Sunday, June 13, 2021

Is Air Travel Coming Back Soon?

Its been 1.5 years since COVID-19 struck us. Air travel had completely come to a halt when many countries announced border closures. Airports were left empty and airlines had to cut flights and retrenched staff as a result. 

However, things seem to changed recently with higher rates of people being vaccinated. In the US, their government have started to relax measures and air travel is definitely back in the United States. Their airports are full again and flights are also full.

This is a stark contract from last year where airports are empty and flights were relatively empty too. Studies have shown that higher vaccination rates reduces COVID-19 infection rates significantly as seen in the chart below.

Minister Lawrence Wong has also said that "With a higher vaccination rate, compliance with social distancing and safe management measures, regular testing, and faster and more comprehensive contact tracing, Singapore will ease restrictions and gradually restore "our normal lives, both within Singapore and at our borders", said Mr Wong, who is co-chair of the multi-ministry task force tackling Covid-19. Mr Wong said: "As we progress through these stages (of reopening), we will ease our restrictions and gradually restore our normal lives, both within Singapore and at our borders. Then we will move to phase three, and even beyond phase three, to a new normal phase of living with endemic Covid."" This was reported in the Straits Times article here. We have a chance of going into endemic mode once we achieve vaccination rates of above 75% in October, which is the target set by the government. 

Shares of US airlines such as Delta Airlines and United Airlines have went up steadily in the past 1 year. It may still have some run up over the next 1 year as air travel progressively resumes. 

Here's a video on the situation of US airports and its airlines where we can see clearly how packed and crowded it is currently:

Elsewhere in Singapore and Asia, it doesn't seem that air travel is resuming soon as COVID-19 infection rates is still high in countries such as Malaysia. But, as vaccination rates pick up, more air travel bubbles will be formed in the next few months and we will see some form of air travel and tourism back in action. 

As an investor, it may probably be a good time to accumulate some travel related stocks such as Hospitality REITs. Their prices are still depressed and those who are early in the game may be able to reap some rewards in the future. We shall see how situation develops from here on. 

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Tuesday, June 8, 2021

Identifying Buying Opportunities In The Stock Market Using Investor One Portal

Many investors will find it difficult to research on stocks as we often have to go to different websites just to get the required information. For myself, I often have to manually go to the company's investor relation page and search for information such as financials and key ratios to make the right decision for my investment. 

With Singapore going back to phase 2 of the circuit breaker again with more COVID-19 restrictions, some stocks have went down which present buying opportunities again. Recently, I was introduced to a content portal by ShareInvestor called Investor One. This is something like a one stop platform for all our investment needs. To be honest after I found this platform, I would personally use it to find all the investment information I need because its easy to use and really has all the considerations on the information which an investor would want access to. 

Investor One Main Page

The Investor One main page is simple and easily accessible. As you can see from the top bar, there are 5 different tabs: Editorial, Performance, Quick Facts, Social and IPOs.

These are information which are useful for investors to find stock buying opportunities or find out more about the stocks they want to invest in. 

Let me dive briefly into what each section has which I found to be useful. 

Firstly, under Editorial, it has this academy page which new investors would be able to read up on how to value stocks. From its front page, you can already see 3 solid articles on how to evaluate a REIT, common characteristics of quality growth stocks and how to understand business models.  

Secondly, they also have bloggers insights and C-suite interviews with CEOs of listed entities. These interviews are useful to know more about who the management are and the direction of the company moving forward. Hearing from the management is often important for investing as the wrong management team can often lead a company to destruction. 

Thirdly, also under editorial, there is a company insights page where we can find information on companies to invest in. 

When we run out of stocks to invest in, sometimes we will use a screener to find stocks. Investor One has a performance page where we can screen for the top 5 stocks in various categories such as lowest price to earnings ratio, highest dividend yield, highest discount to book and highest revenue/earnings growth. These are all good metrics to screen a stock for. 

I especially like the quick facts page where I am able to key in a stock name which I want to find information on and it will display most of the information I need to evaluate a stock for investment. 

For example, when I key in Lendlease REIT, here's what the page displayed:

In one look, I'm able to see its chart, and key ratios such as price to book and dividend yield which is what I look for when investing in REITs. With dining-in restrictions in place, shopping mall REITs prices have dropped from a high and are becoming attractive again. Lendlease has a price to book of 0.88. At the price of 0.74, it is at a discount to its book value. However, yield looks low due to the rebates given to tenants during this COVID-19 situation to help them. Yields should gradually increase as COVID-19 situation becomes better but it may take awhile as we see some swings in the market for the next few years. As Lendlease is still a relatively new REIT listed only in Oct 2019, it does not have the growth figures. 

Let's look at another company, Micro-Mechanics, which is benefiting from the demand on technology growth as they are in the semiconductor industry. 

As we can see from above, the growth figures of Micro-Mechanics can be seen now as this stock has been listed for quite some time now. We are able to see its revenue and profit growth in one glance. We can even see other ratios of this company where you will find that it is quite fairly valued.

If you think that's all for the quick facts page, you would be surprised that there are more information such as other key ratios like return on assets or equity, total shareholder returns, links to annual reports where you can easily read up more on the company, latest news and and even a link to its investor relations (IR) page where we can easily retrieve financial reports and presentations on the stock we are looking for.

You can try out the quick facts page and find more companies you are interested in. 

Perhaps, the most interesting thing is its collaboration with Investing Note where we can see what other investors like us are saying about the stocks we are looking at. Investing Note is like the Facebook of the investing world where investment ideas are discussed actively by thousands of investors on this social media platform. They even dedicated a social page to consolidate all the buzz in the Investing Note social media platform. 

