Sunday, 28 April 2013

Passive Income Streams - Stop Smoking

My friend avoids egg yolk like poison.  He said yolk has high cholesterol and deliberately digs out the yolks from foods, be it high boiled eggs or from moon cakes.   However, after having done that, he still smokes one pack of cigarettes per day.

This friend of mine is also vested in the stock market and looking for other passive income streams.  While I have nothing against smokers, I feel that smoking is like burning money.  I have worked out the mathematics (cost of smoking) for him.

1. Cost of cigarettes

Like the high housing cost, Singapore is also one of the most expensive place for smokers.  One pack of cigarettes costs between $8 to $15, depending on brands.  For simplicity's sake, I use $10 for calculation: $10 a day becomes a massive $3,650 a year!

If $3,650 is the dividend payouts from stock investment, how much is the investment amount required?

Taking Starhub as an example because the company pays the same dividend ($200 per lot) every year, $3,650 dividend requires 18.25 lots of Starhub.  Starhub closed at $4.57 on 26 April, therefore investing 18 lots of Starhub will require $82,260!

Therefore, a simple act of quitting cigarettes will save him money, just like it is another passive income stream for him.

2. Higher Insurance Premium

As he is a smoker, he is paying higher premiums for his insurance policies.  This is to compensate the insurer because of the increased health risk of the insured person.  But thing done (smoking) cannot be undone, and the insurer will not reduce his premium even if he quits smoking.

3. Increased health risks - income streams for doctors

Smokers have higher health risks.  This creates income streams for doctors while reducing the wealth of the smokers.

4. Harmful to your wife and children

Second-hand smoke is harmful for your family members.  There is no risk-free level of contact with second-hand smoke; even brief exposure can be harmful to health.

In conclusion, smoking is like burning hard-earned money, while at the same time, it is harmful to the smoker and the smoker's family.

Friday, 26 April 2013

Passive Income Farmer - My Biggest Investment

For most Singaporeans, the biggest investment is our home - the house that we live in.  And for most people, it is the biggest purchase in our lives.

As Singapore has small land area but with big population, the property market is sizzling hot and our "house" is the fastest growing investment in our investment portfolio.

Recently in February, an executive maisonette (EM) at Bishan changed hands for S$1.01 million, beating the previous S$1 million paid for a similar unit in Mei Ling Street last September.

This record sale also creates a vicious cycle and boosting the housing prices even higher.  It is people's nature that seeing your neighbour sold his flat at such high price, you would also raise your own expectation.

As I am currently staying at an EM too, so I expect my flat also worth close to 1 million.  Potentially I am a millionaire, just that I do not feel like a millionaire myself and I do not think we should count our house when evaluating our wealth.

Previously when I received cold calls from property agents asking whether I want to sell my flat, jokingly I quoted them 1 million, as I have no intention of selling.  Look like I will need to raise my asking price now.

I come from a very humble beginning.  I stayed in a rented two-room flat in Toa Payoh when I was young.  My father not daring to buy HDB flat then as he worked as an odd-job worker.

After I started working for a few years, HDB torn down some old flats in Toa Payoh and rebuilt some new flats .  The new flats were opened for ballot and for fun I paid $10 and submitted an application form.

Lady Luck smiled on me and I was allotted a four-room flat in that ballot.  The flat cost $200K and emptied my CPF money and I have to take up a housing loan.

I stayed at the four-room flat for 10 years and then I decided to sell and upgrade to EM.  I found that my role was very contradictory at this sell-buy moment.  At one end, I wished that I could sell my flat at the highest price possible, while at the other end, I wished to pay the lowest possible price for my new flat.

I managed to sell at $450K, which was more than double my original cost.  I topped up another $100K loan for the EM.  The housing prices have really sky-rocketed now and looking back, I would not be able to afford the EM without that "stepping stone" of the 4-room flat.

I feel bad for the younger generation nowadays.  Most of them are buying expensive houses/flats, taking on 25-30 years long term loans and working hard just to service the loans.

Sunday, 21 April 2013

Deposit Insurance Scheme

Singapore has a sound banking system.  Banks and finance companies licensed in Singapore are supervised by the Monetary Authority of Singapore (MAS) and MAS requires these banks and finance companies to have sound risk management systems, adequate internal controls, well capitalization and sufficient liquidity to meet any unforeseen needs.

