Friday, December 28, 2012

We've Crossed 400,000 PageViews

With more than millions of blogs around, this blog is not one of the large blogs around.  Neither is it a "hi - bye" kind of blog.  Each milestone is memorable and crossing 400,000 pageviews is memorable enough for me.

Thanks to all readers for supporting thus far.

Monday, December 24, 2012

What are REITs?

Desert real estate, May 1972 

 Real Estate Investment Trusts or REITs can be a corporation, business trust or association that acts as an investment agent that acquires or provides financing for the acquisition of real estate or real estate mortgages or even a combination of both.  It basically combines the capital of many investors to purchase any form of income producing real estate.  In most countries, REITs are often accorded special tax breaks where they are not required to pay any corporate income tax if it distributes the majority (usually 90% to 95%) of its taxable income to shareholders each year.

Unlike property stocks, REITs is akin to holding personal property where the taxation of income takes place at the investor level rather than at the company level.  In certain countries, dividends or distributions are also not taxed.  So there is an added advantage for investors to own it. REITs are usually traded just like any stock or share on the stock exchange.  They are easily liquidated compared to owning a real property.

Different type of REITs

REITs can be classified as equity REITs, mortgage REITs or Hybrid REITs.  Mortgage REITs are more common in the United States compared to the Asia Pacific region where most of the REITs are equity REITs.

Equity REITs invest in and own usually immovable properties with revenues and income derived mainly from the rental income of these properties.  Most equity REITs are spun off by property developers who aim to free up capital for their core business of property developing which gives them a better return of investment compared to owning property just for rental yield of less than 10%.

Mortgage REITs invests in loans that are secured by real estate or mortgage backed securities.  Their revenues and income are usually derived from the interest paid for the mortgage loans or the difference in rates at which they borrow and lend out money.

There are some REITs that are also a hybrid of both equity REITs and mortgage REITs.

Sunday, December 23, 2012

Blessed Christmas to All Readers

Christmas is coming in exactly 3 days.  And less we forget the true meaning about Christmas, it is not about the presents, or the good food that we fill our tummies with.  Neither is it about the gatherings, or shopping for presents or whatever retailers will have you believe.

Christmas is to celebrate the birth of Jesus - the greatest gift to all mankind.

Hundreds of years before Jesus' birth, the prophet Isaiah said: "Therefore the Lord himself will give you a sign.  Behold, the virgin shall conceive and bear a son, and shall call his name Immanuel."

I leave you with this beautiful rendition of Oh Come Oh Come Immanuel by the Franz Family.  Enjoy and blessed Christmas to all readers.

Friday, December 21, 2012

Jimmy Kimmel - Lie Detector

Funny video where Jimmy Kimmel hooks up kids to a "lie detector" machine. Just for laughs.


Wednesday, December 19, 2012

REITs Trading Below NAV (Net Asset Value)

Net Asset Value or NAV is one of the factors to consider when investing in REITs.  The NAV is basically the sum of all the REITs' assets (usually property and cash) minus away its liabilities (e.g. bank loans).  Investors often look at the price of the REIT and its NAV to see whether a bargain exists when a REIT is trading at significant discount to its NAV.

Should a REIT trade above NAV or below NAV?

A common argument is that REITs should actually trade above their NAV.  Why so?   There are a few reasons given:
  • A REIT is more liquid that a property itself.  As such, a "premium" or value should be placed on this added liquidity as compared to a real property.  An investor in a REIT can basically liquidate his holdings in the stock market as compared to holding a real property which requires time and effort to get rid of.  
  • Smaller upfront capital required as compared to a real property.  
  • Professional management without hassle of being a landlord yourself
  • Divesification into various properties
  • NAV was determined sometime back and it is likely that today's NAV of the property is higher

However, it is not uncommon to find certain REITs that actually trade at a discount to their NAV.  Many reasons are given for this discount.  The most common answer that links the reason for this discount is that of RISK.  This could be due to:

  • Foreign Exchange risk
  • Drop in property value 
  • Potential drop in distributions
  • Country Risk
  • Uncertainty about the future outlook of the REIT
  • NAV was determined sometime back and it is likely that today's NAV of the property is lower

Just a few years back, when the market sentiment was weaker, most Singapore REITs were trading at significant discount to their NAV.  At the end of 2012,  REITs that are trading at discount to their NAV are much fewer. These include Fortune REIT, Suntec REIT, Frasers Commerical Trust, Saizen, LippoMalls Indonesia Retail Trust, Ascott and Starhill Global.

Tuesday, December 18, 2012

Singapore REITs - History and Regulations

Singapore has probably done more than any other Asian country to grow and foster its Real Estate Investment Trust (REIT) market.  Since the first REIT was listed till now in 2012, the number of listed REITs in Singapore has grown and looks set to surpass Japan for the top spot in terms of market capitalisation in the next 5 years.  Its foundation was not without trouble though.

In the beginning....

The first REIT to be listed in Singapore did not take off.  Its public offering took place in November 2001.  The developer was Capitaland and the REIT was SingMall Property Trust.  Offered at S$1.00 each with a forecasted earnings yield of 5.75% for 2002 and 6.05% for 2003, it was scrapped when the issue was only 80% subscribed.  The cause for the weak market sentiment was probably due to the aftermath of Sept 2011  and the uncertainty that was around.  Poor understanding of what a REIT was could also be a contributing factor.

A year later (July 2002), the original three major shopping centres/malls of Junction 8, Tampines Mall and Funan the IT Mall were repackaged into CapitaMall Trust.  The yield offered was 7.1% this time and investors were hooked.  This ushered in the start of the REIT market in Singapore.

The next few REITs to be listed on the Singapore stock exchange (SGX) were Ascendas REIT ( November 2002) and Fortune REIT (October 2003).

Today, there are around 20 REITs listed in Singapore covering various property types like commercial, residential, hospitality, hospitals, industrial, and retails.  Many of these are also cross-border REITs and own properties outside of Singapore.  These include CapitaRetail China Trust, First REIT, Frasers Commerical Trust (previously known as Allco REIT), Ascott REIT, LippoMall Indonesia Retail Trust, etc.

With many sponsors being developers too, it is highly likely that these sponsors will also inject future properties into the trusts already established.

Friendly Regulations played a part

Regulatory changes probably played an important role in fuelling investors' enthusiasm for REITs.  Withholding tax was set at 10% while there was full tax exemption for local and foreign individual investors.

The gearing limit (i.e. amount of debt the REIT could raise), was also increase from 25% to 35% and went up to 60% (on the condition that the trust received a rating from a credit rating agency).  Of course, some analysts have commented that the 60% gearing is not conditional on any rating the trust receives as long as a rating is obtained.  Through borrowing, a trust could potentially fund new purchases using cheap debt while increasing the amount of distributions to unit holders.  And that probably explains the acquisitions that followed for SREITs after the gearing level was increased.

REITs listed on SGX

Do note that some trusts are listed on the SGX too and these are not to be confused with REITs.  REITs are required to pay out 90% of their profit as distribution to enjoy tax incentives. Trusts do not have to do that.  So there is certainly less certainty on the distributions that one obtains from trusts as compared to a REIT.

Most of the REITs (if not all of them) are equity REITs in the sense that they hold real immovable properties unlike some of the mortgage REITs listed in the US stock exchange.

Here is the list of REITs listed on SGX:

  1. CapitaMall Trust
  2. MapleTree Industrial 
  3. Ascendas REIT
  4. CapitaCommerical 
  5. Suntec REIT
  6. Mapletree Logistics
  7. Mapletree Commercial
  8. Saizen
  9. First REIT
  10. Cambridge REIT
  11. LippoMalls Indonesian Retail Trust
  12. Cache
  13. Starhill Global
  14. CapitaRetail China
  15. Sabana
  16. Ascott
  17. Fortune REIT (HK$)
  18. Frasers Centrepoint Trust
  19. Frasers Commercial Trust 
  20. Keppel REIT

Friday, December 7, 2012

Dividends for November 2012

I have been doing a really bad job keeping records of dividends that I receive.  Every month, I will receive 2 cheques from two of my monthly dividend paying stocks.  And I have not developed the habit of banking those cheques in immediately.  Sometimes, the cheques sit on my desk for days or weeks before they are dropped in at the bank.

