What is an IPO?

By Team Wall Street Survivor

There are as many glorified tales of triumphant IPOs as there are devastating ones. Many companies’ entry into the public markets lead to their ultimate undoing. An initial public offering can be a great strategy for a business to grow, but it’s not for everyone. Fewer than 1,000 businesses a year are successful at IPOs!

What is an IPO?

An IPO is the first offer of a company’s stock on the public market. “Going public” is the sought-after destination of many emerging companies. Traditionally, the IPO has been used as a financing vehicle. Today, it’s a little more complex than that. An IPO can cost hundreds of thousands of dollars — and there’s no guarantee it’ll even become a reality.

Why Do Companies Go Public?

Going public exposes all kinds of vulnerabilities. Not only does it subject a company to new rules and regulations by various governing bodies, it also opens it up to the risk of takeover. A public company’s shares can be snapped up by anyone — even its competitors.

The heart of the matter is knowing when. Undertaking an IPO too early can have catastrophic effects on the future health of a business; waiting too long might allow a competitor to steal the thunder. Before deciding whether or not to issue an IPO, companies need to spend some time evaluating the big picture.

To learn more, head over to Wall Street Survivor.

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Mortgage Information and Networking Luncheon (August 1, 2015)

By Property Soul


Making A Smart Move For Your Mortgage
An Information and Networking Luncheon by Property Club Singapore


With the rising SIBOR rates hitting the home loan market, how would it affect homeowners? What precautions should property owners and investors take to cushion the impact of interest rate hike? How to make a strategic choice out of refinancing, repricing and restructuring? What are the legal implications that all borrowers should know when financing their properties?

Get first-hand updates and invaluable insights from experts in the industry. Join us at the luncheon with over 140 minutes for group discussion, peer-to-peer networking and visit at information booths.

Event Details

Date : August 1, 2015 (Sat)
Time : 10.00 a.m. – 2.00 p.m.
Venue: NTUC Centre


Introduction and ice-breaking
All attendees

Rising SIBOR: Are we entering a new era of interest rate hike?
Ms Audrey Goh, Senior Investment Strategist, Standard Chartered Bank

Property financing strategies: Prepayment, repricing or refinancing?
Mr Wayne Quek, Director, Home Loan Whiz

Group discussion: Housing loan scenario analyses
All attendees

Legal issues concerning property financing
Mr Rayney Wong, Lawyer, Vision Law LLC



Member: $35 (register by July 10), $45
Non-member: $65

1. Registration fee includes buffet lunch and a goodie bag from Standard Chartered Bank.

2. Seats are limited. Registration will be closed once function room reaches full capacity.


For members, please log in and register here.

For non-members, please register here.

You can sign up for Property Club Singapore membership now to enjoy all the member benefits.

Read more here:: Mortgage Information and Networking Luncheon (August 1, 2015)

Indonesia Switching its Economic Advisory Team

By Mireille Bisnaire

The Indonesian economy, now worth almost US$900 billion in nominal terms, has been among the world’s fastest-growing in recent years. However, economic growth has significantly declined and now stands at the lowest level in half a decade.

Indonesia’s main stock index has had its gains since President Joko Widodo’s election wiped out, with the IDX Composite at its lowest level in over a year. This trend has mainly been caused by disappointing corporate earnings and waning confidence in the president’s ability to bring about the quick change that was promised.

Vice President Jusuf Kalla says that problems are still caused by administrative snags, lack of progress on major construction projects, and inefficient distribution of budgeted funds. Additionally, Indonesia is only marginally successful in persuading foreign investors to fund projects which Indonesia cannot launch on it own, says Kalla.

Kalla acknowledges that the Indonesian economy is suffering. Therefore, it is a top priority of the president to speed up spending on stalled infrastructure projects. Such actions, it is hoped, will inject billions of dollars into the economy.

With falling global oil prices cutting into Indonesia’s oil-gas revenue, and tax collection so far coming up far short of targets, the government is also increasing its efforts to attract more foreign direct investment, says Kalla. This could prove profitable in the long-term.

According to Kalla, foreign companies “don’t need more incentives” to invest in Indonesia — a large population and low labor costs attract businesses and manufacturers. However, the government has to address old problems of improving infrastructure and access to electricity, acquiring permits for foreign workers and helping to clear land.

Especially the oil-gas industry is of vast importance to the resource-rich nation. Recently, however, exploration has come to a standstill and major projects by the likes of Chevron Corp. are only advancing slowly. Major oil companies have long argued that Indonesia lacks incentives to develop projects in the deep water and remote environments that are home to the nation’s largest remaining oil and gas fields.

The government’s primary goals to address those issues are studying new rules for cost recovery and ensuring legal certainty across industries, Kalla said. It is well-heard news then, that talks for Chevron’s US$12 billion, ultra-deepwater gas project are now moving forward after stalling in 2014.

Despite increasing efforts to attract more foreign direct investment (FDI), the president and his advisers remain ambivalent in efforts. The country is depending heavily on foreign help but does not want to risk stifling the rise of its own industries. In an effort to make his intentions clear, President Widodo recently boosted the local shipyards industry by banning the import of ships.

Whether recent efforts by the president will carry fruits or not, only the future can tell. For now, the pressures on Widodo are increasing. A cabinet shake-up, the president hopes, will help revitalize the struggling economy. Kalla declined to say when a cabinet shuffle would happen. However, advisers to Mr. Widodo, who took office last October, and members of his coalition said it could happen in July after the Islamic holy month of Ramadan.

An adviser to Mr. Widodo said a cabinet shuffle was expected to bring virtually all political parties into government, including Golkar, the nation’s third-largest party, which was once led by Kalla.

The post Indonesia Switching its Economic Advisory Team appeared first on InvestAsian.

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By Team Wall Street Survivor


Everyone has heard of the lottery winner that ends up squandering away their winnings. It’s a sad tale but it actually happens more than you would think. Financial experts claim that 70% of lottery winners go broke within 7 years.

Like Callie Rogers, who worked as a shop clerk earning $5.83 an hour before winning nearly $3 million in the National Lottery in 2003. She bought four huge homes, several new cars and a whole bunch of plastic surgery. By 2012 she had $60,000 left and had picked up work as a housekeeper.

Or Sharon Tirbass – a single mother on welfare who won nearly $11 million. Sharon splurged on a massive house, threw a ton of fancy parties and went on a bunch of exotic trips. Less than a decade later she was back riding the bus and working part-time.

The worst may be Evelyn Adams who won the lottery – not once, but twice! Adams won $5.4 million but apparently gambled it all away in Atlantic City and now lives in a trailer park.


There are tons more stories just like that out there – stories of lottery winners that burned bright and then burned out.

So…what exactly should you do if you win the lottery?

Winning the lottery is exciting and unexpected and crazy and there are so many things you are dying to do! Don’t do them. Just wait.

Most mistakes made by people who come into a life-changing windfall are made because they feel they have to do something…anything. This is simply incorrect. The money is an unexpected luxury that now affords you time. If you win the lottery, you shouldn’t change your routine. You should keep living as normal and over time, make it a point to get yourself educated – learn about finance.

There’s advice out there that will urge you to hire a team of financial professionals to help you.

Sure, they’ll help you. Help you right out of your money.

Why hire a team of people all looking to score a piece of your wealth? At the very least, make sure you don’t allow anyone to make decisions concerning your wealth without fully understanding what is transpiring. Educating yourself is so important. You want and need to know exactly what is happening, even (especially) if someone else is doing it for you.

Just park it in a savings account and don’t touch it. The one thing you can do, however, is pay off any debts you have, breathe that sigh of sweet relief, and then go back to not touching it.

You won the lottery and you want to shout it from the rooftop. Don’t do this. Actually, don’t tell anyone.

Seriously, zip it. Don’t tell a soul about the sudden windfall. Of course you will share it with your spouse, but it’s best to keep it from other family or friends. Once it becomes public knowledge, too many people will cozy right up to you and it will become both confusing and frustrating.

If you have the option to keep your name private as a lottery winner, do it. You don’t want your face plastered on the news giving every Tom, Dick and Harry in your town permission to approach you.


Open a trust. Put lottery winnings in there.

Fight the urge to write your name on that lottery ticket. This is going to go a long way towards helping you keep your win quiet. Lottery commissions will gladly publicize the identity of winners if you don’t take steps to fight it.

Hire an attorney who will open a blind trust in order to claim your winnings as an anonymous trustee. All communication should take place through your lawyer and no one will know who the winner is.

Don’t. Buy. A. House.

Please, please, please don’t do this. Don’t go and buy a house. There are people who win millions of dollars and then instantly go out and spend it all on a big fancy house.

Don’t forget, a house is a lifelong money sink. And if you spend millions on a house, you can expect the property taxes on that house to be a pretty penny as well.


This is actually where many lottery winners get tripped up. They spend all their money on the big house but then don’t have any money to handle the hefty upkeep that a giant mansion demands. Property taxes also go up every year so they just get more and more ornery as time passes.

Property taxes are going to be your downfall if you don’t think smart.


This is the meat-and-potatoes section because the choices you make in regards to investing your winnings is what will separate you from the other now-broke lottery winners.

It can be tempting to spend a lot of your windfall, but a $2,000 trinket here and a $5,000 purchase there adds up quickly.

Also remember that the amount that you win is quite variable. Not everyone is winning tens of millions of dollars. There are many lottery winners who win between $500,000 and $1.5 million. In the U.K. the upper bound on lottery winnings is about $20 million and no one has ever won that much.


The point is that a lottery win may not even be that much money in the grand scheme of things.

Think about it. If you hadn’t won the lottery, how much money would you have wanted to set aside for your retirement?

A conservative estimate might be $30k/year for every year after you turn 65. If you live to be 90 years old then you need to sock away $75,000. But why would you think you need less money in retirement than you did when you were working? Well, you suddenly have all this free time and studies actually show that people end up spending more in retirement than they did during their working years.

So you might end up needing $100-150k for retirement. Take a look at the lucky lottery winner in the photo above. That is nearly half of your winnings!

For a lottery winner it is super, super important to take care of that windfall.

Investing should be relatively simple because even a conservative dividend (2-4%) will yield you a good return, in the amount of absolute cash you gain. After all, 4% of a million dollars is $40,000. Not bad.

Let’s recap. So if you win a smaller amount of money in the lottery: it’s probably smart to invest all of it, collect the interest and just go about your life as normal. Avoid advertising so you can live in peace and allow the magic of compound interest to take sweet, sweet care of you.

To learn more, head on over to Wall Street Survivor.

The post YOU WON THE LOTTERY! But Now What? appeared first on Wall Street Survivor Blog.

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Economic Growth Superstars

By Team Wall Street Survivor

economic growth

There’s a lot of attention being paid towards the Euro area these days. With Greece on the brink of financial ruin the world’s eyes are turned to the old continent. Europe is an interconnected house of cards and the fear is that Greece’s fall in economic growth will cause the rest of the dominoes to tumble with her.

Europe is fighting a crisis and is seeing stagnant economic growth with growing concern that the entire continent might suffer from deflation for the next decade. Deflation occurs when inflation is negative meaning that prices are actually getting cheaper. This is not optimal because when deflation occurs people tend to put off purchases for later, figuring: “well, I’ll just wait to buy that LCD TV until the price goes down even further”. This means there’s less money in the system and as a result deflation tends to choke off growth in economies that are consumer-driven.

Europe seems to be stuck in quicksand…are there any countries that are the opposite? Which countries are likely to see growth in the next decade?

Let’s take a look.

