Money Personality Type

Money Personality Type: "People always relate success with money. Every successful people are rich people! Somehow, I find it quite true as well. Most of the success..."

Here's my friend's post on the Money Personality Type which we've learnt during the MMI. so.. Which one is yours? Actually, I remember that I've only heard 4 main types during the event so perhaps the 5th one about the "Amasser" is added by my friend.

Understanding the Root Cause About Your Money Believes

Have you ever asked yourself, the following questions?

• What is money?
• Is it just a piece of paper?
• What can you do with it? - Take out a piece of your biggest note inside your wallet and think about it...
• What did your parents share with you about money?
• What is wealth?
• Is it just about having lots of money?
• Is it important to you?
• What can it do for you?
• What's your impression of rich people?
• Are they nice or greedy?
• Are they generous or stingy?
• Do they con others or help others?

Only after you've answered those questions that you can have a much clearer picture of your impression on your current financial situation.

(Adapted from Millionaire Mind Intensive...)

I'm blessed to be in Singapore

Well, over the past few weeks, what I've concluded from the "Guide to Investing in Gold and Silver" is that, I felt very blessed to be living in Singapore. Because, I'm pretty certain about is that our government is certainly a lot better at managing our current money supply. :D

Overall, I felt that what the book was saying is about how currency is being created out of thin air, and why it causes inflation as well as how the action of the US government is causing to the economy. I guess, that's what their currency is weakening. Then it also tells us why they felt that gold and silver is the next "In" thing when it comes to an alternative means of currency other than the pieces of papers in our wallets.

I still felt that stocks or businesses or even valuable properties are a much better choice when it comes to investing, because, at least those stuff adds value to our economy and other people, but gold and silver are merely some metal that doesn't really add values to our lives. Its value should be moving hand in hand with inflation instead or huge appreciation, because it doesn't really make sense, unless our "pieces of papers" no longer worth much.

Comments on: Wing Tai's AGM

Today, I'm the proxy to attend Wing Tai's AGM but then I was about 15 mins late so, it's actually over LOL. Well the AGM is actually held at Raffles City Atrium Convention Centre. Amazingly, the AGM lasted about 10mins according to the chairman. What I can guage from the AGM is that they are very successful in coaxing their shareholders in terms of their needs. Most of them are not young and they seems to be mainly there for the food. Probably 'cos those young ones didn't bother to attend AGM as what I used to do as well.

What I can say is that the chairman is pretty responsive when I ask him questions as he is able to answer my questions almost immediately. Just that he doesn't feel very comfortable answering them. Hence, my conclusion is that either the Chairman and board of directors are very competent so their shareholders gave them 100% trust and thus didn't ask any questions at all, or the shareholders that attended are really there just for the food and they can't be bothered about their investments at all.

My take is that I'm pretty glad that I'm only a proxy and didn't have any shareholdings there. After all, if the crowd is not that concerned, I felt very concerned somehow. In fact, it sort of reminded me about the Eastern Holdings' AGM that I went to the last time round, just that I'm the only one that asked questions and hence, the overall meeting was a bit longer. Now, I'm quite glad that I've already sold all my holdings in Eastern Holdings as of now.

Highlights from Investment Outlook Seminar

After attending the Investment Outlook Seminar conducted by Financial Alliance Pte Ltd on Thurs, I felt that the presenter of seminar is pretty honest and frank about their sharing as well as in their investment strategy. The way they help their clients invest is not just by purely asset allocation but rather based on their research and market analysis in order to protect their client's capital. 

Although they too lost money during the economic downturn, the chart they showed us still has a positive return of 8% p.a. if the investment period is from 2004 to now. It looks pretty positive and consistent, yet slightly better as compared to the index benchmark they shown us. I'm not too sure about why they picked those benchmark but it seems pretty ok to me. I'd attend it again if I had the chance to.

The speaker mentioned that they believe that the current market might be at the beginning of the 4-stage Recovery Model that they shared with us. Which means the market will probably continue to go up for the next 3 - 6 months, according to their sharing. But the more curious part that I've yet to find out is what's next after the Recovery Model? Is it another breakdown, and hence the cycle repeats or is there some Stabilization Model after it?

They also mentioned that there's still worries about the slowing global economy and weaker earnings yet the market is pretty much in a bull run recently, probably due to the need to generate returns currently. Hence, it's more of an technical analysis sort of thing as there's not really any justifiable fundamental analysis to backup the uptrend in the current market situation. Which I think we will need to be more careful of our investments to ensure that there's at least some fundamental backing wherever possible so that we can sleep better at night and stay invested.

The 4 stage of recovery shared is pretty interesting: 

1. 1st stage is the base building toward recovery, which is in a way at the bottom of the market. 
2. 2nd stage is the adjustment from an oversold position, which means the market will correct upward rapidly.
3. 3rd stage is the consolidation period where the market moves sideways.
4. 4th stage is the new upward tend, whereby the market just keeps going up.

Then, I didn't see anymore diagram, so I'm not too sure what's next after that. But I felt that it should be after the market hit the peak then it'll lose balance and collapse again (Just my personal feeling, 'cos since nothing is shown, but from what I saw in the charts, it does look that way, although it's not highlighted.).

Anyway, they too have the disclaimers to tell us not to rely on their analysis and judgment too much, we should consult our adviser before any purchase, etc. So it's still back to... Please exercise independent thinking and not follow blindly. Whatever it is, just make sure that you know what you are doing. :-)

US National Debt Clock

During the MIPA program that I've attend at the beginning of this month, we got to visit this Interesting Site - U.S. National Debt Clock : Real Time. It's amazing how the amount of debt gets higher all the time and it keeps me pondering about... What's next? Perhaps the great stock market sale is still in the making. Let's look forward to it :)

Difference Between DBSS and BTO

The main difference between DBSS (Design, Build and Sell Scheme) and BTO (Build to Order) is:

• DBSS are new flats in mature estates developed by private developers, hence are not considered to be subsidized. So 2nd time HDB buyers do not need to pay HDB resale levy if they buy such flats.
• BTO are new flats in new (aka upcoming) estates developed by the HDB, hence they are still considered to be subsidized. So 2nd time HDB buyers will need to pay HDB resale levy if they were to buy such flats.

