Online Resources for Help in your Debt Problems with DebtHelp.com

The Americans are quite advanced in debt management as their consumer culture is one in which Singapore learns and emulates in many respects. The McDonaldisation of our credit card industry would have been much more aggressive if our Monetary Authority of Singapore had not stepped in with curbs and restrictions on the banks ability to provide unsecured credit to consumers. Currently you can get a credit card in Singapore if you are earning at least SGD 30,000 (approx USD 19,500) a year.

Review of Debthelp.com
One of that interesting websites that the US has is DebtHelp.com. It is a financial website that shares with consumers ways and means in which they can do mortgage refinance and debt consolidation. The types of debts covered in the website is pretty comprehensive: ranging from Student Loans to Housing Mortgages to tax debts. Mortgage refinance is an important aspect of debt management for many of you because your home mortgage is arguably the largest consumer long-debt you will get yourself into to finance your home.

Navigation and Interface
DebtHelp.com has a clean interface and splits up its content into the following main sections:

• Debt consolidation : debt consolidation loans, credit counselling and debt settlement
• Loans: Mortgage Refinance, Second Mortgage, Home Equity Loan, Home Equity Line
• Taxes: Offer in Compromise, IRS Payment Plans, Penalty Abatement, Tax Liens, Wage Garnisment Release, Business Tax Relief
• Students: Federal Loan Consolidation, Private Loan Consolidation
• Bankruptcy: Bankruptcy Options - Chapter 7/13/11/12
• Credit: Credit Report, Credit Repair, Credit Monitoring
• Help Center: Browse Articles, Debt Calculators, Website Problem
  

Singapore is also facing the problems of people who get over their heads with their credit card debt as well as their personal lines of credit. Our own credit bureau has only been established since 2002, for less than 10 years and is lagging behind the US in this area.

Interactivity with users
Debthelp.com also has interactive questionnaires that you can fill up with the amount of debt you have, your income level etc to learn more about possible ways you can restructure your debts. It's similar to what Singapore banks' websites have except that they usually help you borrow even more money! :-)

Relevant Articles
In addition, the website has useful articles on the right section of each page. Hence, if you are reading about Debt Settlement and want to read other relevant articles to this topic, you can just move to the right side and click on articles related to "Statute of Limitations" or "What is a Charge Off?: Prevention & Recovery" that pertain to the topic of debt settlement. This is a nifty feature which will save the reader some time in trying to search for further reading on his topic of choice.

Financial tools
There are also the useful financial calculators to help in computing whether it is worth refinancing your loan or whether you should pay off debt of invest your money. This is a perennial issue that is faced in Singapore by those of you who take up HDB loans at the concessionary rate of 2.6% and have CPF savings in your ordinary account giving you a 2.5% return. Now you can compute once and for all whether you should empty your CPF ordinary account into your loan or use your CPF OA monies to invest.

It might be worth you time to take a quick look at how the US's consumer debt environment is different in some respects to Singapore and yet the same in other areas.

Do you think you can time the market?

I look towards the stock market to help enhance my returns from investments. My investment objective is very clear: to get returns that are double that of prevailing fixed deposits (time deposits). Given that time deposits are paying about 2% to 2.5% or so, I am looking at generating returns on my portfolio of at least 4% to 5%. So far, I have managed to meet my investment objectives mainly due to the buoyant stock market as well as careful investments in blue chip shares.

My achievements have very little to do with my own ability and skill. 95% of it is pure dumb luck! I happen to start going into equities since the 2003 SARS hit Singapore and our stock market and have been selectively trading blue chip stocks over the period of 4 years plus. The question you must be thinking is how does he time the market?

Timing the market is difficult
The problem of timing the market is that unless you have the ability to tell the future, timing the market at its very peak and its very trough are virtually impossible. However, what is possible is riding the trends while the market is moving towards the trough adn moving towards the peak.

So far I have been very fortunate because I manage to ride the bullish streak on and off through some of the blue chip counters such as SIA, Singpost, DBS, OCBC, UOB. Of course I do not own all these counters at the same time (though I wish I did!) but have held them on and off during these 4 years. I do not know technical analysis so my approach has been to use fundamental analysis to understand what are the key factors driving the outlook and earnings of these companies and more importantly, how other investors would perceive it. The share price is a function of the expectation of future earnings of the company as well as its business performance. The share price is also a function of investors perception on these and their sentiment. I take these factors into consideration in my investment decision while evaluating the price level of a company's share.

My approach to stock picks
I pick mainly blue chip stocks that have a track record of dividends, preferably dividend yield is close to or near fixed deposits returns. Strong competitive position in their respective markets is also a quality I look for and also the prospects for that company as the broader local and global economy grows. Liquidity is another concern because illiquid shares can leave your funds stuck during a time when you want to cash out your equity holdings and move your money to safe havens such as treasury bills or Singapore government securities.

A tale of two stocks
Singpost
To provide some examples of what stock picks I do, here are some examples. :-) Singpost was a share I have been monitoring even since its IPO, it is a type of share I will hold long term although I have been trading in it when its price shot up a lot last year. I still hold it. Why do I hold Singpost? While some people were spooked by the liberalisation of the postal service sector this year, in reality, Singpost is in such a dominant position for basic mail and post services that it is effectively a monopoly. The capital infrastructure needed to get into basic postal services are too prohibitive and cannot be easily duplicated by any new entrant. But what's really sexy about Singpost is that it is a monopoly on agency services. It has one of the largest (if not the largest) retail presence for accepting counter payments for statutory fees, charges and payments such as TV licences, CPF top-ups/contributions, income tax, property tax, road tax, etc. There is still a significant segment of residents here who do not own a ATM card and do not know how to use the internet to make payments. I think it's long-term prospects are good even with the occasional hiccup when they tried to buy a local SME.

China Aviation Oil
My purchase of this stock was really pure speculation and not completely in line with my investment strategy. I happened to chance upon some internet chatter than this share could be a performer after it went through restructing. I monitored it for some time and decided to go in at 1.03 for 10 lots. The price was pretty stable and it shot up to 1.17 at one stage and I sold it. On hindsight (and that's why you can never 100% time the market unless you can tell the future!), it has since go up to $2.30+ and I missed out on $13,400 profits on just this one counter. :-( This and many lessons have taught me that you can never time the market, so take your profits and run! I have also met some people who lost money on CAO before it collapsed under its losses from trading oil derivatives under old management and it is this human greed for more profits and fear of losing out potential profits that you and I as investors must guard against.

What is your own investment objective and strategies? Share them in my comments section!

Be well and prosper.

Money savers: see less and you buy less

In an earlier post on "We covet what we see", I touched on how you are programmed to want more than what you really need. Underpining this behaviour is how your desires are stoked by the images you see trying to get you to fulfil that perceived need or want.

If seeing is believing and making us buy stuff that we don't need. Then the way to save money is to see less so that we will buy less!

How does this work
You receive tonnes and tonnes of mailers from your credit and debit card companies all the time filled with glossy brochures and incredible good deals and discounts for fashion items, accessories, jewellery, electronic gadgets, toys, furniture and so on. In order for us to curb our unnecessary spending, you can slowly wean yourself off this diet of glossy brochures and glimmering big offers by putting them aside and not reading them when you first receive them. Just put them to one side and wait for the rag-and-bone man or your charity organisation to come for their monthly collection of old newspapers and magazines and put these brochures together with the pile and recycle for a greener world!

