Hello SP Group, I'm Back!

 

Yup, I've moved back to Big Daddy's electricity provider this month.

To recap and have a better sense of context, you may want to read my previous 18 Oct 2021 post:

SP Wholesale versus Electricity Retailers

I've been "lucky" for the past 2 years - paying a mere $0.168/kWh - despite the rising quarterly Electricity Tariffs...

But that 2-year honeymoon ended this month.

My current electricity provider tried to "entice" me to renew the contract for another minimum 18 months with an extra "discount" for repeat customers.

Good try.

I don't sweat the small stuffs like downloading apps to enjoy extra discounts for Kopitiam or points for free burgers at McDonalds...

But for my monthly electricity plans? I bothered to do some quick research. Wink.

For historical electricity tariff prices, click the excel file from SP Group below: 

Historical Electricity Prices

Those of you who see better with pictures may want to convert the data into charts yourself. (What? I don't spoon-feed one OK?)

What do you see?

Locking prices for the next 18 months at current electricity prices is like buying near a market top...

I just can't bring myself to do it. (Occupational hazard of a trader)

But why return to SP Group?

That's because no independent electricity retailers are now offering variable plans!!!???

Remember when we can choose independent electricity retailers for the first time?

We were offered "fixed" and "variable" plans right?

I'll let you figure out why no independent retailers are offering "variable" plans to us anymore...

Well, no worries!

Hello SP Group, I'm back!

Of course I can be wrong!

I'll have eggs on my face if next quarter's electricity tariff goes up...

But if you are a Trend Follower like me (Lower electricity bills from April to June as tariff falls by 5.4%), then not locking-in our monthly electricity is the way to benefit from future lower deflationary electricity prices.

P.S.  Since I'm not Buy-and-Hold but a Man-Whore Market Timer, once electricity prices have dropped to the low 20s (break below 20 even better), I'll start flirting with the independent retailers again.

What's The Best Way To Earn More Money?

 

Selling.

Duh!

Digital Sing Dollar - Akan Datang

 

Ever wonder why NS55, CDC, and other big daddy "handouts" nowadays always come in the digital form?

For IT dinosaurs like me, I surely miss those hardcopy paper voucher days!

Have you also noticed the booths around high traffic shopping areas offering smart phone courses for senior citizens?

Yup, big daddy laying the groundwork.

Singapore fell behind China with WeChat Pay and Alipay - Mainland Chinese tourists coming to Singapore a decade ago were surprised Singapore so "behind"!?

Yup, when I was in Shanghai, they were already using mobile payments at the wet markets.

Once big daddy realised it, we quickly developed our own PayLah! and other apps. 

The benefit is that big daddy can better target and monitor their handouts do what as they are intended.

For eg, if $300 is given to lower income families to offset their grocery bills, the recipient cannot then use the digital $300 to buy Toto or enter our casinos integrated resorts... 

Big daddy knows!

As for the ugly side, like "kiam siap gui" boyfriends who after a breakup, demand gifts given to their girlfriends back!?

Trudeau's Canada very shamelessly froze the bank accounts of those citizens who financially supported the truckers' strike. 

That's low.

Of course, that would not happen in Singapore! (I not stupid; I don't want to be invited for kopi)

Anyway, we are living in interesting times! 

In my lifetime, I can witness a new innovation in money.

The last time money had such an innovation was when the Chinese invented paper money!

And that's even longer than when policemen wore shorts...

MAS on Digital Sing Dollar 

Diversification is for the Know Nothing Investor

 

Edge as in Local Local Knowledge - Or so I thought!

 

We often ask what's our edge when it comes to investing/trading.

Tip: If you have no freaking clue, you don't have an edge lah!

Just this morning, I discovered what I thought was my edge turned out to be merely superficial advantage all along...

I've been staying at Queenstown all my life - all 55 years of it!

If Queenstown were a stock, I'll have an edge over those who are not staying here. I mean I can rattle off what happened 30 years ago, what new shops or buildings popped up recently (technicals)...

I also have first-hand knowledge of the population growth (or lack of) here; the mix - whether it's aging or more young families moving in; and whether there's buying power as reflected by the "attasness" of the retail shops here (fundamentals).

