Ascendas Hospitality Trust should do well.

A reader saw my blog on Ascendas H-Trust earlier this year and, after doing some research, decided to invest in the Trust for income. He shared the following with me:

1. 52% of net property income is derived from Australia and this proportion could rise because of the boom in tourism. Number of international flight routes have increased with more Chinese tourist arrivals.

2. 25% of net property income is derived from Japan and tourism has been on the rise in Japan as well. The Japanese government's drive to almost double the number of visitors to 40 million by 2020 is going to give a continued boost to the hospitality sector.




3. The Trust has a gearing level of 33%. Backed by a strong sponsor and having natural forex hedge with its debt largely denominated in local currencies are positives.

4. Through Park Hotel, the Trust derives only 15% of its net property income from Singapore. So, the slowdown in the Singapore hospitality sector is less of a concern for the Trust compared to CDL H-Trust and FEHT which have much larger exposure to the market here. The fact that Park Hotel is master leased provides greater income visibility too.

5. Assets owned by the Trust are mostly freehold and do not suffer from lease decay which is another plus when compared to CDL H-Trust and FEHT.





Good stuff.

I will end this blog by saying that I got into the Trust at lower prices and I am investing for income. Not too concerned with the fluctuation in unit price.

As long as the trust continues to do well enough to pay me an income that makes sense, I am happy.

Related post:
More income from Ascendas H-Trust.
See my Japan travel photos: HERE.

Planning a $1.4m legacy but be aware of this.

Reader:

I have an idea to bounce off you. 

Just chit chat. 

I know you don't give advice.

I am 54 and just became a father. 

I married rather late in life.





As a father, I am thinking about my child's future. I am well aware that by the time he is 21, I would be 75 if I am still alive by then.

Next year, I will be able to withdraw more than $100K from my CPF account as I have already met the minimum sum for my age. 

I am thinking of putting the money into my child's CPF SA instead of leaving it in my OA.





I could top it up to $166K and do a one time top up to his CPF SA and, compounding at 4% a year, he will have a retirement nest egg of more than $1.4 million when he turns 55. 

I won't be here for most of his life and this is something I can do for him.







AK:

You have to remember that your CPF money is meant to help fund your retirement. 

If you have other ways to fund your retirement adequately, then, OK.

Yes, your child won't be able to touch the money until he turns 55. 

If your plan is to help your child be financially secure in his old age, I would say that this is a very generous and thoughtful thing you are doing for him. 





However, remember, the CPF SA interest rate could change over the very long term and 55 years qualifies as very long term. 

After all, the plan is to peg it to long term government bond coupons eventually, if I remember correctly.





When would this happen? 

I have an inkling that this might happen when the 10 year SGS bond rises to a level that is at 4% or a bit higher. 

We will have to accept higher or lower returns on our CPF savings in future from then on.





So, we won't be wrong to expect CPF SA interest rate to fluctuate over the very long term. 

So, don't think of 4% as something that is sacrosanct.

Even so, at 3.5% per annum, $166K will become $1.1 million in 55 years. 




At 3% per annum, it will be about $844K in 55 years. 

That is still quite a bit of money.

Your child won't have to worry as much about retirement funding and can be quite comfortable as a working adult, I imagine. Lucky kid.

A father's love. :)





Related post:
Make CPF part of child's savings.

Want to withdraw $500,000 from CPF at 55?

Reader says...

A quick intro about myself.

I am 34 this year, staying in a bto hdb flat and have existing housing loan of $20k outstanding (serviced by my wife and myself).

Checking with you on my strategy for CPF.

I have around $5k in ordinary account, and $145k in special account.






Already met my min sum for medisave. Am hoping to hit my S.A. min sum when I reach 35yo.

My thinking is that once my min sum (FRS of $166k) for S.A. is met, all employment contribution will flow into my ordinary account(~$2k a mth), and I would be able to hit around $500k when I reach 55 ( $24k x 20yrs - not including contribution from bonuses) and withdraw this amount.

