One decent reason to get Singapore Savings Bond

Now, as many travelling on the mrt has seen, there is the presence of Singapore Savings Bonds advertisements being tossed out around. This got me interested on the topic of whether it was worth it to bid on them. The interests rates are as shown below.

Source: http://www.sgs.gov.sg/savingsbonds/Your-SSB/This-months-bond.aspx

At first glance, of course, the returns are barely enough to cover the average inflation rate of Singapore. Nevertheless, this is a risk-free investment, and can be ideal to use your rainy day funds/savings and invest it in the manner I will explain below.

DBS multiplier comes straight to mind as a great way to combine the returns from both sides (DBS and SSB) . What am i talking about here?

As some may know, DBS Multiplier gets higher interest rates the more categories of transactions one does , namely your salary entering through the account, house loans from DBS/POSB, insurance payments from DBS/POSB, credit card usage ($1 is sufficient to trigger the category) and most importantly, if you INVEST through DBS/POSB.

Let's assume you want the most bang for your buck. Naturally, I would say sticking to SC (refer to previous posts) for investing might still be a good choice to a certain extent, as I believe the transaction costs are still the lowest there.

However, if you wish for a double-pronged method for investing, one can actually "trigger" another category for DBS multiplier by actually obtaining the SSB from the CDP account if one has one with DBS/POSB. In essence, you will be obtaining the interest for buying the SSB bond, while still triggering a higher return for your DBS multiplier. I think that is a win win, especially considering how relatively liquid retrieving this money from SSB/DBS multiplier can be. Meanwhile, I can still be obtaining the sweet low cost investing from Standard Chartered too.

Cheers people, and onwards to investing towards a brighte future.

Disclaimer: I am not associated with any of the banks, nor am I associated with the Singapore Government in anyway (other than paying them taxes. Boo.)

Tech Trends and Stock Plans

Here's a view that I like to look at when I invest into my companies.

Fundamentally, I find myself believing it hard for many of the companies today to exist 10 years into the future. IF they are to exist 10 years later, per my time horizon for investing in stocks, they will have to have certain identifying factors to compel me to make a long term purchase into them.

Here are some of my reasoning when looking at stocks right now. For this, I am excluding my purely value plays into some of the smaller stocks in my portfolio, and will be talking about my stock purchases which I will plan to add into going further.

1.) Possible growths with technology

Some of my key purchases now are into companies that are quite large but yet still remain nimble in their willingness to invest into R&D. Alibaba, for example, is a company that I love, coming from a logistics background. Their foray into technologies that encompass the newer generations' forms of consumerism, including buying online, deliveries, e-payments, and also the underlying technology (cloud as a good example) is one key reason why I am buying into them. The company itself has a sound and great business model, but they aren't afraid to dig into their coffers to invest into newer industries.

Another great example of this is my two purchases into Daimler and Alphabet. Alphabet is currently one of the companies most ahead with their autonomous vehicle technology, and so is Daimler. These two companies, along with Alibaba, are all companies that are doing great right now but have invested heavily in not just being relevant, but keeping ahead. Daimler has also collaborated with Baidu on their autonomous technologies, and I am looking forward to the fruit this bears, while their current business models still bring in tons of money.


Human MIA

2.) Value and Growth at the same time
Some people might argue that a company like Alphabet may be overvalued and not in line with the traditional value mindset. My reasoning against this is that the current business world does not allow for competition amongst companies as much anymore. We are seeing consolidations and huge purchases by technology companies, and they are no longer just going into tech ideas. While the stock market may at times be overheated due to people buying tech stocks, the reasoning is quite simple to me why I should buy into them, and keep them for the long run. Companies like Alphabet, Alibaba have huge moats that protect them from any temporary setbacks, and their technological advantage allows them to hold near monopolistic grips on their industries ( who uses yahoo anymore?) In my opinion, this goes fairly well in hand with the idea of wonderful companies at fair prices. I don't care if the stock market is going to price them high today and price them low tomorrow. These companies have huge moats, will be around for years to come, and most importantly, hire some of the smartest people in the world. These assets more than justify the slightly overvalued prices,  and if one looks at a 10 year window, more than covers the margin of safety. As these companies continue to grow and their free cash flows increase, eventually the companies will start providing dividends. I see them less as growth stocks as much as facing the reality they are going to be around for a long, long time.

