Pulau Ubin - An Island Escapade / 3D Coffee

It's the Golden Jubilee Weekend. Lots of places are free. I guess there will be maddening crowds everywhere. But perhaps that is part of the fun? Already, the office is starting to thin out. Some have taken the opportunity to travel over the long weekend.

One place you may want to consider without actually leaving the country is a short excursion to an island escapade. And no, I'm not talking about Sentosa Island. An inexpensive bumboat ride from Changi Point will bring one to Pulau Ubin, just a stone throw away. It's just $2.50 per person, one way. Ok, got to throw the stone very hard to get there. The only bummer was having to wait for a sizable group before the boatman would depart. It's a pretty random experience. But no regrets. we were greeted by this wonderful view upon landing at Pulau Ubin. Doesn't look like Singapore isn't it? But it is.

Kind of reminded me of Tanah Lot in Bali. Pretty tranquil and peaceful. It was a weekday when I went. So there was minimal crowd on the island.

There are some "taxi" services available at the pier and the drivers would be happy to bring you to Chek Jawa. Look for the vans.

My wife and I went trekking to the eastern side of the island. It's quite a long walk. But we were pretty happy for the exercise.

Coconut trees are in abundance, as were durian trees that were also in season. We hunted around, hoping for a lucky catch. But guess it wasn't our day.




The lotus pond was quite a sight. It's quite a common scene that can be found at some of the mainland parks these days. But this pond is BIG. I presume it's wild.







We reached Chek Jawa, and had a pleasant walk along the boardwalk. Fortunately, the weather was cloudy and wasn't too hot that day.

A couple of herons were sunbathing along the mud flats. An iguana was trying its luck for a birdy lunch. It wasn't successful though. Guess it went hungry.






Staring harder, we realised there were lots of strange looking crabs on the mud flats. They have only one big arm - tok-kong. One-arm robbers scurrying around. They are really tiny!

There seems to be only one public toilet available at this end of the island, and it's located at this house which doubles up as a museum.

The tap water is not for drinking though. So if you're looking to top up your water bottle, you're out of luck. There is a soft drink dispenser machine at the back of the house.

At this point, we struck jackpot as we came across something that we had hoped to see. Wild boar! There was a family of wild boar which came roaming around at the junction leading to this museum and the Chek Jawa mudflats.

They seemed pretty used to the presence of human. But to be on the safe side, we kept our distance.

So how about it? An overseas trip without leaving the country. Pack a meal from Changi Hawker Centre and enjoy a picnic on Pulau Ubin. Or go cycling if you prefer.

p/s: Along the row of shop houses at Changi Point, you may want to give this coffee place a go - Choc Full of Beans. It's located at the corner, near the bus interchange, facing the main road. The iced gourmet coffee comes beautified with these cute 3D foam characters. So cute, couldn't bear to drink. A good chill after a sweaty morning. Enjoy!

Happy SG50!

A Taxi Driver Who is Far Richer Than I Am

Drained and tired after a day of non-stop brain work, I was feeling really exhausted. As I waited for a taxi, a fellow colleague appeared, queuing behind me. She said, "So late?"

I paused as I contemplated how to answer her. I was thinking, so was she. But I could only utter a "Huh?" Told you I was tired.

She went on to say, "If we're leaving when the sun is already down, it's late." Couldn't agree more with her definition. I nodded in agreement. We managed to flag down our taxis soon after.

It turned out to be yet another interesting taxi journey. I recognised the driver by his voice. I was pretty sure I had taken his taxi before. When I mentioned this, the driver said enthusiastically, "Yes, I recognised you too!"

With most taxi drivers, they were usually (a) the silent type, (b) the chatty type who talks about anything under the sun, or (c) the anti-PAP type. This gentleman was the chatty type.

He volunteered that he was emigrating to Australia next month. Curious, I asked how much did he need to emigrate. His answer was a cool $5 million, and went on to add that he had $20 million. I was dumbstruck!

"If you have that much money, why are you still driving a taxi?"

"I'm just hardworking." He chuckled in reply. Seems he owned four properties and was collecting rental from three of them. He was a former Forex trader and had made quite a bundle. With more than enough money, he was looking forward to enjoying an easy life in Australia. He had bought a plot of land in Melbourne and was planning to do some farming. That didn't quite sound like an easy life to me. I'm more sedate I guess.

His two kids were grown up and already working. They would be joining him in Australia as well. I wished him well. Guess I am not likely to take his taxi again.

WTF, with $20 million, who needs to work? If I had only one-tenth of that, I would have happily retired. WTF. Ok, I'm obviously envious. I should have asked if he wanted to adopt a godson.

$20 million at 4% would have reaped $800,000 a year in perpetuity. That's tons more than I earn a year. It's enough passive income to buy a new house every other year, even by Singapore standard. It could also fund a retirement for somebody every year. That's a lot of zeroes. WTF.

For another taxi ride story:
Condo, wife, kids and a taxi

Supplementary Retirement Scheme - No Need to Liquidate Anymore

Looks like there is no longer a need to liquidate SRS investments during withdrawal. I suppose this means shares and unit trusts can simply be transferred out. The 50% taxable amount will be based on the valuation at the point of transfer.

