Friday, 24 October 2014

Building The Ideal Portfolio

If you're reading this article, chances are that you are interested in building your own investment portfolio but you have no idea how to begin.

Well I'm attempting to assist you in that direction as far as I possibly can.

When people are trying to build their own portfolio, Asset Allocation is probably the number one thing in mind.





You read many financial blogs, books etc. You could have heard the age old maxim,

"Don't Put All Your Eggs in One Basket."



Why? Investments, any kind of investments carries risk. So it's better to spread your money around in various assets. So, if one investment fails or performs poorly, you don't damage your overall returns / investments. When you spread your money around, it's a form of diversification. 

So we come to the second essential part of an ideal portfolio.

"Diversification"

Assets like ETFs, Bonds, Domestic and International Equities and cash should be a part of your portfolio. Higher returns ; Taking more risks. Being cautious? Having more bonds/cash etc would be a good idea.

The way you allocate your assets will change over time as your needs changes. When you're young, your portfolio may have more stocks and equities. During retirement, your portfolio may have more bonds.

There are usually 3 different types of strategies.

1. High Risk.
You're willing to take on more risks for growth potential.

2. Balanced.
You're a mix of bold and cautious. You can't afford a huge setback.

3. Cautious
You like it safe. You're not willing to take high risks.


Limit your exposure to certain industries. Maybe you have too many shares in the oil industry. Or technology. One major change in the industry may leave you badly wounded.

It also depends on your goals. Dividend Stocks are a boost for investors who wish for good dividend yield.

Rebalancing is also important to achieve maximal returns.


Signing off,
Teenage Investor

Thursday, 23 October 2014

Is It Better To Invest Alone or as a Couple?



It got me thinking for quite some time, if you are a budding investor but your significant other isn't interested or knowledgeable about it, what should you do?

Maybe your boyfriend is not aware that you have an existing portfolio. Or your wife is focused on her day-to-day life and not willing to take the risks.

Or let us even assume that both you and your partner have seen the benefits and risks of being invested and chosen to invest together.

What then? Should you invest together? Or have your own separate portfolios?

Let us first talk about the various benefits of investing as a couple.

1. Having more capital / dividends

This is the first benefit. When you invest together as a couple, you are able to invest in more shares from the beginning as your purchasing power is doubled. For example maybe you have $2,000 and your partner has $2,000. I'm sure you'll agree that $4,000 can buy more than what $2,000 can. Therefore a higher amount of shares owned will result in a increased amount of dividends as well.

2. Incurring less Commissions/Expenses

Depending on your broker, buying from one account would result in lower expenses overall compared to two separate accounts.

3. Closer Relationship (?)

Notice the (?). This depends on your relationship status. For example, it could work out if both of you have the same strategy, mindset and goals. In this case, it would potentially bring you closer as you plan strategies together. It may give off the impression and satisfaction that you're working as a "team".

There are some of the various benefits that I can think off. But unfortunately, I can think of more negative consequences when deciding to invest together as a couple.



CONFLICTS, CONFLICTS, CONFLICTS.

Maybe you're more aggressive, willing to take higher risks for higher returns. But your partner is more conservative. Therefore this may result in conflict along the way.

 Or maybe you're happy with your portfolio. Even in bear markets you're okay with seeing your investments decrease in value knowing you're in this for the long term. But your partner freaks and wants to sell off everything to minimise losses. Conflict.

Investing styles are mostly dependent on your personality as a whole. Therefore expecting your partner to adapt to your style may not be the best way. Nor should your partner expect you to comply with his/her styles no matter what. Conflict.

You're a person focused with saving and investing. She's more obsessed with buying the latest handbag. Arguments about how much each person should contribute to your investment fund may result in negative consequences. Or you're a person that believes in saving regularly. Your husband prefers to spend his cash on booze and socialising. Again, conflict.



Notice that most of these problems stems from incompatibility as a couple. Your thinking may be different from one another and this would not help. A couple should understand each other's fears and work towards a common goal. Taking the lead is not wrong, completely deciding the direction of the portfolio and investments is not wrong either.

I guess what I'm trying to say there's no right or wrong answer here. It all lies in your common understanding as a couple.

It's all about whether they have agreed on a common goal and both are equally aware of what direction they are heading towards to.

