SG Wealth Builder

Gold price to surge to USD65,000 per ounce in 5 years?

July 2, 2016 sgwealthbuilder 1489 Views 0 Comments

Before Brexit took the world by storm last month, BullionStar boldly predicted that gold price will surge to USD65,000 per ounce in 5 years in one of their articles. To be frank, even though I am bullish on the long-term prospect of gold, it is difficult to envisage that gold price will reach such stratospheric level.

If gold really do reach USD65,000 per ounce, it would be approximately 48.5 times the present level. Those who have bought just one piece of the 1kg PAMP Gold Bar would become an instant millionaire. But then again, under such circumstances, inflation would probably be ultra-high, hence that one or two millions worth of fiat currencies would probably have limited purchasing value.

One important lesson that I have learnt from my years of financial blogging is that it does not matter whether BullionStar’s prediction is accurate or not. It only matters if you are prepared to build wealth with gold bullion. No analysts or economists can predict the future and there will always be endless debates who is right or wrong. At the end of the day, you have to ask yourself what actions have you taken in the course of your wealth journey to succeed financially.

Stocks

CSE Global Limited

July 1, 2016 sgwealthbuilder 1813 Views 0 Comments

CSE is a global integrator for software services specializing in the automation, telecommunications and environment sectors. CSE started life as a subsidiary of ST Group but after a successful management buy-out in 1997, CSE became a public listed company in 1999. After a series of acquisitions, CSE Global Limited evolved into an international technology firm with more than 30 offices across the globe.

Performance

For the first quarter of 2016, the group achieved $5.5 million profit after tax, a decrease of 20.9% year-on-year. This performance reflected the challenging weak economic sentiments in the industry sectors that the Group is operating in.

CSE is a key player in the offshore oil and gas sector, providing system services such as Supervisory Control and Data Acquisition (SCADA), process control and safety shutdown systems. Thus, the current down-turn in this sector has a significant impact on the Group’s business.

Business outlook is challenging as many of CSE’s client are cutting costs. As a result, CSE has a reduction of 23.8% new orders from continuing operations. The number of outstanding orders from continuing operations has also reduced by 28.9%.

In light of the challenging operating environment, CSE has managed to rein in operating expenses, which were 6.4% lower at $17.8 million as compared to previous year.

Gold; portfolio management

Devastating effect of Brexit

June 29, 2016 sgwealthbuilder 1934 Views 1 Comment

As one of the very few reserve currencies in the world, Britain’s Sterling pound is considered to be one of the most popular reserve currencies held by many central banks. Historically, Sterling is the third most widely held currency, after US dollar and Euro. Thus, one cannot ignore the devastating effect of Brexit on Sterling pound when it recently plummeted to historic low. Currently, Sterling is trading at a 31-year low and this led to a lot of fear in the market.

Market turmoil

The current turmoil stems from the massive drop in the Sterling pound which wiped off billions from the markets. Governments which hold Sterling pound as foreign currency reserves suffer huge losses. Many investors fled for safety and bought into Japanese yen, causing the yen to rise substantially. The upward swing results in Japanese exports becoming expensive overnight and potentially worsen the deflation condition in Japan economy.

The havoc in the currency markets may prompt central banks to take drastic actions before the situation manifests into global crisis of confidence. Some of the possible measures may include further interest rate cuts, stimulus packages to encourage spending or even negative interest rates, which Japan and several European countries have recently implemented.

Stocks

OCBC Bank

June 27, 2016 sgwealthbuilder 1460 Views 0 Comments

If you are a high net worth individual, you would certainly not want to take chances with your wealth. Usually wealthy individuals would choose private banking because of their specialized financial needs and the desire for discretion. In Singapore, there are many banks that offer private banking services and one of them is OCBC Bank’s private banking subsidiary – Bank of Singapore (BOS).

In my previous article, I touched on OCBC’s acquisition of Barclays Asia Wealth Management and highlighted it as a strategic move that allows OCBC to enhance its investment moat in the arena of private banking. Indeed, the real money to be made is actually from the rich and wealthy clients, not the mom-and-pop depositors.

