(Post 86/Year 2 week 23)Investment project updates(Peer to peer lending):Moolahsense(My thirteen and last campaign)

Moolahsense(My thirteen and last campaign with Moolahsense)

Note*the company name will not be revealed just like the previous post as my money are still inside moolahsense, haha(this is not a sponsored post by the way)

Issuer summary
Date of listing:April 2018
Amount:S$100,000.00
Tenor: 12 months
Note type: Equal installment

Quoting from the moolahsense website

• Equal installment:A promissory note by which an installment of the principal subscription amoung and/or interest accrued and due up to the date of payment shall be payable on such dates as set out in a repayment schedule specified in the promissory note, and on the maturity date, the principal subscription amount would have been paid in full

Repayment frequency: Monthly

• Repayment frequency: Will be paid monthly

Target interest rate:18%P.A

Quoting from Moolahsense website

• Target interest rate: The maximum rate the issuer is willing to provide the interest on the principal subscription amount which the issuer wished to obtain, as notified in writing by the issue to Moolahsese

Purpose: Working capital

Quote from valuepenguin:https://www.valuepenguin.sg/what-is-working-capital

• Working capital: It is a concept to describe a business ability to cover its short-term operating costs
• E.g For this campaign, I have funded $100 into it
• As the target interest rate is 18% PA, this means that at the end of the tenor, which is 6 month I will expect to receive $118
• 100%=$100
• 18%(Interest for 12 month)=$18.00
• 118%(The Principal + the interest)=$100+ $18.00=$118.00
• Since the tenor is 12 months, each month I will receive $9.83(inclusive of interest) in payment/equal installment
• 1month=$118.00/12=$9.83

Summary company profile

• The issuer is a company incorporated in Singapore in 2014
• The Issuer is in the food and beverages industry and has around 10 employees. 
• The Issuer specializes in the retail sale of snack food products (including chips, cookies, chocolates and candies) sourced primarily from Japan. 

Detail of purpose

• The Issuer seeks working capital for the performance of various contracts which have been awarded to the Issuer.

Financial statement

Will only reveal a part of the financial statement due to confidentiality. As I have mentioned a few weeks ago in my post, that I only mainly use this three ratio: current ratio, quick ratio and debt to equity ratio to decide in investing in a campaign, hence I will be showing its ratio below

The ratio is as follow(left side of the column is for the year 2017/right side of the column is for the year 2016)

Year 2017/Year 2016

(Current ratio 2017:8.53),(Current ratio 2016:10.49)

• A simple ratio of current asset divide by current liabilities
• Current liabilities are debt that needs to clear in the short term(in a year)
• If a company has a current ratio less then 1.0, do not invest in it
• If a company has a current ratio more then 2.0, May consider investing in it
• The higher the current ratio, the better
• For the current ratio of 2016:8.53, it is higher than the recommended range(>2.0)
• For the current ratio of 2017:10.49, it is higher than the recommended range(>2.0)

(Quick ratio 2016:6.52),(Quick ratio 2015:9.54)

• The quick ratio is almost similar to current ratio except that it is assumed that the company does not sell its inventories(e.g Toyota inventory is its car) or stock, it is still able to fulfill its debt
• If the company has a quick ratio of 0.75 and below, do not invest in it
• If the company has a quick ratio of 1.25 and above, May consider investing in it
• The higher the quick ratio the better
• For the quick ratio of 2016:6.52, it is higher than the recommended range(>1.25)
• For the quick ratio of 2017:9.54, it is higher than the recommended range(>1.25)




(Total liabilities/equity 2016:0.3),(Total liabilities/equity 2015:0.41)





• The debt ratio is calculated by total liabilities divided by the equity
• If the company has a debt ratio of 1.5 and above, do not invest in it
• The company should essentially have a debt ratio of 1.0, if the debt ratio is below 0.75, do consider investing in it
• The lower the debt to equity ratio the better
• For the Total liabilities/equity of 2016:0.3 it is within the recommended range(<0.75)
• For the Total liabilities/equity of 2017:0.41, it is within the recommended range(<0.75)

Why did I invest in this loan?

