Month: June 2020

A SIM only telco – GIGA (Part 1)

On By RistrettzIn New Ideas, Personal Finance SeriesLeave a comment

In the past, there used to be only 3 players in the telco market – Singtel, Starhub and M1. They sort of formed into a monopoly where 5.2 million people on the island will choose either of the 3 companies. All things change when Circles.life came into the picture and to be honest, it was such a game changer that almost instantaneously switched to them at the earliest time possible once my contract was up. Notably, Singtel has the best coverage in Singapore and underground but they were keen on only making profits for themselves.

The comparison

After some time, all three incumbent were forced to break off from their current model into a SIM only plan. This has been really great for consumers in particular as more competition means more competitively prices plans and better customer service. Of course, the incumbent truly matched the competition and eventually I switch out to GIGA, a SIM only plan from Starhub.

Benefits

The real benefits of going with GIGA means that for a basic plan,

a. S$18 for 20GB of data, 200 mins of outgoing calls, 200 SMS, free caller ID and free incoming calls and incoming SMS.

b. For unused data, you can carry over to the next month (Capped at 2x the base data – 20 GB x 2 = 40GB

c. No contract means, flexibility and freedom to cancel the contract anytime.

d. Signup is digital only – meaning you can only sign up online. You can use the GIGA app to access your account as well as setup your payments. They accept most major credit cards.

e. There isn’t any IDD so for for overseas usage. You would need to buy either gigaRoam (Asia Pacific) or gigaRoam (Rest of the world)

f. There is a small registration fee. You also need to arrange for the SIM card to be delivered to you. However, you can use a referral code to supplement the discount. You will get a one time $20 gigabucks off the 25GB plan or a one time $42 gigabucks off the 50GB plan. Use my referral code – “LhS9Ng”. The referral credit is only valid for any plans except the basic $10 GIGA plans.

Others

The downside of using GIGA is that you can’t surf the internet while on a call. (E.g. checking for emails or stuffs while on a call. However, if you have your WiFi switched on, it works perfectly) You can still receive OTP (One time Pin) while still on the call so that’s not too much of a worry.

Generally, I like the interface, colours and customer service support on GIGA. They even have a live chat function but you need to clear your cache regularly as it seems like it is stuck on my app most of the time. It is fuss-free and simply to use. I’ll say that they are trying hard to evolve and re-invent themselves. I don’t have too much faith with Singtel and GOMO so this is my next best choice.

GIGA just launched a 40GB data, 300 SMS, 300 outgoing calls at $20 for 12 months. It is still a no contract plan but that it reverts back to $30 a month from the 13th month onward.

From time to time, they will launch limited time offers like the one above. You can visit their website to find out more: https://www.giga.com.sg/

Disclaimer

If you like what I am sharing or if it resonates with you, do use my referral codes for other services at https://atomic-temporary-178675883.wpcomstaging.com/contact/

The pictures were taken from GIGA website for this article.

A SIM only telco – GIGA

On By RistrettzIn New Ideas, Personal Finance SeriesLeave a comment

In the past, there used to be only 3 players in the telco market – Singtel, Starhub and M1. They sort of formed into a monopoly where 5.2 million people on the island will choose either of the 3 companies. All things change when Circles.life came into the picture and to be honest, it was such a game changer that almost instantaneously switched to them at the earliest time possible once my contract was up. Notably, Singtel has the best coverage in Singapore and underground but they were keen on only making profits for themselves.

After some time, all three incumbent were forced to break off from their current model into a SIM only plan. This has been really great for consumers in particular as more competition means more competitively prices plans and better customer service. Of course, the incumbent truly matched the competition and eventually I switch out to GIGA, a SIM only plan from Starhub.

The real benefits of going with GIGA means that for a basic plan,

a. S$18 for 20GB of data, 200 mins of outgoing calls, 200 SMS, free caller ID and free incoming calls and incoming SMS.

b. For unused data, you can carry over to the next month (Capped at 2x the base data – 20 GB x 2 = 40GB

c. No contract means, flexibility and freedom to cancel the contract anytime.

d. Signup is digital only – meaning you can only sign up online and use an app to access your account as well as setup your payments. They accept most major credit cards.

e. There isn’t any IDD so for for overseas usage, you would need to buy either gigaRoam (Asia Pacific) or gigaRoam (Rest of the world)

f. You would need to pay a small registration fee and arrange for the SIM card to be delivered to your preferred location. However, you can use a referral code to supplement the discount. You will get a one time $20 gigabucks off the 25GB plan or a one time $42 gigabucks off the 50GB plan if you use my code – “LhS9Ng”. The referral credit is only valid for any plans except the basic $10 GIGA plans.

