Tag: Interest

Wellnex & My-Insurer Platform

On By RistrettzIn Wealth & HealthLeave a comment

Something interesting came in my way last week. I managed to speak with the General Manager of Wellnex (Link here if you are interested to find out – https://www.wellnex-singapore.com/) and My-insurer. (Link here – https://www.my-insurer.net/) They are in the field of Insurtech field – Insurance Technology. (Something that works differently as compared to the traditional agents who sells you an insurance) I’ll say that they are more of a 99.co or property guru in Insurance style but with a tad more zest as all interactions and details are done digitally so it is as good as meeting the customer face to face. Given current Covid situation, I’m not sure if I want to meet anyone face to face for a 2-3 hour chat about personal finance.

It isn’t a sponsored post. I’m very strict with the way things are being done regarding a sponsored post. As the way it is, I’m happy to write and type whatever my views are and trash whatever I find is trashy. In any case, my-insurer has a separate wellnex platform – which is more of a deals, news, more information kind of portal where businesses and writers can create and post articles.

The Wellnex Interface

In terms of user-interface, it is simple – no frills but also nothing fancy. The whole idea is to create content, display them out and get people to read them. Hopefully, some people actually think that my content is worth reading. I am a firm believer of things taking time to grow organically. Spending marketing dollars on stuff is what companies who have cash to burn does. Usually it comes with a price, there is always a catch or ROI to it – Then the marketing dollars will eventually be reduced or some others suckered into buying into it and spending even more marketing dollars.

Data Trustmark

Sometime last week, i received an email from them stating that they have achieved the Trust-mark for Data Protection so you can be sure that there is a standard or ISO for dealing and protection the data that you store with them. I’ll say that is a good job considering that they hold key to agents and customer data.

What I really do like about them is that, they have no requirement for me to have at least one post per week or anything of that sort. There isn’t a fee that they pay to me or I need to pay them for using their application to post articles as they wish to stay neutral and free from conflict of interest. That is respectable for a business who work on that ethics. Not many companies are true to what they preach.

Help one another / Refer a good deal

If you own a company or wish to share some deals, do reach out to these folks out there. Perhaps, they can add more marketing value for space or reach or impressions as the marketing guys call it. After all, the idea is to get what you have out there so people know and talks about it.

The whole idea that I wish to do is to create a space where people enjoy reading articles about finance. Perhaps, get them excited about finding out what is out there. What is the current trend? Sometimes, even finding a good deal or good idea will come back. Though I did not start out as early as so many other bloggers did, it is never too late.

Eventually, finding out and working together as online bloggers is something I wish to build in the community. I started out reading financial blogs for many years. In the process, I procrastinated about building one as it takes up too much time. However, the circuit breaker forced me to take on something that I have put off for many years. I hope I will grow my project to a sizable one in the near future.

Disclaimer

These are just solely opinions of mine. Different people have different needs, requirement, financial situation and views. For me, this is what I would do if I would like to build my blog. The main aim to to get more viewership and subscribers to keep the lights running.

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

The pictures were taken from Wellnex website for this article.

GIGA – Even more bang for your buck [Up-sized Data for the same plan] (Part 2)

On By RistrettzIn Personal Finance SeriesLeave a comment

So, I received an email from GIGA (a subsidiary of Starhub) on updates on the data plans. I was previously on their pop up plan of S$18 monthly for 20GB of data and 200 minutes of talk time and 200 free SMSes. The best is that I do not need to do anything and 40GB will be shown on my next renewal date for the same price. It is not a temporary but a permanent change. Thumbs up for that GIGA.

With random outages from broadband throughout the country despite telcos being KPI-ed from keeping their lines up. At times, such disruptions can bring inconvenience or affect business deals. With more data, it give more assurance and back-ups should anything go wrong.

The good of GIGA

In my previous post about GIGA, the two main points is really what I like:

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

2. 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 and changing them us just through a click.

I still find their branding and customer approach more appealing than Singtel and M1, hence will still stick with them.

Things to take note of

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 discount if you use my referral code – “LhS9Ng”. The referral credit is only valid for any plans except the basic $10 GIGA plans.

