Reits Symposium 2017

First time at the Reits Symposium organised by share investor. Personally I think the symposium acts much like a mini AGM where investors get a chance to hear from the CEO’s of the major reits listed on the SGX. Held in May, the symposium was also a good place for the reits to showcase/offload their old inventories of past annual reports.

For a novice investor like myself, the symposium was a platform to get to know some of the reits better. For example, BHG reit and Straits Trading Company are now 2 new stocks that I will be looking into following the symposium.

Being a public/retail investor symposium, the reits were not able to be as technical as they would have liked to be. Even during the panel discussion they were centered on several, I thought, were rather over asked questions such as rising interest rates, rise of e-commerce and other forms digitization which may threaten retail or hospitality reits.

Overall, the overriding theme that I got from the symposium was that the securitization of property here in Asia is only beginning to take root. Compared to elsewhere, Singapore listed reits as an asset class have only just begun to gain wider acceptance. (The first reits listing on the SGX was in 2001). And as compared to other reits listed in the region, the yields seen on the SGX listed reits are generally higher than those on other exchanges. I think that that in itself represents an opportunity for all of us to take advantage of.

Good investments always come at a premium to price, picking quality assets with good potential for enhancement and good management should be a cornerstone of any potential reit investors philosophy. This was underscored in the individual CEO presentations for their respective reits, most CEO’s have a gameplan to unlock value for unitholders and have also highlighted their track record in creating value for unit holders.

With that I would say that the reits symposium was a good experience for myself and I would definitely encourage anyone who is interested in reits as an asset class to attend.

P.S: On a side note, I think sometimes as investors we also need to learn how to be more pleasant. I felt a little bad for the lady from K-reits marketing team, who was asked why they didn’t have any freebies to give away. Such an in-your-face question to front line staff really serves no useful purpose at all, considering that this is a public event and not an AGM and really shows off how giving you are too.

Home ownership

We applied for a BTO this week and boy has it been such an enlightening experience. Like most other first time home buyers in Singapore, our main choices were between resale or BTO application, in the end, we opted for the latter.

Frankly, prior to this BTO exercise, I have not been looking much at the property scene. While most of my peers would have already had some experience with flat applications, property was very new to both of us. Like any other form of investment, there is a learning curve involved and here are my takeaways..

1. Finding and paying for value

Like any other asset, physical property depreciates, (even freehold property). That is why many investors look for “site potential”. Other than location, are there any plans for the site that can increase the attractiveness of the property (proximity to future transport nodes, expressways, schools, etc…).

For most of us, our home would form the bedrock of our net worth in the future. Overpaying for what can become fleeting attributes is foolhardy and will potentially have a negative effect on one’s net worth in the long run. Paying a premium for good views or proximity to parents may not necessarily be recognized by future buyers or renters.

We do not know with any degree of certainty if or when the government will lift cooling measures and what property prices will be like when that happens. But we do know how much loan we are taking for the flat by purchasing it today. You shouldn’t be paying $1.1 for something worth $1 today, much less something worth $0.50 in the future.

Action Point: “We decided against a resale flat as the lease of these properties were shorter and would unlikely be worth much when we ourselves retire. The lease remaining on the house would be the last life buoy.”

2. Opportunity Cost

For first time home owners, the maiden property purchase can feel like “big game hunting with only one bullet”. The problem is controlling your emotions and resist aiming for the sky and everything in it. So many conversations on online forums centers on the minimum level of income required to finance the mortgage, unsurprisingly future appreciation in price is almost always used to justify higher mortgage payments.

“Money spent today would comes at a cost tomorrow”. Not being able to invest and grow your capital today due to housing loans means having a smaller capital snowball to work for you in future. Knowing that property is both non-income producing and non-liquid would mean that you should diversify your other investments to supplement your property.

Action Point: “We decided to pick a 4 room against the larger 5 room flats, as it would translate into a lower monthly mortgage payment. We were also fortunate as the project we ultimately picked only had 4 room and smaller units.”

