Tuesday 11 September 2018

(Post 50/week 36)Investment project updates:Moolahsense review(My sixth campaign)

**Congratulation to myself for reaching post 50!!

6.Moolahsense(My sixth campaign with Moolahsense)

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

Issuer summary
Date of listing: Jan 2018
Amount:$100
Tenor:12 months
Repayment type: Callable

Quoting from the SGYoungInvestment
  • Callable: In a Callable note, an issuer has an option to early redeem the note on a quarterly basis. If the note is not early redeemed, the issuer pays a quarterly interest. The principal will be fully repaid on the quarter that the redemption is early called or at the maturity date.
Assume that you invested $10k in a campaign at a final note rate of 13.5% p.a. in a Callable note.(Below is a very useful illustration)

                               

Repayment term: Quarterly
  • Repayment term: Every 3 months
Target interest rate:8%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(which is the amount I actually funded, and the first campaign I funded when moolahsense change their minimum amount to invest from $500 to $100)
  • As the target interest rate is 8%, this means that at the end of the tenor, which is 12 month I will expect to receive $108
  • 100%=$108
  • 8%(Interest for 12 month/1 years)=$8
  • 108%(The Principal + the interest for 12 months)=$100+$8
  • However, a callable note will only pay the interest and you can redeem (principal) anytime,or you can simply just wait until the end of the tenor to get back the (principal)
  • Do note that interest is automatically credit to your moolahsense account holdings
Summary company profile

  • The issuer is a company incorporated in 2011
  • The Issuer is in the metal and minerals wholesale industry and has around 10 employees. 
  • The Issuer supplies three main categories of products: (a) base metals and metal alloys (including lead,copper, aluminium, and steel), (b) scrap metal (including copper, aluminium, steel, brass and zinc scrap), and (c) minerals and concentrates (including coal, iron ore, and copper concentrates and blisters). 
  • The Issuer is headquartered in Singapore and has affiliated offices in Hong Kong, Thailand, Indonesia, Duba, and England.

Detail of purpose
  • In anticipation of an increase in demand and business volume, the Issuer seeks funds to finance the purchase of additional goods for sale to its customers.
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 2016/right side of the column is for the year 2015)


Year 2016/Year 2015
(Current ratio 2016:3.29),(Current ratio 2015:1.57)

  • 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 2015:1.57, it is out of the recommended range(>2.0)
  • For the current ratio of 2016:3.29, it is higher than the recommended range(>2.0)
(Quick ratio 2016:3.29),(Quick ratio 2015:1.57)
  • 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 2015:1.57, it is higher than the recommended range(>1.25)
  • For the quick ratio of 2016:3.29, it is higher than the recommended range(>1.25)

(Total liabilities/equity 2016:0.47),(Total liabilities/equity 2015:2.03)

  • 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 2015:2.03, it is out of the recommended range(<0.75)
  • For the Total liabilities/equity of 2016:0.47, it is in the recommended range(<0.75)

    Why did I invest in this loan?

    • The current ratio 2015(1.57) and total liabilities/equity 2015(2.03) is out of the recommended range of >2.0 and <0 75 
    • However the current ratio 2016 (3.29),quick ratio 2016(3.29) and,total liabilities/equity 2016(0.47) is in the recommended range of <0.75, as the financial statement ratio met all of the above-recommended ratios, I invested in the campaign
    • The increase in current ratio and quick ratio ,and decrease in total liabilities/equity from 2015 to 2016 show that the company is profiting well and paying off their debt
    • The loan is about halfway through so far

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

    As this is a callable note, that is different from the usual equal installment, the company will pay out an interest every month and you can redraw your principal anytime, or you can simply just collect interest until the end of the campaign

    $100(the amount I put in this campaign=100%
    $108=(100/100)*108=108%
    108%-100%=8%

    About 8% earned, and about 1% goes into moolahsense servicing fee hence,

    Total net payment=$100.98+$0.98+$0.98+$0.98=$106.92

    $100=100%
    $106.92=106.92%

    106.92-100=6.92%

    Total 6.92% earn from this campaign, pretty good interest I must say!

    that's all for this campaign, about halfway through all my moolahsense campaign!

