Whither SMRT?

A south bound train experienced an electrical failure as a result of a lightning strike somewhere in around Kranji station area during this morning’s (29 Sep) thunderstorm.  The affected train stalled at Woodlands MRT station at about 0640 hr and was later pushed back to the depot by another empty train.

The incident caused an approximate delay of 35 minutes, affecting approximately 3,500 passengers.  Luckily today is Sunday, else much more passengers would be affected.

Is this a bad omen for SMRT?

Our MRT was truly efficient and was the pride of Singapore just 10 years ago.  When we were in a rush, we took MRT.  Nowadays, when we are in a rush, we have to avoid MRT.  MRT service is so unreliable that it even overloads the bus and the taxi services.

How did MRT ended up in such pathetic state in the present day?  Is it due to POOR planning of over populating our small nation or is it due to POOR maintenance and management of our MRT system?

I was a SMRT shareholder since its IPO.  SMRT was a dividend darling in the past, with stable and growing earnings providing shareholders with a steady stream of dividends to look forward to.  It was a defensive stock and it didn't go down too much even during the stock market crash.

However, the POOR management and short-sightedness in neglecting maintenance had caught up with SMRT and those past days of stability has come to an end. Dividend was cut so drastically that the yield becomes just above 1%, which is not much better than bank fixed deposit interest rate.

SMRT shareholders are currently on a south bound train as we see SMRT share price keeps heading south or downwards. I had jumped off SMRT when it was at $1.615 and counted myself lucky for about $2,000 profit.

Type of Scams and How They Work

While building up our wealth and looking for alternative active/passive income streams, we need to be vigilant and do not fall into scams or traps that would drain away our hard-earned money.

The definition of greed is an excessive desire to acquire or possess more than what one needs or deserves, especially with respect to material wealth.  Fraudsters or scammers make use of people's greed for their scamming schemes.

When an investment looks too good to be true—it probably is.

Common types of scams are:

Boiler-Room scam, AKA "Cold Call"
- Scammers make repeated unsolicited calls offering the sale of shares in third party business, often in companies you have never heard of.
- Scammers may make use of high-pressure tactics, promise high returns with low risks but do not provide a lot of information about themselves or their investments.
- Scammers usually maintain websites to give consumers the impression that their operations are legitimate.
- Overseas boiler-room scams may make use of Singapore telephone numbers to create the impression that they are based in Singapore.

419 scam, also known as “African/Nigerian scam”
- Fraudsters send emails/letters/faxes/SMS claiming acquisition or inheritance of huge sum of money.
- They then seek help from victims to supply a foreign bank account number to transfer the money out of Africa (or any other country).
- They offer huge commission but victims are made to pay large sums of up-front payments as taxes or fees to transfer the "funds".

Employment scam AKA job scam
- Fraudsters posing as recruiters or employers offer attractive employment opportunities (including "Work-at-Home" jobs) which require the job seeker to pay them money in advance, usually under the guise of work visas, travel expenses or out-of-pocket expenses.
- These scams typically involve lucrative offers of employment in Europe, the Middle East or Africa with money demanded to be paid to an agency or travel agent for visas or travel costs.
- Fraudsters usually have official-looking websites and documentation.

Lottery scam
- Fraudsters send emails/faxes/mail/SMS or call the victims claiming that they have won prize money in overseas lottery.
- Fictitious documents such as lottery tickets might also be enclosed.
- Fraudsters may request for consumer's bank account number or personal particulars to facilitate the transfer of funds.
- Consumers are also asked to pay large sums of up-front payments as taxes or fees for administration and transference of funds.

Ponzi scam
- Fraudsters promise high returns to investors, often claiming their investments are low risk simultaneously.
- Fraudsters then use part of the money deposited by subsequent investors to pay dividend or interest to earlier investors.
- Investors are lured into believing the investment schemes are genuine and encourage their friends or relatives to participate.  Alternatively, they may decide to increase their own investment.
- Ultimately, the scheme collapses due to lack of number of new investors.

