There hasn’t been any updates on SG TTI for almost 2 weeks, and for good reason. Tons of stuff has been happening that’s keeping me occupied.
PROPERTY – I am in the midst of selling a property. Well, not in the midst. More like just started. For privacy reasons, I’m not going to go into specifics, but it is an investment property that I’ve previously stayed in for a few years, then rented out for another few years.
On the surface of it, everyone knows the SG property market is undergoing a slump of sorts, isn’t this a bad time to sell? Particularly so since I still have a tenant that’s staying put and the rent hasn’t been cut even after renewal just recently. The property has been fully paid for, so the rent = a very nice monthly FCF for me. So why sell now?
Well, based on the latest similar transactions, I estimate I’d pocket a gain of approximately $170k. If I include rent over the years, the gain shoots up to well over $250k. Considering that I’ve held it for 7 years, that’s not too shabby a return. Not eye-popping great like the stories you read in TheEdge, but I’m not grumbling.
Perspective huh. My rationale is that at some point, probably between late 2017 – 2018, I’d like to get another larger place near to my kids’ future school. (Yes, their future schooling is settled even though both are <4yrs old. I’m a tiger dad when it comes to education.) And everything I’ve seen that I fancy right now, is NOT exactly stroll-in-the-park affordable.
So if SG property market continues on it’s downward trend, as I hope it will, selling now and pocketing that gain would go a long way to supporting the next purchase. I probably wouldn’t even have to come up with a single cent and can fund it with this sale as well as from CPF.
Probably anyone in SG who’s thinking of buying/selling any property is starting at this chart. Some are willing it to stop dropping, some are clamoring for the property restrictions to be lifted, others are quietly praying it’ll drop more quickly.
In my experience, it’s never wise to go against government policies. Already, the restrictions are in place way longer than most commentors had expected, and in the environment, I don’t think the drop is over. We’re in this secular trend for the long haul.
I’ve never considered myself to be an expert on the SG property market. I just think that there are so many agents, commentors, speculators and genuine buyers who are staring at all these listings, the figures, harping on every related news, that it’s very difficult to find inefficiencies in the market.
More importantly, property moves really slowly. Even if I find a buyer, it’d take another 6 months to go through all the paperwork and legal framework and finally close it.
So my personal thoughts and rules dictating how I’d act in the property market are very simple.
I’ll restrict myself to only the CCR – Districts 9,10 & 11, and only the ones that have FH tenure. Nothing else.
That’s a principle that’s applied to my investing as well.
Reduce scope since I cannot compete with the massive amount of talented geniuses out there looking at the same things as me, but focus on quality and go in depth.
Also, (and this one is just a very simple, logical way of thinking), since I’d actually have to have a place for my family and myself to stay, I figured that any supposed property investment, would mean that one has to have at least 2 properties before you can consider yourself a property investor right?
Afterall, if you sell at a market high, you’d have to buy at a market high. Yes, there will be proponents who say you can rent while waiting for markets to come down etc but that’s just not my game. Not with 2 kids in tow.
So I’ll always hold on to 2 or more properties, either local or foreign.
Any expert reader with strong, substantiated views on this, please feel free to share with me via the comments section, or privately via email. Or if you have absolutely great buys that you’d forgo yourself currently due to the quantum or CF, but would like to share with me, please let me know too. No agents though please.
And this is the reason for the relative inactivity at SG TTI for the past 2 weeks.
My son picked up this god-awful virus in preschool, and subsequently came home and infected my daughter and myself via a shared ice cream.
I’d post up some pictures but I’ve decided that’s just too gory for most people reading this. Being a healthcare professional, I knew how to identify the symptoms, and the subsequent management. I can imagine how panicky other parents may get though. It’s just an absolutely terrible thing to have.
Anyway, I was pretty upset at the preschool. A virus gets picked up through their lax efforts at hygiene, and for the past 2 weeks, the entire house is in a constant flux, not to mention the extreme suffering everyone goes through. Particularly myself as the virus has a way of extracting the worst revenge on adults. Christmas was pretty much spoilt too.
And what penalty did the school suffer? Absolutely nothing. I still had to pay the same school fees despite my son not attending it for almost the entire month.
