How much do you need to have to get married?

Supposing you want to get a decent sized ring , 0.5 carat. Nevermind the clarity , colour or setting.. It'll cost you around 4.5k. That's just the diamond ring, you need to get wedding bands too, which will easily cost up to 2k.

So we've got that settled. You're a face-loving Chinese descendant who needs to host a grand wedding. You need to host a wedding dinner/Banquet for all your family members and friends. Suppose the going rate for 1 table is at least 1k, you'll host at least 30 tables depending on how sociable you are. That's 30k for 30 tables + booking fees for dining hall which is another say 10k. You'll need some more money for the misc stuff, wedding gown, suits, photo albums, etc etc. That'll cost about 10k
All in all it'll cos 50k

Then you'll need to go on a holiday. Suppose you two go to the NATAS fair and found a really good deal for 2 to Hokkaido for 10k.

Summing it up, 50k +10k + 6.5k = 66.5k

Supposing your girlfriend is really picky and wants another setting at you ROM, that'll cost 3.5k? to round it up, So in total you'll need at least 70k to get comfortably married.

On the up side, you may recover up to 20k-30k from Angbaos depending on how affluent your friends and immediate family are.

I'm pretty sure every lovebirds would want a private nest they call home, so you'll still have to pay 20% upfront for your HDB if you're buying one. Let's take the average of 250k *20% =50k. Damn you still need to top up 30k and all your Angbaos will go to paying for your new flat.
Plus, 40% max of your earnings will go into your new flat as illustrated in previous post, which will make your life so damn miserable.

Sigh, almost makes you want to have a void deck wedding doesn't it?

~KKS

Affordable HDB

Recently, I've been thinking, does it make sense to get a new HDB flat?

Mr Mah said on 10 Apr 2010 that housing was still affordable. Is it really?

Let's just say for argument's sake that you ballot for new HDB BTO project in Choa Chu Kang and you got it on the first try. Woopee!

For new 4-rm units, pricing ranges from $226K to $278K. Let us take the middle of $252K as representative.

252K, That's not so bad right, so you wanna use your CPF to pay. Let's just say for argument's sake that you and your gf have just nice 52K in your CPF OA + 1st time grant etc. So your CPF is basically wiped out.
To pay for the 200K balance, you have to get a loan, let's say you apply for HDB housing loan..

Let's just say you and your gf have a gross monthly income of $5500, of course, that won't be stagnant as you get more experienced. And you decide to pay the whole thing in 10years because, let's face it, 2.6% loan interest is too high, and the more you decide to delay payment the more money you lose.(Max 30 years)

$5500 * 40% = $2200 repayment per month @ 2.6% interest.
HDB max ceiling for housing repayment is 40% for income. so your CPF OA per month is wiped out for 10 years
So if you do a little calculation, you can repay the HDB in around 9 years.
$2200*9years*12mths=$237600. That's over your loan of 200K , including interest
Let's just say that amount is the amount you pay for 9 years with interest.

So let's sum it up, your
1)OA is wiped out for 9 years
2)You have $3300 left for household expenses, clothing , food,personal insurance, housing insurance, bills.
Let's say you spend $2000 total on all the stuff above.
You have $1000 left in your savings for holiday and extraordinary expenses like eating out on special occasions, personal entertainment.

So what happens when you want to have a baby? You can't possible be waiting for when you're 30+ to have a baby. How are you able to pay for all that?

And of course, all that is dependent on you , having a reasonable girlfriend who doesn't demand that you pay for all the expenses.

Yes, HDB is affordable, but the cost of living here is not. We do live a sad, debted life. No wonder we always complain "Money not enough"



KKS out.

REITs Screening Criteria I

It is no secret that I am a fan of REITs. For me, the great thing about this class of assets is that I get to enjoy regular and predictable distributions in most cases, barring any extraordinary circumstances. However, what the recent credit crisis has done is it has exposed the weaker REITs for their ability to secure financing and ultimately, the fallabilities behind the management of their debt profiles.