Cut down stimuli to your brain to make you buy stuff
If you know how the brain works, our desires tend to be activated by the images we see and the thoughts generated to get us to consume this product or that service. This is what advertising is all about, trying to change our attitudes and preferably our buying behaviour towards a particular product or service. For you to save money and cut down on spending, you have to consider cutting down the amount of stimuli your brain is getting about consumption.

Go on, try out this techique for one week and report if you have had any success in being less inclined to buy stuff you don't need!

Be well and prosper.

How to save money daily?

Have you heard of this saying that, "a dollar saved is a dollar earned?"

Saving money is making money. By choosing to go for more economical ways of doing about your daily lives, you can save a lot of money. A forummer by the name of homer123 gave some of his suggestions he read from another forum many years back:

"1. spend more time reading and exercising (jogging, cycling--free anyway) to keep fit to avoid unnecessary illness instead of getting involved in bad activities like drinking or chioning.

2.Avoid any temptation to spend-avoid the shopping centres. Each time, prepare a grocery list and just go to the nearest provision shop and get them... the longer you linger... the more itchy to spend.

3. Recycle/reuse waste water. When taking shower or bath daily, stand inside big bucket and collect bath water running down the body inside bucket. Collect all washing machine rinse water. Use them to flush toilet or wash floor. Enough to last many toilet flush. Save water.

4. When washing hands, use water from container instead of water flowing from tap.

5. Place 1 litre bottle inside toilet cistern to limit water flushing quantity.

6. Let your tap drip overnight into a pail... free water... the meter can't detect small movements... good for mopping floor.

7. Learn to fish. I spend my free time fishing ..The amount of fish I catch every month is enough to last me for a while ..Provide good protein and they are free!

8. Plant some of own veggie. I live near Malaysian Railway track..The land along it is unused and I cleared some plot to plant my veggie.I tried to plant those that grow easy...like sweet potato or gourd-type veggie

9. Buy good secondhand electrical good when possible. Save money.

10. Empty refrigerator and buy smaller fridge as much as possible. Eat 2 meals a day and stay thin. Buy only when needed, do not overload fridge.

11. Short distance travel use bicycle. Stop using bus/mrt or taxi. Save travel expense.

12. Use company toilet to bath or s#$% everyday. Save home water usage.

13. Charge all your batteries in the office (save elec bills)

14. Surf in the office... or get the cheapest rates

15. When purchasing computer. Don't buy brand new. Buy secondhand, it is just as good if for normal internet surfing purpose.

16. Cook yourself and Bring own lunch to work...

17. DON'T buy any drinks, even softdrinks cos' they're the most unworthy ones... bring a sports water bottle... Keep one in backpack ... one day at least save $2-$3 on drinks

18. Terminate your Handphone line. Get a pager and a phone card, it is cheaper. It may be inconvenient but you are still contactable.

19. Stop using aircon. Buy electrical fans. Save electricity.

20. Install window film or tinted glass at home to keep heat away from home. Keep house cool and bring down air-con or fan electrical bill.

21. Don't buy newspaper..Read from CC or library.

22. Wear your cloth and shoe until there is a hole before buying a new one."

Do you have your own money savers to contribute? Leave your suggestions in the comments section!

Be well and prosper!

Health, Happiness and Wealth

How many of you use positive affirmations in your daily life? :-)

What type of affirmations do you use?

Affirmations for financial freedom
I have this affirmation that I am starting to use everyday when I wake up, commute via the MRT and throughout the day. The affirmation goes like this,

"Everyday I attract health, happiness and wealth!"

The sequence in which I say out the affirmation (in my head) is critical. Without health, it is very difficult to achieve happiness and all the wealth in the world does nothing for you if you do not have the health to enjoy it! This lesson was drilled into me yesterday when I was hit with a bout of food posioning! I spent the entire night alternating between clearing my churning bowels at the toilet and curled up in bed weaker than a baby. When I saw the doctor the next day, she surmised that it was most likely the fish that I had cooked the day before that was the cause. She prescribed lomotil and charcoal tablets plus panaco for the fever that had developed.

Health is a critical part of financial freedom
As we continue on this journey towards financial freedom, do we consider how our health plays a critical part in this process of attaining financial independence? You work for a living. You work to save. You work to invest. Working or running a business (or managing an inheritance) are ways that we can obtain our income. This requires us to be healthy in order for the income to continue to be generated prior to us attaining the stage where our passive income sources earn more than our living expenses. As a result, it is critical for us to take care our health and to invest some of that 24 hours in a day towards looking after our well-being.

Diet, exercise and managing stress
Diet, exercise and managing stress are the key components of living a healthy life! Yesterday, it was diet that did me in because I was not careful about food hygiene and that contributed to my bout of food poisoning. I have lost weight in the recent one year partly due to my diet of quaker oats Mondays to Fridays for breakfast.

What is missing now for my health is regular exercise. It is still pretty much a hit-and-miss affair, as I go for runs when I feel like it which is not ideal. I should make it pretty much part of my lifestyle just as I have incorporated frugal living and prudent investing as part of the overall means of achieving financial freedom.

Managing stress becomes easier the closer I move towards my goal of financial freedom because when you have a net worth that grows nearer to your targetted objective, you become less worried about being beholden to your job and more opportunities appear before you.

When my housing loan was a big chunk of my net liability position, I often felt trapped by my job because I was working to pay off my mortgage and you feel that you are a slave to your job. Now that I have settled my mortgage through prudent saving and ploughing all my income and bonuses into the loan, I no longer work for the bank but work for my own retirement and the dream lifestyle that I want to achieve. Each small victory in this quest for financial freedom motivates me even more to continue on this path. The journey may be long and the financial discipline tough but the reward at the end of the road more than justifies the endurance needed to last the journey.

May you find your paths to health, happiness and wealth!

How should I buy treasury bills: using poems or direct to banks?

I am a regular at two main forums. One of them is Hardwarezone and the other is SgFunds. The interesting thing about forums is that there are many young people who are new to investments and they ask many "newbie" questions.

Newbie questions may be irritating to some but they are a veritable gold mine for me to write posts about personal finance because it allows me to know what people want to find out and hence by responding to their posts with answers, I also generate content for this blog!

It's a win-win situation!

Poems or Banks?
One of the questions that arise after new investors learn of treasury bills is how should they do their investing? Should they go through the bank or use Phillips securities Poems trading platform?

The main difference between buying from a bank and buying through poems is as follows:

1) Time
If you are working a day-job and hardly have time to go queue at a bank, it is better for you to invest in treasury bills using poems as you can do it online with a poems trading account. If you are a retiree or work flexible hours or afternoon shifts, you may want to consider applying for Singapore Treasury Bills or government securities direct through the banks as there are no commissions or charges by the banks as primary dealers. The bank is doing "national service" to process your application for Singapore treasury bills to the Monetary Authority of Singapore.

2) Cost
Poems levies a spread of around 15 basis points (0.15%) between the cut-off yield arising from the treasury bill auction and the yield that you get investing through Phillip securities. Hence, if you had applied for the treasury bill direct, you would have saved this 0.15%. If you are a small investor with a couple of thousand dollars, this does not make much of a difference. If you have a couple of million to invest, then you can probably afford to get someone to go down to the bank and apply for the treasury bill to save that 0.15%. :-)

3) Knowing the yield
When you buy treasury bills from poems, you know what is the cut-off yield (less 15 basis points). When you apply for the same tranche of treasury bills through the banks, you are basically going in "blind" as a small player, you want to get your allotment by accepting the cut-off yield after MAS matches the succesful bidders for the auction. Hence, if you think that treasury bill yields may go up or down and want to know what is the yield before locking up your funds for the next 3 months, you may want to consider investing in the treasury bills through poems after comparing the yield against what you can get from the best fixed deposits rates for the amount of funds that you have on hand.

