There was a hive of activities this morning.

We were walking towards Lorong 4 market, Toa Payoh, this Sunday morning. To our surprise, we witnessed a group of elderly people doing directed stretching-exercises beside the outdoor exercise equipment. This was not common. I thought this was a good activity. As we moved towards the market, we saw a group of people gathered at the carpark fronting Block 73. This was unusual. My wife remarked that probably it was a visit by a MP to this area.

She was correct. The minister who is also the MP appeared at the car park moment later. Cameras flashed and the group welcomed the minister. The minister then proceeded on the walk-about.

By the time I left the market, there were people already using the outdoor exercise equipment. The elderly people were guided by younger individuals on the use of this equipment.

This appeared to be an orchestrated event. It was not common weekly occurrences. My wish is that MPs of the precinct should see the real situations of their wards. There should not be padding by grassroot members to throw a favourable light for the MPs to see. In this way, improvements and changes can come about. I think that MPs and ministers know that these things happen. So each time when an MP or a minister visit, there is no need to prepare the ground. Let him/her see the true thing.

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Water Price Increase – Singapore Budget 2017

The talk of the town this week was water price increase of 30% resulting from the Singapore Budget 2017 statement in parliament. 30% increase will be phased in and starting July 2017 and then July 2018.

Naturally, I looked at my home usage of water and calculated the new water bill comes 1 July 2018. The following table is the calculation based on my February 2017 water bill.

Water Services – Price increase
Current (Feb 2017) From 1 July 2018 Increase
Rates ($) $ Rates ($) $ in %
Water Tariff (usage 14.5 cu m) 1.17 16.97 1.21 17.55 3.4
Water Conservation Tax (% of water tariff) 30% 5.09 50% 8.77 + 20% more
Waterborne fee 0.2803 4.06 0.92 13.34
Sanitary Appliance fee 2.8037 8.41 0 * 0
Total water charges 34.53 39.66
Add 7% GST 2.42 2.78
Total after GST 36.95 42.44 14.8
* Sanitary appliance fee is combined into waterborne fee

Before the changes in water charges, my home’s bill on water was $36.95 inclusive of GST. After the increase in water prices, the water bill would go up to $42.44 (holding my actual water usage constant at 14.5 cu m). This is an increase of 14.8% overall, inclusive of GST.

Though the water tariff only increases by 3.4%, the killer cost component is the water conservation tax. The tax is increased from 30% to 50% on water tariff. This tax increases by 72.2% in dollar term based on our usage.

No U-Save rebate for me

Additional U-Save rebates are available for HDB householders to offset part of the increase in water prices. This does not apply for me.

Reduce water usage to reduce water charges

My only way to bring down water bill is to really reduce water usage. The more we reduce water consumption, the more savings we can have. Dollar aside, we can do our part in protecting our living environment and reduce water usage from our current level. If everyone does a bit, overall water consumption can come down. Besides the many ways of reducing water usage, one just needs to be mindful when one next turns on the water tap.

Note: The water rates change when one is a heavy user (ie more than 40 cu m).

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Losses on Currency linked Investments – My experience

Back in 2008, I invested S$400,000 in currency linked investment (CLI). CLI is a short-term yield enhancement structured product based on investor’s view of the exchange rate movement between 2 currencies.

The currency pair was Aussie dollars against Singapore dollars (AUD/SGD). The strike price I had contracted was A$1 = S$1.265. So long that Aussie dollar remains strong and stays above S$1.265, the investment would not be converted to Aussie dollar. At the same time, the investment earns a yield of 4.50% p.a. interest income. This yield was big and enticing. However when the Aussie dollar weakens below S$1.265, conversion to Aussie dollar may mean that you would not be able to get back to Singapore dollar at the original strike price. The negative is that investor gets stuck with Aussie dollar unless you convert back to Singapore dollar at a lower value and lose a big chunk of your investment. Alternatively, the bank relationship manager may try to pair your investment with another currency to beat the market and regain your investment value.

