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

Tuesday, 14 August 2018

We Don't Lack Leaders, We Lack People With Empathy


What makes a leader? What makes a person a leader?
We follow leaders because of many reasons; because they have a strong vision; because they are charismatic; because they inspire us to do great things; because of this and that.

Great leaders like Steve Jobs, had many followers who followed him because he was a visionary, he was charismatic, and he demanded - inspired - people to do great work. We can stretch it a little and say the same can be applied to Hitler - the man literally convinced his people to go to war and risk their lives for him.
These are great leaders, and I believe there are many more of such leaders around us that we know.

I have seen and been under leaders who emits "leadership" qualities. They can give great instructions, make us work together as a team, and make us willing to push ourselves just a little more to achieve their goals.

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But does these "leadership qualities" really make a leader so great that we are willing to go to lengths for them? In the short-run, I believe these "leadership qualities" are key as they get people started, get people to work together, and push people to achieve short-term goals - like completing a project. In the long-run, however, I believe caring for people (empathy) is the key characteristic, is the true mark of a leader.

I do not think that someone who can lead is naturally a leader.
I would work really hard for a charismatic leader for 1 week to complete the project for them. But if they are not caring, not empathetic to people, I can see myself quitting once I am burnt out. Because a leader can only keep us in their 'reality distortion field' for so long before we all break free from it and realise that he/she can lead, but is not a real leader.

We lack people who care for others, who are genuinely concerned about their people's well-being, and not just their own. I am arguing for another kind of leader, the kind of leader that has a normal vision, has minimal charisma, does not really inspire us to do great work, but genuinely cares for us and our well-being, and because of that care, we are willing to work with and for them.

Recommended Post: Is Whole Life Insurance A Scam?

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Thursday, 26 July 2018

Is Whole Life Insurance A Scam?


A lot of people have written a lot about the difference between the 2.
So instead of comparing them again, we recommend you read the difference in the link below:
The Case of Term vs Whole Life Insurance

Instead, I will go into the figures.
Context:
30-year-old male non-smoker planning for $100,000 in death payouts
Quotes are figures I got from CompareFirst.
Term Life:

Whole Life:

I covered the insurance companies - but you can probably do a simple search on CompareFirst to find the insurance companies.

$1,094 per year in premium difference
In total, you pay $3,570 in premiums for Term, and $46,761 in premiums for Whole, a big $43,191 difference.
Had you took that $1,094 difference in annual premiums and invested it in an index fund that has a long-term returns of 6% annually, that pot of money would have grown into $120,815.65 by the end of the 34 years - and it would be a lot more if you survive longer than the 34 years.

To make it an even fairer argument, you invest that same $1,094 premium difference into an index fund that gives you a long-term average return of 4.75%. That too will grow your money to $92,747.59 by the end of the 34th year - still $25,700 more than what the insurance company gives you. Why the big difference you may ask?

Because most of these returns are derived from the insurance companies investing the money into stocks and bonds that you and I can buy as well, and if stocks and bonds give you an average long-term return of 6%, they have to minus away fees and costs before they give you the returns. So net-net you probably are getting only 4% to 5% returns each year from buying an insurance plan (the returns could be worse).

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Important Point to Note:
When buying life insurance, don't be cheated into the mindset that "if I bought whole life insurance, by the end of the time if I do die, I can get the guaranteed amount + additional investment returns."
More often than not, you will get better investment returns if you bought a term-life insurance, pay lower premiums, and invest the premium difference into say an index fund that gives you an average 6% annual returns (which is fairly low returns already).

People often think that "if I bought a $1,100 annual premium whole life insurance, after 40 years, I can get $100,000 (guaranteed) PLUS additional returns from the plan (unguaranteed portion), making my insurance a lot more worthwhile".

The fact is, if you had bought the $100 term-life insurance for 40 years, and invested that extra $1,000 in an index fund that pays you a long-term average of 6%, by the end of 40 years, the insurance plan would have lapsed and you get no money back - yes, $40,000 goes into the insurance company's pocket. But hey, the $1,000 you invested in the market that gives you a 6% return each year would have grown to about $164,000 - more than the $40,000 premiums you have made, and also more than the $67,000 given by the insurance company as 'cash value'.

The Psychology Behind Whole Life Insurance Plans
The reason people buy whole life is that it is hard for people to get over the fact that after paying tens of thousands in insurance premiums over decades, they are not getting anything back. This is a psychological trick that can end up costing you money in the long-term.
So, think twice before committing to a Whole Life Insurance Plan.

The 2 Advantages of Whole Life Insurance Plans

  1. Your beneficiaries will definitely get a payout because (touch wood) everyone will eventually pass away. Whole Life insurance is forever, hence it is a definite payout
  2. If you do not have the discipline of saving aside that extra $1,000 each year to invest in the stock market through a passive index fund, and let it stay in there for 40 years, then maybe whole life insurance is not be a bad plan for you because it ensures that you will definitely pay that extra $1,000 and it will invest and grow the money on your behalf (just at a lower return).


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Image Source: NTUC Income

Friday, 6 July 2018

5% Travel Insurance Discount with FWD


At Investment Stab, we are always finding ways to help you save money, earn money, earn more money, and learn about money.
And we have just this offer right here today:
5% discount on your insurance premiums with FWD Insurance!

Simply click on the link below and you will be brought to the FWD website with a promocode to reduce your insurance premiums by 5%!
https://www.fwd.com.sg/?ref=180619MAOFyDcU

Nope, this is not a sponsored post.
Story about how this 5% discount came about:
Our content coordinator went on an overseas trip recently to Japan and bought travel insurance online via https://www.gobear.com/sg.

Here is why it is important to get travel insurance: Do I Really Need Travel Insurance?

He ended up choosing FWD because of price and coverage.
After buying the insurance, FWD offered a 5% discount promocode for him and his friends to use.
He figured it would be great to share it with our readers - EVERYONE SHOULD GET 5% OFF.
And that's why we are sharing this great promo code with you.
Utilise it well! :D

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Thursday, 21 June 2018

Differences in investing viewpoints for bonds and equities

15:11 4 comments

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 the 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 its underlying ability to pay the interest and principal loan amount. If the underlying private equity investments do perform better, the bond investors do 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 do 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.

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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.

Click HERE to find out more about the offering.

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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

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?

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.

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