The amount I get from those two cheques are aroudn $90 to $100.

During the month of November, I also got dividends from Thakral ($50) and Sabana ($46.80).

CPF Board's Are You Ready? Instagram Contest

CPF Board started the Are You Ready? Initiative to get Singaporeans thinking about these important decisions in their lives. They are
-          Manage your cash flow;
-          Buy a house within your means;
-          Take charge of your healthcare costs; and
-          Secure your retirement.

The AYR concept revolves around using four simple checklists to measure your financial readiness. This year, CPF improved the checklists to include more resources.

In addition, CPF is running an Are You Ready? Instagram contest with an iPhone 5 and more than $2,000 shopping vouchers up for grabs.

It’s simple to join. Simply take photos of what best relates to ‘Cash Flow’, ‘Housing’, ‘Healthcare’ and ‘Retirement’, and tag them with your caption! The hashtags are
-           #AYRcash
-           #AYRhouse
-          #AYRhealth
-          #AYRretire  

Click here to go to the campaign

Sunday, December 2, 2012

Armour Residential REIT (ARR) dividends

Received a cheque for November's dividends from Armour Residential REIT (ARR).  Total dividends was  S$45.89 after accounting for 30% withholding tax as well as handling and GST charges. ARR has been paying me monthly dividends ever since I bought it.  However, the stock has been quite volatile at times.

Friday, November 30, 2012

Lippo Malls Indonesia Retail Trust (LMIR Trust) to Acquire Pejaten Village and Binjai Supermall

Just received a circular dated 26 Nov 2012 from Lippo Malls Indonesia Retail Trust (or LMIR Trust) that states : "This circular is important and requires your immediate attention".  Okay.  All circulars come with that label but even though it requires my immediate attention, I am way to busy to flip through a thick circular at the end of a typical work day.

Well, I finally got some time to flip through the circular and realised that it was in relation to the following 3 items:

  • Proposed acquisition of Pejaten Village from an Interested Person;
  • Proposed acquisition of Binjai Supermall from an Interested Person; and
  • The Whitewash Resolution
Just by reading the title, a few questions started popping in my head.  They are basically:

  • Who is this Interested Person?
  • How much do these acquisitions cost and are they yield accretive?
  • What is the Whitewash Resolution?  (it almost sounds like some top secret codename for something).
A quick flip through the circular has given me the answers.

Who is this Interested Person?

Firstly, an "Interested Person Transaction" is defined in the footnotes as "a transaction between an entity at risk and an Interested Person". The properties are owned by Lippo Karawachi's subsidiaries (?).  Actually, after flipping through the document and taking a quick glance, I am not certain whether this is explicitly stated inside the document or that as an investor, I am supposed to derive that companies like Sea Pejaten Pte. Ltd is a subsidiary of LMIR's sponsor.  Or perhaps, I am just not familiar enough with legal terms like "Interested Person".  Does "Interested Person" in LMIR Trust's case specifically only referring to one single entity (i.e. Lippo Karawachi) ?

How much do these acquisitions cost and are they yield accretive?

Pejaten Village = S$95.1 million
Binjai Supermall = S$30.2 million

The average of independent valuations for Pejaten Village and Binjai Supermall are S$108.8 million and S$31.8million respectively.  So LMIR Trust is buying these two properties at a discount.  The occupancy rates of both the malls look strong at 96.3% and 91.2% respectively.

I was looking for the word "yield accretive" in the document but could not find it.  It does however state that it expects a 16.3% increase in LMIR Trust's Net Property Income.  Also, based on the pro-forma DPU and financial effects, it seems that the distribution yield will actually go down.  So these acquisitions are probably not yield accretive.  Hopefully, LMIR Trust will be able to carry out some asset enhancement initiatives to improve the yield of these properties.

On the plus side, the acquisitions are at a discount, will help enhance the earnings of LMIR Trust, are at locations with sustainable retail traffic, will increase economies of scale, and also diversify the portfolio to minimise concentration risks.

What is the Whitewash Resolution? 

The Whitewash Resolution is perhaps the most important resolution to be passed at the EGM since the purchase of the properties are conditional on this Whitewash Resolution. 

Basically, the manager is seeking approval from Independent Unitholders for a waiver their rights to receive a Mandatory Offer from the Sponsor and parties.  This is simply because the acquisition fees to be paid out the manager could possibly result in the number units held by the Sponsor and parties acting in concert with it to be above 30%.

What this means is that the Sponsor and the parties are not interested in taking over LMIR and thus do not want to make a mandatory offer as required under regulation

Cross Timbers Royalty Trust

I had read about Cross Timbers Royalty Trust (listed on the US stock exchange) many years ago and had placed it in my stock watchlist but never got the chance to look at it.  All along, I thought this monthly dividend paying stock was involved in timbers or harvesting of logs.  And so I was a little hesitant to invest in it.

To my surprise, Cross Timbers Royalty Trust (or CRT as per its ticker symbol on NYSE) has nothing to do with timbers.  One wonders why they give such a name to this trust anyway. As I speak, it is currently trading at US$26.37 and pays out a regular monthly dividend.  The last dividend paid out was in October at around 18.62 cents per share.  Of course, as a foreigner, one will probably incur some kind of withholding tax.

A little about CRT.  It is an express trust and the principal asset of the trust is the net profit interests.  I guess this means it does not hold any physical assets and that the only thing it has is derived from the interests in profits it obtains from various royalty interest properties (oil and gas) located in Texas, Oklahoma and New Mexico.  Its website is also pretty simple and sparse with little information.  All the properties are owned by XTO Energy Inc. Bank of America, N.A. is the trustee.

This monthly dividend paying stock is trading near its  52 week low probably because of a steady decline in its dividends.  DPU for the 3rd Quarter of 2012 was $0.544601 as compared to 3Q2011 of  $0.860987.  The lower distributions have been attributed to lower gas prices, decreased oil/gas production and increased development costs.

Not yet vested but watching it closely.

Thursday, November 29, 2012

Spending for Yesterday

This is my spending for yesterday:

Breakfast = $2.90
Groceries = $3.40
Lunch (skipped)
Dinner = $150
Household items = $250

Realised that I have been spending quite a bit on food.

Wednesday, November 28, 2012

Investments and Dividends for November

Made quite a few investments this month.  Bought into a few stocks/REITs:

  • 50,000 shares of Thakral
  • 10,000 shares of LMIR
  • 20,000 shares of Saizen
Dividends/passive income for November was quite okay.  Roughly $250.  Most of it were contributed by Gamco Global Gold and Natural Trust (GGN) and Armour Residential REIT (ARR). ARR is a mortgage REIT.  Both stock prices hve declined quite a fair bit but I will like to think that my strategy is one where I will diversify a bit into other stocks rather than focusing on just these two stocks.

I also bought some shares of the Coca Cola Company (KO).  

Tuesday, November 27, 2012

Spending for Today

I read a book about real estate investing and it suggested keeping a budget for one month so that one is aware where all your money is going to.  I don't really live by a budget and I will like to think that I spend my money quite carefully.  But having tracked my daily expenditure for this month, I am quite surprised at what I have discovered.  Will probably share a little of my findings when I am comfortable.

Anyway, here is today's spending:

Breakfast (at home) = Nil
Coffee = $2.20
Lunch = $54.00
Dessert+Coffee = $10
Present/Gift = $23
Dinner (at home) = Nil

Reader's Query

A reader read one of my postings and asked whether he could buy some of the stocks that were listed in that posting.

The short answer to his query is "No".

Let me share why I might from time to time share what is on my watchlist or what I have already bought into my portfolio.  It is basically to let readers know what stocks I own and what stocks I am watching so that they know I have vested interest when I am talking about those stocks.  In a sense, I am also trying to get some feedback and thoughts from readers on why they think certain stocks may or may not be good investments.