• All current ratio,quick ratio and total liabilities/equity ratio meet the requirement,hence invested in it

Repayment schedule?

link on how too read the effective interest rate for moolahsense:http://letscrowdsmarter.com/understanding-interest-rates/

Monthly interest rate:interest/start balance=$1.50/$100=1.5%(Percentage conversion must *100)

Effective interest rate:1.5%*12=18% same as the target interest rate at 18%(see the top of the post))

From the above picture, you can see that the Net repayment is at $9.08 instead of the $9.83 that I have mentioned above at the working capital, hence I will do a calculation here again

1-month repayment:$9.08

12-month repayment:$9.08*12=$108.96

$100(the amount I put in this campaign=100%

$108.96=(100/100)*108.96=108.96

108.96%-100%=8.96%

The target interest rate as you can see in my above post is at around 18%P.A, after taking into account of the tenor rate being 12 months, which is 18 % and comparing it to 8.96% its almost 10% difference(i shall call this net interest rate instead)in this campaign. To conclude, this means that if you invest in a (18%P. A) high-interest rate campaign in moolahsense which has a tenor rate for 12 months, you will get only about 8.96%

The reason for quitting moolahsense is because I prefer investing in stock and also some of the delinquent payment via moolahsense, that's why this is the last campaign in moolahsense, who knows i will return in the future?

Do look out for future update on this blog!

(Post 85/Year 2 week 22)Learning investing/trading together part 17: Practical Guide On Financial Planning (By Tan Kin Lian) part 3

Continuing on from part 1 here... and part 2 here...

21.Structured Product

• Simply avoid products that are complicated to understand, unless you have a lot of time on your hands

22. Unregulated Investment Product

• MLM, wine investment etc, you name it, avoid it!

23.Investing In A Life Annuity

• The book recommends putting your money in a life annuity, but I think you are better off parking your money with SSB(Singapore Saving Bond), which is backed by the government and either in the STI ETF or Singapore ABF bond

24. Writing A Will

• Definitely a must for retirees!

25.Experience Of Consumer

• various scenario of people with a different financial and family background,nothing much here

26.Commonly used words and what they mean

Annual management fee

• This is the fund management fee, charged by the fund manager to manage your fund

Benefit illustration

• Shows the benefit you get from the insurance before you sign the dotted line
• Do read carefully, if in doubt refer back to the company

Bid price

• The selling price of your stock 

Bond

• A bond is like a loan
• When you "buy" a bond, you effectively "lend" the government or company some money, in return for some interest over the next few years
• The ability of the government or the company to repay this interest is known as the creditworthiness of the government/company
• A common measurement is this creditworthiness is the credit rating of the government/company(e.g the bond is rated AAA)
• A bond issue by the government is a government bond,a bond issue by the company is a corporate bond

Offer price

• Price at which you buy the shares, also known as "asking price" or "selling price" or "buying price"

Sales charge

• the charge you pay initially when you buy a financial product

Shares/stocks

• This is a paper which represents a unit of ownership in a listed company.
• With a purchase of a stock/share, you own a small fraction of the company, depending on how many shares you have accumulated'

All in all,that's is a quick summary of the book:Practical Guide on Financial Planning,in the next few post,we are going to learn on how to read financial statement which is useful for long term investor(and also short term investor aka traders),do look forward to it!

(Post 84/Week 69) Just for Laugh part 1: 20 Wise And Funny Working Life Quote

20 Wise And Funny Working Life Quote

After blogging for personal finance for a year, I had the "feel" to blog something else other than the usual personal finance, hence I am creating a new segment for my blog known as chill and relax! For now, it would be some interesting jokes and quotes, so do look forward to this segment!

