Wednesday, September 30, 2009

Phrase from Sir John Templeton

I learnt a phrase today...(by Sir John Templeton)

"Bull markets are born on pessimism, grow on scepticism, mature on optimism, and die on euphoria."

* The bull market should have started as most people are already not so pessimistic compared to 1 year ago.
* Though not pessimistic, we are still sceptical if the bull will continue.
* If the Bull really continues, we will get optimistic and gain a lot more confidence
* However, when over confidence steps in, the bull will die and the bear comes back...

This is history and I'm happy that there are still scepticism in the market which means more upside potential for equities. Hope history repeat itself this time round...

Monday, September 28, 2009

Timing the Market?

Many of my clients are sitting on a profit of between 20% to 30% for their investments especially those who heed my advise to invest during the early part of the year. Some of them asked in May, some in June and July if they should sell their investments. I instead proposed to increase equity position and switch from Global bonds to Corporate bonds during May and June. Fortunately, it pays off.

I'm still sticking to the 60% equity position for balanced investors, 75% for growth investors, 85% for agressive investors. I try not to time the market too much and manage risk via the asset classes of equity, bonds and money markets using largely geographical allocation with bias towards Asia and Commodities.
I advocate investment with a longer term perspective. I'll try convince my clients to avoid timing the market. Its hard for anytime to give them the exact time to buy and/or to sell.

To make a market timing strategy works, you must be right 2 times. The time to buy and the time to sell. Mistake in either, you will have serious consequences towards your investments. There is a high risk that you end up locking in the losses you sufered from a fall in the market or missing out on gains when the market picks up.

Its easy to say "Buy Low, Sell High" but are we doing the opposite? We can get very emotional if the market changes direction suddenly with significant gains that can come in short burst, over a matter of days. If we are in, we will say "Take Profit". If we are out, we will say "Invest when its down". Eventually when the market is experience a bull run, most of us are out of the market but when its experience a bear run, most of us are in the market.

Look longer term and you probably be able to sleep better. At current moment, volatility is expected in the short term but I'm positive on the long.

Sunday, September 27, 2009

Another year passed

Din work for 3 days. Went back Malaysia on Thursday, Celebrated my birthday on Friday and bring my rabbits for a walk on the beach + going for my YEC Bi-annual meeting on Saturday. Friday spent in Malaysia with the super cheap RM11 ktv with buffet and a RM10 movie. Cheaper, yet better than Singapore. Dinner at Outback in Singapore and hear the roaring F1 cars in town.

Time really flies that I'm older by another year again. Contrary to past years where I'm happy during birthdays, I'm getting worried with myself with each passing birthday nowadays. My 2008 birthday wishes did not materialise and I'm already 1 year older. I felt that I'm heading nowhere. My only wish is on my career this year. Simply nothing else crosses my mind this time round. My business model is not very good and I'm still confused on what I should do next.

2 shows I watched recently gave me some encouragements.
* The first scene is from the TV series "Fated to Love You" where Ji Cunxi told Chen Xinyi to say "Jia You" to herself whenever she wants to say anything to discourage herself. Why say something to discourage myself when I have the choice to say something that encourage me?
* The next scene in on Jack Neo's movie "Where Got Ghost". One of the scene show a guy proclaiming that all wealth and prosperity are useless without health. My consolation is that I'm in good health and when I still have my breath, I will still have a chance to improve on myself and just be better in this profession...

Tuesday, September 22, 2009

Simple joy in the Hawker Centre

I visited my Mum and Grandmother at the hawker centre last friday afternoon just to have a short chat with Granny and to have a free plate of Hokkien Mee at their stall.

