How to be better investors?

I had a conversation with a fellow blogger whom I have grown to respect earlier today and he said that I might want to remind readers of the fact that I am not infallible. Although I think that I have continually mentioned this in my blog, it doesn't hurt to say it again.

As I don't have much time to blog this weekend, sharing my conversation with him is a good way to generate a blog post which I believe is useful rather quickly.

Yes, I know, sneaky AK!

How to be better investors? Know that we are not infallible.

Read the blogs mentioned in the conversation:
1. Managing exposure in AK's investment portfolio.
2. How to size our more speculative positions?
3. How to make recovering from losses easier?
4. Excuse me, are you an investor?

With some difficulty, AK says "good-bye".

When I was in secondary school, my family was staying in a HDB 3 room flat and my parents cordoned off a section of the living room for me to use as my bedroom and study area. 

In a way, I had the largest bedroom in the flat!





On hindsight, they did what they could to make our lives comfortable despite the difficult circumstances.

This is another reminder of my mother's love:

My mom bought this for me after I told her that my English Language teacher asked us to listen to the BBC as a means of improving our command of the language. 






She paid $40.00 for this and it worked tirelessly for 29 years.

The price tag stuck in my mind because I thought it was a lot of money back then.

Although I do not tune in to the BBC anymore, I would still tune in to a couple of local radio stations. 

Sound quality might not be amazing but it is clear and crisp.





Still serviceable, I will be giving it away to a co-worker who has greater utility for it. 

I think of it as a chance to unclutter my life as well which I have been doing a lot of recently.

Suddenly, however, it feels hard to say "good-bye".





Thank you for 29 years of faithful service.

Thank you, mom, for giving this to me.

Related posts:
1. Parting with an old friend.
2. My mug from 1987.
3. Ancient t-shirt is still good!

SAF Group Insurance and CI coverage.

I received an email from a reader, B, and he has agreed for it to be published in the hope of getting more ideas from other readers here:

Dear AK,

Thanks for your ever inspiring and encouraging blog posts for our daily living.

I would like to seek your advice (or what would you do if you were in my shoes) on some insurance matters.

As a background, I am a 27 year old working professional working for around 2+ years, just married, received my BTO flat and planning to have kids next year or the following. I owned a few income producing shares like REITS (not surprising as I am a regular reader of your blog).

I do not own a Investment linked insurance policy nor an endowment. I do have the SAF Group term insurance (Assured for $300,000) as well as the MyShield Plus (the hospitalization plan plus full rider).

I received a letter from SAF Group insurance, asking me to add 2 riders to my term insurance:

1) Supplementary Living Care  - For 30 critical illnesses, Sum Assured $300,000, monthly premium of $30.00

2) Living Care Plus - For common early critical illnesses, Sum Assured $200,000, monthly premium of $20,00

FYI, I am currently paying monthly premium of $38.40 for the SAF Group Term Insurance. 

More info on the 2 riders can be found below if it is useful:

http://www.aviva.com.sg/pdf/SAF_Living_Care_Product_Summary.pdf

http://www.aviva.com.sg/pdf/SAF_Living_Care_Plus_Brochure.pdf
 

 

AK's reply:

Hi B,

I enjoy reading your email because from the looks of things, you are doing things right and doing well. Happy for you. :)

I firmly believe that we need CI (critical illness) coverage. So, I would encourage that you take up the rider. I am not so sure about early critical illness coverage though. I suppose for people who might not have a lot of money put aside for emergencies (or do not have meaningful passive income), this would provide peace of mind.

I like to look at the annual cost instead of monthly cost so as not to be lured into an illusion of cheapness.

$30 x 12 = $360 a year. For a $300,000 coverage, it is inexpensive.

$20 x 12 = $240 a year. For a $200,000 coverage, it is also inexpensive.

If you do not yet have a CI plan, you should give the above serious consideration.

Genuine and constructive comments are appreciated, as always. Thank you.
-------------------------

Update: 13 September 2016.
A reader received this:

Value for money!

Complete table: here.

Related posts:
1. Graduating soon? Steps towards financial security.
2. Free Investment Linked Policies or Term Life Policies?

Tea with Jean: Improving personal cash flow.

The following guest blog is contributed by a reader, Jean:

I have done some search from internet and see whether got any way to get return slightly more than FD and also receive some amount of return in the future.

 

Here's what I have done and for sharing purposes:-

 

First, I open an 360 saving account at OCBC.

www.ocbc.com.sg/personal-banking/accounts/360-account.html

 

If I qualify, I will get 3.05%pa for 50K saving.

