31 March 2007

Get prepared... With Education

After sharing an article regarding the US housing market situation, a friend replied with a one-liner thank you email. I shared near to a page of reply after that. Not sure if people are going to get sick of my reply if i do keep sharing of such long reply to a 1-liner thanks in future. lolz

Below is what i'd shared.


There are a few good key issues to watch out for at this point in time:

1. US Housing Market. If the bubble really burst, get really for a mild recession to follow thereafter.

2. Middle East. The last Iraq war caused a longer than expected correction in May/Jun 06. As the war fueled the rise of the oil price ($77 at a high point), which affects corporate earnings, market corrected itself by devaluing in share prices. What if this is combined with S/N 1 above?

3. Yen Carry Trade. There are a lot, and I mean A LOT, of traders borrowed cheap money from Japan (then their interest rate is only 0.25%), and invest into other higher yield products or markets for the past few years. This fueled growth in quite a few markets, especially in Asia. Imagine if Japan increase their interest rate subsequently (which they intend to do so and has started doing it), these traders will has to unwind their earlier investments done using these cheap money. Wow! I cannot imagine how deep is the ocean if these are combined with S/N 1 & 2 above. How not to expect a Great Stock Market Sale!?!?

What this means to traders and investors are, in my opinion, as follows:

1. SHORT (http://www.investopedia.com/terms/s/shortselling.asp) the market if you can catch the crash coming.

2. If you missed the crash or do not know how to short, then wait for 6 months to a year for the southwards momemtum to subside. Then go shopping during this Great Stock Market Sale!

So what we can do now is:

1. Increase your financial education. As fast as you can, steepen your learning curve now. Albert Einstean once said, “Keep doing an the same action and expect a different result is insanity”. True enough, so far I have not come across an investor that makes it big” by being lazy. No, not meet one yet. Majority I know or have read had put in their hard work educating themselves before they see L.U.C.K. in their undertakings. So continue to be lazy by not putting effort to increase your financial literacy, and yet at the same time wish to be rich is what Albert called an Insane. Abrahim Lincoln once said, "If i have 6 hours to chop a tree, i will spend 4 hours sharpening the axe". So sharpen you axe now.

2. Save. Save as much as you can, as hard as you can, as crazy as you can. When the market crash, Cash is King. There is this saying, “Save when the Bull is running, Buy when the Bear is out”. Of course, this “Truth” is kind of going against our emotions of greed and fear. How can you possibly stand aside when the bull is running and every traders (or they call themselves investors, whatever) around you are making tonnes of money from the market? When the market crashed and the Bear is out, every traders (or they call themselves investors, whatever) avoid the market and keep their cash. Then you go on a buying spree and subject yourself to uneasy views from these traders, reading their mind that says, “This guy is siao one”. After 1 year of trading and investing, I am still trying to get a good handle over greed and fear. This takes practice. But the easiest thing we can do during this period of the bull is to Save and build our first pot of capital. It will come in handy when the Stock Market Sales comes. See alternative saving strategy (http://ongcherhowe.blogspot.com/2006/11/singapore-treasury-bills-as.html)

3. Patience. One of Warren Buffet’s key strength is patience. Not because of his old age and lack of energy. But I feel that he mind is just like a lion, lying low, observing his prey, and pounces only when the time is right. There must be a good reason (or reasons) for his success till today. I do like to think and believe that this virtue, Patience, is one of them.

While the biggest crash of this century may not come in 2007, 2008, wait untill the baby boomers start to retire and will be forced, by law in the US, to liquidate their investments. This group has invested for the past 40 over years and imagine the compounding effect of their investment by now. Their no.s goes by the million and increses every year thereafter. Get ready your ark. This coming wave is going to give us a very rough ride. (Tinker… The Great Depression is great. Define great as stock market losing 90% of their value over a year.) A good read on the coming depression can be found at my buddy's blog (http://ongcherhowe.blogspot.com/2006/11/part-i-great-depression-no-2-coming.html)

Happy Learning,

“When I Stop Learning, I Stop Living”

25 March 2007

The Power of Free Time

One of the key difference between Rich, the Poor and the Middle Class is how they utilise their spare and free time. How are you spending yours?

