Positioning 101

Hey fans out there, i need your favor to sink into deep thoughts on the following questions:

1. Are you afraid to lose your hard-earned money?
2. Do you keep all your available cash in your savings account / fixed deposit?
3. Do you have all you cash in one single currency?

Should your answer to any of the above questions is "Yes", you are exposed to investment risk. Why? Read on....

1. Since you are afraid to lose, your sub-conscious mind will instruct you to keep it well in a "Tin can" stashed away from public eyes.
2. If you a little smarter, you would keep the money in your savings account or fixed deposit earning slightly over mediocre interest.
3. Thinking that S$ will remain strong against other currency, you chose to keep all your money in one currency.

All the above will subject you to very high investment risk. Still don't understand? Read on....

1. Putting your money in a "Tin can" will not earn you any interest; which will eventually be eroded by inflation + GST.
2. Being a little smarter, the little interest you receive for parking your money with a bank will only cover either inflation cost or GST.
3. Having all your money in one currency will only expose yourself to exchange rate risk. Also, most deposit interest rates on local currency (wherever you are) are lower. Hence, you might lose money due to exchange rate without knowing it.

Things got a bit brighter now? Therefore, it is good to have a qualified advisor help you plan your financials. Don't be Penny Wise Pound Foolish!

Structured Investments

Happen to get my hands on a comparison between 2 structured products launched at almost the same time. You make your own judgement should you be keen to subscribe to it. My advice is to have your "financial health" checked by a qualified advisor before leaping into this. :)


Anyway, should you be keen to find out more, there is a free seminar on 1st June 2007 (Friday), from 7 - 9pm at Capital Towers, FTSE Room.

You may RSVP with Benjamin Lee at 63200669. Limited seats available.

Calmness Before A Storm

While Dow ended the last positive and Asian markets opened positive this week, many would think that weather had turned bright again. I would love to be very sure, but my guts feel is telling me to be careful; there will always be a period of calmness before a storm. So punters out there, pls stay vigilant. :)

God Bless.....

UT Portfolio as at 26 May 07

My portfolio grew by 6.6% in a week, thanks to Europe & China. However, I am a little concern of the sustainablility of this bull run. To play safe, i decided to take profit and reinvest into a balanced portfolio of equity and fixed income fund. You will be able to see the change in the next 2 weeks.

Here is my scorecard for the week:

Remember the 2% per day return?

Forget it lah.... its 50 cents to $6,000,000 TOTO jackpot! Quickly join the Queue! :P

UT Portfolio as at 19 May 07

There are alot of speculation on the bubble bursting, especially after Li Ka-Shing's comments this week.

The market are made up of big time institutional investors (like Mr. Li) and many small time speculators (like myself). If you follow the market closely, you will realise that when these institutional investors ("big boys") take profits from the market, a rippling effect will form; small player follow suit in cashing out on their investment subsequently - causing short term corrections. However, with growing market efficiency, more influx of small players might just create a shift in control of market directions.

Currently in Asia, it was witnessed that most new investors happen to be small players who wanted a try their hands on the "hottest slot machine" - China / Hong Kong Stock Exchange. With the increase in market players, it is not surprising for the big boys to shock the market in a bid to scare away the weak-hearted punters. In my opinion, the big boys just want to show that they are still in control.

However, all this might change in a very near future. With information readily available and small players being more investment-educated, the investment table might turn. A stronghold the small players created together could easily manipulate the market in any way they wish. The effect would be even greater than any market movements witnessed before..... this will be the REAL BUBBLE.

Here's my scorecard for the week:

Is this Market Noise or Bubble formation?

I happen to speak to a fund manager (who specialises in Asian Markets) today, asking her on her thoughts of the various negative comments in the market - formation of the equity bubble (in China).

She mentioned that she have been through a few corrections through her many years investing in Asian equity. She concurred that "the Bubble" is indeed growing larger by the day, but she do not foresee the bubble bursting anytime soon. We also discuss about China 2008 and possible fiscal policies the authorities would take to prevent the bubble from burst too early.

However, she warned me about the "Silent Killer" - when everyone is talking about the bubble, most would have taken necessary precaution which results in dying-off effects of negative noise. And when that happens, the real danger lurks............