Am I missing out on anything here? Thanks!








AK says...

Once you have hit the FRS, you will still be making mandatory contributions to your SA. 

So, monthly CPF contribution goes to OA and SA but nothing to your MA if it has maxed out.

When you hit 55, the prevailing FRS goes to the newly created RA and you can withdraw whatever is left in your OA and SA, if you like.







If we do the right things, we could withdraw a more meaningful sum of money from our CPF account at age 55 instead of a token $5,000. 

Do you like that? 

I know I do.







Related posts:
1. Changes to the CPF and SRS.
2. My CPF-SA (Jan 2016).

A big loan to buy a condo and CPF not enough.

The focus should be on the CPF but I cannot help but wonder if Kelly has little money, why is she spending it on dogs and cats?
Shouldn't she use the money to better prepare for her old age?
(Credit goes to Raymond Ng for sharing the above with me. )

Reader (not Kelly):
I came to know of your blog recently and find it to be full of useful information.I regret that I did not know what you know and had not done what you've done in terms of CPF voluntary contributions when I first started working.

I've recently bought a condo and borrowed serious money from a bank to do so ,so much so that I can only pay off the housing loan at the age of 65.:(

I've attended trading courses/read up on trading for the past few years and through my experience,have some confidence in generating returns of 10-20% /annum

If you were me and have some confidence in beating the CPF rates,would you still consider contributing voluntarily to CPF or try to 'frontload' and payoff the housing loan first as the loan amount is much much more than what I currently have in my CPF?

I'm also conflicted towards contributing to CPF as it will still eventually go towards paying off (at least the OA portion) the loan and I may be able to generate more( in terms of %) on my own through trading.

Hopefully you can shed some light on what you would do if you were on a similar situation financially (short of selling the condo).



"...higher income ceilings for new HDB flats..."

AK:
We are all made differently. So, we will look at things differently.

However, I think we should be able to agree that there is a place for risk free and volatility free savings instruments in our life, especially one that rewards us relatively well like the CPF.

We can be confident as an investor or a trader. Confidence is a good thing but we should also be sensitive to the fact that things do go wrong and sometimes very badly wrong.

I am reasonably confident in my ability as an investor and I used to trade quite a bit as well but I did not chuck CPF in the back seat and I am still contributing to my CPF account in my retirement.

What would I do if I were in your shoes? I don't really know because I would not ever put myself in such a position.

I don't know if you have read my blogs on how our homes are really consumption items. Something that costs more than $1 million, which does not generate income and which requires me to borrow hundreds of thousands of dollars to purchase is mind boggling to me.

I can only say don't discount the importance of the CPF in your life especially if you believe in having a risk free and volatility free bond component in your investment portfolio.

Best wishes,
AK

Why do we buy insurance? To transfer risk because bad things do sometimes happen in life.

What about the CPF? 

I told friends and family years ago that if all my investments failed, I would still have my CPF money.

I am sure Dr. Lee Wei Ling would agree with me. To recapt,

Related posts:
1. 4 ideas on housing loan repayment.
2. We need a home but a condo?
3. $1.2m in my CPF acount by age 65.

CPF members above 55 should use it as a savings account. (Deposit for 5 years 11 months for higher returns?)

Some readers might remember this blog post:

http://singaporeanstocksinvestor.blogspot.sg/2016/06/mom-stunned-at-what-happened-to-her-cpf.html





My mom has met the minimum sum for her cohort and she has also maxed out her CPF-MA. So, guess what my reaction was when she sent me the following SMS:

"I went to XXX bank because my fixed deposit matured and they asked me to deposit for 5 years 11 months. Get 1.6% per year for first 5 years, Balance 11 months see how is performance. Get minimum 1% and maximum 2%. Principle guaranteed upon maturity but suffer penalty if withdraw before maturity. Can put or not?"

Noooooooo! 