I'd realised the power of free time at a time when TIME becomes a premium. There are so much to do (or rather to read) and yet there is so little time. All of us have 24 hours a day. Some monsters will tell you they have 25 hrs a day. I cannot comprehend this part of the calculation so I don't bother. TIME is indeed a premium resource that cannot afford to be wasted away just like that. It is the most valuable asset that each of us have.

How I use my free time basically will determine my future. This is the power.

During my secondary school days, my hobby is to play computer games. Then my father bought a XT computer (the fastest processor speed it can offer was 4 Mhz) to do his work. When he is not using it, I will.... be playing computer games. And I will be playing with all the spare time I can spare lor. I can play until into the middle of the night and will only stop when it is time to prepare to go to school.

Strange... no one really taught me how to use the various DOS commands (then Windows is still not popular yet so everything is by command line) but I know the need to know the employment of the commands, so that I can load my computer game and play it. I even took the initiative to borrow books from library just to learn more about computing. My learning curve was so steep that my computer club teacher realise it and made me the Chairman of the school computer club. Haha... actually nothing to do as the Chairman, just share with my fellow school mates how to programme simple games using basic programming language. During my poly days, my hobby evolved into programming utilities using C++. C++ was a computing language that I needed to learn then as a subject. I had so much fun programming away and spent my free time learning techniques and tricks beyond the textbook. To pass in modules that involves computer or programming was a breeze to me. And I never fail to get good grades for these subjects. Why?

Why?! Pretty obvious right? For 7 years, I'd spent my spare time programming, or do programming related activities. Every books I'd read are on programming. All these because I love programming then. Nothing can stop me. It naturally becomes a natural instinct to me. Programming, programming, programming.

Of course, other then programming, I do continue my hobby of playing computer games. This is where I started it anyway. And I was so good at all the games I'd played then. No horse run siah!

When I started work in my current company, all my spare time was used for work. Other than work, socialising. I have tonnes of friends who can socialise with me too. I was a spender, a generous one somemore. And this attracted alot of friends who socialised to socialise with me. Work performance improves, friends network expanded. I have no time for myself though. I began to burn out. So i thought why not tone down on some activities and I can breathe better. I did... tone down on socialising. All my spare time goes into work. Suete right!

My recent neck injury has triggered me to think slightly ahead about my future. What do I really want in this lifetime. Life became more purposeful with a defined purpose. I try to strike a work-life balance. I plan up to 15 years ahead. Most importantly, I found my first pot of gold and I started investing for my future. I love this new journey.

My first pot of gold is my financial knowledge and I am constantly investing my free time to expand and deepen this knowledge. In less than a year, I'd cleared two consumer loans and changed my financial situation of living from paycheque-to-paycheque to having free cash flow for asset investment. All this can happen because I'd spent my free time to improve my financial knowldege and that's why I understand personal cash flow is very important. Most of the time I will carry a book with me. Whenever there is waiting time in between appointments or meetings, I will utilise that waiting time to red. It works wonder.

So what happened after one year of the new found way of spending my free time? I feel richer now in cognitive and monetary sense. All these just by spending my free time to expand my financial knowledge.

Have you ever observe on how do you utilise you free time? Playing computer games? Talk on the phone? Shopping? Drink coffee with friends? Disco? KTV? What you invest with your free time will determine what you will become in the future. So use it wisely.

Till then, it is time for me to sleep liao. Good night!

Leroy Ang
"When I Stop Learning, I stop Livng"

22 March 2007

How to Learn?