Spending for Today

Let's take a look at my spending today.

Breakfast = $3.20
Lunch = $4.75
Coffee = $1.50
Dinner (at Home)
Dessert + Tea = $11.60

Total spending for the day is slightly over $20.  Of course, I did not include transportation costs.  But a quick look suggests that all my expenditure went into food.

Thursday, November 22, 2012

Ascott REIT - Presentation by CEO Tay Boon Hwee

CEO Tay Boon Hwee of Ascott REIT gives a presentation and gives a good detailed explanation of Ascott REIT's business and how it differs from a hotel and a normal condominium.  Here are the few points that were made during the video:

  • Sponsor of Ascott REIT is Ascott Limited.  Ascott Ltd is o world's largest serviced residences owner and operator.
  • 7260 units across 24 cities in 12 countries in Asia Pacific and Europe
  • Operates under the brands of The Ascott Residence, Citadines and Somerset Residence
  • $2.9bil portfolio
  • Major shareholder is Capitaland which owns 49% of Ascott REIT
What is a serviced residence?

A hybrid between hotel and apartment.  Provides the comforts of an apartment and essential services one will expect to see at a hotel. like laundry, daily housekeeping and limited F&B services.  

Key differences  lies in the lease structure.  Hotels cater for short term stay ranging from one day to one or two weeks.  Target audience is also the leisure market and the corporate market. Apartment for rents on the otherhand are typically rented out for at least one year.  Serviced residence thus are able to capitalise on the gap, focusing on the long stay segment,  looking at between stays of 1 month to 1 year stay.  The focus is also on the corporate market and not the leisure market.

Ascott REIT's weighted average length of stay is 4 to 5 months.  This provides stability to the REIT.  It is also less affected by the seasonal demands one would expect arising from tourists.

Serviced residences also only cater 1-2 F&B facilities to the guests and not to the public.  They also do not include banquet halls or function room.

Serviced residence comprises studio apartments, 1/2/3 bedroom.  This can be from 30 sqm to even 100 over sqm.  All apartment units come with fully equipped kitchen facilities.

Hotel staff to room ratio is around 1:1
Serviced Residence staff to room ration is around 0.3~0.5: 1

Sources of Income for Ascott

Broadly classified into 3 categories.

Firstly, properties under management contract.  Ascott REIT enters into a management contract with the operator (Ascott) to maange and operate the property on its behalf. A property management fee is paid in return to Ascott. which is tied to gross revenue and gross operating profit.  18 of its properties (mainly located in Asia Pacific) are under this arrangement.

Secondly, are properties on master leases.  Ascott REIT enters into a master lease agreement with the lesse regardless of the performance of the property.  A fixed rental income is given and this provides stability.  This is mainly in Europe (France & Germany), Philippines and Singapore.

Thirdly, are properties on management contract with minimum income.  Similar to the first category except that a minimum income is guaranteed.

[Disclaimer:  Writer owns shares in Ascott REIT]

Wednesday, November 14, 2012

Three Great Ideas to Spend Your Annual Bonus

It did not seem too long ago that I was writing about what I should do with my annual bonus.  Most people will be getting their annual bonus in December and I thought that it will be timely to look at a few great ideas on how to spend one's annual bonus.

1.  Insurance

Most people are under-insured.  But one should also be careful not to be over-insured or to be overpaying for insurance.  Some time back, I wrote about one of the cheaper if not cheapest insurance plan in town.  It is NTUC's i-term insurance.  I don't work for NTUC so I can't vouch for this plan.  Neither do I own this insurance plan.  But looking at the rates, it definitely looks like one of the cheaper insurance options around.

Another cheap insurance plan one could consider (if you are a national serviceman or woman) is the SAF Group Term Insurance plan.  Just recently, Aviva has increased the maximum coverage from $600,000 to $1million.  Another thing I like about this group term plan is that it gives rebates.  I am currently covered under this plan and am considering whether to increase my coverage.

I also wrote about whether one is ready to take charge of one's healthcare costs and you might want to consider reading it especially if you are a Singaporean.

Of course, before you dive in and go out shopping for an insurance policy, I must caveat that everyone has to do their due diligence.  In fact, during one of the polls conducted on this blog,  the poll results indicated that many people considered insurance products as toxic investments.  Of course, there is nothing scientific in the way I conducted the poll and it is just the opinion of readers.  I also recommend the following articles on insurance:

2.  Invest

Of course, besides saving up your annual bonus, one could also chose to invest it in instruments that could potentially give you a higher return than the interests rates offered by banks (can someone remind me again what is the interest rates banks are offering again?) 

Most readers should know that I invest mainly for income with capital gains as a secondary goal.  To understand a little more about income investing, I would refer you to some of the previous articles that I have written:
For myself, I am looking at a few stocks that pay good dividends.  On my current watchlist are Sabana REIT, Saizen REIT, Ascott REIT, Far East Hospitality Trust, Lippo Malls Indonesian Retail Trust, SingTel, Capitaland, United Engineers.

3.  Pay off Your Debts

This is self-explanatory.  If you have credit card debt, you should be paying that off before even thinking of investing.  The interest rates on any outstanding credit card bills is just too high to justify you not paying off that debt first.  

For others, you might want to consider making pre-payments or full redemptions of other outstanding loans (e.g. auto loan, mortgages).  

Saturday, November 10, 2012

Random Thoughts

Have been busy lately so have not been finding much time to write anything new.  And not that there is anything new that I can contribute in terms of financial knowledge to the already booming community.  There are so many high quality articles on newspapers, magazines, blogs, etc where one can find information about investing and personal finance that it is making me re-think what is my purpose in maintaining this blog and whether it is still worthwhile to put in time, effort and energy into something where my contributions are perhaps not worth mentioning.  After all, there are so many other ppl who are much more knowledgeable and who write much better than me.

The amount of emails that I get are also way too many for me to reply and track (so sorry if I have not been responding).  I am too busy to attend any events, market products or liaise with people to exchange links/post guests postings.  Ask any blogger and I am certain they will tell you this is like doomsday for any blog.  But this approach has served me pretty well thus far.  I know blogging is about building a community but I don't really have that much time on my hands.

Because I have been "dry" on new things to write, I have started reading quite a fair bit.  Just finished a book by David Bach on the Automatic Millionaire.Homeowner.( I read another of his books previously on the Automatic Millionaire which is sort of summarised here)  It was really easy to read and I skipped all the parts that were not really relevant to me so managed to finish the entire book in less than a day.

It was written in 2005 before the subprime crisis but the main idea is that we should all aspire to own our own homes rather than rent a home since owning a home is a way to automate savings simply by forcing oneself to save.  Of course, that is assuming that your home value does not drop drastically along the way.

Another idea that I like is that one should try to become a landlord and rent out your house.  It has always been something that I have thought of doing.

The last takeaway I had from the book was the idea of bi-weekly mortgage payments.  The concept is to make more mortgage payments (or pre-payments) so that you pay less interest on the mortgage loans.  Of course, I am certain many people disagree with this approach as they will cite low interest rates in Singapore as a very good reason to stretch out your mortgage loans as long as possible.

Just a quick and short sharing.

Wednesday, October 17, 2012

Learn From a Fool - Believing that I Can Find a Ten Bagger

I wrote two posts recently about my investment mistakes and some mistakes that I nearly made.  I guess that as one grows older and has a longer time spent in investing, one will certainly make some mistakes here and there.

The next mistake I will like to highlight it a mistake that can perhaps only be described as ..... sheer craziness.

There is perhaps this unspoken dream amongst investors to find that ten bagger stock - the stock investment that will return your investment capital by ten-fold.  That is an alluring argument since most investors start off with a small capital base and to multiply your returns with a 5 to 10% returns seems almost meaningless.  After all, a 10% return on a $1000 investment is only $100 in profits.  Yes, we all know about the effects of compounding.  But in the Singapore stock market, most stocks don't make 10% year in and year out.  They go up 10% one month and drop 20% the next month.  So it is almost impossible to get a consistent 10% return every single year.

