The Japan story - Croesus retail trust and Saizen Reit

Croesus retail trust and Saizen Reit have been two of my favourite investments since day one. One is a business trust while one is a real estate investment trust. One owns shopping malls while the other owns residential properties. What do they have in common? They are both from Japan.

The investments in these two companies have proved to be a good one. Recently, the stock price of these two companies went up one after the other.

Croesus Retail Trust

Saizen Reit

My first write up on investing in Japan is here: Looking to invest in Japan's real estate
This was written in November last year before the run up.

The whole motivation behind investing in Japan's real estate is fundamentally due to economic reasons. As readers would know, Japanese prime minister Shinzō Abe has launched Abenomics which is a combination of measures such as quantitative easing (QE), increased public infrastructure spending and the devaluation of the Yen. All these stimulate growth which will increase asset prices. Investing in Japanese property may be a good choice if growth does set in and bring the Japanese economy out of a decade of deflationary economy.

Croesus and Saizen were the two Japanese companies that are listed in Singapore. Investing in them was the way to gain access to the Japanese market. Let's take another brief look on Croesus retail trust and Saizen Reit to understand what they do and whether its still a good investment at the current price?


Saizen Reit
Saizen Reit has a portfolio of income producing real estates. These properties are mostly residential properties. To date, it has 139 properties spread across 14 cities in Japan. Occupancy rate is at 91.1%  in 3Q FY2014. As home ownership is low at about 60% in Japan, rental properties are still in strong demand there. Rental prices are set to rise as Japan's economy recover.

The NAV of Saizen Reit is $1.17 as at 31 March 2014. At the current price of $0.96, this still represents a discount to NAV of about 18%. The annualised dividend yield is about 6.67% at the current price. It's gearing ratio is about 38% as at 31 March 2014. This represents the total debt it has to its assets.

Moving forward, will Saizen Reit be able to maintain or even increase its dividend payouts? This is an important question to ask for investors investing for income. The first dividend payout this year was comparable to the first dividend they gave out last year. All else remaining equal, we should still see dividends in the range of 6.5% for FY2014.

At 6.5% dividend yield, is it still a good offer? I personally would prefer a yield of at least 7%. But with the stability of Saizen Reit which owns residential properties, the yield is still quite a good offer for investors.


Croesus Retail Trust
Croesus retail trust is a business trust which owns shopping centres in Japan. Currently, it has 6 shopping centres all located in Japan. When i invested in it, the trust had only 4 shopping centres and recently it acquire 2 more shopping malls located in Tokyo city itself.

The NAV for the trust is at 88cents. At the current price of 94.5 cents, this represents a premium to NAV of 7.4%. The gearing ratio is at 53.5% which is rather high. The gearing ratio was 41.8% before it acquired the 2 properties in Tokyo. With this, the annualised dividend yield is 8.2% at the current price of 94.5cents.

The trust has manage to declare higher dividend yield than what they previously forecast. They will pay out 100% of their distributable income for the first 2 years ending June 2015 and at least 90% of distributable income thereafter. After June 2015, if rental yields remain constant, the annualised dividend yield should decline to below 8% at the current price.

Now, is it still a good investment if dividends decline below 8% and gearing ratio remain high at more than 50%? I would think the risk is higher as any investor who buys now is buying at a premium to NAV. Buying at fair value of 88cents may be a better choice but anyway, nobody will know how the stock price will move thereafter. It may move up or it may move down. I cannot foretell the future.


I believe Japan will continue to benefit from the monetary policy that they are embarking on now. The Yen has fallen significantly boosting exports and attracting investors into the country. QE has worked in the US, UK and also for the European region. It cushions the impact of a full fledge crisis. Of course there will be side effects such as inflation rising too fast which is the main concern. But Japan is in deflation so i don't think inflation is any concern as of now. It's still interesting to see how the situation will unfold in the future. For now, its just taking the ride up by investing in Japan.

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Related Posts:
1. Looking to invest in Japan's real estate
2. Short interview with Jeremy Yong, Co-founder of Croesus Retail trust

Planning retirement for my parents

Readers who read my blog would know that i've been researching and writing on issues related to CPF for the past 1 week. As mentioned in my previous post, CPF is for retirement. My post on CPF was also mentioned in a blog post by Singapore's manpower minister. It is a surprise that my blog has reached to greater audiences out there. In planning for retirement, we cannot forget that there is such thing called the CPF. This is part and parcel of what we have as Singaporeans.