However, MAS does not guarantee the soundness of individual banks and finance companies.  As there is no 100% safe business in the world, therefore, a Deposit Insurance Scheme (DIS) has been set up to protect the core savings of small depositors in Singapore in the event that a full bank or finance company collapses. 

This is a safety net provided to the depositors that their Singapore dollar denominated deposits, including those in CPF Investment Scheme and Supplementary Retirement Scheme placed with a DIS member bank or finance company, are insured up to a maximum of S$50,000.   Foreign currency deposits, dual currency investments, structured deposits and other investment products such as shares and unit trusts are not insured because these investments require the investor to assume higher risks for higher returns and therefore these products do not form part of the core savings of small depositors.

Singapore Deposit Insurance Corporation Limited (SDIC) administers the Deposit Insurance Scheme and Insurance Policy Owners' Protection Scheme in Singapore.  SDIC is a company limited by guarantee under the Companies Act.  The board of directors is accountable to the Minister in charge of the Monetary Authority of Singapore (MAS).

In the event a DIS member fails, the MAS will request the SDIC to step in.  The SDIC will put its crisis plan into action.  Arrangements will be made for depositors to be paid either by cheque or through accounts opened for them in another financial institution.

As we have a mechanism in place to guarantee the safety of deposits, people are less likely to panic if and when things go wrong.  This could prevent such incidents like disastrous bank runs.  An example is the recent banking crisis in Cyprus.

As the insured amount is S$50,000 per bank, therefore, it is against our own interest to have too much money in a single bank.  The old saying "do not leave all eggs in one basket" is also applicable here.

Previously I had a priority banking account with a certain bank, but the bank relationship manager was more interested that I invested money on their structured products.  As I have purchased structured product with them in the past, I became a "priority" customer as the bank profiled me as one able to taking higher risk and easier parting with my money.

As I seldom go to the bank now as many transactions can be done through internet banking, I see no point in maintaining the status of priority customer.  Taking full advantage and coverage of the DIS, I downgraded myself to normal banking account holder.

Friday, 19 April 2013

Passive Income Farmer - Suntec REIT AGM

Suntec REIT held their AGM this year on April 18 at Pan Pacific Hotel.

As I have some free time on Apr 18, I decide to attend the Suntec REIT AGM.  This is my second AGM and I found that it is a different experience compared with the Starhub AGM on April 15. 

First of all, registration for Suntec REIT AGM is not so high tech.  You arrive at the venue and let them scan your IC to verify your unitholder status.  Then, they copied your name and the number of units you hold onto a paper form and let you sign in.  

So, at the point of signing in, I saw that the 2 ordinary-looking person queued in front of me hold 25,000 and 50,000 units respectively.  This really prove the point that we can't judge people by appearance.

After signing in, I was issued a polling paper to use for AGM resolutions polling and a refreshment voucher. 

I entered the hotel ball room, found a seat and wait for the AGM to convene.  I estimated the crowd about 400-500, perhaps double the attendees compared to Starhub's AGM.

Next, AGM started.  Introduction of the Suntec Management team and Board of Directors, presentation of the REIT's past year performance, future plans and development, questions and answers (not many), then polling on the AGM's resolutions. 

We were asked to mark our votes on the polling papers and people came around to collect the polling papers.

Then, it is refreshment time.  People queued up to exchange the refreshment voucher for food.  Very easy and straight forward, one bento set and one bottle of mineral water per person. 

While the unitholders are eating their refreshment, Suntec REIT's people counted and tallied the resolution polls.

Most of the people left after finishing their foods.  By the time the polling results were ready and Suntec REIT's management team resumed their seats in front, only about 10% of the attendees remained in the room.

The polling results were showed to those still present and so completed the whole agenda of this AGM.

Wednesday, 17 April 2013

Passive Income Farmer - My First AGM (Starhub)

I have not attended AGM before.  Partly because my busy work schedules did not allow me to attend the AGMs on week days.   Also, I have heard bad things from friends about AGMs.  Most particularly the ugly scenes at AGM buffets; people are said to be scrambling, rushing, pushing and taking excessive food than what they could eat.  Heard some even brought containers (most likely exaggerated) to package food home.

From this year onwards, as I have less travelling, I decide to attend an AGM to have such an experience.  I always wonder how the voting/polling is done at the AGMs?  I want to attend one AGM myself so I would not be the "mountain tortoise" any more.  Perhaps this can be a pastime after my retirement.

Starhub held their AGM this year on April 15 at the company's headquarters at Starhub Green, Ubi Ave 1.