3.) Old time players stepping on potential goldmines

Some of the other companies I buy may be much more simpler and familiar to the Singaporean audience. I made two stock purchases into Daimler and Singtel. While Daimler is not a SG company, the mercedes brand is one known by all. So is Singtel. These two companies are companies that have established their roots for a long while, and have been in a mature industry. However, I like the two companies' ventures into future tech, while still providing a steady dividend.

Daimler's foray into autonomous vehicles and electric vehicles, especially their trucks, are what I love about this company, in spite of their stock prices tanking recently. They are not afraid to invest heavily while being an old timer (what with mercedes being the first automobile created and all).

So is Singtel, and their foray into 5G. 5G is what will connect the autonomous vehicles to the Siris and Cortanas, and will be the start of what connects the big data collection possible to run AI with. Singapore's smart nation will be what allows Singapore to stay ahead, and Singtel and 5G will be the support base.

Of course, the above are not just what I look into when investing in a stock, but they do factor heavily into me making a decision, post-financial statements.

Cheers everyone.

Random Thoughts

It has been a year and a half since I fully committed to my investing journey. I have experimented with a few investing styles and have perhaps made some losses due to my forays into some slightly riskier stocks, reducing my earnings since I began. As the tariff war in the US goes on, I see quite a few of my stocks suffering, which had been bought with the assumption of world trade, you know, not deciding to take a nosedive.


The birds flew away, just like the cash I placed into the market recently.


It's hard not to doubt myself and wonder why I didn't just enter the S&P ETF and gotten maybe up to 6-7% just by buying an ETF (since the start of 2018), and save myself the trouble of active investing. I advise my friends who are barely interested in investing to do so; why shouldn't I heed this advice?

I guess it is my own belief that I am able to achieve better returns than the market. I think that the 2 or 3% alpha that I could possibly get would justify my purchasing of value stocks that others won't, to not ride the greed train and go after the Facebooks, the Netflixs', Iqiyi, Teslas of the market. (I still maintain my reasoning for purchasing Alibaba and Alphabet, in spite of them not being conventional value stocks)

As this journey draws on past the halfway mark for my second year, I remind myself that I am giving myself at least one and a half more year to see if I can be more consistently beating the market.

The thing about me is that I truly do understand what the average investor would think whenever they see their stock prices drop. Sincerely, is it not all our hard-earned money going down the drain, if our stocks and investments don't do well? I feel the irrationality, the doubt, the fears coursing through my veins, telling me to just sell all my stocks now, just get away and invest only in safe bonds.

Yet sometimes, it takes some writing, some pondering, to realize that there are ups and downs in the market. And just like in other aspects of life, its what happens when things are down that truly matters. For this slight drop in the bucket for my investments, I will learn to do the right thing; and that is to do nothing. The stocks I have purchased are still bought with logical decisions and as little emotions as I could, and many are still dividend providing stocks that will justify being there in spite of their slight under-performance now.

I shall wait and see. For the market giveth and the market taketh away

The Layman's Guide to Start Investing in Singapore

This will be my multi-part series on starting on an investing journey in Singapore. I will go through a few common concepts on how to start investing in Singapore,  and is meant to help those who have 0 experience in investing take their first step.

Purpose of the Post

On talking to many of my friends, colleagues, and relatives, I have realized a common statement mentioned. "I want to invest, but I do not know where to start." 

Many are scared off by the prospects of risks, and heard the tales of people who invested in stocks and lost hundreds of thousands of dollars (many, by using leveraging and contra trading, which I am strongly against), or honestly are just plain overwhelmed by the barrage of information thrown at them, from various acronyms like TA or FA or CDP, limit buy market buy etc etc. They end up stuck in their confusion and think to start another day.  For this post, and a few going further on, I would want to simplify things and highlight the summary of how I started my first investment, from a uniquely Singaporean perspective. I will highlight the step by step of actually MAKING a trade, before I talk further about actually choosing the right stock in a future guide.

Step 1: Starting a Stock Account

Let's start with the basics. You can easily set up a stock account with most of the banks in Singapore. For myself, I started with an OCBC Securities account because it allowed me to invest before I was 21 (It required me to have $5000 in the bank as deposit, before I could invest any money thereafter) . After I reached 21, I changed to a Standard Chartered Online Trading Account, which has one of the lowest commissions in Singapore, and yet still has access to many different stock markets across the world. Take note that SC trading account is a NON-CDP account, and will meant that you might miss the AGMs of the companies that you bought, and other terms. Still worth it in my opinion.

