Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Thursday, 21 June 2018

Differences in investing viewpoints for bonds and equities

15:11 Posted by szcszc 1 comment
Recently, Azalea Group has just released its Astrea IV Class A-1 bonds. It was widely marketed as the debt instrument which provides access to private equity investments. This was definitely confusing (at least for me) and here are the reasons.

Bonds and equities have different long-term investing objectives
Bonds are predominantly debt instruments while equity, regardless private or public, are stake holdings in companies. Debt is primarily raised externally with the purpose of investing in the company’s operations for higher future returns. Interest and loan repayment is required. Debt is classed higher than equity for repayment in the event of a default. While the risk of failure of loan repayment can be mitigated by securing the loan with collaterals (where the collateral can be sold in the event of default), the investment returns are still from the interest payments. Hence, simple judgement of attractiveness of a bond is based on the underlying company’s ability to pay (risk) and the interest rate it is offering (reward). Investors should look for cash flow stability for company’s ability to pay.

Equity funding can be raised internally or externally with the similar purpose of investing in the company’s operations for higher future returns. However, the principal amount invested is not required to be repaid. Investors get their returns from the performance of the company through dividends issued or sales of its shares. As such, the attractiveness of a company’s equity is based on its probability of default (risk) and its business potential and performance (reward).

Why I am confused
While Azalea Group is a Private Equity firm, Astrea IV is a debt instrument which relies on Azalea Group’s cash flow for interest repayment. The attractiveness of this bond should be based on its relative interest rate offered and ifs underlying ability to pay the interest and principal loan amount. If the underlying private equity investments do perform better, the bond investors does not receive further benefits from the interest rate offered. In addition to this, even though Azalea Group is indirectly wholly-owned by Temasek Holdings, the bonds are not guaranteed by Temasek. 

While I understand that the rarity of these private-equity-backed bonds may be the reason of its attractiveness, getting exposure to Private Equity via debt instruments does not resonate well unless the debt instrument has an option to convert into equities or equity-related benefits. A better gauge of bond attractiveness will be to compare its relative default risk and interest rate among other bonds offered in the market.

Conclusion
The Astrea IV bonds have definitely performed well in the light of the positive marketing and its early performance (heavily oversubscribed). The purpose of this post is also not to discount its merits but to offer my 2-cents thoughts of how investors should differentiate the investment perspectives of an equity and debt instrument.

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Wednesday, 23 May 2018

SGX My First Stock Carnival (AKA Stock FunFair)


SGX will be holding a carnival this coming weekend at Vivo City!
This event is suitable for those of you who are wanted to start their investing journey.
Join us at this event to learn more about investing and how to start the journey.

MOST IMPORTANT THING TO NOTE:
There are prizes to be won: 50 Units of STI ETF - it is worth about $170!!
There are also free goodies bag being given out on that day - like we always advocate: free thing just take~

In addition, we (Investment Stab) will be sharing with you on stage what we think is important to you before you start your investing journey.
Details of our segment are below:

Sunday, 27 May 2018
13:15 - 13:30
Topic: 3 Concepts to Understand Before You Start Investing
Sneak peak of the 3 concepts:
     1) What is Investing?
     2) When to Invest?
     3) How Risky?

Join us at the event during our segment to find out what we have to share!
You can also come find us and have a chat with us (or any other partners above) to find out more about investing.

See You There!

Wednesday, 25 April 2018

Get $2 Cashback & More When Watching Avengers

12:07 Posted by cheez No comments
Yes, movie promotions are here, and of course, it is for any movies, not just Marvel The Avengers Infinity War.
This promotion is by DBS in conjunction with Golden Village (GV).

Simply pay with DBS PayLah App when you buy your tickets at GV's automated ticketing machine to receive $2 cash back from now till 31 May 2018 - regardless of how many tickets you buy.

In addition, you buy popcorn also got promotions:
A) DBS PayLah! Combo for $7 - 1 regular popcorn & 1 regular drink
B) DBS Combo for $9.90 - 1 large popcorn & 2 regular drink

Use the DBS PayLah! App to get all these promotions when you are going to watch your movie.

No PayLah App?
Check out our link here to find out how to download the app
How to Download DBS PayLah!

Of course, this kind of thing got terms and conditions (as always):
1) Limited to first 10,000 transactions only
2) Only for first time transaction only
3) Have to be GV member and need to scan your GV e-card before you can enjoy this offer
4) Not valid for premium priced, 3D, Gemini, Gold Class, D-box, group screening, film marathon, film festival, premieres, Sneaks and other possible events

For more details about the promotion, visit the link HERE.

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Monday, 23 April 2018

How to Buy Real Estate in Singapore?

08:00 Posted by cheez 1 comment
Property purchases in Singapore can be some of the most lucrative if done right. However, it is without a doubt challenging. For instance, anyone looking to invest in the property project should understand what it offers in its entirety.
You need to follow a process, and some decisions need to be made early on. Like buying property anywhere else in the world, in Singapore too, owners incur costs like repairs, maintenance, and a commitment.