Thus, i decided to take a look at both my Dad's and my Mum's CPF account to see if they are prepared for retirement. There were a few issues which i discovered and if it was known earlier, they could have more money to retire now. Nevertheless, it's always never too late to start now.


The CPF probe begins

My parents both were self employed for a period of time and so they do not have much CPF savings. A portion of it was also used to pay for the housing loan instalments which they have already finished paying a few years ago.

To be automatically put into the CPF life scheme, one needs to have $40,000 in his OA + SA at age 55 or if did not meet the requirements at age 55, then one needs to have $60,000 in his RA at draw-down age. The draw-down age is the age where you start receiving monthly payouts from CPF. For most Singaporeans, it is at age 65 now. For more information on the CPF life scheme, read my previous post: All about CPF minimum sum and CPF life


Mum's CPF

My mum turned 55 last year and she did not meet the $40,000. As such, she was not automatically put into the CPF life scheme. At the current levels of CPF savings she has, she would only get a monthly payout of $250 at age 65. However, she can still opt to join CPF life. Under the CPF life scheme, she would receive monthly payouts till death. This is better than the previous scheme which provides a monthly payout for only 20 years.

I came out with a plan and based on the various calculations, if my mum joins the CPF life scheme, she can expect to receive $320 monthly for the rest of her life compared to only $250 for 20 years. I found out that she had used her CPF OA and SA for some investments 7 years ago. The investment from the OA account lost about 2k while the investment in the SA made a meagre $600. We have decided to sell the investments and return it back into the respective account. Then, that amount can be transferred to my mum's RA account to earn a guaranteed 4% return. By 65, the losses would be made back with a bit more extra.


Dad's CPF

As for my Dad's CPF, he will only turn 55 next year and also does not have much savings in the CPF. I noticed that he had less than $40,000 in his SA so after discussing, we decided to transfer some monies from his OA to his SA to enjoy the higher interest at 5%. After all, no matter what, he can only take out $5000 when he reach 55 and the rest will be transferred to the retirement account(RA). For those of you who're reaching 55 or have parents who are reaching 55 years old, you can transfer monies in your OA to your SA up to the current minimum sum to enjoy the higher interest. Even if you're young, you can consider to transfer also. But remember when you transfer from your OA to SA, the transfer is irreversible. Your SA cannot be used to pay housing loans so before you make any transfers, check whether you need the money in your OA account in the future?


Importance of cash savings

Of course, CPF is only one part of retirement planning. As most people pay their housing loans using CPF (including my parents), most do not have enough in their CPF to retire on. This is when your own savings come into place. Fortunately for my parents, they were frugal and saved up some money in their bank accounts. It was not a lot but i think it would be enough for them to survive on. I would definitely consider to put their retirement savings in at least a fixed deposit to earn higher interest than the current savings account . It is not the time for them to invest in any risky investments including stocks at this stage now.


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Related Posts:
1. Queries on CPF minimum sum - Pledging your property
2. All about CPF minimum sum and CPF life

Queries on CPF minimum sum - Pledging your property

There has been much discussions on the comments section of my previous post: All about CPF minimum sum and CPF life. A reader named NV volunteered to write to CPF with regards to the issue on pledging your property. There was a concern that if you did not meet the minimum sum which is $155,000 from July 2014, then you may not be able to pledge your property to 50% of the MS and withdraw the balance. You can only pledge to make up for the shortfall. 

For example if you have $100,000 in your OA and SA, you can only pledge your property at $55,000 instead of 50% of the MS at $77,500. This is not true and has been verified by the email reply from CPF board below. 

This is the reply from reader NV on the email from CPF:

Hi SG Young Investment,

Received a reply from CPF today. 

Don't mean to sound preachy and windy here. But before going into the details of the reply from CPF, I would suggest readers get themselves updated from time to time as the rules may change and they will not want to be caught off guard at the worst time. If possible, look upon your CPF savings as an additional reserve to draw upon when you retire. Work hard, save, spend below means and get a second income. Understandably, it should be tougher for lower wage workers who will have proportionately more of their savings locked up in CPF and housing. 

From the reply from CPF, and as SG young investment has rightly pointed out in his article, you can apply to pledge your property bought with CPF funds in lieu of the CPF MS (with a limitl) and then apply to withdrawal for the pledged amount. Making this withdrawal will immediately reduce your RA balance and you will have less do draw on for CPF Life. Do think carefully if you really need to take out this amount of cash or leave it in RA to earn the 4% or 5% pa.

