Thursday, September 22, 2016

New Way To Look At Money (TED Video)

As the saying goes, MONEY is the root of all evil, but there is also another Chinese version of saying to counter it : 钱不是万能,没钱万万不能 (loosely translated into : Money isn't everything, but everything need money)!

So, let's talk about MONEY today. 

Recently, I watched an interesting TED Talk pertaining to the future of money (i.e. the programmable money or the cryptocurrency aka those Bitcoins etc...). What interest me more is about the Yap Economy that shared by the speaker (Neha Narula) i.e. using the bulky and heavy Rai Stones as "money". Fast forward to present, money is becoming more and more invisible i.e. just plain 1s and 0s in the system.  

Now, check out the TED Talk below :

In fact, Bitcoins made the headlines in local news one or two years ago with the installation of our first ever Bitcoins ATM, but it has been uneventful since. By the way, 1 Bitcoin is equivalent to SGD 814.43.  

Do you invest in Bitcoins? If yes, what is your experience so far?


Saturday, September 17, 2016

3 Non-Wealth Things That I Treasured Dearly!


Yes, I am back to Singapore after a short getaway with family at Southern Thailand (Dannok and Hatyai). As this is the first time that I went Thailand by car, it's quite an experience which I will trasure.

Some highlights of the trip:

1. First hand experience of the laxness of Thailand custom, it is truly eye-opening. We literally drove through the border (and stop our car over at Dannok, Thailand), then walk back to the custom (short distance) to stamp our passport. Yes, this is a true story... 

2. If you like theme-park with mixture of Western and Eastern themes, can consider the Asian Cultural Village situated at Dannok, Thailand (just within 5 minutes drive from the border). Lots of amazing lighting and statues etc..and they also throw in a couple of dinosaurs to please the kids. 

3. Have a sumptuous dinner at the lake side (Water View Restaurant) whereby the food were served by boat... unique and great atmosphere! Oh, it comes with live band too but sang mostly in Thai Language. 

OK, now let's get back to the topic that I am about to share today. As a follow-up to my earlier post on Wealth Quotes, which I agreed wholeheartedly, I thought it would be good to do some soul searching myself on what are the non-wealth things that I treasured most. 

Here is the result (I am excluding those obvious things like family, friends and health) :

1. Memories - I always believed that when we are getting older, besides money and/or physical wealth, we will constantly digging back to rekindle with all the fond memories throughout the journey of our life. The sad thing of course is that our memory usually fading as fast as age (which is happening to me right now, slowly but surely). Hence, it is important to preserve such memories in one way or the other. That's why in the recent years, I like to take photos or videos and upload them into my Facebook as a back-up. I can't really trust my memory that much nowadays, but fret not, I always has Facebook to rely on ;-)

2. Positive Energy - I am glad that I belongs to the category of people who always look at the cup as half full (or always look at the bright side), it does make the journey of my life a little bit less eventful (or smoother sailing) as I don't usually over monsterise the DOWNs or over excited with the UPs. My motto in life is : Keeping Going ; Keep Smiling! I do believed that smiling is a very powerful "tool" to ignite positive energy.. So, try it, it's FREE anyway!

3. Knowledge/Wisdom - This is something that we all should continuously harness, either through reading, attending courses (online or offline) or just learn from friends. There are so much to learn and the more we know, the more we know we don't know. As for the wisdom, I guess it grows with your experience in life and ultimately we kind of know a bit of "life Hacks" here and there which forms the "wisdom". Still long way to go for this one but I do treasure what I've learnt and shared so far. 

What about you? What do you treasured most (exclude the wealth and the "by default" thingy)?


Saturday, September 10, 2016

Best Quotes On Wealth

For the next few days, I will be away from Singapore and spend some time with my families back at my home town and road trip to Southern Thailand. It also means that I will be away from this blog for a few days ;-P

In any case, thought of sharing one of the best quotes on WEALTH that I've read a couple of days ago. the reason why I like this quotes is because it is on WEALTH but also not about WEALTH. 


Nah, it's kind of a very logical one too... 

Here you go...

