Me On Money Matters

Cost of tertiary education

Let's say your degree costs $7,000/year, so it works out to be $28,000 for a 4-year course.

Then, suppose that in place of studying, you got a job that paid $1,200/month. You'll earn $57,600 in 4 years.

Total opportunity cost: $85,600.

Dismal T-bill yield

After buying the T-bills just once, the yield nose-dived to near 0.5%. The most recent one (26 Dec 2008) is just 0.40%.

DBS issue $4bil rights!

News: Rights issue not for M&A

Date: 22 December 2008. Source: ST.

DBS Group Holdings, South-east Asia's biggest bank by assets, said on Monday it plans to raise about S$4 billion in a rights issue.

The funds will beef up the bank's balance sheet at a time when global investors favour financial institutions with higher capital levels, DBS said in a statement.

DBS has always been very proactive in raising capital. It was the first to raise funds using preference shares. Then OCBC and UOB followed suit.

Now DBS issues rights. Could the other two banks be close behind?

Not cutting CPF is a bad thing

News: CPF cut not the way to go

Date: 22 December 2008. Source: ST.

FORMER labour chief Lim Boon Heng has ruled out a cut in CPF rates - which was the case in past severe economic downturns - for now.

There is already a lot that can be done to trim wage costs, as the wage system has become more flexible, he told unionists on Friday night.

Here's another way of putting it: we will cut the cash component, leaving you with less cash, rather than cutting CPF and leaving the Government with less cash.

(Let's face it. Most employers will be under pressure to reduce cost in 2009. Reducing employees' pay is an easy avenue.)

Technically, CPF is still your money. However, the Government is its custodian for most of your life.

Most people adopt the attitude that since you can't touch CPF for such a long time, you might as well make full use of it. Little wonder that anything that can be paid using CPF goes sky-high.

Transaction date vs billed date

I always have this issue where I buy something, but I pay for it later. The transaction (or purchase) date and billed date do not match. The most common example is the credit card bill. I prefer to track the transaction date, as I have spent the money there and then. However, the bills show the billed date.

I'm going to add a new column to my bank statement tracking worksheet to track the transaction date.

Good time to refinance?

News: Lower Sibor attracts buyers

Date: 13 December 2008. Source: ST.

0.9% rate sees more interest but analysts warn of risks

INSTALMENTS for many home loan borrowers are set to fall after the all-important interest rate at which banks lend funds to one another nosedived to about 0.9 per cent this month.

Many home loan packages are pegged to this rate - known as the three-month Singapore Interbank Offered Rate (Sibor) - so when it goes down, so do Sibor- linked home loan instalments.

According to economists, the three-month Sibor should remain at these depressed levels into the new year.

One factor to decide whether to refinance is the remaining loan duration. If it's less than five years, it's probably safe to do so as the SIBOR is expected to remain low for the next two years.

I won't opt for 1.85% just because it's lower than HDB's 2.6%. SIBOR of 0.9% will not persist for years.

Bad times ahead for HDB

News: Defaults expected to rise

Date: 12 December 2008. Source: ST.

THE number of defaults on HDB home loans is expected to increase if the economy 'goes down even further', said National Development Minister Mah Bow Tan on Friday.

This is a very interesting piece of news. The Straits Times never publish something that is not already on the pipeline. In this case, the cases must have already been happening, but the official statistics have not been released yet.

Recession hasn't hit home

News: 'If we can spend, why not?'

Date: 10 December 2008. Source: ST.

Most teens with allowances don't think recession will curb their spending: Poll

SINGAPORE'S school-going children seem unaware of terms such as 'recession' or 'economic downturn'.

To the average teenager, a budget meal costs $8 at a fast-food outlet and saving means putting aside money for a 'cool' $248 iPod nano. When they run out of cash, they just ask their parents for more.

Teen spending lags behind the slowdown. Parents skim on themselves while trying to maintain the same standards for their children. Wait until they can't do so anymore. That could come in another few months.


I rake my head very hard to recall the gifts I've given to other people over the years. It shouldn't be very difficult because I have not given out many gifts. :-)

I'm just not a giver. I also hope people don't give me gifts, especially on my birthday, because it means I got to reciprocate. Small gifts are still fine. Big gifts stretch my budget and I need to put in effort to find something appropriate.

I believe that the most expensive gift that I've given, other than wedding ang pows, is $100.

Too miserly, part 2

My father thought very poorly of my idea of turning the fridge off. To stop me, he bought some perishables to populate the fridge and now I'm forced to leave it on.

The utilities when my father was around was $65. It'll take a while to revert to our previous average.

Recently, my father gave me the unsolicited advice that I should be more generous with spending. Women like that, he said. Shows what my father think of me. I kept my mouth shut.

With a father like that, who needs enemies?

How long can your savings last?

News: S'poreans less confident of getting by without main source of income

Date: 9 December 2008. Source: CNA.

Singaporeans these days are less confident of surviving without their main source of income, according to a recent survey conducted by American International Assurance (AIA) Company.

The AIA survey showed that only 19 per cent of interviewees said they could get by for more than two years without a primary source of income — down from 27 per cent a year before.

This is an age-old question: how long can your savings last?

20% claimed they can survive a year without working... I am skeptical.

Toy expenses for 2009

I only have two planned toy expenses for 2009.

The first is MP-08, Grimlock. It should be around S$120. I don't plan to buy any transformers toy except for the MP series.

The second is the Beagle Mospeada rider. Stick's figure was just released at around S$300. I'm aiming for just one figure: Houquet.

Misplaced priorities?

I saw a couple of books that I was interested in. In the past, I would have gotten them without a thought. They were cheap, about $20 each.

However, I did not buy them. I decided to borrow from the library instead. On the other hand, I spent $30+ on two comics. (Since they are not available from the library.)

And then, I decided to skip a colleague's church wedding, partly due to the cost consideration. If I had gone, I would need to give a $20 ang pow.

Sometimes, I wonder if I'm making the wrong choices in my attempt to reduce expenses.

Too miserly?

I give people the impression that I am miserly. I do not think I deserve this reputation, but the truth is somewhere in-between.

Let's see. I'm not into food, so it's not natural for me to consider meals to entertain guests. My mistake was taking some relatives to a food-court when they expected restaurant-class food — it slipped my mind completely. It was dinner time and I just went to have dinner at my usual kind of place. This was a few years back. When my father let me know that my relatives think I'm cheap, I didn't bother to defend myself. (I don't care what others think of me. Perhaps I should.)

Another wrong impression is that I don't pay my share of expenses. Suppose my brother paid for a birthday dinner. I don't announce that I am sharing the cost. I just funds transfer to him. (I doubt he knows too, given his lax accounting.)

On the other hand, I sometimes ta-bao for my brother and he doesn't pay me. It would be nice if he does so automatically. But he doesn't and I don't ask for it.

