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These days, $1M seems to be the golden figure that everyone aims to attain before retiring. I know there is this great debate about whether $1M is enough, but hey, $1M can get you by for many, many months.

Here’s a table summarizing exactly how much you need to save (or rather, invest) every month, in order to retire with $1M. Using some formulas from my finance 101 class in university,

tableThere you go. I tabulated the figures for easy reference.

It’s one thing to know how much to save monthly, but the real challenge is to get down to doing it.

Here’s 3 tips I have to help you guys attain your own financial goals. They are simple, but you might be surprised how hard they are to actually follow-through with!

 

TIP 1: SAVE MONEY, REALLY.

Yes, save money. This is so easy to say, but difficult to do.

I remember that in my younger days, after receiving my first paycheck, I went out and quickly spent half of my salary on a ‘gift’ to myself, as a reward for seeing the first stack of cash come into my bank account. I quickly learnt that I did not actually need that gift, and that saving money was very, very difficult, especially since you know that your income is certain!

If there was one piece of advice on how to actually save money, it is this: PAY YOURSELF FIRST! It is surprisingly difficult to get yourself to do this, but you must learn to pay yourself first. Paying yourself first doesn’t mean buying something for yourself; it means moving money out from your paycheck into a savings account or investment account on a regular basis.

Perhaps its tough for the first few months, but new habits take time to form and when you actually get down to it, you see that it is a very useful habit to have. In fact, if you have children, it would be good to start teaching them this from a young age. “Pay yourself first, and then spend what you have left” is a good way to instill financial discipline in the younger generation.

Before you ask “How much do I need to save?”, why don’t we just get down to the first step, which is to actually start saving money?

Once you get in the habit of saving, it because second-nature. After doing so for some time, we can move on to the next tip:

TIP 2: BUILD A TRULY DIVERSIFIED PORTFOLIO

Generally speaking, there are two kinds of investing strategies:

FAST money: trading income, bringing in quick gains.

Trading is the way to quickly build up a portfolio and invest in dividend-yielding counters or REITs. Once you’ve stuck to a simple trading strategy, repeating it over time is bound to yield significant profits, much faster than you would in a fixed deposit or by holding the stock index for 5-10 years.

SLOW money: passive income, bringing in smaller but consistent gains.

For those with lots of money, they can allocate much of their portfolio to more stable assets, like dividend stocks, the stock index (it brings a dividend as well!), or other longer-term bonds.

Most people want to use fast money  all through their life, but it is unrealistic. As we age, we have less and less energy and time to continually engage the markets, so the goal is always to have a large war chest that brings in true passive income.

You might be surprised how few people understand the true meaning of a portfolio. Sometimes, the word ‘portfolio’ brings in the idea that you can only buy 5-10 stocks and hold them over 20-30 years. I beg to differ; in a portfolio, one must be truly diversified across…

  • All asset classes (forex, bonds, stocks, REITs, ETFs, commodities)
  • Time horizons (fixed deposits / buy-and-hold dividend stocks VS trading income)

Learning to do so requires some dedication and bumping your head in the wrong places at first. That’s why I always recommend that beginners take up forex trading; they’ll be exposed to market volatility, intra-day and longer-term trading, and also different asset classes by trading oil, gold, wheat, the stock indices, and bonds. Furthermore, you need as little as $500 to start with, and the cost of failure is very low.

 

TIP 3: STAY CONSISTENT

It is remarkably difficult to do something simple over and over again.

Want to lose weight? Exercise and eat healthy. But how many people actually keep to this?

Want to become better at socialising? Spend more time with people rather than with your phone or computer. But how many people actually keep to this?

Want to learn to trade? Stick to 1-2 trade setups, and repeat these trades week after week. But how many people actually keep to this?

It is very, very difficult to do what is simple and boring. In fact, it is the boredom that kills most traders!

One thing that experienced traders fail to do that knocks them out of the game is this: they fail to keep reading, reflecting, and honing their craft.

Continuous learning has to be part of your investing plan. After all, most people only want to invest money, but don’t want to invest the time to learn how to be profitable.

How much returns is good returns?

Well, that depends on your goals. There is a trading strategy for every level of returns. A conservative 10-20% returns as a trader is possible and you generally take a lot less risk than someone who wants 100-200% returns a year.

Depending on when you want to retire, you need to find out how much % returns you need a year, and look for a strategy that gets you there.

 

IT’S BORING, BUT YOU NEED TO TRACK YOUR PROGRESS!

how-muchWith a Google search, I found a useful table to track your progress, credits to businessinsider.sg! Source: BusinessInsider.sg

Suppose you want to save $1M, it’s extremely important to track if you are on target, and see if you need to allocate more funds to fast money or slow money.