Amidst the global economic downturn, OCBC reported strong results for 1Q16 private banking income. Operating profit from Global Consumer/Private Banking grew from $218 million to $253 million, an increase of year-on-year 16% for 1Q2016. This was OCBC’s best performing segment for 1Q16 and given the growing affluence of Asians, there are a lot of opportunities for growth in this banking niche.

In 2015, BOS was one of only 5 private banks in Asia to record more than 5% growth in assets under management (AUM).

Gold; silver

Brexit sparked explosive gold price surge

June 25, 2016 sgwealthbuilder 1709 Views 0 Comments

With the score-line at 0-0 nearing full-time, Brexit voters unleashed an unstoppable volley past the “Remain” goal-keeper and claimed an unexpected victory on 23 June 2016. UK has chartered into unfamiliar horizon. Government officials, analysts and economists were all dumbfounded by the results as most of them expected UK to remain part of European Union. In the midst of the chaotic situation, Brexit sparked an explosive gold price surge as expected.

Flight to Safety

At one point, when the Brexit was released, gold price stormed past USD1,300 per ounce as investors bolted to park their wealth in the safe haven amid carnage in the global currencies. Notably, Euro and sterling pound suffered record meltdown as investors flee for safety. Their concerns were not unfound as UK is the world fifth’s largest economy. Decoupling from European may have deep implications in terms of trade and military cooperation.

Whilst it is easy to argue that UK voters had let their emotions ruled their heads, it should be highlighted that the issue of immigration has always been sensitive in an open economy like UK. Many global leaders and analysts grossly underestimated that ground sentiments can swing the voting results, even though there are a lot at stake, in terms of political and economic stability.

Retirement

You’ll Never Walk Alone with Central Provident Fund

June 24, 2016 sgwealthbuilder 1697 Views 0 Comments

For many football fans, the song “You’ll Never Walk Alone” is synonymous with English football club, Liverpool. The song is the anthem of Liverpool and has inspired many great comebacks for the football club. Although glory days are clearly over for Liverpool, many fans still adore the club because of its great tradition and core values.

Indeed, values define who we are and guide us through good times and bad times. The Central Provident Fund (CPF) was implemented in 1955 by the British authorities with the aim of abolishing the pension schemes in Singapore and introducing a national saving scheme. The scheme requires employers and employees to contribute a portion of the employee’s monthly salary into their CPF accounts.

The intent of the CPF scheme was to instill among Singaporeans the value of hard work and saving for retirement. Each of us is responsible for growing our wealth and save for rainy days.

Over the years, the CPF scheme had gone through significant changes, especially during the eighties, when the late Mr Lee Kuan Yew was at the peak of his power. These changes were needed to cater for the growing aspirations of Singaporeans. As a result, CPF was expanded to include healthcare, housing and investment purposes.

Gold; portfolio management

How safe is your money in Singapore banks?

June 22, 2016 sgwealthbuilder 1751 Views 0 Comments

No bank is too big to fail and one question that every depositor may ask is how safe is our money in Singapore banks. During the Great Financial Crisis, Citigroup was on the brink of collapse before being rescued by the U.S government, which had to guarantee losses on more than US$300 billion worth of assets and injected US$20 billion into the troubled company. At that point of time, Citigroup’s share price was trading less than US$1, which was the historical record low for the bank.

Money Crisis

Fast forward today, Citigroup recovered from the crisis but is no longer the world’s largest bank in terms of assets. However, its share price has surged to close to US$50. Investors who bought the shares back then and held it till today would have made a fortune. But the point that I want to reiterate is that Citigroup was very close to being made bankrupt in 2008 and savers who put all their hard-earned savings in banks may have lost their monies overnight if the renowned bank collapsed unexpectedly.

Singapore Banks

In the aftermath of the financial crisis, people start to realize that the prospects of bank failures are real even in Singapore.

Stocks

SGX Hall of Shame

June 19, 2016 sgwealthbuilder 1838 Views 0 Comments

On 3 March 2016, Singapore bourse operator, SGX, included 41 listed companies into its infamous watch-list due to the implementation of the 20-cent Minimum Trading Price (MTP) rule. In all, there were 76 companies under the SGX watch-list, which was like the Hall of Shame.

To be part of this watch-list can be very embarrassing because it means that affected companies have to buck up and improve their financial performances. Otherwise, they may face the prospect of being delisted from the stock exchange.

