Silver’s Price at a 5-year Low

Silver bullion has always been a favorite of many investors because it’s relatively low price as compared to gold allows investors to buy silver at a fraction of the cost of gold bullion. Today, silver’s price has reached a 5-year low of USD14. In fact, this is the lowest price level last seen since the Great Financial crisis in 2009, thus representing a good window of opportunity to buy silver bullion in Singapore.

Is it a good time for wealth builders to buy silver bullion? If so, should wealth builders buy gold or silver bullion? My perspective is that even though prices of gold and silver are expected to continue to slide moderately in 2016 due to the surging strength of the US dollars and improving US economy, precious metals still offer a form of asset allocation for individual investor’s portfolio.

gold and silver

In my previous article on investing in silver, I had touched on the risks involved. One of the key reasons why silver bullion is not featured in many professional investors’ portfolios is because silver can be very volatile. It can surge more than 5 percent in one day and therefore, not many people can stomach this kind of volatility. In fact, silver reached its peak during 1980, valuing about $50 per ounce. 34 years later, it is languishing at less than $20 per ounce while gold has more than doubled in value since then.

Of course, with volatility, there are opportunities to make money but then again, the difficulty in predicting the direction of silver prices had deterred many investors from buying silver. With silver, you stand a higher chance of losing lots of money if you are not careful with the price volatility.

Indeed, there are many supporters for gold and there were huge demands for …

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How to be a better investor in 2016

During this festive season, I have thought deeply on my investment style and track records so far in 2015. While I did not make any major investment moves for the past three years, my personal finance is certainly in a better shape now as compared to 2010, the year I started this blog. Along the way, there were several intriguing investment ideas, new philosophies and key lessons that I have picked up from the various people that I have met. In view of this, I thought it is important to pen down my thoughts for more clarity.

SG Wealth Builder
SG Wealth Builder

Have you wondered why some people just keep winning in their stock investments while others lost huge sum of monies in stocks or fallen prey to silly gold scams which they never should have in the first place? Is it true that “the rich will become richer and the poor will become poorer”? I have come to realize that those who keep making money from the stock market are those who know how to read the game. In other words, they have the available tools and data that enable them to make informed decisions, thus allowing them to get ahead from the rest of the people.

Smart investors know that their potentials and abilities are limited, so they are willing to constantly invest in themselves to expand their knowledge and acquire new skills from proven investors. In some cases, they also join investment networks to leverage resources or share experiences. Very often, I am amazed that people are willing to spend years and even fork out ten of thousands to obtain tertiary education in the hope of achieving good careers and attractive salaries. Yet they don’t realize that schools don’t teach you how to make money and be an …

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Three important skills to succeed in life

As a young parent, I always believe in giving the best for my children. In this regard, my wife and I have been sending my daughter for enrichment classes with the view of developing her thinking, speaking and writing skills. These are the three skills one should possess in order to succeed in life, so we hope to give her a good start.

Contrary to what many people thought, being academically good does not mean you are well-equipped to achieve great things when you enter the workforce. I have seen many scholars who can think and write well but cannot speak confidently in public. Like-wise I have many ‘A’ list friends who can think fast and speak confidently but lack substance in their writing. Henceforth, my view is that it is important to lay a strong foundation for these three skills, starting from a young age. At the end of the day, even if my children did not achieve great things, at least I hope to mold resilient characters in them so that they can overcome obstacles in life.

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Thinking Skill

I have been sending my daughter to attend lessons at Clay Works Singapore in East Point Shopping Mall. The idea is to encourage her to think creatively and also to let her experience the fun of learning. In future, she would realize that studying for exams in Singapore is highly stressful and dull. So I want to sustain her interest in learning and instill in her that learning can be fun. The structured curriculum helps to develop her problem solving skill and unleash creative potential. More importantly, I want to boost her self confidence and self esteem upon seeing her own craft.

As a wealth builder, it is also important to think critically and not follow the herd mentality …

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How much have you lost investing in Tiger Airways IPO?

In November 2015, Singapore Airlines (SIA) made an offer to acquire the remaining 44.23% stake in Tiger Airways for SGD450 million. The takeover, if materialized, would mark a sorry end to the listed company, which has seen its stock price plummeted from $1.50 at initial public offering (IPO) in 2010 to a low of $0.245. SIA is offering to buy out the remaining shares at $0.41.