As I was eating, the Yong Tau Foo stall owner came over and complain that an old auntie whom many of the stall owners always gave her a dollar or two was depositing a stack of $2 notes into POSB. She was so furious because that Auntie always beg for $2 with them saying that she do not have money to eat and she was caught red-handed when she was queueing to deposit her stack of $2 notes. (Just to prove that sometimes, people begging might not be really begging for survival, they actually have more money than we probably thought)

As we are still talking about it, another Weird Auntie came begging for money with the customers near our stall. One of them eventually gave $2 and that weird auntie bought a plate of Rojak. The weird auntie sat and did not eat the rojak. She only put the rojak into her mouth and suck each item dry before spitting it back into the plate. She did not eat anything at all and left after sucking all the rojak gravy. The plate of rojak looks as if it was not eaten but without the Rojak Gravy.

Shortly after she left, another weird uncle whom we know like to scavage for left-over food came near the rojak table and shouted if the plate of rojak belongs to anyone. The Hawker centre aunties shouted back and told him that he can take it if he don't mind that there was no gravy.

Oh. I don't know whether to laugh over it or not. The Uncle really eat that plate of rojak and was so happy about it. The images of that Auntie spitting the rojak was still fresh in my mind. It was really so gross...

Anyway, the weird auntie was happy to have the Rojak gravy, the weird uncle was happy with the rojak without gravy, the stallowners have a good laugh and I was also happy to see all of them happy... That simple $2 note made so many of us happy... Sometimes happiness can be so simple. Its the people around you that can really make you laugh.

Sunday, September 20, 2009

Keeping track of my Budget

Many people monitor their cashflow by looking at how much cash they have in their POSB account whenever they withdraw money. If their POSB Savings is growing, it probably means positive cashflow. If its not, then they may only complain that they are not earning enough.

This group of people will always feel that their POSB savings don't seems to grow and whenever the amount gets larger, its time for some big ticket expenses and the POSB savings comes back to a small amount it was originally 1 year ago.

For me, I keep track of my budget by using my monthly Balance Sheet and Cashflow Statement. It is actually a very simple excel spreadsheet which I file under "Adrian's Money" in My Document folder.

My Balance Sheet
* I only have Cash and Invested Assets in my balance sheet.
* Personal Use assets and CPF are left out of the picture. As I don't have specific debts except mortgage and I pay all my credit card bills on time, I also leave debts out of the picture.
* I make use my internet banking to check the balances of all my bank accounts and key all the figures in my assets positions every 1st or 2nd of the month.
* I will also log into the SGX and i-fast account to check on my investments.
From my balance sheet, I know very clearly if my savings and investments are growing.

My Cashflow Statement
Its pretty tough to track cashflow but I have a few tips to keep things easy for you.
1) I giro link all my fixed expenses such as insurance premium, regular investments, transportation, phone, utilities, etc.
2) I normally use my credit card for entertainments such as shopping, movies, dining, club memberships, etc. I earn some points yet able to monitor how much I spent for shoppings.
3) Only one savings account will be used for above 2 purposes so that I can print my monthly statement every first of the month and key the appropriate figures into my excel spreadsheet.
4) As for food and business expenses, I normally uses cash. I will also make use of the 2 slots in my wallet. The first slot of cash is strictly for food and client's meeting where I withdraw an average of $100 every week and the 2nd slot is for anything else that need cash.
5) If there are extraordinary expenses such as wedding dinners and holidays, etc, I'll write it down on my notice board and record them appropriately in my cashflow statements.

It is impossible to be exact with such tracking system and its hard to track that few dollar and cents. Hence I have that last column called "Unaccounted Cash" in order to reconcile my month end savings account figures with the following month opening. I'll try to keep this unaccounted part as low as possible.

The Discipline
Budgetting is about taking some discipline. It normally takes me about 30-40 minutes to complete this exercise every 1st or 2nd of the month and I feel that I'm in control of my finances. I'm a frugal spender and disciplined saver but surely not a stingy person. I still treat friends or colleagues for coffee or tea or good dining once a while. I try to delay some of my wants and increase my regular investments whenever I ready.

