Singapore Blue Chips
Time 2021-11-10 06:06:02Web Name: Singapore Blue Chips
WebSite: http://www.sgbluechip.blogspot.com
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keywords: description:A financial BLOG written by a DIY investor covering Singapore blue chips, dividend stocks, financial education, corporate news, money saving tips, book reviews and my journey to financial freedom. Currently managing a personal portfolio of more than SGD $1,000,000, I aspire to have an average cash flow of minimum $10,000 per month either through realised capital gains or dividends.
Looking at the current environment, some banks provide above average deposit rates:
Hong Leong Bank first 200k = 1.5975%CIMB first 100k = 1.43%(not stated valid till when)RHB High Yield first 100k = 1.4125% (not stated valid till when)Maybank Isavvy first 200k = 1.3%SCB Esaver first 200k = 0.7% (till July)
Out of the 4 malaysian banks, I have 3 accounts with them. They do need a lot of patience to work with. HL bank does not even have a banking app (if you downloaded one, its the Malaysia's version). Maybank is actually the best among them in terms of online banking, recently improved interface sees them assimilating to our local banking digital expectations.
As local banks with huge liquidity from locals and foreign funds are unlikely to match their rates, savers unfortunately have to put up with some inconvenience of having multiple accounts with sometimes frustrating digital banking experience.
Hong Leong Bank does not even provide estatements. You need to pay then to generate a statement of account standing. I do not think it will cultivate any customer loyalty as deposit rates becomes commoditized - ie the highest rates take all. But given the rates are higher than all new mortgages rates now, unfortunately, we would have to take it, even if there is no internet banking!
No comments: Labels:Stretch your dollar series Saturday, April 11, 2020 Setting aside a war chest of $500,000
It feels good to be able to work from home.
Bloombergterminal at finger tips with Netflix at the background.
The recent bear market provides a good opportunity for longterm investors. I would gradually deploy the funds over the course of possibly6 months to 1 year. It is hard to see where the bottom is. On one hand, thebulls are saying the Trillion dollars worth of stimulus will find its way tofinancial markets and raise the value of stocks. The bears are saying therecession will be worse than GFC and it doesnt make sense for the market tojust drop 20%.
I dont know.
Buy when there are dips. My war chest are placed in HL bank @ 1.98% and Maybank @ 1.75%. I believe this 2 banks offer the highest no lock in rates.
No comments: Labels:Investment opinions Monday, January 20, 2020 Do not buy insurance savings plan to save for retirement. Save 300k by reading this!
Thereare many endowment plans and single premium plan marketed by insurancecompanies. One of them works this way.
You pay$1M upfront and 5 years (60 months) later, you will receive income forlife. The income is about 42k a year. After 5 years, your principal is guaranteed.Apparently, it is selling like hot cakes as people like guaranteed products.
To me itis plain silly because there are like a billion alternative investments equallysafe and more liquid.
Forexample, you can buy a portfolio of Unit Trust. First State Dividend Advantage,Schroder Asian Income, First State Bridge, Schroder Asian Income etc. They arenot the best but surely can generate 5% pa or more and pays you dividendstraight away upon investing.
Or simply invest in infinity series world equity funds. Expense ratio of 0.4% only.
You canbuy 4 different bonds of different tenure. For example SPH 3.2 2030, Wingtai3.68 2030. Or today's IPO Shangril 3.5% 2030 bond.
If youstill think it is risky, then buy STI ETF! It pays you at least 3% a year ofdividends! I do not think the 3 banks + Singtel will go belly up in 10 yearssince they form majority of the STI ETF.
STI returns assuming 3% dividend and 2% capital gains (cash out) would have become 1.5M after 10 years.Similar so for your Unit Trust portfolio, assuming 5% dividends and 0 capitalappreciation.
Your SPH+ Wingtai + Shangrila bond portfolio would have become 1.35M assuming your coupons arereinvested at 0%. I am not even talking about decent perps (since yourinsurance is in perpetuity right?!) like SPH 4.5 perp, UBS 4.85 perp, Ascott3.88 perp, Mapletree 3.95 perp, wingtai 4.48 perp, FPL 4.38 perp.
Why buysomething, receive guaranteed negative returns for first 5 years, poor liquidity, payinterest for 5 years with no cash flow return (banks provide financing) andthen get sub par returns thereafter?
If youare supporting your insurance agent, relationship managers, IFAs because oftheir excellent service, then give them money directly instead of compromisingyour returns!
Effectively, you are foregoing almost 300k or 30% of your returnsover 10 years!
