TheFinance.sg » Lau

When To Start Saving For Retirement?

Lau — Tue, 31 Jan 2012 07:42:00 +0000

Retirement carries a different meaning at different ages.

For the young adult starting to work in their 20s, retirement is something that probably does not carry much meaning. Something their parents are transiting into and has nothing to do with them. First and foremost on their minds will be landing that dream career, falling in love, getting married, purchasing all the “wants” with their first year paycheck, etc.

Next stage is the 30s, life has moved on for most from singlehood to setting up a family unit. Focus will be to stop job hopping, stablize a career to support the mortgages and plan for the first child. Even those single usually start taking care of their parents who have started making retirement plans.

Moving on to the age 40s, those with children start fussing over primary school entry or the dreaded PSLE. Some planning for the child’s future tertiary education …

Roar Of The Dragon Babies!

Lau — Fri, 27 Jan 2012 09:05:00 +0000

The Chinese zodiac dragon year is here once every 12 years. The birth rate this year has a significant impact to the whole country in the years to come. For example, primary school intake has to be expended to accommodate the larger intake, right up to secondary school, National Service and post secondary education. The competition among the children born this year will be most intense.

Well, for financial planners, the opportunities are going to be amazing. With parents nowadays so focus on their children, many even take the proactive approach to get at least an education plan for them the day after the child is born. Foresee that the insurance industry will carry on to boom with this market segment.

For property segment, the supply of new homes, seller stamp duties and the buyer stamp duties is going to halt the rate of price increase. Do note that it …

CapitaMalls Asia Bonds On Offer

Lau — Wed, 04 Jan 2012 01:50:00 +0000

CapitaMalls Asia is offering up to S$400 million of 10-year callable step-up bonds. DBS is the sole bookrunner and lead manager.

The issue has an initial offering of S$100 million for retail investors and S$100 million under a placement for institutional investors. Another S$200 million may be issued in event of excess demand.

The bonds are callable at par by the issuer after 5 years, i.e. 2017 through 2021 yearly on Jan 12.

They will bear a 3.8 per cent coupon for the first five years of their tenor and 4.5 per cent thereafter.

It looks like this is going to be another hot issue. 3.8 per cent is nothing to shout for, but it is better than zero point zero, something per cent. After 5 years if the interest rate environment is still low, they will call the bonds, however, if rates have increased, they …

Happy New Year

Lau — Thu, 29 Dec 2011 14:29:00 +0000

It is nearing the end of the year. December has always been my most favorite month of the year. It is the month people seem to be a lot happier, kinder, more generous and overall nicer. Even the taxi fare hikes, MRT train breakdowns and recurrence of flooding, are finding it hard to dampen the mood.

Reflecting back on 2011, I was wondering what I have done right and what I could have done better. I think this will serve as an important feedback on how to make 2012 an even better year.

In particular, in reference to this blog:

Most read articles for 2011
to pay or not to pay
why your salary is not enough
being penny wise pound foolish

Least read articles for 2011
interest rates
learning through reflecting
pre-paid packages

In conclusion, it seems articles related to property finance attract more attention than random updates like …

Retirement Woes

Lau — Wed, 21 Dec 2011 08:08:00 +0000

According to a recent survey by Aviva, the Consumer Attitudes to Savings (CAS) study, it showed an increasing concern over prospects for retirement.

About half felt that they will not have enough money when they retire to provide for an adequate standard of living and will have to work beyond the normal retirement age to fund their retirement.

I believe this is mainly due to an awareness of the importance of planning for retirement.

Previously, many would think that retirement is taken care of by having children and their CPF. However, now, the cost of living has been increasing exponentially with inflation stubbornly high. They are starting to fear that in addition to trying to provide for themselves, they may even need to provide for their children to give them some head start in life. This has been termed, the sandwich generation. They are worried and rightly so. To make …

This Is Home, Singapore

Lau — Fri, 09 Dec 2011 05:52:00 +0000

Back to Singapore after a 2 week break and it seems that a lot has changed in such a short time!

Increase in Comfort taxi fares
Comment: Not that I am blaming the fare increase, inflation is so high, I think it is only fair. However, the way it is implemented those not make sense. Extending the peak period to throughout (6pm to midnight) gives no incentive to space out the peak situation. Instead of usually delaying the trip to avoid the surcharge, there is no point now and it will cause frustration for the true peak period. As everyone now rushes for the same timing.

Singapore ranking as most costly city jumped up
Comment: Guess our kiasu culture as influenced even trying to be the number one most expensive place to live! If it is due to the strong SGD dollar, it is not exactly working. Although the effect …

Learning Through Reflecting

Lau — Wed, 30 Nov 2011 07:22:00 +0000

Was reading a book one day and this statement took me completely off guard, “you do not learn by going through an experience, you learn from reflecting on the experience!”