Personal Picks

I am looking at individual country funds in Europe region..... things seems to be heating up. I am also looking at Fidelity China Focus Fund; seems like a lot of demand for this....

I still maintain the view of underweight on US, overweight in GEM / Asia (short term), overweight Europe ( mid term - long term).

Why my housing loan application got rejected???

I believe there are more than a handful of people out there who have the same question on their mind when their housing loan applications got rejected by the banks. But how many actually know what goes on behind the scene in credit processing?

Besides the normal credit checks, banks have a standard procedure to calculate your Debt Servicing Ratio (DSR) to check if you meet their internal criteria. Based on my past experience, i have summarized the steps require to tabulate the DSR (may differ from bank to bank):

Scenario:

Client A (40 yrs old) would like to buy a freehold private property with indicative value of SGD 1,000,000. He is planning to take a loan from the bank for 20 years. He has a CPF lumpsum of SGD 350,000 sitting in the OA account after working for many year. He also have FD Savings of SGD 200,000 with a bank. He has a outstanding car loan where he pays a monthly installment of SGD 700, and a monthly installment of SGD 300 on his Credit Card. If he earns $4,500 gross employment income every month, will his loan application be approved (for 80% financing package)?

Step 1: Calculate Stamp Duty requirement

Stamp Duty Calculation:
1st $180,000 – 1%
2nd $180,000 – 2%
Subsequently – 3%

For property worth more than $360,000, you may use the following short cut formula:

Stamp Duty = Property value * 3% - 5,400

For Property Value @ 1,000,000

Stamp Duty
= 1,000,000 x 3% - 5,400
= 24,600

Step 2: Calculate Maximum Loan Amount (80% financing)

Private Property VL = $1,000,000
Maximum loan amount = $800,000

Step 3: Calculate Monthly installment for the loan after deducting CPF lumpsum

CPF lump sum available = $350,000
FD = $200,000
Stamp Duty = $26,400 (use CPF to offset)
Nett CPF available to use = $323,600
Loan Tenor required = 20 yrs

Income = $4,500 (Gross)
Car Loan = $700
Credit Card Monthly Installment = $300

Generic 80% loan package @
1 yr 3.50%
2 yr 3.75%
3 yr 3.98% (normally banks will take the largest to calculate)

Actual loan required
= $1,000,000 - $200,000 (FD) - $323,600 (CPF Lumpsum)
= $476,400 (less than 80% - ok )

For 20yr loan @ 3.98%, monthly installment:
Loan required (PV) = $476,400
Tenor (n) = 20 x 12
Interest (i) = 3.98/12

Compute montly installment (PMT) = $2881.87 (require amortization)

Step 4: Calculate DSR (most bank uses 40% as benchmark)

Total Current Liabilities = $2881.87 + 700 + 300 = $3881.87

Debt Servicing Ratio (DSR)
= Total Current Liaibilities / Total Gross Income
= 3881.87 / 4500 * 100%
= 86.26% > 40% (Loan will be rejected)

Options:
1) Get one Joint Applicant with income > $5204.68 (3887.87/40% - 4500)
2) Reduce loan amount
3) Increase loan tenor + joint applicant

Note: Most banks have age limitation on the applicant; they restrict the maximum age of applicant after the expiry of the loan to be at 65 years. In above scenario, Client A will be 60 years old after the loan expires, thus still within the age limit. Take note that legal fees not taken into account.

4D & Toto

Alot of people i know place bets on 4D & Toto on a regular basis. They all say that the odds are at 50% chance of winning (be it small prize of big prize); so optimistic! But on a serious note, i too place bets on Toto each time the accumulated cash price crosses $2,000,000. Imagine if you only spend $2 to win the grand prize (single winner of course), the ROI is 1,000,000 times.... :P

So, Happy Betting!

UT Portfolio as of 12 May 2007

Asian indices presented much volatility in the past week due to mixed signals interpreted by investors. While some investors decide to take profit from the market, more decides to make some quick bucks from the bullish trend. This resulted in most Asian funds performing in both positive & negative region throughout the week.

In China, Investment advisers issued warnings of an overheated stock market this week as local markets propelled to new highs and throngs of new Chinese investors flocked to open accounts. To give you some statistics, a total of 4.79 million new A-share trading accounts were opened in April, 853,500 more than the combined total for the previous two years, according to statistics from the China Securities Depository and Clearing Corporation.