The downside of using GIGA is that you can’t surf the internet while on a call (for e.g. checking for emails or stuffs while on a call however if you have your WiFi switched on, it works perfectly) but you can still receive OTP (One time Pin) while still on the call so that’s not too much of a worry.

Generally, I like the interface, colours and customer service support on GIGA. They even have a live chat function but you need to clear your cache regularly as it seems like it is stuck on my app most of the time. It is fuss-free and simply to use. I’ll say that they are trying hard to evolve and re-invent themselves. I don’t have too much faith with Singtel and GOMO so this is my next best choice.

GIGA just launched a 40GB data, 300 SMS, 300 outgoing calls at $20 for 12 months. It is still a no contract plan, just that it reverts back to $30 a month from the 13th month onward.

From time to time, they will launch limited time offers like the one above. You can visit their website to find out more: https://www.giga.com.sg/

Image from Giga website.

A low cost Brokerage option? Tiger Brokers

On By RistrettzIn New Ideas, Personal Finance SeriesLeave a comment

In the last few years, we have seen quite a number of independent brokerage firms popping out of nowhere. The idea that their platform charges an extremely low brokerage fee seems to make us think about their sustainability and how they are make money to survive the long game.

Low Cost Brokerages

Well, for consumers and folks who are talking about low costs – such competition will only benefit retail consumers and I will definitely take them into consideration. Interesting enough, the backers of Tiger Brokers are a Chinese online security brokerage firm in Beijing founded in 2014. Their investors are Interactive Brokers Inc, Jim Rogers, ZhenFund and Xiaomi Inc. Tiger Brokerage is listed on Nasdaq under ticker: TIGR.

Tiger Brokers

In Singapore, Tiger Brokers is under their subsidiary, Tiger Brokers (Singapore). The biggest sell for them is their 0.08% fee on the share value with no minimum fee for equities on SGX. They also do not charge a custodian fee.

The on boarding process is pretty simple and easy. You can also use SingPass to ease the sign up process. For funding purposes, SGD transfers takes only an hour or so during the weekdays. I transferred some funds to the platform at around 7.30 pm and funds were approved at around 8.15 pm. At the same time, I also tried out their withdrawal process. It takes about 24 hours to receive the funds in the bank account. It could be due to a first time withdrawal but I shall try it out to find out more. One important point is to deposit and withdraw funds in the same name as the one you use to register for the platform otherwise there will definitely be delays.

An impressive in-depth study on Tiger Broker can be found on Seedly article here: https://blog.seedly.sg/tiger-brokers-review/ and one of the key points about custodian was discussed in the article.

Mentioned on one of their paragraph: “Unlike the other brokerages operating in Singapore, Tiger Brokers does not have a custodian license and has to rely on a third-party broker or bank.” It means that they use a third party custodian bank and specifically two other banks (ANZ and CIMB). It also means that you do not need to worry about Tiger Broker going default since banks are holding your securities and funds.

I think that they are a good platform to invest some funds in but definitely not your core or bulk of your funds.

TIGER Promotions

There are some promotions for new signups which doesn’t seem too shabby:

  • Free level 2 data on US or HK stocks for 30 days after registration
  • Commission-free for 1 order of US&HK stocks in 30 days after opening an account
  • Get up to $100 worth of stock vouchers when you deposit funds or transfer shares
  1. Fund account with SGD 2,000-5,000 to get Stock Voucher worth SGD 30
  2. Fund account with SGD 5,000-10,000 to get Stock Voucher worth SGD 50
  3. Fund account with SGD 10,000-30,000 to get Stock Voucher worth SGD 70
  4. Fund account with more than SGD 30,000 to get Stock Voucher worth SGD 100

Referrals

  • Get an additional $100 worth of stock vouchers when you refer friends
  1. Invite a total of 5 people to own SGD 10
  2. Invite a total of 9 people to own SGD 20
  3. Invite a total of 12 people to own SGD 30
  4. Invite a total of 15 people to own SGD 40
  5. Invite a total of 25 people to own SGD 100

If you find this as something interesting, please do use my referral code link here: https://www.tigersecurities.com/accounts?invite=S5LTM6

Here you can also find a funding guide from Tiger Brokers: https://youtu.be/AmgLNhDvA68

Disclaimer

If you like what I am sharing or if it resonates with you, do use my referral codes for other services at https://atomic-temporary-178675883.wpcomstaging.com/contact/

The pictures were taken from Tiger Brokerage website for this article.

Low or no interest? Where to park your funds?

On By RistrettzIn Interest Rates, New Ideas, Personal Finance Series1 Comment

Due to the current covid-19 pandemic, we have seen quite a change in the world’s economic situation. Central banks around the world have reduced interest rates to an extremely low level. In finance, or what we call an emergency fund – has to always be liquid. It is well known to keep 3 – 6 months of funds for a rainy day. As for the amount to keep, it really depends on everyone’s personal situation. I would say, it depends on how much you spend and how willing one will be able to adjust to change their lifestyle. Given the current situation, it may be better to keep up to 9 or 12 months of emergency funds. Again, it depends very much on every individual’s finance situation.