The preschool business is an example of an excellent business to invest in though, at least in Singapore. The CFs are iron clad, regardless of what happens, you’d have to pay school fees, even if the school decides to close on their own accord!
I’m switching schools for my kids next year, but the new school fees are close to $1.2k/mth. No wonder so many parents cite costs for the reluctance to have kids in Singapore.
Let’s have a hypothetical scenario whereby both parents are working, earning $5k each a month, with 2 kids in preschool. That works out to be a household income of $10k, while the school fees alone would cost $2.4k. That’s 24% of the total month income spent on the school fees alone!
I’ve been blessed to have done well in my career, and having a high income means that all these figures are something I can afford fairly easily. But I cannot imagine how 2 parents earning $5k each (which is considered above the median in Singapore I believe), can afford to spend more than a fifth of their total income on school fees alone. That doesn’t leave much for everything else.
The respected late LKY publicly said that he thinks $$$ is not a solution to solving Singapore’s low birth rate.
$$$ does solve a lot of problems in this world. But the question is, to what extent? I’m sure as the gov doles out more $$$, the law of diminishing returns sets in and you get a weaker effect. It’s just not proportional.
The other question that’s not raised because it’s not politically viable to talk about this, is what segment of the population does the gov wants to have kids. Yes, we want kids, but we also want responsible parents that put in resources into raising up quality kids with abilities. Simply throwing $$$ may result in more kids for segments of the population which simply do not put in that much effort raising them.
To the government’s credit, they have set up a series of PCF schools that are low cost, catered to parents in the heartlands. The problem is, somehow the government thinks that in certain estates (like mine!), where the housing is mainly private, there is no demand for such government sponsored preschools and hence there are no PCF centres near my place. Maybe they’re right. I don’t profess to be an expert in this arena.
Obviously after this episode, my emphasis on hygiene in the school is heightened. The new school seems much better in its curriculum too. Teachers are relatively highly educated, and I’m happy to pay that sorta fees if there’s a discernible difference between the previous school and this new one.
No, this is not an in depth discussion about gold. I am no expert on gold, and my knowledge of how gold relates to economic conditions is rudimentary at best. But Robert Elway from Rosland Capital contacted me to talk about gold, and since he seems like a polite, nice guy, I’d just be generous and include Rosland Capital into this post.
Plus he sent me a very cool chart he did himself:
I’m not getting any remuneration or benefits of any sort from Rosland Capital, and this is not an advert.
I just thought that this chart is really interesting and maps out the major events, as well as some not-too-major ones.
Keen eyed readers may notice 2 new blog links on the right. ———–>
Off-Piste Investing (http://offpisteinvesting.com/) focuses more on the Asia region, not particularly so for SGX listed companies. He has some interesting ideas, presented in a simple, easy to read manner. Those who want to have some exposure to regional markets may find some ideas there.
Kevin from Turtle Investor (http://www.turtleinvestor.net/) has been a great help, answering some of my questions about how to privatize and monetize his blog. That’s been useful for a non-IT guy like myself.
The thing is, SG TTI is currently on a free plan in WordPress. But that comes with limitations. There’s no way to monetize the site on this plan, and more importantly, there is a cap on the storage space available.
So as there are more posts in future, I may soon hit this cap. This means either I NOT share images and tables in future company analyses, or I’ll have to upgrade to a paid plan. Obviously it’s hard to analyse companies without figures in tables and charts, so at some point, I’ll have to migrate SG TTI. And if it’s a paid plan, I’d at least like for the ads to cover the cost of maintaining the site.
In the meantime, please go over to Turtle Investors site and read his posts, click on some ads there. There’s absolutely no cost to you, and next to zero effort, but it helps to keep good content online that’d help you in your investing journey. (No, don’t click on my ads here right now, it doesn’t help SG TTI at all)
Good, informative content takes a lot of effort. Content and data that helps readers spot gems is by definition, not going to be easily available. If it is readily available without any analytical effort, the price-intrinsic value gap narrows and the opportunity ceases to exist.
So please support any efforts at maintaining good content. And please subscribe to SG TTI too. That’s how you can help.
ADVICE FOR BEGINNERS
I get very encouraged and flattered when I receive emails from young investors who are just starting out, asking for advice. Many of the questions are pretty much similar actually.
