in their Growth!

Come on down to our closed-door info-session to find out more about the next campaign launching on MoolahSense. Don't miss your chance to “Meet The Boss” and get first-hand information about the business.
Time: 9 Feb, Monday | 7pm-9pm
Venue: 5 Teck Lim Rd, S088383


I would have a lot more confidence if this becomes a regulated line of business.

Previously:
Crowd Funding Comes to Singapore

A Great Retirement Offer from CPF

This is possibly one of the most important change in recent decade that will affect our retirement planning and definitely worth reading: Recommendations by the CPF Advisory Panel.

I view with much excitement the proposed option for the Enhanced Payout. With an Enhanced Retirement Sum of $241,500 giving a monthly payout of $1,750 to $1,900. For a couple that maxed this out, that would mean $3,500 to $3,800 of monthly income post-retirement at age 65. That's a hefty sum to meet retirement needs. The recommendations also suggested that this sum can be voluntarily topped up. I hope these can become tax-deductible as well.

I did a quick estimate, if I were to take the same sum of $241,500 (age 55) and achieve an annual rate of return of 6.5% for 10 years (age 65), and withdraw thereafter at 4% per year, I would only achieve $1,511 per month. Of course the difference in my model is one with a perpetual capital retention but with more market risks, whereas CPF's is comparatively risk-free and involves a draw down.

At the end of Chapter 2 of the report, there is a summary data from the household expenditure survey of retirees conducted in 2012/13 . Projected into the future, the per person expenditure works out to be $409.70, $669.70, $931.90, $1,364.90 and $3,170.10 for the respective quintile by 2026 (2% inflation assumed). Assuming at the top end, a retiree couple in 2026 would hence require $6,340. If $3,500 has been met via CPF retirement income, that leaves $2,840 to be met via other means. I figure that would mean an investment portfolio of $852,000 (i.e. $2,840 *12 months / 4%) generating 4% income per year.

Other options effectively retained the current Minimum Sum but renamed Full Retirement Sum at $161,000 with $1,200 to $1,300 monthly payout, and the Basic Retirement Sum at $80,500 (with property pledged) with $650 to $700 monthly payout. These provide options for those who are adverse to CPF holding the retirement savings and prefer to cash out.

CPF and the study team has done a great job in putting together the information packages that are reasonably easy to digest. It looks like MoM has accepted the recommendations. I look forward to the introduction of the Enhanced Retirement CPF package.

Related:
CPF - A Lifeline for Retirement

The Allure of Gold - Treachery of the Glitter

Gold is such an alluring product. It somehow carries this magical feeling of value. Perhaps it has to do with the Chinese and Indian cultures of collecting gold products as items of value, passing on from generation to generation.

Unfortunately in recent years, gold scams have been repeated, case after case. How does it work? Here's the general idea ...

The Scam

Company sets up shop in some flashy area, coupled with gold plated signages. It looks "rich", creates the illusion of grandness and brand. The Company sells the idea of VERY HIGH interest returns from buying gold, padded with the offer to buy back after a lock-in period at a lower percentage of the cost. Let's say 80%. So it comes across as principal guaranteed right? And coupled with the interests earned each year, it would seem like the full principal sum would be guaranteed. The holding period seems short. Perhaps three years. Would seem like the risk is gone after the three years? Certainly looks a lot shorter than waiting 20-30 years to see one's CPF money? So it starts to look damn attractive.

Then, couple this with a year or two of real track record - i.e. the pay out feels real. Now you build a base of investors who have become your spokesmen. They are then enticed into introducing their friends, people in their circle of trust. Unknowingly, the first generation of investors have become their sales agents. The pyramid now snowballs.

Is this whole business even real? This is actually viable for the company when the price of gold is on a continuous uptrend. Consider the early part of 2000s. That's how the price of gold looked like. The company is able to pay out the interest from the appreciation of the value of gold itself. Actually, the investor might have been better off buying a Gold Exchange Trade Fund (ETF) directly from the stock market and get the same outcome!

Post 2010, what has happened? The price of gold has been on a decline. Consequently, the company selling the scheme wouldn't be able to provide the high interest payout anymore. Or they could do so but suffer horrendous losses with no certainty of the trend moving forward.

So what do they do? They run! The investor is left holding the can, losing whatever cash they had invested. Capital guaranteed? Alas, not when the seller has run away with all your money. These schemes are not regulated by the Monetary Authority of Singapore (MAS). Best of luck!

In a country seen as upright (some say uptight) and trustworthy, it just seems unthinkable to the average man on the street that such large scale cheating can happen here in Singapore. There is too much in the psyche that the government is taking care of everything.

Then there is the problem of greed, and that absence of understanding on what realistic investment returns can be. When the risk-free rate of our CPF-SA is at 4% per annum, is it realistic to expect any real investment that can give out 4% per month!? That's 48% per year. Come on! If there is such easy money to be made, nobody needs to work anymore. The money tree must have become a reality. Ah, Utopia.

A Consequence

Most unfortunately, I came across an old friend who got himself caught up in this shady business. He was apparently the seller. I do believe he was quite an innocent partner thinking that he was offering a legitimate investment business. His partner ran away. He didn't. So he gets all the shtick. He got sued by a whole bunch of investors. You can imagine how his life has gone downhill. From living in a decent condo to driving a taxi trying to make ends meet. I hope he recovers from all this.

Morale of the Story

To repeat the cheesy line that has been so often said, "When it's too good to be true, it's most certainly too good to be true."

Related:
Gold and Fear