Aretheir service and advice worth 300k? They probably make 10k commission fromyour 1M only. If they are from banks, the revenue works out to be 2k commission to them. Please,give them 11k from your pocket instead. Everyone will be happier.
1 comment: Labels:Investment opinions Thursday, January 2, 2020 Miles or cash back? An opportunity cost perspective
I used tobe a 100% cash back credit card chaser as it is hassle free and cash is alwaysbetter than a captive currency like miles.
Recently, Ihave been reading quite a bit on miles blogs. Apparently, there is stronginterest in chasing the miles to redeem for premium flights. But do theyactually make sense? The value per miles as advocated by some blogs is 1.9cents per mile. Hence even paying 2% admin fees to buy miles make sense forsome.
I wouldprobably value it at no more than ~1.57 cents, which I will illustrate simplybelow, base on my personal circumstance.
As I spend3k per month, I usually split up 2k on UOB one card (5%) cash back and 1k onOCBC 365 cash back card (averages 3.5% or so). For simplicity, the cash back Iget back is roughly $135 per month. This works out to be 4.5% blended spending cashback.
If I wereto spend it on miles, I probably would apportion my spending on 3 cards: $1k UOBVisa pay wave (4 miles), Maybank horizon (3.2 miles) $1k, miscellaneous $1kspending on UOB privi miles card @ 1.4 miles/dollar earn rate. I can earnapproximately 8600 miles monthly.
Hence theopportunity cost to earn the miles is to give up cash back of $135 which worksout to be 1.57 cents per miles. The true opportunity cost should be even highersince cash is paid frequently to offsetbills and miles can expire (or even devalued).
Theattractive part of miles redemption is that business class tickets actuallycost roughly only 30%-70% of outright purchase price when redeemed using miles.It is almost similar to earning a premium flight ticket discount coupon byusing miles card.
Forinstance Sin-HCM-Sin business class ticket costs $1075 or 43k miles (opportunitycost $675 cash back from spending. 37% discount on ticket).
Businessclass ticket Sin-HK-Sin route costs $1800 but or 61,000 miles (opportunity cost$958 cash back, 46% discount on ticket).
The furtherthe distance, the more value is derived from miles. Sin-Auk-Sin cost $5800 or124,000 miles (opportunity cost $1947 cash back, 66.4% discount on ticket).
It isactually uncomfortable for me to abandon cash back card altogether and earndelay gratification on business class travel. However, given that I am unwillingto pay for business class tickets, I would probably give miles cards a try.
Signs upare probably much faster to earn then spending. Hence, I am likely keeping myUOB one card for the 5% cash back but earning miles sign up bonuses to kickstart the discounted business class travels.
Hence Iapplied for the SCB X card 100k miles for a start. That actually costs me $700annual fee + $300 opportunity cost of using 5% cash back card = 1k. Hence mymiles cost me 1 cent/mile.
Redeemmiles on business class travel make some sense otherwise just stick to cashback cards to earn the cash and pay for economy class tickets.
It ispossible to stick to 1 card for cash back (eg if spending is around $900/mthstick to OCBC/Citi cash back; $2,000/mth stick to UOB one card).
For mileschasers, a lot more planning is required on which card to use in order tostretch the miles rate.
You shouldntaccumulate miles on your own and your partner should preferably share yourobsession in chasing miles.
A hybridapproach will stretch your dollars more; using miles card that earn 3.2-4 milesper dollar targeted spend; general spending to earn 3%-5% cash back ispreferred over 1.4-1.5 general spending miles.
It makeslife a bit more fun, brains a lot more thinking to use a miles card!
No comments: Labels:Personal,Stretch your dollar series Saturday, December 28, 2019 Random reflections on my spending Been awhile since I blogged, in fact more than a year! The initialrationale of having a finance blog in 2008 was to detail my decisions onspending and investing to provide a platform for reflection.
As I progressed in my career, theprobability of financial independencebecomes more certain. Admittedly I became overconfident that my decisions on spending are right; up to a point along the wayit became ostentatious and losing myself. Buying branded goods, driving luxurycars, watches, hotel membership on dining, 6 travelling trips a year (just tomaximise the free 24 priority pass lounge visits every trip I can utilise 4,2 in SG, 2 overseas) became a way of life.
This is no good. This is not me.
Where did the initial child like ambition of early retirement and simplelife disappear?
Slowly, I started to declutter goods that I bought for the purpose of _____.As I struggled to fill in the blanks, phrases like showing I can afford, keepingmy image, keeping up with my peers appeared at first instance.