A thousand times, nooooooo!







I told her she might as well put the money in her CPF account and enjoy 2.5% interest per annum. She is allowed to withdraw the money anytime she likes too.

5 years 11 months? 1.6% per year? Penalty for early withdrawal? 

You must be kidding me.







For those who do not wish to deposit more money into their CPF accounts, they could enjoy similar returns by simply parking their funds in Singapore Savings Bonds (SSB).

Held for 10 years, the SSB yield is about 2.1% per year but if withdrawn after 5 years, the yield is about 1.6% per year.  (See: Daily SGS Prices.) Safer and no penalty for early withdrawal too.




Don't ask barbers if we need a haircut.
Also read these which are from my FB wall:

"At 55 and older, cannot top up SA anymore.
And any top up to RA cannot be withdrawn suka suka." - AK

"After 55 (after creation of CPF-RA and meeting BRS or FRS) and if unemployed, yes (the member can still do VC to his CPF and any money in CPF-OA and SA can be withdrawn anytime).
Note that this is for regular VC which puts money into OA and SA when MA is already maxed.
If MA is not maxed, most of the VC will go to the MA for older members and will be locked up.
Top Up to the RA will also be locked up.
At 55 and older, Top Up to SA is not allowed." - AK

If the CPF member is still gainfully employed after 55, withdrawal is allowed once a year.






Shirl Wong:
The rules have changed. Withdrawal not restricted to once a year if employed. I have checked this at CPF board recently.

Desmond Lee:
Yes the rules have changed. CPF officer told me last week and I did a check at their website.

Updated on OCTOBER 17, 2017.





Related posts:
1. Nobody cares more about our money.
2. Bad experience at a local bank.
3. Singapore Savings Bond.

An average HDB household and $1 million.

Some might remember that I talked about an article written by Cai Haoxiang in The Business Times in 2013. He wrote about what an average household's monthly expenses could look like in 2042, using the Household Expenditure Survey 2007-2008 from the Department of Statistics as reference.

1997-1998, an average HDB household's expenses was S$2,681. 2007-2008, it was S$3,138. That was an increase of 17%. By 2042, if core inflation is 2% a year, that number would hit S$6,400. In 3 decades, the number doubled and then some. 

If we were to assume that costs would increase steadily, monthly expenses for an average HDB household could hit S$7,500 by 2052.





Many people say they need $1 million in savings when they retire at 65. I don't know if they know this for sure or if they are just saying it because $1 million sounds like a big deal.

OK, let us look at how long would that $1 million last?

Hold on to your seats.

At a draw down rate of $7,500 a month, about 11 years, assuming that the banks did not pay interest on savings and that there would be no further inflation. 

The money will run out at age 76.

Alamak, how like that? Many people are expected to live till 85 or older these days.

2052. 

Hmmm. 

That is 35 years away.

So, if you are 30 years old this year and you are from an average HDB household, this could well apply to you. 

Aiyoh. Stress.

OK. Before you run around doing a Chicken Little, an average HDB household was assumed to have 3 to 4 members. So, if your household size is smaller, then, expenses should be lower. 




Single or DINK at 65, anyone?

Of course, even for married couples who have children, at 65, their children should be financially independent of them. So, again, expenses should be lower than what is assumed here.

I am going to stick my neck out here and say that, in 2052, $4,000 of spending money a month could probably give most people who are 65 and retired a comfortable life.

If you are 30 this year, have $1 million in savings by age 65, you should be able to fund a $4,000 a month retirement easily into your 90s.

If we max out our CPF contributions annually and top up our CPF SA to hit the Full Retirement Sum (FRS) earlier, we could have this magical $1 million in our CPF account by the time we are 65.

Don't believe me? Read this:

http://singaporeanstocksinvestor.blogspot.sg/2016/08/1m-in-cpf-by-age-65-what-about-12m.html

From an average HDB household? If you do not have the temperament to be an investor, this is something to seriously consider.





