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A money tree, a candy store and some eggs in a basket.

Saturday, August 29, 2015

A friend just congratulated me on my purchases made earlier this week in the stock market.

He said:
"You were like a kid in a candy store."

I said:
"Nope, I was an adult in a candy store."

He asked:
"Got difference meh?"

I said:
"Yup, a kid would not have the money to buy like I did. A kid would probably have enough money to buy one type of candy but I bought a variety."


I hope my friend got the messages I was trying to share and didn't think that I was trying to show off.

1. Money doesn't grow on trees. For most of us, to have money for investments, we need to save money from our earned income and, later on, save the passive income generated by our investments.

2. Avoid concentration risk unless we are very sure about the investment choice. As most of us are "know nothing investors", it is a good idea not to put all our eggs in one basket. This is sensible not only in the stock market but in other forms of investments too.

Remember,
"Putting all your money in a single investment to have the income it generates cover all your household expenses exposes you to concentration risks."
From:
What would I do if I had $750,000 to invest with?
  
Related posts:
"As my blog becomes more popular, it disturbs me that people think that I am some investment guru. Of course, I am not. I might be a bigger retail investor than most of my readers but I think that is where the difference mostly ends."
2. Concentrate or diversify?
"You have, however, rightly pointed out one of the weaknesses of such a strategy, especially if our funds are limited."

Is my insurance agent friend scaring me? (MediShield Life, free medical insurance and hospitalisation?)

Friday, August 28, 2015

UPDATED (26 DEC 16):
Reader:

"Recently, my friend who got into insurance gave me his sales pitch about how Medishield Life is inadequate..."
AK: 
"Well, you said it was a sales pitch. ;)
If we are OK with staying in Class C and B2 wards, Medishield Life is enough. This is a fact."


Medishield Life is inadequate if we wish to stay in Class B2 or A wards. For these, consider getting a private shield plan which could be free too.




----------------------
FREE? Yes, it is possible.

Now, if you are a regular reader of my blog, you would know that I blog about the importance of having H&S insurance coverage. 

We can budget for the annual premium of a H&S policy more easily than budgeting for the cost of hospitalisation if it should happen.

Yes, who knows how much any visit to the hospital might cost?

What if we were able to budget for the cost of hospitalisation? What? Is AK going to reveal some secret of the century?

Well, it might seem magical but it really isn't.

Remember how I shared how we could get free medical insurance in Singapore? Yes, it is another magical non-magical thing.

So, how could we budget for the cost of hospitalisation?








The answer is quite simple. Get a rider!

Some of you might remember that I blogged about this before. With a rider I purchased for my H&S policy, the maximum that I would have to pay in any year in case I should be hospitalised is $3,000 and not a penny more.

So, not only do I know how much I would have to pay for my H&S insurance coverage each year. I also know the maximum amount I might have to pay in each year in case I stayed at a hospital.

This knowledge gives peace of mind.

Now, what about not having to pay anything at all? What? Am I going to talk about getting free H&S coverage again?

No, no. I mean what about having the H&S policy and rider pay for everything in case we should be hospitalised? 

Yes, what about not even having to pay a single cent in case we should be hospitalised?





Well, here is a conversation I had recently with a reader:

  • L


    Been a follower of your blog for years but only recently I found out you have a Facebook account too. Wanted to seek your opinion on the NTUC income shield. After reading your post on H&S insurance, I am also looking at getting the assist rider plus with 10% co pay but cap at 3k. But I can't decide between advantage and preferred. Is it necessary to get the preferred over advantage? If you do not mind sharing, I guess you get the preferred plan? tongue emoticon

  • Assi AK

    Assi AK
    I got the Preferred Plan because I want to have options. smile emoticon

    It is not a need. It is a want. ;p


  • L
    haha thanks AK for being so truthful with me. There is a new rider called Assist Rider that covers 100% instead of the rider plus that co pay 10% cap at 3k. Wonder what is your views on this and why you didn't change to the new rider? Its a little more expensive than the rider plus but can downgrade next time without penalty to rider plus when older and premium higher.. i am wondering did i miss out any catch to this and why master AK didn't upgrade to this rider tongue emoticon
  • Sorry AK, should be the other way round. plus rider is the one cover 100% while rider assist is the co pay 10% cap at 3k tongue emoticon

  • Assi AK

    Assi AK
    For me, getting well insured for H&S is about having options that I would like to have and also knowing the absolute maximum sum that I might have to pay in any given year.