All in all, Investor One is a good portal which I will use moving forward. It lets me easily find stocks information which I do not have to search on multiple sites anymore. You may check out Investor One page here which is free to use and no subscription needed. 

You can also check out the Telegram page below:

This post is sponsored by ShareInvestor but all views are of my own

Wednesday, May 26, 2021

How Much Does It Cost To Own A Car In Singapore?

Buying a car in Singapore is a dream for many. The problem is cars are getting more expensive in Singapore with the cheapest new car at around $75,000 now. Recently, I've been pondering on the idea to own a car and still meet my financial targets for retirement. Can this be done? 

Its a fine line between planning for retirement and owning a car. It took me awhile to finally pend down my thoughts and perhaps finally be able to plan to own a car while still achieving my financial goals. In this post, I will list down the cost of owning a car and how it is still possible to plan for retirement. 

My initial financial target was that by the age of 48, I will be able to save up a million dollars in cash excluding CPF. With owning a car, the financial target will be pushed back by about 5 years to 53 years old. Doesn't sound that bad isn't it? Let's get straight to the numbers.

Cost of car in Singapore (2021 May)

The first thing is the cost of the car itself. Looking through several websites, the few lowest price cars you can get are probably the Mitsubishi Attrage at $74,000 and Honda Fit at about $75,000. These prices are inclusive of COE. If you look at other models such as Hyundai Avante, Honda Vezel or Toyota Vios, these will cost about $85,000 to $95,000. Any other higher end models will cost you close to or above $100,000 easily. 

If you have the cash to pay for it, then it will decrease your savings by one lump sum but you don't have to incur a monthly instalment cost. Let's say you don't have the cash and have to take a loan:

Car cost: $91,000
Loan amount: $63,699 (70% max loan)
Interest rate: 2.78%
Loan term: 7 years

Monthly loan installment: $906

If you decide to buy a lower price car at $74,000, the monthly loan installment will then be $737.

Monthly loan installment for car: $737-$906 per month

Road Tax

The next cost is the cost of road tax. For a car with 1500cc and age of car is less than 10 years, the road tax is $686 per year. If the car is 1600cc, the road tax will be $744 per year.

Road Tax: $686-$744 per year 

Car Insurance

Insurance is important for a car to protect you against liability for any accidents. If you've not met any accidents before and never claimed from any car insurance and have more than 3 years of driving experience, insurance cost will be lower at $800+. It can go up to $1600 if you're a young driver with less than 3 years of experience or have claimed from car insurance before. 

Insurance cost: $800-$1600 per year 

Petrol, Parking & ERP

The daily running cost will include petrol, parking and ERP. For HDB season parking, it is priced at $110. If you go to your parents or in laws house often, you might have to buy another family season parking at $55 x 2. Total cost of season parking will be about $220. Other miscellaneous parking cost such as when you drive out for meals or outings will probably cost another $50 per month. For petrol, let's say your car fuel efficiency is about 20km/litre and you drive about 40km/day, with average pump price at $2.40/litre, petrol cost will be about $144. For ERP, let's put it at around $40 per month. 

Petrol cost: $144
Parking: $270
ERP: $40
Total: $454 per month

Maintenance cost

The general recommendation is to send your car for servicing every 10,000km driven or every 6 months which every is early. This will set you up for a cost of about $600 per year. 

Maintenance cost: $600 per year

Summary of cost to own a car in Singapore

After listing out all the different cost, we are now finally able to add it all up. 

Cost per month
Car Loan$737
Road Tax$57
Petrol, Parking & ERP$454

If the car is paid in full without any loan, then the monthly cost for car will be about $628/month.

Can you afford to own a car? How does it affect your retirement planning?

Now, we come to the tough question of can we afford to own a car? If owning a car causes you to have little to no monthly savings from your income, then its definitely a no. If after deducting the expenses to own a car and you still have savings, then it may be a yes. Question is, how much savings you should have in order to retire in Singapore? 

The amount required for retirement in Singapore is always increasing. Some say its $1 million, some say its $2 million, others can afford to retire with just a few hundred thousand or some just totally give up and rely on their kids in the future to give them allowance. Let me put this forward, retirement planning is hard. I've struggled through it a lot the past few years finding a balance towards spending and planning for retirement to the extend I can be pretty stressed up. Its no wonder people do give up planning for retirement. 

To make things easier, let's set the retirement amount to be $1 million. We have the below profile of person to see if he can afford to own a car:

Person A
Salary: $5000/month
Salary increment: 3% annually
Salary Bonus: 3.5 months
Monthly expenses: $2500 (without car), $3100 (with car)
Monthly expenses increase: 3% per year
Savings: $100,000
Investment returns: 5%

For person A with $5000 monthly salary and the above expenses, he still can save up $1 Million in 16 years without a car, 21 years with a car. Owning a car pushes back retirement by 5 years so it doesn't seem that bad. This is assuming the person does not buy another car after 10 years which is the end of life for cars in Singapore. 

Using the same parameters, if we bring down the salary to $4000 per month, this person will take 21 years to save up $1 Million without a car and 26 years with a car. Do take note the above parameters assumes the monthly expenses per household member and probably will be for a person without kids. For a couple, the expenses will be higher but if your spouse is also working and contributing to household expenses, then its still affordable. In the 2018 household expenditure survey, it was stated that Singaporeans with a family of 4 spends an average of $4906 per month. This may have included owning a car but the figures here are still quite high.

If you're a single income earner supporting a family of 4, you definitely need to earn above $7000 to afford a car and still have enough for retirement. 

Can you afford to own a car in Singapore? Its better to work out your own financial plan before committing to buying a car. If your income is relatively high above $5000 and don't have much other commitments, you might be able own a car without affecting your future retirement plan. 

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