"You aren't wealthy until you have something money can't buy"
Many a time, when we are too focused on amassing wealth (for our future good), we tends to neglect what the wealth cannot buy (even if you successfully amassed them ultimately), for example, the relationship with your family or kids, your health, your youth, your laughter etc... 

Of course, I am not encouraging you to YOLO (You Only Live Once) all the way but do still ensure to focus on living the NOW instead of just focusing on the future.


Monday, September 5, 2016

Summer Is Over And Global Market Are Heading North! What's Next?

Today (5th Sep 2016), STI "chiong" (rise) 47.82 points (or 1.71%) to close at 2,851.74. Effectively, all the regional market are in the green green land today. What is the cause(s)? 

Is it because summer is just over? 

Is it because of the weak US jabs data? (I know, this is kind of contradicting)

Is it because summer blockbuster movies are over? (just joking...)

I guess no one can say for sure but whatever the cause(s), it doesn't means anything the for future performance, my friend, STE, put it greatly in his recent blog : The Greatest Gambler Fallacy. Also, this is the irrationality of the market movement (during the short term) that most Value Investor gurus talking about. 

Whatever it is, I will just try to "ignore" the short term volatility while focus on the long term as well as the dividend income. Hopefully I won't fall for the "present-focus bias" ;-)

Oh, since we are talking about the summer blockbuster movies, recently I've watched the latest sleeper hit, Don't Breathe (horror thriller genre), small budget but damn effective in making the audience stop breathing... 

If you are an horror movie fan and haven't watch it yet, don't miss it!
Don't Breathe - Top the US Box Office for the second week!

Wednesday, August 31, 2016

What Is Your Inclination In Making This Investment Decision?

As retail investors, we are making decision all the time, decision slike :

What stock(s) to pick for review/analysis?
What stock(s) to buy?
What stock(s) to sell?
How much cash to hold as war chest?
How to diversify your portfolio to minimize the risks?
When to do NOTHING? (yes, doing nothing is also a decision) etc..

Today, just like to throw out an hypothetical question and hope to see some response/reaction from the readers in such situation. Of course, there is no right or wrong answer, just inclination and perspective.

The scenario is like this : If you are currently holding 2 equal size stocks, one is making 50% paper profit (let's call it Stock A) and the other is making 50% paper lose (let's call it Stock B) , for some valid reason, you need to sell one of the stock (in full), which stock will you sell? Stock A or Stock B?

1. Both stocks have equal chance of making further profits (or losses) in the near future. In short, Stock A might turn into loses and Stock B might turn into profit in the future.
2.  You cannot hold the stock and must sell ONE (and only ONE) of the stock in FULL.

This is a JFF (Just For Fun) question, if it intrigues you, do join in the fun by sharing with us your inclination (to sell Stock A or B?) and why (your thought/rationale) in the comment section.


Saturday, August 27, 2016

3 Things That You Should Do While PSI Is Hovering At An Unhealthy Level

At the time of writing this post, the 3-hour PSI reading is at 106, which is the lover end of unhealthy level (to check the latest PSI readings, you can download the app from NEA or visit their site here). Air pollution affect everyone, whether you are rich or poor, successful retail investors or investing newbies, like me. We all breathe the same air! 

Of course, unless you are willing to take the trouble and incur the expenses to get away from Singapore during this period, if not, I guess we all need to accept it and keep going. Life goes on, here are the 3 things that you probably should do during this period :

1. Do Indoor Programs/Activities with Families or Friends
We consider ourselves lucky that there are so many indoor programs/activities that we can do in Singapore. To name just a few:
- Indoor sports like badminton, table tennis and indoor swimming. 
- KaraOK session with friends. SG Budget Babe has published a post on the cheapest Karaok (KTV) places in Singapore, you can check it out here.  
- Shopping or just window shopping at malls scattered all over the island
- Pay home visits to families or friends just to chill out etc..

Talking about indoor program, this evening, am going to have a social mahjong session with a couple of peer bloggers! So long never play the game already, it's time to drill my brain cell harder to prevent early senile dementia. I am sure it will be a fun gathering... 

2. Drink More Water And Standby the N95 Masks
Staying hydrated is crucial during this period. Also, it is important to standby a few N95 marks on hand just in case the PSI reading is getting from bad to worst. Prevention (for getting sick) is always better than cure.   

