Slaving to stay in a condominium. (Sanity check in the comments section. Please read.)

"House poor is no fun."
UPDATE (JUNE 2018):

A reader sent this to me:

Reader says...
Monthly income of $3500 can own a condo 😱

AK says...
Slave for life lor... House poor. Cham like that.

Salesman only wants to sell... 

We buy already is our problem liao. 😛

When we buy anything with borrowed money from banks, we don't actually own it until the loan is fully paid up. 

We might have control but we don't have ownership. 

This is why most people don't receive the original title deed to their homes until their golden years. 😉





UPDATE (DECEMBER 2016):

Why are you borrowing?

Borrowing money for important things like buying a home may be unavoidable. But getting into debt is also a major responsibility. Too much debt can easily get us in trouble.

Avoid the debt trap by controlling how much you borrow. Even if you qualify for a bigger loan, ask yourself whether you really need the item you are buying and whether you can really afford the debt repayments (on top of all your existing debts and expenses). Consider buying it another day, perhaps after saving up for some or all of it first. Interest charges and the extra you pay in instalment plans over time can add up to a lot more than you think.

Source: http://www.moneysense.gov.sg/Understanding-Financial-Products/Credit-and-Loans/Is-Debt-Right-for-You.aspx

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

In my memory, there were two people I knew whose families squeezed out all the money they could just to buy and stay in condominiums. 

One person was a schoolmate in junior college and another was a colleague during my stint in National Service.

I remember both as being extremely frugal and I always wondered why being people who stayed in condominiums were they so poor. 





Of course, those were days when I was a financial ignoramus.

Now, although I think that frugality is a virtue, it is a virtue when we are so without being forced to be so. 

If we had a choice and we chose to be frugal, good. 

However, if we are frugal because we don't have a choice, that is misery on earth!






I remember when I talked to both of them, they gave me almost identical answers. 

Yes, I was a nosey kid. 

Their families had to make hefty monthly repayments to the banks. 

So, they had to be very careful with their money.

Although I have suggested that investing in properties could give us a leg up in our wealth building efforts, I believe that buying properties without any margin of safety is foolhardy.





Basically, if we had to take the maximum of 80% LTV allowed in order to buy a property and if the monthly repayment was an amount that would lead to a very frugal lifestyle which was not by choice as a result, we should not buy the property. 

It could be within our means by conventional definition but this is one example of how we should not succumb to conventions.





Buying properties in Singapore has been seen as the way to riches. 

To many ordinary Singaporeans, buying a condominium for self-stay seems to be a natural first step.

I will share these thoughts:

1. Like I said, if we have no choice but to be frugal in life, that is utter misery! If to stay in a condominium, we are forced to live like paupers, the price is too high.





2. We have to remember that our homes do not generate cashflow. So, a home is not really an investment. It is consumption. 

So, just like anything we consume in life, make sure we do not spend beyond our means. 

In fact, we should not just spend within our means. We should spend well within our means.


Of course, our homes might have the unique property (pun unintended) of being able to appreciate in price over time which makes them unique in the world of consumption but it does not detract from the fact that our homes are not investments but consumption.





3. Borrowing to the max with no reserves means there is no margin of safety.

Probably, a $3,000+ monthly repayment on a 30 years loan of $800,000 is manageable for a couple who is making some $8,000 in combined gross monthly income. 

Now, we have lots of cheap money sloshing around, after all.


What happens when the party stops? 

What if interest rates go up just 1% which means almost a doubling from current levels? 

What if the economy goes into recession and home values decline? 

What if the couple were to be retrenched?





I won't talk about whether it is a good time or bad time to buy a condominium in this blog post. 

I will, however, say that we must be very careful or we could end up slaving just to stay in a condominium. 

Surely, this is more so for new condominium buyers who intend to be owner-occupiers today.





Related posts:
1. Good debt is always good?
2. Affordability of housing in Singapore.
3. More cooling measures on the way?

