It's been tumultous weeks for the U.S. finance industry that began with the packaging of mortgage-related assets.
To take stock, here's what happened so far:
* Lehman Brothers filed for bankruptcy
* Freddie Mac, Fannie Mae and AIG were rescued by the US Fed, making the Fed their largest equity holder
* Bank of America bought Merrill Lynch in an all-stock sale
* Morgan Stanley and Goldman Sachs are no longer investment banks, choosing now to be regulated by the US Fed.
This is driven by a need to borrow money from depositors as short-term LIBOR rates continue to remain high amidst the drying up of liquidity.
* WaMu (Washington Mutual) is the next bank to go belly up. JP Morgan bought their good assets and not their liabilities.
* Wachovia Bank is in early talks with Citigroup, Wells Fargo, and Banco Santander.
Is this the end?
No one really knows, but I think it is still early days. At the very least, confidence is shaken and you will start seeing US domestic consumption and GDP growth slowing, especially as domestic consumption forms the lion's share of GDP in the United States.
The market is jittery, and any rebounds in the past seem to be a result of bears covering their shorts. Regulators have since forbid naked short selling (i.e. selling a share without owning it first) and the market is range-bound with further downside potential.
Wall Street is waiting to see if the US Fed is able to convince Congress to agree to the proposed US$700 billion bailout plan. The nearing Presidential elections has made it seem like a political play, and no one is sure it is going to be a cure-all for the US economy. Critics were everywhere and have tugged the heartstrings of the population - namely why are US taxpayers, themselves in massive (housing mortgage) debts, be liable for additional debt while the banks' CEOs get to pocket the US$'millions they have earned over the years?
Another concern I have is, the US Government already have over US$9trillion in debt. Who is going to continue lending to them? And at what cost? It is likely the USD will continue depreciating against most currencies in the near future.
Ben Bernanke's comment on buying the distressed assets at close to hold-to-maturity value is also cause for worry as it could mean buying the assets at a premium over the mark-to-model values and might mean he could not deliver on the promise where US taxpayers are entitled to capital gains when the assets are held to maturity.
How about emerging markets in Asia?
For Singapore where I am based, I think there are both direct and indirect impacts. Direct impacts will be limited as our main trade flows are intra-ASEAN and inter-Asia. However, we will still be affected as we are a very open economy. Also, indirect impacts are harder to measure and lies unknown. Inter-Asia trade is likely to be negatively affected as US demand falters, thereby affecting demand from other Asia countries because the US continues to be major trading partners of many countries, especially that of China.
What's next?
The market is likely to await to see if Congress passes the Bill on the bailout plan, and it depends on which candidate wins the Presidential election and what steps he will take to steer the US economy back on track (or it could be further off). Unemployment figures are likely to rise as banks continue to retrench and it may start overflowing to other sectors of the economy, including manufacturing.
It is thus prudent to keep cash and maintain liquidity till we have more positive news ahead of us. As for my unrealised losses in mutual funds and equities that is reaching 15-20% of my initial value, I have decided to keep it there as I bought them for the longer-term and will relook at them early next year. I am guessing the economy picks up then when the financial turmoil is over (hopefully by end of this year).
Sunday, September 28, 2008
Sunday, September 14, 2008
Updates
It's been some time since I last updated.. I've since started work in the finance industry, and that has kept me rather busy.
Also, for STI to fall to the levels of 2,500-2,700 is a setback to my investments. That was the level last seen when I started investing, and after two years, I'm back to square one and nursing my losses. But my own stocks portfolio are in defensive sectors and I'm getting reasonable dividend yields :)
Of course the mutual funds I've invested are >30% down and I'll continue holding them for the next one year or so. I'm not sure if I'm caught in the mentality of "selling winners and holding on to losers", but I still believe in long-term fundamentals, even though oil prices falling below US$100 per barrel is an indication of slowing global demand.
Anyhow stay tuned as I start paying more attention to my investment portfolio again.
Also, for STI to fall to the levels of 2,500-2,700 is a setback to my investments. That was the level last seen when I started investing, and after two years, I'm back to square one and nursing my losses. But my own stocks portfolio are in defensive sectors and I'm getting reasonable dividend yields :)
Of course the mutual funds I've invested are >30% down and I'll continue holding them for the next one year or so. I'm not sure if I'm caught in the mentality of "selling winners and holding on to losers", but I still believe in long-term fundamentals, even though oil prices falling below US$100 per barrel is an indication of slowing global demand.
Anyhow stay tuned as I start paying more attention to my investment portfolio again.
Tuesday, June 3, 2008
The latest hype: OCBC 5.1% Preference Shares
OCBC has recently announced it is offering its Class B preference shares to its retail and institutional investors that pays a fixed dividend of 5.1% per annum. These preferred shares are non-convertible and non-cumulative and the fixed dividends are tax-exempt, payable semi-annually.
For the retail investor, the minimum subscription is 200 prefernce shares of S$20,000 and thereafter in multiples of 100 preference shares for $10,000. These shares are perpetual securities with no fixed redemption date, redeemable at the option of OCBC Bank five years from the issue date and on each dividend date thereafter. It carries an investment grade rating of A-/Aa3.
Things you should know before you invest:
* Non-convertible preference shares
This means the preferred shares are not convertible to equity. While this might be preferred by some (preference shares rank above equity in liquidation), it essentially treats this like a fixed-income security, but not a loan. A loan debt is like you lent $20,000 to OCBC and it pays you 5.1% p.a. in interest. However, capital is NOT guaranteed, so it should be compared to a fixed-income security such as a coupon bond.
* Non-cumulative preference shares
There are cumulative and non-cumulative preference shares available. Non-cumulative shares means if OCBC faces cash flow problems and decides not to declare dividends, these preference shareholders forfeit their dividends, i.e. no dividends for the year. This is another feature that makes it different from a plain-vanilla loan. However, one consolation is OCBC has to pay preference shareholders before their equity shareholders, and in previous years, OCBC has been regularly paying its shareholders. So the likelihood of this is small, although not zero.
* No capital guarantee
As mentioned, this is not a loan or fixed deposit (as many retail investors choose to see it). This cuts both ways because it also allows for capital appreciation as well. A look at OCBC's Class E 4.5% preference shares shows that prices are relatively stable and it is currently trading at 100.70.
Also, note that should OCBC run into bankruptcy, preferred shareholders are paid before common equity shareholders, but after taxes, employees and debtors.
* Liquidity
Shares are traded on SGX at 0.1 lots. For large lots, market impact costs might be incurred. It is possible that only 10 lots or 10,000 shares are traded daily. This makes it difficult to sell if you should need money urgently.
* Interest Rate Risk
These shares are redeemable after 5 years on each dividend date. The option to redeem lies with the bank; usually the bank will redeem if the current interest rate environment is falling or the level of interest rates is low so they could refinance at a lower rate. For the preferred shareholder, this means that they have to seek alternative investments as they have a lump sum of cash on hand upon redemption by OCBC. However interest rates are low and they might not be able to get good yields on the cash balances and are subject to the prevailing SIBOR rates.
* No voting rights
Voting rights are given to common equity shareholders. Preferred shareholders typically have no say in the business of the company and are not in a position to fire management/directors. This is another reason why preferred shares are likened to fixed income securities.