I was reading this article from a newsletter sent to me from The MASIE Center (http://www.masieweb.com/), and one of the short article caught my eyes and freezed my mind for a while... and it set me thinking. How do I learn? Below is an extract from the newsletter:

Trainer's Tip: Ask Them How They Learn! One of my favorite questions to ask learners attending a classroom based program is: "How do you learn?" Ask the question and be quiet for a full minute. Just listen and they will tell you an incredible amount about how to help them succeed as learners.

One of my mentor shared with me this model on learning, which i found extremely useful. Seems very theoritical, yet effectiveness depends largely on how you apply the concept. The model raised my awareness of how i can accelerate and steepen my learning curve, and it have been helping me to accelerate and steepen my learning curve since. It is called the Active Learning Model. The link to this model can be found @ http://honolulu.hawaii.edu/intranet/committees/FacDevCom/guidebk/teachtip/active.htm

Blogging is one way I talked to myself, my inner self. Blogging requires deep thinking to happen before I am able to spit out my digested thoughts, in words. Some call it journaling, others called it reflection. More importantly, make your learning double-looped.

Let's activate the Power of Sharing (http://leroyang.blogspot.com/2007/02/power-of-sharing.html) and accelerate our learning further. Share with me how you learn or how you improve your learning by using the comment feature below.


"When I Stop Learning, I Stop Living"

16 March 2007

Standard Chartered eSaver - Investment made easy

Updated on 8 Feb 08:

The link to Singapore Inflation Index, aka Consumer Price Index, has been updated to http://www.singstat.gov.sg


Original on 16 Mar 07:

As a citizen, the bare minimum financial knowledge we should know are:

1. Inflation Rate
2. Bank Interest Rate

Money has a time value. The reason for this value is due to inflation rate. Money gets smaller in value as times goes by. 10 years ago, a McDonalds burger meal cost only S$3.50, but now it cost nearly S$6! As at time of this writing, Singapore’s inflation rate now is 1.4%. Check out the latest inflation rate @

Those who do not have knowledge on how investment works or which investment to enter into, the easier investment, which even my grandmother can understand, is what the bank can give you on your deposit in terms of interest rate.

If your think that POSB is short-changing you, you are most probably right. They are offering only 0.25% interests per annum for the deposit amount that most of us have in their bank. Subtract this from the current inflation rate and it is not difficult to realise that your bank deposit is now losing 1.15% worth of value now. I mean NOW.

"How to overcome this as a layman citizen", you may ask. "I am not savvy in investments". Educate yourself. I am not telling you to take up a course about investment right away. I am not telling you to read a lot of books or articles right away. But the bare minimum you can do is, Research.

The very fact that you are reading this shows that there is a very high possibility that you are computer literate and internet friendly. If this is the case search online for the best interest rate that our local banks offer. It's a 10 min task only.

For a start, the simplest investment instrument I can guide you to is Standard Chartered eSaver (
www.standardchartered.com.sg). It’s a simple saving account offering 1.8% interest per annum now. I mean NOW. Since it is just a saving account, there is no lock-in period. The beautiful lady at the counter told me that I can start opening one with them with as little as $10.

You may be asking how can this be so good? There must be a catch somewhere. You are right! There is a catch, and the catch is… There is no physical bank statement to be sent to you every month. You don’t have a bank book to update your transaction records. Everything is done online. Yes, everything. That’s why they can cut cost and pump their savings to us in terms of better interest rates.

The very fact that you are reading this email shows that there is a very high possibility that you are computer literate and internet friendly. If this is the case, what are you waiting for? What is stopping you from opening an eSaver account now? Doesn’t it make more sense to you to park your cash in eSaver account with 1.8% interest rate (effective difference of 0.4% to inflation rate) right away?!

To quote Robert T. Kiyosaki, “Investment in your financial education can pay a greater percentage return, even on something as simple as a savings account.”

