Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.
January 2018 is a great month for the stock market, and probably a good start too!
The Straits Times Index (STI) is up about 3.4% for the month of January.
The S&P500 is up about 5.6% in the same month.
But does this mean that stocks will continue to do better for the rest of the year?
Here's a short video clip to explain if this will happen.
The Straits Times reported a few days ago that EZ Link Cards will soon be accepted in hawker centres and subsequently with other merchants. This is all in a bid to move Singapore towards a more cashless society. Although this is a good initiative - and one that has finally arrived, it really came a bit too late.
For those of you who have been to Hong Kong before, you would know that they have a really good cashless payment system, the Octopus Card. It was created in 1997 mainly for payment of public transport but subsequently expanded to become Hong Kong's main wireless smart card payment system when the Government allowed it to be used for more than just transport payment in the year 2000.
Meanwhile in Singapore, although we have a similar card that does that does the similar function, EZ Link was never promoted to be used for anything more than transport (maybe 7-11). Or maybe it did try to mimic what Hong Kong's Octopus Card did but fail badly, and this time it is attempted to try it again. But, with the push from NETS' Flashpay, Mastercard's PayPass, Visa's Paywave, and many other cashless payment services coming out, can EZ Link succeed its push this time?
Netflix released their latest quarter's earnings results and it exceeded Wall Street's expectations for it.
Shares of Netflix went highly by nearly 15% yesterday and it is currently now worth USD 100 billion.
You can refer to more of the results HERE.
What we are going to talk about instead is an article that we had posted 3 years ago on Netflix.
The link to that article can be found HERE.
But we have highlighted the key points below: January is a good month for Netflix for many years!
Netflix's stock went up by 15% after it reported good earnings results yesterday!
But this is not the first time this has happened.
Over the last 6 years, this has happened consistently.
Every time after Netflix announces its fourth-quarter earnings results in January, its stock tends to pop higher.
Is this a consistent and reliable trend to invest in?
Is this just pure coincidence?
Or is this a potential fraud?
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Just a few days into the New Year of 2018, I think it would be apt to review the movements in the cryptocurrency market in 2017. After all, the buzzword for 2017 was "Cryptocurrency". A self-proclaimed "early adopter" of cryptocurrency where I started mining for Bitcoin before it became cool, cryptocurrency has reached new hypes where more people are entering and identifying themselves as "experts and fanatics" of cryptocurrencies or Blockchain technology. Effectively, all "moms and pops" are now entering the market in search of easy riches (note this sentence).
There have been several major movements in the cryptocurrency markets in 2017. Bitcoin shot through the roof where it reached a price tag of USD$20,000, giving an amazing return for its believers. There was also a major correction to nearly USD$10,000 where people are speculating whether the bubble for cryptocurrencies has burst. Just a few days ago, Ripple (XRP) has increased by more than 1000% in the past month. It has also replaced Ethereum as the second most valuable cryptocurrency based on market capitalisation, after Bitcoin. While Bitcoin became obscurity, Ripple news is now all over the internet.
However, similar to all asset bubbles that are identified in history (retrospectively), a common symptom was the overvaluation and excessive confidence in the asset that made investors believe that the asset prices will only keep increasing. Referring to the previous statement where everyone was jumping onto the cryptocurrency bandwagon, is this scene replaying itself in another form or cryptocurrencies are inherently worth the price tags?
I believe this question is a huge one for anyone that wants to determine whether to invest in cryptocurrencies. Like any investor, one needs to determine the real value of any assets based on assumptions, be it future cashflows or underlying asset valuations. One problem of cryptocurrencies is that they do not have these components to be valued. I do agree with Mr Damodaran's classification of cryptocurrencies as currencies instead of assets (duh, hence the name) (you can read more here: http://aswathdamodaran.blogspot.com/2017/10/bitcoin-backlash-back-to-drawing-board.html). Then how else can we value cryptocurrencies or even attempt to value them?
One convenient way could be modelling fiat currencies with cryptocurrencies, assuming that they are going to convey similar valuation concepts with identical functionalities. With all forms of fiat currencies, a big component of valuation is trust and number of users adopting the currency. Just referencing to the US dollar (basically because the greenback is the most widely adopted currency), we can see these 2 components being incorporated. Negative news of the country's economic performance or countries abandoning its USD-based reserves trigger devaluation of the currency. Even identifying all components, it is extremely difficult to identify a single valuation for fiat currencies. More commonly so, price tags are all based on market demand and supply pressures from investor expectations as a reflection of the major market movements. Cryptocurrencies also seem to react on these factors where Ripple has been surging as Coinbase, a major cryptocurrency exchange, is considering adding it to its platform, opening access to a wider audience. This essentially increases the number of users adopting Ripple.
Offering my "2-cents" opinions, I do believe the cryptocurrency market is moving towards overvaluation as we have yet to see the implementation of its proclaimed functionalities and remove key cost barriers that are present in traditional banking systems. Even so, there are examples of inefficiencies and problems arising from its volatile prices. One of such is Steam, a gaming platform behemoth, removing Bitcoin as one of its payment methods citing reasons of high transaction costs.
The symptoms where people are turning to cryptocurrencies as a quick way to riches are also worrying. Loads of institutional and retail investments are been thrown into "alt-coins" and Initial Coin Offerings are now the norm. Without regulations, such incidents are likely to increase risks, adding instability to the market.
While this post is not to demerit the advantages of blockchain technology and the promises of cryptocurrency, I believe the media hype and market speculation is likely to derail the market where the community is looking at it for pure profits rather to improve it to benefit the society. Only time will tell whether this is to be true or not..
