Facebook: An alternative to real life.

I became active in Facebook only very recently and I have been under a spell since! It is terribly addictive and, honestly, this scares me.

I still remember when older folks were complaining that people rather talked on the phone instead of meeting up in person years ago. Then, a few years ago, they complained that people would rather send text messages on their phones rather than talk to people on the phone.

Now, some might be at a loss when I say the physical world is going to be a lesser reality compared to the online world for many people, well, if it has not happened already! The culprit? Facebook!

Roughly, there are more than 7.1 billion people in this world and Facebook has 1.1 billion users! Just 3 years ago, Facebook had less than half the number of current users!

Facebook has more than doubled the number of users in just 3 years while world population is estimated to have grown only 1.1% per annum. Imagine a business with a penetration rate of 14.29% globally and growing!

We don't have to be very good at math to guess that years into the future, almost everyone will be a Facebook user.

Facebook is not an alternative to real life! It is real life for many people and, I suspect, soon it will be so for all!

Related post:
Really follow AK71 on Facebook.

To rent or to buy: Rule of 15.

I get the feeling that most of us don't like the idea of renting a place to stay in Singapore. Why pay rent and not own the place? We are helping the landlord pay his mortgage on the property!





However, a question then is what if we were to buy our home only to find out that we bought it at a price too high? That has happened to many people before, I am sure. 

Then, in such an instance, the person who chose to rent instead of buying would have done better.

How not to pay a price too high?

I am sure that there are many things to consider but there is a nice little rule that can make it easier for us to make a decision on whether to rent or to buy.

"Rule of 15" says that if we could buy a home at a price that is 15 times or less the annual rent a similar property would fetch in the area, it makes more sense to buy than to rent.

So, if a two bedroom condominium is selling for $1.5m and the gross annual rent a similar property in the same area is $60k, it makes more sense to rent than to buy. Annual rent of $60k x 15 years = $900k.





We can also use this simple rule of thumb to help decide if we would like to put up a property for sale.

If we look at it in terms of rental yield, this rule is basically saying that if the gross rental yield of a property is 6.66% or higher, it makes sense to buy and if it is lower, it makes sense to rent.

For a while now, we see people buying real estate in Singapore and being quite happy with rental yields of 2+% to 3+%. This is acceptable really only because of the abnormally low interest rate environment. It won't last.





The "Rule of 15" is a rough gauge but it is a sensible one as it suggests that a 6.66% gross yield, whether we are owner occupiers or real estate investors, is what we should be looking for to survive more normalised (i.e. higher) interest rates in future.

Definitely, it does not take in all factors which are necessary for consideration but it is a nice preliminary check on whether we should buy or rent a home.

Related post:
Leverage up and buy investment properties.

Cheong arh! No, I am not referring to the stock market.

I just saw this on YouTube. Unbelievable!





Minions from Despicable Me are all the rage at McDonald's. I think people who didn't get their Hello Kitty are having their revenge by going after the Minions instead.

Imagine people being that excited about attaining financial freedom instead! Oi! Queue up hor.

These people are crazy over us?

Wahahahaha! Banana & potato!

Related post:
McDonald's Singing Bone Hello Kitty.

Rich gets richer and poor gets poorer.

Point #1

Someone might have more money than another. He is simply richer. It doesn't mean that he is rich.

Someone might have less money than another. He is simply poorer. It doesn't mean that he is poor.


Compared to the needy, most of us are very fortunate.

Point #2

Instead of lamenting how some people are getting richer, try to understand what they are doing to become richer. Unless seriously disadvantaged, anyone can become richer.

If we want it badly enough, we will make it happen!

只要功夫深，铁杆磨成针.

Related post:
The very first step to becoming richer!

Sabana REIT: 2Q 2013 2.4c DPU.

Sabana REIT has declared a DPU of 2.4c and will go XD on 23 July. Unit holders will be paid on 29 August.

The numbers are nothing out of the ordinary:

NAV/share: $1.06

Gearing: 37.1%

Interest cover ratio: 5.1x

Occupancy: 100%

Some people wonder why Sabana REIT is trading with such a high distribution yield. It is nearly 8%.

Well, there are many possible reasons but one reason is probably because 5 of its master leases are expiring in November this year and this is something I have blogged about since the second half of last year.

In the latest report, the management revealed that 1 of the master leases will be renewed while the other 4 are still undergoing negotiations. It has been revealed that in the event these 4 master leases are not renewed, the REIT will see a 7.3% vacancy rate. This would impact income available for distribution negatively even if temporarily.

