Monday, 15 February 2021

KC asks readers: BTO or Resale HDB? (Dilemma)

  Posted at  February 15, 2021 8 comments


Share your tips with KC! What did you do for your HDB purchase? Was it a BTO or resale? (context: KC is currently perplexed over HDB housing.. and inclined to buying resales. However, this seems to be a complicated process. I invite you to share with me what did you do if you bought resales or BTO HDB and if there are any information that would be good for me and others to know!)

First of all, KC would like to wish all investors and readers a Happy Chinese New Year 2021

Readers who have been following me would know that KC has been setting aside cash for wedding/ housing plans and as such have been watching the market go by without much updates to the portfolio. This is due to the mantra that I cannot invest money that I would need for bigger ticket items in near future (~ 2 years time). 

Recently, KC have tried to BTO 2 rounds of BTO exercise but failed in both. The recent Covid-19 situation is not helping the BTO projects with extended delivery dates for some projects to be 2027 or 2028. (KC would be 41 by then, that's crazy!)


Headache over housing


Buying or owning a house is probably one of the biggest ticket items for any Singaporean couple. With escalating BTO and Resale prices, owning a house seems increasingly difficult and many would have to work for life just to pay off the housing loan. Without doing the sums and proper planning, the financial strain is bound to create repercussions and consequences to the family in future. 


The HDB Flat


HDB's mission is to "...provide affordable, quality housing and a great living environment where communities thrive." It was set up in the early 1960s to address housing concerns. Fast forward to 2021, generations of Singaporeans have benefited from the system. Recent trends however, do worry KC as to whether HDB can indeed keep up with the "affordable portion" with new projects and resale flats getting more expensive for a housing that would expire by 99 years. Without going into the debate of the pricing of HDBs and resale, these are example of trends that I am looking into:


Regarding Lease Decay (HDBs will appreciate/depreciate over time till its end of 99 years): https://lifefinance.com.sg/whats-the-value-of-my-leasehold-hdb-3-dealing-with-lease-decay/ 

Our Resale flats pricing trend: https://www.99.co/blog/singapore/million-dollar-hdb-flats-are-hiding-a-worrying-resale-price-trend-heres-proof/


My main thoughts and observations on current situation (I may carry bias):

 

HDB is an expensive outlay the Singaporean cannot avoid.
➤ We can use CPF for our housing needs, but CPF is a shared pool meant for retirement and healthcare too. The more we use for housing, the less we have later on for retiring. we need to plan ahead
➤ HDBs will depreciate over time and the seemingly rising resale prices may not tell the full story of older flats that depreciate quicker (it is far more complicated to valuate them as such) 
➤ Covid-19 has delayed projects (can one afford to wait?) and also pushed up resale prices (can one afford to pay the price for not waiting?)


The solution as they say is to: "Plan within your means". (But easier said than done).


Keeping Options Open

My partner and I were filled with hope, originally planning to get a 5 room HDB flat in a non-mature estate. However, after 2 rounds of failed tries and staring at an ever increasing timeline for landing a flat with BTO - the future looks challenging. The average Singaporean would do what they do here - complain.


KC ranting mode (don't mind me): How are we expected to get married, form a family and start having kids when we can't even land a house that we like?! 

At the moment, it feels like going back to square one all the time and the timeline just gets pushed back all the time. We are still keeping options open in hopes of future BTOs, SOB (sales of balance), or resales but that hope is fading a little with each setback.

Real world, real issues

Unfortunately, one cannot always expect the government to save us from our individual issues as they have the bigger things to worry at hand. That is why there are housing grants to help couples like us for resale. And, we have to take decisions. And increasingly, it looks like the resale flat option is more realistic because there is less uncertainty over timeline of BTO delivering. 

Now, going on this route isn't quite straightforward. It does come with a fresh set of challenges:

➤ Wah, what if kena those Ah long flats, how? (previous owners owe debts)
➤ Where to buy?
➤ Lease remaining
➤ Opinions of elders
➤ Loan/ cash upfront
➤ Accrued interest and resale levy (seems like govt trying to prevent flipping)

But, resale flats does come with some pros:

➤ Don't need to wait so long
➤ Can choose locations that you want
➤ More flexibility for choices
➤ More spacious units

So, this is not supposed to be a ranting post by the way. KC is actively seeking wise fellow readers and investors who have trotted down this resale path to share your experience and knowledge here with me! 