I felt that this was very meaningful as we can go through many experiences every day but we will learn little if we do not take some time to debrief and reflect on what we went through.

The debrief process also needs to be effective. So, objective questions need to be addressed:
1. What happened?
2. What worked, and why?
3. What did not work, and why?
4. What could have been done differently?

Firstly, it is to recall what happened.
Secondly, focus on how to recreate the success.
Thirdly, the mistakes to avoid.
Lastly, how to avoid those mistakes.

The process may seem very logical and simple. Many may even be thinking, “Like that only, who don’t know”?!

…

The Best Interest Rate This Xmas

Lau — Fri, 25 Nov 2011 03:29:00 +0000

Walked past a HSBC roadshow recently, and they were offering 0.9% p.a. interest on a SGD 3 month time deposit. That is way higher than most banks for such a short duration fixed deposit (FD). In addition, they are giving a limited edition HSBC NETS CashCard pre-loaded with up to $500.

Just a side track question, what in this world is not “limited edition”? Once something stops production, it is also “limited edition”, what realistically lasts forever in the physical world? Will this NETS CashCard be worth more in future?

Anyway, let’s get back to talk about the tangibles, like reading the * Important note and “up to”.

Well, I do not qualify for the Premier class, so I’ll stick to review the Advance class. It offers a 0.8% p.a. rate for the same SGD 3 month FD. It gives a $28 CashCard (reasonable to equate …

Gambling Trust

Lau — Fri, 18 Nov 2011 06:41:00 +0000

I read with amusement the recent news about the lady, who has a vegetarian hawker stall in Geylang, denied of her jackpot winnings at Marina Bay Sands (MBS). Two things aroused my interest.

One, MBS as a renowned casino operator did not want to pay! In an industry based on gambling trust, that is going to severely affect their business. Excuses given of faulty machines only made matters worse. In my opinion, it raises further questions, when was it detected and why were the machines still allowed to operate? They are in fact cheating customers to place bets that may never win! In addition to paying the lady her rightful winnings, they should refund every single customer who placed bets during that period of “machine fault”. It is no different from saying that if you lose, it is working correctly; if you win, something is wrong and we will not …

Best Card To Use

Lau — Mon, 14 Nov 2011 06:42:00 +0000

I am a strong supporter of the Standchart XtraSaver account. I have been using it for years.
- It gives cashback for NETs purchases
- It gives the cashback in the form of cash every single month with no minimum spend requirement
- It gives a high cashback on MasterCard rebate of 2% (if no petrol purchases and $6k average account balance)
- First cheque book free
- No yearly fee
- No income requirement

1. I do not know of any other card that has rewards/cash for NETs purchases.
2. No complicated reward points system and pages upon pages of t&c-s.
3. Some other cards may give 3% or higher but too many complicated requirements to fulfill.
4. I do not use a lot of cheques so I am fine, some banks charge $2 every month just to open cheques.
5. An annual fee seems to be newly introduced, …

Trading Psychology

Lau — Fri, 04 Nov 2011 15:46:00 +0000

This article may seem philosophical as I was listening to an interview with a successful trader recently and the topic was about trading the markets.

Naturally, the first question was how did he get so successful trading the markets?
In light humor fashion, he cheekily responded the question with a question, “Do you think it is because I am a financial guru that thoroughly understands the market inside out? What factors affects and influence at the macro and micro perspective?”

“Well, if you are expecting such a typical textbook answer, I must be is BS-ing you!”

He went on to explain that the only predictable thing about the market is that it is unpredictable. What is important is to focus on your interaction to this unpredictable animal, i.e. how do you perceive and react to the markets. Everything in this world is relative to the most important …

Watch Out For That Car Loan

Lau — Mon, 31 Oct 2011 09:23:00 +0000

A recent article showed that the average car loan size has risen to $85,000. And I am pretty sure property loan sizes are also on the rise due to higher prices. Not surprising, loan tenures are also increasing to the maximum allowable length. This represents that affordability is being stretched to the maximum. Though some may argue that it is due to low interest rates that it makes economical sense to maximize the loan, but there is good debt and there is bad debt. This loan is on a depreciating asset, it falls in the bad debt category.

When times are good, everything is rosy, it is easy to get complacent and take on debt bigger than one can chew just for that instant gratification. However, this is going to be a huge concern when a down turn occurs. Most will experience serious cash flow problems as these loans are …

Results And Beliefs

Lau — Mon, 24 Oct 2011 06:09:00 +0000

Recently was speaking to a top sales consultant and his views completely blew me away.