Reduction of interest in “High Yield”saving accounts

Recently, we have seen the banks reducing the interest rates of deposit accounts or “high yield” saving accounts. It is only a matter of time when everyone else will reduce that interest amount so it is important to always keep funds liquid. You will never know what happens so it is important to stick to the rules – Keep your liquid funds liquid. A couple of months back, I found an interesting channel to keep some funds for a pretty high yield of 2.5% pa.

Of course, there are plenty of choices out there to choose from but today we shall talk a little more about an “alternative” choice as compared to a bank. Let’s throw Fixed Deposits out of the equation as well as they are close nothing at this point in time.

Singlife

This is Singlife account. The interest of 2.5% p.a. is capped for the first $10,000 that you fund the account and the next $90,000 will be on 1.0% p.a. Any amount more than $100,000 will earn no interests thus this account will be suitable for anyone who wishes to keep a small sum of funds with Singlife and the hassle of having another account.

As indicated on their website, the Singlife Account is an insurance savings plan and it is neither a bank savings account nor fixed deposit. Each person is only entitled to one Singlife Account policy.) Singlife is also known as an Insurance Technology company that is licensed by MAS.

This is a really good channel to keep funds in however just take note that the 2.5% p.a. is not guaranteed and can be changed anytime. I think that this is fair given how flexible the funds can be taken out at will. In a most recent post, the news state that Singlife has raised 100 million funds in new AUM.

Pros

Below are some of the pointers that I felt is compelling enough to sign up for an account as the pros outweighs the cons at this moment and I am going to discuss more about why we should just get an account online:

First, Singlife is an insurance savings plan coupled with insurance and interest features. Fund placed with Singlife will be capital guaranteed so there will not be any hidden fees.

Second, you can earn up up to 2.5% p.a. for the first $10,000 with minimum funding of $500 to start earning this interest amount.

Third, there is insurance benefits – 105% of the account value and retrenchment benefits.

Fourth, the Singlife debit card is complementary and works like a normal debit card.

Fifth, No Lock-In. No contracts. Funds can be withdrawn anytime with no cost and minimum term.

Sixth, application is easy. Works only on an app and you can use SingPass to register easily.

Seven, funds are covered by SDIC so your funds are safe and protected for up to S$75k if there are any bank run on deposits.

In Summary, this can be a good tool for transition of better interest accounts or a medium terms solutions to parking your own funds.

Cons

There are not many bad points out there but to name a few and mainly only due to requirements and how cumbersome it can turn out to be.

First, they are relatively the new boys in town. In terms of branding and knowing who Singlife is needs to be worked on.

Second, since they are an alternative choice, traditional and conservative folks will just monitor or give it a pass

Third, the threshold of up to S$10k for 2.5%p.a. may not be appealing for some folks out there. 

Fourth, having yet another digital wallet or account is going to be slightly more cumbersome. Hence this might deter more sign ups.

The other choice is to go to Tiq or Dash Easy Earn. The interest option is slightly lower but you can’t avoid opening yet another account. 

Conclusion

The whole idea here is to share what are the different options and alternative available to park your funds. If this works for one person, it might not for the other. There isn’t a one size fits all solution but there are plenty of solutions out there. We just have to dig deeper and find out more about them. Then, we also question about the time spent to research and the effort to track different apps and accounts. It really depends on every individual. To some it might be creating more issues but to others, these solutions may be gems. 

I find that these solutions are a good option for the younger group of graduates and those who have just started to find employment. You have to start somewhere so this is one avenue to do so.

To find out more about Singlife, click here: Singlife Website

Disclaimer

This is not a sponsored post and purely my own opinion that I am writing about in my thoughts. If you like what you are seeing, do remember to check they out and do your diligence. Don’t be too fixated with what is the best.

If you like what I am sharing or if it resonates with you, do use my referral codes for other services and products here at https://atomic-temporary-178675883.wpcomstaging.com/contact/ for the services.

Images seen in this article were take off Singlife website for illustration purposes only.

Foray into CryptoCurrency – The MCO Card (Crypto.com)

On By RistrettzIn Alternative Investments, CryptocurrencyLeave a comment

Cryptocurrency

Invest in cryptocurrency! The first thing that comes to mind is that it is a scam or it is risky. It is not only after you take some time to find out more.

Getting someone to go into cryptocurrency can be challenging. When I first started, I was late to the game but the fees I paid were way much higher than what it is today. Today, I can see that the adoption crypto is slowing and steadily increasing and solutions are being provided to solve the problems in the real world. There are indeed real world situations that need solutions.

