Sometimes the power of now can really kill you?? can it???
As discussed earlier on(Singtel)….let see how patience fare.
You have saved up $2,900 to purchase Singtel stock.. How should I purchase?
(Dividend calculation are not included to simplify calculation)
“LIMPEI want to do something now” Scenario
- Notice Singtel price soaring and thinking about how much you would have made if you bought it during 2007
- Decided to purchase it at 2008 at the price of $2.9
- Went through the crazy emotional cycle when the price drops to $1.4 at 2009 all the way to 2013 (5 years of emotional trauma)
- To only gain $0.10 capital gain
- Purchase 1000 units ($2,900) worth of stock at 2008
- Stock value at 2009 ($1,400) – Half of your initial purchase value when you’ve just bought it
- WOULD YOU SELL IT IMMEDIATELY?? or could you hold on or would you even know what to do?
- Value of stock at 2013 ($3,000)
- Gain of only $100 [1,000 units x $0.1] – Average earning of $20 a year (5 years)
“I’ll wait for the golden egg” Scenario
- Learn the art of patience and saw value in the stock at 2009
- Purchase it at a price of $1.4
- Held it easily for the whole 4 years
- Capital gain of $1.6 per share
- Purchase 2,071 units ($2,900) at 2009
- Gain of $3,314 [2,071 units x $1.6 x] – Average earning $828.57 for a year (4 years)
“lazy to think and bother” Scenario ( Dollar cost averaging)
- Learn a new technique called Dollar Cost Averaging
- Decided to purchase Singtel stock every year with a fixed amount of $362.5
- When price is high, I purchase lesser units with $362.5
- When price is low, I purchase more units with $362.5
- Not so emotionally affected
- Sold at the price of $3 (for easier comparison) – a Capital gain of .55
- Decided to purchase for 8 years with – $362.5 a year ($2,900/8)
- At the end of 8 years, I would have purchased the stock at an average price of $2.45
- Capital gain of $651.02 [1,183 units x $2.45 ] – Average earning of 81.40 a year (8 years)
- Units : $2,900 / $2.45 (average price) = 1,183 units
- Wait for the golden egg (Patience) – So when is the best time to buy????? That’s the million dollar question
- Lazy to think and bother (Dollar cost averaging) – You still have to research and do basic identification and understanding of what is a good company… so technically you cant be lazy unless you do go for index investing 🙂
- LIMPEI wanna do something now (Inpatient/aggressive/greedy)
Obviously, patience does get you
somewhere richer faster…. so what happens??? why do we always want something now? Do you realize the increase in our need for immediate physical gratification??
“1 Knowledge point”
The graph is always easiest to understand
In order to facilitate easier understanding of what is happening… An image is always the best to start with
- Basically, Deutsche Bank Stock Price has a high probability to head the same direction as Lehman before the Crash/Filing for bankruptcy (2007-8).
- Currently, have low liquidity (very low cash) & Failed twice on the bank stress test (basically how banks would to fare in severe economic conditions)
- Isn’t a big bank suppose to be “Self-Sufficient / Safe”
- They have a Total Derivative exposure of 54.7 Trillion Euros
- 4-5 times the amount of Euro Zone GDP
- That’s why everyone is concern if the banks file for bankruptcy
- Imagine making a loss of 10% of that amount…. yup
- Why isn’t anyone helping them out???
- The cost of insuring them is getting more expensive (would you try to save a dying cancer man at an age 100 – a bad analogy but
hopefully you get what I meant)
- Plus they failed many regulations
- They have been fine by the Department of Justice (DOJ) for more than 5.4 Billion Euros
Conclusion: Deutsche Bank holds a very strong risk to every company due to it’s many “strategic” relationship and business doing… Countries included… Should we fear or should we gear up and be prepared for a buying spree??? 🙂
P.s whatever that is shared here are information paraphrase from Reuters, Bloomberg, Zerohedge…. Hopefully, it is more digestible
Everything so expensive
Now after knowing all the Cost/Other factors in Part 1, let’s move on to the only way to get a Second Home.
