Living investment ebook

Living Investment Ideas on living, a collection of blog posts

by Lim Kim Tong

Š Copyright 2013 by Lim Kim Tong Book Design by Lim Shu Ning Illustrations by Lim Shu Ning All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner.

Typefaces used: Gill Sans and Fertigo Pro

Contents Introduction to book I Financial Management, Investments and Retirement Planning 2006

Saving Fixed Sum every month 3 Pay Credit Card Outstanding Amount promptly 4 Contribute towards Supplementary Retirement Scheme (SRS) Know your expenses per month 6 Know your financial assets 8 Buy Life Insurance Early 10 Open a Junior Savings Account for your children 11 Invest in shares with a level head 12 Invest in shares with sufficient research 14 Diversify your investments to manage risk 16 Buy Medical Insurance for Hospitalisation 17

5

2007

Margin Trading 18 When US economy sneezes … 19 Global Financial Markets Contagion started from US Mortgage Problems Free-Falling Singapore Stock Market 22 Consider various fees when buying and selling shares 23 Bursting of the Real Estate Bubble 25 Run on a British Bank parallel Run on Hedge Fund 26 Economic Indicators of Singapore 27 Sub-Prime Mortgage Crisis in US 30 2008

The dreaded “R” word 31 Sub-prime mortgage write-downs 33 Great Investment Gurus 34 US financial problems spill over to Asia 37 Currency Linked Investment (Part 1) 39 Currency Linked Investment (Part 2) 41 Time to create portfolio of equities 43 Financial Management

Investments

Retirement Planning

21

How to pick stocks? 44 Investing in shares are dictated by public information 45 Contagion effect of US sub-prime mortgage problem 47 Driven by Greed or Need to grow retirement money? 49 Loss due to collapse of Lehman Brothers 51 Is leveraging or borrowing bad? 52 When will stock markets be not oversold? 54 Diversify your risks 56 Significance of 2008 58 2009

Fresh lows for stock indices 60 Investment Psychology 62 Currency Linked Investment – Forex movement has huge impact Selling shares and regretting? 66 Stock Indices Rallied 67 Reading Economics 69 streetTRACKS Straits Times Index Fund (SPDR STI ETF) 70 Year in Review - 2009 71 2010

Debt is a problem 73 Lehman Brother’s Minibond 74 Risk-Weighted Decisions 76 May 2010 took a hit 78 Singapore equities offer decent returns 79 Buying SIA Bonds on the Singapore Stock Exchange 80 Preference Shares – What investors should know 82 DBS Preference Shares 4.70% 84 STI and the Economy 86 Lessons learned in investing in stocks 88 2011

Achieving investment returns 90 How much is enough for retirement? 92 When is a good time to buy or sell shares? 93 Singapore equity portfolio lost value during Japan earthquake Personal and Household Spending Budget 95 Financial Management

Investments

Retirement Planning

94

64

Earn 2.5 per cent interest 96 Invest in something you know 97 Keeping track of individual stock investment A year to forget - 2011 100

98

2012

Investing in shares on the Exchange – learning experience Planning for retirement 104 Have you got enough to retire? 106 Coping with volatility 108 How to live with limited funds? 110 Reaching 55 and CPF 112 Have a filing system for financial matters 114 Experience in buying investment property 115 2013

Financial prudence and ME factor

116

II Living Tips 2006

Staying mindful and Be Present always 121 Connect with Nature 122 The Power of Letting Go and Forgiveness 123 Reduce clutter in your life 124 Live Life Simply 126 Write a Will 128 Get sufficient sleep for a better health 129 Dealing with Anxiety, Fear and Stress 130 Spend time together on activities as a family 131 Make physical exercise a habit 132 Retirement is scary if you have not planned for it 133 See beyond the faults of another person 135 Managing anger starts with you 136 Dealing with Guilt, Self-Pity and Mild Depression 137 Dealing with Envy and Jealousy 138 The power of Smile 139 Self-doubt can be debilitating, be conscious of it 140 Financial Management

Investments

Retirement Planning

102

2007

Being Gracious 141 The grass is not always greener at other organisations Contentment 144 How to stay anger-free? 145 Morning motivation 146 2008

Living an uncluttered life in a clean environment This too will pass 148

147

2009

Being humble 149 The Wishing Game 150 Living meaningful life 152 How to live a happy life? 153 Overcoming Guilt and Fear 154 2011

Let it go 156 I am Full of I 158 Watching emotion 160 Fear 161 Upset and Acceptance 162 How to simply your life 163 2012

Equanimity 165 Stress Buster 167 Re-organise my life – Clearing my contact lists

169

III Life Journey 2007

Taking care of pet – Rabbit named Brownie Panic attacks 174 Memory of my father 175 Charity begins at home 177

173

142

Taking a 5-month break from full-time employment Going back to work 179 Volunteer brings cheers to patients 181 Going on to 50 183 Hair-cutting day at Bright Vision Hospital 184 2007 – Personal Reflections 185 2008

The big move to a rented home End of 2008 188

187

2009

Moved to a permanent home

189

2010

Good bye 2009 and Hello 2010 190 The earlier years 191 Reflections - Goodbye 2010 192 Snippets of 2010 194 2011

Recollections - 2011

196

2012

One week after retirement 199 My journey on path of education 201 Recollections of 2012 203 2013

Being Papa 206 Celebrating learning with Shu Glossary References About the author

208

178

To Lim Chau Lee and Lim Shu Ning, Love of my life

Introduction to book

This is not a textbook or a self-help book. It is a collection of my meaningful pieces I had written in my blog since 2006. It captures my life events since that year. This compilation is to fulfill my dream of publishing a book. I know it is narcissistic, but not to do it is a pity.

The blog Living Investment was started when I went into early retirement.

Because I was trained as an accounting and finance professional and I was able to retire at age forty-nine, I have experiences to share in areas of investments and retirement planning. The second aspect of Living Investment is living this life.

It is a journal of personal encounters. My life journey changes from one of high stress to a fulfilling one. If not for my decision to quit full-time employment, I could still be visiting my doctor almost every week.

This book is structured in chronological order and blog posts are marked by themes. It captures moments of past as major events happened, like the global financial crisis of 2008/09. The writing is therefore in context.

This book has three main themes: 1. Financial management, investment and retirement planning 2. Living tips 3. Life journey

Disclaimer The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

I.

9 October 2006

Saving Fixed Sum every month

Set aside a constant amount from your take-home salary every month and deposit it in a separate bank savings account. This amount is not to be withdrawn for routine expenses. The quantum is decided by you after considering your take-home salary and routine expenses for yourself and your family. A simple rule of thumb could be 10 – 15% of the net salary.

Example: If your take-home salary is $3,500 per month, an amount set aside for forced savings is 10% of $3,500 = $350 per month at beginning of each month.

Over 2 years (24 months) period at nominal interest rate of 1% p.a (0.01/12 p.m) compounded monthly, the amount will grow to = $8,488 Future Value FV24 = $350 × [ {(1 + 0.01/12)24 - 1} ÷ {0.01/12 } ] × [1 + 0.01/12] = $8,488 = Principal sum of $8400 (350 x 24 months) + Interest earned of over 2 years $488 This is a sure way of savings and you will have a significant sum of amount at the end of savings period.

If you own a business with business income, the same principle applies. You will pay yourself first and set aside some amount on a regular savings plan. You will be surprised at the final amount after say 2 years.

Financial Management, Investments and Retirement Planning | 3

10 October 2006

Pay Credit Card Outstanding Amount promptly

The convenience of using credit card for purchases and settling payments is what the card is meant for. The card issuer also provides credit at an interest charge for cardholder to take advantage of. Using credit card requires discipline so that both the cardholder and the card issuer benefit. Often we hear of people who hit financial difficulty because of inability to settle the account and the card issuer has to write-off the bad debt owed by the cardholder.

The following tips will help: 1. Use the credit card to pay only when you know that you can afford to pay for items or services you are buying.

2. Do not try to use the card for credit facility if there are better ways of obtaining bank loan at a lower interest rate.

An example of credit card interest charge is: Interest accrues daily at the rate of 2% per month if the card issuer does not receive full payment of the Outstanding Balance by the Payment Due Date.

This is a nominal interest rate of 24% per year.

3. If you do not want to pay interest charges, pay the credit card outstanding amount in full before Payment Due Date. Ensure that you do not make mistakes with writing the cheque or using the on-line payment mode. An error can result in payment not received in time before the Payment Due Date.

Interest charge is then levied from the Payment Due Date on a daily basis.

4. Illustration of interest charge on outstanding amount of say $1,250 from 9 September to 8 October at 2% per month accrued on daily basis: 29 days compounded interest amount = $74 4 | Financial Management, Investments and Retirement Planning

12 October 2006

Contribute towards Supplementary Retirement Scheme (SRS)

Besides contribution to the Central Provident Fund (CPF) and if you have spare cash which you do not need until you retire at the statutory retirement age of 62, you may want to place some money in the Supplementary Retirement Scheme (SRS). This scheme was put in place as additional means for you to accumulate your retirement fund.

The details of the scheme can be viewed from the Ministry of Finance (MOF) website: http://app.mof.gov.sg/supplementary_retirement_scheme.aspx There is one major benefit of contributing towards SRS besides saving for retirement. The amount contributed can qualify as personal tax relief when computing your personal tax liability.

Financial Management, Investments and Retirement Planning | 5

23 October 2006

Know your expenses per month

Do you know how much you spent every month, every quarter and every year? By knowing how much you spent, you can choose to decide whether to scale back some expenses so that your total expenses do not exceed your income every month. You would want to set aside some sum of money for savings every month. You may not want to rely on credit from the banks or credit card issuers which charge high interest when compared with what you can earn if you place your money in savings account.

If you are planning to retire, you would want to know whether your retirement fund can support your monthly expenses.

The expenses will change over time and need to be reviewed when there is a change of circumstances, e.g. having your first child or your child has started work.

The following provides a list of possible expenses. They are not exhaustive.

Family & personal expenses and outflow (both revenue expenses and capital expenditures) Housing (TC & S&C Charges or Management Fee & Sinking Fund; Property Tax) Utilities (water, gas, electricity) Groceries and Eating out Domestic Help Other Household expenses (e.g. Newspaper) Public Transportation (Bus; MRT) Car (petrol; repairs and maintenance; insurance; road tax; car wash; ERP; car park charges) Telephone and Internet (fixed line; broadband) Mobile phone Fees and Interest on Credit Cards 6 | Financial Management, Investments and Retirement Planning

Loans (Housing Loan repayment covered by CPF or cash; monthly hire purchase installment for car; others) Club Memberships Insurance premium (life; term, endowment, medical) Medical Care Education (school fees & miscellaneous fees; books; stationery) Allowance for children Allowance for parents Personal Expenses (haircut; clothes; personal maintenance) Entertainment (movies; pubs; hobbies; sports) Vacations Gifts Charity Income Tax Others (e.g. pet’s expenses) From the list, you estimate the monthly/quarterly/yearly outflow for each item and then convert to Total Annual Cash Outflow. Divide this annual figure by 12 to arrive at estimated monthly outflow.

The above do not cover asset purchases like buying a computer, TV, household appliances, etc. Some money will need to be saved to able to buy these items.

Financial Management, Investments and Retirement Planning | 7

25 October 2006

Know your financial assets

Have you ever wondered how much you have in terms of financial assets? Are your asset values more than your loan & credit facilities? Do you keep track of their current values? Once you know your financial position, you can work towards accumulating wealth for your retirement. So knowing your financial assets is first step to retirement planning. It takes discipline and time to track these assets and it will be a worthwhile exercise.

The various financial assets could be in the list below, depending on your circumstances.

Assets Cash and Deposits Own Business net equity fund Shares Bonds Unit Trusts Foreign Currency Accounts Gold and Commodities Arts and Antiques Insurance Single Premium (investment + protection) Life and endowment policies (with cash surrender values) Property Value (lived-in property and investment property) Car Value CPF balances (subject to withdrawal rules) Ordinary Account Special Account Medisave Account Retirement Account Supplementary Retirement Scheme balance (subject to withdrawal rules)

8 | Financial Management, Investments and Retirement Planning

Less: Liabilities Outstanding mortgage loan on property CPF utilised + accrued interest on property Hire purchase on car Credit card facility Other loans = Net Assets Note that property value could be negative after deducting mortgage loan and CPF utilised. Similarly, car value could be negative in value.

The value of each asset is estimated at the time of compilation, e.g share value at a particular date. There is a need to revalue at periodic interval to see your financial position over time, e.g. quarterly. In the case of shares and unit trusts investments, you may want to actively watch their values so that you can react at the appropriate time in order not to suffer permanent diminution in values.

Financial Management, Investments and Retirement Planning | 9

26 October 2006

Buy Life Insurance Early

When we first started work, life insurance is furthest from our mind. There is no need to think about it because we are young, single and our pay is not significant. There are competing demands on how to use our salary and usually it is not enough as one might often say. One is also healthy and there should not be any worry of sick health.

Life insurance provides financial protection for you and your family against financial losses that can occur after death or total and permanent disability.

It can be designed to also provide you with retirement income and financial reserve in an emergency. It is both protection and savings combined.

My proposition is that it is never too early to start a life insurance plan. There are several reasons for this.

When you are young and healthy, the premium payable is low and this premium amount is fixed for the rest of the life insurance period.

If you start early, the premium contributions every month stretch over a longer period (say from 25 years old when you first started to 65 years later). Hence it will accumulate into a tidy sum with bonus or profits earned on the policy.

You are protected from loss of ability to earn because of incapacity suffered.

It forces you to set aside a small sum of money every month and this is one form of savings.

10 | Financial Management, Investments and Retirement Planning

31 October 2006

Open a Junior Savings Account for your children

It is never too early to inculcate in your children the value of being thrifty. Your children can be taught the value of money and how one can save for the future.

They will also learn how to spend appropriately depending on how much they have in their savings accounts.

Banks have these savings accounts targeted at children below 16 years of age.

Bank provides facility of ATM card and convenience of withdrawal of money.

Children sometimes receive “ang pow” money on festive occasions. There is no need to spend every single cent immediately. Some can be placed in this savings account and accumulated to either earn interest or be spent on some major purchase in the future.

As parents, we give allowances to our children. It is recommended that we give them a fixed sum every month and it is for them to decide on how to spend it or to save part of it. This is starting them early on financial management.

Since we are getting our children to be responsible, it is further recommended that they keep their own savings account passbooks.

We can explain how these savings earn interests and it is one way to “grow” the money. The entries in the passbook can be used to explain this concept.

Financial Management, Investments and Retirement Planning | 11

13 November 2006

Invest in shares with a level head

Investing in shares of listed companies can be both rewarding and depressing.

If you trace the history of share investment over a long period, the average returns from share investment always outperformed less risky investments such as bonds for example. There is potential upside to companies’ shares because of growth in companies and some can be spectacular. These companies are well managed and stay ahead of competition, changing with the times. At the other extreme, we have also heard of spectacular collapse of seemingly good companies but due to mismanagement, the companies were wound up.

Share investments are sensitive to the economy of the country and the world.

During the crisis year such as 2003/04 resulting from the Iraq war and SARS in the region, Singapore took a hit on economic growth. The Straits Times Index (STI) on the Singapore Stock Exchange (SGX) dropped to a low of 1700.33 points on 17 May 2004. Share values lost ground across the board as investors pull out of the stock market. By now in 2006, the STI index climbed to a high of 2745.31 on 10 Nov 2006, a 1044-point jump! If you have stay invested in 2003 till now or bought into blue chip shares in 2004, you would have reaped huge capital gains on your shares. Share investors in most cases follow the herd instinct and follow most investors. Sell when all are exiting and buy when all are buying them. This is not a wise way. If you have selectively bought shares of good companies in 2004 and in 2 years, you would have seen the shares have appreciated handsomely.

The key to share investment is to do your own analysis of companies you are investing. You ought to know the businesses the companies are in. If you do not understand the business, don’t invest. Read up their annual reports and watch out for news of these companies in the media, on the SGX website and on-line share broker’s website.

Of course, we will encounter companies who were once “darlings” in the stock market and suddenly fell because of mismanagement. At some point, you should cut loss and divest quickly and do not remain sentimental and hope that the share will recover someday to the level you have known. That day may not 12 | Financial Management, Investments and Retirement Planning

come! When counting your losses in share investment, look at your total share investment portfolio and not focused on specific share investment.

Share investment requires your attention and if you were not able to monitor the share market, it would be wise not to go into share investment in a big way.

A small proportion of investment funds can go into buying of shares and this amount is something you can afford to lose.

Financial Management, Investments and Retirement Planning | 13

15 November 2006

Invest in shares with sufficient research

You must have an objective when investing in shares or stocks. Are you hoping for capital appreciation over a longer period, or good dividend payout yearly, or speculative play - moving in and out of shares for quick gains?

Based on your financial situation, you may want to assess carefully your appetite for risk and your tolerance level for losing all your investment in shares.

Investment in shares requires your careful consideration in deciding which particular share or stock to buy. In this regard, it is wise not to just buy a stock based on impulse or incomplete information or gut feel. The least we must do is to study the company you are planning to invest in. Then the next question is what information we must look at to get a feel of the value of the share.

First we must understand that there is no perfect timing to buy or sell a stock.

We cannot time the market, so to speak.

If you wanted to invest in a company, first you must review the economy of the country. This covers among others, projected Gross Domestic Product (GDP) growth rate and interest rate environment. Is the interest rate going up or down? Note that interest rate is inversely correlated to share prices in general.

The next macro-level indicator to consider is the overall stock market performance: whether the Straits Times Index (STI) of the Singapore Stock Exchange (SGX) is trending upward or downward.

Then we review the specific industry sector that the stock is in. Let’s say you are looking at buying a bank stock, you should look at the banking sector for comparison of a particular bank stock to shares of other banks. If you study the PE ratio (Share Price to Earnings ratio, sometime known as multiple of earnings) of this bank stock with other bank stocks, you would see whether the particular stock is selling higher or lower than the others. Next you can study the Dividend Yields of stocks and compare among them. Other useful financial indicators are Earnings Per Share (EPS) and Book Value Per Share.

14 | Financial Management, Investments and Retirement Planning

Each stock has a historical 52Weeks High and 52Weeks Low share prices. You can assess where is the current share price in relation to the high and low prices. Compare the current share value against the Book Value Per Share and see how much you are paying above Book Value Per Share.

Having looked at financial ratios, it is necessary to review news of the company you are investing in. These news indicate past and future activities of the company.

From the above analysis, you then make your own decision whether to invest in the company share.

Financial Management, Investments and Retirement Planning | 15

17 November 2006

Diversify your investments to manage risk

If your investments are narrowly focused, i.e. putting all money in one particular asset class (e.g. shares), or focusing on one sector of the economy (e.g. retail), or focusing on a single country, you are not adequately diversified. The risk of losing substantial amount becomes real when the particular asset class, or industry sector, or country is in negative territory.

It is advisable to consider asset allocation in various asset classes and invest in broad ranging industry sectors and various countries. The rationale for this practice is that not all investments are positively correlated with each other, i.e. investment values move up or down all together at the same time. A gain in one investment can offset the loss in another with the net effect of change could still be in your favour.

In planning your asset allocation, you have to consider your particular financial situation. If you are still young and have potential earning power for a number of years, then you can afford to take more risks and this can result in higher returns on your investments but on the flipside you can also lose big. However, if you are near retirement age, then you should not take unnecessary risks but go for safer investments with less wild fluctuation in values of your investments.

In order to know your asset allocation proportion of each investment class, you should keep records of all your investment assets, such as shares, unit trusts, bonds, bank deposits. You should also need to look at a specific investment and determine whether it is narrowly focused e.g. investment in a specific country.

Only with this disciplined approach, would you know how your asset allocation is like. From this knowledge you can then make investment decision to shift your money around from different investments in order to balance your risk acceptable to you.

16 | Financial Management, Investments and Retirement Planning

20 November 2006

Buy Medical Insurance for Hospitalisation

It is wise when one buys medical insurance for hospitalisation and critical illnesses for a peace of mind. Hospital bill can set a person back a fair bit if the person is not covered by insurance. The insurance premium per annum is small when we consider the amount that insurance can cover you in case of catastrophic illness. Furthermore, premium payable under the MedisaveApproved Integrated Plan can be deducted from your medisave account.

The benefits provided are dependent on various plans offered by the insurance company. For higher medical expenses coverage, you will need to pay a higher premium. If you choose to be treated by private hospital, the premium payable will be higher than the Government Restructured Hospital. If you choose Class A ward, then the premium will be more expensive than the Class B1 ward.

Before any claim can be paid out by the insurance company, you will have to first pay the annual deductible which ranges from $1,000 to $4,500. The insurance company then pays for the balance of the hospital bill after the deductible. The maximum that the insurance will pay is limited to the annual policy year limit which may range from $100,000 to $300,000 depending on the insurance company.

There are a few insurance companies providing Medisave-Approved Integrated Plans. The benefits and premiums payable are different. Study these carefully and compare them across insurance companies. Be aware that some insurance company has amount limit even at each in-patient benefit level, such as Daily Room and Board, ICU, surgery etc. This means that besides paying the deductible, you will need to pay also the amount exceeding each in-patient benefit. This can happen because the premium of this insurance offered by the insurance company is lower than the one offered by another insurance company.

The latter insurance company pays the full amount as charged by the hospital.

So it pays to “shop� around and study carefully medical benefits offered by each insurance company and pick the one that best suits your needs.

Financial Management, Investments and Retirement Planning | 17

1 March 2007

Margin Trading

The stocks in Singapore took a huge tumble yesterday. The Straits Times Index (STI) dived 4% or 127.87 points on Wednesday 28 February 2007 to 3,104.15.

This is the largest one day drop in 20 years. The index lost 6% since last Friday 23 February 2007 record close of 3,310.44.

Reality of uncertainty in the stock market hits home, though the signs of the sudden drop in a particular day may not be so obvious.

One group of stock traders are margin traders. They suffered when share prices fall significantly. They had borrowed funds (loans) on the collateral of their portfolio of shares, to trade in the stock market. When the portfolio of shares lost values because of the sudden drop in share prices, stock broking firms or lenders will do a margin call for stock traders to top up their margin accounts or if the stock traders cannot top up with their own cash, stock broking firms have no choice but to sell the stocks (at unfavourable prices) in order to cut further losses.

Is this too much a risk to take?

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19 March 2007

When US economy sneezes …

Asian economies get the chill. The United States of America (US) is still the world’s largest economies. When the Dow Jones Industrial Average (DJIA) closed sharply lower overnight, the Asian stock markets would follow suit when it opened for trading in the morning.

This was the case when DJIA dropped more than 400 points on 27 Feb 2007 and again at more than 200 points on 13 March 2007. The Straits Times Index (STI) in Singapore suffered in tandem. The Asian stock markets went into the red too.

The latest drop in DJIA on 13 March was triggered by the sub-prime US home mortgage wave of defaults. The wave of defaults of “sub-prime” or high risk home mortgages not only rocked DJIA; it also threatens to ripple through the economy of US. The sub-prime home mortgage loans were taken by borrowers with poor credit ratings. The mortgage lenders took risk by offering these loans to these homeowners for higher interests.

When homeowners cannot pay when interest rates rise, they are vulnerable to default and even foreclosure of their properties.

The sub-prime mortgage lenders got hammered because they had originally resold their high-risk mortgages to investment banks and now they are forced to buy back these bad loans, which hurts their earnings and stock prices.

The investment banks lose businesses because now they cannot repackage these high-risk mortgages and sell them as securities for a profit. As securities get riskier, there are fewer buyers. That means lower profits.

The institutional investors such as banks, hedge funds and mutual funds are exposed to these risky securities (e.g. bonds). As defaults of paying high interest Financial Management, Investments and Retirement Planning | 19

rates on these bonds spread, the promise of interest receipts evaporates.

The end results? The mortgage storm plus slowing consumer spending lead to investors looking for safer bets than stocks. Another fear is when tighter credit further weakens the housing market. (Source: TIME magazine 26 March 2007) So the moral of the story, do not ignore the US economy and the DJIA’s performance on trading days.

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11 August 2007

Global Financial Markets Contagion started from US Mortgage Problems

You thought the sub-prime mortgage delinquencies originate from the US hence is contained in the US. You thought wrong. Easy credits were given to less creditworthy individuals to pay for their property purchases in the few years to 2006. To help fund the easy credits for these individuals by financial institutions, they pooled these mortgage loans into a financial instrument known as Collaterised Debt Obligations (CDOs). They then repackage all these mortgage debts and sell “slices� of the whole CDOs to investors, funds houses, banks and financial institutions around the world as high-yield bonds. It is a classic case of high yield with the associated high risk.

When CDOs collapsed in value because the underlying mortgage loans were in default, the financial markets holding on to these CDOs suffered huge losses.

The global financial markets are now reviewing their investment portfolio and weigh in on their exposure. Two hedge funds worth US$1.5 billion of Wall Street investment bank Bear Stearns crashed. The American Home Mortgage Investment filed for bankruptcy protection. The French bank BNP Paribas temporarily suspended three investment funds exposed to the sub-prime mortgage problems that were worth more than US$2 billion. (Source: The Straits Times, 11 August 2007) Trying to determine diminution in values of these funds is a difficult task as the episode is still developing.

The Asian stock markets were in jitter. The central banks of EU, US, Japan injected funds into financial markets to avert global credit squeeze as investors exited from the stock markets and the investment funds hit by the US problem.

This is a case of falling investor confidence and it is not looking pretty.

Financial Management, Investments and Retirement Planning | 21

17 August 2007

Free-Falling Singapore Stock Market

The Straits Times Index (STI) plunged 3.35% on 15 August (Wednesday) and continued to drop by 3.7% with STI ending 3152 points on 16 August (Thursday). With the latest drop, STI lost 14% from its July 24 record closing high of 3665. But this is still up 5.6% for 2007. (Source: The Straits Times 17 August 2007) Singapore is not alone. The world financial markets are also in this similar sad state.

This is a case of flight from risk by investors as they fear that they would lose heavily if they hold on to their financial assets, e.g equities, bonds, hedge funds, unit trusts, etc. Worse still, some hedge funds and home mortgage lenders were declaring that they were in financial difficulty.

The consumer confidence in the US had dropped too thus resulting in poor consumer sales by Wal-Mart and Home Depot. This may result in slowing demands by the world’s largest economy and this in turn affects the other economies that depended on the US for its purchasing power.

The unwinding of the Yen carry trade accelerated dramatically on 16 August.

(The Business Times 17 August 2007) This added further stress to the global financial market.

When will the financial woes end? No one dare to predict. The scary part is, no one knows how enormous these problems in the global financial market are.

The financial markets of the world are inter-connected and a problem in one country feeds into another country.

For today’s trading on the Singapore stock exchange, the STI went through a free fall, dropping as much as 5.7% at one stage to below 3000 psychological level (STI at 2972) before picking up through late afternoon buying by bargain hunters. It ended at 3130, a drop of 0.68% from yesterday’s close. Such was the “madness” of the stock market today. This is certainly not for the faint heart.

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21 August 2007

Consider various fees when buying and selling shares

The STI rose 6.1% on Monday, 20 August 2007, to end at 3,322.38. This was a significant one day jump not seen since October 1998.

It is tempting for investors to cash in and take profit. When deciding to sell your stock, consider the costs of transaction besides the share price. Each time when you trade in stocks, the transaction costs include: a. Brokerage fee (tiered with minimum sum of $25) b. Clearing Fee (0.04%) c. SGX Trading fee (0.0075%) d. GST amount (currently at 7%) (based on on-line trade with a particular brokerage house) All fees are variable depending on stocks you are trading in and price of each stock. It would be wise to take note of the total cost of transaction including GST for each purchase of stock. GST is payable by you and if you are an individual, treat this as cost too. When you sell your stock, the same transaction costs apply.

Typically for small-time investors, all fees including GST can come up to $28 $30 per on-line trade through a brokerage house.

Say you bought 1000 of SMRT at $1.73 and the buy-trade costs of transaction was $28. The price quoted as at yesterday for SMRT was $1.79. If you were to sell at this price, the sell-trade has costs of transaction of about $28. Would you make a profit?

Financial Management, Investments and Retirement Planning | 23

Cost of stock – SMRT Costs of buy-transaction

$1,730 28 $1,758

Sale of stock – SMRT $1,790 Less Costs of sell-transaction 28 $1,762 Profit

$4

The profit to be made from this buy and sell transaction is mere $4 and NOT $60, [1000 x ($1.79 – $1.73)]. The lesson from this is that we have to consider transaction costs for both buy and sell trades before making a decision to cash in and exit from the stock market.