As a retail investor, I have thus learned that I have to screen my buys stringently to protect my own interests. Below is my newbie attempt to establish a set of criteria to determine which REITs to buy for stability and for value-for-money:

Stability

1. Low gearing, i.e. < 35% (also the limit for REITs without a credit rating)
2. Presence of a sponsor, preferably a strong one, eg. Capitaland, F&N, etc
   
3. Portfolio mainly in Singapore, as I will have a local knowledge of the industry in that case

Value-for-money

1. Discount to NAV, i.e. paying less for more
2. High yield, preferably > 8% p.a.
3. Quarterly distributions (as opposed to semi-annually), this is just a personal preference to improve my own cash flow

After Saizen had set the precedent of suspending its distributions to conserve cash for paying off debts, I typically ascribe the most importance to the gearing criterion. Having a sponsor can be argued both ways, it can bail the REIT out in times of trouble, but it can also dump its own rubbish into the REIT. Reading about the efforts of F&N with regards to FCOT which it took over, I choose to believe the former rather than the latter. Despite the general penchant that Singaporeans have of complaining about their own country, I actually think Singapore is a stable country to do business in and hence have no issues with REITs having the majority of their portfolios here. Discount and yield are somewhat related since they are based on the share price, here TA is extremely helpful in determining good entry levels.

When I decide to enter into a counter, I settle for nothing less than 5 ticks. Of my holdings, 4 out of 5, with the exception of FCT, still pass my screening at current levels. Additionally, AIMSAMP after their recapitalisation exercise and the two Indo-based REITs, First and LMIR, fulfill the majority of my criteria and are on my watchlist.

As always, I am constantly seeking to refine and add on to my screening criteria and appreciate any inputs from friends and well-wishers, cheers!

Yield

As stock markets head towards a correction this May, for me this represents an opportunity to accumulate. Principally for me, I am vested in shares mainly for the dividends as an additional stream of 'passive' income for me. Once in a while though, my fingers get itchy and I attempt to do a spot of trading, but so far, have not been very successful at it =P

It has always been a dream of mine to be a 包租公. For the more ang moh pai people, it means to own properties and collect rental. Since I have just started working, this is of course not possible. So, when you have peanuts, then you play with peanuts. REITs represent a chance for me to own perhaps a single tile of huge properties like malls and hospitals and warehouses and enjoy the rental income from them.

With regards to my current portfolio, I was fortunate enough to begin my buying at a reasonable level and hence, have built up a certain margin before I begin worrying about losing my capital.

At the moment, my collection of REITs are yielding 8.2% per annum. Actually, my aim is for 8% and anything above that is a bonus. To put things into perspective, suppose you wish to generate an annual cashflow of $50k from stock dividends, you would need to invest $625k at 8% yield. This has taught me one thing: always try to buy at reasonable or even better, underpriced, levels so as to benefit from better yields (capital growth) and limited downside (capital protection).

Thus, my strategy for this correction is to keep my eye open for sustainable 8% yield stocks and continue to add to my portfolio. Wish me luck!

Hijack!!

So Micheal Ballack msged me the other day, he said Germany is going to win the world cup. That was way before FA cup when he got injured by Boateng. Now the German Captain is out of the world cup. Sadness. I'm sure Podolski or Klose will score some goals on his behalf..

The yongkiat is being ridiculous. Everytime I mention about Micheal ballack msging me he shuts me out. He's ignoring the fact that Germany will win the world cup. It's in the maths. 1954 -> 1974, 1990->2010.
20 years apart. It's all fated. Nothing can stop them. The world is coming together for their victory!

Check out the groups..

1	Australia	0	0	0	0	0	0	0	0
2	Germany	0	0	0	0	0	0	0	0
3	Ghana	0	0	0	0	0	0	0	0
4	Serbia	0	0	0	0	0	0	0

oh come on.. Ghana ? Australia? Serbia? pffftttt cya in world cup 2010...

and yes, I got an iPhone, finally succumb to the temptation.. now BKMY left Kiat without an iPhone.. When are you gonna get one?

KKS out.

