Sunday, 8 May 2016

Moolahsense - growth of fintech companies

I have been tracking the fintech scene in P2P lending since early last year with a view to invest as an angel investor. 

You can find an interesting article here about P2P lending with a more detailed "Money of the Future" report here

Examples of P2P lending companies in Singapore include:
  1. Capital Match
  2. Funding Societies 
  3. Moolahsense
  4. Fundedhere (for accredited investors only)


I think Moolahsense became more "legit" and the "de-facto" leader this year after it reported a tie up with DBS Bank. The fact that a listed company has raised funds through the platform also helped boost its profile. I enclosed the news announcement below:

There has been a lot of brickbat about Epicentre "borrowing" money at 13.5% through crowdfunding but if you bother to look through the actual effective interest rate paid, it is around 7.5% (based on my recollection and yes, I am one of the lenders). You weigh that against the administrative hassle and the time you need to deal with banks and the opportunities are lost. In fact, banks are probably known as people who will lend you an umbrella when you don't need one. 

Why Crowdfunding?

Crowdfunding meets an unique niche within the banking ecosystem with great potential to disrupt the financial ecosystem. This threat is real and it can be disruptive. We already see it happening in United States, Europe and China.

For the entrepreneurs, borrowing from the crowd is probably better than maxing out the credit cards. The interest is definitely more palatable than borrowing from "loansharks", legal or otherwise. These are firms which are too small for our local banks who find them a hassle. 

Through P2P lending, I hope to help some of these entrepreneurs successful.  

For the investors, crowdfunding helps lower the risk as you only lend out small amount of money in return for a higher yield. The yield has to commensurate the risk you take. What investors need is a platform who is reliable in making due diligence on the companies and entrepreneurs who are not crooks. 

It is also important P2P platform will not "run away" with investors money as what happened in China recently. 

My Moolah account

Being the ever "high risk high return" investor who is open to new ideas, I tried out the Moolahsense account this year with a $20,000 initial funding. Have yet to make any "interest" yet as I just started recently. I will blog about my "P2P journey" here over time. If there is a default, I will also let you know. Lol. 

The nominal rate is around 15.05% but the effective is only 8-10%. I will roll over the P+I into new projects and see if the money will compound over time. 

You can watch me from the side and see my "experience" first hand but please don't participate if you have low risk tolerance and definitely don't treat it as an endorsement from me either. It's more for me to share my journey with you. 

What to consider if I want to try out P2P lending?

Well these are the things to consider if i want to try out peer lending :

• it's money that I can afford to lose if any of the companies go bust. Keep to a cap on each loan and spread to many "loans" to get a diversification effect

• invest only in industries which you like or are comfortable with  

• invest in lenders whom you believe will repay you. Most of the lenders are required to provide personal guarantee to the loans they borrow from you. The more guarantors there are, the more "assurance" you have. While lenders who defaulted may not go to jail, it can still be a painful thing for most. 

Happy moolahing. ^_^

Sunday, 3 April 2016

SRS Portfolio as of 31 March 2016

March seemed to be an "active" month for both SRS portfolio for my wife and I.

Corporate Actions for March 2016
  • Sold my position in DBS Bank for a profit of around $3,500
  • Made a stupid mistake to "chase" Jumbo and bought at the highest price of 48.5 cents ^_^ 
  • Contributed $15,300 to both SRS accounts. In case you are not aware, the limit was raised this year. You can read more from IRAS website here.
  • A late entry was a $492 distribution from Keppel DC REIT which i didn't update early.
Including the 2016 contributions, the invested capital for our SRS accounts stands at $189,975. Including the unrealised mark to market values of UMS Holdings and Jumbo, the fair value as of 1 April 2016 is around $208,570.