Take a look at the picture above.

On the left side, there's a long row of 2 storey building. This I know about although I never went in and see it for myself - it was a former golf driving range. 

I only knew about it as there's a sign outside near the Queenstown library (what others say).

This week finally walked in to take a look.

Now it has been transformed into Children's Cove and Aqaduck? Interesting! (Child care big business!)

I discover there's 2 empty fields on the right side only after moving to my new high floor Dawson flat???

I mean I've only walked or took public transport outside Margaret Drive road previously.

The 2 fields are nestled inside landed properties estate. 

 

Just googled this morning and discover the top field is the Singapore Cricket Club Rugby Academy, while the bottom field is the Singapore Cricket Club Ground.

I'm not so smug now.

Feels similar?

Especially those of you born and bred Singaporean investors who have been investing in STI stocks for over 30 years?

Even now, I still make "I thought I knew but actually I no freaking clue" mistakes in trading...

LOL!

  

Are You Confident Enough To Recommend Others Your Favourite Eating Places?

 

I have a Filipino sales colleague at my weekend sales gig who have his in-laws coming to Singapore to visit.

He asked me about the usual touristy Maxwell and Novena hawker centres. Which stalls good, what food to recommend, etc...

I smiled and asked, "Near your home you don't have your favourite hawker centres and coffee shops?"

His eyes suddenly lit up, "I like you recommendation! Thanks!"

I didn't say anything!!!

That's coaching by the way - let others figure out the answer for themselves.

This Filipino colleague has been in Singapore for 5 years already. He is in his mid 30s. 

Before joining us as Showroom Sales, he was "sitting at home" for 2 years.

Previously, he was Shop Manager at one of our local DIY shops - which unfortunately closed down...

He is no bei kambing; he is shepherd.

That's why he got the "answer" to his own question immediately. Wink.

Bei kambings need to be spoon-fed.

Long time readers at this watering hole may find this post kind of familiar... Deja vu?

It's this 10 year old post lah - What's Your Favourite Chicken Rice Stall?

When friends or relatives ask you what stocks to buy or what asset class good to invest, how would you reply to them? 

That's quite telling about your level of craftsmanship, isn't it?

Doctors and Lawyers

 

When we ask kids what they want to do when they grow up, no prizes to guess the top 2 professions. Wink.

Its no surprise at our local Universities, the Medical and Law faculties are the hardest to get into... 

If you don't have straight As... 

Wait! How do you reconcile this with the recent deemphasizing of grades by big daddy? Eh...

And if you look at parliament, how many of them are lawyers and doctors? 

Power or what?

You know what's interesting?

If we say doctors represent the left-brained and Science stream, then lawyers would be the flagbearers for the right-brained and the Arts stream.

Those weak in math would not get into the Science stream. And without Science, you can't enter the Medical faculty.

Students more comfortable with words (euphemism for bad at math) will choose the Humanities or Arts stream. Try telling your parents you want to do Literature or History... But once you mention Law... All of sudden everyone fully supports your "wise" decision to choose the Arts stream! LOL!

You know the irony?

Doctors (metaphor) who are good in math don't take the time to verify the numbers. If they had, they would have spotted the numbers don't add up!?

Instead, they pay more attention to the shilling and spin of snake oils. These snake oils are skilled in using words to obfuscate and bewilder their flock...

Of course these marketing and PR propaganda do not work on lawyers (metaphor) who can read between the lines and tell the nuances between similar words. For eg, snake oils don't say high risk; they say high volatility. You don't say junk bonds; you say high yield bonds!

Guess what? 

Lawyers instead prefer to be swayed and bamboozled by numbers and statistics plucked out of thin air by snake oils!

Some of you can spot the humour of this post.

And if you can laugh at yourself, you'll probably survive the next few bull/bear cycles. 

In gambling speak, if you can't spot the patsy at the poker table, you're it!

Or if you're a yield hog and you can't figure out how the asset you're riding is able to sustain the yield??? 

You're the YIELD!!!

 

Stock Index Versus Individual Stocks

 

We are often told stocks always go up.

And this is TRUE!

Of course there are 2 tricks to it.

