Series 1: Starting your Cryptocurrency journey with Crypto.com

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Crypto.com (CRO mainnet & https://crypto.com) has been around for some time now. I have not seen any utility crypto company who has delivered what they want to deliver to consumers over the last few years. They are as similar if not the same as any other company with a physical product that works. While I have my concerns, I do feel that they offer a little bit of everything which new users can learn about and existing users can complement with their existing knowledge.

Cryptocurrency

To a certain extent, sometimes just jumping on the bandwagon allows one to commit and understand how the crypto world works. Once you have committed some money, one will take the effort to find out more and discover the traits of the crypto world and what it entails. Crypto is a highly aggressive alternative investment and everyone should be careful. This article just talks more about what I feel so do your own diligence before jumping onto something.

Meanwhile, given that Binance International is going through some regulatory and compliance issues in Singapore. Crypto.com is a good way to explore your options. To explain further about the perks on opening a crypto.com account:

Sign-up promo (SGD100 + NFT) & USD25 Referral promo

 
By signing up, you will get SGD 100 and an exclusive NFT. Of course, you would need to be the first 100,o00 users to do so. To find out more read here: Mid-Autumn Crypto.com Promotion
 
Plus, I’d get my very first NFT “Lion Mooncake”. Curious to know how it looks like!
 
To maximise your rewards, you can choose to stake SGD $500 CRO so that I can unlock the referral bonus of US$25 (Referral Bonus)
 
To redeem NFT, you will need to sign up the NFT account that Crypto.com has at Crypto.com NFT Account
How to connect your Crypto.com/NFT and Crypto.com App accounts (Taken from their website):
    1. Sign in or create an account on Crypto.com/NFT.
    2. Go to Account Activity and select Connect to App.
    3. Enter the email address that’s associated with your Crypto.com App account and send a connection request to your inbox.
    4. Open the authorisation email, click Connect, enter your Crypto.com App passcode, and click Authorise & launch NFT.
If you would like to give Crypto.com a try do remember to use my referral code: 1JIC-91CM

Crypto.com Eco-system

 

I understand that by now, most would be a little confused with so many accounts. What Crypto.com can do is a lot of stuff. Listing it down and in summary:
 
a. https://crypto.com – This is their main app which allows you to swap cryptocurrency and also to setup your Metal VISA card. The Visa Card gives you the perks of cashback and using CRO to pay for specific vouchers (Special cashback discounts as well) – [APP only]
 
b. https://crypto.com/exchange – This is the trading account which allow you to set limits and trade with other pairs that they allow on the exchange (You can treat this as a brokerage account. The perks of opening the exchange account can be found here: Exchange Perks [Website & APP]
 
c. https://crypto.com/NFT – This is the marketplace for NFTs and also known as non-fungible Token. This is also what many know as digital art. [Website & APP]
 
d. https://crypto.com/defi-wallet – With the Crypto.com DeFi Wallet (a non-custodial wallet), you can send crypto to anyone around the world at your preferred confirmation speed and the network fee. With this you can also store and earn interest Crypto.com DeFi Wallet is a decentralized wallet, which means you own your private keys. During wallet creation, you will have to write down your recovery phrase which when needed, you will be able to restore your funds. (This is very important)
 
From here you can have the option to choose among the whitelisted validators for staking and redelegation (change delegation from existing validator to another validator). This will give you additional interest. Read more about it here: Defi-Wallet Earn

Some simple benefits for sign up

1. Supercharger

Other than putting approved coins to earn interest on the APP. You can also join in the syndication on the Exchange or the Supercharger event on the Crypto.com APP itself. You can stake your CRO and treat it as a way to farm for other coins that crypto.com has a promotion or link with. More information can be found here: Supercharger Event.

2. Metal Card Cashback

 
The Metal Card Cashback works like a credit card cashback account. The only thing that functions differently is that it is a debit card. You will need to pre-load it with cash before transacting with spends. Like any other card, they have to abide by MAS PSA. The card also credits cashback based on the MCC spends. More details can be found here: Cashback eligibility under their CRO cashback rewards program
 
Not to mention that if you take on the higher tier cards, you can get rebates for Spotify, Netflix and ever prime plus other perks which can be found here at https://crypto.com/sg/cards

3. Additional Promotion and Discounts

More perks and discount will be added over time and the updated ones until 30 Sep 2021 can be found here at User Exclusives and Promotions. If you have any queries, drop me a note and I will try my best to answer your questions. It can be daunting at first but eventually, you will get a hang of it.