Share with me and fellow readers!

Feel free to share with me articles, comments and your story of how you overcame your challenges. I certainly hope these nuggets of wisdom help me in my own journey as well.

K.C.
If you like this post, you might like our facebook page as well. I'm also on Investing Note. I am also partnering with Reit-tirement blog and other bloggers to share ideas at: https://www.facebook.com/groups/1397925937071525/

4. Why I refuse to spend >15-30 minutes budgeting each month

Portfolio updates:
I have switched to using stockscafe to monitor my portfolio:


Disclaimer: The views expressed, opinion and information in this article are strictly for informational purposes to encourage educational discussions only. No content on this site constitutes - or should be understood as constituting - a recommendation to enter any securities transactions or to engage in any of the investment strategies presented in our site content. We do not provide personalised recommendations or views as to whether a particular stock or investment approach is suitable to the financial needs of a specific individual. No representation or warranty expressed or implied is made as to, and no reliance shall be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained on this website. "30 Year Old Investor" shall not be liable whatsoever for loss or damages of any kind arising from the result of any use, reliance or distribution of the articles or its contents from information contained on this website. 

Monday, 2 November 2020

7 Months (unplanned) hiatus.

  Posted at  November 02, 2020 2 comments

Hello fellow friends and investors!

Sorry, I have not been updating the blog as much as I would have liked. Hope everyone is still coping well in this Covid-19 pandemic season. I miss everyone and indeed miss having the luxury of time to sit down, study stocks, read books and craft blog posts.

I still do post and share articles I find useful on facebook! Click to follow the following to receive updates:

What changed in the last 7 months? (work wise)


My last blog post happened during the "crash" back in March. That coincided with a working from home implementation by my company.

I had thought that working from home would mean that I would have more time at home to "do my own things". As it turns out, I misjudged the situation. 


1. Resilient Business and Projects = Extended working hours


Even though with Covid-19, at work I was expected to continue to run projects (but with reduced manpower) to fulfill expectations. The overall effect was that the amount of follow-up and liaising often carried past the usual 8-5pm working hours as I needed to keep up the communications with overseas colleagues often till midnight.

This was further compounded when the lockdown lifted in Mid June 2020 when projects that were halted during the lockdown were suddenly requested by customers (with shorter timeframes/deadlines). The silver lining above all these busyness was that the industry I am in is still proving to be resilient in the face of recession so far. This is despite my parent company suffering and having retrenchment exercise. It has so far not spilled over to my company (yet).


2. Isolation/ Managerial changes has been tough for me 


When I was getting into the rhythm of the new normal, something else hit like a truck. The manager who is currently in charge of me and who was the mentor/manager who hired me suddenly announced his retirement.

Now, I am unsure what were the reasons behind his retirement. It could be that the company also took the chance to reduce cost, but the official reason was to go back to his family and enjoy an early retirement.

What this meant for me is that I felt much of the work I've done is now going to go unrecognized for the new incoming manager who is stationed halfway around the globe. I fear for my future role at work now that my "backing" is gone and that has brought about alot of anxiety at work.

Because often at work - we really work for our immediate managers.


So, here I am again: Back to the drawing board


I am finally now able to take a step back to clear leave, take a breather and re-align. After much reflection, I guess I have the following choices:

  • Default position: Stay on and win the trust of the new manager. Continue to deliver
  • Start looking out for new opportunities: There have still been some decent enquires received on LinkedIn. Unfortunately, I have not stayed in a single position for more than 2 years in my last 3 jobs (voluntarily and involuntarily). 

It would be a shame to leave this current organisation prematurely as there are still things to be learnt. Thus, default position would be to bite down the teeth and grind out some results.


What changed in the last 7 months? (Investing wise)


From my last post, I have only added YZJ Shipbldg (SGX:BS6) at $0.985. This was because in spite of the pandemic, YZJ has still secured business.