All you need to do is to invest your time (which is free) to gain education (Knowledge, Skills and Experience). The higher your financial IQ the less money it takes to get rich. It is not difficult to spot opportunities to make more money after that, or at least don't lose money even if your money stands still. So you see, investment is easy, with some education, ya. ;-)


"When I Stop Learning, I Stop Living"

14 March 2007

BIG e by Aviva - Good buy?

Updated on 8 Feb 08:

The link to the Singapore Inflation Index, aka Consumer Price Index, has been updated in the original post to http://www.singstat.gov.sg


Original Post on 14 Mar 07.

I'd received a sharing recently from a friend who highlighted a new CPF-Approved investment product by Aviva called, BIG e. More details about this product can be obtained @ http://www.avivadirect.sg/bige.

I took a look at the product and did some sharing of my views on it. And at the same time, i took the opportunity to share a few more cents worth of other perspectives. Below are my sharing.



Thanks for sharing. It doesn’t really matter on whether you have vested interest in it or not. It’s still great to share info. There is a lot of hidden power in sharing.

And it’s good to be risk adverse. I paid a few $K to learn this lesson.

I went thru the website and product spec. If it’s an investment, I will study it from the perspective of an investment. The insurance part is just a good to have feature and does not generate cash flow into our pockets.

This product is VERY, VERY, VERY RISKY. Yes, you are not seeing things. I wrote VERY, VERY, VERY RISKY. Allow me to elaborate further:

1. Given principal-secured clause does not mean “risk-free”. The only risk-free product I see on the market is Singapore Government Bonds. If the returns are less than CPF-OA interest rates, inflation will eat up the rest of the returns. THERE IS INFLATION RISK. If they declare their interest is less than 1%, which they can do so? It’s a win for them, lose for us situation. (For current Singapore inflation rate, see

2. There is no info or means to help us understand how they invest with our money i.e. we cannot understand the product fully. It is a product that is not easy to understand at all. This is EXTREMELY RISKY. Although insurance companies activities are regulated by MAS, there are investments that they can still do but layman investors like us may not understand. If we placed our money in an investment product that we cannot or do not understand, it is as good as gambling. How can this product be suitable for risk-adverse investors? Almost every adult Singaporeans will know how our Government earns their money. In fact, we know that Singapore Government, if taken as a business enterprise, will never fail to earn a profit i.e. their PROFIT IS GURANTEED. That’s why our government bonds are termed as risk-free and the interest (or coupons) they pay investors is considered truely risk-free. Unless our government collapses, but highly unlikely in my opinion.

3. Aviva calls the shot on how much of their returns to be declared as our returns i.e. there is no stated basis for them to make this decision. Even our puny returns are at the mercy of the company. We have no control and cannot even influence. This is VERY, VERY RISKY. If we invest our money in shares of listed companies, we can still question the management on the progress and earnings of “our” invested company. We, as shareholders, can even recommend to sack the Board members or the management team of the company. There is some form of minimum control in our hands.

4. Singapore Government T-Bills offers a coupon rate of at least 3% at this point in time. This 3% is guaranteed. Capital protection is also “guaranteed”. Compare that to the projected return of 3.5% from this Aviva product, the difference is only 0.5%! For a meager 0.5% more, is it worth while to RISK your hard earned money in a product that is so hard and difficult to understand, no control over our earnings and, really just for the sake of 0.5% more? Are we investing $1 million or more here?

From your writing, it seems like your financial education comes from the family of bankers, financial planners or insurance sector. That’s why I believe your risk is measured against the % return. Higher Risk means higher expected return, Lower Risk means lower expected return. Or the other way round, Low return means the investment is less risky.

I have a different defination of risk. See my sharing @
http://leroyang.blogspot.com/2007/02/what-is-risk.html. It takes Higher Financial Education to expect higher returns. Risk can be managed, with the correct tools. And we must educate ourselves to use this tools effectively to manage the risk accordingly.

