Sunday, September 29, 2013

My blogging experience and interview with successful bloggers

Saw this video on Youtube of an interview by channel news asia with successful bloggers. One of them is from Singapore called Wendy, who owns the popular blog, and the other is from Australia. The co-founder of nuffnang was also on the interview.

Before i show you the video, maybe i should talk about my blogging experience so far. I started my blog in 2011 to write on a new passion i found which was on finance and investing. I had no prior experience in blogging and did not know how to link my blog with other blogs or whatsoever. I had very little readers and i think from 2011 right up to June 2013 this year, i only had 200 plus views (well, i only had less then 40 posts in the last 2 years).

It was until in June this year that i was introduced to a finance blog by my colleague called A Singaporean Stock Market Investor (ASSI). This blog is owned by a guy called AK71 and i was inspired by the things he wrote on. I knew his blog had many readers from the comments he had on his blog posts. That was when i thought that i could start actively blogging again. I still had the passion for finance and investment stuffs. Thank you AK for your inspirations and also your encouraging comments on my blog.

I did a revamp of my blog 3 months ago and started linking to other blogs and financial websites. That was when views started to increase and i know the things i blog on are seen by people. It is the thought that my posts may help someone out there to better plan for his or her finances and i hope to inspire others to plan for their lives and achieve their dreams. To date, i've written 107 posts. I'm surprised that i can write so much unknowingly. This post is the 108th post. I've written 71 posts just this year alone.

So how's the performance of my blog for the past 3 months? From statistics, i've had an average of 12500 views per month. Total of about 37600 views for the past 3 months. The top view post is "My views on the new POSB Invest-Saver" with over 1800 views followed by "Investing Basics - Low Cost Index Fund investing (Passive Investing)" with 1200+ views and "The history of 9.5% Post Office Savings Bank (POSB) interest rates and the effects of inflation" with 1100+ views. I guess posts related to local investment products generate a lot of searches. I'm still getting traffic from search engines to this particular post till now.

The best experience of blogging is that i'm able to know other bloggers who share the same passion as me on finance and investments. Some of them have been around for quite some time while others are just as young as me. I've exchanged a few conversations with bloggers and readers alike through emails and also comments on each other blogs. You know who you are if you're reading this now. Thanks to both readers and other bloggers for your friendliness so far. I appreciate all the encouragements and comments i've received. Sometimes bloggers get nasty comments but i would say my blogging journey has still been smooth until now.

I have placed ads on my blog like what many other bloggers will do. This generates some profit and encourages me to continue blogging. But honestly, its doesn't generate much but still its better than nothing. I've also created a facebook page just less than a month ago and i appreciate those who have liked my page so far. Its also an encouragement for me to continue blogging. Do LIKE my page to support my efforts. Blogging does take effort especially when writing on finance related articles. I try to balance boring theoretical finance topics with more light hearted sharing posts so that readers do not get too bored. Thus, you may see that some of my posts will be on videos i come across, news i think is worth sharing or some rumblings of my life.

Moving forward, i hope to come up with more ideas and write better articles in the days ahead.

Now, here's a video of the interview with successful bloggers:

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Friday, September 27, 2013

Rags to Riches

This is an interesting documentary titled "IT figures" shown on channel news asia that decodes Singapore's journey from rags to riches.

In the video, it discusses things like why are the rich getting richer and the poor getting poorer? 

Singapore is wealthy but why don't we see it distributed to majority of the people?

Economic concepts like GDP, wage sharing, Gini Coefficient are also discussed in a simple and illustrative way. I feel they had done a very good job to explain these concepts in a easy to understand way. Most people would be able to understand it. 

Watch it here (Channel news asia has removed the video. So sorry to those who missed it.)

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Thursday, September 26, 2013

Singapore girl, 17, confesses to selling body for cash to party

This news really caught my attention and i'm sad that our society has become like that. Young people are willing to do anything to get the money they want. This young girl sells her body for cash to buy alcohol and the things she want. Has our society become one which focus on material things only? 

Recently, there has been court cases of men who were being charged because they had underage commercial sex with a minor. Most of the time the girl is a willing party. They just want the money. 

For this particular news, the reporter posed as a potential customer in online chat rooms and met up with the 17 year old girl. After which, they conducted a closed door behind the scenes interview with her in which she opened up and told the reporter about her life. Some things caught my attention. 

Firstly, the girl comes from a poor family. Her parents worked as cleaners and only earn $1200 a month. This was quoted from the interview from the news: 
"My parents earn only about $1,200 each and they rarely give me any extra cash to buy clothes or whatever else I need," she said. "It can be frustrating to not have money. I am young and I want to have fun." 
Secondly, she has an expensive lifestyle. She needs the money for parties and she said she spends $200 each time she parties. Is it the parents fault that they did not teach her properly or its the society fault that influenced young people to be like that? Some kids grow up well while others grow up waywardly. I will not comment further on this.