Therefore, the answer to this question really depends if you have time, are concerned about the 15 basis points spread and you would like to know what the yield is before investing. How you invest depends on what is your objectives in approaching treasury bills.

Be well and prosper.

Financial Freedom : A Reality Check

Flight VF506 touched down on Changi Airport at 12:40 a.m. and within less than 1 hour 30 minutes, I was back from a short-weekend trip to Jakarta. A city is so like Singapore in many ways and yet so unlike Singapore in many other ways.

A tale of two cities
Jakarta is a cosmopolitan city and if you compare shopping malls, restaurants and food courts, cinemas, both are very similar. And yet in this sea of similarity I find vast oceans of differences that separate these two cities. Firstly, the quality of public infrastructure varies widely between these two cities. Secondly, the rich-poor divide is also very stark because you can see hawkers pushing mobile food carts juxtaposed against palatial residential homes just 2 streets behind gleaming malls of Senayan.


How does this relate to financial freedom?

Financial freedom so that you can...
It gives me a reality check on my journey to financial freedom. One of the key dangers of pursuing this path is to forget to appreciate the ride, the experience and the steps that one goes through to reach financial freedom. It is too easy to think that achieving the goal of being able to let passive income exceed daily expenses and allow one to live a life of leisure as being the only thing in life. It is not. There is more to life than this, and the ability to care and lift up your fellow man even as you lift yourself out of the rat race should not be forgotten.

A short-trip now and then to other countries allows us to re-evaluate our priorities and to be thankful for your health, happiness and for our family even as we pursue the wealth that gains us the freedom to pursue other things in life.

What will we do when we attain this freedom?

You need to decide for yourself!

Be well and prosper.

Thirsty for financial freedom?

I remember reading the science fiction series by Hugo award winner Frank Herbert titled "Dune". It is a facinating book because it talks about a future on a desert planet aptly named Dune where the rarest of commodities know as melange or "spice" exists and where interplanetary travel is only made possible by Guild Navigators who ingest and consume this exotic additive. The main character Paul Atreides finds himself trapped on the desert outside of the protection of the city and in the desert among the fremen, spice itself is not the ultimate treasure... The ultimate treasure is water!

What has water got to do with financial freedom
That's an interesting factoid but how does it relate to personal finance and money?

The reason I am bringing up this story is to share with you that while we may think making more and more money is the ultimate goal for our financial freedom, we need to consider see ing money as a means to our ends and not the ends itself.

Let me explain further. Many of you want to achieve financial freedom. I want to achieve financial freedom. Your boss, colleagues, neighbours, friends, relatives and most Singaporeans all want to achieve financial freedom. To what ends?

What is your true thirst in life
In the novel, Dune, although spice was the equivalent of money, water was ultimately life itself because without water, you would have no life and no amount of spice could save you from death if your die of thirst. In your quest to earn more, save more, invest more, do you pause to seek the objective that you are trying to achieve with your activities? What is the true thirst that you are trying to quench in your pursuit of wealth and financial freedom?

Maslow's hierarchy of needs theory teaches us that we will stop being satisfied by the material side of life (food, shelter, safety) i.e. financial freedom considerations, we will start to yearn for the spiritual side (self-actualisation, fulfilment). This is a continuing theme that I alluded in one of my earlier posts that as we drive towards our destination of financial freedom, do we spend equal time thinking about what drives us?

Quenching your thirsty
Financial freedom as represented as having sufficient passive income that exceeds your living expenses allows you the choice to decide what the life you want to live that will satisfy both your heart and your soul. Some of you do not even have to wait for that if you have already examined yourself and know what exactly it is that thirst that you need to quench with life-giving water.

I challenge you to look into your own hearts and minds and see if you can find out what makes you thirsty?

Be well and prosper.

Am I adequately covered for healthcare costs?

If you talk to taxi drivers during cab rides, a common refrain you hear from them is,

"It is better to die than to be sick in Singapore!"

Medical costs are rising with rising affluence and longevity
Wow... Has our society turned so commercial and materialistic that life is not precious anymore? Why does the taxi driver make this observation about healthcare costs in Singapore?

Many of you who read this blog are just fresh out of school, you are starting on your first job or have worked for a few years. You realise that as you start planing for your financial future, healthcare costs must be factored in. In order for you to make the right choices regarding your healthcare insurance and savings needs, you need to be aware of the 3M framework! :-)

Nope, I am not talking about Making More Money but Medisave, Medishield, Medifund.

What is the 3M framework?
Let's see what the Ministry of Health website has to say about this: http://www.moh.gov.sg/

Medisave
"Medisave, introduced in April 1984, is a national medical savings scheme which helps individuals put aside part of their income into their Medisave Accounts to meet their future personal or immediate family's hospitalization, day surgery and certain outpatient expenses.

Under the scheme, every employee contributes 6-8% (depending on age group) of his monthly salary to a personal Medisave account. The savings can be withdrawn to pay the hospital bills of the account holder and his immediate family members. "

This is your first line of defence, essentially, Medisave is YOUR OWN MONEY and you can use for for certain medical expenses if needed and also to buy medical insurance plans either from CPF or from private insurance companies. Now let us look at the 2nd M, Medishield.

Medishield
"MediShield is a low cost catastrophic illness insurance scheme. Introduced in 1990, the government designed MediShield to help members meet medical expenses from major or prolonged illnesses, which could not be sufficiently covered by their Medisave balance. MediShield operates on a co-payment and deductible system to avoid problems associated with first-dollar, comprehensive insurance.

Premiums for MediShield are payable by Medisave. A very large medical bill can easily wipe out your Medisave balance, as it is only a cash savings account. For this reason, you are advised to take up MediShield or an appropriate private health insurance in order to stretch your Medisave dollars.

MediShield will cover an average of nearly 60% of your large medical bill at Class B2 or C wards. Your co-payment and deductibles can be payable using Medisave or cash. MediShield and other Medisave-approved private integrated plans are designed to cater to your different insurance coverage needs."

Your second line of defence is medishield. How medishield helps you is that it is a form of medical insurance, i.e. you pay a premium from your medisave and the insurer will absorb part of the costs of your medical treatment subject to deductible. What is a deductible? A deductible is the portion that you first need to pay either in cash or medisave (which are both your monies but from different sources) before the medishield kicks in to cover a PORTION of your medical bills. According to the Ministry of Health,

"Deductibles are set high because the scheme is intended to cover large or catastrophic bill sizes. A high deductible is also necessary to discourage excessive use of medical services, and keep the premiums low and affordable."

What this means is that insurance is not meant to cover EVERYTHING! It is meant to protect you against very serious illnesses where the treatment costs would bankrupt you. This is an important concept in insurance. The more protection you want, the higher your premiums-- the amount you pay per year for your medical insurance. Hence, the optimal level is sufficient protection so that you will not be financially wiped out by an unforseen illness or condition and yet pay reasonable premiums.

Medifund
The final component of the 3M framework is medifund. This part only kicks in if you have exhausted your medisave, medishield etc and a committee will scrutinise if you tap on this funding. Typically, it's given on a case-by-case basis on a very selective criteria. If you really need to tap on this, talk to a medical social worker in the public hospital who will be able to help you with the paperwork if the need arises.

