I have not written in this blog for 9 full months and am pretty ashamed of it. The last 9 months was bad for my investments as the markets tanked. During this period of time, my main investments were:
1) Stocks.
A) Buying of warrants which I failed miserably. I started buying warrants using swing momentum and was gaining a bit, but when the markets start to get irrational, my winnings was wiped out in a blink of the eye and got into more losses. My weakness is that I often do not get out of a losing trade. Mainly trading in HSI warrants under Macquarie.
B) The other investments I have made, which I have gathered and will accumulate, are the high yield stocks. Mainly the reits or shipping trusts. Presently, I have First Reits, Lippo Maple Infrastructure Reits, Cambridge Industrial and First Shipping Lease Trust. My priority is to get the highest yielding stock. Currently, these stocks are giving at least 8%pa dividends. My aim is to accumulate enough to get some passive income from these stocks. Target is $10k/yr from dividends by 2015(7-8yrs).
2) Funds
The funds did badly over the whole period. I made the mistake of putting money into a China fund and it is now <70%.>30%. I have also supported a friend, who has just joined the insurance field by buying a couple of funds. I have not monitored the funds but I know it is losing money.
3) Lastly, over the last few months, I chanced upon an investment which is a bit controversial. It's basically a high yield deposit. As the "bank" does not have the reputation to guarantee the amount, it puts down a collateral to the depositor. I have tried with small amounts over the last few months and have received the interest and gotten back the principal.
I have a few stocks under my radar and is itching to buy but i am very tight in cash. Moreover, I heard that the market has a good possibility of going down again. Thus, I am staying put. When I have the money, I will put most of it in my yield stocks first before considering the others.
Showing posts with label Investment Instruments. Show all posts
Showing posts with label Investment Instruments. Show all posts
Tuesday, June 17, 2008
Friday, May 18, 2007
Investment Instruments Series - Property
In property, people normally invest in it for 2 aims; either to collect rent or for capital returns.
If you are going for capital returns, just follow the rule, buy low sell high. Property prices goes in cycles. In Singapore, if you take the last property boom(1994-1997), and the current booming market, its about 12 years apart(start of both booms). So for example, if you buy a 5 room HDB flat in Bishan at the low, it would be around $350k. It can easily fetch $450-500k during the boom period. Or if you are cash rich, get a district 10 property and a tidy profit of $400k-$1m is not unusual. During my father's time(1970-80s), he bought the flat for <$100k and now, its going for $350-400k. Nowadays, you will have to buy a new flat for $200-300k and the profit, if any is only at most $50k. Buying and selling flats is no longer as profitable.
If you have read or attended any renowned real estate experts / gurus talks such as Robert Kiyosaki or his advisor, Dolf de Roos, you will know that rental returns is better than the capital gains as you will be using other people's money(OPM) to pay your property. Take for example a property worth $500k. You pay a minimum sum of maybe 10%, and takes a loan of $450k, the monthly installments would work out to be about $1500 for 30 years. If you rent it out for $1800, you will have a positive cashflow of $300/mth. This $300/mth would be your passive income no matter if you work or not. And the tenant would also be paying for your installments of $1500.
But in Singapore, it is very difficult to find a cashflow positive property as the government controls the market very tightly. Furthermore, when you rent a property, the government would impose on you a tax. So all in all, you will not be getting much from your rental income. This scenario has an exception though. From my understanding, only the commercial properties could command a positive cashflow. The only problem is that to buy a commercial property, you would have to pay cash and a good commercial property costs >$1m. Not a lot of people has that type of money in Singapore.
For me, I prefer overseas properties. Depending on which country, advantages being that it is relatively cheaper to buy a property overseas, overseas rental is higher as compared to Singapore, not needing to pay rental tax and no stamp duty. Of course the downside would be not being to see if the property is well managed. That is why due diligence has to be done before one buys an overseas property. The reputation of the property manager, type of tenants, location, possibility of long term lease, country's property law are just a few of the issues to be researched before plunging into the overseas property market.
If you read the Saturday's newspapers, there are bound to be some companies advertising on overseas properties. The cheaper properties are usually from our region, such as Malaysia, Thailand, Australia and New Zealand. I am not comfortable with the Malaysian and Thai government. Malaysian government has changed their property laws several times and this has brought great inconvenience to Singaporean property investors. As for Thailand, I feel that the government is too instable. Maybe I enjoyed my Aussie and NZ trips, I do prefer the people and the environment there. The more expensive properties are usually the UK ones. As a rough reference, Aussie and NA properties ranges between S$150-$500k. UK ones are normally at least $800k. The rental yield for Aussie and NZ properties is usually around 5-10%. But beware of the loan interest rate. It is around 7-9%. So this high interest rates do eat into your rental income.