So would it better to invest alone or as a couple? The answer is up to you to decide. Only you and your partner will know what's best for the both of you.

Signing off,
Teenage Investor

Wednesday, 22 October 2014

Get a Free Taxi Ride- On Me.


Hello Readers, How often do you get to have a free taxi ride in Singapore? Doubtless, not a lot of times. Uber is the newest taxi app on the blog, in the ever increasing successful attempts to get a cab any time you need one. Instead of calling 6 different Taxi Companies only to fail to secure a cab.

HOW Frustrating Is That?

So How do you secure yourself a free ride worth up to $10?

Step 1: Sign up for an account on Uber / Download the app on App Store/ Google Play

https://get.uber.com/sign-up/

Step 2: Key in your personal details.

Debit/Credit Cards are used for payment, absolutely complete cashless transactions. No longer necessary to pay cash. So much more convenient for us.

Step 3: Book a Taxi Ride using the app.



Step 4: Enter Promo Code

BENP375 

That's it! Your Ride is free! However, the ride is up to $10!

Have fun!

Signing off,
Teenage Investor

Tuesday, 21 October 2014

Personal Financial Investment Seminar - SOLD OUT


Hello readers, this is just to update that the event has been sold out. As of now, sales have been closed. I haven't been blogging as actively because school have reopened for me and just like any teenage kid, I'm faced with the new prospects of upcoming projects, tutorials, lectures and the numerous deadlines to meet. Therefore I can look forward to months of not sleeping on time, and in some cases not sleeping at all to meet deadlines. Hopefully that forecast won't come true.

My Investing journey will continue, as I pour in fresh funds each month. With increased expenses in school, I will have to find a part time job soon.

Hope everyone's doing fine and chasing their dream. My last few months in Poly, I aim to leave with as little regrets as possible.

Signing off,
Teenage Investor

Sunday, 19 October 2014

Why a Multi Level Marketing (MLM) Company isn't a source of Passive Income






Recently, I met up with an old friend from high school for dinner. Over dinner we chatted about our school life, our plans for army and the future. He told me he recently joined a MLM Company called WorldVentures. I was quite shocked, but I refrained from commenting about anything as he was pretty excited about the whole thing.

It's shocking to be approached twice to join this company in the time span of 2 months. I refuse to be a downline however.

Read post on WorldVentures here. WorldVentures

Anyway, he tried to get me to join, but I politely declined of course. Of course, he kept talking about the passive income he would earn. His exact words were "Bro, it's so easy to get rich. I'm earning money while I'm talking to you."

But when I asked him about the full compensation structure, he was unable to answer me. Apparently, his friend only told him he would be getting passive income and that's all he knew.

So essentially, he paid SGD$400+ on a single sentence. That got me wondering. How many joined MLM companies and then realised the compensation structure only after that? Or are they even clear about it at all?

As their distributors, their plan determines how you get paid. So it's extremely worrying that my friend joined based on trusting his friend and not understanding and approving of the structure.

Usually MLMs distributors get their "passive income" by sourcing for new members. Or essentially, their "Downlines".

The problem I have with is this. The concept of "Passive Income" is all wrong.

Tip: If people tell you that you can get passive income from a business opportunity or selling a product or whatever... Run. Run and don't ever look back.

Passive Income - Passive income is an income received on a regular basis, with little effort required to maintain it. It is closely related to the concept of "unearned income". (Wikipedia)




Little effort is required to maintain it. There's a difference between passive income and earned income.

When you source for downlines, you're making an effort. Not everyone you meet is willing to join. It requires much time and effort just to get 1 downline. Some MLM distributors are doing this full - time.

To make passive income usually requires having assets that generate income for you. So technically the products/memberships you're selling on behalf of the company isn't your asset. 


If you stop selling, chances are your income would decrease. Maybe you would continue to receive a commission depending on your downlines. If you stop working, eventually your passive income would decrease day by day. The turnover rate of downlines in MLM companies are tremendous. I should know, having worked in a MLM company before. People are quitting everyday and new downlines are joining.

Think of it this way, can you leave your job for a extended period of time and expect to receive the same income everyday?

Truth is what you get from MLM companies is Earned Income.

You earn this with your own hard work and effort. There's nothing passive about it.