MCO/CRO Card

I have been with crypto.com (CRO) for almost 2 years now. (Updated:  3years now) Though I did not experience that huge dip in prices after it went as high as USD20+ (MCO) but what I have seen from them is absolutely amazing.

CRO coins are what define crypto.com (They were used to be called Monaco and MCO coins) and the fact that they managed to obtain the domain name says something great about them.

I would say the CRO coin is more of a hybrid crypto. You can get a real metal card depending on how much of the coins you buy. A real debit card that pays you instant cashback on anything you can pay with the card.

You can always opt for a “free card” and that gives you a 1% cashback on all transaction and it gets better.

Buying and staking 50 MCO coins will get you the Ruby card – 2% cashback

These staking requirement changes from time to time so do visit https://crypto.com/cards to find out more.

In summary:

Blue card – 1% cashback (No staking required)

Red card – 2% cashback (USD 400 equivalent)

Blue/Green card – 3% cashback (USD4,000 equivalent)

Icy White card – 4% cashback (USD40,000 equivalent)

Black card – 5% cashback (USD400,000 equivalent)

What I really like about this is not just the cash back. However you have to be comfortable to lock in at least 10000 CRO for an initial 6 months.

Pros:

1. I always want to buy cryptocurrency more fuss-free and easier. This platform makes it really easy

2. Funding from SGD does not incur any fees if you use xfers and follow their instructions diligently

3. 100% cashback in CRO coin for subscription to Spotify and Netflix (literally free – capped at the amount for blue and green card)

4. Unlimited access to loungekey (Airport lounge)

5. You can trade other crypto available on the app and their exchange

6. Certain coins have “earn” capabilities, meaning you get interest by staking it on the earn platform on the app.

Cons:

1. The price of CRO is around 0.25 SGD at time of writing. That’s double of what I initially got into but you never know when it will go higher or lower

2. You need to put in an initial investment to get all these benefits

3. You need to fund your debit card with cash first before using it.

Things may get complex from here if I add on more information. If you wish to know more, drop me a note and I can share more with you.

Meanwhile, if you use my link/referral code, you will get USD25 and I will get USD 25 worth of CRO.

All you need is to make a transaction and stake your CRO to get the debit card of your choice. That’s some cool amount of cash to start off with.

https://platinum.crypto.com/r/im3py887ty to sign up for Crypto.com and we both get $25 USD 🙂

Exchange Traded Funds (ETF) – Reits Version

On By RistrettzIn Personal Finance SeriesLeave a comment

The Singapore equity market is really slow to say and there are only a handful of reits ETFs that were launched previously (that was like 3 to 4 years ago). Quite a number of people were rather yield starved back then. With that bullish USD interest rate hike (Before Covid-19) it was almost a guarantee that this will happen.

I kind of blame the media for setting off such rumours. The central bank will never act on just pure speculation but rather more than data and in today’s world. There will be even more data that they can ever get. A big economy like the USA is something that most people watch. This trend has slowly diminished after successful propaganda by the emergence of the Chinese. Don’t get me wrong, it is kind of good that they are getting their act together. It is just that there’s much more skepticism more than ever since anything and everything can be fake. The Chinese just look at profits over anything.

Back to the point here. I was trying to look for yield related stuffs that could add on to the portfolio. When I did a quick filter away from reits, there isn’t much that is available on the SGX that is sizeable. (i.e. blue chip enough) To diversify that reits risk, I went into the details and tried to see if I could mimic the fund portfolio. As it turns out, it might be too much of a challenge.

Diversification

Diversity lies in the location: Singapore, Hongkong, China, Australia with the scope to add on more countries according to the fund manager. (Exposes some FX risks along with fees, fund management, platform fees)

Diversity in the types of holdings: Office, retails, industrial, others and more diversified real estates (Exposes to certain sectors that are cyclical in nature)

Lower fees as compared to a fund, as it is structured as an ETF (Exchange Traded Funds), it’s annual management fees are also lesser than usual. (Cheaper but more passively managed)

Yield: Approximately 4-5% p.a. Nett for all the trouble. Perhaps even using different brokers and also different FX rates. Believe it or not, institutions get a better Forex rate just because they have the size to do so and sometimes. The fees on the allocation can be rather cheaper than a retail customer. It’s pretty much how you value it. Some people prefer total control, counting the pennies. (every cents counts) Some prefer to delegate via a fee based model.

Reits ETF

NIKKO AM – Straits Trading Asia Ex Japan ETF (Check that out here: Nikko AM reits ETF)

Philips SGX APAC dividend Leaders reit ETF (Check that one here: Poems reits ETF)

Both are much similar in context just that with Philips, the majority holdings will be Australian reits (about 60%) while Nikko AM will be the majority with Singapore reits (about 60%).