* Tax-exempt
The semi-annual dividends, like most other dividends and interest income, are not taxed. Dividend income received by common equity shareholders are already taxed at the company level.
Should I invest?
* Risk appetite
This varies from individual to individual. It depends largely on your risk appetite - if your risk appetite is low and you are risk averse, yet would like some exposure to OCBC, this could be a right investment for you. However, if you have medium to large risk appetites, you might want to choose OCBC equity because you have participation rights, i.e. in a good year, you might receive special dividends and could thus get >5.1% p.a. Also, OCBC equity are more liquid and more volatile than preference shares so capital appreciation (and loss) is much faster. On average, equities return ~10% p.a. over a ten-year period.
* Investment Horizon
If you need the money in a year's time, then you should not invest. You get 5.1% in dividends but after incurring transaction costs and opportunity costs, it is less than 5.1%. Thus, this is best for three-five year term horizon and beyond.
* Your existing portfolio
If you have cash lying idle in bank deposits, then yes you should consider this higher-yielding alternative. This is a higher rate than most fixed deposits and inter-bank rates (since the risk characteristics are different). However, if ALL you have is $20,000 to $40,000 I would advise against choosing this. You should have six months of expenses in liquid bank accounts for emergency funds use. And you should attempt to diversify whatever little you have instead of throwing all your net worth (your eggs) into OCBC preference shares (the only basket).
* Current status
If you are currently a retiree looking for stable income, this is a good addition to your portfolio. However, if you are in your early 20-30s, this can be part of your portfolio to diversify (it works like fixed income) if your portfolio or net worth is large enough. Otherwise, choose other (riskier) investment alternatives.
My thoughts
I applaud OCBC for providing retail investors with this option to invest in their Class B preference shares. They did take our feedback into account especially after DBS only offered their Tier 1 capital to institutional investors.
I might consider applying for the shares but I expect it to be over-subscribed. However I'm ambivalent about whether or not I receive the allotment since my existing equity portfolio has provided me with 9% return to date (7% trading gains + 2% dividend yields which I will update on another post) and my funds are still trading at a 10% unrealized loss. I am hesitant about liquidating my equities to invest in OCBC preference shares, or even my externally-managed funds as I hold a three to five-year horizon for them so I am holding on. Given the relative size of 1 lot of OCBC preference shares and its relative return, it is not attractive in my opinion.
NOTE: Please seek your financial advisor's advice about investing in these preference shares. I have brought up a few salient points for you to take note so you are aware of the questions to ask and you could decide if this is the best investment for you.
For more information on OCBC's previously-issued classes of preference shares, visit this website http://www.ocbc.com/global/investorrelations/Gco_Inv_PrefShareBond.shtm.
For the retail investor, the minimum subscription is 200 prefernce shares of S$20,000 and thereafter in multiples of 100 preference shares for $10,000. These shares are perpetual securities with no fixed redemption date, redeemable at the option of OCBC Bank five years from the issue date and on each dividend date thereafter. It carries an investment grade rating of A-/Aa3.
Things you should know before you invest:
* Non-convertible preference shares
This means the preferred shares are not convertible to equity. While this might be preferred by some (preference shares rank above equity in liquidation), it essentially treats this like a fixed-income security, but not a loan. A loan debt is like you lent $20,000 to OCBC and it pays you 5.1% p.a. in interest. However, capital is NOT guaranteed, so it should be compared to a fixed-income security such as a coupon bond.
* Non-cumulative preference shares
There are cumulative and non-cumulative preference shares available. Non-cumulative shares means if OCBC faces cash flow problems and decides not to declare dividends, these preference shareholders forfeit their dividends, i.e. no dividends for the year. This is another feature that makes it different from a plain-vanilla loan. However, one consolation is OCBC has to pay preference shareholders before their equity shareholders, and in previous years, OCBC has been regularly paying its shareholders. So the likelihood of this is small, although not zero.
* No capital guarantee
As mentioned, this is not a loan or fixed deposit (as many retail investors choose to see it). This cuts both ways because it also allows for capital appreciation as well. A look at OCBC's Class E 4.5% preference shares shows that prices are relatively stable and it is currently trading at 100.70.
Also, note that should OCBC run into bankruptcy, preferred shareholders are paid before common equity shareholders, but after taxes, employees and debtors.
* Liquidity
Shares are traded on SGX at 0.1 lots. For large lots, market impact costs might be incurred. It is possible that only 10 lots or 10,000 shares are traded daily. This makes it difficult to sell if you should need money urgently.
* Interest Rate Risk
These shares are redeemable after 5 years on each dividend date. The option to redeem lies with the bank; usually the bank will redeem if the current interest rate environment is falling or the level of interest rates is low so they could refinance at a lower rate. For the preferred shareholder, this means that they have to seek alternative investments as they have a lump sum of cash on hand upon redemption by OCBC. However interest rates are low and they might not be able to get good yields on the cash balances and are subject to the prevailing SIBOR rates.
* No voting rights
Voting rights are given to common equity shareholders. Preferred shareholders typically have no say in the business of the company and are not in a position to fire management/directors. This is another reason why preferred shares are likened to fixed income securities.
* Tax-exempt
The semi-annual dividends, like most other dividends and interest income, are not taxed. Dividend income received by common equity shareholders are already taxed at the company level.
Should I invest?
* Risk appetite
This varies from individual to individual. It depends largely on your risk appetite - if your risk appetite is low and you are risk averse, yet would like some exposure to OCBC, this could be a right investment for you. However, if you have medium to large risk appetites, you might want to choose OCBC equity because you have participation rights, i.e. in a good year, you might receive special dividends and could thus get >5.1% p.a. Also, OCBC equity are more liquid and more volatile than preference shares so capital appreciation (and loss) is much faster. On average, equities return ~10% p.a. over a ten-year period.
* Investment Horizon
If you need the money in a year's time, then you should not invest. You get 5.1% in dividends but after incurring transaction costs and opportunity costs, it is less than 5.1%. Thus, this is best for three-five year term horizon and beyond.
* Your existing portfolio
If you have cash lying idle in bank deposits, then yes you should consider this higher-yielding alternative. This is a higher rate than most fixed deposits and inter-bank rates (since the risk characteristics are different). However, if ALL you have is $20,000 to $40,000 I would advise against choosing this. You should have six months of expenses in liquid bank accounts for emergency funds use. And you should attempt to diversify whatever little you have instead of throwing all your net worth (your eggs) into OCBC preference shares (the only basket).
* Current status
If you are currently a retiree looking for stable income, this is a good addition to your portfolio. However, if you are in your early 20-30s, this can be part of your portfolio to diversify (it works like fixed income) if your portfolio or net worth is large enough. Otherwise, choose other (riskier) investment alternatives.
My thoughts
I applaud OCBC for providing retail investors with this option to invest in their Class B preference shares. They did take our feedback into account especially after DBS only offered their Tier 1 capital to institutional investors.