As Starhub is my current top holding and I have some free time on that day, I decide to start my first AGM with Starhub.

Registration for Starhub AGM is a breeze.  You just show up at the venue, let them scan your IC to verify your shareholder status and sign in on an electronic signature pad.   All these processes are very high tech and all paperless.   Unlike my reservist experience with SAF where people had to manually check your IC against one long list in paper print-outs.  And ironically sometimes they could not find your name when you reported for in-camp training.

After signing in, you are issued a sticker to paste on your shirt and also a "Trust Poll plus" handset.  This handset is programmed with your name and number of shares you held; and is use for voting/polling.  You press "1" to vote "for" and "3" to vote "against" on this handset.

Then, you are set and ready to enter the AGM venue, the Starhub Green Auditorium for this Starhub AGM.  I estimated that there were about 200 people attending this AGM.

Not too many questions were asked during Starhub's AGM.  I guess most shareholders are satisfied with the company's past year performance and the current stock price appreciation.  Wonder what would it be like in an AGM where the company is losing money?

Polling on the resolutions are done with the handset.  The results were almost instantaneous and were projected and showed to all in the room.  The AGM/EGM concluded swiftly in about 1 hour.

Then, it was quite a sight as people gathered at the buffet table in a flash.  Generally, people are quite civilized with no scrambling or pushing.  Starhub is also smart that they provided small plates (small surface areas for food), so people fill up their plates with food quickly and move out of the way swiftly.  More than sufficient foods are catered.  Although I queued at the back, I still managed to get a second serving.

One of the attendees told me that StarHub’s AGM typically attracts smaller crowd compared to rivals M1 and SingTel, as Starhub is largely owned by institutional investors (Temasek has 36%).

This is an eye-opening experience for me and I will attend other AGMs, particular SingTel's to see what the scene is.

Sunday, 14 April 2013

Scam - Lost All Money in UK

Last December I received a weird and interesting email from one of my friends.

Below is an extract from that interesting email:

Hello, how are you?  I do hope that you receive this email in good health.  I am presently in England London with my family for holiday.  Unfortunately, this holiday is turning into a nightmare for us.  I was pickpocketed at Trafalgar Square yesterday.  I was carrying all the cash and travelling cheques with me at that time and this incident leave me and my family cashless in London.

I had made a police report, but the hotel we are staying has detained our passports and will not release them to us unless we settle payment with the hotel first.  

My family desperately need money and I am wondering if you can be of assistance to us.  I need GBP 2,500 to settle the hotel payment.  My family's flight back to Singapore is 2 days later.  Please transfer money immediately over to the hotel account:- XXXXXXX.   I do hope that you understand my family's plight and I'll surely pay you back once we get back home.

Your friend,
Tom (not his real name).

I tried to call my friend on his mobile phone but was unable to get in contact with him.

Next, I need to decide whether the email was genuine or whether it was a scam?  Upon careful scrutinizing the contents of the email, I found it was quite "fishy":

1. My "friend" has not addressed me by name and it look as though the sender did not know who I am.

2. My "friend" mentioned where he was pickpocketed, but failed to tell me the name of the hotel his family is staying.

3. My "friend" could call me direct on my mobile phone if he is really so desperate and does not really need to write email.  Response time for email is definitely much slower than talking on mobile phone.

So, I decided this must be an online scam and ignored the email.

One month later I met Tom and asked him whether his family went to London?  He told me he did not.  This scam could have happened because:

1. He has lost his mobile phone.  Some scammers may have looked into his email account and his contact list.

2. Also, he received an email from a "friend" asking him to click a link for an interesting video.  He foolishly clicked on that link and caused virus infection to his email contact list.

The scammers could hack and access his email contact list either way and mass send scam emails to email addresses in his contact list. 

We need to be vigilant to this type of online traps and scams.

Saturday, 13 April 2013

ICICI Bank Fixed Deposit - 1.2% 12 months for $50,001

Just learnt that ICICI Bank has launched a Fixed Deposit promotion this Saturday, Apr 13.  This new FD is now slightly better than Maybank's FD.  The minimum deposit amount for ICICI Bank FD is only S$1,000, and significantly lower than Maybank's S$25,000.

ICICI Bank is India's second largest bank with global presence that currently spans across 19 countries including Singapore.  There are only 2 branches in Singapore, at Raffles Quay and Little India.