Anyway, here are some funny working life quotes that I saw in magazines, Source: reader digest

1. Keep track of what you do, someone is sure to ask

2. Be comfortable around senior manager or learn to fake it

3. Never bring your boss a problem without a solution, you are getting paid to think not to whine

4. Long hours does not mean anything, result counts not effort

5.Write down ideas,they get lost like good pens

6.Always arrive at work,30 minutes before your boss

7. Help other people network for a job, what goes around come around

8. Don't take sick days, unless you are

9.Assume no one can take a secret

10. Treat everyone in the organization with respect and dignity, whether it be the janitor or the president. Don't ever be patronizing

11. When you get the entrepreneurship urge, visit someone who has his own business, it may cure you

12. Career planning is an oxymoron, the most exciting opportunities tend to be unplanned

13. The size of your office is not as important as the size of your paycheck

14. Job security does not exist

15. Always have an answer to the question"what would i do if i lost my job tomorrow?"

16. Go to the company holiday party

17. Avoid getting drunk at the company holiday party

18. Avoid working on the weekend, work longer on the weekday if you have to get

19. Understand your skills and abilities to set you apart, whenever you have an opportunity, use them.

Hope you enjoy reading!

(Post 83/week 68)Learning investing/trading together part 16: Practical Guide On Financial Planning (By Tan Kin Lian) part 2

Continuing on from part 1 here...

11.Good Financial Products

• Criteria for good financial products: transparent, fair charges and value for money
• Product traded on an exchange such as stocks are transparent and available to all, you can either be a buyer or seller
• Invest in renown company stocks that have high volume transaction per day, avoid fund or stock has less than $100 million in asset
• Once again...avoid insurance saving plan!
• Stay away from any complex product that you do not understand!

12.A financial adviser

• Contrarily to the book, Simply, just avoid them or find a trusted financial advisor (or DIY yourself,there are many information about various product on bank websites, there is no need for a financial adviser)

13.How to deal with inflation

• Simply put, earn more money(1001 way to do this!)

14.Planning at a later stage

• Start saving early

15.Higher commitments

• Allocate your saving and expenses according to your income(see part 2:Start a financial plan here)

16.Investing on your own

• Before investing in the stock markets, you should be aware of the following risks:
• Poor performance of invested company
• Failure to take up right issues
• High expenses of trading
• Bad timing decisions

• Trading in shares requires a close knowledge of the market, most of the individual investors like you and me do not have the time or resources to monitor the market, that is our disadvantages against a large fund
• Investment research information is more readily available to large fund, they are able to act quickly to take advantage of the news.


• On the other hand, our advantages are that we are able to hold on our stocks throughout the bad times, large fund have to consistently make a profit and show results to shareholders
• We may end up selling at a low price or buying at a high price due to the delay in getting relevant information

• When a company makes a right issue, new shares are available for a discount, existing shares are diluted and drop in value
• Hence, avoid companies that have a habit of making rights issue regularly

• Don't rely on an investment tip

• In a bull market, investor make a profit by buying shares
• In a bear market, investors sell their shares

17.Cost of term insurance

• Get one of this,I got one under the SAF Aviva
• Term insurance will pay out after a person death

18.Cost of health insurance

• Get one of health insurance

19.Cost of life insurance

• Also, get one of life insurance

20.The fun of gambling

• Don't start gambling, simple as that, unless its new year!

Will continue the next part here!

(Post 82/week 66)Learning investing/trading together part 15: Practical Guide On Financial Planning (By Tan Kin Lian)

This is one of the earliest finance books that I borrow from the library, it is simple and easy to read and give a brief introduction to the different aspect of finance such as stock and insurance. Hence, I wanted to share this book with you guys.

This post will only cover the key point throughout the book if you would like to read in-depth do borrow or buy the book:)

A brief synopsis

• Contain practical point on financial planning for young people and retirees
• The need for saving, investment, and insurance

1.Overview

• Start financial planning early
• A student should avoid making commitments to a life policy unless they can afford it
• A life policy is a bad form of saving for any person with irregular income, as they may not able to make a continuous commitment and would opt to cancel the life policy, which generally comes with a penalty

2.Allocate your earning

• Income allocation for most people(For current expenses:50%,For housing:25%,Save for the future:25%)
• Income allocation for people with lower income or 3 or more dependent(For current expenses:60%,For housing:20%,Save for the future:20%)
• It is important for young people to prioritize clearing their debt first e.g study loan, wedding loans, renovation loans, car loans
• People should generally save about 6 to 12 month of their personal salary, which is to be used for emergency