3. Catch A Movie
To be frank, this one is a bit bias as I am a movie buff, watching a movie came so naturally to mind ;-) Amidst the humid and hazy day, it's godsend to be able to spend 2 hours or so in a dark and air-conditioning room to watch your favorite movie.

If you need some recommendation, here are my top pick for the week:

1. Don't Breathe - Genre : Horror, Thriller:
Don't breathe

2. Shin Gadzilla (Japanese) - Genre : Action, Adventure:
Shin Godzilla

3. Train To Busan (Korean) - Genre : Action, Horror, Thriller:  
train to busan

What other tips you have to "fight" against the hazy air particles?


Wednesday, August 24, 2016

When Breath Becomes Air - A Memoir And Also A Beautiful Gift From The Author

I first chanced upon the book, When Breath Becomes Air (by Paul Kalanithi) was a couple of months ago at the Kinokuniya Orchard. After browsing through a couple of pages, I've made up my mind that I will get hold of this book (or memoir) one day.

Recently, I've gotten hold the book and finished reading it within 1.5 weeks. I must give myself a round of applause for this "mini achievement", you see, I am a slow reader and this is one of the book that took me shortest time to complete, from cover to cover. Of course, the key reason is that I was intrigued by the book from page one, a page turner as they called it, not by the mysterious events or twisted plots but by the beautiful recount of the last few years of the author (Paul Kalanithi passed away before finishing this memoir and his wife, Lucy, has to step in to finish it up on his behalf). 

Paul Kalanithi is a successful neurosurgeon, due to the terminal illness (lung cancer), he switched from the role of doctor to patient at the young age of 30+. Down but not out, he made his last few years count by writing this memoir (I would rather call it gift) for the world. He is teaching us how to live, from a dying soul!

Even though the book contains quite a fair bit of medical lingo (because of his profession), but it makes me wanted to understand every single words written and finding out the meaning of the words is a joy in itself. If you can only read one book for the balance of the year, this is the book to pick. Highly recommended!

Following is the short trailer of the book:


Friday, August 19, 2016

Wongamania Banana Economy - Financial Board Game Reloaded

Wongamania Banana Economy
Courtesy of the private invitation by the owner of Wongamania Board Game, managed to play the revamped Wongamania - Banana Economy game with a bunch of financial bloggers (you know who you are) 2 days ago at the Big Fat Purse office. This is not the first time I have played the Wongamania game but this "evolved" version (if you are a Pokémon Go players, you will know what I meant when I said evolved!) has more blast with plenty of fun.

In fact, this is the third time that I've played the game (click here and here for my recount of the previous 2 games). This time round, it is a bit special as we have the privileged to enjoy the yet-to-be-officially-launch revamped version : Wongamania - Banana Economy (HINT : The game will be officially launched in Singapore on 9th September 2016 at Kinokuniya @ Ngee Ann City, 1 to 6 PM).

So, what are the major attraction in this evolved version?

1. The materials (including the cards, the "banana" dice, the token and the board) are with higher quality (as compared to the original version). Think along the line of a "Power Up" version of the Pokemons that you caught in Pokémon Go ;-)

The "Banker" is demonstrating the rules of the game
Within 2 rounds, most of us have gotten the hang of it!
2. There are more dimension and variety of the cards being introduced, for example, previously there is only one type of "Bond" but now it has "Bond", "Junk Bond" and "Convertible Bond", also, it has the "Insurance" cards which are getting closer to the real financial environment.
"I am a Value Investor, I am sure I will win!"
3. There are slight change to the game rules but I like the introduction of the modular variation of the game e.g. you can remove certain category/color of game cards (deemed to be more "cheem" [difficult] for the youngsters) to make it more suitable for young adult/teenagers to enjoy the "Power Down" version of the game. Same same but difference!
"YES! The game is on my hand"
All in all, Wongamania - Banana Economy is a great social board game that you can have tremendous fun and laughter with your friends and family while picking up some financial knowledge along the way. It is best suited for 4 to 5 players for a session of the game (which usually lasted for about 40 mins to 1 hour).


