Sunday, 21 August 2016

Thoughts on the Book: A Random Walk Down Wall Street

Random Walk
One in which future steps or directions cannot be predicted on the basis of past history

Around late last year, I sat down with my first ever book on investing/finance: A Random Walk Down Wall Street. I didn't know what to expect then. 

At its core, the book says you should just buy index funds and make it the core of your portfolio, manage it passively. Of course, then buy some individual stocks if you want the excitement. 

In other topics which stood out the most to me, The Fitness Manual presents exercises such as: You must start to save and start early, build reserves and insure yourself, be competitive with your reserves, make use of tax relief by putting money in retirement plans, understanding your investment objectives with a sleeping scale. 

The Life Cycle Guide presents how you can assess your risk based on age, and how the allocations like cash, bonds, stocks and real estate (REITS) can be rebalanced as you age. 

Behavioral finance is talked about, and the lessons from history also stood out to me. 

In valuation, there are basically 2 techniques: Firm foundation and castles in the air. The techniques of fundamental and technical analysis are debated in the book. 

Being a newbie, it was harder to understand the Efficient Market Hypothesis (EMH), Modern Portfolio Theory (MPT), pricing models and the debate on smart beta in the book. 

I felt that the writing was written with the layman in mind, with many analogies and statistical examples. The first part of the book teaches you to always remember the past lessons and relate how your own psychology is often your biggest enemy in investing. The middle of the book got a little more complicated with EMH and MPT. The last part of the book finishes it off with how you can conduct the walk with indexing. 

As it was the first serious investing book I read, it was generally easy to read and I found myself leaning slightly to some of what the book proposes. Of course, more than just being a teacher, the book also kicked off other habits. I started to read the Invest section of the TheSundayTimes. I started going to Kinokuniya to satisfy the craving for knowledge. I also bought and read The Intelligent Investor by Benjamin Graham which was a far more difficult book to digest. 

Knowledge is power 
Francis Bacon

Till next time, 

Saturday, 30 July 2016

POSB Invest-Saver RSP Update

If I am to describe myself as an investor now, I will probably be an index investor. It has since been about 9 months ago that I subscribed to Invest-Saver. There were a couple of reasons that got me started. 

Firstly, I wanted to get started with stocks, secondly, learn about investing with a small capital and lastly, to discipline myself financially. 

9 months on, how did it fare? 

Dollar-Cost Averaging

$100 goes into the RSP monthly, except for June's amount of $200. 

Total Investment Costs and Cumulative Portfolio Value as of 30 July

Capital Gains/Losses as of 30 July

There were dividends of $2.93 in January and $10.59 in July. 

Total Return is $17.64 as of 29/7/16 which includes the dividends minus the commission costs. (Note that a few months back, the STI was really volatile and Total Return was negative, so it isn't all rosy always). Current share price stands at 2.93 as of 29/7/16). 

I am going to continue this plan until my ORD because that's when my cash flow stops. There was no particular reason for putting in $200 in June other than trying out the ATM function. 

There will always be different expectations of returns. A fellow army mate shared how he can win hundreds in a casino, another won hundreds in the recent World Cup. So when this topic came up, it's quite apparent that the returns are low and volatile for this Invest-Saver. But one of them signed up after he realized that time and the value of compounding could help here. To each his own. 

So I tell myself that in time, this RSP will shine even with corrections in the STI. I must be able to wait out those falls and be in for the long haul. 

Till next time, 

Monday, 18 July 2016

Don't let your smartphone be in control

No, I am not talking about the rise of artificial intelligence but rather on how we folks today are increasingly gluing our faces onto our smartphones. 

Singapore is ranked the highest globally in mobile penetration rate, read this here. Well, we do see almost everybody using a smartphone here, so much so that there are rising cases of zombies. In South Korea, authorities have tried to mitigate their smartphone zombies apocalypse. 
Photo from Asia News Network

Now, if you are reading this post while crossing the road, I suggest you put your phone into your pocket. If you are walking down the stairs from the train platform, please put away your phone.

The rise of the smartphone zombies

There were a few cases, whereby the person in front of me was watching a drama show, and she was so slow in walking down the stairs that everybody behind me was obviously annoyed. There were another instance, where I tapped on the shoulders of a guy in front of me, simply because he was walking too unpredictably while using his phone. I am not about to get stepped on in a stampede. 

I am sure we have been taught road safety from young to look left and right while crossing the zebra crossings and traffic lights. I make it a point till today but I observed some pedestrians just crossing the road while their faces were still glued and earbuds inside their ears. It's like as if the smartphone rips you of your senses and gives you a false sense of safety. 

Maybe we do need such signs like those used in South Korea too. 