In order to start an account, all you need to do is go to the nearest bank near your house and ask to set it up. They will usually require you to have a savings account (in the case of SC, a minimum $1000 in their eSavers account), and then you can open your account with the brokerage. They will also ask you what exchanges you will be interested in opening your account to. I started with just HK and SG, but moved on to include the US, UK and etc so as to increase exposure to the foreign companies I found interesting.

The SC account is pretty good for Singaporean stocks, with relatively cheap commission rates (S$10 per transaction as compared to $25 for most other local banks), but I have been looking at Interactive Brokers as an alternative, due to their better foreign exchange rates (heard there was no SG stocks there though). IB, however, requires a minimum deposit of USD 10000 (or SGD 14000) to start a bank account, and requires regular transactions, which might not be what I am looking at now, but definitely in the next few years.

Step 2: Making Your First Trade

In order to make your trade, all you need to do is wait till all the documentations have been sent to your house/email. I believe it took me around 2-3 weeks before everything was ready for me to invest.

In the case of SC (considering it's the one I use the most), you will have to transfer the appropriate amount of money into the currency trading account that is the same as the market you are buying into. 

Clicking on online trading will bring you to another platform, where you can just enter the counter code (make sure to include the search for all the stock exchanges!) and select the purchase amount, order price, order quantity and etc. Selecting the order quantity will then show the buy order price of the stock. Here, you can choose between a MARKET or LIMIT order type, where market is essentially choosing to buy the stock at ANY price it is at right now, while limit allows you to set the price, but could means you could fail to have your stock purchased by the same day (limit orders expire at the end of the day).

ETFs

ETFs can also be bought from the SC account, including the NIKKO AM ETF (following SGX) or the Vanguard S&P 500 ETF. Those who believe ( and rightly so) in just purchasing ETFs can look into these, with a fair warning on the S&P 500 ETF subject to US withholding tax (tax on dividends).

Your returns may not be as good as an US citizen. I will update more about this, as I seek to convert maybe 20% of my investments into an ETF.

Step 3: Choosing your investments

There are a hundred and one ways to invest the money you have and making them work for you. For myself, I choose to split my investments/savings into 4 different aspects : liquid savings, insurance, stock and other adhoc investments.

For my liquid savings, I chose to start a DBS Multiplier account to throw my money into on a day to day basis. The interest rate on a DBS Multiplier account seems to be the best I have seen around so far, especially considering that in orde to get the best rate, that I would not need to actually spend much on a credit card. I compared that to OCBC 360, which required a slightly higher amount of spending on credit card ($500 per month), which seemed to be counter-intuitive regarding having to spend more to *save* more.

For my insurance, I personally do not believe in financial products from any of the insurance companies, because I do feel that many of them are not worthwhile to put ANY money into. However, I do appreciate the need to cover my downside, in the scenario that I encounter any sickness or illnesses. I utilize a basic hospitalization insurance and a Prudential multiplier flex to cover critical illnesses and death. I would argue the latter insurance is more useful when you have a family going, which at my current age, is not necessary yet, but I would want to have some coverage in the case I am bedridden for a few years due to any medical problems.

For equities, I divide my portfolio into an array of stocks, some dividend stocks, some REITs, and some undervalued but non-dividend giving stocks. I will talk more about these in the coming posts.

My other ad-hoc investments include a small amount in crytocurrency, and other of my side projects :) The truth is that since I have just begun my journey not too long ago is that I would want to purchase property, but am unable to with the war chest I have now.

I know that there are other investment instruments, including options, bonds, and even loans through MoolahSense, but I personally feel my favorite instrument so far is that of stocks. I would argue that bonds currently are not worth it, especially at my age. I may switch to some more bonds, as per Benjamin Graham's advice, going further into my investment journey.

Step 4: Study, Study, Study

I placed this at Step 4 because I know that having the first three steps done will make all the administrative issues to be cleared and done. The non-stop studying on investments, the way to choose a proper stock and etc, starts here. As per advice given by Benjamin Graham, and Warren Buffett, I would recommend that anyone who does not wish to put in a larger amount of time into investing just set aside an amount of money and put it into the ETFs mentioned in Step 3. One can still get a reasonable return for your money and have an earlier retirement, just by putting your money in sensibly.