P/S : Am still waiting for my Wonagamania - Banan Economy board game (supported them via Kickstarter) which is supposed to be in the shipment now.  

Sunday, August 14, 2016

Top Of The Singaporean's Major Concerns Is NOT About Money!

Yes! This is true! 

At least according to the recent survey by HSBC Bank (Singapore), as published in today's The Sunday Times. If not money, what else? I believed some of you might have guess it right, it is about our HEALTH! As the saying goes, Health is Wealth, without good health, you can't really do much with the money. Don't get me wrong, I am not saying money is not important, like the Chinese saying 钱不是万能,没钱万万不能 (loosely translated as : Money is not everything; But everything needs Money). That's why money came out as a close second in the survey. 

As per the survey, following are the top 15 Singaporeans' Major Concerns:

Source : The Sunday Times
Come and think of it, when we are getting older, our health will get deteriorate sooner or later due to wear and tear, so, personally think that it (health problem) will happens, just like death. The key is how long we can maintain our healthier state of body/mind and prolong it from happening. Besides, stress is the key source of most sickness, so, let's worry/concern less and live our life NOW! ;-)

Personally, I don't usually worry/concern a lot, maybe it's due to my peanut size of brain, my simple mind or just plain poor memory but I do believe everything will be 船到桥头自然直! (loosely translated as : when the boat reach the peer, it will turn straight automatically!)


Friday, August 12, 2016

How Much Time Are You Willing to Invest in Trader Training and Working? (Guest Post)

There is no denying that learning how to trade can open up exciting new financial possibilities for you. However, perhaps you are worried that it is something that might need more of your time than you are willing to give.

The truth is that you can carry out this task successfully without it taking over your life. 

Get the Right Professional Training

You might think that it is a good idea to save some time by skipping the training and just plunging right in to make your first deals. The problem with this approach is that it is going to take you longer to get going in the first place.

A better idea is to set aside sufficient time to get your training sorted out right at the start, to find out about common investing terms and to feel really comfortable. In this way, you will be able to hit the ground running feeling confident and ready to make some smart investments.

By arranging a trader trading session at the start you can make the most of your time spent trading and feel good about doing it in the best way possible. You certainly don’t want to waste your time and energy by getting started when you don’t really know what you are doing.

Once you have learned the basics you will be keen to find out more and become a fully-fledged trading expert. It is clear that the more time you spend doing research and making trades the more experience and knowledge you will carry on gaining.

Don’t Rush In

One mistake that some new traders make is to rush right in and start to invest all of their money as quickly as they can. While you will be keen to use your new-found knowledge and to get some results, you don’t want to do this too quickly and risk making bad moves.

Instead, you should look to set aside enough time to get start gently and in a relaxed way. By taking your time over your first few investments you can wait until you are completely sure that you are making the right moves.

On the other hand, if you rush in then there is more chance of you making a bad investment decision and living to regret it. This means that you really need to wait until you have enough time to get going in a way that suits you and without cutting any corners.

If this means holding off until you have enough time to do things properly then you will benefit from this in the long run, even if it is mildly frustrating to have to hold off at the start.

Fit It Around Your Life

One of the biggest advantages to trading stock on the market is that it is the kind of job or hobby that you can fit around your life. If you want to do it as a part-time hobby and just spend a few hours a week on it then this is possible.

Alternatively, if you want to make this your new career then you could easily do it on a full-time basis instead. It all comes down to how much free time you have and how much of it you want to dedicate to doing this.

Of course, you can also do this wherever you are. If you want to trade on the beach, at home or anywhere else then the power of online trading makes this entirely possible. If you are serious about trying this as a new hobby or as a new career then you should think about how you would prefer to fit it around your life.

It doesn’t matter how much or how little time you have spare to get trader trading and then to start working. Once you decide to give this a go then finding the time to do it right is going to be easier than you might have imagined it would be.

Saturday, August 6, 2016

Weekend Sharing - Anything But Investing!

Suicide Squad
This week alone, there are a couple of major events that has happened and will (or has) affect me directly or indirectly. No, none of them are related to investing, so, let me list them down below.... 