The expansion of the watch-list to include companies failing to comply with the MTP rule had riled market players because this move essentially blurs the distinction between market quality and business fundamentals.

To be fair, even though a company’s share price is trading below 20 cents, it does not mean that the company has shaky business fundamentals. So to put those failing to meet the MTP with those companies with financial problems is deemed by many to be onerous.

To put things into perspective, the MTP rule was introduced in the aftermath of the penny stock crash in 2013. Many retail investors lost their pants after dabbling in Blumont, LionGold and Asiasons Capital. The three penny stocks surged to incredible levels within a short period of time and then dived spectacularly, prompting rumours of market manipulations by the Big Boys.

Career management

Record retrenchments in Singapore

June 17, 2016 sgwealthbuilder 1641 Views 1 Comment

On 13 June 2016, the Ministry of Manpower (MOM) announced a surge in the number of workers being made redundant. Overall, 4,710 workers were retrenched by their companies, representing a record level of retrenchments in Singapore for first quarter layoffs since 2009.

The MOM data is not surprising as it tallies with the ground situation for the employment landscape. In fact, there are many recent articles of Singaporeans struggling to find work after being given the retrenchment notices by their employers. Many of them are actually qualified professionals with many years of relevant working experiences in their industries. Hence, it is understandable that they feel bitter and resentful.

Being fired or retrenched from the workplace can be the worst thing that can happen to an employee, possibly even worse than been passed by for promotion. This is because losing your job is more than just losing your income, it can be extremely damaging to your self-worth and ego. Understandably, you may feel emotional and victimized. The “why me?” will definitely pop up in your head and you start to demonize your ex-bosses or colleagues. But as a wealth builder, you must pick yourself up quickly and move on from the self-pity stage.

Stocks

Neptune Orient Lines: End of another Singapore icon

June 15, 2016 sgwealthbuilder 1738 Views 0 Comments

In a month in which SGX-listed Haw Par Corp announced the closing of the Underwater World Singapore, Temasek Holdings tendered all their shares and paved the way for French giant, CMA CGM to take Neptune Orient Lines (NOL) private. This marked the end of another Singapore icon and highlighted how fragile the economy is right now.

The take-over offer for NOL is $1.30 and it is unconditional. According to the listing rule, NOL can be delisted once it obtains more than 90% of the shares. The offer is deemed by many to be fair given that NOL has been bleeding for several years due to the collapse of the Baltic Dry Index (BDI). Temasek Holdings had been looking for a white knight for NOL for quite some time and CMA CGM came to the rescue.

The downturn in the shipping industry took many players by surprise. After all, the BDI stormed to 11,000 level in 2007 and subsequent crashed to near 700 level with the arrival of the Great Financial Crisis. Nevertheless, the downturn turned out to be much longer than expected and its seems that Temasek Holdings, which is the parent company of NOL, decided to throw in the towel.

Money management; personal finance; relationship Parenting

Stroke of Calamity

June 9, 2016 sgwealthbuilder 1475 Views 0 Comments

Since 2013, I have written articles paying tribute to my late father during Father’s Day. This year will be no exception. Dad passed away at home after 20 years of struggle with a major stroke that resulted in him being half-paralysed. It was really a stroke of calamity for our family and the last 20 years were like “lost decades” for us. Dad had played a major role in shaping my values, character and life’s perspectives. I cannot claim to remember everything that he said but most of his important teachings still live in my heart. I hope that by walking down this memory lane, my children will appreciate and learn from his legacy.

As a child, I had very little opportunities to spend time with Dad because he was always working. In fact, he even worked on weekends because in the late 80s, there was a huge construction boom in Singapore. Dad was a self-employed lorry driver and business was thriving back then. He was a typical baby-boomer – hardworking, thrifty and disciplined. Every morning at six, he would wake up and had quick shower and breakfast. Then he would do some quick calculations using the Chinese abacus and then promptly left for work.

Gold; silver

Buy and store bullion in Singapore

June 7, 2016 sgwealthbuilder 2097 Views 4 Comments

Below is an email from one of my readers. I feel obliged to reply him because it is the first time that I received queries that touched on precious metals, a topic that I have a lot of interest in and am still learning. Through this sharing, I hope that there is a better understanding of precious metals among Singaporean investors.