With this major difference, those HDB home buyers that can afford DBSS may buy through DBSS instead of BTO flats. Another advantage of the DBSS is that it allows family with higher income to purchase a HDB flat as well, instead of just being able to purchase condominiums. The gross household income eligible to buy such flats range from $8 - 10K a month, with up to $12K a month if they are purchasing together with their extended family. (i.e. to be purchased with their parents-in-law's name)

As for BTO, the maximum gross household income is actually $8K a month only.


Download: Knight Frank Research Paper on "An assessment of the
Design, Build and Sell Scheme (DBSS)" to find out more about DBSS and BTO.

POSB Everyday Card - How to Save $ with it?

The new POSB Everyday Card has a auto top up feature that's something like the CitiBank SMRT card. Just that from experience, last time when I use the SMRT card from CitiBank, actually it totally didn't give me any rebate because I spend merely $50 using that feature only. So in the end, after 1 use, I decided to just terminate that card since it's quite pointless anyway, I heard that you need to spend at least $600 to get the 2% rebates. And if I remember correctly, there's some activation fee or something that comes along with it.

Now, with the new POSB Everyday Card, it's truly a money saving card that gives me the same 2% rebates without any condition at all. That's what I love about POSB Everyday Card :)

Fyi, Effectively the 2% rebates is just 2% less $0.25 only. So it's not exactly 2%. But it's definitely worth your time activating the feature because you will save money using that. Most importantly, you won't need to top up your ezlink card ever again. Why not save $ and time at the same time with it? That kills 2 birds with 1 stone :P

I've also come to realised that actually it's better to accumulate the Daily$ till it reaches about $10 - 20. Then use internet banking to offset your bills with it. This way, you get to enjoy all the potential rebates from anything that you ever spend on and yet get to use your Daily$ to offset your bill. But of course, you must do that early 'cos generally, it can only offset your next bill that way.

See also: How to Activate POSB Everyday Card's Ez link feature.

Profit Margin -- Apple Analogy

There are 2 types of Profit Margin, Gross Profit Margin and Net Profit Margin. Here's my analogy used to explain it to one of the graduates at MIP today:

I bought an apple at $0.60 and my staff sell it at $1.

So my gross profit is $0.40, hence the gross profit margin is $0.40/$1 * 100% = 40%.

I paid my staff $0.10 to sell that apple. So my net profit is actually $0.30. Hence, my net profit margin is $0.30/$1 * 100% = 30%.

I'm glad that it helps in her understanding. :)

Comments on Jiki Life Aka Japan Life

My friend once shared with me about Jiki Life (Japan Life). They basically managed medical devices in a way similar to real estate. 

E.g. Jiki Life sells me some medical devices (about $3K worth) and I'll get the "title deed" of the medical devices and become the owner of it. After which, I'll entrust Jiki Life to rent it out for me at 6% p.a. (about $15/mth). After 20 years, I either get back the $3K that I've paid for the devices or $3K worth of medical devices and it continues. During this period, the medical devices' maintenance fee will be paid by Jiki Life as they'll do all the fixing and repairing if there's any issue with them. The "tenant" will pay for the rental commission, the fees required to handle all the rental and other rental related issues. [This is the usual deal]

During that sharing, there's this promotion on the deal:

1. Half Price: I pay $1.5K and own $3K worth of medical devices so my rent is 12% p.a. (About $30/mth).
2. 1 for 1: I pay $3K and own $6K worth of medical devices so my rent is 12% p.a. (About $60/mth).
3. 2 for 3: I pay $6K and own $15K worth of medical devices so my rent is 15% p.a. (About $75/mth).

For these promotion, after 20 years, I can only get back the amount that I've paid for or the equivalent worth of medical products.

For this plan, the bet is that Jiki Life will always be in business and the medical devices are highly sought for so that it'll always be rented by some hospital / clinic, etc. Should Jiki Life not be in business, my agent is the only person that can help me continue to collect the rent for the equipment, so my agent has to be very trustworthy and it'll help me in terms of my bet in this investment. I'm not sure if the promotion is still valid 'cos it's been quite a long time since I heard about it. And promotion 1 and 2 is actually the same thing.

Companies Affected During Economic Downturn

According to the book "Your First $1,000,000" By Dr Michael Leong, there are various type of companies that are likely to be affected in the event of economic downturn:-

• Highly leveraged companies
• I quite agree with it as such companies have large amount of debts. During a downturn, there's a slight chance that if their business is not good enough, they might not have the funds to pay off even the installments to the banks. Even if they do have enough to pay the installments, if the bank decides that the value of their collateral (e.g. property and other assets) has a much lower value than the amount they have borrowed. The bank may call upon them to top up the difference in value between the value of the property and the amount they have loaned. Which may result in the company being adversely affected.
• World-wide goods manufacturer
• The author thinks that it's so as the demands may drop and affect their business while they may not be able to reduce their overheads in time. But I think that it depends on what is the goods that the company manufactures. If it's a necessity type of product, there's actually nothing much to worry about, as whichever the economic condition, we still will need the products. But if it's those luxury type of product then it will be more affected, especially if the target market is people from the middle class whom are usually most affected by economic downturn I think.
• Oil-related companies
• The author thinks that the demand will  be reduced and need for oil is likely to ease. But actually, even if the need reduces, a lot of time, a lot of business and people will still need oil to function, hence, I don't see that much a drop in terms of demand. On the other hand, I think such companies are more affected by the raise and drop in oil prices more than economic crisis, although their stock price will dropped a lot during the crisis but once it's over, the price will go up all over again, even to a new high, hence, it's not much of a worry in my opinion if the company's fundamental is strong and they know how to hedge against the oil price fluctuation. But I'm not sure how to gauge that yet so I'll just leave such companies out in my analysis.
• REITs (Real Estate Investment Trust)
• Although the property price and rental will drop but I felt that during the mist of economic downturn, especially during recession, it's when the price of such companies that's very attractive due to the type of dividend return they will be able to provide when the economic recovered. However, when buying such companies, we need to ensure that we have better cashflow and have excess cash on hand as they might take the chance to get rights issue and increase their capital. Most of the REITs does that the last economic downturn recently.
• Retail-related companies
• Their business will of course be affected as the demand will drop and times will be tough during the downturn, which I totally agreed with.

