Hello Canadians!

I realised that a lot of Canadians have been visiting this site lately.

Just wanted to say a big "Hi!" to all Canadians who are visiting this site.

It is interesting how the internet has really shrinked the entire world such that whatever I am typing here in sunny Singapore is actually being read by a Canadian in Canada (which is like right across the other side of the globe).

While I am sipping coffee here in noon, it is probably like the wee hours of the morning in Toronto.

I wonder what Canadians eat. What clothes do they wear? What are their dreams? What are their fears? What are their working hours like? How do they spend their free time? What do they invest in? What are the online newspapers they read?

Is it as stressful as it is in Singapore? Is the pace of life as fast as that in Singapore? Is the cost of living high? Do Canadians also hope to be financially free?

I really wonder..

See Related Articles:
1. Income Investing - Canadian Royalty Trusts
2. Investing in Canadian Royalty Trusts

A Perfect Day

I am a morbid person. I have recently been thinking about life and death. I realise that death is a respecter of noone. It can visit you when you are young. It can visit you when you are old.

Too many times in our lives, we are just cruising through. We are not truly happy. We are just making a living.

We all know that we should live each day as if it is our last. But how practical is that? If everyone was to do that, I am pretty sure that noone will be going to work. Everybody will be hanging around and doing nothing.

So as much as work is a "curse" in that sense of a word, it is still a necessary part of our lives. Without work, most men will not find meaning in their lives. Without work, there will be no food on the table. So how do we balance work and life? What would make a perfect day?

This is my thoughts on the perfect day (inclusive of work):

8.00am - Wake up and wash up
8.30am - Breakfast, coffee, read newspapers
9.30am - Leave home, DRIVE to work, listen to the radio
10.00am - Reach work, say HI to all your colleagues
10.30am - Settle down and clear all your emails
11.30am - Plan out what you are supposed to do by the end of the day. Meet boss.
12.00pm - Eat lunch with colleagues
1.00pm - Coffee to go, start finishing the work that you have planned out.
3.00pm - Tea Break, catch up on the latest news in football
3.30pm - Back to work, read your email, finish your work
4.30pm - Meet boss, clarifications
5.00pm - leave office
5.30pm - Reach home and change
6.00pm - Get out of the house and meet friends
7.00pm to 10.00pm - Chill out.
10.00pm to 11.00pm - Surf net, read books

That will be a perfect day for me =)

PWE

PWE? You might be thinking that I have gone crazy. Is is some wrestling federation or something like WWE?

Nope, PWE stands for Penn West Energy Trust. Just typing PWE into Google gives me the stock price of this canroy which I own. It is listed on the New York Stock Exchange with the ticker symbol as PWE.

In fact, I have been receiving cheques from PWE every month for the past few months. Based on my estimate, the distribution yield by this canroy is slightly below 10%. It does make a very good income source I must say.

It also just declared its distribution for the month of September:

Penn West Energy Trust ("Penn West") (TSX:PWT.UN) (NYSE:PWE) confirms that its September 2009 cash distribution will be CDN$0.15 per trust unit payable on October 15, 2009 to unitholders of record on September 30, 2009. The ex-distribution date is September 28, 2009.

The CDN$0.15 per unit is equivalent to approximately US$0.14 per unit (before deduction of any applicable Canadian withholding tax) using currency exchange of one Canadian dollar equals US$0.90. Registered unitholders with U.S. addresses will receive their distributions directly from Penn West's transfer agent, and will be paid in U.S. currency using the exchange rate in effect on the record date. Non-registered U.S. unitholders will receive their distributions through their brokers.

I bought into this stock while it was over US$10. Today it trades at close to $15. That is close to a 50 per cent gain on top of the dividends that I have received. But guess I will just hold on to this stock for now.

See Related Articles:

1. Income Investing - Canadian Royalty Trusts
2. Investing in Canadian Royalty Trusts

Income Investing - Rental Property

What do you need to know about property investment? Renting out a property gives one monthly income. It is similar to investing in a REIT except that you own the property. What are some things that one should note when buying a property for rental income?

