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

Tuesday, 28 June 2016

Hope for BREMAIN?

Brexit or Bremain?
There is still hope for a Bremain. All is not doom as United Kingdom (UK) would require the consent of 3 other parliaments (Scotland, Wales and Northern Ireland) plus London to agree on Brexit before UK can request to be out of the European Union (EU).
The ‘out of EU’ legislation that will be drafted by the London parliament needs to be approved by the other 3 parliaments before the UK can leave the EU. This is in addition to requiring UK politicians to negotiate with the EU on the terms of the departure. The UK could also reject any separation deal given to them by the EU and remain as a member of the EU during the separation discussions.
The departure negotiations can only start after the UK have elected new Prime Minister; which is scheduled to be elected as early as October this year. 

There is also hope for the UK to remain in the EU as there are Britons now calling for a second referendum, particularly after the surge in Google searches related to Brexit after it became a reality. 1.5 million Britons have signed a petition to have a second referendum conducted – that proposal has garnered enough signatures for the second referendum proposal to be discussed in the parliament.

However, PM David Cameron and Boris Johnson had played down the possibility of a second referendum. It is still unclear now if a second referendum might occur to undo the Brexit.
While the UK people have voted out of EU, the UK parliament has the rights to seek to remain in the EU. In a sense, the referendum becomes an opinion result. Of course, the parliament will follow the public wish to protect their political career.

Recommended Post: Is MBS REIT Possible?

The referendum to Leave on the Rise in Europe
France, Netherlands, Hungary, Italy, Denmark, Slovakia and Austria are all facing calls for a referendum by their citizens to leave the EU.
While many view this as a step backwards towards the war-torn Europe period, I see this as a step forward towards solving the root problem of the Euro-Crisis.
The UK leaving EU is definitely a bad choice for the UK in the short-term (and maybe even the long-run depending on how you see it), but it sets up the stage required to push for the EU countries to leave the EU and subsequently the Eurodollar - the currency that triggered the Euro-Crisis.

The Tragedy of the European Union
In George Soros’ latest book ‘The tragedy of the European Union: Disintegration or Revival?’, he described several ways in which the Euro-Crisis may be resolved. Either the stronger EU countries (namely Germany) forgave the loans made and provide fresh financial aid to the weaker EU countries (much like the Marshall Plan after WWII), or for the stronger EU countries to leave the Euro-dollar, thus allowing the Euro-dollar to depreciate to a level that can help make the weaker EU countries a more attractive a place for tourism or other purposes. Mr Soros also reiterated that a disorderly the disintegration of the EU may trigger an even worse economic the outcome for the whole of Europe.

Recommended Post: Debt Crowdfunding 101

In my view, Brexit fits two of Mr Soros’ view of aiding the recovery of Europe. UK is considered as a stronger member of the EU. Although Her leaving does not have a direct impact on the value of Euro-dollar, it sets up the stage for the rest of the stronger EU countries (like France) to want to leave the EU and the Euro-dollar. Furthermore, because it is a departure of a strong EU member, there is time on the UK and EU side to discuss the terms of the separation, which can be set as the reference for future departures. This compared to if it was a weaker country (eg; Greece) who is in dire need for economic reforms; any delay could push them further into the economic brink of no return.

Ironically, this can be seen as using the UK as an example of what would happen to an EU country when it leaves the EU – especially if the UK were to suffer long-term recession. This can be a driving factor for the rest of the EU members to realise that they need deeper integration and wider safety nets for one another instead of pushing for separation and economic disaster. However, this can be a little long (at least 2 years) to watch how it would turn out and by then, maybe the populists and nationalists would have already taken over Europe and disintegrated the EU.

In another article detailing the conversation with Singapore's late MM Lee, the idea of a Euro-disintegration was also vaguely mentioned with "small players... the role of supporting player", signifying individual European countries each surviving on their own.

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

Have feedback? Tell us now!

Subscribe to us or

Follow us: Investment Stab on Facebook

Wednesday, 22 June 2016

POSB New Savings Plan for NSF a Good Deal?

Is the new savings plan rolled out by POSB a good deal for NSF?
We went through some of the terms and conditions of the POSB to give you a full picture and the things you need to know about it!

The new Savings Plan, known as POSB Save As You Earn (SAYE) aims to help NSFs earn more interest on their savings and enjoy cash rebates when they spend money.