If you are interested in going into any overseas property market, go to any of the "no obligation" seminars/sales talks advertised in the newspapers. Learn more about the different companies.
If you are going for capital returns, just follow the rule, buy low sell high. Property prices goes in cycles. In Singapore, if you take the last property boom(1994-1997), and the current booming market, its about 12 years apart(start of both booms). So for example, if you buy a 5 room HDB flat in Bishan at the low, it would be around $350k. It can easily fetch $450-500k during the boom period. Or if you are cash rich, get a district 10 property and a tidy profit of $400k-$1m is not unusual. During my father's time(1970-80s), he bought the flat for <$100k and now, its going for $350-400k. Nowadays, you will have to buy a new flat for $200-300k and the profit, if any is only at most $50k. Buying and selling flats is no longer as profitable.
If you have read or attended any renowned real estate experts / gurus talks such as Robert Kiyosaki or his advisor, Dolf de Roos, you will know that rental returns is better than the capital gains as you will be using other people's money(OPM) to pay your property. Take for example a property worth $500k. You pay a minimum sum of maybe 10%, and takes a loan of $450k, the monthly installments would work out to be about $1500 for 30 years. If you rent it out for $1800, you will have a positive cashflow of $300/mth. This $300/mth would be your passive income no matter if you work or not. And the tenant would also be paying for your installments of $1500.
But in Singapore, it is very difficult to find a cashflow positive property as the government controls the market very tightly. Furthermore, when you rent a property, the government would impose on you a tax. So all in all, you will not be getting much from your rental income. This scenario has an exception though. From my understanding, only the commercial properties could command a positive cashflow. The only problem is that to buy a commercial property, you would have to pay cash and a good commercial property costs >$1m. Not a lot of people has that type of money in Singapore.
For me, I prefer overseas properties. Depending on which country, advantages being that it is relatively cheaper to buy a property overseas, overseas rental is higher as compared to Singapore, not needing to pay rental tax and no stamp duty. Of course the downside would be not being to see if the property is well managed. That is why due diligence has to be done before one buys an overseas property. The reputation of the property manager, type of tenants, location, possibility of long term lease, country's property law are just a few of the issues to be researched before plunging into the overseas property market.
If you read the Saturday's newspapers, there are bound to be some companies advertising on overseas properties. The cheaper properties are usually from our region, such as Malaysia, Thailand, Australia and New Zealand. I am not comfortable with the Malaysian and Thai government. Malaysian government has changed their property laws several times and this has brought great inconvenience to Singaporean property investors. As for Thailand, I feel that the government is too instable. Maybe I enjoyed my Aussie and NZ trips, I do prefer the people and the environment there. The more expensive properties are usually the UK ones. As a rough reference, Aussie and NA properties ranges between S$150-$500k. UK ones are normally at least $800k. The rental yield for Aussie and NZ properties is usually around 5-10%. But beware of the loan interest rate. It is around 7-9%. So this high interest rates do eat into your rental income.
If you are interested in going into any overseas property market, go to any of the "no obligation" seminars/sales talks advertised in the newspapers. Learn more about the different companies.
Tuesday, May 8, 2007
Investment Instrument Series - Land Banking
This will be a series of investment instruments which I will be writing. As I have been to a presentation and done some research, I decided to start on this investment instrument.For a start, land banking is quite new in Singapore. I believe it appeared around 3 years back.
I believe all knows that property is normally a good investment. If you research on most, if not all, property markets in the world, you will see that the property market gives a return of at least 10% pa (this is provided you take a long term view). In Singapore, the type of properties that are worth more are the freehold properties. People are not interested in the building when they buy the "property", they are more interested in the land beneath it. Land appreciates while the building depreciates over time. That is why companies are now selling land rather than the property as the returns can be very lucrative. Just a carrot here, the returns can be as high as 10-20 times your capital. In London, land prices has been rising at about 20-25% for the last 5 years.
How these land banking companies work.