But most people still hang on to the dream that they might find a stock that will appreciate in value by 10 times or more.  How many stocks are actually capable of doing that in the Singapore stock market?  Some times, in the blind pursuit of such a stock, many investors throw in lots of money on a penny stock hoping that it will increase in price by ten-fold.

How possible is that?  You judge for yourself.

Monday, October 15, 2012

How To Buy US Stocks in Singapore

I received a query from a reader about how to buy a particular US stock from Singapore.  This is a common question that I get and I thought that I might as well answer this through a blog post instead of replying to the email.

First of all, you will probably need a brokerage account.  When you open a stock trading account with a brokerage firm like UOB Kay Hian, they will give you the option on which markets (e.g. Singapore, Hong Kong, U.S) you want to trade in.  There are a few particular forms that you will need to fill in. To trade the US market, you will need a W8-BEN form which is downloadable from their website (usually).

I leave you with a few links that might be useful if you are interested in opening a trading account. As it is really self-explanatory, I will leave it up to the reader to navigate the technical details of how to open a stock trading account to buy US stocks that are listed on the US stock markets.

  1. UOB Kay Hian.  (go to the top menu bar on Getting Started and read the questions.  Pretty self explanatory)
  2. POEMs. (go to Getting Started on left column)
  3. Standard Chartered.
  4. OCBC

Sunday, October 14, 2012

Dynasty REIT IPO

Dynasty REIT is the first RMB denominated REIT to debut on SGX. The sponsor is ARA Asset Management Ltd and its estimated yield will be around 7%.  The IPO price range is from SGD0.86 to SGD0.94 with expected listing date on SGX on 30 Oct 2012.

Dynasty REIT holds commercial properties in Nanjing, Dalian and Shanghai.

Given that this year seems to be bumper year for IPO, I think it one should proceed with caution.  Singapore REITs are trading at a high price now and Mr Li Ka Shing is probably a good market timer when it comes to cashing out of the property market.  As the saying goes, buy low sell high.

I am not vested and will probably not be subscribing for the IPO.  I don't usually subscribe for IPOs anyway.

Sunday, October 7, 2012

A Fellow Investor Passes On - Only learnt the news today

As I was flipping through some investment magazine today, I just read the news that Mr Dennis Ng had passed away.  I had a particularly weak feeling in my stomach as I have sort of "known" Dennis through his regular posts in the old Wallstraits forum and also seen him appear on TV as well as youtube videos.

Though I never met him in real life, my knowledge about investments and personal finance would have been much poorer without his selfless sharing.  If I recalled, he even left a comment on this blog before though I can't really remember which post it was on.  He also contributed to CPF's IMSavvy site.

To find out about his passing so late is quite a shocker to me.  He left at a very young age and certainly was still in his prime.  A weak feeling went through my entire body as I read and re-read the news time and again.  He passed on in Jul 2012 but his knowledge that he has shared will probably endure in the minds of those who were willing to accept his ideas.

It is sad to know that Singapore has lost somebody who was passionate enough to stand up for his beliefs in personal finance.This news is only a stark reminder to me that life is too short to let it pass it by just like this.  Enjoy your life even when you have not accumulated your first million. My heart goes out to his family and friends.

Friday, October 5, 2012

Learn from a Fool: Mistakes I Almost Made Last Month

I almost made some serious investment mistakes last month.  While reading various analyst's reports, I came across trading BUY calls  for Bumitama Agri and Golden Agri.  In what was an almost rash moment, I was very close to buying into those shares hoping to make a quick buck that just seemed so tempting to resist.  After all, the upside forecasted by the analysts in their target price suggested that I will get a good return on my investment.  And besides, I had also liquidated quite a fair bit of my other shares.

It was good that I was too busy to think much about it over the past weeks and so I did not enter into any positions.  The prices did go up a little and finally slipped due to expected weak crude palm oil prices.  Apparently, there is going to be an oversupply in the near future and palm oil prices are expected to be low in the near future.

It shows that one should not be too quick to jump into investment decisions based on other people's analysis.  At the end of the day, all forecasts and projections are just anyone's guess.  We can make educated guesses but that is what it remains at the end of the day - just an educated guess.

Monday, October 1, 2012

Ng Teng Fong Family - Singapore's 40 Richest

Ng Teng Fong, born in 1928  in the small rustic prefecture-level city of Putian, located within the eastern province of Fugian, People’s Republic of China was never a stranger to hard work.  As a boy and eldest of eleven siblings he learned early on the value of perseverance.  His parents moved the family to Singapore when Ng was at the tender age of six to pursue a family owned soya sauce factory and grocerry shop.  He worked arduously to contribute to the success of his family’s business as a factory hand and repairman of bicycles for years and as the eldest son, was expected to carry on the family legacy.  Ng Teng Fong however had other aspirations, which to the chagrin of his parents did not involve the soya sauce business.

In 1950, Ng set out to realize his goal of becoming a business mogul in his own right.  What he lacked in formal education he made up for in desire, ambition and internal fortitude.  After a failed provision shop venture, Ng was able to rebound acquiring enough funds to establish his own property development company in 1960.  Under the capable tutelage of billionaire Eliya Thamby, the Far East Organization (FEO) was born and all of Ng’s dreams were finally realized.

A billion dollars is quite an outstanding net worth for any family let alone one person.  The astronomical figure has easily made Ng Teng Fong named number one in Forbes Asia while he was alive. And although rich beyond comprehension, his lifestyle was a complete oxymoron to his financial worth.  Not one to indulge in the flamboyant and extravagant self-deserving life that most billionaires thrust themselves into; Fong lived a rich but humble life.  Although one of the largest real estate developers in Hong Kong, Fong lived in the same house for over thirty years and was known for packing his lunches.  The simplicity of his lifestyle was in direct contract contrast to the fortune he had accomplished.  Perhaps his simple lifestyle was because of his humble means that he was raised, or being in the position of poverty as a young man may have been the reason for his modest living.

As the first of its achievements FEO developed a housing community comprised of 72 terrace houses at Jalan Pacheli in Serangoon Gardens, in Singapore.  These homes, as part of the now exclusive Singapore community, sold for $20,000 each in 1962.  Following closely on the heels of this success Ng ambitiously threw his hat into the hotel arena constructing a $5.5 million Singapore Forum Hotel on Orchard Road.  The first in a very illustrious portfolio of luxury residences the Forum Hotel boasted an Asian inspired experiential experience that is still coveted today.

With the success of that development, the company ventured off into hotels.  From there, his developments continued to flourish, in hotels, residential developments and other endeavors.  And although he was on a steady slope of success, he did nearly go bankrupt when a local institution withdrew credit facilities.  However, with creative financing strategies, he rebounded and maintained his successful and ever growing business in the long run.

Ng established many companies throughout his career and in addition, he would purchase large land opportunities for retain and commercial developments.  He was also aggressive at purchasing land during the property crash in the early 1980s, which later proved to be an intelligent business move. His investments and smart business practices sustained his companies and businesses through downturns.  He became known for his prudence in property and acquiring new land.

After several decades of diversification and expansion Ng Teng Fong had launched his company into the forefront and by 1994 his portfolio was estimated at HK$60 billion in property holdings in Hong Kong.  His expansion endeavors dubbed him the “King of Orchard Road” as he continued to exercise dominion over Singapore’s prime shopping district with the construction of Lucky Plaza in 1978, Orchard Plaza in 1981, Far East Place in 1983 and Claymore Plaza in 1994.

As his net worth continued to ascend into the higher billions, Ng remained grounded.  The Sino Group’s famous developments include the Conrad Hong Kong grand Royal Pacific hotels, Central Plaza in Wanchai and the Centrium in the Central district. He became one of Hong Kong’s largest real estate developers and one of the largest landholders.

