Getting my spouse to go along with my frugal plans

Doing it on our own self, it's easier. Influencing others is much harder.

Ask yourself this question. How many times have you tried to convince others - friends or families - to live frugally by spending lesser and saving more and how many times have you succeeded. Many times, the impact to our lives is small as these people have their own problems with their own solutions. But family is a bit different. Take our spouse for example. Imagine yourself being the sole bread winner of the family bringing money home each month to pay off household expenses, only to find your spouse spending it all. This could be disaster.

To me, choosing the right partner with similar mindset and goals as ourselves is a crucial stage before marriage. It is much easier to live a frugal lifestyle if both are frugal to begin with. But in life, we never get things done our way. Usually there would be some sort of differences in opinions that makes our life more "exciting". Anyway, going back to this, if your spouse has a bad spending habit that you feel you needed to tame off, here are some things you could do.

1.) Share your roadmap plans for the next 5/10/15 years

In this blog, I often shared my roadmap plans for my financial freedom and I do that regularly with my spouse as well. I feel that it is important to share goals that are not only important to myself but also goals that are achievable and the many things we can plan ahead once we reach that stage. When we do this, we try to look at things as objectively as possible, even when there are difficulties along the way.

2.) Lead by example

Here, we are referring to doing more actions and less on talking.

If we lead by example by living a frugal lifestyle, we send out intentions that we really care about putting the money to a better use for the family instead of spending them away rashessly.

For example, if you are able to convince the difference between a necessity and luxury item, sooner or later, your partner will follow your spending pattern.

3.) Keep your other half's spending in check

This is about keeping each other's spending in check when one buys an item.

It may not necessarily be for every single item. You could do this once a month when the two of you sits down and review your historical expenses.

Another way to do this is to open up a separate account that both of you can use to spend on items you need each month. 

There are many ways you can make this work. 

There are many people who I'm sure would argue that if both couples are working, then what's wrong with spending money that we had hardworkingly earned. My answer is simple. Sure you can spend the money you earned to a certain extent but at the end, we are still talking about a family obligations that both of you would be responsible for. Taking responsibility of our own matter in advance is better than finding solutions to save the situation.

Lippo Mall Indonesia Retail Trust (LMIR) - Interview with the management

I had a chance to have a one-on-one interview with the management of Lippo Mall Indonesia Retail Trust (LMIR) this afternoon. The top 3 management - Mr. Alvin (CEO), Mr. Lo (CFO) and Mr. Wong (Financial Controller) were all present during the short 1 hour meet-up.

 

 

 

It was a great chance to have a close up understanding on their views of where the Reit direction is going to go in the next couple of years and I will try my best to share as much as possible from this meeting.

 

The first question which many of the investors have similarly asked I am sure is why would they have their lease income to be denominated in their home currency (IDR) while holding debt in SGD. As much as I have guessed, the reason is because they would be able to save the interest charges from the much lower interest rates we have in Singapore as compared to Indonesia. However, they would still be bearing the risk of a volatile currency movement, if unhedged.

 

As much as they have hedged exchange currency risk between IDR and SGD, the plunge in IDR we saw in the past couple of months prove too much to impact the bottomline and DPU to unitholders suffered as a result from what we saw in their recent Q1 results. This is despite having year on year growth in both gross income and net property income in absolute IDR figures.

 

I also asked about their recent placement in Nov last year and whether it is becoming increasingly difficult to find acquisition in Indonesia that are yield accretive to investors. The CFO mentioned that unlike other Reits in Singapore which grows over time mostly via organic growth rather than via acquisition (because of land scarcity in Singapore), LMIR has many pipelines of assets from their parent group that they can acquire that can immediately be yield accretive. Being a non-vested shareholder at this point, I am unable to comment on his statement.

 

Overall it was a good quick chat with the management team and they were very friendly. It was first the business then the direction then the things they do in the office with regards to their everyday job. It was a nice sharing and experience overall.

"Discipline" for proper handling of funds for your child's University expenses

The EDGE publication for this week edition wrote an article about how you can ensure your child's proper handling of the funds you have saved up for his/her University expenses.