Utilising CPF – If only you never wipe out your CPF after your 1st house
- You can only utilize it if your CPF(OA/SA/CPIS-SA) have more than Half of the prevailing CPF minimum Sum currently at $80,500 [$161,00/2].
- If your CPF surpass the $80,500 mark ( You can only use the excess – the amount above $80,500)
- How much can you use?
- Valuation Limit – Purchase Price or The Value of the property (Whichever is lower)
- Withdrawal Limit (Maximum amount use on private property) – 120% of Valuation Limit
- Which can you use?
- You are first entitled to use the valuation limit which is 100%
- In order to use the Withdrawal Limit, your CPF have to set aside the Basic Retirement Sum (BRS) in your Special account (SA) of $80,500 – if you’re below the age of 55
- If you’re aged above 55, You have to meet the BRS in your Retirement Account (RA).
So should you get a second home as an investment??
Some points to note if you’re lazy to follow the chart:
- Basically, you need ALOT of Excess Cash/ CPF to purchase
- And if you do, is it even wise for you to invest???
- You might be better off investing that money into Reits ( 7 times better)
In an investment nutshell, I have left capital gain out for a reason due to the inability to predict housing prices and how much a REIT can grow in terms of price. I would only suggest you buy a second home if you have a strong understanding of the vicinity’s market competition (Value) as it has to be stronger than your purchase price and also only if it (Price paid) beats your other opportunity cost ( I.E Reits/Index Investment)
P.s Click here if you have not read part 1, do let me know if there is missing information 🙂
” Ultimately, it’s knowing your options well and of course, choosing the best”
“+1 Knowledge point”
Is it impo@ssible to buy two house in singapore???
As there will be too many numbers, this topic will be a two part series with the final one connecting all of them together.
Before buying it is always important to know ALL costs/factors behind them.
Cost Factors – Upfront fees before getting your keys
- Buyer Stamp Duty Tax (BSD) – On property price
- 1% for the first 1$80k
- 2% for the next $180k
- 3% for the remaining amount
- Additional Buyer Stamp Duty Tax (ABSD) – On property price [On top of your BSD]
- 7% (Second Property) – Singaporean Rate
- 10% (Third & Subsequent properties onward) – Singaporean Rate
- 5% (First Property) – Singapore PR
- 10% (Second Property & Subsequent properties onward) – Singapore PR
- 15% (First Property & Subsequent properties onward) – Foreigners
- Legal/Valuation/Fire insurance Fees – USED TO be absorbed by the banks (Now you have to pay)
- Market Rate for legal fees are 0.4% of the property price
- Valuation fees are done by the bank before providing loans – $200 to $500
- Fire Insurance range from – $100 to $300 per anum
- Condo Payment
- Option Fee – 1%
- Options Exercise Fee – 4%
- Downpayment – 15%
Other Factors – How many people you can rent it to/Loan
- Total Debt Servicing Ratio (Everyone living in Singapore is tagged with it to prevent over borrowing/ debt repayment failure)
- Capped at 60%
- Meaning, money used to service the loan cannot exceed 60% of your total income.
- Example : You are paying $1,000/monthly for your HDB Loan, $1,000/Monthly for your Car Loan and $400 Credit Card Loan/Monthly with a monthly Salary of $7,000. Which means you can only loan $1,800 [$7,000 x 0.6 =$4,200 – $2,400 (current loan) = $1,800] – Computation is based on a FIXED monthly income.
- TSDR considers your gross monthly take-home income (EXCLUDE CPF Contribution by employer) | Plus it also considers your Annual Variable Income ( Bonuses, Commissions and Rental income) at 5.8% & if your bonus and commissions are fixed they would be calculated at 1%. [Situation where you have both fixed monthly income and variable income] – Thanks CORY 🙂
- If all these are too confusing for you, you can just type all your numbers down and it will crunch it out for you HERE
- If your salary is a variable one, you have to first minus 30% of it which leaves you 70% of your variable monthly income. Then computate 60% of it(70%)!
- Loan-to-Value (LTV) limit (How much percent can you loan from your property price)
- First House – 80%
- Second House – 50%
- Third House – 40%
- HDB – Minimum Occupation Period of 5 years ( You have to stay for 5 years before subletting out your flat, Including RESALE FLAT – Thanks Foolish Chameleon!)