Do Your Research
Researching the market is a great way to find out what type of properties are available and what you can expect to pay. Prepare a short list of homes that meet your requirements. Your requirements may include things like:

  • The number of bedrooms.
  • The overall size of the home or real estate.
  • Your preferred location.
  • Reoccurring costs associated with the property.

Recommended Post: Free $5 with DBS PayLah

Usually, it's better to start your research from the websites of the best property developers. Here is the list of the Top 10 property developers in Singapore, created by https://www.asiapropertyhq.com/property-developers-singapore/ :

  • Far East Organization
  • El Development Pte Ltd
  • City Development Ltd
  • Frasers Centrepoint Ltd
  • MCC Land
  • Qingjian Realty
  • GuocoLand
  • Bukit Sembawang Estates Limited
  • Hoi Hup Realty Pte Ltd
  • CapitaLand

Take the New Futura Condo for instance. If you were considering the condo, you would have to research to determine which size will fit you the best. You’ll also need to determine if you have the required budget for the beach facing view. Other things you’ll need to consider when choosing a condo is if its near to your place of work. Also, what type of maintenance costs you’ll incur.

Types of Properties You Can Buy – Freehold VS Leasehold
When buying property in Singapore, you’ll be faced with a choice between freehold and leasehold. The difference between the two is significant, and so that has influence over the price as well.
Freehold properties can be held by the owner forever or transferred to their kin.
On the other hand, leasehold properties will revert back to the state when the lease expires.
Lots of properties in Singapore are freehold. That means you can own the property for as long as you want and sell it when the time comes.
However, keep in mind that generally speaking freehold properties are 10% - 15% more expensive.

Price Valuation
Before you buy any property, you’ll want to get it valuated. Now even though property price has already been valuated, it is essential to make a comparison. When you compare the costs of this project with others, it becomes easier to estimate how big a loan you can or should get.

You should also consider the total duration of the loan and its subsequent monthly instalments.
Individual borrowers who don’t have an outstanding house loan, the LVL or Loan to Value Limit is 80%.
If the tenure exceeds 30 years or extends beyond the age of retirement of a borrower, then it's 60% of the property’s value.

Closing the Deal
Once the buyer and seller have agreed on a price, the sale can be completed. Completing the purchase will require paying the seller, and transferring the CT or ‘Certificate of Title’ to the purchaser.
The CT is only issued by the Singapore Land Authority (SLA). It is also proof that you own the property.
Your lawyer then inspects the CT. It is also at this point that the lawyer holds on to the CT.
The next couple of steps are handled by the lawyer. This usually requires that the solicitor holds the CT until legal formalities have been completed. After that, it is surrendered to the SLA, which then reissues a new CT in the name of the new owner.
It takes a total of around ten weeks for the process to complete. If a mortgage has been sought the solicitor lodges a caveat for the property and coordinates with the bank or any other financial institution.
Finally, the mortgage documents are prepared, and the property is officially yours.


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If you don't put your two cents in, how can you expect to get change?

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This article is brought to you by:
Author: Robert LampPosition: Ghostwriter in New Property Guide, Blogger Email: robertlamp10@gmail.com

Monday, 9 April 2018

Free $5 with DBS PayLah

Here is a guide to finding your promocode to share with your friends.
The first part of the guide is to get you signed up and get your first $5.
The second part of the guide is to get you familiar with how to share your promocode with your friend so that you can get your subsequent $5.
Get them to download DBS PayLah so that you can both of you can get $5 from DBS!
Just by downloading an app you can get $5!
And if you like, you can transfer that money to your POSB or DBS bank account.
You don't have to use the app, we just want you to get that free $5 first.

Part 1: Getting My First $5

Step 1: Downloading the App
iOS link: App Store
Andriod Link: Play Store

Step 2: Login into the App
This is the home page, click on the bottom right 'More'.

Step 3: Click on 'Add Promo / Gift Code'
Click on 'Add Promo / Gift Code' to enter the promo code 

Step 4: Enter the promocode to get $5
Enter the promocode 'ANGRLL088' and click submit.




Part 2: Getting My Subsequent $5

Step 1: Login into the app
This is the home page, click on the bottom right 'More'.



Step 2: Go to 'Invite and Earn'
Click on 'Invite and 'Earn' to find your promo code 

Step 3: Click on 'Share' to share your code with your friends
Click on 'Share', options will pop up for you to share your promocode to your friends either via WhatsApp, Facebook or any other platform you wish to use to reach out to your friends.




MAI TU LIAO!
Hurry and grab your promo while it last! :D


*A bit of disclosure: while we are not working with DBS to promote this app, we do get a $5 when you sign up with our promo code :D So thank you in advance.

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If you don't put your two cents in, how can you expect to get change?