This can be a long and daunting process if you are a new parent as you probably need to be doing this over the course of the full 21 years. Multiply these numbers by the number of children you have and you know that "discipline" plays an important part.

There are 2 parts of the "discipline" that can take precedence. One is the discipline from the parents and another is the discipline from the child. If either one of the two lacks the discipline, then the consequences could be severe.

1.) Discipline - from parents

For parents of a new born baby, this means that you probably need to start saving right from the start when your baby is born until the day he/she turns 21. The good thing is time is on your side and you can save minimally each month such that your daily activities would not be impacted. Additional income such as the baby shower angbao and New Year angbao from relatives and friends can also be channeled into this account. Alternatively, you can set up an endowment plan for your child by putting in small amount of money each month to ensure that sufficient amount of the child's University expenses are met when he or she turns 21.

My case: I am still figuring out whether I should be saving them on my own by opening a separate account for my son or use an endowment plan that could give me higher returns than fixed deposits in banks. The advantage of the latter is probably the higher interest rate that could combat the rising inflation but given other commitments I have (such as my monthly life insurance for 15 years), I wouldn't want to commit to another fixed plans over the long run. Saving up on my own would ensure more flexibility but again this amount would lose to inflation over time.

2.) Discipline - from child

On the other hand, proper discipline needs to also be accounted from your child when he or she turns 21. Imagine the amount of money that you have saved up all these while for his or her education expenses goes into unnecessary expenses like buying luxury goods on car and clothing if your child lacks the discipline. The end result could be much worse than we thought. By opening up an account and saving these monthly funds under your child's name, the funds could be withdrawn for potentially unnecessary expenses.

My case: While I have not gone through this stage yet, I am planning to instill tight financial discipline right from the start by teaching him the proper ways to handle money. To do this, I can monitor over time on how he spends his weekly allowances for example and whether he has saved up any excess allowance he doesn't need to spend on. Peer pressure and temptation could play a big part in our society here, so it is important that the family leads by example right from the start.

What about you? Any better ways you think parents could use to educate their kids?

Project Survey $60 incentive - PM if you are interested

I thought I could perhaps share this with the larger community.

This is a survey which I have went last week. The extra incentive is not too bad, it's about $60 for 45 minutes. I am not able to disclose the objective or anything about the survey but all I can say is this is totally free money if you have the time to do it. 

If you are interested, please leave me a message before the slot time and I will forward to the interviewer on a first come basis. Please note that you will need to meet the criteria strictly below:

Status: Singapore Permanent Resident

Work: Must not work in industry related to Advertising, Banking and Insurance

Incentive: $60/45 min

Location: Newton

Time-slot: 26th May 2014, Monday or 27th May 2014, Tuesday

9am, 9.30am, 10am, 10.30am, 11am, 11.30am, 12pm,

2.30pm, 3pm, 3.30pm, 4pm, 4.30pm

METHOD OF RESEARCH

All respondents are just required to watch a 45 mins video clip when they are here.

When respondents watch the video clip, they will be wearing an EEG (electroencephalography) cap,

which looks like a swimming cap with small holes. We will be applying some gel into the holes

and then place sensors onto the cap which will pick up their responses. The sensors will not touch

their head, only the gel will. The sensors do not emit anything, they only provide measurement.

 

Respondents must come with clean and dry hair, without applying any hair products (e.g. gel, mousse, spray, etc)

 

** Smoker - Must not smoke 1 hr before their scheduled appointment

** All must be Right Handed

** All mother currently not pregnant or nursing

Bar Scanning Code - Will this work in Singapore?

As a Reit investor, one of the objective we would like to see from the management is to increase DPU over time through both organic and inorganic growth. For organic growth, this probably means that they will need to increase their rental over time, passing down the costs to retail tenants who will be increasingly under pressure to outperform their rental lease rate.

I've been learning about strategy concept this past week and one of the professor in our class introduced us to this concept - a Tesco Homeplus Virtual Store. The concept is simple. Targeted at busy professionals who does not have the time to do grocery shopping, the items that are similarly available in the supermarket are now placed at the subway in the form of QR Code. Retailers can then use their smartphone to scan and proceed to checkout systemically and the order will be delivered right at your doorstep. For those who've been to Korea, I think you would have seen this. Think this business model might appeal to Singapore?