You can visit their website to find out more: https://www.giga.com.sg/

Disclaimer

These are just solely opinions of mine. Different people have different needs and requirements. You can also use Seedly to compare on the different type of plans.

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.

The difference between all Chas cards & all Singaporean gets it

On By RistrettzIn New Ideas, Wealth & HealthLeave a comment

The Chas (Community Health Assist Scheme) card is for all Singaporeans! Yes, that’s freebies for all Citizens but wait, what is the catch? Well, there are different cards for different segments. There are a total of 5 different segments with two other more pronounced as a benefit for the Merdeka and Pioneer Generation. Then comes the Green card which has the lowest subsidy, followed by the Orange card for lower income households and the Blue card to help out the low income households. The criteria also looks at the Annual Value (AV) of the home that you own.

Chas Cards

CHAS cards can be used to see the doctor or dentist at participating GPs and dental clinics. For referrals to specialist outpatient clinics at public hospitals or the National Dental Centre. You will get a subsidy depending on your type of card you are eligible for.

With the new CHAS Green tier, all Singaporeans with certain chronic conditions can now receive subsidies for their treatment costs, regardless of income. Definitely a plus for all Singaporean Citizen.

From the Chas website, you can check your eligibility on their online calculator. Given the current situation, “You can apply online – It is recommended to so do in light of the current situation.”

Application

Apply for CHAS via the online application. Singapore Citizens aged 21 and above can apply for CHAS online on behalf of their household members.

Alternatively, you may download a hardcopy application form here. Once completed, please mail the form (and supporting documents, if any) to

P.O. Box 680, Bukit Merah Central Post Office, Singapore 911536.

Your application will be be processed within 15 working days from the date of receipt of the completed application.

If you have not received the outcome after 15 working days, you can visit the CHAS online application and login using your SingPass or call the CHAS hotline at 1800-275-2427 (1800-ASK-CHAS) to check on your application status.

FAQs

More of Chas FAQs can be found here: https://www.chas.sg/faq_list.aspx?id=626

Disclaimer: These are just solely opinions of mine. Taking care of your own health is also part of being financially free. Taking steps/transferring these risks to avoid those hefty medical bills is also part of financial planning. Being prepared for such events whether it happens to you or someone you know is also a harsh reality which we should be prepared for.

If you like what I am sharing or if it resonates with you, do use my referral codes here for other services at https://lifejourney840443474.wordpress.com/contact/

The pictures were taken from the website for this article.

Ways to make some money & Reviews

On By RistrettzIn Alternative Income, New IdeasLeave a comment

This is not a click bait. I have always been interested to find out what is there in the market when I see such headlines but eventually it is usually click baits. One of the many ways to make some money online if you have time is actually through doing online surveys. The best part of it is that you can take your own time to do it.

Though you may miss out on some high value surveys but eventually it is suited to your own timing. I will review some of those, past and present and I have personally used them. Only if the time is worth your effort, you can proceed go sign up or use my referral link. It is totally up to every individual as it may not be worth the effort for some. However, if you have some time on hand – The answer is Why Not?

Make Some Money

I will run by the ones that i find the easiest to use and easy to cashout. Most importantly, you should sign up for a PayPal account if you do not have any. It is really easy to sign up, just visit https://www.paypal.com and there is no referral fee for this. Just for easy survey credits

Milieu Survey (Singapore)

Milieu Survey has a Singapore presence. Once you have chalked up enough points, you can either donate them away or Otherwise, you can choose to cash out via PayPal or PayNow. 

$10 can be redeemed with 9500 point and $20 can be redeemed with 18000 point.

Once you complete 7 surveys, both parties get 500 points each.