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Thursday, 29 March 2018

Uber's Partnership in Recent Years

10:44 Posted by cheez No comments

Biggest news in Singapore yesterday was the merger between Uber's Southeast Asia wing and Grab. This is not something new. After years of fighting and bleeding money in markets all around the world, Uber decided to try a different route and has been partnering with many of its competitors in major markets.

Exchanged its China's operation for 17.7% stake in Didi Chuxing
On August 2016, Uber sold its China operations to Didi Chuxing (China's leading ride hailing company). Didi invested US $1 billion into Uber (Parent company) at US $68 billion valuation. Uber on the other hand, receives 17.7$ stake in Didi. One year after the merger though, there have been feedback that it is now harder and more expensive to get a ride through Didi. 

Exchanged its Russia's operation for 36.6% stake in Russia Ride Hailing Company
On July 2017, Uber merged its Russia operations with another ride-hailing company startup to form the Yandex.Taxi company. Yandex is the largest internet company in Russia, the Google of Russia. It owns a ride-hailing service as one of its subsidiary. The subsidiary is the company that merged with Uber Russia. Uber owns 36.6% of this combined entity.

Exchanged its Southeast Asia operation for 27.5% stake in Grab
On 26 march 2018, Uber sold its SEA operations to Grab for a 27.5% stake in Grab. Grab will take over Uber's ride hailing and food delivery business. 


There is this underlying person behind the scene that not many of you may know, Japan's richest man - Masayoshi Son, founder of Japan's SoftBank Group (and no, it is not actually a bank, and FYI again, he's Korean and not Japanese). SoftBank invested in many ride-hailing startups around the world. Just to name you a few, he invested in Didi Chuxing, Grab, Ola (India), 99 (Brazil startup that was recently bought by Didi) and recently Uber. Just to make things look a little more interesting, here is what SoftBank owns.
  • US Sprint Corporation (83%)
  • Yahoo! Japan (43%)
  • Alibaba Group (29.5%)
  • Nvidia (4.9%)
  • Flipkart (23.6%) - India's e-commerce
  • ARM Holdings (100%) - the company that makes your smartphone chip
  • A ton of other startups beside ride-hailing companies.
This is what SoftBank owns outright. But its effective ownership in many companies are more than what is stated. That is because Alibaba also invests in tons of other startups, many of which overlaps with SoftBank's own investments. This significantly increases the effective ownership SoftBank has over these companies.

Is it possible for this to be the last merger in the ride hailing business scene? Probably not. There are probably going to be a lot more mergers as companies start to consolidate, merge, and partner up in order to compete with other startups and to reduce the rate they burn their capital. SoftBank will probably also push for more of such deals since less loss-making = more profit-making, which will increase the value of its investments.
I think the most important question thus far is: Will I still be getting my weekly dose of promo codes and discounts for rides? Probably not :(


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Tuesday, 13 March 2018

How Warren Buffett Convinced Me to Invest & Not Speculate

10:10 Posted by cheez 1 comment

This quote was the reason that convinced me to invest instead of speculating, to invest long-term instead of short-term. Investing to me is putting money to work to build the future. That is why we say "invest in infrastructure", "invest in human capital", "invest in healthcare" etc. It is because it is not a guess or gamble. Investing has a purpose, has an output, and is beneficial to the economy. Imagine someone saying "let's speculate in our infrastructure, human capital and healthcare". How scary is that!

Using Warren Buffett's example, imagine you are stranded on an island with another 99 people (total 100 people on the island). In order to survive, the people are grouped and allocated different tasks:

10 wheat farmers
10 corn farmers
10 pig breeders
10 chicken breeders
10 cow breeders
10 fishermen
10 dig wells and cleanse water
10 build houses
5 auditors/accountants
5 police to ensure law and order
5 leaders to govern the place
5 traders

Recommended Post: Save $ in Singapore Savings Bonds or CPF?

The leaders created a currency (stranded dollar) to facilitate the business transaction between the people living on the island. You know what 95 people on the island do: they produce some sort of output that ensures that 100 of us survive. There are people making food, water, homes, security, etc. But there are 5 people who produce no economic output. They basically come together every, sit at a round table, and start betting with one another how many pigs is the pig farmer going to have by end of the year, how many fish will the fishermen catch etc. These "talks" create no positive economic output to the society.

Today, a large number of people are participating in this form of mindless activity. Not everyone on Wall Street is speculating, they are also providing a form of service - a positive economic output. They provide us with insurance, facilitate money transfers, provide retirement advice etc. But way too many are speculating on asset prices and other assets.

For the average mom-and-pop investors, I would recommend investing for the long-term, invest instead of speculating. It is really not that difficult, it can be as simple as a savings plan except instead of money accumulating in a savings account, it gets invested in the stock market. But that is beyond the scope of this post. Read up on why it is easy HERE.

Recommended Post: Infographs about SG Budget 2018 that You Should See


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