They buy a hugh plot of undeveloped land first. Then they split them up into small pieces and sell them to investors. Previously, such investments are only for the super rich as the hugh plot of land cost millions. Now, with the smaller pieces, small investors can join in the fun. The cost of a small piece of land is as low as S$10,000 (area of about a 4 room flat). Please note that as this is a piece of undeveloped land, the price is very low. The company then tries to get this plot of land approved by the government to be developed into either residential or commercial land. When it does get approved and developers will then buy over this piece of land at the current residential or commercial land price. Normally, this price is at least a few times your buy price. A catch in land banking.....you will have to sell your piece of land at this stage(as contracted).
Question: Why does the company not want to buy the plot, get it approved and take all the profits?
This is an economy of scale. Say for example the land cost $1million. If this company has a million dollars, it can buy this land, wait for a few years and then sell it for 5million. But on the other hand, if it cuts this land into 100 pieces and sell each at $20,000, it would have immediately $2million. These companies normally will keep about 20% of these cut-up land. If the company sells 80 pieces of the cut-up land at $20,000, it would have $1.6million. They could then use this money to buy another 1-2 pieces of land and do the same thing. When the land gets approved, they would also profit from the 20 pieces of cut-up land that they have kept. The new pieces of land then are cut up and sold again and the cycle goes on. With this concept, the company then can generate enough money and profit to keep the operations going.
In Singapore, the 2 main players are Walton International (http://www.waltoninternational.com/asia/about.asp?ArtID=104) and Profitable Plots (http://www.profitableplots.com/). WI is selling Canada land whereas PP is selling UK land. It seems that more Singaporeans know WI but with PP's advertisement in English Premier League, I believe more people are aware of PP now. PP's website has more information on how it sells, market and gets approval for the land they sell. WI has recruited quite a number of salesperson to sell their land.
To all who are reading this, though I have vested in land banking, I have not heard of any track records from both these 2 companies in the lands which they have sold to Singaporeans. Maybe it is only 2-3years since they have started and it normally takes about 5 years to get any approval. That is why I have only vested a minimum amount with Profitable Plots. If you are interested in this investment, feel free to contact me. If I refer you to PP, there is a referral fee. We can share this fee (win-win). In any case, please do your due diligence before deciding to invest in land banking.
I believe all knows that property is normally a good investment. If you research on most, if not all, property markets in the world, you will see that the property market gives a return of at least 10% pa (this is provided you take a long term view). In Singapore, the type of properties that are worth more are the freehold properties. People are not interested in the building when they buy the "property", they are more interested in the land beneath it. Land appreciates while the building depreciates over time. That is why companies are now selling land rather than the property as the returns can be very lucrative. Just a carrot here, the returns can be as high as 10-20 times your capital. In London, land prices has been rising at about 20-25% for the last 5 years.
How these land banking companies work.
They buy a hugh plot of undeveloped land first. Then they split them up into small pieces and sell them to investors. Previously, such investments are only for the super rich as the hugh plot of land cost millions. Now, with the smaller pieces, small investors can join in the fun. The cost of a small piece of land is as low as S$10,000 (area of about a 4 room flat). Please note that as this is a piece of undeveloped land, the price is very low. The company then tries to get this plot of land approved by the government to be developed into either residential or commercial land. When it does get approved and developers will then buy over this piece of land at the current residential or commercial land price. Normally, this price is at least a few times your buy price. A catch in land banking.....you will have to sell your piece of land at this stage(as contracted).
Question: Why does the company not want to buy the plot, get it approved and take all the profits?
This is an economy of scale. Say for example the land cost $1million. If this company has a million dollars, it can buy this land, wait for a few years and then sell it for 5million. But on the other hand, if it cuts this land into 100 pieces and sell each at $20,000, it would have immediately $2million. These companies normally will keep about 20% of these cut-up land. If the company sells 80 pieces of the cut-up land at $20,000, it would have $1.6million. They could then use this money to buy another 1-2 pieces of land and do the same thing. When the land gets approved, they would also profit from the 20 pieces of cut-up land that they have kept. The new pieces of land then are cut up and sold again and the cycle goes on. With this concept, the company then can generate enough money and profit to keep the operations going.
In Singapore, the 2 main players are Walton International (http://www.waltoninternational.com/asia/about.asp?ArtID=104) and Profitable Plots (http://www.profitableplots.com/). WI is selling Canada land whereas PP is selling UK land. It seems that more Singaporeans know WI but with PP's advertisement in English Premier League, I believe more people are aware of PP now. PP's website has more information on how it sells, market and gets approval for the land they sell. WI has recruited quite a number of salesperson to sell their land.
