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Thursday, March 28, 2013

What are some of the things you would miss should you achieve financial independence and stop working FT one day?

Don't get me wrong. Much as I would love to be financial independent right now, I am nowhere near the target at the moment. It would be at least another 8 years to financial independence. So for those who have achieved financial independence, what are some of the things you would miss about working full-time?

The following are some of the things I would miss once I stopped working full-time:

1.) Social Interaction - A huge part of the my working lifestyle and as far as I can remember, it is probably one of the most valuable thing I have an impression of, even as I left the company. 
 
 
 
2.) Teamwork - Being part of the productive team, strong bonds that come with working with different people with different backgrounds. When there are issues or problems, we struggle and think together as a team.
 
 
 
3.) Access to credit - We generate active income as we work and that means that we can get access to loans and credits for the purpose of buying a property or applying for a credit card (not encouraged).
 
 
 
4.) Printing - I am not trying to sound cheapskate but I admit that I do not have a printing machine at home as I find that printer is one infuriating and expensive device. As such, I print most of my stuff at work, even if some are personal related emails.
 
 
 
5.) Getting paid on weekends/public holidays/medical/annual leave - Working employees generally tend to enjoy plenty of medical leave / annual leave / public holiday and they are paid for these leave entitlement. Even as I was having one of my unproductive days by sitting at my desk staring at the monitor, I was glad that my pay was not deducted.
 
 
 
6.) Health Insurance - My company's term insurance includes outpatient and specialist leave which has been very cost effective for me these few years.
 
 
 
So what do you miss from your working life should you "retire" from the corporate world and achieve financial independence one day?

Ready to dump REITS?

For anyone who has not read the post written by FFN recently, I would recommend you to go to his site to read on his recent post on the possible bubble on REITS (Link here). I think he provides a great insight and an interesting perspective that all of us as a REITS investor can take away something from.
 
As we have ended the 1st Quarter of 2013, let us take a look at how REITS have performed relative to their 2012 closing price.

Rank – Capital Gains

REIT
Mar-13
Dec-12
Gain
First REIT
$1.250
$1.060
17.9%
PLife REIT
$2.530
$2.150
17.7%
Cambridge
$0.790
$0.675
17.0%
FE-Htrust
$1.175
$1.005
16.9%
StarHill
$0.890
$0.785
13.4%
MGCT
$1.040
$0.930
11.8%
Sabana REIT
$1.265
$1.140
11.0%
MCT
$1.345
$1.215
10.7%
Ascendasreit
$2.600
$2.370
9.7%
A-Htrust
$1.030
$0.940
9.6%
CDL Htrust
$2.050
$1.880
9.0%
Fortune Reit HK$
$6.860
$6.370
7.7%
SuntecReit
$1.800
$1.675
7.5%
FrasersCT
$2.140
$2.000
7.0%
FCOT
$1.410
$1.320
6.8%
CapitaRChina
$1.750
$1.645
6.4%
MapletreeLog
$1.215
$1.145
6.1%
AIMSAMPIReit
$1.575
$1.495
5.4%
CLT
$1.305
$1.240
5.2%
LippoMapleT
$0.515
$0.490
5.1%
K-REIT
$1.360
$1.295
5.0%
SaizenREIT
$0.190
$0.181
5.0%
MIT
$1.405
$1.360
3.3%
AscottREIT
$1.380
$1.360
1.5%
CapitaMall $ 2.09 $ 2.13
-1.9%
CapitaComm
$1.585
$1.685
-5.9%
Source: SGX Reit Data

Not surprisingly, REITS have once again taken the spotlight and outperform the STI index for the 1st Quarter of 2013. Yields for some of the best performing REITS like PLife Reit and First Reit have further compressed to 4.1% and 5.7% respectively. We also have many other REITS yielding 4+% and 5+% which may suggest further capital appreciation is limited. A good example would perhaps be retail REITS - CapMall Trust which is currently yielding 4.4%. The price is trading at a range for a good recent few weeks and the low volume buyer on CMT may suggest exhaustion on this particular REIT.
 
Personally for me, I am ready to take profits on PLife Reits and FCT. It has risen by some 36% and 27% (excluding dividends) since I last bought them. The probability for the downside to its price is probably much higher than the upside. Also, I don't foresee FCT injecting Changi City Point in its portfolio in 2013 based on its past records and a more likelihood will come in 2014. Until then, we'll never know what kind of "Cyprus incident" there may be out there.
 
There are currently many investors out there who are asking for advice and waiting for a pullback to enter REITS and they may be somewhat disappointed based on what they see for the 1st Quarter. Based on my past investing experience, the risk has somewhat increased a lot now to enter REITS. With talks from the FED and analysts that the interest rates may somewhat go up in the early 2014, prudent investors may want to take note of the risks they are getting into should you decide to enter REITS today.

Tuesday, March 26, 2013

Everyone is a genius - A. Einstein

Albert Einstein once said: "Everyone is a genius. But if you judge a fish by its ability to climb a tree, it will live its whole life believing that it is stupid."