Quoting this article in 30 April 2020: "As at 31 March 2020, Yangzijiang sat on an orderbook of $2.9bn for 69 vessels, excluding the 157,000-dwt tanker. The orders are expected to keep the yards at a healthy utilisation rate up to late-2021 and provide a stable revenue stream for at least the next 1.5 years."

https://www.seatrade-maritime.com/shipbuilding/yangzijiang-bags-seven-newbuilding-orders-worth-360m-q1

I certainly have hopes that this industry would still continue to stay resilient. Also, announced in August 2020, YZJ has secured new orders with Hong Kong based SITC for six 1, 800 TEU gearless container carriers

As the time of writing today on 2nd November 2020, its recovery in June has quickly given way to uncertainties in the wider global market on the backdrop of US elections, and the fears of second waves of Covid-19 in US and Europe.

YZJ chart from point of entry back in May 2020 (Blue arrow)

1. Portfolio Update 2nd November 2020.


I am now relying on Stocks Cafe to quickly track my portfolio. It saves me time to compute individual stock returns and I am able to focus on tracking my expenses and savings rate. I still do run my own portfolio tracker and tabulate it once a month.

However, Stocks Cafe does give quick analysis tools that I find helpful to track the progress of my portfolio. 

The Covid-19 has seen a sharp drop, with share recovery but now fallen back into negative zone.

2. Stocks watch (US elections/ Covid-19 wave 2) - SReits


I am now currently watching the market for opportunities as many of the SGX counters are down and it could present a new opportunity to accumulate shares again (like what happened in March 2020). The Singapore market has barely recovered and it has since become the worst performing stock market in Asia.

Overall market is still in down trend but it presents opportunities to buy in counters that are trading at discount from their recent highs. 


Of course, the talk of town all over the papers is about Robinson's closure. According to a Straits Times article on 31st October 2020, they have been making losses for at least the past 6 years. The following reasons were cited:

  • Increase of heartland malls (more competition/less traffic)
  • Onslaught of online businesses.
  • Covid-19 impact (but it is recognised that they were already struggling before Covid)

Source: https://www.straitstimes.com/business/companies-markets/singapore-reits-exposure-to-robinsons-owner-in-spotlight-as-fashion

There have been many netizens pointing fingers at the "Landlords", and that REITs are evil for being money suckers. However, I think these are knee jerk reactions. In the past, we've seen many departmental stores close down as well. Mr Market run in cycles and unfortunately, it seems we are at the end of a business and economic cycle brought about by Covid-19.

Before Robinsons, there was John Little, Carrefour, Duty Free, Metro, Forever 21 that closed. Did these companies close because of high rentals alone? I don't think it is essentially the government's job to bail out companies like these (but do note that the government did in fact try to help wage supplement with all the packages to hep soften the blow to Singaporeans).

Also, retail malls would have to evolve to stay relevant to changing consumer habits. There are also blogshops like Love Bonito that open brick and motar shop to better reach its consumers. Why isn't the traditional departmental store model working out? Businesses will have to keep evolving to stay relevant. Meanwhile, malls may change to incoporate more eateries (as have been an observed trend over the years)


This won't be the last closure we are seeing anytime soon for sure as the group that owns Robinsons also own other brands like Marks & Spencer, Zara and Mango. 

SReits in spotlight due to Robinson's exposure


I believe that these malls would no doubt recover over time. The question remains only to answer is how long these Covid-19 restrictions and fear would prolong plus how would the market recover as new tenants take over the vacated spaces. This in turn means that if we are to buy in, we would need holding power to stomach further potential losses to reap the potential gain when it recovers.

This means we need to have a high saving % to be able to deploy money we would not need in the immediate future for survival (with emergency fund).

1. CapitaMall Trust (SGX: C38U) has changed name to CapLand IntCom T (SGX: C38U) - largest exposure to the group by store count with 15 outlets. Trading at $1.76 which has dropped off from recent $2.00 levels. Of course the parent CapitaLand (SGX: C31) is also affected. 