I should be earning below a typical Singaporeans wages for my age but I believe that I'm above average in how I manage and monitor my finances. I hope to help impart such discipline into my client's life and this is my job as a Financial Planner. I'm not the best or most intelligent planner and I'm still learning from others. I was quite sad to hear others commenting that I'm incapable to help other just because I'm not as rich as them or just because I'd recommend Unit Trust as part of their investment portfolio.

Wednesday, September 16, 2009

Nomination of Beneficiaries (NOB) Framework

There is a big changes to the nomination framework from 1st September 09 onwards. There are a lot of info on it but I try to summarise a few points for you. If you need more info, you can just google on my subject title and I believe you will get a lot of info.

Nominations in the Past
* Before 1 Sep 2009, there is no provision in the Insurance Act for us to nominate our desired beneficiaries for our insurance proceeds.
* Nomination of beneficiaries was governed by Section 73 of the Conveyancing and Law of Property Act (CLPA) and Section 45 of the Co-operative Societies Act (CSA). Only NTUC Income is under the CSA.

Problems faced by policyowners in nominations
* When a policy owner names his spouse and/or children as beneficiaries of an insurance policy effected on his own life, Section 73 of CLPA will automatically create a statutory trust in favour of the beneficiaries, even though the policy owner may not have intended to create a trust.
* Once a trust is created, the policy owner will lose all rights and control over the insurance policy.
* Only NTUC Income under the Cooperative Societies Act(CSA) is able to freely nominate their desired beneficiaries.

What happened after 1st Sep 09?
2 Acts came in-force
1) Revocable Nomination under s 49M(2) of IA
2) Trust (Irrevocable) Nomination under s49L(2) of IA

Why the change?
* Our Government saw a need to consolidate the law on nominations by amending the IA to provide policy owners and insurers with clear directions on nominations.
* There are too many problem with the Section 73 and it is just too strange that only NTUC Income is able to make nominations

Explain the Revocable Nomination under s 49M(2) of IA
* It is a Revocable Nomination that allows a policy owner to unilaterally change his nomination at any time. Any legal entity can be nominated to be a beneficiary.
* However, the nomination is only applicable for distribution of the death proceeds. This means that while the policy owner is alive, he continues to retain all rights and control over the insurance policy, and any insurance payout while he is still alive will go to the policy owner.

Explain the Trust (Irrevocable) Nomination under s49L(2) of IA
* It is an Irrevocable Nomination which allows a policy owner to create a statutory trust in favour of the beneficiaries. Only the policy owner’s spouse and/or children can be nominated as the beneficiaries.
* This is similar to the trust regime created under section 73 of the CLPA. Once a policy owner creates a trust nomination, he will lose all rights and control over the insurance policy including the policy proceeds.
* However, the advantage is that the policy proceeds enjoy protection against claims from the policy owner’s creditors when this statutory trust is created unless there is an intention to defraud the creditors.

How about my Will after nomination?
* A Will can only supercede a Revocable Nomination.
* A valid will executed after a Revocable Nomination must be made known to the insurer and satisfy specific requirements under the Wills Act(Cap 352). There are a whole list of items that you must write in the Will about this particular policy under Regulation 5(3) of the Insurance (NOB) Regulations 2009

How about my previous nominations?
They will stay. No change.

Can I change my nominations after I made them?
Yes. but there are different criterias that you have to make between a Revocable and Irrvocable nomination before revocation.

Should I do my nomination for all my insurance policies now?
* Unless you have intention to give insurance proceeds of specific policies to specific person, then you do the nomination for that specific policy.
* I will not suggest that you do nominations for all your policies now to potentially conflict with your intentions under your Will.
* Write a Will to keep things neat and simple.

Do not Assume.

I was at the same table with one of my Uncle during Grandma's birthday last week. I've known him to be a stock investor who put in at least several hundred thousands into Singapore Shares and another few hundred thousand more in Cash. Naturally, I'll hope that I can convince him to diversify some of his investments via me.

With some help from my mother and Sister, he finally told me to plan something for him for a small sum and insisted that he don't want insurance but investment. Its probably just 5% of his overall investments compared to shares.

