Query from Reader - $20K to Invest

I don't usually do this but I got a query from a reader recently asking me what safe instruments one could invest in that will provide a better return than fixed deposits (FD).  Based on the sketchy information provided, here are the following facts that I got from the very brief email:

•  $20K cash
• "Invest on something safe"
• Earn more than FD (which I assume stands for fixed deposits).

Firstly, I think the reader must ask himself whether the $20K in cash is really spare cash.  Has he/she set up an emergency fund of 6 months expenditure (or for the kiasu ones - 6 months income).  Without questioning too much, I assume that he/she has already set aside money for an emergency fund and this is really SPARE cash to invest.

Secondly, I deduce that the reader is probably risk adverse.  Capital protection is probably key to him/her.  Stocks with their high volatility are perhaps not suited for everyone (even though I strongly recommend it to most people).  

One of the few options I can think of is to invest in SGS bonds.  That will give a better return than FD.  However, at the same time, the returns from bonds are not spectacular at all (at least to me).  Personally, I don't invest much in bonds (not directly anyway).  

Any thoughts from other readers?

One Stock that Pays Monthly Dividends

Have been holding on to this stock that pays monthly dividends for a few months now.  The stock is Gamco Global Gold & Natural Resources Trust (GGN).  It pays a dividend of US$0.14 every month and is currently trading at US$13.69.  After accounting for withholding tax rate of 30% (since I am not a US citizen), the dividends is slightly less.  There are of course exchange rate fluctuations to account for too.

I just bought another 200 shares recently bringing my total holdings to 500 shares.

GGN is a close ended fund (CEF).  The fund's objective is as follows:

The GAMCO Global Gold, Natural Resources & Income Trust by Gabelli is a non-diversified, closed-end management investment company that seeks to provide a high level of current income. The Fund's secondary investment objective is to seek capital appreciation consistent with the Fund's strategy and its primary objective.

Under normal market conditions, the Fund will attempt to achieve its objectives by investing at least 80% of its assets in equity securities of companies principally engaged in the gold industry and the natural resources industries. The Fund will invest at least 25% of its assets in the equity securities of companies principally engaged in the exploration, mining, fabrication, processing, distribution or trading of gold or the financing, managing, controlling or operating of companies engaged in "gold-related" activities. In addition, the Fund will invest at least 25% of its assets in the equity securities of companies principally engaged in the exploration, production or distribution of natural resources, such as gas, oil, paper, food and agriculture, forestry products, metals and minerals as well as related transportation companies and equipment manufacturers

The dividends declaration for July, August and September 2012 also remains at US$0.14.

• The distribution for July 2012 will be payable on July 24, 2012 to common shareholders of record on July 17, 2012. 
• The distribution for August 2012 will be payable on August 24, 2012 to common shareholders of record on August 17, 2012. 
• The distribution for September 2012 will be payable on September 21, 2012 to common shareholders of record on September 14, 2012. 

Voltaire's Thoughts About Labour

Labour holds off three great evils:  tedium, vice and poverty.

True?

Work as boring as it seems wards off tedium or boredom.  Boredom can drive people mad.  Imagine having no purpose in life and having absolutely nothing to do.  So yes it does ward off tedium.  But work can sometimes be boring too after a while.

Of vice, it does ward off to a certain extent.  After all, it is during idleness that the children start disturbing the cats.

And with work, rightly should come some form of income.  Thus one who works ought not to be poor.

Armour Residential REIT

Have bought 500 shares of ARMOUR Residential REIT (ARR). ARR pays out US$0.10 per month in dividends. Its current share price is around US$7.00

Harvard Classics - Herodotus and Book of Job

I must have done at least 6 hours of pure reading yesterday.  And I sure covered a lot of ground though some of my reading was outside the "canon" of the Harvard Classics.  I spent most of time reading the Book of Job though I spent a greater part of the time wondering why this had been placed under the History of Civilizations section since the Book of Job was clearly a book that discusses about suffering (or in particular, why do good people suffer).  I guess it was helpful to see what the wisdom was about why suffering occurs and how some times, human wisdom has its limitations.

Reading Herodotus' Histories is tiring.  In the harvard classics, it is his second book that is inside and it gives an account of Egypt.  Or should I say ancient Egypt.  As much as I love history, the way it is told is actually a bit too detailed for my liking.