A few years ago, my father asked me how come I never treat them. I just shrugged.

Another example. I was trying to find out how much water did the washing machine consume in a washing cycle. It was more to satisfy my curiosity than anything else. Bad timing, my cousin was staying with us. I hope he does not think I'm a control freak.

Still on the utilities. I want to use as little utility as possible. Not to the extreme that every appliance must not be used, but only when they are unused anyway. I finally managed to switch off the fridge after a few months of removing our dependency on it. Our utilities bill dropped from $45 to $30.

Many people took this the wrong way. Switching off the fridge sounds extreme. It is, but we didn't use it anyway. I don't aim for maximum efficiency. I am fine with leaving the modem/router on throughout the night because I usually surf to sleep. I'm not going to walk over to switch them off. I also leave the cordless phone on 24/7, although it can be switched off when I go to work.

And I'm not the one who pay the utilities bill. I take it as a challenge to reduce the usage with the least amount of effort and sacrifice.

I prefer to ride a motorcycle than drive a car. I think riding is the most economical way to get around in Singapore. This gives some people the impression that I'm cheap. Then, to cement my reputation, I got a car but still continue to ride more often.

I also give the impression that I don't like to spend. It's true, I don't like to spend unnecessarily. But if I need to, I will do it.

Perhaps it's the way I put it. Say, enjoying a branded coffee for $5 a cup. It's fine to do it once in a while, but once you start doing it regularly, then it becomes a permanent expense. Is that something you really want? Is there something else you rather do with that $5?

I'm very conscious about any permanent increase in expenses this year, because I want to keep my expenses as low as possible!

Red bombs

It has been quiet for a few years, then suddenly I got three red bombs from my colleagues this year, one each for the last three months of the year.

They were unexpected expenses — and unnecessary, perhaps?

Why should I attend my colleagues' wedding? Only the family, and perhaps relatives, should attend. It's really none of my business.

Indeed, I have some colleagues who didn't attend any of the three weddings. I was somewhat surprised, to tell the truth. It's not always easy to turn down social obligations.

These unexpected expenses account for 5% to 7% of my monthly expenses... quite significant when I'm trying to minimize my expenses.

Stock-taking time!

It's the end of the year and it's almost time to do a "stock-take".

I tracked my expenses very meticulously this year. It works well. However, it's slightly too tedious and I will make some changes next year.

I track most expenses thrice, once in the bank statement tracking worksheet, the second in the expenses tracking worksheet and the third in a general-purpose expenses (by category) worksheet.

The word "tracking" means it's itemized.

The bank statement tracking worksheet is pretty vague. It tracks five broad categories of expenses (basic, cash, credit card, vehicle and others). I will add more details to it so that it can replace the general-purpose expenses worksheet.

I will remove CC as a category. It will be considered a mode of payment.

There were few instances where I was given cash when a loan was returned. I needed to deposit it to make it appear in the bank statement tracking worksheet. Then, I withdrew it to use it as cash. Recently, I realized that I just need to transfer an equivalent amount to my savings a/c and label it as a cash withdrawal.

The expenses tracking worksheet is still needed as it gives more details on the purchases. It is compulsary for frivolous purchases and big ticket items. Meals above $15 are now compulsary items. One-off items (such as gifts) should also be tracked.

There's a separate expenses tracking worksheet for vehicles. All the simple expenses will now be tracked in the bank statement tracking worksheet. Only the ones that require more details will be tracked separately.

Another thing I want to do is to account for annual expenses accurately. To do this, I will find out the values in my cashcards, ez-link cards, parking coupons and other stored value cards so that the unused amount will be deducted from this year's expenses.

Good news for AIG, in a way

News: AIG, U.S. in deal to terminate some debt obligations

Date: 2 December 2008. Source: Reuters.

American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz) and the U.S. government have reached an agreement to clear the insurer of its obligations on about $53.5 billion in toxic mortgage debt, the giant insurer said in a regulatory filing on Tuesday.

The development is part of the U.S. Federal Reserve's agreement last month to buy up to $70 billion of toxic mortgage assets -- collateralized debt obligations -- underlying AIG credit default swaps (CDS), a type of debt guarantee.

$53bil debt written off by the US government, just like that. No, it doesn't disappear. The taxpayers have to pay for it.

The US government is said to have spent $3tril out of a possible total cost of $7tril. I wonder which country will call its bluff first. And will the US then declare war on it?

Expenses for November 2008

Category Jan Feb Mar Apr May Jun
Basic 902.71 936.18 2,294.03 817.89 883.92 780.06
Cash 182.72 194.95 212.00 304.00 194.45 233.50
Credit Card 103.10 44.00 194.50 0.00 0.00 17.00
Vehicle 282.32 830.80 196.07 893.33 262.66 770.06
Others 304.15 200.00 326.10 239.95 105.89 22.72
Total 1,775.00 2,205.93 3,222.70 2,255.17 1,446.92 1,823.34
Category Jul Aug Sep Oct Nov
Basic 2,153.47 881.76 1,018.15 695.93 982.11
Cash 207.60 223.50 203.50 142.90 190.80
Credit Card 76.03 21.13 0.00 72.80 0.00
Vehicle 2,502.69 498.65 65.06 191.07 362.08
Others 20.33 178.87 238.48 340.10 206.93
Total 4,960.12 1,803.91 1,525.19 1,442.80 1,741.92

Basic expenses were slightly lower than expected because the phone bills were not deducted.

I finally got some way overdue car parts ($159) that I ordered more than a year ago! I also sent my car and bike for inspection.

Other expenses were high due to yet another colleague's wedding (S$120), an outing and some "extravagant" meals.

Meal guideline

Not being a food connoisseur, I'm easily satisfied with simple food. Thus, I don't really spend much on food.

However, I do try to eat different kinds of food every week. For me, it means fast food or western food.

I try to have 2 such meals a week. Even at this low rate, they already account for 20% – 25% of my food expenses.

Was the meal worth it?

Last weekend, a friend of mine asked me to go to Changi Village for dinner. Not having eaten the CV's nasi lemak for several months, I needed no persuasion. The drizzle made the weather very cooling.

It turned out my friend wanted to eat at Charlie's Place. It was very expensive: $13+ for a fish-n-chips, and then $3+ for a small bottle of root beer.

Needless to say, if my friend had mentioned to me beforehand, I would have suggested Botak Jones. It has much more economical prices. (Remember both are coffeeshop/hawker centre places.)

Now, I must admit the fish-n-chips was pretty good. But for $13+? I can only afford such "extravagant" meals once a month.

Also, the trip was around 40km round trip. I had no idea Toa Payoh was so far from Changi Village.

A few days later, my colleagues organized an "own-pay" lunch "in recognition of our hard work". Our department lunch had just been canceled due to cost cutting. One of them was also sore that his business trip was canceled.