3.Meet current expenses

• Current expenses include the following(Food,transport,utilities,telephone,entertainment,household appliances,interest on borrowings)

4.Cost of borrowings

• Debt occur due to the following reasons(house, car, furniture, unemployment, unexpected illness)
• Avoid credit cards due to the hefty interest

5. Buy a home

• Do not over commit
• Do consider transacting with the seller directly when purchasing a property

6. Save for future needs

• Saving are mainly used for retirement, unemployment, insurance, medical expense, education
• Simply, Save as much as you can

7.Invest your savings

• Invest your savings for the long term and aim to achieve a yield that is 4% per annum, 2% higher than inflation
• To achieve this yield, you have to invest in equities, you can read all about my  post on the boglehead portfolio here or my investment project updates here
• If you trade,prepare for a high transaction cost
• Avoid structure investment products, such as capital guaranteed products, capital protected products, credit linked notes,equity-linked notes, dual currency investments, life insurance saving policies(especially this!!) and land banking products
• Most of these products are design by the financial institution and the commision that is taken by your savings are used to pay for creating, marketing and administering the product and the profit margin
• Equity generally has an annual return of 5 to 8%  and has high volatility
• Property fund has an annual return of 5 to 8%  and has high volatility
• Bond fund has an annual return of 2 to 3%  and has low to medium volatility
• Fixed deposit has an annual return of 1 to 2%  and has low volatility

8. Use of savings before retirement

• Savings are to be used for purposes such as education, unemployment, disability, unexpected expenses or  insurance

9.Use of saving after retirement

• Can consider investing into CPF Life Annuity, it has an imputed interest rate of 3.75% to 4.25%, 
• Some advantages of CPF Life...
• Provides the security of a lifetime income
• The Government gives a bonus of $4,000 for people who join the scheme
• Its interest rate of 3.75% to 4.25%, is higher than other low-risk bonds

10.Insuring your risk

• Consider getting insurance for premature death, medical expenses, disability, and personal accident...All other types of insurance, just avoid it!

Will continue part 2 here!

(Post 81/week 64)Learning investing/trading together part 14:How to set up POSB/DBS invest saver(regular saving plan)

Recently, lots of people have PM me asking on POSB invest saver, how to purchase etc. So, I thought it would be useful if I write a guide on how to purchase stock using POSB invest saver. 

So here is a step by step guide on how to purchase a stock on POSB invest saver(Do comment below if you need any help though)

Step 1)Log into the DBS I banking website
Step 2)Click on invest tab and click on more investment service(Black circle)

Step 3) You will reach this page


Step 4) Scroll down and select Set up or update unit trust Regular savings plan(RSP)(Red circle)

Step 5)You will Probably be asked to enter your SMS 6 digit pin number at this time

Step 6)After entering your sms 6 digit pin number, you will arrive at this page below.

Step 7)Select regular saving plan(red circle)

Step 8)After selecting regular savings plan, you will arrive at this page below

Step 9)Select your investment account and click search(red circle)

Step 10)After selecting search, you will arrive at this page below. Next, Select the RSP setup(black circle)

*Note: Most of you will probably arrive at a different kind of page if you are not sure of the next step do message on me on the blog or on the facebook post

Step 11)Or after you have click the search button as in step 9, you will probably be brought to a page rather similar to this

I will explain the various term as shown above below

Fund name:ABF SINGAPORE BOND INDEX or STI ETF only(choose one)

• For more information on ABF, do refer to this post

• For more information on STI ETF, do refer to this post

Day of Debit:The day where the monthly investment amount is deducted from your bank to purchase either ABF SINGAPORE BOND INDEX or STI ETF

Gross Sales Charge:1%, 

• If your monthly investment amount is $100, the gross sales charge every month will be $1 which is 1% of your monthly investment amount of $100.