If you are proficient with MS Excel, you should be able to come up with a table for your income, expenses, savings, investment returns, and projected net worth by whatever year that you are aiming to retire by.

I hope this article brings you to your feet and gets you started on your quest for financial freedom. Maybe for you, the first step is to actually start saving money! Starting where you are is all you need to do. With every step you take, you’ll be one step closer to your goals.

Cheers! 😀

RESEARCH SOURCES & REFERENCES

businessinsider.sg/compound-interest-monthly-investment-2014-3/
businessinsider.com/retirement-savings-guide-2014-3?_ga=1.199140719.1988080035.1478087095

 

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Here’s an interesting article I came across during the weekend: according to a Credit Suisse report, the average wealth of Singaporeans is the highest in Asia.

In the report, it states that the average adult has US$276,885 (S$395,000) in wealth, which is 1.4% higher than last year.

“The Global Wealth Report ranked Singapore number 1 in Asia, and when compared to the major economies, Singapore is ranked number 7.”

 

averageSource: Today Online

 

 

This is great news and I’m quite humbled that our tiny nation has managed to achieve this. However, remember that there are two main sources of household assets:

#1: WEALTH FROM FINANCIAL ASSETS

“Financial assets — which include items such as currency, deposits and equities — accounted for more than half of the average wealth per adult in Singapore at US$180,414.”

Wealth from financial assets accounted for >50% of the wealth of a singaporean adult. That means an average Singaporean has $130,000 in cash, foreign currencies, deposits, stocks, and other liquid investments.

Of course, the figure is just an average. I went to Singstat to get a visual of these figures, and here’s what I found: while the growth rates of household assets and liabilities have slowed down dramatically since 2010, net worth continued to climb every single year alongside liabilities!

householdThe growth rate for assets and liabilities slowed down in the past 6 years.
Source: Singstat

I recommend that you click the image above to expand it. Take a look at the details: liabilities have never exceeded assets, but the growth rates have plummeted severely over the past 5 years. It seems that low growth rates in household net worth is going to be the norm.

The average Singaporean has about S$130,000 in financial assets. Cash, stocks, deposits, and foreign currencies included.

That’s a very good figure to have, because most Singaporeans will be able to tide through a 1-2 year period of retrenchment before having to look for sources of income.

What about the statistics on Non-financial assets?

#2: WEALTH FROM NON-FINANCIAL ASSETS

“Non-financial wealth, including assets such as housing, accounted for US$151,239.”

I wanted to find out if this was accurate, and dug deeper to get the data. I decided to do away with Credit Suisse’s claims and check out the figures reported by the statistics department:

householdMost of the wealth is still held in financial assets, rather than in homes.
Source: Singstat

This gives a more accurate figure in my opinion. The data until Q4 2015 reveals that approximately half of every Singaporean adult’s financial wealth came from residential property valuation. The average Singaporean’s wealth in residential property assets could be anywhere from 40-60% of his/her personal wealth.

A casual glance like this might lead you to conclude that Singaporeans are well-protected, wealthy, and financially-savvy.

It is no wonder that even though Singapore has a great number of millionaires as a percentage of population, much of the wealth is held in property. I managed to find statistics on the total assets of Singaporean households, and these are presented in the tables below.

Note: The figures below are in millions of dollars.

householdNot counting CPF & Residential Property, Singaporeans have a lot less liquid assets as a percentage of total assets.
Source: Data from Singstat, Chart generated using MS Excel

In essence, the Singapore as a whole without CPF and Residential Property can be almost 65% poorer on average! That means the true amount of liquid capital that our country commands is much lower than the net worth figures reported. Take note that the data is in millions of dollars and represent the whole nation.

SIDENOTE: DEBT

“The average debt was US$54,768, or 17 per cent of total assets, moderate for a high-wealth country, the report said.”

The average debt was “moderate” for a high-wealth country, and I wanted to understand what this meant. To my pleasant surprise I realized we could actually get the data for our CPF, life insurance, pension funds, shares, liabilities classified by category, and many other statistics from our very own statistics department of Singapore.

excelWith data, in hand, much magic can be performed.
Data Source: Singstat

After downloading their data in XLSX format, I saw that there were several categories for liabilities. They are:

  1. Mortgage loans – to financial institutions
  2. Mortgage loans – to Housing and Development Board (HDB)
  3. Personal loans – motor vehicle
  4. Personal loans – credit cards
  5. Personal loans – education loans, renovation loans, hire purchase loans, loans for investments etc.