Ng Teng Fong’s financial savvy coupled with his aggressive acquisition practices preserved the health of FEO even through several economic downturns.  The patriarch Ng Teng Fong, died at the age of 82 on February 2, 2010 of a cerebral hemorrhage and is survived by his wife, Tan Kim Choo, his two  sons Richard Ng and Philip Ng and seven other children. At his death, Ng was at an estimate 7.8 billion dollars.
Today the estate is estimated to have about a net worth of $9.2 billion with the number one spot among the 40 richest families in Singapore.   His true rags to riches story is one that only dream of accomplishing.  As Forbes Asia richest man, his inspirational professional journey led him to develop over 1,000 properties.  His sons carry on the family business.

Ng Teng Fong left a legacy of hard work, financial prowess and dedication.  His two eldest sons have equipped with their father’s financial savvy and have continued along the same successful current of business.  Philip Ng is an MIT graduate and manages Singapore's interest (FEO) while brother, Richard Ng manages the Hong Kong side of business (Sino Group). Together, they are the coexcutors of their father's estate.  A hospital to be built in Jurong will be named Ng Teng Fong hospital.

Sunday, September 30, 2012

My Favorite S-REIT

Love about to wash away... 

S-REITs are having their limelight in the recent weeks.  With the announcement of QE3 and the low interest rate environments expected in the near term, many analysts are crying out BUY calls for S-REITs.  Kim Eng expects another 11-14% upside for the S-REIT sector due to the low interest rate environment.  Apparently, many pension, insurance and income funds are switching into the REIT sector which provides better yields than bonds.

Of course, I am cautious when I hear all these positive news.  After all, S-REITs have been featured in the past few weeks in newspapers and I know the saying that goes "Buy when people are fearful".  And if people are so hopeful now, perhaps it is a good time for me to sell.

With the increase in S-REIT stock prices over the past few weeks, I have liquidated almost all my REIT holdings less a few.  One of them is my favorite REIT (yes, I know we are not supposed to fall in love with our investments).  But I have grown this emotional attachment to this REIT which I have held for some time.

This is Ascott REIT which I bought some time back. For my August dividends, most of them came from Ascott REIT.  I have bought in and sold out on First REIT many times and looking at the share price now of around $1, I sort of regret that I exited it too early.  With Ascott REIT, I am not certain whether it can rise any further.  But with good earnings yield and dividend yield, I am probably going to keep this REIT in my portfolio for a long time to come.

Saturday, September 29, 2012

Long Life a Curse?

Senior Citizens Find That New Ulm, Minnesota, Is a Good Place to Retire.  There Is a Close Community Responsibility Towards Older People No Matter What Their Financial Position Might Be... 

 Is long life a curse?  With life expectancy going up, we are all sold to the idea that most of us will live long and happy lives.  However, I am wondering whether long life expectancy is a gift or whether it is a curse.

Too often, we have the image of ourselves ageing gracefully and in complete bliss, surrounded by people we love.  But most people (who have elderly at home), will know that this is probably not the case.

As one ages, one's mental faculty also deteriorates.  Not only that, one's physical state also starts to decline. So apart from dealing with health issues, there are also a whole lot of emotional or even psychological issues that can become a source of friction within the entire extended family.

And this has really got me starting to think whether I really want to live until a ripe old age.  I have seen firsthand the difficulties that caregivers face when looking after the elderly.  When the elderly are good in health, it is okay.  

But there are also many other factors that can strain family ties.  An example is:  Who looks after the aged parent?  Will the eldest son or eldest daughter rise up to the occasion?  What if all the children are located in different countries?  How does the care arrangements work out?  And what happens if the elderly is not in good health, or worse still , not in good emotional/psychological state?

Caregivers face a difficult, tiring, and mentally exhausting task.  Those who have gone through it will probably know the difficulties.

I now know it when I hear the common phrase used by older people about how they do not want to "burden their children".  

Is long life a blessing or a curse?  What do you think?

Saturday, September 22, 2012

August Dividends

Dividends collected for the month of August 2012 is $846.67.  I was kind of disappointed as I thought or had the impression that I would be expecting more for this month.  However, 800 bucks is still a decent sum.    Most of this came from Ascott REIT.

I also sold off Fortune REIT and Cambridge REIT for a tidy profit.

Wednesday, September 19, 2012

10 Financial Practices to Improve Your Financial Health

photo remix: Yoga woman on exercise ball - flickr_enthusiast_rocks_Nilmarie_Yoga-001

Having a healthy financial life is not difficult, it just takes discipline and a little planning. Schools rarely teach personal finances classes, so sometimes adults need to learn the basics of personal finance. Luckily, once the ideas and plans are in place, it will become easy to have great financial health. Here, are 10 financial practices to improve your financial health.

Two Incomes
Many people get a great paying job but use all their money at the end of the month. A way to get over the hump is to have a second job. This can be an easy job 1 day a week waiting tables. Any little extra income is going to a long way in improving your bank account balance.

Debt is not evil by any means; there are some terrific uses, such as home and car loans. One should be careful to minimize debts, especially credit cards. Credit card debt can carry extremely high interest rates, making them difficult to pay off. Getting ahead is extremely hard when one is trying to make payments to credit card companies.

Credit Cards
With that being said, a credit card can be an enormous asset. Not only can one get cash back with credit cards, but they offer superb protection. It is essential to have a credit card or two.

Many people enjoy drinking, smoking and gambling. These vices can be extremely expensive and offer remarkably little return. It would be best to minimize vices, as the return on investment is nonexistent.

Credit Score
Getting and maintaining a phenomenal credit score is tremendously beneficial. Anyone looking to get a car, home or student loan, will want excellent credit. Having excellent credit can save a person hundreds a year in interest rates.

Make sure to not go cheap on insurance. Many people look to save money by lowering insurance coverage. This is okay if it is done by shopping around. Not having health insurance, or having minimal car insurance can leave one vulnerable in critical times.

A great way to save money is to live a healthy lifestyle. Cooking at home and riding a bike instead of walking will save money and improve health. This will also improve ones bottom line with lower health care costs.

A lot of people have an abundance of junk that they do not need. Anyone looking to get ahead should get rid of excess possessions. Not only do they get in the way, they can also cost money to store. Plus, if you sell your possessions not needed, you will get an influx of money.

Watch out for recurring bills; it is easy to forget them. A gym membership here, Netflix there, it adds up. Sit down and go over all of your monthly fixed costs, cutting some of them will be beneficial.

Take advantage of tax benefits, such as retirement accounts or write-offs. Billions of dollars are lost a year in tax write-offs. Simply because some people do not include them when filing taxes.

It is extraordinarily easy to improve ones financial health. It just takes a little bit of discipline and organization. The exciting thing is it is easy to stick to better financial decisions once put in practice.

Roger Hammerson writes about finance, self help & more at

Monday, September 17, 2012

Yale Endowment Fund Asset Allocation

An endowment fund or what is popularly known as a financial endowment is the name given to the money which is transferred to an institution which can differ from academic, to cultural and religious institutions. One of the most common and known names in this category is the Yale Endowment Fund. Yale endowment fund is known as the pioneer in the approach which followed the process of investing heavily in investments like real estate and private equity. David Swensen, in his career spanning 25 years, is credited with starting this

Yale Endowment Fund management.
Asset allocation allows investors to manage risks and their portfolio’s volatility. Portfolio owners can maximize their returns only by allocating their assets appropriately. It is not the funds or individual stocks in your portfolio that count but the manner in which investors chooses to combine the assets and give a proper structure to their portfolio so that they can increase their returns.

Yale Endowment Fund Asset Allocation approach has been received well by many investors. The model has produced great returns for many investors. A look at the Yale Endowment Fund Asset Allocation model suggests that the fund uses simple allocation methods and is yet amazingly effective.

Yale Endowment Fund Asset Allocation model focuses on investing in multi-asset class (including cash, bond or equity), which offers higher annual returns and reduces risk and volatility since the investor does not depend on one particular class of assets. The Yale Endowment Funds accesses the leading private equity, hedge and institutional fund managers, which is what makes them so successful and assures the investors of greater returns.

The Yale Endowment Funds Asset Allocation model relies mainly on the modern portfolio theory. The modern portfolio theory was designed by Professor Harry Markowitz who also won the Nobel Prize for designing the theory. The theory basically portrays how by simply diversifying assets that are variedly co-related with each other, investors can minimize risk and improve the returns from their portfolio.