What are the things that might or might not work with this business model? Definitely something to consider for supermarts like NTUC or cold storage who would like to increase their online sales and to deter the increasing rental from REITS.

Vicom - Is special dividend going to increase again this year?

We know that Vicom is a cash-rich company that has made consecutive growth of profits year after year.

However,with the recent announcement of results for Q1 FY14 and with Cash & Cash Equivalent finally reaching top of 50% on the overall total asset, the question is whether the management is going to increase Vicom's special dividend again this year?

	Cash & Cash Equivalent ($m)	% of Total Asset	CAPEX Requirement ($m)	Net FCF ($m)
2008	28.3	31.3%	(4.5)	13.7
2009	42.5	40.6%	(7.9)	14.7
2010	49.2	41.6%	(11.1)	6.7
2011	55.2	41.2%	(12.2)	5.9
2012	66.0	45.5%	(4.6)	11.0
2013	78.5	49.6%	(3.9)	12.5
2014*	85.0	51.7%	(1.4)	6.4

*Q1 FY14

A look at their cash and cash equivalent and you would know that the company is holding a humongous piece of cash as an asset here. Based on the annual report for 2013, the company placed most of these cash into fixed deposits yielding an effective interest rate of between 0.33% to 0.85% (2012: 0.48% to 0.85%). If you ask me, that's not the best capital allocation with interest yielding so low in fixed deposit.

A quick look at their CAPEX requirement and it shows that they require little to maintain its business. The only requirement for CAPEX was for the "Purchase of vehicles, premises and equipment funding from the LTA". The company has been generating positive cash flow for the past couple of years, contributing to the increase in their cash holdings.

With cash and cash equivalent now representing 51.7% of the total assets, I would actually like to see them distributing more special dividends to shareholders. We know that special dividend has been gradually increasing year on year, and it was only last year that we saw special dividends doubled from 3.2 cents to 6.4 cents, but you get the feeling that investors want more from the company, especially now at current price where the dividend yield is only at 3.7%. Perhaps, investors could allocate these funds at a higher rate than the fixed deposits they are putting at right now.

If I have to make a bold prediction, I reckon we will probably see at least another 50% increase in special dividend this year to 8 cents, assuming no acquisition or any other CAPEX requirement are made. The company should still be able to payout the 8 cents, still maintain their huge allocation of cash, and satisfy those yield hunger investors.

As an investor, I hope it will materialize and if that happens, we'll probably see its stock price hitting roof beyond the $6 mark really soon.

"May 14" - SG Transactions & Portfolio Update"

No.	Counters	No. of Lots	Market Price (SGD)	Total Value (SGD) based on market price	Allocation %
1.	FraserCenter Point Trust	30	1.825	54,750.00	22.0%
2.	Vicom	6	5.83	34,980.00	14.0%
3.	SembCorp Ind	5	5.40	27,000.00	11.0%
4.	SPH	5	4.20	21,000.00	8.0%
5.	Ascott Reit	15	1.195	17,925.00	7.0%
6.	Mapletree Greater China Commercial Trust	20	0.86	17,200.00	7.0%
7.	China Merchant Pacific	17	0.955	16,235.00	6.0%
8.	FraserCommercial Trust	11	1.285	14,135.00	6.0%
9.	Neratel	20	0.715	14,300.00	6.0%
10.	First Reit	10	1.16	11,600.00	5.0%
11.	ST Engineering	3	3.84	11,520.00	5.0%
12.	Second Chance	13	0.455	5,915.00	2.0%
13.	Ascendas Hosp. Trust	7	0.715	5,005.00	2.0%
14.	Mapletree Logistic Trust	1	1.135	1,135.00	1.0%
	Total SGD			252,700.00	100.00%

For the month of May, I took the chance to liquidate a small portion of First Reit at $1.185. The stock has not gone to approximately 5% of my entire portfolio. I thought price ran up quite a bit since the last we saw near the $1 mark, so thought at $1.185 it represents a good opportunity to take some profit.