I took pains to construct a portfolio, draw out a chart of different countries PE ratio and indices with latest data from the Bloomberg terminal, read up the market news, comparing funds with the good Alphas and Sharpe Ratios, draw up a beautiful chart with the geographical, sector allocations, past performances charts of 1 and 3 years, etc. All hoping to impress him so that he can part a bit more for me in future. Took me nearly 1 full day to do all just these.

Time to present yesterday and excited to show him all that I'd prepared. He allows me half an hour near his workplace to present and it goes like this.

Uncle: What do you have for me?
I took out my file and not even open up my file.
Uncle: I don't want Unit Trust har! I hate all these investments
Not even having the chance to open my file yet.
Adrian: Oh. Whats wrong with Unit Trust?
Uncle: Wait I lose all my money there like that Lehman Brother case
Adrian: But Minibond and Unit Trust are 2 different things
Uncle: No no. I thought you work for insurance company and have those deposit scheme that gives high returns
Adrian: Maybe I show you what is Unit Trust first
Uncle: No no. I just don't like Unit Trust. There are too much risk in it. I heard of people losing all their money in it.
Adrian: Okay. So are you looking at those offered by Insurance companies?
Uncle: How many percent can they give me?
Adrian: Maybe around 3-4%p.a after 5-10 years
Uncle: You must be joking. Its too low. I rather put more money into Shares. Can you give me at least 6-8% p.a and I can take out after 1-2 years?
Adrian: No such guaranteed instrument. Fixed deposit nowadays gives less than 1%. How to give until 6-8% without risk? Unless you invest. How about see what I have here.
Uncle: I don't want Unit Trust. Its just too risky. Don't need to show it to me. If I want Unit Trust, I will already buy the Bonds from OCBC
Adrian: What Bonds? Are you talking about their preference share? They are different from Unit Trust.
Uncle: Tell your mother that I can't help you. Unit Trust is too high risk and I can lose all my money in it. Just let me know if you have something better in future, I can consider again.

He went away in just 5 minutes. His mind are all closed up. He kept shaking his head. No chance to show him my colourful 1 full day effort of charts and graphs. I had assumed that he is a well versed investor with his so many years of investment experiences. My assumption was dead wrong.

Monday, September 14, 2009

More about Gold

Gold as an Investment
Gold is often regarded as a crisis-resistant investment and a hedge against inflation. Rising government debt and the worldwide economic crisis are increasing the pressure on major currencies which resulted in the price of gold hitting US$1,000/oz again last week.

Gold is relatively uncorelated to Equities and Bonds. They performed well in times of uncertainties triggered by international conflicts, financial tsunami and times like now where government around the world are printing money like nobody business. Its a good diversification and its good to have 10% to 15% exposure in your overall portfolio.

I'd written about Gold in my March Posting

Sources and Production
About 40% of the gold that is mined today comes from China, the US, South Africa and Australia. China has become the world's number 1 producer of Gold. Annual output amounts to about 2,600 tons - which meants that in a period of 2 years, more gold is produced than in the one thousand years of the Middle Ages.

Gold Bullion
One delivery bullion bar (995%. fineness) contains 12.44kg (400 ounces) of gold. Gold is also made in bars of 10,20,50,100,500 and 1,000 grams, with a fineness of 999.9%. and is purchased mostly by private investors. With bars less than one kilo, the spread is higher and may occasionally amount to more than 5%.

Degree of Fineness
Historically, the fineness of gold has always been quoted in carats. 24 carats denote pure gold (fine gold). Upon introduction of the metric system, the measure for fineness was changed to "Parts per thousand". Thus a "750"hallmark on gold product means that 1,000 parts of the metal (by weight) contain 750 parts of pure Gold.

