(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!

(Post 78/week 60)TipforThought:how to mail and selling on carousell tip and tricks

This week tipforthought is about how to post a mail and some carousell tip, tricks, and hacks that I have research and used

Please do visit my carousell page if you would like to purchase any cheap second-hand book
My carousell:carousell.com/eric996

How to post a mail?

Actually posting a mail is quite easy, you need to purchase the envelope and the stamp and off you go!

Step 1.Purchase the envelope

• You can choose to purchase an envelope from either popular bookstore(around $3.50 for 10 pcs of A4 envelope if my memory serves me right) or any stationary shop or even Daiso(Try not to purchase from singpost outlets itself as it is a tad expensive).
• In my case, I purchase A4 envelope from the Tesco supermarket in Malaysia when I make my monthly trip there due to it being cheaper than Singapore envelope price
• Below is an example of the envelope that I have purchased

Step 2: Purchase the stamp

• For purchasing of the stamps, you can easily do it at the nearest sam machine(see pic below)

                                                    

• Here are the postage rates, for more information refer to the singpost website here

• As I am using A4 envelope which also means C4 envelope, I will be purchasing $0.60 stamp from the SAM machine

Step 3:Write the buyer address,your return address and paste the stamp

• Write the buyer address in the red box,e.g Pasir Ris drive 51 Blk 123 #02-01 s600123
• Paste the stamp in the orange box
• At the other side of the envelope,write the return address (your own home address) for return mail just in case, in the orange box,e.g Tampines drive 52 Blk 456 #03-02 s601456

Step 4:Mail it out

• Mail it out at the nearest posting boxes, you can google the location for the nearest posting boxes

In the second part, I will be talking about some tip that I used to sell on carousell...

1. Regularly update your carousell

By regularly updating your carousell with listing, this has enable my carousell to have more sales.

As this article from Sonia point out, this is due to 3 reasons

1. Your followers get your updates in their browse views
2. Your new listing will show up on the homepage for random browsers
3. Newer listings appear higher when one uses the ‘recent’ filter

2.Updates on weekend

The best time to post on carousell is on a weekend as most people would have time to browse through the listing during the weekend

3.Delete and re-update your listing that is old

For those items that you have listed more than 3 month and above, you should delete and re-upload the listing so that it would help to boost your sales more

4. Share your listing on gumtree and facebook group

Gumtree and facebook group selling second-hand book has a lot of potential buyers, some of my buyers come from gumtree.

5.Create a template to handle customers to save time

In my personal experience, I have created a template to reply to customers to save some typing energy(think of it like an answer or an automated chat bot).

If the buyer makes an offer, this is how I will reply...

1. Meetup is at an extra charge of 50 cents and mailing is at an extra charge of 1.50

2. Hi meetup is at xxx MRT only due to the low cost of the item

If the buyer chooses to meet up, this is how I will reply...

1. Hi, I will only be able to meet up on the weekend

and continue to  discuss with him on the arranged timing, however, if the buyer opts for the mailing option

1.Ok sure, pls make payment via paylah at xxx

2.Would I have your address for mailing purpose?

If the buyer does not have pay lah, this is how I will reply...

1. My bank acc is xxx, please let me know when you transfer

2.Would i have your address for mailing purpose?

And last but not least, remember to thanks your buyers...

1.Please notify me when you have received the item and thank you for purchasing from me

That's all for this week tipforthought!

(Post 77/week 59)Investment project update:Posb invest saver JAN 2019 summary + dividend

Posb invest saver update(JAN 2019)

My POSB invest saver update for the month of Dec, read here

Regular saving plan updates for ABF Singapore Bond Index Fund(A35)

Breakdown of my regular saving plan(A35) this month(JAN 2018)
Total amount(regular saving plan)A35:$100
Price per share:$1.129300
Gross sales charge:0.5%
Net sales charge amount:0.5% of 100=$0.50
Net amount invested: Total amount-net sales charge amount=$100-$0.50=$99.50
Units issued: Net amount invested/price per share=$99.50/$1.129300=88 units

Summary: As of 19 JAN, the share price of A35 was at 1.131, has drop from last month, but still quite at the middle with its maximum at 1.25(2011) and its lowest 1.00(2008). Will be watching it for any further movement, once below 1.100 will make a bulk purchase.No change in sentiment from last month.

And also the dividend!

Fund name: ABF Singapore BOND index

Units held:2,255.00000

Dividend per share:$0.026200
Dividend amount:$59.09

Regular saving plan updates for Nikko AM Singapore STI ETF(G3B)

Breakdown of my regular saving plan(G3B) for this month(DEC 2018)

Total amount(regular saving plan)A35:$100
Price per share:$3.280000
Gross sales charge:0.82%
Net sales charge amount:0.82% of $100=$0.82
Net amount invested: Total amount-Net sales charge amount=$100-$0.82=99.18
Units issued: Net amount invested/price per share=$99.18/$3.280000=30 units

Summary: As of 19 JAN, the share price of G3B is at 3.274 and ES3 is at 3.29. Both ES3 and G3B has been on a Uptrend,but how long will this last? 