Thirdly, the reporter said she is not the only girl who's doing that. They chanced upon a few other girls in their early 20s who are doing the same thing for money also. This is becoming a lot more common now. It's all about the money.

This is certainly a news that sets me thinking. I guess this post has little to do with finance but more to do with values and spending habits. Having money and achieving financial freedom is important but don't forget about life values. It will be good if we can balance both.

Read the full news here

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How to get rich? - The dreamer's way

Many people want to be rich. However, it is only a dream for many people. What is a dreamers' way of getting rich?

1) Buy 4D/Toto and hope to strike it rich. 

Remember the 8 million chinese new year ang bao draw? Didn't you hear your friends or colleagues say if they strike it then they can resign from the company and don't need to work anymore? Maybe you can be lucky and strike it rich. Is it just a dream or will it turn into reality?

2) Speculate in penny stocks and hope it goes up 10 fold in a very short time. 

Have you ever thought that you could make a lot of money in stocks in a very short time? There are advertisements on the newspaper and internet of people making $1000 in stocks in a day? That is $30k in a month. Maybe once you sign up for the seminar and pay thousands of dollars, you can learn and be like that guy too? Maybe this is your hope to get out of your poverty life? Maybe, just maybe.

Don't get me wrong, Some of the seminars out there are really good and they teach you proper ways to invest. I have attended good ones before. However, there are many scams too. If there's someone who promise you guaranteed investment returns or say that you can get rich quick, most likely its a scam.

3) Go to the casino.

The casinos are finally here in Singapore. You don't have to travel to Genting taking the long coach rides and the treacherous mountain roads. You don't have to board a cruise ship and get sea sick. But there is a $100 entrance fee for the Singapore casino. $100? Small fee maybe? You think you can make back the $100 and even much more money. Maybe its just a dream. A dream and a hope you can't get out of.

4) Start a business
You read on books that many people make a lot of money through business. There's bill gates, donald trump, Steve jobs etc. In Singapore there's the famous bread talk owned by George Quek. You are inspired by their success stories and think that you can be like them. No money to start? No experience or knowledge? But well, i'm young and just want to strike it rich for myself. Working and having a job is for timid people. How will it turn out? Nobody knows and maybe you just could be the lucky one to succeed.

The Reality
So what is my point of listing down the ways to get rich which is supposedly a dreamers' way? I suppose many of us have thought of either one of the ways before. It is frustrating when you don't have enough money and humans will just think of any ways to get rich. However, the probability of the 4 ways above working out is very very low. I hope you realised it when you were reading it. Even if someone did strike it rich through the lottery, gambling or speculating in stocks, it will also be gone very quickly. It seems like money that comes quickly goes away quickly also.

Comparing the 4 ways above, I would think the most legitimate way of getting rich is starting a business. However, do note that on average, 6 out of 10 businesses close down within the first 5 years of operations. Starting a business is hard work and it does requires lots of knowledge and experiences. If you think that doing business is easy to make money, you may be one of the dreamers too. It is certainly harder than the full time job you have now.

My point in writing this post is to awaken people who are still in dreamland. I may have sounded sarcastic but what i have said is the truth. There is no point in hoping to strike it rich or counting on luck to strike it rich. It is ok to buy lottery or go to the casino just for some fun or entertainment. But do not let it become an addiction to the point when it becomes damaging to your life and your family.

How do the rich get rich? It is through proper financial planning, risk management, hard work, patience and lifelong learning.

There are 2 basic ways to have more money. Firstly, increase your income. Secondly, reduce your expenses. However, doing the above 2 steps will NOT make you financially free. You still need to invest and create passive income. Learn how to invest and multiply your money. Have patience to wait for the results. Sooner or later you'll realise that you have achieved financial freedom and don't have to worry much about money any more. This is the reality of getting rich. The sooner we get out of dreamland and go back to reality, the faster we are on our way to financial freedom. Choose to be in the right zone today!

Success is One percent inspiration, 99 percent perspiration - Thomas Edison

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Related Posts:
1. Money or happiness? Which would you choose?
2. A Blog Post by Singapore's Youngest Millionaire Adam Khoo

Tuesday, September 24, 2013

Understanding financial statements (Part 1) - The income statement

To be an investor, you have to know how to read financial statements. I would say that this is a skill that every investor must know. In fact, Warren Buffet said that the greatest skill a young person can learn during his or her school days is the skill of accounting.

In an annual report, you will basically find 3 financial statements.

1) The Income Statement
2) The Balance Sheet
3) The Cash Flow Statement

I will go through all 3 statements in detail as simple as I can. For this post, we shall use the company Singtel's financial statement as an example. It is the largest company listed on SGX in terms of market capitalization. It is also one of the blue chip stocks and is one of the 30 components stock that make up the Straits Times Index (STI).