Carat - Designation - Content(Wt./atom)
24kt - Fine Gold - 999%. - 100%
22kt - Gold 916 - 916%. - 83%
20kt - Gold 833 - 833%. - 68%
18kt - Gold 750 - 750%. - 50%
14kt - Gold 585 - 585% - 38%
10kt - Gold 417 - 417% - 23%
9kt - Gold 375 - 375%. - 20%
8kt - Gold 333 - 333%. - 18%

Information summarised from magazine "Future" May09 issue

Thursday, September 10, 2009

17th YEC Term BGM on 26th Sep 09

I had served in Bedok YEC (Youth Executive Committee) over the past 4 years. I'd pledged for my 3rd YEC term where I will serve for another 2 years. Our Bedok YEC is a committee made up of young volunteers who take an interest with organising activities specially for youths in Bedok area. We also participate on National Forums where we voice our concerns about problems and challenges faced by youths in Singapore.

We are screening "G-Force" on 26th September evening at Cathay Cineplex at a cost of only $4 if you are aged between 12 to 35. The cost include the movie, drinks and free pop corns. If you are my client or I had did a Financial Plan for you before, I can treat you for this event. If, not I can help to register for you. Drop me an email on your Full name, NRIC, DOB and address if you are keen.

Its a good offer. The only thing you need to note is that you have to sit through around half an hour of our bi-annual meeting and a speech by our Guest of Honour Professor S. Jayakumar.

Money Gone Again

I was standing beside the ATM when my phone rang. It was from a Secondary School Friend whom I met during my Army Remedial Training 2.5 years ago. He subsequently became my client by taking up a Shield Plan from me.

He is self employed and I know that his business is not doing that well. He asked for $1,000 and I eventually lend him $500 with a lot of reluctance. I seriously doubt I will get back this money after talking to one of his good friend. He called me because of desperation and he already owned a lot of people money.
I felt so sad that I lent people money again. Everytime they will say its urgent. Everytime they will say I will pay back next month. Everytime they will say no money when I called to ask it. I currently have ~$2k of uncollected debts and some of them are already Uncontactable.

I have a big problem of not knowing how to reject people. I don't know why people will always look for me when they need money. I probably gave the impression to them that I very successful in my career.

86 and going strong

This is my "Ah Ma". She celebrated her 86th Birthday yesterday. I seldom have a chance to take picture with her and she chose to sit beside me during the dinner last night. She didn't smile in the picture but she really looks beautiful when she did...

At the age of 86, she is still cooking Hokkien Mee at Bedok Interchange Hawker Centre where her stall is opposite the toliet. Her cooking hour is from 9:30am to 2:30pm and is closed on Wednesday. Her cooking style is the wet type of hokkien mee where the soup base comes from the fresh prawn and Sotong that she cook in the early morning. (Its so far the best Hokkien Mee I tasted)

My Mum told me that she worked as a Samsui Woman during her younger days and that explain why she is so strong. Her mind is still very sharp, if you order 3-4 packets of hokkien mee of different prices and gives her a $50 note, she can give you the exact change without much thinking. Try her Hokkien Mee before it get extinct.

Saturday, September 5, 2009

Moratorium Underwriting

There was report recently in the newpaper about a baby not able to get Medishield cover due to a pre-existing health condition. From my experience, CPF Board has been the most lenient underwriter for a Shield plan and yet still not able to get the cover, I doubt any other insurer will want to accept the baby under normal circumstances.

I felt that it was so unfair that the baby got totally rejected instead of an exclusion for a government scheme. It seems to me that they are more profit oriented than for the people. They probably should follow Aviva lead in allowing Moratorium Underwriting.Under Moratorium Underwriting, cover starts almost immediately as no underwriting is required. Any new, unexpected medical conditions arising after the start of insured person’s coverage will be covered.