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16 September 2007

Bursting of the Real Estate Bubble

In 1997, the Asian financial crisis that resulted in a contagion that swept through the Asian and South East Asian countries, started with Thailand devaluing its currency, Thai baht. The real estate of Thailand collapsed and similarly, Singapore’s property market had also nose-dived from its peak in 1996.

This was the scene 10 years ago and now it is repeating the same story but now in the US. The sub-prime mortgage problem of the US is the result of easy credit available to borrowers. The short-term interest rates were kept low for a long time in the US and hence this enticed borrowings to buy assets. The Collaterised Debt Obligations (CDOs) is a piece of financial engineering that caught the world financial market off-guard with some mortgage houses and hedge funds getting into insolvency problems.

It is apparent that the world has not learned from asset bubble problems of the past, whether it is dot.com bubble, or property market bubble, or stock market bubble. Greed, irrational exuberance, and ignorance will continue to plague mankind whether it is now or 10 years later or even 20 years later. We have to be careful and watch out for the next asset bubble.

Financial Management, Investments and Retirement Planning | 25

18 September 2007

Run on a British Bank parallel Run on Hedge Fund

Britain’s fifth-biggest mortgage lender, Northern Rock saw its share price tumbled 27 percent, adding to its 32 percent plunge on last Friday, when it issued a profit warning and tapped the Bank of England (BOE) for emergency funds. Scores of customers queued up over the weekend to withdraw their money from Northern Rock. (Reuters News 17 September 2007).

It was estimated that withdrawal of ÂŁ2 billion was made which represented about 8% of its deposits. (Reuters News 18 September 2007) Even with the assurance from BOE that it would provide emergency funds for Northern Rock, this did not stop depositors from withdrawing their savings from the mortgage lender. These are the people with lower appetite for risk and their fear and actions are typical of a run on a bank.

This is the same with hedge funds. Investors will redeem units in a hurry and pull out their money from the hedge fund once they had news that the hedge fund was exposed to the sub-prime mortgage problems.

One recent case is two highly leveraged hedge funds belonging to US Investment Bank, Bear Stearns. The underlying securities of these funds were nearly worthless.

Investors would not be kind to continue to support hedge funds because current investment values tumbled. The result is a permanent diminution in value and that there is slim hope of it rising in the future. The run on these funds can be swift and no actions by the fund house can stop investors from abandoning these funds.

The moral of the story is not to put all your hard-earned money in hedge funds.

26 | Financial Management, Investments and Retirement Planning

5 December 2007

Economic Indicators of Singapore

You cannot plan and execute financial investments without reviewing economic indicators of Singapore. Investment analysts all over the world study these indicators for signs to invest or divest their investments. United States’ economic indicators are keenly watched and they have impact to investments in this region.

In Singapore, there are similar key economic indicators released by government agencies at regular intervals. The following are some important data to watch.

Gross Domestic Product (GDP) GDP is the sum of goods and services produced by a country. It is expressed as percentage growth from the previous quarter and growth from the same quarter a year ago. The information is broken down into different sectors, e.g. manufacturing, construction, financial services, etc. This information is released by the Ministry of Trade and Industry (MTI) on a quarterly basis.

Consumer Price Index (CPI) CPI measures inflation in a country. It tracks percentage changes in prices of goods and services, such as food, housing, transport & communication, health care, etc. CPI for October 2007 is 3.6% higher than the same month in 2006 and it is 1.3% higher from September 2007. The higher inflation rate will result in lower purchasing value of your savings, investments and cash on hand. The same dollar will buy less than previously. CPI data are released monthly by Singapore Department of Statistics (DOS).

Manufacturing Output Manufacturing sector accounts for a quarter of Singapore GDP and hence a significant indicator of the economy. The information provided includes the percentage growth or decline in the total manufacturing output compared with the same month of the previous year. For October, manufacturing output grew slightly by 0.9% year-on-year. It then describes which cluster of manufacturing affects the overall results. Economic Development Board (EDB) put out the Financial Management, Investments and Retirement Planning | 27

monthly press release.

External Trade figures This information shows the growth of Singapore-produced goods exported to international markets. It excludes oil exports and the term used is nonoil domestic export (NODX). On a year-on-year (y-o-y) basis, NODX rose for the sixth month in a row by 6.8 per cent in October 2007 compared to October 2006, improving from September month’s 2.2 per cent growth.

It provides information on where the major importer countries Singapore exporters are dealing with. The monthly trade figures are provided by International Enterprise Singapore (IE Singapore).

Employment Data Ministry of Manpower provides information of the employment situation. It provides employment statistics, unemployment rate, retrenchment numbers, new jobs created, etc. This information provides indication of potential spending power of workers hence has impact on the economy.

Purchasing Managers’ Index (PMI) Monthly PMI is tracked by the Singapore Institute of Purchasing and Materials Management (SIPMM). This index is a forward-looking indicator that provides indication of manufacturing activities in the months ahead. It surveyed purchasing executives at more than 150 manufacturing companies in various industries on matters relating to new orders, input prices, inventory, production output, and employment situation. A PMI of 50 and above indicates that manufacturing is expanding.

For the month of November, the overall PMI was 53.8 which was higher than October’s PMI of 52.9. The electronic sector’s PMI for November was 53.7, indicating 16th month of expansion. (The Straits Times, 5 December 2007) Retail Sales and Catering Trade The monthly retail sales index and catering trade index are released by the Department of Statistics (DOS). Retail sales cover a whole range of retail sales which also include motor vehicles and are broken down into specific retail sales e.g. apparel and footwear, supermarkets, furniture and household equipment, etc. Catering trade index covers food and beverage. These indices indicate the confidence level of consumers with regard to the economy and their 28 | Financial Management, Investments and Retirement Planning

willingness to spend.

Overall retail sales index rose by 3.7% in September over August. Excluding motor vehicles, the sales rose by 1.9%.

(Sources: “Taking the pulse of a nation” by Chen Huifen, The Business Times, 26 November 2007 and “Tell-Tale signs of the times” by Chen Huifen, The Business Times, 3 December 2007)

Financial Management, Investments and Retirement Planning | 29

23 December 2007

Sub-Prime Mortgage Crisis in US

The sub-prime mortgage crisis caused major banks in the US to write-down asset values from their balance sheets in a massive way. Investment assets in the form of securities held by these banks (including Collaterised Debt Obligations) had to be marked down as investors shun these securities.

According to CNN source and reported in The Straits Times, 22 December 2007, losses incurred so far for some of well known names were US$43 billion:

Citigroup US$11.5b Morgan Stanley US$10.3b Merrill Lynch US$8.4b Bank of America US$3.8b Bear Stearns US$2.6b Wachovia US$2.4b JP Morgan Chase US$1.6b Goldman Sachs US$1.5b Lehman Brothers US$1.5b As in any investment instrument, where there is high returns it must come with high risk. The banks fall into this sad state of affair even though we seem to believe that the banks have better risk control procedures when compared with retail investors. This is not to be as greed can blind any investors in the world of finance. So caution is still important as we invest our savings for better returns.

30 | Financial Management, Investments and Retirement Planning

19 January 2008

The dreaded “R” word

Move aside sub-prime mortgage woes and here comes the most used phrase recession in the US. Is US in recession already? This sent investors globally into a bearish frenzy.

Who said that Asian economies are decoupled from the US economy? The world’s largest economy has so much influence over other economies as stock markets round the globe had shown over this week.

The world has not seen so many new highs in 2007. On 30 October 2007, the stock indices reached new highs. Since the beginning of 2008, the stock markets tumbled across aboard. The latest indexes as at 18 January 2008 are: 30-Oct 18-Jan Change % ST Index 3,906 3,104 -20.5 Hang Seng 31,638 25,201 -20.3 Taiwan Taiex 9,859 8,184 -16.9 Nikkei 225 16,651 13,861 -16.7 Kospi 2,070 1,734 -16.2 Bangkok SET 918 789 -14.0 Shanghai Composite 5,897 5,108 -13.3 Mumbai Sensex 19,783 19,013 -3.8 Jakarta Composite 2,680 2,611 -2.5 Kuala Lumpur KLCI 1,416 1,439 +1.6 The Straits Times Index dropped significantly by 20.5% followed by Hang Seng Index at 20.3%.

Singapore and Hong Kong are prominent financial centres of the world and investors move in and out of the market freely. These markets are pseudobarometers of the global economies (US economy in particular) as global funds buy into HK and Singapore equities to find higher returns or sell on short notice to downsize the fund size in order to provide cash for sudden Financial Management, Investments and Retirement Planning | 31

redemption of these funds by investors.

The US economy is encountering the possibility of recession if nothing is done by the US Bush administration or the Federal Reserve Board (Fed) to prevent the US from slipping further.

The Dow Jones Industrial Average (DJIA) sank to close at 12,099 on 18 January 2008, the lowest level since March 2007. For DJIA to go below 12,000 psychological level will spell more gloom for investors of US and the other stock markets. Fears have overtaken optimism that the US economy would have slower growth in 2008 instead of recession. Fear feed on fear and it takes brave hearts to go into stock markets to cherry pick fundamentally good shares that had been oversold. The oft-quoted phrase that buying shares now is like trying to catch a falling knife. Is this the bottom yet?

32 | Financial Management, Investments and Retirement Planning

3 February 2008

Sub-prime mortgage write-downs

Since the last time I wrote on sub-prime mortgage related write-downs by major banks and investment banks on 23 December 2007, the problems are even worse now. There are further asset write-downs and total write-downs reported for the whole of 2007 were: Merrill Lynch US$22.4b Citigroup US$19.9b UBS US$14.4b Morgan Stanley US$9.4b HSBC US$7.5b Credit Agricole US$3.6b Deutsche Bank US$3.2b Bank of America US$3.0b (Source: Taken off Newsweek, 4 Feb 2008) Note that not just US banks are in dire straits, some European banks are affected by the financial crisis originating from US. Some banks had asked sovereign wealth funds from oil-rich nations and huge surpluses nations, such as Kuwait, the United Arab Emirates, Saudi Arabia, Norway, China and Singapore, to provide capital infusion to shore up balance sheets of these banks.

When will this end? The end is not near despite the write-offs. The scale of the financial crisis has hurt consumer sentiments in the US. The consumers are holding back consumption and this affects the US economy significantly and in the process hurts the export-driven nations selling products and services to the US.

Financial Management, Investments and Retirement Planning | 33

8 February 2008

Great Investment Gurus

There are timeless and valuable investment books that guide investors in their selection of shares for investments. Their methodologies and gems of ideas are being followed by many investors. Their methods and investment philosophies are even more relevant in today’s climate of stock prices volatility. The following are some priceless books for those who are going into equity investment for the first time.

“The Intelligent Investor – The Definitive Book on Value Investors” by Benjamin Graham was first published in 1949. There are several revised editions ever since Graham passed away in 1976. Graham taught finance classes at Columbia University and managed the respected Graham-Newman investment fund.

Graham was the mentor for Warren Buffett who himself has been very successful managing Berkshire Hathaway.

There is another book that I would recommend: “Benjamin Graham on Value Investing” by Janet Lowe. This book listed 14 points which Graham subscribes to: 1. Be an investor, not a speculator 2. Know the asking price - Is the business worth as much as the market capitalisation based on current share price?

3. Rake the market for bargains - Buy stock when its unit price is below the “Net Current Asset Value” per share (after deducting also short-term debt and preference shares) 4. Buy the formula - buy stock at price below the intrinsic value of the company based on a formula 5. Regard corporate accounting numbers with suspicion 6. Don’t stress out - Allow a band of 20% above or below the intrinsic value as range of fair value 7. Don’t sweat the mathematics - when calculating stock values stick to simple arithmetic 34 | Financial Management, Investments and Retirement Planning

8. Diversify, rule#1 - Investors should have minimum 25% in bonds and another minimum 25% in equity. Investor can divide the remaining 50% between the two according to the varying stock and bond prices.

9. Diversify, rule #2 - Graham believes in holding large number of stocks with relatively small number of shares of each stock. Graham suggested holding at least 30 different stocks.

10. When in doubt, stick to quality - Buy quality stock at reasonable price and not at the upper reaches of the bull markets. Quality refers to good earnings, solid dividend histories, low debts and reasonable Price to Earning (PE) ratio.

11. Dividends as a clue - Companies with a long record of paying reasonable dividends reward shareholders.

12. Defend your shareholder rights, if you are unsatisfied with policies of companies 13. Be Patient, and prepared for poor showings of the overall stock market 14. Think for yourself, don’t follow the crowd “The Warren Buffett Way - Investment Strategies of the World’s Greatest Investor” by Robert G. Hagstrom, Jr. Warren Buffett had been the second richest man of the world consistently after Bill Gates. Buffett earns his fortune from investments whereas Bill Gates is the founder of Microsoft. Investments can make one a very rich man despite one does not produce products or software.

So what is Warren Buffet Way? Buffett does careful and in-depth analysis of each stock before he buys big on this stock when it is undervalued. His strategy is to buy and hold stock for a number of years instead of buying and selling at short term. His analysis of companies includes: 1. Long history of operating profits 2. Company resources are generating profits 3. High returns on equity (ROE) of at least 15% 4. Shares which are cheap relative to real cash earnings (low share price to free cash flow) Financial Management, Investments and Retirement Planning | 35

5. Company is creating profits for shareholders in form of higher stock prices.

Another great investment guru is Peter Lynch. His National Bestseller “One Up on Wall Street” is an easy read.

The book is divided into 3 parts: Part 1 – Preparing to Invest; Part 2 – Picking Winners; Part 3 – The Long-term View. Each chapter provides tried and tested methods of picking winners and staying invested. It also provides keys to some accounting ratios to look out for in financial statements.

Peter Lynch placed stocks into 6 general categories and suggested ways to adapt investment strategies for each category: 1.

Slow Growers 2. Stalwarts 3.

Fast Growers 4. Cyclicals 5.

Assets Plays 6. Turnarounds Overall, he focused on sustainable earnings growth, relatively undiscovered companies, insider buying by directors, and manageable debt levels.

(Source: Jack Hough’s “Your Next Great Stock” published by John Wiley Sons, Inc. – reported by Sunday Times 6 January 2008) “Common Stocks and Uncommon Profits” by Philip A. Fisher focused on qualitative aspects of a company instead of quantitative financial mathematics.

He provides 15 points which a shrewd investor should think about before investing.

36 | Financial Management, Investments and Retirement Planning

18 March 2008

US financial problems spill over to Asia

We are seeing replays on Mondays in Asia whenever the Dow Jones Industrial Average (DJIA) fell on Fridays before. This was more frequent in recent weeks when the stock markets are falling. Asia stock markets reacted negatively each time DJIA fell on Friday.

17 March (Monday) was no different. Asia stocks plunged at the start of opening bells. What caused the jitter in the US on last Friday was the near collapse of Bear Stearn, the fifth largest investment bank in US. Federal Reserve Board (Fed) injected liquidity to rescue Bear Stearn in order to arrest the possible systemic collapse of financial market in US. The question in everyone’s mind is: “Which financial institution is going under next in this period of credit crunch and degradation of asset values?”

The US dollar plunged to new depth against the Yen and the Euro on Thursday’s trade (13 March). At the same time, US light crude oil crossed the US$110 per barrel in a sustained way. All these hurt the US economy. With any further cut in Fed interest rate can only cause the US dollar to slide further against major currencies in the future.

Asian stock markets slumped. The indices of these markets at the closing of Monday (17 March) were listed below. When compared with 30 October 2007. when the stock indices reached new highs, the percentage drop was frightening for most markets.

30-Oct 17-Mar Change % Shanghai Composite 5,897 3,820 -35.2 Hang Seng 31,638 21,084 -33.4 Nikkei 225 16,651 11,787 -29.2 ST Index 3,906 2,792 -28.5 Mumbai Sensex 19,783 14,809 -25.1 Kospi 2,070 1,574 -23.9 Taiwan Taiex 9,859 8,005 -18.8 Financial Management, Investments and Retirement Planning | 37

Kuala Lumpur KLCI Jakarta Composite Bangkok SET

1,416 2,680 918

1,177 2,312 806

-16.9 -13.7 -12.2

Most investors are very afraid to get into the market. There are sellers but fewer buyers. Economists were predicting worst case scenarios and whatever calls to buy specific stocks at certain target prices were greeted with skepticism.

How long and how deep this financial problem will last is anyone’s guess.

38 | Financial Management, Investments and Retirement Planning

8 May 2008

Currency Linked Investment (Part 1)

If one places a sum of money in fixed deposit with a bank, it would probably earn you less than 1% per year in interest. This is low and surely cannot preserve the purchasing power of Singapore dollar since inflation rate is in excess of 6%.

Banks may suggest that one invest money in currency linked structured deposits to earn higher interest rate of say 4.5% per annum. With this kind of return, the associated risk is also high. This risk comes in the form of foreign exchange loss if you finally terminate the investment and convert the foreign currency denominated investment back into Singapore dollar.

In order to minimise risk of foreign currency loss, which can wipe out your interest earned on the structured deposit, one must be able to assess the currency strengths or weaknesses of both foreign and local currencies and make informed decisions. In this regard, one must be able to read macroeconomic factors that impact foreign currency vis-Ă -vis local currency.

This type of investment is not for those who are not trained in economics and hence not able to evaluate both countries’ economies to which the currencies belong. Many investors rely on bank’s customer relationship manager to advise.

However, the risk still belongs to investors and not the bank.

The following is an illustration of workings of a currency linked investment (CLI).

Currency linked fixed deposit: Base Currency = Singapore Dollar (SGD) Alternate Currency = Australian Dollar (AUD) Amount placed in deposit in SGD = S$400,000 Interest rate = 4.5% per annum Maturity is 1 month later (known as tenor) Interest to be earned for 1 month = S$1,676.71 Financial Management, Investments and Retirement Planning | 39

You have to agree with the bank on the strike exchange rate for converting SGD to AUD dollars at maturity. This is decided before you take up the deposit.

Strike rate: A$1 = S$1.265 When one month maturity date arrives, the prevailing exchange rate is compared with S$1.265 rate agreed before. If AUD remains strong against SGD, say at S$1.270, the CLI will not be converted to AUD. You keep S$400,000 and earn interest of S$1,676.71.

However, if AUD weakened at S$1.250 one month later, you are obliged to convert at agreed strike price of S$1.265. The total principal amount and interest earned S$401,676.71 becomes A$317,531 after conversion. This AUD amount is now placed in AUD fixed deposit earning interest of 7% per year (AUD fixed deposit earned higher interest compared to SGD fixed deposit).

Another month later, AUD fixed deposit earns A$1,881.90. The principal amount and interest is now A$319,412.90. If AUD strengthens against SGD say S$1.270 then, you can choose to convert AUD back to SGD giving you S$405,654.38. This is S$5,654.38 gain after 2 months duration of initial investment of S$400,000.

However, if AUD weakened below your original strike price of S$1.265, then do not convert AUD back to SGD but hold onto the AUD fixed deposit. If you insisted on converting to SGD, your foreign exchange loss will wipe out the total interest earned todate.

There is therefore higher return potential if the foreign currency you have selected strengthens over time but it can also turn against you if the foreign currency weakens against SGD instead.

40 | Financial Management, Investments and Retirement Planning

22 May 2008

Currency Linked Investment (Part 2)

This is another illustration of how currency linked investment (CLI) worked.

Assume this time, you have S$200,000 initial sum to invest in CLI. You decided to pick Euro as the currency for your investment.

Currency linked fixed deposit: Base Currency = Singapore Dollar (SGD) Alternate Currency = Euro (EUR) Amount placed in deposit in SGD = S$200,000 Interest rate = 4.5% per annum Maturity is 2 weeks later Interest to be earned for 2 weeks = S$345.21 You have to agree with the bank on the strike exchange rate for converting SGD to EUR dollars at maturity. This is decided before you take up the deposit.

Assume Strike rate agreed was 1 EUR = S$2.13 When 2 weeks maturity date arrives, the prevailing exchange rate is lower than S$2.13 (i.e. Euro weakened), you then take delivery of EUR at strike rate of S$2.13 as follows: Principal + interest earned = S$200,345.21 converted to EUR = EUR 94,058.78 Now you have EUR amount. You can continue to place it in CLI with base currency in EUR and alternate currency in SGD and hope that at next maturity, you can convert back to Singapore dollars if the currency rate goes in your favour.

Financial Management, Investments and Retirement Planning | 41

New currency linked deposit: Base Currency = Euro (EUR) Alternate Currency = Singapore dollar (SGD) Amount placed in deposit in EUR = EUR 94,058.78 Interest rate = 5% per annum (interest rate in Euro is higher than SGD deposit) Maturity is 2 weeks later Interest to be earned for 2 weeks = EUR 182.89 Strike rate agreed with the bank was 1 EUR = S$2.13 (Exchange rate is same as before. This is to remove foreign currency gain or loss in this investment. You hope to gain on interest income alone without the foreign exchange fluctuation.)

When 2 weeks maturity date arrived, the prevailing exchange rate was higher than S$2.13 say S$2.144 (i.e. Euro strengthened), you then strike back to SGD at agreed rate of S$2.13 as follows: Principal + interest earned = EUR 94,241.67 converted to SGD = S$200,734.76 Your initial investment of S$200,000 has now earned S$734.76 (purely interest income) over a span of 4 weeks.

42 | Financial Management, Investments and Retirement Planning

13 June 2008

Time to create portfolio of equities

During past weeks, nervousness crept back into major stock markets, from US to Hong Kong and Singapore. Dow Jones Industrial Average, Hang Seng Index and Straits Times Index had fallen on fear of sky-high oil prices. Inflation is now the main focus of major economies instead of slowing economic growth.

As saying goes, cash is king during this climate. Existing holders of shares are off-loading their shares and reduce their holdings of shares for various reasons.

If you have ready cash and have the holding power for a longer period, it is a strategy to pick up some blue chip companies during dips in the STI index. This strategy is not speculative since you will be holding these shares for at least 1 year.

As the Minister for Finance had said recently, “Singapore is not in recession�.

Some blue chip companies are managed by capable CEOs and they have proven track records to survive downturns in the economy. Only good CEOs surface during a slow-growth environment. It is harder for CEO to perform during downturn than economic boom situation. So, one selection criterion in picking blue chip companies is the reputation of CEOs. Assuming if you have set aside $100,000 to invest in equities as a portfolio, you should have done some research into various blue chip companies and selected 15 share counters you will be watching. You decide to buy these shares at target prices that you are comfortable and low enough considering 52-week high and 52-week low share prices of these blue chip companies.

Buy only when share price drops to your target buy price. Do not be tempted to buy at prices higher than target prices. This call for patience and it will be alright if you do not get the counter now. There can be other time during the rest of year to pick them up.

Financial Management, Investments and Retirement Planning | 43

6 July 2008

How to pick stocks?

If you have spare cash and wanted to invest in equity for the long term, how do you select which stocks to invest in?

Here are some ideas: 1. Pick stock with a track record and stated policy of paying dividends. Dividend yield of these stocks are certainly better than the interest received on fixed deposits. Some stocks include SIA (latest dividend = $1 per share), DBS (80 cents), SGX (39 cents), SIA Engineering (20 cents).

2. Pick stocks that are defensive during a slowdown in the economy. These companies are in core businesses that provide services that are still required despite the downturn. Some examples include Singapore Press Holdings (newspapers), SMRT (public transportation), Singtel (telecommunication) 3. Pick stocks that have home-grown recognisable brand names worldwide. The brand name has value that was built up over a number of years. One famous brand name is SIA. The major shareholder of the company will not sit by and watch the brand name erodes.

A word of caution is necessary. Past record of performances is not indication of future performances. Company may still fail if there is poor management of the business. Hence, Board of Directors’ individual credential is key for sustained good performance.

Once you have identified the shares to invest, the next question is how much to pay in order to achieve a return that is better than your target long term returns. You may decide to invest in a portfolio of shares and aim for an overall target returns based on dividend yield of say x% per annum. If the share prices go up in value, then the capital gains will add to your dividend yield achieving more than x% per annum in the long term.

44 | Financial Management, Investments and Retirement Planning

28 July 2008

Investing in shares are dictated by public information

If you have not realised this, it is not too late. Of late, investors world over made their buy or sell decisions on news originating from major economies and circulated by writers of business and economic news. Investors are jittery and they will get out of equity markets (thus depressing the markets) on any news that is negative. Good news was few when compared with deluge of negative news. The world over, except for oil-producing nations, faces slow-down in economic growth and inflation not seen in many years. It is therefore natural to read more negative news than positive news in various mass media.

Positive news caused stock index to move up. But not for long, the negative news soon came along and the index dropped in the process. The decline in stock index was often more severe than the uptick of the index. You then have a case of stock index trending downward but there can be several movements up and down along this downward trending line. As long as the index is trending downward, whenever you buy into a stock, the value of your stock will be lower than what you originally bought them, except for few exceptions with exceptional company profits.

The story of stock prices is almost the same week after week. STI index dropped when Dow Jones Industrial Average declined the night before. Oil prices rose and stock index dropped and conversely stock index rose on news of oil price decline. STI index mimicked the Hang Seng Index and they moved in tandem. News of bank failures in US, such as IndyMac, drove down STI and banking stocks. Sub-prime mortgage problem affecting National Australian Bank recently affected our local bourse. This is despite the fact that the Singapore banks have stated that their exposure to US sub-prime mortgage problems had been nearly fully written down.

It is expected that the economic performance for the rest of the year will be weak. Most companies are bracing for less than optimistic set of financial numbers when compared with 2007 results. Companies will be cautious in business investments or expansions, which will further slow down economic Financial Management, Investments and Retirement Planning | 45

growth of the country.

Investing in stocks require more work than just buying on sentiments or on momentum. You have to analyse how the economic problems, such as oil price increases, affect the company’s operation. In short, you have to look at each company specifically and decide for yourself how it can or able to ride out this difficult economic period. Reading news of specific company is still necessary but you have to decide how to use them in buy, sell or hold decisions of that particular stock and this is the difficult part.

46 | Financial Management, Investments and Retirement Planning

16 September 2008

Contagion effect of US sub-prime mortgage problem

It started off as a US sub-prime mortgage problem in August 2007. One year on, the bursting of property asset bubble in US caused world economies into a tailspin radiating from the epicenter in US to European countries, Japan, Australia, New Zealand and Asian countries.

Equity investors have lost confidence in major economies and sold off their holdings in anticipation of worst to come. Stock indices are pseudo-indicators of overall health of economies in months ahead. If this is the case, then it is scary because most stock indices have plunged since the start of 2008.

2-Jan-08 15-Sep-08 Shanghai Composite (China) 5,272 2,079 Mumbai BSESN 20,465 13,531 Hang Seng (HK) 27,560 19,352 STI (Singapore) 3,461 2,486 Paris CAC40 5,550 4,168 Australia All Ordinaries 6,434 4,875 Germany DAX 7,949 6,064 FTSE100 (UK) 6,416 5,204 New Zealand NZX50

4,033 3,319 S&P 500 (USA) 1,447 1,192 Nikkei 225 (Japan)

14,691 12,214 Dow Jones (USA)

13,043 10,917

Change (%) -60.5 -33.8 -29.7 -28.1 -24.9 -24.2 -23.7 -18.8 -17.7 -17.6 -16.8 -16.3

The worst performing nations were China (-60.5%) and India (-33.8%). Hong Kong and Singapore were next worst performing countries dropping 29.7% and 28.1% respectively. Germany, France and Australia were down 23% to 24%.

Between US, UK, Japan and New Zealand, they shed about 16% to 18%, making them better performing countries among all though still in negative territory.

Asia is certainly not decoupling from the US as stock indices indicate that it is the worst hit nations. The European countries are expected to face recession Financial Management, Investments and Retirement Planning | 47

and similar property devaluation like the US. Even the commodity-rich countries such as Australia and New Zealand are next in line to be affected by global slowdown. Their currencies, Euro, Australian and New Zealand dollars, had weakened significantly against the US in the past 2 months.

Most of us investors have investments in unit trusts that were invested in global, Asian and local equities. We would expect to see our portfolio value nosedived significantly. There is nowhere to hide from this financial contagion effect starting from the US. Should one liquidate one’s investment in unit trusts or hold on to it? I would recommend that investors should take an active interest in reviewing what specific equities go into the portfolio and the financial status of fund managers managing your funds. If money is not tight, to redeem the unit trusts now is to realise the loss in value. Consider holding out for a longer period provided that the funds have not collapsed. There can be no clear cut advice and one must be prepared to lose their investments and hopefully not every dollar invested is lost.

48 | Financial Management, Investments and Retirement Planning

19 September 2008

Driven by Greed or Need to grow retirement money?

During past global recessions, such as 1990-93 and 2001-02, we were busy with our careers. We had our jobs and were lucky to be spared from retrenchment.

