Expenses - May 2018

Busy busy. So many things happening now, wedding and honeymoon preparation, Trump-Kim summit on our little island, world cup, potential trade war, red red stock market yet with many shares buyback. We will probably just buy on weakness and average down/up instead of looking for new investment opportunities.

Interestingly, CZM was chan zui (not surprising!), went to buy one of the Trump-Kim food last week and was interviewed by one of the foreign national TV stations! They asked if CZM was following the Trump-Kim news and what was her reason for buying the food. She said not following and she just wants to try the food. Both the interviewer and translator looked at each other and gave a sian look. LOL. I was telling her she missed such an excellent opportunity to be featured in a TV, she should have said Kim deserve a Nobel Peace award for his efforts in trying to denuclearise North Korea. Naturally, she was not featured. Back to my expenses for last month...

Current Profile: 28 years old male planning to get married this year and is still living with his parents

You can read more about how we manage our finances here. Removing our shared expenses which come out of our mutual fund (KPO Expense Fund), my expenses for May would be $1978.35 - ($229.23 / 2) = $1,863.74.

Parents
I previously blogged about my promotion and increment - Salary - You Are Your Best Investment and it was only effective from February so I gave my parents more allowance as well.

Treat
Treated my family + CZM to New Ubin Seafood and CZM's family (split with CZM and her brother) to the three peacocks for Mother's Day celebration.

Wedding
CZM bought some haircut deal (ammonia dye + cut) from Fave for $45 each to prepare for our prewedding shoot which we initially thought was a good deal. However, when we reached there, they gave us a very limited number of colors to choose from (dark colors - some cannot even tell that the hair has been dyed) and said they are clearing stocks -.- Topping up meant another $68 for myself and $88 for CZM for more colors + non-ammonia dye which they said is better for the hair. What a scam...

CZM is the real KPO, she initially wanted to just make do with whatever that is available but knowing her, she will definitely regret her decision so I convinced her to just top up since the prewedding shoot is once in a lifetime. After everything, they tried to convince us to sign some package for 7 sessions (valued at $86 each) which we can immediately use 2 (since CZM dyed ($88) her hair and did highlight ($96)). We concluded that the other places are probably using similar tactics on Fave, we negotiated for 4 sessions instead so that we can return the next time before our actual day wedding.

Both my mum and CZM like my new hairstyle a lot since I am the kind of guy that does not really care about his look/hairstyle but it cost $113! I joke with CZM and my parents that I can cut my hair for 3 years ($3.80 haircut at Snip Avenue). Oh well, all for the sake of our wedding.

Gift
Attended another church wedding + a baby shower.

Insurance
This is a fixed monthly cost for the basic coverage - term life and hospitalization.

Clothes
Bought a new shoe after being forced/nagged by my parents. lol.

I took this photo before throwing it away. This was the state of my previous shoe which I have been using for almost a year. This shoe was handed down by my dad many years ago. He bought it but found little use for it and gave it to me. They have been nagging me for a few months asking me to buy a new shoe but I refused because it still works really well for me. To the extent that my dad said he will go buy another shoe and give it to me. Win liao lor, I am already working, how can I let that happen, so I gave up and went out with them to buy a new Timberland shoe.

Transportation
I would always pay for CZM's cab ride home during night time since I am too lazy to send her home. That was one of our agreement. lol. EZ Link expenses were much higher this month which was probably due to the wedding preparation, hence we have been commuting a lot more apart from work.

Public transportation seems a lot lower because of 2 reasons:
1. I am no longer using EZ Link Auto-Reload. Account-Based Ticketing (ABT) is a much better choice as you pay what you use instead of triggering top up where the money is stored in the EZ Link card. The best part is miles can be earned too (using UOB PRVI Mastercard)!
2. $0.50 Discount for commuters who enter stations before 7.45am on weekdays.

Food
My food expenses are exceptionally low because I stay with my parents! Most of it is incurred when I am out with CZM.

Me
The $69.97 is the installment for Surface Pro which I got about 2 years back. I have successfully replaced the faulty/flickering Surface Pro!

Gambling
Trying our luck on an $8 million draw.

Investment
Applied for May SSB to build the bond ladder so that we can get higher interest for DBS Multiplier account - DBS Multiplier + SSBs + Joint Account = Higher Interest!

Summary
January 2018 - $2,256.43
February 2018 - $1,759.01
March 2018 - $5,049.79
April 2018 - $1,572.54
May 2018 - $1,863.74

Total expenses for 2018: $12,501.51
Average expenses per month for 2018: $2,500.30

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Astrea Bond? Nah!

