Financial Freedom: January 2013

Gangnam Style Acoustic Version - Better than the Original?

A talented Singapore singer gives an acoustic spin to Psy's Gangnam Style. She doesn't speak Korean but this version of the song is really catchy. Her name is Steph Micayle.

United Engineers Launches Rival Bid for WBL - Another F&N in the making?

United Engineers (UE) is launching a takeover bid for WBL Corporation. Will this be like another F&N? UE's last done price was $3.33 while WBL's last done price today was $4.20. Looking at UE's price chart over the past few months, one wonders whether there might have been some leakage of news. The share price of around $2.40-$2.50 rose sharply from Nov 2012 onwards to today's current price of $3 over dollars. There was also a significant spike in volume.

Anyway, UE is looking for more recurring income and thus is looking to use up its war chest of money to buy WBL which has businesses spanning automotive, property and technology. Considering that UE is mainly involved in property development, they might be interested in spinning off some of these businesses subsequently. But that is probably anyone's guess.

It looks like the stock price of both UE and WBL is only likely to surge as shareholders await for the bidding price to go up just like the case of F&N.

Ascott REIT Dividends

Ascott REIT has gone cum dividend and will be paying out an advanced distribution or dividends per unit of 0.59 cents to 0.63 cents. The book closure date is on 5 Feb 2013. This advance distribution is to account for the private placement of shares.

In addition to the advance distribution, there is its normal distribution with book closure date on 5 Feb 2013 too. Each unit is entitled to 4.238 cents.

Based on both announcements of the distribution payments, Ascott REIT's dividends should range from 4.828 to 4.868 Singapore cents. Ascott REIT pays out its dividends on a semi-annual basis.

The yield is roughly around 6.2% if you ignore the dilutive effects of the private placement. OCBC has a HOLD call on this REIT with a fair value price of $1.36. Lim & Tan maintains its BUY call on this REIT.

I sold my entire holdings in Ascott REIT recently. Ascott REIT's price at closing today was $1.375.

Warren Buffett and others on Gold

I know that there are many people who are positive on gold and silver right now. So it is good to take a look at the other side of the story so that we do not get too much group-think.

In this video, Warren Buffett says he would rather own a productive asset than gold.

Some time back, Wells Fargo also gave its outlook on the gold "bubble" and warned investors on being over invested in it.

Must Watch! Crazy Fishing Methods

It is the weekend so thought I will break the monotony of it all and show some entertaining videos of people fishing.

This shows a homeless man fishing with stones:

Russian man ice-fishing with bare hands:

Catching wild salmon with bare hands:

Jeffrey Gundach's Picks and Outlook

Jeffrey Gundlach is co-founder of DoubleLine Capital LP and also its chief executive. He correctly predicted the subprime mortgage disaster and is one of the world's leading bond fund manager. In fact, he is sitting on cash because he sees bleak times ahead. He is favoring protection over growth in the next 1-2 years. He believes the opportunity for sitting on cash is much larger than if you were to be invested for growth now.

Regarding the European Union, he sees a possible break-up and does not think that the Euro is going to work. The question boils down to Germany being able to forgo the gains that it had obtained from the single currency.

He recommends buying hard assets like gemstones, art, commercial real estate. DoubleLine has also been buying the stocks of Chinese companies, U.S. natural gas producers and gold-mining firms. It is funny that he is now into equities given that he operates bond funds.

Liquidated Ascott REIT, Sabana REIT and Cross Timbers Royalty Trust

Liquidated my entire holdings in Ascott REIT, Sabana REIT and Cross Timbers Royalty Trust since they have all appreciated. Most of them were sold for a profit though I have held on to some for a few years while others were just bought recently.

Ascott REIT sold 15 lots at $1.415
Sabana REIT sold 2 lots at $1.18
Cross TImbers Royalty Trust sold 100 shares at US$30.789

My sense is that the REIT market in Singapore is already fairly valued and there are perhaps little opportunities for further increase. I could be wrong but thought it will be better to sit on some cash and await further opportunities.