Always do your due diligence, after all everyone has different risk levels. There are always other options. ETFs are just one of the many tools.

Bond/Debt

On By RistrettzIn Interest Rates, Personal Finance SeriesLeave a comment

For an extended period now, the Marine, Oil & Gas industry is going through trying times for some time now. Going forward, it is going to be difficult to say what is next for them and many other industries

We know that bad times don’t last so are the bankers/relationship managers just out there to sell investment products for their own benefit? During good market cycles, when the company books are looking great, bonds are being issues to help provide the working capital for these companies. The moment the cash-flow stops, the banks stop lending or restructuring. Quite a tough and sad moment though.

Bond/Debt

I discussed about bonds/debts a few posts back and talked about public/private financing in the capital markets. What most companies did was to find some banks to finance their working capital with contracts and assumption of a stable cash flow and they would pay off interest to bondholders over a period of time. What the lead banks provided are in turn offered out to retail/institutional/HNWI to take on a portion of the bond. Most of the time, financing is offered in terms of Loanable Value.

An Example

Let’s use this example: I buy Bond S.Limited on point of purchase for the initial offering at Par Price (100.00). The bank who syndicate this capital raising and offer a portion to other parties so as to diversify the risk. When “Sophisticated” investors take on these investments I offer a 60% Loanable value.

It means that for every $1 worth of S.Limited bonds. The bank will be willing to finance you $0.60. All you need is $0.40 worth of cash. On each reinvestment amount, you get another 60% in loanable term.

a. When the real problem surface

When S.Limited announces that they may have issues repaying bondholders, then the same banks who finances the bond syndication would deemed these investments as not so valuable now and decides to tell you that you can’t lend anymore from the $0.60 previously as what they have valued the investment at so you have to make back the full amount in a few days’ time.

b. The real liquidity and Loanable value changes dynamically

I would think that this is as good as lenders telling the company that they will stop lending. To raise $0.60 from elsewhere isn’t really a problem for most people but how about $600,000 or $6,000,000 which I really doubt many of us have that kind of cash waiting around somewhere.

Sample Illustration

Mathematically,  it can be easily understood. (Not really isn’t it looking at this complicated piece of calculation table) This is basically a long form of maximising the full loanable amount and then re-investing them back into the same investments and over again:

Name of Security Cash for Investment Loanable Value Loan Amount Cash Used Balanced Cash Value of Portfolio (Nett of Loans)
S.Limited 6.00% 2025 1,000,000.00S$ 60% 600,000.00S$ 400,000.00S$ 600,000.00S$ 1,000,000.00S$
  600,000.00S$ 60% 360,000.00S$ 240,000.00S$ 360,000.00S$ 1,000,000.00S$
  360,000.00S$ 60% 216,000.00S$ 144,000.00S$ 216,000.00S$ 1,000,000.00S$
  216,000.00S$ 60% 129,600.00S$ 86,400.00S$ 129,600.00S$ 1,000,000.00S$
  129,600.00S$ 60% 77,760.00S$ 51,840.00S$ 77,760.00S$ 1,000,000.00S$
  77,760.00S$ 60% 46,656.00S$ 31,104.00S$ 46,656.00S$ 1,000,000.00S$
  46,656.00S$ 60% 27,993.60S$ 18,662.40S$ 27,993.60S$ 1,000,000.00S$
  27,993.60S$ 60% 16,796.16S$ 11,197.44S$ 16,796.16S$ 1,000,000.00S$
  16,796.16S$ 60% 10,077.70S$ 6,718.46S$ 10,077.70S$ 1,000,000.00S$
  10,077.70S$ 60% 6,046.62S$ 4,031.08S$ 6,046.62S$ 1,000,000.00S$
  6,046.62S$ 60% 3,627.97S$ 2,418.65S$ 3,627.97S$ 1,000,000.00S$
  3,627.97S$ 60% 2,176.78S$ 1,451.19S$ 2,176.78S$ 1,000,000.00S$
  2,176.78S$ 60% 1,306.07S$ 870.71S$ 1,306.07S$ 1,000,000.00S$
  1,306.07S$ 60% 783.64S$ 522.43S$ 783.64S$ 1,000,000.00S$
  783.64S$ 60% 470.18S$ 313.46S$ 470.18S$ 1,000,000.00S$
  470.18S$ 60% 282.11S$ 188.07S$ 282.11S$ 1,000,000.00S$
  282.11S$ 60% 169.27S$ 112.84S$ 169.27S$ 1,000,000.00S$
  169.27S$ 60% 101.56S$ 67.71S$ 101.56S$ 1,000,000.00S$
  101.56S$ 60% 60.94S$ 40.62S$ 60.94S$ 1,000,000.00S$
  60.94S$ 60% 36.56S$ 24.37S$ 36.56S$ 1,000,000.00S$
  36.56S$ 60% 21.94S$ 14.62S$ 21.94S$ 1,000,000.00S$
  21.94S$ 60% 13.16S$ 8.77S$ 13.16S$ 1,000,000.00S$
  13.16S$ 60% 7.90S$ 5.26S$ 7.90S$ 1,000,000.00S$
  7.90S$ 60% 4.74S$ 3.16S$ 4.74S$ 1,000,000.00S$
  4.74S$ 60% 2.84S$ 1.90S$ 2.84S$ 1,000,000.00S$
  2.84S$ 60% 1.71S$ 1.14S$ 1.71S$ 1,000,000.00S$
  1.71S$ 60% 1.02S$ 0.68S$ 1.02S$ 1,000,000.00S$
  1.02S$ 60% 0.61S$ 0.41S$ 0.61S$ 1,000,000.00S$
  0.61S$ 60% 0.37S$ 0.25S$ 0.37S$ 1,000,000.00S$
  0.37S$ 60% 0.22S$ 0.15S$ 0.22S$ 1,000,000.00S$
  0.22S$ 60% 0.13S$ 0.09S$ 0.13S$ 1,000,000.00S$
  0.13S$ 60% 0.08S$ 0.05S$ 0.08S$ 1,000,000.00S$
  0.08S$ 60% 0.05S$ 0.03S$ 0.05S$ 1,000,000.00S$
  0.05S$ 60% 0.03S$ 0.02S$ 0.03S$ 1,000,000.00S$
  0.03S$ 60% 0.02S$ 0.01S$ 0.02S$ 1,000,000.00S$
  0.02S$ 60% 0.01xS$ 0.01S$ 0.01xS$ 1,000,000.00S$
  2,499,999.97S$          

