Which type of insurance for parents and why?

Reader says...
What do you think of the idea of getting insurance for own parents who are in their late 50s and still healthy?

My parents do not have insurance coverage.

I'm planning to get for them a hospitalization insurance + term life w/ critical illness.






I view it as a protection against my financials should anything happen to them.

Because at the end of the day i'm probably be the one who is footing the bill should any mishap happens.






Thinking along that line, i'm thinking if i should actually profit from the demise of my parents. As a form of investment from the lump sum payout from term plan =X

What would you do?

AK says...
Life insurance are for people with dependents.

If your parents do not have dependents anymore, they only need Medishield Life (H&S) or a private shield plan if they can afford it.





If they are Singaporeans, they should already be covered by Medishield Life.

If C or B2 wards in government hospitals are acceptable, they do not need a private shield plan.

As for critical illness (CI) coverage, it is to provide us with a sum of money for our living expenses in case we are hit with an illness that prevents us from working and making a living.

H&S expenses should be covered by a H&S plan mostly and not by a CI plan.






If we no longer depend on income from employment and are able to retire comfortably, I don't see the need for a CI plan (especially when they are so expensive for seniors).

Please read related posts too.





Related posts:
1. Insurance weakened a family's balance sheet.
2. Do your parents have enough insurance?
3. Why do we need critical illness coverage?

Crowdfunding and nudist beaches.

Reader says...
I found your blog when googling crowdfunding in sg.

Feeling very anxious because of Capital Springboard which never pay investors.







Although I am not one of the investor, I have money in another crowdfunding.

I am wondering how safe it is now and I would like your opinion on this which a friend introduced to me...

AK says...
Firstly, you are not an investor but a money lender.

You have taken on the money lending role of a bank here and have assumed all the risks.

Read my blog again and if this is still not clear, read it again and again until it sinks in.

See related post at the end of this blog.







Secondly, the higher yields might be very tempting but did you question why are they so much higher?

You said a friend introduced you to crowd funding.

Is he working for the crowd funding platform or did he receive any benefit as a introducer?








We would do well to remember that altruism is a rare commodity in our modern day world.

You should also not believe everything you read and that includes blogs.

I am not suggesting that there is any wrong doing on the part of your friend but we don't want to ask barbers if we need a haircut.








"Only when the tide goes out do you discover who's been swimming naked." - Warren Buffett

There are nudist beaches in the world.

So, it is not so surprising to see crowds of naked swimmers.





This is not the first and it won't be the last.

Related post:
To make 20% per annum, we could lose it all.

"This is getting embarrassing."

Some readers might find this shirt which I have just washed and put out to dry familiar:

If you are one of those readers, you must have been following my blog since 2011! (See related post at the end of this blog.)

Back then, I blogged about the t-shirt and how it was at least 26 years old.

By now, it is 33 years old.






I wore the shirt out recently when I bumped into someone I had not seen in years.

We chatted a bit and I could tell that he kept looking at my shirt.

Finally, he said something which surprised me:

"I really cannot hold it back anymore but that shirt is so old and it looks old too."

He said something else.






He was pretty diplomatic but it was obvious that he thought it was embarrassing.

To be fair, he was not the first person to say something like that about the shirt.

The shirt has turned yellowish in places and its collar is out of shape.






OK, actually, if I were to be totally impartial (or brutally honest), the shirt looks like a sack that has seen better days.

I think it is time I give the shirt away to the rag and bone man.

Some might say I should have done it years ago but the shirt is so comfortable.






This reminds me of why Warren Buffett got a new car.

He got a new car because his daughter told him:

"This is getting embarrassing — time for a new car!"






Some of us are not very good with things like that and we should listen to people who are better at these things.

Live and learn, I guess.

Related posts:
1. Evolution: "lobster taller than small girl , ak's t shirt older than evo!"
2. Ak says good bye to another old friend.

Sound approach to investing for income?

Reader says...

I am a Singaporean student who is interested in building up a dividend portfolio.

I like to seek your advise whether it is viable to reinvest dividends into shares of the same counter, as the commission seems too expensive to do so.





Is there any way which companies can give out share in place of dividends?

Will this be a sound approach to building a dividend portfolio?






AK says...

If we are investing for income, we want our investments to be able to pay dividends in cash. 

Sometimes, companies might ask if shareholders would like to receive their dividends in cash or scrip (which means new shares)?

If there is an opportunity for arbitrage, then, for the income investor, taking the dividends in scrip might make sense.






And I mentioned it before:

"Many S-REITs have DRPs (or DRIPs), Distribution Re-investment Plan. Some readers asked me if I would take part in these plans.