I had the most expensive pasta ever — at $28+. However, the place had very nice deco, so you definitely know what to expect. It has a good setting for special dates.

(The $28+ was for a full meal, including starter and desert. The most expensive pasta I had eaten was $25 for just the pasta. I can't remember where I ate it. That was the best pasta I had ever eaten.)

Pretty high default rate for HDB

News: Long term measures to help HDB mortgage defaulters is best solution

Date: 18 November 2008. Source: CNA.

The Housing and Development Board (HDB) will continue to keep tabs on flat owners who default on their HDB mortgage payments.

It stressed that long term measures to help these owners manage their mortgage payment is the best solution, and that compulsory acquisition of the flat is a last resort.

No statistics on those who took bank loans...

Now they tell us

News: $12m in troubled products

Date: 17 November 2008. Source: ST.

TWO town councils - Holland-Bukit Panjang and Pasir Ris-Punggol - have about $12 million invested in troubled structured products.

These products include Lehman Minibonds and Merrill Lynch Jubilee Series 3.

The first question on my mind was, do the TCs need so much sinking fund?

Long term expenses? Why not earmark them specifically?

Retrenchments on the way

News: Surge in layoffs expected

Date: 15 November 2008. Source: ST.

LAYOFFS in Singapore are expected to surge next year, and the numbers are very likely to jump beyond the peak suffered during the 1998 Asian financial crisis. About 30,000 jobs were lost then. But it could be worse this time because the economic crisis is global, with most signs pointing to its effects slowing Singapore's economy for a longer period.

This gloom expressed by most economists and analysts interviewed yesterday was, however, not totally shared by labour chief Lim Swee Say, who is also a Minister in the Prime Minister's Office.

He believes there is 'some hope' that Singapore can stave off a higher retrenchment peak next year if companies hold off job cuts till the last minute.

Singapore is late to the party. US firms are announcing their job cuts left and right. Perhaps it's tradition for US firms to announce before Christmas, and local firms to do so before the Chinese New Year. Best way to spoil your new year mood.

Reducing headcount may be the least favoured option, but the fact that companies do it anyway shows that either it is the easiest option or that it is inevitable (other steps have already been carried out).

Are you willing to take a 20% pay cut to save your colleagues? :-)

Defaults continue...

News: Investors to lose principal

Date: 14 November 2008. Source: ST.

INVESTORS of Pinnacle Notes Series 9 and 10 on Friday received the crushing news that their investments will probably be wiped out.

The two notes are part of the Pinnacle Notes Series of credit-linked notes, issued by Pinnacle Performance and arranged by Morgan Stanley Asia.

The second wave... won't be the last if the crisis worsens. The main worry now is not the big names. They will not be allowed to fail. (Lowered rating, still possible.) The worry is the basket of companies. Some products only allow a small number to fail before they call it a day.

Update: 700 investors who invested $26mil were affected.

Chapter 11

Many US firms are filing for chapter 11. However, there's no need to worry because this is "merely" bankruptcy protection and not bankruptcy per-se.

Run along, there's nothing to see

Now that the US presidential election is over, we can go back to worry about the economy.

Expenses for October 2008

Category Jan Feb Mar Apr May Jun
Basic 902.71 936.18 2,294.03 817.89 883.92 780.06
Cash 182.72 194.95 212.00 304.00 194.45 233.50
Credit Card 103.10 44.00 194.50 0.00 0.00 17.00
Vehicle 282.32 830.80 196.07 893.33 262.66 770.06
Others 304.15 200.00 326.10 239.95 105.89 22.72
Total 1,775.00 2,205.93 3,222.70 2,255.17 1,446.92 1,823.34
Category Jul Aug Sep Oct
Basic 2,153.47 881.76 1,018.15 695.93
Cash 207.60 223.50 203.50 142.90
Credit Card 76.03 21.13 0.00 72.80
Vehicle 2,502.69 498.65 65.06 191.07
Others 20.33 178.87 238.48 340.10
Total 4,960.12 1,803.91 1,525.19 1,442.80

Basic expenses were low because my father refused to take the parents' allowance to help me defray my car repair cost. (I was going to repair it, but I decided to postpone it.)

Cash expenses were low because I had been having dinner at home. The expenses shifted to my father instead.

Credit card expenses were due to a lunch treat for old friends in the previous month.

Other expenses were extremely high due to a birthday treat for my mother ($96), topping my CPF Medisave a/c ($100), and attending a colleague's wedding dinner ($110).

Credit card debts

News: Banks asking for credit card debt forgiveness

Date: 30 October 2008. Source: Yahoo Finance.

Banks losing billions in unpaid credit card bills urge government to forgive consumer debt

With defaults on credit card debt spiraling amid a global financial downturn, banks already reeling from the mortgage crisis are losing billions more from unpaid credit card bills.

Big banks have formed an unusual alliance with consumer advocates to urge the government to allow huge portions of credit card debt to be forgiven, a turnabout from recent years when the banking industry lobbied strenuously to make it harder for consumers to erase their credit card debts in bankruptcy.

This financial crisis is making a mockery of people who live within their means.

Swap lines

The Federal Reserve seems to have endless amount of US$ on its hands to lend out.

It's alright if the banks hoard the money (as is the case now). However, if the money is used, it will be hyperinflationary. Not a good time to be holding cash.

The Federal Reserve just announced US$30bil swap lines each to four countries (Brazil, Mexico, Korea and Singapore). The intention is to avoid speculators making a run on these currencies.

Wow, just wow. Separately, I wonder why Singapore is on the list. It looks like Singapore is more vulnerable than reported.

LV Sands again

Falling and still falling. If anyone is sure that it will be bailed out, then buy its shares. Remember AIG? Someone bet that it was too big to fail. LV Sands could be bailed out too, but it's due to face. (Ha ha ha!)

I wonder how does this impact Genting? I read Genting has some cashflow issues too. There were rumors it could issue rights to raise capital.

In these volatile times, today's rumors are tomorrow's news.

Update: LV Sands fell by 14.7% (to US$4.95) despite Dow Jones going up a breathtaking 10.9% (to 8,374.73).

So much for the market rate

HK banks announced a few weeks back that they would buy back the Minibonds at market rate.

Today, DBS (HK) announced that only 2 out of the 32 Lehman related structured products have 8.7% of their value left. The rest have zero.

So much for buying back at market rate. There's no market, where to get any rate?

Three questions before using credit card

I always ask three questions before I pay by credit card:

  1. Is there any surcharge?
  2. Is there any discount if I pay in cash?
  3. (to myself) Can I get the item elsewhere cheaper by cash?

The first case is not supposed to happen, but it does.

The second question is very important. Someone is absorbing the transaction charges. It better not be you!