Dear SG Wealth Builder,

I came cross your blog and enjoyed reading the articles. I am considering to buy gold and silver bars from dealers and also like to rent their vault storage facilities in Singapore. As such, I will be very grateful if you could help me by answering my questions stated below.

1. Do you have the list of licensed bullion dealers in Singapore?

To the best of my knowledge, based on information gathered from IE Singapore, there is no licensing requirements for the import and export of precious metals in Singapore. IE Singapore is the lead agency tasked to grow Singapore into a precious metal trading hub. Thus, this policy of not regulating bullion dealers make sense because Singapore government’s objective is to ensure a free flow of precious metals through Singapore without any hassle.

Actually, until a few years ago, I also shared the same thoughts that bullion dealers are regulated by Monetary Authority of Singapore until BullionStar revealed to me that bullion dealers don’t actually need a license to trade in Singapore.

Stocks

Mayday for Noble Group!

June 6, 2016 sgwealthbuilder 1917 Views 0 Comments

In the world of aviation, one of the most dreadful radio distress signals is “Mayday!”. When the pilot-in-command made this signal, he would be facing some emergency situations that might be potentially life threatening. On 4 June 2016, it certainly was Mayday for Noble Group when the company’ share price tumbled to its lowest since 2003 after the announcements of a rights issue to raise $500 million and the shock resignation of founder, Richard Elman. This latest episode marks another embarrassing chapter for Noble Group after it was kicked out of the benchmark Straits Times Index in March 2016.

Today, Noble Group’s share price tanked further when the commodity trader announced that the proceeds for the rights issue will be used for working capital instead of paying down its massive debt. Obviously, investors are not happy with the management’s move given that only 20% of the proceeds from rights issue will be used to pay for the net debt of $3.7 billion. Furthermore, the price of the rights issue is at a huge discount of 63% to its price of $0.30 at the date of announcement. As a result, many traders punished the share price and sent it tumbling by 13%.

Self improvement

The winning formula

June 3, 2016 sgwealthbuilder 1511 Views 0 Comments

Our ability to excel in life lies on whether we can constantly re-invent ourselves to continue playing the game. To achieve this, we need to keep learning new skills and knowledge in this new economy in order to position ourselves for success. Obviously to a certain extent, most of us yearn for career success but how many of us are willing to learn and earn? There is no secret winning formula as everyone has a different life path. But then again, successful wealth builders almost certainly share some common traits.

Receptive to new ideas

Even though you may be very experienced or have deep expertise in your job, you should always stay curious and be receptive to new ideas. In my job journey, I have come across many colleagues who are afraid of experimenting different approaches to resolve issues because they only believe in tried-and-tested methods. Because of their rigid mindsets, work productivity were often affected.

A few years ago when Singapore exempted Goods and Services Tax (GST) for investment-grade bullion, I asked a few fellow investment bloggers their main reasons for not buying gold and silver in Singapore. Most of them shared that they don’t believe in diversifying their wealth in gold and prefer to focus on Singapore shares.

Gold; silver

Record demand for silver in 2015

May 31, 2016 sgwealthbuilder 1982 Views 0 Comments

According to The Silver Institute, the silver market posted record demand in 2015, driven by new highs from demand of jewelry, coins and bars. Last year also saw the third consecutive annual silver market deficit of 129.8 million ounces, reflecting the continued strength in silver demand.

The data from The Silver Institute reveals a couple important trends that wealth builders should take note. Firstly, unlike gold, silver has very wide industrial applications. Thus, the majority of silver demand come from industrial fabrications for electronic devices, photography, solar and brazing alloys. In 2015, due to the weak global demand, the overall industrial demand declined from 611.2 million ounces in 2014 to 588.7 million ounces last year.

Interestingly, the data on investment demand for silver bars and coins reflected a contrasting picture in 2015. Silver coin and bar investment surged 24% to reach a feverish high of 292.3 million ounces as investors took the opportunity to buy silver on the cheap in the midst of market correction. This was the highest demand on record and overtook the previous high in 2013. The explosive demand from investors was a result of lower average annual silver price of USD15.68 per ounce. The low price of silver in 2015 was due to the slowdown of China and strengthening of US dollars.