Unfortunately, we are being tested and selected everyday in an unfair cruel selection methodology in our society. Some of us, who may be potentially good entrepreneurs, found ourselves working for others in a 9 to 5 job just to stay competitive in this society. And I've seen too many of those - Potential winners becoming amateur just because they don't "fit" the system.
 
I myself am guilty of this at times. Am I a monkey who is ready to climb the tree or a fish who is ready to swim across the ocean. Maybe that is the reason why there are so many people who feel that life is meaningful and stupid!! These people haven't found or utilise their ability... just yet.

Sunday, March 24, 2013

Is getting rich all but worth it?

One anonymous user answered this one million dollar question recently on Quora which I thought was interesting and would like to share with the other readers.



I made $15m in my mid-20s after I sold a tech startup. I talked to a lot of people about this question, and thought a lot about how to stay the same person I was before and after making money.

Here's my answer: being rich is better than not being rich, but it's not nearly as good as you imagine it is.

The answer why is a bit more complicated.

First, one of the only real things being rich gives you is that you don't have to worry about money as much anymore. There will still be some expenses that you cannot afford (and you will wish you could), but most expenses can be made without thinking about what it costs. This is definitely better, without a doubt.

Being rich does come with some downsides, though. The first thing you are thinking reading that, is, "cry me a river". That is one of the downsides. You are not allowed to complain about anything, ever. Since most people imagine being rich as nirvana, you are no longer allowed to have any human needs or frustrations in the public eye. Yet, you are still a human being, but most people don't treat you like one.

There's the second downside. Most people now want something out of you, and it can be harder to figure out whether someone is being nice to you because they like you, or they are being nice to you because of your money. If you aren't married yet, good luck trying to figure out (and/or always having self doubt) about whether a partner is into you or your money.

Then you have friends & family. Hopefully your relationship with them doesn't sour, but it can get harder. Both can get really weird about it and start to treat you differently. They might come and ask for a loan (bad idea: if you give, always give a gift). One common problem is that they don't appreciate Christmas presents the way that they used to, and they can get unrealistic expectations for how large a present should be and be disappointed when you don't meet their unrealistic expectations. You have to start making decisions for your parents on what does and does not cost too much, and frankly, it's awkward.

Add all of these up and you can start to feel a certain sense of isolation.

You sometimes lay awake at night, wondering if you made the right investment decisions, whether it might all go away. You know that feeling standing on a tall building, the feeling you might lose your mind and jump? Sometimes you're worried that you might lose your mind and spend it all.

The next thing you need to understand about money is this: all of the things you picture buying, they are only worthwhile to you because you cannot afford them (or have to work really hard to acquire them). Maybe you have your eye on a new Audi -- once you can easily afford it, it just doesn't mean as much to you anymore.

Everything is relative, and you are more or less powerless to that. Yes, the first month you drive the Audi, or eat in a fancy restaurant, you really enjoy it. But then you sort of get used to it. And then you are looking towards the next thing, the next level up. And the problem is that you have reset your expectations, and everything below that level doesn't get you quite as excited anymore.

This happens to everyone. Good people can maintain perspective, actively fight it, and stay grounded. Worse people complain about it and commit general acts of douchebaggery. But remember this: it would happen to you, too, even though you might not think so. You'll just have to trust me on this one.

Most people hold the illusion that if only they had more money, their life would be better and they would be happier. Then they get rich, and that doesn't happen, and it can throw them into a serious life crisis.

If you're part of the middle class, you have just as many opportunities to do with your life what you want of it. If you're not happy now, you won't be happy because of money.

Whether you're rich or not, make your life what you want it to be, and don't use money as an excuse. Go out there, get involved, be active, pursue your passion, and make a difference.

Thursday, March 21, 2013

How much loyalty should you owe to your company?

Loyalty is respect.
 
Back in the days where mobility and transition are remote, loyalty is seen as one most important aspect of an employee's characteristic. Fast forward to 20th century, do we still see the same loyalty in an employee? How much loyalty do employees owe or have to their employers?
 
 
 
From an employer's point of view, they want staff who they can nurture and stay with the company through thick and thin. This means that they will spend resources after resources and efforts after efforts to train the employee so that he/she can one day become the leader of the organization and contribute to the ultimate long term goal of the company. Training sessions, team buildings and seminars are one of the few schedules employers send their employee to because they want to nurture them long term. Based on one source, if an employer hires a staff and he/she resigns after 2 years, the employer would have to start again from scratch, costing almost 150% of the resources which they could invest in somewhere.
 
However, most of us are after all an employee, at least that's what I am right now. Departing employees often feel a deep sense of loyalty to the company and I've seen it enough to know that the feeling is common and genuine. This can be a troubling dilemma for you as one hand you want to pledge your loyalty to your employer but yet on the other hand you want to pursue your dreams elsewhere.
 