Below are the three case examples from CPF's email to me (in brackets are my personal notes). I have also just requested the CPF officer to let me know where I can find the relevant rules on CPF's website and also the CPF Act. If you are interested, it is probably in section 15 of the CPF Act which I have no time to look in detail.

In all the cases, assumed Medisave MS is met and the prevailing CPF MS is $155k. Also assumed that the amount available as property pledge is $100k, so way above 50% of the MS. 


Case 1

Before 55,
OA+SA = $100,000
 
At 55,
OA+SA = $5,000
RA = $95,000
 
Mr A can withdraw $5,000 from his Ordinary Account. Separately, he may also pledge his property to withdraw another $17,500 from his RA. (Property pledge $155k/2 or $77.5k minus MS shortfall topup $60k = $17.5k)
 

Case 2
 
Before 55,
OA+SA = $200,000
 
At 55,
OA+SA = $45,000
RA = $155,000
 
Mr B can withdraw $45,000 from his Ordinary/Special Account. Separately, he may also pledge his property to withdraw another $77,500 from his RA. (no MS shortfall, so can apply for property pledge and withdraw up to $77.5k)



Case 3
 
Before 55,
OA+SA = $60,000
 
At 55,
OA+SA = $5,000
RA = $55,000
 
Mr C can withdraw $5,000 from his Ordinary Account only. (Maximum auto property pledge of $77.5k + RA balance $55k = $132.5k. A MS Shortfall of $22.5k. But can withdraw max $5k under current rules)


What was my reply?

Hi NV,

You have good financial management concepts. Work hard, save, spend below your means is what I propose in my articles too. Its better to live a simple life and be happy. If you want, I'd welcome you to guest post on my blog. Just email me and we can share more :)

The reply from CPF is clear now. It goes to show we can't believe every article that is written out there. The whole CPF saga has generated much confusion. Some ask for higher interest rates but they may not know the implications of higher interest rates. Also, we can have the freedom to transfer money from our OA to SA earlier so we can enjoy the 4% interest instead of just 2.5%. The 1.5% interest will make a big difference over the years. Isn't this getting higher interest by using the system in our favour? .....

Thanks to reader NV for the contributions!   

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All about CPF minimum sum and CPF life

Is increase in minimum sum a bad thing?

There has been much discussions on the CPF minimum sum recently again. The CPF minimum sum will be raised to $155,000 from July 2014. This amount has been raised consecutively for at least the past 10 years. From $80,000 in 2003 to $155,000 in 2014. Of course, people will naturally be unhappy since they realised that the amount they can take out from their CPF becomes lesser and lesser. If you do not meet the minimum sum, you can only take out a maximum of $5000 from your CPF. I'm only in my 20s now and by the time i'm 55, the minimum sum will be much higher. Some people might ask will we be able to take out our CPF money at all?

I've done some research on the whole CPF structure and now i understand where the government is coming from. My parents have reached 55 and they are still confused about how the whole system works. There is just too much noise and confusion out there. That is why i decided to embark on my own research to find out more. The CPF scheme may not be that bad an impression as what was painted outside and in social media. I'll explain this in a simple and direct way. I'll only touch on what most people are concerned on.


What is CPF for?

This is a simple question with a simple answer. The CPF is for our retirement. We have to understand that this is our own money and the government is in no way trying to keep or take our money. When a person reaches 55 years old, a retirement account will be opened. Let's take a look at 2 different scenarios:

When you reach 55 years old


1) A person who does not meet the minimum sum of $155,000
If a person only has $100,000 in his Ordinary account (O.A) and Special account (S.A) combined, he can only withdraw a maximum of $5000 at age 55 and the rest will be put into his/her retirement account(R.A) in CPF. This works out to be $95,000 in his/her R.A.


2) A person who meets the minimum sum of $155,000
If a person has $200,000 in his OA and SA account combined, he can withdraw all of the money less the minimum sum. He/she can withdraw $45,000 at age 55. Therefore, $155,000 will be put into the RA account.

However, there is also a medisave minimum sum(MMS) which we need to meet. The MMS will be $43,500 from 1 July 2014. If you do not have this amount in your Medisave, you'll need to top it up with your OA and SA to make up for the shortfall before you can withdraw the balance after meeting the minimum sum.


3) A person who meets or does not meet the minimum sum of $155,000 and pledges his/her house
You can pledge your house value up to half of the minimum sum. This means for a minimum sum of $155,000, you can pledge up to $77,500. By pledging your house, you can actually draw out more money, which means you can take out an extra of $77,500 out in cash from your CPF once you reach 55. However, because you draw out more money at age 55, your RA account will have lesser money and you will receive lesser monthly payout at your draw-down age. For those born after 1953, the draw down age is 65.

