Tea with FunShine: Easy Loans.

Here is another thoughtful guest blog from FunShine:

First World Problem - Easy Loan

Received a phone call from a local bank.

They are offering loans at 0% interest rate. I was puzzled. 0%?

Have a bit of time and entertained the call. I asked what are the hidden charges, he added, there is a small admin fee.

I asked how much? He shared it's only $138. I did the maths and it's only 1+% quite cheap.

I asked when is the repayment period? He shared that it is 6 months.

I asked further, so what is the interest rate if people default? He shared that it is 25%.

I thank him for the call. And put down the phone.
With the information, I was thinking, I can take the money and roll it in the stock market. 

However, 6 months is too risky. No point take on this risk. If I am wrong, the interest rate is 25% and will wiped out my earning.

Thinking a bit deeper, I go, how many people honestly got such loan for their wants items?

For friends that have been reading about my life, you should know that I am a very prudent person and try to live a frugal life, just that God has blessed me with many things.

I am puzzled when people need to take a wedding loan, renovation loan, kid education loan and it goes on and on. (AK says "A happy marriage is worth waiting for.")

The only loan that I will take is a housing loan. If not I will take a loan and have my assets backed it up such that if I default, my assets will be gone but I do not need to stress about the repayment.

At the age of 36 and having worked for the past 11 years in social services, you have seen many cases where people made many interesting financial decisions.

I really hope that in Secondary school there is a subject that teaches the youth how to manage their money. As what I find lacking is financial literacy.
I have friends that are middle income and draws a good salary but are living from pay cheque to pay cheque. These are intelligent people but their money management skill is unique. (Read AK's e-book: "Don't depend on wage increases."

Got a bit of time so decided to write on this. Meanwhile, I am happy for that local bank, as I am vested in it. I am trying to collect all the three local bank stocks.

I am just left with DBS. Still waiting for a good enter price.

Have a good day and watch over your income and spending when you can.

First World Problem - Easy Loan

Read more guest blogs from FunShine: here.

Tea with FunShine: Crystal Ball Predictions.

Diary of an Investor
Funshine's Crystal Ball Predictions

I lost count of how many hours have I invested into reading or watching articles on the subprime crises or more commonly referred to the Bear followed by the the Leman Brothers collapse or 07/08 financial crisis.

If I was to estimate at least 20 to 30 hours watching the video version of such movies related to it or documentaries. Lost count of how many articles I read relating to it.

I just watched the movie, the Big Shot. And is reflecting on the current market conditions. One of my friends bought bonds last year and lost some money. Sounds familiar.

My portfolio due to my experience and believes has always consisted of:
20% Cash/FD/Bonds
20% Precious Metal/Oil
60% Stocks of which:
35% Dividend Stocks
20% Growth Stocks
05% Trading Stocks

I have stuck with this portfolio mix since 2012 July.

I started investing in Oct 2011, the returns has fluctuate per year from positive 17% to negative 15%. Average out to around 5-7% returns per year only. 7% is considered an average investor. So in a way, I am merely average. However, if I remove Precious Metal/Oil from the mix, the returns is a lot more juicy since I start buying Gold from 1700 to 1500 to 1450 to 1320 to 1250 and most recently trading it.

My financial period is from July to June. Think I will stick on to the current portfolio allocation till end June 2016.

On 1st July 2016, I should be changing the portfolio allocation which I have not done so since 2011 to:
25% Cash
05% FD, 3 months rolling
20% Precious Metal/Oil
30% Dividend Stocks
15% Growth Stocks
05% Trading

Looking at the crystal balls this is my market predictions, of cos I am no different from the weather man.

My next five years forecast, FY16/17 to FY20/21:

2016 to 2018:
STI should bounce back to 3200-3400.
If it hit 3600 sell 30% of all stocks.
If it hit 3800 sell 50% of all remaining stocks and rotate the money to rolling 3 months FD.

2016 Sept to Early 2018:
Market will be very volatile
Cash is King and Key
Stick to the portfolio mix and react appropriately.

Mid 2018:
Time to consider buying a property

End 2018 to Mid 2019:
Acquisition of a property

2019 to 2021:
Market should recover.
Back to buying dividend generating stock

FY16/17:
25% Cash
05% FD, 3 months rolling
20% Precious Metal/Oil
30% Dividend Stocks
15% Growth Stocks
05% Trading

FY17/18 to 18/19:
20% Cash
12% Precious Metal/Oil
08% Property(Hold Cash if no Opp)
60% Stocks of which:
40% Dividend Stocks
15% Growth Stocks
05% Trading Stocks

FY19/20 to 20/21:
20% Cash
10% Precious Metal/Oil
10% Property
60% Stocks of which:
45% Dividend Stocks
10% Growth Stocks
05% Trading Stocks

My savings and emergency fund does not form my portfolio. My SRS is considered as the portfolio under cash but CPF is not included.