    The Assist Rider does that for me. So, I don't see the need to upgrade the rider for me.

    I see the upgraded rider more as a want and not a need when paying a max of $3K a year for H&S is not going cripple my personal finances.

    However, the rider is cheaper when we are younger and gets progressively dearer as we age just like the H&S policy. So, for younger people, it might make sense to get the plus rider and later downgrade to the assist rider when they are stronger financially. When they are older, that is when the riders become more expensive too.



We need H&S coverage but do we need more than the soon to be launched Medishield Life? If we would like to have more than Medishield Life, do we need a rider?

Apart from considering what we need and what we want, we should always consider our situations and the options available to decide what is best for us. Only we have the answers.

Finally, please read the documents and be very clear what we are buying before we sign on the dotted line.





C
I don't want buy something later end up can't claim

Assi AK
Assi AK
Be very careful before signing any document... Read carefully


C
Sometime your agent only said this is this after that some sign on the dot never read


Assi AK
Assi AK
Must read...
 
C
Sometime don't understand the chim word


Assi AK
Assi AK
Check dictionary...

Remember, no one cares more about our money than we do. Similarly, no one cares more about what we are buying than we do. 

If we care enough to know exactly what we are buying, we should care enough to check carefully before signing on the dotted line.

Although more enlightened companies might not say this but we should assume that it is always a case of Caveat Emptor or "let the buyer beware."






Find out more about MediShield Life: here.


Source: Ministry of Health.


Related posts:
1. How to get free medical insurance?
2. Enhanced Incomeshield for my mom.
3. Do you know if your parents have H&S coverage?

Get the most out of ASSI as we embrace financial security.

Thursday, August 27, 2015

These days, very often, when readers ask me questions, I would direct them to my blog's "Search" function found at the top of the blog. 

What? You didn't know there is one?

Alamak, you must be reading my blog using your mobile phone all the time. 

The mobile friendly version of my blog shows the latest 5 blog posts and that's about it.





Apart from the "Search" function, the full web version of my blog also has plenty of useful links in the left and right side bars. 

There are links to recommended blog posts, the latest news and comments, for examples.

Having said this, I would like to share an inspirational email from a new reader who made good use of the full web version of my blog over a short period of two months:





Questions? Use the "Search" function in my blog.


Dear AK,

I was researching on insurance as I only have H&S and HPS plans even after working for 5 years. I moved in to my new HDB flat in January and I began to manage the household finances. 

Suddenly, at the age of 30, I thought that life is vulnerable especially when my husband and I had mortgage loans to pay off. 





I was on sabbatical leave for 2 months as I was pretty burnt out from the previous job. 

Fortunately, our flat was $368k (3-room HDB, 60sqm). We could afford a 4-room flat but decided that we do not want to fork out extra cash top-ups after deducting from our CPFs. 

It was a wonderful 2 months and a good friend of mine recommended your blog. 






It was such an eye-opener! 

First, I started by reading the suggested posts, then by labels. But still, I don't think I have finished reading all the 2000 posts. Some posts, I read it many times over. 







Every day, I'll share an article you have written with my husband. 

I have also read a few other bloggers and think of something which will work for us. 

I'm proud of myself that I learnt something new and not eroding away my husband's money =p





Then we started to think things over, like we should set aside some funds before trying for a baby. 

Both of us agreed on the part where children are wealth destruction *ouch*. If we were to have children, we have to make sure that our war chests are solid.



Because of your blog, I have also helped my parents to review their rubbish insurance policies and streamline it so they don't have to pay so much. 

I even got my mum to contribute to her CPF-RA account on a monthly basis. It's a small amount of $300 per month but better than nothing. 

She's only 55 and have 10 years for the magic of compounding to happen. I also have plans to do cash top-ups for her. 





I drafted our monthly fixed and miscellaneous expenses (eg. $4000). 

