Are you SABOing your Investment for Retirement?

It is a very unfortunate event that investors lost their hard earned money and retirement fund with Six Capital.

Angry investors file police reports against fintech firm SixCapital

What can we as the retail investors learn from this incident?

Let’s use the SABO model to analyse this incident. By the way, this SABO is NOT the Singlish of “Sabotage”.

SABO stands for S (Suitability), A (Affordability), B(Benefit) and O(Objective).

 

Objective

Before we invest, we need to have a very clear objective in mind on why we need to invest, how long is our investment horizon, what is our risk profile, how much time we can allocate to monitor our investment portfolio, etc.. Setting the right objective is very important because it serves as our lighthouse to identify, select and understand the right asset classes to meet our objective.

 

Suitability

Once we are clear with the objective, the next step is to select the asset classes which are suitable to our risk appetite, our life style, available time to do our homework and investment horizon.

Examples of the wrong match of one life style, personality, risk appetite with wrong asset classes and investment strategy:

  • a busy executive scalps forex every night after work;
  • a retiree invests his / her majority of retirement fund in land banking;
  • a person who dislikes numbers trades Option
  • a housewife who does not have computer knowledge trades crytocurrency

It is not sustainable with all the above examples due to the mismatch.

If you are struggling with your current investment, it is strongly suggested you do a review immediately on your current investment portfolio or your trading strategy, before you commit more time and more money doing something which is not suitable to you.

The following questions the investors have to ask to see whether the investment is suitable to them :

  • How the investment strategy can give 18% per year?
  • What are the risks in this investment?
  • What is the worst case scenario?
  • How volatile is this investment?
  • How quickly if the investors want to redeem their investment? Is there a lock in period? Are there any early redemption and other charges?

 

 

Affordability

  • Can we afford to lose all our investment if we make mistake investing in the wrong asset classes or instrument?
  • Can we afford to ride through the market volatility if there is a big correction or black swan event?
  • Can we afford to take more risk for higher return?
  • Can we afford to be ignorant, DIY and listen to tips when come to investing?
  • Can we afford to get professional advice to help building the safe and diversified portfolio?

 

Benefits

  • Is the return of the  investment meet my expectation?
  • Is my expectation realistic?
  • Is it worth to take more risk for additional return?
  • Is my investment liquid and sell anytime when I need money?
  • Can the investment give me Peace of Mind and give me a “Sleep Well” factor?

 

I am rather concern with this statement “A few retirees indicated that they had poured in significant retirement sums. One lady was the age of my mother. She said that she was going to the temple to pray.”

My recommendation to retiree on their retirement fund:

  • First priority is Capital Preservation, Not Chasing for Return because you can’t afford to lose your retirement fund unless you can replenish your capital easily if you lose all of them.
  • Look for investments which are less volatile and pay consistent dividend like Bond or REITs.
  • Nothing is guaranteed in this investment world. Please don’t believe in those marketing materials indicate “Guaranteed Return”, etc. Countries, Banks, Insurance companies can all go bankrupt.. so, where does the guarantee come from?
  • Do have a diversified investment portfolio and Manage the Risk… Don’t put all your eggs into one basket. You cannot afford to make any costly mistake at retirement age. One big mistake may wipe out all your retirement fund.

 

If you need an Independent Third Party to have an unbiased view on  your current investment portfolio (Fee based), you can contact me through email kennyloh@fapl.sg.

 

Scope of the Investment Portfolio Review

  • Identify your Investment Objective
  • Risk Profile Assessment
  • Strength and Weakness of current portfolio
  • Recommendation

 

Kenny Loh

Singapore REIT Price / NAV Range Chart Dec-2017

Original post from http://mystocksinvesting.com

Singapore REIT Price / NAV Range Chart base on Dec 1, 2017 Singapore REITs Table.

 

See last Singapore REITs Price/NAV here to see the changes.

Included Keppel KBS US REIT and Cromwell European REIT in the Price/NAV for comparison. How’s the valuation compare to other office REITs?

 

Disclaimer: This chart is NOT a recommendation to buy or sell. Do NOT use it if you don’t understand how to interpret it.

 

Check below on other events:

REITs Investing Course

Investing in Singapore REITs

 

REITs Portfolio Advisory 

PRIVATE PORTFOLIO REVIEW

 

Singapore REIT Fundamental Analysis Comparison Table – 1 Dec 2017

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) increases from to 826.94 to 834.92 (+0.97%) compare to last post on Singapore REIT Fundamental Comparison Table on Nov 5, 2017.  The index continues within uptrend channel after retested the 820 resistance turned support. All 3 moving averages (20D, 50D, 200D) are showing strong upward momentum.