How Much Does Youtube Pay?

So how much does youtube pay its partners for videos that are uploaded and monetised? For those interested in earning some additional cash, youtube offers a partner program which pays you cash. You can check out the partner program here (http://www.youtube.com/yt/partners/).

Youtube is basically owned by Google so its partner program is really like Adsense. It is linked to adsense and one basically earns revenue from the advertisements that are shown. The amount one can earns depends on the type of ads and the pricing of the ads that appear with your videos.

Based on feedback, it seems like the normal rate paid is 1/3 cent to 1 cent per view. What this means is that for a video with 1,000,000 views, you can earn $3300 (1,000,000 x 0.033 cents). Other users claim a rate of between $1 to $5 for every 1000 views. So that places it around $1000 to $5000 for a million views. The rate does not seem to far off from the normal adsense program where one is paid both for clicks and for views. At this stage, one can only wonder how much Psy earned from his Gangnam style music video.

Of course, your videos have to be original content, suitable for all users, etc. And if you do the math, you will realise that it isn't that easy. You basically need to have a large audience before it is possible to make money from youtube.

Time to work my butt off

How to Check if I Have Medishield

To check if you are covered under Medishield, it is really quite simple. There are basically 3 ways:

Look at your yearly CPF Statement of Account (the yearly statement will also tell you whether you are paying for a dependent)
Log in to my cpf online services and go to My Messages (this is located at the menu on the left hand bar). Under Insurance, you should be able to see your medishield coverage
Call CPF Board at 1800-227-1188 to check.

The CPF FAQ also states it quite clearly as follows:

Your yearly CPF Statement of Account and “My Messages” (under "my cpf Online Services ", which you have to log in to with your CPF Account Number and SingPass) will indicate the status of your/your dependant(s)’ coverage. Alternatively, you can also call CPF Board at 1800-227 1188 to check.

Jesus is Lord by Daniel K.L. Chua

Just sharing an inspirational song that I heard some years back in church. I am somewhat surprised that this song is not more widely sung in churches and I have yet to come across any other video on this song in Youtube thus far. I hope this song ministers to you whatever station that you may be in your life.

Lyrics and Music of the song by Daniel K.L. Chua

Jesus is Lord, behold the King of Kings

Exalted high, the name above all names

I sing his praise, the Lamb upon the throne

Who reigns in glory, power and majesty

This is my God, behold his hands and side

The wounds of love, that healed my brokenness

What God is this? What kind of sacrifice

Would give so much to gain a loveless soul?

For me to live is Christ to die is gain

For Christ has died that I might gain his life

He is my All, my joy, my righteousness

My hope of glory when he comes to reign

Yes, suddenly, my God shall come again

And every name shall bow before his name

And he shall reign, forever on the throne

And in his glory there I shall proclaim

JESUS is LORD

Added Starhill Global REIT to Portfolio

Have added a small amount of Starhill Global REIT that is traded on the SGX into my portfolio. Bought them at 82.5 cents. This is just part of my diversification strategy as I have found my REITs holdings to be heavily weighted towards one single REIT.

Starhill Global REIT owns various retail/office properties in Singapore, Malaysia, Australia, China and Japan. Its distribution yield is slightly over 5% and various analysts have chosen it as one of their top picks with a target price of around 85 cents. I am also expecting the REIT to pay out its distributions in Feb or Mar 2013.

For newbie investors, S-REITs have actually risen quite a fair bit over the year and now trade at a premium to book value. For quite a long time, S-REITs have been trading at a discount to book value. Most analysts are perhaps NEUTRAL on S-REITs right now given how much they have appreciated over the past one year.

Paid Paternity Leave for Singapore?

There is much talk and buzz going on that the White Paper on Population to be discussed in Parliament in early 2013 might include the possibility of paid paternity leave for fathers (of course). While mothers are already entitled up to 16 weeks of paid maternity leave, fathers have not been given that entitlement. And all that could be set to change this year.