At its worst economic slowdown, I had friends calling up to ask whether there were job openings. They were retrenched. At that time, we were still paying our mortgage on our property. In any case, we did not have much savings to even think of other investments. Whatever we had in cash, it went to reduce the mortgage so as to minimise interest payments.

When you were living thriftily, you did not bother with how the stock markets were performing, much less where the global economies were heading. You would not read the newspapers intently to see whether your investments would lose their values overnight, because, there was not much investment to talk about, except for the single big property purchase. I did not even know about derivative products called the credit default swaps or the collaterised debt obligations. Both have surfaced recently to bring down big institutions such as Lehman Brothers and AIG. It was only in recent years, we had a sum of money to invest. It was ironical.

We were encouraged to think of growing our money for retirement. With inflation, interest earned on money placed in fixed deposit (FD) could not cover inflation. Hence the need to see where we can put our money so that we can earn decent returns. So we searched and were advised to place them in currency-linked investments, credit-linked notes, investment-linked insurance, equity unit trusts, etc that promised to pay incomes exceeding the FD interest rates. We were blind to the risk or consider risk was remote. In most exotic investment products, we did not understand the risk fully until they blew up in our face.

Now, the truth is that these investments have lost value. This is savings gone to waste. Retirement money is reduced. So with wealth, we lose them through some investment schemes. With little wealth, you will not have the heartache of investments losing their values but you will need to ensure that you are Financial Management, Investments and Retirement Planning | 49

employed to receive constant stream of wages.

The lesson learned is to be conservative and not to put all savings or retirement money in one basket. If you are not certain of a product, then avoid it. There is no free lunch. High returns entail high risks. It is better to protect the principal sum of your money than to lose it. You may not be able to earn them again because of your age and health.

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23 September 2008

Loss due to collapse of Lehman Brothers

Since the collapse of Lehman Brothers Inc (14 September 2008), the fourth largest investment bank in US, the horror of impact on investors in Singapore surfaced over the past week.

Minibond was a structured investment product linked to Lehman Brothers.

Many retail investors placed money in this product hoping to receive interest payment of about 5 per cent a year and the full principal sum on maturity few years later.

The scales of these issues is estimated to be hundreds of millions.

- Minibond Series 3 – S$200 million (Source: The Straits Times, 19 September 2008, by R Sivanithy)

- Minibond Series 5 – US$44.95 million - Minibond Series 6 – US$28.12 million (Source: The Straits Times, 23 September 2008, Advertisement by Note Trustee)

Another investment product linked to Lehman Brothers which was in the news include DBS High Notes 5.

What saddened me was that retirees were putting their lifelong savings into these products. Some retirees withdrew their CPF money and invested them in these products without fully comprehending the risks. One retiree invested $125,000, part of CPF money, in DBS High Notes 5. That amount was lifelong earnings accumulated in CPF while working as a clerk for 30 years. Another invested $25,000 so as to provide for her son’s overseas study in the future.

This became remote possibility now. (Source: The Sunday Times, 21 September 2008) These are two of many affected by the collapse of Lehman Brothers, going by the sheer size of these issues. I am sure that these investors are having a rough time thinking of their finances right now. As this is water under the bridge, life still continues and the sooner we accept the fact that investments have lost their values, the better we are in coping with moving on.

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16 October 2008

Is leveraging or borrowing bad?

We learn in corporate finance that using debt or borrowing for business is one means of growing the business, as long as the money is put to use that earns income that surpasses the interest cost of this borrowing. No company can depend on just shareholders’ funds for their operations. This will be limited.

Credits from suppliers, banks and investors provide a source of usual funding for companies. For lending money to companies, creditors expect interests to be paid to them.

During this financial crisis, creditors including banks are increasingly wary of lending money to corporations for fear of defaults. On re-financing when the debt is due for re-payment, creditors will demand higher interest rate from corporation, now that the cost of funds has shot up. If the corporation cannot obtain fresh loans, then business may fold because funds are required to continue operation. Leveraging has become an albatross round the neck of some corporations which have negative cash flow. They found their share values battered in recent months as the investors off-load them in the market.

In the same fashion, individuals who are heavily leveraged, ie borrowed too much against their collaterals, such as property, shares, and future earning power, will find themselves worrying about the diminishing values of these collaterals.

When investors invest in equities during these times, it is wise to review the debt levels of corporations and compare them across companies in the same line of business. There are some ready indicators of debt level from internet search of listed companies. The following are some and they are by no means exhaustive: 1. Current ratio – current assets divided by current liabilities. Ratio must at least be greater than 1. The bigger the number will be better.

2. Debt to Asset ratio – total liabilities (excluding shareholders’ funds) divided 52 | Financial Management, Investments and Retirement Planning

by total assets. It shows how much assets are funded as a result of borrowings.

Ratio must be less than 1. The smaller the number will be better.

3. Debt to Equity ratio (also known as leverage or gearing ratio) – total debts divided by total shareholders’ funds. This shows the ratio of borrowings (both short term and long term) against shareholders’ funds. Say a ratio of 0.4 means that for every dollar of shareholder fund, the company borrowed 40 cents. A very low leverage ratio is good for conservative investors in this credit-starved time.

As for all prudent investors, if you do not depend on debts (such as margins) for your investments, there is no worry and you can sleep easy every night. You have to ensure that you have set aside sufficient money for your retirement in safe investments and also keeping them in CPF before investing in shares using your spare cash. Such is the climate of investments now that the stock markets are very volatile.

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6 November 2008

When will stock markets be not oversold?

Now that US Presidential election is over and we know Democrats’ Senator Barack Obama is the President-elect of USA, the stock markets have that unknown out of the way. How will the stock markets react from now on?

The truth of the matter is that the economic fundamentals of the world remained unchanged despite the win by the Democrats in both Houses of Congress. The financial crisis has not blown away overnight. Both the financial crisis and economic slowdown have still to play out in the next few quarters and any policies by the President-elect Obama’s will take time to take effect after January 20, 2009.

What is known now was that the world’s major economies are taking concerted measures to prevent a slide to 1930-type of depression. The central banks were cutting benchmark interest rates to bring them lower to stimulate economies by loosening monetary policies. There will also be fiscal measures by governments to pump-prime the economies to created economic growth and employment in their own countries. There will be infrastructural development projects in these countries to keep production of goods and services up.

Question is will these measures be enough? When can the world see a return to growth again? Economists and analysts ventured to predict that some positive signs would come about in the second half of 2009.

If investors wanted to invest in equities for long term, when would be a good time to consider going into the stock markets? If assuming that the world sees the worst in October 2008, the level of indices at 31 October 2008 and 24 October 2008 were at the following levels:

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24-Oct 31-Oct FTSE100 (UK) 3883 4377 Nikkei 225 (Japan) 7649 8576 STI (Singapore) 1600 1794 Dow Jones (US) 8378 9336 Hang Seng (HK) 12618 13968 S&P 500 (US) 876 968 Shanghai Composite 1839 1728

Change % +12.7 +12.1 +12.1 +11.4 +10.7 +10.5 - 6.0

On 24 October, most indices were at near record low level. A week later on 31 October, some senses prevail to bring the indices higher compared to the week before.

In The Business Times dated 1-2 November 2008, Ms Teh Hooi Ling wrote for the paper titled: “This is the time to buy on dips”. She did a study of STI price movements comparing current crisis with a) the Asian Financial crisis (1997-98) and b) the dot.com bust 2000-01, 11 September 2001 terrorists attack and the SARS episode in 2003. The current crisis “may have seen the bottom this week.

Tremendous volatility typically marks the turning points of the market,” wrote the writer. This is a brave call based on analysis of stock indices movements with caveats of course. Her sense was that investors could buy on dips and she cautioned that the “key is to pick firms that won’t go bust, and be sure that you would not need the money committed for the next five years.”

So at what level of STI should we start to accumulate Singapore listed companies? Would it be a) 1600 (October 24) the 52-week low level, or b) 1473 the intra-day low on 28 October, or c) 1750 - 1800 a more realistic level when the market is not oversold?

Then again, we cannot predict the future.

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12 November 2008

Diversify your risks

You read in the newspaper that some investors placed their life savings or funds meant for retirement in structured products linked to Lehman Brothers Inc. These products were structured to offer higher interest payments above very low bank interest rates. They were popular to retail investors who were not satisfied with low bank deposit interests. These products came onto the markets in 2006 in a big way with eye-catching newspaper advertisement on their high interest payouts.

Bank relationship managers and insurance agents (I know of one insurance company which has similar structured products) were promoting these products without any inkling that in 2008, they would see a dramatic collapse of reputable financial institutions which made these products worthless or significantly reduced values. To be fair, they too felt then that the products would not fail the way it happened.

From 2007 till middle of this year, we saw prices of commodities were shooting skywards. Costs of corns, wheat, soybean, rice, oil, gold, steel, etc sent alarm bells ringing round the world. Inflation was a real concern up till only recently when the slow economic growth overtook it as public enemy number one.

Commodity traders were projecting new high prices and advised investors to buy into investments tied to commodities during stratospheric advances of these commodities. Again investors went with the crowd and buy into commodities or unit trusts of companies in this sector. Now these commodities have come down to earth losing 40% to 50% in values. The oil price per barrel is now about US$60 per barrel down 60% from all time high of US$147.

Investing in shares did not escape these onslaughts. From markets in the US, Europe, Japan, China, Middle East to Singapore, we see their market capitalisation reduced by 40% to 65% from beginning of this year.

Even currency investments suffered the same fate. For instance, the Australian dollar lost 20 over percent against Singapore dollar from its peak. It is a double 56 | Financial Management, Investments and Retirement Planning

whammy if you have placed your money in foreign currency deposit. You lose in currency conversion back to Singapore dollar and at the same time the interest rate has since come off after the Reserve Bank of Australia reduced the cash rate by 75 basis points to 5.25%, effective 5 November 2008.

It is apparent that most investments have all suffered in this downturn. Even, property values and rentals are declining starting from the US (where the subprime mortgage started), UK and the rest of the world.

If you have $200,000 of your life savings and you invest all in Lehman Brothers structured product, you would find very quickly that this savings will be wiped out by the collapse of Lehman Brothers. The interest rate may be enticing at the beginning but one must not “put all the eggs in one basket�. The same can be said when one place a huge amount in currency-linked investment. $200,000 can easily dwindle to $100,000 at current market valuation.

The simple advice is to break up the total investment amount into several investments. If one investment fails, you still have the other portions to hold onto. In this poor economic climate, it would be wise to place up to half in cash, bank deposits and Singapore government bonds. The other half can be spread between equities, corporate bonds, commodities and currencies.

Even when you have decided to invest in unit trusts that invest in shares of companies, it pays to spread the risk further by not investing all in singlecountry stocks and shares. You may consider investing in global equities. The concept of diversification applies just as well.

Diversification of risk is not new. Every financial management book covers it. It becomes prominent during this time because we see good money wasted on bad investments as the Lehman Brothers Inc investment products turned out to be.

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30 December 2008

Significance of 2008

As the year draws to a close, I reflect on the events that now characterised the tumultuous 2008.

2008 is a year of the Olympics held in Beijing, a place of the same time zone as Singapore. I held the view as most that China would continue to expand economically because of the Olympics and Asian nations would benefit too.

The US presidential election was in full swing which culminated in Barack Obama being the first African-American to be elected. With most US presidential elections, it would have a positive effect on the US economy in an election year because of promises of goodies for citizens and corporations.

On both counts, the expectations did not happen. The global economies nose-dived towards the final quarter of 2008. China could not do what the US was capable of helping world economies in the past, through their substantial imports.

The US economy was doing alright for a number of years until 2007, when the property bubble burst and with it dragged down some large and well-known financial institutions into bankruptcy or near bankruptcy, the most spectacular ones being Lehman Brothers Inc., AIG, CitiGroup, Bear Stearns, Merrill Lynch, Fannie Mae, Freddie Mac. The financial storm did not stop there. The real economy took a hit as a consequence. The domestic demand for goods and services was reduced as US residents grappled with diminishing personal wealth from reduced asset and investment values and job losses. The contagion reached globally hurting UK, Europe, Japan, China, Australia, Singapore and others.

When 2008 started, the Straits Times Index (STI) was 3482 points. Right now, STI was hovering at around 1750. This was a drop of 50%, ie half its value from the start.

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Denial There were signs of slowdowns at the end of 2007 and few economists/ analysts were warning that the worst will be happening in 2008. But, I remained optimistic and was in denial from the beginning, that the economy can collapse spectacularly without progressive warning signs. Who would have thought that the US financial crisis can blow up in our face? Now, we began to fathom the depth of the problems and understand how “clever� financial products were structured that caused investors to lose their pants. It is wise to listen to the gloomiest of economists and give them some due respect for being different from the crowd. They got it right.

Patience Because time-deposits with banks pay so low interest, it does not make sense to place all cash in bank deposits. The interest will not be enough to cover inflation rate. So, I think it was clever to invest in equities, foreign currency instrument, fixed income instrument, commodities, etc. It was not to be. As it is well known now, such investments were now significantly reduced in value. It is better off not to move into the markets but to place your money in the banks.

It pays to be patient and not to move quickly and invest all money at one go.

Diversification One thing I am glad that I have stuck to is the principle of diversification. We should not put all money in one financial product. When that product fails, your whole live-savings go down with it.

No Greed One should not be greedy. Borrowing to invest is not smart when you know that you do not have the capacity to service it when you are out of job. Be happy with small gains.

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4 March 2009

Fresh lows for stock indices

On 2 March, we faced a black Monday and realised that there can still be bad financial news to cause stock markets to plumb new depth.

Recent disclosure of huge losses of financial giants, like AIG, HSBC and Citi Bank, sent ripples around the world.

The indices of these markets as at 2 March 2009 and percentage changes from 23 February 2009 numbers were: 02.03.09 Shanghai Composite 2093 Hang Seng (HK) 12317 STI (Singapore) 1533 FTSE100 (UK) 3625 S&P 500 (US) 700 Dow Jones (US)

6762 Nikkei 225 (Japan) 7280

Change (%) -7.4 -6.5 -5.9 -5.8 -5.7 -4.9 -1.3

For the first time, Dow Jones Industrial Average (DJIA) fell below 7,000 points, which was the psychological floor for a while since the financial crisis erupted on their home ground. The last time we saw this level was in 1997, more than 10 years ago.

Singapore’s Straits Times Index (STI) touched 1,533, a level last seen in August 2003 which was the year of Severe Acute Respiratory Syndrome (SARS).

Will STI slip further down from 1,533 level?

It is a real possibility when the economic crisis is prolonged and extended to 2010. This economic crisis is certainly more frightening when compared to SARS. For one, it is a global crisis now instead of Asian-centred one in 2003 and 1997/98 Asian financial crisis.

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Very few are willing to call a bottom on the stock markets. The consensus is still that the end is not in sight. Some market watchers were predicting that STI at 1,200 level is possible. What is needed is for sustained bad news on financial institution failures to trigger further fall. What is lacking now is confidence boosting financial and economic news.

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11 March 2009

Investment Psychology

We know that interest rates from deposits placed with banks are less than 1 per cent. With inflation, the purchasing power of the dollar will erode over time.

How best to grow our dollar for our retirement in this economic climate?

One strategy is to do nothing and hoard cash for fear that principal amount can be wiped out with a wrong investment. As mentioned earlier, this will not grow your retirement fund if you are not economically active or employable.

However, this could be the best approach now for some, if they cannot stomach risk. Most investment asset classes have lost values since 2008 and those who have not invested would be happy.

But doing nothing cannot be forever. At some point in time, we have to consider investing again. Is this the right time?

Let’s consider one asset class, equity. Equity has proven in history to bounce back after a period of downturn and can reward handsomely over longer term.

The corporations’ fortunes are closely correlated with the economy. When economy shows signs of growth, corporations’ performance will move in tandem.

The weaker corporations will slowly be exposed and in some cases will go into liquidation under harsh economic climate. Those corporations that can withstand this credit and economic crisis right now will emerge stronger and move ahead of the competition in the future.

Once we have identified corporations that are resilient through our research, the next question is when to invest in them.

If we were to put a label to the mass psychology of investors now, we can possibly look at timing of entry into the market.

Investors have clearly passed the denial and disbelieve stage of emotional 62 | Financial Management, Investments and Retirement Planning

feeling cycle. Economy is bad, period. No one will dispute that. There is genuine fear and desperation among investors and that had driven down stock markets since September last year. Is there panic yet resulting in capitulation of shares?

I do not think we have reached mass panic or depression yet. Once we passed panic and mass depression stage, shares would have bottomed and there will be buying opportunities for good corporation shares.

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25 March 2009

Currency Linked Investment – Impact of Forex Movement

The interest rate for currency linked investment (CLI) is attractive when compared with the rate you can get from plain vanilla Singapore dollar fixed deposits, hence the draw to this investment.

When investing in this product you have to handle the risk of foreign currency (forex) movement which can wipeout interest receivable if forex moves in opposite direction from what you have expected.

To illustrate that by way of example: Assuming you have placed Australian dollar A$150,000 for 2 weeks at interest rate of 5.5% per annum.

You have also contracted with the bank to convert to Singapore dollar in 2 weeks time at strike forex rate of A$1 = S$1.027 if Singapore dollar weakens against Australian dollar (i.e. A$1 > S$1.027) At the time of contract, you believed that Australian dollar would not rise so quickly against Singapore dollar, since Australian dollar had been trading at below S$1 for a long while.

But your expectation turned out to be wrong. Australian dollar strengthened to A$1= S$1.0532. Hence you are converted to S$ at agreed strike rate of A$1 = S$1.027. You have lost the chance of converting at higher forex rate to the tune of: (1.0532 -1.027) x A$150,000 = S$3,930 This amount can hardly be covered by the 5.5% p.a. interest earned for 2 weeks: (14/360) x 5.5% x A$150,000 = A$320.83 = S$329.49 at conversion rate of 1.027.

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It is better off if you stay invested in Australian dollar fixed deposits and convert at exchange rate of 1.0532. On top of that, you would have earned some interest in 2 weeks, though the interest rate would be lower for A$ fixed deposit of 2.6% p.a.

CLI as an investment product is somewhat risky during a climate of volatile exchange rates. The illustration shows a movement in forex rate can cause a huge impact on gains or loss on your investment. Interest rate to be earned on the investment would not be sufficient to cover this loss or foregone opportunity to profit.

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6 May 2009

Selling shares and regretting?

On Monday May 4, the Straits Times Index (STI) rose a hefty 5.6% in a single day. The next day, it rose again. This time round, the change was at 2.2%. STI stood at 2,074 yesterday, breaking the 2,000 points psychological level.

One commentator said that most fund managers were holding huge amount of cash, with some at around 60% of total current portfolio. They are waiting to invest in Asian equities at the earliest signs of major economies stabilising.

Monday’s trading was indicative of such actions of buying interests.

Most retail investors who sold early on Monday often wished that they had delayed sales of their shares when prices could be higher. As it turned out, it is not possible to time the market. You would not be able to predict the behaviour of the market with pinpoint accuracy. Such is the nature of investing in shares.

One advice is that once you have made up your mind to sell your shares, which might be at a profit you can accept, then live with that decision. Do not regret when the shares move up in the future. For one good reason, you have locked in the profit which you are comfortable with. There is no need to be greedy for more.

You can monitor this particular counter and if you believe in its good fundamentals, you can move in to buy at a later date. In this regard, your new cost could be higher than your original cost when you had it. Your next sell decision should be based on the new and higher cost of purchase. You can still make subsequent profits in the future in a rising stock market.

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9 May 2009

Stock Indices Rallied

Major stock indices rallied again for the week ending 8 May 2009. Since last Friday, all indices rose above the 24 October 2008 low levels: 24.10.08 08.05.09 Change (%) Dow Jones (US) 8378 8574 2.3 S&P 500 (US) 876 929 6.0 FTSE100 (UK)

3883 4462 14.9 Nikkei 225 (Japan) 7649 9432 23.3 Shanghai Composite 1839 2625 42.7 Hang Seng (HK) 12618 17389 37.8 STI (Singapore) 1600 2238 39.8 Confidence returned to market players, flushed with cash to invest. They believed that the bottom in stock markets had reached and the only way is up for the stock indices from now on. They saw signs of green shoots of recovery in the US. China’s manufacturing has started to recover with four trillion yuan stimulus package starting to impact growth.

How far can the stock rally go?

If we compare the current indices with 2 January 2008 figures, when US recession started to take hold and before any steep declines in 2008, the current indices are about thirty over per cent away.

02.01.08 Dow Jones (US) 13043 S&P 500 (US) 1447 FTSE100 (UK)

6416 Nikkei 225 (Japan) 14691 Shanghai Composite 5272 Hang Seng (HK) 27560 STI (Singapore) 3461

08.05.09 Difference (%) 8574 -34.2 929 -35.7 4462 -30.4 9432 -35.7 2625 -50.2 17389 -36.9 2238 -35.3

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Is this when stock indices rally took a breather from recent gains?

The economic fundamentals of global economies have not changed significantly.

The International Monetary Fund (IMF) projected the economic growth for Asia will shrink this year when compared with last year. Notably the economies with negative growth in 2009 were: Year-on-year growth (%) Singapore -10.0 Taiwan -7.5 Japan -6.2 Hong Kong -4.5 South Korea -4.0 Malaysia -3.5 Thailand -3.0 New Zealand -2.0 Australia -1.4 China may grow at only 6.5%, while India is projected to grow only 4.5%. Both countries would show slower growth when compared with past three years.

(Source: “S’pore economy may shrink 10%: IMF”, The Straits Times, 7 May 2009)

If this is the case, how much more can the stocks rally or will there be a correction?

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11 June 2009

Reading Economics

Views from economists are often sought for predicting future direction of stock, bond, commodity, currency markets. They dish out investment advices based on their readings of the state of economy of various countries.

Some private sector economists are better known than some celebrities. They appeared on pages of newspapers. It was said that some celebrated economists make investment calls that result in market movements of certain stocks identified.

Some economists are less optimistic about the economic recovery such as Paul Krugman and Nouriel Roubini. They went against the grains of majority economists who are expecting “green shoots” in the US will develop into economic growth in 2010 or late 2009. They are prominent economists who had been correct before in their economic assessments.

As an investor, one has to read the economic news of various countries. This has impact on the stock markets, currencies, interest rates, etc. If one is trained in economics, he/she can make informed choices in investments.

Students in Business Studies, Accountancy are fortunate as they are exposed to theories of microeconomics and macroeconomics as part of their core syllabus. It is advocated that students studying in other disciplines should read economics as a cross-disciplinary subject. They will find it useful when they ventured into businesses related to their fields of study. If it is not for business, the knowledge is useful for their personal financial planning with investments forming a significant part.

Retail investors may consider reading up theories of economics from books or attending courses. In this case, investors do not invest “blind” based on what other economists say. He/She can decide for themselves on the economic state of countries and choose to agree or disagree with readings or publications available to them.

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28 September 2009

streetTRACKS Straits Times Index Fund (SPDR STI ETF)

This exchange traded fund (ETF) released its annual report recently for the year ended 30 June 2009. Results disclosed here are based on 30 June 2009 closing figures.

This fund invested in 30 FTSE Straits Times Index (STI) component stocks at varying percentages of total net assets. Net Asset Value (NAV) per share as at 30 June was $2.38. Since then, STI ETF has moved up in value and was last trading at $2.67 per unit as of today.

Net assets attributable to unitholders came up to $624,028,009. This is the sum of all 30 component stocks using their fair values at the closing, including $11,064,522 of cash and other net assets. The number of units in issue was 262,500,000 resulting in NAV per share of $2.38.

The units in issue had gone up 10.9% over last reporting period from 236.5 million to 262.5 million units. There were interests in STI ETF and improving despite the economic downturn faced in the first half of this year.

Because STI ETF invests in actual stocks, dividends from these stocks received by the Fund was distributed back to the unitholders. On 18 July 2008, the Fund declared a final dividend distribution of $0.06 per unit. On 20 January 2009, the Fund declared an interim dividend distribution of $0.05 per unit. The Fund anticipates that dividend distribution would be make twice a year and the amount of distribution would approximate the yield on the STI. The annual costs, including management and trustee fees, incurred by the Fund were at 0.3% of average net assets. The other costs borne by the investors were the brokerage commission and other fees levied on trading on the Singapore Stock Exchange.

To get a piece of action on Singapore stocks, this ETF allows you to do so at a fraction of costs as opposed to actually owning 30 component stocks of STI. 70 | Financial Management, Investments and Retirement Planning

23 December 2009

Year in Review - 2009

I remember starting 2009 feeling fear and uncertainty. Lehman Brothers Inc collapsed in later part of 2008 and with it big names such as AIG and Citigroup were in financial difficulty. Credits and loans froze among banks around the world at the beginning of this year. International trade nearly came to a standstill. Economies ran into recession.

My investments lost substantial value at least on paper. Singapore equities, credit-linked notes, currency-linked investments, and various unit trusts lost value. Paper loss for some of my investments hit a high of 50 per cent. Fear of credit default events may happen to two companies tied to credit-linked notes was nerve wrecking.

I count myself fortunate in that I did not cash out at hefty losses for majority of my investments. I held onto hope that this panic sell-off in the markets was overdone. Since then, my investments have recovered. On an overall portfolio basis, my investments are down about 6%.

Over the year, I did some re-balancing of my portfolio and moved more funds into cash and cash equivalent instruments kept with a bank and an insurance company. The final allocation is 32% cash and cash equivalent instruments.

In addition, I bought into selective Singapore equities, only blue chips with strong brand names which I think were of good value and profited when I sold them at higher prices.

What have I learnt from this year?

1. Not to be greedy, small gain is okay. Do not wait for huge gain to realise the gain.

2. Do not panic and sell off completely. Study the investment portfolio carefully to assess risks of investments held.

3. Buy blue chip companies while others are selling. Sell them when it reached a Financial Management, Investments and Retirement Planning | 71

value that you had decided it had risen enough.

4. Re-balance investment portfolio ever so often so as not to be heavily weighted in one or two investment instrument types. Spread the risks.

5. Held on to cash to provide a cushion just in case other investments plummeted.

6. Active review of monthly statements of investments and act when necessary.

Finally, live within your means and not to spend on unnecessary items. Do not borrow money or take credits for investments. We need to hope that things would get better and see the brighter side of the gloom.

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12 February 2010

Debt is a problem

United States of America plunged into recession in 2008 – 2009 sparked by sub-prime mortgage crisis when asset bubble burst. US residents borrowed to invest or spend and banks lend to poor credit clients. When property market lost values, borrowers were unable to service their loans and recall of loans became rampant. Lenders took a hit and loss of confidence in the financial institutions spread across major economies.

Now Greece is facing a similar problem. The government spent beyond their revenue incurring debts to support the budget deficit. To continue borrowing will require Greece to pay a premium on servicing new debts. Investors are less willing to buy government bonds seeing that the financial health of Greece is not good.

Greece is currently in talks for a rescue by Euro-zone countries. The outcome will affect the Euro currency which had depreciated since news broke.

As the development is unfolding, one is reminded of the age-old advice that one must live within one’s means. Too much debt can cause bankruptcy if one cannot service it. The same goes for countries. Countries with healthy budget surpluses and reserves will be able to weather the economic crisis better. Cash in hand is still king in this trying period.

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16 February 2010

Lehman Brother’s Minibond

Lehman Brother’s Minibond is not a bond. It is a credit-linked note, a derivative tied to underlying credit status of Reference Entities. Investors are exposed to credit risk of these Reference Entities and will receive less than the principal amount back should a Reference Entity goes into bankruptcy, failure to pay or restructure.

I bought Minibond Series 3A and 5 on 12 Jan 2007 and 23 May 2007 respectively. The amount of investment was not significant. At that point, the world did not foresee the Lehman Brother collapse in September 2008 and the eventual global financial crisis that followed.

The return for Minibond Series 3 was 5 per cent per annum for 5 ¾ years and for Minibond Series 5 was 5.1 per cent for first 3 years and then 6.4 per cent for following 4 years. These investment returns were attractive and the Minibond was easily available to retail investors from 9 well-known distributors.

The Reference Entities for Series 3 are Barclays Bank, Citigroup, Deutsche Bank, Goldman Sachs, UBS and UOB. The Reference Entities for Series 5 are Citigroup, DBS, Goldman Sachs, HSBC, Merrill Lynch and Standard Chartered Bank. These are well-known financial institutions and hardly one can think that a few of them can get into trouble during the financial crisis when we made the decision to invest.

The arranger of Minibond was Lehman Brothers. The issuer of the Minibond was Minibond Limited, a special purpose company that was linked to Lehman Brothers. No one would ever think that a 165-year old established investment bank can go under in September 2008.

What can go wrong when we bought into Minibond in 2007 with all good credentials of a structured product? With hindsight, it did go wrong and a “safe” investment turned out to be a “lemon”.