Lessons from the Cashflow Game

After playing and facilitating Cashflow Games, I understand more about the various ways to achieve financial freedom. There are really many lessons that I've learned from the game itself. For those that does not know about the game, here's a brief description, the main aim of the game is to get out of the rat race and into fast track. Which is like get out from our employee cycle (rat race) to achieve financial freedom (fast track) in reality. There's still a pint of luck that's required to win, but the key to it is still in identifying the good deals from the bad deals.

Some of the lessons I've learnt are:

• It'll be much easier to get out of the rat race if we, the players can collaborate with each other during the game. 
• The lower our expenses, the easier to get out of the rat race.
• If my monthly cashflow is low, I would need to aim for higher "savings" amount to buy the good deals that I want.
• If I have a monthly cashflow is higher, usually, my pay might be higher and same goes for my expenses and hence, sometimes, I need to use higher leverage to make things work better when I do get a good deal.
• If I keep taking small deals, it'll take a much longer time to get out of the rat race as compared to taking a bigger deal when I have enough money to do it.

The main lesson you will learn from the game is that how you play the game is actually a reflection of how you are playing the money game in reality. By understanding yourself more, it does help in fixing issues that you may not have realized on your own.

In fact, there's even a version for kids that I think parents should get for their kids so that they are educated in the way rich thinks from a younger age. Last time when I'm young, there's only monopoly and I only get to pay at my cousin's house as we couldn't get one. In fact, no one ever gave us a debrief on how to win that game and we really need to figure everything out ourselves. How I wish that I get to play such a game when I'm just a kid!

But do take note that in reality, things are not as simplified as the game itself. It's the idea that's important and when we know about the strategy, it actually takes much longer in reality to get the results when applied as our loan system isn't that simple. I'm still wondering, is there a Singapore version to this game?

Things about Private Residence's cooling measures

With the new cooling down measures that our government implements recently, there are a few things that we may need to be aware of before investing in private residential properties (e.g. landed bungalows, semi-d, terrace house, condos, etc).

• Seller's Stamp Duty (SSD) is now imposed on residential properties sold within 3 years (used to be 1 year this Feb). [I think it's to encourage the residential properties owner to hold their properties for longer duration so as to reduce speculation]
• Within 1 year - Full SSD
• Between 1 to 2 years - 2/3 SSD
• Between 2 to 3 years - 1/3 SSD
• According to one of my mentors, the SSD is calculated from the date the Option to Purchase is being exercised. So do take note on that if you didn't want to incur the fees. Because it's a date that few people will remember.
• For property buyers with 1 or more outstanding  housing loans
• There's also a new rule that increased the minimum cash payment from 5% to 10%. [So more cash is required to buy such properties, especially for property investors, those CPF richer investors with less cash on hand will need to be aware of this]
• The loan amount has dropped from 80% to 70% [So now, more CPF or cash is required for down-payment. As a result, those that didn't have enough cash or CPF due to the new rules may take longer to enter the market]
• Overseas private property investors will need to take note that having such properties directly under their names will affect their eligibility in buying even resale HDB flats, as they will need to sell off their overseas property within 6 months. (The same goes for locate private property owners.)

Although the price hasn't drop yet, but I think with the new measures, it should decrease gradually until the market is more stabilize and sustainable. During the course I attended on Saturday, one of the instructors mentioned that due to this ruling, our stock market went up as funds are redirected. Hence, I think if that's the case, when those investors accumulate enough funds through whichever other means of investments, like the stock market, the redirection of such funds back into the property market might probably affect the stock market more than the property market, due to the liquidity level of stocks. Which means, the stock market might become even more fluctuating.

I personally do hope that our government can release the new measures much earlier than on the effective date itself so that we can have more emotional preparation when the time comes. So that it's a more gradual process.

Reference:
Measures to Maintain a Stable and Sustainable Property Market

Things about HDB flat's cooling measures

Our government has announced some new measures to ensure that our property market to be more stable and sustainable on 30 Aug 2010. I think their aim is to cool down the property market so that middle and low income group can afford the property in the long run and to reduce over speculations. Here's my summary of the overall picture in my knowledge:

• Concessionary HDB Loans (as in direct loan from HDB themselves)
• Still granted at up to 90% of the valuation limit¹. [I think it's good]
• Only offered to eligible 1st time flat buyers and 2nd time buyers that are right-sizing their flats to meet their housing needs. [Looks like not change here to me]
  
• For 2nd time buyers must use 100% of their CPF refund and 50% of the cash proceeds from their 1st HDB flat sales to pay off the new flat before they can get a loan. [This is something you may want to take note of. I think they are just trying to reduce speculations.]
• 10% down-payment is required
• Bank Loan
• 20% down-payment is required. [I personally find it strange that the person can loan more money from HDB than from the bank.]
• General:
  
• For Build to Order flat (Aka BTO, DBSS - Design, Build and Sell Scheme) and EC, your option fee is 5% of the purchase price to be paid in cash only.
• As HDB flats owners needs to stay in the flat for at least 3 years before they can sell, they are not affected by the new Seller's Stamp Duty (SSD)'s regulations.
• Additional HDB Housing Grant is available to help the lower income family buy their 1st subsidized flat. (Only for those family with annual average gross income of less than $5K/month, subsidy varies from $5K to $40K)
• For private residential property owners, they must dispose off their private residential property within 6 months after they buying their resale flat. (Even overseas property must be disposed, if it's under their name.)
• For such owners, they will only be allowed to take up bank loans and if they currently have any outstanding loan from the bank, they can only take up to 70% of the valuation limit. Of which, 10% of the down-payment must be made in cash! [I think that this rule is to deter the private property owners from buying HDB properties so that the prices will cool down more as usually such owners have more money to buy flats]

*Note: Please note that my comments are in [...]. Feel free to correct me if you have any opinions. :)

Footnotes:

1. Valuation Limit is the purchase price of the property or the valuation of the property at the purchased date, whichever is lower.

Reference:
Measures to Maintain a Stable and Sustainable Property Market
Additional CPF Housing Grant
Buy Resale Flat Finances
Foreign Homes, Same Rules

Glad to know of my dream financial advisory service

http://money.cnn.com

Recently, a new friend from some networking session shared with me that my dream type of financial advisory service is actually available! He's currently a director for an independent financial advisory firm, called Financial Alliance. From what he told me, the way he services his clients, and the way he educates his staff sounds a lot better than most other financial advisory firms. I should say that it's a new way of doing things.