For example, if you have $200,000 in your OA and SA currently, you can withdraw $122,500 out from your CPF at age 55 if you pledge your house. This is more than the $45,000 previously for a person who does not pledge his/her house. If you have less than the minimum sum in your OA and SA combined, your house will be automatically pledged up to 50% of the minimum sum to make up for the short fall. For example, if you have $100,000 in your OA and SA, your house will be automatically pledged.

However, do take note that you can only pledge up to the amount you pay for your housing loan using CPF. If you used only $50,000 in your CPF to pay for your house, then you can only pledge up to $50,000.

*Note: If you pledge your house and then decide to sell your house after that, you'll have to return back the pledged amount plus interest back to your CPF account.

Sources: http://mycpf.cpf.gov.sg/Members/Gen-Info/FAQ/MinimumSum.htm


What is the retirement account used for?

The RA account is used to pay for your retirement needs. Depending on how much you have in your RA account, you'll receive a monthly sum of money at your draw-down age. As mentioned earlier, the draw-down age for those born after 1953 is age 65.

The money in your RA account can be put into a scheme called the CPF life. You will be automatically placed on the CPF life scheme if you're born in 1958 and after. For those born before 1958, you have a choice to join CPF life or remain on the minimum sum scheme.

So what is the CPF life? As quoted from the CPF life FAQ page: "The CPF Lifelong Income For the Elderly (CPF LIFE) Scheme provides you with a monthly payout starting from your drawdown age (DDA), for as long as you live. It improves on the Minimum Sum (MS) Scheme, where payouts only last for about 20 years."


CPF life scheme

Meets minimum sum and on CPF life scheme

CPF life pays you a monthly sum of money for as long as you live. You do not have to worry about depleting your RA account on the minimum sum scheme which only pays up to 20 years. With this, a person who meets the minimum sum of $155,000 and is put into the CPF life scheme will receive a monthly payout estimated to be around $1100-$1200 at draw-down age. This monthly payout is not fixed and will be adjusted from time to time. I'm not sure how they calculate the payout though. You can use a CPF Life payout calculator to estimate the monthly payout you will receive.

Do not meet minimum sum

If a person does not meet the minimum sum, he/she will still be automatically placed on the CPF life scheme if:

1) He/she is born in 1958 or after and
2) Has $40,000 in RA at age 55 or
3) Has $60,000 in RA at draw down age

If a person is born before 1958, he/she can choose to stay on the minimum sum scheme which is to draw down his/her RA funds for 20 years or choose to join in the CPF life scheme to receive monthly payout up till death.

If you are born in 1958 or after, with less than $40,000 in your Retirement Account (RA) at 55 or less than $60,000 in your RA at 65, you can apply to join CPF LIFE instead of remaining on the MS Scheme. While CPF LIFE provides a monthly payment for as long as you live, the MS Scheme provides a monthly payment until the monies in the RA runs out.

Sources: http://mycpf.cpf.gov.sg/Members/CPFSchemes/CPF_LIFE.htm


The more money you have in your RA, the better the payout 

The minimum sum was raised to ensure better payout for Singaporeans when you're old. Imagine if the minimum sum is still at $80,000 in 2003 and has not raised till now, what would be the monthly payout you will receive? Using a CPF Life payout calculator, the monthly payout is estimated to be $695 to $766. Is this enough to survive on?

Of course, we can argue that why not the government give us all our CPF money at age 55 and not have all these CPF life scheme or this minimum sum thing? It's our money after all and we can decide how we want to spend it right? Don't the government trust us to manage our own money? The truth is, very few people will be able to manage their money wisely. Either we spend it lavishly to enjoy or we get cheated of our money at old age. This has happened a lot of times. Some gamble it away while some fall into scams. This is the reality. With this, the CPF schemes act as a safety net to prevent escalating social problems.

So, with the minimum sum raised to $155,000 from 1 July 2014, the estimated payout is about $1200 monthly. This is a decent sum to live on during retirement and we do not have to worry about having not enough money at all if we're under CPF life scheme. It's like an allowance you will get for the rest of your life. Sounds like back to school days when your parents gave you an allowance?


What happens if you die early?

When we talk about retirement, we have to bring in the topic of death. If you die before you can receive the monthly payouts, then the total amount in your RA + interest + the unused annuity premium paid on CPF life, will be paid to your beneficiary whom you nominate under the CPF nomination scheme.