Economic Growth in China

Ten years from now, (barring some unforeseen dramatic event) China will be as large as the U.S. economy. China has been a remarkable economic growth story over the last 15 years which has transformed the nation. It’s become a major world player. China is now the biggest export market for many parts of the world and the biggest source of imports as well.

economic growth

In the 30 years leading up to 2011, China had an average annual growth rate of 10.2%. Since then China has “slowed down” and only averages about 7.5% growth in GDP a year. Most economic watchdogs and organizations expect China to slow even further, with growth reaching 4% by 2025.

But remember, these are still extremely healthy numbers and China’s GDP today is about $9 trillion – half that of the U.S. And bigger than Germany, France and Italy combined.

The challenge for the Chinese will be how they develop the Renminbi, the Chinese currency, alongside the dollar. Will the Chinese RMB supplant the dollar? Will China continue to impose tight control on their currency?

Only time will tell.

Economic Growth in Mexico

The BRIC countries, Brazil, Russia, India and China were once touted as future economic powerhouses but barring China, the BRIC countries have largely failed to inspire.

Instead, Mexico is a country that seems to be firing on all cylinders.

Brazil and Mexico grew very similarly over the 90’s, following which Brazil benefited from a commodity-led boom. The game-changer: massive demand from China for commodities which boosted the Brazilian economy. Now Brazil is struggling.

On the Mexican side, the country is the third largest in terms of U.S. imports. China may be number 1 in terms of U.S. imports but that share is stabilizing while Mexico’s is on the rise. Mexico now produces more cars for the U.S. than Canada does. Given the close proximity to the U.S. it is easy to see how Mexico’s growth is tied to the U.S.

Mexico is also making the move up the value chain. While countries like Brazil rely on their natural advantage in commodities: items like sugarcane, cotton or soybeans, Mexico is preparing for a future in manufacturing.

The country has two positive factors in its favour. The first: as China grows, labor costs will grow with it – making Mexico a more attractive place for other countries to set up manufacturing businesses. Secondly, Mexico is already attracting high-value manufacturing such as aerospace which is high cost and capital intensive.

economic growth

With all these positives, economists expect Mexico to overtake Brazil by 2022.

Economic Growth in the Philippines

The Philippine economy is expected to grow an average of 6-7% over the next decade. This upbeat outlook combines well with the reform-minded government looking to crack down on corruption, improve the country’s infrastructure and the overall business environment.

Emerging economies have to contend with currency fluctuation risks to economic growth. As their currencies move against the dollar, investors often pull money out of these countries so as to invest in “safer” U.S. holdings. One way to counter that is to have lots of money in reserves, to buttress the outflow of capital when your currency fluctuates versus the dollar.

And that’s exactly what the Philippines have. With gross international reserves of nearly $80 billion, the South East Asian economy is sitting pretty.

economic growth

That’s not all. In 2013, for the first time in its history, Philippines received an “investment-grade” status from world-renowned rating agencies such as Standard & Poor’s. In fact, recently, Standard & Poor’s actually upgraded Philippines to just above-investment grade. This will definitely help the country attract the capital it needs to spur future growth.

While in the past the Philippines has been a bit of a laggard, growth looks to really take off in the next decade. Economists at the HIS forecast that the Southeast Asian nation can become of the top three economies by 2030 and that the Philippine economy will more than double by that time.

There you have it. Three countries that are expected to be economic-growth super stars over the next decade. China, Mexico and the Philippines are all ones to look out for in the next ten years. As an investor, it’s always good to diversify away from a purely U.S. portfolio and because international equities tend to outperform when the U.S. underperforms (meaning it is a good hedge) it may be a good idea to put some money aside to invest in these emerging economies.

Think about it!

To learn more, head over to Wall Street Survivor.

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Philippine Economy to Weather Interest Rate Hike

By Mireille Bisnaire

With a rise in US interest rates on the horizon, the Philippines is well positioned to withstand the shock resulting from such a move said Cesar Purisima, the country’s Finance Secretary.

Purisima admitted that there will likely be an initial “knee-jerk reaction” to the change of US monetary policy. Money will flee from emerging markets but after investors reassess the shock, the Philippines will stand out relative to other markets, Purism believes.

This is mainly thanks to the government’s efforts to reduce its dependence on foreign borrowing. Because of this, the Philippine economy is on a stronger footing, Purism said.

The Philippines’ external debt is at 15% of its gross domestic product, down from 30% in 2005. Additionally, the country has been able to post a current-account surplus for 13 consecutive years which has helped to bolster the foreign-exchange reserves of the nation.

In many ways, the Southeast Asian country is healthier than many other emerging-market economies. Last year, the Philippine economy grew 6.1%, making it one of the fastest-growing in Asia.

Consequently, the Philippine central bank has been able to follow a stable interest rate policy since September 2014, while many of its neighbors, such as Thailand and Indonesia, had to cut interest rates to stimulate growth.

Last Thursday, the central bank left its benchmark interest rate unchanged for a sixth straight meeting with the central bank saying there’s no need for stimulus.

The stable monetary policies of the Philippines has in turn supported its currency, the peso, which has only edged down 1% against the dollar so far this year — an impressive fact since the Dollar index has gained significantly since the beginning of this year.

Nonetheless, like most emerging markets, the Philippine economy has been hit by a slowdown in global trade.

However, despite the possibly marginal long-term effects, the uncertainty of the pending Federal Reserve rate increase has left its toll. Foreign investment flows into emerging-market stocks and bonds fell to $4.2 billion in June, the weakest month in 2015,

According to the Institute of International Finance. Philippine stocks and bonds experienced an outflow of $455 million in March, according to the IIF.

“Despite global headwinds, the Philippines has a solid outlook underpinned by strong fundamentals and a reformist government, making it well-placed to continue to outperform most of its EM peers,” said Bejoy Das Gupta, chief economist for Asia Pacific at the Institute of International Finance.

The post Philippine Economy to Weather Interest Rate Hike appeared first on InvestAsian.

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Investing Myths

By Team Wall Street Survivor

investing myths

Investing myths are plentiful. They’re out there, muddying the investment waters. The truth is that you really can take control of your financial future and you can do it quite well. Here are some of the most common myths surrounding stock market investing.

Investing requires advanced training and college degrees: MYTH.

While formal education is certainly beneficial, the stock market is constantly changing. We’re now able to invest in our own education by using online resources, reading books and doing our own intensive research into the industry and market. It’s not an exclusive club and you’re no less capable than the next person.

You get what you pay for: MYTH.

Financial sales-people would love to have you believe that your rate of return more than pays for the financial advice they provide. Sadly, statistics tend to show differently, no matter how convincing your broker may be. Eliminating the middle man can significantly increase the rate of return for many investors. Just make sure you fully understand what you are paying for and then decide if it is really worth it.

Pay-for-Performance: MYTH.

Mutual fund companies have been criticized for high fees without demonstrated performance. Especially once the fees are subtracted, performance isn’t always that impressive….some would even call it dismal. Don’t pay to play if the fund doesn’t perform.

Good Companies Automatically Make For Good Stock: MYTH.

A company may have a great product and a super charismatic CEO, but this says close to nothing about whether or not it’s worth investing in. Sometimes smoke and mirrors do a seamless job and a seemingly hot company may actually have no profitability. They may be covering up a business model that consumes, rather than generates, cash. It is important to always conduct proper analyses and verify the stock’s valuation before buying any stocks, because a good company can sometimes make a good product but a really bad investment.

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Chinese Home Prices Show Hope for Economy

By Reid K.

China’s National Bureau of Statistics reported a reverse in a declining trend of new home prices in China. Prices rose by 0.2% month-on-month – the first positive sign observed since April 2014. Data was from the 70 largest cities in China.

However, the prices of new homes year-on-year fell by 5.7% in May, although this decline was less steep than in previous months. In April, China saw a decrease in prices of 6.1%. In the month of May, Shanghai and Beijing saw a decrease in prices of 2.3%.

Out of all 70 cities, Shenzhen had the best performance. Prices in the city rose by 6.6% from April to May and also showed a second consecutive month of increase.

According to Reuters, investment in real estate slowed down in the first five months of 2015 to the lowest pace since May 2009. Besides Shenzhen, investment levels also remained high in lower-tier cities.

China is facing a challenging decline in its property market, representing a major threat to an economy where construction activity is so important. The nation’s economic growth slowed to a six-year low of 7% in the first quarter of 2015, which was mainly due to a decline in domestic and international consumption which persisted into the second quarter.

Some analysts say that the Chinese government needs to focus on strengthening its policies. China’s central bank took action in May by cutting interest rates to stimulate the market. This will enable banks to increase lending by reducing the amount of cash held in reserve.

According to Wee Lee, managing director and regional head of property research at BNP Paris, the market has reached the bottom already and will soon begin to show more positive signs. However, this recovery will be on two different speeds.

“What we see in the tier one and two cities is a recovery in volumes and prices are creeping up, but on the other hand, tier three and four cities, given the oversupply situation, are still at the bottom. We are not seeing prices dropping but we are seeing a floor after the government’s support to stimulate the market.”

China plans on investing in key sectors such as shantytown renovation, rural power infrastructure and urban transport in order to revive economic growth.

The post Chinese Home Prices Show Hope for Economy appeared first on InvestAsian.

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Housing Loans and CPF: Why you cannot retire at 60

SG Wealth Builder is pleased to form a partnership to syndicate articles from iCompareLoan Mortgage Consultants, a research focused independent mortgage broker based in Singapore. I share the same passion with Paul Ho, the editor of iCompareloan. He is passionate about helping people enhance their wealth through financial literacy and in making money work harder for them. We must understand that property can be your key to financial success – but only if you play the game right. To this end, mastery of knowledge is important in building the foundation. So join me in the Property Investment Series and start your wealth building journey as early as possible.

Central provident fund (CPF) was originally introduced in 1955 by the British Colonial authority to help workers save for their retirement. Over the years, CPF has developed many different uses. One of the main reasons these days for dipping into the CPF is to use their savings to buy an HDB flat or a private property.

CPF savings consistently makes up 30 to 40% of a person’s gross salary, this has provided much liquidity for property purchases and potentially one of the reasons for the inflated property prices.

Most people in Singapore would rely on CPF to fund all or part of their housing loan installment way into 65, 70, 75 years old.

The CPF savings is meant to enable contributors to have a secure retirement. However it could also be CPF that is hindering your retirement plans.

Can You Really Retire At 60 or 65?

When you think of retirement, most would conjure images of sitting back and relaxing, “doing things you enjoy”.

In fact most Singaporeans do not enjoy this luxury when they hit age 65.

With the rising cost of staying alive, it is common for Singaporeans to work beyond the official retirement age, especially if you have yet to pay off your home loan and expensive medical care.

And do not count on hoping to unlock all your savings with The Central Provident Fund (CPF) as there are withdrawal limits and other restrictions. (Reference 2)

Gold and Silver Bullion

Gold and Silver Bullion

Amount Credited into CPF Ordinary Account shrinks

Once you reach 60, the percentage of wages credited into your CPF ordinary account is reduced from 12% to 3.5%.

When you reach 65 years old, while you contribute 5% of your monthly wages to CPF, only 1% of your monthly wages gets credited into your ordinary account. (Table 1)

table 1

Table 1: Ministry of Finance, Singapore Budget 2015, New CPF Contribution and Allocation Rates from 1 January 2016 for Employees (Note: the Underlined figures are from 1st Jan 2016 onwards)

This compares to 12% for those in the age bracket “Above 55-60” (Table 1). This means that the inflow into your Ordinary Account shrinks over time, all else being equal. This would be a problem for those still servicing home loans and with tight finances.

Those falling into the bottom 20% percentile may be eligible for the Silver Support Scheme, which assists them with payouts of $300 to $750 quarterly starting around first quarter of 2016.