1.  You need to use a long time frame. 100 years is best! (If you were wrong, its your clients' grandchildren who will be threatening to sue, but by that time, you will be long gone...) 

2.  Always use a stock index.

Of course readers who are i9 multi-core will have guessed what I'll be writing next and don't even have to bother reading further...

For readers who are single core Pentium like me, let me explain by applying History to investing.

You do know that empires come and go. Even empires so mighty and great that no one can believe will decline and fall one day...

Remember Rome? How about the Tang dynasty? Or more recent the British Empire?

If empires and countries do rise and fall, how are you so confident that the individual stocks that you own will always go up in the LONG term?

Remember Kodak and Polaroid? Or Motorola and Nokia?

There's not much money to be made by telling clients to buy an index fund or ETF. 

Hence snake oils show long term charts of stock indexes, but charge you fees and commissions to recommend what INDIVIDUAL stocks you should buy (and never sell).

See how you got "manipulated"?

This is a common Jedi mind trick used on unsuspecting bei kambings...

Now its so much easier to spin Buy-and-Hold; think Long Term; when its Lower, just buy More!

These are comforting words when staring at your portfolio in the red...

No?

Are You A Yield Hog?

 

No need to reinvent the wheel.

Read the article below and take the 4 test questions and you'll know:

Are you a Yield Hog?

How?

Let me refresh you with some financial history, if you still in denial...

1) Remember the Lehman minibond saga of 2008? Why did those "savers" jump onto the path of Earn More instead of sticking with their Save More fixed deposit accounts? Was that extra few % really worth it?

2) How about Peer-to-Peer lending a few years back? Did you bite? I mean lending your money out at 18% interest is surely better than voluntarily contributing to CPF at 4%! Why today so less hype?

3) Did you invest in "High Yield" corporate bonds over their rated cousins? Why? It was all fun and games until you realised they were called Junk bonds in the past for a reason!

4) Where did all the Shipping Trusts go? I mean when they were launched, their yields were on average 3-4% more than their REITs counterparts. There must be a reason so! 

5) Did you choose the "lowest" wholesale electricity plan last year? It never occurred to you they must be a reason big daddy very low key - never promoting it to the general public? Maybe wholesale plan is more suitable for corporations who know how to hedge their electricity exposure? Just like how SIA hedges their fuel costs?

Dividend investors are not the same as yield hogs. 

I'll leave it to you to figure out the difference yourself.

I too was once a yield hog... Until "crash got sound" straightened me out.

LOL!

Yup, I no better than you.

   

Diversification is for...

 

As with everything we read or learn from others, we need to understand the "essence" instead of just blindly parroting what others say...

Of course I diversify across different asset classes. 

Then again, for my equities investment portfolio, I don't own more than 10 stocks.  

To some, its too "diversified"...

To others, it may be too "concentrated"...

Compared to those retail "investors" who have most of their net worth concentrated into equities, but they are spread across 50 stocks or more. 

Who is more diversified?

Its quite easy to determine.

Did you panic or have sleepless nights beginning of March when Russia invaded Ukraine?

We all have different competences and pain thresholds.

Crash got sound.

Don't let the recent bounce go to waste if you realised you have taken on too much concentrated risks... Wink.

 

How To Make Money In Investing/Trading?

 

By SELLING.

I'll let you figure that one out yourself...

Timing, Luck, and What Might Have Been...

 

You know what?

If the current Ukraine war had happened 2 years earlier, Hing Leong would still be around. And making money hand over fist at the current oil prices!

The owner of Hing Leong got the direction of oil right, but got his timing wrong...

Similarly, if that Singapore nickel trading scam operator was "legit" and not a scam, those high net worth investors would be celebrating their windfall of a win! That's if they went long.

On the other hand, if they had shorted nickel, their investments would have turned into zero... 

Go big or go home?

If big daddy would to sell Chartered Semiconductor or NOL today, would they not have gotten more for their divestments?

Well, Warren Buffett didn't hope one day he'll breakeven on his lemons... Remember the last time oil went ballistic in 2008?

Even Warren Got Hurt By Oil Prices

Risk management is very personal.

Everyone is different.