Unlike developed markets overseas, individual investors make up a majority of China's stock market, including a lot of retirees who risk losing their hard-earned savings. Besides retirees, university students are also joining the bull run.

With this in mind, investors should be cautioned that UT investments, like all other investment tools, are not meant for short term speculation. Professional advice should be seeked before punting hard-earned money into such investments.

Here's my scorecard for the week:

Sales Training from 14th May - 18th May 07

I am currently busy preparing training materials for next week's Sales Academy. Together with some of my other colleagues, we are supposed to conduct product training to the new batch of bankers who recently joined our organisation. I am conducting training in a few areas:

1. Property Financing
2. Insurance Overdraft
3. Renovation Loan
4. Insurance
5. Investment
6. Need-Based Financial Planning

The training will last for one week, of which i will be training for at least 3.5 days. :) I enjoy cross-sharing of experiences with new staffs as i get to learn more from others in this manner. Wish me luck!

Profit Taking AGAIN!

With a sea of red in Asian & European market yesterday, hence today's market will likely be volatile. This is mostly due to profit taking prior to FED's announcement. With the FED likely to maintain their rates, Dow came back from a double digit deficit to close single digit lost this morning. Overall growth trend in the markets have not been broken.

My Views:

Mid to long term - Europe
Short to mid term - Asia / Emerging Markets
Tactical Investments - Energy, Property, Agribiz

I Passed!

I received a call from a gorgeous lady, Dora, sharing with me my exam result. I passed! i have got another accreditation to my belt. :)

I am ASSOCIATE FINANCIAL PLANNER (AFPCM) qualified!

Can you get up to 2% return per day on your investments?

Haha..... A great fren of mine just called me to participate in a investment program with a daily return of up to 2% per day return. Minimum investment amount is at $5,000.




Should nothing goes wrong, i could cover my initial investment in 50 days. Else, potential loss will be 25% of capital invested. Keeping my fingers crossed on this.... :P

Bomb Blast in Thailand on late Saturday

Sigh.... just got emotionally wounded by my wife on my previous posting of Thai equity picking up speed after she became aware of the recent bomb blast.... so coincedentally that it happened after my posting. For the past few hours, she has been nagging on "not to count the eggs before they hatch". :(

UT Portfolio as at 05 May 07

While my wife is busy battling her Mahjong kakis, i am back home posting this blog. With a great week behind us, the market in the coming week might present some volatility, likely from Asian markets.

I expect Thai equity to pick up speed this week, following a good momentum from the last speculative "coup". I like Thai equity not only because i am 1/4 Thai myself, but the fact that valuations are cheap and market confidence is picking up. As seen from my last post, my virtual portfolio's growth is mainly contributed by Thai equity. :)

Anyway, here's my updated portfolio:

Virtual Portfolio Update May 07

Chin (01 March 07)
DWS China Equity Fund - SGD 2.0477
Lion Capital Vietnam - SGD 0.999
First State Bridge - SGD 1.358

Chin (02 April 07)
DWS China Equity Fund - SGD 2.1005 (+0.0528)
Lion Capital Vietnam - SGD 0.998 (-0.001)
First State Bridge - SGD 1.3766 (+0.0186)

Chin (02 May 07)
DWS China Equity Fund - SGD 2.2088 (+0.1611)
Lion Capital Vietnam - SGD 0.989 (-0.010)
First State Bridge - SGD 1.3988 (+0.0408)

Calvin (01 March 07)
DWS China Equity - SGD 2.0477
Aberdeen Thailand - SGD 4.1917
Lion Capital Global Flexi - SGD 1.129

Calvin (02 April 07)
DWS China Equity Fund - SGD 2.1005 (+0.0528)
Aberdeen Thailand - SGD 4.1059 (-0.0858)
Lion Capital Global Flexi - SGD 1.157 (+0.028)

Calvin (02 May 07)
DWS China Equity Fund - SGD 2.2088 (+0.1611)
Aberdeen Thailand - SGD 4.2971 (+0.1054)
Lion Capital Global Flexi - SGD 1.201 (+0.072)

Net gain for Chin by 2 May 07 is 0.1919, while i gain 0.3385. One more month to go..... my free lunch is in sight!