Passive Income Update

This section is purely our investments made for passive income. It does not include the gains or losses from trading. My target is to hit $120,000 per year at retirement using the bond ladder i blog about here. That will hopefully create a monthly income of around $10,000 which we can use to travel round the world. I promise to blog more about my world travelling plans here when i retire next time)

Mrs IPO applied for the Aspial Bonds which i had a write up here. Since she applied for it, i gave it a miss so that on a combined basis, we are not overly exposed to a single counter. Believe it or not, it was her first "virgin" application. Although the interest income goes to her, i will view it as part of the passive income that i am creating for the family. Hopefully, she will get more interested in investing and spend less time on bags and shoes. :-P

I was also allocated 25,000 shares in the placement tranche of Croesus Retail Trust at 75 cents each. The trust is currently yielding more than 10% but i have to say they used a lot of leverage to get that 10% yield. I will hold it for now since i got it at a really nice price.

Based on our stocks and bond investments, the current projected interest income is around $11,600 per year. Still a long way from our target and most of the income coming in April and October. 

Till next time and best wishes for your personal pursuit for financial freedom.

Saturday, 5 March 2016

SRS Portfolio as of 29 Feb 2016

It has been a while since i last updated my Starfish SRS portfolio. My last update was on 30 Sep 2015 last year.

One of the reasons why i stopped updating was because DBS stopped sending me the monthly statement but that is frankly a lousy excuse. The other reason was that I am pretty inactive in my SRS accounts and there had been no change in my holdings till February this year. (nothing to buy from Singapore market during this period anyway).  

I will try to make it easier for readers to follow going forward and hopefully i can be more discipline myself in doing more for this two accounts (me and wifey) through trading and investing.

Let's take a quick recap on my cost and holdings 

Invested Capital as of 31 Dec 2015

Fair Value of Holdings as of 31 Dec 2015

Corporate Actions for Feb 2016
  • Sold 10,000 shares of Capitamall Trust at $2.10
  • Received $288 as dividend from Capitamall Trust
  • Trade Singapore Post and received profit of $1,187 (regretted selling too early)
  • Received dividends of $375 from Singapore Post
  • Bought 2,500 shares of DBS at $13.75 (part of my rebalancing in selling UOB)

It was quite funny. My total value actually went up from $134,918 to $144,180 from 1 Jan 2016 to 4 March 2016 (increase of 6.86%)

Wifey's SRS account

Wifey's SRS account didn't fare as well probably due to a few mistakes i made. Let's quickly summarize.

Fair Value of Holdings as of 31 Dec 2015

Corporate Actions for Jan/Feb 2016
  • Received $200 dividend from UOB
  • Received $492 distributions from Keppel DC REIT (updated subsequently to this post)
  • Sold 15,000 shares of Keppel DC REIT at $1.045
  • Sold 1,000 shares of UOB at $16.95 (when the $17 support broke).
The cut loss of UOB turned out to be a very bad move. The share rebounded immediately and it is $1,500 "profit" gone as of yesterday!

The value dropped from $38,631 to $37,010 as of 4 March 2016 (drop of 4.2%)! Better buck up. hahaha.

I am holding all cash in this account today.

Next Steps

I have decided to take a more pragmatic approach towards investing in these two accounts. I am not so fixated on creating "dividend income" anymore but would rather look at growing the total value of these two portfolios till i can withdraw the cash in these accounts. I am currently behind schedule as the value are compounding only at between 3-4% since i started (worse than the special accounts) hahaha.

Sigh! i would need to scale up my own performance! ^_^

Let's check back again later this year.

Sunday, 28 February 2016

Creating a Bond Ladder

I spent the last few weeks finishing a book bought during Christmas. (I skip some irrelevant chapters in between and focus on the gist of the book). 

Considering my workload, this is actually quite an "achievement" and I didn't have to travel for work in Feb helped tremendously.  

Bond Ladder

I will assume you know what a bond is. I have blog about a few retail bonds that IPOed last year. You can read about them here

I am not sure if you had heard of a bond ladder but basically what it means is that you buy a series of bond papers at regular intervals and hold them till maturity

Each bond pays you interest twice a year (typically) and the principal amount at maturity. Assuming you repeat that process every month, you will create a portfolio that gives you a stable and predictable cash flows similar to that of a paycheck. If you have no use of those interest, you can reinvest them into bonds to enjoy the magic of compounding (similar to your CPF accounts). 