To build a sustainable business based on selling, you would have to sell memberships constantly. And there's only so many people that are willing to join, aren't they?


In fact, do read this post wrote by Lionel Yeo, the Admin of Cheerful Egg.com


I really like and agree with this quote: "I’m sorry, but there’s no such thing as a magical switch you can flip and instantly watch ten thousand dollars roll in every month."

Signing off,
Teenage Investor

Friday, 17 October 2014

Does Having A Perfect Wedding means spending Thousands?

Recently, my blogpost was shared on The Real Singapore.



Read post here: How Much Do You Need to Save For A Decent Wedding

I took a peek at the comments, very very interesting comments too. They provided necessary insight into how our generation is indeed changing. Many people don't see the need to have a big fancy wedding. They want a marriage. Weddings are merely a choice of celebration.

They view their marriage as the most important thing.

Take a look at some of the comments below.



























Times have changed. Marriage is about 2 people in love, coming together to forge an ever-lasting connection with each other.

Singaporeans are increasingly looking for better ways to spend their hard-earned money. Not everyone is looking to spend hundreds of thousands on the "Perfect Wedding".

Sure, there are probably a percentage of people still envisioning their "Perfect Wedding". But having that Perfect Wedding is subject to your own expectations.

Some people can have a small intimate wedding celebration with only close relatives and friends attending and feel that is their perfect wedding.

Some spend thousands and thousands on their wedding and wonder why it's not perfect. Why? Because their expectations are too high.

It's all about expectations isn't it?

What about those who are under pressure by their parents or parents in law to spend thousands on the wedding? Are they happy?

At the end of the day, it's all about personal preference. People may feel the need to spend, but some don't.

They'd rather spend the money on their BTO flats. Their future. Their honeymoon.

My estimation of SGD$78,000 for a wedding can be used to renovate their flat and get new furnishings.

In the comments on The Real Singapore, many people were indignant. Many felt the article was highly inaccurate.

I was truly happy to read such comments. It confirms my belief that a wedding doesn't have to be flashy. To quote one of the comments "Ego will make it expensive."


What do you think?


Signing off,
Teenage Investor



Personal Financial Investment Seminar Singapore - By Investors, For Investors 17 January 2015


Hi everyone, this post is really quite late considering many financial bloggers have already did a write-up on this seminar. But hey, the good thing is if you didn't already know about this event, well now you know! :D

Some financial bloggers include:
Uncle CreateWealth8888
Lady You Can be Free
Dr Wealth
My 15 HR Work Week
Singapore Man of Leisure

With regards to this event, what should you know?

Event Information:


When:  17 January 2015, Saturday
Time: 12.30pm to 5.30pm
Where: NTUC Auditorium, NTUC Centre

No.1 Marina Boulevard
#11-01, One Marina Boulevard
Singapore (018989)

Price: SGD$16.00 per person.
Discount Code: WDFRIEND (50% off, valid until end Nov 2014)

You can also use various discount codes provided by other bloggers. All are valid for 50% discount until the stipulated time.

What: View Programme Here
How: Sign Me Up!

Now that you have all the details, why should you or anyone else attend this seminar for that matter? Putting beside the fact that it's at an extremely affordable price of $8/person?

Read on!


Event Highlights:

This event is organised by Wealth Directions with their slogan, "By Investors, For Investors". This is an event that is open to the general public who wish to gain more information and knowledge for their Investment Journey. And since I'm a Teen myself, all the more I'm encouraging fellow readers my age to attend this event.

Am I earning anything from this event? No. Am I getting special privileges? No. I am promoting this event, because in the two months that I have begun blogging, I have read at least some, if not all the blogs owned by fellow financial bloggers/influencers who will be speaking at this event.

Do you feel that $8 or $16 is very expensive? Assuming you're the average teenager, some of you may spend more than twice or thrice this amount on a single meal / club / pub etc. Even a simple lunch buffet at Seoul Garden sets you back by at least $30.00. And most importantly, if this event meets my expectations, it's going to pay back much more than what you invested.

Many of my readers have emailed me asking for advice. Personally, a limited amount of information can be shared through my blog posts/ emails. Wouldn't you rather spend $8 to come down and listen and hopefully, leave with more insight and knowledge of what you plan to do?

