Save money by being less picky and be wealthier.

"Aiyoh, this Kimball Chilli Sauce price is up again!"

I was at NTUC Fairprice doing some grocery shopping.

"Ya lor. Price keeps going up. Now, it is $1.55 for a small bottle." 

OK, I am not sure if it was $1.55 or $1.35 by now. Such is the state of my short term memory.

Anyway, it was a conversation between an old uncle and old aunty. They looked to be in their 60s.

"NTUC is too much! Always increasing prices!" The old uncle was relentless.

I was holding on to a bottle of NTUC Fairprice housebrand chilli sauce and debating whether to take 1 bottle for $1.05 or 2 bottles for $1.85 when I heard the exchange. There was a special offer going on and I have always been a bit of a sucker for special offers.

I wondered whether to tell the old couple that they should give the NTUC Fairprice housebrand chilli sauce a chance. It looked like it was twice the size of what they were thinking of buying and a third cheaper in price! More if they were to buy two bottles. For those of you who have not tried, frankly, the housebrand chilli sauce is not bad.

So, did I do it?

I was feeling a little under the weather today and one look at the couple, I decided to mind my own business. They had faces that looked like someone just stole their CPF money. Yikes!

I feel that it is unfair to accuse NTUC Fairprice of being too much in increasing the price when it is not a brand they have control over.

In fact, NTUC Fairprice do a pretty good job of offering good quality and value for money housebranded alternatives. Here are a couple of other examples I have at home:

Is there anything special about atas branded detergent?

Is there anything special about atas branded tissue paper?

We could save quite a bit of money without compromising on our quality of life if we are less picky. We would also almost certainly become wealthier and happier people in the process.

In case you are wondering if I bought one or two bottles of chilli sauce, I did the sensible thing and bought one bottle. It is going to take me quite a while to finish one bottle, after all.

Related posts:
1. Waste not, want not, save lots with Pasar brand.
2. A visit to Fairprice could teach us about stocks.

NeraTel: Is 1QFY15 a sign of things to come?

I received a message from a reader last night saying that NeraTel's profit after tax plunged 33.8% for 1Q FY15. Looks bad, doesn't it?

I was somewhat surprised at the plunge since I remember that the full year 2014 results although not positive were flattish when compared to the year before. We don't usually see big negative shifts in a single quarter in a business as usual scenario. So, it is important to ask whether the decline is due to something that has permanently damaged NeraTel's ability to deliver the goods, so to speak.

NeraTel's management has for a while now mentioned that stiff competition is impacting the business. This is the reality but given their track record, NeraTel should be able to hold their ground even though they might have to give up some margin. This is just my view, of course.

In an interview that NeraTel's CEO, Samuel Ang, gave to The EDGE, some time ago, he said that it is important to remember that revenue recognition could be lumpy because NeraTel is generally a project based business. Annualising any one quarter's results would not give an accurate picture of full year performance. Now, with this understanding in mind, the weak 1Q FY15 results become less worrisome.

The following slides are self-explanatory:

2Q FY15 results, logically, should be better, all else remaining equal.

Although the stiff competition and pressure on margins are pertinent considerations, NeraTel's track record and their continuing efforts to expand their regional footprint, especially in the generation of recurring income, will likely bear fruits in future. How long will this take before we see significant results? I don't know.

However, even as we recognise the costs of expanding their business, as long as NeraTel's current businesses continue chugging along in the meantime, I would be quite happy to wait.

In conclusion, if we believe that 1Q's less attractive results were due in part to the lumpy nature of NeraTel's revenue recognition (i.e. it is an issue of timing), then, earnings over the next 9M should make up for the weaker 1Q FY15 showing.

In my blog post dated 25 Feb 15, I said that at 76c a share then, we were looking at a PER of about 17x and that it wasn't cheap as the stock was priced at 71c a share a year before that with similar numbers. Now, with a rather reasonable expectation that the numbers might remain similar this year, the current price of 65c a share looks more palatable.

See all presentation slides: here.

Related post:
NeraTel: Still a good investment for income?

AK was at Breakthrough Conference 2015.

I was invited to give a talk at an event that happened earlier today. It was called "Breakthrough Conference" where every speaker was given 15 minutes to deliver one key idea on diverse topics such as communications, marketing, beauty, business, real estate and stocks.

Naturally, I was to talk about investing in stocks although I tried to convince the audience that I could be a candidate to talk about beauty as well since I blogged about hand moisturisers before. Don't believe me? See these blog posts: here. Say "no" to paper cuts.

I was given a lot more time than the other speakers because the organisers know that I am very long winded. They even gave me some time for Q&A. Overall, I was given almost an hour as the last speaker of the day.

Anyway, as my memory of the event slowly fades, I should quickly make a few notes on what I said at the event for readers who might want to know:

First, an introduction. AK is a blogger. AK is a retail investor. AK is a regular salaried manager who made a mid to high 4 digit monthly salary (not anymore because AK is semi retired).

I shared my journey and how I wanted to retire at age 45. See blog post: here. I realised that for a person like me, I must listen to Warren Buffett and “Never depend on single income. Make investment to create a second source.” 

I referred to a free "e-book" which is really a compilation of some blog posts which the audience could read in my blog. Click on: Retiring before 60 is not a dream. Just AK talking to himself, of course.

Investing in income generating assets is what helped me achieve financial freedom and because the organisers said in the ticketing website (i.e. Eventbrite) that the audience will learn "how to build a portfolio of stocks that pays year after year" from AK, I had to share something to that effect.

I hope the audience were not disappointed with what I shared.

AK with his FREE pre-owned iPad.
Credit: Ho Khinwai

Basically, it all starts with being financially prudent. Save money, invest and reinvest the dividends. See: The Millionaire Next Door.

Then, I shared three points:

1. Be patient. Remember what Charlie Munger said about the big money being in the waiting. See: Revisiting AK's simple strategy with Charlie Munger. Go take a look when there is blood on the street.

2. Always have a war chest ready. Unless we are born with a silver spoon in our mouth, we need to save money and build our war chest. If we do not have a war chest ready, how are we going to fight a war? Without a war chest, we won't be able to take advantage of opportunities. See: If we want peace, be prepared for war. I also made a point on how money in the war chest is not the same as our emergency funds.

3. Know what to look for as an income investor. Ask 2 questions that matter: How is the income being generated by the proposed investment? Is the income generated sustainable? I also said that asking these questions would very likely help us avoid investment scams. The second question is probably more difficult to answer than the first and I used two examples to help illustrate my thought process: Old Chang Kee and QAF Limited.

During the Q&A, I answered two questions. The first one was on SembCorp Industries and the second one was on REITs and how a rising interest rate environment would impact REITs.

Here are a couple of blog posts which I hope would be useful to the gentleman and the lady who asked the questions: 1. SembCorp Industries: Partial divestment and 2. How should we approach REITs as investments for income now?

Investing for income, depending on our circumstances, some might achieve financial freedom earlier and some later. However, if we remember to do all the right things which I hope I have neatly encapsulated in my talk, then, there will come a day when we work because we want to and not because we have to.

Of course, as always, remember that I am only sharing what has worked for me but remember that if AK can do it, so can you. Gambatte!

Related posts:
1. Journey to financial freedom is not a race.
2. Don't depend on wage increases for higher income.
3. Nobody cares more about our money than we do.