"My answer is that I invest in S-REITs for income. So, I would usually take the cash distributions unless there is a chance to benefit from arbitrage which happened once before for AIMS AMP Capital Industrial REIT and some might remember that I blogged about it."

For those who are interested in this:
http://singaporeanstocksinvestor.blogspot.sg/2013/05/aims-amp-capital-industrial-reit.html






Always question how is the company generating cash and ask if the dividend being paid is sustainable.

Otherwise, we could be investing for growth or it might be a value trap or it could even be a scam (or maybe I am just talking nonsense here).





As you are new to my blog, you want to read this blog:

http://singaporeanstocksinvestor.blogspot.sg/2015/10/invest-for-income-and-ignore-two-ms.html

If we would like to invest the dividends we receive from our investments, there is no hurry to do so unless Mr. Market is in a big depression.

If we don't need the money, save the money.

Build up our war chest.

And pounce when opportunity knocks.





I know that patience is sometimes the hardest thing. 

I know because I am human too.

http://singaporeanstocksinvestor.blogspot.sg/2013/02/little-book-of-value-investing.html

Related post:
Sit with all that cash and do nothing?

Stronger personal balance sheet and cash flow statement.

Reader says...
I need to spend more time to learn more about investment and not wait till it's too late.

I find it inspirational to read your blog and it motivates me to invest more to be like you.





I have some savings every month and would like to seek your advice on how I can manage it to optimize the very little amount and still be able to grow it further.

1) Reduce my housing loan with the bank in Jan 2020

2) Transfer money to SRS to reduce my income tax contribution for 2018

3) Put aside for my savings account

4) Put aside money for trading





Should I divide my savings evenly among the 4? And since the money in SRS cannot be withdrawn, do you think I should use it to trade?

AK says...
Welcome to my blog. :)

I am glad that you have realised the importance of investing for income.

I believe that you will thank yourself in your golden years. :)





For sure, unless we are born with a spoon made of some precious metal in our mouths, we need to save money in order to have money to invest with.

OK, I know we can also borrow money to invest with but not everyone can sleep well investing with borrowed money.

Indeed, I have a blog on how to have peace of mind as an investor and you might want to read the related posts at the end of this blog.





You have to know that I am not a financial adviser and I am not allowed to give specific advice to anyone.

As a blogger, however, it should be safe enough for me to talk about things in general and you have to make your own decisions.





1. If interest rates go much higher and is even higher than the 2.5% we earn on our savings in the CPF-OA, it makes sense for us to pay down our home loan, especially, if we don't know how to safely invest our savings for much higher returns.

2. Use the SRS to reduce income tax payable only if you have maxed out your CPF-SA. With the CPF-SA, you earn 4% to 5% per annum. 

If you decide to do this, remember, only the first $7K of top up (per year) to the SA will enjoy income tax relief. 







If you have more to contribute, let it flow into your SRS and you could use the SRS savings to invest for income (but dividends cannot be withdrawn until age 62 together with the SRS savings).

See: SRS: e-book and analysis.

3. We always need an emergency fund and a war chest. Having more money saved up is a good idea.

4. Of course, you should think about investing for income.





Which one you do and in what proportion depends on what is more important to you.

If you feel that some measure of financial security is more important while retaining flexibility, then, you should concentrate on #3 first, for example.





It doesn't take much to have a stronger personal balance sheet and cash flow statement.

It does, however, require a lot of discipline.

Related posts:
1. Peace of mind as investors.
2. Top Up SA, MA or SRS?
3. How much in Emergency Fund?

Dislike QAF's CEO and investing in QAF.

Reader says...
What is your view with QAF now and what do you think about their management?

Heard some negative comments on their current management, especially about their CEO background.

AK says...
QAF is related to the Salim group in Indonesia. They have a tight grip on the business. Some don't like this kind of family controlled businesses.

I try to stay objective.






QAF did pretty well until the downturn in the pork business in Australia and that is a cyclical commodity business which means things should look up again eventually.

QAF does have a strong balance sheet and should be able to weather the downturn.





Having such a large majority stake in the business, it is in the interest of the insiders to make sure the business does well and continue to be the major beneficiary of a steady and meaningful dividend payout.





Many years ago, some people also told me horror stories about Old Chang Kee's CEO but it has turned out to be one of my best investments.

Most people are attracted to gossip and that is why tabloids do well.





We should only have to concern ourselves with whether the business is able to deliver what we expect from our investment.

Everything else is just a distraction.

Related post:
QAF's earnings downs but...

Frasers L&I Trust and 21 European assets.

My investment in FLT made more than a year ago has done quite well so far and I would have been quite happy to have them keep the status quo.

Of course, that is not how things work in the real world.





