Tuesday, 20 March 2018

Having a good credit score

Recently, I came across this YouTube video about this real estate investor from U.S.emphasing about the need of having at least one credit card as early as you can afford to. He starts the video by talking about his family situation since young where his family was very opposed to having debts in cluding credit cards. So his family did not have a good impression of credit cards and everything should be paid in cash. Credit cards also made his parents became bankrupt and so he was really into cash. 


As a real estate investor he wanted to purchase a few good properties and needed money to invest in. So he used $200 000 which he had as savings in cash. He then went to a few banks and wanted to use 25% of the $200 000 as down payment. The rest would be a loan from the bank so that he could purchase a few properties. He was rejected by all the banks that he went to. He was very confused as he had ZERO debt and had a huge sum of money in his savings account.

He asked himself, "WHY?" and he later found out it was because the banks had no record of him being able to pay back his bills on time and he had no credibility. Hence he had to build it up by having a credit card set up and showed that he was capable of paying back. 

I find it really interesting for me as I too at first felt that being debt-free is a sign of being able to manage your finances well and that credit cards are actually redundant. But records matter for banks especially if you were to take a loan from them. So credit cards to the bank serve as a form of your capability to pay your bills and manage your finances well.

Friday, 16 March 2018

Turning 23

My birthday was on 10th March and this year was a little special as it falls on a Saturday and usually when my birthday is on a weekday, I don't really celebrate it due to school or work. So since this year, my birthday was on a Saturday, there was a celebration and my whole extended family celebrated my birthday with me including receiving another round of angbaos. I usually just have a good meal with my mum and brother if it falls on a weekday. As I get older each year, I feel like birthdays are a day for us to reflect on what we are ever so grateful for in our lives.

Since turning 23, my perspective on some things have changed and whether for the good and bad, there have been some changes due to the experiences that I have gone through.

Perspective on Money

I have started to value money a lot and not to spend freely like I used to in secondary school. This is due to all the part-time jobs, working experiences and also when my mum told me that she wanted to retire soon as she is very tired of her work.

My brother and I had a conversation a few days before my birthday because we do buy presents for one another.
Bro: "Hey, what do you want for your birthday?"
Me: "Well, I think at this stage I would prefer receiving money then getting presents"
Bro: "Me too"

I think recently both of us now know the value of money and how hard it is to earn it. My brother recently ORD and he is currently waiting to matriculate into university so he took up an internship with a Government agency and he was paid $600 for a month. It was pretty tight for him and lucky for him that he saved up during his time in army. So we now don't really look for materialistic items as gifts and would much prefer cold hard cash. HAHA.

Another thing that changed my perspective on money was the part time job that I chose to take up. In my polytechnic days, I worked as a waitress earning $8/hour and to me that was pretty good at that time. When I started university, my friend introduced me to tutoring and I earn $20/hour right now.
I teach tuition 5 days per week right now and I earn about $150 per week. Pretty neat for me as the locations are within walking distances for me from my home.

Without tutoring, I would have to spend about $150/$8 = 18.75 hours working in a cafe. While right now, I spend about 10 hours a week. This hit me hard when I thought about it one day, if I am able to increase my hourly rate means that I can afford to work lesser hours. And this brings me to my next point, perspective on education.

Perspective on Education 

I think in Singapore, education matters a lot. Being enrolled into a private university means that certain opportunities have been taken away. For example, when I was applying for internships, I was not able to apply to quite a few as they had certain requirements about the interns that they wanted. Also, I am studying psychology which in a sense is a very general degree and not very niche. I am currently trying to get into the HR industry having done one internship in HR.

I am hoping to build up my portfolio using more practical skills. Usually, private uni grads get a lower starting pay compared to our fellow local uni grads and with my degree, I am actually not too optimistic about getting a good job when I graduate in 2019. But I will have to work with what I have so improving and learning more is what I am aiming for.

Perspective on Family

Recently, my mum has repeatedly mentioned to me that she wants to retire soon and that her work is draining her out. During this period, I started thinking about expenses and how if my mum really retired, would she be able to enjoy herself? Being a single parent means that her savings are not very substantial due to spending on me and my brother. She is also a very generous person who buys gifts for people quite often.

The uncertainty that lies ahead worries her and also because my dad has incurred debt once and she had to pay back for him. It was extremely tough for her and I know that money to her is very important. Even though she does not have a lot of savings but I am glad that she still uses her money to travel and buy stuff that she wants because I wouldn't want her to be controlling herself just so she can save more as she is getting older and I feel that she should enjoy the companionship of her friends.

My brother has just ORD-ed and he is rather smart, coming from a prestigious JC, he is planning to study economics in uni and is currently in the process of obtaining a scholarship, still awaiting the medical and psychology checkup before he will be offered it. This will really helps to ease the burden on my mum and hopefully she can retire in the next 2 years or so.

It was a great celebration for my 23th and hoping 2018 to be a great year ahead.

Sunday, 4 March 2018

Feb 2018 Portfolio Update and Transaction

February hasn't really been a good month for my portfolio due to one particular stock in it which I didn't get to let it on time and the price has dived down due to an announcement of profit guidance. This stock is design studio as I have mentioned it in my previous post.

For the month of February, I added a counter to my portfolio, Singtel (SGX:Z74). I purchased it at a price of $3.53 on 1st Feb. Together with commission, the average was $3.547.
For the next few months, there won't be much movement on my portfolio as I am planning to build up my cash on hand before making purchases. In the meantime, I will still be on the lookout and if any opportunities, I might deploy some cash.