Unlike dividends, the interest and principal repayment is an obligation by the company to repay. As such, cash flow is predictable as long as the issuer is solvent and able to repay and your capital is returned at maturity.

Why can't the man in the street create a bond ladder?

The key issue in Singapore is the capital outlay as the bond market here is not fully developed. 

Each bond typically requires $200,000 a certificate and are not offered to the man in the street! I can't afford $200,000 each time! 

The regulations are finally changing!

You will be heartened to know that regulations is changing here. MAS is (after much lobbying from others) trying to make it easier for corporates here to issue bonds to retail investors. You can read the MAS consultation paper here.

Setting distribution costs aside, it is currently legally more onerous to issue corporate bonds to retail investors than to accredited investors but this is likely to change soon.

Regulators should have incentives in place to encourage issuers to issue bonds to retail investors like you and me.

In the next 10 months, I definitely hope to see more blue chip and reputable corporates issuing retail bonds in more palatable bite sizes (say in tranches of $2,000). With current technology, I don't see why the bite size can't be even lower.

With smaller bite sizes, it will also be easier to create a more customized bond ladder and allows you to mix and match issuers of different quality and interest rates to diversify against over concentration.  
Credit standing of issuers are important

The book which I was reading encouraged only investment grade bonds. That means the bond ratings by S&P, Moody's and Fitch are at BBB or better (A, AA and AAA). 

Buying a bond issues by credit worthy companies ensure very low risk of loss on the original capital and let you sleep soundly at night. 

How much do you need each month?

Each person has different values and life styles. Do you like to travel? Do you wine and dine a lot? Do you have family to take care of? Do you want to donate to charity? 

I have recreated a simple bond ladder for you. This is how it would like once we can invest in bite size amount and you manage to create a portfolio of $600,000. In a steady state condition, it would look like this:

If you refer to the table above, a final capital size of $600,000 yielding 4% will generate a monthly income of $2,116 in a steady state. If your lifestyle warrants a higher capital amount, then you should adjust accordingly and invest more. This monthly income can of course be supplemented by your other passive income sources like stocks and properties.

Can i create a bond ladder today?

You can if you have a large capital to start with. You can call you broker for a list of bonds traded. Please see an example of bonds traded in Singapore here which i get from my broker. 

As i mentioned above, it will cost you around $200,000 to $250,000 for most of them. Most secondary bonds are traded Over-the-Counter. (I haven't bought any bonds from the OTC market yet).

My first bond purchased was made in October last year where i bought Perennial Real Estate Bonds. You can read the write up here. I have yet to receive the first interest amount.It will come in April this year! 

Get ready for it

The further development of the retail bond market is good news for you and me. We can start to create our passive income in smaller amounts but i would recommend going for the blue chip names for a start even though the yield is lower but you would want to sleep soundly at night.

That is it for today. I will blog more about my activities in SRS in another post.

Happy Bonding.

Sunday, 25 October 2015

Creating a retail bond portfolio

The opening up of the retail bond market is very good news for investors like you and I. Bonds are basically debt securities which a company promises to pay you a regular interest for borrowing money from you.

Hopefully more blue chip corporates will start tapping into this segment and not just targeting the high networth private banking market. 

The Perennial bonds was a case in point where a 3-year bond offering a yield of 4.65% were over subscribed by 4x with strong demand from retail investors! 

A James Bond Portfolio

I know of a lady lawyer friend who is extremely risk averse but over the last decade, she has built up a portfolio of bonds worth more than $2 million. 

I nicknamed her "bond gal"  (without her knowledge or approval). She uses her bonus and savings to purchase bonds in a disciplined manner, resulting in the fact that she has now managed to build up a sizable asset base. 