First and foremost, it is the recent announcement by CPF Board in introducing more option to their already quite complicated product, CPF Life. I am sure the intention is a good one i.e. to provide more flexibility or option to the members, however, personally think that much more effort is required to educate the members in gaining their support/trust in the basic CPF Life scheme. Just like watching a movie, if you don't like the main cast(s), regardless how strong is the performance of the supporting cast(s), you will still don't like the show ;-)

Secondly, the long awaited anti-hero blockbuster, Suicide Squad hits the big screen this week. It has been receiving very negative/bad reviews from the US movie critics (many of them are unwarranted, in my humble opinion). The Rotten Tomatoes rating is sitting at 26% at the time of writing (which is very bad) and it even spin-of an online initiative to ban the Rotten Tomatoes site by the movie fans. Personally, I am a movie fan and not a movie critic fan, I am still so gonna watch the movie, especially Harley Quinn. I've booked the IMAX 3D tics for next Tuesday, so, s*** the movie critics! ;-) 

Lastly, just today, the hell breaks loose as the long-awaited Pokemon Go game (app) is officially available for download in Singapore and Malaysia this morning! Personally, I am not a fan of gaming but still downloaded the game/app in my iPhone just to have the fun of it. To be frank, it is quite fun and I think it can be a very good tool to boost bonding (especially between parents-kids) and exercising aka walking. As at now, I am still at level 3, with 6 unique Pokemon Monsters in my bag. Loooooong way to go. 

Oh, have you watched the movie, Suicide Squad? If yes, please keep me posted on your review in the comment below. 


Monday, August 1, 2016

What Forex Traders Need To Know About The Yen (Guest Post)

For those of you interested in forex trading, you will have learned that the foreign exchange market is not just hugely competitive, but it is also rather complicated. Learning about the major currencies is vital if you ever want to succeed. When you consider the forex market, you can’t forget about the yen. It is one of the largest currencies in the world, so studying it is essential.

Learning About the Yen

If you want to learn to trade forex, then you will have heard how essential it is that you educate yourself on how forex trading works. Use online resources to gain a better understanding of the fundamentals, technical analysis, market trends, and everything else there is to know. After all, forex trading is not for the ignorant or unprepared. You need to know about the major currencies of the world, and that includes the Yen.

The Japanese yen (JPY) is one of seven major currencies that dominate the forex market, with these seven accounting for 80% of the market. Japan has one of the largest economies in the world, so it comes as no surprise that the yen is one of the biggest currencies regarding forex and international trade.

The central bank behind the yen is the Bank of Japan, and it has the directive to conduct in a manner that will minimize inflation and encourage economic growth. It is important to note that since deflation has been a big issue for Japan for several years now, the central bank has kept very low rates to encourage demand and stimulate growth.

These low rates drive global carry trades, which is where you borrow money in an environment with a low-interest rate, and then invest this in assets from other countries that offer higher yields. For this reason, any talk of an increase in rates can affect the rest of the forex market.

The Japanese Economy

The state of the economy plays a big part in how a currency is valued. In the case of Japan, it is important to note that despite being one of the largest economies, it has considerably lacked growth since the collapse of its real estate bubble. On several occasions, growth rates have been zero or negative between 2001 and 2011. For much of the last decade, it has also experienced deflation.

What Drives the Yen?

The general belief is that several factors influence the value of currency, including things such as price levels and relative interest rates. These models may not work that well in real markets, however, since supply and demand determine these rates and are in part affected by market psychology factors.

As a trader, you should pay attention to major economic data; this information is readily available from sources such as Bloomberg and the Wall Street Journal. Look out for the release of data such as trade balances, inflation, GDP, industrial production, and retail sales. These will all have an impact on the forex market.

Of course, other factors will have a significant impact on exchange rates. These include things such as interest rates, employment figures, and local and global news. Look out for scheduled meetings held by the Bank of Japan and keep your eye on the news. Things such as elections, natural disasters, and changes in government policies can all influence the value of the yen.

For Japan, in particular, you should look out for the Tankan survey, a quarterly reported economic review of Japanese business released by the central bank. This document is used to prepare monetary policy and will often move trading in Japanese stock and currency.