Money stuck in Medisave Account – Never to be seen?

As you age, a growing percentage of your CPF contributions goes into your Medisave Account – starting from age 55 (reference 2), which is allocated to meet your healthcare needs. For those 65 and above, 10.5% of your wages goes into your Medisave Account.

Do note that there are limits as to how much you can withdraw from Medisave.
This means that the savings in your Medisave Account are basically stuck and cannot be used to pay off your housing loans or for other emergencies.

There is a maximum to the savings in your Medisave account, which is known as the Medisave Contribution Ceiling (MCC), of $48,500. Amounts above the MCC will be automatically transferred to your Retirement account not Ordinary Account.

The MCC will be renamed as Basic Healthcare Sum (BHS) and rise to $49,800 with effect from 1 January 2016. The BHS will be held constant when you reach the age of 65.

Also, with effect from Jan 2016, the Medisave Minimum Sum (MMS) will be removed. CPF members do not need to meet the MMS of $43,500. (Source: CPF)

More Cash Payment needed for your Housing loan after 60 years old

Let us investigate whether there is any extra cash out-of-pocket for people as they grow older.

Scenario 1: Mr. Lim’s Property Purchase of 1.25m

Property Price : 1.25m
80% loan : 1m
Age of borrower : 35
Loan Tenure : 30 years
Salary : $7500
Interest rate : 2%, 3% and 4%
Assumption : CPF OA is emptied into installment servicing each month.

Note: CPF Contribution ceiling is $5000 in 2015, $6000 from 1 Jan 2016.

table 2

Table 2: CPF Contribution and Take Home Pay of a Person earning $7500 a month. (Source: CPF, iCompareLoan.com)

From the table 2, we can see that the biggest impact is when Mr. Lim reaches 60 years old. The Ordinary account crediting goes from $720 to $210. This is a drop of $510. This means that there would be a bigger cash outlay for installment. This would then easily cause hardship for lower income earners. However in this case, the impact seems to be manageable provided that the person continues to be employed at $7500 a month. In fact, as if to mask the issues, the take home pay actually increases. Hence it is important to take a look at the net pay. (Table 3)

table 3

Table 3: Net Pay after paying for Installment. (Source: CPF, iCompareLoan.com)

The net pay @ 2% interest rate drops from $3744 to $3564 when Mr. Lim reaches the age group 60 to 65. This drop causes some hardship, but may not be sufficient to cause distress. It becomes critical when interest rate reaches 4% when Mr. Lim is at age group of 60 to 65. Chart 1 illustrates the Net Pay at various mortgage interest rates versus age.

chart 1Chart 1: Net Pay of a person earning $7500 after factoring installment assuming all CPF OA is used for installment.

Hence a take home pay of $3564 (2% mortgage interest rate) in 30 years time @ 2% inflation will be equivalent to $1,967 in net present value.

And a take home pay of $3044 (3% mortgage interest rate) in 30 years time @ 3% inflation will be equivalent to $1254 in net present value.

As a general rule of thumb (with some exceptions) (reference 5), higher interest rates correspond to higher inflation.

Payouts from Retirement Account mitigate CPF Ordinary Account woes

For those who took up housing loan before 2013 and with tenures up to ages of 70 to 75, payout from the Retirement account which starts at 65 will slightly cushion your housing loan woes.

At 65, you can withdraw up to 20% of Retirement Account savings (includes first $5,000 withdrawn at age 55. (Reference 3, 4)
Those on the CPF LIFE Plan, a national annuity plan, would also have the option to receive monthly payouts when they hit 65, ranging from $650 to $1,900 (Reference 4) or opt to defer their payout start age up to 70. Deferring the payout start age will allow you to earn a higher interest rate of up to 7% for every year that the payout from CPF LIFE is deferred.


When Mr. Lim hits age group 60 to 65, he starts to see higher Cash outlay to pay for his housing loan due to the drop in CPF crediting into ordinary account. Though the reduction in net take home income is marginal, it is masking the issue of a reduction in incomes and over-funding of Medisave and other accounts. (Appendix A2)

As long as Mr. Lim continues to be employed at $7500 per month until age 65, he should still draw a decent net take home pay of $3564 @ 2% mortgage Interest rate, $3044 @ 3% mortgage interest rate or $2486 @ 4% mortgage interest rate and should be able to withstand a crisis.

However owing to inflation, the present value of his take home pay is small. Mr. Lim cannot hope to retire until he at least pays off his housing loan at 65 as his net take home income will be hardly enough. And he cannot afford to lose his job or get a reduction in pay or he will be in trouble.

While there is probably no immediate crisis within sight, the increased CPF contribution being locked up into Medisave account is worrisome coupled with the escalating medical fees which then empties the Medisave account. The Singapore government should really look at Singapore more as a country than as Singapore Inc., and allocate more resources to our underfunded healthcare system, which by and large are funded by us.

Can Singaporeans really retire at 60 or 65?

References: –

1. Ministry of Finance, Singapore Budget 2015, New CPF Contribution and Allocation Rates from 1 January 2016 for Employees (increases are underlined) http://www.singaporebudget.gov.sg/data/budget_2015/download/annexb1.pdf

2. Buying a Property – use up CPF before it vanishes into retirement account at 55, http://www.icompareloan.com/resources/buying-a-property-use-up-cpf-before-it-vanishes-into-retirement-account-at-55/

3. Source: Central Provident Fund, www.cpf.gov.sg

4. Based on estimates from the CPF LIFE Standard Plan as of April 2015, Source: Central Provident Fund, http://mycpf.cpf.gov.sg/Members/Gen-Info/CPFChanges/COS2015_CPF.htm

5. Mortgage Interest Rates – Key factors that impacts it, http://www.icompareloan.com/resources/mortgage-interest-rates-key-factors-that-impacts-it/

Notes: –

Definition of “Net Take home income” = Gross income – Employee CPF Contribution – Cash Outlay required for housing loan (after factoring CPF-OA being used)


A1. Installment matrix, (source: http://www.icompareloan.com/calculator/interest-rate-sensitivity-calculator)

A2. Chart 2, Total CPF Contribution of a person earning $7500. (Source, HDB, iCompareLoan.com)

What does iCompareLoan.com do?

www.iCompareLoan.com is a Loan Portal and a Mortgage & Loan broker, helping property buyers and home owners to get the best fit home loan and business owners obtain Business loans for business expansion.

Home Loan Report ™ is Singapore’s first Cloud based Home Loan Report ™ platform to be used by Property agents, financial advisors as well as other Mortgage brokers to prepare reports for their customers.

Home Loan Report ™ – Enterprise allows a property agent’s website to immediately add a loan section. Improve your Google Ranking, let’s viewers increase Time-on-site. Property or Finance sites that deployed Home Loan Report ™ – Enterprise loan section sees viewers stay on their site longer by between 30% to 350% after 4 to 8 weeks of installing the Embedded Loan Plugins.

About PAUL HO:

Paul holds an a B.Eng(Hons) Aberdeen University (UK) and a Masters of Business Administration (MBA) from a Macquarie Graduate School of Business (MGSM) Australia and has distinctions in finance and economics. He also serves as current President of Macquarie University Alumni Association of Singapore.

He is founder of www.iCompareLoan.com, his articles have been syndicated/featured on STproperty, iProperty, BTInvest, TheEdgeProperty, Propwise, Propquest and Yahoo amongst many other sites. He is passionate about helping people enhance their wealth and in making money work harder for them.

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Throwback Thursday: Rent or Buy?

By Team Wall Street Survivor

rent or buy?

As colossal life debates go, the rent-versus-buy one is a biggie. People guard the turf on either side of this divide with fierce conviction. The math is different in different local markets, as is the personal situation of every one wrestling with this question. There is no clear cut answer.

Which explains why confusion reigns.

So, should you keep renting or should you buy a home?

It depends…

Ultimately, the rent-versus-buy conundrum amounts to one of those multifaceted subjects whose consideration extends beyond hard numbers and facts and into the highly charged realm of the emotional and psychological. In other words, it’s not just an individual’s financial situation that will dictate on which side of the divide they should fall, but their personal situation, as well.

Given that complicated backdrop, a few key considerations rise to the top of this decision making process. Every one of them plays host to powerful arguments that could support either side.

Here are some of them:

The Down Payment

The down payment a home buyer puts on their purchase represents a massive upfront expense. How much you put down determines the amount of your mortgage. And while it’s possible to buy a house with a down payment as low as 3.5 percent of the house’s purchase price (that’s the minimum down payment requirement for an FHA loan), the requirement to engage with private mortgage insurance that’s associated with such an arrangement recommend you pony up at least 20 percent.

If you’re renting, on the other hand, your upfront fees — typically first and last months’ rent — are considerably less.

Ongoing Expenses

Once you own a home, the hits keep coming, your regular mortgage payment being the most significant.

Home owners argue loudly here that paying a mortgage amounts to a forced savings vehicle, and one that can take place outside of the long arm of governmental taxation. As long as the market is holding or rising, home owners are building equity and increasing their net worth with every bite out of their mortgage. Ultimately and ideally, your house represents a valuable asset that can be cashed in upon in the future.

But on the other side of the coin, detractors point to real estate data that equates the annual increase in real estate value to inflation, meaning it’s not much of a savings instrument, after all. And lots of studies indicate that a renter with decent savings discipline could actually end up wealthier than if they were a homeowner.

More than that, sometimes the cost of carrying your own home (principal, interest payments and property taxes) amounts to a wash when compared to the cost of renting. And there’s no question that renting is the sweeter option in a housing market in which sales have slowed but house prices have continued to creep upwards.

For those not satisfied with such seesaw calculations, consider the rent-versus-buy report that online residential real estate site Trulia conducts every six months. In its most recent report, the results — reflecting consideration of the 100 largest metro areas in the US, and assuming a 30-year fixed rate of 4.5 percent and conservative home price appreciation — suggest that owning a home is 38% cheaper than renting.

Other Costs

The purchase of a house comes with a multitude of costs. There are legal fees, commission fees, moving costs, utility adjustments, closing costs and land-transfer taxes. You might need to purchase a property survey or title insurance. And the list goes on. Some experts suggest that these transaction expenses, taken together, combine to a figure that hovers in the neighborhood of 10 percent of the house’s purchase price.

Then once you own the thing, the costs persist. Think: property taxes, maintenance costs, upkeep obligations, repair bills. When you rent a home, you’re pretty much just responsible for paying your rent. Someone else — the owner — has to cover its ongoing expenses. When something breaks in a house you own, the only one who’s going to fix it, and pay for the repair, is you.

Generally speaking, the older the home, the higher the maintenance costs are going to be. One rule of thumb suggests that maintenance costs will run between three and five percent of the home’s value per year. So a house worth $250,000 would cost about $10,000 a year, or $833 a month, to maintain.

rent or buy?

The Commitment

Renting is all about mobility and flexibility. If you’re a person who likes a frequent change of scene, renting frees you up to move around. And if you’ve got a job that requires occasional relocating, renting is likely the better bet.

A home owner is pretty tied down by his living arrangement. Buying a house is like having a dog: by making the commitment to ownership, you’re obliged to maintain its care.

The Intangibles

While money is undeniably among the biggest considerations in deciding whether to rent or buy, it shouldn’t be the only one. Indeed, all money talk aside, there’s no question of the psychological benefits of home ownership. Home owners get the pleasure of putting down roots and, what’s more, they enjoy complete control of their environment while doing so. And it’s hard to argue that it simply feels better to own the place in which you’re living than to have someone else — be it a landlord or the bank — own it.