I might consider applying for the shares but I expect it to be over-subscribed. However I'm ambivalent about whether or not I receive the allotment since my existing equity portfolio has provided me with 9% return to date (7% trading gains + 2% dividend yields which I will update on another post) and my funds are still trading at a 10% unrealized loss. I am hesitant about liquidating my equities to invest in OCBC preference shares, or even my externally-managed funds as I hold a three to five-year horizon for them so I am holding on. Given the relative size of 1 lot of OCBC preference shares and its relative return, it is not attractive in my opinion.
NOTE: Please seek your financial advisor's advice about investing in these preference shares. I have brought up a few salient points for you to take note so you are aware of the questions to ask and you could decide if this is the best investment for you.
For more information on OCBC's previously-issued classes of preference shares, visit this website http://www.ocbc.com/global/investorrelations/Gco_Inv_PrefShareBond.shtm.
Sunday, May 25, 2008
Setting my financial goals... baby steps towards financial independence
I have had people asking me, how come I think of retirement planning when I just graduated from university? Most college graduates are working hard at repaying their study loan in the short term.
I must say I am one of the luckier ones. My parents had nil CPF balances (used it to pay for the HDB housing mortgage loan as our flat was bought at the property peak and hence loan amount was very high), so my loan was paid off in cash in full. (To be honest, it was tough on my parents.)
However, for young people like us, time is on our side! Whether you are 25 or 30 or 35 now, there is a good thirty years to retirement at 62, the official retirement age. Using the Rule of 72, generating a 6% annual return means your investment amount doubles in 12 years!
How did I start planning for retirement?
Initially, I started setting aside some money each month, around $400, and plonked them into mutual funds. The funds made money at first, and I continue putting money into these equity funds month after month (in a time of rising prices). However, the recent credit crunch has made me lose a substantial 10% of my investments as of now (it was down over 15% at one point). This is another good thing about starting early: you have the time and patience to ride out business cycles! So I have not sold any of my funds, as I believe it will appreciate in the medium term of 3-5 years. Nonetheless, it made me reassess my net worth and I have since placed a smaller percentage of my net worth in mutual funds (also known as unit trusts), choosing to invest directly in the stock market instead.
So how do I keep track of my retirement plans now?
The first important thing, I believe, is to set a retirement goal. I decided early on that I want to earn my first million dollars by the age of 35 - that would ten years from now, and this is my long-term goal. To monitor my progress towards this large goal, I have set many shorter term goals in between. The hallmark moment came when I first reached a net worth level of S$100,000. That was the first time my net worth crossed the sixth-digit mark, and is a significant milestone in my financial planning management, given that I earn less than half that amount in annual income (not to mention that interim capital losses delayed this special moment).
The following are my net worth targets based on conservative annual returns, i.e. 5% annual returns instead of 6%. Thus, the age that I will reach my S$1 million goal is around 38 years old.
Jun 2008: $120,000
(unfortunately, I am not near this level yet. This is because I made some personal choices, and decided to spend a rather substantial amount on current travels.)
December 2008: $135,000
(Hopefully, with discipline, I should be able to reach this level or near it towards the end of the year.)
To be honest, by then, S$1 million would not mean much, since inflation has been running high lately and probably most of us lower- to middle-income earners are already millionaires by then! However, that point is definitely memorable as it marks a significant step towards financial independence. Using S$1 million capital as base, one could easily double it to S$2 million in 12 years using a reasonable 6% return, and this means this same S$1 million turns to S$2 million when I turn 50 years (38 + 12), notwithstanding that I continue to save up and invest during these twelve years. This should result in financial independence earlier on in my life, so I could choose to work in areas I am interested in, including unpaid jobs.
The Dreams of Financial Independence
I believe my dreams are what motivate me to defer current consumption in favor of future consumption. I want to be financially free, to be able to travel the world and befriend friends from all over the world, learning and understanding customs and appreciating differences in culture. Most of all, I would like to spend my last years in rural areas, leading a simple lifestyle with a slower pace of life, and teaching children during my spare time.
Each of us have dreams, and we should dare to dream. Because only when we dream, then we are able to make dreams happen!
So continue to check back this blog regularly as I make updates on my financial position, and my journey towards financial independence. Importantly, I hope it motivates you to save harder or gives you a pat on the back if you have done well in terms of net worth growth! Join me as I struggle between difficult consumption and investment choices, as I am sure we all do. And let's all work hard towards achieving our dreams!~
I must say I am one of the luckier ones. My parents had nil CPF balances (used it to pay for the HDB housing mortgage loan as our flat was bought at the property peak and hence loan amount was very high), so my loan was paid off in cash in full. (To be honest, it was tough on my parents.)
However, for young people like us, time is on our side! Whether you are 25 or 30 or 35 now, there is a good thirty years to retirement at 62, the official retirement age. Using the Rule of 72, generating a 6% annual return means your investment amount doubles in 12 years!
How did I start planning for retirement?
Initially, I started setting aside some money each month, around $400, and plonked them into mutual funds. The funds made money at first, and I continue putting money into these equity funds month after month (in a time of rising prices). However, the recent credit crunch has made me lose a substantial 10% of my investments as of now (it was down over 15% at one point). This is another good thing about starting early: you have the time and patience to ride out business cycles! So I have not sold any of my funds, as I believe it will appreciate in the medium term of 3-5 years. Nonetheless, it made me reassess my net worth and I have since placed a smaller percentage of my net worth in mutual funds (also known as unit trusts), choosing to invest directly in the stock market instead.
So how do I keep track of my retirement plans now?
The first important thing, I believe, is to set a retirement goal. I decided early on that I want to earn my first million dollars by the age of 35 - that would ten years from now, and this is my long-term goal. To monitor my progress towards this large goal, I have set many shorter term goals in between. The hallmark moment came when I first reached a net worth level of S$100,000. That was the first time my net worth crossed the sixth-digit mark, and is a significant milestone in my financial planning management, given that I earn less than half that amount in annual income (not to mention that interim capital losses delayed this special moment).
The following are my net worth targets based on conservative annual returns, i.e. 5% annual returns instead of 6%. Thus, the age that I will reach my S$1 million goal is around 38 years old.
Jun 2008: $120,000
(unfortunately, I am not near this level yet. This is because I made some personal choices, and decided to spend a rather substantial amount on current travels.)
December 2008: $135,000
(Hopefully, with discipline, I should be able to reach this level or near it towards the end of the year.)
To be honest, by then, S$1 million would not mean much, since inflation has been running high lately and probably most of us lower- to middle-income earners are already millionaires by then! However, that point is definitely memorable as it marks a significant step towards financial independence. Using S$1 million capital as base, one could easily double it to S$2 million in 12 years using a reasonable 6% return, and this means this same S$1 million turns to S$2 million when I turn 50 years (38 + 12), notwithstanding that I continue to save up and invest during these twelve years. This should result in financial independence earlier on in my life, so I could choose to work in areas I am interested in, including unpaid jobs.
The Dreams of Financial Independence
I believe my dreams are what motivate me to defer current consumption in favor of future consumption. I want to be financially free, to be able to travel the world and befriend friends from all over the world, learning and understanding customs and appreciating differences in culture. Most of all, I would like to spend my last years in rural areas, leading a simple lifestyle with a slower pace of life, and teaching children during my spare time.
Each of us have dreams, and we should dare to dream. Because only when we dream, then we are able to make dreams happen!
