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Tea with TheMinimalist: If Personal Finance and Investing were a religion, what would be your denomination?

Tuesday, October 7, 2014

The Minimalist, a mysterious and wise man, has contributed another guest blog to ASSI. I hope you enjoy reading it as much as I have:

Over a podcast interview with AK71, he shared that “Investing is a religion”. I can relate to his statement on so many levels. Firstly, there are so many different denominations like value investing founded by Benjamin Graham and David Dodd or permanent portfolio by Harry Browne. Secondly, you cannot “force” someone to adopt an investing style that they are not comfortable with. For example, my best friend is a conservative investor and is satisfied with investment returns that match the inflation rate (3% to 5%). People like my best friend would be best suited for the Permanent Portfolio.


With so many religions in the world, which one is the best for me?

During my university days, I went through a “quarter-life crisis” and was very lost with what I wanted to do in life. Upon the advice of some friends, I decided to turn to religion. As I started reading different religious texts (such as The Bible; Dhammapada; Dao De Jing), attending services, I realise that these religions share common truth. I will share two points that have benefitted me the most. The first one is to engage in meaningful and purposeful work. The second is to love and serve people.

For readers who are new to personal finance and wish to take charge of their finances, where is the best place to start? In my humble opinion, the Bible of personal finance is “The Richest Man in Babylon”.

In this book, it states the 7 universal principles of personal finance. When you secure a copy of this book, read it once, read it twice and commit the principles to heart. More importantly, PRACTISE it. Success only comes by taking actions, NOT by reading. (I have never come across a book that is titled “Read and Grow Rich”) 

After reading the bible of personal finance, feel free to research the different styles of investing and adopt one that you are comfortable with. One of the best ways to shorten the learning curve is to be a mentee to someone who has successfully applied those principles. (Maybe, AK71 can start a mentorship program and start with coaching his mentees to eat oatmeal for breakfast, lunch and dinner. Cheap, healthy and nutritious!) 

Breakfast of champions'.

A word of caution.

Make sure you are learning from the RIGHT people. I am sure many of you have read of religious leaders in Singapore who have fallen into the money/power trap. Or finance trainers who promise infinite riches by paying $X,XXX to attend their courses.

The end goal of personal finance/investing should be financial freedom where our assets generate sufficient passive income to cover our expenses. The means should justify the ends. If your mentor makes his money through insider trading (illegal), excessive leverage (dangerous) or guess-work (lazy), you might want to reconsider learning from this person.

To end off this blog post, I feel that there is no religion that is “superior” or “right”. Everyone should make a well-informed decision on the faith that he or she is comfortable with. Do not convert yourself to a certain faith just because your wife/husband/best friend/teacher is of that faith (I am a deist for those who are curious about my faith). Similarly, there is no personal finance philosophy or investing style that rules supreme over all others. If you are uncomfortable eating oatmeal for breakfast, lunch and dinner, then don’t do it! (Right, AK71?)
Here are some actionable steps to get you started on taking charge of your personal finance:
(1)    Grab a copy of the book, “The Richest Man in Babylon”

(2)    Read and memorise the seven universal principles of personal finance

(3)    Plan and write down specific steps on how you would apply each of the seven principles. For example, you want to apply the first principle “Start thy purse to fattening”. To do this, you write down “On my next payday, 16th Oct 2014, I’ll set aside S$500 from my S$5,000 paycheck to a designated savings account with OCBC.”

If you like what I have shared in my blog post, feel free to e-mail or share with your friends on FB.


Richest Man in Babylon




Richest Man in Babylon
Buy pre-owned with free shipping worldwide at US$6.98 a copy.
Read and learn 7 important lessons in life:
1. Pay ourselves first.

2. Live below our means.
3. Put our money to work.
4. Always have insurance.
5. Our home is a consumption item.
6. Plan early for retirement.
7. Upgrade our knowledge and skills.

Read another guest blog by The Minimalist:
Financial planning? Start with why!


Related posts:
1. Getting paid more while waiting for opportunities.
2. Motivations and methods in investing.
3. If we are not rich, don't act rich.
4. A common piece of advice on saving.
5. Do you want to be richer?

OCBC and CapitaMalls: Providing value for money deals.