Mind you, there’s also much to be said for the psychological boost a person gets from knowing they’re not responsible for repairing their busted refrigerator or re-shingling their leaking roof. Every home owner occasionally yearns for such a worry-free existence.

The Verdict

People say that when you grow up, you buy a home. Full stop. But just who are these “people”? And do they have your best interest at heart or are they just repeating what other “people” told them?

At the end of the day, there will never be a definitive answer to the rent-versus-buy dilemma.. The decision is complicated and personal. It involves much more than just running the numbers. There are significant emotional rewards and challenges associated with each alternative.

Whether you rent or own is, ultimately and at last, a matter of lifestyle, time of life, financial means and personal preference.

Do you rent or buy? Which one do you think is better? Let us know in the comments.

If you want to learn more, head on over to Wall Street Survivor.

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What Is Inflation?

By Team Wall Street Survivor

Simply put, inflation is an increase in prices of goods/services and the subsequent fall in the purchasing power of money.

So, if inflation is 1%, this means that we would need to spend 1% more to buy the exact same things we bought 12 months ago. This is why your grandfather was able to buy a can of coke for 5 cents. It’s also why he was probably happily getting paid around $0.75/hour.

How Do We Measure Inflation?

The most significant measures of inflation are the Consumer Prices Index (CPI) and the Retail Prices Index (RPI). They examine the prices of hundreds of things we commonly spend our money on. They look at things like bread, milk, gas, etc. and track how their prices have changed over time.

Inflation is arguably one of the most important issues in economics – it influences everything from the rate we pay on our mortgages to the level of pensions/benefits.

To learn more about inflation, head over to Wall Street Survivor.

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BoJ Making Efforts to Become More Transparent

By Mireille Bisnaire

The Bank of Japan (BoJ) announced that it is taking steps to improve the transparency in policy decision making at its meeting on Friday. It plans on releasing more information about is decisions through summaries of opinions from policy meetings every week.

Alvin Liew, a senior economist at United Overseas Bank in Singapore, believes that this is a much needed change.”Sometimes the minutes come a bit too late, in my view, to be of much use. This makes it more relevant, rather than the minutes coming out after another policy decision has been done.”

The BoJ also decided on reducing the number of meetings from the current 14 to 8, and to increase the number of economic outlook reports from 2 to 4. All of these decisions will put the BoJ more in line with the practices of other major central banks in the world, adding to transparency and enabling a better understanding of its policy making process.

Economic Policies Left Unchanged

The BoJ, however, plans on sticking to its massive stimulus program. The central bank has planned on increasing the Japanese market’s money supply at an annual pace of US$660 billion through purchases of risky assets and government bonds, in an 8 to 1 vote.

Haruhiko Kuroda, the BoJ’s governor, told the press that the Japanese economy is recovering moderately and its long term inflation expectations are appearing to rise. Indeed, expected GDP growth has been revised from an annualized 1.5% in the fourth quarter of 2014 to an annualized 3.9 % in the first quarter of 2015, showing a positive sign of expected recovery.

However, the Nikkei 225 seems to not have reacted much. The stock market kept on to a rise around 0.8% and the yen has been mostly unchanged against the US Dollar since the beginning of the year.

As for the monetary easing, Japan’s core inflation’s rise of 0.3% from a year earlier puts the BOJ in an inevitable position to step up the monetary easing.

“Despite higher wages, consumer spending has remained weak in Japan so far, well below the normal levels seen before last year’s sales tax hike. Meanwhile, inflation numbers are hovering around 0 percent. There is insufficient evidence to show that a wage-driven recovery in the domestic economy is already in place, or the demand-driven inflation is already building up. Moreover, exports’ growth has started to slow”, explained DBS Bank in a report.

However, not everyone thinks Japan should take its easing further. Nicholas Weindling, a fund manager at JP Morgan Asset Management, shared his concern about the world’s most aggressive Japanese monetary policy.

“I’m not quite sure why the BOJ would need to stimulate more, because as far as we can tell, the economy is getting better slowly”, he said. “Inflation is quite low, but it should tick up as you go the end of the year.”

Although Weindling shows disagreement in pushing easing measures in Japan, he still noted that, as the planned consumption tax hike in 2017 is approaching, there still might be a need to reconsider it.

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What Are Municipal Bonds?

By Team Wall Street Survivor

municipal bonds

If you aren’t already invested in municipal bonds, you should probably be making space in your portfolio for them. Like right away. Because they are awesome. Not only are they a good way to diversify, but municipal bonds are also a great way to receive income free from federal, state and local taxes. Ah, but you ask, “What the heck is a municipal bond?”

What…Are They?

Municipal bonds, or munis as they are affectionately and cutely known, are bonds that have been issued by either the state, county or even city governments. The term municipality refers to a governing, ruling body – so munis can be issued by small, local governances. In the same way a large corporation like Pratt & Whitney can issue a corporate bond to finance the construction of their new warehouse, a municipality like California can issue a municipal bond to raise money for state projects such as highways, new schools or even hospitals.


That’s pretty neat, especially if you are the type of person to get passionate about a cause. Municipal bonds allow you to invest in a specific place or even a specific project. You can help those around you in your community and make money at the same time.

Different Kinds Of Munis

There are two types of munis; general obligation (GO) and revenue municipal bonds. General obligation bonds are guaranteed by the issuing municipality’s ability to tax its constituents. From tiny towns in the middle of nowheresville, USA to the biggest, most populous states, general obligation bonds run the whole gamut. These types of municipal bonds are often issued to pay for public works like schools or sewer systems. As a general rule, GO munis are considered to be safer than revenue munis.

General Obligation Munis

Going even further, there are actually two subcategories of GO bonds. There are Unlimited Tax General Obligation Bonds, and Limited Tax General Obligation Bonds.

Unlimited Tax GO bonds are guaranteed, i.e. they will pay out based on the power of their taxable base. It can use property taxes, sales taxes, etc. to repay the bonds.

Limited Tax GO bonds are slightly different. These have a more narrow taxing power. You might have a limited tax general obligation bond that is issued to build a new hospital in a tiny county. The people in that county might then agree to a 1% increase in the medical services tax for the next three years in order to pay off the debt. Thus you can see how the source of where the money is coming from – the taxable base – is much narrower than with an unlimited tax general obligation bond.

Revenue Municipal Bonds

Revenue municipal bonds, on the other hand, are issued by special state or local government entities, such as a utility company or a public transportation authority. They have to be issued by government agencies or funds that act like a business (i.e.: they have expenses and operating revenues). These bonds are unique in that the revenue generated by the specific project in question will be used to pay off bondholders.

So for example, if revenue bonds are being issued to finance the building of a YMCA or local gym, then the bondholders are paid back from all the revenue earned from gym member subscriptions. If revenue munis finance the construction of a toll bridge then the tolls earned from that bridge will pay back the bondholders.

Okay…Why Should I Buy Them?

Now you understand what municipal bonds are, here are the three main reasons why you want to buy them:

Munis give you tax-free income.

A major benefit of muni bond interest: it is free from federal taxes! Additionally, if you purchase a tax-exempt bond from the state you live in, then your investment is free from state taxes as well. When you earn interest from your savings account or dividend portfolio, that money is taxed as income. However, when you earn interest on a tax-free muni, you get to keep that sweet, sweet cash all to yourself. Ah…

They have relatively low risk.

Ok, so there’s no such thing as a free lunch. We all know that, and while no investment can be totally free from risk, municipal bonds are historically known to be less risky than stocks or corporate bonds. They have a lower default rate than corporate bonds, meaning you have a better chance of getting your money on-time and in full.

Astonishingly, since 1970 – a full 45 years – there has not been a single default on AAA-rated municipal bonds. In that same time period, only 0.01% of municipal bonds rated Aa (the second highest rating) have defaulted. In comparison their corporate bond counterparts have defaulted at a rate of 0.49% and 0.99% for AAA and Aa ratings respectively.

municipal bonds

So there you have it. Based on the historical data, municipal bonds are 50-100 times less likely to default than their corporate bond counterparts.

Not only that, but there are just more highly-rated munis out there than corporate bonds. 16 of the 50 states have AAA-credit ratings. By the end of 2009 only four companies in the S&P 500 were rated AAA.

They are great for diversification.

Diversification is good for a portfolio because it makes it more robust to shocks. The key to diversification is making sure not all your investments move together. If stocks go down, you want something else in your portfolio to be increasing in value so to as to mitigate the loss in equity. To that end, high-yield municipal bonds have historically had very low correlation to other asset classes. They behave differently to equities and government bonds making them very useful diversifiers.

municipal bonds


So to recap: munis are tax-exempt, excellent diversifiers for any portfolio and are relatively risk-free. Just to sweeten the pot, municipal bonds also have yields that are attractive relative to other fixed-income alternatives. The yield on the Barclays High-Yield Muni Index is actually higher than the yield on the Barclays U.S. Corporate High Yield Index.

There are a lot of good reasons to purchase municipal bonds, but as always, make sure you understand all the differences between all your investment opportunities before making any decisions.

To learn more, head over to Wall Street Survivor.

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7 tips to start stacking Silver coins or bars

Below is a piece of editorial from Gold Silver City, a bullion dealer based in Singapore which exempted investment grade precious metals from the goods and services tax (GST). Just like Gold Silver City, one of the the goals of SG Wealth Builder is to educate Singaporeans on the merits of owning gold and silver bullion as a means of wealth preservation.

If you are new to stacking and don’t have a clear concept on how to start, here are some tips here. I am no expert, there are many more experts out there preaching their advice. Be cautious though, as many advice can be confusing and not suitable for newbies. I learnt this the hardway. I started some years ago and learnt through the school of trials and errors:-

start stacking silver

The joy of seeing your wealth grow
  1. Start stacking silver with a clear budget. Know what amount of your disposable income you can afford to start stacking. Only use spare cash that you can afford, for example, how about reducing your entertainment expenses like that weekly drinking session? Or cut down on that expensive daily starbucks? Those small bills can pile up to be a good silver stack.
  2. Do not get carried away and over-stack. Start small, and do it regularly, along the principles of dollar cost averaging. Do NOT throw all your cash into silver. Keep some cash for unpredictable emergency needs. This is to avoid selling your silver at inappropriate timing when you badly need the cash.
  3. Diversify your investments for the future. Do not invest in silver. It is healthy to hold a good portion in precious metals, such as gold. Invest in stock index funds, some healthy insurance plans or pay off your mortgages and debts. Plan for the future.
  4. Especially for newbies, do not get overly excited and buy everything! Stick to regular buying. It would be better than to overindulge and exhaust your savings. Many newbies fall in love with this healthy habit so much that they overstretched themselves in the first few months.
  5. If you are fairly new, stay away from the fanciful stuff. Numismatic coins are lovely, but as a newbie, wait till you are familiar with mintage and designs first. If you really like a design, do some research and buy small. You may become more skilled at this and appreciate this hobby, but start slow and slow.
  6. Try not to buy from eBay, Craiglist, Carousell or some unknown guy from any forum. There are many bad sheeps and fraudsters around. Stick with some reputable online or physical shops. Take your time to shop around. You can google for a few shops. (Disclaimer I am vested with www.goldsilvercity.com.sg which offers free delivery and low premiums)
  7. Don’t be impatient. This is a great hobby that will grow with you for years. =)

Start Stacking silver. Start small and buy regularly, like once a week or month. Enjoy this beautiful and valuable hobby and you will be thankful when you retire!

Gold and Silver Bullion

Gold and Silver Bullion

Thailand is Feeling the Debt Burden

By Reid K.

Fitch Ratings says that Thailand’s high household debt remains a source of risk for the Southeast Asian nation’s economy.