A quick check on Wikipedia (http://en.wikipedia.org/wiki/Parental_leave) shows that most developed countries have some form of paid paternity leave. Last year, NTUC also called for 2 weeks of paid paternity leave. In fact, quite a few employers already practise paid paternity leave (usually around 2-3 days). In a newspaper report last year, PM Lee was reported to have indicated that "paid paternity leave may finally get the nod". Maternity leave is however not likely to be increased.

Of course, most fathers will welcome the news of paid paternity leave but it remains to be seen how many days of leave entitlement will be introduced. There might be concerns among Singaporean men that too much paid paternity leave (together with their national service liabilities) might put them in a weaker stead if they intend to look for a job. In addition, there will probably also not be something too over the top with regard to paternity leave. For a start, paid paternity leave may be introduced in a bite-sized manner that will probably bring cheers to fathers but also be manageable for employers.

What say you? How many days of paid paternity leave do you think is reasonable?

Howard Buffett - Son of Warren Buffett

An interesting video on Howard Buffett who is the son of Warren Buffett. Warren Buffett has named him as his likely successor in Berkshire Hathaway.

Portfolio Additions and Dividends Received

Wow! We are already half a month into the new year and I have yet to make any new year resolutions (not that they matter, I break most of my resolutions anyway). Have also been making some additions to my portfolio.

I bought more of The Coca Cola Company (NYSE: KO) and Cross Timbers Royalty Trust (NYSE: CRT). Warren Buffet owns shares in Coca Cola so I guess it is a pretty safe bet. After all, Coke is a product that is probably not going to disappear in the next few years. The business is stable and of course, Warren Buffet owns it. So have added a bit more of the stock into my portfolio.

Also added Cross Timbers Royalty Trust which pays a monthly dividend. This is a bit like tabasco to one's portfolio. Not for the faint hearted. But the price has gone up quite a fair bit since I bought it so I am happy with the results.

Dividends I have received this month and last month include:

$48.41 from Armour Residential REIT (another tabasco addition to my portfolio)
$45.74 from GAMCO Gold & Natural Resources
$4.36 from The Coca Cola Company.

Have also made some voluntary contributions into my spouse's CPF Special Account. The CPF-SA pays a 4% interest. The first $60,000 combined in the various CPF accounts also earns 1% additional interest. Much better than the interest rates one gets from the bank. Of course, you are not allowed to withdraw it like a bank account. But for the long term, it is good enough for me.

Starting Salary for Poly Grad

The starting salary or pay for a poly graduate is up from $1850 to $1950. That is a $100 increase. The survey was conducted by the the five polytechnics in Singapore. You can compare it with the starting pay last year.

For poly graduates who have completed national service, the median gross monthly starting salary was also up from $2,100 in 2011 to $2,253 in 2012.

How Much to Give for Church Weddings

Not too long ago, I wrote a post about how much to give for Chinese wedding dinners. It was pretty well received so I thought a good follow-on would be how much to give for church weddings.

Well, the custom amongst most Singaporean Chinese is to give red packets or what is also commonly known as "hong baos" during weddings. It is a custom and trying to explain a custom is probably the worst thing one can do. But red packets are a custom and like it or not, it is considered "polite" to give a red packet when attending a wedding.

A church wedding is usually a much simpler affair compared to a wedding banquet held in a hotel. The costs involved are usually just the rental of the church premises, catering and other miscellaneous items that the couple arranges for. Considering that most church weddings are usually held during lunch time, lunch or tea might be served. This usually cost around $10 to $12 per head for the catering but can of course go up if better food is served or additional frills are thrown in.

While I will say that $20 per head ought to be respectable amount to give in terms of ang bao money to "cover for one's expenses", I have reason to believe that the market rate might be slightly higher around the $30-$50 range if one is just solely invited for the church wedding and not the dinner banquet. This takes into consideration the cost of booking the venue, etc.