Staying Current

If you want to be a successful forex trader, then you need to stay up to date with your knowledge. Don’t expect to be able to thrive off the basics. You will need to continue to learn about what is happening with the major currencies and what we can expect in the future. Stay up to date with the news and be sure to read forex forecasts, such as USD/JPY forecasts.

This technical analysis will provide you with a review of major events that are expected to move the Japanese Yen and dollar/yen, but you can focus on the currency of your choice. While short-term traders are less likely to use economic-based models to predict currency rates, they are useful for shaping long-term trades.

Friday, July 29, 2016

What NEL (North-East-Line) Breakdown This Morning Taught Me About Investing And Life?

This morning, during the peak hours of the train service, the jinx event happens again!

Yes, NEL (North-East-Line) breakdowns once again, from around 7.30 am, for about 30 minutes. After alighting from the LRT and witnessing the packed station with multiple snake line queues, I need to make a decision and make it fast!

So, what options do I have now....?

1. Proceed to join in the already crowded queues and waiting in the stuffy environment OR

2. Proceed to take the alternative transport via free bus services, which is nearby - but, equally long queues have been formed within the whole interchange OR 

3. Proceed to take the alternative transport via taxi - of course, there is no guarantee that I can get the taxi easily, so there is a risk here OR
4.  Proceed to take the alternative transport via  Uber - Personally, I've never tried Uber service before so, this option is the lest feasible OR    

5. Take the LRT back home and come out again when gotten the news that the train services has resumed OR

6. Call a friend - I had a few friends staying around the same area as me and probably they are on the way to work too, so probably can ask for a ride OR

7. Any other options that I've never thought of at that time....

Within seconds, I've decided on Option 5, with a slight variation! Instead of taking the LRT back home, I decided to take the LRT and ride along the loop. My rationale are :

1. The train station is too packed and stuffy, I need more fresh air and not prepared to join in the queue amidst the stuffy condition.

2. With such a queue, even if the train service is resumed, I foresee that I can only get into the second or third train, at best.

3. The whole loop of LRT line will take me around 10 to 15 mins and I am prepared to sit inside the LRT train and enjoy the air-conditioning as well as get entertained by Muttons In The Morning (Class 95 radio program).

I am pretty happy with my decision as soon after I completed the loop, the train service resumed within 5 minutes and I managed to get into the second train. All in all, I only late for work for about 30 minutes or so. I remember in one of the previous similar incident, I've chosen Option 3 (via taxi) and waited for 30 minutes for the taxi alone ;-)

So what have I learnt from this unfortunate event about life and investing?

1. We are constantly making decision in our life (or investing), knowingly or unknowingly.

2. Once you've made your decision, other options become irrelevant as you can't relive to make another decision. There are opportunity costs involved in making or not-making decision, but we should not be paralyzed by it.

3. Whatever decision you've made, it is deemed the optimal one at that point in time, you need to accept the consequences and move along. Most of the time, there is no right or wrong decision, just how optimal at that particular moment.

In life or investing, every step or decision counts! 

If it was you, what option would you make in that situation?


Friday, July 22, 2016

7 Financial Terms Many Singaporeans Get Wrong (Guest Post)

Finance has a language of its own. Most of that if dry is boring - right up to the point where it hits your wallet.

It makes sense for anyone, whether they are investors or not, to understand these common points of confusion:

  1. Nominal versus Effective Interest Rate

You often see two sets of interest rates on a banking product. The nominal interest rate, and the Effective Interest Rate (EIR). What’s the difference between the two?

Well the nominal interest rate is just the stated interest rate. It doesn’t take into consideration the effect of compounding. There is a significant difference between the two. For example:

Assume you have a form of loan that doesn’t compound (a vanilla bond is a good example). You are owed $5,000, after a period of 10 years. If the interest is 5 per cent per annum ($250 per year), you would get $7,500 at the end of 10 years.

But if the interest was compounding, you would get a very different result. You would no longer be getting just $250 per year. You would get $250 in interest in the first year, but in the subsequent year you would get $262.50 (five per cent of $5,250), and in the third year you would get $275.60 in interest (five per cent of $5,512), and so on. You’d have $8,144.47 at the end of 10 years - a difference of around $644.70.

