How Fintech is changing our financial life

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Financial technology or FinTech is going to change our way in dealing in the financial world! No if, No But, the only question is how our life will be affected and when is going to happen!

So, what is FinTech? FinTech is the short form of Financial Technology. FinTech is transforming the financial services in a way we have not seen before. In a very layman term, any services on how and where we use our money or any financial services will be impacted. Everything will eventually become faster, cheaper, simpler in our lives.

Below are some examples how our daily life evolves in future.

  • Mobile Banking:  The smartphone is becoming our bank.  People can consume financial services on the go. We no longer need to queue at the ATM machines or visit the bank branches for transaction.
  • Cashless transaction: We no longer need to bring money, credit card and even wallet. Our physical wallet will be replaced by digital wallet or e-wallet in the Mobile phone. This digital wallet or e-wallet is basically an apps to link to our bank account. Cryptocurrencies like BitCoin, Etherium, Ripple may be the currency in the very near future.
  • Cyber connectivity: The Internet has compressed time and space.  Interaction is real-time and unconstrained by physical boundaries.
  • Unlimited Brain Power and Storage: Don’t worry about our memory power when we are aging. We have unprecedented computing power. The devices in our hands or on our wrists are our 2nd brain that pack more data and more processing power than super computers just a couple of decades ago.
  • Big Data / Cloud Computing / Artificial Intelligence: You are going to hear all these alien words more and more frequently.

 

While there are so many advantages FinTech can bring to us. This new technology also brings another type of risks or threats. As every data is stored in a cloud system, cyber risk like data breaching become the biggest threats. The recent hacking of the SingHealth’s patient data is a very good example. The following are the risks we have to be aware off:

  • Personal Data / Privacy Breach: Ranges from our bank account, where we stay, what we do, how many properties we have, employment income, investment, etc.
  • Location Traceability: As we are connected through internet all the time, our location, our movement, our favourite visiting places are easily exposed and we can be easily the targets of the criminals.
  • Cyber Theft: As our digital currency and our investment are all stored in the cyber space, all our assets could be stolen easily if there is any successful hacking.

 

There is no way we can run away from this FinTech Revolution, we just have to get ourselves prepared to embrace FinTech and use FinTech to improve our productivity in everything we do. You may want to learn more about FinTech in the coming Invest Fair 2018 on Aug 25 and 26. Look for the FinTech Zone in the Invest Fair to learn more about the Digital Exchange, Crowd Funding and how the Wealth Management scene embraces FinTech. You can register the event by clicking HERE and enter promo code MYSTOCKSINVESTING to have 3x chances to win the lucky draw.

 

Register here http://sg2018.invest-fair.com/register

 

 

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Pros and Cons of Fixed Deposits

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Fixed deposits are another way to invest your money. Like other investment options, FDs have both advantages and disadvantages. To help you decide if a fixed deposit is right for you, here are some advantages and disadvantages of putting money into a fixed deposit.

Advantages:

Fixed Deposits give guaranteed returns

Unlike the stock market, they do not have price volatility. For example, if you invest $1000 for a year and the interest rate is 1.8% at maturity, you will get $1018 after a year. No more, no less.

Fixed Deposits give higher interest rates than ordinary saving accounts

Fixed deposits generally provide more interest than ordinary savings accounts. As of July 2018, fixed deposits provide up to 1.8% p.a. interest, whilst ordinary savings accounts only provide up to 0.80% p.a. interest.

Fixed deposits are virtually risk free (for smaller deposits)

Unlike other forms of investment, fixed deposits are virtually risk free. So long as the bank does not collapse, you will get your money back in addition to interest. Your deposits are also insured, up to $50,000 even if something happens to the bank, thanks to the Singapore Deposit Insurance Corporation (SDIC).

Fixed Deposit interests are not taxable in Singapore

This means you can keep all the income from FDs, so long as the bank is approved by IRAS.