I also accumulated China Merchant Pacific for this month. Based on a thorough review at InvesmentMoat, I liked how the management is prudent about its capital allocation and debt management. At current price, the stock is attractively yielding 7.2% while it only represents some 52% payout. Operating Free Cash Flow is also stable and generating cash inflow positively.

The portfolio has gone slightly down from the previous month due to many of the stocks going ex-dividend this month. While it appears otherwise, I am not too concerned about the change in the price. Let's stay calm, rationale and be prepared for opportunities that come our way.

Dedicated to the Ultimate job of all time

This post is dedicated to the one and only mother of our baby Oscar and also to every mother in the world.

It is a role which pays next to nothing but the amount of dedicated hours needed to take care of the children is immensely huge. There are no emergency, sick and vacation leave, not even a weekend day off.

Their contributions to the family cannot be put to a monetary value because this is unconditional love they bring to the family.

To all mothers out there and my wife in particular, wishing you a Happy Mothers Day and thank you for your all the sacrifices you have made :)

*adapted from Jobstreet via IMoney

Dividend Income for May - Fruits of Our Freedom

The month of May has been my favorite month of the year because of dividends that start pouring in, rewarding shareholders that believe in the company throughout the thick and thin.

I love dividends simply because they are hard actual figures that anyone anywhere in the world can earn. They represent the fruit of my labor which I have built up over the past couple of years. When you see your dividend income grows over time, you know that your past hard work has finally paid off. The best thing about this is I have created a system where it will auto-generate passive income for me the following year the same time, again and again, until the day the I never see another day.

Dividend investing is a fantastic strategy in my opinion. Rising dividend income is usually most predictable and can be used as a cash inflow to dictate our expenses during the month and for budgeting purpose the next couple of months. Most notably, they can one day replace your active income without having your physical presence to manage the day to day business. Someone is there for you to do the job!!

It's a fantastic feeling to be receiving S$6,132.00 in dividend income this month. This alone is already more than the salary I received from my company. With the money, I will probably use a portion to finance my May and Jun expenses and re-invest the rest into some quality stocks that could give me higher dividends in the future. What a nice cycle to be in.

Companies	Total Dividends ($)
FraserCenterpoint Trust	864.00
Vicom	870.00
Sembcorp Ind	850.00
SPH	350.00
FraserCommercial Trust	225.50
Neratel	800.00
First Reit	258.70
ST Engineering	360.00
MGCCT	620.00
China Merchant Pacific	722.50
Ascendas Hospitality Trust	192.50
Mapletree Log Trust	18.90
	6,132.10

I hope that for those who are just starting out, that it is important not to give up at the early stage. The fruits and dividends you will receive will make your investment and journey all these while worth the every single effort you put in today.

Sembcorp Industries - Q1 FY14 Results

Sembcorp Industries has just release its first quarter set of results for FY14. The highlights were:

• Turnover  at $2.6 billion, up 12%
• Profit from Operations at $300.9 million, down 4%
• Net Profit at $184.8 million, up 5%
• EPS at 10.3 cents
• ROE (annualised) at 13.5%

My thoughts

Following my post back in Feb, we would have expected a much improved results for the first quarter. It appears that following the de-consolidation of Salalah, revenue and gross profit for the utilities sector was expectedly going to be affected. Nevertheless, the sector still managed to turn in some growth in its net profits, up 3% from the previous year.

As expected, contributions from overseas operations were going to be crucial for the growth in this sector. China overseas operations grow 33% to $16.7 million while the Singapore operations were growing only marginally. Moving forward, we should expect continuous growth from the overseas segment while the Singapore operations will tend to slow down due to intense competition.

The Marine business has also turned in improved profits from previous year, up 3%. Moving forward, we should be able to see marginal growth in this sector while its Brazil yard kicks off.

Q1 is usually the weaker quarter amongst the rest so we should see increase EPS once the next few quarters came in.

At $5.35, it appears that the price were still quite decent and investors are not yet accounting for its prospects of future growth. We hope and see and I believe they should perform quite well by the end of this FY14.