 

 

Fundamental Analysis

  • Price/NAV stays at 1.06 (Singapore Overall REIT sector is over value now).
  • Distribution Yield increases from 6.36% to 6.42% (take note that this is lagging number). About one third number of Singapore REITs (11 out of 37) have Distribution Yield > 7%.
  • Gearing Ratio reduces from 34.3% to 34.1%.  17 out of 37 have Gearing Ratio more than 35%. In general, Singapore REITs sector gearing ratio is healthy.
  • Most overvalue REIT is Parkway Life (Price/NAV = 1.73), followed by Keppel DC REIT (Price/NAV = 1.53), First REIT (Price/NAV = 1.37) and  Mapletree Industrial Trust (Price/NAV = 1.40).
  • Most undervalue (base on NAV) is Fortune REIT (Price/NAV = 0.70) and Sabana REIT (Price/NAV = 0.73).
  • Highest Distribution Yield (TTM) is SoilBuild BizREIT (8.94%), followed by Cache Logistic Trust (8.22%), Lippo Mall Indonesia Retail Trust (8.48%) and Sabana REIT (8.10%).
  • Highest Gearing Ratio is iREIT Global (41.7%).

Disclaimer: The above table is best used for “screening and shortlisting only”. It is NOT for investing (Buy / Sell) decision. To learn how to use the table and make investing decision, Sign up next REIT Investing Seminar here to learn how to choose a fundamentally strong REIT for long term investing for passive income generation.

 

Economy Analysis – Singapore

 

  • 1 month increases from 1.00413% to 1.00513%
  • 3 month increases from 1.12583% to 1.12658%
  • 6 month maintains at 1.25000%
  • 12 month maintains at 1.37758%

The Singapore Manufacturing PMI increased to 52.6 in October 2017 up from 52 in the previous month. The reading pointed to the fastest pace of expansion in the manufacturing sector since December 2009, boosted by a strong performance of new orders and new exports orders, growing employment and a positive overall outlook for manufacturing. The PMI for the electronics sector came in at 53.3, slightly down from 53.6 in September, but still expansionary. Manufacturing PMI in Singapore averaged 50.23 from 2012 until 2017, reaching an all time high of 52.60 in October of 2017 and a record low of 48.30 in October of 2012.

Manufacturing PMI in Singapore is expected to be 53.00 by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Manufacturing PMI in Singapore to stand at 51.40 in 12 months time. In the long-term, the Singapore Manufacturing PMI is projected to trend around 50.20 in 2020, according to our econometric models.

 

The Singaporean economy grew 5.2 percent year-on-year in the third quarter of 2017, following an initial estimate of 4.6 percent and up from 2.9 percent in the prior quarter. It is the biggest expansion since the last quarter of 2013, led by a sharp acceleration in manufacturing. On a quarterly basis, the final estimate showed that the GDP grew an annualized 8.8 percent in Q3 (vs a preliminary 6.3 percent), sharply surpassing the downwardly revised 2.2 percent growth of the previous quarter. The Ministry of Trade and Industry announced that the Singapore economy is expected to grow by 3.0-3.5 percent in 2017 and by 1.5-3.5 percent in 2018. GDP Annual Growth Rate in Singapore averaged 6.66 percent from 1976 until 2017, reaching an all time high of 19 percent in the second quarter of 2010 and a record low of -8.80 percent in the first quarter of 2009.

GDP Annual Growth Rate in Singapore is expected to be 2.80 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate GDP Annual Growth Rate in Singapore to stand at 2.20 in 12 months time. In the long-term, the Singapore GDP Annual Growth Rate is projected to trend around 1.80 percent in 2020, according to our econometric models.

 

 

Summary

Fundamentally the whole Singapore REITs is over value now. Office rental and price index seems like reversing the trend. Do watch out for the turnaround of this office sector in 2018.  Technically Singapore REITs continues the bullish uptrend after the Singapore REITs Index broke the 820 resistance. It is expected the bullish sentiment to continue as Singapore economy fundamental is strengthening based on improved PMI and stronger GDP numbers. December 2017 rate hike to 1.5% has already been priced in and unlikely there will be any knee jerk reaction to the Singapore REIT.

I attached the summary slides of (1) Review of 2017 Singapore REIT performance and  (2) Singapore REIT 2018 Market Outlook which I have presented to various groups retail investors (organised by Adam Khoo Learning Technologies Group and Shareinvestor) in the past few weeks.

 

Safe hunting!

 

See all other relevant  Singapore REITs blog posts here.

Check out coming seminars at http://mystocksinvesting.com/events