The third case fooled many people. Just because you get zero-interest installment plan doesn't mean it's a good deal. The same item is usually much cheaper elsewhere.

Hold on to your seats!

What a wild ride it is. STI opened at 1,496.12 (from last Friday's 1,600.28), went as low as 1,473.77 in the morning, but recovered to close at 1,666.49.

What I would do if I am still holding stocks: sell into strength.

Worse than the Asian crisis?

News: This may be worse than 1998 Asian crisis, warn economists

Date: 28 October 2008. Source: BT.

No safety in any region as the whole world is seeing slower growth

Pain is seeping in as Singapore braces itself for a recession. And the big question is whether this pain will be reminiscent of what was felt in past downturns.

Some economists have started to warn that the current down-cycle may well turn out to be worse than the Asian financial crisis in 1998, during which the G-7 economies were still holding up well.

One crisis after another. After the financial storm, it'll be the currency and emerging markets.

Singapore's economy is not very diversified. It's either manufacturing, tourism, properties or financial. All are badly hit in this crisis.

The Great Depression

News: The Great Depression 2.0?

Date: 27 October 2008. Source: BT.

Given the scale of the current financial turmoil, will the world see a repeat of the Depression of the 1930s?

AS FEARS of a prolonged and severe recession sent share prices crashing on Friday, questions are being raised about whether the world is experiencing the beginning stages of a second Great Depression. While most economists say that the situation is not as dire, there are certain indicators that point towards a slide in the depression direction.

What is the Great Depression?

The Great Depression marks a severe period of recession that started in the United States in 1929, but soon spread worldwide. The start of World War II is generally viewed to mark the end of the Depression. Prior to the US stock market crash in 1929 - which most economists believe is one of the biggest factors to have triggered the Depression - sentiment in the US was optimistic.

We are on our way, or are we? Only time will tell.

Good news coming up

These are the known good news in the next few weeks:

  • Oct 29: Federal Reserve will announce an interest rate cut
  • Nov 4: US presidential election
  • Nov 15: global summit to tackle this crisis

Will one of these be the turning point, or will they just cause another bear rally for the funds to unload?

AIG is playing it sly by announcing their 3rd quarter earnings on Nov 4. You know it's going to be bad news by their choice of the date.

It's not over

Hang Seng free fall 12.7% today (to 11,015.84). Would this be the pre-cursor to black Monday on Dow Jones?

(I was told that Hang Seng crashed ahead of Dow Jones in 1987 too.)

What is happening right now is massive deleveraging. I wonder just how much longer can it go on? It is now slowly becoming a currency crisis...

Well, just enjoy the ride.

Update: Dow Jones dropped only 2.4% (to 8,175.77), and only in the last half hour. If you believe that funds are still selling, then this is just a trap for the retail investors.

Instilling savings habit

My suggestion to instill a saving habit on your child:

  • Create a joint a/c. It can only be topped up by you, not your child
  • You will give extra interest based on the bank's monthly credited interest
  • You will give bonus interest if the monthly withdrawal is less than some pre-determined amount

The first rule is to prevent abuse where your child borrows money to artifically inflate his savings. Won't happen? Don't bet on it. People has been exploiting any arbitrage since time immortal.

What if he spent less than expected? Well, he'll just have to withdraw less the next time he needed the money.

The second rule is to make the bank work for you. Banks already accrue interest on a daily basis, but only credit it monthly. The interest is an accurate measurement of the average monthly balance.

The third rule is to promote thrift on a monthly basis. Work out a sensible budget for your child. If he manages to meet it, you should reward him. This is important because once the savings is substantial, your child may not have the motivation to save anymore. The bonus can be based on the entire balance or the amount below the expected withdrawal.

To prevent abuse, you should use the rolling 12-month withdrawal amount. Your child could make a big one-time annual withdrawal to last him the entire year. Plug this loophole.

How much extra interest should you pay? In the current environment where the best savings interest rate is 1.2% pa (from the first $1; FinatiQ), I'll say a total of 3 – 5% pa and a bonus of 0.5 – 1% pa. This may seem little, but it'll add up pretty fast.

Now, it's obvious that you cannot continue this scheme forever. What you can do is that after a substantial amount is saved, say $5,000 or $10,000, it's time to invest in real-world financial instruments, such as funds or even the stock market (but probably not). This is another reason why you should not have very high interest rate. If your return is better than in the real world, why would your child want to invest in the real world?

Interesting T-bill data

I noticed something about the current T-bill, BQ08142X:

Allotted amount $2,200,000,000
Total applied $4,708,332,000
Non-competitive amount $171,932,000
Cut-off yield and price 0.82% p.a., 99.796%
Allocated to non-competitive applications 100%
Allocated to competitive applications 13%

Just 13% of the competitive applications were successful! This means some big player(s) must be very conservative.

How big? The lowest 13% applications were enough to use up $2.03bil (after subtracting the non-competitive applications). That's how big they are.

In the last T-bill auction, 66% of the competitive applications were successful.

With MAS guaranteeing bank deposits, I had expected T-bill yield to go up, because it is now less attractive. You can place 3-month FDs and easily get 1.5% to 2%. Even normal savings accounts easily offer 1.2% to 1.38%.

Rising debt


Date: 25 October 2008. Source: ST Forum.

Reduce debts

MONETARY Authority of Singapore statistics show Singaporeans have piled on debts at a fast rate up to August this year.

Total debts to individuals and professionals stand at $112 billion, almost 10 per cent up in the past 12 months. In particular, credit card rollover debt has ballooned to $3.3 billion, an increase of $296 million over the past 12 months against a $94 million increase in the previous 12 months.

It is natural to draw on your credit lines in bad times. It is more prudent, though more painful, to reduce living expenses. The recession is upon us. We need to make sure we have enough savings to last a few months.

One of my biggest expenses is my car. Should I get rid of it? Every dollar that I save now can potentially be turned into $5 or $10 in 5-10 years time.

IR Sands is not a given

News: Storm over Sands in US hits local IR lenders

Date: 25 October 2008. Source: BT.

Damaging ripple effects as parent company of Marina Bay Sands integrated resort struggles to raise funds

THE Marina Bay Sands integrated resort (IR) has been visited by the desperate travails of its parent company, which is struggling to raise funds.

And local banks, which BT understands have a combined exposure of almost $2.2 billion to the $5.44 billion project, saw their stock prices take another hammering yesterday.

If you believe a local developer will take over, buy its stock now.

However, it has been said the Government wants a world famous brand name to attract gamblers. IR CapitaLand doesn't have the same ring as IR Sands.

Emerging markets are not spared

News: Why Emerging Markets Are Getting Caught in Crisis

Date: 24 October 2008. Source: Reuters.

Once thought "decoupled" from economic crisis in the West, emerging markets are now taking the brunt of recent global financial turmoil with stock markets and currencies slumping in value.

