8 Personal Financial Ratios to check Before you invest

Like a professional footballer, the physio has to check the physical health of the players before they are declared fully fit to play in a 90 min competitive game. Similarly, to us as retail investor, we need to understand our own personal financial ratios so that we put priority in the most pressing area in our personal financial planning due to limited resources. Don’t jump straight to investment if we are not sure out financial fitness level.

There are 8 basic personal financial ratios we need to check.

(1) Basic Liquidity Ratio: This ratio checks whether we have enough cash reserve to serve our monthly expenses. The guideline for a typical person is 3 to 6 months but it may need up to 1 year for unemployed PMET who are aged 40 and above because they may need longer time to find a job. In other word, this can be treated as the number of month emergency fund available to deal with unforeseen circumstances.

(2) Liquid Asset to Net Worth Ratio: This ratio indicates the percentage of your net worth that are liquid. If you are retiree and you think you have “Asset Rich Cash Poor” symptom, check whether your ratio is meeting the guideline of at least 15%.

(3) Saving Ratio: This ratio measures whether one set aside part of the monthly income to invest regularly with discipline to meet their own financial goal. As a general rule of thumb, one should put aside at least 10% of monthly gross income. In another word, “Pay Yourself” first!

(4) Debt to Asset Ratio: This is also known as personal Gearing Ratio. This ratio checks how much your assets are funded by debt. As a general rule of thumb, you should have no more than 50% of your assets leveraged through debt.

(5) Debt Service Ratio: This ratio measures how much you use your “take-home-pay” to service total debt obligations. If you don’t want to become a housing loan slave, credit card loan slave or any debt slave, start reducing your Debt Service Ratio to less than 35% as per the general guideline.

(6) Non-Mortgage Debt Service Ratio: This ratio measures how much you use your “take-home-pay” to service you credit card debt, personal loan and other non-mortgage related debt. The effective interest rate of all these debts are much higher than mortgage loan. If you are in financial distress and facing difficulties in clearing your debt, this is the area you should be focus on immediately. As a general rule of thumb, you should have no more than 15% of your net income going into non-mortgage debt.

(7) Net Investment Assets to Net Worth Ratio: This ratio measures how much your net worth is invested assets, and whether you deploy the resources efficiently to income generating asset classes. As a general guideline, you should have at least 50% of your assets invested in some form of capital (investment) assets.

(8) Solvency Ratio: This ratio measures your technical solvency in terms of whether you have sufficient assets to meet your liabilities. As a general rule of thumb, your Net Worth should be at least 50% of your Total Assets.


In summary, understanding our own personal financial ratio is extremely important when charting our financial journey to prioritize the allocation of our limited financial resources. Personal Financial ratio also serves a measurement of our financial progress when we are moving along our life stages. Things get measured, things get done and get improved. Start measuring your Personal Financial Ratio now!


Kenny Loh is a Senior Consultant of a largest Independent Financial Advisor in Singapore. He won 4 Awards in 2017, Financial Alliance Quality Class Merit Award, Top 5 Investment Asset Under Advice (AUA) Award, Rookie Consultant of the Year Award and Best Practice Consultant Award. You may contact Kenny at kennyloh@fapl.sg if you need help in conducting a Financial Health Check to understand your Personal Financial Ratio.

Singapore REIT Fundamental Analysis Comparison Table – 4 Mar 2018

Technical Analysis

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) increases slightly from 805.48 to 811.22 (+0.7%) as compared to last post on Singapore REIT Fundamental Comparison Table on Feb 12, 2017.  The REIT index up trend is definitely over and looks like going to reverse to down trend after breaking the 200D SMA support. There are a few bearish signals from the charts:

  • 20D has crossed down 50D and 200D SMA.  This is the 2nd warning signal the FTSE ST REIT index will start the down trend.
  • A Bearish Pennant is in formation. Breaking down this pennant will send the index down to 740-750 region.
  • 200D SMA is served as tough resistance now and will turned down pretty soon if index cannot get back above the 200D SMA.
  • The index now is consolidating around the 61.8% Fibonacci Retracement Level.
  • The immediate important support is 800. Breaking this 800 support is the confirmed signal for the bearish trend starts as a “Lower Low” will be formed.