Some may prefer to lick their wounds and walk away to live to fight another day...

Some will only stop fighting till they got taken out on a stretcher...

Some just want to make money.

Some prefer to be "right"...

The Math for One Day I'll Breakeven...

 

Hands up for those of you during your bei kambing days, honestly thought if we had a -50% loss on a stock position or at portfolio level, all we need is just a 50% gain to breakeven?

Math is hard right?

For those of you whose math is like mine, here's the shortcut above.

Actually, just memorise two will do:

1)  - 20% need + 25% to breakeven...

2) - 50% need + 100% to breakeven! 

Let our track records do the talking.

If you have lots of 2 baggers in your portfolio, then you've earned the right to tell others that if we can't stomach a -50% loss, we should never be in the stock market.

Alternatively, if you have a history of making lots of 25% gains, then you'll be comfortable with any plain vanilla -20% bear markets. They don't phase you.

All of us have our "uncle point". 

That's the capitulation point where we just can't stand the pain anymore and just throw the baby out with the bath water!!!

I've discovered my "uncle point" through crash got sound....

The trick is to get out way before we reach that point.

Are You Financially Literate On Our SingDollar?

 

Jamus Lim to MAS: Let Singdollar strengthen to boost our purchasing power.

The average Singaporeans riding the ComfortDelgro bus probably have no interest in our Singdollar exchange rate.

You too, if you are a Singapore koala bear or panda - only invests in Singapore properties or Singapore stocks exclusively.

When you should.

Would overseas investors come park their money in Singapore stocks and properties if they think our Singdollar will slowly weaken and weaken over the next 10 years?

Would you invest in Malaysia properties if you think the MYR will likely reach 4 to 1 in the next 10-20 years?

That meant your Malaysian property has to appreciate by more than 33% just to breakeven what you have lost in currency conversion....

The good news is that youths are probably more savvy than old fogey koala bears and pandas in our community - when it comes to Singdollar exchange rates.

Especially when they are already vested with US options, stocks and cryptos. The same goes if they held passive ETFs with LSE or Hang Seng listed China tech stocks.

Even for those youths not in our financial freedom community, they are fully aware and know how to take advantage of our Singdollar strengths and weaknesses - especially when they like to buy stuffs online from overseas!

Before this Wuhan virus thingy, whenever a country's exchange rate has "bombed" against our Singdollar, you'll see a spike in holiday travels to that country! 

You think why so many visited Korea with the recent opening up?

The thing about Singdollar exchange rate is that its a bit like our property prices.

If we are not vested and looking to buy a property in Singapore, we'll support big daddy's property cooling measures. Who doesn't like lower prices?

But if we already vested and looking to sell our properties, we'll probably send our "regards" to big daddy for capping our profit taking...

Similarly, if you are looking to take profit from your overseas investments, and bring the funds back to Singapore, you'll hope our Singdollar will weaken... The lower the better!

But if we are looking to diversify and invest overseas for the first time, we'll sing another tune... Let our Singdollar strengthen leh!

Its fun when overseas investing is like going to JB; everything is so much cheaper than in Singapore!

Until you got burnt.

Then you'll become born-again koala bear or panda. 

LOL!

To Concentrate Or Diversify?

That's not difficult to answer.

There's usually 2 situations where one tends to concentrate or diversify - depending on one's situation.

1)  Got craft? 

When you are clueless to what doing you, of course being diversified is one way to ownself do less harm to ownself.

But if you believed "luck" is preparation meeting opportunity; when opportunity presents itself, of course you would concentrate and strike while the iron is hot!

That's what edge over others or craftmanship is for!

2)  Up mountain or down mountain?

When you have nothing else to aim for, or is wary of giving back to the markets what you have gained so far, then diversification to protect wealth may be the preferred choice.

It could also be due to shrunken baxxs due to old age... 

But if you're like that Indonesian Chinese who went from $1 billion to $7 billion with his concentrated bet on Tesla, and is still aiming to reach $100 billion, then concentrated bets would be the poison of choice.

He reminds me of the tale of the bird with no legs... Got to keep flying... Always on the way...

What has age got to do with anything!?