Aviva SAF Insurance I

Recently, Aviva sent me a letter offering me an "exclusive offer to automatically upgrade your (my) group term life insurance cover to $200,000". The key points of the letter were:

1. Revision of maximum coverage to $600,000 in October 2009
2. Automatic upgrade of insurance coverage to $200,000 costing $0.85 daily (monthly premium $25.60) unless the insured person opts out

Upon reading the letter, I had an issue with (2) straightaway. It reminded me of the "innocent unless proven guilty" versus "guilty unless proven innocent" conundrum. In this case, Aviva was adopting the "Yes you want it unless you say otherwise" approach. I do not think this should be the way. For me, where insurance is concerned, there are two conflicting stands:

1. The level of coverage I would like to have
2. The level of coverage I can afford

Who doesn't want to be covered for a million bucks? But would you be able to pay the premium every month?

Subsequently though, Aviva realised its customer relations folly and sent me another letter. This time, it was "Yes you want it if you say so, otherwise status quo", which is of course much more palatable to the customer. In fact, Aviva was fairly quick to act upon its initial boo-boo. The first letter was dated 30 March and the second one 12 April.

I first signed up for this policy back when I was a blur-like-sotong NSF. It was only when I graduated and entered working life that I started to review all my existing insurance policies and recalled that I have been paying for this all this while. Initially, my monthly premium was $16 for a coverage of $100,000. Then, in a letter dated 28 April 2008, Aviva offered existing customers an automatic upgrade (similar to the one now):


This brings me to my current policy. Upon receiving the recent letter from Aviva, I did a brief comparison:


The third column is the premium per month per '000 coverage and shall serve as the basis of my comparison. To my surprise, the insurance component of my Manulife ILP turned out to be the cheapest in this respect, followed by the CPF DPS, and finally by the Aviva SAF insurance.

However, I will be the first to concede that this is not an entirely fair comparison study.

Firstly, insurers have to make money from somewhere, and for an ILP, the insurer's profits do not come from the insurance component but from the investment portion in the form of fees and the penalties incurred during the first few years.

Secondly, to compare amongst these various insurance policies that I have, is a bit like comparing apples to oranges. For instance, the Aviva SAF insurance has amongst other benefits, accident coverage and hospital cash whereas the CPF DPS is solely for death and total and permanent disability (TPD), which the Aviva SAF insurance also covers. A fairer comparison would entail comparing between policies which have the exact same terms and benefits, such as between term policies. The trouble is, I find that policies nowadays tend to combine benefits across various categories such that it is harder to classify them solely as just one certain type of insurance.

Nevertheless, despite the seemingly unfavourable results of the comparison, I have decided to go for the upgrade due to a few reasons:

1. To increase my overall coverage
2. Aviva SAF insurance allows spouse and children to enjoy the same coverage under one policy
   
3. Every year, I receive a partial cash rebate which helps to lessen the actual cost of the insurance
4. This offer includes free first one month premium

For more details on Aviva SAF Insurance and CPF DPS:
http://www.aviva-singapore.com.sg/life-and-health/for-individuals/saf-insurance-for-nsmen.html
http://ask-us.cpf.gov.sg/explorefaq.asp?category=23023


Disclaimer: The writer is covered under GE DPS, Aviva SAF Insurance and Manulink Flexi ILP mentioned in the post. This is not a solicitation to purchase insurance. Premiums quoted are for males who are non-smokers, aged 35 and under.

Private MediShield Plans

CPF

In Singapore, we have 3 accounts under CPF:

1. Ordinary Account (OA)
   
2. Special Account (SA)
3. Medisave Account (MA)
   

From CPF website:

For (1) Private Sector Employees (2) Government Non-Pensionable Employees (3) Non-Pensionable Employees in Statutory Bodies & Aided Schools (4) Singapore Permanent Resident (SPR) employees from their 3rd year onwards