Quite retarded reasons.
Fortunately, I have managed to declutter some. 2 years ago, I signed upfor the AIA vitality and discovered that by wearing a fitness watch, I am ableto earn $10 grocery vouchers weekly, discounted movie tickets monthly andyearly $150 cash rebate. The perks are more than sufficient for me to wear any otherwatches that do not pay me weekly cash!
3 years ago, I was at the cross road to change my vehicle. It wasextremely tempting. Back then, I was driving a 2.5L luxury car and financesallowed me to continue driving one. It didnt help when peers were changing tonicer rides. I test drove Jaguar, Mercedes, BMW, Lexus, Infiniti. Porsche wasvery close on my list as well. After all, a colleague who was earning lesserthan me could buy one as well. I can stretch my budget to 20k a yeardepreciation cost right?
Fortunately, good sense prevailed. I evaluated the decisioneconomically. I only wanted a car slightly better ( in terms of size, design,performance) than a bread and butter (point A to B) car like Toyota Altis orHonda City with slightly higher depreciation cost.
Imanaged to buy a 1.6L humble continental ride that comes with only 6 speed gearbox, all around sensors, memory seats, 4 doors (keyless entry), leather seats,Apple car play, reverse camera, 18 inch sport rims and free 1 year insurance capat 1.5k. The dealer also provided 5 years warranty and servicing furtherreducing my cost of ownership till 2022.
Thedepreciation on straight line basis worked out to be $10k/year, cheaper than acamry of around $12k/year then.
x
So farit has not given me any problems other than being a laughing stock amongst mypeers.
Caralready so expensive in Singapore, it is stupid to buy an expensive one and notenjoy it!
Noresale value one!
Kiamkanna!
Theseare some of the remarks made by peers. Living with it saved me at least $5k ayear. I think I can live with it.
My maincost of living is housing, transport, travel and food. For housing, as myproperty is in the money, in a way I am living for free. This is because I amable to cash out upon sale of my property and all payments made for the housefrom day 1 will be paid back to me. I can subsequently invest the money togenerate an income to compensate rent or simply buy another HDB and fully payoff with my CPF balance.
I am actuallycontemplating to sell my house for a resale HDB in order to live even moresimply. Of course more objections from people around me living in landed andcondos:
Whatfor? Save the money and not spend it belongs to the bank!
I have not seen anyone getting rich buying aresale HDB.
It may not happen eventually, as I am comfortable at my place right now.
Although Irarely use the gym, pool and have never booked the common facilities.
The things Ilike (and not available in a new resale HDBs) are sheltered undergroundparking, kitchen built-in rubbish chute, nice lifts with aircon lobby, balcony(for plants and clothes drying) and my low entry purchase price (on hindsight).Moreover, the monthly maintenance of $300 is about $150 more than a comparableHDB (after accounting for parking). I will probably end up spending $150 ongym/pool facilities if I live in HDB hence the savings are insignificant.
Forfood I am spending approximately $1.5k a month on it. This works out to be $50/day.I do know that by picking up the skill of cooking I am able to keep foodexpense to $500 a month. It is something I would definitely explore as I movetowards early retirement. However at the moment, I still quite enjoy the daily restaurantsdining.
Infact, I do try to dine at odd hours where possible where there are 1 for 1deals in town and neighborhood areas. Some credit cards also allow 50% offdining which fits my budget and taste buds comfortably.
Some randomrants! I think I need to blog more or I will just have endless to say in 1post!
As I reach MOP for my house, I face 2 choices: To cash out and rent or to buy (another one). Conventional wisdom (or culture) states that we should always buy, otherwise we are subsidising the landlord. This mindset is especially prevalent in Singapore where house ownership is more than 90%; public housing is highly subsidised and housing instalments are paid for via CPF.
Due to the CPF restrictions, many people feel that they are not paying for housing as it is paid for via CPF contributions. This reasoning is flawed as CPF can be cashed out at age 55 and pays a respectable 2.5% risk free rate. If we were to ignore mental accounting and view CPF as really our own money, the tendency of owning a home may differ substantially.
Let's breakdown the cost of my home ownership and determine if it makes sense to rent or buy.
Owning a home (calculations exclude utilities)
20% Downpayment for a 1.2M private property: SGD 240k (add 10k for basic renovation to round up to 250k)
Yearly interest payable base on 2% (long term rate) approximately = 960k x 2% = SGD 19,200. I am assuming interest rates rising gradually but the principal is reduced hence yearly interest paid works out to be 19,200. It is hard to forecast the total interest paid but let's just simplfy it to SGD 19k.