If you die after receiving your monthly payouts say age 75, then the total amount in your RA + interest + unused annuity premiums paid - annuity payouts, will be paid to your beneficiary. You can use the CPF life payout calculator to gauge roughly how much your bequest will receive at different stages of your life.

Sources: http://mycpf.cpf.gov.sg/Members/CPFSchemes/CPF_LIFE.htm

Conclusion

I hope by writing the above information, you can have a better understanding of how the CPF schemes work. CPF is for your retirement. People may not like it since it feels like our money is locked up in it. It is in actual fact a forced savings scheme which delays our gratification. Even when you save money yourself, it's the same feeling. But how many people are disciplined to force themselves to save? Most probably when we see the latest gadget, the great Singapore sale or the travel sales, we'll unknowingly spend it all away.

Of course as with every other schemes, there will surely be weaknesses in it. Some argue that the interest paid on the CPF OA account at 2.5% is too low. Yes i agree its low and not enough to fight inflation but then again for those who have no investment knowledge, getting 2.5% anywhere is virtually non existence now. Remember the banks only pay 0.05% on your savings account currently. We can only hope that the interest rates in CPF will rise in the future. CPF OA interest rates did rise to above 4% during the late 1990s.


*Note that CPF minimum sum has been renamed as Full Retirement Sum. Refer to my other article here for more information on the changes to the CPF system

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Related Posts:
1. The affordability of housing in Singapore and the various housing grants available
2. Queries on CPF minimum sum - Pledging your property
3. Return our CPF?

Yongnam reports a marginal loss of S$1.9 Million in 1QFY2014

Yongnam just released their Q1 financial results and as expected, it's a bad report. For the rest of FY2014, Yongnam is still expected to report this kind of financials. Any contracts they are awarded now will only be reflected in their books from the second half of FY2014.

Q1 revenue fell 12.4% which results in a marginal loss of S$1.9 Million. Yes, its a loss. I wrote in an earlier blog post that Yongnam's full year financial results for FY2013 fell by 49.7% as compared to FY2012. This resulted in it share price falling along in tandem as well. The share is trading at a fair value of 24 cents now with NAV at 24.79cents. Why did i invest in this stock when everything is so negative for Yongnam? Yes, for those who did not know, i did initiate a position in this stock when the price fell.

Yongnam has good track records of profits. For the past 5 years from year 2008, profits have been steadily increasing up till 2011. From year 2012, profits started to decrease to a low of only 5.5 Million in 2013.

This may just be a cyclical downturn for Yongnam itself. Yes, i said it may or may not be. No one can be sure of what will happen next or if Yongnam will be able to rise back to where it was previously. But, with its good reputation and a track record of winning contracts, things may start to look good again as Singapore and other parts of Asia are still actively expanding their infrastructure projects.

Moving forward, there are concrete plans which Yongnam has laid out. I quote from it's press release today:

"In 1QFY2014, the Group has secured orders amounting to S$54.3 million, including two new structural steelworks subcontracts for the upcoming Changi International Airport Terminal 4 and the redevelopment of the UIC Building along Shenton Way, Singapore.  

“Outlook for infrastructural developments and commercial projects in Singapore and the region remains positive and the Group continues to actively pursue S$1.2 billion worth of new infrastructural and commercial projects in Singapore, Hong Kong, Macau and the Middle East of which 73%, if awarded, is expected to commence in the second half of FY2014,” added Mr Seow.  

In addition, the Group, together with consortium partners, Changi Airport Planners and Engineers, and JGC Corporation had, on April 22, 2014, re-submitted its proposal for the design, construction, operation and maintenance of the Hanthawaddy International Airport in Myanmar.  

The Group’s order book stood at S$316 million at the end of March 2014." 

Again, do note that any new projects they secure, would only start contributing from the second half of FY2014. The whole FY2014 may still report poor profits but things should start to look good after FY2014 once more contracts are awarded to them. 

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Related Posts:

1. Is Yongnam's disappointing FY2013 financial result a concern?

2. Yongnam secures subcontract for construction at Changi Airport Terminal 4

The art of balancing motives and making money

Achieving balance is not easy. Most of the time, we'll tend to lean more to one side. Whatever we do, there is always a motive behind it. Good or bad, there is a motive. I'm in my last semester of studies and surprisingly the module is on policy. This was an elective module which is very different from the econs and finance modules i've been taking. I have to study the motives behind the policies that the government makes and how they balance social and economic motives. It's an arts major module.