Self improvement Trading

Falling from the peak

May 30, 2016 sgwealthbuilder 1420 Views 0 Comments

Borrowing a phrase from the Taiwanese, the late Mr Lee Kuan Yew described those Singaporeans born from the eighties onward as “The Strawberry Generation” because of the perceived lack of resilience. Indeed, compare to him, many Singaporeans don’t have the experience of living in the World War II period and thus do not understand what hardship really means. Due to this, we often lose the fighting spirit of our fore-fathers in overcoming life obstacles. This is especially so when we start falling from the peak of our lives.

Contrary to what most people thought, the difficult part of mountain climbing is not the ascending phase. It is actually the descending that is more treacherous because after reaching the top of the mountain, the climber would have expended all his energy and fatigue began to set in. He would not have put much thinking on the journey downward and because of this, he become complacent, which led to his downfall literally. In fact, statistics have shown that most climbers die on their way down the mountain, rather than on the way up.

Similar to our education system, you need years of training to build up your body stamina and fitness in order to scale the highest mountain.

Stocks

Falling knife for EZRA investors?

May 28, 2016 sgwealthbuilder 1511 Views 0 Comments

One of the victims of the global oil crisis, EZRA Holdings announced a set of terrible 2^nd quarter financial results on 14 April 2016. Losses after tax came in at USD282.6 million for 2^nd quarter and USD336.4 million for the first half of the financial year. This is a massive financial loss and there are not many companies in Singapore which can withstand this sort of impact. If EZRA investors are thinking of dollar-cost averaging and buying EZRA shares on the cheap, they need to be careful of catching a falling knife.

The company is actually biting the bullet for 2QFY2016 and realized the impairment losses from all front – loss-making joint ventures, losses on fixed assets and bad-debts. Given the depressing market conditions for the oil and gas industry, it is still unknown whether there is any more impairment to be made for EZRA Holdings further down the road.

Many investors thought that dollar-cost averaging is a good strategy to buy more shares at a lower price. But many of them don’t understand the difference between price and value. This technique, if applied wrongly, can cause massive wealth destruction to an investor’s portfolio, especially if the business fundamentals of the company are shaky.

Gold; currency

Record Negative Inflation for Singapore

May 26, 2016 sgwealthbuilder 1510 Views 0 Comments

On 23 May 2016, Singapore smashed the record for the longest streak of negative inflation, recording a stunning 18 consecutive months of declining Consumer Price Index CPI (all items). On a year-on-year basis, CPI (all items) for February 2016 was -0.8%. Is this a good development for Singapore and should wealth builders pop the champagne because things are going to be cheaper? This is certainly not the case because the data is disturbing and reveals dark sides of the economy that every Singaporean should take note.

The statistics on consumer price development track three data, namely CPI (all items), CPI-OOA which excludes rental from owner-occupied accommodation and MAS Core Inflation, which excludes the cost of accommodation and private transport costs. The top reasons for the negative CPI (all items) are due to declining housing prices, weaker Certificate of Entitlement (COE) premiums and slump in global oil prices. Together, these three factors drove CPI (all items) to 18 months of downward trend. The negative trend is expected to continue as Monetary Authority of Singapore (MAS) forecasted that CPI (all items) is projected to average -1.0 to 0.0% for the whole year.

On the other hand, MAS Core Inflation rose to 0.5% in February due to higher food inflation.

Property investment; Singapore market;

The Terrace Executive Condominium

May 24, 2016 sgwealthbuilder 1390 Views 0 Comments

Prior to our purchase, one of the questions that my wife and I had been thinking over and over again is whether it is worth buying The Terrace Executive Condominium (EC). We are certainly not buying for investment purposes but then again, as a wealth builder, you would want a home with potential to appreciate in value significantly over the long run. In Punggol and Sengkang residential areas, we shortlisted three ECs for consideration and they are The Vales, Bellewaters and The Terrace EC, which is known famously as “Venice of Punggol”.

In terms of location, The Vales is considered the best among the three because it is located within walking distance to the SengKang MRT. However, as an upgrader, we need to pay the resale levy for The Vales, hence this project is not an option for us. Then again, we also noted that virtually most of the good-facing units have been sold. Those remaining unsold are either road-facing or facing the nearby SengKang Hospital. To make things worse, the recently launched EC, Treasure Crest is located just beside The Vales. Thus, the residents of The Vales will have to put up with the incessant noise and dust pollutions for at least 3 years after moving into their new homes.