I am risk-adverse. If I don’t understand a product, I don’t buy it. Even is the projected returns is good, I won't do it. I am risk-adverse.

For those who managed to read what I write till this point in time, congrats! You have the patience for great things in life. Lolz. Too free right?! ;-)

Since you’d already read until here, I have another perspective to share. It’s on the part about staying away from “today's sideways equity market”.

The most simple and easiest formula I can find so far for equity investing is “Buy Low, Sell High”. There you go, I bet there are a lot of “ya-da”, “ya-da”s in your mind now. :-)

Yes, you are right. Every so called or what they call themselves, “investors”, know this is the easiest formula to apply. But a lot do not understand how to apply it successfully and most of them seem to always buy low, and the next moment the share price drops even lower. Sigh. “If I have know earlier that the prices will drop, I will not buy it liao”. Sounds familiar again? Emotions at work.

No matter what or which formula we use, if we cannot control our emotions, we can never see good returns on our investment. This is made worst if we don’t have the financial education to employ the formula.

I have another perspective, or I call it opportunity for great returns, to share. In a market that moves side way or bear market, or market experiencing a correction, or to the extend a stock market crash, the opportunity to profit is in abundance! You see, Money is a Concept. Concept is an Idea. And Ideas are in abundance! So there is a lot of money to be earned everywhere, anytime, any situation, Bear or Bull market or market that goes side-way.

No investor in the world can pin point the exact DTG of a market crash or a bull run. No investor can tell you when a side-way market is going to go up or go down. But if we have a plan to invest in certain type of market conditions, We can tell ourselves that the return is more or less confirmed. How?

Do you have spare cash to spare for investing? ;-)

Formula: Buy Low, Sell High. In a bear or side-way market, confidence level of stocks as an investment class will be low (this is very easy to spot). A lot of investors will avoid this class of investment. That will depress the share price of some great companies for a while, sometimes to the extent that the price make it seems like a great bargain to buy NOW, IMMEDIATELY! Improve your plan with another concept call Dollar-Cost Averaging if the market continues to decline. Stop buying when the bull starts running. (This is also very easy to spot). Wait for the expected rate of return and exit if you wish. Or continue to hold if you fall in love with the companies that you bought shares in. ;-)

The advantages of this formula are:

1. In bad times, bear market, side-way market or market that just crashed, companies will be selling at a price much lesser than what they are worth in terms of value. (Note: Price does not equate to value here). There will be a Great Stock Market Sale going on.

2. Since we have already identifed a good company to buy, if the share prices continue to fall, it will make it even more attractive to buy more of its shares!

3. We are using cash that we can spare so there is holding power. If there is holding power, we can afford to wait long long and sit tight tight for the expected exit point (shares price).

4. We have a formula, we have a plan. We have cash that we are in no hurry to use or no urgent need. So emotions are much easier to control here. So the success rate of this formula is VERY, VERY, VERY HIGH.

5. The tricky part is you must have the financial education on stock selection. But if you don’t have, you can still consider STI Exchanged Traded Fund (ETF). It’s a fund that tracks the 50 main listed blue chips that influence the STI.

It’s so easy. Who say investing is difficult, if you understand how to go about doing it? :-)

Disclaimer (this is a standard practice what…): I must clarify that this formula has not been successful applied by me yet. B’coz when I started investing, I am at the 75% mark of a bull run. Therefore apply if you want, but with caution as I cannot afford to pay you back when you may lose by applying this formula. :-O

That’s my 2 cents worth of sharing. Those who can read my sharing, pls share your comments on it and help me grow too.


When I Stop Learning, I Stop Living

11 March 2007

Diversification exposes more Risks

There are numerous articles about diversification in your financial portfolios. Even MoneySense, an educational feature under MAS, also speaks about diversification to spread or reduce risks.

Hmm... Not trying to steer away from the main stream of thinkers here, but i will like to offer another perspective about diversification as food for your thoughts.