NSFs will earn
1) 2% interest (per year) on their savings for the first 2 years
2) 2% cash rebate on local MasterCard contactless transactions

Recommended Post: REIT Symposium 2016 Key Take Aways

Terms & Conditions for earning 2% Interest
1) Credit your monthly NS allowance into your bank account that is linked to POSB SAYE account
2) Transfer a minimum amount of $50 each month into your POSB SAYE account

Terms & Conditions for earning 2% cash rebate
1) 2% cash rebate on all local MasterCard contactless transactions
2) 1% cash rebate on online transactions
3) 0.3% cash rebate on all other retail transactions
No minimum spending required for NSFs
Also, as long as you own one of the cards (HomeTeamNS-Passion-POSB Debit Card or SAFRA DBS Debit Card), you are automatically eligible for the cash rebates.

When can I apply for one?
You can apply once you received your first NS allowance.

Things You Should Know

1) Interest Disbursement
The 2% interest earned is accumulated for 12 months and released all at one go.
This means if you sign up now (June), you only receive the first year interest payment in June 2017 and the second year interest payment in June 2018.

2) Income Qualified for 2% Interest
The 2% interest is only for months where you receive a NS allowance.
This means if you are near ORD date, you do not really have a lot of time to earn the 2% interest. This will be just like another one of your savings account.
On the other hand, if you are going to enlist or just enlisted, you have a longer period to earn the 2% interest.

3) Savings Limit
You must deposit a minimum of $50 and a maximum of $3,000 into your POSB SAYE account every month.
You can set the amount and the date you wish to do the monthly transfer. You can also adjust the amount of money you wish to contribute each month

4) Forfeiture of Accumulated 2% Interest
We think this deserves a big note and attention!
At any point should you make an withdrawal from the POSB SAYE account, you will
1) earn only the base interest for that month's balance and;
2) lose all your previously earned 2% interest.
You open POSB SAYE account on July 2016. You accumulated the 2% interest all the way till May 2017. On May 2017, you made a withdrawal from your POSB SAYE account. 
For the month of May, you will earn the base interest on your account balance. 
In additional, you will lose all the 2% interest you have earned from July 2016 to April 2017.
You will continue to earn 2% interest in June 2017 if you still met the criteria.

5) Cash Rebates are NOT real cash
The cash rebates you get from your spending is not actual cash credited back into your account.
Instead, HomeTeamNS$ and Safra$ are credited into your Card Account and can be spent at all HomeTeamNS and Safra clubhouses and participating merchants.

Recommended Post: Is MBS REIT Possible?

Our Take
If you are going to enlist or just enlisted, it is recommended that you open this account.
While you might withdraw money from this account, should you not withdraw a single cent from this account, you get to earn a bonus 2% interest!

Or, instead of saving your money (which most likely you will not have a lot of it), it might be better to transfer your parents' money (if they have plenty) into this account to earn the 2% interest.
DO take note however that the money they transferred in cannot be taken out during the 12 months period, if not the 2% interest will be forfeited!
Assuming you put in $3,000 every month into the account from the start of your NS journey, by the end of your 2 years, you would have put in $72,000 and earn an accumulated interest of $1,537.5!
Kind of works like a Fixed Deposit I would say.

Friday, 17 June 2016

Debt Crowdfunding 101 in Singapore

There are 4 general kinds of crowdfunding in the world. They are namely donations, pledge (or reward), equity and debt. We will be focusing on the more prominently seen method used in Singapore: Debt!
It was reported on Straits Times February 2016 that MoolahSense has helped 22 companies raised a total of $5 million since it was launched in 2014.

What is it?
In debt funding (aka peer-to-peer lending), fund providers are basically taking over the job as a bank; lending money to firms that need them (fund raisers) and in return, gets interest payment. Fund raisers also get what they want (access to money to support their business).
This has been the case for many years – friends and family supporting the business of someone they know. But today, with the help of internet, the help and support from “family and friends” have expanded to a lot more people, including friends you have not met!
You may be curious as to why are the banks not helping these companies. The reason is because most of the companies that seek crowdfunding are usually small and medium enterprises (SMEs). They are considered to be of higher risks for the banks than big enterprises (think ShengSiong versus your neighbourhood mama shop).
Another reason is because of the costs and returns achieved from lending these SMEs money. SMEs usually requires not much funds (usually less than $1 million). The banks have compliance cost, legal cost, operating cost and interest cost (just to list a few, there are more costs) to cover when giving loans. If the loan amount is not big, the returns that banks get from SMEs are insufficient to cover these costs. Thus banks are unwilling to lend money to small borrowers.

Recommended Post: Is MBS REIT Possible?