I'm pretty amazed that he enjoys his career and loves sharing with others genuinely about what they really need and willingly helps them to solve their financial issues if any. But as what he said, not ever issue can be resolved without compromising the goals. Because some things are just impossible to achieve through the insurance / fund management type of financial advisory service, such as trying to retire with $0 savings and within 5 years. They share with their clients, only if they want to become more financially savvy personally. And he claimed that they don't force sell and don't even need to beg for appointments. He has a mailing list type of site which I shall subscribe to it 1st, if the contents is interesting, I will share it here, otherwise, there's no point in doing so.

From my point of view, it's not really impossible to achieve such goals. It's rather a matter of how to do it and how committed the person is in wanting to achieve the goal. Of course, just by buying insurance, it's impossible. And such person don't even have money to buy any funds to multiply their wealth, even if they have anything less than $200K, it's also very hard to achieve as it still need to depend on the economic market conditions and other factors. And the only way to achieve such a goal is really by doing business and really go all out to make it big! But of course, 1st of all the person must be willing to educate himself / herself and be willing to spend a certain amount of money to learn from more successful people, go for networking sessions to look for people that will help him / her attain success in the business itself. Sitting there and doing nothing or even dreaming about success or retirement just doesn't work. :)

CIMB Higher Interest Savings Account

CIMB StarSaver Account:
Pros

• At least 0.5% interest rates per year.
• Interest rates become 0.8% per year if you put in additional $500 or more every month.
• No fees deducted even if the funds fall below $5000.
• Free Cheque Book.
• Monthly Statements.
• Free internal fund transfer to your own account in CIMB.

Cons

• Min Deposit of $5000.
• Min Deposit to earn interest: $5000.
• Can only be open from age 21 and above.
• Not sure if external fund transfer is charged, as in to another bank.
• Early closure of account within 6 months - $50.

Correct as at 1st Sept 2010.
Other higher interest savings accounts.

Genneva Gold

Genneva Gold is a company that I've came to know recently, the rebates scheme that gives us up to 24% returns sounds too good to be true. After operating for years, the company is still able to retain its operations and I suspect that the main reason behind it is in the gold, itself. As gold prices kept increasing these years, if the increase in gold price is more than the rebate scheme that it gives to its customers, then with the type of markup price and the business or trading gold bullions, there's certainly no issue in continuing its current operations. But if gold price drops for a few years, then I'll be worried about what might happen.

Genneva Gold basically has 3 rebates scheme:
1. 2% per month with a lock-in period of 3 months.

2. 5% every 3 months.

3. 1.5% every month.

Generally, the gold price of the bullion quoted by Genneva Gold is about 10% higher than the price of gold you buy at the goldsmith, where they sell the gold jewelery. So if you didn't sell back the gold to them, your potential loss is about 20-30% depending on the gold price in the market. Hence, whichever scheme you pick, the downside is always 20-30%.

For the 1st scheme, (2% / month but locked in for 3 months) you buy the gold at the current quoted price, e.g. $70/g, but you only need to pay 98% of the price due to the 2% rebates that you "receive" upfront. At the end of the 1st and 2nd month, you will need to sell the gold back to them at the quoted price which you've bought the gold at, then buy it back from them at the new quoted price. The amount you need to pay is also 98% of the quoted price due to the 2% rebates that you've "received". At the end of 3 months, you will sell the gold back to them at the stated price, by now you have about 6% total returns from the gold purchase, and your 3 months contract terminates. Depending on the gold price, it may not be exactly 6%.

For the 2nd scheme, (5% every 3 month) you buy the gold at the current quoted price, e.g. $70/g, but you only need to pay 95% of the price due to the 5% rebates which you "receive" upfront. But with this scheme, you will save on the time required to renew the contract and rebalance the gold price every month, and relieves you from any issues that may arise from the fluctuation of gold price. At the end of the 3rd month, your will sell the gold back to them at the initial quoted price of $70/g. Hence, you've received the 5% returns.

For the 3rd scheme, (1.5% / month) you buy the gold at the current quoted price, e.g. $70/g, but you only need to pay 98.5% of the price due to the 1.5% upfront rebates. At the end of the month, you will sell the gold back to them at the initial quoted price of $70/g. Hence, you've received 1.5% returns.

For all the schemes, there's a always a window period of 7 days that you've got to sell / buy back the gold from them in order to get your return, otherwise, they have the right not to buy back the gold at the stated price. Do take note of this and you should only get the 999.9 gold bars which they bought from UOB and not accept if they only have their own in house manufactured gold bar to be on a safer side. And they have super long queue 'cos their system is super manual.

Some people likes this scheme and some people doesn't. My view on this is that it's just a scheme to lend the company money at 24% per annual interest with a 70% value in the form of gold collateral. Which means your downside is at least 20 - 30% because when you sell the gold to UOB or any other people, at any point in time, you'll lose at least 30% of your money should the company close down. Your upside is 24% per annual in the form of 2% per month. So you must believe that gold price will go up before you should even buy into this scheme, because you are betting that the company will continue to operate for the period that you have buy their gold. I feel that if there's anything that will cause the company to close down, it's usually when there's a major drop in the gold price plus over a long period of time and when this happens, the downside will be more than 30% confirmed.
But if you think that gold price will rise more than 24% a year, then you should buy gold from cheaper source, such as UOB.

It's entirely up to you whether or not you wish to trade gold with Genneva Gold. There's no right and no wrong in my personal opinion. But do take note that what you are doing is betting that the company will remain in operations while you are holding the gold, and you also need to make sure that you do renew your contract and sell back your gold within the stated 1 week period :)

Higher Interest Savings Account

Here's some of the Higher Interest Savings Account in Singapore:

• CIMB StarSaver Account (0.5% to 0.8%), minimum amount required to receive interest is $5K and above. 0.8% is not easy to get, needs additional balance of at least $500 a month to get it. Comes with Monthly statement and Cheque book.
  
