As we reach the end of the year, there are several things that you need to pay attention to.
DETOXIFY YOUR WALLET WITH THE DEBT DIET
The Yuletide season is all about merriment and festivities. Due to the overall positive spirit that it exudes, you may want to shy away from the looming shadows of your debt. I suggest that you pause for a moment. Now is a good time to acknowledge your credit score and to cut back on your spending.
Debt takes a toll on your relationships, your family, and your future. It is only hurting your financial health. You do not want this suffering to roll over the next year. This is why you must consider to go on the “debt diet”. The debt diet uses practical ways to help you get back on the right track. Read about it, here.
OPT FOR GROWING YOUR WEALTH
It comes as no surprise that the newbie investors are apprehensive when it comes to the timing of their initial stock purchases. However, it is important to realize that time is your ally whenever you first invest.
The compound interests of your strategic investments will add up despite the current condition of the market. You will most likely have time to recover. This idea may seem like common sense to you, but there are many Singaporeans who wish that they started investing earlier on.
KEEP YOUR INSURANCE POLICIES IN ONE PLACE
Insurance is your safeguard against unforeseen and unpleasant events. It is a way to minimize your risks and cushion your potential losses. If you are a client of several insurance companies, it is a chore to hold all the policy documents. This is where PolicyPal app comes in. It is an app that allows you to keep all your insurance policies in one place.
After collating your policies, get a summary of your overall coverage. This will help you to decide if you have too much or too little policies. For example, you may avail the AIA GLOW OF LIFE (Critical Illness Insurance) instead of adding a special rider to cover female-focused diseases.
AUTOMATE THE PAYMENT OF YOUR BILLS
December is a hectic month! To save valuable time and effort, consider automating the payment of your bills. Schedule electronic transfers thru your internet banking feature.
You may also set up a bank GIRO. GIRO payments take a substantial amount of time. This is why your money must be available at least 3 working days before the bill’s due date.
Image Credits: pixabay.com
Doing an annual review of your finances can help you spend and invest wisely for the upcoming year. Take the pro-active route to financial wealth!
Singapore investors love their dividend stocks. According to the Investment Trends Singapore Broking Report 2015, 75% of investors polled stated that they usually invest in dividend stocks when trading on the Singapore market. And they are spoilt for choice! Many companies that list on SGX pay dividends. But with so many dividend-paying stocks out there, which stock would you consider?
A High Dividend Yield Stock: Better than a Low Dividend Yield Stock or?
That is the question. The stock with the highest dividend yield in the industry may look attractive now, but is a stock with 10% dividend yield better than one with 3% in the long run? Does a high yield stock always outperform a low yield stock?
High dividend yield should not be taken at face value. It always pays to dig deeper and find out the real story behind certain attractive numbers before deciding to invest.
Companies with a high dividend yield compared to the market average may not necessarily equate to companies with good financial performance. The high dividend yield could be the result of declining share price due to weak fundamental such as inconsistent earnings, high debt etc. Besides, high dividend yield may not be sustainable. If earnings fall, the management may cut dividends or eliminate the pay-out altogether. Hence, investors should also look at companies with consistent dividend payouts and with the cash flows coming from actual core operations.
A Dividend Growth Strategy
If a stock with a high dividend yield is not necessarily the best choice for long-term investors, then what other strategies are there? A dividend growth strategy for one, is something you might want to learn more about.
To clarify, dividend yield is the dividend amount divided by the share price. Dividend growth meanwhile is how much the dollar-amount of dividends given out increases each year.
Take this hypothetical example which compares the performance of two investors (based on certain assumptions where indicated).
Investor A: Invests in ABC Company which pays 7% dividend yield at the outset and every year after that.
Investor B: Invests in XYZ Company which pays 3% dividend yield at the outset.
XYZ Company has a lower dividend yield because they choose to reinvest some of their earnings into the business. The business grows, and so does their dividend pay-out – to the tune of 8% every year (e.g. $0.03 dividend per share in year 1, $0.032 in year 2).
Assume that the share prices for both of these companies remain unchanged for 25 years and both investors reinvested their dividends every year. Their performance can be found in the table below.
The Results Investor A, the high yield investor, beats Investor B during the beginning years but the dividend pay-out and portfolio value of Investor B caught up in year 16 and 22 respectively. In the end, the total dividends received by Investor B are more than 3 times that of Investor A.
So, while Investor B received low pay-outs initially, he was rewarded with future growth. This is the underlying principle of the dividend growth investing strategy. Length of the period of investment would also affect the total dividends received.
Finding Dividend Growth Stocks
That will be the next question on your mind if you want to explore using a dividend growth strategy. Stock screeners come in useful here. A stock screener allows you to choose certain criteria, and to find stocks that fit the criteria you have selected.
Here is a set of criteria that could be used to pull dividend growth stocks:
Dividend yield>3%
Market capitalisation>200 million
Dividend growth rate (5-year average)>8%.