Key in the referral Code: DbKjxMP 

Google PlayStore – https://goo.gl/eTHTya

Apple Store – https://apple.co/2MmnprL

YouGov SG

YouGov is based in London but they also have a Singapore presence. Surveys doesn’t come as frequent as Milieu but once you accumulated enough. 5000 points redeem a S$25. There are also alternative but to me cash is always King. There are no referral benefits so click the link to sign up.

https://sg.yougov.com/en-sg/account/login/

Google Opinions

This is rather tricky as it is not for Apple/IOS users. Android Users will be able to download and setup their account. Surveys come at random and you can also set a notification. Once you reply, it varies from S$0.10 – s$1.50 or so. You can’t cash out these but you can use these credits to supplement subscriptions or pay for some paid apps that you wish to buy off. It’s just easy to use, answer and keep. Practically no upkeep. There are no referral benefits so click the link to sign up.

https://play.google.com/store/apps/details?id=com.google.android.apps.paidtasks&hl=en_SG

Valued Opinions SG

This requires a little more effort but as for the rewards, I personally find it rewarding with Zalora or Cold Storage vouchers (via Edenred voucher redemption). However, with the recent covid – They seem to be less productive or less efficient. Vouchers redemption seems slower and also seem to be out of stock faster. There are no referral benefits so click the link to sign up.

https://www.valuedopinions.sg/

Rakuten Insight

Rakuten re-branded a few times in the past. Their surveys take longer than most but once your accumulate 150 Epoints or more, you can redeem $10 via PayPal. Redemption starts from 75 Epoints for $5.

https://sg.m.aipsurveys.com/

Disclaimer: These are just solely opinions of mine. You should try them out first to review if they are suitable for you. These works for me as I have tried out more than 20 of these during my free time.

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 the respective websites for this article.

When is it time to invest?

On By RistrettzIn Macroeconomic, New Ideas, Personal Finance Series, Robo AdvisorsLeave a comment

We hear a lot of this all the time. Our parents, our friends, our colleagues and everyone. There isn’t any in my opinion. Some may beg to differ but there really isn’t any the way the see it. There is an actual science to this because it really depends on what kind of person you are. No one will manage your money better than yourself. There are three dimensions to this how I see it.

Your Life Cycle

Life-Cycle – Depending on which part of the cycle one is in, you will change the way you invest and how you want to invest. Different stages in life provides you with different perspective and capability to do certain aspects of financial tweaks. Some get a head start while other don’t but that is not the end goal. It is your objective that is key – No one should just carbon copy a portfolio or process. This is customised and should be based on your own circumstances.

How much you have to invest?

How much you have – This is really a sticky question because the real fact is that no one knows. I am of the mind that your own networth and liquidity is for your own to know and manage. Unless you own the millions that you can’t manage because time is what you need, this would apply to at least 90% of the folks out that. How much can you afford to save or take out that does not affect you paying off your bills on time depends on your financial situation. I remember when I first started out, the salary I have is for my own takings. The very first thing I did was to spend almost all of it. It isn’t smart but we all learn.

Paying yourself first

Paying yourself first is essential in building a bigger pool. The first $1k, $10k, $25k $50k, $100k will be exponentially easier with every milestone. However if you don’t start, then the milestone will not be met. Regular saving plans/investment does help in this process. Using the envelop technique is also recommended for guys who are really starting out.

Time – This is a large and essential part of everything else.

First, you need to find time and give time to learn and experience. No one grew up knowing everything, all of these lies with exposure and experience. Some gets it faster than the rest while others manages this slower. Like an exercise buddy, the journey is long but if you persist and encourage one another, it will ride for a long time.

No excuses – Is Netflix and the next PlayStation more important every other day? Educating and understanding finance takes time and effort. Even if you hate it, try it in a smaller scale model and gradually increase it over time. I can certainly say that over a time period, it will become second nature.

Second, You do not have a warchest overnight. You need to build it. No one knows when is the next drop, what is the next promising industry to go into. No one knows who is the next unicorn or donkey but through time, you will eventually find out about your own strength and sense of investing.

My four points on a good time to invest

These four points in my opinion sets the basis of what is a good time to invest. TLDR:

a. Anytime is a good time to invest as long as you have a plan and you know what you are doing

b.Do not invest more than what you require to pay your bills.

c. Start early, start young, the later you start – the tougher it is. It is never too late but the results will be less than one would expect.

d. Learn as much as you can so that you are well-equipped. Today, there are too many tools around to learn and see.

I also do understand that by saying “When is a good time to invest?” It will attract criticism as to “timing of investment”

Timing the Market?