We don't own a car. We credit our salary into a joint account. The surplus (eg. $3000) will be transferred to another joint account which we defined as "Savings/Invest/Travel". 

Once we think that this account is solid, we will open another joint account for Emergency Funds. 

Every year, we will do a yearly $7000 top up to our CPF-SA each so that we could also get tax relief. We have not started investing for dividends yet as that's another whole new topic. 







As for insurance, I'm taking my time to review and shortlist the ones that cater to our needs. And yes, my husband and I are now a strong advocates of "Buy Term Invest the Rest" :) 

Whenever when we "eavesdrop" on conversations of insurance agents pushing ILPs to clueless clients at fast food restaurants, painting beautiful picture of the 8% non-guaranteed return, we always roll our eyes and shake our head in disbelief. LOL! 

You mentioned that you have a job which pays slightly less than $10k monthly, which means you are probably in the senior management. I suppose you are a busy man.

First, how do you manage to squeeze out time to write your blog?

Second, may I have your opinion on our strategy to save money? Any way that I can improve on? 

Thank you AK and I look forward to every one of your posts. 



Regards,
A







Taken on my recent vacation.


Hi A,

A warm welcome to my blog. :)


These days, I have many more emails from readers and to read one like yours always brightens up my day.

I am happy that talking to myself has helped anyone who would care to eavesdrop. LOL. ;p


As for what you plan to do, I feel that having adequate insurance and, then, having an adequate emergency fund should come first. These are the safety nets.

Even if we were to pluck low hanging fruits, having some kind of cushion in case we should trip and fall is a good idea. ;)







I am really glad that you are helping the elders in your family plan for a more secure retirement and to have healthier cash flow in the present as well, all without sacrificing any necessary insurance coverage. :)


How do I find the time to blog and engage readers? The honest truth? I don't really have a social life, I guess. A close friend told me this quite bluntly before.

As I retire from active employment, I have more time on my hands and I am making an effort to spend more time with friends and family. Of course, I appreciate having more "me" time. ;)









Your story will inspire many more to take affirmative action. :)


Good job!


Best wishes,

AK

Some related posts (yes, only some):
1. Do the right things and transform our lives.
2. Do you know if your parents have H&S coverage?
3. AK is buying a 12 year tenor AAA rated bond.

AK is a panelist at InvestX Congress 2015.

Wednesday, August 26, 2015

Although I have said that I would try to organise another "Evening with AK and friends" before the year ends, I might not be able to.

From now till end of the year, most of my Saturdays are booked by family and friends. I will also have a few official engagements. So, if there should be another session, it would probably be the last session for the year. No promises though.

However, something is certainly happening in the near future and AK will be a part of it. This is one of the few official engagements I mentioned in the last paragraph. The event is InvestX Congress.

Remember, last year, AK made his first public appearance (in disguise, of course) as a speaker at InvestX Congress in Suntec City? This year, AK has been invited by the organiser again but, this time, he is going to be part of a panel of investors who will be taking questions from the audience.




I hope it is more cushy a job. Oops. Shhh. You didn't hear me say that.

InvestX Congress is organised by The Fifth Person, of course. Many of us know that they are the same guys who brought us "Dividend Machines".





For those who don't know, InvestX Congress is about sharing, sharing and more sharing without any hidden agenda. The speakers are there to share their knowledge and answer questions on stage. They are not there to sell any financial or investment products. The event is not a preview. Those who have been to last year's event would know this.

So, if you do decide to go to this year's event, bring a pen and some paper. OK, for those who are IT savvy, bring a laptop, notebook or tablet. (You happy can already.) Be prepared because there will be lots of notes for you to take that day, I am quite sure.

For more information on the event, follow this link: here.

Date: 
17 October 2015, Saturday.

Time: 
9am to 6pm (Registration starts at 8.30am).

Venue: 
Suntec Convention Centre, Level 3, Summit 1.

Price of ticket: 
S$129.00 each.

Early birds pay less at S$99.00 each. 


You hear AK talking about investing for income all the time but that is not the only type of investing available out there, of course.

At InvestX Congress, you would also learn about stocks of growth companies and hear the speakers share case studies from their own portfolios. Invest for growth and income? Why not? I like the idea.