The opening hours for ICICI Bank are slightly different from other banks.  It is more or less normal for Raffles Quay (John Hancock Tower) branch.   It is open Monday to Friday, 0930 hrs- 1530 hrs; closed on Saturday and Sunday.  

Little India (184, Serangoon Road) branch operation hours are: Monday, Wednesday to Friday : 1430 hrs - 2000 hrs;  Saturday to Sunday : 1200 hrs - 2000 hrs.  Tuesday : Closed.

There are multiple fixed terms to chose from and also multiple interest payout options such as monthly, quarterly, half yearly, yearly or on maturity.

Besides Singapore currency fixed deposit, ICICI Bank also offers FD in US dollar and Australian dollar.

Interest rates w.e.f. April 13, 2013

Tenure< 50,000 < 100,000>= 100,000
1 month0.00%0.00%0.00%
3 months0.40%0.45%0.50%
6 months0.50%0.55%0.60%
9 months0.65%0.70%0.75%
12 months1.15%1.20%1.25%
18 months1.25%1.30%1.35%
24 months1.40%1.45%1.50%
36 months1.65%1.70%1.75%

Monday, 8 April 2013

My Stock Portfolio @ end March 2013

CapitaMall Trust
CDL HTrust
Sing Tel
Suntec Reit
Starhill Global
FE Orchard
CapitaMalls Asia
FE HTrust
HPH Trust
SP Ausnet
Yeo Hiap Seng

Movement in my portfolio in March:-
Sold:- SP Austnet (partial).
Bought:- Starhub.

Dividends collected in Mar: $89.23
2013 avg dividends/month: $215.26

March is a bad month for divdends and very likely a big "0" for April.  Can't wait for May when the 3 "S" - Starhub, SPH and SGX pay dividends.

Sunday, 7 April 2013

Best Saving Account - CIMB StarSaver Account

Savings accounts serve the purpose of regular savings and parking your money for later deployment.  When the money gets to a sufficiently large amount, then you could either transfer it to fixed deposit or use it for other investments.

However, the interest rates for saving accounts are almost zero nowadays, most banks offer pathetic interest rates at 0.05% to 0.1% p.a.  Even Standard Chartered's eSaver, which supposed to give higher interest rate than others because the bank does away with all non-essential services like passbook, cheque book and atm/debit cards, has dropped to 0.1% p.a.  There is no longer motivation and incentive to keeping the money there.

After some looking around, I found that CIMB StarSaver Accounts offer the highest interest rates for savings accounts in the market, a massive 0.8% p.a.  The interest rate of StarSaver Account is even higher than some banks' fixed deposit interest rates!

There are 2 types of StarSaver Accounts.  One is a simple plain savings account and the other a checking and savings account.  [For simplicity's sake, I will refer to them as savings account and checking account].

The initial deposit is $1,000 for the savings account and $5,000 for the checking account.  To enjoy 0.8% p.a. interest rate, every month you need to deposit $100 or more for savings account and $500 or more for the checking account.

Initial Deposit

StarSaver Checking

StarSaver Savings



Interest Rate

Month-end incremental deposit

StarSaver Checking

StarSaver Savings

0.8% p.a.

S$500 or more

S$100 or more

0.5% p.a.

Less than S$500

Less than S$100

Even if you can't maintain the monthly incremental deposit, there is no penalty fee.  Your interest rate for that month just drops to 0.5% p.a., which is already 10 times better than those banks offering 0.05% p.a.

For convenience's sake, you could also place periodic lump sum deposits that will be automatically converted by CIMB Bank into equal portions.  For example, if you place a lump sum of $3,000 into the StarSaver checking account, it is equal to 6 months of incremental deposits.

I find this monthly incremental deposit a good thing, as it force you into a regular saving habit.

In addition to the 0.8% interest rate, other superior features of StarSaver checking account are the free cheque books and zero checking account maintenance fee.   For comparison, some banks charge $2 a month for maintenance fee and also charge you for each new cheque book issued.

There is a $1 monthly account fee for StarSaver account.  However, you could get it waived by opting for electronic statement.  This save you some money and also is more environmental friendly.

There is one disadvantage with CIMB bank.  CIMB has only 2 branches in Singapore as of today and the few ATM machines that they have are only available at the branches.  So, it is not convenient to withdraw money and do face-to-face banking with them.

However, this disadvantage can also be considered advantage because your savings stay inside your bank account. 

If really necessary, you could transfer your money out from CIMB through internet banking to your other bank accounts, which you can then conveniently access it.  Moreover, the CIMB Orchard branch opens 7 days a week.