Total Amount / (1-Loanable value) = $1,000,000 / (1-60%) = $2,500,000

With $1, the bank can loan you up to $2.50 presumably that you reinvest them into the same bond.  Total investments become $3.50 (e.g. Nett of loans, $3.5 – $2.5 = $1). The Nett portfolio value still remains the same but that comes with plenty of risks:

1. You leave no buffer for any mark to market movement
2. You become concentrated into one single asset class and one company
3. Loans means you have to service the interests on a regular basis so with increase in interest rates, that brings your return lesser though you have taken more risks
4. In times of liquidity and crisis, most likely you will not be able to sell your holdings as fast
5. When you hit a margin call, you most likely have to top-up your cash balances as soon as possible or that would become a sell-out eventually at the current price.

On the flip side,

1. You maximize fully what leverage can bring you.
2. Yield is increased because of the leverage factor.
3. Returns will eventually increase with a higher risk taken.

What is your investment profile?

Again, it brings us back to basics again. That high risk taker with a long horizon? The conservative investor that is skeptical? I am not surprised that there are high risk takers who doesn’t mind this scheme. Then again, if you know the risks you are taking then take it like a man.

I’ve met and known people who are so egoist about their aggressive investments ideas. When shit his the fence, they do point the finger on others. Unfortunately, they know the risks that comes with. When it comes to money, humans behave differently.

Increasing Debt

There are businesses who keeps increasing their loan size at every maturity. When you look at the cash flow, they are paying out more than 100% from what they make. It is similar to spending more money than what you make. In this aspect, it seems like the company wanted to:

1. Keep investors happy that they are receiving the dividends
2. Ensure that their stock price on the exchange stays stable
3. Waiting out for the bad cycle to ride through and business to pick up again.

Extending Debt result

1. The money paid out have to be taken from somewhere and most of the time it is from a bond and restructured many times most likely
2. Anyone who digs deeper into the company details will know the state of their company
3. The cycle may not ever recover for the company to be relevant anymore

It is important to be thrifty and know how much you can afford to spend. Does looking rich or being rich matter more to you?

The need for an Emergency Fund?

On By RistrettzIn Personal Finance SeriesLeave a comment

Emergency Fund

I discussed with many others about the need for an emergency fund, the purpose of an emergency fund and the reason for an emergency fund. I can’t say more that I am a pro-believer of an emergency fund. The naysayers are out there thinking about the every single penny that is without a higher interest cost. Everyone is programmed differently and we react differently in the response of what we termed as a “decision”.

Situation

With the Covid-19 situation, I do not think that the previous requirements apply now. Taking reference in the medium Singaporean salary on MOM stats in 2019. (~SGD 4,563) A really safe bet is no longer the 6 – 9 months of emergency funds but 12 – 18 months of safety net. Each and every individual is different, as we also adapt to situations quite adequately.