 

SP Wholesale versus Electricity Retailers

 

I noticed some Singaporeans are quite pissed off with the increased in electricity tariff for households by a "mere" 3.1% for October to December period.

Really?

I mean for a HDB 4 room flat, the average monthly electricity bill will increase by $2.49 before GST. 

That's if you are one of those who have not switch to any of those OEM Electricity Retailers, still happily on the SP Group default regulated tariff plan. Those who laughed at you for not switching are not laughing now... Are they?

To be precise, these pissed off Singaporeans are very "buay song" their chosen Electricity Retailers are no longer giving them the generous 20-30% discounts they used to enjoy.

I mean if you are not in sales, don't have profit and loss responsibility in your day job, you got excuse.

Then again, you mean you have already forgotten what happened with Grab and Uber? 

What about those generous "carrots" that banks and credit card companies dangled in front of you, but after a few years, they'll give you a bigger hamster wheel to run on, or else the carrot incentives will be taken away... 

So fast forget?

You really believed the 20-30% discounts from OEM Electricity Retailers will be forever and ever? You didn't anticipate the spread between Standard Regulated Tariff Rate and Non Standard Rates will narrow over time?  

If you're an investor or trader, I'll be betting you'll be more drawn towards Technical Analysis. Wink.

Before I go on, I believe MOST of you will not be affected by the price increase of electricity FOR NOW.

Steady lah. Don't anyhow panic for nothing just from reading headlines.

Firstly, if you are still on the SP Group's default Standard Regulated Tariff plan, the impact is non-event.

Secondly, if you already have switch to any OEM Electricity Retailers, you are only affected if you are RENEWING your electricity plans within these 3 months from October to December.

Unless you were one of those "unlucky" customers who chose the "wrong" electricity retailers that decided to throw in the towel... Now feeling very jilted and abandoned...

Can anyone spot the biggest difference between those electricity retailers that are still thriving and those who cannot make it? (You may want to reflect if you always thought you're a fundamental investor)

Want to know why LUCK is better than skill?

During May 2021, I blur, blur, no goals, no plans, just renewed my Tuas Power PowerFix plan for another 24 months.

The price locked 4 months ago was - $16.80 cents per kWh with GST. 

Today if I were to renew the same PowerFix plan for 24 months, it would cost me - $25.68!!!

Crazy right?

Not so crazy if you knew during April 2020 last year, WTI Crude futures went negative!? And today one year later, WTI futures is now above USD$80!!! Now that's what I call a reversal!

So what's next year's energy price? Your guess would be as good as mine!

For the majority of us who have locked-in a much lower price till next year or two, don't be complacent.

Use the extra time to prepare in advance what would you do if oil prices were to revert back down to mean. What to do if prices go higher and higher and breaks USD$100? 

If you think oil prices will go lower going forward, would switching from a fixed price plan to a guaranteed percentage discount variable plan be better?

Then again if prices were to go higher, of course remaining on a fixed price plan would make better sense. You should be asking whether to lock the price for 6 months, 12 months, or 24 months? It all depends on the level of conviction for your thesis, doesn't it?

OK, there's a reason I've left the trickiest one till the last - SP Wholesale Electricity Price (WEP).

On paper, its the "cheapest".

If you believed in the Market Efficiency thesis, why isn't this plan the most popular???

I'll let you figure it out for yourself.

But I can help you along with some poking questions:

If big daddy were to liberalise the electricity market today, would it succeed?  

Would you make the switch for a mere 3% discount from standard regulated tariff?

So was big daddy lucky like me? Or did they spot an opportunity 3 years ago, and quickly acted upon it? 

I would humbly suggest you can consider WEP if you are NOT one of those who were genuinely surprised that HDB flats will go to zero after 99 years. 

If your england is so poor you don't understand what a lease meant, you're probably the type of customers that SP Group want to avoid having. Hence the reason why SP Group not pushing WEP so hard in the market.

They probably don't want the CPFIS scenario where customers go to Hong Lim Park complaining why offer the WEP option to me when I can ownself hurt my ownself!? 

Want to bet that even if OEM were to be introduced today and not 3 years ago, there will be customers who will still switch? Even if the discount is a mere 3%...