    Thursday 6 September 2018

    (Post 49/week 35)Zero dollar project updates:carousell,Bitcoin Faucets,Short Link,Online survey and Adsense update

    Updates for last two 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

    Total earnings for carousell last week:$3+$2=$5(paylah)

    2.Bitcoin faucets


    Current coinpot holding




    Bitcoin core: 5334 Satoshi
    Bitcoin cash: 6211 bch
    Dogecoin:  58.68doge
    Litecoin:  0.00169 ltc
    Dashcoin: 0.00047304 dash

    3.Short link

    Last two week







    Currently






    Total earning for short link last two week:$5.1971-$4.6883 = $0.5088

    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 last two week:2 x surveyon($2.00)

    The total payout for last week survey:$2.00+$2.00=$4.00

    5.Adsense




    Last week earning for Adsense:$0.60

    Total earnings for last two week zero dollar project:$5 + $0.5088 + $4.00+ $0.60=$10.01

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

    Sunday 2 September 2018

    (Post 48/week 35)Learning investing/trading together part 3(Blue chips,Income stock and growth stock)

    Learning investing/trading together part 3! (Let's learn about investment products!)

    Note: Data are based on 2018 report, from yahoo finance and dividend.sg*

    What investment are available?
    • Nowadays, there are many investment products on the market which can be quite daunting and confusing for the new investor. Understanding the different product as well as our own investment goals and risk appetite is important in determining the right investment approach for ourselves
    • There are four common investment products that a new investor can potentially start off with, they are blue-chip stocks,exchange-traded fund(ETF), real estate investment trusts(REITs) and regular shares savings(RSS) to help you better understand which products would best suit your investing goals
    Blue chip stocks

    What is a blue chip?
    • Large and well-established companies with a history of stable earnings
    • Typically refers to companies of quality and reliability and who have the ability to operate profitably in good times and bad
    • From a financial perspective, blue-chip companies typically have: Market capitalization> $2 billion
    • Business revenue > $200 million per year
    What is a market capitalization?
    • It is the value of the company trading in the stock market
    • Market Capitalism = Share Price x Number of outstanding shares of the company
    Did you know?

    Image result for capitalandImage result for thai beverageImage result for dbs
    • Blue chip companies have worldwide business with an estimated 50% of the total revenue generated outside Singapore. For example, Capitaland(the company that own at least half the shopping mall in sg) has a vast global presence in around 146 cities across 27 countries worldwide, from Paris to Singapore
    • Thai Beverage, a blue-chip company, owns famous brands like Chang Beer and 100PLUS. You can own a piece of their business with just $73(0.73/current share price * 100), that's the equivalent of 15 bottles of Chang beer
    • If you had invested in DBS(the bank that every Singaporean has an account in)in the year 2015, you would have received an average dividend yield of 3.77 %. Compare this to a DBS savings account that pays up to 0.10% p.a interest in your savings
    • The combined minimum investment in three well known blue chip counters-OCBC(the lesser popular bank, but still very popular), Singtel(the company where everyone sign contract for their phone with), and Keppel Corp(mostly marine and offshore, oil)-used to cost around $19,820.With the reduction of board lot size(from 1000 per lot to 100 per lot, you can buy into these companies with just $1928 now
    • SATS(the company that provides ns man food...) shares gave a total return of around 30% in 2015. Investing in the company cost just a little over $400
    Growth and income stock

    In general, stocks can be classified as growth, income or a hybrid of both. Using certain financial ratios, we can differentiate between growth and income growth and income stocks and determine which best suits our investment goals

    Growth Stock:


    • A company stock that tends to increase in capital value rather than yield high income,this mean you earn more from selling the company stock rather than via dividends 

