Thursday, March 9, 2017

Basic Rules for Financial Decisions - Family Edition

It is way easier to make financial decisions when you are single. It gets harder when you get married and have a partner whose view points on finances does not always match yours. Don't get me wrong - it isn't a bad thing usually because hearing another's view point about money actually adds to your own understanding of what money is about. As I've said before, money isn't just money. Money represents something to all of us - whether it is security (which usually means you like to hoard save money), or whether it is financial power (which usually means you like using money to spend on your lifestyle choices), or whether it is financial freedom (which means you want to invest and make money work for you).

Throw into the mix starting a family and making financial decisions just got a lot harder. Why? Trade-offs.

Do you want to save the money in your CPF now? Or use that money to buy a house nearer your kid's targeted primary school?

Do you want to use the money to invest in a short term trade, or put into buying ETFs that would only reap results 10 years down the road?

At the end of the day, I feel there are a few rules to follow:

1. Know that your kids will be young only once. 

I subscribe to the rule that yes, your kids may not remember everything that happened when they were young, but what they are left with is an unshakable feeling in their subconscious. So, you may think that you don't remember anything from your first 5 years on earth so it doesn't matter that you don't spend time with your kids when they are 0 - 5 years old. However, the subconscious brain is a powerful mysterious thing. Your subconscious probably still remembers the warmth from your childhood. Its an imprint left in your brain. And its the same with your kids.

What's the suggestion then?

Put in your hours with your kids while they are young. Stop the long hours at work. Be with your kids. And when you are with your kids, play with them and really be with them. Not your phone. Alas, this isn't a time to go all out with your career unless your other half is able to be with them for you. Your financial plan shouldn't be something that takes up too much time.  If you are obsessing over ticks in the markets or reviewing too many financial statements after work, stop that right now.

What do I do as a FTWM - that is a full time working mum for the uninitiated - with 2 kids below 5 years old? I use a mix of 1) Philips Share Builders Plan 2) Fixed Deposit in USD 3) Dividend Stocks Why? You just won't have time to monitor the markets. After my first kid, I realised the number of trades I made dipped to an all time low of just 2 in 2014. And those were bad buys made upon hearsay. With a regular investment plan, you avoid the issues of timing the market, spending too much time reading up on news, making decisions in a hurry. The Fixed Deposit acts as my war chest to be used in times of bear market.

2. Minimize your purchases 

It's so easy to buy buy buy. But the cost is more than just the dollar value of your purchase. There is a time element - you need time to shop, to store, to arrange and to take care of your purchases. I purchased a few branded bags over the years. With each expensive and lavish item, I had to spend more time to care for it - taking the bags to bag spa, making sure i remember to use the bags to air them, cleaning them. Its the same for my husband's expensive purchases too. With a new lens, he had to buy a new camera cupboard to ensure that the lens don't get moldy. We need to shop for furniture to keep his camera collection.

So my rule of thumb - one in, one out. Less item to care for, manage and clean.

And the best thing is - you save money!

3. Planning your Money 

With kids, your timelines for certain investments are shorter. This isn't about just a retirement nest where you have a good 30 years ahead. There are other milestones to plan for.

Like:

1) moving house. If you have 2 or more kids, depending on the size of the house you start off with, you may have to move to a bigger property in 3-4 years. Or you want to move nearer to your kid's primary school. Your investments should then have a time horizon of 3-4 years.

2) taking a breather from work when your kids hit primary school. Maybe you want to be around the house more often when your kids enter primary school. It is also around that time when your parents can't really care of the kids anymore. If you are thinking about that, you probably should look at your investments reaping a return at about the 7- 10 years time.

3) overseas education. Start thinking about this. In my search for a property, I met a few parents who were selling their houses to fund their kids education overseas. The thing was, it wasn't the best time to sell their houses. You don't want to be stuck at that situation.

Honestly, the years with kids fly by so quickly. Its really at your early 30s when you want to maximise your time with the kids. Yet, being employed in most jobs mean that your early 30s is when you move on to positions that take up more of your time. It is so hard to make decisions about your money but what i do know is this. You don't need money to spend quality time with your kids. You don't need a fancy staycation. Your kid is perfectly happy to spend time with you at the neighbourhood park. If your job is making you unhappy and giving you so much stress that you are upset when you are home, reconsider it - your kid is only young once. If you are still in the habit of making too many purchases, reconsider your spending habits. Remember, with kids, its more often than not that they will spoilt your fancy furniture, beautiful bags, expensive cameras, dirty your continental car. Purchases are supposed to enhanced our lives, not limit it.

