Saturday, September 17, 2016

Renew COE for 10 years versus 5 years versus brand new similar car

As i like to quantify things, i just needed to do up the following table to see how much savings i make if i were to renew my COE car. Note that the depreciation which i calculate is much more stringent than the depreciation that is thrown around frequently in forums or sgcarmart and the likes because i also took into account the increase in annual road tax, the increase in the mandatory vehicle inspections and the overhaul i did for my old ride.

Just to say:
Annual road tax increases by 10% every year till the 5th year. 5th year onwards, it will remain at 1.5 times times the original road tax.
Mandatory vehicle inspections is required yearly for old cars while brand new cars only need to do inspections on the 3rd,5th,7th and 9th year.

As i am able to use full cash for all three options, interest payments on car loans will not be included. Insurance will also not be included. In my opinion, old cars only need third party insurance as if one encounters a major accident, just scrap the car and get back the prorated COE. If interest payments and insurance is included in the calculation, buying a brand new car will be much more expensive as comprehensive insurance and loans are normally required for brand new.

Renew 10 year VS Brand new car , i save $2270 per year.
New 10 year VS renew 5 year, i save $586 per year.

Some may say that the higher upfront cost ( $26,670) i fork out for renewing for 10 year vs renewing for 5 years would have lost me interest if i were to put in fixed deposit for 5 years or the likes of a risk-free investment and negate the $586 in yearly savings. But i see the option to renew anytime for 5 more years as valuable since COE can swing from $1000 to $90,000 and 5 years from now has a very high probability of a much much higher COE, looking at the COE cycle.

Just writing to straighten out my thoughts.

Friday, September 9, 2016

Tips for renewing car

Alas, my trusty Japanese car is turning 10 years old and i have decided to renew its COE as it still runs smoothly and a check with my trusted mechanic says that it is in perfect condition for 10 extra years. Base on the COE chart below, i was hoping that the cost of COE would go down since 2006 had the highest COE quota given out and that more people would deregister in 2016. It didn't go down much to my utter dismay.

Who would have thought that Grab and Uber would buy so many cars in such a lackluster economic climate!

Anyway, from what i gathered, here are some findings i would like to share. In sharing, i hope to receive constructive feedback in case my thinking is not optimal or plain wrong.

1) The best times to renew COE
The best time to renew is after the third wednesday of the prior month to your deregistration date, depending on the 2 scenarios below.

Take for example my scenario.
My car is to be deregistered on 5 October 2016. The September PQP is $53339.
If i see that the COE bidding for the 1st and 3rd wednesday of September is lower than $53339, i can be absolutely certain that the October PQP will be lower than $53339. I will then renew my car in October before 5 October.
If i see that the COE bidding for the 1st and 3rd wednesday of September is higher than $53339, i will renew it  before 1 October.

In considering the above, take note that if you renew your COE on the deregistration month, your new COE starts the day after your deregistration date. If you renew your COE anytime before your deregistration month, your new COE starts from the 1st of the next month. 

2) Renewing in CASH ( No loan) for a 10 year period is generally better than a 5 year period at this point in time
The disadvantage of renewing for a 10 year period is the high upfront cash you have to fork out. It gets stuck with the government until you choose to deregister your car and get back the prorated unused portion of the COE. 

However, renewing for a 10 year period gives you an option to deregister your car anytime while awaiting for the COE to drop drastically. You can renew for another 10 years, in blocks of 10, indefinitely. If you renew only for 5 years, you can still deregister anytime, BUT you are compelled to deregister on the 5th year and can no longer renew .What if the COE within the 5 years is still super high?

Furthermore, looking at the COE quota cycle currently, by renewing COE for 5 years now, one is caught at the wrong part of the COE quota cycle as 2011 had very few COE quotas.

Other advantages include amortising your foregone PARF over a period of 10 years instead of 5 years. Take note that when renewing COE, road tax increases 10% every year till the 5th year before remaining at 150% of the road tax for the remaining years.

3) Japanese cars is generally more worth it to renew than Continental car, unless you are driving a classic continental car which appreciates in value
Japanese cars generally have lower PARF forgone. Also, Japanese cars generally have chock full of available parts, not to mention being more reliable. 

For my case, my car depreciation per year if i were to renew for 10 years is about $6000 per year, compared with the minimum depreciation of $9000 per year if i were to buy a brand new car.