So, I know for a fact that there are many serious investors here, many are spending a lot of time and effort to perfect this art. Kudos to you guys.
Not too long ago, my fellow bloggers, Kyith and Brian (their blog links are on the right) conducted a sharing session. I read the post just 1 day after it was posted, and guess what, the slots were fully subscribed.
Getting rich is serious business.
And there are many people who are serious about getting ahead. Good for you guys! You could’ve spent the 3 hours after work watching tv or lazing around, but instead you added to your knowledge base. That cannot be a bad thing.
On this note, I’d end this post by sharing a couple of absolutely fantastic videos on investing that I’ve seen recently.
The first one is posted on NextInsight. Tom Gayner is one of those under rated, little known investors who’s actually done fantastically well. I think most people would do well to watch this video:
The NextInsight article is here:
But don’t just read the article. Go watch the video.
Alright, now that you’ve watched the video, what are the 4 points that Tom Gayner mentioned in the video?
If you can’t answer that, go watch it again and write them down and memorize them this time.
I think that’s the issue for most people. Everyone likes to read and watch things casually, but investing in this manner will give you the exact results congruent to your attitude: Casual results.
I think it’s necessary to take it seriously, no different from how you’d study for an exam.
But the reality is, people like to read easy things that don’t need much thinking, and certainly no memorizing. People like to click on blog posts with large colorful pictures, talking about frivolous stuff, because it takes less brain cells to comprehend. Good for reading on the MRT.
I can assure you that you can read 1,000 of such articles, and it wouldn’t give you an iota more investing prowess. It’d be much better to take all that effort, sit down seriously and watch and learn just 1 more technical, harder to digest and understand video/post/article, and try to incorporate that into your thinking.
Anyway, the 4 take home points from Tom Gayner for finding gems:
- Companies have to demonstrate a record of profitability, with good ROIC and achieve all this with minimal debt.
- Management – Integrity and Ability
- Price relative to intrinsic value
- Scalability – Power of compounding
Yay. I typed all that out without having to refer to anything. It means I’ve internalized them. You might find me giving more discussion to these points in future analyses.
Point 4 in particular, is something new that I’d admit I haven’t considered much. It is probably the biggest take home message for me.
This is another excellent lesson for beginners that I came across some time ago:
Martin Shkreli is painted as a villain by the media, but I don’t think anyone doubts that he’s a really smart guy.
I’d recommend paying attention to the front of the video, in which he talks about more general stuff.
Go listen and take down notes for the entire video if you have to, do whatever you need to do to internalize the key points.
I’d point out something important that he said. You have to be serious about this, there are many professionals doing the same thing. What makes you think you can beat them?
If you can’t, or don’t find it fun to try, then don’t. Park your money in index funds, or give them to the professionals who do this for a living. (Find a good, honest money manager!)
Then use the time to focus on your career instead.
Although SG TTI thus far, only discusses investing methodology, ideas and specific companies, in terms of actual financials, I’d earned a lot more by focusing on my career and specific skill sets that’s valued by society.
And since my monthly income (which comes from multiple sources btw), although variable, usually way exceeds the expenses (for the whole family) every month, it means that if I think of myself as a business entity, I’m extremely FCF generative and that provides a lot of ammunition. In short, I’m a Boustead or a Dutech. :)
Many people talk about “Achieving financial freedom” via investing, and indeed, it’s taken as a gold standard by everyone I know. Everyone’s trying to build some pot of gold and then retire from their jobs, as though their jobs are some poison and they hate it so much.
Good for you if you’ve achieved it.
But thinking like that is kinda like sending a battalion of troops to the battlefield without any backup supplies, hoping that they’d pick up ammunition, food and medical supplies along the way while they wipe out enemies.
Possible, but very difficult and tiring. Wouldn’t it be better if there’s a constant monthly supply of ammunition, food and medical supplies for your troops? And you actually like the process of supplying this ammunition and am focused on providing more every month. Anything that they pick up is a bonus.
So if you hate to fight the battle, or simply suck at it, at least focus on sending more and more ammunition for your troops every month, while you hire military experts to strategize and move your troops around.
Alright, that’s the end of this post.
I sincerely wish all readers of SG TTI a great Christmas, and an absolutely fantastic 2017 ahead!