The Yale Endowment Fund managers focus on five basic principles, which has become the very basis of the Yale Endowment Fund Asset Allocation model. These principles include, investing in equities, as being an owner is much better than being a lender, holding a portfolio that is diverse, fine-tuning asset allocations at extreme valuations and avoiding market timing, investing in private markets that do not have complete information and low liquidity to enhance returns on a long term basis, using managers from outside for all except the most indexed or routine investments and allocating capital to investment organizations managed and owned by people who actually do the investments on their own to minimize conflicts of interest.

Based on these very principles, the Yale Endowment focuses on diverse assets and has always invested primarily in equities. The success of the Yale Endowment Funds Asset Allocation model resulted in other lager endowments following the same model. In a matter of a decade that ended on 30th June 2008, Yale Endowment offered a return of 16.3 per cent on an annual basis to its investors. Yale Endowment Funds increased to 22.9 billion dollars from a mere 6.6 billion dollars in ten years.

The Yale Endowment Funds Asset Allocation model has been consistent in achieving higher investment returns and less volatility owing to its approach of investing in multi-asset class. Therefore, those investors who chose to shun the traditional model of investment and adopted the Yale Endowment Funds Asset Allocation have realized that the application of multi-asset class principles to a portfolio that is based on index is what that can help them in maximizing their returns.

The fund follows the following principles which are being described briefly below:

Increased Diversification, and re-allocation during the period of extreme valuation for the asset classes.

This model was followed for diversifying the endowment fund into different other portfolios for providing a cushion to the losses that might be in the offing for the fund. This model followed a simple principle of diversified portfolio carrying lower risks with higher returns.

Allocation of more funds to equity.

The principle behind this model was that it is always better to own something in return of your investment rather than lending money out as a mode of investment.

Using active managers rather than following an easy method of investment.

Yale actively pursued the policy of active approach of management strategies, with the planning to stay ahead of the market by some percentages year on year.

Hiring of outside investment firms.

This model was followed to ensure that there remains no conflict of interest between the managers handling the fund and the income generated by the fund. To ensure the same, Swensen hired external investment firms and other primary investors for handling the fund.

Increasing the fund allotment to private markets along with non-asset classes.

Non-asset classes or the commodities were added to the fund’s portfolio as it was believed and these commodities provide a better value than the normal equity as this class of investment carries low risk due to their low dependence on the equity and other markets.

Though these principles gave good results to Yale in the beginning but gradually they were criticized by financial gurus and fund managers world -wide. It had a bad year in 2009 with the fund suffering losses and was not left untouched by the financial crisis which had shaken the world market. Still, the consolation remains that though Yale suffered losses during FY09, it had always maintained that most of the fund is invested into asset classes which come with risk along with returns on a comparable table with private equities. Though, it is true that diversifying the fund can definitely provide with the shock absorbers that are required for protecting a fund as big as held by Yale, but still one cannot fight the abnormalities of the market. This fund comes with some important lessons for other big funds while also providing some important insights with small investors though it is advised not to blindly follow these models.

[The following is a guest post]

Sunday, September 16, 2012

How to Manage Your Money When Working Overseas

Half Moon Bay

Working overseas can be an excellent opportunity for just about anyone. Not only to learn about new cultures and new ideas. Working overseas can also give the employee significant tax benefits. With the internet, it has become much easier to manage personal finances from overseas. It is essential to properly setup the management of your money while working overseas. Here, are 5 tips on how to manage your money while working overseas.

Local Bank Account

When working overseas, it is essential to have a local bank account. This can be a bank that with headquarters in their country, or a bank with an international presence. Many people rely on direct deposit to get their paychecks, therefore, thinking they do not need an account. If any problems arise or a human is needed, having a local bank will be beneficial.

Foreign Transaction Fees. There are a few credit cards that do not charge a foreign transaction fee. A foreign transaction fee is charged by most credit card companies when a card is used overseas. The typical charge is 3 percent, which can add up quickly. Luckily, there are a handful of credit card companies that offer a card that does not add a foreign transaction fee. This will be a tremendous money saver in the long run.

Online. Every bank or credit card has a website. When working overseas, it is essential to sign up for online bill pay services. This makes paying credit cards and other bills online remarkably easy. Sign up for electronic statements, they will be emailed directly. They are just like any other statement you would receive in the mail. Another great benefit of online services is the ability to communicate. One can log into their credit card account and easily message a representative, since calling may be difficult.

Second Bank Account. Keep a bank account in the United States open, this is a terrific way to transfer money. Western Union and other wire places charge massive fees. There are a lot of banks that allow a bank to bank transfer for free. It would be extremely easy to have a relative or friend deposit money into your account, then initiate a free transfer. The transfers can go both ways, so in addition, the money can be sent home.

Inform them. When going overseas, inform the banks and credit card companies. If a credit card or ATM card is suddenly used in a different location, it may be declined. Many card companies have fraud alerts in place, for example, when someone uses a card 5,000 miles from home. A simple call to the credit card company will help prevent them from freezing the account. It is much easier to do it before leaving, but can be done during the trip if needed.

Working overseas can be an exciting and life changing experience. It is crucial to prepare your finances for your day to day life. Ones financial life and dealings back home should not be neglected either. With the internet, it has become extremely straightforward to manage finances while overseas.

Fran Childers writes about finance, travel & more at

Thursday, September 13, 2012

Yale Endowment Fund

The opportunities laid out for endowment funds benefit the students; as well as, the school itself.  In general, a university will be able to generate necessary funds through annual revenues generated from endowment funds.  Although particular schools will vary as to how these funds are allocated, it has remained to be an integral part in drawing out prestige and maintaining a status among the best of the best.  There are numerous endowment funds that support a wide range of programs within a university.  Some examples include: scholarships, fellowships, loans, professorships, research and development projects, and countless other special programs. There is no doubt that these donations; which may reach to the millions of dollars, have made an enormous impact on the school’s quality of education and enrollment.  One such school that maintains these high ideals and brings to reality the possibilities of acquiring excellence in all respects is Yale University.

Building the Foundations

Yale University and its law school has established several successful ways to place endowment funds at the peak of their purpose, accepting gifts that merit different programs and facilities to enhance teaching and offer students every resource to succeed.  As it were, certain amounts in gifts will merit a particular program to be named.  $500,000.00; for example, will allow the creation of a research fund.  A gift of several millions will name a certain position within the faculty, depending on the amount.   Most endowment funds will go toward continuing advancements in student opportunities; both for undergraduate and graduate courses.  Under the graduate program, $7 million will name students as tutors, scholars, and program directors.  While some gifts will create an endowment fund that will directly benefit the law school and its initiatives to sustain innovative programs, others will impact the surrounding facilities.  These endowment funds may encompass the development, renovation, or construction of different buildings, classrooms, halls, library, and other structures within the scope of the learning environment.

Shaping the Future

One of the main objectives of endowment funds; at least within Yale, is to create a future that is rich in educational resources and to create career opportunities.  This is done through various forms of development found by way of endowments.  Perhaps the most important aspect would be in establishing scholarships programs to assist in the growth and development of students.  In fact, a pledge of $10,000.00 to $50,000.00 will undoubtedly aid in the payment of tuition fees, which can be spread in increments within a period of approximately five years.  It is financial aid; in this respect, that sets standard for progress and ultimate success; especially for Yale University.  In its rich history, Yale has proved itself to be among the top universities in the world.  Its efforts in establishing endowment funds have truly made the school shine above many others.  It has used resources appropriately to the advantage of its students and those who dream of getting quality education.  Endowments given are not only gifts to the school, but they are gifts to ensure a more successful future.

What makes Yale Endowment Fund interesting is that its asset allocation model could perhaps offer us insights into our own asset allocation and how we ought to manage our investment portfolio.  But that is perhaps best left to another posting.