    General telltale sign
    • Generates substantial and sustainable positive cash flow
    • Revenues and earnings increase at a faster rate than average companies
    • Has a competitive advantage over its peers
    • Pay small dividend as these companies tend to reinvest profits for further growth
    Relevant financial criteria
    • 5-year Revenue Growth
    • Price-Earning ratio
    You can read about 5-year revenue growth and the price-earnings ratio at my last week post here
    Income Stock
    • Found mostly in stable industries and pays a consistent dividend to reward their shareholders
    • Capital return is generally lower than a growth stock
    Relevant financial criteria
    • Dividend Yield (consistent payout for at least 3 years)
    You can read about Dividend yield at my last week post here

    Examples of Growth Stock

    Stock(Stock code):DBS Group Holdings Ltd(D05)

    • Stock code are a short form that consists of letter and number or both, so when you purchase DBS share, you key in D05 instead

    Industry: Bank

    Link:https://sg.finance.yahoo.com/news/sgx-research-dbs-ocbc-uob-084407840.html
    • DBS, OCBC, and UOB has an average P/E ratio of 14.1x
    • There is also the sector P/E ratio,shareinvestor has such info but must be a member

    Market Cap :$63.815 Billion



    Link:https://www.investopedia.com/terms/m/marketcapitalization.asp

    • Small cap companies: Around $300 million to $ 2billion
    • Mid-cap companies:$2 billion to $10 billion
    • Large-cap companies: More than $10 billion
    • Hence, DBS is categorized as a large-cap company


    Total Revenue($B): $10.17 Billion




    • Known as sales in income statement, will delve deeper into it when I will study more on the financial factsheet

    5-year Revenue growth %:9.32%


    • 23 Aug 2013:$16.16
    • 30 Aug 2018:$25.23
    • Using the cagr calculator from Investopedia to calculate, it gives us:9.32%
    • Interpretation from the calculator: Over the course of 5 periods your investment grew from $16.16 to $25.23, its compound annual growth rate, or its overall return, is 9.32%.
    • Interpretation of CAGR: Over the course of 5 periods your investment grew from $16.16 to $25.23, its compound annual growth rate, or its overall return, is 9.32%.
    • CAGR essentially smoothes out the progress of your investment over a period of time, providing a clearer picture of your annual return. However, although your investment started at $16.16 and ended with $25.23, its growth in any one year may have been quite a bit higher or even negative (if the investment ever lost money over that time). Consequently, the CAGR figure may give the impression that the investment has produced a stable return throughout its life, even if the investment was extremely volatile, fluctuating a great deal from year to year.

    Price-Earning ratio:13.43




    • Big and established companies(blue chip) normally have a P/E ratio of 15 of 25
    • Still on its way to reaching the P/E ratio of 15
    Dividend yield(Not included in the book)

    • For comparison between growth and income stock


    • Dividend yield(2016):2.38%
    • Dividend yield(2018):6.75%(this is crazy man btw)
    • From 2.38% to 6.75%(this has evolved to both a growth and income stock)
    • In my opinion, any stock that has a dividend yield of more than 5 % is an income stock

    Examples of Income stock

    Stock(Stock code): Capitaland mall trust(C38U)

    • Stock code of Capitaland mall trust, C38U

    Industry: Real Estate Investment Trust(REIT)

    • REITs are normally categorized under Income stock, due to their high dividend yield

    Market Cap:$7.666Billion

    • Small cap companies: Around $300 million to $ 2billion
    • Mid-cap companies:$2 billion to $10 billion
    • Large-cap companies: More than $10 billion
    • Hence,capitaland is categorized as a Mid-cap company (a little surprising, really)
    • Total Revenue($B):0.68


    • Known as sales in income statement, will delve deeper into it when I will study more on the financial factsheet
    5-year Revenue growth %:2.61%(not included in the book)

    • 23 Aug 2013:$1.89 
    • 30 Aug 2018:$2.15 
    • Using the cagr calculator from Investopedia to calculate, it gives us:2.61%
    • Interpretation of CAGR: Over the course of 5 periods your investment grew from $1.89 to $2.15, its compound annual growth rate, or its overall return, is 2.61%.
      CAGR essentially smoothes out the progress of your investment over a period of time, providing a clearer picture of your annual return. However, although your investment started at $1.89 and ended with $2.15, its growth in any one year may have been quite a bit higher or even negative (if the investment ever lost money over that time). Consequently, the CAGR figure may give the impression that the investment has produced a stable return throughout its life, even if the investment was extremely volatile, fluctuating a great deal from year to year.