There may be some light refreshments or so, but hey you're attending the event for the potential knowledge that you can gain.

These speakers put their name, faces and reputation on the line for a good reason. They are talking about what they believe in and what has worked for them.

Teenagers and young adults will benefit the most from these. Why? They say Youth is wasted on the Young. When you're old and have more experience and knowledge, you wish you knew this when you were younger. Well, since you're young now, gain the experience!






Here is a quick run down on who is talking about what:

Financially free at age of 40. He will be talking about why one need to invest and more importantly how choose the correct investment for yourself.
As a certified CFA, he will be running through the finer points of creating your very own financial plan the correct way.
Are your investment yield better than 8% a year? If not, you should listen to this guy.
He is not a stranger to Wealth Directions’ Graduate. He was one of Dennis’s student and have came forward many time to help out in Wealth Directions program and activities.
In this event, he will be revealing one of the most interesting method of picking under valued stocks. Who don’t want to learn that?
Dr Tee is also no stranger to Wealth Directions’ Graduate. He is the Master trainer in one of our stock investment course.
By this time in the event, you would know why you need to invest, how to do proper financial plan, check if what you are doing is correct and how to pick under valued stocks. Next, Dr Tee will share with you when to buy and sell your stocks. Talk about complete education!
  • Speaker Discussion Panel
This is the best part. All the speakers will come back to the stage again and talk about 2015 investment plans PLUS they will show you where they are parking their own money for the new year ! This has never been done before so definitely the highlight of the event.



(Information credits to Wealth Directions)

For more information, visit http://myinvestmentplace.com

Will I be attending? It really depends on my schedule. Hopefully, time can be allocated to attend. Personally, some of my friends have already signed up. I share what I feel is beneficial! :)

I don't share what I personally feel is not.

Have fun! Invest in knowledge today!

Signing Off,
Teenage Investor





Wednesday, 15 October 2014

How Much Do You Need to Buy Your First Home in Singapore?



This is a post in continuation with Buying Your First HDB Flat in Singapore

What are the costs involved? Planning your Finances is important.

As of Sep 2014, a regular 4 room BTO flat would cost without grant:

Bukit Batok $269,000+++
Buangkok $268,000+++

Therefore, I will round off the amount to $300,000. This price is inclusive of miscellaneous fees including agent fees, option fees etc.




As seen on my previous post,


This is a sample calculation. Assuming the total selling price is $253,400,  the downpayment would be around $30,000 give or take.

Now this is close to 12% of the total amount.

Assuming the flat costs $300,000, the minimum downpayment would be $36,000! The balance would be paid off with CPF/Cash when you get the keys. This payment could also be done in instalments.

Please note that downpayment based on 10% would be at $30,000.
The $6,000 is an estimate on stamp duty fee, conveyancing fee and caveat registration fee.

Here, I'm assuming it's a 25 year loan payable monthly. That's a total of 300 months, bringing a monthly payment of $900 not including interest.
With interest, the monthly payable amount be around $1500 or lesser.

Do note, that there are two types of insurance you have to take out:

HDB Fire Insurance Policy
If you are taking a loan from HDB, you will have to take out a fire insurance policy from the Insurance Agent appointed by HDB.



Home Protection Scheme (HPS)
HPS is a mortgage-reducing insurance scheme administered by CPF Board. It insures CPF members and their families against losing their homes should members become permanently incapacitated or pass away before their housing loans are paid up.

If you are using your CPF savings to pay your monthly housing loan instalments, you have to apply for HPS.

For more information on HPS, you can obtain an HPS booklet at HDB Hub or call CPF Board or visit the CPF Board's website.



What can you use to pay for your home?

1. Cash Savings

$10 Adminstration fee.
$2000 Option Fee.

2. CPF Money

You can use the savings in your CPF Ordinary Account to pay for your flat purchase. However, under the CPF Board's requirements, you are allowed to withdraw only up to a certain limit. Once the CPF withdrawal limit is reached, you will not be allowed to use your CPF money to pay for your flat.

To find out the maximum amount of CPF that can be used for the property, you may log on to the CPF Board'sCPF Housing Withdrawal Limits Calculator (for flats with remaining lease of 60 years or more) (e-Service) or theProperty with less than 60 Years Lease Calculator (for flats with remaining lease of less than 60 years, but at least 30 years) (e-Service).