 

2nd, I just need to change my current giro payroll to this 360 saving a/c 

 

3rd, I also applied a credit card called OCBC Cashflo (with Great Eastern logo at the top right), which would be useful for my 4th point below.

www.ocbc.com/personal-banking/Cards/GE-Cashflo-Mastercard.html

 

4th, I bought an insurance plan called Family Three from GELA for three of my children. I just need to pay for 10 years and the return will run till my children pass away and still got a lump sum for my grandchild, if any. I make use of the credit card above to make the payment by instalments to enjoy the yearly rate for the premium, which is cheaper if compare to monthly premium. As I bought three policies thus my monthly instalments is more than $400, which make me qualify for the 3rd criteria of the 360 saving a/c.

www.greateasternlife.com/sg/en/pdf/brochures/Family3.pdf

 

In order to fully enjoy the 3.05% interest of 360 saving a/c, I need to meet one more requirement, ie pay any three bills using OCBC online or Giro. So, I use this a/c to pay the above credit card bill, tel co bill and utility bill.

 

Good point for the 360 saving a/c is.....I can withdraw any amount any time freely which FD cannot. But.... ceiling is 50K. :(

 

Pertaining to the insurance......I have bought the similar type in Malaysia, which introduce this plan few years earlier than Singapore, and now I enjoy the return...... use for travelling and service other present policies. If I rich enough, I may buy more so that can get more guarantee return in the future, provided GELA never got financial problem in the future. And in order to enjoy the lower premium...one must have CHILDREN.

 

Hmmm.....I am not insurance agent, not work in OCBC bank and also not a credit card promoter. This is just purely for sharing only.

 

In an email to me, Jean said, "I also hope to receive some comments that can improve my plan." So, please feel free to leave comments for Jean. Thank you.

 

Related post:
Getting paid more while waiting for opportunities.

Singapore properties will surely make money in the long run. There is no need to time the market.

JK sent me a link to his latest blog post and has graciously allowed me to extract a portion of it to share with readers here. See what JK has to say:

I have some doubts on the claim that Singapore properties are sure to make money in the long run and we should not time the market. 

(AK says: This reminds me of what a friend told me that there is never a bad time to buy a home...)

I witnessed my siblings purchasing properties in Singapore when there was an economic revival. It was year 2007 (when COSCO was at S$8 a share, remember?). Then, crisis struck in year 2008.
I think timing of the market is important. I know you guys are searching for the below market value property, but how much bargain is that under such good economic environment? I take Caspian as an example, if owner bought in year 2009 at S$600K, and they are able to sell it last year at S$1.2 million and now the selling price dropped to S$1 million, is this a good buy now? Take note, Lake Point condo also dropped heavily to S$300K before it shot back to S$900K, and with current market of S$800K, is that a good buy?

Bought a condo at a sky high price?

My advice is, unless you have a lot of cash, you can afford to have multiple properties, that's different. If I have only enough to shoot for one, my advice is, keep your money, build up your war chest because there will be a better time to buy.

I am sorry to say that the real estate price is following "closely" 6 months after the stock market performance for the entire history except for year 2009. In year 2009, the real estate price following exactly the same as stock market. Both index rebounded together in March 2009 , starting with Caspian new launch, then Mi Casa, etc. then, Interlace come in September 2009.

 

So, does that mean these two prices index will be decouple ? It will not.

 

Look at Dow Jones right now, it is at history high . Look at STI, it does not even challenge the new height just yet. We are all in good party mood. Will the stock  market come down? It has to come down.

If you don't like market crash, perhaps a meaningful correction of 30% is needed. If so, why can't you use the time now to prepare all the cash tightly and wait for the time and shoot once BIG TIME. Guess what, there are many people waiting out there as well, that is why when the price dip for 10%, 20%, people start to enter and support the price and the price stable or stagnant. But then, as I said, timing is still relatively important. Why did we not buy in year 2009?

Why?

It is because we didn't have enough cash at that time? (That is why I emphasize to build up the war chest) Or you fear that it will go down further? (If you fear the property price will go down further in year 2009 BUT NOT in year 2014, I think we have a problem here) Or you fear that you are next to be retrenched when you see DBS was slashing so many jobs away in year 2008 , 2009?

I know we must have positive mindset. I fully agree. But, for big investment with a fees of ABSD, I don't think it is attractive at all at this moment. Anyway, I am building my cash pile now slowly and I am all ready to shoot a big one when time is right. I sincerely wish all the investors winning big time!

Read JK's full blog post: here.



Discounting is the new trend.

I agree with JK. I have always said that entry prices are important. We don't want to overpay for any investment.

More than 2 years ago, I also cautioned that the government is engineering property prices to be significantly lower. At the time, I had some readers telling me that it won't happen because it is not in Singapore's interests as so many people have their wealth tied in properties.

Well, I always say don't underestimate the political and social motivations that power our government.

"I would caution that there are reasons for why the cooling measures are here. Whether the reasons are good or not would depend on where we stand. However, it is obvious to me that the government is sending a clear message that they want property prices in Singapore to lower in the next couple of years, not that they need to do much more to achieve this."
From: Leverage up and buy investment properties now?

Remember, we should never ask a barber if we need a hair cut, especially not the ones who are bald.

Related posts:
1. Affordability and value for money.
2. Never lose money in real estate?
3. Buying an apartment: Some considerations.