I would also want to address this issue of timing. It does no one any good if you time the market. No one has the crystal ball.

a. Start by splitting your warchest into different portions. Be disciplined and when market drops, buy some then don’t expect these to turn unto profits overnight.

b. Keep an eye on what you are investing especially if you are buying into a company. Investing into index funds leave you to a more passive investor. We shall not talk about Core and Tactical management of investing this round.

c. Regular investing also helps. Find mutual funds or portfolios who have in-lined principles to what you belief and stick by it.

d. Remember to always review. Things change and so do us as humans during different life cycle.

Small Note

P.s. As you can see, my beliefs is as such that all things work in an ecosystem (Before it gets disrupted). Smaller efforts gives greater confidence and these translate into positive energy, mindset and clear mind. Then, this brings you to another aspect. When this Eco-system is in place, many of the things we have discussed earlier will be a second nature and you would know how to react accordingly.

My Take on Robo-Advisor

Personally I like to use some form of Robo, systematic investing such as Endowus. It also cancels out my liking of timing my Buy-in timing.

  • Most importantly, the cash related funds uses a big institution related fund manage such as Dimension Fund which is not readily accessible to retail investor.
  • They have shown that they return the rebates they receive from the fund houses instead of absorbing it to pay fees to Banks/Financial Institutions as recurring revenues
  • All funds invested are held on behalf by UOB Kay Hian and held in my own name so funds are safe I say.
  • My only grip is really about the buy time which I have no control over. By the time the markets drop, I’m not sure when my funds are invested but on the bright side, it means it is consistent and disciplined trading.
  • Relatively lower management fees which means more compounding interests for all. That is good news.
  • I also like that they only debit the management fees at the end of the quarter instead of taking money at the start. Tells a lot about how they want to be different. Say no to upfront fees.
  • The first Robo-advisor to be able to invest using CPFIS. I think they were also the first to be able to use SRS to do so as well. That makes one more level up as CPFIS only approves certain funds that you can invest in. This makes it flexible to invest using Cash, SRS and CPFIS.
  • If you use my referral code to sign up and invest minimum S$10k, we both get $20 each which can be used to offset the management fees to keep their lights running: https://endowus.com/invite?code=EDZ8M

Disclaimer

Money is not everything – They say (Who? I don’t know). Without Money, there are lot of things we cannot do. With proper money management, these will slowly go away and your mind’s will be clearer. With a clear mind, things unravel. An end is always where new things start. Be positive and do not be bound by just money.

This is also not a sponsored posts. I used it and I like what I am seeing.

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 a few websites for this article.

NDP 2020 Promotion: 1 Year Free Membership from Gallery Insider

On By RistrettzIn DealsLeave a comment

There is an ongoing promotion for National Day 2020. That is a one-year complimentary membership for Gallery Insider. It is really good to see companies doing their part to make art and increase activities locally.

National Gallery Insider

From the Gallery Insider (link here: https://www.nationalgallery.sg/support/join/membership) –  This Gallery Insider is an annual membership programme. Insiders get unlimited access to their dynamic line-up of exhibitions, as well as privileges and discounts for selected programmes. You can also get unique museum merchandise and the Gallery’s culinary offerings at a discount. This sounds really good as it is a great time to explore such options now. Travelling is definitely not available in the near term. However it is not all doom and gloom. There are other things to do and appreciate in Singapore.

Click here at https://www.nationalgallery.sg/support/join/membership to get your FREE ONE Year Gallery Insider membership. This is worth up to $120 in value from unlimited and priority access to all exhibitions. There is a bonus perk of up to 15% discounts on dining and shopping. This is pretty decent.

Free Perk

This Free perk will end on 31 October 2020 so get it as soon as possible. Don’t forget you need to be there physically to activate your membership before October 2020.

However do note that this is for Singaporeans and Singapore PRs. Time to explore Singapore. It is not a sponsored post but I find this a great initiative and also a good way to find out more about Singapore.

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 National Gallery website for this article.

New Referral Scheme from Singlife

On By RistrettzIn Alternative Income, Interest Rates, New Ideas, Personal Finance SeriesLeave a comment

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://atomic-temporary-178675883.wpcomstaging.com/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://atomic-temporary-178675883.wpcomstaging.com/contact/

The pictures were taken from Singlife 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.

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?