Let's start with the income statement.

The Income Statement

I personally use to read up on a company's financial report. You can access Singtel's income statement here. Alternatively, you can get the full annual report from either SGX or Singtel's own investor's relation website.

The income statement shows how much a company is making or losing. The first thing we see on the income statement is revenue. It is the sales the company has made for that quarter or year. This is the money it earned through selling a service or product. For Singtel, it can be the selling of mobile phone service which we pay a monthly subscription. The money collected is recorded as revenue. For Singtel, its 2012 revenue was $18.18 Billion

Cost of goods sold
Next, we see the cost of goods sold. This is the cost that is directly involved in creating the revenue. It can be labor costs, raw material costs, or the initial cost price of the goods. This is deducted from the revenue.

Gross Profit
After deducting cost of goods sold from revenue, we get gross profit. Gross profit is revenue minus cost of goods sold. For Singtel, its 2012 gross profit was $5.5 Billion. This is after deducting cost of goods sold of 12.7 Billion.

Selling General & Admin Expenses, Total
Next we see Selling General & Admin Expenses. This is also known as operating expenses and includes expenses such as marketing costs, administrative salaries and research and development costs.

Depreciation & Amortization, Total
The next is Depreciation & Amortization. This cost is the depreciation on assets that the company purchases. Assets like machineries and motor vehicles will drop in value over time. The depreciation reflects the cost of the depreciation.

Operating Income
Another important one we should know is operating income. This is revenue minus cost of goods sold and also all operating expenses. It is the profit the company made from its actual operations. For Singtel, it is the earnings from its main business in the mobile, internet and IPTV services.

Interest Expense/Income
You'll see the next 2 rows being interest expense then interest income. This records the interest the company paid on bonds it issued or the interest collected from bonds it owns.

EBT, Including Unusual Items
EBT means earnings before taxes. A more accurate term you can look at is EBITA. This is earnings before interest, taxes and amortization. You will realise that before the EBT, there is a big chunk of expenses called other non-operating expenses. Accountants may remove this expense and not include it in the calculation towards earnings.

Net Income
This is the company's profit after all expenses have been deducted. It is the income that most companies will report on when they release thier earnings result. However, do note that the figure may be distorted as it includes one time charges or investment income. It does not really reflect on the true operating profit of the company. Investors sometimes look at operating income as it reflects the income earned from its actual operations in the business.

We have just gone through the various items included in the income statement. In summary, the income statement reflects the income and expenses of the company. For an investor, we do not just analyze a company's earnings power using the income statement only. You'll come to realise that the cash flow statement is a more accurate measure of a company's financial health. Income can be distorted more easily while cash flow is harder to fake. It is the actual cash that flows into the company business.

The next 2 financial statements, namely the balance sheet and the cash flow statement, will be discussed in the next part.

Read the other 2 financial statements below:
2) The Balance Sheet
3) The Cash Flow Statement

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Friday, September 20, 2013

Money or happiness? Which would you choose?

If you have only one choice, would you choose to have money or happiness? I believe you would agree that this is a hard choice to make. Many of you would think why can't i choose both? I want to have both money and happiness. Won't having more money make me happy? This is not entirely true. Let me illustrate.

Think about the first job you had. The first pay of $1800 as a diploma graduate made you excited. Finally you have a decent pay and more money to buy the things that you want without having to rely on your parents. The first smell of money is so good. After a few months of getting the same salary, you begin to feel less excited about the money. You start to think that the amount of job you do does not justify the pay. You want to have higher salary. After a few months in your company, you realise that some of your friends in other companies are getting higher pay than you and somehow their job is much easier and enjoyable. Worse still, you realise your colleagues in the same company have higher salary than you also. You start to feel really dissatisfied with the salary that you have.

Do you feel this way? If you do, it is normal. Most people feel this way. But why? What happened to the initial excitement when you first got your salary which you think is high compared to your previous part time and temporary student jobs? Let's continue the story. After almost one year, you're feeling really dissatisfied with your job. You want to change jobs. But, here comes the annual salary increment and you got a pay raise. Plus, there is some performance bonus that the company rewards you with. You think maybe this job isn't that bad after all. For the next 2 months, you're feeling a little bit happier getting the higher salary. However, the little bit of happiness didn't last long, In fact, it died off very soon. You're back to your normal self feeling dissatisfied at work. Some of your colleagues are feeling this way too. The younger ones complain that they want more money and the older ones complain that things are getting more expensive but their salary never really increase. A survey showed that Singaporeans have a very low level of happiness index which measures the level of happiness in a country. We have a job, we have money but sometimes we are more unhappy than people in poor countries. What is happening to us?