Sorry.I can't help it. There is a saying that the more we mention about something, it comes true. I'm hoping for the stock market to fall.
The car i cant' afford nor want nor desire

Thursday, July 7, 2016

Private hospitalization experience for my toddler

My toddler had a persistent high fever of above 40 degrees for a few days and a loss of appetite. Being a first time parent, naturally we were worried and we wanted the best for our child. We therefore sent him to a private hospital as it was only 3 minutes drive to our house and we didn't want to waste time queuing at Kedang Kerbau Hospital (KKH), based on feedback from others.

Anyway, the feeling during the whole stay was just money, money, money, money. The nurses were good at their job but i was sorely disappointed at the lack of transparency and lack of communication in terms of administrative matters. Professional care giving was up to standard. For a 1 night stay for an uncomplicated stay, total bill including A/E fee, pediatrician bills, medicine, ancilliary et.c is $1584.80.  

Even though I have bought for my son the highest hospitalisation plan possible with a rider so its fully covered for by my insurance and medisave, i still feel its not right. The following is the interim bill ( estimated). 

Red box:
Biogaia Probiotic 5 ml drops cost $91.17. Buying from Guardian cost only $45 based on the screenshot below. This is more than 100% more expensive.

Green box:
Do you notice something wrong with the billing in the green box?
2 sachets cost $8.74 while 8 sachets cost $15.74. Am i overcharged or undercharged? Anyway, the fact that such thing occurs does infer that something is way off about billing issues.

During the admissions procedure, the executive clearly told me that a full night stay was from 6 July 12.01am to 7 July 11am ( about 23 hours). We admitted at 12.30 am 6 July. Another admissiions executive told me that if i was warded on 5 july 11.30 pm ( 31 minutes more to 6 July 12.01am), i would be charged a full days rate if i discharged on 6 July 11 am ( spending only 11 hours 30 minutes). As i love to read fine prints, i pored through the contract and it stated official discharge time is 11 am so there is not reason to doubt the 2 executives words. Being a paranoid, i further looked at the help file given beside the bed, and it stated that 11 am is the discharge time and if discharged after 11am , before 8 pm, an additional half day is charged.

But surprise, surprise, as the PD was good and her medicine effective, my toddler was told he could be discharged as he has stabilised. So we discharged at 10.30 am 6 July before 11am, thinking that it is considered half day, but alas we were charged full day.

Maybe im really stupid to not understand, after asking 2 different admissions executive, 2 different nurses and 1 accounts billing executive how it all works and after reading the contract and the help file.

My bill have been fully paid with no cash outflow so why should i bother? It bothers because the end result is us the consumers suffering when we end up paying more premiums if the insurers cant make their money with the private hospitals, doctors and dentists being the sole winners.

Why can't places for more doctors and dentists be offered locally? I understand the logic of having the best people for the job and we want only competent people to treat us BUT this logic is debunked when you see doctors or dentists who practice medicine here and can't get into local universities but get their degrees from recognised overseas universities just because their parents have the means to do so. Note: I have had my best experiences with overseas doctors, my main point is, is there room for opening up more spaces in local universities such that those without financial means but are able to get into overseas medical universities will still be accepted?

Friday, February 5, 2016

How to stop oneself from being greedy during bear markets

For some, allocating their warchest in tranches based on price level of an index helps them. For me, it helps slightly but not much. I am a sucker for sustainable dividends. So i need a reason to stop wasting money using up all my warchest too fast. I have been buying lately and i do feel very guilty.
The drop so far can be considered the 4th worst bear market since 1987 for the STI. 
The official definition of a bear market refers to a downturn of 20% or more.
The STI dropped 20% from its most recent peak and entered bear market territory in September 1997, May 2001 and February 2008. It reached the bottom roughly in the months of August 1998, March 2003 and February 2009 respectively.
Number of months to reach the bottom from the start of the bear market
Sept 1997 - Aug 1998 = 11 months
May 2001 - Mar 2003 = 22 months
Feb 2008 - Feb 2009 = 12 months
Average months to reach = 15 months
Sep 2015 - Don't know when = ??

So far, about 4 months have passed since STI reached bear market territory. I think i really have to make sure my warchest can last at least another 11 months and to hope for the market to fall very very steep as the steeper it drops, the faster the recovery process can take. The most 'sian' one will be if it turns out to be like May 2001- Mar 2003 where one will suffer many DEAD BIG CAT BOUNCES. 