China Minzhong: Breakout or fake out?

There was a bit of excitement in the price action of China Minzhong towards the end of the day. It broke the long term resistance provided by the declining 100w MA to touch a high of $1.05.

Daily chart.

However, volume was lower than the day before and without higher volume, share price closed at $1.025 or just one bid under the long term resistance. A long legged white spinning top was formed in the process, suggesting that bulls and bears are evenly matched.

Weekly chart.

With three more sessions to go this week, we could see a new high in China Minzhong's share price if volume expands while it continues to push higher.

That volume was lower suggests that many are waiting on the sides to see who would win the tug of war.

A convincing break above resistance would invite a mad rush from the bulls. An obvious decline would invite a mad rush from the bears.

Which camp do you think I am in?

Related post:
China Minzhong: Partial divestment at $1.01.

Cache Logistics Trust: 4Q DPU 2.154c.

Full year distributable income improved 9.5% while full year net property income improved 11.7%.

However, full year DPU improved by a very much smaller 1.6%.

Why do investors like Cache Logistics Trust? Some reasons could be:

1. 100% occupancy rate.

2. Only 2% of lettable space is up for lease renewal this year.

3. Weighted average lease to expiry: 3.9 years.

At $1.27 per unit, annualised, distribution yield is 6.78%. This is much lower than Sabana REIT's but Cache Logistics Trust offers greater certainty and that alone would command a premium.

A more interesting question is whether the size of the premium is justifiable. That is another exercise in subjectivity.

Gearing is higher now at 31.7% which, however, is still comfortable.

Related post:
Cache Logistics Trust: DPU down 5%.

Vote and win cash prizes!

Make some people insanely famous!

Vote for your favourite and win cash prizes!

Go to:
Vote: Kinder Bueno Mashine mash-up and win!

Voting period: 22nd January 2013 to 5th February 2013.

K-Green Trust: DPU of 4.69c.

K-Green Trust announced a DPU of 4.69c for 2H 2012.

For a long time now, I have been waiting for K-Green Trust to gear up, acquire assets and increase DPU. Well, it seems that my wish is going to come true.

"In 2013, we will focus on acquisitions in areas of waste management, water treatment, renewable energy and energy efficiency, including assets that were identified under the Rights of First Refusal," Thomas Pang, CEO of the manager of the trust.

Perhaps, it is time to look into buying in the next bout of selling by Mr. Market.

Related post:
K-Green Trust: DPU of 3.13c.

Sensible wife and lucky husband!

Thinking of getting married soon?





Say anything you want about her but I think this lady has a sensible head on her shoulders. She and her man could afford to spend more on their wedding but they chose not to.

Apart from saving lots of money, what they did was also good for the environment as they cut down on excesses. What would she have done with the wedding gown after the whole event was over if she had gone ahead and bought one, for example?

She didn't even ask for a diamond ring from the man! She asked for a simple gold band!

Sensible wife and lucky husband.

Well, if you are worried for the economy, don't be.



Many Singaporeans are still willing to splurge on their weddings and contribute to our country's GDP.

Hey, if you are thinking of splurging on your wedding, go ahead. Don't let anyone stop you. It is your wedding and you have to be happy! :)

Related posts:
1. Not enough money to be married.
2. If we are not rich, don't act rich.

China Minzhong: Partial divestment at $1.01.

My sell order for China Minzhong at $1.01 was filled today. I retained some 50% of my investment in the company in case resistance should break which would send share price higher.

There is always a chance of a retracement in share price to supports. So, locking in some gains at resistance frees up resources for me to take advantage of any such retracement if it should happen.

Whether share price should rise or fall, I have a plan in place and could potentially benefit either way.

With 99c resistance broken, the declining 100w MA which approximates $1.03 is the immediate resistance to watch. Being a long term MA, the 100w MA is likely to be a tough nut to crack in the shorter term.