After putting them in a pie chart, this is what it looks like:

pieMortgage loans in both categories take up 75% of liabilities Singaporeans have.
Source: Data from Singstat, Chart generated using MS Excel

It was interesting that much of household assets include residential property, while much of household liabilities also include residential property. It’s understandable that most of the loans would be made with financial institutions since HDB has a fixed loan rate, while the FI’s have variable ones (good news for us in a low interest rate environment).

It is remarkable that credit card loans amounted up to almost the same size as motor vehicle loans!

WHAT ABOUT YOU?

The average adult Singaporean has $130,000 of liquid assets, has 75% of liabilities in housing loans, 19% of liabilities in education/renovation/investment loans, and, unsurprisingly, derives most of his/her wealth from CPF and Residential Property.

What does your balance sheet look like? It’s important to review your own finances periodically and see how they have changed over the years.

Perhaps it’s time for a financial health check-up as we round up and conclude the year 2016. Hope you enjoyed plowing through the numbers like I did!

Cheers!

 

REFERENCES & RESEARCH SOURCES:

http://www.todayonline.com/business/singaporeans-average-wealth-increases-us277000-credit-suisse-report
http://www.singstat.gov.sg/statistics/browse-by-theme/household-sector-balance-sheet
http://www.singstat.gov.sg/statistics/visualising-data/storyboards/household-sector-balance-sheet
http://www.tablebuilder.singstat.gov.sg/publicfacing/createDataTable.action?refId=1952

This month, I decided to log in my Singpass account and update the value of my CPF accounts to better reflect the current values.

I realised that the CPF SA actually serves as an excellent replacement for the Bond component of my portfolio, as it gives an almost risk-free 4% yield, and an additional 1% for the first $60k.

Since I have almost hit the minimum sum, I will be treating it like a 25-year bond which matures at 55.

This is quite an interesting topic, and I will be doing a separate post to summarise all my CPF research and optimization strategy.

monthly portfolio updates (July 2016) 2

 

For my current allocation, cash and real estate (allocation budget) still remains the bulk of my portfolio, at 29% and 35% respectively. Fixed income consists of 13%, which is very close to the target allocation of 15%. I also added some Gold (2%) to hedge my portfolio, since Gold looks poised for a strong move up.

The biggest disparity at the moment between my current and target allocation is the amount of Stocks & REITs holdings, which I have not aggressively accumulated, as I still think that the prices of these assets can fall further. Patience is key at this time, and I will continue to grow my warchest using my trading capital while biding my time.

REVEALED: FULL PORTFOLIO HOLDINGS!

Here are my current holdings as at the end of July 2016:
(Click on any of these buttons below to unlock; for mobile device users, please click twice)
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monthly portfolio updates (July 2016) 1

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For more insights into my portfolio construction, and how you can create your own customized portfolio, I will be touching more on it during my “Trading Foundation Workshop”, where I will cover all the essentials to kickstart your trading & investing journey. Check availability: https://synapsetrading.com/trading-foundation-workshop/

Good luck! 😀

For the month of January, the stock markets drifted lower and continued to hover near the lows, as traders and investors speculated whether they would break new lows or start a rebound.

Fundamentally, nothing much has changed, and the outlook continues to be bearish. As such, I will not be adding any equity positions till I see a stronger bottom for the market. I am looking at 2,200 or 2,000 for the STI index.

As part of my defensive strategy, I have increased my holdings in Gold, which should act as a good hedge if the stock markets continue to head lower.

For my long-term capital appreciation strategy, I have also increased my holdings in Oil, as I foresee a possible rebound some time this year.

monthly portfolio updates (January 2016)

For my total assets, 9% was kept in Savings & Liquid Assets, 22% was Non-investment Assets, while the rest (69%) was used to build my investment portfolio.

For my investment portfolio allocation, there is a small amount in Fixed income (6%), slightly more in stocks (19%) and commodities (16%), and the rest was in cash (23%), Trading Accounts (17%) and Misc Investments (19%).

Stay tuned for next month’s update, or subscribe for our mailing list to receive monthly updates in your email!

Greetings, fellow traders! 😀

I’m back from my trip across South America, covering Brazil, Peru and Argentina!

It was a great time experiencing the adventure of travelling, while covering the cost of the whole trip while trading on the go with a few simple trades with just 15 minutes a day!

To see the full photo albums for this trip, please visit: https://synapsetrading.com/travel-log/

 

Here are some photos from the trip, with a brief intro snippet from Wikitravel:

1. Rio de Janeiro, Brazil

Rio de Janeiro is the second largest city in Brazil, on the South Atlantic coast. Rio is famous for its breathtaking landscape, its laidback beach culture and its annual carnival.