Thai household debt accelerated rapidly between 2010 and 2013 in particular, mostly due to tax breaks on vehicle and housing purchases. More recently, growth in household lending has slowed to 6.5% for Thailand in 2014 from 18% in 2012.

Yet despite slower household credit growth over the past two years, household debt per GDP in Thailand remains among the highest in ASEAN at 86% at the end of 2014.

Fitch noted on the matter ”While the slowdown in household debt growth is positive, household leverage is likely to stay high in the short to medium term as consumer loan demand is unlikely to be materially below GDP”.

High leverage leaves households sensitive to macroeconomic weakness. With challenging headwinds coming from China as the world’s second biggest economy takes a pause, this risk is unlikely to end at least for some time.

Further asset quality deterioration is likely and will depend on the outlook for economic growth and unemployment, with lower-income households being more vulnerable.

According to Fitch, large commercial banks seem well-placed to weather any asset quality stress, due to their better-quality customer base, reasonable capital and asset quality buffers. However, escalating delinquencies, exposure of some institutions to vulnerable lower-income segments and weaker economic growth have the potential to seriously disrupt the banking sector.

It’s also important to note is that the faith of the Thai banking sector might no longer depend on the Thai economy alone. The US Federal Reserve decided to keep its zero interest rate policy unchanged on Wednesday, the 17th of June.

However, two rate rises of 25 basis points each before the end of this year, to bring the Fed rate to 0.75 per cent, are widely expected among market analysts.

Analysts have been warning for a long time that the Federal Reserve’s zero-interest policy, launched in 2008 and accompanied by massive money printing totaling $4 trillion, has seriously undermined the global economy.

Such policies have been unprecedented and it remains unknown how the markets will react once the Fed decides to normalize rates. The Fed too is vary of possible negative spill overs, hence the delay in the rate rise.

Thailand, as an emerging market economy, would not be exempt from possible financial shocks. Most certainly, higher US rates would induce capital outflows.

The Bank of Thailand has brought down its short-term rate to 1.5 per cent. For now, the goal is to hold a low rate and to keep the Thai Baht weak, in the hope that this will help stimulate the economy and boost exports.

However, with the Fed on the brink of raising rates for the first time since 2008, the Thai central bank will more likely than not have to follow along. This will only put more pressure on the Thai banking sector.

For now, brace for more tough times in the second half of this year when the effect of the recent drought on Thai farmers begins to spread. The third and fourth quarters of 2015 will most certainly be interesting.

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What Happens When A Government Defaults?

By Team Wall Street Survivor

government default

Greece is all over the news and not for any good reasons. The country that gave us Greek gods and spanakopita is currently embroiled in the midst of a financial crisis…and possibly a government default.

What’s Going on With Greece?

In 2009, the Greek budget deficit hit a crazy 12.7% of Gross Domestic Product (GDP), leading many to question the nation’s ability to pay back its debts. Many of the top ratings agencies, i.e.: Fitch, Moody’s, Standard & Poor’s, would eventually downgrade Greek government bonds to junk status. And when we say junk status we don’t mean it in an urban, hip sort of way. Their bonds were basically being branded as worthless.

Interest rates on government bonds sky-rocketed to the point where Greece could not afford to borrow any money. After being priced out of their own bond markets the Greek government had to request a bailout ($$$ please)….twice.

The problem: all that money they accepted came with strings, as is often the case.

The bailout funds from Europe came with some pretty harsh austerity conditions. They were basically being told to tighten their belts or to watch as their funding dried up.

This was fine, until a new Greek government came into power and essentially decided: well, no. We’ll do what we like. Thanks though.

And that’s how we find the Eurozone and Greece locked in a dangerous game of financial chicken. Each needs the other. Greece cannot continue without more bailout money. And if Greece collapses – what will that mean for the Euro area? If both parties continue down this road of brinkmanship, we might just find out.

The scariest scenario is a Greek default – a failure to pay a loan – which causes a domino effect across Europe. Remember, countries like Spain, Italy, Portugal and Ireland are in similar situations.

The question now becomes: what happens if Greece can’t pay back its loan? Have there been other countries that have defaulted before?


Nations have failed to meet their debt obligations on many occasions. As far back as the 1500s, King Philip of Spain defaulted on Spanish debt four times between 1557 and 1596.

In more modern times, there have also been numerous sovereign debt defaults. There would have been more, if not for similar bailout-style rescue packages.

In 1998 there were three separate default events. Between July and September of 1998, Venezuela, Russia and Ukraine were all unable to make good on their debt payments. Venezuela defaulted on $270 million worth of domestic currency bonds, and Ukraine needed to write off more than a billion dollars in debt – but in the summer of ’98 it was Russia that stole the show.

Russian Financial Crisis

The Russian financial crisis was precipitated by the Asian financial crisis in 1997 and exacerbated by further currency woes.

The Ruble was in the toilet. Russians were on strike and low oil prices meant Russian energy, so often the lifeblood of the economy, was worth less and less. Over $20 billion in bailout money was prepared by the IMF and World Bank – $5 billion of which was promptly stolen upon arrival in Russia.

The Russian government basically then issued a memo to their creditors saying something to the effect of “sorry guys, we won’t be paying you”.

Russia would go on to write off $72 billion in debt.

government default

If that seems impressive, just wait. We still have yet to talk about Argentina.

Argentine Financial Crisis: Biggest Government Default. Ever.

In December 2001, Argentina pulled off the largest sovereign debt default in history: nearly $83 billion.

The 2001 debt crisis had many instigating factors. Bad economic practices meant that Argentine government finances were in shambles way before the default ever happened. In the 80′s, Argentine economic policy was this: throw money at the problem and hope it goes away. Unsurprisingly debt levels soared during this period.

In 1983 democracy was restored. The new president installed austerity measures and a new currency (the austral) was born. All they were really doing was slapping a fresh coat of paint on a junky car, because this was immediately followed by the taking out of fresh loans to service old debts.

When commodity prices collapsed in 1986 it meant that the country was in deeper trouble. Wages fell by almost half and the government responded by raising prices on state-run services. As Argentines lost confidence in their government, inflation spiralled out of control – reaching 200% in July 1989.

That’s the Argentine backdrop as we enter the 90s.

Much of the 90s was spent trying to fight inflation. The high public debt hadn’t gone anywhere either. The IMF kept lending money to Argentina with abandon. Foreigners were eager to lend to Argentina, unaware of the real risk factors as credit reports overestimated Argentina’s strengths.

In 2001, disaster struck.

government default

The situation had simply been allowed to go on for far too long. The IMF had propped up Argentina, lending too much for too long a period of time. On December 20, 2001 Argentina defaulted on their debt. They owed private investors bonds with a value of $81.8 billion, $95 billion to the IMF and $6.3 billion to the Paris Club countries, an informal group of countries that lend money.

What Follows a Default Declaration?

A government default happens when a government is unable to make its debt payments.

But then what?

Well in Argentina’s case, you go to court.

Facing a huge debt burden Argentina insisted on asking its creditors for write-downs. They wanted all the debt to be wiped off the record. A clean slate. Easy.

Yeah, right.

After years of negotiations, Argentina elected to settle through the SEC (Securities and Exchange Commission) in order to settle with their private creditors. They hoped to reach a final settlement on the $81.8 billion in bonds, which by now had accrued $20.8 billion in interest.

In the end Argentina issued $35 billion in new bonds to private creditors in exchange for wiping out $62 billion of the debt. The interest was never addressed.

As recently as 2010, Argentina owed $29 billion in bonds and interest, and $6.3 billion to Paris Club countries. In 2010 Argentina entered another debt restructuring program in which they hoped to get write-offs and pay less than they owed. Private bondholders, of course, were livid.

So, you ask, what happens when governments default?

It becomes extremely hard for lenders to get their money back. Like, really hard. In the case of Argentina, you may spend a decade in courts – only to get cents on the dollar.

Sounds like fun times for Europe.

government default

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Japanese Economy Helped By Capital Spending

By Mireille Bisnaire

Japanese companies are increasing their spending on new capital assets as they observe brisk profits from replacing aging facilities and equipment, leading to more promising economic growth for Japan.

In the January-March quarter, Japan’s GDP rose by an annualized 3.9%, the highest number seen since the same quarter back in 2014 where growth had risen by 4.4% due to demand ahead of the sales tax hike implementation last April.

This growth is mainly due to active investments from Japanese companies, as Chief Cabinet Secretary Yoshihide Suga told a news conference on Monday. Companies are starting to increase their domestic capital spending.

Indeed, the number significantly rose from 0.4% to 2.7% on the quarter from preliminary data. Furthermore, the average age of Japanese companies’ domestic facilities has risen from 10 to 15 years between 1995 and now.

Preliminary data had undervalued capital spending figures by a considerable amount. A large number of these figures had to be adjusted upward in the revised data.

The numbers that were estimated in May 20 showed that Q1 would mark the first increase in four quarters, when it reality, revised data showed that this quarter was the third straight quarter of growth in corporate expenditures. Overall, revised data was changed from a 0.5% decrease to a 0.4% increase.

Businesses in Japan Have More Incentive

In the past few years, Japanese businesses did not have any incentives to renew their facilities. With contracting domestic demand, an ageing population combined, and a long economic slump, businesses had shied away from renovation.

However, with growing profits and a sustained weak yen, which has been one of Asia’s worst performing currencies, more and more companies find an advantage in replacing their facilities that have become uncompetitive.

This recovery can be best illustrated by the electronics industry, which is coming out of a restructuring period. Panasonic’s president Kazuhiro Tsuga said investments in domestic facilities for products that can be exported from Japan will be the number one priority for this fiscal year.

Panasonic plans to increase its capital spending both in Japan and abroad to 285 billion yen (($2.25 billion), representing an increase of 25%.

Toyota Motor is another example. It is looking to boost their global investment by 1.2% to 1.2 trillion yen in the fiscal year 2015. The global automaker plans to invest in both new assembly plants abroad and in existing domestic plants.

This capital spending boom has spilled over to industries other than the manufacturing sector. Mitsubishi Estate is planning on increasing their investment by 81% to 320 billion yen this fiscal year. The company wants to redevelop its domestic properties in Tokyo.

Statistics from the finance ministry shows that capital spending should outpace depreciation costs. Companies are starting to spend their cash that was accumulated during the deflation years, and are breaking their old habit of making minimal investments.

Is the Growth Enough? Is it Sustainable?

However, it must be asked: is this capital spending boom enough to really drive the economy? The answer to this is less clear. Indeed, a leading indicator showed that machinery orders for April-June are projected to decline by 7.4% on quarter.

Furthermore, the Economy Watchers Survey for May shows signs of unsteady economic conditions. According to the survey, the economic sentiment index is set to decline 0.3 points to 53.3. This is due to concerns about material prices rising against a weak yen.
There is a clear trend of companies investing with their abundant cash, but it still remains to be seen whether this will continue to have a significant impact on the Japanese economy. Growth prospects for other countries in Asia are still brighter and more certain.

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Chinese Shares Enter Correction Territory

By Liana Lie

Hong Kong – China’s main Shanghai Composite Index and the CSI300 both plunged by over 2% on Friday morning, falling by over 10% from their highs on the 12th of June and entering correction territory. The decline marks the first drop of over 10% since January of last year.

Investors sold stocks as Beijing begins cracking down on illegal margin trading, along with a new wave of IPOs across mainland China this week totaling around 6.7 trillion yuan (US$1.1 trillion). Margin trading is over three times as prominent in China than in the US.

The drop also comes a day after Janet Yellen indicated that the Federal Reserve will be slow in raising interest rates, highlighting investors’ concerns for the US, China and the rest of the global economy.