If you are buying a flat with remaining lease less than 30 years, CPF monies cannot be used. This is applicable to flat applications received on or after 1 July 2013.


For a new HDB flat bought with a concessionary HDB loan,


Use of All CPF Savings


Subject to limits for properties with less than 60 years of remaining lease, buyers must use all the available savings in their CPF Ordinary Accounts for the purchase of or taking over the flat before any housing loan is granted by HDB. You may set aside the amount required for payment of stamp, registration and conveyancing fees and CPF Home Protection Insurance Premium (if applicable).

You can use all the CPF savings in your Ordinary Account to pay up to 100 % Valuation Limit (VL) of the flat. The VL refers to the purchase price or the value of the flat at the time of purchase, whichever is lower. If your HDB loan is still outstanding when the total CPF withdrawals towards payment of the flat reach the VL, you may use additional CPF savings from your Ordinary Account if you have set aside the prevailing Minimum Sum cash component.

For any other options, readers would have to key in the values themselves as it requires information that would be known to the buyers only. Eg: (market value/ CPF money paid)

3. Housing Loan

What is the maximum amount loan you're entitled to?

I'm basing this on the assumption that you and your partner are drawing a salary of $2000/month. Because this is the average salary, most diploma holders get. May be more or less, this is just an estimate.

You would be entitled to a maximum loan of $264,500 payable over 25 years.


That would bring your monthly instalment at $1200/month.

Still, assuming your home costs $300,000 and you pay $50,000 upfront, with the balance of $250,000 to be paid in instalments over 25 years.

If so, your new monthly instalment is calculated at $1,135/month.


So, if my salary is around $2,000/month it may be prudent for me to opt for a smaller home. 

Assuming you and your partner pay half, you would have $2865/month to settle other payments and costs of living.

4. Bank Loan

I would not go into too much details here, as different banks offer different loan packages. Do keep in mind however, that bank interest rates tend to increase over the years.

So to sum up, to purchase your first home at costs of $300,000 you would need:

1. $10 Admin Fee
2. $2000 Option Fee.
3. $36,000 Downpayment
4. $5.50 (5 years) HDB Fire Insurance
5. $143/year (Home Protection Scheme)

Average amount needed upfront: $38,158.50 rounded off to $40,000.

Hope the above information have helped you in any way. Would appreciate constructive comments if I have made a mistake anywhere!

Signing Off,

Buying Your First HDB Flat in Singapore



I've decided to do some in-depth research into the steps needed and criterias a Singaporean like myself has to meet before we can purchase our first home.

Therefore for this post, I would focus more for Singaporean couples that are planning to get married / already married and intending to purchase their first HDB flat.


Things To Note:


Buying a home is probably the biggest financial commitment for most Singaporeans. It is a long-term commitment which should be carefully planned upfront.

Before you start looking for a home to buy, first work out what you can afford as well as find out what you need to pay for. What you can afford depends on your current income, existing debt obligations and expenses, available savings as well as the loan amount you are eligible for.

Buying a home involves making some upfront payments, as well as monthly payments such as your housing loan instalments and conservancy charges.




So, knowing this and assuming you're still prepared to buy a house, what's next? 

Some Things to Consider before Buying a House:


1. Do You Have Enough Money?

This is perhaps the most obvious, but sometimes obvious is not enough. Why waste times looking at hundreds of homes only to realize you cannot afford them?

Don't get trapped in the house of your dreams only to suffer for the next half of your lives. Would it be very romantic and feasible to live in an amazing apartment and not be able to enjoy it?

If you're getting an agent, check with them on their fees and charges so that you would have a more accurate concept of the total budget required.

Do you want to get a flat near your parents?

Would you be getting a bank loan? HDB loan?


With the above in mind, let's progress to the steps needed to apply for your first HDB flat, usually a Build-To-Order (BTO) flat.

Step 1: The Launch of BTO Exercise. 


When announced, information like location/prices/designs and number of units will be provided. Check first, if you're eligible to buy a flat from HDB.

Eligibility Requirements include being a Singaporean Citizen / be at least 21 years old at time of application.

Income ceiling is also important and taken into consideration.