That means we wouldn't have to cash out and then reinvest, suffering from double payment of transaction fees. It's a good policy change. More cost avoidance for the retirement investor. That can only be a good thing.

See the official MOF website announcement:
http://www.mof.gov.sg/MOF-For/Individuals/Supplementary-Retirement-Scheme-SRS

Related:
SRS - One way to avoid paying more tax
Maximising returns with minimal risks
SRS Booklet - summarised version (from MOF website)

The Best Entertainment is Free

In recent weeks, we have been given the opportunity to experience uniquely free entertainment. Many have taken advantage of these.

It usually cost quite a bomb to get tickets to an airshow, such as the bi-annual Singapore Airshow, to witness high performance aircraft carrying out flying displays. But at the ongoing National Day Parade rehearsals taking place each Saturday evenings, we are getting it for free.

50 aircraft, ranging from helicopters to fighters, fly in tight formations over the Marina Bay each weekend. The full array of the RSAF is on display. It is quite impressive. As the aircraft fly over Marina Bay Sands in the evening hours of the setting sun, the view is simply majestic.

Likewise, it is only at theme parks that we might get some hope of seeing a fireworks display here in Singapore. But at the same NDP rehearsals, it's fireworks extravaganza. The cacophony of streaking streams of lights, exploding into colourful spectra of fireworks is a sight to behold. If only we had the music that is meant to go along with it.

Take a MRT train down to Raffles Place Station and stroll across the underpass at Fullerton Hotel to One Fullerton. It's a short and pleasant walk. Any spot along this strange is a great spot to watch everything as they unfold.

For those who prefer, there are also numerous waterfront restaurants for gastronomical delights. An outdoor seat is really a great choice. Enjoy a wonderful meal while enjoying the spectacle as it unfolds. As the sun sets, the reflections off Marina Bay Sands changes in tones. This gets even more magical during the fireworks!

If you want to experience the "shock" effect of the 21-gun salute, hang around in front of the Merlion. The gun battery sails in to the bay on their float bridge/pontoons (M3G) and positions itself there. Trust me, when they fire, it's quite a shock effect. The audience gets a kick to see the "O" shaped smoke formed whenever the guns fire.
[Warning: Not suitable for the little ones as they may get frightened!]

The flypasts take place between 6pm till 7pm. The fireworks appear in surprising spurts between 7pm and 8pm, with the grand finale sometime between 8pm and 8.30pm.

Check out the NDP Rehearsals schedule and do take note of the road closures.

My pick for the SG50 event of the year. Have fun!

In Times of Fear, How Did You React?

In recent weeks, there was much hoolaboolah with the Greek debts as they danced around the European partners, and the collapsing China share markets as the unwinding unfolded. These were accompanied by a fear of contagion of the deadly MERS virus in the region following the spread in South Korea.

The Singapore stock exchange saw some downwards movement, but never quite breached the 10% mark. At the individual stock level, most were in trend with this. Cries of a correction and bear market could be heard. At our Singapore Zoo however, our bear was flat out and enjoyed his snooze.

So what did you do during this period? Did you sell? Did you buy? Did you do nothing?

If you sold, was it because of the fear of further losses with the collapse in 2008 fresh on your mind? Did you then suffer regrets when the same stock you sold started rising again? It seems like every time you sell, it was at the lowest point?

If you bought, did you experience worries when the stock continued diving? Or did you experience glee when that happened and continued to buy more?

If you did nothing, was it because you were gripped by fear and uncertainty. You felt a sense of "I did the right thing" when you saw the stock continued to slide, and then felt a sense of "Damn, missed an opportunity" when you saw the stock climb?

The behaviour during this interesting period sheds interesting insights about the kind of investor we are. It probably helps to understand whether one is a speculator whose mood peaks and troughs with the market barometer, or is one a value investor who looks for opportunity and continues to focus on the company and its business rather than how the market is reacting.

The wider market is just a voting machine. Does it matter if the stock price goes down whereas the business continues to generate profit, experience positive cash flow, gives out dividends below its earnings, and maintains a rising trend of dividends? Or a proven management team that has proven itself over time and doesn't over reward itself, a business that can face off competition and dominates its segment, a business that provides products and services that remains relevant now and moving forward, insiders who continue to hold and buy their own stock; those are many other factors that give us greater confidence on the viability of a business.

For me, it's been a buyer's galore these past weeks. All that I need is a lot of cash. Lots.

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?

24 Tales in the Journey to Wealth

RETIREMENT

"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]

STOCKS

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.

[http://lizardorealm.blogspot.sg/2015/01/the-performance-of-unit-trusts-in-2014.html]

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.

[4. http://lizardorealm.blogspot.sg/2015/01/2-portfolios-of-etfs-growth-vs-income.html]

BONDS

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.]

Bondsupermart.
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]

MAXIMISING SAVINGS, REDUCING EXPENSES

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]

Donations.
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]

EXOTICS & ALTERNATIVES

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

Crowdfunding.
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]

Inheritance.
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]

STAY HEALTHY

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]

ANTHOLOGY OF DISASTERS

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]

Extravagance.
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!"

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.

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

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.]