Monday, October 6, 2014

At the sharing session with Sean Seah and friends, there was plenty of food. It was like a pot luck session and I saw a few boxes from Polar. They are famous for their puff pastries and Swiss rolls, I believe. Their curry puffs cost $1.80 each and I always thought they were quite expensive. So, until quite recently, I never did buy Polar curry puffs.

Wah! AK recently bought atas curry puffs?

Well, I got them for $1.00 each and that was the first thing I said yesterday to the group. Yes, terrible. I totally forgot that initial impression is very important and they probably thought, "What a cheapskate..." Of course, I went on to say how they could also get $1.00 curry puffs from Polar, oblivious to what they might be thinking.

Actually, it is all thanks to the OCBC Frank VISA card that I have now. To get the special deal, I use the NETS Flashpay function. We will also need the NETS Flashpay Savers app which is free to download. The app lists many special deals and one of them is from Polar.


Each time, we are allowed to buy up to a maximum of 4 curry puffs at $1.00 each and pay with NETS Flashpay. A discount of almost 45%! That is a pretty good deal!

So, ever a sucker for great deals, I tried their curry puffs. Not bad but, honestly, I still prefer Old Chang Kee's curry puffs which are cheaper, heartier and tastier.

What? You think I am saying this just because I am an Old Chang Kee shareholder?

Aiyoh, terrible. How could you think like that?

Anyway, I am very sure there will be comments after this to suggest curry puffs which are better than Old Chang Kee's and I promise not to delete them as long as they are not advertisements. Nice AK.

Then, to augment the impression participants might have that AK is a cheapskate, I told them about how I admire CapitaMall Trust's management very much and how I think they are doing a good job of driving shoppers to their malls. How does this show I am a cheapskate?

I revealed how I am a CapitaMalls credit card holder and also a CapitaStar member. For a whole month, I get free parking in all their malls any day of the week for 3 hours per visit per mall when I have $1,200 worth of spending using the credit card. The spending doesn't have to be money spent in their malls too. It could be payment of bills at the AXS machines etc.

Assuming that we visit their malls 10 times a month, we could easily save $30 in parking fees. That is 2.5% of $1,200. My sister shares my car and I also go out with my mom once every few days just to spend quality time together and do a bit of grocery shopping. We make sure we visit a CapitaMall when we go out and not a competitor's mall. When I meet up with friends on weekends, I always suggest meeting in a CapitaMall. Sneaky!


Anyway, there is another reason why I like CapitaMalls. Getting discounted shopping vouchers!

Once a year, they will have this special deal for members to buy $300 worth of vouchers and get another $30 for free! I bought plenty last year and I am buying again this year. Everyday, for a limited time, each member is allowed one purchase per mall. The purchase of vouchers will count towards that $1,200 spending to get free parking too. Nice.

We use the vouchers mostly when we shop in NTUC Fairprice supermarkets in CapitaMalls but they are accepted in most of the shops, really. So, it is like getting a 9.1% discount on our groceries, on top of getting Link Points (about 1.3% rebate) and NTUC shareholder rebate of 4%. When I go shopping with my mom on Tuesdays, we get additional 2% discount for senior citizens too.

Some money, we have to spend. If we can save some money in the process, why not?

Related post:
1. CapitaMall Trust: Buy the retail bond or the REIT?
2. Save $: Frank Card, Signature Card & Dividend Card.
3. Supporting my businesses and getting paid in the process.

13 blog posts for a sharing session on investing for income.

Saturday, October 4, 2014

I participated in a sharing session earlier today on investing for income in the local stock market. The group was made up of experienced real estate investors who are possibly interested in diversifying their passive income stream by investing in the local stock market.