So what does that mean for me
Having at least seen what is the 3M framework, what you need to know is that your health is in your own hands. In general, your company's plan or your own pocket will cover the outpatient consultations for normal cough, cold and flu. Medisave generally cannot cover this unless it is for specified medical services such as regular consultation for chronic diseases such as diabetes, etc.

What do you do then with your medisave monies? Buy insurance. The basic medishield only covers the bare minimum to reduce the risk of major illnesses and subsequent treatment from bankrupting you. If you are working and contributing to CPF, then you should consider buying privatised medishield plans that provides greater coverage for a higher premium. It's generally easier to join such schemes when you are younger and healthier and your premiums are lower per year.

Keep yourself healthy
However, the most important thing you should do is to keep a healthy lifestyle! One thing I learnt from serving national service in the army is to take care of my own health. This is one of the most cost-effective ways to reduce your healthcare costs.

So eat that apple, go for that jog and be well (and prosper!)

What does money mean to you?

You read about it in the money pages of the newspapers. You work hard 9 a.m. to 6 p.m. for it. You go to school, study, take your exams in order to qualify for a job in the future where you earn enough of it.

What exactly is money
But what exactly is that IT we are pursuing?

"Don't be stupid, Singapore is a very practical society, we need money and a decent income to have a certain standard of living!"

Exactly, money in itself is just the notes and coins in your pocket. The figure in your savings account book. The number that represents your status in society. But what money does is that you use it to exchange for something else. Other than those who collect numismatic coins and notes, money is used as a form of exchange. Money facilitates us selling our labour in exchange for goods and services that we need and want from other people. Money is used as the measure of value and exchange of goods and services between different parties.

If you withdrew all the money in your bank account in terms of bank notes, pooled them in a pile and jumped into them, that would make you happy maybe for all of 10 seconds. After that, you find that you cannot literally eat it or build a house with it.

What do you want out of money
So what do you ultimately that want out of your lifelong endeavour to earn enough money from work, investments or gambling? That is what drives you. If you find that it is to continue this endless cycle of exchanging it for goods and services you do not need but want, then it could be time to examine the reasons that drive your very existence.

How many of us are trapped in our daily grind and we blame it on the mortgage, taking care of the family and obligations? How many of us can reframe money to see it that it is the reward for us contributing to society in productive ways so as to facilitate us bringing life into this world and sustaining the next generation for the future? How many of us can alter our perspective that we have choices.

We have choices
We can choose to work or we can choose to starve, but these are choices! Instead of seeing ourselves as the victim of our circumstances, see ourselves as masters of our financial destiny. We choose to work because we want to build up enough money to exchange our time for other pursuits. We chose to save because we want to bequeath a positive financial legacy to our children. We chose to invest because by building up capital for the future, we give ourselves more options when we get there.

Are we able to reframe our attitude and approach to money?

Pause in your daily life, think about what is the ultimate aim of this endless pursuit of money? If you goal contributes to the universe, money will flow onto you.

Does Singapore educate its young enough about personal finance?

5C10C_065_RJ copy

Originally uploaded by panzergrenadier

There are literally hundreds (and perhaps thousands) of questions to personal finance on some of the forums that I monitor and it reveals the abysmal lack of foundations built for our future generations when it comes to financial literacy. I too was ignorant about personal finance until I started working and I learnt some painful lessons the hard way, through losing some of my hard earned savings through investments in unit trusts that I didn't really understand.

Common financial questions
Some of the common questions posed by forummers are simple ones that can be answered by googling or searching for the right websites.

Take for example, this common question:

Q: "Where can I find the best interest rates for savings and fixed deposits"?
A: You can visit Qotion.com or check out the money section under Hardwarezone forums

Another similar question about loans:

Q: "Where can I find the best loan rates?"
A: You need to shop around different banks as loan packages can be customised to the requirements on the customers. You can also visit Dollardex or Qotion.com for some indicative rates.

Others who have just started working begin to think about their insurance needs. While there are a plethora of independent financial advisors, financial planners representing the big life insurers etc. There appears to be a relative lack of resources in our mainstream schools, polytechnics and universities to teach our young about personal finance. How can we be truly building up a nation of knowledge workers who know where to search for information if we do not equip them with the foundational financial literacy skills to chose between the bewildering range of financial products both suitable and unsuitable for them?

Are we leaving our young to the financial wolves
Is it because we want to feed them to the ravenous financial planning industry, the fund management industry, the financial service sector that will sell and sell and sell them the financial products they think they need?

When I started this blog to share what I knew about treasury bills, I am amazed that virtually everyone I talk to in the physical world (including financial planners themselves!) are not aware about how they work and how retail consumers can invest in them either direct with the primary dealers or through poems. This scares me as it shows how a low cost and safe instrument that yields at fixed deposit rates for low minimum sums of SGD 1,000 is given so low publicity while financial institutions hawk credit linked notes and other derivative products to the unsuspecting investing public while relying on fine print and brandishing the famous latin phrase "caveat emptor" (let the buyer beware!).

I do not think this is a satisfactory state of affairs. Do you think that we should continue to allow our youth to find their ways into debt, not learn about personal finance until they unwittingly get into trouble with banks, financial institutions, credit bureaus and be declared bankrupts until we are satisfied?

Let me know your views by leaving a comment! I'd love to hear what you have to say be it as a consumer, a professional in the financial planning world or staffer in a bank, financial institution or even the regulator!

Be well and prosper!

Making Money is Fun!

5C10C_041_JFR copy
Originally uploaded by panzergrenadier

We sometimes get too serious about making money! We get stressed over the lack of it. We agonise over how to get more of it. And we lose sleep if we lose some of it!

Why does money (or the lack thereof) have such an impact on our lives?

Money makes the world go round
Let's face it, we live in a globalised world run largely on the capitalistic, free market model where the exchange of goods and services is determined by demand and supply...AT A PRICE! That price means we have to pay for goods and service we consume. One of my good toastmasters friends, Patrick Chang once quipped that his mother told him, "Money is not everything, but everything is money!"

How true! In the backdrop of rising consumer prices, we need to work or run a business to earn an income that supports our living standard and it boils down to how much we earn and how much we spend. But have you ever paused to wonder why money is giving you so much pressure in life? That it may even affect your health, your state of mind, your happiness?

Why are we unhappy over money
Part of the cause of our own unhappiness over money is the scarcity mentality. We grasp what relatively "little" we have tightly because we are afraid to lose it. We think that it's a zero sum game, every dollar I spend is a dollar I have less! That's true only if your tap of income cash flows has dried up. One of the greatest fallacies we have in life is that I need to have ______. You can fill in the blank yourself. Our needs and our wants are different but few of us realise that we are driven by our wants most of the time.

Think for your own life. Look at the watch you wear, the brand of shoes you have chosen, that haircut or hairstyle you have on your head. You chose the brand, the cost and the product or service. Was it to satisfy your need or your want or both? In our consumption culture, we rarely pause and think about separating our needs and wants and because of our inate drive to want more, we tend to spend beyond our means, giving us financial pressure, being a slave to our jobs and being a slave to money.

Choose to satisfy your need or your want
There is another way out. You can control your spending by controlling your thoughts and attitudes towards how money should be allocated to our needs vs our wants. Our wants are plentiful and insatiable. Our needs, on the other hand, are limited and can be satisfied within a moderate spending pattern. What it takes is the discipline and focus that can only come if you make a conscious effort to distinguish between a need and a want.