As asking rents of industrial properties have risen over the last 3 years, I expect Sabana REIT to renew these leases with positive rental reversions if they should be successful in securing renewals. Failure to secure renewals would mean some temporary loss of income but it could be a good thing as the asking rents could be scaled higher compared to that of a master lease.

See presentation slides: here.

ASSI: 10 quarterly reports with 1 blog post.

One of the things I used to do which I stopped more than two years ago was to keep track of how ASSI was doing in terms of visitor numbers and pageviews. Someone told me back then that it was as if ASSI was a company and I was reporting to shareholders on its performance. Guess what? The last time I did such a report was on 2 April 2011!

I guess I am pretty late in presenting the results of the last 10 quarters. Yes, I know. If I were the CEO of a registered company, I would be in so much trouble. Thank goodness I am not.

Click to enlarge.

You know it is like how we live with someone in the same flat for a couple of years and we can't really tell if the person has changed in appearance? It takes someone who has not seen the person for quite a while to be able to tell the difference, if any.

Well, I had such a moment just now when I looked at the graph. Amazed.

I guess, somehow, I must be doing something right and there is even less reason for me to stop blogging now. Thanks to all of you. :)

Related post:
ASSI 1Q 2011Quarterly Report.

Sex bloggers did it again!

As if it is not enough being labelled a sex blogger and having National University of Singapore terminated his scholarship last year, Alvin Tan has done it again with his girlfriend, Vivian Lee!

What? Another sex video gone viral? Nope, something worse!

This:

Last Thursday, Tan and Lee, both Malaysians, posted a photograph of themselves eating “bak kut teh” (herbal pork soup) with the words “Selamat Berbuka Puasa” - a Malay greeting for breaking fast - and the “halal” logo, prompting attacks by netizens for its insensitivity toward religious matters.

Are they dumb or what? Insensitive and selfish. They are a disgrace to their country, their schools, their families and their race!

The couple could be prosecuted for displaying offensive pictures and words under Section 233 of the Communications and Multimedia Act. If convicted, they could be fined up to RM50,000 or be given a one year jail sentence, or both.

Lock them up! They have to be taught a lesson in decency (in more ways than one too)!

They have issued an apology but will they change? Spare the cane and spoil the child, I say.

Source:
Dr Mahathir: Punish the sex bloggers!

Related post:
Sex blogger loses scholarship!

A movie: Pacific Rim.

Watched Pacific Rim this evening. I guess I went in with lots of expectations because I have heard so many good things about it from friends. It was good but I wasn't wowed by it.

Took a photo of this standee outside the cinema.

The story is kind of predictable. I mean I could guess who were going to die and who would live in the end. I think more effort could have gone into fleshing out the story too. It was a little bit weak.

There was this scene where a Jaeger (human controlled robot) used what looked like a bulk carrier, a ship as a club to hammer a Kaiju (monster). Watch the scene in the trailer (about 2 minutes 4 seconds into the trailer):



At that point in time, a question came into my head. I wondered which shipyard might have built that ship. It was so sturdy! Didn't break into half when it clobbered the Kaiju.

Anyone knows the answer?

NeraTel: Trading around an investment.

Today, I divested some of my investment in NeraTel. Why? Do I not think that the share price could go higher?

Well, high could go higher. With the MACD and RSI still rising, the positive momentum is strong for price to possibly go higher. We also see a higher high in the CMF.

However, there seems to be an established pattern in the recent meteoric rise of NeraTel's share price. A high volume long white candle day seems to be followed by a short period of low volume pull back.

So, sell some close to the high and buy in again as price pulls back seems to be a good trading strategy. It also seems like a good idea for a long only investor to do this and make some pocket money in the process.

Fundamentally, my main motivation for investing in NeraTel is for a relatively high dividend yield. With its share price having run up so much in so short a time, dividend yield has compressed rapidly. At 84c, we are looking at a yield of 4.76%, far less than the 6.35% to 6.67% just a month or so ago.

With the uptrend intact, I will be looking to add to my long position if a retracement to support should happen. Where is immediate support? Possibly at 79.5c, give or take a bid.

Related post:
NeraTel: Is there no telling how high it could go?

恨人有, 笑人无.

We are human, we are flawed and money issues sometimes bring out the worst in us!

I read this in a rather candid article:

I have a tendency to use money as a scorekeeper in life. If I’m doing well financially, I’m beating all of those schmucks who have less than I do. And all of the people who are doing better than me got there because they cheated, got lucky, or otherwise fell into wealth.

The problem is the worst when I notice other people’s money making me mad. Here (is an example) of the sorts of relationships and encounters that stick in my craw:

• I have an acquaintance who is aloof, socially awkward and somewhat dimwitted. He also tends towards greed and arrogance to boot. But somehow, despite all of these serious faults, he has a knack for making big money. Against all odds, he is succeeding in his field. If current trends continue, he will end up far wealthier than me. And it burns me up.