I would call this the disease of unhappiness. If the majority of the people in your company are feeling dissatisfied with the job, most likely you will too. No matter how much your salary is, you will still feel unhappy. Have you heard people who earn more than 10k a month still complaining that they are stress at work? I bet you have. Some would say earning this much of salary with that amount of stress is not worth it. They would rather have lesser money than stress themselves up and affect their health.

So what do you want in life? High paying and high stress job or low paying and low stress job? Which will make you happier? What if there is a high paying job and you are also happy doing it? Is it a dream job that you will never see in your lifetime? I believe if we know what we're passionate in and we search in that direction, we'll find it one day.

As a financial blogger, my blog posts are mostly about money. I set my financial goal to reach 1 million by age 42 and i blog about learning how to invest and grow my money. But why do i want so much money for? Is it to have an extravagant lifestyle staying in a high end condominium and drive a luxurious car? Is money just for buying material things? That is not my purpose. I plan and set high goals just because i can have financial freedom and not having to worry about having not enough money or worry about retirement when i'm older. I do not want to be stuck in a job i do not like in my old age. I want to have the choice to do the things that i like without having to worry about money matters. I want to give my family the best and be able to spend quality time with them like travelling together or having a nice meal at a restaurant. That to me is the true purpose of life. Having both money and happiness is possible if we plan ahead and know our priorities.

Too many of my colleagues complain of having not enough money. They have reached retirement age but many are still not able to enjoy life and do the things they like. They still have to force themselves to work even when they don't like. Having not enough money and the burden to pay bills is stressful for anyone. It is not possible to be happy when you live a life full of burdens.

Don't get me wrong. I'm not saying retirement is about not working. In fact, i think we should have an active life even when we're not really working. We can do volunteer work, help others and do something that we really enjoy.

Some people have a lot of money but are not happy. Others have little money and are not happy also.

So what's your choice? Money? Happiness? or both? I would like to choose both. What about you?

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Monday, September 16, 2013

5 ways how young people can save more money

Living in the current generation encompasses many temptations. The temptation to keep up with trends, the need for active social life and the ego and pride to not lose out. Some people describe the current generation Y and Z as 月光族. If we divide the words up, 月 means month. 光 indicates nothingness or emptiness. 族 means the generation. All together, the three words is used to describe people who are living paycheck to paycheck. Their expenses equal or exceed their monthly income. They have nothing left over at the end of the month.

Living as a young person in Singapore, i can understand the pressures to keep up with the standards of society. Young people like to dress nicely, own the latest gadgets, buy branded goods to impress friends and so on. It is no wonder most people can't save any money by the month end. I did had a discussion with my friends on how we can save more money. We joked about if we really want to save money, then we should just stay at home and maybe play computer games. Stay at home = no money spend. In this way, we can save a lot of money. Well, by now, most young people will start to think this is absolute no life. We call it the anti social life. No one wants to be labelled as anti social. End up will be without friends and feel lonely. This is not what we want.

So how can young people save money without compromising their social life? The truth is, there will be some sacrifices involved. But well, you can choose to enjoy now and suffer later or you can choose to sacrifice now and enjoy later. It's your choice. But i guarantee that you will not end up in the extreme of being anti social. There are 5 ways which i will share below:

1) Pay yourself first
This is what most financial planners and advisers will tell you. It is not new to many people. But how many people really understand the true meaning of this phrase? Paying yourself first means setting aside a fix amount of money even before you start spending. Will this compromise your social life? The answer is no. Let me explain.

Think about how much did you earn when you started working? Maybe just slightly above $1000 per month working part time. Think about how much did you have as allowance when you were a student? Maybe just a few hundred dollars per month. Did you still live through life and still have friends? Yes you did. When we start to grow up and earn more money, unknowingly we start to spend more also. We buy more things and dine at more expensive places. Our usual cheap hangout places become more and more high class as our income increases. When we're young, we hope to have more money thinking that we would be more happy being able to buy the things we like. But sadly, this is not true. We will come to realise that spending money will only make us happy for that instance. It doesn't last long. The new thing that we bought starts to lose it attraction very soon. We get into the cycle of always wanting to have new things to make us happy.

So, try paying yourself first. Set aside a fix amount to save once you get your paycheck. You can start by saving just 10% of your income. Watch your savings account grow every month. This could make you more happy than spending money.

2) Track your expenses
You need to know where you spend your money in order to find out why you can't afford to save every month. Record down your big and small expenses. This include how much you spend on food everyday, what are the things you buy and also how much you spend on transportation. You can track your expenses using a smart phone app. I personally use "expense manager" on my Samsung phone. The app icon is blue in colour. After one month of recording, you'll know what are your biggest expenses. You'll be shocked at where you spend your money. Start tracking now and be in awe of yourself! You can only resolve a problem if you see the problem. Tracking your expenses will open your eyes to the problem.