My actual experience with this currency linked investment was bad. From S$400,000, I reduced my exposure to CLI to just S$100,000 in 2013 when the Aussie dollar was below my initial strike price of S$1.265. The Aussie dollar did not recover to S$1.265 against Singapore dollar (AUD/SGD) since 2013. Now the currency pair (AUD/SGD) is S$1.0902.

I took a drastic decision to get out of this type of investment last year and this month by selling out the investment.

For eight years since 2008, my income and capital losses for CLI were as follow:

Interest earned: S$13,184
Capital losses: S$33,488

Overall net loss on investment: $20,304.

Considering the amount of loss in relation to the quantum to start with, it did not look as bad. It could be much worse.

Clearly, this currency linked investment carries risk. I do not think that I can beat the market with this kind of currency volatility, especially when the Aussie dollar against Singapore dollar had declined significantly over the eight years.

Copyright © 2017, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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Profits down for 2016

Based on the financial results released so far for 2016, there was noticeable trend of negative performances for most companies I am tracking.

Counter Year Profit ($m) Year-on- Year Change (%) Remarks
Keppel Corp 783.9 -48.6
SPH 45.7 -43.8 1 month
SingPost 98.6 -31.3 9 months
M1 149.7 -16.0
SIA 498.7 -13.9 9 months
OCBC 3,473 -11.0
StarHub 341.4 -8.3
ST Engineering 484.5 -8.0
SGX 171.4 -6.3 6 months
DBS 4,238 -5.0
UOB 3,096 -3.5
Singtel 2,889 -1.2 9 months
Comfort Delgro 317.1 5.0
CapitaLand 1,190 11.7
SATS 191.3 12.6 9 months
SIA Engineering * 286.5 111.9 9 months

* SIA Enginnering: Profit of $286.5m included a gain on divestment of HAESL of $178.0m. Before the divestment, profit attributable to owners of the parent was $126.1m.

Price-to-Book Ratio (P/B Ratio):

Counter NAV ($) Share Price ($) P/B Ratio
CapitaLand 4.15 3.46 0.834
SIA 11.72 9.84 0.840
Keppel Corp 6.42 6.64 1.034
DBS 16.87 18.60 1.102
OCBC 8.49 9.52 1.121
UOB 18.82 21.18 1.125
SPH 2.16 3.46 1.602
SingPost 0.7658 1.37 1.789
Comfort Delgro 1.1477 2.40 2.091
Singtel 1.65 4.00 2.424
SIA Engineering 1.361 3.66 2.689
SATS 1.386 4.92 3.550
M1 0.434 2.05 4.724
ST Engineering 0.702 3.62 5.157
SGX 0.854 7.59 8.888
StarHub 0.113 2.80 24.779

Price-to-Earnings Ratio (PE Ratio):

Counter EPS ($) Share Price ($) PE Ratio
DBS 1.66 18.60 11.20
UOB 1.86 21.18 11.38
OCBC 0.822 9.52 11.58
CapitaLand 0.28 3.46 12.36
M1 0.161 2.05 12.73
StarHub 0.198 2.80 14.14
Keppel Corp 0.432 6.64 15.37
Comfort Delgro 0.1472 2.40 16.30
ST Engineering 0.156 3.62 23.21

Note: Share Prices were at 17 February 2017.

Copyright © 2017, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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Comparison of DBS, OCBC and UOB – FY 2016

All three local banks had released their full year financial results for 2016.

Banks Q4 Profit ($m) Change (%) Year Profit ($m) Change (%)
DBS 913 -9.0 4,238 -5.0
OCBC 789 -18.0 3,473 -11.0
UOB 739 -6.2 3,096 -3.5

All banks gone negative in 2016 with OCBC showing the poorest results.