Those who voluntary contribute to CPF would do it! (3% not much different from 2.5 or 4%)

These are people who value certainty. And 3% saved, compounded by 30 years, these happy souls would probably giggle in their sleep! 

WEP would be ideal for those who are already into selling naked options for the "passive income".  Its fun collecting the premiums month after month, especially when most options expire worthless. That's until...

Similarly, WEP would appeal to REIT yield hogs gleefully collecting their dividends year after year. That's provided the REIT massacre don't happen again like in 2009. A more recent example is Eagle Hospitality Trust. And I guess most Singaporean yield hogs will never touch Shipping Trusts ever again, never mind their juicy yields were much higher than REITs!

If a 50% increase in electricity bills can get you all knotted up, would you go ballistic if your electricity bill were to spike up by 2 times, 3 times, 7 times?

OK, one year's data from SP Group is too short.

New Zealand has decades more experience with Wholesale Electricity Market. Try this:

Spiking Electricity Prices A Shock To The System

Figure out why those customers not on "spot contracts" were better "insulated".

And why WEP not popular due to "high market risks" according to insiders:

Switch and Save

 

I know. 

Who wants to do their own due diligence. What? Do my own reading and research?

Nah!

Come to think of it...

Why study when we can just copy the homework from our classmates?

Die lah! Your family of 4 don't earn $6500 per month...

Family of four needs $6,426 a month for basic standard of living in S'pore.

Let's round it up to $6,500 per month since I hate "precision" when its not needed.

Which means we can assume the man is making $3,500 and the wife makes $3,000?

(OK, OK. For feminists, we can easily say husband makes $3,000, while wife makes $3,500. There. Happy?)

If husband makes $6,500 per month, to have a better standard of living, the problem is easily "solved" by having wife go back to work. 

I mean their children are not babies right?

My time before maids were popular, when both parents work and children were left at home on their own, they were known at latchkey kids.

Now what happens if a family of 4 only earns $5,500 per month. And both husband and wife works. Die! Below basic standard of living!!!

How to overcome the shortfall of $1,000 per month?

What if I come "selling" the benefits of a dividend portfolio? 

I mean all this couple need is "just" have a $250,000 portfolio of dividend stocks that yield 5% per year. 

Problem solved!

Gee. Thanks!

Wait. 

How do this couple amass the $250,000 capital in the first place?

I mean first they have to increase their income to $6,500 per month, no? 

Unless you tell me the researchers got it "wrong"? $6,500 is not the basic standard of living? Its much lower?

To start saving, its only when their household income is above $6,500 per month before they can afford to save any surplus... Can we agree on this?

To save $1,000 per month, the couple have to increase their household income from $5,500 to $7,500 per month!?

And they would still need 20 years before they can have their hands on that "fabled" $250,000 capital to play the dividend income game!!!

Has anyone spotted the Elephant in the room?

If this couple can increase their earned income by $2,000 per month, is there still the need to wait 20 years for that dividend income!!!???

LOL!

What if the same couple meet the 1M65 people?

Would the 1M65 people awkwardly shy away from any families that make $6,500 and below per month?

Or would the 1M65 people still encourage voluntary contributions to CPF? 

I mean, man up! 

A little bit of austerity never killed anyone. 

Just take $1,000 from their current $5,500 per month and voluntarily contribute to CPF. The interests will compound and compound until...

Look! You both are already making so little mandatory contributions to CPF due to your low salaries... 

Cannot! 

Like that how to survive when you both retire???

No, don't live for today, we must live in the future! 

If we fail to plan, we plan to fail...

"Chotto matte"...

Pray tell how should this family of 4 survive on $4,500 per month again?

Giving advice is easy when the pin don't prick your own skin...

There's another "easy" solution.

Report on minimum income standards not an accurate reflection of basic needs

Well, that was quick!

What if the basic standard level of living income, for a family of 4, according to big daddy's calculation is $4,500 per month?

(Big daddy gives a knowing nod and wink to the 1M65 people. Don't worry. I got your backs)

Problem solved!!!

Invite the researchers for "coffee" for stirring shit?

What do I think?

Well, I know my own feet, I don't need others to tell me what basic standard of living shoes I should wear. 