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Under liquidation, the recovery for each series ranges from 21.5 per cent to 70.8 per cent of the original amount invested. For Series 3A, the recovery amount is 55.9 per cent and Series 5 is 29.8 per cent. On average, I can recover 42 per cent of total investment, making a loss on investment of about 55 per cent (after subtracting interests earned before the credit event).

The hard lesson learned is that we have to accept risks that come with investments offering high returns. Could we have foreseen this coming? The short answer is No. The unfortunate event unfolded itself swiftly and no one could react in time to limit the loss. Another lesson learned is that one should not put all savings into one financial instrument. The loss can wipe out one’s lifetime of savings.

Financial Management, Investments and Retirement Planning | 75

8 May 2010

Risk-Weighted Decisions

What are the known facts?

1. Greece requires bail-out package from EU and IMF to prevent her from defaulting on sovereign debts. €110 billion was arranged.

2. Spain and Portugal are on radar screens of creditors and investors. They too have sizeable country debts.

3. China is tightening bank lending towards the residential property sector.

Besides the property market, China is taking measures to cool the likelihood of asset bubble.

4. US is proposing legislations to rein in on financial institutions so as not to see a repeat of the global financial crisis.

5. Global economy is expected to be better than 2009 and recovery from the recession of 2008/2009 is in place for most nations.

6. US is showing signs of recovery despite having unemployment rate of 9.9% in April.

7. Singapore economy is forecast to grow 7.0 to 9.0 per cent for 2010.

8. Some large cap companies in Singapore were reporting significant increases in first quarter financial results.

What are the risks in macro-economic environment?

The fear of contagion in the Eurozone countries such as Portugal, Ireland, Italy, Greece and Spain (PIIGS) can affect the economic growth of European Union (EU) which also includes Eastern Europe.

The EU accounts for 11.3% of Singapore’s total external trade, purchasing 11.1% of Singapore’s exports and providing 11.4% of its imports. (based on trade data in 2006) This does not seem much but it still has impact on the Singapore’s economy.

The problem of the debt crisis of Dubai World has somewhat receded. This seems to be a smaller scale problem when compared with what is happening 76 | Financial Management, Investments and Retirement Planning

with Greece and Europe.

What are the action plans?

When the stock markets reacted negatively in the past week, I sat out and watch the major stock indices without much fear. Institutional investors were selling off to move their funds around different countries and different asset classes. This can be seen from the huge stock trading volume in the past few days. Friday’s trading volume on the Singapore Stock Exchange was 2.14 billion shares traded worth $2.31 billion which was way above the average seen in the quiet months of March and April.

For long term investors, the daily gyration of stock prices should not cause alarm. In fact when share prices dropped significantly, it presents buying opportunities for some blue chip stocks. It would also be wise not to put all your money into stocks. Set a budget amount to accumulate and create a stock portfolio. It is tempting to buy when prices are low but once the budget limit is reached, stop further acquisitions.

Financial Management, Investments and Retirement Planning | 77

17 June 2010

May 2010 took a hit

May 2010 was a month of negatives.

The Eurozone sovereign debt crisis received almost daily news updates in May. Fear of global banking system seizing up again, much like the global financial crisis that erupted with the collapse of Lehman Brothers in September 2008, began to circulate in the investing community.

Within the month, the Straits Times Index (STI) declined 7.5 per cent to 2,752 points. The Dow Jones Industrial Average (DJIA) dropped 7.9 per cent. The major European stock indices were not spared, since they are at the epicentre of this recent crisis. The Euro currency dropped to the lowest point in four years against the US dollars sinking to 1.19 â‚Ź to 1 US$ last week.

As a consequence, new private home sales in May (1,078 units) was nearly half that of April (2,208 units) sales data. Home buyers in Singapore became cautious because there were fears.

Commodities, currencies, and country specific funds took a hit too. However, bad news lifted slightly at the start of this week. DJIA rose 2.1 per cent to 10,404 points yesterday and STI rose 1.02 per cent to 2,846 points today.

My diversified portfolio declined 2.1 percentage points on costs but this is just on paper and not realised loss. I sat out in May and did not liquidate or sell out any investments and was glad that the economic fundamentals were not worse than 2008/09 global recession.

78 | Financial Management, Investments and Retirement Planning

15 September 2010

Singapore equities offer decent returns

I started buying Singapore equities and built up a portfolio of S$100,000 during the period May to July 2008. The collapse of Lehman Brothers Inc. on 15 September 2008 threw the global financial markets into a tailspin. Almost all kind of investment portfolios lost huge amounts during 2008/2009 Great Recession.

The Straits Times Index (STI) was 3147 points on 1 May 2008 before we even know that a financial tsunami was going to hit us later in September 2008. The Index reached a low of 1456 points on 9 March 2009. That was the period when extreme gloom prevailed among investors. Singapore recovered sharply from the recession this year and the STI was at 3066 points on 13 September 2010, recovering much of the loss seen since the crisis. In the span of two years, we are almost back to where we were before the recession.

I kept faith with my portfolio since most of total 19 stocks are established names of local companies and are blue-chips on the Singapore Stock Exchange.

The total dividends received amounted to $8,800 over the 2-year period. I sold off some shares selectively to realise some gains on sales. Total amount of gains was $10,400. On a rough estimation, the dividend and gain on disposal yielded a return of 9.6% per year. My current portfolio still shows a paper gain of 5%.

With this kind of result, the return is better against not actively managing it and leaving it as deposit in the bank.

The return though not phenomena is decent. It is important that we need to invest time and be tuned in to the global macroeconomic environment and the local economy. Local blue chip stocks have the reputations of surviving economic downturns. Selecting good stocks and buying and selling at appropriate times are essential in managing the portfolio. Time spent on effort and patience are ingredients for successful investing.

Financial Management, Investments and Retirement Planning | 79

10 October 2010

Buying SIA Bonds on the Singapore Stock Exchange

Investors who are buying SIA Bonds on the Singapore Stock Exchange will need to compute the yield to maturity of the Bonds before deciding on the purchase. This yield will be different from the coupon rate stated on the Bonds depending on the acquisition cost and the number of interest payments to be received till maturity.

The coupon rate (interest) is 2.15 per cent per year payable semi-annually and the principal amount is due for redemption on 30 September 2015 (5 years later). There are 10 interest payments from now till maturity. On maturity, you will then receive the principal amount of the Bonds (i.e. the face value of the Bonds).

The acquisition cost of the Bonds will include, besides the principal amount of the Bonds, premium over face value of the Bonds, costs such as brokerage fees, clearing fee, SGX trading fee and GST amount.

Let’s say you have decided to pay 1.009 for every unit of the Bonds (at a premium) because there are sellers at this rate. Your total acquisition cost for 10,000 units with a face value of $10,000 will be: a. Amount paid for the Bonds = 10,000 units X $1.009 = $10,090 b. Costs associated with trading = $35.36 Total outlay to acquire $10,000 face value of the Bonds = $10,125.36 The interest payment on half-yearly basis is 2.15% p.a. on $10,000 divided by 2 = $107.50 (received twice a year) On maturity 5 years later, you will receive the last interest payment (the 10th interest payment) and the principal amount of $10,000.

Considering the above data, the computed yield to maturity (or internal rate of return) is 1.89% per annum. This is lower than the coupon rate of 2.15% per annum if you are able to acquire it at IPO stage at $1 issue price for $1 80 | Financial Management, Investments and Retirement Planning

principal amount of Bonds.

Investors must be able to accept lower yield to maturity than the stated coupon rate. The acquisition costs including the premium you are willing to pay must be factored in before making the purchase.

Financial Management, Investments and Retirement Planning | 81

6 November 2010

Preference Shares – What investors should know

What prompted me to write this piece was the news report on DBS Bank’s third quarter financial results published on Friday in the Business Times.

The journalist quoted DBS’ chief executive as saying that “all of this quantitative easing and loose monetary policy (by the US) … will keep interest rates subdued.” We are not about to see a rise in interest rates for bank deposits any time soon. POSB deposit rate for first $100,000 is only 0.1 per cent.

For investors finding ways to earn better returns on their savings, DBS said that they would launch the retail tranche of preference shares before the year-end.

When DBS issued $1.7 billion preference shares to private banking clients last month with dividend rate of 4.7 per cent and minimum size in investment of $250,000, the retail investors were left out of the action. This time round, the planned new preference shares will be of a lower minimum size in order for retail investors to participate.

In the news report, the journalist ended by saying that there are some risks in preference shares unlike savings placed with bank.

What are preference shares?

Under the Companies Act (Chapter 50) Section 75, company can issue preference shares so long “there are set out in its memorandum or articles the rights of the holders of those shares with respect to repayment of capital, participation in surplus assets and profits, cumulative or non-cumulative dividends, voting and priority of payment of capital and dividend in relation to other shares or other classes of preference shares.”

Preference shares are not ordinary shares and typically do not have voting rights at company’s annual general meeting. For this reason, they have preference over ordinary shareholders with regard to payment of dividends and repayment of capital. However, preference shareholders’ rights over capital 82 | Financial Management, Investments and Retirement Planning

repayment will rank below those of bonds/debt instruments issued by the company. In other words, the bondholders will be paid first before preference shareholders should the company is liquidated.

Before one invests in preference shares, one must study the terms of the issue. Some preference shares can be converted to ordinary shares in the future, known as convertible preference shares. Some preference shares are cumulative preference shares, meaning that dividends unpaid for some reasons are accumulated for future payment.

To see examples of preference shares issued, OCBC Bank has five listed on the Singapore Stock Exchange (SGX), each with different dividend rate. Even when OCBC’s preference shares are traded on the SGX, volume of trade can be low or none at all. As an illustration, only one (OCBC Bk 4.2% NCPS) had trading volume of 70,000 on last Thursday. The other four had only 1,000 to 2,000 or none traded. So liquidity of preference shares traded is low and is a problem.

Preference shareholders may not be able to sell off their shares at a better price if they needed money urgently.

The other risk of owning preference share is that holders may not get any money back should a company is liquidated since company’s creditors and bond holders get repaid first before preference shareholders.

Financial Management, Investments and Retirement Planning | 83

12 November 2010

DBS Preference Shares 4.70%

DBS announced yesterday the public offer of up to S$500 million in aggregate liquidation Preference Share of 4.70% Non-Cumulative Non-Convertible Non-Voting Preference Shares Callable in 2020 subject to the Upsize Option (maximum issue of S$800 million).

The dividend payout is 4.70 per cent per year but this is not cumulative, meaning that should for some reason DBS does not declare any dividend for a particular period, this dividend will not be paid and is not accumulated for future payment.

The Preference Share is non-convertible, meaning that it will not be converted to ordinary shares at all. It remains callable in 10 years time at which time or after, DBS can redeem the Preference Share at current issue price which is S$100 per one Preference Share.

These Preference Shares will be traded on the Singapore Stock Exchange at board lots of 100 shares. CPF money cannot be used for this issue. The minimum amount for 100 shares at S$100 is S$10,000.

The total amount of S$500 million, subject to upsize option, qualifies for Tier I regulatory capital of DBS Bank. The ratings agencies gave these Preference Shares an “A” rating by Fitch Ratings and Standard & Poor’s. Moody’s gave it “A3” rating.

Preference Shares are ranked lower than the DBS depositors, creditors and bondholders but higher than ordinary shareholders with regard to recovery of money should DBS is liquidated. They may lose all or part of their investments in the Preference Shares. In this case, investors have to assess the business and operation risks of DBS in the future.

Even that the Preference Shares are traded on the Singapore Stock Exchange, there is no guarantee that the market for this counter can be active or liquid.

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Looking at the low interest rate environment, 4.7 per cent annual interest rate is attractive to investors. I foresee that this issue will be many times subscribed just like the S$1.7 billion preference shares of the same terms issued to institutional investors in October 2010. But one has to bear in mind that potential investors will be locked into 4.7 per cent interest over a period of ten years. The interest rate environment can change over the ten-year period.

If future interest rate goes up significantly, the price of preference shares will decline during that time. Interest rate and price of preference shares moved in opposite direction.

Financial Management, Investments and Retirement Planning | 85

15 November 2010

STI and the Economy

The Straits Times Index (STI), comprising 30 blue-chip stocks, is influenced by actual economic performance of Singapore and expectations of where the economy is heading. With improved economic growth, one can expect the STI to trend upward. The same can be said about decline in economic growth putting downward pressure on the index.

Looking back at some of the recent economic crises, the STI declined significantly during a crisis.

End of Month Crises STI August 1998 Asian Financial Crisis 856 December 1999 Recovery from crisis 2479 May 2000 Dot-com Bubble 1795 September 2001 Sept 11 attack on twin towers (US) 1319 March 2003 SARS 1267 October 2007 Economic expansion (2003-07) 3807 December 2007 Start of Global Financial Crisis 3482 During the Asian Financial Crisis, the STI was at 856 points in August 1998.

The recovery did not take long. By December 1999, the STI climbed to 2479.

Subsequently, three more events caused the STI to go below 2000 points level. These were the Dot-com bubble (May 2000, STI at 1795); September 11 attack on twin towers of WTC in US (September 2001, STI at 1319); SARS (March 2003, STI at 1267).

After SARS, economic growth gathered pace for a good four years from 2003 to 2007. STI reached its highest level in October 2007 at 3807. When the global financial crisis started in December 2007, the STI was at 3482. It went through a major dip touching 1456 on 9 March 2009.

Since then and coupled with phenomenal economic growth for this year, STI was currently at 3252 on 12 November 2010. Will STI catch up to the pre86 | Financial Management, Investments and Retirement Planning

global financial crisis level of December 2007 (at 3482 points)? To hazard a guess, one needs to ask a rather simplistic question: Is the current global economy better than the global economy just before the global financial crisis of 2008/09.

For four years to 2007, US and European countries went through a bubble economy where asset prices, including the equity markets, reached the roof.

This is not sustainable and one should temper one’s expectations of future level for the STI. US, Japan and some European countries have still to fully recover from the crisis and this will take a while. The projected global economic growth for 2011 would not be spectacular compared to this year. It would be moderate. On that note, it is not easy to be overly bullish on the level for the STI. (Afternote: STI at end 2010 was 3,190 points.)

Financial Management, Investments and Retirement Planning | 87

4 December 2010

Lessons learned in investing in stocks

Investing in shares requires time. You cannot be on top of the game compared with those whose pre-occupation is to watch the stock market every trading day. With a full-time career in an unrelated field, it is difficult to know what is happening in the stock market. By time you hear any news, you would probably be one day late. You would have missed the chance to capitalise on the news.

Keep watch of certain stocks you are following and read up news relating to these stocks. Quarterly financial results and annual reports are also important source of information. Knowing the history of price movement over a period of time is useful to time the purchase or sale of stocks. It might prevent an investor from buying and selling too soon or too late. This is easier said and there are many other factors, including historical price movement, influencing the decision.

Be willing to cut losses. Emotion has no place in investment. If certain share stayed depressed for a long time and business’ outlook is not optimistic, do not hope that it would rise eventually. Better to sell the stock and move on to other shares with better prospects. I continue to own Informatics, which was bought in 2002 at $1.33 and was now at 13.5 cents. Informatics was a darling stock during its heydays but had lost its value permanently through years of business setback.

Do not be sentimental over stocks. If a stock has risen and profits are decent, sell it. Do not hold on to it and try to catch the peak. Two recent examples include selling SGX at $10.14 from original cost of $7.25; selling OCBC at $10.26 from original cost of $7.70.

Holding on to too many stocks is not a good strategy. It is difficult to keep track of all these stocks. At one stage, I bought into too many real estates investment trusts (REITs) because of attractive distribution yields. When the recession hit in 2008/2009, these REITs lost values because the investment community frowned on the financial leverage of these REITs. 88 | Financial Management, Investments and Retirement Planning

I am now more wary about stock recommendations from stock analysts.

Buying stocks based on buy recommendations can be painful. Some examples include Tat Hong bought at $1.95 and sold at $1.07; Tiong Woon and Lian Beng declined during the recession and had not recovered to original cost of purchase. Like Tat Hong, I had decided to cut losses and sold the last two stocks.

In order to be level headed in investment, one must have the money for investment. Stock trading on margin is stressful and risky. Fear can be minimised if one can afford to lose the total amount of investment set aside for them.

One must not be too greedy and together with fear, these form the twin obstacles to rewarding experience in investing.

Financial Management, Investments and Retirement Planning | 89

24 January 2011

Achieving investment returns

How much investment returns can one achieve on excess funds? A simple question but one that is hardest to answer. One may desire a return of 10 per cent on their investment but can this be achieved without risks? Assuming that we are not talking about investments in real estates or own businesses, could an average person with a salary still get that 10 per cent return every year on their savings?

There will be trade-off between returns and risks. The higher the returns expect higher risks on the investment. Take the case of Lehman Brothers minibonds and you would know what I am saying. There is no free lunch as the saying goes. If someone promised super returns on investments, be wary of this promise. See the example of land banking deals of Profitable Plots Pte Ltd, which was placed under Investor Alert List by the Monetary Authority of Singapore.

Taking a lower risk on investments comes with lower returns. Take the example of savings and fixed deposits with local banks. The interest rates range from 0.1 per cent to 0.6 per cent per annum based on rates offered by one local bank. Singapore government securities (SGS), which are almost risk-free, pays at best a coupon of 3.5 per cent per year for SGS with long-dated maturity on 1 March 2027.

Venturing into foreign currency deposits may offer higher returns in the region of 3.5 to 4.5 per cent for Australian dollar fixed deposits with different durations. But this comes with foreign currency risk and this can wipe out the interest earned quite quickly if the currency rate is volatile. See the example of Australian dollar, which declined as result of massive flooding in Queensland and Victoria states recently.

If you put your money in Singapore equity and invested in blue chips, you may get total returns (including realised capital gains and dividends) of about 8 to 10 per cent on your diversified portfolio. Equity is volatile and share prices can 90 | Financial Management, Investments and Retirement Planning

move either way from your cost of investments. Dividend yields for some blue chips and some real estates investment trusts (REITS) may range from 1 per cent to 5 per cent and hardly more than 10 per cent.

Banks are now offering structured deposits based on linkages to specific equity, interest rate, currency etc. These deposits typically offer interest of about 1.5 – 2.5 per cent per year. Credit linked notes are also offered by local banks and their returns range from 2 to 3.5 per cent per year. The risk here is that the principal amount is not guaranteed on maturity.

This year, bonds are floated on the Singapore Stock Exchange. The SIA bonds and CapitaMalls Asia bonds offer interest payouts of 2.15 per cent per annum.

DBS offered its Preference Shares and the dividend payout is 4.7%. Though not guaranteed, the latest offerings gave retail investors an avenue to invest their funds.

As for investment in unit trusts, picking winners is just not easy. My experience with unit trusts had not been positive. Investing in various types of commodities, both soft and hard commodities, such as wheat, oil, copper, gold, etc, requires specialised knowledge of the industry. It is a risk not worth taking.

Investing in foreign currencies fall into the this category.

Investors can avail themselves to buying endowment policies from insurance companies, which provide protection as well as growing your invested amounts on maturity. The returns consist of two portions: guaranteed payout amount and non-guaranteed amount that is dependent on the performance of the Life Participating Fund of the insurer. Returns range from 3 to 5 per cent depending on performance of the fund.

Going back to the question whether investors could get 10 per cent per year on their savings, it would be difficult without taking certain risk. There is no sure-win investment where the principal amount can be protected and still receiving regular investment returns yearly. I suggest that one must be contented with lower returns without having sleepless nights.

Financial Management, Investments and Retirement Planning | 91

28 January 2011

How much is enough for retirement?

Whether you choose early retirement or retiring at statutory retirement age (62 years with re-employment till 65), there is still a need to set aside a sum of money at retirement since employment income will cease. How much must one set aside at time of retirement?

This will depend on how much you need to spend every month till the end of life to retain same standard of living just before retirement.

Assuming, we do not consider medical expenses (which will increase as one gets older), no more housing mortgage and holiday travel is minimum, global standard suggests one spend two-third of last drawn salary. Say, your last drawn salary is $5,000 per month, retirement income should be $3,350. If you opt for early retirement at 50 years old, based on current life expectancy of about 80 years, you will need 30 years of living expenses. What is the lump sum to be set aside now to draw on monthly annuity of $3,350 assuming that annual interest on investments is 2 per cent? That will be a staggering $908,000! You really cannot retire early unless you have that kind of money.

Let’s say, one is to work until age 65 and last drawn salary is still $5,000 and no change with other parameters, the lump sum to be set aside for retirement will be reduced to $521,000.

A retiree at age 65 may think that he can do with less than $3,350 per month, say $2,000 per month, then the lump sum becomes $310,000. Does a person have that amount in the CPF and cash on hand to purchase an annuity that pays $2,000 per month?

One must save and do retirement planning and it is not too soon to do so now. This field of retirement planning is a big area and one must be interested in it to seek information.

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22 February 2011

When is a good time to buy or sell shares?

In the middle of October last year, we started to reduce our local equity portfolio when the Straits Times Index (STI) was climbing. In the span of two weeks, our portfolio was cut to half. It was on 9 November when the STI touched a 52-week high of 3,313.61 points and since then the STI had declined to 3,070.60 points yesterday in the face of political uncertainties in the Middle East region. A good friend asked how we time our sale of equity. This same question applies to timing purchase of equity.

Correct timing the market is not always possible. We sold off some stocks during that Oct/Nov period because some of our stocks had run up into profits and we just wanted to realise these gains instead of leaving them as paper gains (and losing them if the market turns south).

At a personal level, we are cautious by nature. Keeping greed at bay is also an important trait. Being contented with some gains is important instead of waiting for the next new high. It is near impossibility to always time to sell at the highest point or buy at the lowest point.

Investing in equity is driven foremost by macroeconomic environment of countries before looking at specific circumstances of each company. Researches and constant updates of news in these aspects are imperative. Investing on the blind and speculation on tips are not for us. The European sovereign debt crisis became a major concern last year. In addition, we see no end to the unemployment problem faced by the United States in 2010. These are the impetus for our action to reduce our equity portfolio then, besides locking in some gains.

Keeping an interest in the stock market on a daily basis is necessary. The historical movement of STI provides an indication of trending (despite the daily gyration). During this period as the companies are releasing their annual reports, it pays to read the financial performances of companies. There can be no gains without work on our part.

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23 March 2011

Singapore equity portfolio lost value during Japan earthquake

Natural disaster such as the recent earthquake and tsunami experienced by Japan has impact on equity investment. The resulting nuclear crisis at Fukushima Daiichi nuclear plants added more pressure on portfolio value.

The Japan earthquake and tsunami happened on Friday, 11 March in the afternoon. The catastrophic destruction to lives, buildings and infrastructures was aired on TV and web over the weekend. As if this is not enough, two Fukushima Daiichi nuclear reactors blew up over the same weekend.

When the Japan stock market opened on Monday, 14 March, the Nikkei 225 Index lost 6.1 per cent. On Tuesday, the loss was even steeper, at 10.5 per cent.

Over a span of two days, Nikkei collapsed from 10,254 points to 8,605 points (16.0 per cent decline). Thankfully, the Nikkei gained some grounds this week to end at 9,449 points today, a 7.8 per cent loss.

Singapore stock market declined as well over last week but not as badly. The Straits Times Index (STI) lost 3.5 per cent over last week (from 11 March to 18 March) to end at 2,935 points. Since the low point on Friday, STI recovered 2.9 per cent to end at 3,022 points today, which nearly regaining all the losses.

My Singapore equity portfolio followed the same pattern as the STI. It lost its value to end at 8.5 per cent below cost on Friday, 18 March. It is now back up at a smaller loss of 5.2 per cent. (I had started off with about 3.5 per cent loss before the Japan earthquake and today’s value is closer to that.) I had held on to my stocks and waited out for the market to come to its senses.

During last week, I was nervous as the Japan nuclear crisis unfolded. I was hoping that the nuclear crisis would not develop into a catastrophic disaster for two reasons, firstly further human tragedy should be avoided and secondly economies of nations would not be adversely affected. As the nuclear crisis has not been resolved yet, one can only hope that events will not turn out for the worse.

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19 April 2011

Personal and Household Spending Budget

Back in October 2006, I wrote a blog on “Know your expenses per month”.

It’s been four and half years, so I decided to review my current situation and compiled a new list based on actual expenditure made last year.

The source of such information came from bank statements, cheque stubs, invoices and credit card statements. All these source documents were still available and not discarded. If one wanted to track actual expenditure, then there is a need to keep these source documents for at least one year.

Since 2006, my current situation has changed with regard to life style and matters pertaining to home front. But looking at the overall annual expenditure, it came as a surprise that the quantum amount still remains about the same.

By doing this exercise, though it may be tedious, it helps you to know where the bulk of monthly spending went to and more importantly it set you thinking how best to reduce spending on non-essential expenditure.

Note that expenditure is not the same as cash outflow. The latter may include payment for insurance premiums (a form of savings/investments), charity donations (to benefit others), and investments (such as shares, bonds, unit trusts, etc). These are separately tracked.

In looking at cash outflow, personal income tax is an item which has to be set aside for payment to IRAS. The other major spending include payment for durable goods and capital expenditure (e.g. household appliances, renovations, etc), and vacations.

When money is tight, then discretionary items can be cut back. If not, you must save before spending on them. I am an advocate of “not to borrow and spend” but “to save and spend within your means”. At the end of the day, you still have to set aside money for retirement. This whole exercise is the first step to retirement planning.

Financial Management, Investments and Retirement Planning | 95

6 September 2011

Earn 2.5 per cent interest

Looks like we are in for a long ride on this bumpy road. I cannot see a smooth road ahead of the American economy and the Eurozone economy.

If governments are unable to spend on economies, unemployment rates prevented domestic consumption by residents, and corporate investment came to a halt due to poor economic climate. From economic standpoint, no economic growth will be forthcoming. If the two major trading blocs are trying to recover from the slowdown, global export to these countries will slow too.

Under this condition, investing correctly becomes difficult.

One silver lining is that the Government of Singapore has kept the interest paid on ordinary account of the Central Provident Fund (CPF) at 2.5 per cent for last quarter of this year despite a low interest rate environment. The major local banks’ interest rates for the three-month period, 1 May 2011 to 31 July 2011, worked out to be 0.36% per annum. (Source: CPF website) This kind of return is risk-free and guaranteed by the Government. Though at 2.5 per cent, the real interest rate after factoring inflation rates of above 5 per cent will be negative return. It is still better than investing CPF money ourselves and run a risk of capital loss. It is best kept in the ordinary account and earn this return.

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27 September 2011

Invest in something you know

On 8 February 2008, I wrote a blog post on four investment strategists, namely Benjamin Graham, Warren Buffett, Peter Lynch and Philip A. Fisher. Up till this date, I am a firm believer in value investing though some were suggesting the death of value investing in recent times.

Selecting a stock is based on detailed research work and seeing perceived value in a company. When you see value in that business, then by all means buy the stock at a price entry level, which still makes sense in owning it. As Warren Buffett said that you are buying into a part of the business and not just buying the stock in name. You own a portion of the business when you are a shareholder. You can say you own a part of SMRT when you ride on the MRT line. When you read the Straits Times, you can say you own the company (SPH) that prints the dailies.

When you own a part of the business, would you consider dumping the share just because its share price has declined? If you have faith in the management, operation and business prospect, you would not sell off and get out of the business. Likewise, you may not want to sell the business just because the share price has risen but yet to reach the level of maximum potential.

Get to know the business. If the business does not make sense to you, then do not buy its share. During the Dot.Com bubble in 1995 – 2000, almost all internet companies were being chased up in share prices to ridiculous levels that were not supported by their fundamentals. The bust of these companies was as spectacular as well as the bubble.

Similarly, if you are not familiar with certain investment products, the best advice is not to venture into it. Some recent products traded on the Singapore Stock Exchange include Contract for Difference (CFD), American Depositary Receipts (ADR) and Synthetic Exchange Traded Fund (ETF). You would need more knowledge of their workings before considering trading in these products.

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23 October 2011

Keeping track of individual stock investment

When investing in equity, do you know how you are performing with regard to each stock counter you owned, on an overall basis? Do you keep track of each stock purchased and sold and dividends received for the same counter? There could be rights issue and bonus issue for the counter over time. Are these tracked too?

More than ever before, I find that this information becomes important for me to decide on investment decisions on a particular counter. The share prices had been volatile. Decisions can then be made based on an informed basis, such as how many additional shares to buy and at what prices; what is the price to sell in order to minimize loss or make a profit on the counter.

Let’s take an example. Say the counter is CapitaLand.

Since the time you started investing in CapitaLand, you had bought and sold the counter before. You had also received dividends.