Disclaimer

This is not a sponsored post. This is purely my own opinion after using their service and/or products. If you like what you are seeing, do remember to check they out and do your diligence. There is no one size fits all investment strategy. If you would like to give Crypto.com a try do remember to use my referral code: 1JIC-91CM

Now, if what I am sharing does resonates with you, do use my referral codes here at Referral and Recommendations

If you like what I am sharing or if it resonates with you, do use my referral codes for other services at https://lifejourney.blog/contact/

The pictures were taken from Crypto.com website for this article.

 

Singlife Reopens with new Marketing Strategy

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I like how Singlife uses the community to spread information. It is definitely a cheap way to spend money. It gives me content to publish while it provides Singlife with multiple arms to disseminate information. However, there isn’t any referral scheme with this re-open. Instead, I guess that to stay sustainable, they have to reduce the interest rates for the first S$10k.

I received the email from their Marketing Communications team and it reads:

The Central Banks continue to keep interest rates low, Singlife has introduced a new way to be rewarded for spending and investing, earning up to 2.0% p.a. return on the first S$10,000 through the following campaigns:

  • The Save, Spend, Earn Campaign and,

  • The Grow 0.5% p.a. Bonus Return Campaign.

The catch here is up to 2.0% p.a. return. Beginning 1 July 2021, the Singlife Account will offer up to 2.0% p.a. return on the first S$10,000. The base crediting rates will be revised to 1.0% p.a. on the first S$10,000 and 0.5% p.a. return on the next S$90,000, customers will still have the opportunity to enjoy up to 1.0% p.a. bonus return.

So, sustainability of the business is a way forward. I’ll say that the interest rate has been semi-nerfed for valid reasons. On top of that, you can still gain 0.5% more by spending and another 0.5% if you invest with GROW. Personally, I wouldn’t put money with GROW but I will spend to make the interest up to 1.5% for the first S$10k.

Disclaimer

This is not a sponsored post. This is purely my own opinion. If you like what you are seeing, do remember to check they out and do your diligence. There is no one size fits all investment strategy.

If you like what I am sharing or if it resonates with you, do use my referral codes here at Referral and Recommendations

In this article, the pictures were taken from websites for illustration only. Stay Safe!

Where to Stash (Dash) your cash and Grow Money (EasyEarn)

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Stashing Your Cash

In my earlier posts, I talked about the need for an emergency fund and other than Singlife, which caps the 2.5% p.a. for the first S$10k. No other financial institutions have been able to match this super high interest yield for a pretty risk free approach .(Given that Singlife is under SDIC so the first S$75k is covered and safe) In recent months, we have seen some insurtech or alternative ways to put your money and entice people with relatively decent interest rates for your cash/emergency funds.

Emergency Funds

To recap, your emergency funds should have some level of liquidity so that you can utilise when necessary and not be penalised for doing so. This is by far my personal first rule. It is extremely interesting and exciting to see what might happen to the digital banking sector where there is a mixed bag of consortium lining up to be licensed to offer financial services. It looks like it is going to be something similar to what these insurtech is offering or even more innovation. (e.g. bundled products, higher interest rates or even offering curated financial products, robo-advisors and payment channels) It does seems exciting to see what new innovation these services can offer and retail customers will benefit from this digital drive.

Dash EasyEarn

Dash Easy Earn is a collaborative work between Dash (Singtel payment service) and Easy Earn (Tiq – An Insurance arm of Etiqa and a subsidiary of Maybank)

Let’s go for the Pros first:

a. Flexible no lock-in period hence no penalties for cancelling the plan.

b. First year interest rates stands at 2% p.a. (So this part is locked in and low interest rate environment is set to stay)

c. Relatively low barrier to entry. With S$2k minimally as maintenance amount that you keep, you get the interest accrued on a daily basis.

d. Capital Guaranteed.

e. Interest earned can be transfer to Dash Payment Service with no extra charge and they have a suite of deals and payments which you can use to pay your bills with. There is a $2 cashback for your first Singtel Dash transaction! Sign up with the referral code DASH-RYJKN or tap on this link https://appserver.dash.com.sg:443/mgm?DASH-RYJKN now

f. You can top up anytime to this account.

g. 105% of the account value is the sum assured should something happen to you.