Step 2: Submit Your Application


Fill in the lengthy form online / do it in person at HDB's Branches. A non-refundable administration fee of $10 must be paid.


Step 3: Receive Outcome of Application



After the sale closes, you are able to check the status of application / receive a letter from HDB with regards to the results. If unsuccessful, apply again. People have tried 9 times before they got in. Perseverance is key here.

Step 4: Book Your Flat



The different option fee payable.



Do note that the option fee is refundable if you meet the following criteria:


If you cancel your application after the selection of your flat, the money will be forfeited.

Once informed of your balloted queue position, you'll receive an invitation package with an appointment to select your flat. Time to begin the dreaded task of shortlisting 20-40 units a day, praying hard that nobody will select the unit(s) that you have selected. 

Documents to bring: 


Refer to the letter from HDB for a list of documents that you will need to bring on the day of flat selection. If you are applying for AHG, do ensure that you meet the criteria and bring along the required documents.


Step 5: Apply for Your Mortgage Loan

Before signing the Agreement for Lease, you will need to obtain either 1)HDB Loan Eligibility Letter (HLE) if you're getting a loan from HDB or 2)Letter of Offer from Bank/Financial Institution if you're getting a bank loan.


Step 6: Sign Agreement for Lease

Hang in there, Dear Reader. This painful process is almost over. Almost.


Downpayment if you're getting a loan from HDB. (10%)

You are required to pay 10% of the purchase price of the flat as downpayment if you are taking a housing loan from theHDB or not taking any loan. You can use your CPF savings to make the downpayment. If your CPF savings are not enough, you will have to pay the balance in cash.

You may request reimbursement of the option fee after you have paid the 10% downpayment using your CPF savings.


Downpayment if you're getting a loan from a bank. (20%)

If you are eligible for a loan ceiling of 80%, you will have to pay the initial payment of
  • 5% in cash
  • Balance 15% using CPF savings, CPF Housing Grant or cash
If you are eligible for a loan ceiling of 60%, you will have to pay the initial payment of
  • 10% in cash
  • Balance using CPF savings, CPF Housing Grant or cash
If you are eligible for a loan ceiling of 50% or lower, you will have to pay the initial payment of
20% in cash and another 5% in cash when they are invited to collect the keys to the new flat.

You would have noticed downpayment includes a (1-3% in legal and stamp fees) What are they?
How much would you need to pay exactly?




Therefore, based on selling price of $253,400 for a 4 room flat, you would pay a total downpayment of around $30,000. 

Step 7: FINAL STEP. Collection of Keys

After this long, difficult journey, it's at the last step. For BTO flats, you would be able to collect your keys in 3 years time. Waiting time varies.

Documents to prepare:



Paying the balance of the purchase fee.

2-room or bigger
Balance of the purchase price of the flat booked, by Cash or CPF or a combination of both.

Studio Apartment
The HDB will not grant loan for the purchase of the Studio Apartment. Applicants are required to pay the remaining 95% of the purchase price of the Studio Apartment in full before they can take possession of the flat.

Applicants who are owners of HDB flats may request for contra facility to offset the payment for the purchase of the Studio Apartment from the proceeds held by the HDB pending the completion of resale of their existing flat. The keys to the Studio Apartment will be issued after the completion of the resale of the existing flat.

HDB Concessionary Loan
If you are eligible for an HDB concessionary rate loan, you may be given a loan up to the housing loan ceiling, subject to full usage of funds from your CPF Ordinary Account and credit assessment.

GIRO Application For Paying Monthly Instalments by Cash
If you intend to pay the monthly instalments partially or fully by cash, you will have to submit a completed GIRO application form before we grant you a loan. If we do not receive the completed GIRO application form on or before the appointment for keys collection, we may withdraw the letter of offer and you will have to find alternative financing for the purchase.

Bank Loans in Case of Non-eligibility for HDB Concessionary Loan
If you are not eligible for an HDB concessionary rate loan, you may approach the banks or financial institution (licensed by MAS) to obtain a mortgage loan.


These are the major steps needed as you purchase your first home. It may be a painful process. The above information are gained from HDB website and updated as of 18 July 2014.

I'm writing this post to help myself be more aware of the costs involved. If my post has helped you in any way, it is my pleasure. Sourcing for all these information isn't easy. Information are all jumbled up.

Signing off,