The stock screener below, for example, has found 17 stocks that match the above criteria. This provides a good starting point for investors to do further research into these specific stocks. Try to come up with your own set of criteria and see how it works.
Source: Recognia Strategy Builder on Maybank Kim Eng’s KE Trade platform as at March 2016
Disclaimer: This message is for general knowledge or information only. It is not an offer or invitation to buy or sell securities, futures or other products or services. Our products or services vary in different jurisdictions, subject to their respective terms and conditions and the licences our affiliates and us hold. This message is not an advice or recommendation for any financial planning, investment, legal, tax or other purposes and, accordingly, no responsibility or liability is assumed by us or our affiliates, whether directly or indirectly, from any person taking or not taking action
In the dynamic world of the investments, you will encounter the term “short selling”. How does it work and what are the rules behind it?
The age-old practice in investing is that you will profit by purchasing stocks in a low price and selling them for a higher price. Although you have invested in a seemingly good performing economy, some stocks or securities may go down. You cannot earn money by “buying low and selling high” in this circumstance. Fortunately for you, there is another way to make money! That is short selling.
Short selling plays a soothing music to the risk-taker’s ears. Its concept is relatively simple. It takes advantage of the market transitions from higher to lower prices. It occurs when an individual borrows a stock, sells it for a higher price, and purchases the stock again at a cheaper price. Watch this short video to grasp its essence:
Most local brokerage firms let you experience the ease of selling short. Just place an order to sell the stock and communicate with the broker. The brokerage firm will borrow the shares for you to sell. Then, it loans the shares to your account and conducts the sell order.
As with everything, rules shall apply. Here are just some of the common rules in short selling:
1. The “Uptick Rule” is one of the key edicts that short sellers abide. It refers to selling a stock short only when the last trade was a move up. You cannot short a stock that is moving down.
2. The odds may not be in your favor if you heard that a flock of investors are shorting the same stocks that you are shorting. There are so many risks if you short a stock that everyone else does. They can simply abandon their shorts if things do not go as planned. Doing so will drive the price to hike.
3. Short selling during seasonal holidays or during “options expiration week” may attract painful losses because those circumstances do not follow the natural or normal supply and demand.
Short selling takes advantage of the market transitions from higher to lower prices. The steep learning curve intimidates some investors, leading to avoiding it entirely. It is undoubtedly a skill that experienced investors develop!
Making New Year’s Resolution is synonymous to crafting a new budget plan. Creating these two signifies an act of self-improvement. However, no plan is entirely foolproof!
These are just some of the reasons why I previously failed at budgeting:
I FOCUSED HEAVILY ON THE PRICE
Before purchasing a new laptop for work, I inspected some of the contenders from the well-known brands. My new laptop must not only fit my physical preferences, but also my financial limit of up to S$1,000. I searched vigilantly through the store and found a 14-inch HP laptop as well as a 14-inch Dell laptop. These two devices have the same processors and operating system. However, the main memory of the former is 8GB and the latter is 4GB. An important fact is that only the Dell laptop was within my budget.
Which one did I chose? The one with better specifications. Although it retailed for S$1,099, I still taught that it was a smarter investment.
According to a 2012 study published in the pages of the “Journal of Marketing Research”, people fail to follow their budget because they are more likely to spend more than they planned. You must not always beam too much focus on the price. Instead, compare the value (e.g., which has laptop optimal screen size and RAM) of what you are getting before committing to a sale.
MY BUDGET WAS TOO STRICT
Upon getting my first full-time job, I started to restrict myself. My goal was to make enough money to save up for my graduate studies and to help my parents in the household expenses. I did so. I gave about 10% of my salary to my parents and 50% would go to my savings account. I removed my trips to the spa and the cinema. A hefty savings greeted me at the end of every month. But, I felt burnout as there was no room for pleasure. This is when my budget failed me.
To turn things around, I started to make money on the side. I became a blogger that solicits money for endorsements. Eliminating unnecessary expenses is a good idea, but you must reward yourself (from time to time).
I FELT EXHAUSTED WHILE TRACKING MY SPENDING
You need discipline to track your own spending. I realized this firsthand. I used to compile all my receipts and banks statements. But, it got too exhausting! I started with a willpower to succeed until the constant vigilance took a toll on me.
A study supports my statement as it was found that self-control and intelligent decision making involves one’s energy supply. Once this energy runs out, you are more likely to go on a spree.
Image Credits: pixabay.com
Get things by following thru your plan. Practice is the key! Improved decision making and control will become second nature to you as time passes.
In its fundamental form, insurance is a contract that enables individuals or entities to receive financial protection against losses. It ensures the stability of families and businesses after a crisis or other unfortunate events. Simply put, insurance grants policyholders a peace of mind. Isn’t that what everybody wants – to be able to sleep at night without having to worry about what the future holds?
These are the reasons why I am drawn to getting insurance policies. I have to be completely honest. One of the major drawbacks that I dislike about insurance is its complexity. I am apprehensive about the piles of questions and bulky documents. Do not get me started about the confusing technical terms!