• MayBank iSAVvy Account (0.25% and 0.4%, may go up to 0.26% and 0.41% respectively based on loyalty, for balance of $5K and below, and $50K and below, respectively), internet banking and ATM, nothing about statement is being mentioned, min $10. (**$2 fee charged for balance less than $500.) For balance > $5K, the interest is 0.25%.
• Citibank Step up Account (0.23%, step up to 1%), terms and conditions applies, please click on the link /find out at their branches. It's not that easy to reach 1% as you can't withdraw the money to less than the balance you've got in the last month, which is rather ma fan in my view.
  
• Standard Chartered e$aver Account (0.2% to 0.4%, with bonus interest at times), internet banking only, no statements / cards for withdrawal.
• NTUC - OCBC Fair Price Plus Account (0.2% and 0.4%), internet banking, paper statements, debit / credit card only.

(Note: Interest is correct as at 31 Aug 2010)

Please do take note of their interest rates as it keep varying, most of them drops consistently over time. Since last year until now, it has dropped pretty much, about 50%, I should say.

Increase your streams of income

Whether you are an employee, self-employed or business owner, or even investors, you can still increase your streams of income. But of course if you are currently an employee, avoid quitting your job before you have any form of passive income just to do things you would love to do more, unless you have enough money to cover your expenses for at least 1 - 2 years. And make sure you plan well before doing that. At least that's the lesson I've learnt.

There are various ways you can have more income, here are some of them for you to think about:

• Internet Marketing
• Network Marketing (aka MLM - Multi-Level Marketing) [You need to join one that you really believe in and likes their products otherwise, it's even harder]
• Freelance [Any form of freelance jobs that you can think of and you are capable of doing]
• Part time jobs [This is the easiest to find of them all]
• Property Investment [Of course, you've got to find one that's worth investing and generates good rental income]
• Stock Investment [Make sure you know what you are investing in, it should be a quarterly reviewed kind of investment rather than actively monitoring it.]
• Some people likes trading [There's forex, commodities, stock options, etc. But I find it risky myself]
• Mutual Fund Investment
• Bonds
• Treasury Bills
• Start a part time business
• Write your own book and sell it!
• Alternative investments [find one that at least give you good returns > 10% is good, do visit invest fairs for more info. But you've got to understand them before buying.]

All the above should be tried out one at a time so that you don't tax yourself too much as concentration and focus is needed in order to succeed in anything! I'm still working on this.

You may want to read Robert G Allen's Multiple streams of income to find out how to implement and get the type of income steam you want.

If you do have debts, create a repayment plan

If you do have debts, such as credit card loan, car loan, housing loan, study loans, etc, start planning which loan to pay off earlier and what to pay off 1st.

Make a list on the type of loan, interest amount in %, amount you need to payback, and look at how much you currently have. After deducting a basic 3 months worth of pay, if you do have anything left, look at which is higher, the highest loan interest or the interest that your excess money is generating you. If the loan interest is higher, use that money to pay off that particular loan first.

Plan which loan you wish to pay off, prioritize the one with higher interest rate to be paid off 1st. Set the deadline to when you plan to pay off all your debts. But for certain loans, it might be better to keep than to pay them off, i.e. housing loan. Why? Because for housing loan, the interest might not be very high, if the interest is low, and you can get better returns if you invest the money you intend to pay off your loan with, you should just keep that loan, and pay off just the minimal amount and earn on the difference in returns. (e.g. investment return % - housing loan interest %, as long as this is positive, you should just keep it.)

Think about it, don't just pay off all your loans for the sake of being debt free, unless you are not generating more money from your excess cash. :)

Reference: The Lazy Girl's Guide to Success: Financial Success, Step 4, Pg 124 - 126

Invest Fair 2010

I attended the Invest Fair today with some of my fellow MIP classmates :) They have like about 4 seminar rooms which wasn't exactly very big. But just enough for the amount of crowd I guess. Wasn't a very crowded place. And it's the 1st time that I went to Marina Bay after so long. The last time I went was when they still have steamboat buffet.

In the end, I registering for an account in an online portal for Malaysia Shares (they gave us the Share Investment book for Aug 2010) which kills 2 birds at 1 stone, I get a chance to find out what is it that's available in Malaysia, was really not exposed to that area. The only thing I knew was that last time when we singaporeans buy Malaysian Shares in our stock market, then somehow the shares we bought become invalid after one of the ruling got implemented. So I didn't really looked into it. But in order to be very very safe, I think if I do want to buy anything there, I'll see if I can get my Malaysian friends to buy on my behalf haha. Just in case.

I also registered for some free seminars by Mastery Asia, not really sure what is it about but I'm just pretty curious what does that "You can create wealth" CD contains that's all. :P So I guess, after all giving freebies sometimes does helps in getting people to register for things.

The 1st seminar I attended was conducted by a professional forex trader, well it sounds pretty amazing that he got consistent returns from it about 15% per month according to what he claims. But despite looking at the results, you should also look at how he looks like now. I believe truely that there's not really any fast and easy method to do things. It's about how much time and effort you've put in to make things work right.

He really looks like those that put in at least 16 - 18 hours a day for like about 1-2 years or so ba. As he already has this typical trader look, super tired and pale looking guy despite having quite a lot of money. For me, I like my life more and is totally not tempted at all after looking at his appearance. I certainly won't want to trade health for money. For that's just my personal take. No hard feelings ok. :)

Change the way you pamper yourself!

Image Source: http://www.travelblog.org/Wallpaper

If the way you pamper yourself is costing quite a sum, do consider changing the way you pamper yourself: -

• If you love buying yourself presents, consider buying yourself a more income generating present such as a particular good stock that gives good dividend yield, good investment grade property that gives good rental income, basically, anything that has potential in value appreciation in the long run.
• You can consider strolling at the park / beach to relax after a tiring day.
• Or even sitting by the beach doing nothing but watching the sunset or sunrise when you are feeling down.
• Organize picnics instead of high class tea buffet.
• Delay your purchases that you intend to pamper yourself with for 3 days to a week, if you still wants to buy it, probably you love it very much. Sometimes, it's just a impulse purchase, you may not really want it. Hence, by delaying the process, you might save some money. After all, you will appreciate things more if it's harder to get, or you need to wait longer for it. :)
• Find out when you spend the most and why? Change the mindset when it comes to spending, spend only on pampering stuff when you really needs it rather than as a form of comforting yourself.
• Buy assets that generates you extra passive income, and use this passive income generated to pamper yourself instead.