Now for the Cons:

a. You need to download and register for yet another app. This is the Singtel Dash App. I mean, I really hate Singtel but I will not say no to free money.

b. You have to remember to maintain at lease S$2k in the EasyEarn Account.

c. 2% p.a. only applies for the first year and I believe that it will drop to 1.5 % p.a. thereafter. (From the terms and conditions: *Guaranteed 1.5% p.a. + 0.5% p.a. bonus for first policy year, available on a first come, first served basis) – Seems like there is sort of a cap to this.

d. There is a maximum amount to this. Once you have Topped Up to S$20k, that is the cap for every individual account. So there is this element of troublesome to remember and track for a 2% p.a. but if it suits you, then by all means go ahead.

e. Here is the key part to this which you will not hear it from Dash themselves. For any transaction that you transfer out via PayNow back to your own transact or savings account, there is a payment fee of S$0.70 per transaction. This is free if you transfer to Dash payment as described above for Pros point (e).

Seriously

To some, the S$0.01 is money which they refuse to let go of but to others, not so much of a great deal. Don’t be penny wise pound foolish or you will never see the bigger picture. You will not gain anything by spending time and energy on pinching 1 cent. I personally know 8 out of 10 people does it and it annoys the hell out of me. If you have time to pinch 1 cent, I would rather you take that time to find ways to make $10 instead of ruining your own mood, wasting your time and fussing over the small things. I don’t get it and I still don’t today.

The User Interface

Here is how the screen looks like on the Dash EasyEarn App. You can see the Grow Money (New) in the Dash App which you can access and see your funds and interest. Do note that the interest are not accumulative though so it means that whatever you have in excess of S$20k earns no interest.

When you log in to EasyEarn, that is how the app looks like below.

Conclusion

Before I end off, I saw an interesting product which is on similar terms as Dash EasyEarn. They are from Tiq Insurance – meaning GIGANTIA but this works in their own Tiq App. (First year 1% + 1% p.a.) I’m not too sure why they have something similar to Dash EasyEarn. There can be a variety of reason. It could be that they have extra tranche of funds to offer customers or it could be that this is a longevity version of their product as compared to having inflexible Dash systems. I would explore Tiq option as well but let’s see what kind of proposition it makes to consumers.

If you like what I am sharing, do use my referral codes here at https://lifejourney.blog/contact/

Disclaimer

This is not a sponsored post. This is just a tool and exploration to find out cash solutions, interest rates as well as a market survey. It is never too much to learn and know more about.

This picture image was taken off Singtel Dash and EasyEarn for illustration purpose only.

 

Crypto.com (MCO swap to CRO)

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Crypto.com (MCO) has been around for almost 4 years now. I have not seen any utility crypto company who has delivered what they want to deliver to consumers over the last 4 years. They are as similar if not the same as any other company with a physical product that works.

Crypto.com

My first serious foray into crypto was the MCO card introduced by a friend of my. The great deal initially was a referral fee of USD 50 for both referrer and referee. Then comes the Spotify, Netflix and free airport access (via Lounge key – Not so much now but still it is okay) all these comes in at 100% cash-backed to the card via the utility token (Used to be MCO but now it is swapped into the CRO)

For many users, especially the pioneers or even global users who have been approved in their countries to issued MCO Visa cards (Debit card), it is certainly not what was listed in the white paper but hey, it is a pretty good move in my opinion and while the Wirecard Fiasco is still ongoing, I think it is a win-win for all Crypto.com users. Some users think otherwise but I find that this is an option once more to think bigger profits which a 10x margin might be possible. Of course crypto comes with risks. It is a big risk but it should also return big as well.

The community has been negative for such changes. I guess there is no right and wrong answer to it. I still choose to believe that is moving in the right direction for customers as well as sustainability. So in all that, I will still hold and wait on for more good news on their end. The CRO staked amount has also been adjusted lower which means more good news and more CRO released for usage.