How much one’s emergency fund really depends, a fresh graduate. (For example who make three grand a month) One may not have much disposable income after netting off parents’ allowances, school loan if any and daily expenses. A typical planner would say probably three to six months worth of cash fund to tide through any sudden surge in expenses. I’ll say that is rather quite a decent sum to begin with. How then should the emergency funds look like for someone who is in his 30s, 40s and 50s? A $9k emergency fund ten years down the road does not reflect an emergency fund 20 years down the road. People change, society change, lives change and money value changes certainly.

I can’t speak for everyone but I do see that almost everyone’s spending pattern increases when they get a promotion, get married, buying a house, buying a car, having children, family members becomes sick, friends who are retrenched, friends who fall into financial debt and many more. We are not the person we were at ten years old so neither will we be at twenty years old.

Naysayers

Against others who says there isn’t a need for such funds. Perhaps the only uncertain thing in life is to know that no one ever knows what. When shit hits the fence, it will hit us hard and fast. It is probably then too late to realise so. If there isn’t a need or purpose to think of that in such a manner,. At least think of it as paying/investing in yourself first before other things.

Perhaps we should so away with the thought of “Spend first save the rest or Save first and spend the rest” There isn’t really a one size fit all theory. Afterall, how many of us are blessed to have people taking care of our education, exposures, overseas trips, trend and fashion purchases when we were still young and not understand the meaning behind financial planning.

The use for emergency fund

Perhaps there is that profession certificate that you are aiming for. Some even to build those first $100K before age 30 or 25. Even before you dwell into that, put that emergency funds aside. There will be a time where there will be a use for it. It could prove to be extremely useful when the time comes. We have seen this in the most recent budget release. Our country’s reserves are being utilised to tide through this unprecedented period of distress.

I often hear folks who tells me bonds, equities, funds are liquid. They can easily get funds out when they need them. I’ll probably say no because emergency funds are defined as such. You got to understand the reason why it is called that. The level of ease has to be as liquid as cash on hand. One can argue that cash in bank and at most in Fixed Deposits is the alternative.

Liquidity in investments

Bond price, equity prices, fund prices will rise and fall. During recession, the true sellers outweighs all buyers. There is a false sense of security on the understanding of liquidity. In times where there is immediate use of the cash on hand. Emergency funds gives that comfort and security. In doing so and I find there there is no better way at this moment. Unless there are disruptions that change the way in the future.

Blockchains and a Fourth Industrial Revolution

On By RistrettzIn Macroeconomic, Personal Finance SeriesLeave a comment

We hear a lot about FinTech funding and block chain technology. Along with Bitcoin, Ethereum or even new funding coins as an alternative way implemented into bank payment systems over the last 3 to 4 years. This is ruling the world today.

It is rather difficult to bring across this concept and idea as it works better in demonstration as compared to talk about it.

What is FinTech?

It is mainly disruptive technology that has the capabilities to replace financial services. It can be in the form of cheaper way or a more convenient way. At the same time, it will proof to be more efficient and safer too.

Just to get yourselves interested on the concept of block chains, do watch this quick video: BLOCKCHAINS

I really like to see, read and hear about Bitcoins in which they are a small subset of the bigger ecosystem and this is a good introduction to start with: BITCOIN

Such block chains systems should be a secure channel as a third party using bitcoin as part of the transaction which in turn can be redeemed back into the real currency thus creating a market and a natural one in doing so.

The World Economic Forum 2016 early this year in Davos discussed deeply into the trends and how the world is moving into. In summary, it could possibly be the fourth industrial revolution.

Revolutions are a result of significant changes that destabilizes and question the status quo. Eventually, it pushes change through over time.  The first revolution might bring about a new form of problems coming many centuries into the future. (Such as air pollution, breaking the ecosystems, genetics and food production techniques just to name a few)

Source: WEF

Changes

Significant changes brings about many issues such as loss of jobs/income. The non-necessary skills required previously and to reduce amount of time and effort required to get things done. Eventually, new skills and new jobs will eventually be created thus it is important to stay relevant. The loyalty that one pledge to the company are no longer viable. Companies are also faced with the same task of returning ROI on every dollar of shareholders’ money and that in my opinion is vested interests.

a. IOT – Internet of Things

The big subset of block chains in my view is Big Data. That is IOT, Internet of Things combined. With many many different concepts to build a computer server that can maintain and sustain all of this. Many of us know this and that is Cloud computing. In time to come, Superhuman computers may be developed into cybersecurity into a whole new level. (e.g. AI, Artificial Intelligence)

I would believe that Amazon and IBM resources would have the capabilities to bank on such new technology. I do see a lot of the practicality developing into China. A lot of these are going on aggressively but the level of secrecy and confidentiality still plays such a big role as a former communist country. My guess is that China will bring blockchains to a whole new level all together and that would be a footprint into the new world technology.

b. Alternative Financial Solutions

Financial Institutions are not tapping greatly on FinTech to date. Take a look at Nokia today. Sometimes it makes us think about embracing change before it is too late. The Financial services are also part of a new form of Robo-Advisors. This is another form of artificial intelligence. From here on, related services are going to be transformed into a new level all together.