So, I shared with them my little ideas regarding bonds and stocks and, to a large extent, drew upon past blog posts for this purpose. These were the ones in the notes I gave out:


1. Nobody cares more about our money than we do.

2. Perpetual bonds: Good or bad?

3. Leverage up and buy investment properties now?

4. Gear up and receive more passive income.

5. Bonds, REITs and the instant gratification of yield.


In the course of my rather long winded discourse, I also made verbal references to several other blog posts and I am listing them here for easy reference. Yes, I know it is a chore to comb my blog. I find it a bit demanding myself but thank goodness I still have a fairly good memory:


6. How should we approach REITs as investments for income now?

7. AIMS AMP Capital Industrial REIT: Making money.




8. Saizen REIT: Sell the entire portfolio or find a bigger partner.

9. A simple way to a double digit yielding portfolio.

10. Motivations and methods in investing.

11. Save 100% of your take home pay. What?

12. Recommended books for FA and TA.

13. How to be "One Up on Wall Street"?


It was invigorating as I fielded questions from participants and got to make some pocket money at the same time. :)

Related post:
Two blog posts I would like the recovery group to read.

SembCorp Marine: A nibble.

Friday, October 3, 2014

Shareholders of Marco Polo Marine would remember that they ordered an oil rig from SembCorp Marine earlier this year. The value of the contract was about US$214 million. That is a lot of money. SembCorp Marine is a leader in the building of oil rigs, of course, and they have an impressive order book.

That led me to wonder if it might be a good idea to be a shareholder of SembCorp Marine too and benefit from Marco Polo Marine's purchase of the oil rig. Yes, I know. I am so greedy. Bad AK, bad AK!


SembCorp Marine was trading at about $4 to $4.20 a share back in February. The stock price was in a downtrend. (It still is.) Support was at around $3.90. The moving averages were all descending and the momentum oscillators were not supportive. (They still aren't.) So, there was a good chance that prices could go lower.

The many times tested support at $3.90 gave way eventually and, this morning, stock price hit a low of $3.54 a share. The CMF hinted that selling pressure has reduced. It could be that some short positions were being covered and it could be because this is the last trading day of the week.

Ahead of a long weekend, short sellers might think it safer to close their positions. Selling could resume next week or it might not. So, with share price more than 10% lower than it was in February, I wondered if I should wait a bit more or buy this morning?

I took a look at some numbers:


From a valuation perspective, the stock is more reasonably priced now. In April 2011, when it touched a high of $6 a share, it was trading at a PE ratio of 16.66x. Pretty high. Mr Market obviously expected better earnings to come but better earnings did not come.

Today, share price touched a low of $3.54 in the morning. At that price, assuming an EPS of 24c, annualising 1H 2014's figures, we are looking at a PE ratio of 14.75x. This would seem like a fairer valuation although still not cheap.

If we believe that oil is still going to be an important energy source in the world and if we believe that any weakness in oil prices is temporary, then, weakness in the share prices of rig builders with good track records like SembCorp Marine presents an opportunity to get in at more reasonable valuations.

As I like to be paid while I wait, I looked at the dividend payout record of SembCorp Marine:



It seems to me that SembCorp Marine normally pays out about 50% of their earnings as dividends to shareholders and more during good years with better earnings. An 11c to 13c DPS would mean a dividend yield of 3.1% to 3.67%, given an entry price of $3.54 a share. As an investment for growth and income, I feel that this is pretty decent.

So, although a PE ratio of 14.75x  does not look cheap, I decided to initiate a long position this morning at $3.56 a share. A nibble, so to speak. Didn't throw in too much and definitely not the kitchen sink. Continuing weakness could see gap cover happening at $3.30 and for people who believe that gaps will eventually be covered, it could be worth waiting a bit more.

What would I do if price should test $3.30? I would probably be buying more.

Related post:
Marco Polo Marine: Drilling for higher income.

A H&S story: Make money that helps us spend less money.

Thursday, October 2, 2014

Hospitalisation and surgery (H&S) insurance coverage is a must have for everyone. What might not be perceived as a must have is the rider that is usually offered and one possible reason is that this is an out of pocket item which means that we cannot use our Medisave savings to pay for it.

However, I am quite happy to pay for the rider and will encourage anyone who can afford the rider to get it. Early last year, I shared that:

"So, it means that I only have to pay 10% of my total medical bills if I were to be hospitalised and this 10% has an annual cap of $3,000 in my case. So, if my hospitalisation and related bills were to total more than $30,000 in any year, I would still pay a maximum of only $3,000."

Hospitalisation bills could turn out to be quite burdensome. Knowing that I have only got to pay $3,000 even if my bills should exceed $30,000 in any one year gives me peace of mind.