CZM and I have been pretty busy preparing for our wedding and honeymoon. Some of the stuff we did include printing of our wedding invitation at TDragon (a reader once commented that our site looks "obiang". I thought so too until I visited their site but do not judge a book by its cover. The whole process was simple and smooth), manually making the invitation cards, extending the invitation, tracking the attendance and arranging the tables. Hunting for hotels, looking for BRG (Best Rate Guarantee) and attempting to make it cheaper and the cycle repeats. On a side note, we had our food tasting last weekend and the 提亲 was a success! There was some awkward silence here and there as well as funny moments but definitely much better than expected. Let's get to the main point...

This post probably came a bit late since the application started on 6th June and will end tomorrow (12th June 12pm). I usually only blogged about things I am interested in after researching on them but after seeing so many blogs and articles stating how "good" it is, I decided to play the devil's advocate and said why we are not interested in it/not find it attractive.

1. Are you really participating in the PE (Private Equity) funds?

In my opinion, this would have been really attractive if this is packaged as a PE ETF instead of a PE bond. lol. At the end of the day, you have to understand the difference between a bond and equity. As a bondholder, you are merely the "lender" and you play no part in the business. Regardless how well the funds do (double or triple-digit returns have no impact on you), your investment will not "grow". The only important thing that matters is that there will be sufficient money to pay your coupon and redeem the bonds.

One of the perks of investing in PE is that you will be able to experience a ridiculous amount of growth, double-digit growth or sometimes even >100% gain as compared to a maximum of 100% loss. On the other hand, this bond meant that the gain will only be 4.35% + a little bit of premium upon maturity as compared to a maximum of 100% loss although the default risk is low.

2. Capital is not guaranteed before maturity

I know it may sound ridiculous but my concern is people may think that the Astrea IV Bond is the same as Singapore Savings Bond since both came from the "government". Just so you know, although the Astrea IV Bond is "packaged" and issued by Temasek, they do not guarantee it.

The above chart belongs to Perennial n4.55%200429, one of the listed bonds with coupon closer to the Astrea bond (4.35%). Once the Astrea bond lists in the secondary market/SGX on 18th June 2018, it will trade like an equity/stock where price is driven by demand and supply. You can only sell when there is a buyer on the other side and vice versa. Are you prepared for the volatility?

3. Rising interest rate = Lower bond price

I remember back in NTU, I took an elective in "Business Finance" where we had to price/value the different bonds and one of the factors affecting its price is the interest rate. If you would like to understand how it works, this article might help - An Introduction to Bonds, Bond Valuation & Bond Pricing. If formula and numbers do not work for you, an easier article to read is Why Bond Prices Go Up and Down. Think about it, if Astrea V Bond comes out in the future with a higher coupon (due to the rising interest rate), the only way others will buy Astrea IV is when the price is lower so that its coupon rate will be relatively higher. I am pretty sure that the Astrea III bondholders have lost some of their capital but I could not find any information on it.

What are the better other alternatives?

It really depends on individual's risk appetite/profile. If you still want to be a legitimate ah long/debt lender, there is MoolahSense (shorter tenure, much higher returns --> higher risks). A more conservative ah long can consider the Singapore Savings Bonds (SSB) where your capital is guaranteed. Not forgetting our CPF SA which gives 4-5% interest + tax savings - CPF RSTU - Is It Worth It? Alternatively, you can also become a "property owner" (1mm x 1mm or is that still too much) through Lion-Philip S-REIT ETF - New Singapore Budget, New REIT Strategy! with dividend yield > 5%.

CZM and I will take that $2 and go buy the $8 million ToTo draw instead. Hahahahaha.

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StashAway - May 2018

We have decided to invest more money (from $500 to $1,000 monthly) through StashAway since January 2018 and I blogged about it here - Automating Capital Growth Through StashAway.

1. ACCOUNT SUMMARY (as of the last day of the month)

Based on the statement (31 May 2018), we gain $103.29. It has been a while since we see green green. Like I always say, the market goes up and down, as long as your investment horizon is long enough, it will become green :)

As of 6 Jun 2018, we gain $132.06 mostly from investment returns with a negative currency impact of -$1.25. Yay! In our last monthly update, I said that I would have preferred the USD to be weaker because we will be going to the US for our honeymoon. Weaker USD meant that we can convert the same SGD for more USD to invest too.

SGD time-weighted returns: 3.8%
USD time-weighted returns: 3.9%

2. PORTFOLIO DETAILS 

3. TRANSACTIONS

SGD $990.00 converted to USD $738.54 (USD $745.45 last month)
Exchange Rate:  1.3405 (1.3280 last month)

4. FEE CALCULATIONS

There will be no fee until August 2018 because I recommended some friend. Interestingly, we can see the GST stated as being absorbed by StashAway explicitly in this month statement. Not sure how it works but investors will not complain as long as they are not asked to pay more fees.