- 1/2 Room – 4
- 3 Room – 6
- 4/+ room – 9 (you can click to check the HDB board)
- Maximum 8 people (No matter how big the unit is) – Each occupant should have at least 10 Sqm of space.
- All have to be rented out for at least 6 months and max at 3 years
As daunting and intimidating as the cost can be, is there a way around it??? hmm?
p.s Do let me know if there are missing information!
+1 knowledge point
A thousand word in an article but only 200 is needed for them to bring a point across
As the world gets more complicated, simplicity is something everyone yearns for and thus I shall bullshit no more.
Basically, Clipped Summarises news article from famous News provider like CNN, Reuters, IB time and Etc. Category ranges from World News, Finance and Technology.
Here’s how the interface looks like:
Imagine understanding a two thousand word article in one minute through a 200-word summary. That’s Clipped for you.
Hope it can benefit you guys as much as it benefits me.
+1 Knowledge Point
Every second count……is it even logical for us to say that?
It is definitely easier to say what we can do then do what we have said. Have you realized the lack of hours we have in the day is a true excuse? Because I have….
Identify How you spend every hour in a day (It takes 21 days to form a basic habit – as intimidating as it may sound, remember success is just a matter of attitude)
- Use one week as an experiment – one month would be the best
- Be as concise as possible when logging them down
Learn to alter the time used through questioning
- For example (Below are my habits on Monday- from an activity tracker)
- 0800: Grind raw lemon juice and drink
- 0830: Begin Market outlook (Forex)
- 0900: Prepare a blog post
- 0945: Prepare for gym
- 1200: Have lunch
- 1300: Watch youtube videos???
- What can I watch to increase my knowledge yet at the same time entertains me? – Finance documentary or crash course
- 1400: Watch Netflix???
- What movies/tv series that stimulates my mind? – Wolf of wall street: “How do you sell a pen? by creating a demand”
- 1500: No idea what to do now/ read other blogs/ check in and out of the chart
- How can I improve my “strengths”?
- 1700: Go back to watching Netflix??
- 1800: Prepare dinner to cook
- 1900: Lost on what to do/ Watch videos/laze around at home
- Plan what I can do for the next week/month and once it’s done I can watch all the “mindless” show
- 2330: Sleep
- Blues are solutions and Red are spotted habits that aren’t value added
In a “productive” nutshell, spending time on “mindless” activity is inevitable (we are all human) but how and when we choose to spend it, can only be decided by us. What we want to aim for is to be empowered (values/knowledge) at the end of the day, hence learning how to spend our time wisely is crucial.
“Only you can determine your future”
+1 knowledge point
If you’re curious on what I used to track my daily activities
investing in bonds are safe and slow
What are Perpetual Securities
- A hybrid form of securities that combine features of both debt and equity
- Won’t be paid on time if Issuer decides to postpone the payments ( But Hylfux has implemented a dividend stopper – means if they do not pay regular coupon payment, it will not be able to pay dividends to its shareholders)
- Won’t be redeemed if Issuer decides not to exercise the call option
“Specialist in water treatment and among the top global desalination plant provider. It operates in Asia Pacific, Middle East, Africa and America. Just won the largest “waste-to-energy” project in Singapore. The bond rate will change in 2020 to 6.2%.”
1. Identification of Bond Below par value
- Current market value: 0.968 ( discount of 4 cents) – That’s a capital gain of $40 with it matures, assuming you buy only 1 lot.
- Price to book value of the company: 0.2 (80% discount?!)
2. Their Numbers – Financial health (some numbers are not shown as they are too choppy over the years, which shows the lack of consistency. Do understand that this company growth has a heavy reliance on projects – means they need heavy financing)
- Net Asset Value Per Share: 54.23
- Debt to Equity: 79% (Quite dangerous as growth & management is based on financing)
- The dividend payout has been decreasing (not a good sign)
Although the company has a long MNC reputation and dividend stopper is in place, it wouldn’t be an investable product for me as I find the numbers too choppy 😦
+1 knowledge point