2. Frasers Cpt Tr (SGX: J69U) - second largest exposure with 11 outlets.


3. Other counters affected potentially by links to the Al-Futtaim brands:

  • StarhillGbl Reit (SGX: P40U) - Ngee Ann City, Wisma Atria
  • Lendlease Reit(JYEU.SI) - 313@somerset
  • Mapletree Com Tr(N2IU.SI) - VivoCity

Likewise, these counters have seen their stock prices dropped (but these were more on the backdrop of fear of Covid wave 2 on the global scene and US stimulus talks).

Every 危机 (danger) also represents 转机 (opportunity). Wishing all friends and investors good health amidst this global pandemic as it drags on.

K.C.
If you like this post, you might like our facebook page as well. I'm also on Investing Note. I am also partnering with Reit-tirement blog and other bloggers to share ideas at: https://www.facebook.com/groups/1397925937071525/


Disclaimer: The views expressed, opinion and information in this article are strictly for informational purposes to encourage educational discussions only. No content on this site constitutes - or should be understood as constituting - a recommendation to enter any securities transactions or to engage in any of the investment strategies presented in our site content. We do not provide personalised recommendations or views as to whether a particular stock or investment approach is suitable to the financial needs of a specific individual. No representation or warranty expressed or implied is made as to, and no reliance shall be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained on this website. "30 Year Old Investor" shall not be liable whatsoever for loss or damages of any kind arising from the result of any use, reliance or distribution of the articles or its contents from information contained on this website. 

Thursday, 19 March 2020

Covid-19 Crash: Amusing behaviours encountered + updates

  Posted at  March 19, 2020 4 comments
"Your blog is growing grass!" a reader J exclaimed over a Whatsapp chat as we exchanged updates on latest developments on the Covid-19. Sheepishly, I gave a weak excuse and later admitted that I have been lazy.

Indeed, my regular interactions have been reduced to just 2 small chat groups with some of my closest investor friends. Late February, the market caught many off guard as many are not sure what to make of the market tanking in our blank faces. Some bought in thinking it would rise back up as previous times last year.

Of course, this time is different. The crash finally arrived.

The tl;dr 5 min summary:

1. Background: This February-March 2020 market crash is probably the worst we've had in recorded history. It has been waiting to happen for sometime. In the Covid-19 pandemic and Oil price war, we've finally met the triggers that sparked the downward spiral. I do not think that this market crash will let up anytime soon, given that the Covid-19 is just about to reach it's peak in Europe and just starting in the US. There could be more room to fall.

2. KC encountered some amusing investor/ trader behaviours this crash:
- Behaviour 1: A few readers asking KC how to open CDP/brokerage accounts saying "We want to invest because the markets crashed!"

- Behaviour 2: One reader, without any prior investing knowledge or knowing anything plonked all his money into derivatives tanking substantial losses. (good luck) "All IN!" "High risk, High Gain!"

3. Personal Updates and thoughts:
- KC was busy from January to March due to run in of night class modules (3 days night classes per week). Exams plus assignments plus exams plus assignments... it's finally going to be over soon.
- KC is also working hard with new projects, new opportunities and responsibilities given at work.
- KC been saving cash since November 2019.
- Portfolio tanking a -15% loss at the moment.
- Some seasoned investor friends have shared with me that this period is a highly stressful period for them as this is truly an unprecedented black swan event. >30% loss over 2 weeks is quite heavy to stomach.

------------------------------------------------------------------------------

The backdrop: A Market Wide Crash
Global markets plummeted since late February and have fallen about 30% off from its peak given the backdrop of 2 triggers:

1. Covid-19: An unknown Coronavirus that (probably) originated in China during late November 2019 sparked mass panic in a number of South East Asian countries before causing widespread panic similarly when the pandemic reached Europe eventually and US soil later on. Globally, businesses are suffering with some companies at the forefront of it (such as tourism, hospitality, airline companies). This is mainly due to a huge drop in consumption of goods and services globally out of fear and panic of the risks of contracting the virus.

Dow Jones index dropped about 30% from recent high.
Interestingly, the US market did not respond to monetary policies rolled out by the Trump administration nor the quantitative easing (QE) policies from Fed cuts. This was unlike previous round of QE when it seemingly propped up and supported the market and businesses alike.

2: Russia-Saudi Arabia Oil Price War: As an employee working in the Oil and Gas industry, I could say this has been an "accident" waiting for a long time to happen. We've all probably known for the longest time that Oil prices are artificially controlled with limits placed on production on the Organization of the Petroleum Exporting Countries (OPEC) and its allies.