Hope this helps.


Wednesday, March 1, 2017

I am Female, here me roar

There has been a great interest in the endangered species known as the financial female lately. It seems that being interested in finances and being female are two separate circles, and the people who fall into both categories are far and few.

In any event, apparently there is a new conference specially for this little silver of people falling into this unicorn segment and its organised by the good people at The New Savvy.

Although I do think it is very helpful, my take on this is that it is unlikely to be a big hit. Why?


1. Limited Numbers

There aren't many female bloggers around. At least the very active ones. Why so? It could be a cultural thing -  the fantasy that most of us grew up with (think barbie dolls) is that we will find a prince who will take care of us and we will live happily ever after. Practical mothers of the good old days would press upon us the need to find a man that can provide. Nothing wrong with that advice, but it seems that most of us are looking for someone to take care of the financial aspects. And not to mention, money is actually more of an emotive issue. And females are emotional creatures. We spend when we feel sad, we spend when we want to look good. Do not judge me, but most financial bloggers are very practical with their spending. And most females aren't. If we were, we won't be spending thousands of dollars on about CL or MB shoes which only serves to torture our poor feet. All in the name of vanity.

Even if you manage to find the financial female, there comes the second problem.

2. Lack of Time

For women with a family, time is indeed a precious commodity. And if you think this is an excuse which no modern women should dare use, consider this: when was the last time you went out to purchase vegetables for dinner? Or when did you even had to think about grocery shopping? Was it handled by ahem, your mum? your spouse? Or if you were the lucky few who have a helper, when was the last time you gave your helper your pay and did some management issues with your helper? Who is the person that the children go to when they have some issues to handle? And if the women in question has a full time job, very likely that she really has her hands filled.

This is what us working mothers are busy with all the damn time.

I can't tell you how many different thoughts are in my mind all the time: whether I still have vegetables in the fridge; it's Monday and the wet market isn't open but we ran out of fish for the toddler; need to get back to Boss on recent work email; haven't yet send out the invites to relatives for the child's birthday party; need to check what cakes there are for the one year old party; whether i should pretend that i did not know that my nephew on my husband's side hates durians but we all love it so go ahead to order that durian cake; that ruined shirt that my helper caused - when should i talk to her about it; maid's health check; need to buy more diapers... the list goes on.

Of course, a lot depends on how much help one is getting and how hands off one can be with regards to the helper, housework, kids, work.

With that, you lose quite a bit of the already slim financial female audience already.

Be that as it may, I wish I could stress on how important for the female audience to be more financially educated. Why? Because 1) we live longer 2) we spend more of our own retirement money on our kids than our spouses do 3) we have more health issues due to living longer 4) there is a tendency for women to take a back seat with their career the minute we have families 5) divorce rates are up, so its not like you can depend on your man for the rest of your life if anything goes wrong 6) if anything happens, the knock on effects on the children can be serious.


Sunday, January 15, 2017

USD Fixed Deposit Review

I have with me a sum of USD and every 6 months to a year, I have to find a good place to park my USD to get some good returns.

So why does Mrs Spoon have this sum of money? Well, working for an MNC have its perks. MNC typically give away some shares to its employees and I have been saving a few rounds of my bonuses. I cash them out (yes, at a bad price though) and I opted to have the monies in United States Dollar as a hedge for the fledging Singapore economy and currency. It is good news now since USD is trending upwards. I am really unsure of Trump's move though. what is his plan for the US economy? How will interest rates be affected?

So is a comparison of the current FD rates for USD right now:


Bank
Rates (3 Months)
Rates (6 Months)
Rates (12 Months)
Minimum Amount
CIMB

1.77
1.85
20k
Maybank

1.1
-
50k
ANZ
1.18


50k
OCBC
0.65

0.8
5k
UOB
0.05+0.9


50k

So it does seem like CIMB is tops at the moment. 