Investors who remain faithful with Tiger Airways since its initial listing must have lost a lot of money. Suffice to say, the offer by SIA is definitely not attractive enough but then again, the offer of $0.41 represents a premium to the price range it was trading ($0.29 to $0.40) prior to SIA’s offer. So investors who bought during the IPO high of $1.50 need to ask themselves whether is it realistic for Tiger Airways to turn around its fortune and increase its stock price.

Stock Market
SG Wealth Builder

Being a budget airline, Tiger Airways has been battling stiff competition within the region against formidable rivals like Jetstar Asia and Air Asia. In 2008-09, the company lost almost $50 million but things got better after it got listed in SGX, with the company clocking in profits of $28 million in 2010 and $40 million in 2011. Probably because of this, IPO investors got seduced and buy into the Tiger Airways’ story. What they would not realize is that subsequently for the next three years, the company would go on to clock in successive years of losses.

The case of no-frills travelling is certainly compelling but somehow, the management of Tiger Airways has no solution to address the competition from Qantas’s Jetstar and Malaysia’s Air Asia. This has probably caused investors to depress Tiger Airways stock to a low of $0.245. Against this backdrop, the average …

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Growing your CPF Retirement Fund (Part 2)

As a wealth builder, it is important to start compounding your CPF savings as early as possible when you are in your prime. This is because if you start early, the compound interests can work wonders for your retirement sum. When you reach 55 years old, your Special and/or Ordinary Accounts savings will be transferred to your Retirement Account to form your retirement sum. Your retirement sum can be used to join CPF LIFE or the Retirement Sum Scheme which provides you with a monthly payout of about 20 years.

After setting aside both the Full Retirement Sum or Basic Retirement Sum with sufficient property charge/pledge and the current MMS of $43,500, you can choose to withdraw​ the remaining cash balances in your Ordinary and Special Accounts, or continue to keep your savings in CPF to earn attractive interest.

For myself, I would be placed on the CPF LIFE scheme but when I saw the monthly payout for the Basic Retirement Sum (BRS), I almost fell off the chair. I mean what can you do with $700 per month? Thirty years down the road, with the onset of inflation, the diminishing purchasing power of money would mean that $700 would be equivalent to today’s $200. In today’s context, you definitely cannot survive in Singapore with a $200 monthly payout. Thus, in my point of view, this scheme is definitely not attractive for me. However, from January 2016, we will have one more option to choose from – Enhanced Retirement Sum.

Your monthly payout* for life from 65Retirement Account savings required at 55
If you own a property and choose to pledge your property.​​$660 – $720Basic Retirement Sum (BRS)

$80,500

​If you do not own a property or choose not to pledge your property.$1,220 – $1,320
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Growing your CPF Retirement Fund (Part 1)

A few weeks ago, I was pleasantly surprised to receive a letter from MINDEF informing me that I was eligible for the 3rd milestone of the NS HOME Awards and that they would credit $5000 into my CPF accounts ($3000 into my Ordinary account and $2000 into my Medisave account). Even more surprising was that due to the award, I have reached the Medisave Contribution Ceiling (MCC), which is currently $48,500. This caused the excess of the MCC to be transferred to my Special Account.

Many Singaporeans, including my wife, are clueless on what will happen to their Medisave accounts when the ceiling is reached. Many people also cannot appreciate the difference between the Medisave Minimum Sum (MMS) and MCC. Ignorance is certainly not blissful when it comes to managing your CPF retirement fund because if you are not given the right information, you may be misled by bloggers trying to stir up negative sentiments.

Before proceeding further, I think it is important to highlight the CPF schemes, especially for those who just started working. Every month, you and your employer will contribute to your CPF accounts which consist of Ordinary Account, Special Account and Medisave Account.