3) Have a budget plan
Have a plan. This is as simple as that. There is a famous quote that says: "If you fail to plan, you plan to fail". After tracking your expenses, you can work out how much you need for your expenses every month. Cut down unnecessary expenses and live below your means. You may start to think hey, that's not the life i want. Why do i have to restrict my enjoyment of life? But do hear me out. I believe firmly that if you want to have a more enjoyable life, then you have to to try to earn more money. Yes, increase your income so you can spend more but at the same time still be able to save money. You are still living below your means but having a much better life. Go get a degree if you haven't got one. In Singapore, certification is important and almost guarantees you a higher pay. Go learn new skills to create more income. Learn how to invest wisely and receive dividends from stocks. Learn how to start a part time business. Learn how to communicate more effectively and expand your network in your workplace so you can get promoted or get higher bonus.

Work out the amount you can save every month. Have a long term savings plan if you can. How much do you want to save in 2, 5, 10 and 20 years time? List it down and have savings goals. This is also part of planning for retirement. If you can't meet your target, you can review it and know the problem immediately. Remember, if you fail to plan, you plan to fail.

4) Know the reason and purpose for savings
By now, you would have felt that saving money is really hard. Why do i have to do this? Is it even worth the effort? This is what happens to most young people. They give up and end up not saving money because they are not able to persuade themselves into it. They will say: "Life is too short, why worry about not enough money when i'm older. I may just die any time so why not enjoy now?". Or they may also say:" I work so hard for my money. I should pamper myself for working so hard". Does it sound like you? If it does, then you need to change the way you think.

Have a reason for saving. Without a reason and a purpose, you will find it very hard to save money. This is the same as losing weight. Why would people want to lose weight? Because they want to regain confidence and look good and healthy. So why would you want to save? It may be for retirement or for your future house or family. One of the most important reasons is because you need that savings in case of emergency. If you lose your job, you definitely need that to tide you through that period. A guide is to have at least 6-9 months of your expenses set aside as emergency fund. So in essence, this is saving for rainy days which the older generation will tell us young people to do.

5) Make savings a habit 
There are good and bad habits. Saving money is one of the good habits that young people can develop. A lot of people say saving money has to start from young. Once its a habit, then the child will not find it difficult when he or she grows up. So parents should teach their children on the importance of saving money.

But what if you've already grown up and your parents did not teach you how to save money when you are young? You spend a lot and find it very difficult to save. It has sort of become a bad habit to spend more than you earn. But here's the good news. Habits can be developed at whatever age you are. You just need to start somewhere and do it month after month. After awhile, you'll realise that the good habit of saving money has developed.

Start by paying yourself first. Open a separate savings account and transfer a fix amount of money into that account once you get your salary. You can do this automatically by setting up a standing instruction using internet banking. I use a POSB account for my daily expenses and i transfer a fix amount automatically to my other accounts every month on my pay day. This service is provided free of charge. I have an emergency fund account, an investment account and a separate spending account that i use for big expenses (this account i use a card to pay for my expenses which gives me cash rebates). I only keep a minimum amount in my POSB account which i can draw out from the ATM for daily expenses.

Start today!!
With technology and services by internet banking, saving money is not so much of a hassle any more. Just take the first step and the rest will be automatic. Track your expenses and have a budget plan to reinforce your savings habit. Ultimately, humans need to see in order to believe. Writing your plan down creates a vision for your future and whatever your brain can see, it will also try to achieve. I wish you all the best in your journey towards creating a better future.

"Too many people spend money they haven't earned, to buy things they don't want, to impress people they don't like." ~Will Smith 

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Sunday, September 15, 2013

The dangers of over leveraging on debt

This post is inspired by comments from my previous post on Recession Heroes Ep 5 - Resilience during tough times. Too many people have too much debts causing problems for them and their families when they lose their jobs. Housing debts are one of the major debts among young people in our current generation now. When buying a house, remember to plan ahead and do not over commit. A general guideline is not to use more than 30-35% of your monthly income to pay for housing loans. However, different people have different circumstances. You will know your situation yourself. Plan accordingly.

MAS has reported that statistics show rising household debts in Singapore is worrying. Measures have been put in place the past few months and is still ongoing currently.

National development minister Khaw Boon Wan has also spoke regarding the future spikes in interest rates.