The harbour of Rio de Janeiro is comprised of a unique entry from the ocean that makes it appear to be the mouth of a river. Additionally, the harbor is surrounded by spectacular geographic features including Sugar Loaf mountain at 395 meters (1,296 feet), Corcovado Peak at 704 meters (2,310 feet), and the hills of Tijuca at 1,021 meters (3,350 feet).

These features work together to collectively make the harbor one of the Seven Natural Wonders of the World.

2. Lima, Peru

Lima is the capital of Peru and its largest city.

Founded in 1535 by the Spanish conquistador Francisco Pizarro, the modern city is a curious mix of the modern mega city with some ‘islands of modernity’, large but orderly slum areas and colonial architecture in the city center. Lima was the seat of the Spanish rule during 300 years, and as such it has wonderful churches, cloisters and monasteries that are worth a visit.

Lima is also the best place to try the wonderful Peruvian cuisine, which has a huge variety of ingredients from coast, mountain and Amazon regions. The cold sea current in front of Peru’s large coast makes the sea very rich in fish and seafood, which have a great taste due to the special plankton they eat. Fish and seafood restaurants are therefore worth the time, and not expensive.

3. Cusco, Peru

Cusco is a city in southeastern Peru, near the Urubamba Valley of the Andes mountain range. It is the capital of the Cusco Region as well as the Cuzco Province.

In 2013, the city had a population of 435,114. Located on the eastern end of the Knot of Cuzco, its elevation is around 3,400 m (11,200 ft).

Cusco was the site of the historic capital of the Inca Empire and was declared a World Heritage Site in 1983 by UNESCO.

It is a major tourist destination and receives almost 2 million visitors a year. It is designated as the Historical Capital of Peru by the Constitution of Peru.

4. Machu Picchu, Peru

Machu Picchu is a 15th-century Inca site located 2,430 metres above sea level. It is located in the Cusco Region, Urubamba Province, Machupicchu District in Peru. It is situated on a mountain ridge above the Sacred Valley which is 80 kilometres (50 mi) northwest of Cusco and through which the Urubamba River flows.

Most archaeologists believe that Machu Picchu was built as an estate for the Inca emperor Pachacuti (1438–1472). Often mistakenly referred to as the “Lost City of the Incas”, it is the most familiar icon of Inca civilization.

Since the site was not known to the Spanish during the colonial period, it is highly significant as a relatively intact cultural site.

Machu Picchu was declared a Peruvian Historical Sanctuary in 1981 and a UNESCO World Heritage Site in 1983. In 2007, Machu Picchu was voted one of the New Seven Wonders of the World in a worldwide Internet poll.

5. Puno, Peru

Puno is a city in southeastern Peru, located on the shore of Lake Titicaca.

It is the capital city of the Puno Region and the Puno Province with a population of approximately 149,064 (2014 estimate).

The city was established in 1668 by viceroy Pedro Antonio Fernández de Castro as capital of the province of Paucarcolla with the name San Juan Bautista de Puno. The name was later changed to San Carlos de Puno, in honor of king Charles II of Spain.

Puno has several churches dating back from the colonial period; they were built to service the Spanish population and evangelize the natives.

6. Lake Titicaca, Peru/Bolivia

The Uros are a pre-Incan people who live on forty-two self-fashioned floating islands in Lake Titicaca.

The Uros use bundles of dried totora reeds to make reed boats (balsas mats), and to make the islands themselves.

The larger islands house about ten families, while smaller ones, only about thirty meters wide, house only two or three.

The islets are made of totora reeds, which grow in the lake. The dense roots that the plants develop and interweave form a natural layer called Khili (about one to two meters thick) that support the islands. They are anchored with ropes attached to sticks driven into the bottom of the lake.

The reeds at the bottoms of the islands rot away fairly quickly, so new reeds are added to the top constantly, about every three months; this is what makes it exciting for tourists when walking on the island.

7. Iguazu Falls, Brazil/Argentina

Iguazu Falls are waterfalls of the Iguazu River on the border of the Argentina province of Misiones and the Brazilian state of Paraná. The falls divide the river into the upper and lower Iguazu.

The Iguazu River rises near the city of Curitiba. For most of its course, the river flows through Brazil, however, most of the falls are on the Argentine side. Below its confluence with the San Antonio River, the Iguazu River forms the boundary between Argentina and Brazil.

 

Once again, to see the full photo albums for this trip, please visit: https://synapsetrading.com/travel-log/

Enjoy! 😀