Reference: The Lazy Girl's Guide to Success: Financial Success, Step 3, Pg 122 - 123

Where and what to cutdown on?

After we have create our budget and tracked our expenses, it's time to make a list on all the non-essentials that you have been spending on for the past 1 month. If you are wondering what's an non-essentials, it just means stuff that you buy but without them, you will still survive and carry on with your life.

Eg.

• Meals out (tea breaks, coffees, high class / expensive lunches / dinner)
• Drinks (alcoholic, can drinks, anything except plain water / mineral water)
• Mobile internet plans
• Books / magazines / papers (unless you can't get them from the library)
• Cinema / DVDs / Videos / CDs
• Gym / Yoga membership
• Presents
• Clothes (except when you really need it or has run out of it, not when you still have tons at home, unworn)
• Beauty and toiletries (including hair) but just those that you've bought but never use or hardly use.
• New laptops / computer / mobile phone (when you still have a working one at home and didn't use that to trade in)

These are stuff that you can cut down on until you have reached a point where you've attained financial freedom, and your passive income is already way beyond your expenses such that you can easily afford all these even without your active income then, by all means get them if you want. After all, there's no point having lots of money but being unable to spend them to pamper yourself once in a while.

Reference: The Lazy Girl's Guide to Success: Financial Success, Step 2, Pg 118 - 121

Be Fearful When Others are Greedy

I always remember these words by Warren Buffett - "Be Fearful when Others are Greedy, and Greedy when Others are Fearful." Not sure if I should comment on this but recently the hottest topic in Singapore is probably about the 14% increase in Genting's Share Price!

Ref: http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_566194.html

Well my take is that, the main reason why it continues to increase the moment, it hits the headline is because most others are greedy I supposed. When such news come out, my idea is that it's probably time to sell if away, if I'm a trader, but anyway, I don't have any of their shares. 'cos there's really not much reason why a stock price can keep on going up every few days because of an article that says the price went up by 14%. How long can this news last?

But the good thing is that the main reason behind the increase in stock price is due to the high increase in profits but then, as a gambling firm, I knew that most of the time, the casino should make money but normally the excitement of it being new won't last very long, at most 1 yr or so in my take. Then it'll probably cool off and becomes normal. In fact, the amount of profit should be somewhat similar in terms of proportion to that in genting highlands isn't it? 'cos eventually, everything will become like normal and the guest number should drop a bit. I'd give them a 50% discount in revenue during calculation of their stock intrinsic value myself. Because, it feels safer.

This is just my personal take.

Creating and Tracking Your Budget

If you are wondering how to create and track your budget, here's a monthly expense tracker but then it tracks your income and expenses every single day. 

Alternatively, a way to ensure that you'll keep to your budget is to withdraw all the cash that you intend to spend for the month and put it into jars, label the jars according to what you wish to spend your money, i.e. Food, Travel, Movies, etc. If you prefer, piggy banks also can. The whole point is not to spend beyond your set budget. Of course for this to work, you must make it a point that when there's nothing left in the jar, either you use the fund from other jars or you stop spending money on the item labeled on the jar itself.

If not you can also use things like having a separate spending account etc, to separate your spending money with your savings so that you will never spend your savings on unnecessary stuffs. So just create your budget and stick to it. :)

Reference: The Lazy Girl's Guide to Success: Financial Success, Step 1, Pg 116 - 118

Where can I find more money to invest?

If you would like to invest and wanted more money to invest in, here's some steps that you may want to consider taking:

1. Create a weekly and monthly budget so that you can track what are you spending on
2. List your non-essentials and find out if you can reduce spending on them
3. Change the way you pamper yourself, do it in a way that requires less money
4. Create a repayment plan that prioritizes your debts (if you have any)
5. Just make more money! Increase your sidelines, or passive income or even your current income :) 

Reference: The Lazy Girl's Guide to Success - Financial Success Chapter.

Potential Event due to High Borrowings

After understanding more about borrowings, let us look at what might happen to a company in the event that they had high borrowings:-

Well let's quote the Sino-Environment as an example, it's ex-CEO Sun JiangRong pledge his stake on the company to secure his own personal loan and due to the bad market conditions, it triggers a force-sell which caused him to lose control of the company entirely. To make things worse, the company is unable to pay off their bondholders and triggers a default in bond payment. All these events results in the suspension of the stock counter from trading in the stock exchange. Hence, we must always ensure that the company is in a healthy condition and have enough to pay off their borrowings on time before we buy any shares to ensure that we will not become a victim of the Sino-Environment case.

So how are we supposed to know if the company shows any signs of such incident? In fact, months before the suspension of that company's stock counter, the news on potential risk in terms of the company's ability to repay the upcoming bond was out.

Just do a google search on the news available for the company you are interested in purchasing, and if there's any bad news about it, take note and do further research on it to ensure your security before making any decision, especially the buying decision. Do a check every 3 months along with the reviewing of their quarterly financial report, as well. The bottom line is ... Always be safe than sorry. :)

Sometimes, no news is good news.

Read more on this topic:

• Cash is King Once More
• Sino-Environment plot thickens, unsettling questions raised
• Sino Environment may face new setback in proposed share sale

Borrowings / Debts

Borrowings/Debts refers to the money owing to the banks and other members of the public (through the use of bonds - long term / notes - short term). In the event that the company is unable to pay off these borrowings / debts on time, the company is very likely to end up in a highly undesirable position.

The ability to pay of borrowing / debts are especially crucial to the survival of the company. Hence, we must always ensure that the company is able to pay off their borrowings within the time frame stipulated, to protect ourselves. By protecting such downsides, we will be able to lower our risk exposure. :)

Just imagine, in the aspect of owing the loan shark money and we can't pay them. So there's a chance that loan shark might spray / splash paint on our wall, write our unit number at the lift, threaten us, hit us, pose danger to us or our loved ones etc but we won't be declared bankrupt. Just that our life will be more miserable and might be in danger if we can't pay up. Which is pretty scary right?

But when we owe bank money, and we can't pay up, there's only 2 results, either we become bankrupt and continue to slog and work so that we can pay back the money, or the mortgaged item will be possessed by the bank and they will sell it off to cover our debts.

Put this in the company's view. If the company can't pay up, there's also only 2 path, either it close down, or the bank will possess the item on mortgage and sell it off for money to cover the company's debt. But there could be a 3rd case that the government may want to save the company but this only applies if the company one that the government can't afford to let it close down.