Of course you can argue that she has a high pay to start with that allows her to build up the portfolio as each bond outlay is at least $250,000 but nevertheless, I admire her perseverance to do that.

Creating passive income from retail bonds portfolio?

Most bonds pay coupons twice a year and repay the principal at maturity. 

Let's assume there is a decent bond issuance every month and it pays a 4.5% interest and you invest $10,000 each time. Over a 12 month period, you have created a $120,000 bond portfolio that pays coupon every single month from the second year onwards.  

Monthly Interest received = $120,000 x 4.5% divide by 12 = $450

Now you repeat that process over a long period of time and you will create a bond portfolio that will take care of your needs.

Whether you like bonds or not depends on where you are in your life cycle?

Different people go through life cycles at different points in time. I do admit that I never like bonds when I was much younger. 

People who have been following my blog know i have a high risk appetite. I invest in unlisted pre-IPO companies and punt IPO stocks. I invest or trade in stocks and shares but when someone mention bonds, I will usually sweep it aside as saying the yield is too low. 

As a side note - One of my unlisted companies is going to be listed soon... Fingers crossed... Not sure how it will perform post IPO as I am under moratorium. I will blog this story another time. 

The opening up of the retail bond market changed my view as I no longer need to set aside a princely outlay each time. I can decide the quantum that I want to invest from $2,000 onwards. 

As bonds has lower volatility (it should theoretically) and lower risk of loss (given it pays its principal back at maturity), it will be more suitable for risk averse investors and this comes with age ^_^

How the rich play the bonds game?

I didn't really want to blog much on this but if you think they are happy with the yield, it's not true. 

The rich will take leverage (through the private bank) on the rated bonds for up to 80% of the value and earned a levered return from their bonds investment. 

As such, a rated bond instead of yielding 3% may yield up to 6-8% via leverage. 

Happy retail bonding

I hope the retail market deepens. MAS has been trying to open up the retail market and perhaps we can even see a Temasek retail bond soon?

However, don't expect a high interest payout from a AAA-rated bonds. The higher the credit rating, the lower the interest but at least it opens up more options for smallish investors :)

My bond investment criteria

I am not going to kid you to say it is without risk. Let's take an example of Ezra bonds trading below its par value now. If it can refinance its bonds or repay them at maturity, then no issue. The unrealized loss is temporal. If it can't repay its debt, then the company will be in default and that will spell trouble for all investors alike. 

That is why some equity investors track the credit ratings of a company very closely. If the credit rating is bad, it means the bonds will go below par as there is a fear of default. Consequently, the share price will plunge as well. 

Let's run through some simple criteria I had for bond investing. 

• Yield of at least 3%
• Short tenure of less than 5 years
• Stable business with predictable cash flows or foreseeable revenue
• Decent balance sheet that is not overly geared

My investment target - A $2 million portfolio when I retire 

My target is to create a bond and stock portfolio of at least $2m over the next 10 years yielding at least 5% per year. It will be funded via cash or from my SRS portfolio. 

Not sure if I can achieve but at least I need to start somewhere :)  I want to retire while I am still alive and kicking!

I have kick started that goal with a placement tranche on Perenial Bonds. 

You should create your own goals too and work towards them too!

Happy bonding

SRS Portfolio - 30 Sep 2015

It has been a while since i last updated on my portfolio and one reason is that DBS stopped sending me the monthly SRS statements without notifying me! I was "gong gong" waiting for it to come into my mail box. The other reason is that i am consumed by a mega project that is taking away all my time and attention on my own retirement accounts. This project will not end for many more months...

Anyway, I will do a quick recap on the dividends that i received from July to Sep.

My wife's SRS account received a dividend of $534 in August. During this quarter, the accounts sold Semb Corp but re-invested into UOB. The share price of UOB has since rebounded to $20.40 and the portfolio is currently up 7%. I am contemplating buying some retail bonds from the open market with the remaining cash.