The actual fee as stated is based on the monthly-average assets SGD $7,267.86 x 0.8% / 365 days * 31 days = $4.94

StashAway VS STI ETF
Since there is no way to compare the performances among the robo-advisors, I came out with a spreadsheet to track our StashAway portfolio performance (General Investing - Risk Level 28) against that of STI ETF which I will be updating on a monthly basis. For simplicity, I shall assume that one can either invest in Nikko STI ETF using POSB Invest-Saver or invest in Nikko STI ETF/SPDR STI ETF using SCB Priority Online Trading (no minimum commission). These would be the opportunity costs while we continue to invest in StashAway.

Apart from the absolute P&L, we should also look at the Reward-to-Risk Ratio where risk/volatility is taken into account. For more information, do read StashAway Clarifications - Reward-to-Risk Ratio. StashAway has the highest ratio of 1.25 which is significantly higher than the other 2 STI ETFs (< 0.4). Let me quote Freddy Lim (Co-Founder & Chief Investment Officer of StashAway), "for every dollar of risk taken, StashAway P28 is producing 1.25 times the return".

This month commentary: In terms of both absolute return and XIRR, investing in either ETF through SCB priority online trading is giving higher returns. If you look closely at the fees paid by POSB Invest-Saver ($80+) as compared to the others at $20+, it simply shows why fees matter when it comes to investing. Having said that, the difference of $4 in fees between StashAway and SCB has minimum impact on the return for now...

Going forward will be pretty interesting because the commissions/fees incurred by StashAway are now greater than SCB Priority Online Trading and the difference will only continue to get bigger. This will be a battle between cheaper/lesser fees and asset allocation/diversification...

You might be interested in last month update too - StashAway April 2018.

I believe there is a need to redo/regenerate the volatility used to compute the Reward-to-Risk Ratio. Do take it with a pinch of salt for now. I have been compiling some data in order to do so :) Below is a sneak peek into the side project I have been working on (in case you missed it when I shared it in my previous post)!

Which is the best? Only time will tell :)

This is the link to our spreadsheet - KPO & CZM StashAway Portfolio VS STI ETF which I have also added to Our Portfolio page.

StashAway Referral Link for Our Readers
Here you go: KPO and CZM Referral Link

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What is Happening to Singtel?

Singtel (Singapore Telecommunications Limited) needs no introduction, it is a familiar name for everyone. Based on its latest results, it seems like it was an excellent year for Singtel at a glance.

Record net profit + the whole year this up and that up, only Q4 down, why would the price keep falling?! It is currently at a 5 years low (based on ShareInvestor). Why?

The record net profit is largely bumped up by the divestment on Netlink Trust which was recorded as an exceptional item (gain) of $1.93 billion. If we were to remove this gain from the record net profit of $5.45 billion, we will get $3,500 billion which is lesser than FY 2017 $3,853 billion.

Once we adjust its net profit, it becomes more evident that Singtel is not trading as "cheaply"/undervalued as it is, with its previously inflated earnings/EPS. Using the given EPS of 33.40 cents would mean that some of you may compute Singtel PE as ~9.79 (3.27 / 0.334). Realistically, the adjusted EPS should be ~21.42 cents giving a PE of 15.27 (3.27 / 0.2142). Not so surprising as to why the price has fallen so much anymore right? So why did we buy more Singtel? There are actually many many reasons. lol.

Firstly, I took some time to compile the financial numbers for the last 5/6 years to compute its PB, PE and dividend yield based on the closing price one day after the full year result was announced. Although PB is not relevant for Singtel, it is still worth noting that at the current price, Singtel is trading below its average and median PB and PE since 2013.

In addition, Singtel has "promised" to maintain dividends at 17.5 cents for the next two financial years. The price which we entered ($3.30) meant that we would be getting a dividend yield of ~5.3%. The next question to ask is will the dividends be sustainable? If you were to look at its FCF (Singtel Free Cash Flow = Net cash from operating activities - Payment for purchase of property, plant and equipment), you will see that its FCF is still relatively healthy and the dividend payout ratio is below 1. Hence, the dividends are in fact very sustainable.

Singtel businesses can be broken down into the above 3 groups - Group Consumer, Group Enterprise, and Group Digital Life. The general public impression of Singtel business is from the Group Consumer (the mobile, broadband, etc.) which contributes the most revenue, is unfortunately declining and facing fierce competitions. One example is Circles Life who recently launched a Flexi Plan for $0?!

Looking at the breakdown of the revenue, we can see that Singtel is trying to move the dependency of its revenue from the Group Consumer business by growing the other 2 businesses. It is also interesting to see the huge growth in the revenue of Group Digital Life (~100%) but I am pretty puzzled as to why it is still making losses (2013: make $111, lost $145. 2018: make $1,080 but still lost $120?!). The declining revenue/net profit of its businesses is the main cause of the drop.