The current contribution rate totals 37%, with 20% deducted from your gross salary and 17% from your employer. Below diagram illustrates the functions of each CPF account:

CPF

Source: http://www.areyouready.sg

Medisave

In this article, I will focus more on Medisave and how it can play a part in our healthcare needs as well as retirement fund. Firstly, there is a maxi​​mum amount you can keep in your Medisave account and it is revised periodically to take inflation into account and expansions in the usage of Medisave. This limit (MCC) can be easily reached by mid-thirties if you have been gainfully employed for …

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BullionStar’s Bullion Savings Program

SG Wealth Builder is pleased to catch up with Luke Chua, Chief Operating Officer of BullionStar on their latest product offering – Bullion Savings Program. 

1) What are the key features of Bullion Savings Program? You can actually convert the grams in BSP to physical metals?

The key features of the BSP are that it allows customers to save and/or trade in precious metals. With the BSP, customers can buy BSP Grams of Gold, Silver or Platinum that is fully backed up by physical precious metals in BullionStar’s stock inventory. Grams in the Bullion Savings Program (BSP) are fully allocated physical precious metals. Our BSP Grams are available in Gold, Silver and Platinum for a low price premium and a low spread. This provides customers with a cost-efficient way to start saving in precious metals.

BSP Gold Grams can be converted in increments of 100 grams to 100 gram PAMP Gold Cast Bars. BSP Silver Grams can be converted in increments of 15,000 grams to 15 kg Heraeus Silver Bars. BSP Platinum Grams can be converted in increments of 1,000 grams to 1 kg Heraeus Platinum Bars. BSP Grams can be converted to physical bullion bars at any time or sold back to BullionStar at any time.

2) Fundamentally, what is the difference between BSP and the previous Vault Grams? 

Fundamentally, the BSP is superior to Vault Grams because customers are now able to convert the BSP grams into physical bullion bars in the above mentioned increments. This is the major difference to Vault Grams.

3) Any restrictions for foreigners residing in other countries? 

There are no restrictions whatsoever. Foreigners as well as companies and other entities are welcome to buy BSP Grams.

4) Is this the first-of-a-kind of bullion scheme in Singapore? To address the transparency concern, I

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Silver Market Review for 2015

Festive season is fast approaching and now is the time to buy gold or silver bullion as gifts for your loved ones! Before making a move, let’s take a look at the global market trend for bullion.

According to a report by Thomas Reuters, 2015 has been an intriguing year for silver as total supply is forecasted to fall by 3% from the previous year. This represented the weakest performance since 2002, when mine production fell by 2%.

There are a lot of head winds for the silver mine production and on top of this, scrap supply is expected to fall for the fourth consecutive year. Because of this, silver will face a physical shortfall for the third consecutive year. Nonetheless, this shortfall is mitigated by outflows from the ETFs and derivative exchange, thus softening the impact of supply shortage from the mine productions.

Interestingly, the deficit in the supply may not cause a spike in prices. This theory is vindicated by the performance of silver prices this year, which saw silver prices averaged US$15.91 per ounce, which was 18.3% lower than in the same period in 2014. Wealth builders have seized this window of opportunity to snap up silver on the cheap and this led silver bullion coin sales to reach record level in the third quarter of this year. The slide in prices has apparently triggered a massive surge in buying in the silver coin market, leading to an unexpected shortage of silver bullion coins among global mints.

In the midst of global shortage of silver coins, BullionStar is well stocked on the popular Silver Maples and Silver Eagles. With Christmas coming, BullionStar is running their best silver coins promotion.

Silver banner

Buy Silver Maples for only the spot price of silver + 16.9 % (≈spot + USD 2.39; …

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K1 Ventures announced capital reduction

Perhaps one of the most overlooked dividend stocks by wealth builders in Singapore, K1 Ventures announced capital distribution of 1.5 cents per share in October 2015 to reward shareholders. The objective of the proposed capital reduction is the maximisation of value, through the distribution of surplus cash to shareholders because the company will not be making any new investments and instead will focus on managing current portfolio. This is the second capital reduction for K1 Ventures since Dec 2007 and for each of the past 10 years, the company had announced dividends. 

In announcing the capital distribution, K1 Ventures also released a fantastic 1Q 2016, which saw a net profit of $87 million. Revenue was $89.3 million for the first quarter ended 30 September 2015 compared to $2.9 million in the prior year period driven by an increase in investment income from KUH, attributable to the receipt of a cash distribution of approximately $85.6 million. The balance sheet is also in great shape because net current assets is $144 million and there is no outstanding borrowing. After the disposal of Helm, K1 Ventures had finally become more “asset-lite” and not burden by the heavy borrowings. Cash-flow is also good, with the operating activities at $84 million and cash and equivalents at $135 million.

