Financial Freedom

Income Investing - Bonds

Bonds are probably investment tools that most people are familiar with. A bond is basically a debt instrument in which the issuer is obliged to pay the holders or buyers of the bond an interest (usually in the form of coupon payouts) and the principal sum at a later maturity date.

I never really liked buying bonds due to the hassle involved and the lack of liquidity. I prefer to get my exposure to bonds through unit trusts as it is a far simpler way compared to going down to the banks or ATM to subscribe for government bonds or treasury bills.

In Singapore, you can invest in bonds by buying it through the primary market. The good thing about bonds is that the income that you get from it is exempt from tax. You can also use your CPF to invest in bonds. You are however required to set aside the first $20,000 in your CPF-OA and the first $30,000 in your CPF-SA before you can invest in the rest.

There are some great links to read up on the bond market in Singapore. You can view some useful info here: http://www.sgs.gov.sg/

Formula 1 Singapore

So its the Formula 1 Race for Singapore again. The whole town is jam packed and everybody (well almost) are suddenly Formula 1 fans. People who don't usually watch the race are now catching it on TV. Now that's what I call good marketing by F1. People here can't really tell the difference between any of the race drivers. I am still abit surprised that the F1 fever is actually quite hot in Singapore.

I sold away Suntec REITs @ 1.08 on Friday as I felt that the price should hopefully drop further. Been monitoring a few stocks lately and have been thinking of trading the stock market a bit more actively since now I have time on my hands.

Have been reading some ebooks on trading lately. Hope to brush up my skills on trading especially in terms of the Mind, Method and Money. What struck me perhaps was the focus on money management and how much of each stock one should buy when trading. It never cross my mind that money management was such an important aspect of trading.

Adsense earnings have been pretty decent this past few days and if this keeps up, I think my broadband expenses can be covered by my monthly expenses pretty soon. I still think it is possible that there are people who earn more than 3 digit per day from online income. If one really puts in the effort, everything is possible.

Signing off,
Sleepless in Singapore on Sunday 1.31AM

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2. Earn $1000 a Month Working From Home

Portfolio Update

I have sold off Hongguo and PWE (Penn West Energy Trust) for profits of around 30%. Decided that a 30% gain was good enough so decided to exit both stocks. If the opportunity arises, I will enter into both PWE and Hongguo again.

I have also been trying learn more about technical analysis. Just downloaded ChartNexus. It seems like a pretty good software to play around with. Think I will be combining both FA and TA for my purchases of stocks next time round. Still need to learn a great deal about the various indicators and stuff though.

Still no success at the job front. Just bumming around each day with nothing to do. Don't really know what job I am passionate about. I just feel so weary and tired and feel like I could do with a really really really long break.

Just for my records purposes:

Dividends received from PWE = $11.27
Dividends received from ST Eng = $30.00
Cash from selling 24000 shares of Hongguo @0.355=$8488.93
Still waiting for the proceeds from the sale of PWE.

READ RELATED POSTS:
1. Decided to Quit My Job

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