Stocks

SGX-listed stocks lack quality?

May 22, 2016 sgwealthbuilder 2169 Views 0 Comments

Almost a year ago, the Straits Times Index tanked from almost 3500 points to the current 2760 points. The fall in the Singapore stock market benchmark index reflects the challenging economic conditions and those who invested in SGX-listed stocks would have suffered from a certain level of wealth destruction. Incidentally, the market correction started since the previous SGX CEO, Magnus Bocker, was replaced by the current Loh Boon Chye. But the rot probably started during Bocker’s time and it would not be fair to blame the current CEO for this mess.

One thing for sure is that Bocker was highly unpopular during his helm as SGX’s chief because of his slew of projects that did not yield much improvements to Singapore market. The biggest flop definitely had to be the introduction of a new $250 million trading engine that promised to propel Singapore into Asia’s top trading centre. Instead, a massive technical fault in 2014 caused SGX to stop trading for at least 3 hours and left SGX red-faced. To make things worse, this embarrassing incident came after SGX tried to restore confidence following the penny stock crashes involving Blumont, LionGold and Asiasons.

The penny stock crashes in 2013 probably summed up the lack of quality in SGX-listed stocks.

Gold; portfolio management

Buy Gold, Now or Never?

May 21, 2016 sgwealthbuilder 1443 Views 0 Comments

When it comes to investing in gold, there is a need to understand the fundamentals and study the long term trend of the gold spot price movements. According to BullionStar, the global daily amount of gold mined is only 9 tonnes, yet the daily trading volume in London amounts to 5,500 tonnes. Why is this so and how does this affect the price of gold? Should wealth builders buy gold, now or never?

London is the heart of all the gold trading activities and is regarded as the world’s largest gold market. The market in London set the price for spot gold for the rest of the world to follow and London is also the home of London Bullion Market Association (LBMA), a renowned trade association known for setting the refining standards, trading documents and trading practices. Henceforth, the data concerning gold trading activities in London will provide insights on the value of gold moving forward.

Generally speaking, the supply and demand rule is not strictly applicable to physical gold. In fact, the total amount of gold mined will have limited effect on the price movements of gold because 95% of the gold traded in London is actually unallocated. This means that the trading instruments for gold in the London market are mostly not backed by physical gold.

Property investment; Singapore market;

Build wealth with property

May 18, 2016 sgwealthbuilder 2112 Views 0 Comments

There are a lot of online debates on how to build wealth with property. In my humble view, there is no absolute right or wrong answer for this topic because whether property is a wealth enhancer or value trap really depends on how you play the game. If you play your cards right, there is no doubt that property investment is one of your best tickets to financial freedom. However, if you don’t have a clear strategy on playing the property game, it can be your greatest financial nightmare.

One thing that readers must be clear is that property investment may not be suitable for everyone because every wealth builder’s financial needs, goals and profiles are different. As such, when it comes to building wealth from property, it is not possible for Singaporeans to adopt a blanket approach. The conventional wisdom is to wait for a financial crisis and expect housing prices to drop and then you go in for the kill as a bargain hunter. However, in today’s context, things are not so straightforward anymore.

To illustrate my point, I shall use my family’s real estate strategy and compare it with a working couple. Let’s assume that both my family and the working couple are presently living in a 3-room HDB flat and planning to purchase the next property.

Property investment; Singapore market;

The Terrace Executive Condominium (EC)

May 16, 2016 sgwealthbuilder 1935 Views 1 Comment

In one of my previous posts, I updated that I have recently purchased an Executive Condominium (EC), which is actually The Terrace at Edgedale Plains, Punggol Drive. In this article, I will touch on the motivating factors for my family’s purchase and also share with readers the buyer referral scheme offered by the developer of The Terrace Executive Condominium (EC).

HDB Resale Levy

In 2013, HDB announced that second-timers must pay a resale levy for new ECs launched on or after 9 December 2013. However, for land sale before 9 December 2013, applicants need not pay the resale levy. There is a list of ECs that HDB upgraders need not pay resale levy and it is found here. One of the motivating factors of my purchase of The Terrace EC is that this project is exempted from resale levy, which in my case, amounted to $45,000. If you have previously bought a new Design, Build and Sell Scheme (DBSS) or received a CPF Housing Grant, then you need to pay a resale levy when you purchase your next home.