If I were to hazard a guess, I would say the 100w MA could force share price lower. In such an instance, share price could decline to as low as 80c which is where we find a flattening 50w MA. 80c is some 20% lower than where we are now.

However, in the event that resistance provided by the 100w MA is broken, Mr. Market is likely to become quite euphoric and we could see the gap formed in September 2011 covered at $1.20 eventually in such a case.

Since risk and reward analysis gives me a 50/50 chance either way, divesting 50% of my investment seems like a logical thing to do.

Related post:
China Minzhong: Share price to go higher.

Big chill in Europe (and Singapore).

This is something funny that just happened.

A colleague was saying out loud that there is a big chill in Europe. Another colleague asked if they were also having cooling measures in Europe?

This shows how, after seven rounds, "cooling measures" as a phrase has become significantly entrenched in the minds of Singaporeans.

As people in Europe experience heavy snow and blizzards far away from us in Singapore, we are experiencing chills in the form of property cooling measures.

About ten months ago, I wondered in a blog post if there would be more cooling measures and if they would extend to industrial properties. I also opined that developers would probably be offering more discounts in time to come. At that time, many friends were still very optimistic about the property market.

Well, the government has not disappointed. Neither have the developers.

Would we see a round 8? The number 8 could be an auspicious start to the Chinese New Year. No?

Related post:
More cooling measures on the way?

China Minzhong: Share price to go higher.

Templeton International, Inc. became a substantial shareholder of China Minzhong last year in May 2012. Their additional purchase of 980 lots at 84.56c a share pushed their ownership from 4.91% to 5.08% of the company.

As of 10 Dec 2012, Templeton owns some 13.05% of China Minzhong's common stocks. They bought more when the share price sank and they have also been buying as share price recovered. They are accumulating continually and some might even say, aggressively.

Dr. Mark Mobius of the Templeton Emerging Markets Group said this on 11 Dec 2012:

Successful investing is not only about picking the right stocks, but also finding values others may not recognize. We think the best way to determine if a stock is a value really boils down to growth.

During market downturns many stocks can be cheap, but if there is no future growth potential, than that stock could be considered a value trap. If a company is inexpensive and growing (and our earnings projections for it look good), then there can be a good case to invest.

When the current market isn’t recognizing this potential and we’re able to buy stocks at a discount to what we think they’ll be worth five years out, then that’s where we see value.

During a severe market downturn, you’ve got to be willing to go into the market, then wait. The global market downturn in 2008-2009 is a good example of this.

Patience and a willingness to go against the crowd mentality is a very difficult thing for most investors to do, but we believe it is critical as a long-term investor.

It is also interesting that China Minzhong was mentioned in an email sent out by The EDGE.

Apparently, the Australian investment bank, Macquarie, thinks that China Minzhong is a prime beneficiary of the country’s move to modernise and promote large-scale farming under the Five-Year Plan.

“Its large-scale vegetables origination and processing business in China is well poised to grow given the burgeoning population and increasing urbanisation trend,” says Macquarie, which has a $1.40 price target on the counter.

I like the fundamentals of China Minzhong but I am also corrupted by technical analysis. So, looking at the chart, I see a natural resistance level at 99c, give or take a couple of cents, which must be overcome convincingly before we could see the next resistance level tested.

The last session's high volume white candle tested the immediate resistance level but failed to take it out. Could it happen next Monday?

In case of a retracement, I expect strong support to be provided by the rising 100d MA. That support if ever re-tested would be where I would buy more.

Related post:
China Minzhong: What are we to do?

More smoke free areas from 15 Jan!

NEA is going to step up enforcement in the next 3 months and people who flout the new rules could be fined up to $1,000.



Of course, we know that smoking is bad for smokers. We also know that it hurts the health of the people around them. Then, why smoke?

Furthermore, with cigarettes so expensive, it makes sense for Singaporeans who are smokers to consider quitting. Buy a pack of stuff only to light up and inhale pollutants into the body?