Singles and DINKs will find this easier to achieve than those who are married with kids, everything else remaining equal.

Some might have to try harder and some might take more time but if this is important enough to attain, then, do the right thing. Start today.

Related posts:
1. Retiring a millionaire is not a dream.
2. A cornerstone in retirement funding.

Earn $350K a year and on track to financial freedom.

Hi AK,

I hope this email finds you well!

I have been your loyal reader for the past 2 years and have written occasionally to you. I like to share one additional perspective to achieving financial freedom which have not been written as much in your blog I believe:

Focus on maximizing your earning potential so that you have a nest egg to use to achieve financial freedom

I manage to develop my career in a niche field that is sought after and relevant- currently, I am making S$350K per year and will take 3 years to make S$1mil in income. My previous role paid S$250K per year so it took me 4 years to make S$1mil. Before that, being more junior in my career and making about S$150K per year, it took me about 6-7 years to make S$1mil in salary.

So with a high salary income and keeping expenses to a minimum, I have:

- maxed out CPF SA by 42 years old

- ensured my family is well covered with various relevant term insurance plans

- grown and still growing my SG stocks and REIT portfolio towards S$1mil now generating passive income that covers 70% annual expenses

- fully paid retirement plans (~pay out S$2K per month from 55 yr old)

- fully paid house and car (no loans)

- my two kids who are teenagers each have their own CPF SA accounts and $70K SG shares portfolios

I fully agree on being prudent in expenditure and financial planning for the future. But I strongly believe the FIRST step is to properly build your career if you can, so that it can one of your stable pillars to help you gain financial freedom.

I thought I share this perspective to encourage people to take charge of their careers, whatever that may be =)

Have a very happy Sunday!

Best regards,
L

Hi L,

There is a reason why I don't blog about careers much. I didn't really have a good career and didn't make more than $100K a year. Really.

I share my experience to show that we don't have to be high flyers to achieve financial freedom but I have also said that for some who have a very good career, investing for income becomes optional. Just be better savers. :)

http://singaporeanstocksinvestor.blogspot.sg/2016/08/just-be-better-saver-and-forget.html

I will share your perspective in my blog. Thanks for this. :)

Best wishes,
AK

Related post:
Very first step to becoming richer.

Thinking of moving out of the family home?

Dear AK,

As we know, Singapore citizens can buy a HDB if they are married. If they remain Single, they can get a flat at 35 years old.

Each citizen cannot own more than one HDB at any point in time

My father passed away some years ago, and I co-inherited the HDB with my mum. Hence, I am the half owner of my parent's HDB apartment.

I do not get along well with my mother, and I wish to move out as soon as possible. However, as I am already an owner of parent's HDB apartment, I will not be able to get my own HDB apartment even if I get married, or pass 35 years of age.

This means I have only the following options:
1) Rent forever (or until my mum passes on, and I inherit the entire flat)
2) Buy a private property, with no subsidies

The Dilemma:
I am able to afford both options with ease, but the dilemma I have is I'm not sure which option is the most prudent.

Asian culture tend to favor home ownership, so I feel compelled to select option 1), to buy a private property. However, this option would mean most of my net worth will be locked up in a property, and my CPF account will be exhausted.

If I chose option 2), and rented, then my net worth will be liquid. This allows more opportunities for investments or whatever other endeavors; after all, cash is king.

When my mother passes on, I will inherit the entire HDB from my her. Then I can terminate my tenancy and move back home.

If you were in my shoes, what would you have done? Please start talking to yourself so that I can eavesdrop hahaha.
I really appreciate your help.




Hi ,

I won't tell you what is best for you. I will just raise a few points.

1. You already have a property (i.e. HDB flat).

2. Do you want more of your wealth to be in property or would you rather have more cash to invest with when Mr. Market is feeling depressed?

3. A home is a consumption item and it does not generate income. If you are concerned with having more passive income, buying that private property would probably set you back. As long as you are staying in the property, it is not an investment.