Fundamental Analysis

  • Price/NAV increases from 1.04 to 1.05 (Singapore Overall REIT sector is still over value now after the recent sell off).
  • Distribution Yield decreases from 6.54% to 6.47% (take note that this is lagging number). About one quarter of Singapore REITs (9 out of 39) have Distribution Yield > 7%.
  • Gearing Ratio increases from 34.4% to 34.8%.  20 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 = 1.62), followed by Keppel DC REIT (Price/NAV = 1.49), First REIT (Price/NAV = 1.34) and  Mapletree Industrial Trust (Price/NAV = 1.36).
  • Most undervalue (base on NAV) is Fortune REIT (Price/NAV = 0.66), followed by OUE Comm REIT (Price/NAV = 0.77)  and Sabana REIT (Price/NAV = 0.74).
  • Highest Distribution Yield (TTM) is Lippo Mall Indonesia Retail Trust (8.94%), followed by SoilBuild BizREIT (8.72%), Viva Industrial Trust (8.59%), Sabana REIT (8.28%), and Cache Logistic Trust (8.02%).
  • Highest Gearing Ratio are Soilbuild BizREIT (40.6%) and iREIT Global (40.3%).

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.


Interest Rate

  • 1 month increases from 1.00879% to 1.12625%
  • 3 month increases from 1.12691% to 1.24563%
  • 6 month increases from 1.33784% to 1.39888%
  • 12 month increases from 1.46634% to 1.52796%


Fundamentally the whole Singapore REITs is still over value now after the recent sell off.  Overall yield for Singapore REIT is still attractive (average yield of 6.47%) but we have to watch closely the US interest rate hike (84.5% probability US Fed is going to increase another 25 bps to 1.75%). The FTSE ST REIT Index has already moved ahead before the next interest rate announcement on Mar 21, after dropping about 7.4% from the peak.  Currently the REIT index is trading in consolidation phase.  The index may have another big move after reaching the apex of the bearish pennant pattern. Technically the direction of the REIT index is short term side way and medium term down trend.


What Should You Do?

  • If you are holding any big REIT position, you may want to reduce your exposure or hedge your portfolio. You have to proactively manage (making decision logically) your portfolio instead of reacting to the event (emotion takes over) when things happen. Be prepared for another huge leg down after the Mar 21 Fed announcement of the rate hike.
  • If you do not have any REIT now but want to build up your REIT portfolio for passive income, it is time to do homework now to put fundamental strong REIT into your watch list. You can do a great shopping when there is panic selling.
  • I receive many emails asking me when is my next REIT class. Unfortunately there is NO firm schedule at the moment. Tentatively I am planning in May or June 2018 but it is very much depends on my schedule. I would suggest you subscribe through my mailing list to be kept posted on the next REIT class schedule. http://mystocksinvesting.com/course/singapore-reits-investing/
  • If you need an independent professional review on your current REIT portfolio and need any recommendation, you may engage me in the REIT portfolio Advisory. REITs Portfolio Advisory.  http://mystocksinvesting.com/course/private-portfolio-review/



See all other relevant  Singapore REITs blog posts here.





3 Pitfalls investors must know before investing in REIT

Most investors are attracted by the high yield and passive income REIT offers. However, there are 3 important points to take note when investing in REIT.

(1) It is never wrong to buy a real estate at a discount (i.e. under value) in theory. However, beware of the value trap because some of the REITs are always traded below its book value due to the inherited risks. There is no free lunch in the investing world, cheap stuff may not be a good investment as the stock market is efficient and adjusted to the true value very fast. The smart money always buy up cheap and good REIT when there is an opportunity before the retail investors even have a chance to spot it.

(2) REIT uses debt and/or equity financing to raise funds to acquire properties, collect rental from the tenants and pay 90% of the net property income back to unit holders. As such, it is very common for REIT to issue additional shares (i.e. to the existing unit holders or to private investors to raise capital. Most of the time, the right issues are offered at a discount to the market price and immediately the existing shareholder will suffer capital loss if they are unable to folk out additional funds to subscribe to the rights.

(3) High return always associate with higher risk when it comes to investing. Similar to REIT investing, some of the REITs give very attractive distribution yield up to 7-9% but one must make sure they fully understand the risks in it. Most retail investors are just purely relying on the distribution yield as the selection criteria when come to REIT selection.

Investing is all about risk management, it is very important to understand all the risks before putting your hard earned money investing in REIT for your retirement. Get a professional help in building your REIT portfolio for your retirement because retirees cannot afford to make any mistakes when it comes to investing.


Kenny Loh is a Senior Consultant from Singapore Largest Independent Financial Advisor helping clients in building an investment portfolio for retirement. He specialised in Singapore REIT and has been conducting REIT investing courses for past 6 years. 

He won the Top Investment Asset Under Advisory (AUA ) 2nd runner up in 2017 and currently managing million of AUA. He also won the Best Practice Consultant Award in 2017. He can be contacted through kennyloh@fapl.sg if you would like his help to personalise a REIT portfolio for your retirement.