Social justice or economic prosperity?

There is always a debate of whether a government policy is for the welfare of its people or just about making money? The government cannot have too many policies for welfare but not be able to generate income in order to sustain it. The government also cannot have zero welfare policies but everything is about making money. A balance has to be achieved to win the hearts of its people.

The government has a huge responsibility in policy making. These policies change the direction of a country and impacts our lives indefinitely. Film makers who publish movies also have a responsibility in the films they produce. These films changes the mindset and culture of people and indirectly affects our lives. They can produce a movie which depicts bad moral values or they can produce a movie which lifts the moral standards of society.


Film makers for social justice or profits?

There have been numerous cultural films which won international awards at the oscar and cannes film festival. One example is the movie: "12 years a slave" which won the best picture film in the oscar awards 2014. The director dedicated this movie to those who endured slavery and the 21 million who are still suffering from slavery today. There is a good purpose to the film.

Bringing the scene one step closer to home, local home grown director Anthony Chen, won the cannes film festival Camera d'Or prize for best feature film for his movie Ilo Ilo. This is a film on the life of a typical Singaporean family who hired a Filipino maid and how the maid integrated to become part of the Singaporean family culture. It is a simple film with a heart-warming message behind it. Both of the movie directors made an impact to society and at the same time their film was recognised which created profits. This is making money with a purpose.

On the other end, we see people using unscrupulous ways to make money. They cheat, they lie and they cause harm to society. This is making money just for the sake of money.


Money and purpose

What about ourselves? Do we do business just to make money? Do we invest just to make money? What is our motive behind making money? If our motive for doing something is just for the money, then money has no purpose at all. Focus instead on creating value. Be it in business, investing or your workplace, create value which will make an impact to society. When investing, invest in the company which creates value. Even traders in the stock market have a purpose. Traders have the responsibility to balance price levels in the economy. Collectively, they can move market prices such as oil prices which will affect our lives. They reward the good companies and they punish the bad companies. That's what investors do too. They invest in good companies who are socially responsible. Well, maybe some don't and thus create imbalances in the economy.

Imagine if everyone starts to be greedy and only want to make money but not caring about how it will affect society. This behaviour is what lead to the 2008 financial/sub prime mortgage crisis. Many people had invested in what we called toxic products which the banks sold aggressively. When everything crashed, many lost their life savings.

We have a choice to make. We can strike a balance between our motives and making money. You can choose to make money with a purpose. Focus on creating value and money will come. Focus on just making money may cause great destruction not just to you but the people around you. Learn the art of balancing.

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Related Posts:
1. The pursuit of money or happyness?
2. What if money was no object?
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Book review: Winning Psychology of Defensive Traders

I have just finished reading the book titled Winning psychology of defensive traders by Conrad Alvin Lim. Adam Khoo learning technologies group (AKLTG) contacted me and they were kind enough to give a complimentary copy of the book to me. I've read a few other books by Conrad and Adam Khoo seperately and its always inspirational to me.

I came to know AKLTG as an organisation 3 years back when I just started out my investing journey. I was searching on the internet to find if there were successful investors or traders in Singapore. That's where I stumbled upon the profile of Adam Khoo and Conrad. I was drawn by the wealth academy trader tutorial conducted by Conrad and so I went for a preview session. I was lost in my own financial journey and had lost some money during the European crisis a few years back. I needed some guidance and was desperately finding some help.

Defensive in trading

When I attended the preview session of Conrad, I learnt how tough being a trader was and what it takes to become successful in trading. This was the main point which the new book, "Winning psychology of defensive traders", was trying to bring across to readers too. Its about having the psychology to be defensive and not lose money in trading. Contrary to what we've heard or seen on newspaper advertisement about how a particular person has earned XX amount of $$ through trading forex or whatsoever in a short time, Conrad tells the hard truths of making money from trading. In his new book, there is also the story of his life on how he got out of bankruptcy and did whatever it takes to become a successful trader, author and educator today.


The importance of economics and financial risk management

To be a successful trader, one needs to learn macroeconomics. This is the essence of how money flows from one asset to another and how it affects the economy as a whole as well as individual companies. Some finance and economics concepts are discussed in the book as well. It was also mentioned that if successful traders at wall street attend the best universities in the world to learn about finance and economics and later on undergo years of intensive training and mentorship, what makes ordinary people like us think that we can make money easily through trading?

Thus, if we really want to succeed in trading, it takes hard work and also we need to be defensive in order to stay in the game. The book discusses on risk management, how to manage your psychology in trading and I particularly like the section on the pyramid system of financial management. This is a book not only about trading but the principles discussed can be applied into your life in general too.