The Swap Value

There’s the alert and actionable items: Action is required before 2 Nov 2020 at 23:59 UTC, or you will lose the functionality currently associated with your MCO. We will not perform the MCO swap on your behalf and the swap will not happen automatically.

Crypto.com will use the following formula based on the volume weighted average price as expressed in United States dollars (“VWAP”)to determine the number of CRO allocated to you that reflects each swapped MCO:

1 MCO = (30-day VWAP of MCO / 30-day VWAP of CRO) x 1 CRO

(30 days between 4 Jul 2020 to 2 Aug 2020, both dates inclusive)

So it will be fixed at 1 MCO = 27.4639 CRO

Crypto.com will offer an Early Swap Bonus in CRO if the MCO swap is performed before 2 Sep 2020 23:59 UTC, based on the following formula and criteria: So Swap early for

1 MCO = 33.1726 CRO

The pros is now that the stake and interest has now increased as CRO terms are on better rates. Development of De-fi is on its way. More flexibility in terms of usage and managing the tokens. Benefits are better now for existing customers.

The cons would be the way they initially managed and wrote on the white paper. This definitely lost some points as well as how MCO was originally the golden boy which has turned obsolete now.

All Benefits remains the same and on the same tier. Not bad I supposed, just that the quantity of CRO is now much more than before. I don’t think that’s a big deal. The whole idea is adoption, more utility and more users. It spells 10x to me more. Just be patient.

Disclaimer

If you like what I am sharing or if it resonates with you, do use my referral codes for other services at https://lifejourney.blog/contact/

The pictures were taken from Crypto.com website for this article.

New Referral Scheme from Singlife

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This is really a great piece of marketing work from Singlife. Though late into the referral game, this is some good way to get and garner new acquisitions. It is well known that Singaporeans are pretty starved for yields. This insurtech firm is one that I have wrote about recently and it is a good product.

(Updates 1 Nov 2020): I received an email from Singlife communications – As a heads up, Singlife Paid Referral Programme will come to a close on 1 November 2020.

All referees (i.e. people who have been referred) who have successfully in-forced their Singlife Account by 1 Nov 2020 will have up to fifteen business days (i.e. 20 Nov 2020) to order and activate their Singlife Visa Debit Card for both you and your referee to still qualify for the S$10 referral bonus. 

You also probably received an email from them on 30 Oct 2020 notifying of the upcoming termination. 

As from their excerpt:

“Singlife’s Paid Referral Programme has enjoyed a successful run and will come to a close as of 1 November 2020. Thank you for all your support! Upon the Effective Date of Termination (1 Nov 2020), all referees who have successfully in-forced their Singlife Account(s), by the Effective Date of Termination, will have up to fifteen business days (i.e. by 20 Nov 2020) to order and activate their Singlife Visa Debit Card to qualify for the S$10 bonus.”

Still, the good and bad and them. It is still a decent alternative cash source.

The Good about Singlife

I’ll have one more strong and valid point to date with this referral scheme.

  • A referral fee of S$10 is deposited in your Singlife account for each friend you invite to Singlife and there are no cap for this. Each friend gets S$10 too so if you find this useful, do use my link to sign up here: https://app.singlife.com/S49MSfXlF8
  • SDIC covered
  • Relatively high interest rate for the first $10k
  • Simple and fuss-free – registration and login all done online
  • You can also spend normally like what a debit card does, having a functioning physical card.
  • Transfers are all ifast which is really impressive and same day receipt
  • Customer service is pretty responsive and quick to reply (Live chat and email)
  • Some form of insurance is complimentary including retrenchment insurance (It’s not a lot but it is a nice gesture)
  • No-contract, no terms no fees when you withdraw.

You can read my previous post about Singlife: https://lifejourney.blog/2020/06/26/low-or-no-interest-where-to-park-your-funds/

Find out more here: https://singlife.com/

Disclaimer

If you like what I am sharing or if it resonates with you, do use my referral codes for other services at https://lifejourney.blog/contact/

The pictures were taken from Singlife website for this article.

Low or no interest? Where to park your funds?

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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://lifejourney.blog/contact/ for the services.

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

Bond/Debt

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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?