FLT is proposing to buy 21 properties in Europe from its sponsor, most of them German and the rest are Dutch.

Germany is Europe's strongest economy and that is one reason why I invested in IREIT Global so many years ago.

So, to me, that is a reason to like FLT's proposal to invest in German properties.

The properties are 100% occupied, are mostly freehold and mostly come with some form of built in rental escalation.

The proposed acquisitions should make FLT more resilient overall, having less concentration risk in terms of geography as well as tenants.

Of course, the most important question to be answered is how is this going to benefit us as retail investors from an income perspective?

After all, it is reasonable to assume that we are investing in FLT for income.





From FLT's presentation, the deal is likely to be yield accretive and NAV per unit is likely to creep upwards too.

So, income investors should approve.

However, it would depend on how the deal is funded and this is key.





We are not talking about buying 1 or 2 buildings here, we are talking about increasing the portfolio value by some 50%.

For a portfolio that is valued at more than a billion dollars, 50% is a big deal.

Even after taking on more debt, there is going to be a big shortfall.

So, there has to be equity fund raising which, of course, is a private placement and/or a rights issue.





Regular readers would know that I very much prefer a rights issue because it would allow retail investors like me to participate in the fund raising exercise as well.

The number of units in issue is going to increase by a third or so to help fund the deal.

There will be both a private placement and a rights issue.

Find the details in the EGM announcement on page 66: HERE.

As long as the deal allows retail investors to participate in the equity fund raising and as long as it is DPU accretive, I am happy enough for now.





See announcement: HERE.
See presentation: HERE.

Related post:
FLT and CRCT.

ComfortDelgro HUAT and is SingTel next?

Reader says...
Wa!!! Your CDG HUAT AH!!!

Blog more about it lah and we can HUAT more!!!

Many thanks!!!

AK says...
I am sure I do not have any influence over prices.

Have you looked at SingTel's share price, to be fair?

As investors for income, our job is to decide if an equity is right for our purpose and if its price is attractive enough for us buy in.





For examples, in 1Q 2018, I added to my investment in ComfortDelgro at under $2.00 a share and SingTel at under $3.40 a share.

I had no idea how the prices would move.

After buying, most of the time, we simply wait while we get paid.





We only act if Mr. Market decides to continue selling cheap (i.e. at prices we would not sell at) or if Mr. Market decides to buy from us at prices we would not buy at.

Well, if you are right, now that I have mentioned SingTel in this blog, maybe, SingTel will HUAT next week. ;p






Bad AK! Bad AK!

Related post:
AHT and CDG (SBS).

Ascendas H-Trust and ComfortDelgro (SBS).

Reader says...
Thanks for talking to yourself all these times. 

You have really helped the average Singaporeans pick up good financial tips.

I have been invested in AHT and have collected good dividends. 

I noticed that prices have dropped so far and am thinking of picking up more. 





I read through their latest announcements and I don’t see anything that indicates that their fundamentals have changed. 

However, their numbers for 2 AU Pullman hotels are not that good. 

Also the exchange rate is not in their favour. 





They also look like they may be thinking of expanding beyond Asia as per their change in mandate. 


Try as I could, I can’t figure out whether these factors would be good or bad for AHT. 

Am I missing something?







I also noticed that even though you are picking up shares in CDG, you are not doing it for SBS? 

Since CDG taxi biz is at risk, how about just their bus biz?

AK says...
AHT is in hospitality. 

There will be seasonal changes in fortunes. 

Since I am staying invested for income, as long as AHT is well managed, the bumps will smoothen out over time. 

Having more assets in different parts of the world could be a good thing because it reduces concentration risk and reliance on the A$. 

Will have to wait and see.





I find SBS' valuation a bit rich compared to ComfortDelgro. 

SBS is 75% owned by CDG. 

I think SBS will be worth more in future but in the meantime, can we accept its richer valuation and also the much lower dividend yield (~ 2%)?





In years to come, SBS could increase dividend payout to shareholders. 

Of course, then, CDG would be a major beneficiary.





Related posts:
1. Ascendas Hospitality Trust.
2. ComfortDelgro Analysis.

EC World REIT.

Reader says...
What do you think of EC World REIT?

AK says...
EC World REIT, I looked at it and was in the process of blogging about it but, somehow, it joined the ranks of half finished blogs. I have about 400 of these. Terrible, I know.

Looking at that half finished blog, I remember I was concerned about the relatively short land leases, similar to most Singapore industrial land leases and the relatively low distribution yield.





The yield was 7% or so and this was because it was bolstered by the sponsor as well. Without the sponsor's support, the yield would have been much lower. Less than 6%.

Still, the sponsor accounted for two thirds of the REIT's income. Real concentration risk.