The Chinese stock market has had impressive gains this year and remains up over 45% year-to-date. The Shanghai Composite began 2015 standing at 3,234 points, and remains over 4,600 points as of Friday, June 19th.

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Indonesia’s Chance of Default Rises, Rupiah Weakens

By Mireille Bisnaire

Slowing economic growth, the rupiah at a 17-year low versus the dollar and accelerating inflation have all fueled concerns that foreign investors could pull out of Indonesia.

Subsequently, costs to insure Indonesia’s bonds against default have reached 2015 highs. Five-year credit default-swaps on the debt jumped 19 basis points to 180 since the beginning of June.

Foreign investors’ interest in Indonesian bonds has slowed significantly in recent months. The country is finding it increasingly difficult to sell its debt as investors have become cautious of parking their money in the archipelago — four of the last five sovereign auctions failed to meet their targets.

The country’s total foreign debt stands at US$298 billion, much of which is going toward financing large infrastructure projects, according to data from Bank Indonesia (BI). Foreign contributions stand now at 38.5% of the national debt, the highest ratio in Southeast Asia, which leaves the market vulnerable to outflows.

Most of the debt is due in more than a year’s time, sparing the country from risks of a liquidity crunch at least during the remaining quarters of 2015.

Indonesia Remains a Risky Investment for the Short Term

The Bank of Indonesia forecasts that Inflation will remain above 7% through September as the yearly occurring El Niño weather pattern awaits.

The rupiah has led the decline of ASEAN’S currencies falling to 13,385 a dollar, its weakest trading value since August 1998. 13.385 to a dollar is an important value. Foreign investors who pumped 46 trillion rupiah (US$3.4 billion) into Indonesian debt during January’s and February’s bond auctions, will start to incur losses on their investments below 13,400 a dollar according to PT Mandiri Sekuritas, a unit of the country’s largest lender.

The Bank of Indonesia truly is caught in a difficult place, for the rupiah’s descent to a 17-year low is limiting its scope to support the economy by cutting interest rates.

Lowering rates to stimulate a recovery seems impossible now, as the domestic currency’s response would be drastic. With a rising risk of a global currency war on the back of a mighty dollar rally, pressures on the central bank will only keep on mounting.

Based on optimistic predictions, the government has achieved 49% of its full-year bond sales target. However, as the Indonesian economy is taking a pause —the country’s GDP is predicted to continue to slow at 5.3%—, President Joko Widodo’s plan to boost tax revenue by 30% in 2015 is looking tough to meet.

Ergo, the issuance goal will very likely have to be raised during the second half of 2015, says Handy Yunianto, manager of fixed-income sales at Mandiri Sekuritas, Jakarta.

Furthermore, that prediction could be upset by El Niño. Indonesia, along with India, will be most harmed in Asia by the weather pattern as 18% of GDP is driven by agriculture, forestry and fisheries.

It seems likely that investors will keep demanding higher yields and could readjust their positions, at least going into the near future. Additionally, large supply pressures for investors will continue to exist going forward.

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Philippine Economy Slows, Businesses Remain Optimistic

By Mireille Bisnaire

With its lowest growth rate in three years, the Philippine economy suddenly got analysts’ attention. The economy grew by only 5.2 percent in the first quarter of this year, having previously been one of the fastest growing in the world.

During Q1, the gross domestic product (GDP) growth of the country was lower than the 5.6 growth recorded for the same period last year. It was also a significant decline from the 6.6 percent in the fourth quarter of 2014. It is the lowest since the 3.8 percent growth recorded in 2011.

Most importantly, the sudden decline came totally unexpected. The first quarter growth figure is “lower than what the government and the market expected for the period”, said Economic Planning Secretary Arsenio Balisacan.

According to Baliscan, recent decline in public construction and lack of public spending have slowed down the overall growth of the economy — government spending was 13% below the target. The drop in public construction spending was due to delays in some projects of government agencies. Growth in the private sector remains robust.

As the government’s disbursement performance for the first quarter showed an uptrend in government spending, it is hoped that Q1 will just be remembered as an outlier. “Higher government spending should fuel more activities in the private sector, which in return hopefully push economic growth in the next quarters of the year,” Balisacan said.

Further reasons to be hopeful about the next few quarters come from the latest business confidence index conducted by the country’s central bank. Next quarter’s confidence index climbed to 58.2 percent from 43.1 percent in the previous survey.

To complement the optimistic outlook from the business sector, consumer’s sentiment also improved. Balisacan believes this to be due high numbers of employed families, high job availability, expectations of stable price of commodities and the decline in oil prices.

Both the rising consumer sentiment and business confidence leave Balisacan confident that the country can still meet its full-year target of 7% to 8% as expected.

Some analysts, however, are less optimistic. Both the International Monetary Fund and the Asian Development Bank have already lowered their growth forecasts for the Philippines this year.

Nevertheless, even if the country ends up with below-target GDP growth for the whole year, the economy will still be one of the fastest growing in Asia. However, should the downward trend hold, analysts will become alarmed about the near-term prospects of the ASEAN economies.

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Investors Go Short on Singapore Stocks

By Reid K.

Stocks in Singapore are being shorted now more than ever in recent history as investors and speculators alike seek to gain from weak profits of companies exposed to China, which faces a sagging economy, and/or the energy sector which is suffering from low oil prices.

Although Singapore, unlike larger stock markets such as Hong Kong and the United States, has never been a haven for short sellers because of the Singapore Exchange’s (SGX) comparatively smaller size, the presence of short sellers surged in the first half of 2015.

According to data from Markit, a financial services firm based in the United Kingdom, the amount of short positions in the Singapore stock market increased by around 25% this year with almost 1.2% of companies’ free float shares out on loan compared with 0.9% in December of 2014.

Regional and Global Issues Spilling Over

The jump in shorting interest can be attributed to a slowing Chinese economy along with a decline in oil prices. Harsh statements from several different research firms toward Noble Group have also increased shorting interest.

Muddy Waters Research said that Noble Group “exists solely to borrow and burn cash,” leading to the company’s stock reaching an 18 month low. Iceberg Research issued its first report in February alleging that the firm had inflated asset values. Noble shares have fallen by around 40% since the beginning of 2015.

“Perhaps the short-selling in Hong Kong and China has influenced the Singapore market,” said Markit analyst Relte Stephen Schutte, noting that shorts have been primarily targeting companies that are under investigation over their accounting standards and corporate governance.

A recent example of a company shaken by investigations into their accounting practices is Hanergy in Hong Kong. “That could be filtering through into other APAC (Asia-Pacific) regions. It’s difficult to say where the SGX is going in the future.”

The Straits Times Index’s 30 largest stocks attracted more interest from short sellers than the SGX as a whole, with an average of 1.5% of their shares on loan – still a low number when compared with global standards. Businesses in the energy and manufacturing sectors were among the most popular for shorts.

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Lessons learned from a property investment trap

By Property Soul


I was in Jakarta when I saw an article on the front page of The Jakarta Post with the headline “Property firm deceives thousands of buyers” (May 27, 2015).

Another story of property investment scam

A property consulting firm known as PT Royal Premier Internasional marketed to the public investment opportunities of 12 complexes across Jakarta, Bali, Yogyakarta, Bandung in West Java and Tangerang in Banten.

The company bought condotels from developers with progressive payments but claimed that it owned those properties. By leveraging on a partnership with the reputable property agency Century 21, their investment opportunity gained a lot of credibility. Prospective buyers were also lured with attractive incentives by making one-off payment, including high return on investment and various gifts such as cash back and car prizes.

As in any high profile investment scheme that promises ultra-high returns, we all know what’s going to happen next: The company embezzled all the investment funds and the person-in-charge fled to Seoul. There were as many as 1,157 victims who lost a total of Rp 800 billion (S$80 million).

The police found that the company only paid around Rp 155 million (S$15.5 million) to the developers. The rest of the funds from the investors were spent on buying insurance, houses, land and vehicles.

What are the lessons learned?

This is not the first incident, and there will definitely be more to come. And it is almost impossible for any government to weed out all these property investment scams.

Every day potential property buyers and amateur investors are tempted by different investment offers. How can they tell which ones are real projects and who can be trusted?

Below are four invaluable lessons learned from this property investment trap in Indonesia.

Lesson #1: Look out for what’s underneath, not what they want to show you.

Is PT Royal Premier Internasional a trusted company? No one knows. But for three years it has a nice office at the prestigious Bakrie Tower, a grand 50-storey office tower which is a landmark in the heart of Jakarta’s prime CBD area.

So what? The infamous Brazil public housing project developer EcoHouse also opened its Singapore office at Suntec Tower Two in February 2013. It was closed 1 ½ years’ later when investors started legal proceedings to recover their investment funds. Even then the once high-profile developer still denied all accusations in front of the media. Barely three months later, it suspended all its global operations.

Look beyond what the developers and their marketing agents want you to see. Conduct due diligence before making any purchase decision.

What is the history, background and business profile of the company? Do those numbers in their recent years’ of financial statements look suspicious? Have they just started venturing into real estate? Any track record of building relevant property projects?

Lesson #2: Look into the developer, not the marketing agent.

Is Century 21 a reputable and trusted marketing agency? Definitely. Century 21 is the franchisor of the world’s largest residential real estate sales network, with presence in 74 countries comprising more than 100,000 property agents.

But when things turned sour, with the company director of PT Royal Premier Internasional still at large, the police summoned the management of Century 21 for investigations.

PT Royal Premier Internasional is not even a developer. And they don’t really have full ownership of the properties that they are selling. So why Century 21 didn’t raise the alarm but signed up as the exclusive marketing agent?

The property agency might not be in the know. Or their judgment might be clouded by the lucrative business opportunity, high profit margin or any vested interest.

Message to prospective investors: do the due diligence on the developer or the seller. Whoever marketing the project is irrelevant to the credibility and quality of the deal.

Lesson #3: Look for completed properties, not off-plan projects.

Is it safe to buy off-plan properties with progressive payments? My book No B.S. Guide to Property Investment has touched on the different types of risks involved in buying uncompleted projects.

I don’t like surprises in my investments. I prefer to buy resale properties because what you see is what you get; and what you pay is what you get.

The legal counselor in Bali advised buyers to ensure that the properties they intend to buy should have at least 20 percent constructed. But even projects with over 70 percent completion will still have the chance of being abandoned by the developers.

Prudent investors should make a trip to the actual site to check whether construction has already started. At least a significant portion of the project should be completed.

Singapore buyers are used to buying off-plan projects from local developers even before the latter started any foundation work. However, they must beware that once they buy overseas properties outside Singapore, they are no longer protected by the regulations of the Monetary Authority of Singapore.

With sky-high property prices and property buying restrictions at home, Singaporeans are looking overseas for cheaper alternatives. However, property investment is different from buying your own home. You can’t settle for less just because you can’t afford the better choices.

Lesson #4: Look at the deal itself, not the incentives.

Is high return or buyer incentive critical to attract buyers in a property project? How many of the 1,157 victims were drawn by the promise of high return, cash back and car prizes?

The US property fix-and-flip scheme by CTL Global promised a high return between 14.5 and 22.3 percent. Victims from Singapore claimed that except one month’s rental for a property, they never received the guaranteed return. Instead they received legal letters from the US asking them to pay up the outstanding mortgage or face foreclosure. Rather than getting cheques with high rental returns or flipping profits, they ended up sending cheques to save their properties.

The risk of ultra-high return investment schemes is that, once the company can’t deliver the promised return, they can only go bankrupt or go missing.

And do buyers know that they are actually the ones paying for all the incentives, cash subsidies and rebates they get from the developers?