This is why, when you take a loan, the bank is required to publish both the nominal interest rate, and the EIR next to it. You should take note that the EIR is the genuine rate you are paying.

2. Median versus Average

Unless you paid careful attention in school, you have probably forgotten or missed the difference between a median and an average. This slip-up can be used to mislead you.

For example, say you are asked to join a marketing scheme, and to help sell cruises. When you ask how much you can earn, you are told the average amount is $3,950 per month. Does that mean the majority of the sellers earn that much?

Probably not. Consider this:

Say there are 100 sellers in the scheme. 90 of the sellers only make $500 a month. However, 10 of the sellers are tremendously successful, not least because they take a portion of the sales made by the other 90 people (this is how many Multi-Level Marketing schemes work. So now:

90 people earn $500 a month from the scheme. 10 people manage to earn $35,000 a month from the scheme. What is the average?

($500 x 90) + ($35,000 x 10) / 100 people = $3,950.

The average is indeed $3,950 per month. However, we know for a fact that 90 per cent of the sellers don’t earn anywhere close to this amount! They only earn $500 per month.

This is because the unusually high earnings from those at the top of the scheme (the ones earning $35,000 per month) greatly skew the results.

By using the median, we lay out all the numbers in a row, and knock off the numbers from both ends until we come to the middle. In the above example, we would lay off the earnings of all the sellers in the straight line, and eliminate one number from each end until we come to the number in the centre (which would be $500).

This is why reputable agencies like the Ministry of Manpower always report median income, when trying to give a sense of how much the typical Singaporean earns. An average income would be a highly misleading figure.

Bear this in mind when you are told the “average” amount someone can make from a product, or the “average” pay for a particular job.

3. Capital Protection Versus Guarantees Against Loss

Capital protection often sounds like a great form of safety. In fact, many advertisements like to boast that a financial product is safe precisely because of capital protection features.

In reality, capital protection is no guarantee against significant losses.

Capital protection means that only the initial amount you invest is protected. The rest of it is not guaranteed. Now, consider what happens if you invest a large portion of your life savings (say $100,000) in a structured deposit, which promises returns of five per cent per annum. You must commit the money for a period of 10 years. You are warned the risk is high, but you have capital protection.

After nine years, you receive a call that something has gone wrong. The structured deposit has been cancelled (the bank is “calling” the deposit). You will only be receiving your initial capital back.

Have you lost money? Quite definitely.

At the end of nine years, the amount of money the deposit has accumulated is around $155,133. By getting back only your initial capital, you have wasted nine years of growth, and lost over $55,000.

All that time, you could have had the money invested in a safer product. And remember that over nine years, the rate of inflation would have significantly lowered the real purchasing power of your initial $100,000.

Capital protection is of some use, but don’t be under the impression that you are perfectly defended against losses.

4. High Volatility

Many lay investors are scared off by the term volatility, or risk. It’s important to remember, however, that high volatility does not inherently mean something is bad.

High volatility means there are large price movements in either direction. A volatile asset can fall significantly in price, or it can rise significantly in price. Without volatility, profit is impossible (if all prices are permanently fixed, how could you ever find a discount, or run a business?)

Some degree of volatility is needed in order to grow your money. As such, many financial advisors will suggest mixing in a small amount of volatile assets. One such approach, called the barbell strategy, is to have 90 per cent of your assets in safe products (like fixed deposits), and 10 per cent in highly volatile products.

In this way, losses from the volatile products cannot significantly damage your wealth (they account for just 10 per cent). But in the off chance that they pay off, the high volatility means they could triple or quadruple returns, and the high profits will offset the slow growth of safer products.

To put it simply, do not assume that high volatility is all bad. The key is to balance your portfolio by getting the right mix.

5. The “Free” in Interest-Free

There are many misconceptions about how an interest free loan works, particularly with regard to credit cards.

If you use a balance transfer, the interest free option is not without cost. This is the balance transfer fee, which is a percentage of the amount transferred. So if you shift a $2,000 debt to another card, at a processing fee of 4.5 per cent, your total debt grows to $2,090.