So continue to check back this blog regularly as I make updates on my financial position, and my journey towards financial independence. Importantly, I hope it motivates you to save harder or gives you a pat on the back if you have done well in terms of net worth growth! Join me as I struggle between difficult consumption and investment choices, as I am sure we all do. And let's all work hard towards achieving our dreams!~
Friday, May 23, 2008
Great Singapore Sale 2008
The Great Singapore Sale starts today!
For every Singaporean, it certainly marks a season of shopping with great deals! This year's sale is especially inviting, since retail sales have been slowing down and retailers are introducing deep discounts in an attempt to boost mid-year sales.
Before you head out to the malls, remember to check the newspapers and the website for cut-out or print-out coupons. It takes up only a while of your time, yet this small act can save you a lot of money!
The official website, for example, has a coupon website. Some savings include:
- Get $10 off with every $100 spent at Watson's
- 50% off Leonard Drake Facial or Health Spa treatment
Also, look out for credit card partnerships to reap more rewards! For example, Millenia Walk has StanChart as its credit card partner, Suntec City has ABN Amro, while FrasersCenterpoint Malls encourage you to use UOB cards. The GSS is sponsored by Mastercard, so it pays to use cards with the Mastercard logo as well if there are promotions in-store.
Honestly, I'm getting confused with the myriad of promotions out there - all I know is, always double check for any discounts or rewards before purchase! Remember, the small cents do count! And happy shopping!~
For every Singaporean, it certainly marks a season of shopping with great deals! This year's sale is especially inviting, since retail sales have been slowing down and retailers are introducing deep discounts in an attempt to boost mid-year sales.
Before you head out to the malls, remember to check the newspapers and the website for cut-out or print-out coupons. It takes up only a while of your time, yet this small act can save you a lot of money!
The official website, for example, has a coupon website. Some savings include:
- Get $10 off with every $100 spent at Watson's
- 50% off Leonard Drake Facial or Health Spa treatment
Also, look out for credit card partnerships to reap more rewards! For example, Millenia Walk has StanChart as its credit card partner, Suntec City has ABN Amro, while FrasersCenterpoint Malls encourage you to use UOB cards. The GSS is sponsored by Mastercard, so it pays to use cards with the Mastercard logo as well if there are promotions in-store.
Honestly, I'm getting confused with the myriad of promotions out there - all I know is, always double check for any discounts or rewards before purchase! Remember, the small cents do count! And happy shopping!~
The Road to Financial Freedom
The other night, I was talking to a friend, W, over the phone... and I was inspired by the amount of savings she manages to accumulate each month.
W receives salary of around $2,300, and is able to put aside $1,200 in her online savings account each month. That is an impressive savings rate of >50%! And since she gives a monthly allowance to her parents of roughly $600, that essentially means she gets by with only $600 each month!
Let's do the sums. Assuming W starts off with a net worth of $20,000. The forced savings of $1,200 will increase her net worth to $34,400 at the end of one year (ignore compounding for now, since interest rates in Singapore continue to be very low). If, a year later, her salary increases by $500 and she is able to put aside $1,500 in forced savings. Two years later, her net worth increases to $52,400. These calculations did not include bonuses, so assuming bonuses of $10,000 for each year - her net worth at the end of two years increases to $72,400!
To make a comparison, assume another friend, K, earns $3,400 a month, and spends $2,800. She justifies the extra spending as she has to be on par with her colleagues in terms of dressing, and dines out frequently with her friends. After taxes, she manages to save $500 a month. A 15% savings rate is a decent amount, especially for fresh college graduates just starting out. Starting with the same net worth of $20,000, she ends up with $26,000 at the end of one year. A year later, her salary increases by $800 and thus she increases her savings to $1,000 a month. At the end of two years, her net worth increases to $38,000. Her bonuses amount to $30,000 over two years, of which she saved $20,000. Her net worth at the end of two years becomes $58,000.
Earnings (Annual)
K $ 70,800
W 47,600 (48.7% less)
Net Worth
End of Year 1
K $ 36,000
W 44,400
End of Year 2
K $58,000
W 72,400
This may be a simplistic example, but it teaches us an important lesson in financial planning - that net worth is determined not by how much you earn, but by how much you spend! K earns on average 50% more than W each month, but her net worth is 25% less than W's! Extrapolating this trend, it's not hard to figure out who ends up richer. Since both of them live in the same city and are subject to similar costs of living, differences in net worth is a result of differences in consumption and saving habits. And it's all the more inspiring because this is a real-life example so you know it can be done!
So, instead of thinking negatively and complaining about how little you earn from your job, change your thoughts to positive ones! You now know that you can use your cents to build up future riches!
Here is a useful formula to follow: Expenses = Income - Savings.
W makes a conscious effort to spend only what is left after saving up a specified portion of her income. K uses Savings = Income - Expenses, and while the formulae are equivalent, she spends first and saves up whatever is left. This typically leads to overspending, because people tend to spend when they see positive balances in their accounts!
Make it a habit to save from today, or else you'll make it a habit to spend! Which would you prefer? :)
W receives salary of around $2,300, and is able to put aside $1,200 in her online savings account each month. That is an impressive savings rate of >50%! And since she gives a monthly allowance to her parents of roughly $600, that essentially means she gets by with only $600 each month!
Let's do the sums. Assuming W starts off with a net worth of $20,000. The forced savings of $1,200 will increase her net worth to $34,400 at the end of one year (ignore compounding for now, since interest rates in Singapore continue to be very low). If, a year later, her salary increases by $500 and she is able to put aside $1,500 in forced savings. Two years later, her net worth increases to $52,400. These calculations did not include bonuses, so assuming bonuses of $10,000 for each year - her net worth at the end of two years increases to $72,400!
To make a comparison, assume another friend, K, earns $3,400 a month, and spends $2,800. She justifies the extra spending as she has to be on par with her colleagues in terms of dressing, and dines out frequently with her friends. After taxes, she manages to save $500 a month. A 15% savings rate is a decent amount, especially for fresh college graduates just starting out. Starting with the same net worth of $20,000, she ends up with $26,000 at the end of one year. A year later, her salary increases by $800 and thus she increases her savings to $1,000 a month. At the end of two years, her net worth increases to $38,000. Her bonuses amount to $30,000 over two years, of which she saved $20,000. Her net worth at the end of two years becomes $58,000.
Earnings (Annual)
K $ 70,800
W 47,600 (48.7% less)
Net Worth
End of Year 1
K $ 36,000
W 44,400
End of Year 2
K $58,000
W 72,400
This may be a simplistic example, but it teaches us an important lesson in financial planning - that net worth is determined not by how much you earn, but by how much you spend! K earns on average 50% more than W each month, but her net worth is 25% less than W's! Extrapolating this trend, it's not hard to figure out who ends up richer. Since both of them live in the same city and are subject to similar costs of living, differences in net worth is a result of differences in consumption and saving habits. And it's all the more inspiring because this is a real-life example so you know it can be done!
So, instead of thinking negatively and complaining about how little you earn from your job, change your thoughts to positive ones! You now know that you can use your cents to build up future riches!
Here is a useful formula to follow: Expenses = Income - Savings.