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2017 has been a rather bullish year for Singapore’s residential property market, with a healthy number of transactions over the past few months. As the number of transactions increases so does the number of mortgages. As such, if you wonder what kind of mortgages are people securing in this bullish market, here is the article for you.
Mortgage preferences
Singaporean mortgagees generally tend to depict a conservative approach in the mortgages chosen, loving the word ‘fixed’. In the first half of 2017, fixed deposit mortgages constitute of 74.5% of all mortgage types obtained; a huge market share. This followed way behind by fixed mortgages that represent 19.5% of the total mortgages. Board and SIBOR/SOR rates are significantly less, representing at 3.2% and 2.8% respectively.
Number of properties owned
First-time buyers or homeowners represent a majority share of the mortgagees at 63.7%. The existence of the Additional Buyers Stamp Duty (ABSD) is seemingly effective, as those owning 2 properties followed behind at 30.8%, while collectively those with 2 or more make up merely 5.5% of mortgages.
Age Dynamics
Contrary to the previous statistics, the market shares for the age profiles of mortgage applicants represent a close fight, with 32.7% making up of those aged 41 to 50 years old, 31.9% constituting of those 31 to 40 years old, and 27.2% making up of the older generation aged 51 years old and above.
Nevertheless, it is imperative to note that majority of those aged 31 to 50 years old are home upgraders. This may be partly due to the fact that first-time homebuyers generally turn to HDB loans, however, with stronger financial standings along the way, HDB upgrader turn to bank loans which offer attractive interest rates.
Gender Dynamics
Gender-wise, a majority are men with 56.8%, while women make up the remaining 43.2%. Several reasons can be attributed to this numbers, be it the fact that men are generally the sole breadwinner or the fact women tend to be conservative investors as compared to men. Nevertheless, we can expect this gap to further narrow in the foreseeable future as more women make property investments as a result of their growing significance in purchasing power.
Reasons for Mortgages
Our findings depict that there are more people seeking to refinance their loans as they seek to capitalize on more attractive packages, as indicated by the fact that 60.9% of mortgages are for refinancing purposes, an increase from 58% on a year-on-year basis.
Property types
Most of the properties mortgaged this year make up of condominiums, constituting 71.1% of all mortgages. This is significantly higher than HDB of 23.2% and landed properties of 6.6%. The reason being is the fact that generally HDB flat homebuyers tend to seek HDB loans. Simultaneously, the private residential market has been heating up as well.
Banks of Choice
Standard Chartered Bank, making up 28% of the mortgages, was the most favored bank in the first half of this year due to their appealing promotional rates. Nevertheless, OCBC is second favorites while Bank of China, DBS, UOB, and Maybank are close market competitors as well. You can check out a detailed list of mortgage interest rates.
In conclusion, should you require any advice on mortgages, it is best to contact an established mortgage advisory company such as Redbrick for assistance. On that note, you can also check Redbrick’s blog for any further useful tips and insights.
The Singapore Savings Bond (SSB)
It is a special Singapore Government bond, issued by the Singapore Government and sold to the public as a form of savings.
Introduced as another form of investment and savings plan for people living in Singapore
The Singapore Central Provident Fund (CPF)
It is a compulsory savings plan for all Singaporeans and PR living and working in Singapore.
A portion of an individual's monthly income is channelled into their respective CPF accounts for different purpose; for buying a house, for retirement and for medical expenses,
Differences between CPF & SSB
Differences
CPF
SSB
Withdrawal
No
Each year, you can only contribute to your CPF at max $37,740 - inclusive of both your compulsory contribution and your voluntary contribution.
Yes
You will get back the money next month
Contribution/
Investment Limit
Yes
Each year, you can only contribute to your CPF at max $37,740 - inclusive of both your compulsory contribution and your voluntary contribution.
Yes
You can buy at max $50,000 worth of bonds each month.
Holding Limit
No
You can save as much money as you like in your CPF.
Yes
You can at max own $100,000 worth of bonds in total
Interest Rates
Up to 3.5% on your Ordinary Account
Up to 5% on your Special, Medisave & Retirement Accounts (SMRA)
Up to 6% on your SMRA if you are above 55 years old
Interest rates are fixed
Less than 1% in your first year
Increases every year
Reaches 3+% in the 10th year
Interest rates depend on market conditions.
Interest
Compounding
Non-Compounding
Returns
Beats Inflation
With inflation on average of about 3% per year compounding, CPF's SMRA account provides higher interest rates than inflation, meaning you do not lose your purchasing power over time
Probably will not beat Inflation
With an interest of 2+% per year over the long-term, it is less likely for SSB to beat inflation rates.
You are likely to maintain purchasing power or lose a little to inflation
Purpose
Save for long-term
Save for Retirement
Save for medical expenses
Save for home payments
Save for short-term
Save for an expense that will occur in a few months or years time, like a wedding, or home down payment
By the Singapore Government,
one of the remaining few AAA-rated countries.
Confirm can repay you back the money you put/save with them
Guaranteed Interest
By the Singapore Government,
one of the remaining few AAA-rated countries.
Confirm can repay you back the interest you have earned
Ownership
It is your money, whether in CPF or in the Bonds,
the money is still yours
Risk Level
Low Risk, or No Risk
By the Singapore Government,
one of the remaining few AAA-rated countries.
Confirm can repay you back the money you put/save/earn with them
Conclusion:
If you want to save for the long-term, go with CPF. It pays a higher interest over the long-term and ensures that your itching hands will not be able to squander it away.
But if you are just looking for a place to save before spending it (say on your home down payment), then save with SSB, it is less risker and provides a good enough interest to ensure you do not lose too much to inflation!
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