Back to my story. After attending the preview session by Conrad, I signed up and attended the whole 8 lessons of tutorial taught by Conrad himself. This inspired me to go further to university to study economics which I'm graduating soon in August this year. I discovered my own passion for finance and started my own blog to help others learn more on finance and investments. Reading this new book by Conrad reminds me of the days when i just started out in my journey. It's truly an inspiration to learn from Conrad. This book will definitely inspire you too.

The book "Winning Psychology of defensive traders" is now available at all major bookstores islandwide in Singapore.

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5 Tips for Selecting the Best Private Student Loan Lender to Help Pay for College [Guest Post]

With so many tutoring jobs emerging in Singapore, many people are hiring a home tutor in Singapore to prepare for tricky entrance exams to get admission into the top colleges. And once you get into the college of your choice, worries of arranging finances for college start creeping in. Here’s telling you the 5 most essential tips on selecting the best private student loan lender to help you pay your for college.

When considering a private student loan, make sure you carry out a comprehensive research on all private student loan options available to you and compare each one of them. Look out for some exclusive offers along with the rates and terms, such that you keep all options open and select the one that is best for you.

Credits: http://www.simpletuition.com/wp-content/uploads/2013/10/student-loans-needed-300x200.jpg

1.     Look For The Total Number Of Lenders 

If you think the very first lender you searched for is offering good rates, do not sign up until you compare student loan rates with several other lenders.  Majority of the loans are available to Singaporean/PR students in the age group 21–62 years. 

Some banks in Singapore (OCBC, for example) even offer loans (against the tuition fee) to international students as long as they have a co-signer. Most lenders require that your cosigner or sponsor has a minimum income of $30,000 per annum. 

2. Look For The Most Favorable Terms 

Private loan lenders offer fixed and variable rates. Fixed rates are generally above 5%. Banks such as POSB, for example, have 5.88% fixed interest rate on student loans. Some cooperatives and other institutions may even offer student loans at attractive 2.9% (flat) interest rates. The variable rates are generally lower and are tied to a fluctuating key index. But, variable interest rates on student loans can also jump up in future. Repayment duration can range anywhere between 5 -10 years or more. When selecting a variable interest loan, it is important to consider the loan term because fixed interest rates are suited for long durations. 

3. Look For Credible Lender 

Make sure the private loan lender you select has been in the market for quite some time and is more likely to stay for years to come. In case your lender closes up, your loan would be sold to some other company which you may not like much. So, instead of just looking at flexible loan tenure and not-so-strict paperwork, pay attention to the kind of financial institution you’re dealing with. In Singapore, some of the most credible lenders include: 

• TCC Credit Cooperative 

• SINDA Study Awards 

• HSBC 

• Citibank Ready Credit Line 

• Maybank Education Loan 

• CDAC Education Loan (best for the Chinese Students) 

• POSB Study Loans 

4. Only Look For Education-Specific Loans 

There are private lenders who only deal with generic lending and do not have true educational lending programs. Carefully look out for lenders who offer a program that is specifically designed for lending loans to students. 

5. Look For Positive User Experience 

Make sure you check every single detail about your lender. Is their web-site user friendly? Do they offer a courteous customer service? Make sure you check out their profile and company history thoroughly. Do not jump the gun right after you notice a stupendous student loan offer from an online lender. 

The above guest post is contributed by Lim Chuwei from http://www.championtutor.com/

Managing money as a couple

When you're single, it is easy to manage your money. When you get married, it may be a little more difficult as you and your spouse's views on money may be different. How much should each person contribute to the household? How to budget household expenses and eliminate overspending? These may be some questions you would ask yourself.

Before you get married, you would have your own bank account for your own savings. Let's say your bank account is the circle A below.

Similarly, your wife or husband also has his or her own bank account. Let's put your spouse's bank account as the circle B below.

Each of you have your own money but its time to settle down and get married. Once you get married, there are household expenses which you need to plan for. Failure to plan may result in overspending and land you in financial problems. How do you prevent that?

Joining your bank accounts as a couple

I was attending a class on business statistics and the lecturer used an interesting real life example to illustrate the topic of probability. When circle A and B joins together, there is a small overlap in the middle. This is like a husband and wife getting married and start a new family. The overlap in the middle is called the joint account. Traditionally, many people in the past open a joint bank account when they are married. This joint account is used to pay for general household expenses such as utilities bills, housing loans, kids expenses. Both husband and wife contribute a certain amount into this account every month. The rest of their money is still in their own bank account for their own use.