To all who are reading this, though I have vested in land banking, I have not heard of any track records from both these 2 companies in the lands which they have sold to Singaporeans. Maybe it is only 2-3years since they have started and it normally takes about 5 years to get any approval. That is why I have only vested a minimum amount with Profitable Plots. If you are interested in this investment, feel free to contact me. If I refer you to PP, there is a referral fee. We can share this fee (win-win). In any case, please do your due diligence before deciding to invest in land banking.
Monday, May 7, 2007
Ways To Grow Money (for Unsophisticated Investors)
I wrote this blog a couple months ago in my other blog, but copied it over as I feel it is more suited here.
This is what I have written for a couple of friends whom I have been hoping that they would invest some of their money rather than putting them in banks a few months back. Basically, what I have written in point form are only very basic information about each instrument, where you can put your money in. Please note that the figures are true(to the best of my knowledge) at the time I write this article.
1) Savings Account
Banks (~0.25% - 2.48%)
Financial Institutions (~1% - 2.9%)
2) Fixed Deposits
Banks (~0.5% - 3%)
Financial Institutions (~0.5% - 3.215%)
3) Currency Deposits
Banks
Financial Institutions
Additional currency fluctuations
4) Structured Deposits
Slightly higher returns but issuer can terminate any time they want.
5) Bonds / Treasury Bills (2.8-3.5%)
Govt or private companies
Bonds are longer term
6) Equities / Stocks
Returns depend on company performance
Growth or Stable or Income stock
IPO, pre-IPO & post-IPO
7) Unit trust / mutual funds
Big basket of stocks / bonds / deposits depending on structure of fund
Region, Industry, Type(growth, emerging, income, bond)
8) Investment Linked Insurance
Same as unit trust except a portion of premium is to cover insurance.
Fund to choose are normally from the insurance company.
9) Warrants / Options
Buying into future equities
10) Property
Spore or overseas
11) Land Banking
UK or Canada
12) Business
MLM, Insurance, Property agents, shop owner, internet marketer, service or product provider.
13) Commodities
Gold, Silver, cotton, cocoa etc
After going through what I have written, I think there are a lot of decisions you have to make in order for you to do good investments. One of the foremost is to gauge your risk appetite. On one extreme are people who don't mind losing all their money in hope of very big returns(1000s%). On the other end are people who cannot sleep if their money depreciates. I will write more on each instrument and some strategies in time to come.
Happy Investing.
This is what I have written for a couple of friends whom I have been hoping that they would invest some of their money rather than putting them in banks a few months back. Basically, what I have written in point form are only very basic information about each instrument, where you can put your money in. Please note that the figures are true(to the best of my knowledge) at the time I write this article.
1) Savings Account
Banks (~0.25% - 2.48%)
Financial Institutions (~1% - 2.9%)
2) Fixed Deposits
Banks (~0.5% - 3%)
Financial Institutions (~0.5% - 3.215%)
3) Currency Deposits
Banks
Financial Institutions
Additional currency fluctuations
4) Structured Deposits
Slightly higher returns but issuer can terminate any time they want.
5) Bonds / Treasury Bills (2.8-3.5%)
Govt or private companies
Bonds are longer term
6) Equities / Stocks
Returns depend on company performance
Growth or Stable or Income stock
IPO, pre-IPO & post-IPO
7) Unit trust / mutual funds
Big basket of stocks / bonds / deposits depending on structure of fund
Region, Industry, Type(growth, emerging, income, bond)
8) Investment Linked Insurance
Same as unit trust except a portion of premium is to cover insurance.
Fund to choose are normally from the insurance company.
9) Warrants / Options
Buying into future equities
10) Property
Spore or overseas
11) Land Banking
UK or Canada
12) Business
MLM, Insurance, Property agents, shop owner, internet marketer, service or product provider.
13) Commodities
Gold, Silver, cotton, cocoa etc
After going through what I have written, I think there are a lot of decisions you have to make in order for you to do good investments. One of the foremost is to gauge your risk appetite. On one extreme are people who don't mind losing all their money in hope of very big returns(1000s%). On the other end are people who cannot sleep if their money depreciates. I will write more on each instrument and some strategies in time to come.
Happy Investing.
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