Now, let me tell you about the ultimate truth regarding relationship between an employee and employer:
 
"Beyond a hard day’s work in exchange for a paycheck, an employee owes NOTHING to a company"
 
Whether you like it or not, the truth is you are only important to the company as long as you contribute something to the company. A company's responsibility is to drive up profit margins and increase shareholders value so irregardless of the tenure you have served in the company, once the company sees you as useless, the agreement will not be mutual and they will terminate your service.
 
Robert Green once said: "Your loyalty is not to a career or to a company but to your life's task - to giving it full expression".
 
You can love your colleagues, bosses or even your work, but you should never have any affection to your company. If you end up one day on the other side of the fence as an employer, always remember that your employees don't owe you anything more than a hard days work.

Tuesday, March 19, 2013

Do you like your working environment?

Employees are an important assets to the company. It is their overall productivity that determines the bottom line of the company. One way to increase productivity is to give them a happy environment at work. I am not talking in terms of monetary terms about increaseing their bonuses but instead the power of environment. Ever wonder why your office always look so squarish? Does good looking workplace increases employee retention? That's definitely one thing the HR can consider.

Google Singapore office









Facebook Singapore office






Now where did I save my resume?

Friday, March 15, 2013

"Mar 13" - SG & US Transactions & Portfolio Update"



Counters
No. of Lots
Average Price (SGD)
Total Value (SGD) based on average price
Market Price (SGD)
Total Value (SGD) based on market price
Total Dividends collected (SGD) since purchase
FraserCenter Point Trust
12
1.69
20,280.00
2.13
25,560.00
1,185.00
SPH
4
4.09
16,360.00
4.52
18,080.00
0.00
SIA Engineering
3
4.12
12,360.00
4.75
14,250.00
210.00
Neratel
20
0.46
9,200.00
0.68
13,600.00
400.00
First Reit
11
0.89
9,840.00
1.20
13,200.00
519.00
SembCorp Ind
2
5.44
10,880.00
5.14
10,280.00
0.00
Ascott Reit
8
1.29
10,320.00
1.35
10,800.00
386.00
Boustead
6
0.92
5,500.00
1.40
8,400.00
140.00
PLife Reit
3
1.85
5,550.00
2.38
7,140.00
556.00
Second Chance
17
0.43
7,210.00
0.415
7,055.00
456.00
Ascendas Hosp. Trust
7
0.89
6,250.00
1.06
7,420.00
63.00
CWT
4
1.43
5,730.00
1.455
5,820.00
0.00
STX OSV
4
1.250
5,010.00
1.265
5,060.00
0.00
ST Engineering
1
2.82
2,820.00
4.21
4,210.00
1,240.00
Singtel
1
3.09
3,090.00
3.58
3,580.00
316.00
QAF
3
0.71
2,135.00
0.93
2,790.00
20.00
Noble
2
1.12
2,240.00
1.19
2,380.00
0.00
YZJ
2
0.96
1,920.00
0.95
1,900.00
0.00
Total SGD
 
 
136,695.00
 
161,525.00
5,491.00

The big highlight for the month of Mar is the potential spinoff of the SPH property portfolio into a REITS. The stock jumps almost 10% (based on latest closing price) since before the announcement was made. Looks like I managed to get into SPH just at the right time. If the stock continues to go up further, I might just... just be tempted to take profits on SPH, for all the various reasons.
 
I've added 3 new entries into my portfolio for the month of Mar. I have rotated out of FCT and Neratel once again as the price rises and I've added CWT, STX OSV and Yangzijiang based on the low valuations these stocks are in. CWT is a logistic and commodities company which I see deep value in. Its commodities business segment in particular is only in a baby stage growth and it will grow to much much more than what it is valued today. This is definitely a growth play. It will pay dividends of $0.03 a share in May.
 
It has been a very busy month for STX OSV (Vard) as investors await for the offer which lapsed this week and the Fincateri Italian company only gained some 4% thereafter. This is another company which has great value and current price is compellingly undervalued.

I have a total of 18 stocks in my portfolio.



Counters
No. of Shares
Average Price (USD)
Total Value (USD) based on average price
Market Price (USD)
Total Value (USD) based on market price
Total Dividends collected (USD) since purchase
Verizon (VZ)
20
43.22
864.40
48.48
969.60
0.00
AT&T (T)
20
34.43
688.60
36.86
732.20
0.00
Coca-Cola (KO)
5
37.07
185.35
39.02
195.10
0.00
Lorrilard (LO)
5
38.57
192.85
39.66
198.30
0.00
Merck & Co (MRK)
2
41.00
  82.00
44.27
  88.54
0.00
Total USD
 
 
1,820.35
 
2,183.74
0.00

I have added Lorrilard (LO) in my US portfolio for the month of Mar.

Lorrilard is the 3rd largest US tobacco company and one of the leading manufacturer of menthol cigarettes. It is currently trading at a PE of 12.7, which is much lower than its main competitor, Philip Morris (PM). Given its competitive earnings and a higher growth menthol market, the stock has a fair value of around US$44 based on a DDM model. The stock is currently yielding 5.70% and is one of the more attractive stock out there in the market.


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