    Price-Earning ratio:11.51


    • Big and established companies(blue chip) normally have a P/E ratio of 15 of 25
    • Still on its way to reaching the P/E ratio of 15

    Dividend Indicative Yield:5.28


    • Dividend yield(2016):5.20%
    • Dividend yield(2018):3.97%
    • From 5.20% to 3.97%(this has become a "non growth and income stock?")
    • Btw, Capitaland mall trust(C38U) is a REIT and REITs typically payout dividend every quarter
    • In my opinion, any stock that has a dividend yield of more than 5 % is an income stock
    • Will talk more about REITs in part 5!

    Monday 27 August 2018

    (Post 47/week 34)Investment project updates part 2:Posb invest saver AUG 2018 summary

    6.Posb invest saver(Aug 2018)

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

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

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


    Breakdown of my regular saving plan(A35) this month(Aug 2018)
    Total amount(regular saving plan)A35:$100
    Price per share:$1.12700
    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/$1.12700=88.28748891=88 units



    Summary: As of 22 Aug, the share price of A35 was at 1.133, a slight increase from last month,1.127(July update) which is 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 may make a bulk purchase




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

    Breakdown of my regular saving plan(G3B) for this month(Aug 2018)
    Total amount(regular saving plan)A35:$100
    Price per share:$3.352100
    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/$3.352100=29.58742281=29 units

    Summary: As of 22 Aug 2018, the share price of G3B is at 3.32 and ES3 is at 3.24. Both ES3 and G3B has been on a downtrend and ES3 has broken the support line at 3300, could be some signs that the economy is slowing down but will probably recover temporary. Will be watching it along with A35





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

    Sunday 19 August 2018

    (Post 46/week 33)Investment project updates:Moolahsense(My fifth campaign)

    6.Moolahsense(My fifth 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)

    My first default loan!!!:(

    Issuer summary
    Date of listing: DEC 2017
    Amount:$500
    Tenor:6 months
    Repayment 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 term: Monthly
    • Repayment term: Will be paid monthly
    Target interest rate:24%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 $500 into it(which is the amount I actually funded, which is the minimum sum that moolahsense accept for the campaign at that time)
    • As the target interest rate is 24%, this means that at the end of the tenor, which is 6 month I will expect to receive $560
    • 100%=$500
    • 12%(Interest for 12 month/1 years)=$60
    • 112%(The Principal + the interest for six month)=$500 + $60
    • Since the tenor is 6 months, each month I will receive $(inclusive of interest) in payment/equal installment
    • 1month=$560/6=$93.33
    Summary company profile

    • The issuer is a company incorporated in 2006
    • The Issuer is in the building and construction industry and has around 10 employees
    • The Issuer is a specialist in mechanical engineering project and has been engaged by government hospitals in Singapore to implement various automation projects.
    • The Issuer is registered with the Building and Construction Authority of Singapore
    Detail of purpose

    • The Issuer seeks working capital to perform automation projects awarded by a government hospital in Singapore 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 2016/right side of the column is for the year 2015)


    Year 2016/Year 2015
    (Current ratio 2016:3.62),(Current ratio 2015:49.79)

    • 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 2015:49.79, it is higher than the recommended range(>2.0)
    • For the current ratio of 2016:3.62, it is higher than the recommended range(>2.0)
    (Quick ratio 2016:3.62),(Quick ratio 2015:49.79)
    • 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 2015:49.79, it is higher than the recommended range(>1.25)
    • For the quick ratio of 2016:3.62, it is higher than the recommended range(>1.25)

    (Total liabilities/equity 2016:0.19),(Total liabilities/equity 2015:0.01)

    • 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 2015:0.01, it is out of the recommended range(<0.75)
    • For the Total liabilities/equity of 2016:0.19, it is in the recommended range(<0.75)