Who wants "basic" shoes anyway?

I want comfortable shoes. Wink.

There are some ang-moh bloggers who can retire to Phuket or Chiang Mai on $1,500 passive income per month. Tell the whole world they have achieved FIRE before age 35...

Then there are non-HDB heartlanders in our community who would treat any retirement incomes below $10,000 per month as "hardship"...

Its like asking others how much you need to retire?

Now that's a dumb question!

Earn More; Save More.

Do both!

But focus on Earn More if you need to prioritise.

Don't believe?

Show me countries, companies, families, or individuals that achieved prosperity through austerity?

STI ETF can be good for those who can't Cut-Loss

 

I'm not a fan of passive investing.

It just intellectually "weird" to me, to savour the pleasure of  getting rich, by not doing anything at all???

The analogue is like winning an Olympic gold medal by sipping pina colada while chilling in the shade on the beach...

But I must say there's one good thing about passive investing using the STI ETF - its great for those who can't bring themselves to cut-loss on losers.

STI will do it for you!

FTSE Russel and SPH do quarterly reviews on the STI component stocks. Any lemons/dead anchors that are dragging the STI down will be kicked out!

They will in turn add "hot" stocks of the season into the index. 

That's the secret sauce why stock indexes always go up!

How not to go up if we only include stocks that go up, and weed out stocks that go down?

Its never passive.

Can you imagine how bad it must be for SPH to ownself kick ownself out of STI?

The current STI ETF is still 3 banks and 1 telco (plus REITS & property if you pedantic). 

ZERO exposure to tech unicorns...

What about SEA Ltd? 

Oh! That's included into the MSCI Singapore Index.

Those who trade the SIMSCI futures will know. Wink.

I know what you thinking.

Is there an ETF for MSCI Singapore?

Yes, you can goggle iShares MSCI Singapore ETF. 

Its listed in the US.

But, but I already torn deciding which is better - SPDR or Nikko STI ETF?

Now I sharing another extra choice is not helping!

Don't worry. 

Just go back to the person who sold you on "passive" investing. He/she will tell you what to do.

Problem solved!

Snake oils love customers like you!

Freehold Investment Income?

 

I think I'll help CW out.

Sometimes we use lingo or terminology that flew over the heads of readers. 

Don't laugh. Give chance.

When I started "serious" mobile gaming a few years back, I too was a bit lost when I went to their Reddit site.

I mean I knew in gaming, "OP" was "over powered".

But in Reddit, "OP" meant "original poster"!? 

Eh? 

Then there was TLDR - too long; didn't read.

Which meant my blog posts and comments would not appeal to these short attention span Reddit users!!!

LOL!

So what is Freehold Investment Income?

Before I explain, let's take a step backwards to explain how land/business owners think.

When a land owner evaluates a new business proposal from his in-house shepherd or outside snake oil, the first thing he calculates is how many years it would take to get his capital back.

For those who studied Business Finance, its IRR (Internal Rate of Return) expressed in land owner language. 

Why is it important to take back your capital?

Have you noticed some landowners are doing very well despite letting their listed or non-listed businesses go to zero in a bankruptcy?

As a minority outside investor, we can only take back our capital from sale of our shares or cash from dividends.

But for the landowner, if he is CEO, he can pay himself big salary increases and bonuses despite the company bleeding in red ink.

And if he is Chairman of the board, he can pay himself obscene director's fees for just meeting a few times a year...

Even better if the landowner himself appoints himself BOTH as CEO and Chairman! 

Yes! Its ownself check ownself!

Then there's other tricks like siphoning funds out of the company through 3rd party related transactions. Wink, wink.

That's why most outside investors will sit up when they spot land owners divesting their own share holdings or surreptitiously and quietly move company funds back into their own pockets.

Ai yeah! Its the same in a divorce settlement lah! 

Some rich men will secretly put their assets in the names of people he can trust. Anything to prevent that bitch from milking him completely dry! 

(Eh! Don't get caught! Its against the law one!)

OK, now we've got the context out of the way, what better way to explain this home made investing terminology called - Freehold Investment Income than through examples?

Shock!