Reference: Investopedia - Debt

Fold an e-Heart Today!

Fold an e-heart on the following link and Singtel will donate $1 to Charity! Let's share this with everyone! They are still short of quite a number of e-hearts!! Do give them a hand in that :)
Click here to fold an e-heart!

Thanks everyone. The Charity Drive has ended. :)

Opinions and How it helps..

Be positive, give others only useful and constructive comments that will help them move towards a better tomorrow. I'm still working on this myself. Shall we do this together so that we can help those we wanted to help. By giving them negative / destructive opinions that they might not know how to convert to a positive / constructive one, there's a chance that they might end up never doing what we wanted to help them in and give up totally in things related to that particular event. Because sometimes in life when I received feedback that is very negative or even destructive, somehow it does affects me.

Listen only to positive comments. For every negative comments on whatever you've received, think about how you can make it positive to improve your life instead of just making it a burden on your shoulders. Know what is it that you want when you ask for opinion. If you don't, don't bother asking for it.

Most importantly, ask the right people for opinions. If you want to buy a house, ask a property investment expert or even your most trusted property agent, don't ask a plumber or cleaner about it. Imagine, you ask your Indonesian maid about whether you should buy a property in Australia, and you ask a banker about how to clear your choked pipes. Does it really help?

In the financial aspect, when you do need help, ask the experts about it. For example, you wish to plan for the future of your baby, you might be asking your financial advisor about it. But when in doubt of their opinions, get a 2nd opinion, such as a 2nd financial advisor. If both of them sell you a different thing, ask a 3rd independent person, someone that know about it but do not have anything to sell you in that aspect at all.

Getting in the Money Game

When getting in the Money Game, our aim has to be for wealth and success, not just for survival if we do wish to become rich and financially free in future. In fact being contented may be good but it doesn't help in making you rich. 

You have to imagine your life to be what you want it to be and not as what it is currently. Consult people that are already at where you would want your life to be for advice. As successful people loves to share their success stories. Share your dream and vision of your life with your supportive friends and loved ones. It has to be shared with people that supports you so that they will help you along and pull you back on track when you diverge.

Next you will need to set a financial goal so that you know exactly what you want and will be able to get there. See how to achieve your financial goal for more info.

Also, you have to figure out what exactly is your current networth in order to proceed further and become more successful in your money game. See manage your cashflow for the link to the excel file. Find out the amount of money you need to live comfortably per month, it might be your current expenses and start thinking about how you can get that amount of passive income per month.

Most importantly, you have to play to win and not just not to lose. The whole point of playing any game is to win it! Focus on the finish line.

Wealth & You

I personally would like to recommend the book "Nice Girls Don't Get Rich" to not just women but also to nice guys as well. Why? Because it's the nice factor in the play that doesn't make you rich, especially when you are too nice when it comes to money.

For example, you are taught to be nice instead of being powerful, so you give helping hand to almost everyone in your workplace and ended up doing everyone else's work on their behalf. That's what happen to the "便利贴女孩" initially in the "命中注定我爱你" show. She contributed her time, her life and even her money to whomever that are nice to her. Then they just took her for granted. She did the most work but she won't be considered for promotion or pay raise despite being the most hardworking of them all as she worked hard, not smart. And because she's too nice, she probably won't ask for even a well deserved pay raise. Just because she's probably not sure if she deserves it! How sad huh?

As for you, if you are still working and do want a pay raise, start asking for it! Before you ask, think of the ways and things you can do to justify the pay raise. I'm sure your boss would love to have you add more value to the company and towards their own promotion / pay raise. And this is the direction that you are looking at if you want a pay raise. Work towards proving your capability and get others to notice your capability!

• Start by making others notice you. Improve your image professionally. Dress as corporate as possible but it must match the way your boss or their superior dress. Follow their standard in order for your boss to see you as their par. (That's why one of my friends did and it works)
• Offer help to your boss as it's your boss that decides your promotion and pay raise, if you do have extra time. Of course, you have to do the additional task assigned to you well and finish at least slightly earlier than expected to make your boss more impressed and notice you.
• Be friends with your peers and respect each other.
• Avoid doing personal things in the office.
• Think of what else you can do that make you more deserving in the upcoming promotion or pay raise and ask for it especially during your appraisal period, or when you want it to happen. As long as you can justify and your boss agrees with you, he/she will be more willing help you on it.
• Build a good relationship with your boss so that he/she is more of a friend to you rather than enemy. They must like you as a person.

Good Luck!

Do the Self-Assessment in chapter 1 to find out more about your behaviour in terms of wealth. :)

Most importantly, you have to do some form of investment for your income or savings in order to achieve financial freedom and from then on, you would need to worry about your future anymore. See my financial freedom posts for more info.

Protective Put Vs Covered Call

Options when traded the usual way as a form of leverage to make money through the current trend of your stock is very risky in my personal opinion. However, options can also be used in a way that you can either protect your downside or make money with it. But before you implement any of these strategies, you've got to analyse your stock's fundamentals before purchasing to minimize your risks further, and of course for the amount of put or call option that you purchase, you should have the equivalent amount or more of the underlying stocks you wish to protect.

The protective put is like buying an insurance to guarantee the value of your stock. You pay a premium to buy the put option in order to ensure that no matter what happened, you can always sell your stock at the specified price.

The covered call allows you to make money when the value of your stock drops but you will make less money should the value of your stock appreciates (increase in price). You receive the premium for selling a call option on the stock that you are currently holding at a price that you think the stock should be valued by the end of a specified date. This price must of course be higher than your purchase price so that you do earn a profit from selling the stock. So in the event that the stock price really drops and the call option was never executed, you makes that premium. But in the event that the stock price increases to a price more that what you specified in that call option, you might need to sell your stock to the person that buys that call option. Which means, you will make less money in the process.

Normally, I won't use either but I would prefer protective put as it's best to protect the downside and let the upside take care of itself rather than limiting the upside and making money during the downside.

Call & Put Options - The creative explanation :)

Basically, there are 2 types of options, namely, call option and put option. For both type of options, it is worth more money only when you can make money out of it and it becomes rather worthless when you can no longer make money from it. When it expired, it's worth nothing at all.