Harvard Classics - Five Foot Shelf of Books

I have started  into my reading habit once again.  And what better way to start by doing it in a structured manner rather than the current haphazard way in which I conduct my reading.  Have been reading Harvard's Classics, which is supposed to be the "Western Canon" of books worth reading in order to attain "a liberal frame of mind or way of thinking".  I was tempted to try Adler's Great Books but then decided to start with the original so-called "canon" first before I proceed on.

This whole exercise is just a way of educating myself for free. Almost like obtaining a liberal arts education except without the need to attend lectures/tutorials/etc And besides,  I love to read.. (Oh gosh, how much I miss school).

Well, it will certainly be a challenge as there are a total of 50 volumes worth of books. You can find all the books online (which means you save lots of money too) in this link:  http://archive.org/details/harvardclassics

 I am getting started on the section regarding History of Civilization (refer to Volume 50 for the introduction to the Readers Guide).  I guess it sure beats reading from Vol 1 to Vol 51.  

If anyone else is interested in getting started on reading the Harvard Classics too, feel free to comment!

Investing in things I use - Mapletree Commercial Trust and Breadtalk

It is always good to have some insider insight to stocks that one will like to invest in.  One simple way to do that is to invest in retail REITs.  There are many REITs in the retail/commercial sector and many of them own shopping malls in Singapore.  Just take a walk at one of the malls and it might give you a good sense of how business might actually be doing for the REIT, whether there is potential for rent increase, whether asset enhancement initiatives are ongoing, etc, etc.  It is almost like an insider's view of the business.

Mapletree Commercial Trust

One of the properties owned by Mapletree Commercial Trust (listed on the Singapore stock exchange) is Vivocity.  To those who are not familiar with Vivocity (or Singapore), it is one of the largest malls around located at the southern tip of Singapore just at the entrance to Sentosa (where one of the integrated resorts - Resorts World - is located at).

Vivocity has 1,038,000 sq ft of net lettable area and 2,179 carpark lots. The occupancy rate stands at slightly above 98% and has 300 over tenants.  More recently in the news, PageOne bookshop closed citing high rental costs.  When PageOne moved out, the space was quickly taken up by two other retail outlets - Franc Franc and Cotton On.

Just walking around Vivocity, you will be quite amazed at the shoppers who are there.  Families, teenagers, tourists, office workers, etc.  One would expect it to be less crowded during the weekdays but it is not.  Sited just beside harbourfront, tourists from cruise ships often go there to shop.  Not to mention that Sentosa is just conveniently located by a monorail from Vivocity to Resorts World.  

The shops are also wide and varied.  There is Giant and Cold Storage (supermarkets) for those who want to do grocery shopping, a cinema, many food outlets and restaurants and lots of retail shops.  The shops cater to a wide mix of shoppers whether they are shopping for electronic products, home furniture, clothes, luxury goods, etc, etc

I think Vivocity will continue to do well but I am not certain what the impact of the new cruise terminal at Marina will have on the business it gets from tourists. Nevertheless, since it is conveniently located at the doorstep of Sentosa, I am certain it will continue to get lots of business from travellers who are staying at Sentosa.

BreadTalk

Well, it is easy to analyse a business if you can see how many customers there are.  Breadtalk is one of those business that has been expanding abroad.  While I am not too certain how the overseas outlets are doing, I can say that the outlets in Singapore are doing pretty well.  Breadtalk sells bread and together with many of the Breadtalk shops are Toast Box (basically a cafe like shop that rivals another famous Singapore brand Ya Kun).  

Anyway, let us focus on Breadtalk first.  Many of its outlets are conveniently located where there are office crowds.  Just walk into a Breadtalk outlet in the morning and you will be surprised to see the number of people queuing up to buy breakfast back to eat in office.  I figure that a typical Breadtalk shop can easily have more than 200 customers just during a one-hour window in the morning peak hour where office workers are streaming to the office and need to grab some food to eat.  Each customer probably spends $3 to $4 on their breakfast.  Many of them are repeat customers.

Conclusion

So there you have it.  Two businesses that are listed in the Singapore stock exchange that you can easily observe to determine how well they are doing.  At my writing, Mapletree Commercial Trust was trading at S$0.965 and Breadtalk was trading at S$0.50.