By U.S. Energy Information Administration - https://www.eia.gov/totalenergy/data/monthly/archive/00351705.pdf (Monthly Energy Review, May 2017, Figure 11.1a), Public Domain, https://commons.wikimedia.org/w/index.php?curid=3457602
Over the years, technology have improved such that we are now able to produce much more oil and more efficiently. Basic demand and supply dictates that without any intervention, market forces would drive the prices down.

Now, Russia and Saudi Arabia have picked quite an interesting time to have a go at each other with nobody wanting to back out from selling their oil. Both Russia and Saudi seem okay with trying to kill their competition by engaging in a price war. The result is that oil price is also down about 20%.

Is this going to stop soon?
With the market tanking in such a manner, I personally think it is unlikely that this would let up anytime soon. China seems to have walked out of the episode but over in Europe and US, panic is reaching an all time high.

The extent of devastation is evident in the sheer numbers of deaths.

From an economic standpoint of view: even if we manage to eradicate the virus tomorrow, the effects of the Covid-19 are far reaching and will have a lasting impact on the global economy. We have to be prepared to last for the long haul as investors because this looks like a prolonged period of downturn.

If China's spread lasted from late November 2019 to Mid March, the situation in Europe could carry another 2 months plus at least, and 3-4 months in US at the very least. This means we will have to look towards June to know if there is any chance of it turning around.

Amusing behaviours (encountered as an investor/blogger)
With the market tanking 30% over a matter of days in weeks, some readers finally decided to take action to open their investing accounts. While it is good that you finally take what many have been advocating to start investing, I would encourage new investors to remain cautious because we are now into uncharted territory.

"I want to invest because the market crashed!" one friend told me.

Anyway, I pointed them to resources on how to get started. I could sense that feeling of euphoria and enthusiasm that it seemed such a downer to ask my friend to be more cautious and learn the basics first before diving head in into the work of investing/ trading. I remember my own sense of excitement when I decided to start investing as well.

Well, at least even a lay man could tell what this stock market crash means. It is a 10 year one time golden opportunity to accumulate stocks on the "cheap". But, the challenge here is that there is some danger here.

Lack of capital and the trouble of bottom fishing

As new investors, I know too well that one of the main constraints is actually having a discipline towards saving: this is the pre-cursor to having capital to deploy. For budding investors, many of us do not have enough to deploy. This is because investments are ideally suitable only for money that we do not need immediately. (Meaning we are able to take a certain degree of losses on them). This is also known as the ability to hold, or holding power. We will not be forced to liquidate positions due to a lack of cash for our daily use.

This therefore requires some careful planning and objective goal setting. As a new investor I would say that the objectives boil down to these 3 points: (at least personally)

1. Having a discipline to save / finding more income
The crash is going to pass us by if we don't have any capital to deploy when it comes back up eventually. Most friends I know simply don't save enough. We are living it up and spending on items such as gaining travel experiences and entertainment. It's not too late to start planning to save a portion first before spending on what you want.

2. Minimising costs of investing
The most absurd thing I've heard from a financial planner friend is that :"If she can earn 6% for her client, it is only right for her to take 2-3% (as commissions)" As a former planner myself, I can tell you that many people who manage others' money out there are only interested in lining their own pockets. You will do yourself a service to learn how to invest at lower costs. Otherwise, you are just helping others to get rich.

3. Managing the downside risks and making calculated risks for potential gain
The crux message of this point is essentially risk management. You identify the potential hazards ahead of your investing journey and doing your best to mitigate them by evaluating the control measures you are going to take to limit your losses. For example, to invest in stocks, you would do well to educate yourself on how to evaluate stocks. Another way, of course is to jump in and find out later that you are swimming with in the sea with no life jackets.

I think one of my friends did a bad move
Recently out of the blue, one of my friends who asked me about how to start investing told me that he probably made a stupid mistake.

He told me that he started "investing" but is tanking some 30-40% loss when the week before I specifically warned that the market crash was going to get worse.