I definitely feel that this is another value for money activity by The Fifth Person.

So, if you don't have anything planned for 17 October 2015, Saturday, you might want to consider spending a day in Suntec City with some brilliant investors at InvestX Congress and, quite possibly, level up.

Remember, don't pay the full price, get your tickets early: here.

Related posts:
InvestX Congress 2014: Closing thoughts.

Funny stuff AK shared in Facebook in August 2015.

Tuesday, August 25, 2015

Dug up in July 2018.

Almost 3 years old!

This is almost 3 years old!


How time flies.

Now, where is that fly swatter?


Remember Mr. Market's pessimism back then?




----------------

With so much panic and tension in the air, I decided to bring forward the publication of a more light hearted blog post. 


Here are some of my intellectually undemanding postings on FB in the month of August:


What was this referring to har?








I remember a reader requesting that I take photos and share here in my blog whenever I go for my long walks. 

I cannot remember the lady's name by now.







BRA OF SHAME. 

The story is quite funny.

Enlarged for those who had difficulty reading the story in the bottom left frame:




I nice, right?







A guest blogger said these looked like gigantic bra cups. 

OMG!

In case you are wondering, this is the stadium at Sports Hub and not something in Madonna's wardrobe.







I have been eating less for dinner which I think is a good thing. 

Still trying to work off weight gained from too much eating on the Super Star Gemini.




Star Wars fans? LOL!






I enjoy savory puff pastry. 

This is good lobang (i.e. value for money) for tuna puffs. 

Just don't use the microwave oven to heat them up.




Oh, don't ask me for lobang in the stock market, OK? 

Later, I share with you a lobang and you fall into a big longkang (i.e. monsoon drain).

(As an aside, if UMNO were to decide to start a script writing class, I would sign up for it immediately. I think if UMNO should start a drama production unit, TVB and Mediacorp should be very worried. UMNO have some really talented people.)





I hope this blog post has brought you some fun and laughter. 

Take deep breaths. 

Relax lah.

Related post:
Missed some stuff AK shared on FB in July?

Religare Health Trust: Initiated long position at 88c.

Monday, August 24, 2015

I avoided investing in Religare Health Trust although I felt quite positive about the healthcare industry in general.

I avoided investing in the Trust because I was concerned about the weakness of the Indian Rupee against the Singapore Dollar. I was also concerned about the financial engineering involved to make its distribution yield more attractive to investors at its IPO when units in the Trust were offered at 90c a piece.

What financial engineering?

In the middle of last year, I shared a conversation I had on FB that the sponsor waiver to income distributions ended on 31 March 2014. The sponsor held some 28% of the units. So, without the waiver, a proportional decline in DPU for other unit holders should be expected. Of course, if Mr. Market had expected the high yield to be maintained, the Trust's unit price could then decline.




Well, we now know that Religare Health Trust's unit price went on to touch a high of $1.14 on 6 February 2015. Astounding!

The main reason is probably because the Trust has demonstrated its ability to improve its revenue organically quite strongly which makes up for the expiration of the sponsor's waiver to their share of the distributable income. This is quite impressive. Additionally, a gearing level of only 15% gives the Trust ample debt headroom for inorganic growth too.

I know from reliable sources that India's public healthcare system is severely underfunded. So, for those who can afford to pay more and there is a growing middle class in India, they are willing to pay for better private healthcare. This probably explains Religare Health Trust's pricing power.

I have initiated a long position today at 88c a unit which is some 23% lower than the high of $1.14 seen in February this year.

Religare Health Trust distributes income half yearly. Its last DPU was 3.71c. Annualising this would give us a distribution yield of 8.43% with an entry price of 88c a unit.

Sentiments are quite negative about Asian currencies now and we could see Mr. Market selling down the Trust if sentiments worsen. If there should be another meaningful decline in its unit price, I would probably be increasing my exposure to the Trust.

Related post:
Religare Health Trust: Opinions?

VICOM: Initiated long position at $5.71.

I drive and I own a car. So, I should be interested in VICOM. Sounds straightforward enough.