Banks NIM (%) NPL Ratio (%) Non-interest/ Total Income (%) Remarks
DBS 1.80 1.4 36.4 Full Year
OCBC 1.67 1.3 40.5 Full Year
UOB 1.71 1.5 38.1 Full Year

Notes:
NIM = Net Interest Margin
NPL = Non-Performing Loans

DBS did well on net interest margin at 1.80% compared with the other two.

UOB had higher NPL ratio at 1.5% followed by DBS (1.4%) and OCBC (1.3%)

In terms of Non-Interest Income/Total Income, OCBC got more from non-interest income type of business than DBS and UOB.

Banks NAV ($) Share Price ($) P/B Ratio
DBS 16.87 18.60 1.102
OCBC 8.49 9.52 1.121
UOB 18.82 21.18 1.125

Price to Book (P/B) ratio for DBS (1.102) was lower than OCBC’s and UOB’s.

Banks ROE (%) EPS ($) Share Price ($) PE Ratio
DBS 10.1 1.66 18.60 11.20
OCBC 10.0 0.822 9.52 11.58
UOB 10.2 1.86 21.18 11.38

Return to Equity (ROE) for all banks were comparable.

The Price Earning ratio (PE) for DBS was 11.20, lower than the other 2 banks based on share prices as at end of 17 February 2017.

Banks Dividend ($) Share Price ($) Div Yield (%) LY Dividend ($)
DBS 0.60 18.60 3.22 0.60
OCBC 0.36 9.52 3.78 0.36
UOB 0.70 21.18 3.30 0.90

Notes:
Dividend Yield, Price Earnings ratio and Price to Book ratio are calculated using share prices as at 17 February 2017.

OCBC’s Dividend Yield was higher than the other 2 banks at 3.78%.

Copyright © 2017, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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I Remember – My Hobbies

I collected stamps and coins in the past. These were common enough hobbies when I was growing up.

In the case of stamps, I collected first day covers and bought stamps that came in packs from shops. I cut up stamps from mails in the past before electronic mails took over our lives. I soaked these stamps in water in order to peel them from the envelopes. These stamps were then dried and placed in a stamp album.

As for coins, I collected coins of countries we visited. I too bought commemorative coins, like coins for Chinese New Year. One example was the coin for Rooster Year in 1993.

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First Day Cover – 25 Years of Nation-Building 1959 – 1984

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Year of Rooster – 1993

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Coins

I have stopped buying to keep items. However, I still cut up stamps on envelopes received through the mail if I found them pretty.

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De-clutter your home

We have been reducing stuff in our home. We gave up things when we did not need them. We will not buy something unless we need it. These are the basic principles of keeping our home clutter free.

To us, space is a premium in our home since we live in a small place. In addition, it is aesthetic to see less clutter in the house, a minimalist look to the place.

We create space in our wardrobes, cupboards, bookshelves, table tops and drawers by reducing things and putting things away neatly. To do the latter, one can consider investing in containers, boxes, and files. When we put away things consistently in a specific place, it helps us to retrieve the items when we need them. This is especially important when one gets older and our memories are not that good.

Let me suggest some practical examples. I learned about a few recently.

  1. Remove shirts and pants hanging in a wardrobe that we have not been wearing for a long while. Fold them and stack them flat in the cupboard. This creates hanging space.
  2. I used to stack current and KIV papers and documents on the table. Each time I wanted to retrieve a particular document, I would have to search for it in the stack. It is all too time-consuming. Instead of lying flat on the table, I bought a plastic holder to help me place these files and documents upright.
  3. Buy some arch files and file away documents and letters as soon as they are dealt with. Do not let them lying around in a pile and soon these items would be forgotten.

To de-clutter the home does not require some consultants to help us. All we need is a mindset of not to hoard things. Instead, we should be ruthless in removing things that we do not need and give them up to charity. At the same time, we should stop buying things unless they are needed for practical living. This way we not only save money, we have more space in our homes.file_000-1

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