Though I do not have a rental property, I do own my own property which I live in. As such, I believe I roughly have an idea of how mortgage loans work and how much one can get from rental income by investing in a property. Note that I am not focused here on buying properties for "flipping" or investing for capital gains. I am basically touching upon property investment for rental income. Should the property gain in value over the years, that is an added bonus.

BUYING PROPERTY IN SINGAPORE

Most people know that land is scarce in Singapore. I believe it was Robert Kiyosaki who also once mentioned in his book about property investment in Singapore. Even international movie stars like Gong Li and Jet Li have also bought property in Singapore before. Jim Rogers moved to Singapore to be closer to China.

Okay, the Jim Rogers case is not really related to property investment but you can tell from the decisions these people make, living in Singapore is something desirable. Singapore also boasts one of the highest standard of living in the world. As such, property investment in Singapore makes sense for both the locals and foreigners.

In Singapore, locals are given special priviliges to own property while foreigners need to apply if they wish to purchase restricted property like vacant land, bungalows, terrace houses and semi-detached houses. For public housing, the minimum requirement is usually that of being a Singapore Permanent Resident. Other rules do apply to. Check the HDB website here for eligibility requirements

WORK OUT YOUR BUDGET AND SHOP FOR THE BEST LOAN

Property investment requires a huge budget. To purchase a rental property, you will need to be able to pay the initial downpayment, monthly mortgage loans and monthly maintenance expenses. Banks will only lend you money based on the amount you are earning. Thus, the mortgage loan that you get cannot exceed a certain percentage of your monthly income (or combined monthly income if you are married).

Different banks give different loan packages so do shop around though a mortgage consultancy firm first. These mortgage consultancy firms usually tie up with the various banks and thus have a clearer picture on the best rates available. Ask them to do a comparison for you. The rates that they offer are usually the same as those offered by the banks so there is no additional cost to you. It saves you a lot of time too so it is much better to get a mortgage consultant instead of doing the comparison yourself. Of course, if you already have an idea of what the best rate in town is, then you can skip the mortgage consultants.

The key to earning income from a rental property is to make sure that your RENTAL INCOME exceeds that of the MONTHLY EXPENSES (e.g. mortgage loans, property tax, etc)

RENTING OUT THE PROPERTY

Get an idea of what the rental rate for your area is. Hire a few property agents if you are lazy to do your own leg work. Surf the internet for info. Usually, you will see similar properties and will be able to gauge the rental income that you can get.

RISKS INVOLVED

There are many risks involved when it comes to purchasing a property.

Firstly, there is the risk that you might not be able to get a tenant for periods of time especially when the rental market is down. You might need to lower you rent to an unprofitable rate just to attract tenants. Therefore, I believe that it is important that you always have spare monthly cash to afford paying the monthly mortgage installments should that happen.

Secondly, there are times when the property value drops. How will that affect you?? There is a little known clause involving bank loans that the bank is only willing to lend you a certain percentage (e.g. 80%) of the property's value. For example, a property could cost $1 million and the bank's maximum loan to you could be $800,000. Should the property value drop to $500,000 someday, the bank reserves the right to ask you to top up the difference between the maximum it can lend you and what you have already borrowed. In this case, it will be a whopping $400,000!! Of course, this scenario might or might not happen so it is something that you ought to consider when looking to buy a property.

READ THE ENTIRE SERIES:
1. Income Investing #1 - High Dividend Yield Stocks
2. Income Investing #2 - REITs
3. Income Investing #3 - Canroys
4. Income Investing #4 - Rental Property
5. Income Investing #5 - Bonds

Another Day at Starbucks

It is another day at Starbucks for me.

People are studying all around me. Some people are sipping coffee. Some are surfing the internet. The guy sitting next to me is busily monitoring the stock market. The Starbucks staff are busily chatting away as they serve customers the coffee. The aroma of the coffee and the jazz music that is playing at the background helps to soothe my nerves and gives me comfort.