What other factors do you need to keep in mind? The transfer fees and the agency fees. 

I plan to move some of my USD out from my existing USD current account to the CIMB account. There are two ways which this can be done:

1. TT transfer; or 
2. By cheque. 

TT transfer is quick and fuss-free. Generally, what I would need to do is to go down to CIMB bank to get a placement form with the relevant instructions so that the bank knows what to do when monies hit the account. There is no charge on CIMB's end as the receiving bank, but there is a charge on the transferring bank. I did not manage to contact OCBC but CIMB informed me that if they were the transferring bank, they would charge SGD30 for admin fees, and their agent bank would charge about USD50 for agency fees. 

For cheque, this is not instant, and it takes about 4 working days for the cheque to clear. However, it does seem like this is free on both the transferring bank and the receiving bank. Let me try this out and see how it goes.

Edit: It is not free for cheque from OCBC bank either. There is a 0.125% charge for commission fees and 0.125% charge for commission in lieu of currency exchange fees! However, what is not charged is a $20 TT transfer. So that is what you are saving on. If 4 clearing days makes you more than SGD20 in interest (either the interest rate is so high or the amount is so huge like in the millions), else a cheque is still cheaper. 

Meanwhile, please update me if you have any idea what else i can do with USD. 

Cheers

Tuesday, January 3, 2017

2016 Review

A year passes by so quickly and its time to set out my review again.

With kids and a full time job, I realise that you have less time to sit, think and savour a good cup of coffee, let alone have time to review your stock portfolio regularly. Hence, one of the things I did since 2015 was to set up regular savings plan for both SRS and cash funding. This is a good thing coz I stayed invested in the market.

So how was the year for me?

Dividend income (from RSPs and shares) = $5169
Capital gains = -12898

Yes, you saw that right. Negative capital gains. Why? I decided to cut losses on shares that couldn't recover. Namely, Hyflux which was a whopping loss of nearly 10k, NOL on a slight loss of 500 (but it was being bought out so I did not have much say) and another penny share which I had entered into recognizing it was a punt. I only made small gains on the sale of AHT.

Do I regret my sale? I guess I am learning to deal with cutting losses. I should have cut losses on Hyflux earlier but I just couldn't bear to. Months turn to years and losses went from a few thousands to many thousands. I couldn't even bear reading the AR for hyflux for months and when I finally did, the numbers were so terrible I decided to just cut loss. Interest rates are expected to rise and I am not sure how hyflux is going to deal with the debts they have at hand, and how they expect to pay off their perp bonds holders.

Current Local Share Holdings (in order of current size):
1. Nikkoi STI ETF
2. Keppel Corp
3. DBS
4. AIMS
5. ST Engineering
6. SPH
7. Wilmar
8. SIA Engineering
9. Ascendas India Trust
10. Ascendas Hospitality Trust
11. Comfort
12. M1
13. SembCorp Industries
14. Singtel
15. Nam Cheong
16. Keppel Reit

Things for next year:
1. I am going to stop RSP for Nikkoi STI ETF and Keppel Corp. Why? I have not sold Nikkoi ETF and I worried about the liquidity. It isn't THAT much since my entire portfolio is now 140k thereabouts but I haven't tried selling any ETFs as yet. As for Keppel Corp, my average price after being on the RSP is now $8.70. It isn't a fantastic price but with the amount of money invested hitting nearly 25k, I want to pull back a little and keep some cash for other dividend plays.

2. Purchase more DBS bank shares. So the good thing about RSP is that I have now build up a substantial DBS amount through RSP. I kept wanting to invest directly throughout 2016 whenever a pull back happened but kept thinking it would drop below 14. Look where that got me.

3. Research on ST Engineering /  Keppel REIT / SPH / SCI. I keep thinking of putting more money in but I haven't yet done the research. Better not be lazy.

4. Purchase Singtel / M1 / AHT on pull backs. Ok, so I have read up and I think ST / M1 is worth purchasing on pull backs. Singtel has a better moat but I desperately (shucks) need to average down M1. I am also expecting AHT to be able to bring in additional revenue next year and want to put more into it.

