I read with great delight that Singapore Government Securities or SGS bonds for short will be available for auction from 1 July 2009 using the ATM! This is great news. Since the financial crisis has proven that banks are not safe and that fixed deposits are merely fixed income instrument subjected to the credit risk of the bank, I've been encouraging my clients to park their FD via the SGS … [Read more...]
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Buy Term invest the Rest
Have you guys heard of this strategy called Buy Term invest the Rest ? The idea is this: Purchase a term insurance which covers temporarily over X years (usually during a person working life) and simultaneously invest a certain amount separately to another portfolio so that when the term insurance expire, the separate portfolio would have grown to an amount sufficient to be used for … [Read more...]
Financial Planning for your MARRIAGE
Marriage is a huge undertaking. It might be prudent to know your financial commitments and responsibilities ahead of time. Read what Wilfred Ling has to say about this subject. The article can be downloaded HERE. … [Read more...]
An example of how to create your own structured deposit
Here is how you can create a "structured deposit" or principal protected investment that is better than the bank! You will need two products - a zero coupon bond + a high risk investment product. In Singapore, it is difficult to get a zero coupon bond and so a substitute can be a single premium endowment. Currently HSBC has a product called Guaranteed Saver Plus that gives a guaranteed return … [Read more...]
How to get triple digits in dividends
Let's assume the dividend yield is 3% per annum. To get $100 in dividends per year, you will need to have a portfolio size of 100/0.03=$3,333.00. This assumes that the expense ratio do not exceed 3% in a year otherwise there will be no dividends. Many unit trusts have expense ratio + hidden fee exceeding this amount. It is best to consider using ETFs for a low cost and diversified instrument. … [Read more...]
Land banking company uses many financial advisers to sell
There are many exotic investments that make your mouth water. One exotic is called Land Banking. I was approached by one land banking company to market their product and this is what I was told. They told me that the land banking gives out 11% commissions! Of course the salesman do not get it all because he has to share with his team leader and the team leader has to share with his group … [Read more...]
Sources of profit for equities
There are three sources of profit for equity investments. These are: Capital gain, dividends and reinvestment income. Reinvestment income is the result of reinvesting the dividends back to the same investment. Mathematically it is: Total Profit = Capital Gain (or lost) + Dividends + Reinvestment Income. For portfolio it may not be easy to track what is the exact amount of dividends because … [Read more...]
Lesson learnt on Temasek’s investment in Barclay
Today's Straits Times reported that Temasek sold its Barclay shares during the December/ 2008/ January 2009 period. This period is right at the bottom of the financial storm. I am sure Temasek is going to face the firing squad again. It is not my intention to criticise them but there are precious lessons we can learn as private investors: * As Temasek has a huge army of smart analysts and … [Read more...]
Stocks are subjected to “Phantom Profit” manipulation
Many clients have asked me to help them to invest in stocks. I have thought about it for a very long time and considered all possible business model that I can use to do that (i.e. how am I going to charge clients fee for doing this). Finally, I figured that the best way to advice in stock is to educate my clients on how to do that on their own. Similarly to what I feel in other financial matters, … [Read more...]
Difference between customers, bondholders & shareholders
Yesterday, Prudential Asset Management came to our office to provide a talk on market outlook and to promote their funds. The speaker said that the valuation for bonds are very low. This is because the current default rate is 20% but the bond prices are reflecting a default rate of more than 50%. In the Great Depression time, the bond default rate was 47%. So based on this reason, bonds are … [Read more...]
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