The Dark Side of Loan-to-Value (LTV) ratio

Once again, this is an article that all existing home-owners and aspiring home-buyers should never miss. Many Singaporeans tend to focus on the interest rates offered in the market when shopping for home loans. However, the biggest nightmare for home-owners is not the rising interest rates. After all, even if the interest rate of your home loan did spike overnight, the monthly installment amount is not going to be catastrophically high. Instead, the scary thing about home loan is when you are faced with margin call due to the loan-to-value (LTV) ratio.

What is margin call? What is loan-to-value (LTV)? Why do they matter and how could they possibly lead to your financial downfall? Once again, I am putting a disclaimer that this article is not meant to be a financial advice. I am sharing this article based on my home-buying experiences. If you have any doubts, please seek advice from your property agent or financial adviser.

If you are using HDB loan to finance your property, then you can sleep well as you would not be subjected to margin calls. This is because HDB loan is a form of concessionary loan granted to Singapore citizens. Unlike banks, HDB would not force home-owners to top up the loan difference in the event that the value of the HDB flat plummeted.

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Invest in Jumbo Group?

2017 is a milestone year for Jumbo Group as the F&B outfit celebrates its 30th anniversary. Listed in SGX Catalist only in 2015, Jumbo counts sovereign wealth fund, Temasek Holdings and Osim founder, Ron Sim, among its major shareholders. Temasek Holdings has a stake of 1.24% while Ron Sim holds 10%. With such strong support from institutional investors, is Jumbo Group a safe bet for retail investors and is it worth the effort to invest in this counter?

Share performance

In my last article in December 2016, I wrote that the share price was on bullish form. Indeed, there was a minor bull run which saw Jumbo share price surging to a peak of $0.78 in February 2017. Subsequently, the shares went on a correction mode and tumbled to a low of $0.54. It was only in recent weeks that the share price recovered to $0.60 level.

Despite its share performance, I like the growth story of Jumbo Group. The revenue had been growing consistently from $87.6 million in FY2012 to $136 million in FY2016, demonstrating management’s track record in growing the company. For the 9 months ending in FY2017, the revenue amounted to $106 million. Based on projection, it is likely that total revenue for FY2017 would surpass the previous years.

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Lending money to yourself through insurance loan

Do you need cash? It may sound odd but you can lend money to yourself. Life insurance loan allows you to do so. Before you dismiss this as yet another click-bait article, I want you to keep an open mind and read on. Because this strategy may be extremely useful in your wealth building journey.

In various stages of life, we may face cash flow problems. Sometimes the money woe may be due to a loved one incurring unforeseen massive hospital bills due to an accident or it could be the purchase of a big-ticket item like a new house which requires substantial hard cash for down-payment and renovation expenses.

Whatever the case, we are likely to encounter phases of life whereby we may need some financial help. In this article, I would share how you can lend money to yourself through insurance loans.

As a general principle, I would not encourage readers to borrow unnecessarily. We should all live within our means. But recent events made me realize the vulnerability of many low-income families in Singapore. I read an article of a security guard who suffered from a massive heart attack and thereafter struggled to pay hospital bills amounting to a staggering $78,000.

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SPH retrenchments

Festive season is only two months away but for many SPH staff, there is nothing to look forward to nor cheer about this year. Within a month of taking over as the new CEO, Ng Yat Chung announced the shocking decision to accelerate the culling of 10% of its workforce. Originally, the 2016 plan was to carry out the lay-offs over two years. Now, the decision is to bite the bullet and complete the SPH retrenchments by end of this year.

The SPH retrenchments come at a time when the media giant is struggling big time to adapt to the disruptions brought forth by technology. In the latest full year financial report, SPH reported net profit of $350.1 million, 32% higher than last year. But upon delving deeper into the financial results, the performance of the core business (the media segment) was not so rosy after all.

Operating revenue declined 8.2% year-on-year to $1.03 billion. But of more alarm was that the media segment clocked in the worst performance among the business divisions for the operating revenue – a drop of 13%. In terms of profit, the media segment also registered a decrease of a whopping 42% to $114 million due to lower income from the advertisements.

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Eldershield defies logic?

In a couple of years, I am turning 40 and would be automatically enrolled in Eldershield. Launched in 2002, this national scheme is aimed at providing basic financial protection to Singaporeans who need long-term care. My late father was one of the beneficiaries of Eldershield payouts. Henceforth, in this article, I will share my views on this insurance policy.

According to the Ministry of Health’s website, it is estimated that 1 in 2 Singaporeans who are healthy at the age of 65 is at risk of having a long-term disability over their lifetime. However, not many Singaporeans are prepared for such a scenario. To meet this gap, ElderShield provides eligible policyholders a monthly cash payout for a period of time, in the event of suffering from severe disability.