Source: Your money, my problem.

I have always said that there is no need to compare. Why do people like to keep score and measure how successful a person is? The only person I should compare against is myself.

The Chinese have a saying:

恨人有, 笑人无.

Translation:
To loathe people who have wealth and to laugh at people who don't.

This is a behaviour we should all avoid.

Related posts:
1. Money making.
2. To be a happy peasant.

AK responds to wedding advice given by an IFA. (Financially prepared to be married?)

I might be putting my head on the chopping board with this blog post but this is not something I have not said before: 

"If there is not enough money for a wedding, the two people do not have enough money to be married."

So, when I saw this topic being discussed in Facebook and, shortly after, read an article on how to prepare financially for marriage, the writing bug bit me.






The article written by an independent financial adviser (IFA) is titled "10 Tips on What to Prepare Financially for Your Upcoming Marriage".

The first line in the article: 

IFA:
"If you have finished school, worked for a few years and is attached, your most likely plan next in the agenda is to get married."

This is like someone who translated his emotional needs into action without sending his emotions through a mental filter first! 

A more prudent thing for the couple to do is to ensure that they are financially stable and have the financial capability to be married.

IFA:
"It is OK to rent (a flat) when you get married."

My response:
No, it is not. I don't think I need to say why. (Unless you do not qualify for a BTO flat, why can't you wait for a BTO flat? Why are you in such a rush to get your own place? OK, you don't need to answer that. Think Rule of 15.)

IFA:
"If you are going to borrow to pay that renovation, try to borrow from your own parents first (hopefully they can lend you interest free!)."

My response:
Forget the renovation. If you do not have the money to renovate your home (unless there is a safety issue), don't. You think parents are ATMs?

IFA:
"You may wish to postpone investments until you have fully satisfied that you have set aside sufficient budget for your marriage."

My response:
This is like putting the cart in front of the horse! Consumption before investment? OMG! Whatever happened to delaying gratification? OMG! This is like... er... OMG!

IFA:
"Finally, do spend some amount of money engaging a good professional wedding photographer. Years later, the only way your kids can know about your wedding is through photographs. Make sure you have both hard and softcopies of these photographs."

My response:
I am not curious about my parents' wedding and they do not see the need to tell me anything about it too. I wonder how many are curious about their parents' weddings or how many people would see it as important to educate their children about theirs?




If you ask me, true love does not need a marriage certificate. Of course, if you want to have kids, then, please get married. 

Marriage, in my opinion, is to give the children legitimacy. Unless the family is not part of mainstream society, children born out of wedlock will have many issues growing up.

Two people planning to get married and thinking of borrowing money for everything in the process should not be getting married. 

Obviously, at least to me, they are not financially prepared for it.

"Once you get into debt, it's hell to get out." Charlie Munger.

Related post:
Not enough money to be married.

Think you cannot reduce your spending?

I am always blogging about how we can reduce our expenses. A dollar saved is a dollar earned, isn't it? 

Well, sometimes people say it is difficult or even impossible to reduce expenses. Is it really difficult or is it too difficult to try?

Michelle Morton, age 43, is married and a mother of three. She took up a challenge to cut her spending and here is her story:

She started logging all her expenses on a daily basis. 






"It’s $4 here, $10 here and it doesn’t seem like that much but then when you go to put the receipts in it’s like Oh my God!"

“Really what needs to happen is to say ‘This is what we’re going to spend on groceries this week’ and when it’s gone, it’s gone,” she says. 

“And ‘This is what we’re going to have to spend on eating out,’ the same kind of thing. I have to stop telling myself that although we really won’t save any money this month we’ll make it up next month because that never happens.”






If you are in your 20s and if you have an active social life, well, you might want to learn from Meieli Sawyer who said:

“I understand being thrifty, but you walk a fine line, and you don't want people to talk about you and say you're cheap,” Meieli says. 

“So I’m just going to try to say, ‘Look, things are tight for me right now.’ I’m going to try and not be embarrassed about it.”

Read the full article: here.






Stop putting it off. Take up the challenge today.

Related posts:
1. How to tell if you are rich?
2. The very first step to becoming richer.
3. Retiring a millionaire is not a dream.
4. A fast track to wealth building.
5. Financial freedom.

Motivations and methods in investing (UPDATED August 2018).

I recently started to blog about NeraTel and revealed that I increased my investment in the company. 

Someone asked me what led me to increase the size of my long position when I did since its share price shot up shortly after I made my move. 