Western investors and hedge funds have dumped anything considered risky, almost regardless of local fundamentals. Falling currencies have endangered repayment of foreign currency loans, threatening local banking sectors. Emerging borrowers are finding it almost impossible to refinance debt.

Below are some facts about recent emerging market falls.

Brazil down by 47%, Russia 75%, India 57% and China 65%. My BRIC fund is done for.

Someone asked me what the fund invests in. Actually, I have no idea. :-)

I have requested a transfer to cash a/c a week ago. I don't know when it will get executed. Well, I've done all that I can. Let us observe a moment's silence and move on to other things that can still be saved! :-D

Paying bills

After paying bills manually for years, I now opt for GIRO. It's more stress free. You just need to monitor the banking a/c to make sure everything is correct. This can be done at your own leisure.

I don't even try to link my bills to my credit card because they give just a few points to be worth the effort. I don't want to monitor two accounts.

Today is the day!

Dow, S&P and Nasdaq futures all limit down. Live history. Wow.

Update: Dow went down by just 312.30 to 8,378.95 (low 8,187.48). Not the crash that many people thought would happen.

However, some people commented that crashes are usually on Monday, so the Federal Reserve better have some good news this weekend...

Anyway, there will be an interest rate cut next week. That should hold prices up for a few days...

Take exchange rate into account!

I wanted to buy an item from the US in August, but I did not do so. It was on sale for US$46, exchange rate US$1 to S$1.40. The item is now US$33, but the exchange rate is US$1 to S$1.50.

How much did I save?

US$46 x $1.40 = S$64.40. US$33 x $1.50 = S$49.50. I saved S$14.90.

STI 1600

STI declined for five straight days, to close at 1,600.28 today (lowest 1590.36). Will this continue or is it just oversold?

If you believe it's oversold and there will be good news over the long weekend, you should load up. Personally, I think there may be some good news. Central banks all over the world are trying to save the market, and they usually make announcements over the weekend. There wasn't one last week, so it becomes more likely this week. Any measures by Central banks are good news these days.

Will Temasek or GIC step in to stablize the market? I think so, but not at 1600. 1600 isn't that low, historically. (If you bought in the last recession, you would still have a hefty margin of safety.)

STI 1200 is no longer an impossibility...

And if you agree with some views that this is the second worst recession since the Great Depression, then it should at least be as bad as the Asian Financial Crisis, which saw STI at 800.

Should we follow Warren Buffet?

Warren Buffet made two big investments recently: $5bil into Goldman Sachs (24 Sep) and $3bil into GE (1 Oct).

Recently (Oct 16), he said, "Buy American stocks. I am."

He also invoked his famous quote, "Be fearful when others are greedy, and be greedy when others are fearful."

However, I get the feeling that he is trying to inspire confidence in the market.

A look at my company's health plans

My company health plans cover life, accident, hospitalization & surgery, and clinical.

Life is by default 26x monthly income. You can choose 13x or 39x. 39x requires an additional $40. You need to answer some questions.

Accident is by default 26x monthly income. You can choose 13x or 39x. 39x requires an additional $9.

The default hospitalization plan is R&B $250, MMP 60k. (R&B = Room & Board, MMP = Major Medical Plan.) I can reduce it to R&B $200, MMP 30k for $66 less, or R&B $400 MMP 80k for $114 more.

Lastly, a clinical plan worth $150.

I opted for the additional 13x monthly income. $40 is cheap for this! A common advice is 5x annual income. With this, I already have covered 3x annual income.

I didn't change accident. The additional 13x coverage is cheap, but I don't think I will ever use it.

I also didn't change the hospitalization plan. Downgrade is too risky, upgrade is too costly.

I have opted out of the clinical plan for two years already. I realized that I seldom fall sick, so I don't spend $150 per year. This does mean that I sometimes skip seeing a doctor for minor illness. Also, whenever I see the doctor, I always ask for 2 days MC to maximize the claim. (I usually take 2 to 4 days MC every year.)

LV Sands

News: Stock market rattles Las Vegas Sands

Date: 23 October 2008. Source: CNA.

Questions have been raised about the health of United States gaming company Las Vegas Sands, which is building Marina Bay Sands resort here.

The company's share price has plunged from a 52-week high of US$144.15 to Tuesday's price of US$12.43 on concerns about a slowdown at its US operations, profitability of its Macau casinos and high gearing.

There are more and more reports on Las Vegas Sands these days. Interestingly, there's not a single report on Genting.

This is not a good time to be holding (unbuilt) properties around Marina Bay.

Topping up CPF a/c!

I just did the unthinkable: I actually topped up my CPF a/c. Specifically, I topped up my medisave a/c. (You are allowed to top up all three a/c in one go, or directly to the medisave a/c.)

I dislike CPF, yet I think it makes sense to top up. This is because I recently opted for a private medishield plan, so I'm paying more out of my medisave a/c — much more in fact; I'm still wondering if I made the right decision.

Some people feel that they should use medisave whenever possible. I feel it is better to let medisave a/c accumulate to its max (currently $34.5k). There are three reasons:

  • It enjoys 4% interest rate
  • Unlike the special a/c, you can still use it in an emergency
  • You need to meet the Medisave Minimum Sum (MMS), currently $28.5k, in addition to the Minimum Sum

The last one is the real reason why I topped up my medisave a/c. If you keep using your medisave a/c, you will never hit MMS, hence you will need to top up from your MS excess. In that case, why not do it upfront so that you enjoy the 4% interest rate?

Note that MS and MMS are money you'll never see again. You'll feel better if you think of them this way. Hence, any topping up must be thought over very carefully.

DBS may pay out $70mil to $80mil

Some interesting statistics from DBS announcement.

4,700 investors from Singapore and HK invested S$360mil. Breakdown:

  • 1,400 from Singapore invested $103mil in High Notes 5
  • 66% are from DBS Treasures
  • 80% are below 60 years old

DBS is likely to pay back S$70-80mil in total. DBS expects the worst case scenario to materialize — that investors (who do not fall under the vulnerable group) get back nothing.

Light at the end of the tunnel for Minibonds investors

News: Help for Minibonds investors

Date: 23 October 2008. Source: ST.

Hong Leong Finance, Maybank and DBS are offering full compensation for vulnerable customers

INVESTORS who lost huge sums in the High Notes and Minibonds fiasco may get some - or even all - of their cash back after dramatic late-night moves by the financial institutions that sold the discredited products.

Maybank, Hong Leong Finance and DBS will pay compensation with the 'highly vulnerable', including the elderly and less educated, heading the queue.

And those who do not fall into this category also had hopeful news on Wednesday when the MAS announced that two international institutions may take over the Minibond programme and let them run their course.