Many people would recommend saving at least 10% of your salary into savings, but I would recommend a much larger number than that in Singapore. I personally am looking into 10% into savings and 30% into investments. I believe it is necessary to consider CPF outside of your savings, as CPF can often be wiped out by purchasing a HDB flat. Do not just depend on CPF. It is the bare minimum. 

I am also building towards recommended emergency money of at least 6 months worth of salary.

Last but not least, I would want to convert readers to thinking more of the power of saving and investment, through this simple but succinct video explaining why we should do it. 

https://www.youtube.com/watch?v=Oi9cq7tXkmg

"Wealth is created through self sacrifice, and taking risks."

Take care, everyone!

(The author of the blog is not affliated to any institutions or companies named above.)

No Magic like Alibaba's

Purchased more of Alibaba.

101 reasons why I think its a good choice, but more importantly, why not.

Uncle Jack Ma's got my back.

'Nuff said.

Mid-August Short Update

I have been pretty busy with work lately, so keeping this short.

Dividends for Barclays has come in and I am converting it into shares. Honestly, I will have to admit it's based on my initial analysis of Barclays earlier. I did not consider the dollar to dollar equivalent or whether it was worth it to re-invest the money elsewhere; the dividend isn't large.

No new stock purchases, as I replenish my warchest and prepare to enter a new position. A lack of time to research and also frankly quite highly valued stock prices for great companies means that I have to settle for either undervalued and mediocre companies, or wait for Buffett's "great company at a fair value."

Design Studio tanked recently and I might take a look at the reasons why in a few days time and update. Overall not concerned, that's what the margin of safety is for. Also, time will tell whether it was a good choice or not.

Cheers all!

Livin' in Singapore (Money Talks!)

Let's talk about some numbers here living in sunny Singapore. I always considered Singapore a great place to live... assuming you have tons of money. 

Breaking It Down

Now let's assume you don't have that money and are, like me, recently working and looking to achieve the adult goals of home, marriage and family. Some simple numbers as of 2018 (obtained from various websites with a quick google search.)

A 4-room HDB flat, even with grants, can cost around $280,000, give or take, according to location. We have the more expensive flats in the central location and the cheaper ones around Woodlands and Punggol. 

A wedding can set you down by maybe $30-40,000,  children even more. a 2016 article by Today highlights the cost of  raising a child, which cost on average $260,000. Two or more if you can afford it indeed.

Those are the numbers if you want a child, a house, a wedding today.  That does not include good ol' inflation, which in the past 40 years averaged around 2.60% from 1962 until 2018. You may just about break even if you invest all your money into a DBS Multiplier account, or just shove the money back to the government as saving bonds. That's in a way better than putting it under your pillow, but only marginally better.

Cars. Even the cheapest cars currently cost around $80,000. Correct me if I am wrong here, with all the taxes, COE, fuel rate and stuff, its probably going to be higher than that. 

If we want the adult goals mentioned above, and assuming having two kids, it will be nearly 900k assuming we want two children in our lives messing up our sleep. Those numbers do not look good, especially since the median pay of Singaporeans in the job market is at $4,232, and that amounts to 55k. If we want the full package, it will require nearly 20 years of working just to get those things, and thats assuming we neglect every other aspect of life including eating and drinking. Not that possible of course. 

Now, I may sound extremely negative about all this, but that's not saying I am not happy to be Singaporean. There are some perks that allows Singaporeans to benefit as well. 

I especially like the lack of any taxes on investments. I for one do not need to worry about any capital gains nor dividend tax in Singapore, and that's one beautiful thing. The numbers above may be disheartening, but are entirely possible to clear and still have good savings left, if we embark on the active journey to invest and make our money work for us. 

And I guess that's what this blog is about. Knowing the numbers above, I would say there is a motivation to just hit the brakes on what we think we may want (a car? nah) and focus on how to spend our money and time wiser. It may not be easy to retire at 35 or even 40 unless there is a constant growth in our portfolio, but I would say that if one could retire even 10 years earlier just because of sound investment making, that would legitimately be worth it.

Don't waste your time. Start investing now. Pick up that book that you have been thinking about reading. Read Investopedia. Devour annual reports. Throw some money into the stock market, even as a trial, just so you know how to buy stocks. Stop thinking about doing, and start doing. 

Cheers!