Pump and Dump scam
- A company may post a glowing press release about its new venture or profits. The company may then become an unwitting victim of a pump and dump scheme.
- Fraudsters may buy stocks of this company. Fraudsters then post stories on bulletin boards, blogs or forums on the attractiveness of the stock.  Often, there is no way to verify the authenticity of these posts.
- Investors may then rush in to buy the stock, resulting in the stock price of the company being pushed upwards.
- Fraudsters then sell their stocks at a profit. After they have sold their stocks for a profit, the stories cease and the stock price of the company falls.

Others
- Fraudsters dupe victims into believing that blackened US currency notes can be used after being ‘washed’ by special chemicals, or some electronics gadgets are very expensive, but the victims could get them cheap (because of some reasons) and subsequently sell them off for profit.
- Victims are made to pay up-front payments to buy the special chemicals or electronics gadgets.


In conclusion, there would always be new scams and bogus investment opportunities designed with only one purpose: to get consumers to part with their money.  Consumers must be vigilant and should make sure that the persons they are dealing with are legitimate and authorized.

UOB's Structured Deposit 2013 Series (2)

After UOB's Structured Deposit 2013 Series (1) closed in August, UOB's Structured Deposit 2013 Series (2) quickly followed, but with some major revisions:

 

Other promotional information:
1. Total Guaranteed Fixed Interest of 9.5% of the Principal Amount over 5 years and 11 months (equivalent to an effective interest rate of 1.6091% per annum)

2. 100% Principal Amount guaranteed when held to maturity. 

3. Minimum investment of $5,000

This structure product has a bonus interest component linked to 5 Singapore companies' shares price performance:

Potential Maturity Bonus Interest of 4% linked to 5 Singapore Company Shares

Shares in Underlying Basket

CapitaLand Limited ("CAPL") Keppel Corporation Limited ("KEP") Oversea-Chinese Banking Corporation Limited ("OCBC") SembCorp Industries Limited ("SCI") Singapore Telecommunications Limited("ST")

Assuming an investment amount of S$10,000, held till maturity:

1. Best case scenario - If all 5 stocks are at least 93% their initial values:

	Best Case Scenario (Maximum Interest Potential)
End of Year	Guaranteed Fixed Interest Rate on Principal Amount	Maturity Variable Interest Rate on Principal Amount	Total Interest Payable
1	1.7%	-	1.7%
2	1.7%	-	1.7%
3	1.7%	-	1.7%
4	1.7%	-	1.7%
5	1.7%	-	1.7%
At maturity	-	4.0%	4.0%
Total interest payout	8.5%	4.0%	12.5%
Principal + Interest payout	S$10,000 + S$850 + S$400 = S$11,250

2. Worst case scenario - If any one of the 5 stocks is less than 93% their initial values:

	Worst Case Scenario (Minimum Interest Payable)
End of Year	Guaranteed Fixed Interest Rate on Principal Amount	Maturity Variable Interest Rate on Principal Amount	Total Interest Payable
1	1.7%	-	1.7%
2	1.7%	-	1.7%
3	1.7%	-	1.7%
4	1.7%	-	1.7%
5	1.7%	-	1.7%
At maturity	-	1.0%	1.0%
Total interest payout	8.5%	1.0%	9.5%
Principal + Interest payout	S$10,000 + S$850 + S$100 = S$10,950

The bonus interest for Structured Deposit 2013 Series (2) is greatly reduced.  Instead of giving out bonus interest every year, there is only the maturity variable interest remains.  So, instead of the total 19.3% interest for Structured Deposit 2013 Series (1) best case scenario, the total interest for Structured Deposit 2013 Series (2) best case scenario is only 12.5%.  

Yes, your principal amount is guaranteed, but it is also locked in for the next 5 years and 11 months.  There is a loss of liquidity, if any other opportunity arises.

I have mentioned in my earlier post that the additional 2% bonus interest for Structured Deposit 2013 Series (1) is not easy to get.  You would need all of the 5 stocks to be 105% over the initial entry price in order to get the 2%.  And it is 2% or nothing, there is no in-between bonus. 