 

Disadvantages:

There are other forms of investment that give higher returns

The main disadvantage of fixed deposits is that it pays relatively low interest rates. At up to 1.8% p.a., this is considerably lower than other forms of investment such as REITS, stock market trading and real estate (albeit with higher risk). For example, Singapore REITS provide 5-8% p.a. in dividends.

Fixed Deposits interest rates may not increase despite inflation

If inflation rate is higher than the FD’s interest rate, your purchasing power will decrease.

You cannot top up more money into a FD

You’ll have to open a new FD account which can only be done if you have enough money for the minimum.

Fixed Deposits will not yield any benefit if you withdraw early

There is also a maturity date. If the money is withdrawn before the agreed date, you either have to pay a penalty or have its interest forfeited. There may also be a need to give an advance notice.

 

 

 

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Singapore REIT Fundamental Analysis Comparison Table – 1 July 2018

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FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreases from  800.42 to 786.10 (-1.79%) as compared to last post on Singapore REIT Fundamental Comparison Table on June 1, 2018.  The REIT index has broken the 800 support and all 3 Moving Averages are turning down. This is a signal of bearish down trend.   The REIT Index has rebounded from a Resistance Turned Support and is currently testing the 20D SMA resistance. If this support zone is broken, the REIT index will continue to slide down to around 742 level.

Fundamental Analysis

  • Price/NAV decreases from 1.02 to 1.00 (Singapore Overall REIT sector is at fair value now).
  • Distribution Yield increases from 6.64% to 6.76% (take note that this is lagging number). About one third of Singapore REITs (15 out of 40) have Distribution Yield > 7%.
  • Gearing Ratio stays at 34.7%.  20 out of 40 have Gearing Ratio more than 35%. In general, Singapore REITs sector gearing ratio is healthy.
  • Most overvalue REIT is Parkway Life (Price/NAV = 1.58), followed by Keppel DC REIT (Price/NAV = 1.42), First REIT (Price/NAV = 1.31) and Mapletree Industrial Trust (Price/NAV = 1.31).
  • Most undervalue (base on NAV) is Fortune REIT (Price/NAV = 0.65), followed by  Starhill Global REIT (Price/NAV = 0.71), Far East Hospitality Trust (Price/NAV = 0.73), OUE Comm REIT (Price/NAV = 0.76) and EC World REIT (Price/NAV = 0.77).
  • Highest Distribution Yield (TTM) is Lippo Mall Indonesia Retail Trust (10.22%), followed by SoilBuild BizREIT (8.53%), Viva Industrial Trust (8.54%), Cromwell European REIT (8.49%), EC World REIT (8.27%), Sasseur REIT (8.22%) and Cache Logistic Trust (8.37%).
  • Highest Gearing Ratio are OUE Comm REIT (40.5%), iREIT Global (40.5%) and Soilbuild BizREIT (40.2%).

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.

  • 1 month increases from 1.38291% to 1.40050%
  • 3 month increases from 1.50704% to 1.52038%
  • 6 month increases from 1.65446% to 1.66171%
  • 12 month increases from 1.84604% to 1.85065%

Summary

Fundamentally the whole Singapore REITs is at fair value now.  Overall yield for Singapore REIT is still attractive (average yield of 6.76%). Yield spread (reference to 10 year Singapore government bond) is 4.23%. DPU yield for a number of small and mid cap REITs are quite attractive at the moment.  However, technically, the REIT index is currently trading on downtrend and more down side is expected in the near term. It is time to get our watch list ready if the REIT sectors continue to correct to an attractive entry level.

 

REIT in Singapore is considered a Listed Alternative Investment. I will be inviting Sani Hamid to give a current market outlook and share his strategy on How to Safeguard Your Portfolio Using Regulated Alternative Investment.  This is an exclusive private event for my blog readers, my students and my guests. Registration is compulsory as seats are limited. Please register online here https://www.eventbrite.sg/e/how-to-safeguard-your-portfolio-using-regulated-alternative-investments-tickets-47455131576

 

See all other relevant  Singapore REITs blog posts here.

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.  https://mystocksinvesting.com/course/private-portfolio-review/

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