SRS and CPF(SA) are considered as war chests.
SRS is open when STI ETF give a 4% yield.
CPF(SA) is open when STI ETF give a 5% yield.

I am turning 36 in July. May draw out some savings to give myself a present, either to upgrade myself or buy into a friend's company.

Once April ends, my 6 months break from work will end. Meanwhile, I am going to apply for a subject in Master of Gerontology which will starts in July. I am also taking M5, M9 and M9A in April if I choose to switch from Social Service to Financial Advisor.

Market will be very bad. Not wise to be a Financial Advisor during this climate. Study first, think later. End April will have time to think about it as I will be in reservist.

Meanwhile, glad to have visited Facebook, Google and Apple in Silicon Valley. Glad to have seen the economy of Canada too as part of my cash holding may be in Canadian dollar if it is still so low.

On my flight back to Singapore from San Fransisco one week holiday after being in Canada, Toronto and Edmonton for nearly two months.

Can't wait to eat a good bowl of BCM, Mee Pok dry with lots of lard.

Diary of an Investor
Funshine's Crystal Ball Predictions
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AK's comment:

"It is important for all of us to have a plan, our own plan, so that we know what to do in different scenarios and not freeze into inaction when action is required. It has to be our own plan, one that we are comfortable and familiar with, one that allows us to sleep well at night."

Related posts:
1. Have a plan, your own plan.

2. Revisiting AK's plan with Charlie Munger.

Tea with FunShine: Diary of an investor.

This is a well written guest blog by FunShine who is another good example of prudence in personal finance and discipline in investing for income:

Diary of an Investor

1. Ever since I have become more open with my portfolio, you get different friends asking or commenting on me for different things.

2. There are those that are surprised as some always thought that I am poor as I worked in social services for the past 11 years. I openly shared that my first job, the pay was only 1.6k after CPF. Plus I do not drive and live a frugal and prudent life other than my toy collecting hobby and my MTG hobby.

3. There is another group that asked how did you do it? I just say when my salary increase, I still live like how I will live based on my first job's pay. I invest and save the difference from my first job pay and last pay cheque.

4. My first job has taught me a lot on financial education and to always save for a rainy day. My first job is almost the same as those officers you see working in SSO that helps the poor and needy in SG.

5. There will be another group that will ask what to buy. To this group I say, go do your homework. And tell them I lost 30k by asking this kind of question.

6. Another group will come borrow money. To this group I say, I myself have good debt and I borrow money too at 2.5% to 4% interest backed by my asserts on loan to those that lend me money. What I do is take the money and invest it and generate a higher return. In the event if I fail, they can keep the assert I "pawn" to them which is more expensive then the money I borrow from them.

7. So if they ask again and still do not get it, I say can I charge you an interest of 5% if I lend you money? They understand and leave.

8. Of cos, there are my friends that is going through real hardship. I normally lend them up to $500 to help them tide through. There is a very firm and fixed pay date. No interest charge. If they go missing on me, I will just write off the $500 and be thankful that $500 can see the true colour of my friend that have questionable integrity. I am thankful as I will save lots of hours in my life with this friend since I will never see them again. So far I have lend more than 20 plus times and all the money has been returned.

9. Then you have another group. The friends that ask you to invest in them. My question is, is your "company" able to generate 5% to 20% ROI per year or on a long run? If no, it's better I place my money in the stock market or Oil/Gold/Silver ETF.

10. If they still pressed on, they will be bombarded by a tons of question from me:
A) Your current cash flow and Capex
B) Why are you raising funds
C) Future potential
D) SWOT
E) ROI in the next 5 years, 12 years
F) Succession planning

11. So far no one has passed this stage. I give to charities but I must know that is money well spend.

12. My this year's tax for my 10 months of work is only going to be $88. So you can probably work backward to think how much I give or put in SA or SRS if you bother to calculate.

13. Portfolio with the recent stocks bound up has been good. I am now just 40k short of being a priority banking customer, two months ago when the "sky was falling" and I got numerous messages on what to do, I was short of 50k. Normally I will just tell the "Sky is falling" group, why do you invest and why do you buy this company in the first place? If nothing change, just ignore the noise.