As such, I consider CIMB StarSaver Checking account the best for checking and savings purposes.

Do let me know if anyone knows of a better savings and checking account.

Friday, 5 April 2013

Maybank Fixed Deposit - 1.1% for 12 months (possibly more???)

My emergency fund is in a fixed deposit.  The fund is for emergency purposes and I also intend to deploy 40-50% of it, if the stock market crushes again.

My fixed deposit matured recently.  Every year just before my FD matures, the bank relationship manager also comes out from hibernation.  May not be the same person, but someone calls you on your mobile, introduces himself/herself as your (new) bank relationship manager.  Then he/she will introduce other options (most of the times some structured products) that will give better returns than FD.

This year somebody introduced one high yield bond fund that he claimed is stable, high dividend yield, and has never gone down since inception.  However, after I asked him when was the inception date, it was end 2010.  How can this be a good track record for this bond fund as everything goes up since 2010?

After some looking around, I found out that Maybank offers the highest interest rates for FD in the market.  Minimum placement amount is S$25,000.

Tenure12 months18 months24 months36 months
Interest Rates (% p.a.)1.101.301.451.60

One attractive feature for Maybank FD is that the FD interest payment will be paid full on the next day after depositing your FD.   The interest is paid into a Maybank passbook account and you need to open a passbook account if you do not already have one. 

Early redemption or withdrawal of your FD within 3 months, interest will be zero and the bank will return your principle minus interest up-front.

If you withdraw your FD after 3 months and before tenure ends, interest rate will be calculated at 0.1875% p.a. for the whole deposit period.  You will get principle minus interest up-front plus whatever interest at 0.1875% p.a.

This is a good place to park the emergency fund and I open a FD and passbook account with Maybank.

The next day I received my interest in full in the Maybank passbook account.  This account pays interest at 0.1875% p.a.

How did I spend this interest?  I took it and invested into Starhill Global Reit, which has dividend yield about 5%.

Let's see what is the outcome after 1 year......

Thursday, 4 April 2013

Scam - Profitable Plots

The world is full of traps.  There are even trap waiting for the unaware when you are watching English Premier League on TV.

Previously I subscribed to Football Channel when Starhub still carried English Premier League.  During half times, the viewers were bombarded by a Profitable Plots commercial, urging viewers to "Buy UK land" and projecting astronomical returns for investors.  Profitable Plots was a land banking firm set up in 2004 by 4 British expatriates and a Singaporean.

The TV commercial was done by some of the famous names in football, including Bryan Robson, Steve McMahon, etc.  Beside the commercial on cable TV Football Channel, Profitable Plots also held roadshows at major shopping malls and also was one of the sponsors for Liverpool Football Club when they visited Singapore.
The scheme "Buy UK land" basically means you invest in plot(s) of land in UK, then wait a few years for the land to appreciate.  The locations were marketed as being in prime positions (plots of land near Heathrow Airport) for development and would quickly appreciate in value.  When a developer purchases your plot of land for development, you could then reap profits from the sales of land.  The company claimed returns can be as much as 300% in 3-5 yrs times.

One day our group of friends stayed at the bar "overtime" after a premier league game and discussed whether it is good to invest into Profitable Plots?

Some said Profitable Plots must be legitimate as they have been advertising extensively on cable TV football channel and doing multiple roadshows at major shopping malls.

Some said Profitable Plots must be reputable as such famous names in football are representing and advertising for them.

Some of us, including me, who had less beer and were still level-leaded, were against investing into Profitable Plots.  The reasons were:

1. Profitable Plots claimed the plot of lands being in prime areas for development.  But we can't verify it.  For all we know, the plots may be swamp-land, forested-land, wasteland, cemetery, "ulu" or off the beaten track places, etc, that will never see development. 

2. The plots of lands are in UK.  It is very difficult to monitor and check development status.

3. Similarly, in event that Profitable Plots goes into bankruptcy or defaults on repayment on our investment, it will be very difficult for investors to reclaim capital.

After our discussion, none of us invested into Profitable Plots.

Later, it was finally found out that Profitable Plots was one big scam.

Instead of prime position lands, in reality, investors were putting their money into plots located on farmland, in the Green Belt, within an Area of Outstanding Natural Beauty or on the sides of hills.  These lands have no chance for development.

Sadly, an estimated 1,000 Singaporeans and 4,000 foreigners had invested with Profitable Plots.