On further pressing, I discovered that he was "investing" in derivatives but do not understand the nature of derivatives and it being a leveraged tool. He thought that it was the same as stocks. In my opinion, this was probably the worst way one can start investing. Firstly, he did not understand the tool (derivative being used here) and how it works. Secondly, there is no plan, no nothing.

Just simply "High risk high gain, and ALL IN".

I questioned what is the rationale for using this derivative tool. He mentions that investing in traditional stock is far too slow. Using the derivative allows leveraging an "higher potential returns."

"Be greedy when others are fearful, and be fearful when others are greedy". 

At this point, I'm rather stumped for words. I wonder if there were more friends like this one who is plonking all his hard earned money this way. Luck seldom makes one rich, and if we depended on luck its more akin to gambling than anything else.

Please people, exercise caution and restraint. This is not like going to the supermarket and snatching what is available with the panic FOMO buys.

March Personal updates and thoughts
My night classes are finally coming to an end: I have no idea if I made it in the final assessment due to my hectic schedule from February to March. I will find out at the end of the month.

Work wise, I have been given new opportunities to shine at work and I'm devoting a huge time and effort to ensure so (which explains why I'm having less time here). However, due to the Covid-19, a chance to go overseas for a short stint has probably gone up in smoke. Over at my new company, news of retrenchment again is announced. Luckily this time, I am not affected. I checked with a few of my friends in the same sector and it was quite congruent that many are cutting people now given the bleak outlook ahead.

Portfolio wise: 

I've not added any more new positions since late last year and been keeping cash. Current invested amount is around $18,000 and the current value is around $14,000. I'm sitting on $30,000 cash pile but am hesitant to deploy it since it is partially earmarked as wedding planning fund.

Shocked, with trembling fear:
One of my closest investor friend who is arguably my most profitable trading/investing friend saw his profits from a few years earlier wiped out during the circuit-breaker weeks where the markets dropped 7% and were halted. He personally told me that this was an unprecedented move and it is certainly a highly stressful event for him.

If we cannot stomach those losses then we probably shouldn't be investing. It is perfectly fine if one does not invest: as long as you live within means and spend less than what you earn, technically you don't need to.

Stay Safe, Play Safe.

p.s. Special thanks to Pete for proof-reading. But there might still be some grammatical errors. :)

K.C.
If you like this post, you might like our facebook page as well. I'm also on Investing Note.

7. Why I refuse to spend >15-30 minutes budgeting each month

Disclaimer: The views expressed, opinion and information in this article are strictly for informational purposes to encourage educational discussions only. It is important to conduct your own analysis before making any investment decisions based on your own personal circumstances. You should take reasonable measures such as seeking independent financial advice from professionals and/or independently research and verify the information that you find on "30 Year Old Investor" before undertaking any important investment decisions. No content on this site constitutes - or should be understood as constituting - a recommendation to enter any securities transactions or to engage in any of the investment strategies presented in our site content. We do not provide personalised recommendations or views as to whether a particular stock or investment approach is suitable to the financial needs of a specific individual. No representation or warranty expressed or implied is made as to, and no reliance shall be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained on this website. "30 Year Old Investor" shall not be liable whatsoever for loss or damages of any kind arising from the result of any use, reliance or distribution of the articles or its contents from information contained on this website. 
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You don't need to pay anyone/company to have a plan of your own and work towards achieving Financial Independence. Only we alone have no conflict of interest with our own money. "30 Year Old Investor" is a personal blog about a Singaporean's savings and investing journey.


Being the average Singaporean, K.C. is also interested in good food, a little bit of politics and a good slice of humour.

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Disclaimer

Disclaimer: The views expressed, opinion and information in this article are strictly for informational purposes to encourage educational discussions only.

No content on this site constitutes - or should be understood as constituting - a recommendation to enter any securities transactions or to engage in any of the investment strategies presented in our site content. We do not provide personalised recommendations or views as to whether a particular stock or investment approach is suitable to the financial needs of a specific individual. No representation or warranty expressed or implied is made as to, and no reliance shall be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained on this website.

"30 Year Old Investor" shall not be liable whatsoever for loss or damages of any kind arising from the result of any use, reliance or distribution of the articles or its contents from information contained on this website.

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