In this month, its the first time I am in red due to the drop of design studio, first time where the value of my portfolio is lower than it's cost. Timing matters and I have been able to witness that a drop in prices can happen swiftly and drastically. I have decided to read up more on stop loss and position sizing.

For the month of March and April, I have quite a few assignments in school to be completed and stress is building up, for example this coming week will consist of a 20% short answer quiz and a presentation on Thursday worth 30% followed by an essay the following week. Whew! Can't wait for it to be over especially this coming week. Wish me luck as I do have some fear of presentations where I would shiver with a shaky voice. In the meantime, HAPPY MARCH AS IT IS ALSO THE MONTH OF MY BIRTHDAY! HECTIC MONTH!

Saturday, 24 February 2018

Matching up to the Index - STI ETF

With the bull run of the stock market last year, many have shown their positive results of their portfolio and I started investing at around May 2017. However, my portfolio in 2017 did not match up to the STI ETF as seen below.

With the current down spiraling price of Design Studio, my portfolio has taken a hit.
What I hope to do is to increase my holdings of the STI ETF since I haven't been able to beat it. Currently, my portfolio has about 200 ES3 (SPDR STI ETF) in my CDP and 316 G3B (NikkoAM STI ETF) from POSB RSP. I am planning to increase ES3 to a larger proportion of my portfolio.

Thursday, 22 February 2018

Savings plan - Yes or No

Savings/Endowment plans, what are they? Do they help in growing your wealth? To my mum, YES IT DOES. My mum is an ardent fan of savings and endowment plans because she has been purchasing them throughout her life. She told me that the feeling or saving each month sucks but when after a few years and you are able to have a substantial amount being returned to you, you will feel damn SHIOK. My mum spent her first lump sum savings on an overseas trip with my aunt as they purchased the plan together.

In my mum's generation, not many were aware of being financially savvy, she mostly listened to her friend who was a financial advisor and would recommend her products to buy. So during 2015, I started my gap year after finishing my polytechnic studies hence my mum knew about my salary and wanted to cultivate a savings culture in me. My cousin who became a full-time financial consultant recommended me an endowment plan however, I failed the checkup that was required as I have a pre-existing condition. My mum was upset and found NTUC income providing a plan with no prior checks required, the plan that I eventually signed up for was NTUC's RevoSecure.

At that time, I havent got into investing yet and so just followed my mum's instructions to sign up for the plan. However, when I went back to my studies in mid 2016, the burden of paying the premiums were rather heavy and I knew that this was not going to provide a satisfactory return. I discussed with my mum about it and she said just to continue so I did just that to not make her upset. In the end, I found that she just wanted me to start saving and that if anytime I faced difficulty in paying the premiums, she would definitely help me.

Over the past one year, I think it is also good to have a savings plan because if I did not have one, I would have placed all these money into the stock market. Maybe I would have profit more but I understand now why my mum wanted me to get one. It is kinda like a forced savings and the surrender value would prevent you from surrendering early. Also because I have started giving tuition part-time from Sep 2017, so my income can cover this payment and my expenses with minimal savings monthly so as of now, I am coping well with this savings plan.

So the premium is $319.20 each month and it is a pay 5 years, hold 10 years plan. I started in 2015 when I was 21 so it will be paid out when I am 31 which will be 2025. WOW, what have I gotten myself into! Locking all my money in this. So below shows the breakdown of the premiums I pay and the 'expected' returns.

My savings plan
Currently, I am paying the monthly premiums of $319.80 I have taken notice that the yearly premiums are lower in value than the monthly premiums so I might change to yearly premiums.

As you can see from the second table which is mainly about the surrender value, it is not worth to surrender it until the maturity date. If I were to surrender it now which will be year 2, I would only get back a guaranteed of $3600 when I would have paid $7380. So I guess I will pay it until I am 26 years old and just let it sit until I become 31 years old in year 2026.

Monday, 19 February 2018

Design Studio - Drastic drop in price

On 15th Feb 2018, I read a message on Investing Note about design studio earnings reporting a significant loss for 4Q2017 and this will affect their performance for FY2017. It was Chinese New Year Eve and today when the market opened, the price dropped rapidly and even breaking the 52 week low. As of now, the 52 week low is at $0.455 so the news of a significant loss for 4Q2017 and in turn affecting FY2017 performance has taken a hit on it's share price.

Snip of the announcement by Design Studio taken from SGX. So we can only know the significant loss that it has made for 4Q2017 on or before 28th Feb 2018. I am currently holding on to 1800 shares of Design Studio bought at a price of $0.538 inclusive of fees. So currently sitting on a loss.

They previously reported for their 3Q2017 a decrease of revenue 9%. We shall see how it all pans out for them and for me. Do comment or share with me any suggestions or feedback.

Friday, 16 February 2018

Investing with Angbao Money

I have read on various post showing that investing the money from angbaos collected during the new year for your child can benefit them in the long run due to the power of compounding. I will be showing how if I were to save my angbao money and invest them from the beginning, how much I would have earned. Since I am 23 years old this year, moving backwards would mean that I started receiving angbao on 1996 as I was born on Mar 1995 which is after CNY during 1995.

Assuming an average yearly angbao amount of $300 in total and having invested them in a RSP, this is what it will look like:

With what has been calculated above, the total amount that I would have gotten would be $7407.15 (Current value estimated) plus dividends of $856.36 with an input of $6592.98.
That would mean a profit of about 25% of the capital placed inclusive of unrealised profits + dividends. This is a pretty profitable investment and I believe that it can be continued. 

This is really a rough guide as I haven't included fees but this is a good way to spend your angbao money and I wouldn't mind trying it out for my child next time! Here's wishing everyone 新年快乐 and HUAT ah!