Employee Age (years) Contribution By Employer (% of wage) Contribution By Employee (% of wage) Total Contribution (% of wage) Credited Into Ordinary Account (Ratio of Con) Special Account (Ratio of Con) Medisave Account (Ratio of Con) 35 & below 14.5* 20 34.5* 0.6667* 0.1449* 0.1884* Above 35 - 45 14.5* 20 34.5* 0.6088* 0.1739* 0.2173* Above 45 - 50 14.5* 20 34.5* 0.5509* 0.2028* 0.2463* Above 50 - 55 10.5* 18 28.5* 0.4562* 0.2456* 0.2982* Above 55 - 60 7.5* 12.5 20* 0.575* 0 0.425* Above 60 - 65 5* 7.5 12.5* 0.28* 0 0.72* Above 65 5* 5 10* 0.1* 0 0.9*

In addition, at the May Day Rally 2010, Prime Minister Lee Hsien Loong announced that the Government will raise the employers’ CPF contribution rate by 1 percentage point. The increase will be done gradually in two steps to moderate the impact on employers. The first 0.5 percentage point increase will be implemented on 1 September 2010, and be made into the Medisave Account (MA). The remaining 0.5 percentage point increase will be effected 6 months later on 1 March 2011, and will be made to the Special Account (SA).

For illustration purposes, this means that for the 35 and below age group in the above table, the contribution by employer will be 15% wef from 1 Sep 2010 (extra 0.5% going towards MA) and 15.5% wef from 1 Mar 2011 (extra 0.5% going towards SA). Hence, the percentages under the green heading will change accordingly to reflect this.

For more details:
http://mycpf.cpf.gov.sg/Members/Gen-Info/Con-Rates/ContriRa.htm
http://mycpf.cpf.gov.sg/Members/Gen-Info/CPFChanges/Changes_ConRates.htm


MediShield

MediShield is the basic medical insurance scheme introduced in 1990 by the Singapore government for CPF members. It is designed to help meet medical expenses from major illnesses, which could not be sufficiently covered by the balance in Medisave, and will cover up to 80% of medical bills at the Class B2/C level. MediShield operates on a co-payment and deductible system to avoid problems associated with first-dollar, comprehensive insurance. Premiums for MediShield can be paid by Medisave.

From MOH website:

Age Next Birthday

MediShield Yearly Premiums

1 to 30

33

31 to 40

54

41 to 50

114

51 to 60

225

61 to 65

332

66 to 70

372

71 to 73

390

74 to 75

462

76 to 78

524

79 to 80

615

81 to 83

1087

84 to 85

1123

MediShield covers medical expenses incurred during hospitalisation, including:

• Normal ward charges
• Intensive care unit charges
• Medications
• Investigations
• Surgical implants
• Surgical procedure fees

MediShield also caters for certain approved outpatient treatments such as:

• Kidney dialysis
• Chemotherapy and radiotherapy for cancer treatment
• Cyclosporin and Tacrolimus drugs for organ transplant patients
• Erythropoietin drug for dialysis patients

For more details:
http://ask-us.cpf.gov.sg/explorefaq.asp?category=23069
http://www.moh.gov.sg/mohcorp/hcfinancing.aspx?id=306


Medisave-approved Integrated Shield Plans

Apart from MediShield, Singaporeans can also choose from several other Medisave-approved Integrated Shield Plans offered by private insurers:

1. NTUC Income
2. AIA
3. Great Eastern Life
4. Aviva
5. Prudential Assurance

Since 1 July 2005, each of these Medisave-approved plans have been integrated with MediShield to form a single integrated plan. These Integrated Shield Plans provide you with additional benefits and coverage when you opt for Class A and B1 wards in the restructured hospitals, or private hospitalisation.

Policyholders on the Medisave-approved Integrated Shield plans retain the benefits of MediShield membership, while their private insurer will service all their needs. In other words, policyholders pay their premium, and submit claims directly to their private insurer. Their private insurer will then sort out all arrangements with MediShield.

Medisave can also be used to pay for premiums of these private Medisave-approved Integrated Shield plans, subject to a withdrawal limit of $800 per policy, per year. For policyholders aged 81 and above, the withdrawal limit is $1,150 per policy, per year.

Since MediShield premiums are paid on a yearly basis, the transition between MediShield and this is effected by crediting back on a pro-rated basis the unused remainder of the MediShield yearly premium which has already been paid, and then deducting the premium of the Integrated Shield plan, whereupon the new coverage starts.