I see people getting off the bus stop and from where I am sitting, I can also see people waiting for the train.

The weather is really hot and I am enjoying the aircon. The caffe latte (whatever remains of it) sits on the table in front of me.

I have been reading this blog by a Malaysian full time blogger and have found some useful tips for my own blogging. You can read his blog here.

Record Earnings from Adsense ($4.85 in A Single Day)

On a happy note, I earned like a record $4.85 from Google's Adsense while I was sleeping last night. Apparently, my articles on Canroys ranked pretty high up Google's search pages. Not too sure how I did it but when I checked again just now, the rankings have gone all the way down.

Imagine the power of the residual income I will be able to earn if Adsense gives me $485 per day instead of $4.85 per day. I will be laughing my way to the bank! Hahahahah

Sold off Hongguo for a profit of over $3000

On the investment front, I sold off one of my small cap stocks (Hongguo) last week before the long weekend. Managed to earn over $3000 from an initial investment of $5000. Quite pleased with my results and am looking to enter into it again should the price drop once more.

I have also been looking closely at the performance of my REITs and wondering whether I should cash out of Suntec REIT which I have entered into at $1.02. The current price is now at $1.12 so it is a profit of $1000.

Financial Standing

How do I compare to the rest of Singapore? I think I should be at least above average in my savings and investment =)

I have $13K in my CPF OA, $14K in my CPF SA and $20K in my CPF MA.
Me and my wife have $100K+ in liquid cash sitting in the bank
I have $80K+ in stocks.
I have $50K in cash value in my insurance policies (Whole Life and Invesment linked plans)
Me and my wife have a flat that is valued at $550,000 when I last checked the HDB website resale price.

I believe that I have an abundance which some people do not have.

Yet, I am pretty sure that there are people out there who are like a hundred times richer than me.

Time to work harder!!!!

Income Investing - Canadian Royalty Trusts

This is part 3 of a 5 part mini-series on my thoughts about Income Investing. Today, we will focus on investing in Canadian Royalty Trust and how you can benefit from such an investment.

Canadian Royalty Trusts (Canroys)

Canadian Royalty Trusts very often tend to be related to energy. They are usually involved in oil and gas mining with the occasional coal mining. Some of the newer trusts actually focus on synthetic oil and coal. Because of they pay out majority of their cash flow as dividends (distribution), they enjoy a special tax exempt status compared to corporations. Many of these trusts actually do pay out a monthly dividend similar to REITs.

Canadian Royalty Trusts are able to grow their amount of reserves and do so primarily through the acquisition of other companies. A Canadian Royalty Trust basically controls an operating company which operates and runs the oil and gas fields.

Canadian Royalty Trusts run the risk of depleting their existing gas and oil reserves. This could result in their distributions being reduced over the years. It is therefore important to take into consideration the reserve life of gas and oil fields.

Another risk of Canadian Royalty Trusts is the expected tax change in 2011 that will remove their tax exempt status. This is because the ruling party in Canada believes that such royalty trusts are actually causing them lost revenue in the region of hundreds of millions of dollars. The announcement of the proposed tax changes caused a huge drop in the prices of many of these trusts. The so called "Halloween Massacre" came about just when some corporations announced their intention to covert into trusts structures. Any hope of this tax being removed is if the Liberal party comes into power.

Many Canadian Royalty Trusts are also exploring the option of coverting back into corporations with the removal of this special tax exempt status. With a 4 year grace period till the 2011 dateline, a coversion to a corporate structure will allow these trusts to reduce distributions and re-invest money for expansion. Other options also exist which include transforming into Master Limited Partnerships - which will enjoy tax advantages in the U.S.

Canadian Royalty Trusts are traded publicly on both the U.S. Stock Exchange as well as the Toronto Stock Exchange. To invest in these trusts, you need to have access through a brokerage firm to either the US stock market or the Canadian stock market.

Investors invest in Canadian Royalty Trusts primarily for their high dividend yields. With the proposed tax changes, the future of canadian royalty trusts are a bit more uncertain and 2010 could prove a volatile period with all the expected changes.