Capital Gain/(Loss) on sale = (Sales price - trading fees) – (Cost price + trading fees) Gain on sale = $860 + Loss on another sale = ($4,727) + Dividend received so far = $295 Net loss = $3,572 You can determine the average cost of the counter by including the loss incurred as part of total costs of your investment. The average cost calculated below is $2.953. (See next page)

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New units Unit Total cost bought price + fees

2000 2.61 5,249.41

2000 2.40 4,829.19 3000 2.33 7,020.31 Add: Loss incurred 3,572.10 Total 7000 2.953 20,671.01 What is not considered in the above calculation is the time value of money over time and the opportunity cost of putting your money to work other than investing in CapitaLand.

Having known the average cost of the counter, you can decide whether to sell at a price either above or below the average cost. This prevents you from selling accidentally below cost.

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26 November 2011

A year to forget - 2011

2010 saw a spectacular Gross Domestic Product (GDP) of 14.5 per cent growth rate for Singapore. With only one more month to go before we see the end of 2011, the GDP forecast is for 5 per cent growth rate this year. This does not seen so bad, 5 per cent is still good, but I cannot say the same about the inflation rate for Singapore. The Consumer Price Index (CPI) stayed stubbornly above 5 per cent for the past four months and the Monetary Authority of Singapore (MAS) said that inflation for the whole of this year would be about 5 per cent.

With inflation rate of 5 per cent, the purchasing power of your dollar will be eroded. Your same dollar now pays for 5 per cent less of the goods and services than one year ago. In other words, you need more dollars ($1.05) to pay for the same goods and services bought one year ago.

If you had a stable job with wages that increased at least 5 per cent for this year, your standard of living need not decline because wage increment will cover the inflation rate. But not all workers are that fortunate. Some may take home less salary for whatever reasons, such as job redundancy, sickness.

For retirees, it is even a bigger blow. There is no salary to talk about. They rely on savings and investments to live each day. How much can their savings earn them? 0.05 per cent interest if their savings are placed with POSB. This interest can hardly cover the 5 per cent inflation rate! What about investments placed with some investment-grade assets? One can be lucky if they can get 2.15 per cent returns on some corporate bonds such as SIA Bonds. Still not sufficient!

I am hard pressed to find an asset class that can offer above 5 per cent constant income and are principal-protected. Most investment classes lost money due to the current economic climate based on my experience. For example, Singapore equity lost 17 per cent since the start of this year and this does not offer any comfort.

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Next year would be worse. The GDP growth rate is forecast to be between 1.0 to 3.0 per cent. This is low. Inflation was forecast to be between 2.5 to 3.5 per cent and that can erode your purchasing power.

I may have sounded gloomy. But this has been the constant message put forth from the leaders of this country. Hold on tight as we manoeuvre this minefield of slow global growth for 2012. Careful spending and investment is called for. It is not time for reckless investment that can set one back seriously.

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30 January 2012

Investing in shares on the Exchange – learning experience

Before 2008, I was not active when trading on the Singapore stock exchange.

Many times, I bought shares or applied for initial public offerings (IPO) but did not monitor these stocks as closely as now. Career and financial capacity prevented me from actively engaging in stock trading.

This has changed. More than three years of watching and trading in the stock market provided me with some useful lessons. These lessons, both good and bad were reflected in my blog posts over the period.

I consider myself a value investor despite many commentators saying value investment is dead and not appropriate in this volatile stock market environment. I do not trade on margin and do not trade on contra. I buy and hold over a suitable period of time.

In value investment, I pick stocks with good financials and history. This is the first step. Next, you review the macroeconomic environment and see how this stock will be impacted by the macroeconomic factors. Take the example of Singapore Airlines. When the global financial crisis hit in 2008/09, business travel, leisure travel and cargo transport slumped and earnings of SIA took a hit resulting in share price plummeting. If you stick with SIA because of good financials and a strong management team, the share rose when better economic times arrived in 2010/11.

Even with a good stock in sight, the third aspect of decision is when to buy and when to sell to maximise capital gains. Precise timing entry into and exit from the stock market is the most elusive of all stock investment decisions. For this, I relied on the level of the Straits Time Index (STI) to give me a feel of the general direction of the stock market. You must have an opinion on the stock market level. Logically, one should buy when most investors are bearish and one should sell when bullish sentiment sets in. Take the example of Sembcorp Industries. Its share was trading at $3.43 in September 2011 when the STI was around 2,700 points level and it was at $4.54 on 20 January 2012 when the 102 | Financial Management, Investments and Retirement Planning

STI was at 2,849 points. This share made a capital gain of $1.11 per share in just four months.

Emotion gets into the way of investing. Emotion can prevent one from selling a share. If the share is rising, one may not want to sell, thinking that it can still go up further. If the price is falling, one may not want to sell thinking that it will turnaround. To reduce emotion to some extent, one can set a target selling price on owning a stock. When this price is reached, sell the share. On the other side when share price is tumbling and when the pre-determined floor price is reached, sell the share to cut further losses. In this way, you can free up your funds to invest another time.

And lastly, investors must monitor their investment portfolio. Check the share prices of stocks and be aware how the shares are performing. There are many full-time traders whose work is to watch the market. One cannot beat them as they have price movement knowledge advantage over us. To overcome this, invest in value stocks and keep your number of stocks to a reasonable number that you can manage (say up to ten). It is far better to focus on few good stocks and increase the quantity of shares owned than owning many stocks with money spread thinly across these stocks.

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9 March 2012

Planning for retirement

How much money must you set aside each month for expenditure once you have retired and not earning any more employment income? Assuming you have balance in CPF money (after setting aside minimum sums) for cash withdrawal on reaching age 55, how much would you withdraw on a yearly basis.

For simplicity, let’s not consider investment income and gains from sale of assets including investments, which can fluctuate on a yearly basis.

If you had purchased an annuity scheme with private insurer and you have CPF Life (which starts paying at age 65), the regular monthly payouts can be factored in to reduce the need to withdraw more from your CPF account.

Coming back to the first question, one approach is to list as comprehensively as possible all expenditure necessary before deciding on how much to withdraw a sum of money.

The second approach is to go back to actual monthly expenditure for past 2 years. I kept all my bank statements and I add up my monthly withdrawals made on the bank. Withdrawal transactions include GIRO payments, funds transfers, bill payments using internet banking and ATM cash withdrawals.

(You may want to exclude mortgage payments as these payments go towards paying for a long term asset such as a real estate property. What you are tracking will be expenditure items that are operating in nature and not payments to acquire a property or a car, which are capital in nature.)

With this exercise, I had 24 months of monthly withdrawal amounts. I then take the total of all 24 months data and calculate the average monthly amount by dividing the total by 24. Let’s say the amount comes to $2,000 per month. You then know that each year you are likely to spend $24,000. Some months you may spend more than $2,000. You may want to tighten your purse string a bit and hopefully, you may spend less than $2,000 in the following month. Using this approach, you can maintain your current standard of living based on the 104 | Financial Management, Investments and Retirement Planning

latest 2-year spending pattern.

As we move into retirement, some spending can be cut. For example, your membership fees to professional bodies and fees for club memberships can be cut. These are not crucial and absolutely not essential. Look at all expenditure and decide how best to reduce them. Ask yourself, whether you need a super fast broadband and pay a high price for it? I am sure as we put our mind to this matter, we can find ways to reduce expenditure.

What if you still wanted to travel overseas for holidays. You can look towards investment income or gains from sale of assets/investments to fund this trip.

That is provided that you have investments and assets to talk about.

Retirement planning is an elaborate exercise with many aspects (e.g. medical insurance, estate planning) and it is best that we start early while we are able to work and accumulate savings. Investing in appropriate instruments must also be carefully managed too so that we can grow the pool of investment money.

In this way, we can retire well without adding burden onto others.

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11 March 2012

Have you got enough to retire?

After you have worked out how much to spend monthly, the next step is to determine how much money and assets you must have to last till the last day of your life. For this exercise, you have to decide when you intend to retire.

You can choose to retire at age 65 or earlier at 55 if you have sufficient assets.

Age 65 is when you can start to get CPF Life monthly payout. If retire at age 55 would require you to have enough to pay for 10 years of expenditure between 55 and 65, before CPF Life kicks in.

Financial resources owned These may include: a. CPF Ordinary account and Special account b. Supplementary Retirement Scheme (SRS) c. Investments in CPFIS d. Amounts placed with banks e. Investments in equities, bonds, real estate, etc. f. Investments and savings with insurance companies g. Real estate property you stayed in (which can be monetised if necessary) Retiring at 55 At 55, a CPF member can drawdown on his accounts so long as he sets aside CPF minimum sum ($131,000) and medisave minimum sum ($36,000).

Assuming that you have more than the CPF minimum sum and medisave minimum sum, you can take this excess amount and add to all your assets (from b to f above). Next you can work out a number (in term of years) to indicate how long the total sum of money can last based on the annual expenditure required.

Since CPF Life payout starts at age 65, you can do a two-step process. CPF Life pays monthly amount of about $1,100 based on the CPF minimum sum from 65 till death.

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By way of illustration, monthly expenditure = $2,000 CPF Life payout of $1,100 per month starts at age 65.

Planning for up to age 85.

Age 55

<-- 10 years -->

Age 65

$2,000 per Total amount $900 per month required month * =10 years x $2K x 12 months = $240,000 NA

NA

<--

20 years

--> Age 85

20 years x $900 x12 months = $216,000

CPF Life $1,100 per month *

$1,100 per month payout till death

* add up to $2,000 per month CPF Life pays $1,100 per month out of CPF money.

Total sum of cash to set aside = $240,000 + $216,000 = $456,000.

The above illustration is a ballpark figure and simplistic. It does not consider inflation over the 30-year period and time value of money where money not drawn-down can earn interest over the period. Hopefully, possible interest to be earned is enough to cover inflation.

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25 April 2012

Coping with volatility

Back in 2008, I came face to face with extreme fear. With the sudden bankruptcy of Lehman Brothers Inc, the world stared at the near global collapse of financial systems. I was invested then and value of investments was declining precipitously.

Fast-tracked to today, there is still uncertainty in the global economy, in particular the economic problems of the Eurozone area. In general, Investments are still volatile. Last year was challenging. As reported by NTUC Income on the performance of its Life Participating Fund, the year ended with a negative return of 0.88%. With a professional outfit as NTUC Income, it too was challenged in a volatile investment markets. What more can we say for minnows of small-time investors like us!

In truth, the extreme fear in 2008/09 was not the case in current environment.

But the sickening feeling is familiar, all the same. In recent weeks, equities were up and down. Foreign currencies depreciate with bigger margins. This spells trouble for investments.

What are coping strategies for retail investors?

1. Talk to your partner if investment lost value. Be honest and upfront about losses. This is a vent to release pressure off you.

2. Know and be aware of potential or actual losses. Do not dwell in it persistently. Avoid reviewing and calculating losses every now and then. Let it pass. Future value of investment is something we cannot predict. It may turn out in your favour.

3. Determine your investment horizon and need for cash in short and long term. If you have the holding power and not in need of cash urgently, do not react to daily movement of prices. Daily gyration is expected. Ride out the volatility. If you own stocks with dividends payout, consider taking dividend 108 | Financial Management, Investments and Retirement Planning

instead of selling them cum dividend.

4. Diversify your portfolio, setting proportions for lower to medium to higher risk investments. Cash amount is part of this portfolio. Set aside cash amount for personal and family expenditures. Reduce higher risk investments to a level that you can afford to lose. As far as possible, invest only with your own money and not to borrow money to invest. Property investment is not part of my deliberation.

5. Take action only after assessing your risk tolerance level. If there is a need to cut loss because of your circumstances, do it and not to go back and review your action.

Investment is not gambling. We have to decide carefully before investing. Know what you are doing before venturing into investing. Seek professional advice from your banks. These banks have relationship managers to walk you through investment strategies. If you do not understand the investment instruments, walk away from them. Investing should not cause us to lose sleeps and affect our life.

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27 April 2012

How to live with limited funds?

Inflation is eating into our savings. It is harder to make decent returns on investments. Some investments are losing money. If you are like me planning retirement and trying to live out limited reserve, what can you do to stretch out your reserve till the end? This may sound over-simplistic but it is what I plan to do or am now doing.

1. Take the public transport instead of driving. Driving is now very expensive. I try to move around taking MRT and public buses as far as possible. The money saved can be substantial.

2. Be conscious of usage of water and electricity. Switch off non-essential lights and power supplies connected to appliances and equipment not in use.

Running water can be wasteful, so think of ways to slow the flow of water.

Besides saving money, it is also a right thing to do for the environment.

3. Limit eating out at expensive food outlets. Seek out good hawker food and inexpensive foodcourt meals. Eating home-cooked food need not be expensive too.

4. We have stopped going to cinemas except for special treats. Some shows and TV dramas were watched at home.

5. Buying for wardrobe is limited to what is truly needed or for replacement reason. In any case the wardrobe has limited space and to buy more is out of question.

6. Buy items that are only essential. For example, there is no need to have many watches. If you can live with few, why not cut back.

7. Give up club memberships if you do not patronise them.

8. Consider resigning as members of some professional bodies, if you have 110 | Financial Management, Investments and Retirement Planning

retired. See whether these professional bodies have retired-members categories and apply to downgrade.

In writing this piece, I am recommending living within oneâ&#x20AC;&#x2122;s means and if we can save, why not do it. I am not suggesting that we do not lend a helping hand to those in need of assistance. When there is a need to be charitable and generous, do it too. There is a difference between stinginess and prudent behaviour.

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24 June 2012

Reaching 55 and CPF

I attended â&#x20AC;&#x153;Reaching 55â&#x20AC;? talk conducted by CPF Board on Wednesday. This talk was useful to understand the many rules and policies of CPF for those who turn 55 years old this year.

Broad areas covered: a. to explain how much a member can withdraw at age 55 years old b. to explain CPF Life scheme c. to explain what happens to CPF used for investment (CPFIS) and CPF withdrawn for education and housing Some things understood after the talk Member has to set aside the following minimum sums before you can start to withdraw CPF money at age 55 onwards: a. Minimum sum of $139,000 b. Medisave minimum sum of $38,500 If a member do not have both minimum sums, then at age 55 the most he can withdraw is 10% of a calculated sum, based on his balances held with CPF. (Most CPF members belong to this category.)

If a member has more than both minimum sums in his account, then he can withdraw the difference after setting aside both minimum sums.

CPF withdrawal can be made only once a year within the one-year window period after each birth date of every year.

Member can choose not to withdraw and earn the prevailing interest rate of between 2.5% to 5% from CPF Board. This is better return than putting the money in a commercial bank.

At age 55, CPF will create a Retirement Account (RA) and the Minimum Sum is then moved to the RA account, firstly taking the balance from Special Account 112 | Financial Management, Investments and Retirement Planning

(SA) and secondly taking the remaining balance from the Ordinary Account (OA).

Because a member continues to work and CPF contributions are still being made, Ordinary Account and Special Account will still be in place together with Medisave Acount (MA) and Retirement Account.

This post does not include what if there are shortfalls in a memberâ&#x20AC;&#x2122;s Minimum Sum amount and Medisave Required Amount.

One take-away for me was that if a member has Minimum Sum and Medisave Minimum Sum, he should get CPF Board to close the CPF Investment Scheme (CPFIS) account and transfer all investments to memberâ&#x20AC;&#x2122;s own cash account e.g. CDP account for equity investment. This way, member can save paying bank charges on the CPFIS account with a local bank.

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30 September 2012

Have a filing system for financial matters

In order to write some of my blog pieces on financial matters, I needed historical information of my financial transactions. I receive statements, advice, payment requests, and updates from various financial institutions (FIs). The mail that I received was filed away by document or information type and by date order in a lever arch file. Documents received directly from FIs, such as purchase advice, were also filed away systematically either by organisation or transaction type.

Only in recent years that I started to keep a proper filing records. I have several files created as a result. I found that I could track performance of some of my investments more accurately. Historical information also assisted me in my current investment decisions and budgeting decisions.

So instead of losing sight of such documents, why not have a filing system. You will be surprised at the usefulness of this historical information when you need them.

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16 October 2012

Experience in buying investment property

The government is putting in measures to cool the property market. The latest measure is to prevent someone from over-extending his ability to pay up mortgage loans. All home loans are now capped at 35 years.

Back in July 1997, we bought an investment property directly from a developer, a freehold property located in a popular matured estate near to a MRT station.

When my wife and I made the decision to buy, we consider our financial ability to service the mortgage loan. We even consider whether we could still service the loan if one of us was out of work and what if we could not rent out the unit. When we looked at out CPF Ordinary Account balance and our cash on hand, we had enough to pay half the value of the total purchase price. We then took a housing loan that was only half the property price.

We used our monthly contributions to CPF accounts to service the monthly repayments that included interests. Whenever when we had sufficient money in CPF Ordinary Accounts (because of year-end bonuses, etc), we took the opportunity to reduce the loan quantum by partial capital repayments. By managing this way, we redeemed the whole mortgage loan in seven years (June 2004). Hence, we reduced interests payments to the bank.

Our stand was to minimize exposure to long loan period. We could not see ourselves taking 20 to 35 years to pay up housing loan and be “slave” to the bank. Back then interest rates were 5.75% when we first took up the loan and 3.5% towards the end. At its highest, monthly repayment amount was $4,000.

This amount was gradually reduced as interest rates came down and loan quantum was reduced.

I urge caution and financial prudence in buying property. The idea of early redemption of housing loan is recommended. In addition, take loan only within one’s means. Consider also worst-case scenario when planning servicing of housing loan.

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29 June 2013

Financial prudence and ME factor

I have a soft spot for IT and communication gadgets. I like to try my hand on new operating system. When my laptop with Windows 7 â&#x20AC;&#x153;diedâ&#x20AC;? on me, guess whatâ&#x20AC;Ś I got a new laptop with Windows 8. I waited eagerly for iPhone 5 and got it when it was launched. I know of a person who has a soft spot for ladies bags. She would check out new designs on the web and in the shops. Another likes cars, changing often with newer model. Are we not like that?

MAS introduced another measure to cool the property market, its eighth. This time borrower of new housing loan must prove that his monthly repayment obligations of all his debts (housing loan and others) is less than 60% of his gross monthly income. This is to prevent someone from borrowing beyond his capacity to service all his debts. MAS called it financial prudence.

This motivated me to write on financial prudence, a high-sounding words. In simple term, can we afford to pay for acquiring assets? Do we need to borrow to pay to own assets? How much interest must we pay to borrow?

In the past, we search for paintings or art pieces to buy. I bought more watches than one needs. What happened now? These paintings are kept away in my store-room. Only few pieces adorn my walls. I just need only one presentable watch for special occasions and another one for daily wear. I do not borrow money for purchases. If I cannot afford it, then it is no go. Most time, we asked ourselves, do we need the item? In the case of iPhone 5, it took me four years to move from iPhone 3 to iPhone 5. That is financial prudence for me.

Can we live without modern conveniences? Owning a smart-phone or a laptop is not a problem. We need them for communicating with one another, to get information on the web and to conduct on-line transactions. These are necessary in modern living. The problem arises when one is obsessed with it and spent hours on the gadget. When the phone is lost or damaged, the world seems to collapse: The phone contacts are all lost! There is a scratch on the phone! Clinging to gadgets is THE problem.

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At the end of day, are we contented with what we have? Having more and more does not equate to happiness. Is pride and ego so important? Live with sufficient is good enough. Watch the greed and financial prudence come about naturally.

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II. Living Tips

10 October 2006

Stay mindful and Be Present always

Have you ever wondered whether you have done something earlier and you cannot even remember? Have you been in a situation when you are with someone talking to you and yet when the person is talking, your mind wandered to somewhere else?

I have and quite often too. As I reflect, I sometimes justify these actions with the excuse that I am tired and there is too much to do to give attention to the task at hand.

I feel this is not right. If you are the supervisor of employees and you are not giving them the attention they need, then over time, the employees will see through this and will not seek counsel from you or worst still they will talk behind your back. We have to cultivate the habit of being present at the moment and give full attention to the person in front of us. This will build trust and better relationship with them.

In the case of forgetfulness, I can attribute this to not being mindful of the events happening right here and now. We do things in â&#x20AC;&#x153;auto-pilotâ&#x20AC;? mode because we are rushing and multi-tasking. Being mindful is very powerful and yet we are not most of the time. We should be mindful of what is going on with ourselves. We should give full attention to each action we do however simple this action can be, like eating. Eating mindfully helps in digestion. Talking to friends mindfully will be appreciated by your friends.

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15 October 2006

Connect with Nature

We spend most of our waking hours in the home, office, shopping centres, hawker centres, on the road. We live and breathe in man-made environment.

We are caught up with rushing from one place to another, from one appointment to another.

Why not spend some time during the weekend walking in the park, the reservoir, the seaside, or nature reserve?

You connect with nature: the trees, the flowers, the water, and the living creatures living there. Consciously set aside your immediate concerns and just enjoy what are around you at the moment. Some quiet moment soaking in the atmosphere will soothe you. Listen to the sound of nature, the birdâ&#x20AC;&#x2122;s singing, the insect noise, sound of fish swimming. You will be surprised that we have not noticed all these sounds until we open up to consciously listening out for them.

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18 October 2006

The Power of Letting Go and Forgiveness

Most of us spend the bulk of waking hours in office/work place. As in any social interaction, human to human contact can result in conflicts between colleagues.

In such a situation, we always brood over the encounter, playing it out in our mind even after the interaction has ended. We can habour hatred or talk about it among our friends. The emotion consumes us and our work output is affected.

We always see the issue from our own perspective and do not consider the circumstances and the psychological state faced by the opposite party at that moment of the unpleasant encounter. We perceive what we see but there can be more than meet the eyes. We are not very good at expressing ourselves and both parties moved away not any wiser why the event turns out the way it has.

We always feel that we are hurt and this is not good for us. Did we spare a thought for the opposite party? No matter how we are slighted either rightly or wrongly, we always feel aggrieved. This is natural.

Are we able to let go of the encounter? Can we move forward and set it aside? Both parties can feel lousy and we are too proud not to admit it. If the relationship is worth treasuring, then both parties must move forward without referring to the unpleasant encounter again. There is no need to.

Everyone wants happiness including those we hate. There is no need to make the other party miserable and what purpose does this serve. Forgiving someone is something we can try to do. What I am suggesting is that we can forgive the person but there is no need to forget the incidents. We need not rake up the past because the event has passed. If everyone is forgiving, then it makes a better world to live in.

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20 October 2006

Reduce clutter in your life

I read this book some time back: Simplify Your Life - 100 Ways to Slow Down and Enjoy the Things That Really Matter

By Elaine St. James The book has an impact on me and I have practised some of the ideas and it has simplified my life.

Top on the list of 100 ways is: Reduce clutter in your life Start by going through your wardrobes and then move on to your bookshelves, drawers, around the house and do the same at your office.

The rule is simple, if you have not used or referred to the items you have kept for a year and more, then they are not worth keeping. These items can be disposed off. If you have items that you think is of use to others, e.g. a second rice cooker in the house, shirts, neck ties, etc., then consider giving them up to a charitable organisation that collects them for jumble sale. This way you are helping the charitable organisation in raising funds and at the same time you remove items from the house and you have less clutter.

This applies to books which you have read and you would probably not read again in the future. Dispose them. You will be amazed that you have free-up so much bookshelf space for newer books. Better still, you need not own these books and you can borrow them at the national library and save money.

Some personal files you kept in the office can be disposed off if you have not touched them for a year. (Caution: You have to follow the record keeping policies of your employer when carrying out disposal procedure.)

There is no need to keep some of these items for keepsake and for memory.

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There is no need to cling on to the past.

The act of removing clutter is exhilarating and it creates more space for your life. You mind is cleared of events of the past. You face each new day as is â&#x20AC;&#x201C; new day - without emotional baggage. You will not feel complicated with the clutter.

You will not have to rummage through piles of unwanted materials to retrieve items that you need. This saves time and reduces frustration.

The first time when you remove unwanted items, it wonâ&#x20AC;&#x2122;t be easy. Be patient, start on a small scale and when you embark on the next round of clearing clutter, it will get easier.

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27 October 2006

Live Life Simply

As one gets older, the chase for material goods is less important. For one, our earning power diminishes over time. Our health is not in the prime. We have a family to feed. Our emotional and mental well-being require our attention much more than before.

As we make the best out of our limited cash reserves, it makes sense that we attempt to live simply. We can start early as a matter of habit and the adjustment will be less as we get older. There are benefits in living simply. You save money. You have less to worry about losing or damaging the material items. You need not worry about what to wear every morning, because the choices are not too many. You do not have to dust/clean decorative items on display.

When you are out shopping for essential items, such as office wear, it makes economic sense to spend well and buy one item that you really like and is presentable, instead of buying many cheaper ones that you may not want to wear later. So quality is more important than quantity.

Same items may be sold at prices that vary in different shops. Make a note of the shop that offers lower prices and when the need to purchase this item arises, go to that shop. Over time the savings add up to a significant amount.

It is also good habit to make a list of items to buy and plan your route to different places. This way you do not make many trips for different items and save on transport costs.

When you are out shopping and before you buy an item, just pause and ask yourself: do you really need the item? This will stop you from buying on impulse.

You may want to consider whether there is a good substitute for an item. The hawker centre tea can be as good as the one from a branded outlet and costs merely a fraction of the cost because you are also paying for the ambience of the latter.

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Living simply also means having more time to spend on yourself and your loved ones. You can read books to enrich yourself. You can connect with your children to understand them better. This is something money cannot buy.

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30 October 2006

Write a Will

Once you are financially independent and accumulating wealth, it is advisable to write a Will. You may not want to consider this when there is not much wealth to worry about, especially when you have just started work. However, when you are married and have children of your own, the Will becomes important.

You may also have elderly parents and relatives whom you are helping to support.

You can consider writing a Will to state how your wealth is to be allocated. If a Will is not in place, then the State will use the existing Intestate Succession Act (Chapter 146) to distribute your wealth and assets. This approach may not be according to your wishes. The Will will help to prevent rivalry for your assets which may result in ugly conflict among your relatives and family members.

In writing a Will, it is advisable that you get a practising lawyer to draw one up.

They would provide professional input so that there would not be a contest on the legitimacy of the Will. The lawyerâ&#x20AC;&#x2122;s fee is not exorbitant if the Will is a simple one.

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1 November 2006

Get sufficient sleep for a better health

This was written based on an article in the latest issue of Reader’s Digest – November 2006.

Having a good night’s sleep means waking up rested and energized. It is recommended that a person requires 6-8 hours of sleep each night. It is also true that the quality of sleep is more important than the number of hours of sleep. If there is sleep deprivation for a stretch of time, this causes sleep “debt” which will require longer hours to recover from it instead of just catching up on lost hours of sleep.

Sleep deprivation reduces our immunity to fight against illnesses. Lack of sleep increases susceptibility to health problems, including heart diseases, stroke, diabetes, obesity and depression.

A person will not be able to perform a piece of work at his/her optimum level because of extreme fatigue due to lack of sleep. This applies to children who have to take major examinations in the day if they lose sleep in the night before.

One way for a good night rest is to maintain a fixed routine of sleep pattern every night. Go to bed at a fixed time. Slow down your active mind by doing light reading before bed, listening to soothing music. Cut back on active mental activities before bed time, such as internet surfing, studying late into the wee hours of the night.

It is best to avoid these late into the night as these may disrupt your sleep: • drinking coffee or tea (which contains caffeine), • drinking liquor • having late supper Learn to relax and not to think of problems which you are facing in the day before the sleep.

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7 November 2006

Dealing with Anxiety, Fear and Stress

Most of us have fear and anxiety. Some of us are all nerves at sitting for major examinations. Even for the seasoned speakers, they too have butterflies in their stomachs when it comes to public speaking. The fear of facing the audience can freeze a person on stage. Some are worriers, worrying the minutest issues, like how your colleagues would think of you.

Fear and anxiety grip us in different ways. It causes less than optimum living.

Being stressed is the one outcome we face often daily.

One Indian Master once said: Why be unhappy about something if it can be remedied? And what is the use of being unhappy about something if it cannot be remedied?

Think about it, the best action we can take is to work on what causes this stress, anxiety and fear. Is there something we can do something about it?

If it is something that is beyond our control, such as aging, then why worry.

Unhappiness paralysed us and is not worth it.

In most cases, we can set up an action plan and carry them out persistently. The small steps taken for a prolonged period will lead to transformation of certain magnitude that you will be amazed that we can do it. The worst case scenario is to brood over the issue and no action was taken to address it. Having friends to talk about the problems can sometime shed new light in tackling the issue.

There is nothing wrong to seek help. Our ego should not come in the way.