Light at the end of the tunnel. If the Minibonds investors are as risk-averse as they claim to be, I doubt they will want the notes to run their course. The chance of credit event is still present.

I find it interesting that DBS say that they expect to pay out $70mil to $80mil. They really sold a lot to old folks.

An almost day-trader

News: Got greedy and lost my savings

Date: 22 October 2008. Source: My Paper (STOMP).

JUST over a year ago, I quit my job with plans to retire early and play the stock market with the money I'd saved.

Back then, the Straits Times Index was soaring and I was making a few hundred bucks easily on most days. But it wasn't long before the bubble burst.

I doubt anyone realized the severity. One quote to everyone who tries to hold or average down: the market will remain irrational longer than you can remain solvent.

The Minibonds saga

News: Gone: The $500 million dollar dream

Date: 21 October 2008. Source: ST.

Three days before Lehman Brothers went bust, triggering one of the world's most horrific financial meltdowns, DBS Bank relationship manager Wilfred Quek was having coffee with his colleagues and debating the fate of the American investment bank.

'My call was that there was no way the Fed was going to let it go down. Some people said it was possible, but not to me and many others,' said the 31-year-old.

'When it happened, I was honestly shocked.'

Very long article, but worth the read.

Show hand!

On Monday, I'm going to sell all my local stocks that I bought in the past year. I'm tired of waiting for the next rally. This, in my past experience, signals the bottom and the stock market will go up and up from that point onwards.

If I don't enter hell, who will?

Of course, this time it'll be different. I believe the market will continue to go down for the next six months, so why not sell now and buy back later? In other words, I believe we are not within 20% of the bottom yet.

Thoughts on Mr Tan's talk

I attended Mr Tan's talk on financial planning in the NUS business school today. Mr Tan is the ex-CEO of NTUC Income. I was somewhat overdressed because the dress code stated "smart casual". Most students wore t-shirt and jeans. So much for "smart casual".

Some thoughts and comments:

Mr Tan advise people to save at least 15% per month, buy term insurance and invest the rest. 15% may sound little, but it's really tough to do it every month.

Mr Tan said Government bonds yield 3% pa. One year SGS only yields 1% pa now. Even 5-year SGS yields just 2% to 2.5% pa.

Mr Tan said decreasing term insurance is not available. It is, although I don't find it particularly attractive.

In the QA, someone asked if the structured deposits are safer now that MAS is guaranteeing the deposits. Mr Tan said yes. I believe the answer is no. Structured products are not covered.

Somone asked what about life insurance after 60 years old? Mr Tan said there's no need to have one. The person then asked what about medical insurance? Well, Mr Tan said, sometimes, it's better to let go than to be a financial burden to your family — with little chance of recovery. This is easy to say, but not always easy to do.

Someone asked about land banking and wine investment. Mr Tan dismissed them as rip-offs and con jobs, but he did not elaborate. I know the guy wasn't really convinced.

I was rather surprised that there were refreshments after the talk — it was free, after all.

During the refreshment, the same guy asked Mr Tan the land banking question again. He then said he did his own investment, from an engineering perspective. He wondered how understanding finance would help. Someone then asked him how he fared. The guy then said he tripled his CPF money in seven years, but Mr Tan reminded him that he now lost half of it. The guy was undeterred and claimed this is just a temporary setback, as he is investing for the long term. He still intend to buy more over the next two years to average down, but will not do so in the good years to avoid averaging up. I usually don't comment on investment strategies. If it works for you, then good for you.

Lastly, Mr Tan parked in the staff carpark. Beyond the first 15 minutes grace period, I believe it's 10 cents/minute, which is quite expensive!

MAS guarantees bank deposits

News: Bank deposits guaranteed

Date: 17 October 2008. Source: ST.

The protection, to run until end-2010, is precautionary, following similar steps elsewhere

THE Government has guaranteed all bank deposits of individuals and corporates here with immediate effect.

The guarantee, which runs till Dec 31, 2010, will cover all Singapore dollar and foreign currency deposits in banks, finance companies and merchant banks licensed by the Monetary Authority of Singapore (MAS).

Looks like I don't have to shift my cash around anymore. :-) I may just put my cash in the savings accounts that give the best interest rate.

I thought MAS would step in when things are going badly for the local banks. However, the fear of losing deposits to HK banks did the trick. I can imagine MAS being really pissed off that it has no choice in the matter!

I believe that bank interest rates may go even lower than now. However, there may be a brief period where banks try to entice you to lock your money in.

Buying a T-bill

I became interested in T-bills after its yield went above 1% recently.

A new 3-month T-bill is announced on every Friday. However, the bank (primary dealer) will accept your order all week round. The T-bill is closed on the following Monday 12pm and are auctioned to determine the cut-off yield. The result is shown on the day itself, but, the T-bill will only start on Thursday. (The amount is deducted from your bank a/c on Thursday morning.)

Being a DIYer, I went down to the bank to buy the T-bill myself. Many people thought you need $250k to invest. It's not true. The minimum is just $1,000 and there are no charges.

It's not too much of a hassle. Just enter the bank, wait for the next financial officer (not teller), fill in the form and that's it. The whole process takes just five minutes. However, there is no auto-renewal or rollover. You need to come back every 3 months.

There are two main things to fill on the form: the amount and the yield. If you don't specify the yield, then you are putting in a so-called non-competitive bid, meaning you will buy the T-bill, no matter the yield. If you specify the yield, you will only buy the T-bill if your yield is less or equal to the cut-off yield.

Personally, I would put in a competitive bid all the time. This is because I do not want to buy T-bills if the yield is less than the interest rate of an ordinary savings a/c (which is currently 1.2%).

The good thing about T-bills is that it is a uniform bid auction and the cut-off yield is used. Even if you specify just 1%, you'll get the cut-off yield, as long as it's higher. (If the cut-off yield is lower, you are out-bidded.) Of course, if everyone is conservative, then the cut-off yield will be low. Just take a look below. There is S$5.2bil bidding for S$2bil worth of bonds.

Some details:

Issue code BQ08141T
Maturity date 15 Jan 2009
Allotted amount $2,000,000,000
Total applied $4,992,468,000
Non-competitive amount $160,611,000
Cut-off yield and price 1.27% p.a., 99.683%

Some online financial portals do auto-renewal for you. They deduct 0.15% from the yield for the first placement and 0.1% for (non-competitive) renewal. I think it's fine to pay these spreads when the yield is around 3%, but not when the yield is around 1%.

The turning point?

News: Fed offers unlimited support

Date: 13 October. Source: CNN.

Fed to offer dollars to Bank of England, European Central Bank and Swiss National Bank to lend to private banks.

The Federal Reserve announced Monday it will offer an unlimited amount of dollars to three other central banks in an unprecedented move to provide liquidity to the global banking system.