To my delight, I was introduced to a revolutionary insurance company that dances gracefully with the modern tides. This was none other than FWD Insurance. FWD Insurance aims to transform the way that Singaporeans experience insurance by simplifying the purchase and claims process. It helps you to skip the agent by directly working with them online.
Say goodbye to nerve-wracking call backs and time-consuming interrogations by embracing their user-friendly website!
FWD Insurance understands how valuable a working Singaporean’s time and money is. This is why the company maximizes these two commodities through providing insurance quotations under 60 seconds for car insurance and 10 seconds for travel insurance. These impressive figures are due to the fact that FWD only asks questions that are absolutely necessary.
For instance, it took me 25 seconds to be quoted with the premium of about S$174 for a DIRECT-Term Life insurance that seeks to cover 5 years of my life. I used the rest of my day to focus on other productive matters. You can do the same thing too!
The people behind FWD best explained the company’s concept: “We believe that insurance doesn’t need to be complex, sold through middlemen, or take up vast amounts of your time.” It offers competitive prices and easy-to-understand insurance.
Attractive Insurance Products
It is usual for people to feel skeptical when they encounter an insurance company for the first time. Wash away this feeling by knowing that you are supported by a company with a strong financial record. FWD is the insurance business arm of the established investment group, Pacific Century Group (PCG).
Choose from the four secure insurance products such as DIRECT-Term Life Insurance. Car, Travel and Personal Accident.
A. DIRECT-TERM LIFE INSURANCE
The DIRECT-Term Life insurance ensures that your family’s financial future is secured despite unfortunate events such as becoming diagnosed with a critical illness, becoming permanently disabled, or passing away.
These are the primary reasons why I am drawn to this policy:
I can choose the period that works for my budget and lifestyle (e.g., 5 or 20 years).
I can purchase coverage through my smartphone – without going through a middleman.
Because FWD does not pay commission to agents, my coverage of up to S$400,000 may cost less than S$1/day.
B. CAR INSURANCE
Three comprehensive plans cover vehicle repairs, third-party damages, medical expenses, and roadside assistance. These plans were crafted to suit your personal needs and budgets.
No matter what plan you avail, your repairs will be completed by the FWD workshops. You can cruise along blissfully until your car turns ten. Furthermore, your 50% NCD is guaranteed for lifetime. NCD stands for no-claim discount. Drivers who have earned their 50% NCD get to keep it for life because they believe that one accident doesn’t make you a bad driver.
On top of that, you can add amazing features which gives you coverage when you are driving in West Malaysia and certain parts of Thailand.
C. TRAVEL INSURANCE
Take for instance; to reap the rewards of her hard work, Jena scheduled a weeklong vacation to Thailand. The beautiful country has so much to offer from pristine beaches to established sports clubs. She did not forget to pack her favorite S$200 golf putter. To enjoy a fuss-free tropical getaway, she purchased FWD’s travel insurance. It was one of the best decisions she ever made as the putter got lost in the airport and fortunately, sports equipment is covered by the policy.
Aside from sports equipment, the travel insurance also includes unlimited medical evacuation. You read that right! The last thing on your mind is how much your emergency evacuation will cost. This is why FWD has thought of this for you.
You can expect the claiming process to be a breeze too. Claim with a few clicks with the “Click to Claim” feature. This means, all you have to do is snap your boarding pass and claim for flight delays via WhatsApp. This feature is available for baggage delays too. Simply take a photo of your baggage slip and send it to FWD via WhatsApp. That is convenience at its finest!
D. PERSONAL ACCIDENT INSURANCE
Personal Accident (PA) insurance provides compensation in the event of disability, injuries or death. In fact, one feature unique to FWD is that the policy also covers the most number of infectious diseases including Zika and dengue fever. Under this policy is the Guardian Angel Benefit. If both parents pass away or become permanently disabled due to an accident, FWD will provide up to S$500,000 for the surviving children.
Lastly, natural circumstances now cannot stop you from having fun as ticketed event cancellations due to haze are covered. Apparently, they are the only insurer in Singapore to offer this.
Irresistible Features and Highlights
Before you make a commitment, it is important to know what this new insurer can do. Let me start by stating the fact that there are no middlemen or agents. Since you do not have to pay for commissions, you can save more money.
FWD allows you to complete your purchases online. It is so quick and easy to complete the online quotation that even your 9-year old niece can do it for you! As soon as you make your purchase, you will get an email with the policy. You will also receive an SMS that notifies you to check your email.
Lastly, the policies are delivered with no technical terms. You will know exactly what you will get explained in plain English.
From now till 31 January 2017, you can now enjoy a 10% discount on all FWD insurance products with this promo code – FWDHi10.
For the people behind FWD, customers are at the heart of the entire process. They let you experience exceptional insurance by minimizing your effort and making products readily accessible. May they change the way you feel about insurance!