      Why did I invest in this loan?
      • Both the current ratio 2015(49.79), quick ratio 2015(49.79) are above the recommended ratio of >2.0 and >1.25 respectively(This default loan is the epitome that if something is too good to be true, it probably is)
      • The current ratio 2016(3.62), quick ratio 2016(3.62) are above the recommended ratio of >2.0 and >1.25 respectively and its Total liabilities/equity 2016(0.19) is in the recommended range of <0.75, as the financial statement ratio it met all of the above-recommended ratios, I would invest in the campaign(again if something is too good to be true, it probably is)
      • The Total liabilities/equity (2015) is 0.01 while the Total liabilities/equity (2016) is 0.19, suggesting it is increasing and this most probably means that the company are taking more on their liabilities/debt
      • Even though this loan has defaulted, nevertheless below is the supposed repayment schedule so far(I only got dec and Jan repayment, by the way)

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

      Monthly interest rate:interest/start balance=$10.00/$500=2%(Percentage conversion must *100)
      Effective interest rate:2%*12=24%(Same as the target interest rate)

      From the above picture, you can see that the Net repayment is at $89.26 instead of the $93.33 that I have mentioned above at the working capital, hence I will do a calculation here again

      1-month repayment:$89.26
      6-month repayment:$89.26*6=$535.56

      $500(the amount I put in this campaign=100%
      $535.56=(100/500)*535.56=107.112%
      107.112%-100%=7.112%

      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 (12% only), compare to 7.112% its almost 5% 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, you will get only about 7.112%.

      And of course, I was a bit depressed at that time because after all seeing your hard earn money go down a drain...there was simply no words to describe...

      Nevertheless, after that incident, I pick myself up and since then I had switch to investing in other areas such as stocks, bond etc(e.g  Learning investing/trading together part 1(Why invest in stocks?)

      But of course, at that time I still didn't know that this loan was going to be eventually defaulted, hence leading to me investing in my sixth campaign...

      Thursday 16 August 2018

      (Post 45/week 33)Zero dollar project updates:carousell,Bitcoin Faucets,Short Link,Online survey and Adsense update

      Updates for last two 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

      Total earnings for carousell last week:$1+$2(via meetup)=$3

      2.Bitcoin faucets


      Current coinpot holding




      Bitcoin core: 5235 Satoshi
      Bitcoin cash: 5873 bch
      Dogecoin:  57.26doge
      Litecoin:  0.00158 ltc
      Dashcoin: 0.00045305 dash

      3.Short link

      Last two week






      Currently





      Total earning for short link last two week:$4.6883-$3.8508 = $0.8375

      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 last two week:surveyon($2.00),mobrog($6.25)

      The total payout for last week survey:$2.00+6.25=$8.25

      5.Adsense


      Last week earning for Adsense:$0.54

      Total earnings for last two week zero dollar project:$3 + $0.8375 + $8.25+ $0.54=$12.62

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

      Monday 13 August 2018

      (Post 44/week 33)Learning investing/trading together part 2(Investment style)

      Continuing on from last week(part 1), this week we will be learning about the different investment  style and the different between different type of stock



      Growth investor

      What you want from your investments
      • Capital gains and growth are more important
      For an investor who...
      • Have shorter term horizons
      • Are seeking higher capital appreciation
      • Want to achieve a lump-sum investment amount that is larger than accumulated savings
      Company and stock selection
      • Identify companies that have the potential to grow, or whose revenues and earnings are expected to increase at a faster rate than its peers
      Relevant financial criteria
      • 5-year Revenue Growth
      How to Calculate 1-year revenue growth?(just like calculating simple interest rate in school)

      E.g A company reports  $10 million in total revenue last year and $12 million for the recent year. You take this year $2million divide last year's $10 million which gives you 0.2(0.2 * 100), which times 100 gives us 20%(remember percentage is *100). Therefore, this company had a 1-year revenue growth of 20% from last year to this year.