The writer owns Canadian Royalty Trusts in his portfolio. He likes the monthly dividends he receives but is uncertain about the viability and certainity of Canroys in the future.

READ ENTIRE SERIES:
1.Investing in High Dividend Yield Stocks
2. Investing in REITs
3. Investing in Canroys
4. Investing in Rental Property
5. Investing in Bonds

SEE RELATED POSTS:
Read : The 25% Cash Machine
Read: Dividends I have Received Thus Far

MOST POPULAR POSTS:
The Road to Financial Freedom (10 part series)
#1 - The Greatest Mistake
#2 - Protect What You Cannot Afford to Lose
#3 - Spend Less Than You Earn
#4 - Spend Less Or Earn More
#5 - Buy Assets Not Liabilities
#6 - Read and Learn More
#7 - The Magic of Part Time
#8 - Health Equals Wealth
#9 - It's a Marathon, Not a Sprint
#10 - Congrats! You have Achieved it!

Income Investing - Real Estate Investment Trusts (REITs)

This is part 2 of 5 on a mini-series based on some of my thoughts about Income Investing.

Read Previous Posting here: Income Investing - High Dividend Yield Stocks

High Dividend Yield stocks are a good way to do income investing as they give out dividends monthly,quarterly or annually. Another good way to do income investing is to invest in Real Estate Investment Trusts or REITs as they are commonly called.

What are REITs?

Real Estate Investment Trusts or REITs are basically like a common stock traded on the stock market just like any other stock. The only difference is that they invest primarily in property and are given tax breaks for paying out a certain amount of their profits as distribution. REITs earn money through the rental income they derive from the properties they own. Investors like REITs for their high dividends (sometimes much higher than those of normal stocks) as well as their defensive nature in a volatile economic climate.

Things to note about investing in REITs

REITs need to secure funding every now and then be it for acquisition projects or simply to refinance their existing loans. In 2008 when the credit crisis was pretty severe, concerns about these REITs getting funding caused many REITs counter to drop in value. Some REITs also had to issue rights so as to raise funding to improve their overall gearing.

When I buy REITs, the things I look out for include the following:

1. Yield - This is similar to the dividend yield that we talked about in the earlier postings. For REITs, I would prefer to have a yield of greater than 5% with the REIT increasing its distributions every year.

2. Net Asset Value - This is the value of all the assets held by the trust. If the price is trading at a discount to the Net Asset Value (NAV), it presents a good buying opportunity.

3. Net Gearing - This determines how leveraged the trust is and how much debt it is taking on. While it might be good to have a low net gearing, having too low a net gearing could mean that the trust is not making enough use of leverage.

4. Parent Company - Some REITs are tied to certain parent companies. These REITs will usually be able to secure funding even during bad times and thus often trade at a lower yield compared to REITs who do not have a strong parent company.

5. Other Risks - Some REITs might be too focused on a certain country (e.g. Japan or Indonesia). Other REITs might be too focused on a certain sector (e.g. office rental space). Should there be a downturn in these countries or sectors, the distributions by the REITs could be affected. Currency risk is also another factor to consider when purchasing REITs. If the REITs receives its rental income in another currency, the depreciation of that currency could affect its distribution.

I currently own a few REITs in my own portfolio. The REITs include First REIT, Suntec REIT and Ascott REIT. I have also been monitoring Realty Income which is listed in the NYSE.


SEE RELATED POSTS:
Read : The 25% Cash Machine
Read: Dividends I have Received Thus Far

MOST POPULAR POSTS:
The Road to Financial Freedom (10 part series)
#1 - The Greatest Mistake
#2 - Protect What You Cannot Afford to Lose
#3 - Spend Less Than You Earn
#4 - Spend Less Or Earn More
#5 - Buy Assets Not Liabilities
#6 - Read and Learn More
#7 - The Magic of Part Time
#8 - Health Equals Wealth
#9 - It's a Marathon, Not a Sprint
#10 - Congrats! You have Achieved it!