Last but not least, are you familiar with the saying that banks that are too big to fail? Going by this logic, Singtel being larger than 2/3 banks would similarly be too big to fail. lol.

I am serious! Look at the top 2 substantial shareholders! Hahahaha.

On a side note, KPO started working on a new project to ingest stocks data in order to increase his efficiency in screening stocks, remove the typical limitation of 3/5 years stock data and to visualize them. The dashboard that I have created is still at its infant stage but looks cool enough for now. lol.

If you believe in mean reversion, Singtel current share price ($3.27) is way below its mean price of $3.799 using data from 2013. However, the mean price will always be limited/affected by the dataset that is available and the timeframe used for computation.

If I were to expand the dataset further to 2008, the mean price would be much lower at $3.48 due to the financial crisis. The current price is still below the mean :)

In comparison, SPDR STI ETF (ES3) is trading above its mean price since 2008. Time to sell? lol.

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Portfolio - May 2018

It was another roller coaster month but life goes on! CZM and I are preparing our wedding invitation cards, about 4 more months to our big day! Our portfolio decrease by -0.59% to $334,055 - $9,252.77 of capital injection and $11,218.72 of capital loss.

SOLD
- None

BOUGHT
- Keppel DC REIT (3,000 units) @ $1.353
- Lion-Philip S-REIT ETF (1,000 units) @ $0.997
- Capitaland (1,000 units) @ $3.54
- Singtel (1,000 units) @ $3.30

It seems like we lost and bought a lot this month. A total dividend of $2,683.38 was paid in May and we merely reinvested/redeployed the dividends into the market. In fact, apart from Lion-Philip S-REIT ETF which was a planned purchase as part of our new strategy - New Singapore Budget, New REIT Strategy!, the other purchases were either a surprise or an opportunity in our opinion.

I blogged about the Keppel DC REIT Private Placement and we were allocated 3,000 units (out of 8,000 units) from the placement. We bought more of Capitaland and Singtel when the market went down. It is interesting to note that both companies have been/are performing share buyback recently. You can refer to this - Why Would A Company Buyback Its Own Shares? by Investopedia to understand the significance of share buyback.

Singtel is pretty interesting and I am writing a separate article for it. If you read the news or the financial statement, at one glance, you will see that FY 2018 was a record year in terms of net profit and earnings and you are wondering why the price is dropping lower and lower. However, if you were to remove the divestment gain from Netlink Trust, one will see that hidden beneath those record net profit/earnings is actually a declining business/revenue. Why did we still buy the share then? Keep a lookout for the next post :)

Dividends
The total dividends collected this month is $4,067.59. The breakdown is as follows:

Company	Symbol	ExDate	Shares	Total
Thai Beverage Public Co Ltd	Y92	25-May-18	10,000	$62.67
CapitaLand Commercial Trust	C61U	23-May-18	2,000	$69.80
NetLink NBN Trust	CJLU	21-May-18	3,000	$194.40
Frasers Logistics & Industrial Trust	BUOU	16-May-18	8,000	$344.00
Ascendas Hospitality Trust	Q1P	16-May-18	15,000	$469.50
OUE Ltd	LJ3	15-May-18	10,000	$200.00
Raffles Medical Group Ltd	BSL	14-May-18	14,000	$245.00
Hong Fok Corporation Ltd	H30	8-May-18	16,500	$165.00
CapitaLand Ltd	C31	8-May-18	5,000	$600.00
Parkway Life Real Estate Investment Trust	C2PU	7-May-18	2,000	$63.40
Chip Eng Seng Corporation Ltd	C29	4-May-18	8,000	$320.00
QAF Ltd	Q01	3-May-18	3,000	$120.00
Far East Hospitality Trust	Q5T	3-May-18	10,156	$95.47
Starhill Global Real Estate Investment Trust	P40U	3-May-18	12,000	$130.80
Mapletree North Asia Commercial Trust	RW0U	3-May-18	5,000	$226.55
Sheng Siong Group Ltd	OV8	3-May-18	18,000	$315.00
Wilmar International Ltd	F34	3-May-18	2,000	$140.00
Tuan Sing Holdings Ltd	T24	2-May-18	11,000	$66.00
APAC Realty Limited	CLN	2-May-18	12,000	$240.00

Total dividends collected for 2018: $6,765.11
Average dividends per month for 2018: $1,353.02

StashAway

Capital: $8,000.00
Current: $8,095.42 (IRR: 2.8%)

Health - KPO Needs to Lose Weight
Date: 2018-06-01
Weight: 69.2 kg (Yay! 3 more weeks to our prewedding photoshoot!)

BMI: 23.1

Do like any of the following for the latest update/post!
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4. Instagram - KPO_and_CZM (Did you see those delicious food photos to the right -->)