Stock Market
SG Wealth Builder

I have been tracking K1 Ventures for more than ten years and I must salute the CEO and Chairman, Steven Jay Green for his Midas touch and investment foresight. He was appointed to head the company in 2001, during the 9/11 terrorist attack. At a time when global investment appetite was extremely low, especially in the United States, he actually overhauled K1 Ventures’ investments to focus in the United States market. Some of the notable major investments included Helm, McMoran Exploration, Knowledge Universe Holdings …

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Choosing the best mortgage loan

The soaring SIBOR rates have created much havoc for many home owners as banks started to adjust upward their mortgage interest rates. I am one of those affected as my bank increased the interest by $200 per annual. More carnage is expected for the market as the Federal Reserve is expected to hike interest rates in a couple of weeks. Thankfully, my loan amount is not too big, so the impact of the upcoming Federal Reserve interest rate hike will be minimal. For many home owners, it is prudent to choose the best mortgage loan.

Incidentally, the lock-in period for my mortgage loan will end next month, so I am looking at refinancing or repricing my outstanding mortgage loan. Lets take a look at the important factors when choosing the best mortgage loan packages in the market. You won’t want to get ripped off by the banks.

My first consideration for a mortgage loan is actually the lock-in period. I am looking at 2-3 years of lock-in period because I aim to pay off my housing debt by then using my CPF savings. For the uninitiated, the term “lock-in” is a clause which restricts you from switching to another loan package.

So wealth builders should ask themselves how long they want to be restricted by the bank. Typical lock-in period can be 1 year to as long as 5 years. So make sure you don’t sell off your property within this lock-in period. Otherwise you would incur penalty fees from the bank.

Of course, one cannot ignore the all important interest rate when it comes to selecting the most competitive home loan package. Nowadays, things can be quite complicated as banks become innovative and peg the loan packages not just to the SIBOR rates. Recently both OCBC and DBS have …

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Rising US Dollar and Its Impact on Gold

Gold is often denominated and traded in US dollars, so a weak dollar will cause gold to be less expensive to buy. In addition, when US dollars devalue, investors will seek an alternative safe haven, such as gold, to store value. Loosely speaking, gold’s value is often correlated to the strength of the dollar. However, with the introduction of quantitative easing by the US government since 2008, I have always been puzzled that global inflation has not shot through the roof and purchasing power of the US dollar has not been diminished a single bit. In BullionStar’s website, I found my answer.

BullionStar explained that 80% of the global trade is still conducted in US dollars as businessmen still trust the stability of US government. In my opinion, a lot of credit must go to President Obama, who took over from his predecessor, George Bush, during the Great Financial Recession in 2009. Under Obama’s leadership, he helped to steer United States out of economic recession and in 2015, his hard work finally paid off. United States’ economy is finally showing sign of recovery and unemployment rate decreases substantially since last year. As a result. the value of US dollar rise for the past few months.

Bullionstar also pointed out that most commodities, such as oil and gold, are priced in US dollars. Thus, the recent drop in oil prices helped to boost US dollar value because of the increased purchasing power of dollar to buy oil. Inadvertently, because of the strengthening of the dollar, gold price is forced to retreat.

Gold and Silver

The last important point raised by BullionStar is that the US dollar has been long regarded as the world defacto reserve currency and many central banks hold US dollar as their foreign reserve holdings. US dollar’s supremacy has been challenged …

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What does being an accredited investor mean in Singapore

In the course of my blog adventure, I am privileged to meet people who shared with me their financial insights unselfishly. From them, I gleaned some knowledge on Singapore’s finance sector from the perspective of a retail investor. One of the important lessons I learned is what does being an accredited investor really means in Singapore.

Before you skip this article, take note that being an accredited investor is NOT about taking financial courses to qualify for investing in risky products. It’s about how much money you have in your bank and your earning income bracket. 

Singapore economy

Under Securities and Futures Act Paragraph 4A, an accredited investor means[This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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