Pre-existing conditions can also be covered after a continuous period of 5 years from commencement date, provided that the insured person has not in respect of that particular pre-existing condition:
a) experienced symptoms or;
b) sought advice or tests from a Physician or Specialist or Alternative Medicine Provider
(including checkups for that medical condition ) or;
c) required treatment or medication or;
d) received treatment or medication

There are also a list of medical conditions that are permanently excluded such as Stroke, Heart Attack, Paralysis, etc

The strength of Moratorium underwriting is that the policyholder is almost guaranteed a medical coverage even with certain pre-existing conditions. I had seen many people deprived of medical coverage due to insurers rejection and sometimes I feel that it was unfair for the policyholder. Example, a person with Hep B, got rejected totally for insurance coverage

Some advisers prefer to use Moratorium Underwriting for the clients because they feel that there might be some medical condition that the client may not know and they will surely be covered after 5 years. For me, I prefer to use full underwriting for my clients because I rather that my clients be very sure what is covered and what is not instead of the insurance company deciding what is covered and what is not at the point of claim. For certain conditions, I'll strongly suggest the Moratorium underwriting.

I experienced people who approached me about Moratorium underwriting after being rejected by other insurers and I have to inform them that Aviva will not accept moratorium underwriting if their Life or Health Insurance application have been previously declined or deferred for any application, renewal or reinstatement of life, health or any other insurance policy.

What I wrote here are very basic stuffs and of my best understanding. There are many other things that you may need to know if you are to apply through this underwriting option. I suggest that you ask your adviser about it.

Thursday, September 3, 2009

Things in my mind over the last few days

Just feel like writing nonsense today...

1) My Rabbit having flu and keep sneezing.

Have you ever seen and heard a rabbit sneezing? My poor little Melody. Heartache to see you suffering. Will bring you to vet this Saturday...

2) I'd passed my IPPT and got Silver

My 2.4km run improved from 12:16min last year to 11:44min this year. My standing Broad Jump also came down to just 2.25m. My best record is 2.60m when I was in BMT. Am I getting heavier?

3. My favourite Cheng Teng Stall

Whenever I go Bedok Camp for IPPT, I'll never fail visit the Fried Hokkien Mee and Cheng Teng stall at the nearby Hawker Centre. I still prefer my Ah Ma's Hokkien Mee at Bedok Central but the Cheng Teng is still the best I ever tasted. The stall name is called "Ye Lai Xiang"

4. Weddings and Baby showers

I'm invited to go for 3 Wedding Dinners and 2 Baby Showers in the month of October and 2 wedding dinners and to be invited for 1 baby showers in November so far. I so poor already. Still got to give Red packets... "Money Not Enough"...

5. Three Clients' parents die of Cancers over past 3 months

2 die of Colon Cancer and the other due to Liver Cancer. 2 in early 60s and one in late 50s. Above is one of the condolence card I sent to my client.

6. My Ngee Ann Poly Intern arrived on Monday
Engaged an Intern to help me and another of my colleague to secure Seminar talks. She seems so energetic and enthusiastic to learn. She will help remind how energetic I was years ago when I started work and why I'm so enthusiastic to help people then.

7. My blog giving me all sort of funny problems
I can post as per normal out of sudden today. I don't know if I can still post pictures tomorrow. My computer is so unpredictable. I want to change my blog skin, blog layout and change blog web-page but clueless on how to do it.

8. I'm exhausted. Only God can help me.
I'm really very tired, demoralised and stressful of late. I'm doing a lot of Financial Plannings, email enquiries, policy consolidations, investment analysis but not earning from all these hard work. They ask questions, ask for quote, ask for comparions but seldom do anything.
On top of these, I have claims, policy servicing, underwriting cases, etc. Work are still piling and I'm not able to take a break. Frustrated and Exhausted. Getting listless and dragging my feet lately. God, Please help me find the wisdom and energy to go on...

Wednesday, September 2, 2009

Problems with new posts

My blog been giving me problems lately. I'm no longer able to post picture, change font or colour whenever I write a new blog. The whole page looks very funny. It must be something wrong with my computer.

I thought by changing back to the template may help but it din. An error message just appear on the left bottom page:

Line: 267
Char: 1
Error: Object Expected
Code: 0
URL: http//.........

Wonder anyone can help me...