Thursday, January 21, 2016

Lessons Learnt in this bear market

Sleep has been getting better. Surprisingly, i managed to not buy anything for the last 3 days. Is this the sign of investor fatigue which i need to be contrarian about against my own behaviour? As of today, total unrealized capital loss is 7.7 %. I am actually getting pretty ok about the further capitulation of the stock market as it just means there is less risk if i were to buy further but lets see how long i can be on cold turkey.
Lessons learnt
1) The role of bonds.
I have come to appreciate the presence of  retail bonds in my portfolio. Nearly all asset classes available to the common retail investor will fall in a bear market ( except US treasury bills, USD,JPY e.t.c) but unleveraged non-junk retail bonds will fall less. My bonds act as a stabiliser, it dampens returns in bull times and dampens losses in bear times. As of now, my bonds could be sold to add to my cash warchest, having helped me earn a higher rate of return as compared to fixed deposits in the past 5 years of ultra low interest rates . Now, the US Federal Reserve increasing rates is something i need to watch out for as it will affect my bonds.

2) The role of sentiment.
As much as fundamental analysis is important, the role of sentiment  is equally or even much more so. I really like the article written by Howard Marks of Oak Tree Capital recommended by investmentmoats and there is a sentence that says" a common behaviorial trait among investors is their tendency to overlook negatives and understate their significance for a while, and then eventually to capitulate and overreact to them on the downside..". I am now waiting for the overreaction patiently.

3) My psychology
I know for a fact that making a return of $50,000 brings me less joy than the "xian-ness" of losing $50,000. A terrible mistake is the failure to apply this knowledge. I must now keep telling myself, it is never a wrong time to take profits. NEVER. Forget the shit of selling for a profit and later regretting when the price shoots much higher. A profit is a profit.

4)The importance of market cycle investing
Warren Buffet said " Never fall in love with your stocks". I read but didn't internalize. Shit man. He is darn right. but of course. Buy and hold is quite a buzzword but does one really know what it means? Market moves in cycles, it had, has been, will always forever move like that. This is just nature. I fell in love with my stocks and now i'm dumped! I have to thank the late Dennis Ng for his knowledge shared in his forum, Masteryourfinance.

Anyway, if my memory is right, i remembered 2008/ 2009 we saw asset managers like Franklin Templeton, Schroders selling en mass, daily or weekly as their unit trust holder panicked but i don't see it this time which may explain why i'm not as calm and collected this time as i was then. This might be a long drawn process, no hurry to buy, so lets go to sleep , life goes on....

Saturday, January 16, 2016

Controlling my emotions in this bear market

I unleashed my greed in August, September, October of 2015 and now with the market sell down again ....honestly, i finally feel sick. My capital gains from my greed in 2008 and 2009 has been totally wiped out due to my greed in the 3 months of 2015 and i am truly 'sian'.  My total portfolio of stocks and bonds is now down 5.5% . I still have a warchest of half my value of stocks and bonds and the dividends i get monthly helps alleviate the pain. The other painkiller that i use to remind myself is that the accumulated dividends over the years has more than made up the unrealized capital loss of 5.5%.

Seriously, i thought i could handle this bear calmly having been through the Lehman crisis but i still can't. Truly, i'm having some sleepless nights and its affecting my work slightly as my eyes are frequently glued to my bloomberg app.

Everyday is an emotional fight within myself to "hold On" ...don't press the buy button...dont be greedy...pace yourself...while the other 'evil' side in me tells me to buy,buy,buy,buy,buy,buy ... Its the greed of losing out on the opportunity of buying at cheap prices versus the fear of prices further plummeting.

Anyway, let's see how it goes and the big question is ...Is this just purely sentiment driven or is there some deep problem going on? George Soros has said there is a looming crisis, and he is a $27 billion networth big fish...who am i to disagree with him but then again, he is a hedge fund person and may do the opposite to what he says.......argh mental struggle again!

Saturday, January 2, 2016

My experience opening an Australian bank account as a Singaporean resident

With the AUD/SGD dropping to a multi-year low on the back of a commodities meltdown, what better way to take advantage of this then to go for a 16 days holiday in Australia. Besides, Australia is an amazingly baby-friendly nation ( much more than Singapore) in terms of places to bring the Baby to. Milk and baby food is also darn cheap, being about 40% cheaper than Singapore. And so i thought i would be "saving" some money. BUT, my wife just had to change darn lot of money just in case we ran out , especially when the currency is cheap now. Naturally, there was excess and bringing back to Singapore to change back to SGD or just to keep it in a milo tin was a "SIN" to me. Money should always work hard, not rest and slack!Money as the spread going to the money changer should always be minimized too!

So the last week of the holiday, i opened an Australian bank account. Here are some lessons learnt.