I am not advocating being a miser and depriving yourself the fruits of your labour and buying clothes to look and feel good, food that satisfies your hunger and yet gives you a pleasurable dining experience. It is not wrong to own that fancy car, watch or home. What I am advocating is a consciousness, that ability to decide and not let your own inate desires drive you to consume. This consciousness comes gradually, through slowly coming to the realisation that, at whatever income levels and whatever wealth, if you cannot differentiate between needs and wants, then you will find that you need to drive yourself to that income level that feeds this insatiable desire, this never-ending cycle of consumption.

Save and invest, there are no shortcuts without high risks
Making money should be fun if you are not under the constant pressure to pay bills and expenses driven by conscious and unconscious wants. You can have abundance in your life if you take steps to prioritise your spending and to eliminate debt. Use your hard-earned income to save and invest consistently. To invest in genuine investments that yield slow but steady returns for the future. Overtime, you realise that making money can be fun because the more your earn and invest, the more your passive income grows and works hard for you! You are working hard to build up investible savings that also works hard for you 24x7x365.

Financial independence and security is important. But it comes not just purely from earning more money or buying lottery tickets. It comes also from knowing what you want to spend and knowing the consequences of each spending decision.

May you find that knowledge so that you can enjoy the process of making money!

Be well and prosper.

Everybody wants to make money on the internet!

How many of you are old enough to remember the dot.com crash in 2000? How many of you recall companies closing down one by one, with IT engineers, application programmers, systems programmers all retrenched? How many of you remember everyone wanted to "tok kong" (dot.com) his business?

Making money on the internet is not easy
If you read any business book about the excesses of the dot.com era, you will realise that easy money is not that easy. For every one success in the dot.com world such as Amazon (yes they still exist and are actually profitable selling books, toys, even groceries online!), there are many instances of companies that go into Chapter 11 or bankruptcy.

What does it take to make money on the internet? What are the actual business models that work and those that do not? How do you know if the "investment opportunity" or "high yield investment program" in front of you is a scam or not?

Ways to make (and lose!) money on the internet
Welcome to the real world making money on the internet. There are many ways, both legitimate and illegitimate to make money and for that matter, lose money via the internet. If you read any internet marketing book sold by a "guru" or attend an expensive course on internet marketing, you will realise that there are fundamentally a few business models to make money on the internet.

1. Sell your product or a service
This is a no-brainer. The internet or world-wide-web has vastly reduced the costs of doing business on the internet. Previously, most business was done largely within a geographic area, especially if you bought and sold goods. Only large organisations that specialises in import/exports typically engaged in global commerce as the economies of scale were large enough for them to defray the costs of transportation.

The introduction of the internet and the ability for the individual to get online via his broadband (or even 56kps dial-up) connection now allows us opportunity to sells services/intellectual property over the internet at very low transport costs. This has spawned multitudes of websites selling you e-books and get-rich-schemes for as low as USD 29.95! Many of these schemes are scams because the easy availability of information means that most knowledge is available via public domain or creative commons resources such as Wikipedia, personal blogs, groups, forums etc. All this information as well as misinformation is available for the cost of your monthly broadband subscription plus a little investment in a computer.

If you are thinking of selling something on the internet, start by selling stuff you already have e.g. using online auctions such as eBay or Yahoo! to get rid of stuff that you still own but hardly use. If you are already operating a bricks and mortar store or business, considering using the internet as a marketing and ordering channel for your distributors and customers!

2. Sell someone else's product or a service
This is where the market for affiliate marketing comes in. Basically, the internet is the new place for advertisers to place advertisements everywhere. So now the cost to advertisers are very low, i.e. virtually anyone can be an affiliate but only if you refer successfully your user to the principal's website or if he makes a transaction, then you get a commission. There are many affiliate programs around e.g. Commission Junction, AuctionAds, TextLink Ads etc. This is one of the means for full-time internet marketers to conduct their business activities.

3. Run a blog and website and get paid for advertising clicks
The way for small websites or bloggers to earn some pocket money is by monetising their virtual real estate. AdSense is one such program that pays you each time a visitor to your website clicks on ads relevant to them. How it works it that Google AdSense is able to intelligently understand what is the topic of your website through keywords and they will send relevant advertisements to your target audience. Each time someone who visits your website clicks on an advertisement, you make some money. In order to monetise your website, you need to have traffic. Before you can have traffic, your blog/website needs to have content, i.e. why would visitors want to visit your website or blog if there is nothing in it for them?

AdSense is something I am trying and it is not easy. You have to rack your brains to think up of good content and to visit social networking sites such as forums to attract traffic to your blog. In addition, search engine optimisation techniques such as keywords will only get you so far. It is a challenge to be able to produce consistent results. But this is a avenue for those who are able to build portals or communities where people gather and result in high traffic.

Many paths lead to Rome
Many roads take us along the path towards the goal of making money on the internet. Some paths are long, arduous but ultimately rewarding. Other paths may be relatively quick, fast but eventually draining. Whichever path you choose, remember this. Money is not everything. ;-)

Sign up now for your GST credits!

Here is a gentle reminder for those of you who have not signed up for your GST credits to do so before 25 June 2007 via ATM or internet so that you can receive it by 1 July 2007!

Does AdSense Work? A Singaporean Perspective

Many of you have heard of AdSense. Some of you who like myself have started trying it out recently. And some of you are even AdSense experts making decent pocket money running AdSense advertisements in your blog, website or portal.

Is AdSense for real?
The burning question that I had when I was in your shoes on 27 March 2007 when I first started my AdSense journey was... Is this for real?

Like many sceptical Singaporeans, I thought will an idea like AdSense work in our context? Isn't it more US-centric and hence most of the value will be created there and not here? These and many doubts filled my mind as I hesitantly dabbled in the world of AdSense. As expected, because I was only "playing" with it and not seriously thinking about how to run a proper blog, my results were mediocre to say the least.

A slow start in AdSense
I had an AdSense account since 27 March 2007 but didn't really go into placing Ads and more importantly creating focussed content on my blogs until sometime in mid-May 2007. Hence, my early results were not surprisingly, dismal. Average single digit number of page impressions and a click-through-rate (CTR) of 0.00% which translates into earning of ... a......grand ..... total of...

Zero, nil, nada, kosong and 零蛋!


I began to read up about how AdSense works and what it takes to generate traffic to my blog. What I learnt was to engage the internet community, to participate in relevant forums, to post quality content about things I know and to develop a niche where I am comfortable blogging whether AdSense earnings comes (or not!). Lo and behold, my results starting to become better as I blogged on specific topics I understood, for example, treasury bills. I also blogged about my approach to financial freedom and discussed topics that were generated because, you, readers asked questions about how to invest in this type of instrument or that type of instrument.

Turning the corner
My efforts were starting to bear fruit. Prior to the increased intensity and depth to which I wrote my blog posts, my results were only a meagre USD 6.41 as at 31 May 2007 as seen below:


But it climbed up steadily as what I wrote appears to have resonated with my audience, my page impressions started to go up to 100, 150 and hit a high of 274 at one stage! Consumer behaviour is such that typical click-through rates are closer to 1% to 5% for the "average" website and I was quite happy to see that as at 15 June 2007, it has grown to the current USD 48.99 for the period of 1 June to 15 June 2007. I would like to thank all readers who have found value in my blog in learning and sharing together about how we can grow save money, invest wisely and grow together on our journey towards realistic financial freedom.