Burning money and messing up the body. That's what smoking is. Where is the good sense in that?

Smokers beware! The bigger expenses will come in future in the form of medical and hospitalisation bills. Smoking kills in more ways than one!

People who are investing for a more secure financial future should not smoke.

Marco Polo Marine: Still cheap.

I have not sold my shares in Marco Polo Marine as its price rose in recent weeks. In fact, I am looking to add to my long position if its share price should do a retracement to support.

OSK Research on 18 Jan 13:
Marco Polo Marine is enjoying 20% premia on its vessel charter rates in Indonesia, yielding a 50 - 60% gross margin on its Offshore Support Vessels (OSVs), due to the severe supply shortage in the country caused by the cabotage law. Target price: 61.0c.

Marco Polo Marine could be continually re-rated upwards over time.

For anyone patient enough, investing in Marco Polo Marine could be very rewarding. It is still under-appreciated and I hope it stays this way for a while more.

Drawing a Fibo fan, it is easy to see that the 20d MA is the immediate support and it also coincides with the 50% line. Share price could move higher from here, hit the 38.2% line before retracing to test the 61.8% line for support or it could move up from here in a fresh attempt to form a higher high. The resistance to watch is at 43c.

Related post:
Marco Polo Marine: Will buy more on pull back.

Good and cheap(er) pineapple tarts.

Chinese New Year is round the corner and I see pineapple tarts for sale everywhere! I have a severe weakness for pineapple tarts, you know.

I felt so tempted by the yummy looking tarts but they were all so expensive. $18 to $20 for a small container is quite normal. Nope! I refuse to give in to temptation. Actually, being turned off by the price tags made it easier to deny myself any gastronomical satisfaction.

Lucky for me, a friend recommended this brand which is being sold at NTUC Fairprice supermarkets.

450gm of yum yum!

Now, it is not the cheapest on offer at $7.80 for 450 gm but it looks quite good. I brought it home, left it in the kitchen and the next day my sister told me that my niece ate 6 pieces at one go. Verdict, it must be good!

Actually, it reminds me a bit of the ones sold at Bengawan Solo but with a smaller price tag.

Er, I am not related to the "Chewly" brand in any way and this is not a paid advertorial. Just sharing what I think is good value for money. Enjoy!
-------
P.S. I just looked at my Deals.com banner in the right sidebar. They have some special offers from more atas establishments for pineapple tarts. You might want to check these out. (9.50AM)

This sounds like good value for money:
CNY Cookies (Choice of any 3 Boxes)
– Only $20 instead of $54
- pineapple tarts ($7.80 for 1 box instead of $18)
For your convenience, here's the link: Pineapple Tarts.

Sabana REIT: An 8.14% yield even now!

Sabana REIT's unit price rose today as expected. It closed 3c higher per unit. Annualised, anyone who bought at $1.185 today would be looking at a distribution yield of 8.14%.

UOB KayHian has a BUY recommendation on the REIT and a target price of $1.30 which means a yield compression to 7.42%. Don't ask me how they determined the target price. I have no clue. However, their call could help push the unit price of the REIT higher if there are enough people who believe the recommendation.

What do I think?

Well, I wrote a piece not too long ago in response to a friend's question as to whether he should buy into Sabana REIT. Anyone who is thinking of buying into Sabana REIT or any other REIT for that matter might want to read that blog post: 5 steps to take in REIT investment.

What about my opinion on Sabana REIT in particular?

Well, although an 8.14% distribution yield is relatively high even when compared to AIMS AMP Capital Industrial REIT which currently yields some 6.4%, I would say that we should exercise caution as almost half of Sabana REIT's leases by gross revenue would be expiring this year.

Although I am optimistic that most, if not all, of the leases would most probably be renewed and with some positive rental reversions to boot, there is always a chance that things could go wrong. Mr. Market will be Mr. Market. Or am I wrong to say this?