5. Sell off Wilmar, Nam Cheong. These were really wild cards to begin with. I should review and discard in time.

What was right about this year?
1. Putting money in RSP. It took away a lot of emotions. It is easier for a working mum to cope with it.
2. Concentrating more on dividend income. My dividend income has finally grown to 5k, which means about 400 per month. This covers some transport and food for me.
3. My total asset is finally more than my biggest liability - my share of the house mortgage.
4. Reading up a lot more on REITS and shares.

To a better 2017. 

Thursday, January 7, 2016

2015 Dividends

2015 was a rather dismal year for me in terms of the overall value of my shares. Most of my shares went down, and i even had to cut losses on a particular punting stock that was recommended by brokers.

but 2015 was also the start of a new resolution, that to create more dividend yield stock and to keep trading / value investing opportunities to a mere 30% of my portfolio. Its a long journey since i do have a lot of crappy stocks but slowly and surely i need to make my way to the dividend portfolio. Its also imperative to hold onto to cash, although the drawback with holding cash is that one tends to spend it away. I have USD as well, which is good, coz i can't spend it, and USD is appreciating against the SGD. I also started more regular saving plan into blue chips stock and the STI ETF so as to avoid timing the market. However, i think i put in too much (like almost 30% of my salary!!!) and i don't have much cash hoard at the end of it all.

As at end 2015, some of my main thoughts on my numbers are as follows:

1. My cash:equities is 7:9. Seriously need to sell off some useless US stocks that i have to increase my cash funds. This cash also includes my emergency funds i should really increase cash.
2. My main portfolio of shares consist of: STI ETF, keppel corp (which seriously i need to relook to my current decision of putting almost 1k every month into a RSP for keppel corp); ST Eng, SPH. Really need to rebalance my portfolio as well. I also need to consider if i should be purchasing blue chips stock seeing that i am heaving investing into the STI ETFs every month
3. I do shop a lot after all, contrary to the belief that i do not shop as much as the average girl. I spend a whopping S$7,908 on personal shopping (doesn't include the family or for my kids) and that works out to almost $700 a month! I know this was because I bought 3 branded bags this year but i also sold off 2 branded bags ( i love carousell and madam milan) so if i take away the 2.4k i made from selling the bags, i actually spend $460 per month. which is still a lot considering that i always thought i spend less than the average girl. Time to relook into this!!!
4. I achieve $4331 as my dividends (including my regular savings plan) for 2015. This is significantly higher than the $2441 for last year.

So my main aims for next year is: 1) rebalance my portfolio some more 2) avoid spending on clothes and unnecessary items 3) increase my war fund 4) review my stocks more often.

As we move into a bear market, its helpful to pull out this little reminder on how much to invest every month.




With the 52 week high of STI being at 3,500, and my war chest at 50k (with some in USD so i need to decided when to change!), this is the amounts that i will be investing in:

1) when STI hits 3150, i invest 5,000
2) when STI hits 2975, i invest 11,000
3) when STI hits 2800, i invest 15,000
4) when STI hits 2450, i invest 5,200
5) when STI hits 2100, i invest 6,250
5) when STI hits 1750, i invest 6,250

Well, STI hit 2700 today, so technically, i can invest some 15k now. problem is that i haven't yet been sourcing for good stocks.

So next steps: high dividend yield stocks with good cash flow!

Possible stocks to purchase:
1) SIA Eng @3,.20
2) ST Eng @2.70
3) AIMS Capital @1.25
4) First Reit @0.85
5) Parkway Life Reit @ 1,3
6) Singtel @3.2
7) M1 @2,3
8) Soilbuild business space @0.73


Sunday, August 30, 2015

living a minimalist life


I am fortunate to be in one of those industries that paid more when I was first starting out as a fresh graduate. About 10 years ago, my industry paid fresh grads about 3.8k, instead of the 2.5k which most fresh grads. It was a windfall for me. My dad, the sole breadwinner of the family, up till his retirement, only earned 2.5k maximum even after 30 years of slogging in the same company. Suddenly, my pay was about 1.3k more than his. I felt rich, really rich.