As I was finishing this blog post, an email arrived at my mailbox. It read “Empty land for sale in Jakarta with the surroundings of offices, mall, apartments and industrial development. For more information, contact us at xxxxxxx”.

Oh no, not another one!

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How to be successful in your career

Throughout my career, I have always heard people claiming that they should have certain level of salaries or pay increments to justify the cost of living in Singapore. My stance has always been that we should first and foremost prove our values or worth to the organization in order to make that sort of demands to your employers. Simply telling your bosses that the inflation rate is much higher than your pay increment is not a valid reason for a higher pay check. Today, during lunchtime, my boss shared with me his insights on how to achieve career success.

Why do some people succeed in life?

Have you ever wondered why do some people able to climb up the corporate ladder faster than you despite them having much lower academic qualifications? Apparently, there is an unique trait that makes them stand out from the rest of the crowd and that is the ability to see challenges differently. Successful  people would strive to prove their merits to  their bosses before demanding his desired pay package. Most importantly, they view challenges as opportunities, rather than obstacles. This trait spurs them to achieve goals and drive them to work excellence. When faced with challenges or setbacks, instead of whining, they remain resilient and bounce back from failures.

Winners Vs Whiners

Successful people are considered “winners” in every organization because they are viewed as problem solvers, rainmakers or go-to guys. They make things happen and embrace failures as an inevitable process to improve themselves. Conversely, mediocre workers whine and complain whole day about their bosses and feel victimized over work issues. They also felt underpaid all the time and would only perform tasks which they felt they are employed to do. If you assign tasks beyond their so called designated work scope, they would reject them or show zero commitments to accomplish them. Instead of channeling their energy on solving problems for their bosses, they play office politics and try ways and means to divert the work. Thus, such people cannot be trusted to deliver on major projects. They are viewed as “whiners” and will not be promoted to carry heavy responsibilities in the organization.

Gold and Silver Bullion

Gold and Silver Bullion

Winning  the Game

Do you want to be a winner or loser? Winning the office game requires you to view challenges positively and learn from failures. Sometimes, in order to achieve career success, you are required to change your game plans, change your perspectives and perform tasks beyond your designated work scope. The secret behind successful people is that they view challenges as opportunities rather than obstacles. They also view failures as part and parcel of growing and learning. So be flexible and stay resilient.

Money will come to you automatically once you have proven your value to the company.

Magically yours,

SG Wealth Builder

5 Common Stock Market Investing Mistakes You Are Probably Making

By Team Wall Street Survivor

common investing mistakes

Whether you are a newbie or a veteran investor, there are five common stock market investing mistakes that you are most likely making. Without further ado:

1) Selling profitable stocks too early and trading losers too late – one of the biggest investing mistakes.

While this is a natural tendency, this strategy is really always the wrong one. Cut your losses early and allow your winners to continue generating profit.

2) Becoming obsessed with short-term market prices, volatility and trends.

While day traders must follow short-term volatility, most investors should not dwell on these issues. You risk losing your focus on safe stocks, investment portfolio diversification, and long-term market trends.

3) Making too many trades.

Another of many popular investing mistakes. Unless the excitement of trading is irresistible, you should follow the advice of most stock investing experts and limit your trades to those that advance your strategy.

4) Investing too much limited capital in initial trades.

Stock market investing basics stress that managing your capital (investment funds) is critical to long-term stock portfolio success.

5) Fighting the fact that “when you’re hot, you’re hot; and when you’re not, you’re not:”

The stock market game remains a galaxy of trends, moods, ebb, and flow. Like golf, poker, or any other activity, there are some days that you simply shouldn’t play. Fight the tendency to simply play harder—at these times, you’ll typically just lose more money.

It’s important to have a plan when investing. Of course, it is easier to list these five rules than it is to really follow them. These mistakes are made by experienced investors almost as often as they are by first time investors. However, there is no doubt that investors who are aware of these common mistakes are at a higher advantage and are more likely to meet their financial goals.

To learn more, head over to Wall Street Survivor.

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10 Famous Investment Quotes and What We Can Learn From Them

By Team Wall Street Survivor

Famous investors

At Wall Street Survivor, we’ve always been fans of using famous investment quotes to really hit home in our investing courses. The wise words of super-famous investors, beautifully wrapped up into perfectly concise sentences…famous investment quotes are pretty much where the stock market and poetry meet. We’re into it.

But when you really stop and think about it, these super-successful billionaire investing gurus have it pretty tough. They put in all that hard work over the years and suddenly people want, nay, expect you to give them the secret to your success – in ten words or less!

Fortunately, a lot of those successful investors seem happy to oblige. From Warren Buffett to Peter Lynch (with detours via the likes of Benjamin Franklin and Michael Jordan), here are 10 nuggets of investing wisdom, and what we can all learn from them.

Here are 10 famous investment quotes by famous investors that teach us famous lessons so we can hopefully one day be just as famous:

1. Sir John Templeton, investor and mutual-fund pioneer

“The four most dangerous words in investing are: ‘this time it’s different.’”

Click to tweet this quote

In the dot-com bubble of the late 1990s, people said it didn’t matter that most of the internet stocks had never come close to turning a profit: this was a ‘new economy’. Things were different. In the more recent real-estate boom, it didn’t matter that homes were overvalued: we were protected by those complicated derivatives that nobody really understood. Things were different.

The Lesson: Any time you hear that things are different this time, invest as if things are the same as they always were.

2. John D Rockefeller, the world’s richest man in the late 1800s

“The way to make money is to buy when blood is running in the streets.”

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It sounds pretty callous, but it’s true. Take a look at any stock chart over a long period, and you’ll see some pretty big dips. Those were obviously the best buying opportunities, but they were also the times when the experts were urging you to sell. It takes courage to buy when everyone else is running for the hills, but if you believe in the long-term fundamentals of the company involved, it’s the right thing to do.

The Lesson: Think long-term. If the long-term outlook is good, then temporary crises are just great buying opportunities.

3. Peter Lynch, successful Fidelity fund manager

“Know what you own, and know why you own it.”

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Some investors spend small fortunes on specialist newsletters in which someone else tells them what to buy. Others place their faith in stock tips from a neighbor, a friend, or a guy in a bar. Peter Lynch knew that successful investing was hard work, and that nobody else could do it for him. He studied companies in immense detail, only investing when he was sure he understood their business model and prospects completely.

The Lesson: Do the hard work, and trust your own research, not someone else’s opinion. To find out how to start emulating Peter Lynch, check out our Evaluating a Business course pack.

4. Warren Buffett, the ‘Sage of Omaha’

“Wide diversification is only required when investors do not understand what they are doing.”

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This is an interesting one, because it goes against most investing advice you’ll read. Newspapers and websites preach diversification, because it’s a safe investing style that works for most people. But Buffett didn’t get rich by diversifying. He made big calls on stocks he was super-confident about, and because he knew what he was doing, those calls paid off.

The Lesson: If you can honestly say that you understand exactly what you’re doing and what the risks are, take bolder positions on fewer stocks. If not, broad diversification is still the safest bet.

5. Paul Samuelson, Nobel Prize-winning economist

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”

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Most of the people quoted in this article got rich slowly. They took advantage of long-term growth, the compounding effect – things that are dull, but effective. When they’d bought a stock, they didn’t worry about every zig and zag of the price. They were thinking decades, not minutes.

The Lesson: Embrace dullness. If you really want to speculate on whims and hunches, do it with a limited amount of money that you can afford to lose (some people call this a ‘Mad Money’ account). Or use our stock market simulator.

6. Benjamin Franklin, Founding Father

“An investment in knowledge pays the best interest.”

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What’s better: doubling your money on a stock pick, or learning something that helps you make more money for the rest of your life? Clearly it’s the latter. The best investors don’t ever think of their education as complete – there’s always something new to learn. A good place to begin is our Getting Started in the Stock Market courses.

The Lesson: Before you invest in stocks or bonds, invest in yourself.

7. Benjamin Graham, pioneering value investor

“In the short run, the market is a voting machine, but in the long run it is a weighing machine.”

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Will the market go up or down today? It depends on the confidence of thousands of investors and traders (mostly institutional), which can shift from bullishness to panic in a heartbeat. Will the market go up or down over the next ten years? It depends on how much money companies make in that time. That’s what Graham was saying, and it’s a valuable lesson. Try to tune out the popularity contest, and focus on weighing the merits of each investment.

The Lesson: You can’t predict the short-term emotional ups and downs of the market, but you can assess long-term value, so invest based on that.

8. Jim Cramer, TV personality and former hedge-fund manager

“Every once in a while, the market does something so stupid it takes your breath away.”

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It’s easy to spot these moments of stupidity in hindsight, but not so easy at the time. As Graham said, the market is a voting machine in the short run, and sometimes voters make bad decisions (remember Dan Quayle?). So be prepared for the unexpected, and try to avoid getting caught up in either ‘irrational exuberance’ or panic.

The Lesson: Trust your own judgment, and don’t follow the herd when it seems to be running off a cliff.

9. Jack Bogle, Vanguard founder

“Don’t look for the needle in the haystack. Just buy the haystack!”

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This is the opposite of Warren Buffett’s advice. Which one to choose? It depends on an honest assessment of your own ability. If you think you can emulate Buffett’s knowledge, work ethic and stock-picking prowess, make a few big investment calls. For most people, however, Bogle’s advice works best. The market as a whole generally gives good long-term returns, so save yourself the stress and just buy an index fund.

The Lesson: It’s tough to beat the market, but just matching it will generally make you good money in the long run.

10. Basketball star Michael Jordan

Well, OK, this quote wasn’t originally about investing, but is definitely worth reading every time you get the urge to click the “Buy” button on a hot stock tip.

“The minute you get away from the fundamentals – whether it’s proper technique, work ethic, or mental preparation – the bottom can fall out of your game.”

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Want more famous investment quotes and teachings? Take some of the courses in our “Investing like the Greats” course pack to get some in depth knowledge into the strategies that these famous investors used to make fortunes.

Did we miss some of your favourite investment quotes? Throw ‘em in a comment below!

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How To Build A Portfolio

By Team Wall Street Survivor

A diversified portfolio will ultimately help you reach your investment goals, but exactly how do you get there?

You want to begin building your first stock portfolio and that’s great. We’re excited, and you should be too. But let’s first answer a few (pretty critical) questions.

The first thing to consider when building your portfolio is how much time you have to invest. This will be your investment horizon. The second thing to figure out is how able and how willing you are to take this risk. Before committing, ask yourself: “should the investment fail, which they often do, will it affect my current lifestyle? What about my psychological well-being?” This will determine your risk tolerance.

Once you’ve considered these things, you’ll have a stronger sense of which strategy is best-suited for you. You can then decide if you want to stick all your shiny, pretty gold eggs in one basket (by making an industry specific investment) or if you’re more comfortable spreading those babies thin (with a diversified investment).

There is No One-Size-Fits-All Approach

Different investment strategies work better for different types of people when building a portfolio. Just be sure to keep in mind that with the possibility of greater returns comes greater risk of losses.

To learn more about how to build a portfolio, head over to Wall Street Survivor.

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How to Choose Between a Fixed or Variable Rate

By Team Wall Street Survivor

fixed or variable rate

Have you ever wondered which one is better: a fixed or variable rate? You might think that a variable interest rate is the best option always, given that a variable interest rate is one that is variable, meaning that it can change over time.

A fixed interest rate, on the other hand, does not fluctuate over time. You’re locked in.