1) As a Singapore Citizen who is just a tourist like me, DO NOT ever give an australian address to the banker to open an account for you. This is a major misconception! You do not need an australian address at all. If you give an australian address, you will automatically be deemed to be staying in Australia and your withholding tax rate will be  46.5% ( top marginal tax rate 45% + Medicare levy 1.5%)  on your savings account interest earned per year.  If you give a Singapore address, you will be deemed as a non-resident and withholding tax is only 10%. I reiterated many times to the banker that i was a non-resident just so he opened the account correctly. 

2) Go to the major banks like National Australia Bank (NAB), Commonwealth Bank of Australia(CBA), Westpac and ANZ. I was just passing by a community bank called Bendigo bank and thank GOD i didn't open with them as the banker asked me for an australian address and didn't even know the withholding tax rate. My suggestion is to go to an asian banker in one of the major banks as he or she has dealt with many asians opening bank accounts in Australia and so will be very experienced. 

3) Open the account at least 5 working days prior to your departure from Australia. The reason was because the atm card needs around 5 working days before they can be collected from the same branch you opened with. 

4) You have to have some activity in the account or else the account will be in dormant status and it will be swept to a government account. According to the asian banker i spoke to, he said it was HELL to get back that money with lots of paper work and time ( think months). He wasn't too sure about the span of time before dormancy starts but told me to open 2 accounts and transfer some funds between them once every 6 months just to be safe. As i can't have a peace of mind not knowing something for certain, here it goes:
Apparently it's 3 years ( i don't know if the 7 years one has be approved) and the Australian government takes about half a billion a year from these dormant accounts! That's free money!

So what's benefits

I opened the NAB reward saver account which currently has an interest of 2.85% pa, ( use to be 3.05% as can be seen in the pic below), After WHT of 10%, the net interest rate will be 2.565% pa (use to be 2.745%), which is better than any banks savings here and even better than our Central Provident Fund -Ordinary account of 2.5%. And this along with the belief that the AUD will appreciate in time to come.Going back to Australia is also certain and this will act as a holiday fund there. 

Sunday, December 27, 2015

Doing business with car dealers - Protect yourself

Not only are cars blood sucking liabilities to get in Singapore, the process of getting one is also fraught with many dangers. 

Examples of car dealers who infamously made the news for various reasons:
Volks Auto, KS Automobile, Galaxy carz, Cars Today, Mich Automobile,.Go google them!

Common danger
The original car owner sells a car to the car dealer for $32,000 . The car has an outstanding loan of $30,000.The car dealer gives you $2000 first and takes the car, promising you to handle the paperwork of settling the remaining loan of $30,000.
The car dealer then finds a car buyer. Car buyer pays a deposit(or worse the full amount!) and takes over the physical car, believing mistakenly that having the physical car as 'collateral' gives one a peace of mind.
Car dealer then runs away.
Original car owner : Still owes the bank the loan of $30,000, is liable for any fines that is incurred and loses the use of the car.
Car buyer : Loses deposit, car will be towed away as it is owned by the bank due to outstanding loan.

Possible ways to reduce risk
For original car owner : Settle your loans by yourself before selling the car to the car dealer. Besides, some car dealers like to charge an admin fee for doing such work. I was asked for $500 before for the admin fee which i found ridiculous for such a trivial job and of course i dropped this dealer. Do not let him take the car after receiving the deposit. After settling the loan by yourself ( you can't transfer ownership until the loan is settled), make sure that there is a transfer of ownership to the car dealer at LTA or if the dealer is an electronic service agent, apply for a transaction pin using your Singpass and then do it at the dealer's premises. On the spot at LTA or at the dealer's  premises, receive the full amount then transfer the ownership.   Only after this, then pass the car to the car dealer.

For car buyer: Paying a deposit seems like a common industry practice which i kind of disagree with. Negotiate for a lower deposit to reduce risk or  a complete safer way is to request the car dealer to go down to LTA to do a transfer of ownership of the car and only then pay him in full the amount once transfer of ownership is done. If the car still has outstanding loan or is not owned by the car dealer, the car cannot be transferred. If he is a scam, he will surely not agree to this. If he is an electronic service agent (ESA), you can ask him to get a transaction pin  and transfer the vehicle ownership to you at his premises.Again if the car still has outstanding loan or is not owned by the car dealer, the car cannot be transferred.

There are actually a lot of permutations of how to get cheated in the car industry but the moral of the story is : The ownership status recorded with LTA and when you hand over or receive the money is very important and always get an invoice. This principle also applies when dealing with direct car owners or buyers.

Other car articles
Buying a brand new car- What i learnt
Buying a brand new car- The minimum considerations