Mr Khaw said: "They assume two things. Property prices will keep going (up). Two, interest rates will keep on remaining low. Both are wrong and therefore one day, both will collapse on them. So, if you are over-committed, let's say you can only afford a 3-room flat, (but) you decide to buy five room flat. Yes, based on today's interest rates you can afford a five-room flat. But, when interest rates go up as it will, you will no longer be able to afford a five-room flat and what will happen, your bank will start calling you up to please top up or sell your flat and that's when trouble starts."
In addition, Mr Khaw said the high property prices will not last in the long run.
At the same time, he acknowledged he cannot be certain when and how much prices will come down.
He added: "Only when you can get enough buyers who can afford, will prices stay up, if not they will come down. Today because of low interest rates, this bubble is being pushed up and sustained longer than it should have. So, it will collapse in a matter of time and therefore do not think that prices will keep on going up."
~ Quoted from Channel News Asia 

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Saturday, September 14, 2013

Recession Heroes Ep 5 - Resilience during tough times

This episode made me very inspired. I really admire the person who was featured in this story. At an old age of 59, he still doesn't give up. He worked for a bank for 16 years and was retrenched because the bank was not doing well. Wanted to find a similar job but other banks did not want to hire him because of his age and his expected salary was too high. The companies would rather hire someone younger who can except lower pay. This made me think that one day i would become old also and i may face this problem too. It is important to plan for financial freedom so that we'll not be burdened at an older age.

He had a lot of loans to pay. Car loans, housing loans became a burden to him. Before that, his salary was high and he could afford all these. I think this is a lesson we can learn. We may be able to have high standards of living now and can spend more but if you're retrenched, the expenses will soon chock up your life. You will need to adjust accordingly when crisis strikes. 

The thing i admire about this person is he continued to go out and find a job. Went to a career fair and he signed up for courses that enable him to switch industry so that his choices will be more. He took up a job as an operations manager to manage ATM machines at only 30% of his previous salary. When the company needed people for Auxiliary Police Officers (APO), his company sent him for Auxiliary Police Officer training for 2 months. The training was similar to a police officer training and most of them are young people. He was already 59 years old at that time. 

Now, he has got a better job with higher salary but he still goes back to his former company to work part time as an APO just because he wants to help. This is really an admirable spirit. Always learning and still hard working at his old age.

Watch this episode on xinmsn here.  

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Monday, September 9, 2013

Dryships - My first 100% return on investment

I have blogged that I divested partially my shares in dryships to reduce risk on August 7 2013. Got back all my capital plus some profit. Just one month later, the share price has gone up by another 70%. Currently, the price is officially double of the price which I initially bought at 1.52. Technically speaking, the return is about 50% since I divested some one month ago. No doubt I'm happy about it as its still quite a substantial return.

I initially bought it last year November 2012. Investing period is less than 1 year. Why has it gone up so much? I can only rationalize that the shipping sector is recovering which I had bet on since last year. I had thoughts that the shipping sector might have reached a bottom as it consolidates at a support for many many months.

It may be a small achievement thus far as I blog about this as part of my journey in investing. I had lost a lot in my investment in NOL 3 years ago when the crisis hit. It was also a shipping stock. I had wanted to give up investing once and for all but I choose not to. I choose to learn everything all over again. It may have been because of my losses in NOL that I really learn about the shipping sector. I would say I learnt it the hard way.

The important thing is never give up when you suffer a setback in your investments. Patience and a humble attitude to learn will bring you back up. I hope my story will inspire those of you who lost money in the stock market to not give up. Persevere on and you'll see results one day.

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Sunday, September 8, 2013

A Singapore movie: Ilo Ilo 爸媽不在家

I have just watched a Singapore film by the name of Ilo Ilo 爸媽不在家 this week. This movie shows how a family live their lives right in the heart of the financial crisis in 1997.  The film was awarded the Camera d'Or award, thus becoming the first Singaporean feature film to win an award at the Cannes Film Festival.

Overall, good story and brings back memories for those who lived through the Asian Financial Crisis period. I was about the same age as the kid in the movie during that period.

Watch the trailer below:

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Saturday, September 7, 2013

An Introduction to Forex: Part 2 [Guest Post]