However, it is also not uncommon that guest to church wedding might not even give a red packet. This is especially so if they have been invited for both a church wedding as well as a lunch/dinner banquet. In this instance, they usually give a combined red packet during the banquet itself.

That being said, there is no standard rule to follow. And how much to give is really up to individuals. Some couples are not picky and might really be inviting friends to join in the celebration. On the other hand, certain couples might be tight on their pockets and a little extra "help" from guests will be appreciated by them.

======
For those who are interested, do check out the following links:

Articles on retirement, savings, financial planning and investing:

Real Estate Investment Trusts (REITs)

Commodities/Gold/Silver

Insurance

Popular Reads

The Road to Financial Freedom:

Why Invest in REITs

The growth of the real estate securities market around the world has led to a discrete asset class known as real estate investment trusts (or REITs). While the United States was probably the first country to introduce such an asset class, REITs are fast catching on in various European and Asia Pacific countries. There are over 20 REITs listed on the Singapore stock exchange today. And REITs do make a compelling asset class of their own. Today, let's look at some of the reasons to invest in REITs.

Diversification Benefits

REITs are known to have a low correlation with stocks and bonds. This means that it does not move in tandem with other investments and can thus be used to reduce an overall portfolio's risk. Portfolios that contain a small allocation of REITs have higher returns and lower risks compared to a portfolio that contains only a mixture of stocks and bonds.

Apart from diversifying away from stocks and bonds, REITs also allow real estate investors to diversify away from just the domestic real estate market. Besides this, investors also have a wide range of different kinds of properties to invest in. This includes industrial, residential, retail, office and even hospitals. So apart from allowing a property investor to diversify across different countries, REITs also allows one to diversify across different property types.

Liquidity Benefits

Besides diversification, REITs also offers liquidity. Not only can investors own a small piece of real estate with a small capital outlay, this asset class is also traded on the stock market where one's investment can easily change hands. An investor thus does not have to worry that he or she might not be able to sell the investment. And with the market price known, an investor will always know how much their investment is worth.

Income Benefits

With many baby boomers hitting retirement age, they seek out a portfolio that will give them investment income similar to bonds. REITs allow them to collect income via the distributions that are paid out. This dividends or distributions makes it an attractive asset since it literally puts money into one's pockets. In today's low interest rate environment, REITs often trade more than 2-3 percentage points above the risk free rate that one can get from holding AAA government bonds.

Conclusion

REITs as an asset class is increasingly gaining popularity. They provide diversification, liquidity and income benefits while allowing investors to be exposed to the real estate market with very little capital outlay. Why do you invest in REITs?

Jimmy Kimmel - Halloween Candy Prank

In this video prank, parents tell their children they ate their halloween candy whilst they were sleeping. See the funny reactions!

Investment Outlook and Stock Picks for 2013

What better way to start the new year then to give an outlook on what 2013 ought to bring? And what better way to know what 2013 will bring by looking at what the experts think will happen.

OCBC Research will be sticking to the strategy of overweighing in the oil & gas, banking, healthcare and selective property sub-sectors. Their stock picks for 2013 include Biosensors, CapitaMalls Asia (CMA), CapitaMall Trust (CMT), City Developments (CDL), DBS, Ezion Holdings, Keppel Corp, M1, Sembcorp Marine, Starhill Global REIT, UOB and Venture Corp. Despite strong gains in 2012, they expect further upside for these sectors/stocks.

For Phillip Securities Research, their top picks include SIA Engineering Company, Capitaland and Pan United. Thematic plays will be dividend stocks and construction stocks.

Here are the closing price of all the stocks on 31 Dec 2012:

	Closing Price on 31 Dec 2012
Biosensors	1.205
CMT	2.130
CMA	1.940
City Developments	12.870
DBS	14.840
Ezion Holdings	1.690
Keppel Corp	11.000
M1	2.710
SembCorp Marine	4.600
Starhill Global REIT	0.785
UOB	19.810
Venture Corp	8.060
Capitaland	3.700
SIA Engineering Company	4.390
Pan United	0.775

Financial Freedom