W makes a conscious effort to spend only what is left after saving up a specified portion of her income. K uses Savings = Income - Expenses, and while the formulae are equivalent, she spends first and saves up whatever is left. This typically leads to overspending, because people tend to spend when they see positive balances in their accounts!
Make it a habit to save from today, or else you'll make it a habit to spend! Which would you prefer? :)
Thursday, May 22, 2008
My Credit Card Rating System
Well it's no secret that banks and credit card companies have been supplying me with plenty of plastic over the years. A typical look at my wallet shows at least 8 cards from 3-5 different banks - the rest would remain in my drawer.
A common (and valid!) question I usually get is "Hey, how do you know which card to use?" or "Don't you get confused? I only use one card." or even "You are not maximizing the use of reward points since you can't accumulate them in one card."
Indeed, confusion ruled in the initial days. I started off applying for one card each from two banks, enough for my use. Then with the advent of roadshows and telemarketing (I am skeptical when they tell me my mobile number and other details are confidential) and free gifts, I started signing up for more cards. Sometimes, it happens when the telemarketers are nice and friendly, and I thought it doesn't hurt me to help them anyway. It gets easier to apply for subsequent cards from the same banks as they already have your information plus, more importantly, your credit payment history.
It is important to manage your credit card expenditure and bills, or your finances in general. More cards do, in some ways, encourage you to spend more. My spending has increased with more cards (not my income though :( ) but thankfully, it is under control. I will leave this topic to another post since I want to address another issue here: namely, which card to use?
I will attempt to articulate my thought process here although I am not sure if it is clear for all. I applied for supplementary cards for my mother and she is confused with me telling her which cards to use.
There are only two general rules to follow:
Rule No 1. If there are ongoing promotions, use the card that qualifies for the promotion. If many cards are eligible, follow Rule no. 2.
For example, if a store advertises a 10%-storewide sale for holders of CB-credit cards, use CB-issued credit cards. This is a no-brainer. Similarly, when dining out, ask if there are dining privileges - if credit cards from XX bank offers 15% off total bill, dish out your XX-credit card from your wallet. If you stick to using only one credit card, then too bad - yes, you accumulate points (good for you!) but at a miserable rate of 0.5%, while I get 15% off a total bill of say $100. That is $15 vs. your point-equivalent of $0.50. You choose.
If the promotion applies to all Visa-cardholders for example, you suddenly realise that any of your five Visa cards qualify. When in doubt, use Rule no. 2.
2. Use the card that ranks the highest in your credit card rating system.
This applies when there is no particular promotion and you are free to choose which card to use. I know your immediate question is - "What are you talking about? I don't have a credit card rating system!" No worries, I will show you mine and you can modify it for your own use.
I use a quantitative measure, i.e. I will not use a card because of its prestige or exclusivity (only for the ladies, or only for the rich), because it is a fair measure. Plus, where I am now, prestige does not count. It's not as if I'm in any tai-tai social circle anyway! I have chosen to use Cash and Cold Storage shopping vouchers as the benchmark. Cash, because cash is king. Thus I use the card which offers me the most cash rebates because I can use cash to buy a.n.y.t.h.i.n.g. since it is a medium of exchange. And why Cold Storage? Because prices are rising, and groceries are necessities. Yes I can make a comparison using Takashimaya Shopping Centre shopping vouchers, but anything I purchase there is not a need. And if groceries are necessities, you ask me, why not NTUC? Simple, because Cold Storage vouchers are accepted widely! Just name it - Cold Storage supermarket, Shop and Save, 7-11 (buy your parking coupons, your bread, etc.), Guardian, Photo Finish, etc. I usually pass these vouchers to my mom when I receive them :)
Okay, so how does my ranking system work? Cash should be clear enough. For Cold Storage vouchers, I visit the individual banks' websites or flip through the booklets they send me with the updated conversion rates. These rates do change as often as the weather! So it pays to do a little bit of research every now and then.
For a sample calculation, let us use hypothetical figures:
Bank A gives 1 point for every $5 spent. For 700 points, it allows you to redeem $20 Cold Storage vouchers.
Bank B gives 1 point for $1 spent. For 3000 points, it gives you a $10 Cold Storage voucher.
Bank C gives 1 point for every $1 spent. For 3500 points, it gives you $20 worth of Cold Storage vouchers.
My rating system tells me I should use Card C, Card A then Card B in this order. If I do not exceed my credit limit and there are no specific promotions (Rule no 1), I will only use Card C to 'maximize' my reward points and receive my Cold Storage voucher sooner.
How did I get this rating result?
Card A's exchange rate is: $20 per 700*5=$3500 of spending, or 20/3500 = 0.57%
Card B's exchange rate is: $10 per $3000, or 0.33%
Card C's exchange rate is: 0.57%, same as Card A.
I prefer Card C to Card A because I assume Card A rounds down the rewards points (it may not be the case), i.e. for $6 spent, you only receive 1 point and a spending of $19 entitles you to 3 points. Over the long term, you receive 4 points for every $25 spent while its Card C provides you with 5 points equivalent (25/5) so Card C provides a better deal in this instance.
Now lest you think that this is complicated, you only have to do this rating once and revise it ocassionally. Let me use my real life example to show you how easy this really is.
Disclaimer: This is for illustration purposes and does not constitute a recommendation to use any particular bank's card! This is not a sponsored post, just a desire to share some tips and my practices with fellow consumers. Follow this example at your own risk - results differ due to differences in spending habits, consumption patterns and spending levels. There is also Vnothing inherently wrong in using only one card to meet all consumption needs, or boycotting the use of credit cards. Pay your credit card bills in full to enjoy the privileges of credit cards usage.
This is an illustration of Rule no 2 (I may use other cards more often in order to follow Rule no 1):
1) UOB One Card
In using this, I applied my rule of Cash is king. This is also a relatively new card so it shows that I am using updated information to revise my rankings.
How this works? Spend $300 ($800) each month for three consecutive months or a total of $900 ($2400) each quarter and receive cash rebates of $30 ($80) for the quarter.
Effective rate: 30/900 = 3.33% cash rebate
Tips: It is close to impossible to keep track of your exact expenditure each month. I usually spend ~$400 each month, over the minimum required of $300. Still it is an impressive 30/1200 = 2.5% rebate! I do not make it a point to hit the $80 cash rebate because there are months when I spend around $500, even though my aggregate bills exceed $1000 usually (recall Rule no 1). The downside is I have to consciously ensure that the minimum of $300 is met else I forfeit the entire cash rebate for the quarter (I have not met this month's minimum yet!).
2) StanChart's Visa Platinum Access Card
I applied for this card only after the telemarketer's persistence.
How it works? It converts every purchase of $100 into 24 equal monthly installments at 5% interest rate and 6% administration fee. I hardly purchase individual items above $100 so this installment scheme is not attractive to me, as such I sign for purchases under $100 using this card and receive double the reward points.
Effective Rate: $20 voucher / (700 points / 2 * $5/point) = 1.14%
3) HSBC Visa/Mastercard Gold
Effective Rate: $20 voucher / (3500 points * $1/point) = 0.57%
Tips: This effective rate is similar to my StanChart platinum cards but I prefer HSBC simply because it provides unlimited supplementary cards for life. Thus both my mom and dad have supplementary cards and my dad uses his card to pay for his petroleum, thereby allowing me to accumulate the points across all three cards.