The rider costs more as we age but don't let that dissuade us from having it because the rider will become even more important as we age. Why?

The chances of being hospitalised and of being hospitalised for many more days per visit will only go up as we age. This is quite natural. So, naturally, we should keep the rider. Simple.

So, in the case of my mom, I told her I will pay for her H&S rider if she cannot afford it. I would rather pay for the H&S rider and also the maximum of $3,000 annually in case of hospitalisation than to pay the regular deductible and co-insurance with each stay in a hospital for her. There is no way of telling how much these might cost on a per visit and per year basis but with the H&S rider, I know how much I should be prepared to pay every year.

If only risk management was always so easy.

Get ourselves and our loved ones insured well and we will not have to fear big hospitalisation bills that will one day come to us. This is simple enough to understand. So, for those of you who have yet to act on this, there is no time to lose.

Of course, I understand that it is a pain having to pay for anything. It would be wonderful if everything in this world was free but that would remain a dream. So, we work so hard to make money only to see the money going to pay for all the expenses in life? I know the feeling. Ouch.

Well, it would be less painful if the money used to pay for all the expenses in life were money that we did not work so hard to make. Huh? Well, what if it were money that was made by money that we worked hard to make? OK, I am sure you get the idea now.

Make some money that will help us spend less money especially on necessities in life. H&S and the rider are two such necessities.

Related posts:
1. How to get free medical insurance?
2. Enhanced Incomeshield for my mom.

Which investment and personal finance bloggers to follow? (5 revelations from a regular retail investor.)

Wednesday, October 1, 2014

Whether we like it or not, many things in life have to be measured. However, it gets rather irksome when people want to measure us against others. 

If you get the feeling that AK is going to be ranting in this blog post, you are right!






My school results were measured against my cousins' all the time, I remember.

When I was a bit older, I told my mom and my aunts very firmly that I didn't like that. They stopped.

I think it was more fun for them than it was for me.


Now, for investments, it is the same thing. For some people, is not enough that we do well, we must be the best. 

Why do some people get so fixated with measuring and comparing everything?






"Wah, you are short! I am long!"

(Hey, I am talking about positions lah. Think straight hor. Huh? What do you mean 64 positions? Aiyoh, I don't know what you are talking about.)


Anyway, it gets so tiring sometimes that I wish I do not hear or read anything like this for a long time. 

It just gets quite pervasive at times.

I have been asked by some people on and off to give more details regarding my portfolio so that they can decide if I am beating some benchmark. 






What benchmark? 

The only marks I know on benches are graffiti in the public parks which might include the odd phone number offering some services by some people. 

Huh? Financial services? 

You say leh?

When I politely declined (for the umpteenth time), some people asked, 

"How would I know if you are worth following if I don't know?"

Wah! WAH! WAH!!!!!

Which color tastes better?





Hey, bro. Here are a few things I don't mind revealing:

1. Don't follow me. 

I have this fear of stalkers. I don't know why. I am just so scared of being stalked.

2. My investments might beat the index or they might not. I don't really care. 

All I care about is getting in with a margin of safety and having a dividend yield that makes sense. 

OK, sometimes, I get a little adventurous but I try to make sure that the occasional misadventure will not kill me. Yes, what I do care about is not losing money overall.





3. I never claim to be an expert or a guru. 


I am just a regular retail investor who got lucky quite regularly (I will admit). I say this all the time. There are some people who believe me and although not all are polite about it, I have no doubt that they are all clever chaps.

4. I am not very clever at spotting growth in companies. 

I can't seem to see very clearly what is in the future. I don't think anyone can guarantee growth. So, I rather get my hands on something which is more or less guaranteed, trying to avoid being stung at the same time.





5. The only person you should really follow is yourself. Know yourself. Know your temperament. Know your aptitude. 


You could be good at some forms of investment. Then, just stick to these.  If you want to be the best in the field, well, go ahead. Just, please, don't think that I feel the same way and that I have to be the best too.

OK, now I have a blog post I can direct some people to in future.

Related posts:
1. Motivations and methods in investing.
2. Market gyrations, my portfolio and a sabbatical.


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