How Does It Work?
For Fund Raisers
  • You submit a request to the platform you are seeking to raise funds
  • You will submit your company’s information, amount you wish to raise, time period of the loan and the interest you are willing to pay (there are also instances where the interest rate is determined by fund providers instead of fund raisers). Rates are also usually set at mid to high teens
  • Upon confirming the credit-worthiness of your company by the crowdfunding platform, your campaign will be published on the platform for fund providers to view and fund
  • Once the campaign closes, you will receive your funds (less the commission of the platform)
  • When the interest payment dates and/or principal payment dates are near, firms will be notified to do the paying to the platform, who will then redistribute them to the fund providers

For Fund Providers
  • The crowdfunding platform will publish the campaigns of companies seeking loans
  • You decide which companies you wish to lend your money to and then you fund them
  • The crowdfunding platform will review the companies’ results and send to you the interest and principal payments when they are due

Benefits of Debt Crowdfunding?
For Fund Raisers
  • Faster process, approval and loan disbursement than banks
  • Lower interest rates (though not always)
  • Get loans that banks are unwilling to provide
  • Credibility aids in getting the loans from public, especially if you had raised funds previously and made prompt payments
  • Publicity boost as company will be ‘featured’ and campaigns will be shared on social media. This aids in bringing in more people to participate in the campaign or increase its customer base

For Fund Providers
  • Higher interest than what banks are providing
  • Funding is as easy as wiring money to a bank
  • You get to choose who you lend your money to (an environment-friendly company or pet home)

Risks of Funding a Debt Crowdfunding?
Bankruptcy of Company
In the event that the fund raiser goes bankrupt, you might not get your money back. However, if the company’s assets are sold, because you are still considered as a debtor, you can claim the sale value of the assets that are sold, hence you may be able to reclaim some or all of your money back.

Missed Interest Payments
Companies might miss their interest payments to you for many reasons ranging from not remembering to wire them to the crowdfunding platform or the companies run out of cash.

Secured or Unsecured Loans
There are some instances where the fund raiser companies decide to put some assets (properties or equipment etc) as collateral to let fund providers feel that the loans are safer, these are called secured loans. In the event of a default by the companies, fund providers may seize these assets, sell them and reclaim back the money they loan to the companies.

Recommended Post: Are Shares really Riskier than Bonds?

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

Have a feedback? Tell us now!

Subscribe to us or

Follow us: Investment Stab on Facebook

Thursday, 9 June 2016

REITs Symposium 2016: Take-aways

We went to the REIT Symposium 2016 at Suntec City Convention last Saturday.
Below are some points we think you might be interested to know and also some other points you should take note of.

1. Singapore REITs ETF to be launched soon on SGX
A REIT ETF based on the current SGX REIT Index will soon be in the Singapore market for retailers. Instead of having to pick and diversify across the asset types that each REIT is geared to specialise in, retailers now can opt for a REITs ETF which covers all different real estate types and capitalise on the property market as a whole. The structure and exact conditions in place are still unclear as there is not much information being released on this in the event. However, we certainly can look forward to something new in the market that will be beneficial to retailers.

Update: More information can be found here in this link:

2. REITs are quite prepared for Rate Hikes
While the fear of interest rate hikes looms, analysts felt that the impact would not be dramatic as investors have been bracing such news for a long time and the damages may have been reflected in current market prices. Pertaining to REITs' context, it seems that REITs are adequately hedged as they can be seen have a longer loan tenure since the periods of increasing interest rates. The analysts also mentioned that most REITs managers have hedged their interest rates against the potential rate hikes, securing their interest rates for the next few years. While they are not totally immune to interest rate hikes, REITs are presently in a better position to defend against such moves.

3. Be contented with the Investment Returns you are getting
Be happy with the rate of returns you are getting, especially if it meets your targeted growth rate. If you were aiming for an 8% returns each year, be happy when you managed to reach it. Don't be affected by the returns others are getting. Many people today are jealous when their friends managed to get a 10% return on their investment and end up being unhappy with their own 8% returns.
Be happy with your results, investment is a personal thing, it is not a competition!

Recommended Post: Is MBS REIT Possible?

4. Invest in Units instead of Spending Cash
Re-invest into REITs units when you get dividends from them. Keep the bonus REITs shares that are given to you instead of selling them. Over the long-term, your goal should be to accumulate more units in a REIT instead of accumulating more cash payouts from the REIT (even though that is the ultimate goal).
As you accumulate more units, you will, in turn, receive a larger payout in the future.
The reason to avoid getting more cash is because of the tendency for us to spend that cash instead of investing it back to reap greater returns for the future.
However, do note that you might want to consider diversifying the income to different REITs; avoid being too concentrated in a particular REIT(s).

Recommended Post: Are Shares really Riskier than Bonds?

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

Have feedback? Tell us now!

Subscribe to us or

Follow us: Investment Stab on Facebook