See how easy this Rating System is? All I do is use the One Card for my first $300-$400 of purchases, subsequently use StanChart's card for any subsequent purchases under $100 and HSBC for the rest. UOB cards used to rank high on my list (I spent a five digit sum in the past year across my various UOB cards) but it fell lower on my ranking system as it changed the terms of its reward system and accordingly, I spent less on my UOB cards.
There you go - I hope you found this post useful for your credit card needs. everyone's smart enough for finance! Now 15 credit cards under your belt does not seem so scary anymore! Grin.
Now this is what I call street-smart. Oh, and did I mention I simply adore credit cards? =)
Note: Rewards information correct at time of writing. The banks have every right to amend their rewards at any point in time. For accuracy, please refer to the bank's website or latest brochures.
A common (and valid!) question I usually get is "Hey, how do you know which card to use?" or "Don't you get confused? I only use one card." or even "You are not maximizing the use of reward points since you can't accumulate them in one card."
Indeed, confusion ruled in the initial days. I started off applying for one card each from two banks, enough for my use. Then with the advent of roadshows and telemarketing (I am skeptical when they tell me my mobile number and other details are confidential) and free gifts, I started signing up for more cards. Sometimes, it happens when the telemarketers are nice and friendly, and I thought it doesn't hurt me to help them anyway. It gets easier to apply for subsequent cards from the same banks as they already have your information plus, more importantly, your credit payment history.
It is important to manage your credit card expenditure and bills, or your finances in general. More cards do, in some ways, encourage you to spend more. My spending has increased with more cards (not my income though :( ) but thankfully, it is under control. I will leave this topic to another post since I want to address another issue here: namely, which card to use?
I will attempt to articulate my thought process here although I am not sure if it is clear for all. I applied for supplementary cards for my mother and she is confused with me telling her which cards to use.
There are only two general rules to follow:
Rule No 1. If there are ongoing promotions, use the card that qualifies for the promotion. If many cards are eligible, follow Rule no. 2.
For example, if a store advertises a 10%-storewide sale for holders of CB-credit cards, use CB-issued credit cards. This is a no-brainer. Similarly, when dining out, ask if there are dining privileges - if credit cards from XX bank offers 15% off total bill, dish out your XX-credit card from your wallet. If you stick to using only one credit card, then too bad - yes, you accumulate points (good for you!) but at a miserable rate of 0.5%, while I get 15% off a total bill of say $100. That is $15 vs. your point-equivalent of $0.50. You choose.
If the promotion applies to all Visa-cardholders for example, you suddenly realise that any of your five Visa cards qualify. When in doubt, use Rule no. 2.
2. Use the card that ranks the highest in your credit card rating system.
This applies when there is no particular promotion and you are free to choose which card to use. I know your immediate question is - "What are you talking about? I don't have a credit card rating system!" No worries, I will show you mine and you can modify it for your own use.
I use a quantitative measure, i.e. I will not use a card because of its prestige or exclusivity (only for the ladies, or only for the rich), because it is a fair measure. Plus, where I am now, prestige does not count. It's not as if I'm in any tai-tai social circle anyway! I have chosen to use Cash and Cold Storage shopping vouchers as the benchmark. Cash, because cash is king. Thus I use the card which offers me the most cash rebates because I can use cash to buy a.n.y.t.h.i.n.g. since it is a medium of exchange. And why Cold Storage? Because prices are rising, and groceries are necessities. Yes I can make a comparison using Takashimaya Shopping Centre shopping vouchers, but anything I purchase there is not a need. And if groceries are necessities, you ask me, why not NTUC? Simple, because Cold Storage vouchers are accepted widely! Just name it - Cold Storage supermarket, Shop and Save, 7-11 (buy your parking coupons, your bread, etc.), Guardian, Photo Finish, etc. I usually pass these vouchers to my mom when I receive them :)
Okay, so how does my ranking system work? Cash should be clear enough. For Cold Storage vouchers, I visit the individual banks' websites or flip through the booklets they send me with the updated conversion rates. These rates do change as often as the weather! So it pays to do a little bit of research every now and then.
For a sample calculation, let us use hypothetical figures:
Bank A gives 1 point for every $5 spent. For 700 points, it allows you to redeem $20 Cold Storage vouchers.
Bank B gives 1 point for $1 spent. For 3000 points, it gives you a $10 Cold Storage voucher.
Bank C gives 1 point for every $1 spent. For 3500 points, it gives you $20 worth of Cold Storage vouchers.
My rating system tells me I should use Card C, Card A then Card B in this order. If I do not exceed my credit limit and there are no specific promotions (Rule no 1), I will only use Card C to 'maximize' my reward points and receive my Cold Storage voucher sooner.
How did I get this rating result?
Card A's exchange rate is: $20 per 700*5=$3500 of spending, or 20/3500 = 0.57%
Card B's exchange rate is: $10 per $3000, or 0.33%
Card C's exchange rate is: 0.57%, same as Card A.
I prefer Card C to Card A because I assume Card A rounds down the rewards points (it may not be the case), i.e. for $6 spent, you only receive 1 point and a spending of $19 entitles you to 3 points. Over the long term, you receive 4 points for every $25 spent while its Card C provides you with 5 points equivalent (25/5) so Card C provides a better deal in this instance.
Now lest you think that this is complicated, you only have to do this rating once and revise it ocassionally. Let me use my real life example to show you how easy this really is.
Disclaimer: This is for illustration purposes and does not constitute a recommendation to use any particular bank's card! This is not a sponsored post, just a desire to share some tips and my practices with fellow consumers. Follow this example at your own risk - results differ due to differences in spending habits, consumption patterns and spending levels. There is also Vnothing inherently wrong in using only one card to meet all consumption needs, or boycotting the use of credit cards. Pay your credit card bills in full to enjoy the privileges of credit cards usage.
This is an illustration of Rule no 2 (I may use other cards more often in order to follow Rule no 1):
1) UOB One Card
In using this, I applied my rule of Cash is king. This is also a relatively new card so it shows that I am using updated information to revise my rankings.
How this works? Spend $300 ($800) each month for three consecutive months or a total of $900 ($2400) each quarter and receive cash rebates of $30 ($80) for the quarter.
Effective rate: 30/900 = 3.33% cash rebate
Tips: It is close to impossible to keep track of your exact expenditure each month. I usually spend ~$400 each month, over the minimum required of $300. Still it is an impressive 30/1200 = 2.5% rebate! I do not make it a point to hit the $80 cash rebate because there are months when I spend around $500, even though my aggregate bills exceed $1000 usually (recall Rule no 1). The downside is I have to consciously ensure that the minimum of $300 is met else I forfeit the entire cash rebate for the quarter (I have not met this month's minimum yet!).
2) StanChart's Visa Platinum Access Card
I applied for this card only after the telemarketer's persistence.
How it works? It converts every purchase of $100 into 24 equal monthly installments at 5% interest rate and 6% administration fee. I hardly purchase individual items above $100 so this installment scheme is not attractive to me, as such I sign for purchases under $100 using this card and receive double the reward points.