And also the dividend!

Fund name: NIKKO AM SINGAPORE STI ETF

Units held:235

Dividend per share:$0.059700
Dividend amount:$14.03

(Current regular saving plan portfolio)

(When you trade long term through dollar cost averaging, no need to worry about the red:D)

Don't forget to DYODD(Do your own due diligence!)

(Post 76/week 58)Zero dollar project updates:carousell,Bitcoin Faucets,Short Link,Online survey and Adsense update

Updates for last week week of zero dollar project
1.Carousell
2.Bitcoin faucets
3.Short link
4.Online survey
5.Adsense update

1.Carousell

My carousell:carousell.com/eric996

Been doing some heavy marketing everywhere, gumtree, facebook, you name it...

Total earnings for carousell from last update:$1 + $0.50 + $2=$3.50

2.Bitcoin faucets

Current coinpot holding

Bitcoin core: 6391 Satoshi
Bitcoin cash: 13446 bch
Dogecoin: 65.77 doge
Litecoin:  0.00228080 ltc
Dashcoin: 0.00080555 dash

3.Short link

Last update

current update

Total earning for short link last update:$4.3859-$3.836=$0.5498

For more information on how's I use both short link on my blog and YouTube, read here

4.Online survey

Current online survey on my list...(Bold mean that these survey websites have been verified for payout)

4.1 Toluna
4.2.surveyon
4.3 YouGov
4.4 mobrog
4.5 ipanelonline
4.6 viewfruit
4.7 mysurvey
4.8 millleu(App on google play store)

Survey that payout:viewfruit,YOUGOV

The total payout for survey:$5.00+$25.16=$30.16

5.Adsense

Last week earning for Adsense:$1.89

Total earnings for this zero dollar project updates:$3.50+$0.5498+$30.16+$1.89=$36.01

That's all for the updates for my zero dollar project! stay tuned to my investment project updates for this week!

(Post 75/week 56)Investment project updates(Peer to peer lending):Moolahsense(My twelfth campaign)

Moolahsense(My twelfth 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:Mar 2018
Amount:S$50,000.00
Tenor: 6 months
Note type: Equal installment

Quote from 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:24%P.A

• 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 24% PA, this means that at the end of the tenor, which is 6 month I will expect to receive $112
• 100%=$100
• 12%(Interest for 6 month)=$12.00
• 112%(The Principal + the interest)=$100+ $12.00=$112.00
• Since the tenor is 6 months, each month I will receive $18.76(inclusive of interest) in payment/equal installment
• 1month=$112.00/6=$18.66

Summary company profile

• The issuer is a company incorporated in Singapore in 2014
• The Issuer is in the manufacturing industry and has around 10 employees.  
• The Issuer specializes in the manufacture of wooden containers and crates for industrial packaging purposes.

Detail of purpose

• The Issuer seeks working capital for the performance of various container manufacturing 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 2017:2.57),(Current ratio 2016:5.2)

• 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 2016:2.57, it is higher than the recommended range(>2.0)
• For the current ratio of 2017:5.2, it is higher than the recommended range(>2.0)

(Quick ratio 2016:2.57),(Quick ratio 2015:5.2)

• 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 2016:2.57, it is higher than the recommended range(>1.25)
• For the quick ratio of 2017:1.3, it is higher than the recommended range(>1.25)


(Total liabilities/equity 2016:1.44),(Total liabilities/equity 2015:1.16)





• 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 2016:1.44 it is out of the recommended range(<0.75)
• For the Total liabilities/equity of 2017:1.16, it is out of the recommended range(<0.75)

Why did I invest in this loan?

• The current ratio and quick ratio of 2016 along with total liabilities/equity is out of the recommended range,however the current ratio, quick ratio are within the range, taken in to consideration that the loan is only 6 month, I have subcribe to this loan and in fact, the campaign has already ended some time ago and I have received the principal along with the interest

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=$2/$100=2%(Percentage conversion must *100)

Effective interest rate:2%*6=12%(almost the same as the target interest rate at 12%(see the top of the post))

From the above picture, you can see that the Net repayment is at $17.67 instead of the $18.66 that I have mentioned above at the working capital, hence I will do a calculation here again

1-month repayment:$17.67

6-month repayment:$17.67*6=$106.02

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

$100=(100/100)*106.02=106.02%

106.02%-100%=6.02%

The target interest rate as you can see in my above post is at around 24%P.A, after taking into account of the tenor rate being 6 months, which is 12 % and comparing it to 6.02% its almost 6% difference(i shall call this net interest rate instead)in this campaign. To conclude, this means that if you invest in a (24%P. A) high-interest rate campaign in moolahsense which has a tenor rate for 6 months, you will get only about 6%

Stay tuned to my next week post:moolahsense(my eleventh campaign)!