The change is here and FinTech and Bitcoins are also an alternative way of investing. That would add on to the list of asset allocation in the previous posts. There are plenty of alternative asset classes. Don’t fall prey to unreal ones so always do your DUE DILIGENCE (DD).

Only Steve Jobs believed in the future of smart phones and tablets before it came here today.

“If at first, the idea is not absurd, then there is no hope for it.” – Albert Einstein

The Dynamic World and our Struggles

On By RistrettzIn MacroeconomicLeave a comment

This can be a bit deep to ponder but with the global pandemic situation, this fourth industrial revolution is probably already in progress.

Macroeconomics

One of the most interesting Macro aspect of the world today and what lies in it for the future on the fourth industrial revolution. This is something that caught my attention as well as made me ponder for a long while then it started to interests me and on a wider perspective, country and globally that is, a topic that is known to all, unknown to many. Why is that so? We probably look to trends in the world today and we know the problems and issues we face while having no answers to all of this at all.

The first 3 industrial revolution talked about the importance and worries of the Labour force as a concept.


1. The first revolution: 1784 invention of the mechanical production and steam power energy.
2. The second revolution: 1870 the invention of mass production and electrical energy
3. The third revolution: 1969 the invention of electronics and IT
4. The fourth revolution: Today? Artificial Intelligence and Big Data? Or something else?


What do they have in common?

That is Automation and Connectivity as proclaimed by Nicholas Davis, the world economic forum Head of Society and Innovation.

Perhaps there should even be a 5th point. The Covid-19 pandemic that digitalise businesses that were putting these options off because of other priorities. Unemployment and redundancy will accelerate and bring about a whole new different way in which we are about to work or to say work from home. These cause and effects, resulting in commercial and office rents demand dropping will lead to other dominos.

Firstly


The first and utmost reaction to structural change is always a fear for job security. Similar to the 1970s, the fear for replacement by computers over current fear over replacement by robots is nothing new but in vary in existence in various forms. Certain Jobs will be lost and many others will also be created so a successful economy is likely to match 4 criteria:


1. Labour market flexibility

2. High skills in the attribute of flexible skills

3. Flexible infrastructure

4. A robust Legal system


The Labour market is one that empowers a lot to substitutes for every country. Whether a particular job results in an inefficiency towards the introduction of technology or a job preservation at the expense of currently inefficiency level, that may ultimately result in the non-existent of jobs in the later part of the revolution which have been the key issues into the third revolution.

Secondly


Skills factor is an subjective matter. In short, a more skilled worker will thrive and eventually earn more in income than a less skilled worker but that being said does not work all the time in all aspects and in all economies. Teaching, self-learning and flexibility to adapt to work trends is crucial to an every evolving revolution of technology.

Thirdly


An industrial revolution is about changing economics structures. Many of these capital intensive infrastructure has been built, developed and enhanced over the longer term and some of these may deemed obsolete. Brick and mortar shops have been significantly reduced since the introduction of internet which pave ways towards e-commerce which is currently a partial result of a complementary support of smart technology, digital connectivity and a more than efficient network.

Fourth


As the economy moves towards a more virtual world, “trade” is likely to become in the form of intellectual property rather than a physical product. Legal protection and legal issues will be the main source of contact point to protect, secure and patent a particular idea or product in order to obtain exclusivity over a virtual world in that sense.


Another point to note would be the power of brand, a quality assurance towards a particular brand that could come in the form of a service/quality or even assurance may be able to enhance the brand power. The opposite also holds for brands that faces competition, margins and quality control or even a layered middle-man system can be greatly reduced in the face of the revolution.


Very likely, we would be very used to seeing powerhouses or Goliath as we know. There will also be another group who have the resources to the revoluionise. This provides a transition phase of moving into a new economy or as we know it, new world. Developed nations, emerging markets look likely to benefit from such a drastic change and the next generation of technology and age will be something different from the hard working baby boomers.


Who benefits from the industrial revolution?  

Like many other things we do in life, It’s never a one size fits all concept. We have to keep on learning because that is the way to stay relevant. Do not stop to innovate and make the necessary changes. Shit happens but being uncomfortable makes us regularly improve and be creative. Imagine a situation when we sit and wait for things to happen, more often things doesn’t happen. Similar to a kind deed, the small acts of kindness usually leads a long way. We never know what might be in store for us.


So I say, keep the faith and keep on thriving in uncomfortable and uneasy situations. Sometimes, it is the comfort that stops us from moving forward.