For anyone who is attracted to the distribution yield and we can understand why this is so especially in the extremely low yield environment which we find ourselves, having a long position as a hedge even at the current price could be considered. However, bear in mind that we could see unit price retracing once the REIT goes XD in a few days from now.

You know yourself best (I hope). So, if seeing the unit price decline by a few percentage points would cause you anxiety, please think twice about buying now. Of course, there is no guarantee that a decline would take place but the probability is for this to happen than for price to go higher when the REIT goes XD.

For those who already have a long position in the REIT, buying when there is a retracement to support would seem like a more logical thing to do. Buying last month when unit price was at about $1.10 instead of now at $1.185 would give you an idea of what I mean.

Anyway, I will leave you with this technical picture and let's see if you can spot the signs which would suggest that caution on the part of bulls would be rather wise.

Have a good weekend.

Related posts:
1. Sabana REIT: 4Q 2012 DPU 2.41c.
2. 5 steps to take in REIT investment.

Sabana REIT: 4Q 2012 DPU 2.41c.

The management of Sabana REIT have once again exceeded their own forecast and they have announced a DPU of 2.41c for 4Q 2012.

The REIT goes XD on 23 Jan 13 and the income distribution is payable to unitholders on 28 Feb 2013.

Gearing: 37.6%

Interest cover ratio: 5.4x

NAV/unit: $1.07

All in financing cost: 4.3%

The numbers are all good except for the fact that 44.7% of leases by gross revenue are still expiring this year. There is no news on any progress made towards the renewal of these leases and that could explain Mr. Market's more cautious attitude towards this REIT.

Sabana REIT's distribution yield is currently the highest in the S-REIT universe. Annualised, we are looking at a distribution yield of some 8.38% based on the last closing price of $1.15 per unit.

Unless it is able to assure Mr. Market that all of the expiring leases in 2013 are being renewed and with positive rental reversions to boot, its unit price could find it harder to rise much higher.

In the meantime, however, we could see unit price moving higher as the REIT goes CD tomorrow.

See presentation slides: here.

Related post:
Sabana REIT: 3Q 2012 DPU 2.34c.

Bona fide invitation or phishing site?

I received this in my mailbox today. Highly suspicious!

Here, phishy, phishy, phishy!

Hello,

You were recently chosen to represent your professional community, deeming you eligible for the inclusion in the new 2013 Edition of Worldwide Registry for Business Professionals.

We are pleased to inform you that your candidacy was formally approved on October 1st, 2012. Congratulations!

Click here to verify your profile and accept the candidacy

The Publishing Committee selected you as a professional based not only upon your current standing, but focusing as well on criteria from executive and professional directories, associations, and trade journals. Given your background, the Director believes your profile makes a fitting addition to our publication.

There is no fee nor obligation to be listed. As we are working off of secondary sources, we must receive verification from you that your profile is accurate. After receiving verification, we will validate your registry listing within seven business days.

Once finalized, your listing will share prominent registry space with thousands of fellow accomplished individuals across the globe, each representing accomplishment within their own geographical area.

To verify your profile and accept the candidacy, please click here.

Please kindly note that our registration deadline for next year's publication is January 31st, 2013. To ensure you are included, we must receive your verification on or before this date.

On behalf of our Committee I salute your achievement and welcome you to our association.


Sincerely yours,

Robert C. Anderson
Vice-President, Publication Division
Worldwide Registry for Business Professionals

1833 Tennessee Avenue
Southfield, MI 48075
248-317-0041



So sweet! Must be bad for me!

I wonder what achievement are they referring to? Light on details and heavy on flattery. The Chinese have a saying for this. I can't quite remember the exact words. Help!

The email invitation doesn't even have my name on it! Oh, in case you think it was sent to my office email address, no, it was sent to my private email address. Duh.

Phishing is the act of attempting to acquire information such as usernames, passwords, and credit card details (and sometimes, indirectly, money) by masquerading as a trustworthy entity in an electronic communication. (Source: Wikipedia)

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