Use your phone at the right time

Ever heard of the "If you see any suspicious article or person, please contact our staff or call 999" while taking the MRT? In light of recent terror attacks, I think it is being played more frequently but it seems many of us folks are glued to the screens until we probably won't know if the guy next to us left something behind or not. 

I am guilty of that. At times I can be very vigilant, doing my part to look around, at times I am scrolling through my Facebook feed or just turning on the screen for nothing. We take things for granted here. 

I am not dismissing smartphones for they have its benefits too. Accessing social media gives us the latest news on what is happening. We can plan an alternative route immediately even before reaching the station if we know of a disruption in the MRT system. 

But if we can use them at the right time such as not using it while crossing the road, or walking down the stairs or while traveling in the trains, I am sure that is a positive for our own safety and our loved ones too. 

The next time you whip out your phone, make sure if it's safe to do so for yourself and others. Remember, you are in control. 

Till next time, 


Tuesday, 21 June 2016

A Savings Account for National Servicemen (NSFs)

Update: I made some changes in the post below, reflecting some of the information that was not written previously and made existing information clearer. As of 2/7/16. 

Good news for us in NS! Other than putting the allowance into other savings accounts that offer meagre interest rates, we have this option now! An option to save for the 2 years or 22 months of service.

Introducing the POSB Save As You Earn (SAYE) account.

I was truly excited for this when I got wind of this. Looking deeper, I made some comparison. I thought the CIMB FastSaver might serve as a useful comparison as well. 


1. Saving

At the end of 2 years

  • Good for new enlistees who just wants to save a fixed amount every month and not do anything with it until they ORD. It gives fixed deposit rates for small amounts.
  • Note: This works like a 24-month fixed deposit,  so you will lose the 2% cash gift interest if you withdraw the sum. So do make sure you are comfortable with the amount being put in and go with it for the long haul.
2. Shopping
  • If you shop often, then you have those rebates so long as you have those cards. 
3. Cash Gift
  • More for new enlistees, you will have to decide if you would like the Home-TeamNS-POSB Debit Card or SAFRA DBS Debit. Those cards come with membership fees. Of course, if you are already intending to get either one, then this cash gift is a bonus.  
  • Existing SAFRA/HomeTeamNS card members do get the $30 cash gift too! 
CIMB FastSaver 

  • You don't have to "lock" the savings up and already get 1% from the get-go. 
  • There is a minimum initial deposit of $1000 to open the account. You also need to have a balance of $1000 in order to have interest paid, though. 
  • There are no ATM cards and no cash rebates for this account. You might also derail from your savings goal and feel the urge to spend since it is convenient to transfer between banks. 
Compared to POSB SAYE

CIMB FastSaver
Initial Amount: $1000 
Monthly Deposit: $100 
At the end of 2 years, 
Principal Amount: $3400  
Interest: $45.35 

Assuming the cash gift interest of 2% and not including the standard interest rates which can be accessed here
Initial Amount: $0 
Monthly Deposit: $100 
At the end of 2 years, 
Principal Amount: $2400  
Cash gift Interest: $51.80

POSB SAYE offers around $5 more. 

My personal thoughts

For the fresh enlistees, this will make perfect sense. If I am a fresh enlistee, I will sign up for POSB SAYE definitely. I can lock it up and forget about it until 2 years later. Probably transfer extra savings to POSB so that I can increase the monthly contribution. Don't transfer emergency funds to SAYE too, if you find yourself needing the cash, you are going to waste the effort. 

For existing enlistees, probably not worth it since time is not on our side. I have around 15 months of service left. Let's say I am to open a FastSaver SAYE account now, assuming $100 monthly contribution, at the end of 15 months, the interest will be $2.50 more. I would prefer to just keep it in FastSaver throughout and save the trouble since the 2% cash gift will not be applicable after ORD. 

With that said, I think the decision will lie on whether you want the HomeTeamNS or SAFRA cards if you don't have either one yet. The $30 cash gift, in a way, can then subsidise the costs. 

Fellow and future servicemen, please do your OWN homework for this! It's your hard-earned allowance! 

Till next time, 
Mr K. 

Sunday, 19 June 2016

Check your Eligibility for GST Voucher 2016!

Come 20 June 2016, Singaporeans can check if they are eligible for the GST Voucher 2016 handout! 
You can check it here: GSTVoucher2016

On top of the regular GST voucher, there is a one-off Cash Special Payment this year. 

I was surprised that I was eligible for it last year even before crossing my 21st birthday. 

I'm all hands up for handouts! I hope I am eligible again! Of course, it must be done with consideration for the country's wealth. I'm confident that the government has considered that. The additional one-off voucher (which will costs $280 million) will help Singaporeans a little more this year. 