The U.S. central bank will lend dollars at a fixed interest rate to the central banks of England, Switzerland and the European Union, according to a joint statement from the banks.

This should put an end to last week's credit freeze.

Is this the turning point? Or is it just the next bear rally?

There's no point selling once the turning point is reached because most bad news after it will be discounted.

On the other hand, I believe the central banks are now very vulnerable. Some speculators may try to mount some sort of attack on them to bleed them dry... do they really have unlimited cash?

Some stats on the affected structured products

You get some interesting stats from MAS statement on the failed structured products.

Minibonds' issue size was S$508mil, of which S$375mil was sold to about 8,000 retail investors through nine distributors.

ML Jubilee series 3 issue size was S$38mil, of which S$23mil was sold to about 350 investors through six stockbroking firms.

For these two, 28% bought S$10k or less. Over 80% bought S$50k or less.

DBS High Notes 5 issue size was S$103mil, bought by over 1,400 investors. More than half bought S$50k or less.

What should I do at this point?

Stock prices have come down substantially. Should I still consider cutting loss?

I cannot decide between the two scenario:

  • We are within 20% of the bottom (should hold)
  • We are still not within 20% of the bottom (should sell and buy back)

There are still plenty of bad news to go around in the next 2 weeks.

What happened to negative correlation?

Is there anything that has not dropped, other than gold?

Gold is a barometer of confidence in the US$. As such, it is truly negatively corelated with the US$. (One can say that gold has an absolute value, and it is US$ that is losing value.)

Bad timing

News: Singapore woman loses $90,000 in just 2 days

Date: 8 October 2008. Source: TNP.

SHE's a 27-year-old whose job it is to advise bank clients and sell them investment products.

Her job title is bank relationship manager. But, going by her own investments, she now jokingly refers to herself as a "relationship damager".

Reason: She's lost about $90,000 of her own money in the stock market.

And she managed to do it mostly in the last two days.

The headline is misleading. Jane did not lose $90k in two days. She just lost the amount due to the sharp drop in the past two days.

27 years old, 5 years in the banking sector, with $150k invested and $100k in currencies... she is paid pretty well.

No recourse?

News: Investors of Merrill notes to get back nothing

Date: 10 Oct 2008. Source: BT.

Unwinding proceeds not enough to cover original collateral

Investors of the Merrill Lynch Jubilee Series 3 LinkEarner Notes are said to be walking around shell-shocked after receiving letters telling them that their investments are worth zero.

The current financial crisis meant that the proceeds from the unwinding process were not enough to cover the original collateral value of the notes which were complex products involving credit default swaps and derivatives.

The Jubilee Series 3 notes are the first structured products linked to the bankrupt Lehman Brothers to be unwound here.

Jubilee series 3 is just small fries, with just $26.3mil sold. Over $500mil of Minibonds were sold.

Invest in FCFD now?

News: AUD, NZD investors hit

Date: 10 October 2008. Source: ST.

Five-year lows of these two currencies hit S'poreans with big paper losses

INVESTORS tempted by the attractive interest rates offered for Aussie and Kiwi dollar fixed deposits are licking their wounds after the two currencies plunged to five-year lows.

Both types of fixed deposits offer generous interest rates, but they cannot cover for the dramatic loss in the value of the currencies.

High yield, high risk.

It seems these two currencies are affected by the appreciating yen. People borrow yen and put them in high yielding currencies. When yen appreciated, people withdrew to pay back the yen, in case it goes higher.

S$ to US$ exchange rate

News: S'pore eases monetary policy

Date: 10 October 2008. Source: ST.

SINGAPORE'S central bank eased monetary policy for the first time since 2003 on Friday, in a widely expected move that will slow the rise of the currency to limit the economic fallout from the deepening financial crisis.

The Monetary Authority of Singapore (MAS) sets policy by managing the Singapore dollar in a secret trade-weighted band against a basket of currencies, instead of setting interest rates.

In hindsight, it is obvious that Singapore has to ease its monetary policy due to the impact to its exports. Too bad only hindsight is 20-20.

MAS should be maintaining S$ in the range of S$1.45 to S$1.55. Will it go back to S$1.80? If you think so, you should change some US$ today, even though you have missed the lowest point.

I placed a US$ FCFD at US$1 to S$1.78. Shows what foresight I have. (I thought MAS would maintain the exchange rate to maintain Singapore's competitiveness.)

Now, people will say that don't put all your eggs in one basket. Put a bit first, then see how. This is difficult to carry out in practice because the minimum amount is US$5,000. How many US$5,000 do you have?

Jubilee Notes series 3 liquidation value is out

Here's how the Jubilee Notes series 3 work: in a credit event, you exchange your good underlying securities for the bonds of the defaulted entity. Then, you need to pay the unwinding fees and make good any shortfall in the underlying securities.

The underlying securities is worth $5.4mil, from the original $26.3mil. The Lehman Brothers' bonds are worth $4.7mil, from the original $26.1mil. The unwinding fee is $2.6mil.

The noteholders get back zero. ($4.7mil - $2.6mil - ($26.3mil - $5.4mil))

It seems to me someone lost $20.9mil.

If we extrapolate this to the Lehman Brothers Minibonds, then we can expect the underlying securities to have just 20.5% of their original value!


News: Undergrad may have lost $66,000 to company

Date: 6 October 2008. Source: TNP.

SHE put $66,000 of her family's money into what she thought would give her quick and lucrative returns.

But a year on, the 20-year-old undergraduate could end up losing most of it because she has no idea what has happened to the controversial company in which she had invested - Sunshine Empire.

A fool and her money are soon parted. This is the eternal truth.

Ever tried convincing someone that this is a scam? Don't bother. Let them learn on their own.

Where were you in the big market crash?

Today is another unprecedented day where the STI dropped by 150 points before recovering.

What would be your answer when someone asked you what you were doing a few years down the road?

For me, it would be, "I'm working."

Perhaps a better answer would be, "I bought some."

Many risk-averse rich people around

News: UOB calls time on million $ fixed deposit drive

Date: 7 October 2008. Source: BT.

Millionaires made a beeline for United Overseas Bank (UOB) last week, swelling its coffers and causing the bank to end its fixed deposit drive just six days after it began.

So there are so many risk-averse rich people around.

FD rates are still too low!

News: Lure of attractive FD rates

Date: 6 October 2008. Source: ST.

Banks see term deposits as alternative source of funds amid credit crisis

BANKS that are hungry for cash amid the global credit crunch have unleashed a string of eye-catching promotional rates for fixed deposit accounts.

This spells good news for customers with cash parked in bank deposits.

FD rates are still too low. The longest FD term I'm willing to commit is 6 months.

The StanChart's rate of 1.688% for a 100-day tenor is very attractive. Too bad you need $50k. It's too much to commit.