Structured Deposit 2013 Series (2) has addressed this issue.  However, now there is only the maturity variable interest remains.  The 4.0% maturity interest for the best case scenario is pathetic and not even 1% a year if you averaged it out for the whole tenure term.  Lastly, any of the 5 stocks not above 93% the entry price and your maturity variable interest becomes just 1.0%.

Lastly, the interest rate 1.7% is fixed, which means it won't get higher with market fluctuation.  Currently, ICICI Bank is offering 1.50% p.a. for FD (<$50,000) on 36 months tenure term. 

This structure product supposed to end 14th September,  but is it really a "smarter way to invest"?

Sep Fixed Deposit Rates Update - 1.12% P.A.at Bank of China

First some clarifications: Fixed Deposit is not for real investment.  My review on Singapore's FD is limited to S$50,ooo and below; and tenure term not exceeding 12 months.  Fixed Deposit is for parking the emergency fund and allowing immediate access to the fund when needed.  These are also based on the following considerations:

1. Singapore's Deposit Insurance Scheme maximum coverage up to S$50,ooo only.
2. Long tenure term will potentially affect your cash-out value for your emergency fund, as you may suffer a penalty fee for early withdrawal.

Back to the update: According to its website, Bank of China's Fixed Deposit promotion is still on.  However, the 12-month FD rates has came down from 1.18% p.a. to 1.12% p.a.  It is  the highest in Singapore currently.  The minimum deposit amount for BOC FD is S$50,000.

This promotion is valid for customers with fresh funds only, meaning it is not applicable for money transferred from existing BOC accounts.

There are few branches of BOC in Singapore:
1. Battery Road (BOC Building),
2. Chinatown branch (Furama Hotel),
3. Katong branch (188-192 East Coast Road),
4. Middle Road (BOC Plaza),
5. Maxwell Road (Maxwell House).

According to BOC's website, this promotion is for a limited period only.

Promotion Details:

	SGD Time Deposits Promotional Interest Rates % p.a.
	3-Month	6-Month	9-Month	12-Month
S$50,000 and above	0.55%	0.85%	0.95%	1.12%

Please let me know if there is better offer in the market.

My Stock Portfolio @ end August 2013

No.	Stock Name	Lots	Portfolio%	Avg Cost$	Breakeven$	Market$
1	Starhub	5	20.84	3.22	2.87	4.20
2	SPH	4	15.60	3.98	3.50	3.93
3	SGX	2	14.43	2.68	0.97	7.27
4	CapitaLand	2	6.05	3.91	3.69	3.05
5	CapitaMall Trust	3	5.54	1.71	1.22	1.86
6	CDL HTrust	3	4.64	1.66	1.16	1.56
7	Starhill Global	6	4.56	0.71	0.57	0.765
8	Suntec Reit	3	4.53	1.52	1.18	1.52
9	SingTel	1.2	4.15	3.21	2.95	3.51
10	Hyflux	2.5	2.93	1.70	1.58	1.18
11	AIMS AMPI Reit	2	2.87	1.635	1.66	1.445
12	HPH Trust	3	2.75	0.90	0.88	0.745
13	FE Orchard	1	1.86	1.18	0.88	1.875
14	CapitaMalls Asia	1	1.78	2.12	2.06	1.795
15	Frasers CT	1	1.78	1.79	1.85	1.79
16	CitySpring	3	1.35	0.65	0.48	0.455
17	Boustead	1	1.30	1.44	1.50	1.305
18	Sing Post	1	1.24	0.875	0.69	1.245
19	SPH Reit	1	0.95	0.90	0.93	0.955
20	FE HTrust	1	0.86	0.93	0.93	0.87

Movement in my portfolio in August:-
Sold:- Nil
Bought:- Frasers CT.

Dividends collected in August: $1,503.17
2013 avg dividends/month: $466.59

August was a milestone month for me.  This was the first time that my dividends harvest exceeded $1,500 in a single month.