In the first part of our Introduction to Forex we talked about basic concepts and characteristics of Forex trading. In this part the focus is on the different types of Forex brokers. This should give you a clearer picture of how the Forex machine works, and how to select the right broker.
There are three main types of Forex brokers out there, namely Market Maker brokers, Electronic Communications Network (ECN) brokers and Straight Through Processing (STP) brokers. Each type operates and makes money in a different way, and it is important to know the difference before deciding which one to use.
Market Maker Brokers
Market Maker brokers are the most common. They are named Market Makers because they essentially “make” the market for their customers – they buy when a trader wants to sell and they sell when a trader wants to buy. Using a Market Maker broker, you will never see the real market quotes, because all your trades will be routed via the broker’s dealing desk. These brokers make money in two different ways. The first way is by quoting fixed spreads (the difference between buy and sell price). The second way is by hedging against their clients’ trades. This means the broker makes money every time you make a loss. Ridiculous, right?
The only real benefits of using a Market Maker broker are the low amount of funds required in order to open an account, and user-friendly trading platforms. The low amount required is mostly due to the high leverage offered, so you should put that into consideration before deciding to invest.
Electronic Communications Network Brokers
ECN brokers provide direct market access. That means you get access to the market where all of the players (i.e. banks, financial institutions, and individual traders) trade against each other in real-time. The price displayed by the broker is the actual inter-bank rate, and the spread is variable – sometimes the buy price can even equal the sell price. All of the placed orders are matched between the participating parties in real-time, and there is no dealing desk routing. Simply put, you gain access to the true Forex market. These brokers don’t make money by setting a spread, but rather by charging a commission on every trade executed. The height of the commission depends on the broker and on the amount traded.
The benefits of using an ECN broker are quite obvious. First of all, there can be nospread/price manipulation by the broker, since the price is quoted directly from the inter-bank market. Next, the spread is variable and that can be used to the trader’s advantage. Last but not least, your broker is not trading against you, like the evil Market Makers do. The only two flipsides worth mentioning are the high amount of funds needed in order to open an account, and a not-so-user-friendly platform.
Straight Through Processing Brokers
STP brokers are a sort of a hybrid between Market Makers and ECNs(but not really). They don’t route the orders via a dealing desk, meaning they send them directly to the liquidity providers – banks, for example.Traders gain access to real-time market quotes, and can execute trades without the intervention of dealers.The brokers make money not by charging commissions, but by adding markups to the spread.
The main benefit of using STP brokers lies in the bypass of dealer desks, which means the broker won’t profit when you make a loss – how decent of them. That being said, STPs still don’t grant the trader direct inter-bank access, which puts them at a disadvantage when compared to ECNs.
Which One Is Best?
So which one to choose? If you have enough money you are willing to invest, and don’t mind the increased complexity of their trading platforms, ECN brokers are definitely the way to go. They are superior to STP and Market Makers in almost every way, making them the right choice for anyone who wants to get serious about trading.
The above article is written by iMoney. Reproduced with permissions. All rights reserved.
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Shipping sector on a recovery

I've posted before that the shipping industry may be on a recovery. First post was on June 20 here and second post was on July 14 here.

I've wrote about the Baltic Dry Index (BDY) and how it is related to the shipping industry. In simple terms, the BDY tracks the cost to transport raw materials. The higher the cost, the higher the index. A higher cost to transport means shipping firms get to earn more on each route.

The BDY has risen by another 25% since the first time i posted about it. Look at the chart here. Dry bulk shipping stocks have already anticipated the move and is on the rise now.

Manufacturing data from the US, China and the Eurozone is showing expansion also. Demand for goods is picking up.

There are 2 shipping stocks listed in the US that have already doubled in price.

The first one is Dryships (DRYS). From a low of 1.49, it has risen to about 2.88 now.

 The second is Diana shipping (DSX). From a low of $6.20, it has risen to about $12.50 now.

How about shipping stocks listed in the Singapore exchange? I've not seen any major movement on shipping stocks listed in Singapore yet. Maybe this would be an opportunity to buy them now at low prices and anticipate the move up. I will never know what will happen. It is purely a speculation. 

Speculation or not? I'll still be watching out for shipping stocks now. There are pretty good fundamental shipping stocks like marco polo marine. Singapore owned NOL may benefit from the recovery also. A caution is NOL has been struggling for many years and we won't be sure whether they can come out of it. 

Let's see what will happen by the end of the year. It is the time to research and watch it carefully now. 

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Friday, September 6, 2013

Recession Heroes Ep 4 - Got retrenched at a young age of 23 but still full of passion in life

This episode really encourages and motivates me. The guy in this story is Ken Chee. I've saw his name somewhere before and i thought his face looks really familiar. The i realised he's the one who started a company called 8 investment. His company runs the millionaire investor program in Singapore and it teaches value investing. I've never attended the program so i'm in no way related to it and this is not an advertisement for the program.

Back to this person. I thought he looked and sounded really humble and i felt he's someone who's willing to help others. He grew up in a poor family as his father lost a lot of money in the stock market. His grandma had to come out from a semi retirement state and go back to work just to support the family. He started working at a very young age as his dad could not give him much allowance. When he graduated, he got a job in an IT company but during the Dot Com bubble crash, he was fired at a young age of 23. This woke him up to the reality of life. You can watch this episode here. The story is really heartening.

What caught me was this is another story of someone losing lots of money in the stock market. The financial loss not only impacted one person but the whole family. Its really saddening to hear that. People would say that stocks are dangerous and do not dabble in stocks because you can burn your fingers and lose a lot of money. This is true. I've heard many cases of it and even have friends who experienced it. They are as young as me. Many are much older than me with family to support.