In my opinion, diversification exposes myself to more risks, IF i do not have the education to manage the additional areas that my investments are exposed to. (Education is defined as Skills, Knowledge and Experience)

Quoting an example to illustrate my point. Imagine myself investing in a blue chip company say, DXS Bank Vs STI ETF (a groupings of 50 bluechips listed on SGX). STI ETF can diversify my investment into 50 companies at once. Does this reduces my risk exposure?

While i can find alot of information about DXS Bank, past 10 years performance, the banking sector situation, postulate next 10 years growth, the risks associated in terms of macro and micro views of this bank, i can effectively managed the systemic and non-systemic risks better. It is only one company and i can focus my time and effort to manage it better.

By investing into STI ETF, i am effectively exposing myself to at least 550 times more risks as the ETF is invested in 50 companies spanning over 11 industries. Which means in order to manage the risk exposure better while staying invested in this ETF, i must spend 550 times more time and effort in my study of this ETF (and what it is invested in). Wow!! I don't think i am willing to and also not able to commit such resources to study into this aspect while the return seems comparable to the one company i may be invested in. IT's 550 times lor!!!

Many people think that investing is easy. I say gambling is. If i am not ready to commit that resources to educate myself about that product or instrument, its better to avoid it. So much for diversification, ya.

I do not deny that diversification has its advantages. Should there be an opportunity (backed and confirmed by study and education), a systemic one, that the broad market is likely to improve tremendously over the next few years, and i have limited funds to invest in most of the listed blue chips favoured, then STI ETF becomes a great tool in this situation as it can diversify my effort into the broad market at once. Thus meeting my investment objective in this case.

So you see, it is not diversification that reduces my risk exposures. It is my education that does the job. More often than not, majority of the so call investors will be too lazy to study into their investment with 550 times effort before they plunge in lor. Thus they are effectively exposing themselves to more risks! Unfortunately, this particular group of so called investors like to comfort themselves by saying that their risks have been spread out. Mind you, the word is "spread", and "reduce"! :-O

So get educated before you diversify. Else, FOCUS on the investment or instrument that you know best and stay invested with it. You will be able to see better gains on that side of the fence.

Warmest regards,

Leroy Ang

"When I Stop Learning, I Stop Living"

06 March 2007

The Power of Savings a.k.a. PYF and my first pot of Gold

While I was drafting my financial plan a year back, I was thinking very hard, very very hard, about how to achieve my first pot of gold, as a stepping stone for greater financial leverage.

After rounds of thoughts, something strucked. In the first book I'd read in Dec 05, Automatic Millionaire, a concept called Pay Yourself First (PYF) was introduced. It took me a while to digest what is PYF then. It's actually setting aside a part of your routine income for growing your wealth; Savings.

After 1 year of disciplined practice of PYF, enhanced with some other financial concepts, I'd cleared as many as 2 bank loans, which would takes up to 2009 to clear if i follow bank's installment plan. Saving on the interest cost, amounting to as much as more than $1,000. I even have spare cash for investments in the stock market.

It's not easy applying PYF. There were alot of mental and emotional resistance. It not my usually habit to have disciplined savings. I told myself, why not think big big but can start small small first? I did. I started saving 5% of my monthly income into a separate bank account (Interest rate higher than or equal to inflation rate), and more from my bonus. This was slowly raised to 10% and eventually, i am not at 20%. It takes me 1 year to achieve this.

I'd realised the Power of PYF.

It can make me debt free and achieve financial freedom in the shortest time possible. I can also use the funds set aside using PYF concept to invest and create greater wealth! However, this neither creates nor generates my first pot of gold.

I found my first pot of gold, in READING. By reading more, I'd realised that my thoughts expanded in both breadth and depth. Chinese has a saying, "You can find your golden house and royal jades in books."

I'd realised and applied PYF and found my first pot of gold. Have you?


"When I Stop Learning, I Stop Living"