Tuesday, September 11, 2012

Investing in United States Real Estate

Many people are beginning to commit long term resources in the United States Real Estate market. The current US Dollar value is not as strong, and mortgage rates have plummeted. This has made it difficult for property owners to see good selling rates; however, buyers and investors are taking advantage of this to grow their business reach, and future fall backs. Many see real estate as a smarter form of investment, as compared to stocks and other unstable riskier ventures. Sales have been increasing over the years, and as an investor, it is important to get a real estate broker in the market to get you solid options before you make an offer. 

Naturally, the coastal areas of the United States have seen the most action in real estate activity. The East coast drew most Europeans, and the west saw more Asians flock to invest in their real estate options. The reason for this is probably proximity of the East to Europe and the West to Asia.

The exchange rate is definitely a great determinant of United States real estate activity, and many foreigners and even locals are looking to cash in on this window that is closing by the day. Mortgage rates are equally on the cards; a three decade fixed rate can hit an 8 month high of over seven percent. 

The United States real estate market has gotten great advertisement from the internet. MLS listings and other resources have brought more options on; Just listed homes, sold homes and new construction on duplexes, condos and other properties to the table. Investors can now take a property tour from their desktops and see just what is on the menu for them. 

Colorado and other cities in the States are booming in real estate sales and acquisitions. Foreclosures are slowly being replaced by short sales, and sincerely speaking, there hasn’t been a better time to invest in United States real estate. Investments like golf properties, resorts and other recreational real estates are equally on sale in the United States. 

Phoenix and Florida are other areas that have seen great influx of investments in real estate lately. These areas have some of the best environments and technological advancements that encourage people from all over the country, and the world in fact to settle down here. Real estate listings show lots of properties to you in the States, and you can be sure that these listings are not unscrupulously refreshed. They are listed to give you the ideal listings to pick from. You can choose from many cities, and go with a serene, tranquil real estate to settle down in. Access to essential amenities is well thought of before listing these properties. The children can go to school with ease, you can navigate to work and around town with relative ease, and many other investment opportunities are open to you as you reside in the states. You can easily raise a family and grow a business in these cities and provinces. So get your funds together and jump on this wagon, because real estate investment in the United States of America has become a cake worth taking a bite if you live in today. 

Monday, September 10, 2012

Investing in Emerging Markets

The emerging markets are often referred to the markets in the developing economies. These markets offer investors, great returns, high profits and long time safe investments. The question why investing in developing economies or emerging economies is profitable has a simple and a logical answer.  These economies as the name suggest are growing; still there are lots of market share and the customer buying potential, which is not properly tapped. This is why all developed economies and investors from strongly established economies like United States of America prefer to invest and reap beneficiary returns from their investment in the emerging markets like; Chine, India, Brazil, Colombia, Argentina and many more.

In last few years United States of America have been able to sustain growth in their markets due to their investments in the growing economies; their investors have gained good profits with their calculated investments in these booming markets. There are many sectors where an investor depending upon their interest and keenness can look to invest their share and increase their profits; one of the most preferred and beneficial investment sectors that have always given a good profitability equation to its investors is the Real Estate. In developing economies, the growth in the economy is directly proportional to the growth in the Real Estate, and the rise in the property rates with the high demand in the market always brings a good return on the investment. A part from real estate; Pharmaceuticals, insurance sector and power sector offers good opportunity to invest as these sectors offer a great scope of return to the investors.

A part from investing in the emerging economies; the investors can also look for the investment in the already established economies like Unites States. No economy can come close in guaranteeing a successful return on investment than the United States, with strong government support and powerful financial banking one thing, which an investor is always sure while investing in this strong market is the fact that their investment are always going to be safe and secure. Even in the global slowdown era, where world has seen a dip in all the major economies; united States have been able to hold its fort and have made sure that the investors are not losing their money.

A good economy for investment is one that can offer investors the options and is strongly and ably backed by the government; it must have a good foreign investment policy in place and have a healthy political atmosphere in the country because the political disturbances have a daunting consequences on the rate of the economy growth, and no investor would like to have an overnight change in the government policy structure, therefore political stability of the country is must. This is the reason why investors all over the world enthusiastically eye United States and other emerging economies as their favored destination to invest as one thing these markets ensure is the continuous dynamic growth in their growth rate which is good for both the investors and the economy.

Sunday, September 9, 2012

When Is The Best Time to Invest?

When is the best time to invest?  This is probably a question that many new (or even old) investors might ask.  After all, market timing seems like an important factor when it comes to making investment decisions.  And most people won't want to be buying into a stock when its share price seems to be so high.

Perhaps I will share this quote that I saw recently.  It is by Sir John Templeton.

"The best time to invest is when you have money".
- Sir John Templeton

So probably the important question is not when to invest but what or where to invest one's money in.

Saturday, September 8, 2012

This monthly dividend paying REIT gives more than 10% yield

Yes.  Chasing high yields is risky business.  But with my risk appetite, I think I fall under the super high risk category - that means I can stomach great volatility in my portfolio). Anyway, I added another 200 shares of Armour Residential REIT recently.

Other monthly dividend stocks I am watching are PIMCO High Income Fund (approx 10% yield) and Cross Timbers Royalty Trust.  But with little bullets left in my pocket, perhaps all I can do is sit and watch till the opportune time comes along.

Monday, August 20, 2012

Risk of Mortgage REITs

At some point in building a wealth portfolio you may come across the option of purchasing mortgage REITs. Mortgage REITs can be an extremely powerful investment in real estate. These are highly risky investments that can sometimes produce a significant return on your overall investment portfolio. However, how much risk are you actually willing to take to get rewards that may never come? When building your portfolio how smart is the choice of adding mortgage REITs? To answer this you must first understand not only the basics of what a mortgage REIT is but also what the hazards involved really are.

Mortgage real estate investment trusts, or REITs, simply put are investments in residential mortgages that have been grouped together into a security known as a Mortgage Backed Security or MBS. The main difference between a regular REIT and a mortgage REIT is that a mortgage REIT owns no actual physical property. This is where the risk factor comes into play. You will then receive your income from payments that the borrowers make towards the mortgages that you own in your REIT package. Because of this Mortgage REITs are more similar in nature to bonds and therefore have more risk involved then regular real estate investments that are backed by actual property. There are two types of Mortgage REITs, called as the agency funded and non-agency. An agency REIT is backed by the government through either Freddie Mac, Fannie Mae which makes them creditworthy. Non-agency REITs are backed by investment banks. Non-agency debts hold more risk because they are less credit worthy and also less liquid, therefore if there is a default by the issuer, the holder of the loan is the one that is at a loss due to this.

Other risks involved include the fact that REITs do not allow for appreciation of collateral since there are no actual physical assets and they are in fact just instruments of debt. Interest rates cause significant fluctuations in dividends making them unstable and sometimes nonexistent. Due to their unpredictable nature the investor has to weigh how much they are willing to risk for a possible short term gain. Even in the best of circumstances, hefty payments that you may receive from a Mortgage REIT are not guaranteed and have the additional problem of being short lived.

When investing in Mortgage REITs one must also consider that if they are using a non-agency held bond the risk becomes even greater. The yields can also become much higher for the investor of a non-agency bond. Unless one is willing to deal with the inherent risks, it might be safer to go with an agency held bond. When using non-agency held bonds there is a certain amount of leverage that must be used. This leverage also increases the risk. By having to utilize leverage (such as the hazard of default), as well as deal with prepayment and interest rates an investor would be wise to understand and be well advised when weighing their options.

Thursday, August 16, 2012

ARMOUR Residential REIT and Investing Risks

Managing Risk At ARMOUR 

Risk management at any corporation, particularly a securities firm is inevitable. This is particularly the case at ARMOUR. At ARMOUR Residential REIT, risk management is critical to successes and failures. Involved mostly in hybrid variable rate, and fixed rate of mortgage-backed securities, risk happens every day. Risk at ARMOUR is never something that is taken lightly by quality assurance managers. Risk is something that is carefully weighed, examined, and mitigated.