When I was an undergraduate, I often gave tuition and could earn up to 1k a month. Even with that amount of money, I was careful not to overspend. However, that 1k could give me a lifestyle that allowed me to keep up with my friends – think the usual clubbing, movies, eating at cafes, expensive coffee, taxis for the late night outs. When I started earning my first pay check, I was extremely happy. The hours were really long and to reward myself, I started taking more cabs, justifying the fact that I was too tired and money ought to be spend. I started having no qualms about purchasing $150 dresses, justifying it with reasons that I had no time to shop and if I found a dress that I really liked, then I should just purchase it instead of spending another 3 hours looking around.

However, even with my new found “wealth”, I guess frugality was already ingrained in me. I couldn’t bear to splurge on a $2,000 luxury bag (then, I must admit I have done so a few times since) even though all my peers were going crazy over reebonz.com at that time. I also could not bear to stay at upmarket hotels during my holidays or eat at michilin star restaurants. I rather use guest houses, bed and breakfasts and eat local cafes when I travelled. I was still a miser in clubs, much preferring to only go for ladies’ night than pay charges when I knew you can go in for free on Wednesday.

I assumed that the reason for my frugality was because of my past. As I have personally witness how difficult it is to earn money, and how the lack of money can constrained your lifestyle, I have no wish to splurge it unnecessarily. Funny enough, I realise that some of my peers who grew up in the same “lower income” group as me were the total opposites.

They grew accustomed to spending. Spending even more than those people who grew up among relative wealth. They thought nothing of buying a $15k watch, or a few $8k bags, or trying out fancy restaurants or going on luxurious holidays. When they got married, they felt it necessary to create the most romantic and fancy wedding ever, to don the most beautiful gown and throw an extravagant party. They wanted to make up for the lost times when they wanted to do such things, but could not do so.

I wonder. Why the difference between myself and them? Did we not grow up in similar conditions? Why was I refusing to spend for fear that I may one day lose my money? Why were they willing to splurge on everything – food, clothes, holidays, watches?


I think the key is in the upbringing. Even when my parents were poor, my parents never complained or commented that we were. They hardly mix with the rich crowd, they never crave brands. Whereas for some of my friends who fell into the latter group, their parents lamented their poverty, compared incessantly with the richer folks, and bought brands even though they could barely afford it. They desired richness and strived towards it, and put it as a goal to be achieved. What I wanted because of my poverty was financial security. What they wanted because of their poverty was luxury. 

Wednesday, August 19, 2015

Investing in Japan via REITS

Japan has been a sleeping giant for awhile now. With Abeconimics, there is hope that there may be revival in Japan's fortunes, and hopefully, there is money to be made from this.

I've taken look at 2 popular REITs - (i) Saizen REIT (ii) Croesus REIT

Saizen REIT deals with residential REITs all over Japan and caters mainly to small families or singles. This REIT is also very popular with savvy investors, and AK71 also buys into this REIT.

Croesus REIT deals with retail malls in Japan and is also highly recommended. If Japan consumption increases, then one strong beneficiary of this should be mall owners. More money = more shopping = happy lessee = happy lessor.

Let's look at the finances for Saizen first:

1. PE= 13.49
2. PB= 1.09
3. Revenue = 31.39
4. Revenue / share = 0.11
5. Revenue growth QoQ = -2%
6. Gross Profit = 2.52B
7. Profit growth QoQ = 4.1%
8. Cash = 42.24 M
9. Debt = 142.05 M
10. Debt / Equity = 63.24
11. current ratio = 2.42
12. book value = 0.79
12. diviend yield: 7.2%

issues: negative retained earnings; -ve cash flow.

Let's look at the finances for Croesus:

1. PE= 17.02
2. PB= 1.54
3. Revenue = 50.92
4. Revenue / share = 0.11
5. Revenue growth QoQ = 42.4%
6. Gross Profit = 2.97B
7. Profit growth QoQ = -51.50%
8. Cash = 11.09 M
9. Debt = 377.48 M
10. Debt / Equity = 124.52
11. current ratio = 2.10
12. book value = 0.759
12. diviend yield: 8.2%

issues: -ve cash flow
other information: occupancy rate of 90.9% in 2015 as opposed to 91.8% in 2014
NAV is currently 1.13 for 2015 as opposed to 1.22 for 2014. debt ratio high at 50%

All in all, i am not sure if either reit works for me! i need to carry on reading. for now, not investing.