4. If you must use your CPF money if you were to purchase a private property, remember the cost of borrowing money from yourself.

However,

5. If you able to find a good value for money private property in Singapore, buying could be a good choice.

Related posts:
1. Accrued interest.
2. Buy or rent?
3. Affordability or value for money?

Tea with Matthew Seah: Margin of safety.

Matthew shares with us a simple and important concept to invest more safely:

The intrinsic value of a company could be calculated base on our estimations of various aspects of the business, both tangible and intangible. Hence one would require to look at both qualitative and quantitative aspects of the business in order to give a more holistic valuation of a company.

Company valuation can be done using 2 broad types of valuation models:
- absolute valuation; and
- relative valuation.

Absolute valuation is a valuation method that give you an absolute value to compare against the current market price. Absolute valuation method is broadly termed as a discounted “cash flow” method. The different models calculates future cash flows -- dividend (Discounted Dividend Model), free cash flow (Discounted Free Cash Flow Model), operating cash flow (Discounted Operating Cash Flow Model), residual income (Discounted Residual Income Model), etc -- and discount these future values to present value.

Relative valuation is a valuation method that compares certain metrics -- price to earnings ratio (P/E), price to book ratio (P/B), price to sales ratio (PSR), total enterprise value to earnings before interest, tax, depreciation and amortisation (TEV/EBITDA), etc -- against the industry or market average.

Each of these valuation models, including those not mentioned, have their pros and cons. 

Do note that even with complete knowledge of the business, company valuation is still an estimation of what the value of the organisation as other external factors such as macro trends and policy changes in the future is difficult to predict.

So how to overcome this miscalculation?

Introducing Margin of Safety. 

The concept of margin of safety originated from Benjamin Graham and he wrote about it in the very last chapter of The Intelligent Investor (Chapter 20: “Margin of Safety” as the Central Concept of Investment).

Simply put, when market price is below your estimation of the intrinsic value, the difference is the margin of safety. The lower the market price of the stock, the more undervalued it is, and the greater the margin of safety. In essence, the risk of losing money is lower when buying an undervalued company with a large margin of safety.

“A margin of safety is achieved when securities are purchased at prices sufficiently below underlying value to allow for human error, bad luck, or extreme volatility in a complex, unpredictable and rapidly changing world.” 
- Seth Klarman

Margin of safety doesn't guarantee a successful investment, but it does provide room for error in an our judgment when calculating the value of a company.

Related post:
3 points to note in investing.

This condo investment has been a drag.

Is cash flow sufficient to service debt?





Reader:
Hello AK, I read many of your interesting articles on your blog on financial matters. 

I would greatly appreciate some advice to manage my finances. 

I turned 55 and am still working. 

I live in a 3 room HDB flat fully paid for. 





I purchased a 2-bedder private condo in the east for investment purpose and renting it out since mid 2015. 

The rental is covering my mortgage loan but the other expenses such as property tax, home/fire insurance and maintenance/sinking fund amount to $7000 (a year). 

I am thinking of letting go this property...

AK:
If you are concerned with investing for income to fund your retirement, it seems that this condo is more a drain than a pump. 

If the home loan is going to be paid up soon, then, less to worry about. 

If the home loan has another 10 years (or more) to go, at 55 years old, I might be worried.





Know your motivations and you will know if something is the right tool for you.

Related post:
Buy a condo or stocks?

Don't have to sell HDB flat and buy 2 condos to improve cash flow. (Have a fully paid HDB flat and make money.)

A friend told me he is seriously considering selling his fully paid 5 room HDB flat in RCR to buy 2 shoebox apartments so that he could stay in one and rent out the other for cash flow. 

Hopefully, property prices would go up and he could benefit from capital gain by selling one.





I told him that he would be moving from being debt free to being indebted. 

There is no guarantee that the monthly rental could cover the mortgage payments (plus the much higher monthly maintenance and property tax of a condo).