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8 November 2006

Spend time together on activities as a family

As parents, we see our children grow up from babies to pre-teens, teenagers and adults. Because we are busy with our careers, we may not find enough time to connect and communicate with our children. We have our responsibilities to inculcate values and morals to our children. We need to impart life skills to our children so that they can cope with life. Some of these life skills include social skills. At some stage in their lives, they need to understand sexuality and how to handle it.

To create opportunities to connect with your children, there are many ways and it depends on each familyâ&#x20AC;&#x2122;s circumstances. But the imperative is that there must be a willingness on the part of parents to set aside time to do so.

Here are some suggestions: a. Have dinners together as a family. Conversation occurs at dinner table. Even when there is no conversation, your mere presence at the dinner table is sufficient to show that you care and you make the effort. b. Have a common hobby together. One example could be attending pottery/ ceramic lessons at the community centre/club. Another could be doing Sudoku together. Common hobby allows a reason to be together. c. Spend time walking in a nature park. This not only brings the family together, it also connects the family to nature. d. Watch some drama serial on TV together. If your child is at a right age to watch adult themed TV serial e.g. Friends, you may casually talk about some of the values portrayed in the shows.

This togetherness would bring your children closer to you and they would know that they have you, as parents, to turn to in time of trouble.

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9 November 2006

Make physical exercise a habit

The best investment is really watching over our health! No amount of money will help if we are suddenly inflicted with a serious sickness. Money will not buy happiness. The quality of life suffers.

We tend to work so hard to earn a living that we neglect our health. We often say we have no time for physical exercises. My suggestion is that we should make physical exercises a matter of habit and routine. This will greatly improve our health condition.

There are many benefits of physical exercises: a. It helps to improve cholesterol and with it, reduces heart problems. b. It reduces stress and high blood pressure. c. Research has shown that physical exercises reduce incidents of age-related macular degeneration of the eyes. d. It helps in psychomotor skills especially when we age. e. It helps in blood circulation and this has many good side-effects, including rosy cheeks. f. It reduces weight and helps you to slim without expensive treatments.

So how can we make physical exercise a habitual thing? These are some ideas: a. Take the stairs instead of the lifts. b. Consider some form of exercises that you would enjoy, e.g. swimming, brisk walking, jogging, yoga. c. Involve your family in these physical exercises. d. Consider some racket games, e.g. tennis, badminton. e. Go to the gym regularly if you are member of a gym. f. Set aside fixed days of a week for exercises. (Do it three times a week.) g. There are some public pools that open early in the morning. Consider a swim before heading to office. h. Get involved in office initiated physical fitness activities.

Getting fit and healthy is in our own hands.

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10 November 2006

Retirement is scary if you have not planned for it

We work more than 40 hours a week for nearly 35 - 40 years before we retire. We are identified by our job titles and hierarchical positions in companies or organisations we worked for. We are so used to exchanging name cards at social and professional gatherings. The card says about our job and responsibilities. We are held with high regard because we are executives that wield some authority in an organisation.

Imagine for a moment, when you retire early and people ask you what you do for a living, you would hesitate. You may say that you were an ex-CFO of XYZ Company and now you are retired. When the bank ask you whether you have changed your job for reason of updating the bank’s records and you say “er…

I am now not employed”, few seconds of silence from the bank personnel is telling. Suddenly, they feel that this customer is not receiving regular income anymore and therefore they lose a client with money to invest. When you go to a supermarket and stay in a queue to pay up, you do it as simply you and not as so-and-so in a company. People in your neighbourhood suddenly see you around more often in the day and they wonder how come you are not in the office. You probably avoid group functions because the question of where you work would surface.

The adjustment from one who is fully engaged in a career to one who is retired must be planned and managed carefully. We must be prepared for derailments that come with retirement. There are few matters that must be thought through* : a. Is your spouse supportive? b. Will there be strain on financial support for the family? c. Can your children understand why you are retiring? d. How will your aged parents be looked after if they depend on you as principal care-giver? e. How are you going to live your life on retirement? f. Will there be something to do to occupy the 40 hours a week?

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g. What give you a sense of purpose and fulfils you? h. Who are you? What are your core values and beliefs? i. Will you be affected by self-esteem when you stop work? j. Are you excited about your future?

These are not easy questions to ponder over. But you must, before you say I retire. The transition to retirement is something to work through. * Ideas from INTHEBLACK, a publication by CPA Australia, November 2006 issue.

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14 November 2006

See beyond the faults of another person

In our daily encounter with people, we sometimes get flustered with behaviour of some. We feel that some are inconsiderate and only care for themselves. We feel that some people have flaws and cannot be trusted.

Letâ&#x20AC;&#x2122;s face it, each one of us is not perfect. We too have our own strengths and weaknesses. What we see of another person is based on our perception of them and we use our own experience to judge them. Do we really know them to make that kind of judgement: â&#x20AC;&#x153;oh the person has problemâ&#x20AC;?. Our view of them is influenced by our own unpleasant past encounter with those individuals. We label them with the problems.

We have forgotten that people has strengths too because we are pre-occupied with his/her faults. They are sidelined when we have important tasks to be assigned. We always want winners in our team. As a result, the able ones are loaded with work and others are less so. The former suffers burnout and the latter is demoralised.

Seeing beyond the faults of a person is to bring dignity to the person. This will raise his/her self-esteem. We can work on their strengths and assign appropriate work that fit their capability. Otherwise, more guidance is required so that they can perform at acceptable level.

We can relate how we were helped and mentored in the past when we were new to the organisation. So similarly, we have to pass-it-on to assist the newer colleagues to settle in on the job.

When we relate to our parents, siblings and relatives, sometimes we are unkind.

Why is this so with some people closest to us? We assume that because they are related by blood, hence we can speak hurting words and carry out unkind actions without due regard. They too need more of our understanding and they require us to see beyond their faults too. Remember, all beings want happiness also, just like us. Why make them miserable?

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21 November 2006

Managing anger starts with you

Anger arises quite often throughout our lives. We can be angry over minor or major matters, angry with people, and angry with ourselves.

Anger is the very opposite of patience and love, and it is destructive.

We tend to have a grasping behaviour that we want the best experience for ourselves and sometimes neglect the feelings of others. There can be a huge ego in us. Something or event can quite easily hurt our ego. We feel angry and frustrated as a result.

If our ego is not the most important thing in our life, no one can hurt us much like â&#x20AC;&#x153;water cannot stay on leaves of lotus flowers for longâ&#x20AC;?.

You can love yourself a bit more. Put yourself in the other partyâ&#x20AC;&#x2122;s shoes. Why get angry if the other person is preoccupied with his/her problem and has hurt us unknowingly. We ourselves had done similar actions to others before and got them angry too. Be tolerant and forgiving.

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22 November 2006

Dealing with Guilt, Self-Pity and Mild Depression

Once in a while we have this range of emotions covering guilt, self-pity and mild depression. It centred on the “I”. “I” am feeling guilt, self-pity and “I” am depressed. It frequently involves self-hatred or self-criticism. All these feelings are negative energy and cause us unhappiness. It affects our work output and our relationships with people. It saps our energy and “immobilised” us by revisiting the events or incidents that caused these feelings.

It is dark, heavy, unhappy state of mind. We may need family or friends’ support to get us out of this state.

So what can we do on our own? First, place less emphasis on oneself and laugh at yourself more often. Do no take life too seriously. Have love and compassion for others and this will give us a sense of purpose of worthwhile living. Help others or the community. Be positive over outlook on life.

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20 December 2006

Dealing with Envy and Jealousy

This is an emotion group which is hard to avoid and ignore. Quite often, we encounter many events and circumstances that cause us to be envious and jealous. We envy someone for his/her good look, impressive job title, excellent academic credential, a loving family, etc. We even ask ourselves why someone is so lucky to have good fortune with regard to job promotion and pay rise.

The other person seems to occupy us more than we care to look deeply into ourselves. We are sometimes blind when it comes to us. We too have other good attributes which others envy us for. Then again, it is not wise to focus oneself as if we are the most important person on earth.

The antidote to handle this set of emotion is to avoid considering the importance of oneself. Rejoice the good fortunes of others. They have earned them because they put in efforts to achieve something that belongs to them.

We can work towards our own set of goals and be contented with what we have got even it falls short of our expectation. Comparison does not help in handling envy and jealousy.

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21 December 2006

The power of Smile

We know that Singaporeans do not smile as much. Perhaps, this is a social norm. We enter the lift to our flats and invariably we put on a serious look on our faces when there are others riding in the same lift. They are our neighbours and we know we stay close by and yet no smiles were exchanged. Take a MRT ride and you will see faces that show a blank look or preoccupied look.

Even at work, colleagues sometimes do not smile due to pressure of work.

Have you ever wondered why some people get along well with others? Why bosses like some staff members better than others, assuming other things being equal? Let’s face it, people like to be with someone who is cheerful and smiles easily. The smile I am referring to is sincere smile, from the heart kind and not “mechanical’ putting-on-an-act type.

If you enter into a discussion with your colleagues or bosses, smile and the environment becomes less gloomy and less hostile. Difficult discussion can be made easier for finding a solution together and moving forward. If you go into a discussion with negativity, the encounter and outcome can turn out less than optimal.

If you look at most successful personalities, they have such good smiles on their faces. Look at the famous actors and actresses, they are chosen to appear on advertisements and cover pages because of their sweet smiles.

If you are out shopping, would you want to be served by a pleasant and smiling sales staff or a glum one? The answer is obvious.

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22 December 2006

Self-doubt can be debilitating, be conscious of it

Once in a while, self-doubt creeps in. If we have not performed a piece of work or assignment before, we wonder whether we can cope. Going overseas for an assignment for the first time falls into this category. After leaving job employment for a while, we wonder whether we can get used to it. Sometimes some people criticised our work, we doubt whether we are capable.

Recently, I saw a movie “Triumph” based on a true story of this teacher named Ron Clark. He taught students who have difficulty coping with studies for various reasons and succeeded in improving their grades.

One scene in the movie caught my attention. The lead actor (Matthew Perry) playing the role of Ron Clark came across a student standing outside a classroom, standing INSIDE A WASTEPAPER BASKET. Matthew, the actor, was curious and moved up to the boy and introduced himself as Ron Clark.

He asked the boy what he was doing. The boy replied that his teacher in the classroom said that he was not good enough and should be treated as one: in the wastepaper basket. The boy looked shy and dejected and probably agreed with his teacher. Matthew thought for a while and then said that he had just forgotten his own name and asked the boy to help him. The boy said “Ron Clark” with puzzlement. Matthew, the actor, then lifted him up from the wastepaper basket and said that the boy had achieved success in remembering his name. This simple encounter raised a grin on the boy’s face and the boy felt happy!

We are all worthy of ourselves. We may not be another Einstein, but we are who we are, unique and have self-worth. We need to be conscious of selfdoubt that may creep in once in a while. Be aware and a friend, a colleague or your spouse can get you out of the “wastepaper basket” syndrome.

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4 January 2007

Being Gracious

Refrain from using mobile phone in a MRT train carriage. This is how Japanese would behave. I saw this TV programme â&#x20AC;&#x201C; Japan Hour - recently and the reason offered by Japanese is that this is the unwritten rule which is readily accepted by citizens. They are considerate because phoneâ&#x20AC;&#x2122;s ringing would startle babies and elderly commuters in the carriage. A Japanese youth, when interviewed, said that radio wave from mobile phone can have undesirable effect on a heart pacemaker worn by someone who happens to be riding the train.

I read in The Sunday Times, that someone suffers in silence enduring the cigarette smoke from her neighbour who puffed away and blew out the smoke outside her window. The smoke gets into units either below or above the smokerâ&#x20AC;&#x2122;s unit instead of his/her own home. This is not considerate to the neighbours. What if a resident suffers from asthma and the cigarette smoke triggers an attack? Of course, the other health risks of cigarette smoke are well documented in medical journals. Having second-hand cigarette smoke is something which the neighbours did not ask for.

Finding a seat in busy hawker centre during peak hour can pose a challenge.

Even when we are able to find one, the table can be so dirty with food scraps, drink spill and soiled tissue papers on top of the table. How wonderful, if hawker centre patrons can keep their eating spaces clean of these. We do not have to wait for cleaners to come by to clear the mess. It would also lighten the work for these cleaners and the tables can be cleared faster.

We can be gracious and adopt good habits. The above are just three examples of how we can help to be gracious. There are many other ways and we can start with ourselves by making them habitual. As parents, we can set a good example for our children and they too can grow up to be considerate and gracious.

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5 January 2007

The grass is not always greener at other organisations

Channel 8 News yesterday mentioned that the job market will be tight in 2007 and it was anticipated that during the next 6 months, there will be movement of personnel from one organisation to another.

Employees resign from one and join another for many reasons. Some include: a. better pay b. better job title c. better job prospect d. perceived good work environment e. better use of talent f. not happy with the current employment During good economic growth period, pressure on salaries tends to be more acute because of these spates of resignations for higher salaries.

Each individual has his/her good reasons for moving on. I would advise that careful consideration be given to this important decision. Balance this with arguments against a switch of job especially to another competitor so that a holistic approach is taken in coming to a decision.

Moving on to a new job means that you will have to come to grip with the new oranisational cultural climate and political aspects of the new organisation.

What you have built up in the current organisation has been long years of finding your place in the politics of the organisation. You will need to spend time trying to manoeuvre a new set of politics in the new office. The question one asks is whether you can fit in.

For a higher pay, do you know what the job entails precisely. It could be that more pay comes with more responsibilities and workload compared to the current job. Thereâ&#x20AC;&#x2122;s no such thing as a free lunch.â&#x20AC;? â&#x20AC;&#x201C; popularised by the late American economist Milton Friedman.

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If it is unhappiness that is pushing one to another job, then one may want to explore ways to resolve with the management of the organisation. Perhaps, there is a way to move forward to address the concerns.

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23 January 2007

Contentment

There lived a King who was neither happy nor contented despite the luxury. He noticed a servant was happily working in his palace, always smiling and singing.

The King asked him why he was so happy. The servant replied that he was nothing but a servant, and his family had a roof over their heads, warm clothes to wear and food to fill their tummies.

The King sought answers from his advisor. The advisor then said that the servant had not been made part of the The 99 Club. The King was puzzled.

The advisor suggested that the King placed 99 gold coins in a bag and left it at the servantâ&#x20AC;&#x2122;s doorstep. The servant was so happy to receive the gold coins and when he counted them, he found that it was only 99 gold coins. He was so adamant to have 100 gold coins instead of just 99 gold coins.

The quest for the 100th gold coin so consumed him that he could not get this off his head. He went to the palace and worked harder than before to earn the elusive 100th gold coin. His happy attitude towards work turned out to be one of serious effort to earn more. He came home exhausted and short-tempered and took it out on his family for not helping him to earn the 100th gold coin.

The servant had joined The 99 Club! He was no longer a happy man.

The 99 Club is a name given to those people who have enough to be happy but are never contented, because they are always yearning more to strive for the extra 1 to round it up to 100.

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15 July 2007

How to stay anger-free?

Early this morning, I expected people to be relaxed and happy, as it was Sunday.

Instead, I witnessed a customer exchanging angry words with the roti-prata stallholder. At the porridge stall nearby, the stallholder was angry with his stall assistant for giving him the wrong order. There was negative energy around me.

Getting hot under the collar is common. Some drivers on the road are impatient and can be intimidating and a road bully. They toot their car horns if you are just a split second slower in reacting at a traffic light junction.

In office, colleagues can get angry for various reasons. They responded in a way that can aggravate the situation or they kept their anger within and that can cause misery to themselves.

We need to handle our anger skillfully. Anger expression is one way to relieve the pressure off you. How can we convert this negative energy to result in positive outcome? There is no one method; it depends on the situation you are in. Here are some ideas: a. Cultivate equanimity and calmness. It is hard to get angry with such a person. b. Stay cool. Listen out what the other party has to say. c. Do not use harsh words to attack at the character of the person. d. Work on the problem on hand and move forward with resolution instead of dwelling in past events. e. If the person is still angry, suggest a timeout and come back to tackle the issue at a later time. This is to let both parties time to cool down. f. Be prepared to say sorry if you are a part of the problem. g. Speak with honesty. h. Speak to someone you can trust about how to handle the situation. This person can provide a detached perspective of the problem. (Ensure that confidentiality of the matter is not an issue for discussion.) i. Learn to forgive the person that caused you to be angry as time should heal such pain. j. Always remember that everyone wants happiness.

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25 October 2007

Morning Motivation

What is the first thing we do when we wake up in the morning?

Be thankful that we are alive and there is this day ahead to do something for others. To be able to contribute, we need to take care of our body and mind first. Without this, you would not have the optimum capacity to cope.

How do we start? You can start with being mindful of your speech when in your workplace. Speech can hurt your colleagues. Even harbouring evil thoughts about your colleagues is not skillful and it hurts you more than it hurts others.

Be gentle with your colleagues and if you are a teacher, be gentle with your students. Ask whether there are actions which you can do that can benefit them? Over a long term, the most unreasonable colleagues and students will appreciate what you do. Do not create mental torture on colleagues. If you know it and continue to inflict pain then this is not skillful living.

Remain calm under intense stress and try to be compassionate and bring forth your wisdom to the situation. Each individual has his or her own problems which are not â&#x20AC;&#x153;sign-postedâ&#x20AC;? publicly for all to see. They may not tell you why they behave the way they do under the circumstances.

This little gesture and motivation for doing good will be appreciated even though you may not know about it. A colleague recently met me and told me that it was his last day in the organisation. He is moving on to a new job.

We shook hands and he held on to my hand a wee bit longer than normal and thanked me for being who I am, though I did not remember any specific incidents to leave a mark on him. He was not even my subordinate in the past.

What I wish to say is that we should not do things for personal gains and rewards. This is not the right motivation. We can be ourselves and be kind to as many people we meet from all walks of lives without having any ulterior motives. This world would then be a peaceful one.

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18 January 2008

Living an uncluttered life in a clean environment

My family and I are at this crossroad that accumulation of more and more material things are not the most important aspect of our lives. We are beginning to release possessions we had accumulated over a number of years to the Salvation Armyâ&#x20AC;&#x2122;s Thrift Shops. Things that we felt a certain attachment to and with memories associated with them were given away. Books, jigsaw puzzles, apparels, shoes, etc used to take up shelf space are now gradually removed from our home.

A close friend made a remark that we should move towards having all worldly possessions fit into ONE suitcase to allow us the mobility to travel from destination to destination, be it moving to a new house or travelling around the world.

I have books which I bought and they cost a lot to buy in the past. These books continue to stay on the shelf gathering dust and never to be referred to again. If they are missing, I would probably not notice it. So what is the point of holding on to them? It might be better to let someone else have them and enjoy these books.

Last weekend, we gave up all our jigsaw puzzles which the family enjoyed when my daughter was still young. It is time to move on without the jigsaw puzzles, though the hours spent on them have built patience and persevering attributes.

Since I have started to work half time, I have more time on my hand. I began to help clean the house every Sunday. The floor requires vacuuming and mopping after each week. It has been an achievement, each time it was completed. Old newspapers and magazines, plastic materials and glass containers were disposed off for re-cycling purposes.

The less we have, the more we feel uncluttered.

It is psychological but it feels great.

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13 October 2008

This too will pass

There was an emperor in ancient time. His kingdom enjoyed prosperity for a while. The emperor and his subjects were in merry mood and live in luxury.

They had forgotten to work hard and soon the kingdom lost its wealth. The emperor was depressed and he ordered his ministers to present him with something to lift his mood. Failure to do so would mean certain death.

The ministers thought hard and finally they presented him with a ring. Inscribed on this particular ring were the words â&#x20AC;&#x153;This too will passâ&#x20AC;?.

The message has meaning in both good time and bad time. In good time, good time will pass and therefore there is a need to build for the future and keep reserves. In bad time, this too will pass and do not plunge us into depression.

Use the reserves accumulated in good time to tide over hard time.

There is no substitute for hard work. There is no free lunch. There is no place for greed if one is to live a peaceful life. Be contented with what you have.

Focus on what you have (and there are many) and NOT on current negative news.

The future has not arrived. Focus on NOW which is the most important aspect of living. Care for others around you to help them out. And do not forget that the most important person is that someone with you right NOW. He/She deserves your undivided attention.

During bad time, we can rely on our network of relatives and friends as safety net. They will be there. This is provided we have been building up our social capital over time. Lend a helping hand to those in need and they will become our support when we most need it.

The financial crisis and recession will pass. We do not know how long it will take but it will have to end.

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4 February 2009

Being Humble

â&#x20AC;&#x153;People who are preoccupied with past achievements cannot humble themselves.â&#x20AC;?

It rings true.

Great achievements give us an emotional high, a sort of light-headed kind of feeling. We bask in the glory when relatives, friends and colleagues praise our successes. We want more achievements in order to continue feeling good.

Subsequent accomplishment must be better than the earlier ones in order to increase our level of euphoria.

Continued success is not a given. We have our failures some times. And at some point in our career, we may have to choose to drop out of the race and allow the younger generation to take over our functions and appointments.

When we come to this, it is hard let go of our past glories and our job titles.

If we continue to be preoccupied with how good we are in the past, we forgot about the present. We will not be humble with our current status.

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22 February 2009

The Wishing Game

5 children were engaged in a wishing game. Each one was given one wish.

The first kid wished for a McDonald’s burger because his parents did not allow him to eat burgers for his own good. He got his burger. He was satisfied.

The second kid wanted to better the first wish. He wished he owned a McDonald’s restaurant. He could now eat McDonald’s burgers anytime he wished. He was satisfied.

The third kid thought for a while and he wished he had one billion dollars.

With this money, he can buy as many McDonald’s restaurants he wants.

He can buy video games and play all day. He will buy a primary school and award himself certificates since he owns the school. After primary school, he can sell it and buy a secondary school. He will continue to do the same till he finishes college. That was pretty smart and he was satisfied.

The fourth kid did not want to lose out and he was intelligent. He wished that he would be granted three wishes. The first wish is to own a McDonald’s restaurant. His second wish is to have one billion dollars. His final wish is to have another three more wishes. In this way, he has wishes in perpetuity, never ending wishes. He thought that no one else could better this wish.

He was satisfied.

The final kid heard all four kids. He was not keen to compete. He wished that he was so contented that he would not need to wish again.

That is it.

The simplicity of the wish slowly dawned on the four kids. Being contented, there is no desire for anything else. There is no more desire for burger, money, good look, intellect and status. He is contented with his life, whoever he might be. He would not compare with others. There is no need to because he will always be contented.

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The moral of the story suggests that one should move away from “Freedom of Desire” to “Freedom from Desire”. ... Saying of a wise man.

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25 March 2009

Living meaningful life

We read them in obituary pages and we noticed some passed away at a young age. The sadness of losing someone was intensified when he/she left behind young children. The loss was usually mourned and remembered by so many friends of deceased as they wrote their messages in the same obituary pages. Sometimes, the newspaper published article on how he/she met with death. It was often tragic and we felt a sense of pity that life was snuffed out prematurely, especially there can be more contributions from him/her.

Over the years, I had friends and acquaintances met with untimely death. It sadden and shocked me. No words can console the surviving members of the family.

As we celebrate each birthday, be thankful that we lived another year. As we get older, it is a good thing if we live them well.

As we live from day to day, remember that family, friends and strangers require our care and concern. Do not delay what can be done today in showing love for family members. Give attention to our loved ones even if we are tired from work. Do not pass our workplace problems and vent it on our family.

One person we often neglect in pursuit of life is us. We tend to be unkind to ourselves. We ignore our health to accomplish our grand plan in the office. We drag ourselves to work even our bodies cry out for attention. When can we say that office is not all important and all consuming in face of family? We have to make that decision before it is too late.

Remember to connect with your loved ones by words or touch everyday. Lend a helping hand to the underprivileged and the sickly in society. We can make a difference in their lives.

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22 June 2009

How to live a happy life?

Over the weekend, I was asked this question. On the surface, it appeared a straight-forward question, a question that could be answered easily.

But no, it was not that simple. We see sufferings, sadness, worries, frustrations, spaced-out individuals who are pre-occupied with problems, all around us.

I tried to gather my thoughts for an answer to lifeâ&#x20AC;&#x2122;s most perplexing question.

We chase for happiness all our lives and yet we are still not able to achieve it totally.

We can have a checklist and mark them off once we have accomplished them, e.g. earned my first million... checked; married to someone I love... checked. But can this lead to happiness. There are physical needs and of course psychological needs. The list is unending.

If we thought through the question deeper, we would see the centre-piece was our own SELF. This SELF is happy or not happy. We are SELF-centred. Most time, the SELF is more important than others. If one think less of one-SELF, pain and suffering can be minimised.

Better still, if we can be detached from this SELF, then we will not be inflicted with pains and sorrows. There is no permanent unchanging SELF to start with anyway. This will require wisdom to see through the true nature of SELF.

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22 October 2009

Overcoming Guilt and Fear

We face guilt as we live our lives. Guilt of not spending enough time with young children, guilt of over-indulgence, guilt of not looking after our elderly parents, guilt of causing harms to friends or colleagues, guilt of not lending a supporting hands to others in need, guilt of not doing enough to prevent collapse of relationships, guilt of making mistakes, etc.

Coping with guilt saps your energy and in some cases result in requiring psychiatrist’s help. We tend to blame ourselves and constantly think about what if events pan out differently.

“If only I have done this, this would not happen,” you would say. But, event has already happened and it cannot be reversed. Is it any help to get into depression?

One coping strategy is to adopt AFL. A – Acknowledge F- Forgive L – Learn Acknowledge that mistake or unfortunate event has happened. Forgive oneself over the incident. Learn from the episode and not to repeat the same mistake or event again. Humankind is compassionate lot. We can be compassionate to oneself and to others. This will ease the pains suffered by the afflicted.

Fear is the other negative emotion that ought to be overcome. Fear comes in many forms: fear of death, fear of medical condition, fear of examinations, fear of public speaking, fear of failures, fear of losing one’s investments, fear of losing one’s beauty, fear of end of the world, etc.

Fear is to do with the future. The future has not arrived and yet we are already in fear. Things may not work out negatively as one has feared. So why fear now for something in the future. We should work towards tackling something we 154 | Living Tips

can control e.g. adequate preparation for a public speaking event or if you are not up to it then decline the invitation.

Being human has its flaws. Mistakes only show that we are human after all.

Bloopers here and there provide comic relief for the viewers and are often appreciated by the audience.

Sometimes we set up ourselves for failures. Too much fear paralyses active actions to overcome failure and hence failure results. This can become a selffulfilling prophecy. We have to love oneself and to have the confidence to live life. If the unfortunate event did happen, accept it and move on. No use in being depressed.

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20 April 2011

Let it go

Many years ago, I held grudges against some colleagues. Anger arose and my inner voice and thought process would justify this negative emotion. As there was no pressure valve release while on the job, it translated into a highly stressed person, irritability during and after work, disturbed sleeps with panic attacks on some nights.

The inner commentator in me would go through the incidents over and over again that caused this heart-ache. “I have the right to be angry.” “He did me wrong.” I dwelled in the past that it disturbed the present. I planned the future, to get back at him. Time was wasted going through this cycle.

The real issue lies with me. It is “I” who got hurt. It is “I” that I must protect.

The ego of “I” affects the harmony to live with peace in my heart. After the unpleasant event, I still continue to hurt myself through arising my anger.

So how do I cope skillfully? Three simple words “Let It Go”. Let the problem go! Do not get entangled with it. Let the ego of “I” go too. There is no right or wrong. No “I am right”, no “he is wrong”. It is just the way it is with living this life. So long as we live, there will be frictions between individuals.

If I let go of the past and not planning for the future, I live in the present moment. Make the best of the present moment. Be present with yourself in the activities facing you. Focus on the present activity and not let the mind wanders off. Be present with the person in front of you. They will appreciate your connection with them.

If I can go one step further, not to habour ill-will against the one that supposedly hurt me, that will be a plus. It is hard to love your adversary, but I can forgive his action. It could be that the other party had no intention to hurt but I perceived that he did it out of spiteful intention. Regardless what was the motivation, it is not important as it is now in the past.

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I am still not good at letting go. But it has improved. I still get annoyed with road bullies, queue jumpers and inconsiderate people. But that annoyance dissipates after a while. I am less uptight and can cope better living in the present moment. Let it Go!

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25 April 2011

I am Full of I

Not grammatically correct, but it says a lot about me.

My life is one that focuses abundantly on me. From the time when I was young, I ensured that I did well for examinations from primary school to higher degree.

I must be better than the next person in terms of grades.

Continuing into adult life, the emphasis moved from exceling in study to perfecting my career and setting up a wonderful family.

At this juncture, I must clarify one point. There is nothing inherently wrong with wanting to progress and to be the best one can be.

What I have found out is that if I am not better than the other person, I would brood about it and I wished I was better. Thoughts arose that I am not good enough and I am less than perfect. I become the centre of focus. I never consider the feelings of others who may not have done as well. They too deserve my understanding.