Due to the fact that my family’s first subsidised flat was a 5-room flat, so we need to pay $45,000 for projects that come with resale levy.

Gold

Gold demand ignites price rally

May 13, 2016 sgwealthbuilder 2084 Views 0 Comments

According to World Gold Council, global demand for gold grew 21% to 1289.8 tonnes, the strongest Q1 on record. As gold demand ignites price rally, many investors are caught by surprise at the yellow metal best performance in 30 years.

The sudden change in the global economic and financial landscape has certainly caused investors to flee for security. Significant uncertainties stem from the sluggish economic growth and the Negative Interest Rate Policies (NIRP) implemented by Japan and European countries. Against this backdrop, many analysts anticipate that the pace of US interest rate increases is expected to slow down significantly. These factors combined to send gold price to rally by 17%, making gold one of the best performing assets in Q12016.

Among the key engine of growth is the astonishing come-back of gold-backed Exchange Traded Funds (ETFs), which saw an increase of 300% this quarter. This is indeed a revelation as it comes about after three years of straight outflow. While this type of scale is unlikely to be sustained for gold ETFs going forward, this trend reflects an improved outlook for gold.

Interestingly, the trend of gold bar and coins followed closely to that of the ETF market in Q1. Demand for bullion shot up by 55% year-on-year from 11.8 tonnes to 18.3 tonnes, representing 11% increase over 5 year average.

Money management; personal finance; relationship

Dying for retirement savings

May 12, 2016 sgwealthbuilder 1863 Views 0 Comments

In facing death, is retirement savings still important? During the recent Parliament sitting held on 9 May 2016, the Worker’s Party raised the possibility of increasing the $5000 cap on CPF Medical Grounds Scheme due to rising cost of living in Singapore. The Minister of Manpower Lim Swee Say rejected the proposal and claimed that he was “hesitant about introducing such a move”. I was truly disappointed with his response and felt that he totally missed the point.

Withdrawal of CPF based on Medical Grounds

You can apply to withdraw your CPF savings on medical grounds if you

are suffering from an illness which renders you permanently unfit from ever continuing in any employment; or
have a severely reduced lifespan; or
lack capacity within the meaning of Section 4 of the Mental Capacity Act (MCA) and the lack of capacity is likely to be permanent; or
are terminally ill.

You will be able to withdraw from your Ordinary, Special and Retirement Accounts, the higher of $5000 or savings after setting aside a reduced Retirement Sum in your Retirement Account. Minister Lim clarified in Parliament that the reduced retirement sum has been set at $40,300, which is half of the current basic retirement sum.

Property investment; Singapore market;

Right time to buy private properties now?

May 9, 2016 sgwealthbuilder 1751 Views 1 Comment

I just bought my first Executive Condominium (EC) last month. On looking back, it was truly an enlightening experience because I have learned a lot on the housing regulations and CPF-related ruling. Prior to this, my wife and I had visited many projects for the past 2 years and we were fairly clear on what we are getting. But what we didn’t expect was the whole slew of housing regulations that not many Singaporeans are aware of. In the next few articles, I will touch on regulatory matters relating to private properties. In this article, I will instead share my views on whether it is the right time to buy private property now.

According to data from URA, for the whole of 2015, prices for private residential properties fell by 3.7%, compared with 4.0% decline in 2014. Credit to the Singapore government, the Property Price Index witnessed a soft landing since 2013. Despite various cooling measures firmly entrenched, the property market did not crash but nonetheless, prices have declined from the stratospheric levels seen in the last few years.

Source: URA

One important trend to note for 2015 was the record vacancy rate of 8.0% since 2011. This trend is expected to continue given the huge supply glut of private residential properties for the next three years.

Stocks

Sheng Siong’ share price is rock solid

May 7, 2016 sgwealthbuilder 1808 Views 0 Comments

Sheng Siong Group announced its 1Q2016 results on 27 April 2016. Revenue increased 5.1% year-on-year to $208.5 million while net profit increased 16.8% year-on year to $16.4 million. Given that many SGX stocks had been heavily sold down since the start of the year, Sheng Siong’ share price remains rock solid in the face of poor market sentiments.

