TEA with ENZA: Total Debt Servicing Ratio (TDSR).

Another guest blog that is actually a collection of comments by a very bright fellow I got to know on FB. Reproduced with his permission:

Total Debt Servicing Ratio (TDSR) = Debt Repayments/Income (per month)

Many of our textbooks are based on western spending patterns, which I think isn't feasible for Asians. I would target 25% of TDSR.

IMO, a household cannot have more than 3 durable goods under instalment (because they are going to be a drag over long-run), whereas housing and vehicles cannot, in combination, exceed 20% of gross combined wage median. Always concentrate on paying off one thing at a time since we only have this much of resources.

You see, Asian parents normally pay for their children's university fees. That is a big chunk.

In the USA and Europe, most parents don't. That's why they can have a bigger TDSR. Of course, the most important thing is SG cars are TOTAL WASTE OF MONEY. Only if we can really waste the "excess money", then should we ever own them. So, if depreciation plus insurance plus road tax plus basic maintenance are below 10% of your wage income, no harm. (which is quite unlikely in SG, all because of the COE.)

Are you too much in debt?

Read other guest blogs by ENZA: here.

Related posts:
1. Don't think and grow rich.
2. Slaving to stay in a condominium.
3. The Millionaire Next Door.

Tea with ENZA: What is "window dressing"?

We often come across the phrase "window dressing" when we watch the business news on TV or read the "Money" section in the newspapers. What does it mean?

Does it mean buying some curtains and blinds for the windows in the buildings along Shenton Way?

Anyway, Solace, a guest blogger, asked that I put this question to ENZA and here is the reply:

Wow what a big question...

I assume your reader is asking about fund managers...

most fund managers do index hugging, only to what extend... So, there will be some winner and loser in the holding... they will normally look at the trend and decide. Trend in the sense of macro view, for example REITs is not going to do so well this year, they hold less...

They will never sell everything unless it is necessary (such as liquidation of funds or market correction)

FMs will sell the loss making fund and liquidate some of the profitable (due to client withdrawal or portfolio balancing after the selling of loss-making funds) However, this generally apply to big funds...

smaller Fund house don't do that due to the scale of the funds. (capital loss are deem to be eligible for a tax reduction at year end filing)

And window dressing normally occur for FMs at every quarter end.

No windows involved. Definitely, no curtains and blinds too.

Related post:
Tea with ENZA: Explaining Mr. Market's behaviour.

Tea with ENZA: Explaining Mr. Market's behaviour.

I chatted with a private banker on FB this evening and he shared some interesting stuff with me.

perhaps I know a little too much of how the inside job, so the more I m actually reluctant to share with the outsiders. because they don't know how to take advantage, but just make noise.

not the inside information, but more of how the institutional investor invest and how fund house and banks work... that's the big big thing coz we don't know why people do certain things and when price moves everyone panic etc...

an example is: sell in may and go away...

By using statistic, 32 out of 34 years actually proves to be true... But the thing is, why??? May is a summer period in Europe. They get 10% of monthly salary for summer holiday. So nobody would like to work during that period. institutional or retail, half of them would go for summer holiday.

So who is there to provide liquidity?? The remaining half. But before people go for holiday, they are worried about market fluctuation... so how to negate that, they hedge off or sell off... Market plunge...

That thing itself is actually a very common sense thing, but who would be able to link the entire picture until we are in the industry working...

Same thing for santa clause rally...

It seems like a simple thing, but those so called technical analysis bullshit to an extend people thought it is a kind of voodoo effect...

and of course the post-may period is a low period, few market data, few earning reporting release, TA guys get out of the fun... the entire duration is low volume and neither bull or bear...

When I suggested that I would like to share the above with readers in my blog, he said:

**send killer to hunt ASSI, burn the laptop and the house**

So, I am actually risking my life to share this here in my blog!

Kidding!

Don't worry because he finally agreed.

aahhh... ok ok go ahead and post ba hahaha

FB has allowed me to "meet" some really nice people.