ElderShield policyholders can choose to enrol in Eldershield 300 or 400. The former is for policyholders who joined between 2002 and 2007. The payout amount is $300 per month and duration is 5 years. My dad qualified for this plan back in 2005. Eldershield 400 is for policyholders who joined after 2007 and the payout amount is $400 with duration up to six years.


Enrolling in Eldershield is easy because by default you are automatically enrolled into the scheme unless you choose to opt out.

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Freehold or Leasehold Property?

One of the most often raised questions among property investors is whether to purchase a leasehold or freehold property in Singapore. While many would argue that freehold is definitely better than leasehold because of the perceived perpetual ownership, this argument may not hold water in Singapore due to the Land Acquisition Act.

In this article, I would share my views on freehold property in Singapore. Once again, I am putting a disclaimer that this article is not meant to be a form of financial nor legal advice. The content is produced to the best of my knowledge and research. If there are any factual errors, please feel free to let me know. I would be happy to amend my article.

Leasehold property

Generally, 99 years old leasehold property must be returned to the government upon expiry of lease. In March 2017, Minister for National Development, Lawrence Wong, highlighted specifically that all leasehold private and public housing will be returned to the state upon expiry. Due to land scarcity, the government needs to recover land to meet changing social needs.

Effectively, this means that home-owners will [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only.

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Superb form of Haw Par share price

For the longest time, home-grown multinational group, Haw Par share price had been in laggard form. Although the business fundamentals had been consistently good over the years, the share price had been hovering way below its Net Asset Value (NAV) of $12.00. But in 2017, Haw Par share price suddenly came to life and roar ahead to reach a record high of $12.28 recently.

Founded by the Aw brothers in the early 19th century, Haw Par is well-known for its Tiger Balm oilment products. However, the family business went through a tumultuous period in the 1970s when massive irregularities almost led to a spectacular collapse of the company. The government of Singapore had to intervene and pulled in the late Michael Fam to restore order.

Following the crisis, there was a three-way battle vying for the control of Haw Par between Hong Leong Group, Jack Chia Limited, and United Overseas Bank (UOB) headed by Wee Cho Yaw. In 1981, merger wizard Wee Cho Yaw emerged victory in the fight and the rest is history.

Under the brilliant leadership of Wee Cho Yaw, Haw Par grew from strength to strength and was transformed into a diversified conglomerate with operating business in healthcare, leisure, property and investments.

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SIA Engineering Company shares rocked by JP Morgan’s sale

On 4 October, SIA Engineering Company shares tumbled to 6-year low following news of JP Morgan’ sale. Share price fell in the early morning of trading to $3.15 before recovering to $3.20 level. In my opinion, the correction is long overdue as the business outlook for the MRO giant has considerably dimmed in recent years with the entry-into-service of new aircraft requiring much less maintenance works.

Financial results for 1Q2017/18 revealed that profit declined 82% to $36.2 million. The huge decline was because of the absence of divestment gain in last year (SIA Engineering divested 10% stake in Hong Kong Aero Engine Services Ltd (“HAESL”) to Rolls-Royce Overseas Holdings Limited (“RROH”) and Hong Kong Aircraft Engineering Company Limited (“HAECO”)).

However, even after excluding the impact of the divestment in the quarter ended 30 June 2016, profit for the current quarter of $36.2 million was $1.8 million or 4.7% lower. Revenue also remained flat, at $272.8 million. Although the results were not exactly that disappointing, they seemed to suggest that SIA Engineering business fundamentals might have peaked.

SIA Engineering

To be fair to the management, SIA Engineering had tried to engineer growth in view of the challenging operating environment. Last year, SIA Engineering began to [This is a premium article.

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What will happen to your CPF monies upon death?

Recently, my colleague passed away unexpectedly, leaving behind two young daughters and wife. His wife is a full-time housewife. In grieving his death, I wondered whether my family would be able to cope if I suffered the same fate. Like my late colleague, both of us are sole breadwinners. So, I can imagine the family’s financial concerns and the fundamental questions on the destiny of CPF monies upon death.

Most often, there are misconceptions on the distribution of CPF monies upon death. There were even false rumours that Medisave savings go to the government after death as they are not included in CPF Nominations. In this article, I will attempt to explain the framework and try to gain a better understanding of the system. Again, I must put a disclaimer that this article is not meant to be a legal nor financial advice. In case of any doubts, please seek advice from licensed professionals.

Upon death, you would want your loved ones to have access to your CPF savings. This is especially so if the family’s financial situation is not so ideal. You don’t want your family to undergo financial hardship after you passed on. Ultimately, how you plan your estate will determine the outcome.

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