Effective Rate: $20 voucher / (700 points / 2 * $5/point) = 1.14%
3) HSBC Visa/Mastercard Gold
Effective Rate: $20 voucher / (3500 points * $1/point) = 0.57%
Tips: This effective rate is similar to my StanChart platinum cards but I prefer HSBC simply because it provides unlimited supplementary cards for life. Thus both my mom and dad have supplementary cards and my dad uses his card to pay for his petroleum, thereby allowing me to accumulate the points across all three cards.
See how easy this Rating System is? All I do is use the One Card for my first $300-$400 of purchases, subsequently use StanChart's card for any subsequent purchases under $100 and HSBC for the rest. UOB cards used to rank high on my list (I spent a five digit sum in the past year across my various UOB cards) but it fell lower on my ranking system as it changed the terms of its reward system and accordingly, I spent less on my UOB cards.
There you go - I hope you found this post useful for your credit card needs. everyone's smart enough for finance! Now 15 credit cards under your belt does not seem so scary anymore! Grin.
Now this is what I call street-smart. Oh, and did I mention I simply adore credit cards? =)
Note: Rewards information correct at time of writing. The banks have every right to amend their rewards at any point in time. For accuracy, please refer to the bank's website or latest brochures.
Wednesday, May 21, 2008
ABN Amro Switch Platinum Card
I recently applied for the ABN Amro Switch Platinum Card, and I was told by the telemarketer it comes with a ABN Amro Platinum Card as well. With a belt of over 10 cards under my name, I was hesitant. But here's what made me agree to the switch (apologies for the pun ;p):
* No annual fees ever!
Now this is an explicit statement saying that they are not going to charge any annual fees! So there is no need to call their customer service hotline seeking fee waivers, and no worries about minimum spending to qualify for the fee waivers!
I think this is a smart move - how many of us pay the annual dues? Traditionally it has been a source of revenue stream for credit card companies, but in recent years it has dwindled in importance. Of my 15 cards (I think... I lost count), I have never paid for the fee subscription, as I took advantage of the x-year fee waivers. There was once I was asked to pay the annual fees, and I cancelled the card. No loss, really, the banks just keep presenting me with cards! It definitely pays to have a good credit history :)
* No cash advance fee
This is attractive for those who obtains emergency cash advances from ATMs, whether locally or overseas. The cash advance fee ranges from an upfront 2-4% usually. However, do note that although there are no upfront fees, the bank does charge interest on the cash amount withdrawn at the prevailing rates! So use it as an emergency back-up line.
* 18% p.a. interest
There are some months when cash is tight - and we are only able to pay off the minimum payment. So a lower interest rate, vis-a-vis competitors' rates of 24% p.a. helps, since interest is calculated on a daily basis.
My advice is, try to spend within your means - spend only what you can afford. And attempt to pay off your credit card bills in full. Credit card companies and banks still love you for this - if you spend enough (like I do!), they still want your business! The business model has changed such that the bulk of revenues come from retailers (credit card companies charge an average of 2-3% to retailers for offering their services).
Still, for the ocassional months when cash flow becomes tight, it helps to be able to pay lower interest.
* 3 times more rewards points
You also get 3 times more reward points for your spend within the first 30 days of card issuance. It's temporary but still it's better than nothing. It goes to show how competitive this retail bit of business is and banks are becoming more creative at luring customers at all expense!
* Waiver of admin fees for cab rides
For those of us who take cab rides often, you will know that for payment by credit cards, the cab companies charge an additional 10% on top of the cab fare. ABN Amro partnered with Comfort, City Cab and Yellow Top (i.e. the biggest cab companies locally) to waive the 10% admin fee and GST for payments using an ABN Amro credit card. Now when there is a huge jam and the cab fare turns out higher than expected, there's no need to worry about not having enough cash in your wallet!
I know this feature appeals to auditors especially. Due to the nature of their work, extensive travel is needed. And cab fares, like other out-of-pocket expenditure are paid first while it takes at least a month for the accounting firms to reimburse their staff. So by using ABN Amro credit cards, they are able to get on to cabs and get the reimbursement on time to pay their credit card bills! Not to mention ABN Amro offers a priority booking hotline as well - comes in handy on rainy days when hotlines are swarmed with bookings!
Overall rating: Average
This rating is based on a self-made rating system using Cold Storage vouchers. The conversion rate is S$80 Cold Storage vouchers for 3200 points (an average spending of ~S$16,000), or approx. 0.5%. The rate compares well with other banks but other banks provide voucher denominations of $10 and $20, so you get to exchange for vouchers sooner. Alternatively, you may choose to use S$50 + 1200 points (~spending of $6,000) to redeem the vouchers.
* No annual fees ever!
Now this is an explicit statement saying that they are not going to charge any annual fees! So there is no need to call their customer service hotline seeking fee waivers, and no worries about minimum spending to qualify for the fee waivers!
I think this is a smart move - how many of us pay the annual dues? Traditionally it has been a source of revenue stream for credit card companies, but in recent years it has dwindled in importance. Of my 15 cards (I think... I lost count), I have never paid for the fee subscription, as I took advantage of the x-year fee waivers. There was once I was asked to pay the annual fees, and I cancelled the card. No loss, really, the banks just keep presenting me with cards! It definitely pays to have a good credit history :)
* No cash advance fee
This is attractive for those who obtains emergency cash advances from ATMs, whether locally or overseas. The cash advance fee ranges from an upfront 2-4% usually. However, do note that although there are no upfront fees, the bank does charge interest on the cash amount withdrawn at the prevailing rates! So use it as an emergency back-up line.
* 18% p.a. interest
There are some months when cash is tight - and we are only able to pay off the minimum payment. So a lower interest rate, vis-a-vis competitors' rates of 24% p.a. helps, since interest is calculated on a daily basis.
My advice is, try to spend within your means - spend only what you can afford. And attempt to pay off your credit card bills in full. Credit card companies and banks still love you for this - if you spend enough (like I do!), they still want your business! The business model has changed such that the bulk of revenues come from retailers (credit card companies charge an average of 2-3% to retailers for offering their services).
Still, for the ocassional months when cash flow becomes tight, it helps to be able to pay lower interest.
* 3 times more rewards points
You also get 3 times more reward points for your spend within the first 30 days of card issuance. It's temporary but still it's better than nothing. It goes to show how competitive this retail bit of business is and banks are becoming more creative at luring customers at all expense!
* Waiver of admin fees for cab rides
For those of us who take cab rides often, you will know that for payment by credit cards, the cab companies charge an additional 10% on top of the cab fare. ABN Amro partnered with Comfort, City Cab and Yellow Top (i.e. the biggest cab companies locally) to waive the 10% admin fee and GST for payments using an ABN Amro credit card. Now when there is a huge jam and the cab fare turns out higher than expected, there's no need to worry about not having enough cash in your wallet!
I know this feature appeals to auditors especially. Due to the nature of their work, extensive travel is needed. And cab fares, like other out-of-pocket expenditure are paid first while it takes at least a month for the accounting firms to reimburse their staff. So by using ABN Amro credit cards, they are able to get on to cabs and get the reimbursement on time to pay their credit card bills! Not to mention ABN Amro offers a priority booking hotline as well - comes in handy on rainy days when hotlines are swarmed with bookings!