On the other extreme, there are people who know that stocks are risky and never invest in stocks at all. The problem is they are also struggling in their finances. I realised many people have poor financial management and poor saving habits. Indeed, without knowledge and good habits, people struggle in life.

The purpose of setting up my blog is to educate readers on how to properly manage their money and also learn the proper way to invest. I hope i can do my part in this society and make it a better place. It is saddening to keep hearing stories of how people suffer in life just because they were taught the wrong financial habits or because of the lack of knowledge in investment. Many times its due to greed where people wants to get rich quick. Getting rich quick has nothing to do with financial freedom. Financial freedom is not about money. It is about the ability to choose what we want to do in life without having to worry about money.

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Market update - Substantial rise in treasury yields

Update of Treasury yields in the US

2yr Treasury Yields - 0.51%
10yr Treasury Yields - 2.98%
30yr Treasury Yields - 3.88%

What do these numbers means? A rise in yields implies a fall in bond prices. If you have investment in bonds,  most likely you'll see a drop in your portfolio value. Short term yields have already more than doubled from 0.24 to. 0.51.

This also means that interest rates are rising. Those with floating rate loan packages will feel the effect of higher interest rates. If you have substantial loans like housing and car loans, do take note of the impact.
The good news is a rise in interest rates usually signify a economic recovery. Money is flowing out of bonds(which is considered a safer asset) into equities and other more risky assets.

Dry bulk shippers have bottomed out from its low and have risen substantially the past one month. Baltic dry index (BDI) is also rising indicating an increase in shipping freight rates. Will Singapore shipping stocks start to recover as well? This will need to be monitored further.

Reits and property stocks will be negatively impacted by the rise in interest rates. Reits generally have high debt to service ratios which means they borrow a substantial amount of money.  Higher interest rates will impact a reit's profit.

There may be an adverse effect as some Singaporeans are overleveraged on debt. Some with debts of more than 60% of their income. Will there be more loan defaulters and bankruptcy? That we'll not be sure and need to see how the situation develops.

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Wednesday, September 4, 2013

What's with the WhatsApp craze?

While i was on the bus, i realised that a lot of people were busy typing out on their phones. I took a peek at the people around me and saw that almost everyone was using WhatsApp. I have to admit i'm one of them too. People use to pay for messages in the old days and many young people were sending too many SMSes which caused their phone bills to burst. I used to hear my friends complaining that their parents cancelled their mobile line just because they send too many messages. Sometimes more than 1000 messages when there was only 500 free. Now, we don't have to worry about the cost of sending too many messages. I think i'm sending out more than a few hundred messages a day now just because there's WhatsApp. Its a great way to chat and connect with people.

Why is everyone using it now? Even my uncles and aunties are using it. So it's not really a young person thing. I have to say WhatApp messaging has almost totally replaced normal messaging in our lives. SMS has sort of become a history. It is a very simple app but many people are using it. I wonder why?

How many WhatsApp messages are being sent out everyday? It is about 8-12Billion messages everyday. That is really amazing. The CEO of WhatsApp is Jan Koum. Watch the interview with him on how WhatsApp was started. Throughout the interview, he kept saying how he can improve the lives of people and how he can improve the services and solve people's problems. That i think is a key to success. If you can add value to people's lives, the chances of success is higher.

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Monday, September 2, 2013

China Minzhong acquired by PT Indofood. Share price shoots up by 112%

China Minzhong has gotten out of its pit. Its trading halt was lifted today and from a low of 0.53, it shot up to 1.12. Reason was because it got an offer from PT Indofood to acquired its shares at 1.12. China Minzhong has offered its shareholders a mandatory cash offer at an offer price of 1.12.

Previously, a negative report by Glaucus Research caused it share price to drop by more than 50%. This caused fear to investors who own China Minzhong shares as they see their portfolio value plummet. There were rumours that China Minzhong could be forever suspended and shareholders could never get back their money. There were many S-chips or so called china stocks which suffered that fate so its understandable that a fear is there.

So what does a mandatory cash offer means? It means all shareholders have to sell their shares and the company will buy it at a price of 1.12. You can sell it now or wait for the mandatory cash offer letter to be mailed to you and accept the offer.

I've received one mandatory cash offer before and it was by the company sakari. It was known as straits asia trading beforehand. It does feel good to see your stocks jump up in value. How to know if a company will be acquired? I have to say there is no sure way to tell but investing in undervalued companies increases the probability by a lot.

Learning how to pick stocks is the best knowledge that you can acquire. In fact, by learning how to analyze a company, i've picked up skills in business management and economics. I've also learnt the skills of accounting. There is so much to learn in the investing world. One can never get bored of learning and lifelong learning is one of the keys to success. It is not just about making money but its about a journey towards financial freedom.

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