One main point that he explained was about results and belief. He said that too much emphasis is placed on past results. Our beliefs are often formed from results we have seen and experience. In sales, if we have been achieving an income of 2k monthly, we will think that we can only achieve incremental performance and not 20k next month. But look at Apple, it was never in the handphone business. It was taking on established giants like nokia and motorola who took 10 years, hundreds of phone models and refining phone features to build their positions. Apple wanted to do it in half the time, with only 1 phone model and a phone that has only 1 button! It would have been assumed to be insane then but look where they are today. …

Hot New Product Launched

Lau — Thu, 13 Oct 2011 01:41:00 +0000

Seems I am pretty backward when it comes to insurance products.

I was recently introduced to a new ILP plan from Company X. Some hype about it includes:
- 100% premium allocation (Most ILPs suffer allocation charge for first 3 years)
- No Bid-Offer spread (Normally a 5% spread which is like a sales charge)
- Wide range of fund available (Usually restricted to within company funds only)
- Bonus units of 10% on 1st year and more every 5 years
- Unlimited free fund switch
- Guaranteed issuance
- Death benefit of 105%
- Available to private high networth clients only

Does it sound too good to be true?

A quick Google found similar products already available since 2008, from Company Z and Company F.

How can the company pay for agent commission, give 100% allocation, no bid-offer spread, short tenure of 10 years and even give bonus units! …

Will Fund Distributors In Singapore Follow The Way of the DoDo?

CCL Fully Opens

Lau — Tue, 11 Oct 2011 01:01:00 +0000

8 Oct 2011 marks the day the Circle Line rail network reaches full operational status.

It also the first day of higher fares on buses and trains, on the average it is an additional 2 cents more per ride. From a usual 71 cents ride to 73 cents, an increase of 2.8%.

It also serves as a reminder that the line took 10 years to complete. It was initially target to open from 2006 and fully operational in 2010. However, the Nicoll Highway collapsed on 20 April 2004, which claimed 4 lives, caused the construction to be delayed. Their sacrifice contributed to the progress we now enjoy.

It also means properties within walking distance of the newly opened mrt stations enjoy immediate property appreciation. Congrats to those who boldly invested or held on since the announcement of the mrt construction plans. Although it has been factored in the pricing …

Drive Cautiously

Lau — Fri, 07 Oct 2011 07:06:00 +0000

Recently, I had a couple of friends involved in chain collison on the expressway on separate occasions. Within minutes, tow trucks from repair workshops who “happen to be in the neighborhood” appeared to offer their services, assisted to collect driver details and assured all claims will be processed according with eye witnesses.

This is not the first time hearing of such things happening and I believe there are some sharings of similar incidents online. These all seem very suspicious to me. How did these kind souls appear so instanteously to such a random event (random location and time) without any notification necessary.

It is a scary thought that unscruplous workshops suffering from a lack of business are so free that they start driving around to cause accidents to drum up business. After all, the payment (and hence profits) is done by inflating the claim through insurance.

What is extremely terrible, …

Interest Rates

Lau — Wed, 05 Oct 2011 06:33:00 +0000

The CPF Board has announced that the minimum floor rate of 4% in the Special, Medisave and Retirement Account (SMRA) will be extended by another year to Dec 2012.

From 2008, the SMRA rate was announced to be pegged to the 12-month average yield of the 10-year Singapore
Government Securities (10YSGS) plus 1%, subject to a floor rate of 2.5% per annum.

However, the government had kept a floor rate of 4% till the end of 2009 in order to help people cope with the transition. Subsequently, the government extended the 4% floor rate for year 2010 and once more for this year, 2011.

This time round will be the third extension for year 2012.

If they had not kept the extension for the 4th year running, the average yield of the 10YSGS plus 1%, from 1
September 2010 to 31 August 2011, works out to be 3.30%, …

Overwhelming Demand For HDB Units

Lau — Mon, 03 Oct 2011 01:13:00 +0000

I read reports about the overwhelming demand for sale of “leftover” HDB units with amusement.

The statistics is 18,428 applied for 2847 units, which is 6.5 times over subscribed. And of course as with all statistics, the results may be bias. Some clean up of studio and 2-room flats need to be removed to better reflect the numbers as these units are only available to the minority who fit the criteria to apply. Then it will be 17,355 applying for 2264, which is 7.7 times over subscribed. Certain hot locations 5 room units can see demand exceeding 20 times over subscription.

This over shadows the 9476 applications for the 5415 units for the concurrent Built To Order (BTO) project, which is less than 2 times over subscription. With the anticipated drop out rate, I believe all the applicants for this project can get a unit even if they …