I have been looking at it for a year or so but found that the valuation was a bit rich.





During one of the evenings with AK and friends, we had a lively discussion regarding VICOM's future too.

As is the case with any asset, when everybody wants a piece of it, price goes up. VICOM's price skyrocketed not too long ago. 

At those prices, its PE ratio was closer to 20x. I wasn't prepared to pay that high a PE ratio for the stock. 






It wasn't too long ago that the PE ratio was closer to 15x, I observed.




2014's EPS was 34c. Assuming 5% growth in 2015, EPS could be 35.7c this year. 

A 15x PE ratio would give us a fair value of $5.36 or so per share.




Assuming a 50% pay out ratio, we could see a DPS of 18c which would give a dividend yield of 3.35% in the year 2015. 

It isn't a sexy proposition, admittedly, especially when we expect risk free rates to rise in future.



Based on technical analysis, during an "Evening with AK and friends", I mentioned that VICOM could retreat to $5.50 a share which is where the share price might find support from a golden ratio (161.8%) if we believe in Fibo lines.




In the meantime, looking at the charts, we see possible supports at $5.82, $5.70 and $5.61. These are possible nibbling points.




This morning, my smallish overnight BUY order was filled.

Related post:
Have a plan, your own plan.

Risk averse and putting money in STI ETF, REITs or stocks?

Sunday, August 23, 2015

Reader says...


Have been reading your blog for some time now and it has been a great source of financial/investment information. Thanks!

I have always been interested in investing but had only started recently after reading your blog and some other materials. 





However, I'm not sure if I'm heading in the right direction and would like your opinion.

I am kind of risk averse hence have decided to start of my investing journey with ETFs, specifically STI ETF. My plan is to buy a lot every month and slowly build up from there. 


But recently I have been thinking if it is worth it to use my spare cash to buy ETFs or should i venture into other products such as REITS or stock. 




One reason for thinking this way is because I feel that since I'm only 28 (okay maybe not really that young), I can afford to invest in more risky products.

Another reason is because per my understanding, ETFs can be bought using CPF monies so it might make more sense to use it to buy ETFs and use the cash to invest in REITs.

I'm considering the following options and would greatly appreciate if you could give some pointers if they are viable. 






I have prepared an initial capital of about $5-10k which I could use and would be able to set aside $500/mth. 

It's not alot but hope it's enough to get started. :)

Option 1: Continue with buying ETF every month and invest the initial capital of $5k in REITs. Read your blog on Aims AMP Reit, First Reit and Saizen Reit and am considering these.



Option 2: Buy ETF with CPF monies and concentrate my investment in REITs and shares (eg SPH, SingTel, etc). Probably 50% on each. Any other recommended apportionment is greatly welcomed.

Option 3: Since my capital is not alot, perhaps it is better to concentrate my investment in blue chips stock and hold.

My purpose in investing is actually for passive income so please share if you have any better alternatives.







Lastly, would like your thoughts on using Standard Chartered online banking platform for trading. 

I am currently using it because of the no min commission fee but am abit skeptical because it would mean that I am actually not holding on to those products I am buying. 

Tried searching your blog on this topic but was unable to find any.

Sorry for the lengthy email and thanks for your time.







AK says...

Welcome to my blog. :)

I never blog about SCB's brokerage because I don't use it. I use Lim&Tan and Kim Eng. 


Frankly, I don't think the savings on brokerage fees is a lot unless we trade often. 

I don't want to say this in my blog because I know I would probably be flamed for saying it. ;p




Buying into the local ETF is a good idea for people who do not have the time or inclination to do stock picking. 



It allows anyone to participate in the health of Singapore's economy.

Long term investors who invest regularly should do reasonably well.

However, we should be realistic and not think that the STI will do as well as it did in the last 20 years or so.

A bigger portion of future performance could come from dividends.






Investing in stocks and REITs require more active management of your portfolio. 


I do not know if this would outperform or underperform the STI ETF.

However, this should beat inflation by a comfortable margin.

How you ultimately apportion your resources is up to you. I won't make recommendations.

However, you must be very sure that your methods match your motivations as an investor. 


You must sleep well at night. 

Peace of mind is priceless. :)




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