Yearly maintainence: SGD 4000
Property tax: $400
Spending on servicing of aircon, repair/change appliances - $600
Hence per annum, the cost of maintaining a 1.2M home for own stay is $24,000.
I am not factoring monthly instalments (of $3500) as the principal paid is your own money and can be recouped upon sale of property.
They key deciding factor is whether you can generate enough returns on the SGD 250k downpayment such that renting makes more sense to buying.
Assuming a 5 year investment horizon (on non leverage basis), a 250k investment if lucky enough, can generate a 5% return or 12,500 per annum return. If we were to be risk adverse and purchase the 4.35% Astrea 4 bond, assuming a buy price of 102, redemption of 100 at year 5, total return is 49375 or 3.95% (assuming interest accumulated reinvests at 0%).
The base case scenario will be to park the funds idle in CPF at 2.5% and thus earning $6250 interest per year.
Looking at the calculations, the cost of owning a 1.2M home works out to be
Opportunity costs (6,250 to 12,500)+ Interest 19,000 + Tax, servicing, maintenance 5,000 = $30,250 to $36,500
Renting the same house works out to be $2,500 - $3,000 per month assuming it is either a 2BR in suburbs or 3BR in further flung places.
How do we make a property purchase decision if we are indifferent to buy or rent? I think a key differentiator will be a person's investment ability.
For a person who can generate 10% P.A on 250k, it is intuitive selection for him to rent and invest the rest. However, not many people I know (myself included) can invest at that rate (especially when equities markets are at record highs).
The selection is much easier (no brainer actually) when the person is deciding whether to purchase or rent a HDB. HDB is highly subsidised (and conditional, not everyone can buy) and cost probably just 2.5k/month to rent a 4 room flat (in central areas). The interest cost is halved and home ownership expenses works out only to be less than 20k including opportunity costs. (Renovation costs more for HDB flat though).
(I am not factoring utilities or other expenses which need to be paid if one were to rent as well)
Furthermore, buying a home provide you with an option (up to lease expiry) to hedge against housing/rental inflation as long as you continue servicing your mortgage. It comes with a piece of mind that you own the place and not be at the mercy of landlords when markets are rising. However, it places a unnoticed strain on retirement income due to constant depletion of CPF savings.
So how? Rent or buy?
For people who choose to stay in HDB, buying makes perfect financial sense.
For people who are at the cross roads between renting and buying private property, take note that renting is akin to shorting the property market - you borrow a house, pays interest (rental on it) while waiting for housing markets to come down. If it comes down, you can buy for instance at 10% discount from current levels thus profiting $120k savings (10% of 1.2M). The rental you have paid eg 5 years x 30k = 150k; Add on the 250k returns of 3.95% = 49,375, the difference is SGD 19,375. Not too bad since the future savings on the original 1.2M property is compounded over the long term (on purchase).
It is not an easy decision to buy or rent, long or short. If we are in the middle of a financial crisis, it is an easy decision to rent (a year) first, buy later. Since rental is low and home prices will continue to fall. However at current juncture where there are no foreseeable crisis on the horizon, shorting the housing market may not yield positive return over next 5 years. There is always the risk that investment on the initial 250k goes sour or markets run flat or higher for another 10 years. Then one would have to continue renting for even long period to ride out the market.
In summary:
Buy HDB is always better than renting if you can
Rent private housing only if you can invest and earn at least 4%-5% P.A on your downpayment + reno budget
Buy private housing if market is trending upwards and be prepared to rent at least 5 years if one is timing entry into the property market. This is to provide the runway to allow cash investments to reap their intended returns while waiting for housing markets to show signs of bottoming.
That said, refer to my blog post in 2013 on HDBs. I think I am fairly accurate here. https://sgbluechip.blogspot.com/2013/01/hdb-prices-will-come-down-because-1.html2 comments: Labels:property Monday, March 7, 2016 Knowing my willingness and ability to take riskIn finance world, willingness and ability to take risk belong to 2 different concepts. Willingness to take risk refers to ones character, education, investment experience, culture and even religion.
For instance, many colleagues around me are high income earners. However, they only invest in time deposits as they are either conservative, have poor experience in investment or simply cannot invest due to religious constrains. They are unwilling to take risk for mainly emotional reasons.
On the other hand, ability to take risk refers to quantifiable criteria like level of wealth, investment horizon, liquidity preferences and investment objectives. A investor with $5M in his account will most likely not hesitate to invest $250k into a high yield bond. His ability to take risk comes from his ability to lose (more) compared to the investor with a much lower level of wealth.