Minimum monthly investment amount:$100

• The Minimum monthly investment amount for POSB invest saver is $100

Monthly investment amount

• Your choice of month investment amount, it could be e.g $ 100, $200 or even $300

Debiting Account

• The bank account that the money will be deducted from

Country of birth

• Singapore, of course:)

Step 12)The term and condition page will appear,click agree(red circle)

Step 13)You will be brought to the verify details page, click submit(black circle)

This is where I will stop, if I continue to click submit I will be setting up a new regular saving plan.

For more information on the regular saving plan, do read my Jan 2019 regular saving plan update here

If you need any help, do comment on the blog, thank you!

(Post 79/week 61)Learning investing/trading together part 13:A35(ABF SINGAPORE BOND INDEX FUND)

I am currently writing a guide on how to purchase POSB invest saver due to the numerous PM that I have received on Facebook. But before that, I need to explain a little bit about A35. I am sure everyone is pretty familiar with STI ETF(ES3 and G3B). You can refer to this link here if you need more information about the STI ETF. 

But, what about ABF Singapore bond fund index? Without further ado, let's get straight to it!

Overview of the A35

• It is the first exchange-traded ("ETF") bond fund in Singapore, 
• The Fund seeks to track the total return of the iBoxx ABF Singapore Bond Index
• iBoxx ABF Singapore Bond Index tracks a basket of high-quality bonds issued primarily by the Singapore government and quasi-Singapore government entities.

What does iBoxx ABF Singapore Bond Index comprise off?

• It comprised of Singapore dollar bonds issued by the Singapore Government or Singapore Government-linked entities  such as e.g Singapore government bond, Housing Development Board, Temasek, and Land Transport Authority, SP Power
• It also comprised of Singapore dollar bonds issued or guaranteed by other Asian government, a quasi-government or supranational financial institution (e.g. Danga capital Berhad, Export-Import Bank of Korea, Korea Development Bank)
• In short, It contains bond from Singapore, Malaysia and Korea
• The pictures below from the annual report shows what does the iBoxx ABF Singapore Bond Index comprise off

• You can download the annual report of A35 here, it contains the portfolio of the iBoxx ABF Singapore Bond Index

Reasons to invest in A35(ABF SINGAPORE BOND INDEX FUND)

Diversification

• Investors achieve diversification in one single transaction with minimum investment versus having to build a similar portfolio by purchasing individual stock, bonds or commodities which could require a huge investment outlay

Cost-effectiveness

• The cost of investing in ETFs are generally lower than actively managed funds(for example, Units Trusts) in the same markets of assets

Accessibility

• ETFs offer access to a variety of local and global markets, as well as asset classes, both broad and specific, which may be inaccessible to individual investors

Did you know?

• You can invest in A35 using CPF SRS(supplementary retirement scheme)?
• Read more about using SRS to invest in A35 here

Fund performance of A35

• 1yr performance=2.01%
• 3yr performance=2.85%
• 5 yr performance=2.55%
• I will be honest here, the fund performance return is not very impressive considering that the above performance is taken into account after reinvesting the dividend.
• However, if you look below the chart in yahoo finance, it is pretty stable being that its min is at 1.00(red line) and its max is at 1.30(black line)

Dividend of A35(One of the most exciting parts of investing is the dividend!)

• Dividend yield for 2017:1.89%
• Dividend yield for 2018:2.31%
• Dividend yield for 2019:2.31%
• There is some mistake in the dividend yield for 2019, hence I have edited and replace it with the actual percentage of the dividend that I have received:2.31%
• For more information about the dividend that I have received for 2019, do read more about it at my updates for POSB invest saver Jan 2019 here

Conclusion

• I am pretty surprised that this index contains HDB and LTA, truly AAA rated!
• History has shown that housing market has collapsed before(yes, I am referring to 2008 financial crisis), but Singapore housing market price is controlled by the government hence it is "rather" safe(take note of the word rather)
• The fund performance may not be very impressive but it provides a better interest rate than most saving bank account or Singapore government bond.
• Moreover, it provides the liquidity of selling away anytime should you need the money.
• Ultimately, the decision to invest or not lies with you, remember to dyodd(do your own due diligence!)

The next post on learning investing/trading together will be on how to purchase from POSB invest saver, do look out for it!