      Total revenue for last year:$10,000,000($10 million)
      This year for this million year:$12 million($12 million)
      Difference between this year and last year:$12,000,000-$10,000,000=$2,000,000
      1-year revenue growth:$2,000,000/$10,000,000=0.2*(100)=20%

      Calculating 1-year revenue growth may seem chicken feet to some(at least not for me! haha), but what if you want to calculate 5-year revenue growth?


      How to calculate 5-year revenue growth?(just like calculating compound interest formula in school)
      Link:https://www.investopedia.com/terms/c/cagr.asp

      The 5-year revenue growth is the same as the CAGR(compound annual growth rate)? I think?
      P.S, I hate financial jargon as much as you do...

      So what is CAGR(compound annual growth rate) anyway?

      • It is the mean annual growth rate of an investment period of more than a year, which in our case is 5 year!
      • It is also a representation number that describes the rate of the investment if it has grown steadily over the years, however, some years the company made more money or made less money(e.g company A make $2 million for the year 2018 and make $1 million for the year 2019)



      For example, company A data:
      The year 2013(Begin value, currently has):$10million
      The year 2018(End value, currently has):$20million
      Number of years=2018-2013=5 years

      CAGR of company A is =(($20,000,000/$10,000,000)^(1/5))-1=14.8%
      • Price-Earnings Ratio
      What is the Price-Earnings Ratio?
      Image result for price to earning ratio formula

      link:https://www.investopedia.com/terms/p/price-earningsratio.asp
      Link:http://www.sharesinv.com/articles/2014/07/04/price-to-earnings-tutorial/


      • The Price-earnings ratio is one the popular ratio that measures the price of its current stock to its earnings.
      •  To put it in a simpler word, it is a ratio that identifies how expensive or how cheap a stock is.
      • For example, a company currently trading at a P/E of 10, this means that the investor is willing to pay $10 for $1 current earnings. Below is an example of how to calculate the P/E ratio of SingTel currently (z74)


      link:http://www.sharesinv.com/Z74/


      As you can see in the above picture, the black circle show the P/E(price to earnings ratio), most of the websites will show the P/E, so there is no need for actual calculation(what a relief, eh?)

      But let's verify the Price/Earning ratio via the formula above:)

      • P/E ratio(Black circle):9.6

      Price per share(Red circle):$3.200
      • Earning per share(Pink circle):$0.3339
      • P/E ratio:$3.200/$0.3339=9.6


      As you can see above the P/E ratio is pretty accurate, hence there is no need to do self-calculation.

      P/E ratio rule of thumb

      • Big and established companies(blue chip) normally have a P/E ratio of 15 of 25
      • Bear in mind that different industries in Singapore have different P/E ratio and that tech company such as facebook and google have very high P/E as you can below(Facebook P/E:28.44, Google P/E:53.56)



      Will delve deep into P/E ratio for the different industries in a future post.

      Risk to be aware of
      • This is a more aggressive form of investing which requires more active portfolio monitoring and management
      Income investor

      What you want from your investments
      • Having an income stream is more important
      For an investor who...
      • Are depending on having a regular stream of income from their investments
      Company and stock selection
      • Identify companies that pay dividend consistently
      Relevant financial criteria

      • Dividend Yield
      Image result for dividend yield formula
      What is Dividend Yield and how to calculate it?


      • It indicates the percentage of your principal sum that the company is going to pay in the form of a dividend. 
      • It is similar to the bank interest rate(e.g DBS interest rate of 0.05%) that you earn annually but in this case, it is the stock interest rate that you will earn annually. Below is an example of how to calculate my dividend for Singapore bond index(A35)

      Link:https://www.dividends.sg/view/A35(This is a very good link to check dividend by the way)

      Using the formula to calculate dividend yield above


      • Annual dividend per share: $0.0261
      • Current share price:$1.125
      • Dividend yield:$0.0261/$1.125=0.0232(percentage always *100)=$2.32


      As you can see it is the same as the dividend yield state above in the picture, so there is not a need to calculate too

      Do look forward to part 3 where we explore the different investment product@