Risk-free interest rate

I told my father about topping up his Maybank iSavvy a/c — with my money — to $50k to take advantage of the extra 0.3% interest. He was in favour of it.

For Maybank iSavvy a/c, <$50k earns 0.88% and >=$50k earns 1.18%. It is not tiered — the rate applies to the entire sum.

This will increase complexity of the account management.

Back to square one

A few years ago, I invested in a BRIC fund at 0.99. Its last valuation is 0.99.

Same as before? Nope, I lost the upfront 5% charge and the annual 1% management fee.

It looks like I need to change my buy-and-hold strategy for unit trusts.

I intend to buy more, perhaps at 0.8, but this time I will use an online service to cut down on the commissions.


Trusts are supposedly good for dividends. There are three reasons why I distrust them, however:

  • They bought the assets at a high price from their parent companies
  • The assets are depreciating
  • The loans are crippling

Top up CPF medisave

I sent this enquiry to the CPF board. Let's see what they say.

I would like to know if I am allowed to top-up my medisave account directly using cash. I do not wish to top-up my OA and SA.

If so, how do I do it? If not, why not? tia.

Edit: I found that I am allowed to top up medisave account directly.

On the failed notes

For the DBS High Notes 5 and Merrill Lynch Jubilee LinkEarner Series 3, Lehman Brothers was one of the reference entities. As such, the investors are expected to be totally wiped out.

These notes are very likely to be some credit default swap against a basket of companies. In other words, you're insuring that these companies will not go bankrupt. If they do, you pay out. In the mean time, the insured pays you a regular premium.

If one entity out of six failed, you may expect the notes to have 5/6 of the value left, even though the prospectus says there is no direct proportion. However, there is no reason to do so because of the first-to-default clause. If anyone default, you're going to close shop anyway, so why not buy the maximum that you can for each entity? Now, when one entity default, you'll lose everything. In other words, the notes is highly leveraged.

Misled investors should sue the issuers, since they are still around. :-)

For the Lehman Brothers Minibonds, the issuer no longer exists. Even if you want to sue it, you stand behind a long line of creditors. Should you sue the distributors, then?

I would not, at this point in time. The trustee, HSBC, is trying to determine the best course of action. It is still not clear if the notes will be terminated. If the notes can continue to pay out the interest, then all is fine — for the time being.

It is also not clear if the notes are worthless. Most investors are assuming the worst case, that's why they are in distress. However, in this case, only the issuer has gone bankrupt, the underlying securities representing the notes are still okay.

It is not known how much the underlying securities are currently worth. Before its demise, Lehman Brothers valued the notes at 30% to 50% of their face value. It has been said this was artificially low — apparently structured products have low redeem values to discourage redemption. If the notes are really worth 50% to 80%, the investors may be happy to take it.

4% vs 5%

Senior Minister Mr Goh said,

"I know (individual) Singaporeans have been hurt; they have invested in Lehman Brothers mini-bonds, in High Notes ... and more have been hurt investing in equities," he said.

"But that's life — if you want to have a good rewards, you've got to take risk."

"Otherwise, leave your money in your CPF ... Four per cent is a fabulous return without risk. Singaporeans complained it was too low, (but) now they know the meaning of a capitalistic existence."

Some people said Mr Goh is insensitive to the plights of the old people. Others said he has a point.

Would I leave my money with the CPF for 4%? No way! At least not the entire amount — you can't take out the lump sum, until your death.

Creating your own structured products

Confused by all the structured products out there? Don't worry, just ignore all of them and create your own.

Here's the basic idea behind structured products: buy a bond or bond-like instrument with the bulk of the capital and invest in some options with the rest.

The bond is the one that allows the capital protection, and the options determine your returns.

For example, if you invest in a $1,000 1-year bond paying 5%, you only need to pay $950 upfront. You use the $50 to buy some high risk options that may pay 100% or more! (But usually zero due to their high risk nature.)

If things don't work out, you still get back your $1,000. If things work out, you will get $1,100 instead of just $1,050. That's a 10% return!

Note that this is capital protected rather than guaranteed. If the bond defaulted, you'll lose your capital. You want guarantee? Find a guarantor... :-)

Construction workers earn $1,700!

A group of 180 Chinese construction workers protested recently when their company wanted to reduce their pay from $1,700 to $1,200. For $1,700, they have to work 28 days a month (2 off days), 14 hours a day.

Apparently they were fine with it. Not for $1,200, though. That's why they protested.

They were here less than two months. I suspect the company is attempting a switch-and-bait. It's not the first time that the employees were enticed to come to Singapore with higher salaries, but were forced to accept a lower salary after they arrived.

I remembered that it happened to NTUC too. Store managers were offered $2,000, but $600 was deducted for "training". They were not told until they came here, of course.

The sole reason why they were offered $2,000 was that this made them eligible for the Employment Pass, which didn't have the Foreign Worker Levy. (The cutoff is now $2,500.)

Time to look at SGS?

SGS = Singapore Government Securities.

The 3-month rate finally went beyond 1% recently. Perhaps it's time to buy some. The minimum denomination is just $1,000.

Electricity tariff up again!

News: Households to see average rise of about 21% in electricity bills from Oct

Date: 29 September 2008. Source: CNA.

Singaporeans will see an increase of 21 per cent in their electricity bills in the last quarter of this year.

The average electricity tariffs from October to December would go up by 5.38 cents per kilowatt per hour. The Energy Market Authority (EMA) said the increase is due to higher fuel oil prices.

This is not unexpected. After all, SP Power has indicated the fuel price used in its previous tariffs. What struck me was that the prices were really low. At least now we know this is the highest it can go.

Surely you don't expect a subsidy? :-) (Nothing less than market rate for Singapore!)

Expenses for September 2008

Category Jan Feb Mar Apr May Jun
Basic 902.71 936.18 2,294.03 817.89 883.92 780.06
Cash 182.72 194.95 212.00 304.00 194.45 233.50
Credit Card 103.10 44.00 194.50 0.00 0.00 17.00
Vehicle 282.32 830.80 196.07 893.33 262.66 770.06
Others 304.15 200.00 326.10 239.95 105.89 22.72
Total 1,775.00 2,205.93 3,222.70 2,255.17 1,446.92 1,823.34
Category Jul Aug Sep
Basic 2,153.47 881.76 1,018.15
Cash 207.60 223.50 203.50
Credit Card 76.03 21.13 0.00
Vehicle 2,502.69 498.65 65.06
Others 20.33 178.87 238.48
Total 4,960.12 1,803.91 1,525.19

Basic expenses have gone up permanently from last month (September) due to an increase in rental. My landlord increased my rental by almost 50%!

Vehicle expenses were very low due to parking reimbursements from my company. The reimbursements were delayed from previous months.

The bulk of Others was due to a large DVD order ($163.48). Another reason was treating an ex-colleague who visited Singapore ($40).