Some personal thoughts

I was searching for more info and I came across the article. He quipped that" if we spend some of these in our neighbourhood shops, it will support our local businesses as well! Gratitude for Mr Heng. I read that he was a good MP and his residents liked him. Hope he makes a full recovery and continue to contribute to Singapore. 

It's important not to cultivate a mindset where people expects handouts from the government to the point of not working even when they are physically able to do so. I think the government will continue to keep the trampoline in good condition to allow Singaporeans to bounce back up instead of a safety net which a few may fall through the cracks. I cannot remember which official talked about the trampoline, but yeah, it makes absolute sense. 

Till next time, 

Sunday, 5 June 2016

Share the love!

After opening a FastSaver account with CIMB 6 months ago, I can say I am a satisfied depositor. I took home a good $10 cash gift. I shared that happiness with my family and friends. Of course, some scoffed at the promotion and interest rate. I tried to convince them. I failed. That's alright. They are happy with POSB. Probably they didn't understand inflation. They didn't think $10 is worth the simple 6 steps process.

In this 6 months, the coffee prices increased by another $0.10 at a nearby kopitiam.

Just last month, one of my army mates got really interested and opened FastSaver too.

He told me about this promotion for another CIMB account.

CIMB StarSaver is offering 0.8% if you maintain $500 of fresh deposits. I assume the promotion is to get some people to sign up for StarSaver since FastSaver is presumably the better option here to a new depositor with no conditions. I could be wrong on this, though. Do your own analysis.

Anyway, he got his interest from FastSaver for the first month which was around $7 more than leaving that same money in POSB. The difference in interest can now buy 10 cups of kopi in the camp's canteen a month. Over a year, that's 120 cups of kopi.

This month, I decided to set the FastSaver account as my emergency stash. With FAST, the transferring of money was easy. It will net me about 3 extra dollars in interest. Again, not much right? Over a year, that's $36. Not too bad. Of course, I am still losing the game to inflation.

Back to the promotion. Share the love!

Till next time,

Sunday, 15 May 2016

Survey: 2 in 3 young people have not started investing

Gen Y or Millenials (the cooler sounding name). That's me!
Picture from Huffingtonpost

An article (see here: Survey: 2 in 3 young people have not started investing) in the Sunday Times by GYC got me thinking.

I am unsure of the intent of the survey but I assume that it is meant to set younger people thinking about the purpose of investing and hopefully, more will be receptive.

If the earlier generation, say, the parents of millennials are already finding it difficult to save for retirement, I can't help but fear how we, millennials, will fare.

Not knowing how to invest

The young people of my time grew up in an environment where information is easily accessible. So it came as a shock when I saw in the article that one of the reasons cited were a 'lack of financial knowledge'. 61 per cent of the two thirds do not invest because they do not know how to.

If I went back into time, I will have cited that reason also.. Two biggest influences are family and school at that age. Schools probably don't go about teaching about investing. How many students will be interested anyway? Hence, I think that the family plays even a bigger role. If I may, make an assumption, it is that the parents of the 61 percent simply didn't know about investing or they didn't want to stress their children. I only knew about a POSB Savings account.

Returning back to the present, the turning point came when I started to read useful investment books and articles written by local financial bloggers. This reason of not knowing how to is an excuse.

Not having enough money to invest

59 percent cited this reason. On one hand, I totally agree. Perhaps there are urgent priorities. We should ensure we have the basics like emergency funds done right first. Millenials will continue to graduate from schools and all the employment news aren't exactly rosy now. Emergency funds must be done right first.

On the other hand, I think we simply have too many spending potholes. It's a social thing to talk about drinking, partying at some club and bleeding our wallets. I'm not saying we should not be doing all this, but we need to know where we stand. I believe in 'YOLO' but sacrifices needs to be made. If done right, budgeting is a godsend.

There are many simplified products that are suitable for our current appetite for risk and returns. We just have to do some homework.

What is the conclusion? 

The survey is accurate because it does seem that my peers are also citing those reasons.

To me, there is only one way. Invest. Not knowing how to is a lame excuse frankly. Of course, we may not get it right, but do not dismiss investing even before trying.

It pains me when my peers ask if I have lost money already. I only hope to fight inflation and use the time value of money to grow my money. Singapore is already one of the most expensive cities, and it is going to be that way.

I have tried to put this across and given up trying to explain. I only said that in time they will understand how I did. I may not have huge sums of money to invest now, but I am and still getting slightly richer in financial knowledge now.

I think on this, we as millennials need to work harder. I believe we can. We have information like no other generation of the past had.

Till next time,
Mr K.