Did I have inside information?

Well, I cannot say for sure if I did have a distant relative or two in Myanmar or not. 

Such is the reach of the Chinese diaspora. 

However, I am quite sure that I do not have the benefit of knowing anyone who might be in the know with regards to the Telco contracts awarded by the Myanmar government recently.

Indeed, increasing my investment in NeraTel had much more innocent motivations.




I have been blogging for some time about how the very low interest rates cannot persist forever and that they will one day rise. 

I have also cautioned that we should not be overly optimistic when it comes to real estate investments in Singapore and also S-REITs. 

So, what is someone who is investing for income to do?

A big portion of my investment portfolio is in income investing. 




I got into S-REITs in a big way during the GFC and bought more of AIMS AMP Capital Industrial REIT and Sabana REIT in late 2011 when prices took a hit. 

Whenever prices took a hit, I would buy more. 

For example, I quadrupled my investment in Saizen REIT in mid 2012 when its warrants were close to expiring and its unit price plunged. 

Conditions were benign for REITs and buying more with an increased margin of safety was, well, safe.

Now, with the spectre of increasing interest rates on the horizon, the sea that is called REITs could become less placid. 

It could become choppy. 




Of course, thinking that REITs will go the way of the Dodo simply because interest rates are going to rise is ridiculous. 

However, not recognising that S-REITs will face headwinds as interest rates rise in future is myopic.

So, the 10x increase in my long position in NeraTel stems from a need to look for alternative investments which are high yielding but with a low or zero probability of being affected negatively by interest rate hikes. 

I like the comfort that comes from having a steady stream of dependable passive income and this remains my biggest motivation for investing in the stock market. 




The following graphic gives a good idea of how I think.

Source: edwardjones.com

..




My investments for income, together with my war chests, form the wide base of the pyramid. 

On top of these but smaller in total value are my investments in certain stocks for growth and income or for growth only. 

At the tip of the pyramid and also representing the smallest total value are more speculative investments which sounds like an oxymoron, doesn't it?

Certainly, like I have always said, there is more than one way to growing our wealth in the stock market and I am not trying to say otherwise by showing the above graphic. 




My methods which are by no means immutable simply reflect my motivations for investing in the stock market.

Ask what are we trying to achieve (i.e. our motivations) and we will know where our money should go. 

Use the right tools (i.e. methods).

If you have read this blog carefully, position sizing is important too.

There is nothing to say that good investors cannot have speculative positions but good investors should keep speculative positions relatively small.




Related posts:
1. Never lose money in real estate?
2. Be cautious climbing S-REIT tree.
3. CPF or SGS?
4. Perpetual bonds: Good or bad?
5. For those who have paid higher prices.

SPH or SPH REIT?

Some people are surprised to learn that I am not all that interested in SPH REIT. Instead, I am more interested in SPH. Why is this so?

I do not think SPH REIT particularly attractive with an estimated distribution yield of about 5.6% although a gearing level of about 30% is comfortable. A yield of about 6% without a higher gearing level would be what is needed to attract me. Otherwise, I think I am better off increasing my investment in SPH.

Simplistically, if I could get a 5% dividend yield by being a shareholder of SPH which will also see its gearing level drop to almost zero with a bigger cash hoard after setting up SPH REIT, why would I still be interested in the REIT?

OK, before I go on, I must say that I am speaking from the point of view of someone who already has a substantial exposure to S-REITs. For someone who has no exposure to S-REITs yet, SPH REIT's IPO does seem like a decent enough proposition.

Some quick calculations show that SPH will see a slight decline in its income by having its ownership of the two malls diluted. So, logically, we would see a decline in its annual dividends paid to shareholders as well, everything else remaining equal. Proportionally, instead of 24c DPS, we could see 21c DPS in future.

In the recent market weakness, I bought more shares of SPH. Assuming an average price of $4.20 a share, a 21c dividend represents a 5% yield. On top of this, the management has promised an 18c special dividend because of the REIT's IPO. This is an additional 4.28% return.

My purchases last month were the highest prices I have ever paid for SPH's stock. Prior purchases were made at between $2.86 and $3.55 a share. However, believing that the management has unlocked value for SPH shareholders in this latest exercise, I am willing to pay reasonably higher prices for the company's stock.

Technically, a pull back could see SPH's share price retreating to test support at $4.22 while any further rise in price could meet with resistance at $4.39. Fellow SPH shareholders want to approach this cautiously since the stock is spotting a downtrend and we don't want to be caught buying at resistance.

Related posts:
1. Which stocks have I been accumulating in June 2013?
2. SPH: A REIT investment.
3. SPH: Better investment than retail S-REITs?