He says he just wants to make money but how sure is he that he would make money this way? 

I see a strong speculative flavour in his hope that property prices would go up. 

I told him if he thinks property prices would double in 10 years like it did in the recent past, that is speculation.




1.
I told him that if he wants money in the pocket, just rent out 2 bedrooms in his current flat. 

Free cash flow guaranteed. Easy. 

To that, he said that it is very hard to rent out the spare rooms now. 

Oh, and he thinks renting out a shoebox apartment is going to be easier? Duh.





2.
I also told him that if he didn't want to share his home with strangers, he could think about downsizing his current flat to a 3 room flat and he would have more money in the pocket. 

Since his current flat is his first, he could get a BTO 3 room flat. 

It is much cheaper than buying resale.

Or maybe a BTO 2 room flat? 

Price tag? $90,000 maybe. 

So cheap hor?
Purchasing a 2-Room BTO flat








A BTO 2 room flat? Serious? 

Alamak, he was thinking about buying a shoebox apartment to stay in. 

How big do you think a shoebox apartment is?

Of course, he might have to wait a few years but he would be able to pocket a few hundred thousand dollars in price difference. 

Also, he would be getting a fresh 99 years lease. 




3.
Then, there is also the option of looking into HDB's sale of balance flats which would reduce the waiting time.

With the price difference of his old and new flats, he could invest for income and it could even be in the form of a shoebox apartment that he is thinking about once he has served his MOP.

There is no need to always take on more risk in life to have a better life. 





I like to have my cake and eat it too but I don't like to choke on my cake.

Oh, in case you are wondering, he got the idea to sell his 5 room flat to buy 2 shoebox apartments from someone. 

Guess what that someone does for a living?

So clever! Bad AK! Bad AK!





Related posts:
1. Power to be financially stronger.
2. Retirement funding and HDB flats.

5 minutes and less than a dollar? Perfect.

Have you ever had a craving for some food which you have never liked before? 

OK, I know the ladies who have been pregnant before might have experienced this but what about us guys?

Well, I have never enjoyed porridge much. 

So, being on a low carbohydrate diet, it is one thing I do not miss. 





However, whenever I am feeling unwell, I seem to crave porridge. 

I don't know why it is so.

When I told a friend I have been having porridge recently, he asked what about my low carb diet? 

When I told him I have been preparing porridge without using rice, he was dumbfounded.

His expression was priceless and I thought my porridge recipe might be blog worthy.

.





Heat up some frozen fried chicken, frozen cooked vegetables (carrots, broccoli and cauliflower) in a microwave oven. 800 watts, 3 minutes. 

Then, put them in a blender with some hot water.

Blend and we get this. Porridge.

I added some black pepper for taste and also a spoonful of olive oil so that the meal keeps me full longer.

Sedap!





Time taken to prepare the meal? 

5 minutes or so.

Cost? 

Probably less than a dollar.

Add an egg if you like.

Cost?

Probably still less than a dollar.





What did you say? 

Spend 5 hours preparing the perfect bowl of porridge?

Hey, do you think I am really mental? 

OK, don't answer that.





Related post:
How to recession proof your life?

How to get things we need or want for free forever?

Eight out of twelve young Singaporeans have yet to plan for their golden years.

A reader asked on Facebook what was the point of the blog which I posted last evening?

Alamak. AK is a mental blogger lah.

Most of the time, he is just talking nonsense. Crazy fellow.

I like to think that everyone's life can be better and it should be better if we have been prudent with money and if we have not been too unlucky in life.

I also like to get things I need and want for free. If I can get someone else to pay for things I need or want in life (legally and ethically), I would.



Regular readers might remember that I said I invested in QAF because I want free bread. Old Chang Kee? I want free curry puffs.

So, what about investing in NTUC Income for income? I want to have some life insurance coverage for free.

Of course, don't take what I say literally but you get the idea.

