Tea with AK71: Parting with an old friend.

Would you consider 15 years a relatively long time to be in a relationship? Personally, I think it is. It is longer than the duration of many marriages I know of.

After 15 years, I am finally parting ways with an old friend which has been showing visible signs of ageing. Beginning to fall apart, it still stayed by me, faithfully serving me while I reluctantly looked for a replacement in the past couple of months.

I must admit that it is really hard to find a fitting replacement as the candidates were either too big, too small, too complicated, too sexy, too fake, too simple or just didn't feel right. Finally, I found one that is just about right.

What am I talking about? My wallet, of course.

My old wallet was from Heritage, a company in West Germany. Yes, it was bought during a time when Germany was divided into East and West. I think it cost me a bit more than S$100.00 back then. I bought it when I got my very first pay cheque.



Visible signs of wear and tear as the stitching in the fold unravels.

The replacement wallet is apparently quite branded or so I was told by friends. Braun Buffel is a company in Germany (not West Germany) and this wallet costs me $109.00, after a discount. 

15 years on, it is still roughly the same price to get a good quality German leather wallet. No inflation! A miracle!

Even though it is very similar to my old wallet in design, I feel that my old wallet is still better. I guess I just need time to get used to the new one.

Related post:
Some of my stuff (Part 2)

Millionaire or not, plan for retirement.

Being a millionaire today is different from being a millionaire 30 or even 20 years ago. This is simply because a million dollars is worth less now due to inflation in the cost of goods and services. These days, even a HDB flat could cost a million dollars!




I cannot remember the person's name but in the latest issue of The Sunday Times an interviewee (a millionaire) says that he does not want to think of retiring when asked for his retirement plan. Why? People who have plans for retirement, he says, will not be as driven or gung-ho.

Conventional wisdom says that we start planning for retirement as soon as possible. Even a very good fisherman should plan for the day when he can no longer do any fishing.

Today, I received a newsletter with a few interesting facts:

1. Singaporean males live an average of 79 years and women live an average of 84 years. Living longer means we need more money.

2. Due primarily to inflation, current savings will be worth less in future. 30 years later, something that costs $3 today could cost as much as $13.70 with inflation at 5.2% per year.

3. Although 91% of Singaporeans find CPF a reliable tool for retirement planning, according to a retirement study in 2011, each year, fewer members meet CPF's Minimum Sum requirement.

4. Escalating medical costs are a big concern.

The newsletter is a sales tool for an insurance company but these four points which I have extracted are pertinent to us all. If we have not started planning for our old age, we should if we could.

Apart from working to make money and being financially prudent, we invest and grow our wealth, creating streams of passive income along the way. Our investment returns, year after year, should be higher than the inflation rate. This is only part of the equation, however.

I am a strong believer in having adequate insurance coverage for medical costs which are bound to be incurred as we age. Our financial health could take a severe hit if we do not have medical insurance as money meant for living expenses could be depleted by medical bills.

Many might have heard the sardonic remark that being sick is worse than being dead. This could indeed be the case especially if one did not have sufficient insurance coverage of the right kind.

Planning for retirement is definitely more than just having enough passive income to replace our earned income. 

Being able to retire is much more than working because we want to and not because we have to.

Knowing how to make money and building wealth is the first step. Knowing how to protect our wealth is the necessary second. 

Protecting our wealth will cost us some money but not protecting our wealth could cost us even more.

In case you are wondering, I am not an insurance agent and this is not an advertorial. If this blog post has alerted some who have yet to plan for retirement to put on their thinking caps, it would have achieved its purpose.

Related posts:
1. Young working Singaporeans, you are OK.
2. To protect our wealth, we have to take risk.
3. Roads to wealth creation in the stock market.
4. Wage slaves should be fearful.
5. CPF is a cornestone in retirement.

Save money with low prices!

I started buying stuff like books and health supplements online only recently. The convenience and savings, especially with a strong Singapore Dollar, help to make online shopping a growing phenomenon here.










You know those mega sales at the Singapore Expo by John Little or Harvey Norman? This reminds me of a mega sale except that we don't have to be in a crowded and noisy location, rummaging through baskets of bargains with everyone else and, then, joining a super long queue to make payment!

Happy shopping in the comfort of your own home!

Made and still making money from S-REITs.

In an environment of very low interest rates, S-REITs are logical beneficiaries and in more ways than one. Regular readers would have heard this many times already. Readers who are new to my blog might want to read some of my older blog posts on S-REITs and why they are expected to continue performing well.

When we invest in S-REITs, it is with a primary aim of receiving regular and meaningful income. I have also said that any capital gains would be a bonus.

The outperformance of S-REITs' unit prices has led some holders to wonder if they should divest. Well, as market wisdom goes, taking profit is never wrong. However, I would ask that these holders consider if they have better places to park their money. Remember, money will go to where it is treated best.

In economics, we learn about supply and demand and how prices are affected by the relationship between the two. S-REITs are seeing their unit prices rising strongly because more investors are now putting their money in S-REITs.

In the last two years, I have had readers from Malaysia, Hong Kong, Europe and the USA writing to me. The early movers into S-REITs are sitting on some very nice capital gains and receiving regular distributions with yields as high as 10+% in some cases. What's more? Their investments have seen forex gains as the Singapore Dollar continues to strengthen against their home currencies!

I kid you not when I tell you that these readers are all very much richer than I am and have made much more money by being in S-REITs although they came in somewhat later. I am happy with how well things have turned out for their investments in S-REITs.

When Pat (a cboxer in Bully the Bear) told me that I have a pool of funds, I told him I know well that what I have is merely a puddle. Having self-knowledge and knowing what I have achieved is humble, I am not fixated by how much I have versus how much others have. Of course, I am only human and it used to bother me when I was younger.

Instead, just like starting a business, we should have a model for wealth creation. Being fixated with how much wealth we have versus how much others have does nothing to grow our wealth.

For someone who is investing in the stock market for income, first, have a clear goal and that, to me, should be to create meaningful passive income streams which will fully replace our earned income. Pick out likely candidates and do the due diligence to decide on the ones which are likely to help us achieve our goals.

Next, have discipline. Stay the course. Yes, stick to the plan. If circumstances have not changed, why deviate from a good plan? However, what if they did change? Then, ask why was our plan a good plan. If the reasons for the plan being good no longer exist, it is time for a change, isn't it?

Maybank Kim Eng, 28 Sep 12: Year-to-date, we have seen many pension, insurance and income funds switching into REITs to pursue higher returns for the sheer fact that the yield-curve is almost flat.  This is further aggravated by the almost "zero-bound yields" which meant that yields have no more room to fall, erasing any prospects of fixed income capital gains for investors. In the quest for returns, many such funds had to turn to slightly riskier asset classes such as REITs for stable recurring distributions.  We believe that with the latest round of QE3 Infinity, ECB’s unlimited bond-purchase program and BoJ’s yen-asset-purchase program, coupled with the low interest rate environment and a yield-spread of 440 bps over the 10-year government bond with low earnings risk, would warrant further yield compression of 56-73bps, translating to 11%-14% upside for the S-REITs sector. Link: here.

Now, is investing in S-REITs still a good plan?

Related posts:
1. Investing in REITs: A flawed strategy?
2. Staying positive on S-REITs.
3. Mr. Market is always right.

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