At the end of the six month interest free period, you again make a balance transfer, incurring another 4.5 per cent. Now your debt is $2,184.

This is why you cannot evade paying your credit card forever, by repeatedly making balance transfers. It is still growing, even if you hop from one interest free period to the next.

6. Credit Card Instalment Plans

Many credit cards allow you to make instalment plans on big purchases, such as televisions or laptops. For example, you may see an offer from your card that says “Interest free 12 month instalment plan” for a $10,000 plasma screen TV.

You might conclude that, when you buy the TV, the first instalment of around $833 is charged to your credit card. That is not how it works.

When you buy the TV, the whole $10,000 is charged to your credit card right away. If it is interest free, you are simply not paying the interest rate on this specific purchase. But the entirety of the purchase has been charged to the card, and counts toward your credit ceiling - that’s why you might find your card repeatedly declined after such a large purchase.

Also, remember that there is a minimum repayment sum. If the minimum repayment is three per cent of the amount owed, buying that TV raises the minimum repayment to at least $300 per month. You still need to pay this or face late charges.

7. Tactical versus Strategic Asset Allocation

Asset allocation refers to the way a portfolio is balanced. If you have a financial advisor or wealth manager, this is often done for you. The allocation is often described to you in simplified terms (e.g. 10 per cent cash, 60 per cent shares, 30 per cent bonds).

Strategic asset allocation usually refers to a long term, buy-and-hold strategy. These principles require portfolios that are tweaked periodically, often every six months (but this can vary).

Sometimes however, you may hear the term tactical asset allocation. The technical sounding term is sometimes used to avoid alarming you, along with the term “actively managed”. Make no mistake, it refers - to a limited degree - to market timing. That is, the risky process of trying to guess market movements, in order to buy low and sell high.

Some salespeople know that concepts can be offputting to the risk averse, hence the use of the more obscure terminology. While it doesn’t immediately mean something bad or outrageously risky, be aware that tactical asset allocation reflects on active, more aggressive approaches.

This article was contributed by, Singapore’s leading personal finance comparison platform for credit cards and personal loans.

Tuesday, July 19, 2016

Pokemon Go - What Investors Can Learn From This Phenomenal Game

Pokemon Go
Are you a Pokemon fan? It doesn't really matter, but I am sure you've seen or heard about the latest mobile game craze, Pokemon Go! Currently available only in US, Australia and New Zealand. Fans from Asia got to wait a bit as the game was delayed its launch in the Asia. 

Pokemon Go has broken all sort of records in the US game app markets. It is free to download in iOS and Android phones and nicely blend in the real and virtual world for the fans (or players) to catch the pokemon creatures in "real life". It's kind of like fantasy comes true for the Pokemon fans. 

So, what has Pokemon Go got to do with investing? I think there are much we, retail investors can learn from this cultural phenomenon, here are my take :

1. Good thing takes time. Do you know long it takes for the creator, John Hanke to create this app? Not 1 year, not 5 years but 20 years. Yes, he started mapping the world of Pokemon since 1996, while he was still a student. Just like any investment, it takes time to bear the fruits, so be patience and have faith in your dream or investment, as long as you've done your home work. As the saying goes : time in the market is more important than timing the market. 

2. There is no need to re-invent the wheel. Do you know that the Augmented Reality game concept of Pokemon Go is not something new? Before Pokemon Go, there was Ingress, even though not as popular. Besides, the graphic and design of the pokemon looks average to me too. Just like in investing, there are enough strategy for the retail investors to adopt, there is no need to reinvent the wheel by coming up with brand new strategy. All roads lead to Rome, just find one or two that suit you.  

3. Luck is important! I believed no one, not even the creator, John Hanke has envisaged such a crazy success of his game. What can I say? I believed luck do play a part in everything. Just like in investing, you might have done your 101% research and homework in studying the stock(s), but at times, you still need a fair share of luck in turning it into an hit.     

Would you have a go on Pokemon Go when it is available here? For me, I am not a fan of games but will definitely give it a try just to have a first hand experience of this phenomenal craze. 

Oh! In case you are still really really have no clue of Pokemon Go, do yourself a favor by checking out the following video:


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