The writing is on the wall.
Related post:
Dividend for FY 2016 and for life.

Dividend for FY 2016 and for life is a waste of time?

MY BANK ACCOUNT by Tian Long. ROFL!

Most of us are not born with a silver spoon in our mouth. We have to find our own way in life and, hopefully, we do not end up in hole full of snakes or spikes.

Snakes are natural while spikes are man made. Yes, there are people out there who are hunting other people.

We have to learn and avoid such holes.

How to get rich quick? Don't ask me.

How to get rich slow? See this?

Yes, it is something I am reminded of on a yearly basis.

This is money I stashed away donkey years ago and till this day, I am still enjoying the benefits.

I have probably taken back all my money and if the company continues to do well, I will continue to receive some pocket money on a yearly basis.

Of course, on its own, it is not a lot of money but if we focus on the absolute sum, we miss the point.

"Aiyoh, I can only invest $5,000. 6% is only $300 a year. So little. Don't bother lah. Waste time lah."

Continue saying something like that and, all else being equal, really, don't bother thinking about a comfortable retirement. Waste time lah.
Related posts:
1. Secret to AK's success.
2. Investing in INCOME for income.

Hock Lian Seng should be 69c a share.

Reader:
A senior of mine at work told me about your blog when we chatted about stocks. I mentioned Hock Lian Seng and he said AK blogged about it. I bought this because my broker told me it was worth at least 69c and that there was a special dividend. I paid 62c but the price has plunged. I wonder if I should hold or sell or buy more. If you are wondering, I just started investing this year and I don't know who to trust now.

AK:

Trust yourself. Trust no one else, not even AK. I have nothing against your broker and I think I know which brokerage he is from but don't trust him either.

Don't rely on others for investment tips. Buying something because it was a hot tip could end up burning you. 






You have to have an idea of what you are looking at and how much it is worth. Only then would you have an idea if the price makes sense. 

If the price doesn't make sense, is it because it is too cheap or too expensive? Then, you know what to do.






Having said this, as investors, we cannot expect a 100% hit rate. If we can be right more often than we are wrong, we should be happy. 

Sometimes, we can do all the research we could possibly do, be reasonably confident and still be wrong. The only one who is always right is Mr. Market.





You might be interested in this blog post and pay attention to the broker's recommendation:
http://singaporeanstocksinvestor.blogspot.sg/2017/01/history-with-sabana-reit-and-current.html

Those who bought then and bought more as the price declined would be bleeding badly.





If you are not prepared to do some work as an investor, it is better for you to stay away from the stock market.
Related post:
Hock Lian Seng returns more than 100%.

Old Chang Kee recorded a big loss in Q4.

I received a small handful of messages regarding Old Chang Kee's latest results and this is a quick blog about the matter.

Old Chang Kee is a fantastic cash flow generating machine and it remains one of my better although smaller investments. I have no intention to let go of my investment because nothing has changed.

Of course, when I saw the article in The Business Times declaring a huge loss for Old Chang Kee in Q4, I took notice. I spent one minute looking at the financial statement and decided that all is well.

One minute? Yes, only one minute.

I just looked at the income statement to see what has changed. Noticing a spike in expenses, especially other expenses, I scrolled down to find the reasons for the spike.

What I was looking for was whether the spike was going to be material and whether it was going to be enduring in nature. Some of the increase in expenses will continue to be challenging. Labour cost. Rental cost. You get the idea.

However, most of the increase in expenses comes from a revaluation loss which is a non cash item. Non cash item does not affect cash flow. So, unruffled, I went back to gaming.

To be investors, we should pick up some basic knowledge about accounting. Leave the more complicated stuff to the professionals but we should have some basic knowledge.

Financial statement:
http://oldchangkee.listedcompany.com/newsroom/20170529_174958_5ML_AYW9SB1XWVC26BOD.1.pdf

Related posts:
1. Income Statement.
2. Recommended books.