Call Option

This is a contract that allows you to buy a specified stock at a specified price before it's expiry.

Let's take McDonald's for example. Supposed, McChicken is for sale for $3, and there's a McChicken coupon that can buy it at $2.60 instead. This analogy, the coupon is the call option and the McChicken is the stock. The coupon is worth $0.40 as it allows you to buy McChicken at $2.60 instead of $3.00.

But this coupon has an expiry date. Once it expires, it's totally worthless.

Supposed, McDonald's now come up with a special offer that sells McChicken at $2 instead! Then that coupon you hold will become almost worthless, but it's still of some value as it hasn't reached the expiry yet and we don't know when this special offer will last. So people may still trade the coupon at certain values, but much less than in the earlier example. :)

Put Option

This is a contract that allows you to sell a specified stock at a specified price before it's expiry.

Let's take Singtel and iPhone as an example. Supposed Singtel has this trade-in promotion where they intend to buy back iPhone at $200, but you must show them the promotion flyer before the promotion ends. In this analogy, iPhone is the stock, the flyer is the put option. Supposed another shop M1 is selling 2nd hand iPhone at $180. So the flyer is now worth $20 as it allows you to sell iPhone at $200 but you only need to pay $180 for the phone itself.

Of course, as usual, once the promotion deadline on the flyer expires, the promotion ends and the flyer will be worthless.

On the next day, M1 sold all it's iPhone. Only Starhub is selling iPhone at $210. But the flyer of the trade-in promotion still has minimal value although quite worthless as it is not expired yet, because we never know when Starhub will come up with a promotion to sell iPhone at a price less than $100 before the flyer's trade-in promotion ends. So people may still want to buy the flyer but at a much lower price of course, maybe just $0.01 per flyer.

Every financial problem has a solution!

The lesson for today is that for every financial problem, there's always a solution. If there isn't any solution, then it's not a problem. :)
Here's some examples:-

• If you are in debt, work out a debt repayment plan and stick to it!
• Even if you have low salary, you can still spend less than you earn.
• If you feel that you are useless with money, just be more open to learning your way to financial success.
• If you loves to spend money, just think before you spend, wait for at least 1 hour before you buy something you wanted to buy but is not in your plans. If you still want to buy after that, you can then buy it, otherwise, you shouldn't buy it as you'll probably regret.
• If are can't keep accounts, I'm sure you can write down everything that you spend on so that you can track where your money goes to and in time, cut down on unnecessary spending.

If there's financial issues in your life, It's time to take action NOW to improve your life!! :)

4. Recommended - Travel Insurance

Here's why I recommends Travel Insurance:

• I recommend that you get this policy whenever you are going for tours. You get this claim on top of whatever existing plans that you may have in place. Additional coverage for travelling is good as it gives you a peace of mind for your trip as it covers travel related events, such as flight delay, baggage delay, lost of items during trips and even trip cancellation. For me, I prefer not to purchase such plans from the travel agency as separate purchase gives me more peace of mind.
• Annual Coverage is recommended for people that travels overseas often (such as more than 2 weeks). If the price of single trip plan cost more than $60, then you might as well get an annual cover. As you will be able to get the coverage as well whenever you visit our neighbour (Malaysia).
  

• For Singe Trip, I find NTUC's Classic Single Trip plan the most value for money.  
• For Annual Coverage, I feel that CitiBank's Savvy Traveller provides the best rate for annual insurance package, $82.5/yr for $100K coverage (Asia). There's also the Standard Chartered's Got it Covered annual insurance package at $88/yr for $50K coverage (worldwide).

That's all for my recommended insurance types.

3. Recommended - Accidental Insurance

Here's why I recommended Accidental Insurance:

• I recommends accidental insurance for those people that are currently not holding a full time job that gives you such coverage. This is an important policy be it housewife or children, etc as it will cover our bills in the event of accidents that might occur in unforeseen events:
• Accidental Death
• Accidental Medical Expenses (this is good when it comes to treatment that doesn't requires hospitalization, usually unless it's major accidents, the chances of staying in hospital due to accidents may not be very high, which means, your normal medishield may not be able to cover such bills)
• Minor accidents includes but are not limited to falls, sprains, non-hazardous sports injuries, cuts, scalds etc.
  
• Food Poisoning (Medical bills for such event is rather high especially if it happens at night and you mostly will visit either hospital emergency department or 24 hours clinic.)

Let's continue on Travel Insurance portion in the upcoming post. :)

2. Recommended - MediShield Insurance

Here's why I recommends MediShield Insurance:

• Medical Shield Plans are good as you can pay for the plan using your CPF Medisave account, of which the money is not really yours as you can only use the money in your medisave for things like medical bills, MediShields etc and you can never withdraw it anyway. Only your kins get the money in the event that you passed on.
• It's recommended that you also get the MediShield rider that comes with it as it helps to either cover 100% of your hospitalization bills or at least the main bulk of your hospitalization bills so that you only pay a fixed amount of the bill. (See my MediShield article for more info)
• Please take note that in order to make a claim, you need to at least stay in the hospital for at least 8 hours except for day surgery.

The following topic will be on Accidental Insurance.

1. Recommended - Term Insurance

Here's why I personally recommends Term Insurance

• [Buy Term and Invest the Rest] If I can set aside $100 - 200 / mth for insurance cum investment, I'll prefer to get a term insurance with critical illness coverage (add-on) at least till age 65. The cost now may be higher than short term 5 / 10 years plan but in the long run, it's more value for money. If possible, I'll love to get a term insurance plan that coverage till age 99 so that I know that I won't need to worry for the rest of my life. Then I'll use the rest of the money to invest in stocks and shares or even property. As the best possible returns actually comes from stocks or property investment, provided you know how to invest in them. If you are not sure about how to invest in that, you may want to educate yourself. Alternatively, you can also invest in mutual funds / unit trust using the balance of the money.
• If possible, get a female / male specific rider (add-on) to protect yourself in the occurrence of gender specific illness.
• As for how to have invest the rest of the funds that you are willing to set aside, just keep it in an account and invest in your desired investment every time you have about $1000. For unit trust investment, after the 1st $1000 is invested, you should be able to set a monthly or quarterly investment amount for automated investment. 

In my next post, I'll be sharing about MediShield Insurance.