With this joint account, the husband and wife can agree and budget their household expenses effectively and use this account to pay for the necessary expenses. They are able to control their household expenses better and eliminate the risk of overspending. They can still save and manage their own personal money separately. This is a simple way of managing finances as a couple. If both husband and wife want to go another step further to save for retirement together, they can open another separate joint account just for retirement savings.

Nevertheless, one may argue what happens if there are unforeseen cost such as your child falls sick and needs to go to the hospital?  Of course these are necessary costs and you should have money set aside separately for these circumstances. Or if the cost is still manageable and payable from the household's joint account, the couple can spend lesser on other things just for that one month.

As the couple earns more, they can increase their household expenses but their retirement plan should not be affected. Living within your means may be the simplest but greatest wisdom there is on financial planning. If you want a better life, earn more money so you can spend more but still be in control. If you don't earn that much, then don't spend too much. That's as simple as it can get. Spending more on food, shopping and family life is good as long as you are in control. However, be careful of debt which can bring you from rich to poor in an instant.

I think this is a good way to be in control of your money together with your spouse. What do you think and how do you manage finances as a couple?

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Financial planning with your needs and wants

This post is inspired by an article I came across on Yahoo finance titled: "How one woman paid of $23,000 debt in 15 months." Instantly when I read the article, I knew those were proven strategies for financial planning. Using these strategies, your financial state will be definitely much healthier.

The strategy is simple: just list down your needs and your wants. Try doing this if you want to improve your financial future.

What are your needs?

You probably know what are your basic necessities for survival. Utilities bills, handphone bills, basic groceries, cheap food and transport(bus & train) are some examples. Basically, these are what you need in order to survive.

After knowing your needs, estimate your budget for each month which you require to spend on.

What are your wants?

Your wants are something which you can do without but still survive. This can sometimes be hard to determine and may be different for each individual.

Let me give some examples of wants:
1) Eating out at restaurants
2) Watching movies at cinema
3) Extra or unnecessary and branded clothes
4) Decorative or accessories stuffs
5) New furniture when existing furniture is still working
6) Expensive starbucks coffees
7) Car and taxi transport expenses

Now don't worry, I'm not saying you can't spend on any of the items above. The key is knowing how much to set aside for spending on those want items.


Bringing your needs and wants together

Now after listing your needs and wants, its time to allocate how much you can spend on them. Your needs are more or less budgeted and you know how much you will roughly be spending on these necessities. Let's say you earn $3000 and you estimate you will spend $500 on it, then you're left with $2500.

With this $2500, determine how much you want to save for it then allocate some portion for your wants. Let's say you allocate $200 for your wants, you'll be left with $2300 to save each month. This is just an example but I hope it gives you a rough idea of how you can plan your finances.

To determine how much to save every month, you need to plan all the way to retirement. Yes, no matter how young you are, you can start planning for retirement. Determine when you want to retire (what age?), determine how much you want to spend per month during your retirement and determine how long your savings will last from retirement.

Here's an example: if you want to spend $1000 per month during retirement and retire at age 55 plus you expect to live for another 20 years till age 75, then you need a total savings of $1000×12×20= $240,000. This is just a simple calculation. Remember to factor in inflation. This means you will most probably need more than how much you are spending now. Chances are that the $3 noodles now may cost much more by the time you retire. Ask your parents what happened to the $1 noodles they had 30 years ago?


Spending 'fast' and spending diet

In the article from Yahoo finance, the author wrote on spending 'fast' and spending diet. When she was in debt, she went on a spending 'fast' which is eliminating all of her wants. This is like food fasting where you discipline yourself to eat certain food only at certain times of the day. A spending 'fast' has the same concept. By eliminating all her wants, she can pay off her debts quicker and get out of debt.

A spending diet is where she allocated a small portion every month to spend for her wants. This is what she did after paying off all her debts such as credit card debts, school loans etc.Without the burden of paying off debts, she can indulge in a little luxury(wants).

Spending, if uncontrolled, always rise to the level of your income. This is what I always believe in. This is also why someone who earns $10,000 can still spend all the $10,000 with no leftovers.

Listing down your needs and wants may be the most basic way of planning your finances. If you have no idea how to save money or where to start from, try out the above method. You don't have to be extreme to save every single bit of your money and eliminate all wants unless you're in serious debt now. Indulging in your wants in a controlled manner is permeable and in fact a healthy balance living.

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