In conclusion, when buying property, it helps to be unemotional about things. Consider all angles instead of merely proximity or hype. The location must make sense to you, do your research, walk the ground and don’t rely on familiarity. Remember we are only looking for a return on the capital paid, so focus on value today rather than potential gains in future.

Second, don’t overstretch the budget. Recognize that property should only form part of your investment universe and not all of it. I think the government has enacted unpopular but prudent measures in ensuring that mortgages are limited by the MSR and TDSR to prevent people from consuming easy credit and inflating housing prices.

Ultimately housing like any other investments requires some common sense and an astute money mind. Lets just hope I get a favorable number :X

Why should you take charge of your finances today?

I am sure that scrimping and saving when the entire world is spending and consuming doesn’t seem like something that is by any means sane. Most people would be laden with a heavy sense of inertia even before they started saving the first dollar. But before you start procrastinating, here are a few reasons why taking charge of your finances today makes sense.

1. Changing of habits takes time

Having the commitment to stick to your budget on your small initially salary would be one of the hardest thing to do as a fresh graduate, period. Taking your post CPF paycheck and subdividing it must rank high on the kill joy checklist.

But over time you will find small financial hacks to make the impossible happen and your financial engine really roars to life when your other income streams begin growing and your investment income slowly replaces your salary as the main source of investment capital.

2. Learning to invest takes time

If the simplest concept in investing is to be buying low and selling high (yes, this includes passive index investments), how would you know what’s high and low if you don’t take the time to look?

From experience, most people really start learning after they have made their first trade. While inevitably people do make bad investment choices from time to time, don’t be caught out missing on a good deal. Time spent researching is never wasted, even if ultimately the decision is a no buy. Like any other hobby, investing takes both practice and time.

3.Getting your loved ones onboard takes time

If you think sticking to a budget is hard, try telling your loved ones to do the same. In fact, the most common reaction towards hearing that someone is on a budget wouldn’t be too different if he/she was on a “diet”.

I know that it is incredulous to some that in this modern day and age with credit readily available that budgeting still forms the bedrock of a financially free future. The typical reaction towards budgeting is “why, when life is already so hard, do I have to do it?”. That’s understandable considering that the majority of the world have accepted and (some even take pride in) exchanging their time for money.

“As two is better than one”, getting your loved ones on board is the single most important catalyst towards fast forwarding your journey towards financial independence.

4. Learning about yourself takes time

I like to think of financial independence as a journey towards self-discovery. Just like how you won’t know how much you can stretch yourself or what really matters to you in life, biting the bullet will give you an edge over your peers by forcing you out of your comfort zone to think differently and prioritize life differently. Most importantly financial independence means learning what your real purpose in life is and having the base to stretch for your dreams when the time comes.

So don’t wait to adopt a wealthy mindset and have good habits, start today!

Out of balance?

Sometimes I wonder if I in my quest for financial independence, have been overly enthusiastic at the cost of others around me. After all, we know that like a big snowball down a long hill, the bigger your puffy snowball now, the larger the “whambam slamdunk” of an avalanche you will get in the future.

Compound Interest
Compound interest is every saver’s best friend. See how a smaller Invested amount leads to a larger final year end value for the portfolio on the left.

While financial freedom in itself  may seem like some sort of a milestone or a finishing point, I am also reminded that, as I continue towards my first pot of gold, that it is also not a race, and that there are many ways to achieving and enjoying this experience along the way. I like how Dave Ramsey shows us how people are driven by money differently, and that sometimes personal pride and achievement get in the way of what was suppose to be a good intention. You can forward to 4:10 to hear how women and men view money.

Last food for thought in this paradigm is to think of wealth in percentages. How much do we decide to spend, save and give away.


First Post!

Hi all, this will be the place where I will store my investing ideas, portfolio updates as well as financial goals. I hope when I look back at this blog I would have hopefully left behind a financial legacy for others to follow.