We often talk about variable and fixed interest rates when we talk about loans. A loan is a debt provided by one organization or individual towards another organization or individual. Generally in a loan, assets are reallocated between the lender and the borrower. So if tomorrow I woke up and felt like buying a car I could go to the bank or auto dealership and ask for a loan; $20,000 to buy a car. They might say no, but the point is I could ask. Likewise, I could wake up tomorrow and say to myself “I’d like to live in a house”, and go to the bank and ask for a mortgage loan, wherein I would borrow money to buy some property.

A loan is a form of debt instrument, or security.

A security in the world of finance is a financial instrument that is fungible, (one security can be replaced by another) negotiable and represents some sort of financial value.

The Main Culprit: Mortgages

In the event that my mortgage loan is passed, I’m now left with the task of paying back that $200 or 300k. A loan then, is when a borrower (me) receives or borrows some money (the principal) from the lender (the bank) and is required to pay back that money to the lender (the bank) at a later date.

I don’t just pay back an equal amount to the bank. For the privilege of borrowing that money I have to pay interest. The interest I pay on a loan is basically the fee I incur for “renting” the bank’s money.

The interest rates on the mortgage loan can take the form of a fixed or variable interest rate.

So I’ve made it to the bank. I know just the type of house I’d like to live in: 3 bedrooms, with a front yard and swings in the back yard. Modern, but also rustic. My loan officer informs me that I have to choose between a fixed or variable interest rate on my 25 year mortgage loan.

Look, a bank generally has two avenues from where it sources its money. One is from its clients. The other is the government. Investment banks may have other sources of capital but for simplicity’s sake let’s just use these two. When a bank gets money from the government it pays some sort of interest rate. They then turn around and charge consumers and potential home owners like me higher interest rates, making a profit of the difference.

fixed or variable rate

Economic Trends

Interest rates are always changing. In times when the economy is hurting, money is made available to banks by the government at very low rates. They do this in order to incentivize banks to make capital available to those that need it at cheap rates.

Now if this was the economic climate that day I walked into the bank looking for a mortgage loan it might make sense for me to take a fixed interest rate.

If the economy is roaring, and money is drying up then I might make a different choice. In this world, we are in the middle half to tail-end of the economic cycle. Interest rates are higher as there is less and less capital available. A 25-year mortgage loan is offered at 7.3%.


Wow. At that rate a $250,000 loan would cost me an extra $275,311 over 25 years. Were I to pick a fixed interest rate at this moment in time then I would be locked into that 7.3%. This could turn out to be a mistake. Given that we are in the middle to last part of the economic cycle I could conceivably expect interest rates to go down. If I picked a variable interest rate instead I would benefit when interest rates declined. I might pay 7.3% for the first year or two but that would steadily decline until I’m paying 5%, 4% or even 3.5%.

That makes a huge difference. Over 25 years a $250,000 loan would cost me $124, 452 in interest at 3.5%, nearly $150,000 less than at the higher interest rate.

On the other hand, if we’re making this decision at the beginning of the economic cycle and I’m presented with a 25 year mortgage rate of 2.7% then I might be inclined to take a fixed interest rate. At 2.7% over 25 years my $250,000 loan would only cost $93,490.


So really the answer to whether or not you should pick a variable or fixed interest rate is: it depends.

Back to the Future

Looking at history it would be easy to judge what you should have done. When interest rates are low and were about to shoot up, you would have picked a fixed rate and if interest rates were high you would either wait it out or pick a variable interest rate if you absolutely needed that house right that instant.

This is a simplistic explanation of a complicated topic but hopefully it shed some light. It is good to know that many academic studies have actually found that a borrower is likely to pay more interest when using a fixed rate loan versus a variable rate loan. Dr. Milevsky of York University examined mortgage interest rate data from 1950 to 2007 and found that choosing a variable interest rate loan would have saved would-be homeowners $20,000 over 15 years.

When making the decision between fixed or variable it is always important to consider the amortization period – the total length of time it will take you to pay the loan – as the longer the amortization period the greater impact changes in interest rates will have on you. A sudden change today will have ripples that permeate throughout the entirety of your contract.

To learn more, head over to Wall Street Survivor.

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Release of second half 2015 Government Land Sales (GLS) Programme

On 11 June 2015, the Singapore Government announced the second half 2015 (2H2015) Government Land Sales (GLS) Programme, which comprises 4 Confirmed List sites and 13 Reserve List sites. These sites can yield up to 7,825 private residential units, including 1,340 Executive Condominium (EC) units, and 277,580 sqm gross floor area (GFA) of commercial space.

Among the Confirmed List sites, Alexandra, Clementi and Siglap are expected to generate the most interest since they are located in matured estates. The Siglap site alone will generates about 750 units. Overall, the Confirmed List comprises 4 private residential sites (including 1 EC site) which can yield about 2,130 private residential units (including 520 EC units).

For the Reserve List, the Stirling site is bound to attract competitive bids from developers as it is located at the popular Queenstown area. The site can accomodate more than 1110 units. The Bedok South Avenue 3 site is also expected to generate interests among buyers as it is located near the Tanah Merah MRT and Bedok Town Centre. The Reserve List comprises 8 private residential sites (including 1 EC site), 2 commercial & residential sites, 2 commercial sites and 1 White site. These sites can yield about 5,695 private residential units as well as 275,580 sqm GFA of commercial space, mostly for office use.

The supply of private housing and commercial space from the GLS Programme, together with supply from projects in the pipeline, will be adequate to meet the demand for private housing and commercial space over the next few years.

There is an existing pipeline supply of about 84,000 private residential units (including ECs). So this release of land sales for private residential units might be a litmus test for developers. Given that buying interests among have cooled down under the current investment climate, developers would be cautious in bidding for the projects to develop.

Investors seeking to build their wealth through accumulation of real assets would be better off buying bullion instead of real estates in Singapore. Through the Addition Buyer Stamp Duties (ABSD), it is evident that the Singapore government does not encourage Singapore to make money from property investment. In fact, due to the scarcity of land in Singapore, the government’s stance has always been that real estate is meant for living and not investment purposes.

BullionStar CEO

In Singapore, you can buy gold and silver bullion from BullionStar, one of the largest bullion dealers based in Singapore which exempted investment grade precious metals from the goods and services tax (GST). Just like BullionStar, one of the the goals of SG Wealth Builder is to educate Singaporeans on the merits of owning gold and silver bullion as a means of wealth preservation.

Magically yours,

SG Wealth Builder

Texas building gold depository

Below is a piece of editorial from BullionStar, a bullion dealer based in Singapore which exempted investment grade precious metals from the goods and services tax (GST). Just like BullionStar, one of the the goals of SG Wealth Builder is to educate Singaporeans on the merits of owning gold and silver bullion as a means of wealth preservation.

I found this article about Texas building a state owned gold vault making the gold in it “non-confiscatable” very interesting.

To summarize, the US state of Texas signed a bill into law 12 June that will allow Texas to build a gold and silver bullion depository. Texas is furthermore planning to repatriate USD 1 billion worth of bullion from the Federal Reserve in New York upon completion of the depository.

It thus looks like the state government in Texas are losing faith in the ability of the Federal government and central bank to safekeep bullion.

Gold and Silver Bullion

Gold and Silver Bullion

The law specifically includes a provision stating that a purported confiscation, requisition, seizure or other attempt to control the ownership is void and of no force or effect!

It’s perhaps not strange that Texas politicians are concerned about the financial health of the federal government. What is surprising though is the brazen way of posturing and displaying it with this law basically stating that they will not allow the federal government to confiscate their gold.

If the vault materializes, this is a major step by a western state government to legitimize the importance of holding fully allocated, segregated metal in one own’s possession and may serve as a precedence for other states and to go the same way. This is of particular interest in a time when federal and supranational unions are trying to exert more power and can be viewed as a clear intent to resisting that trend.

SG Wealth Builder Email Interview with Co-Founder of FirstPropInvest.com

SG Wealth Builder is pleased to conduct an email interview with Myles Clement,  co-founder of FirstPropInvest.com, a property platform that connects Singapore investors to the UK property developers.

1) Congratulations on the launch of FirstPropInvest.com! Can you share with the readers what gap or problem is the platform addressing?

Thank you! Firstpropinvest.com was created to give Singaporean investors CHOICE when looking to invest in the UK. We saw there is a gap in the market to create a clear, simple, impartial, platform that brings investors the latest UK properties directly, with no heavy sales tactics as we are not agents. Currently only the medium to large developers can afford to market their developments out here at great cost. Why not allow everyone to be able to market to the Far East market, bringing greater transparency, more choice, and hopefully better value to the investor, as opposed to being sold what is launched on any given weekend. We feel investors aren’t being given the best options available to them within their budgets. You have worked hard to buy that investment property in the UK why not have a choice.

Logo with web address 2 (2)

2) Who is the target customers?
FirstPropInvest.com targets anyone who is interested in investing in property based in SE Asia, from the first time investor, to the professional investor with large portfolios already. We aim to create a service that is useful to all, and not just one specific type of investor. We want the platform to grow, so if investors want to buy in say Scotland, we will look to list developments in Scotland. FirstPropInvest.com is an investor and developer platform so we want to work with both to help grow the site.

3) How does the platform works?
It is simple. You simply go to Firstpropinvest.com for free, no login is required, search for a property within you desired budget and city, have a browse at the individual units buy price or yield, and if you like what you see and want to talk to someone in more detail about a particular property then click ‘enquire’. The investor then fills out some basic information, and clicks ‘send’. From this the developer or their sales team, will contact the investor directly.

4) What value-add features can investors expect from FirstPropInvest.com, in terms of legal advice, due diligence packs, etc?

Many investors forget that buying a property is not as easy as it seems, though it needn’t be stressful either. We have partnered with some of the best people in Singapore and the UK to help investors who have busy lifestyles. We offer introductions to mortgage brokers, Lawyers, Tax advisers, Fx brokers, due diligence companies and a property management/lettings and sales agent, we have exclusive partnerships with all. With regards to the Due diligence packs, we feel this is an excellent added value service we can offer a busy investor. If you are unsure a due diligence pack can be sought, giving you all the information you need on re-sale values, rental values and the current market conditions etc to help you. This is all done by an independent UK company that has no link to any of our developers. All our other partners on the platform will be working with us closely to send you the latest information direct to your inbox that may effect you or your investment, if you register here.

5) London is hot favorite property investment hotspot among Singaporeans. In today’s current climate, is it still a conducive place to invest?

I think London will always be a great place to invest, like anywhere it does go through cycles however, and nothing is guaranteed. What a lot of investors don’t realise is apart from the big glass towers, London has some fantastic cheaper smaller developments that may be a better investment. They never see these as it isn’t cost effective currently for a small developer to launch over here. One problem with London currently, is it has become expensive due to the current boom. FirstPropInvest.com has therefore listed developments in other cities such as Manchester that are a lot more affordable and the yields more attractive. Again FirstPropInvest.com aims to give you choice.

6) Can you share with the readers your team members’ background?
Myself, I have been involved in property since the age of 19, setting up my on commercial and residential investment company and working with HNW individuals, before moving to work with a private client building out their portfolio in central London. My co-founder has spent many years in the digital marketing industry in the UK, and is the technical side of the platform, his main focus is the marketing of the platform digitally. The rest of our business development team, have years of experience and knowledge sourcing properties across the UK.7) What are the safeguards that Singapore investors should look out for when buying overseas properties?

For me the main thing an investor needs to do is do their research and know your market. I hear too many stories of people walking into one of these launches to have a look and coming out having bought a property! This isn’t something you should take lightly. Look at the options, for instance, do I buy one property in London for 650k at a 5% yield, or do I spread my risk and buy 3 or 4 units for less than my London property, but with a higher yield in say Manchester? Ultimately like anything property is a risk, but if you are sensible it is a great investment.

Magically yours,
SG Wealth Builder