My own SRS received dividend of $500 from UMS in July. UMS pays dividends on a quarterly basis but i have not 'used' the dividends received to date of $2,000 to lower the cost. I bought Capitamall and sold Starbust in Sep but have since been "idle". 

I have a cash balance of $88,559. I hope to deploy those idle cash soon! 

I will keep this blog post short as i am writing another post on creating a bond portfolio! Happy SRSing.

Sunday, 30 August 2015

A bloodshed August

August turned out to be a month of "turmoil" for my SRS and IPO accounts and the month for paying school fees to Mr. Market. 

Let's start with my SRS account and the transactions. 


I have been wanting to sell Starburst, especially so after its Q2 results were released, where it had another quarter of declining profits.

I left a standing order to sell at 40c or better before I travelled for a weeklong assignment in different time zone. The only thing positive from the trip was that I took the A380 that has the SG50 flag ^_^

Alas, the trade was never done due to low liquidity even though i shifted my sell order down a few times. It kept "meandering" down slowly and closed below 30c. Urrgh...

I took a very painful decision to cut loss on this position and moved on. Sigh. 

There are so many lessons to be learnt from this investment:

• the initial investment thesis was flawed. It wasn't a fundamentally strong stock and it wasn't for recurring passive income either.  The company's founders probably cashed in when its earnings peaked last year - lesson learnt. Need to do more due diligence on management and fundamentals. Stick to companies with proven management that shows increasing profitability. 

• I should have cut loss early when Q1 seriously underperformed. Under normal circumstances, I would have cut loss when a key support gives way. I deviate from my usual discipline and now have to pay a price for it. *Ouch :( - lesson learnt. Be disciplined in risk management. Don't let the losses ballooned beyond control. 

• The liquidity of the stock is pretty bad. This creates a wide bid-ask spread whenever a crisis happens. Probably the small cap nature of the stock doesn't help. - lesson learnt. Stick to bigger cap or stocks with better liquidity. 

Capitamall Trust

The REITs have fallen to a level which I felt attractive and has priced in a rate increase. I shortlisted 4 REITs which are trading either at book or below book value and have a stable yield of more than 5% on last Thursday before market opens. I am happy to hold on those REITs for passive income in any case should prices stabilize. 

All gapped up above my order price on opening and I ended only buying 10,000 shares of Capitmall Trust at 1.905 :(

Let's see if I can find any more interesting stocks to add in September. 

I also bought 1,000 shares of UOB for wifey's SRS account at 19.27. This is a beta play. I am betting on a short term rebound in STI. 

Thoughts for SRS

The loss on Starburst is a painful one. It is all about the lack of discipline, wrong choice of stock and being complacent and I paid the price

Another thought that went through my mind was whether a pure equity portfolio is a right one. If I allocate a % to bonds, will it meet my objective of creating passive income from my portfolio with less volatility?

Should I change the strategy and style? 

The losses from Sembcorp and Starburst made me rethink my strategy on whether I should be a more active and responsive investor and whether I should allocate part of the portfolio to less volatile instruments like corporate bonds. 

However, unless the bond market develops further, there will be a lack of choices for bonds. 

I have no answers to my own questions above but it is a path that I need to spend more time pondering. 


I also lost a sum of money on the IPO of CMC Infocomm. I had previously told my broker that I don't like the fundamentals and don't want the placement shares. He assured me that the stock is well received and has the support of shareholders and against my own better judgment, I took the shares. 

Well, the rest is history. The stock tanked against a bearish backdrop and once again, the lack of liquidity resulted in a wide bid ask spread. 

Frankly, I am happy to live and die by the market. If I made a wrong decision, I am fine to "live with the consequences". I am also happy that I didn't let my position affect my IPO ratings. :) 

What i am more "upset" with is the subsequent reluctance to let me cut loss or sell. Although it may have been out of good intentions, they turned out to be disastrous and contributed to the August bloodshed. 

Ok that is all for a Sunday posting. Enough of my ramblings and time to stay focus. 

Good luck to your own pursuit of financial freedom. :)

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