From MOH website:
The following claims return rate table shows how long it takes each insurer to process claims with positive payouts.

The phrase, cumulative claims return rate, refers to the percentage of claims processed by the insurer within one week, two weeks and one month. Note that the fifth column shows the median number of days it takes each insurer to process claims.

	Cumulative Claims Return Rate			Median claims return rate (days)
	<= 1 week	<= 2 weeks	<= 4 weeks
AIA	69%	76%	83%	4
AVIVA	77%	79%	85%	2
Great Eastern	90%	92%	94%	1
NTUC Income	93%	94%	96%	1
Prudential	81%	87%	93%	1

(1 January 2010 – 31 March 2010)

I did a bit of research into the various Integrated Shield plans. Premium-wise, NTUC appears to be the cheapest, this could be due to its mass market customer base and reputation as the "people's insurer" (according to my cousin who is with GE). Coverage-wise, they all appear to be similar, other than for specific diseases and/or certain benefits.

One other thing to take note of about these plans is that they normally have a few levels
of coverage, from Class B1 to Class A and finally to private hospitals. Also, there is usually some sort of rider available which takes care of the deductible and co-insurance portions of the bill, but this of course comes with its own separate premium. So depending on one's needs and finances, one may opt for the plan (with or without rider) which gives greatest ease of mind. After all, this is what insurance is for.

For more details:
http://www.moh.gov.sg/mohcorp/hcfinancing.aspx?id=342


Disclaimer: The writer is covered under GE since Jan/Feb 2010. This is not a solicitation to purchase insurance.

AUD Update May 2010

Reserve Bank of Australia (RBA) media release statement on monetary policy decision found below:

At its meeting today, the Board decided to raise the cash rate by 25 basis points to 4.5 per cent, effective 5 May 2010.

Recently, forecasts for world GDP growth have been revised up again, and growth is expected to be at trend pace or a little above in 2010. Conditions in Europe remain quite weak, though recent data suggest growth is becoming more established in North America. In Asia, where financial sectors are not impaired, growth has continued to be strong, contributing to pressure on prices for raw materials. The authorities in several countries outside the major industrial economies have now started to reduce the degree of stimulus to their economies.

Global financial markets are functioning much better than they were a year ago, but sovereign risk concerns have escalated significantly in Europe over recent weeks. This has prompted additional efforts by policymakers to put fiscal policies onto a sounder footing and to provide support for Greece in the near term. To date, there has been very little contagion outside Europe.

Australia’s terms of trade are rising by more than earlier expected, and this year will probably regain the peak seen in 2008. This will add to incomes and foster a build-up in investment in the resources sector. Under these conditions, output growth over the year ahead is likely to exceed that seen last year, even though the effects of earlier expansionary policy measures will be diminishing. The process of business sector deleveraging is moderating, with business credit stabilising and indications that lenders are starting to become more willing to lend to some borrowers, though credit conditions for some sectors remain difficult. Credit outstanding for housing has been expanding at a solid pace. New loan approvals for housing have moderated over recent months as interest rates have risen and the impact of large grants to first-home buyers has tailed off. Nonetheless, at this point the market for established dwellings is still characterised by considerable buoyancy, with prices continuing to increase over recent months.

Recent data on inflation confirm that it has declined from its peak in 2008, helped by a noticeable slowing in private-sector labour costs during 2009, the rise in the exchange rate and the earlier period of slower growth in demand. In both underlying and CPI terms, inflation over the most recent 12 months was around 3 per cent. Nonetheless, the extent of decline from here may not be quite as much as earlier forecast and inflation now appears likely to be in the upper half of the target zone over the coming year.

With the risk of serious economic contraction in Australia having passed some time ago, the Board has been adjusting the cash rate towards levels that would be consistent with interest rates to borrowers being close to the average experience over the past decade or more. The Board expects that, as a result of today’s decision, rates for most borrowers will be around average levels. This represents a significant adjustment from the very expansionary settings reached a year ago.

The Board will continue to assess prospects for demand and inflation, and set monetary policy as needed to achieve an average inflation rate of 2–3 per cent over time.