14. However, I will be selling 1/3 of my stocks in Mid April. As have a feeling that cash on hand will be good to take advantage of the upcoming opportunities.

15. My war chest consisting of OA-SA and SRS is still untouched. Market has not dropped to the point where I felt the need to open them. Will rather have good debt at 2.5% to 4% to buy them, then to tap on my war chest.

16. Preparing my heart now for quiet time. Just want to do a bit of sharing. Hope that what I share will help you in considering to live a prudent life and give more to others in need.

17. We need to be good stewards in all aspect of our lives. Thanks for reading.

Related post:
Tea with FunShine: Investment Philosophy.

Tea with FunShine: Investment Philosophy.

This is a guest blog by Funshine:

My Investment Philosophy

1. Bought OCBC 2 years ago before the rights issue. Traded it a little during that time 😊

2. Been buying all the way from $9+ till $7.69. Haven't booked my losses yet as I closed my books during June 2016.

3. Sitting on 15% lost on OCBC. To me there is no such thing as paper lost. Paper lost is only for people that wants to make themselves feel better so that they can wallow in self-pity.

4. Rather than indulge yourself in self-pity, might as well sell if you see no potential in the stock and transfer the funds to a better assert.

5. 23 April 2015 is the first day of operation for OCBC in Yangon. I hoped it will be a catalyst of growth in 5 years time.

6. Great Eastern results have not been too good from the last I read. OCBC is the parent company of Great Eastern.

7. Will increase till I have a 5% stake in SG banks based on my current portfolio.

8. Meanwhile been thinking for almost one quarter now to whether push one of my holding to 3.33% of my portfolio on a company that is investing in Ghana.

9. Pushing and confirmed going to increased my position to 6.67% of my portfolio on a country that is vested in Russia. That one, my time horizon will be 24 years if the company fundamentals does not change.

10. The Russia decision I at least ponder for 1.5 years, can't remember reading how many articles on it and I have been trying to speak to Russia people.

11. Investing is a lot of hard work. Although timing and luck plays a very big part. However, you can't be lucky and have perfect timing all the time if the duration is 20 years. I have friends that were so confident and one bad trade, they turn around and need to borrow money from me.

12. If you want quick money, go to a Casino or visit Singapore Pools. I spend $6 last week at Canada Lottery. The prize money is $60 million and one person won it.

13. If you can't afford to take the risk, please put in FD or buy Endowment. Even better just put in CPF.

14. When friends ask me what to buy, my opening statement is that this is not a good question. They will be stunned as suddenly I am rebuking them. I do that so that I can protect my friends.

15. My second response is I lost $30k from asking that question.

16. My next question to them is:
A) Why do you want to invest?
B) Why not just put in the bank?
C) Is this your spare cash?
D) What companies do you know?
E) Can you wait 20 years if we have a very weird and prolong bear market?

17. If I am pleased with the answer and the person have a bit of knowledge on Mr Market, my next question will be, are you an:
A) Dividend Income Investor
B) Growth Investor
C) Trader

18. As all three requires very different skill set.
A) Needs to plow through tons of reading and Fundamental Analysis
B) Macro Econs view, Govt Policy, Consumer taste and competitors need to be considered
C) Technical Analysis

19. However the most important skill to have which I am a firm believer of is IP. Investor psychology.

20. I have seen people with above normal IQ level but they lose big time in stocks market.

21. You are fighting with yourself as you embrace Mr Market. Mr Market may be your best friend at times. However, the next day, he can slapped you silly.

22. Do you have the temperaments for it?

23. I am very glad that my studies in Psychology and Management have given me a better footing.

24. Working for more than 10 years in social services has increased my mental resilient level and I got to know myself a lot more.

25. Lastly I believe in two things for investing or trading. Nothing is easy for the unwilling. What you do in your free time will determine how successful you will be.

26. If you have below average returns or worst then FD and you do not self reflect and ask why?

27. Please... Put your money is FD, CPF or Endowment. It will be better for you. You are responsible for your own money. Not someone else.

28. Thanks for reading. Going off to my Taiji class now to quieten my mind.

29. Keeping pace with Mr Market is not easy. On a 6 months break from work, living prudently and strangely I am traveling round the world. It's a oxymoron as traveling round the world and living prudently does not match. Oh well...

30. Best of luck or God bless as you continue your journey with Mr Market.

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A bit about the writer - FunShine

The writer hopes that his personal account will be a good read for people hoping to take small steps towards different degree of financial freedom.

FunShine has been working in the Community and Social Service Sector for over 10 years. It has always been an interesting sector to work in.