You mean its not proper Business Finance terminology? Can't find it in Investopedia?

Eh! Why you all surprised?

Especially those who are fond of using this home made XIRR.  Yes, its not proper business finance terminology too!

Why is it happiness whenever we have a 2 bagger or doubled our money in investing?

Its because if we are conservative or strolling down the mountain, we can simply SELL half our holdings and retrieve our capital safely back into our pockets.

Then we are merely risking the "unrealised" profits. 

Now its a matter of make more or make less.

We can even "pretend" to be Buy-and-Hold "investors" and chant "Let our profits run!"

Of course conveniently leaving out you already got your capital back...

Shh...

Why?

Because if that investment turned out to be a 10 bagger, pain!

As for those who prefer to flex in percentages, you are ecstatic too!

What's the percentage return for ZERO capital employed?

Infinity returns for the win!

Power or what!?

If you have a rental investment property, and your rental yield is 5%, in 20 years' time, you can do the Tarzan "or-yi-or" thing to others.

"See? This rental property is "free"! Who says you can't have your cake and eat it?"

"And every month, the rental is "free" money too!"

If you are age 25 or 30, compare the above rental investment property path to voluntarily contributing to CPF, which is better for climbing up the mountain?

If don't like property, you can substitute with equities like REITs?

How about cryptos? And double-digit yields from DeFi?

Hello! I'm not dissing CPF OK?

Just doing my gentle poking reminder that depending whether we are climbing up the mountain or strolling down the mountain, the strategies and vehicles we employ can make a world of difference!

 

 

Stable Consistent Income Versus Variable Volatile Income

 

One of the most underrated benefit of the Earn More path is Self Discovery.

Especially when we put real money on the line!

Once upon a time, I wrote this post to help newbies learn more about themselves:

First Things First - Invest In Yourself

There, I used the example of HOW you like to travel may give clues to which investing/trading vehicles or instruments you would be drawn to.

Today, I would like to draw attention to your day job.

Most of us, after several years in the corporate world, would probably know which we prefer:

1)  A stable consistent income month after month, year after year.

2)  Completely cool with a variable and highly volatile income. You know, some months like famines, some months bumper harvests!

Do you know anyone who earns $10K and more a month in a stable job, quit to become an insurance or property agent?

Or throw away their iron rice bowls to start their own businesses with an uncertain future?

If you have children, would you get a stroke if they come back home to share they would like to career switch to become a full time singer or actor?

How you respond can be interesting and revealing about yourself.

Would you be supportive?

"Sure! Go chase rainbows! We are only young once... I support you!"

Or would you with the best of intentions tell them the "odds"?

"Are you sure what you doing? Only a minority can make it. Majority just fail you know?"

Have you noticed to people that don't matter - casual colleagues or acquaintances - you almost always appear positive and all supportive?

Its because if they die its their own business, isn't it?

But to your love ones and people that matter, you are often conflicted...

On one side, if they fail, you really feel their pain. So you don't want them to get hurt.

On the other hand, you were young once too. You had your flames of passion snuffed out by well intentioned friends and family members... You don't want to repeat the sins of the father all over again...

Then again, if your love ones succeed, sure, you'll be happy for them! 

But that will also make you feel sorry for yourself... Sorry that you gave up before even trying so many years ago...

Can you now better understand why some retail investors are yield hogs? 

Why some even structure their dividend portfolios in such a way that they try to get dividends flowing in over as many months during the year, as opposed to one big or two dividend lump sums over the year?

Plus why some prefer the Save More path over the Earn More path?

That's not all!

I want to draw your attention that not everything is what it seems on the surface.

Context is important.

Your opinion of that ultra conservative "no bxlls" CPF voluntary contributor may totally flip, if you discover how volatile his day job pays... He probably got more guts than you!

And that fearless retail investor using leverage with abandonment wasn't as reckless as you thought... That's when you discovered he got tenure for his day job! That's not fair!

Bet you didn't see this coming!

LOL!

Its never about 4 legs good; 2 legs bad... 

Know your own feet; choose the right shoes that fit.

That's all!

If you are a penguin, no amount of "If you think you can, you can!" will help you soar into the air. Wink.