Overall rating: Average
This rating is based on a self-made rating system using Cold Storage vouchers. The conversion rate is S$80 Cold Storage vouchers for 3200 points (an average spending of ~S$16,000), or approx. 0.5%. The rate compares well with other banks but other banks provide voucher denominations of $10 and $20, so you get to exchange for vouchers sooner. Alternatively, you may choose to use S$50 + 1200 points (~spending of $6,000) to redeem the vouchers.
Friday, March 14, 2008
Standard Chartered Promotion
I recently received a call from Standard Chartered Bank in Singapore and was told of a really good deal. Here's what it is:
"Apply for a Standard Chartered Platinum credit card before 31 Mar 2008 and enjoy 10% cashback on all your retail purchases for the first two months*.
So if you spend S$1,000 on your card within the first two months, we will credit $100 cash to your account."
This essentially means there is a 10% cashback for all purchases you make from the day you receive your card for a period of two months, subject to a cap of $100 rebate. You don't have to spend >$1,000, so if you spent $800 over two months, you get $80, still 10%! Better still, there is no minimum expenditure involved. And I was told you are still eligible for regular reward points. I signed up, and will most likely see a jump in my shopping expenses next month! Heh. If you are interested, contact a SCB representative before the promotion deadline!
Terms and conditions apply*:
The 10% cashback is based on the total retail transactions charged to the Principal/Supplementary Cards within 2 months of receiving your card. The cashback amount is capped at a total amount of $100 regardless of the total spending within the 2 months period. This will be credited within 3 months from the transaction date. Promotion is valid for all new sign-ups till 31 Mar 2008.
* Information obtained from Standard Chartered pamphlet in Singapore.
"Apply for a Standard Chartered Platinum credit card before 31 Mar 2008 and enjoy 10% cashback on all your retail purchases for the first two months*.
So if you spend S$1,000 on your card within the first two months, we will credit $100 cash to your account."
This essentially means there is a 10% cashback for all purchases you make from the day you receive your card for a period of two months, subject to a cap of $100 rebate. You don't have to spend >$1,000, so if you spent $800 over two months, you get $80, still 10%! Better still, there is no minimum expenditure involved. And I was told you are still eligible for regular reward points. I signed up, and will most likely see a jump in my shopping expenses next month! Heh. If you are interested, contact a SCB representative before the promotion deadline!
Terms and conditions apply*:
The 10% cashback is based on the total retail transactions charged to the Principal/Supplementary Cards within 2 months of receiving your card. The cashback amount is capped at a total amount of $100 regardless of the total spending within the 2 months period. This will be credited within 3 months from the transaction date. Promotion is valid for all new sign-ups till 31 Mar 2008.
* Information obtained from Standard Chartered pamphlet in Singapore.
Wednesday, March 12, 2008
Booking Hotels Online
Over the past few days, I have been actively planning for my upcoming trip to Cambodia, and this of course includes finding accommodation and as much as possible, book the rooms online. I usually avoid the uncertainty of not having rooms when I get to a new foreign place, especially for the first night.
So searching based on my friend's hotel recommendation, I chanced upon this site http://www.asiarooms.com/ and I like this site! Let me tell you why...
It lists hotels (flights too, btw) by city and country so it's easy to find. Or just use the search tool like I did and you find the hotel you were looking for. Also, it provides a comprehensive overview of the hotel - an impressive four paragraphs! - and gives you a glance how much you pay for the various room types Standard, Deluxe for which periods. Rates include all taxes and service charges so you see the nett price, no hidden charges involved! Here's a sample of the user-friendly information:
So searching based on my friend's hotel recommendation, I chanced upon this site http://www.asiarooms.com/ and I like this site! Let me tell you why...
It lists hotels (flights too, btw) by city and country so it's easy to find. Or just use the search tool like I did and you find the hotel you were looking for. Also, it provides a comprehensive overview of the hotel - an impressive four paragraphs! - and gives you a glance how much you pay for the various room types Standard, Deluxe for which periods. Rates include all taxes and service charges so you see the nett price, no hidden charges involved! Here's a sample of the user-friendly information:
And the best part of all is, to me, the option to pay in local currency! This is so you don't incur additional charges from your credit card paying for 1.5% exchange rate commission, and it's easier to tell your friends how much the hotel costs (if you're sharing the room and paying first) instead of waiting for your credit card bill to arrive. Not to mention being at the bank's liberty at charging you unreasonable exchange rates! Choose from SGD, AUD, GBP, EUR, HKD, JPY, NZD and USD. Most of the other sites I've used only allow the option of USD, and possibly GBP and EUR. This is a premium feature in my opinion!
Here's how the confirmation process works:
You first choose your currency, select your check-in and check-out dates, and proceed with booking. Enter personal details such as name and address, and provide your credit card number. You then receive an email saying your reservation has been picked up, subject to the credit card being confirmed. A few minutes later, when your credit card is verified, asiarooms.com sends you an email telling you so, with the amount temporarily blocked on your card, and tells you reservation is under progress and that they're checking with the hotel itself. Then they send you a confirmation to your local mobile phone (regardless of the country, how cool is that! - do select this option!) when your booking is confirmed. You of course get an email confirmation and will be able to check status/confirmation online at the website. Typically I get my SMS response half a day to a day later, very prompt. And it saves me the hassle of checking my emails constantly to get the load off my mind that I have a room to stay in!
So next time you're thinking of traveling in Asia and booking a hotel online - check this site out! The downside is it does not have all hotels so it's a bit restricted if you have a hotel in mind. But your hotel is in the list, then I think the local currency payment + the global SMS confirmation makes it a pretty good deal.
Saturday, March 1, 2008
This blog is officially revived!~
Now you may ask why... and I think it's for a very simple reason - I can't kill the blogger in me! And I enjoy recommending stuffs, dishing out my hard-earned knowledge to people, so I'm back with tips! Typical Gemini I must say... and I might just venture into sales one day. Haha.
And with the various cost increases, I thought it would be cool for some value-for-money tips, so I will share my ways of saving money and earning money! Grin. It's not the right or best way, it's just my way. These tips in general benefit Singapore-based users though. Feel free to share yours with others by leaving comments! I go for ecommerce too, so expect some to see some cool sites online!
Tada!~ With this formal announcement, my return is complete! Heh. So check back often, ya? :) And leave your footprints!
Now you may ask why... and I think it's for a very simple reason - I can't kill the blogger in me! And I enjoy recommending stuffs, dishing out my hard-earned knowledge to people, so I'm back with tips! Typical Gemini I must say... and I might just venture into sales one day. Haha.
And with the various cost increases, I thought it would be cool for some value-for-money tips, so I will share my ways of saving money and earning money! Grin. It's not the right or best way, it's just my way. These tips in general benefit Singapore-based users though. Feel free to share yours with others by leaving comments! I go for ecommerce too, so expect some to see some cool sites online!
Tada!~ With this formal announcement, my return is complete! Heh. So check back often, ya? :) And leave your footprints!
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