Similarly with a lower liquidity preference and longer time horizon; investors are recognised as having higher ability to take risk and hence often advised to invest in riskier asset classes to enhance returns.
In a bullish market, investors ability to take risk increase dramatically as their wealth increase in tandem with the rising market; the euphoria sets in, reinforcing their positive experience and thus raising their willingness to take higher risk. Unfortunately, all bull markets will eventually lead to high levels of speculation towards the end cycle of bull markets. For instance, the China market rallied more than 50% within 1 year of mutual fund investment. I took profit then, realising close to a 50% gain as seen below due to the unsustainable yearly returns.
Vice versa, a falling market will always lead to lower stock trading volume as investors become poorer and reduce their ability and willingness (due to poor experience) to buy risk assets.
However, the above definitions are purely academic. Ability and willingness to take risk, really, is subjective and varies for an investor sometimes even at different times of a day!
Nobody truly knows their willingness and ability to take risk until going through at least one bull and bear market cycle. Suitability tests on investments are just a rough gauge at best to determine ones risk profile.
This is the same concept for inflation figures. Our official figure for inflation is between 2%-4% over the past few years. However, the inflation figure is only true for us if we consume products in the exact same composition of the basket of goods used to calculate inflation.
In reality, every ones inflation figure is subjective; by the same token, every individuals risk profile is unique and cannot be measured using standard questionnaires.
The current bear market is into its 11th month. Till date I have reinvested all the dividends (for funds) and traded bank bonds (which have rallied due to risk aversion) to higher yielding bonds. At times, I do have regrets of not selling EVERYTHING at the peak (who doesn't!) and purchasing now instead. However, every bear market I experience will only reinforce my mindset to stomach risk, enhancing my willingness to take risk. It also serves as a test of my current portfolio's Value at Risk and its ability to resist market shocks like now. In fact I have a better idea of how my portfolio will behave during stressful market conditions.
Thus, in order to maximise your return on investment given your risk profile, stay invested in bear markets and lime me, you will know yourself better on your ability and willingness to take risk! 1 comment: Labels:Investment opinions Older PostsHomeSubscribe to:Posts (Atom)Popular PostsInvesting in Singapore listed ETFsETFs is the acronym for exchange traded funds, which are basket of stocks traded over the exchange. Having invested nearly 0.5M in stocks I ...Archive 2020(4) May(1)Savings account with higher than FD interest till ... April(1) January(2) 2019(1) December(1) 2018(1) June(1) 2016(1) March(1) 2015(3) April(1) January(2) 2014(3) September(1) July(1) June(1) 2013(12) May(2) April(1) March(5) February(3) January(1) 2012(7) December(1) November(1) September(2) June(1) March(1) February(1) 2011(7) November(1) October(1) September(1) April(1) March(3) 2010(29) December(1) November(10) October(4) September(2) August(3) July(1) April(2) March(1) February(2) January(3) 2009(34) November(3) October(7) September(9) August(1) July(1) June(2) May(3) March(2) February(1) January(5) 2008(98) December(11) November(6) October(6) September(8) August(17) July(10) June(29) May(11)Singapore Blue ChipsLoading...Labelsadvertisements(2)Books and education(31)Complains(4)Corporate(14)Investment opinions(75)paypal(1)Personal(49)Portfolio(20)property(20)Stretch your dollar series(18)About MeSgbluechipI am an ordinary Singaporean guy in my early thirties who is passionate about investing since 2003.I live in a 4 room HDB flat and like many Singaporeans, dream of becoming a millionaire.Currently I am an ordinary worker and have just completed my Masters. I aspire to build up a portfolio of 1 million dollars and derive a yearly recurring dividend income of 6% by 35.The only way to achieve this aim is to work hard and invest prudently.I invest in a variety of instruments such as unit trusts, stocks, REITS and foreign currencies mainly Australian dollars options.View my complete profileFinance BlogsFinance.sgFive Cents Ten CentsghchuaLa PapillionMoney TalkMusicWhizNTU ChartistPassive IncomeSGX Stock InfoSingapore DividendsSingapore stock screenerSingapore Stocks InvestorTan Kin LianUseful Investment LinksBERKSHIRE HATHAWAY Official HomepageBloombergBusiness TimesChan Yan Chong HomepageDaily analysts' reportsFundsupermartGoogle stock screenerHuatopediaIndicesInvestAsiaInvestment dictionaryNext InsightSg FundsSGXShare InvestmentSingapore Market News
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