Google AdSense allows you to request for cash-out only when you reach USD 100. Hence, I am still working hard to deliver useful content in this and other of my blogs so that more people can join this learning journey together towards total financial freedom. ;-)

What I continue to learn from my AdSense journey
I learnt from my AdSense journey that it boils down to human behaviour and you need to generate genuine human traffic so that the relevant ads when delivered to the targetted group of potential interested visitors will translate into a click to the advertiser's webpage. In order to do that, there are no shortcuts except to write useful content, have a clean design and to invest in writing about things you love or or passionate about. Like many of you, I am passionate about financial freedom but I am realistic enough to understand that there is no short-cuts to success. My blogging regime takes me past 1 am most nights and can be very tiring physically. But mentally I am all charged up and enthused because I believe in what I write and I write what I believe in.

For those of you who may have that hidden talent, that pet topic, that immense experience in a field or domain that many others do not possess. If you are able to write, an articulate your thoughts and have sufficient IT skills to set up a blogger / wordpress blog or your own website, consider trying out AdSense. It might just earn you enough to pay off your broadband connection and perhaps help you add to your retirement fund! ;-)

Be well and prosper, and you may prosper in five cents and ten cents with AdSense.

How to monetise junk in your home using Yahoo Auctions!

You bought that game console, original book, collectible toy 1 year ago and now you do not use it. You realise that item you had purchased and used for a while now does not have much use to you. But do you know that it may be the perfect item for a student who is on a tight budget? A working adult who wants to make his money stretch and even second hand goods dealers who want to buy second hand items in good condition?

Welcome to Yahoo auctions!

What are internet auctions
Internet auctions are nothing new and they have been around for some time. I even remember attending a talk way back in early 2000s where I met the founders of Interauct!-- a local auction site that positioned themselves as the "eBay of Singapore". Sadly, I just went to their website recently and the website is a pale shadow of its heydays where there were thousands ot items listed and bidded daily. The entrance into the Singapore market by the big boys like ebay and Yahoo auctions have muscled in and now these two websites are where the buying and selling are taking place.

Why would you want to consider Yahoo Auctions?
It's free. :-)

Ebay charges a fee for users to list and sell their items online. However, Yahoo Auctions still does it FOR FREE! Where do such opportunities still exist?

Listing what is a piece of useless junk or superfluous item in your home inventory and selling it allows you to monetise what is taking up precious space in your home. The cash flow released back to you allows you to save and invest and then allow you to buy that next item or gadget (and of course become a piece of useless junk again in 1-10 years' time! ;-)) again. The cycle of continues....

So what do you need to do to get on Yahoo Auctions. First of all, you may want to create a Yahoo ID/email that you can use for various Yahoo services. Secondly, you can then register for Yahoo Auctions, verify your credit card info/paypal and you can start listing your item and selling it for a few dollars to add to your retirement fund!

The fun part about Yahoo Auctions is that you learn how to package, market and target your Ad to make it appealing for potential buyers to bid for your item. This is teaching me a little bit more about being a better sales person and is a useful skill. Given that many of you out there have broadband access already costing you $30 to $60 a month, why not leverage on it, look at what you can sell, what is sellable in today's market and start monetising your junk using Yahoo Auctions!

P.S. I do not get a commission for recommending Yahoo Auctions but a friend of mine who is a experienced online seller of collectibles and jigsaws has tried both Yahoo Auctions and Ebay highly recommends Yahoo Auctions if you intend to sell to the Singapore market.

Be well and prosper (a little) selling stuff online. :-)

10 ways of using less electricity to save money

Singapore Power has just announced that average electricity tariffs will be revised upwards by 8.83% for the quarter 1 July 2007 to 30 September 2007. What good timing! 1 July 2007 is also the date for the increase in Singapore's goods and services tax from 5% to 7%, a 40% increase.

What can you do, as a hapless consumer who can only buy retail electricity from Singapore power who is the only provider for domestic consumers of electricity? You need to tighten your belt. I need to tighten my belt. We all need to tighten our belts by conserving our electricity use. How can we save money by using less electricity?

1. Switch from air-conditioning to fans
Airconditioner units use up massive amounts of electricity. Turn to using fans to help cool yourself down during this hot June weather

2. Visit libraries and shopping malls more often
Use less of your own fans/airconditioners by leveraging more on those provided by public places. It helps you to cut down your own electricity use since you are cooling down at those locations.

3. Have more cold showers
Before you switch on the water heater, consider bathing in cold water as the weather now is so hot!

4. Switch from CRT monitors to LCD monitors
LCD monitors use less electricity thatn CRT monitors so do your part for the environment, and you electricity bills as LCD prices are falling.

5. Drink more plain water at room temperature instead of chilled drinks
Your refrigerator is the next biggest consumer of electricity in the house. Drink more water at room temperature instead of chilling them which consumes electricity.

6. Wash your clothes with a full load
The washing machine also sucks lots of wattage from your electricity mains. Ensure optimal capacity before running the washing machine. Helps to save water too!

7. Switch off and unplug unused appliances
Appliances that are not used, e.g. computers still draw small amounts of power even if they are switched off. Switch off the power outlet and unplug the appliance.

8. Sleep early
Use more of natural light and less electricity for lighting and cooling by sleeping early. Reduces the need to rely on electricity powered illumination and fans/airconditioners.

9. Iron less frequently
Make use of the iron by ironing more clothes at one go to maximise the use of the iron.

10. Watch less TV read more books
Read more books and magazines (free if borrowed from the library while you are cooling off) and switch off the TV earlier. :-)

Do give your own tips too in the comments section and all the best in your efforts to save money by using less electricity!

We want it all and we want it now!!!

Many websites and "get rich schemes" abound in the internet because we human beings tend to want to make more money and make more money now! But as I travel along this road of personal investments and finance. I realise the road is long and the journey is hard, and that is part of the reason why I started this blog-- to write down those small five cents ten cents nuggets of information that I learnt from experience, from listening and from reading.

The further I travel along this road to financial freedom, the more I realise the "secret" and "magic formula" is there for all to see. There is no quick road to financial freedom. There is no quick way to riches. There is no quick way to be financially free. BUT... there is a way to develop our own individual methods to financial freedom by reading, understanding and internalising some of the fundamental principles that many know, some share but few practice!

What are these principles?

Live within your means
Firstly, live below your means. Some people take offence at this principle. Some of you feel that having worked so hard, you should enjoy the fruits of your own labour. I have no arguments with that, but I am of the view that by all means enjoy the finer things in life, subject to your income levels. There is no point enjoying a rich lifestyle funded by income that leaves you with little savings unless you are 100% sure that the world will end tomorrow. But if that tomorrow never comes, what will you live on then? You can choose to accept this principle or not. My experience has been that those who have become financially free typically are not the one-off lottery winners but rather, the frugal workers who earn a average wage but by leveraging on the power of living within their means, saving the remainder and investing it in relatively safe yielding investments, they grow their money slowly but surely until they can retire on their passive income.

Save and invest consistently
Savings and investment comes naturally if you develop the propensity to save. Savings left in the bank savings account does nothing much. Savings invested into fixed deposits, treasury bills and some equities, unit trusts or investment property helps to grow. The choice of investment is a function of your risk profile and your level of sophistication as an investor. The more savvy you are, the more able you are to balance the risk-reward trade-off for investments. For those who do not understand the different between a blue-chip and a potato chip can leave their money in treasury bills and/or time or fixed deposits. Let the power of compound interest then work for you.