There is so much conceit in me. If I made an embarrassing blunder, I would dwell in the incident and it would affect me for a few days and even recalled them years later. I would withdraw from taking on similar activity in the future.

There were many such incidents. Why canâ&#x20AC;&#x2122;t I be like the other person who is so good at it?

Recently, I had been asked to represent a group of 64 as their spokesperson. I took it that I must be special to be chosen. Pride crept in. I even asked my wife how I performed even though I knew that I did alright. I am still self-conscious and this is a hindrance towards my self-development.

After so many years, I still hold this â&#x20AC;&#x153;Iâ&#x20AC;&#x153; as very important. I extend this selfimportance to my immediate family members. I pay special attention to them but this was not easily replicated towards others. They too deserve my care.

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Even when I say that people deserve my understanding and my care, the “I” creeps in as well. In truth, I still want to feel good that I can look out for others.

I ought to reach out to others without any tinge of pride. Do it with a heart of loving-kindness without arising the thought of “l” as the doer.

Let go of the “I” which is hard to imagine as ever possible. I am still working on it.

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26 April 2011

Watching Emotion

Negative emotion arose often and as a result I reacted while in that state of emotion. Then regret set in after action was taken. Then it was too late because damage was done.

Once I was wrongly accused of doing something that I could not recall I did. I was taken aback and was confused. I answered back my boss and pointed out that he had made a mistake. I left his office feeling that my world had collapsed.

I went back to my office still in a state of shock. After a while, I composed a letter to relinquish my appointment. That letter is still with me till this day and luckily it was not presented to my boss back then. Since then, we maintained cordial relationship albeit an awkward one and the incident was not brought up again.

This episode taught me an important lesson. Not to let emotion gets in my way. What I could have done better was to catch the emotion at the start of it and not to react under that state. I was under tremendous stress during the period that my quick reaction was without careful thought of consequences.

Years of cultivated relationship could be destroyed in an instant. The closer we were, I tended to take good relationship for granted and the hurt was even deeper.

In our daily life, it is important to be mindful and be watchful of our emotions every moment, the negative emotions as well as the positive ones. Emotion arisen may lead us taking action that we may regret later. If we are mindful, we can see these emotions clearly. I have not achieved that level. At least, I have started to note that an emotion has arisen even when there is a time lag. I will tell myself, this is anger, this is greed, this is delusion. After constant practice, hopefully I can catch the emotion quicker.

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16 October 2011

Fear

Before retiring for the night, I was feeling bloated in the gut. That uncomfortable feeling was familiar, which I used to have in the past with irritable bowel. I decided to sleep on it and hoped that I would be alright in the morning. The sleep was disturbed and disrupted several times in the night. I fear for the worst outcome. I started to imagine that I might not be well enough to continue with my holiday plan.

That same night, I was bitten on the hand by an unknown insect in the hotel room. Part of my right hand was slightly swollen and had turned a reddish tinge.

The redness started to spread to the wrist area. I heard one encounter when a single bite on an ankle can be potent that caused the leg to swell. The unknown was scary. Because the itch was there and the spread was obvious, I started to fear for the worst again.

When I was back in Singapore, I visited my doctor at night. As it turned out, all my fears were not justified. The bite on the hand was minor which an antibiotic cream would help to heal the swelling. It did get better the following day.

Fear is a negative emotion and fear projects towards the future. What I should have done is to live in the present. What I can do is to take action now to solve the problem and stop worrying. In the second situation, I can act by visiting the doctor for an opinion instead of worrying of what would happen in the future.

Fear is not going to solve the problem. It makes matter worse.

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18 October 2011

Upset and Acceptance

More than two weeks ago on a Thursday evening, a car driven by a female driver (who was still on probation) hit my car from behind. The fault was entirely hers, as she did not watch her front while driving.

We got out from our cars and surveyed our damages to our cars on a busy road. My first reaction was that this accident should not have happened in the first place and it was my bad luck that it occurred. The damage to my car was minor but her car was in worse shape. I told her that she was not careful and did not concentrate while driving. My frustration and anger were present but it did not degenerate into an ugly encounter. I kept my emotion in check and exchanged our particulars before we moved off. I went on to attend a night class and was determined not to let this incident upset my learning.

We communicated by phone that evening and she asked that I made a statement that it was her brother who was the driver at the time of the accident, since the car insurance policy was in her brotherâ&#x20AC;&#x2122;s name. She also did not want to lose her driving licence since she was still on probation. This was against my moral values and I would not lie for her sake. Her brother talked to me subsequently and requested that I do not report to the police and they were willing to pay for my repair.

I considered the matter and thought that it would be too much trouble if I pursued and started to claim against his car insurance. I agreed to the arrangement. Little did I know that they could not afford to pay the full amount of my damage and they also requested that they pay me after they had the money. I resigned to the fact that it was no use brooding over this accident and let the matter pass.

Last night I got the payment from her brother and it was only 33 per cent of the total actual bill incurred by me. My only wish was that the driver had learned from this accident and be more careful while driving in the future.

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15 November 2011

How to simplify your life?

I attended a talk recently on the subject matter. The talk was given by Venerable Thubten Chodron of Sravasti Abbey, USA. The material written is based on my understanding of the talk.

We are often caught up with busyness with so much stress in this materialistic and fast-paced world.

One starts from a macro, broader perspective of life before we tackle the nittygritty aspects of living.

1. Ask yourself what is the purpose of life? Look deeply into yourself and ask that question. Find meaning in your life. It can be altruistic pursuit to benefit others or some other purposes like leading a wholesome life.

2. Set objectives based on what you truly think in your heart and NOT what external pressures expect of you. We tended to live by othersâ&#x20AC;&#x2122; expectations.

This life is ours and we should be master of how it should end up.

3. Set your priorities based on these objectives. Do the ones with the highest priorities. We will not be able to do too many activities or tasks. If we attempt too much, we suffers burn-out.

4. Leave time for yourself for quiet reflections and NOT what others demand of you. No one should take time off you. Some quiet time without worrying about work matters and social matters is essential to find calm and balance in your life.

5. Stay unplugged for a period of time from technological gadgets such as mobile phone, personal computer, game console, audio-video devices, etc.

Facebook and social network, e-mail, sms and video games are time stealers. Be in control rather than be controlled.

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6. Do not rush into immediate response mode to all sms messages or e-mail.

These can wait.

7. Avoid looking at advertisements in newspapers, internet web-pages. Without knowledge of them, frees one from pursuing them or acquiring them. Greed and attachment to material items would be minimised. Not going out and window-shop reduces temptation towards material items.

8. Walk the spiritual path to nourish one spiritually. Sufferings and mental afflictions can be reduced.

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30 March 2012

Equanimity

Equanimity, n formal, calmness, especially in the way that you react to things: He received the news with surprising equanimity. (Longman Dictionary of Contemporary English, Third Edition 2001) Being equanimous is a good attribute but very hard to attain to perfection. It is a balance of mind, looking at things and events impartially without attachment or aversion. One who can set aside like and dislike and not to be drawn into it, would have achieved a sense of balance and calmness.

We constantly meet people: relations, friends, adversaries, and strangers. We like our friends but are turned-off by someone you dislike. We like someone who is beautiful but less with not so pretty. We are indifferent to strangers, the people you meet on public transport and your neighbourhood, for example. For an equanimous mind, we have to be open to everybody in an equal and unbiased way, much like mother earth receives all things good and bad alike. There is no permanent friend or permanent enemy. Friend can become enemy one day and enemy can become friend depending on conditions and circumstances.

Stranger can say hello or smile at us one day or help us when we needed it and he becomes no stranger anymore.

Accept people as who they are, be impartial. Remain calm in face of difficulties.

It is not beneficial to get angry. Extend a helping hand if you are able to. Do not get agitated when thing does not go your way. Do not cling on to happiness, fame, gain and praise. This is fleeting and will not last forever. Do not be possessive of your loved ones. They need the space to do their own things and one day may depart.

All these require wisdom. If your adversary continues to hurt you, be wise enough to walk away and not be subjected to further torment. He may get to understand the foolishness of it all and may turn around to accept you.

He may be suffering and do not know how to cope. Be sympathetic towards his predicament. On the other hand, rejoice with someone who got that Living Tips | 165

promotion or good fortune. Do not envy for this will cause us misery.

When on a task, do it with gladness in your heart. Stay mindful on work and keep your cool. Work can be done with joy. This way you can be productive and job gets accomplished instead of procrastinating.

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3 April 2012

Stress Buster

Stress is common in our modern lives. This needs not be so. We are not predisposed to have stress.

What is my list of stress-induced causes or conditions?

Packing in too much into a day I started with a Filofax and later graduated to using a Personal Digital Assistant Device (PDA). My diary was so packed with meetings and work schedules. It used to make me feel important and wanted. Packed schedule is a thing of a past after I left full time employment. Even if it is not work-related schedule, my recommendation is not to do too much in a single day. Give some breathing space. Turn down activities if you are overwhelmed.

Rushing When we are on a task, we either take it slow or we can speed through the task. If things are done in a hurry, we can feel breathless and the impact will come at the end of day when we just feel tired out. More haste does not mean more can be achieved. Being mindful of what we are doing will slow things down.

Setting unrealistic expectations We expect events and relationships to be perfect. If it fell out of expectation, we feel miserable. Why the need for expectation? Let event evolves without pre-judgement. Do not be too hard on ourselves if things do not turn out the way we wanted.

Living in the future We tend to live in the future. We worry about what is to come. We are always planning ahead. Plans may not materialise and we get annoyed. What is important is living in the present. There are wonderful things happening now.

Enjoy this moment.

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Money woes Over-extending our financial capacity is a real stress. Money is not enough for the many things we wanted. We envy others who had more than us. Spending within oneâ&#x20AC;&#x2122;s means is one way to reduce stress. Financial planning is necessary.

Relationship problems We live with relationship with people. Bad relationship can sap our energy.

Learn to accept flaws of some relationships. Be less judgmental and more forgiving. If it is impossible after you have tried, be less connected with the individual.

Neglecting oneself People wanted your time. You are obligated to connect with friends and relations. At some point, you need to set aside time for yourself. Take a walk, spend time to read or some hobby, keep some quiet time for yourself and enjoy being alone.

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17 September 2012

Re-organise my life – Clearing my contact lists

My wife’s cell-phone SIM card ran low on storage space, She then decided to go through her contact list and deleted some contacts. That set me thinking. At this stage of my life, do I still need to keep all my acquaintances in my contact lists, namely phone contacts and e-mail contacts?

I went through a exercise of cleaning up my contact databases only sporadically in the past. I remember I had difficulties deleting contacts. There was this feeling that the person might be of use to me in the future and therefore kept and some were kept merely for historical record purposes.

I met with people during school days, at work and during industry networking time. Some contacts came about when carrying out transactions, such as banking, insurance activities, etc. I was trained to exchange name cards during networking opportunities and some acquaintances got into my contact lists.

Back to the question: Do I still need to keep some of these people in my contact list? I see no need and it would not impact my life as a result of deleting these contacts. It is not going to make a difference. Some contacts were mere acquaintances and will stay as that. My circle of friends will dwindle as I get older and not many will stay in contact with me, except through Facebook. This is to be expected as these people have their lives to lead.

So from now on, I will start to delete some contacts from my lists. By deleting, I will not live in the past. I will live in the present and connect with those in the moment.

I recall a quote: “When is the most important time? Now. Who is the most important person? The one in front of you. What is the most important thing to do? To care.”

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III. Life Journey

11 January 2007

Taking care of pet – Rabbit named Brownie

We never had a pet larger than a hamster before. In 2006, my family decided to adopt a rescued rabbit from the House Rabbit Society of Singapore. The House Rabbit Society of Singapore (HRSS) is an all-volunteer, non-profit organisation dedicated to rabbit welfare and awareness. HRSS seeks to reduce the number of unwanted rabbits in Singapore and improve rabbits’ lives through education.

Taking care of Brownie requires commitment to see her through living a decent life. Rabbit can live up to 10 to 12 years and once we decided to adopt one, we must last the distance until its end of life. Taking care means daily activities, such as providing hay, fresh vegetables, pellets, water and cleaning up the rabbit litters. Sometimes, the rabbit can develop some illnesses, like sore hobs, and that may require a visit to a veterinary doctor. When the family travels overseas, the rabbit has to be taken care of by someone during the duration of the trip.

This is not a major concern as there are families willing to provide the care for Brownie while we are away.

Rabbit is a living creature and has feelings and emotions. It deserves care and love for them to be happy. If you have young children capable of taking care of a rabbit, this is a good way to inculcate habits of love and care at a young age.

Looking at the rabbit when it goes about in the enclosure can be riveting and calming. It can be stroked and the gentle touch of the fur and body provides a sense of bonding between the rabbit and us.

The House Rabbit Society of Singapore (HRSS) is working closely with the Society for the Prevention of Cruelty to Animals (SPCA) to facilitate the adoption of bunnies in SPCA’s care. SPCA runs the largest animal shelter in Singapore and receives over 1,000 unwanted animals every single month.

However, the sad reality is that less than 10% of these animals find good homes.

If you are ready to adopt rabbits, do consider exploring the website of HRSS. (http://www.hrss.net/index.html)

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19 January 2007

Panic Attacks

Before mid-2005, I sometimes woke up in the night (about 2 to 3 am) with heartbeat racing, feeling faint. I would then wake up my wife just in case I fainted so that she could react. I panicked in that condition and I would tell my wife to be prepared to call an ambulance in case I collapsed. I am not ready to leave my wife and my daughter. There are still unfinished business and life journey to travel.

As of today, the panic attack is much less frequent and I am able to ride through it myself without waking up my wife or to alarm my wife. I will try to breathe normally and not to hyper-ventilate. I just get off my bed and pace carefully around the house to calm my nerves. I may take my doctorâ&#x20AC;&#x2122;s prescription pill to slow down heart palpitation. In all cases, the panic attack went away after calming down. I went back to work the next day without people knowing that I had gone through the experience.

This attack can be stress-induced or irregular meals or wrong food intake that did not agree with my irritable gut.

The reason that it is less frightening than few years back is because I am now better prepared with living and dying. My wife and daughter will be able to survive after me. Through the living days, do good and have fewer regrets. What is left undone, let it be. There will always be unfinished business.

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29 January 2007

Memory of my Father

Over the weekend, I attended a public talk and the subject of expressing love for fathers came up. The impetus for writing this piece was compelling. I seldom talked about my father.

My father was born in China in 1909. He came to Malaysia and then settled in Singapore as a young man. He came to Singapore in search of better living conditions like those who came before him from China. He was illiterate and hence the jobs that were opened to him were to use his physical strength.

He chose to be a trishaw rider ferrying people and goods around. During the Japanese Occupation, he married my mother. Women who were not married, risked being taken advantage of by the Japanese soldiers, so the rush to get hitched quickly through arranged marriages.

So my father brought home the money and my mother looked after us, consisting of four brothers and a sister. My father was a quiet man and when he was home after a hard day at work, he seldom talked to us. But when my relatives came over occasionally, we saw him spoke a lot more. We heard more from these conversations than one-to-one or heart-to-heart talk with him. He did not discipline us as children. That was the job of my mother. Our problems with schoolwork were not something that we can approach our father. He can’t help obviously. So the opportunity for contact with him was further reduced.

But he was always there at home, his physical presence was enough. He put food on the table so that we did not go hungry.

In the family, our expression of love to father and mother was not verbal but subtle acknowledgment of their presence and respect was by ways of not annoying them by misbehaving.

My father passed away on 7 July 1999, a day short of 90 years old. He did not see the new millennium. The last few months of living for him were reclusive; he hardly talked. We could only watch his expression on his face for clues on how he was coping. Saying “I love you, father, for what you had done for us” was Life Journey | 175

never in our family tradition.

I heard that in the German language, to love is liber, as in liberty, liberation. To love someone is to let them be free and not to cling to them. We can certainly allow our loved ones space and to leave peacefully. Though my father was gone, but we still have memories of him. That will not go away.

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30 January 2007

Charity begins at home

My mother who was 82 decided not to bother my brothers and sister by staying alone in her own home. This gives her freedom to do what she likes at own home. She often said that she would cause inconvenience to whichever family she chose to stay with.

At this age, she is frail and not so mobile. Hence, work such as cleaning her house is not advisable. As children, we are often concerned for her. We call her almost daily to check on her. We would make a trip to her home on weekends and clean up her house to keep it tidy and clean.

We read her letters and acted on some because she could not understand as she did not attend schools. The Progress Package given by the government was one example of something we helped to explain to her.

My third sister-in-law helps trim my motherâ&#x20AC;&#x2122;s hair. She and my sister do a thorough cleaning of her house once in a while.

We have our own family to look after. We can be tired after a week of work with low energy level. We have our own programmes and our parents are not featured highly in our priority list. We sometimes feel reluctant and lament the need to visit our parents even when they ask us to.

If you think about it, how much longer can they ask us to visit them when they are already old? Schools sometimes arrange visits to old folksâ&#x20AC;&#x2122; homes as part of community involvement programme. With our own aged parents, this presents an opportunity for such involvement!

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21 March 2007

Taking a 5-month break from full-time employment

I had worked for 25 years since 1981. On 11 October 2006, I left my last job and took a 5-month break without attempting to find another. I wanted to plan my next career path and needed time to sort out my life.

The past 5 months had been meaningful and rewarding for me and my family.

I was at home most of the time with my daughter who was taking her GCE â&#x20AC;&#x153;Oâ&#x20AC;? Level examinations last year which started 17 October and ended 17 November.

My family then spent 3 weeks visiting London, Paris, Venice, Florence, Siena and Rome from 25 November to 18 December. This was a trip worth every cent as we enjoyed being together as a family on a long trip.

Throughout the 5-month period, I was busy managing my investment portfolio.

I have also been reading and writing articles in my personal blog on financial tips and living tips. It was a discipline to keep myself active.

From 4 April 2007 onwards, I will be teaching at Temasek Polytechnic and I am looking forward to engage my students in lectures and tutorials.

If you ask me whether I will do the same if we are to wind back the clock, I will still say yes. But a cautionary note though: You must have a future plan and you must have the support of your family. You must be able to face people asking what you are do for a living. You must also have enough money to last the 5 months as you have no employment income to draw from.

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25 April 2007

Going back to work

On 4 April 2007, I returned to my workplace after taking a break of 6 months.

I left Temasek Polytechnic after some 14 years of service late last year. During these 14 years, I had many wonderful colleagues who became my good friends.

I felt quite at home when I stepped into the campus, being familiar with the environment, the culture, the work ethics, the usual pre-occupation of issues on hand, the rush of some work routines.

Colleagues were happy to see me. They waved, smiled, stopped me for a quick chat along the corridors, in the lift, on my way to the toilet, canteen. The common exchanges were: How have you been?

Welcome back!

Itâ&#x20AC;&#x2122;s nice to see you.

How is your break?

What did you do during the 6 months?

What subjects will you be teaching for the semester?

Why have you not put on some weight?

To be honest, despite the cheery front I felt I do not deserve the attention I was getting. I wish I am a non-entity and just another colleague going about with his work. Some left me alone and I appreciated this.

I caught up with news from my colleagues and I got up to speed on the developments in the past 6 months in the workplace. Thanks to all and who had engaged me and treated me excellently. Itâ&#x20AC;&#x2122;s also wonderful to note that some have been reading my blog postings. This is flattering.

I gave my first lecture to Year 2 students yesterday 9 am, after a long lapse of time that I had done that. I was in administration for a while and hence opportunity for lecture was not there. I put in extra effort to ensure a smooth delivery without hiccups. The butterflies in my stomach were there; occasionally Life Journey | 179

my hand was in my trousersâ&#x20AC;&#x2122; pocket to hide my nervousness; I was aware that I had not delivered some finer points which I planned to do.

I survived and the students were generally attentive for most part of the 2-hour lecture. I came off the lecture happy. However, I was drained but happily exhausted.

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11 May 2007

Volunteer brings cheers to patients

Last evening, I joined my wife and visited Bright Vision Hospital. I had never been inside the hospital and had only heard from my wife what she did as a pastoral care volunteer. I saw a TV documentary some time back on how one lady, Ellen, brought cheers and relief to long-term suffering and dying patients.

It started Thursday last week, when Ellen said that she would be doing funeral rites and cremation service for an elderly man who died at the hospital and who had no next-of-kin. My wife and Ellen had been the only ones who were in contact with him at the hospital.

I went to witness the service at the Mandai Crematorium with my wife. The service was simple but dignified conducted by a Catholic priest. The elderly man had to journey alone for the cremation. That will be so in this world. You will go away with nothing.

Yesterday, I went to the hospital to provide an extra pair of hands to wheel out some patients to a nearby park so that patients can feel the world outside the hospital. One patient had not left her ward since she was admitted on 28 March. She had so much to talk as I pushed her on a wheel chair. She was delighted to be out for about an hour in the park though I did not know what physical pain she might be going through. As this my first time, it became a heavy responsibility to ensure that she had a smooth ride and no harm came to her. The path from the hospital to the park has a slope that requires your physical strength to pull back as you go down the slope and to push firmly as you go up the slope on the return journey.

I was not able to keep the conversation flowing with the patient. It was uncomfortable and you do not know what suited the situation. I strained myself to hear her speak softly. I just provided a listening ear. Ellen was of course a natural as she cracked jokes and made light the situations. That was a demonstration of an experienced pastoral caregiver!

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Ellen had this pet project and she wished that she had more volunteers so that more patients can be brought to the park to breathe the fresh air and not to be cut out from the public just because they are unwell.

I will continue every Thursday evenings and contribute. The experience of last night was all so humbling.

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14 July 2007

Going on to 50

Very soon, I will be 50 and this magic figure is significant because I will also be discharged from military duties and liabilities. I have started work in 1981 at the age of 24 and I would have worked for 26 years, of which last 15 years were spent in Temasek Polytechnic in capacities of an academic and an administrator.

An audit partner once told me that for the first 10 years of work, we learn as much we can on the job, the next 10 years, we earn as much as we can, and in the third 10 years, we should contribute back to the society. I am now in the third 10 years and have considered that I am not the same person, say 15 years ago. I am no longer youthful, which is what the young students look for to better connect with the lecturer. My male pattern hair loss, aging skins and loss of weight do make me look excessively older. Health is not on your side as you get older. The energy level dipped as the saying goes, the spirit is willing but the flesh is weak.

I have no regret with having to wind down from my previous roles and responsibilities in the organisation. Succession planning is important to build the next generation of leaders. We had our glorious past, it is now their turns.

Money need not be the primary pre-occupation if we have planned well financially before reaching 50. Can we spend more time with our teenage children and look after our aged parents? That can be the start before we devote some time for the society. Do volunteer work and take a small step first to see what you are comfortable with. This will be meaningful in our aging years and can keep our mind and spirit alive.

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20 October 2007

Hair-cutting day at Bright Vision Hospital

Every third Saturday of a month is designated hair-cutting day for patients of Bright Vision Hospital (BVH).

I started off early with my wife and reached BVH at 8.30 am this morning.

Several female volunteer hair-dressers were on hand to help cut patientsâ&#x20AC;&#x2122; hair.

For patients who were able to sit on wheel chairs, they were sent to the barber room at Level 3. They stayed in queue until their turns for the hair-cut.

For those patients who are categorised as fall risk cases, they get their hair cut in their wards. The hairdressers and the assigned assistants moved to the beds of these patients and tried to manage the hair-cutting as best as they can.

Though not conducive, but the hairdressers did well and were very efficient.

Out of 100 patients that required haircut today, the whole exercise must be completed by about 11.30 am to 12.00 pm so that they can be served lunch.

The beds and the wards must be cleared of hair bits so that it will not affect the patients taking their lunch.

Hair-cut is necessary to keep patients comfortable for hygiene consideration and it makes patients look neat. It cheered some patients to have these volunteer hairdressers cutting their hair. Some even asked how much it would cost them! Some volunteers have been doing this for years that it must be gratifying that patients acknowledged their volunteering spirit.

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28 December 2007

2007 â&#x20AC;&#x201C; Personal Reflections

2007 is significant in many ways. Firstly, I reached the age of 50. Secondly, I started teaching part-time at Temasek Polytechnic after staying away from work for 6 months. Thirdly, I spent some time volunteering at Bright Vision Hospital, and lastly, I blog actively for a full year.

Teaching polytechnic students has been a challenge. There is a generation gap between students and me. I am old enough to be their parent and that has somewhat created a barrier. However, I have a daughter that is of the same age group and therefore I understand my studentsâ&#x20AC;&#x2122; behavior better. It was a joy to see my students performing well for the subjects I taught. I taught the same students in the second semester and the bond built in the first semester continued and this made my job easier.

As I get older, the aging signs become pronounced. Your skins wrinkle and your hair starts to turn grey with loss of hair at the same time. You have passed the youthful look. You are vulnerable to common flu and weight loss. But I have to count myself lucky because I have no major illness to trouble me.

Doing part-time teaching allowed me more time for the family. It was less stressful and I could focus on teaching well. I was able to devote some time volunteering at Bright Vision Hospital. This is a hospital where most patients who are often chronic sick.

Because my income has diminished to a great extent, the situation forced me to be careful with spending. It allowed me to feel how it is like to have less money, much like an early retirement. I spent less on expensive items but spent only on essential items.

I spent time reviewing and re-balancing my investment portfolio and shift financial resources to attain sustainable income streams with higher yields compared to savings interest rates. Preservation of capital is also a primary objective.

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I terminated one credit card and kept only one. I find that there is no necessity to hold more credit cards. Cash is king during this period of financial volatility and can be used to purchase over-sold shares at attractive prices. I cut losses on some investments and realised some gains on the others. I continued to contribute to all my insurance plans by spending less.

If there is one thing I have learned in 2007, is that there is a need for people to be sensitive to others. Build that special relationship and not be superficial in people-to-people relationship. Be genuine and care for others and make the other person happier.

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3 June 2008

The Big Move to a rented home

The day before was the day my family moved to a new home. After staying for 21 years in our matrimonial home, it was difficult to uproot and relocate. My daughter grew up in this home since she was born 18 years ago. But nothing is permanent and old must be replaced by new. We have to adjust and adapt. We are happy none the less.

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31 December 2008

End of 2008

2008 is coming to end very soon. At this time, I am thankful for many reasons: 1. I was healthy and rarely visited my doctor. I have stopped taking medicines and let my body copes naturally. My recent annual health screening was good.

2. I have devoted time for my family. Nothing beats spending time with family.

My daughter did her GCE â&#x20AC;&#x153;Aâ&#x20AC;? Level examinations. Our bonds have further strengthened.

3. We spent 3 weeks in UK as a family on a free and easy trip. The weather was kind and not bitterly cold as to spoil our holiday during this winter.

4. I did some volunteer work at Bright Vision Hospital. I assisted in monthly haircutting activities. This was rewarding.

5. I have colleagues who have taken care of my interests. My job was made easier because of them. Some remain as best friends and have kept in contact with me.

6. My secondary school classmates of class of 1973, met on 29 December, on our 35th anniversary. Amazing that we could still be in contact after so many years.

7. I attended religious lessons starting with first year module. These are formal lessons to reinforce my understanding from religious books and some adhoc lessons.

My wish for 2009 is for all to have peace in their hearts and to love and be tolerant of fellow beings.

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23 May 2009

Moved to a permanent home

One year ago, I moved to a new home in the western part of Singapore. I settled in well and was getting used to the vicinity and the neighbourhood.

One year later, my family moved again. This time to a permanent home close to central. I am glad that we managed with little fuss in this second house moving.

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1 January 2010

Good Bye 2009 and Hello 2010

01.01.2010 â&#x20AC;&#x201C; Today marks the beginning of 2010.

Looking back at last year, significant events include: 1. Moving to a new house permanently and no more renting for a short stay.

2. Travelled to Sydney and Taiwan for family holidays to experience different countries.

3. My daughter started varsity and completed first semester. She stayed in the Hall of Residence at NTU, leaving the comfort of home. She passed her driving test and started her business venture with her mom using the label Momshoo.

4. I have been teaching on a part-time basis since April. 2009 is the third year that I left full-time employment in October 2006.

5. I joined Facebook and started connecting with friends.

6. The Straits Times Index closed 65 per cent higher over the year and investments recovered nicely.

7. Quality time was spent with family and I continued to pursue self-enrichment and contentment.

Whatever 2010 brings, letâ&#x20AC;&#x2122;s take it as it comes and live life to the fullest. Peace and Happiness to all.

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5 March 2010

The earlier years

During my 25 years of working, I did not have spare cash for equity investment.

There were mortgages to pay. Back then, salaries earned were used mainly to reduce mortgages. It was a relentless effort to reduce principal amounts owing to banks so as not to pay hefty interest expenses.