Under the current challenging business climate and government’s restriction on foreign labor employment, Sheng Siong’s latest results are impressive as they reflect management’s ability to control cost and improve margins.

I continue to like Sheng Siong for its debt free status and strong cash position. The group currently has cash pile of $113.9 million and operating cash flow remains healthy at positive $5.23 million, which is significantly lower than previous year of $12.8 million. This is because of the acquisition of property, plant and machinery.

In terms of growth expansion, the group is opening 4 new stores in 2Q2016. In addition, Sheng Siong had exercised the option to purchase premises at Block 209 New Upper Changi Road, for consideration of $53 million. I am pretty excited about this project because the traffic at Bedok interchange is very high, thus this store is very likely to increase revenue substantially for Sheng Siong.

Stocks

Epic fall of LionGold shares from $1.70 to $0.003

May 6, 2016 sgwealthbuilder 1418 Views 0 Comments

If you are one of those retail investors who had bought LionGold shares at the dizzying height of $1.70 per share and still holding on to them, you might as well write off the investments. After all, the shares are worth nothing and is now trading at $0.003. The epic fall of LionGold shares from $1.70 to $0.003 represented one of the most dramatic penny stock crashes in Singapore stock market.

LionGold, together with Asiasons and Blumont, were penny stocks but rose spectacularly to new highs from 2012 to 2013. The trio of stocks then went into a free fall at the same time, causing many retail investors to lose huge amount of monies. The huge swings of these stocks had led to speculations of foul plays. SGX, which takes on the role of both regulator and operator, was also blasted for late intervention and lax enforcement.

LionGold is a gold mining company with primary concessions in Australia and Ghana. Investors need to understand that investing in gold mining stocks is different to buying physical gold because the risks involved are inherently very different. Investors who bought LionGold shares and subsequently lost a fortune must have learnt this lesson a painful way.

personal finance

My dream for fellow Singaporeans

May 3, 2016 sgwealthbuilder 2342 Views 0 Comments

As SG Wealth Builder, my dream is for fellow Singaporeans to have an equal opportunity to build wealth. That is why I chose this name for my blog. Even though I don’t work in the financial sector, through my articles, I hope that readers can gain valuable insights and learn from my investment mistakes.

Building wealth is a journey and requires a person to have a correct mindset. There are finance bloggers out there who wrote that more money cannot buy you happiness. I certainly don’t dispute this wisdom but then again, being poor in Singapore will certainly make you unhappy and miserable. If you belonged to the lower income bracket, it is understandable that you feel stressed out and insecure just trying to make a reasonable standard of living here. I have being through that phase in life and can certainly relate to this sort of feeling.

One thing that I must qualify is that I have not achieved financial freedom, nor am I trying to preach to readers on how to live a life. In fact, I am still a struggling middle-class income earner. But I feel that if Singaporeans can step out and share our investment or financial mistakes, collectively, we can become a better wealth builders.

Stocks

Blockbuster dividend from K1 Ventures

May 1, 2016 sgwealthbuilder 1520 Views 0 Comments

While parent company Keppel Corp suffered from another week of attacks by short-sellers, its subsidiary K1 Ventures announced yet another blockbuster dividend of $0.09 per share to be paid out on 18 May 2016. In total, K1 Ventures has given out $0.30 per share dividends this year.

K1 Ventures is one of my favorite SGX stocks which I have been tracking for more than 10 years. It is the investment arm of Keppel Corp and its business objective is to invest in US companies with potential and hidden values. Over the years, it had made many notable exits like Helm Holding, MMR and China Auto Grand. From these divestment, K1 Ventures had rewarded shareholders with hundred of millions of dividend payouts. In fact, based on its dividend track records, K1 Ventures should be the best dividend stock in SGX.

I had made thousands of profits from investing in K1 Ventures but had recently sold off all my shares to purchase my new matrimonial home. Nonetheless, I hope readers can benefit from reading my blog and thus, is sharing my analysis on K1 Ventures (again).

Following an unsuccessful management buy-out in 2013, K1 Ventures has committed to managing its existing investments for eventual exits and returning the excess cash back to shareholders.

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