Take responsibility for your finances
No one except for yourself is responsible for your own financial situation. Your choices in your lifestyle as reflected in the food you eat, the places you shop, the things you buy all percolate down and register themselves in your financial circumstances. Do not say blame the rising cost of living, do not blame COE/ERP rates, and do not blame your pay for the choices you make when you spend. Take a step back, think for a moment. Why do you NEED that Louis Vuitton bag, why do you NEED to drive a car, why do you NEED that big house? Are you sure it is a NEED and not a WANT? There are no right or wrong answers. Your choices determine your financial situation.

Enjoy the journey
The road to financial journey is long and hard. But enjoy the journey. I found that my own journey has been filled with ups and downs. I learnt some painful lessons in poor investments and lost money. I also took responsibility for my losses and started to read up, to learn and to invest. Now, I am in a much stronger financial position and understanding than I was when I first stepped into the working world. Enjoy the ability not to worry about your financial security, enjoy knowing that YOU are in control of your finances. Enjoy the process of being a good steward and guardian of the resources that are at your disposal. Enjoy being financially free, one realistic step at a time.

How can I find out more about treasury bills

treasury_bill
Originally uploaded by panzergrenadier

How can people find out more about treasury bills? In today's internet enabled world, it is shocking that an internet search for the term "Singapore treasury bills" only yields 73 results!

The top secret investment in Singapore
That shows that treasury bills are indeed the "secret" that financial institutions in Singapore appear to be keeping close to their chest. And who can blame them? Treasury bill transactions are basically borrowings by the Government, through the Monetary Authority of Singapore, from financial institutions, corporates and retail investors. But retail investors have not been educated on this very low risk and at time reasonable yielding product that is available for the low investment amount of SGD 1,000 (Singapore Dollars One Thousand Only)! Financial institutions who are primary dealers in Singapore Government Securities (SGS) do not earn any fees from their customers walking into the banking hall and asking to buy treasury bills. They need to process the application as part of their role as a primary dealer in SGS.

Treasury bills compete against fixed deposits
If bank customers put money in treasury bills, banks would not be able to borrow from them and would lose out a valuable source of cheap funds which is their fixed deposits and savings accounts. Banks are borrowing at such low rates they pay on savings accounts and then in return lending out such funds to consumers in terms of credit card debt, personal credit, car loans, home mortgages and business loans etc. Why rock their gravy train? Why make it difficult for themselves to borrow cheap funds from the domestic market to fund their profitable lending? Why not make more money?!!

We need to be more aggressive in educating ourselves
Dear reader, for too long, we have not been more aggressive in educating ourselves on low risk reasonable yield investments such as treasury bills issued by the Government of Singapore through the Monetary Authority of Singapore. For too long, we have been losing side of information assymetry. For too long, we get hit with low fixed deposit rates for our hard earned monies while banks make use of these funds for very profitable lending.

Rise up and become financially literate
It's time to empower ourselves with the internet! Rise up and get ourselves financially literate! Teach our children and youth to appreciate the value of hardwork, savings and investment. Rise up to learn more about how to get into safe and decent yielding financial assets. Learn to make use of the power of compound interest to grow our wealth, lead us to financial freedom... one realistic step at a time!

We see, we covet, we spend

Photo_040906_001
Originally uploaded by panzergrenadier

The Great Singapore Sale is on and hordes of Singaporean residents and tourists and all scrambling for the best deals, the cheapest bargains and the best buys! So what is it with our consumeristic tendencies? What is built into our DNA that we want to buy, consume and spend?

I remember watching the film, "Seven" which was about how a pair of detectives played by Morgan Freeman and Brad Pitt were chasing after a serial killer who stalked and killed his victims for their sins, each of them being the seven deadly sins as mentioned in christian teaching: Greed; gluttony; sloth; wrath; envy; lust and pride. During one of the scenes, the observation was made, "we covet what we see".

We covet what we see
How does this point relate to personal finance and spending. Our consumer culture is very focussed on our individual self-worth being validated through the acquisition of material goods and services. How do we become aware of such goods and services? We become aware through the relentless bombardment of images, sounds and words extolling the virtues of owning that Louis Vuitton bag, carrying that Montblanc pen in your shirt pocket and driving that BMW 5 series down Orchard Road. We see the advertisers' television advertisements, shop displays, goods and items in shopping malls and retail outlets.

All our senses are constantly flooded with messages subtle and overt to see, to lust, to envy and finally to tip our decision point in pulling out our wallet to buy and pay for that something we justify saying, "but...I NEED it!"

The great lie
We covet what we see and we use that great lie many times to confuse ourselves between wants and needs. I too fall prey in my moments of weakness, to keep up with the Lims, Tans and Kohs to make that impulse buy. Now that I have seen the fragility of this economic existence that we eke out for ourselves with our hard earned salaries, I realise that the power lies within myself to reject this great lie and keep asking myself, "Is this a want or a need"?

I am not advocating a totally ascetic lifestyle where you do not consume anything. We still need to meet our basic needs of food, shelter, safety etc. But we can make our economic decisions more pragmatically, to give in to that occasional indulgence --key word being "occasional", so that we live within our means and continue to save and invest for our financial futures.

Do you want to...
Do you want to live a life free from financial worry, anxiety and restlessness?
Do you want to maximise how hard your every dollar earned works for you?
Do you want to be able to say you are the master of your own financial destiny?

If you want any of this, you must first learn to manage your own humanity. Our shared weaknesses, that we see, we covet and we spend.

The power lies within you to redefine your relationship with money and with your own finances.

Be well and prosper!

Advertlets.com : An Asian Review Me! and Payperpost?

I have been blogging furiously for the last 3 weeks and have been exploring the various ways of monetising my blogs partly as an experiment to see how far I can take this activity that I already enjoy doing! I am still experimenting with Review Me! which pays bloggers for reviews on certain products or services by advertisers and also Payperpost where you are bid for opportunities to write posts on your blogs for a fee typically ranging from USD 5.00 to USD 25 and up to USD 250 or more.

As part of my experiment, I came across a blog of a Singaporean blogger through myweblogs and saw that that lady blogger has an Advertlet advertisement and I followed the link to get to www.Advertlets.com. This is when I saw that Advertlets.com has a business model that is quite close to Review Me! and Payperpost except that it was localised to the Malaysian and Singapore blogosphere.

Why I signed up with Advertlets
I took the plunge and signed up with Advertlets because I thought the business model could work since it had already been tried out in the US. While globalisation has broadened the definition of one's market from local to the whole world, not everything can be transplanted across borders without some content localisation. Think about it, not all advertising campaigns that work are universal in their appeal. Even Visa advertisements use the China 110m hurdle champion to help sell their cards and to tie in with the Beijing Olympics 2008. I believe that it is now an exciting time to be involved in a relatively new business paradigm of delivering advertising content using the viral marketing effects of blogs as blogs are the closest thing to a one-to-one word of mouth advertising but yet having the potential for its messages to reach from one blogger to many -- think of the reach that Mr. Brown's podcasts has on Singapore! Simply amazing!