ARMOUR has strategic policies in place to help mitigate risk. These are firm policies committed to lowering risk and improving cash available in the event interest rates rapidly increase, or in the event a financial collapse were to occur. ARMOUR’s investment strategies also involve some risk; therefore policies are set to help protect investors from risk.

The primary risks involved with ARMOUR include risks associated with early payment, increasing interest rates, and concerns associated with ARMOUR’s ability to fund portfolios. Each of these risks are addressed below.

1. Managing prepayment risk. To assist with prepayments ARMOUR has in place a policy that allows ARMOUR to purchase mortgage securities at prices in excess of 100 cents on the dollar. This allows the company to pay top dollar prices for all securities. ARMOUR will also review delinquencies and refinancing to help address premiums traditionally associated with prepayment premiums.

2. Increasing interest rates. Interest rates are sometimes beyond the control of ARMOUR. At present ARMOUR would put into place a systematic program that would increase the cost of funding but allow asset yields to remain constant or allow them to change at a rate that remained slower than the rise in interest rates. This would allow a total decrease in net interest spread earned and accompanying potential dividends that ARMOUR would pay out. If funding costs and asset yields still resulted in a discrepancy, ARMOUR may consider selling assets at prices far lower than the original payment price to help offset costs and fees associated with high interest rates.

3. Funding portfolios. There are currently several strategies in place to protect portfolios and earnings from rising rates, including a strategy that focuses on shorter duration assets. The objective of ARMOUR’S current hedging program is to promote cash flow if rates rise, and decrease cash flow and decline in value if rates decline. ARMOUR’S goals include protecting assets and liabilities for all clients.

ARMOUR also seeks to help mortgage borrowers or homeowners pay off their loans at any time. This is a challenging task, and must take into consideration many factors including different interest rates. It is possible that a company including ARMOUR may over hedge, and under hedge. ARMOUR’s primary
goals include maintaining proper hedging that will protect against these factors and interest rate fluctuations as best as possible.

ARMOUR insists on paying out all dividends monthly and conducting all business in an honorable fashion. All business matters are handled in a transparent manner. This also contributes to the legitimacy and risk management potential of the company.

Monday, August 13, 2012

Shares Investment Conference

Dear Readers,

Some of you might be interested in an upcoming shares investment conference.  Speakers include Jim Rogers.  Details are as follows:

Below will be the details - Speakers: Jim Rogers and Mike Bellaflore

Date - 01 September 2012, Saturday (English Session)

Time - 9am - 1pm (AM Session Pass)
          - 2.30pm - 7pm (PM Session Pass)
          - 9am - 7pm (Fold Full Day/Platinum VVIP Pass)

Adding on, we do have Chinese session as well. 
Please see the below details. - Speakers: Professor Chan Yan Chong and Hu Li Yang

Date - 15 September 2012, Saturday (Chinese)

Time - 9am - 1pm (AM Session Pass)
          - 2.30pm - 7pm (PM Session Pass)
          - 9am - 7pm (Fold Full Day/Platinum VVIP Pass)

For more information, you may visit -

Thursday, August 9, 2012

Enerplus Corporation - An Overview

Enerplus Corporation is a North American energy producer with a varied asset base of top-quality, low-decline oil and gas assets well complemented by growth resources with greater economics. The company focuses on strengthening value for its investors by developing properties in a successful manner and managing a disciplined balance sheet. By carrying out its various activities the company strives to provide a good return of income and growth to its investors.

Enerplus has been resilient even in a very competitive environment and unstable market conditions just because of being a responsible producer of resources. The Enerplus executives pay a close attention and are very responsible towards their employees, their shareholders, their partners and the communities engaged with them. This responsible outlook has been incorporated in the Enerplus foundation and has added to the company’s success.

In 2010, the company generated a revenue of more than1.2 billion from oil and gas sales of 82, 138 BOE/day. These figures placed Enerplus among the top traded gas and oil producers. The picture of Enerplus has been quietly changed from its early times.  Enerplus was founded through investments in gas and oil assets in 1986 with about two dozen employees. The company continued to acquire assets while yielding a high income sharing model. With good progressive plans, the company turned into a high oil and gas producer with about 800 employees.

Enerplus has a low risk and a good return on its investments because of its focus on generating cash flows from the oil and gas industry. The entrepreneurial spirit of the company has helped it in acquiring more attention by providing high yields to its shareholders. Enerplus says that “you are not buying assets but a company with organized people and a well built system”.  Enerplus promises no change in its fundamental values.

Another reason for taking note of  Enerplus is its employee feedback program in which a survey is being conducted every two years by the company. The company compares its performance with its industry peers and studies the survey closely to find the areas which need to improvement. These programs are carried out for empowering the employees and uncovering the ideas for yielding high and profitable results. Enerplus possesses a technical toolkit of a large firm but is quiet small to move decisively with a team of talented experts who have the power of harnessing new technologies to unleash the best resources.

The best time to be a part of a company is when it is in the stage of growth.  Enerplus has already made deep foundations in North America’s various resource plays. A lot of drilling is already going on and the company is trying its best to find out how large can these plays be. The company’s main focus is on Oil and liquids rich gas which has a very high market, so investing in this company could probably yield very high returns.

Saturday, August 4, 2012

Dividends from Armour Residential REIT

Received a cheque for the dividends from Armour Residential REIT.  Based on my holdings of 500 shares, I am given $38.13.  Not a bad amount if you ask me.  Just the day before receiving this cheque, I also just banked in the cheque that I received for my investment in Gamco Global Gold and Natural Resources Trust.

Thursday, August 2, 2012

Feng Tian Wei Wins Bronze Medal

Congratulations to Feng Tian Wei who has won the bronze medal in the Olympics for Singapore on 1 Aug 2012.  Watched the match last night and was impressed with how she completely dominated her opponent.  A medal is a medal is a medal.

Monday, July 30, 2012

Stock Portfolio Update (July 2012)

It has been a long time since I did an update of my stock holdings and I thought it was timely to do so after I just bought some Sabana REIT today.  This is the list of my current holdings:

  1. Ascott Residence Trust
  2. Cambridge Industrial
  3. Suntec REIT
  4. Sabana REIT
  6. Fortune REIT
  7. Capitaland
  8. Innotek
  9. China Aviation Oil
  10. Unifood
  11. Kingboard
  12. Pacific Andes
  13. Citigroup (US)
  14. Armour Residential REIT (US)
  15. Gamco Global Gold & Natural Resources Trust (US)

Sunday, July 29, 2012

Breadtalk and Sheng Shiong

Recently, I wrote about investing in things I use - Mapletree Commerical Trust and Breadtalk.  The idea was really to look out for investment opportunities based on the goods and services that I come across in Singapore.  If one thinks about it, there are probably many goods and services that I use or come across during my daily life.  And that probably should get me thinking on whether this presents itself as a good investment opportunity.


I frequent Breadtalk and Toastbox quite often.  So it is not surprising that I am pretty well acquainted with their business.  While you won't be able to find a toast box located side by side with Breadtalk all the time, most store outlets now usually have both Breadtalk and Toastbox located together.  In terms of crowds, Toastbox is always crowded.  It should be profitable.  Each Toastbox outlet probably only hires 4 to 5 staff. And the number of people ordering takeaways also seem to be quite a lot.  For Breadtalk, it is just a bakery but the morning crowds usually throng the place.  I like Breadtalk's business from how I view it.  At least the Singapore side of the story.  I remember seeing Breadtalk shops in Malaysia that looked quite empty.

Sheng Shiong

Well, perhaps this is a stock that I better start putting in my shortlist.  Sheng Shiong is Singapore's third largest(?) supermarket store.  It has stores located at many neighborhoods all around Singapore and caters to the heartlanders.

Most Sheng Shiong supermarkets that I go to are always crowded.  That is a general observation and so their business should be good though I recognise that profit margins for retail outlets always tend to be lower.  It is a competitive business afterall.

If Sheng Shiong commits to paying 90% of its profit after tax as dividends, the stock will probably be quite attractive. This is however unlikely as it probably looks to expand in Singapore and the region.  Nevertheless, its dividend yield at 90% payout is a very attractive 6%.

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