There was also something about having debt denominated in S$ which I didn't like. I would have liked for all the debt to be in RMB which would give them a natural currency hedge.





Also, I didn't like that a port was such a substantial part of the the REIT's portfolio. Quite the opposite of e-commerce.

It just didn't seem rewarding enough for the risks we must bear.

I would demand a much higher yield for something like this.






Just being promising is not good enough. Whether I am being compensated sufficiently is more important and this brings to mind my PCRT story.

This is just me talking to myself, of course. 😉

Related post:
PCRT: Full divestment.

Investment philosophy is timeless and so is ASSI.

Reader says...
Thanks for your reply. I am aware of (the investment courses available).

I was actually more interested in the tea time talk and session with you.

Are you planning for anything similar in the near future please?


AK says...
Oh, "Evening with AK"? 

Maybe towards the end of the year. :)

Reader says...
Wah... so long beyond towards end of this year?? Please do consider slightly earlier maybe in early 3Q 2018? ;)

Actually, I have been following your blog since early 2016, maybe 2 to 3 years ago, and also the other financial bloggers too like "XXXX". She recommended me to your blog because I was enquiring about REITs and wa-la.... I was following it since then.





I fancy visiting ASSI more maybe because it has all the archives and comments from past years. I also find your thought processes and thinking very logical and mature regarding investing. 

I think it takes lots of guts, perseverance and years of experience to build such solid foundation like yours. I like your website over the other bloggers e.g. XXX, XXXX, XXXXX, XXXXXX, XXXXXXX, XXXXXXXXXX etc.. but I'm very inspired by their investing stories and passion in investing to generate passive income!!


But I have an issue with not knowing how to put up a comment or question to the post directly to your blog. I only know how to send you an email.
Is it all comments comes to you via email and you will filter them and post them in your website?






AK says...
Actually, to be honest, I have been thinking of slowly fading away and might not even have another event in future. We shall see, ok? :)

However, it is receiving emails like yours from time to time that somehow still keeps me at it although I am not blogging as much as before. So, thank you very much for your kind words. Very encouraging.





As for commenting in my blog, I disabled anonymous commenting many years ago. So, you need to have an identity to comment in my blog. Either a Google account or an Open ID.

Sometimes, I do cut and paste emails or FB comments from readers which I feel are worth sharing too. :)

If you have a FB account, you can follow me using FB and, of course, you can comment on my FB wall too. :)








CONCLUSION
Although I kept saying in recent times that I am blogging less because I am spending a lot more time gaming, which is true, there are many other reasons why I am not blogging as much as before.

Long time readers might remember that I have blogged about other reasons over the years.

After all, I cannot be playing MMORPG the whole day every day, right?

OK, I know some people do that and I have also read horror stories about how some played so much that they died at their consoles. Yikes.







Availability of time aside, there are non-resource based reasons for blogging less frequently and being more selective in what I blog about too.

Anyway, the stuff that I blog about is mostly rather timeless if we just focus on the philosophy and the approach.

Everyone's circumstances are different, of course. We are likely to have different experience and beliefs too.

However, if we have the same goal, we should all be moving in the same direction.

So, no new blogs from AK? Read past blogs. 






I believe there is value in reading those older blogs and emails from readers tell me so.

I will share old blogs in my FB page too whenever I feel like it. Sometimes, old is gold. :)

See:
Get the most out of ASSI.

Related post:
Holistic approach to a secure financial future.

Buy the CPF-RA and win win!

Reader said...

Hihi, thank you for taking the time to answer my query. I was trying my luck and wasn’t really expecting a reply! Excuse me while I have a fan girl moment! 😍😍😍

The post which you recommended for my reading was the post that got me started thinking about my parents cpf! I tot it was a really brilliant idea! Would never have occurred to me 😂

We’re thinking to get the best of both worlds by converting my mom to CPF Life and ‘buying’ over my dad’s RA.

We’ll pay him the $XXXX in his RA by topping up my mom’s RA with $XXXX. And then convert my mom to CPF Life at 70 so they can get a fixed payment for the rest of my mom’s life. 

Not sure if hopefully is the right word to use in such situations, but statistically speaking, women usually outlive men, so that’s the bet we’re taking.





At the same time, we’ll top up my dad’s RA to eventually hit $30k while leaving him on the old scheme (i.e. Retirement Sum Scheme) so that we can get the 6% interest. This 6% will also be able to help us provide more for them if needed.

Would like to run it by you to see if there are any insights/ different perspective that we missed.

AK said...
You have cracked the code. Haha. 😜





It is a win win situation for the parents and for the child.

Brilliant, she is!

Related post:
CPF to help fund our retirement...