I remember that I bought my first car not long after I started work. Back then servicing hire purchase instalments was a drain on my pay packets. I had to tighten my daily expenses to get by on my salary.

Next came my first home. CPF and cash were required to pay for the mortgage. My wife and I, like all young couples, dreamed of owning investment properties as a source of additional income. Additional mortgages were taken and it was more belt-tightening.

Fortunately, we became debt-free in 2005 after redeeming the mortgage on our last property. We felt at this stage of our lives, we could not afford to live on credits. Banks suggest all kinds of credit facilities via cold-calls and we do not want to hear of them.

I was not big on equity investing during those years. My first equity investment was in 1994. I used funds from my CPF account to invest in most counters under the CPF Investment Scheme (CPFIS). Equity investment amount was not big. While investors were chasing stocks, I was least interested and not party to the boom and bust of the local stock market of that period.

Now that we have some spare cash, we consider local equity investment as an important asset class. I began to focus on local listed companies which took a large proportion of my time reading up on these companies. Investment in local equity is for long-term gains and sale of shares was undertaken to realise some gains or to limit losses. Margin trading and contra-trading were avoided.

Any loss on equity investment must be something we can afford to lose. Still we stay true to being debt-free as our most important goal.

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22 December 2010

Reflections – Goodbye 2010

This year is drawing to a close. Reflections are in order.

Economy This had been a good year. Singapore economy is expected to grow strongly at 15.0 per cent pace to become the fastest growing economy of the world after the global recession in 2008/09. The economic environment is less than rosy going into the New Year. As a consequence, economic growth is expected to moderate to 4.0 to 6.0 per cent. The Straits Times Index (STI) had factored this with year-to-date rise of just 8.6 per cent for this year. (2009 saw STI jumped 64 per cent. Money was made that year.)

Investments I took the opportunity to reduce my equity portfolio, halving it and took money off the market. Profits made on sales were 18 per cent on cost, which worked out to 9 per cent per year. My current portfolio was 2.54 per cent down on cost.

I was under the impression that our Lehman Brothers’ Minibond investment was a total write-off. But we managed to recover 42 per cent of investment this year. So much for trusting an established investment bank – Lehman Brothers Inc. This is history best forgotten. We are more skeptical of structured investment products now and avoided them when we do not understand the product.

As a family, we re-balanced our investment portfolio. We took less risk and moved money to lesser risk investments, such as DBS 4.7% Preference Shares, SIA Bonds and endowment insurance plans.

Travel We visited Tokyo in August during their hot summer. This was our first trip to Japan. Our fear of not knowing the language would hinder our trip. But that was not the case and we enjoyed the trip soaking in their culture and way of life.

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This week we crossed Johor Strait and spent 4 days in Kuala Lumpur (KL). It was a shopping trip since KL was having its Year-End-Sale (YES). Days and nights were spent shopping, eating and resting in hotel. â&#x20AC;&#x192; Personal level I continued with part-time work and spent more time at home and with my family. This is my fourth year having this arrangement. I am better off and thankful to Temasek Polytechnic and friends in the institution for making this possible. There were more time for personal pursuits, such as reading, writing and spiritual development.

Hopes for 2011 My wish list includes less turbulence in the global economy, no new wars, more peace, less human tragedies and less natural disasters. I hope Singapore continues to prosper with less fortunate people being taken care of. We can lend a helping hand to these people in whatever ways we can. It needs not be donations.

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26 December 2010

Snippets of 2010

I have so much to be thankful for.

Just today, my long-time family doctor came up to me while we were shopping at Ion Orchard. We chatted a little and I realised that he would be away for a week and therefore we could not see him at his clinic as planned. Instead, he did the most unusual action of patient consultation there and then and told us to pick up the prescription for some skin conditions next week. This is customer service and great patient doctor relationship.

I have many colleagues from my last job who are good friends. They are ever so helpful. There is no request of mine that is too big to assist. I thank them all.

I began to read more fictions this year, especially during this past one month.

I had nearly forgotten the joy of completing a good novel with its beautiful writing and the twists and turns of the story line. I will continue to make time to read new fictions into the New Year.

I started Facebook in September 2009 and for past one year have been connected with friends living here and abroad. Initially, Facebook was to connect with my daughter and was to be limited to family and few friends.

However, my students got to know about it and number of friends started to grow as a result.

This blog was originally on Windows Live. It was moved to Wordpress this year and it rekindled my interest in writing. This blog was started in October 2006. Four years had passed and writing pieces with suitable material proved challenging but rewarding.

This year, I commuted more on public transportation. This is a significant departure from my past habits. I now remember bus numbers and their routes.

It saves me money and there is no stress of driving on Singapore roads.

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Finally after one year, my wife and I managed to learn Yang-style Taiji Quan and able to complete all 37 steps. Now, we spend time in some mornings with two rounds of Taiji Quan.

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25 December 2011

Recollections - 2011

Chinese New Year was celebrated like any other years. The usual reunion dinner was held at a Chinese restaurant with extended family members attending. A few days later and still within the fifteen-day celebratory period, my mother suffered a mild stroke and was warded for treatment. Luckily, no invasive operation was required but she was not as mobile as before. She recovered sufficiently as the year wore on. This is how I remember the start of 2011.

Then natural disaster struck Japan. The Japan earthquake and tsunami happened on Friday, 11 March. As if this was not bad enough, two Fukushima Daiichi nuclear reactors blew up over the same weekend. I remember fearing the worse that the nuclear crisis might erupt to something more catastrophic for the region. This disaster too came to pass and Japan has moved on.

At the start of second half, the European sovereign debt crisis became an issue that the world cannot ignore. The problem with Greece took a long while to stabilise and the contagion has spread to Italy, which is too big for a bailout. This crisis is not over and it has affected the economies of the European nations and the rest of the world.

At a personal level, my wife, my daughter and I went on a trip to Switzerland, Germany and Salzburg in June. Subsequently in October, my wife and I went to Penang for a short trip. For the first time, we went on this trip without our daughter tagging along. My daughter turned 21 this year, a milestone in itself. In December, my wife and my daughter went on a tour of Laos without me. Yet another first.

Investment Climate Singapore economy rebounded strongly in 2010 at 14.5 per cent. But it was forecast to slow to around 5 per cent this year impacted by slowing economies of US, Europe and Japan.

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The stock markets, including Singaporeâ&#x20AC;&#x2122;s, were volatile over the year caused by the uncertainties of the Eurozone sovereign debt crisis.

At the beginning of the year, few analysts predicted that the Straits Times Index (STI) would touch 3,600 points by the end of the year. Instead, 2011 started with STI at 3,190 points but as at 23 December it was down to 2,676 points, a drop of 16 per cent and not an increase of 13 per cent as predicted by the analysts. The 52-week range of STI was 2,521 and 3,280 points. Throughout the year, the STI was volatile. One can easily make a wrong bet with the direction of STI. Singapore Equity Portfolio My Singapore equity portfolio lost 13.5 per cent of it value from costs as at 23 December 2011. This was better performance than the STI. Besides equity, I bought preference shares and corporate bonds that were traded on the Singapore Exchange. These instruments held up well during the year and they cushioned the fall in value of my equity portfolio. Overall inclusive of bonds and preference shares, portfolio paper loss was 9.1 per cent.

Book losses I decided to cut losses on some of my investments this year. These investments include unit trusts on Commodity Fund, Middle East Fund and a currency linked investment. They were started in early 2008 and their values were below costs for an extended period of time. I see no reason that I can recover these costs in the future. The losses came up to 4 per cent of my total investible assets (invested or otherwise). Now, my balance sheet is rid of these underperforming investments and it saved me time from tracking their performances and not to mention the heartache associated with them.

Income earned for year With dividends and interests earned for the year, the total income came up to 1.7 per cent of my total investible assets (invested or otherwise). This return was better than the interest rates offered by local banks.

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Asset allocation I was conservative for this year. I took less risk and kept the bulk of investible assets in cash and cash equivalents as follows: Cash & Cash Equivalent 41.4% Insurance-related and structured deposits 24.4% Currency-linked investments 12.4% Singapore equity 11.0% Unit trusts 6.6% Preference shares and bonds 4.2% Looking ahead The Eurozone sovereign debt crisis will persist into 2012. President Obama is facing challenges for his re-election bid. US is still grappling with high unemployment rate. The global economy will slow as forecast by OECD, World Bank, IMF and United Nations. Singapore economy will grow slowly too because of the global condition. There is uncertainty. No one can predict how it will end.

As the 2011 draws to a close, I take this opportunity to wish all a Happy New Year in 2012. May all be well and happy. Live in the present moment, leave the future aside and address it as it comes.

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11 September 2012

One Week After Retirement

One week passed, what was I busy with?

Bookkeeping for Momshoo I spent time doing up the accounts for Momshoo, a business set up since 2009 by my daughter and wife. I am the accounts keeper, transport provider and general duty person. The production activities and creativity are beyond my purview. The accounts were late with five months worth of transactions to record. I completed the work last night and the balance sheet balanced!

Attended Opening of Pameran Poskad 2012 Exhibition I went to this Opening on the night of 6 September. Momshoo is one of the exhibitors. My daughterâ&#x20AC;&#x2122;s work is a series of hand-sewn felt biscuits packed in biscuit tin look-alike postcard-sized pockets.

Sewed a Popin Bird I sewed a second felt bird for Popin craft. The second bird was better than the first. My wife and daughter who are members involved in facilitating such event for Popin craft got me started on sewing. Blanket stitch, tying knots, hiding end of threads, starting new thread as continuation, there is so much to learn in sewing.

Closing my CPFIS account I went to CPF Board, Bishan this afternoon and closed my CPF Investment Scheme (CPFIS) account. Whatever shares remaining in this account will be transferred to my Central Depository Pte Ltd (CDP) account. This way I save on quarterly bank charges imposed by the CPFIS bank. The charges are $2 per counter kept with the bank. If you have 16 share counters, the quarterly charge is $32. This request for closure of CPFIS account can only be effected if CPF member has fulfilled the minimum sum requirements and he has reached 55 years old. Having satisfied both criteria, there is one other consideration. The closure of CPFIS account will mean that any proceed from subsequent sale of shares will not go back to memberâ&#x20AC;&#x2122;s CPF account and will not enjoy 2.5% Life Journey | 199

interest rate offered by CPF on the proceed.

Review investment portfolio in SRS I sold off a unit trust kept with my Supplementary Retirement Scheme (SRS).

This is a result of my review on my investments in SRS. The unit trust is now above cost when in the past during the global financial crisis it was hit by the crisis. I decided to lock in gains in this uncertain economic environment.

I continue to read and write blog posts. In addition, more time is allocated to keeping house. I will also spend more time volunteering at Bright Vision Hospital beyond the once-a-month haircutting activity.

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5 October 2012

My Journey on path of education

There is so much discussion about the Singapore education scene, how children are stressed, have tuition to get ahead, etc. I share how I get to where I am today.

I started primary school in early 1960s in order to place this piece of writing in context. My father was born in China and came to Singapore to find work before the Japanese Occupation. Both my mother and father had no formal education and I relied partly on my siblings to cope with my studies. Most time, it was self-reliance. Back then, tuition was unheard of, except for some wealthy families who could afford to engage private tutors.

I studied at Delta West Integrated Primary School, a school near my home.

We never thought of branded school as we knew no better. I studied hard and relied on teachers to achieve good grades, except for my poor grasp of English Language. The family environment was not conducive for me to be fluent in the language.

After the release of PSLE results, came the time to pick a secondary school.

I remember looking at Raffles Institution as a possibility but opted for middle ranking secondary school, Gan Eng Seng School, so as not to waste my first choice in case I was not good enough for Raffles Institution. Frankly, it was also because of fear of coping in a top ranking school.

I remember that during my formal education years, the Ministry of Education was always changing educational policies in my cohort. But we took it in our stride despite the changes.

After GCE â&#x20AC;&#x153;Oâ&#x20AC;? Level, my choices opened up. I chose National Junior College and tried a JC route of education. Back then NJC and Hwa Chong Junior College were the only two JCs in Singapore. I recall struggling with Physics and Economics. My classmates were coping so well that I felt inadequate.

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My GCE “A” Level results were good enough to get me through Accountancy degree in National University of Singapore. I switched focus from science-based education to business-related qualification. I did not dogmatically stick to my original educational trajectory and we could have choices to make back then. I realised that one could achieve his dream by studying diligently.

I consider myself to be a late starter. I went on to do my Master’s from NTU and came up top in Banking & Finance specialisation. My years of work life provided me a chance to excel. Both IQ and Emotional Quotient (EQ) played an important part in my educational journey.

There was no tuition and there was no parental pressure on me. I consider moral values instilled in me by my parents and siblings as more important than the grades in my educational qualifications. Some important values include: a. Be honest, which includes achieving fairly fruits of own labour. b. Be kind to others and not to cause harms to others. c. Be humble even as we are doing better than others. d. Be generous and offer assistance. e. Be thrifty and living within one’s means. f. Be hardworking and focused on task in hand.

These attributes see me through life and I am passing them on to my daughter.

Academic results follow when one put in effort. It is not an end itself. Education serves to strengthen our virtues and put us on the right path of right living.

Our teachers are there to guide us and together with my parents they put us through who we are today.

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25 December 2012

Recollections of 2012

Significant Year 2012 turned out to be significant for me. I decided on an early retirement. After twenty-five years of full-time work and six years of part-time work, I wanted to devote more time on personal pursuits and developments. Out of thirty-one years, twenty years were spent in Temasek Polytechnic, my last employer.

Since September, I do not have to keep to a schedule. There is no pressure to rush through a task. Sundays are no longer days I have to worry about lesson preparation and to be ready for the week ahead.

2012 was also the year I could decide on whether to opt for CPF Life or to stay on the existing Minimum Sum Scheme. I learned more about various CPF rules and in the process planned how to utilise my CPF funds according to my circumstances.

Change in Food Diet At the start of the year, my family had decided to stop taking meat such as chicken, duck, and pork. We felt that we could do without eating them. There is no craving and our choice is now limited to vegetarian meal, fish and seafood items. Now, we just walk pass cha siew stall, chicken rice stall, wanton mee stall without giving them a second look.

Volunteering at Bright Vision Hospital I expanded my volunteer involvement at the step-down care hospital. Besides assisting in once-a-month hair-cutting sessions for patients, I joined my wife in befriending activities of the hospital. We chatted with palliative patients in this weekly event. We offered them a listening ear and to keep their minds off their conditions. It was not so difficult as I had worried initially. At times, we ran some errands for some patients who requested food items.

Travel of the year I spent five days in Myanmar from 21 to 26 November. Places visited include Life Journey | 203

Shwedagon Pagoda in Yangon, Kyaiktiyo Pagoda (also known as the Golden Rock Pagoda) located on top of Mt. Kyaiktiyo, Aung San Bogyoke Market.

The last day was spent in Zayyar Siri Asoka Monastery in Bago where we distributed stationery items to about six hundred children and some are orphans staying in nearby villages. This trip was both memorable and meaningful.

Living Investment - Blog posts Living Investment is a blog I started in 2006 after leaving my full-time job. I had written 793 posts with average daily readership of 84. Total number of views of my blog for year-to-date was 30,200. From now on, I would write less frequently and instead spend time collating my past blog posts into meaningful themes.

Reducing expenses Now that I do not receive a salary, I focused on finding ways to reduce some recurring expenses. Because of my retired status in several professional bodies, namely CPA Australia, ICPAS, CIMA (UK) and Singapore Computer Society, my yearly membership fees were reduced significantly.

I had also decided to terminate my membership with Temasek Club, a club which I was a member for twenty-two years. Since I had not been using this club, it did not make sense to pay monthly subscription fees.

Investments This year was better than last year. We made gains on our investments (from loss in 2011). However overall returns on investments was just 2.66% for the year. The best returns came from Singapore equity (10.3%). However, overall return of 2.66% cannot beat inflation rate. The only consolation is that our income statement is positive.

Market value of total investment portfolio was just above costs (+0.15%) on an overall basis (at 19 Dec). Over the year, we re-balanced our investments to reduce risks. Investment classes include equity, bonds, currency linked investment, endowment funds and fixed deposits.

Bookkeeping for Momshoo I spent time doing up the accounts for Momshoo, a business set up since 2009 by my family. I bought an accounting package â&#x20AC;&#x201C; MYOB â&#x20AC;&#x201C; and now keep 204 | Life Journey

accounts using this package.

Reflections Only four months into retirement, how do I feel? It was fulfilling time. I was quite occupied with activities. I kept busy with family and personal matters.

Because it is early days, I am not sure how it will be like as years roll by. Letâ&#x20AC;&#x2122;s see.

During this time, I embarked on activities that I would not ordinarily do in the past. I knitted, I sew and I attended classes on Conversational Malay.

My life as a professional person dissipated on the day I left employment. There is less need to connect with people at a professional level. I used to exchange calling cards and more namecards means that I am networking more. This year, I started to throw away these cards because firstly I could not recall how I knew these people and secondly there wonâ&#x20AC;&#x2122;t be any need to meet in the future.

On a final note, I reminded myself again to live with imperfections. Things may not always go your way. I will try to let things be and let imperfections go. Live with it, bad or good, and be less disturbed and have more equanimity in my heart.

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13 June 2013

Being Papa

I dislike the portrayal of fathers “working like cows, horses and no one appreciates them”, so they deserve an OSIM massage chair on Father’s Day, says the TV advertisement. I was also motivated to write this piece after reading The Last Lecture (Lessons in Living) by Randy Pausch. Like the author, I am also a father to my daughter. To put in context, my daughter had just completed her four-year degree programme recently.

Growing up years

Art Education Both my wife and I believe in giving our daughter an education that will see her through life. We wanted her to pursue what she was interested in. She went to art classes before starting primary school and that interest carried on into secondary school and JC in the form of Art Elective programme. She did her degree in Bachelor of Fine Arts at NTU despite other choices. In 2009 together with her mother, they launched Momshoo label where she is the chief designer of many hand-made whimsical creations.

Interest in reading As a family, we like books and still are today. We brought our daughter to Borders Singapore when Borders opened its first store in 1997. All three of us would reach Borders, Wheelock Place at 9 am on Sundays (all other shops opened after 10 am) to browse for books and buy some. We are not stingy on books. We continue to buy books. Just this morning, I bought two books for my daughter at Kinokuniya on its first day of Summer Sale.

Be there for her in education From PSLE, to “O” level, “A” Level and Undergraduate programme, we supported her in education. It could simply be with her to give moral support and make stressful student life a bit more comfortable for her. We would offer ideas and help on subjects if we were competent. She refused external tuition which was a good thing. Most time, she was coping on her own, especially in later years. We took just sufficient interest in her school lives, like meeting her 206 | Life Journey

teachers, and making time to attend invitations to school events.

Multi-hat roles I wore multiple hats in the family. I am the Bookkeeper, Investment Advisor, Transport Officer besides being a parent.

When my daughter was in secondary school, I drove her to school every morning. I am the one who drives in the family and I would be happy to drive her around when the need arises, which was not too often. During these car journeys, we bonded together.

I do bookkeeping work for Momshoo and as Investment Advisor I helped to set up an equity portfolio for my daughter using her own savings. I monitor her portfolio and she is exposed to on-line trading platform.

Inculcating values As parents, we want to inculcate right values to our daughter. Some values include being morally upright (honesty is one major one), having socially acceptable behaviour (e.g. keeping foodcourt table clean while eating), independent, and have a heart for people and animals. She volunteers at Bright Vision Hospital and cares our house rabbit (Brownie) in our home. At the end of the day, she will have to be on her own and hopefully, we have prepared her for the outside world, career work or otherwise.

Giving space We believe in giving space for our daughter to lead her own life. Give her enough guidance and then get out of her way. This can strengthen her sense of independence and control. It is easier said than done but it must be so.

What makes me happy I do not need a special day to celebrate being a father. I feel happiest just to be with my daughter and my wife. A simple meal together at coffee shop is good enough. If we can travel together on a holiday, that will be a big bonus. My wife and daughter were good at planning itinerary and I just relaxed on these trips.

Life Journey | 207

26 July 2013

Celebrating Learning with Shu

Four years ago, I drove my daughter, Shu, to NTU and took a wrong turn at Jalan Bahar. She was enrolled in the School of Art, Design and Media (ADM) reading Bachelor of Fine Arts. Yesterday, I drove again to NTU, on the same road so familiar to me now, to attend Shuâ&#x20AC;&#x2122;s convocation. I remember helping Shu to settle in Hall of Residence in her first year. We brought brooms, mops and pails to clean her room!

ADM was established in 2005. Shu was in the fifth batch. Why choose a fine arts/design course when she had been a science student all along during her secondary school and JC days? Shu had choices of degree programmes to pursue, from medicine to accountancy, courses that offer job opportunities and better salary. In the case of ADM, full-time permanent employment rate was only 61.9% and median basic monthly salary was $2,700 (based on 2012 Graduate Employment Survey).

Cohort size for the pioneer batch of ADM was 100 increasing to 168 graduates for this year. NAFA and LaSalle College of Arts also produce their own graduates for the industry. There is competition for jobs. We also know that design was not such a big thing in Singapore, unlike countries like United States, Japan, Germany, South Korea etc. Good designs sell products like hotcake. So why choose fine arts/design?

Shu was also an art elective student for six years in secondary school and JC. She found her passion in this area of study and as parents we supported her decision. Passion triumphed over reality of job opportunities. Four years of study passed quickly and Shu is happy with the learning journey.

It was also in 2009, when Shu and her mother started a venture using the label Momshoo. Momshoo is all about handmade items that are unique and personal, very much like a home-made gift from a friend. Shu dabbles with design to create saleable items, putting her creative flair to good use.

208 | Life Journey

I was so used to graduation ceremonies, having been on the academic side of such ceremonies seeing our students receiving scrolls on stage. I went through two ceremonies myself as a graduating student. Yesterdayâ&#x20AC;&#x2122;s convocation was my first as a parent.

How do I feel? I woke up early in the morning excited and we left the house early to beat the PIE morning traffic going towards Tuas. Because of the early morning rain, traffic was slow-moving. I was slightly anxious worrying that I might not get a car-park lot nearer to Nanyang Auditorium. Luckily, the rain stopped and I got my covered car-park lot! We did not feel rushed and was able to get good seats in the auditorium. I did what most parents would do; take photographs and video of Shu going on stage to receive her scroll. 30 seconds was all it took. Thatâ&#x20AC;&#x2122;s it for fours years of study!

We are proud of Shu and celebrated her learning journey. It was sometimes stressful but on the whole a very good journey.

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Glossary

Financial Management - Main aim of financial management is to maximise oneâ&#x20AC;&#x2122;s wealth through financial and economic principles. Finance looks at sources and uses of funds to achieve the main aim. Financial principles would include concepts such as time value of money, risk returns tradeoff, cost of capital, etc. Economic principles cover scarcity of resources and how best to allocate limited resources to investments to maximise returns on investments.

Investments - Investments offer returns and cover many investment instruments such as equity, bonds, currencies, commodities, properties, derivatives, etc. One decides on what to invest in for maximum return. It covers valuation and application of various investment instruments with regard to risk and expected return.

Retirement Planning - It is financial planning applied towards retirement from job market. How much to save and invest in assets in order to continue to receive sums of money in future for spending? It also covers Central Provident Fund, annuity, insurance, medical insurance.

Living Tips - Ideas on good and healthy living for both body and mind.

Life Journey â&#x20AC;&#x201C; Description of writerâ&#x20AC;&#x2122;s life journey and milestones in life.

References

Books: Mark Daniell & Karin Sixl-Daniell. (2006). Wealth Wisdom for Everyone.

Singapore. World Scientific.

George S. Clason. (1988). The Richest Man in Babylon. New York. Penguin Books.

Robert G. Hagstrom, Jr. (1994). The Warren Buffett Way. USA. John Wiley & Sons.

Janet Lowe. (1995). Benjamin Graham on Value Investing. London. Pitman Publishing Benjamin Graham. (2003). The Intelligent Investor: The Definitive Book on Value Investing. HarperBusiness.

Peter Lynch with John Rothchild. (2000) One Up On Wall Street. Simon & Schuster.

Philip A. Fisher. (2003). Common Stocks and Uncommon Profits. John Wiley & Sons.

Elaine St. James. (1994). Simplify Your Life. New York. Hyperion.

Michael Phillips & Catherine Campbell. (1984). Simple Living Investments. San Francisco. Clear Glass Publishing.

A.A. Groppelli & Ehsan Nikbakht. (2000). Finance. New York: Barronâ&#x20AC;&#x2122;s.

Lewis J. Altfest. (2007). Personal Financial Planning. New York. McGraw-Hill.

Koh Seng Kee & Fong Wai Mun. (1999). Personal Financial Planning. Singapore.

Prentice Hall.

Michael Parkin. Ninth Edition. (2010). Economics. USA. Pearson Education.

Websites: Monetary Authority of Singapore. http://www.mas.gov.sg Central Provident Fund Board. http://www.cpf.gov.sg Supplementary Retirement Scheme. http://app.mof.gov.sg/supplementary_ retirement_scheme.aspx Singapore Stock Exchange. http://www.sgx.com Ministry of Manpower. http://www.mom.gov.sg Ministry of Trade and Industry. http://www.mti.gov.sg Singapore Department of Statistics. http://www.singstat.gov.sg/ Singapore Economic Development Board. http://www.edb.gov.sg International Enterprise Singapore. http://www.iesingapore.gov.sg/ Life Insurance Association Singapore. http://www.lia.org.sg/ Singapore Institute of Purchasing and Materials Management. http://www.sipmm.org.sg/

The Companies Act, Chapter 50. http://statutes.agc.gov.sg Yahoo! Finance http://sg.finance.yahoo.com/ International Monetary Fund. http://www.imf.org Reuters. http://www.reuters.com/ House Rabbit Society of Singapore. http://www.hrss.net Bright Vision Hospital. http://www.bvh.org.sg/ Magazines and Newspapers: Time Newsweek The Straits Times The Business Times Reuters News Readerâ&#x20AC;&#x2122;s Digest INTHEBLACK, a publication by CPA Australia

About the author

Back in July 2006, I formally tendered my resignation as Deputy Director of School of Business, Temasek Polytechnic (TP). I was then forty-nine years old and had been working for twenty-five years, last fourteen years in TP. The first eleven years after graduation was with the public accounting firm, Coopers & Lybrand (now PriceWaterhouseCoopers). I rose through the ranks to become Senior Manager when I decided to switch career. So I had two employers in all twenty-five years, a rare phenomenon in current job environment. While in TP, I completed a Master of Business Administration (MBA) on a TP scholarship where I came up top in class in the specialisation of Banking & Finance.

I felt that all these trainings and experiences would go to waste if I retired and not do anything. I have the credential and because I could afford to retire at an early age, I wanted to write meaningful blog posts to share my life experiences.

Hence, I started my blog Living Investment with my first post on 9 October 2006. www.limkimtong.wordpress.com The intention of setting up this blog is to share some of my experiences in Living Well with Peace, hence I adopted the name Living Investment for my blog. Most of it covers financial management, investments and retirement planning matters. Some good practices came about because they yielded results and because some did not and hence valuable lessons were learned not to repeat them.

I am married for twenty-six years now and have a daughter who had just completed her undergraduate study. Raising a family is every parentâ&#x20AC;&#x2122;s responsibility and to do it well can be challenging at times. My attempt at writing living tips and life journey covers my experiences of living out this precious life. It is also my way of documenting them to serve as memories of my past. When one gets older, memories fade so it is important to write them down as they happened.

I count myself very fortunate. I began to take a keen interest in spiritual development when I went into retirement. When I was working, stress level

was tremendous. Health was an issue. I had this condition known as Irritable Bowel Syndrome for many years. In 2005, my left eye failed me. I was inflicted with age-related macular degeneration (AMD). I continue to live with this condition and fortunately my right eye is still functioning well.

It was after retirement that I became active in volunteer work at Bright Vision Hospital. Volunteer works include befriending palliative patients, assisting hairdressers in cutting the patientsâ&#x20AC;&#x2122; hair, and taking patients out on outings.

This book is a compilation of some of my favourite and meaningful blog posts.

I got my daughter who has a Bachelor of Fine Arts degree to help me provide art-work and illustrations to liven this book.

In 2006, I took a bold decision to quit the corporate rat race when I was for ty-nine years old. Living Investment â&#x20AC;&#x201C; the name of my blog â&#x20AC;&#x201C; was star ted to record the experiences of a retired gentleman.

Living Investment that covers financial matters, living tips and life journey was intended to leave behind a legacy for my family and friends.

This book was conceptualised to bring the best blog posts into a handy booklet. It is hoped that readers can gain valuable insights of living well without the worry of money.