He has decided to take a 6 months break and live prudently, surviving on his dividends and interests for his personal expenses.

FunShine does not want to compete with the Joneses and is contented with his lifestyle.

Tea with FunShine: Less is more - Prudent Living.

This is a guest blog contributed by a reader who goes by the name of FunShine.

A bit about the writer - FunShine

The writer hopes that his personal account will be a good read for people hoping to take small steps towards different degree of financial freedom.

FunShine has been working in the Community and Social Service Sector for over 10 years. It has always been an interesting sector to work in.

He has decided to take a 6 months break and live prudently, surviving on his dividends and interests for his personal expenses.

FunShine does not want to compete with the Joneses and is contented with his lifestyle.

----------------------------------------

My dividends and interest earned for the month of Dec was $338.37. Ever since the start of my break, I have been trying hard to just live on my dividends and interest for my personal expenses.

Due to this challenge to myself, I have learn and did a few things very differently in Singapore as compared to when I was employed.

1. Meeting with Friends Friends that choose to meet up are given a few choices. 

A. We meet in hawker or coffeeshop.

B. They treat me if we want to eat in restaurant.

C. I have meals at Home first then just have soup at the restaurant of my friend's choice.

Most friends are understanding since I am not employed. For those not so understanding, you just do not meet them. Thankful that during this season, I have been blessed by good friends.

2. Transport Transport actually is the main bulk of my cost which is hard to cut.

A. Meet friends for early breakfast, so that I can have the free transport before 7.45am.

B. If it's only a few bus stops or 1-2 mrt stations, walking is a cheaper alternatively.

C. Farrer Park Mrt to Lavender Mrt is actually not that far and you save a bit if you walk.

D. Punggol to Bishan by walking is viable if you have the time. Gd exercise.

3. Giving/Contributions I struggle with this part the most initially.

A. Contribution Contribution to joint account, parents and grandma must still be there. It's my decision to take a break but that does not excuse myself from my responsibilities as a son, eldest grandson and husband. Contribution from this category will eat into my savings. Thankful that I have enough for this break.

B. Giving to Church You still give just that the amount is reduced as God loves a cheerful giver. Besides, the air-con that I enjoyed in church, someone still needs to pay for it.

C. Donations Donations still carry on if necessary. As I want my tax deduction and giving somehow will make you feel good. Even better when you know the dollar and cents mean a lot more to you now then previously.

D. CPF contribution It's a bit painful to see that there is no money coming in to your OA account. As I have this habit of just keeping 20k in OA and any extra will be transferred to my SA account. Thankful that with the money left in my OA, making payment for my 4 room flat is a non-issue.

E. SRS contribution Contributed to my SRS for long term financial planning in Dec 15. Was bo Liao enough to contribute the amount such that my income tax next year is only $88. Last year income tax was $130+. The amounts are for the whole year not monthly.

4. Lifestyles Changes

A. Plain Water Bringing a bottle out used to be a big hassle. It's so much easier to just grab a drink from the fridge, be it in the Super Market or 7-11. With the challenge, I have to bring my own water. Healthier lifestyle not by choice but by the income I am depending on.

B. Long Walks I love long walks ever since my near fatal bicycle accident in 2008. Also, long walks are free and the scenery in our parks are most lovely.

C. Taxi You have the time. You dun feel rush. Why the need for taxi?

D. Restaurants All restaurants visit in SG is cut to almost zero. We only spurge on this when we are overseas as it is so much cheaper.

What's next for me?

I really dun have a very detailed concrete plan. But for friends that know me, I always have a overarching plan to follow.

Right now, is just to enjoy this 6 months break from Nov 15 - Apr 16.

As for my financials goals, since I have achieved personal expenses freedom which is a small step in the right direction, it's time to think about other goals.

It should be as follow:

1. Enough recurring dividend for the amount I give to my grandma

2. Debt free, pay off my 4 room HDB in full

3. Enough recurring dividend for the amount I give to my parents

4. Enough recurring dividend for the amount I contribute to my family account

5. Legacy Fund

Once there is no purpose for item 1 and item 3, the assets will go into this fund (item 5). This fund will aid in my giving, be it to charities or missionaries.

That's all for now.

Thank you for reading.

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For sure, keeping our needs simple and wants few will improve our financial well-being.

Good job, FunShine!

Related posts:

1. Think you cannot reduce your spending?

2. If we are not rich, don't act rich.

3. 3 points to make us happier people.

"Every man is rich or poor according to the proportion between his desires and his enjoyments."(Samuel Johnson)