What I Hope to Get From Advertlets
Globalisation also means global competition and my experience with Review Me! and Payperpost shows that it is very difficult to monetise blogs without a lot of effort. Even with lots of effort, it is not that straightforward. For example, my blogs were deemed unworthy of Review Me! due to my relative lack of page rank value by Google nor any mention by Alexa. Hence, I can only participate as an affiliate instead of being a blogger that could be tied up with an advertiser to deliver content about their product or service. While I realise that Advertlet has to also take into consideration reach of blogs and a blog with an audience of 1 would not bring much value to their advertisers, there should be room for the smaller blogs who write with an intensity, quality and passion that will give them the potential to reach out to a much wider audience with sufficient time for them to grow through social networking and connections with other bloggers in the local blogosphere.

Suggestions On How Advertlets Can Improve Further
The concept of a blog advertising network is still new in the region and the value-add that Advertlets can bring to this business model is content localisation. To some extent, it is a numbers game, i.e. the more high quality bloggers who are influential, have reach and are able to articulate views and opinions that resonate with the target demographics, the better Advertlets can sell advertisements to potential clients. The term "Think global but execute local" is perhaps helpful in allowing us to remember that the success (or failure) of any venture depends on executing it. Advertlets can leverage on its first-mover advantage by providing delivering multi-lingual ads and also segmenting its blogger publisher community into niches that will appeal to the advertisers. For more bloggers to come on board, the real test would be, "Show me the money". ;-)



Try Advertlets out now
The true test of any pudding is in the eating. Do try out advertlet if you are already an avid blogger and just love to write. Who knows, you may be the next Mr.brown or Xiaxue. ;-)

Are foreign currency fixed deposits safe?

In today's low interest rate regime in Singapore, many retail investors are looking around for fixed deposits that give a higher return than savings and they are asking the question,

"Are foreign currency fixed deposits safe?"

What is a foreign currency fixed deposit (FCFD)?
[Source http://www.investopedia.com/terms/f/FCFD.asp]

Investopedia defines an FCFD to be "a fixed investment instrument in which a specific sum of money with an agreed upon time and interest rate is deposited into a bank. Although fixed deposits have virtually no risk, foreign currency fixed deposits introduce an element of risk because investors must exchange their currency into the target currency and then covert it back again once the term is over

When foreign currency fixed deposits are larger and longer in duration, they receive much higher interest rates. An FCFD can be a very useful and safe way to invest your money. However, you must make sure that you do not need that money for the entire duration of the term."

We understand fixed deposits
Most of us understand what fixed (time) deposits are. They are a deposit with a bank but for a specified period of time, usually 3 months to 12 months, at a interest rate fixed at the start of the tenure. Fixed deposits typically pay a higher interest than savings because your money is kept by the bank for a fixed period of time and most banks would levy a penalty in terms of forgone interest or even administrative charges if you wish to withdraw the fixed deposit before maturity.

FCFD introduces exchange rates
Now what happens with a foreign currency fixed deposit is that we introduce another variable, which is the exchange rate.

Therefore, a FCFD now has two elements:
1) Interest Rate
2) Exchange Rate

How does it work - An example
Assuming USD (US dollar) to SGD (Singapore Dollar) is 1.5 and USD Foreign Currency (FC) deposit pays 4% interest for 1 yr.

Now for you to get the 4% interest at the end of 1 year in SGD, the interest rate would have to be the same at 1 USD : 1.5 SGD. But in reality, the exchange rates go up and down all the time.

In addition, let's say you want to deposit SGD 10,000 into a 1 year FC, assuming now the exchange rate is SGD/USD is 1.5, when you invest, the bank converts your SGD into USD, say at 1.55 (because the banks will make a spread over the exchange rates) so you already lost 3.3% in value. So now you have USD 6,453.61 earning 4%.

Your interest may be less than FCFD rate if SGD appreciates
After 1 yr, your USD 6.453.61 at 4% earns =USD 258.06 interest, if you decide to withdraw capital and interest, it will be USD 6,711.75. When you exchange that back to SGD, assuming that SGD has strengthened against the USD to say, 1.4. So when you translate back your USD 6,711.67 to SGD, it becomes SGD 9,396.34!

If you play around with the interest rates, so long as the SGD strengthens to below 1.49 (> 4%) against the USD, you will lose the benefit of the higher interest rates. So it that is the additional currency risk you bear when you deposit in FC fixed deposits. Of course, the converse is true, if SGD weakens, then you will make 4% interest plus exchange gain!

Risk of FCFD
The example above shows that FCFD comes with a higher risk because exchange rates can go up or down. In general, if you do not need the fixed deposit and can let it renew without exchanging it back to SGD, then you are not affected by the variation in exchange rates. In general, where the SGD appreciates against the foreign currency that your FCFD is in, then there is a high chance of the increase in SGD exchange rate to a point that it erodes or even causes a loss to the value of the FCFD when the amount is changed back to SGD.

It is a double-edged sword and adds an element of risk that investors should review carefully before investing in such products.

Be well and prosper.

How to renew your treasury bills automatically on poems

5C_tbills_rollover
Originally uploaded by panzergrenadier

The more I learn about treasury bills, the more I realise it is a good addition to your investment portfolio under the category of money market instruments.

Similar to a fixed deposit (time deposit), you can also do auto-renewal of your 3 month treasury bills using poems.

How does it work, let's look at what poems say,

Terms & Conditions for Rollover

(source: www.poems.com.sg)

"1. By opting for rollover, you are instructing us to repurchase for you, another Treasury Bill upon maturity of your existing paper.
2. We will buy for you, a similar quantity at the next available MAS auction.
3. If this bid is successful, your trade will be processed at a cost of 10 basis points from the actual auction yield. Should the auction bid be unsuccessful, your trade will be processed at the yield available in the secondary market, without deducting an additional spread.
4. This rollover feature will continue indefinitely, until you opt out. That is, we will continue to buy for you a similar quantity upon maturity at the next available auction, until otherwise notified.
5. Opting in or out of rollover must be finalized by 5 trade days before the maturity of your existing paper. After this cut-off date, no changes are allowed.
6. You are only allowed to select rollover for securities that are in your portfolio. "

Points to note for treasury bills investors
Now the interesting point about rollovers by poems is that the spread will be 10 basis points (0.1%) versus 15 basis points (0.15%) that is normal when you buy treasury bills through poems. Why would Phillip securities give you this slight discount? The reason is that when you do a rollover, you take the risk that the yield may go up or down since treasury bills are weekly auctions by the MAS and primary dealers (financial institutions) and the price (or yield) is only know after all bidders have submitted their bids and the MAS decides on what is the cut-off yield that were successfully in bidding for the treasury bills tranche offered by MAS.

Pros and cons of using rollover
But this convenience allows you to let your treasury bills ride on for autorenewal especially if you have earmarked a certain portion of your portfolio in this very low risk and reasonable yielding asset that is guaranteed by the Government. The only catch is that you need to monitor the direction of the treasury bills yield about a week prior to te renewal date so that if you think yields are going way below that of 3 month fixed deposits of similar denomination, then you may want to stop the rollover.

However, if treasury bills yields are trending up, then your rollover will allow you to capture that yield and yet save 5 basis points on the spread that Phillip securities makes from offering this service. So far, I have been very satisfied with treasury bills using poems because the ease and convenience is unsurpassed. 15 basis points I believe is fair payment to them for offering this service to customers.

Try rollover if you want to sleep well at night
If you are an investor who has already decided at a certain percentage of your portfolio should be in treasury bills for the safety and as a protection against the fluctuations in the stock market, consider the rollover option but remember you will have to accept whatever yield is done at the auction. Caveat emptor, so do your own risk assessment and due diligence if this is suitable for you.

Be well and prosper.