Chong Ser Jing - Seedly
 
Chong Ser Jing

Writer & co-lead of investing team for the Motley Fool Singapore, Jan 2013 - Oct 2019. Blogs at www.thegoodinvestors.sg

Chong Ser Jing

Former Writer/Analyst at The Motley Fool Singapore

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Writer & co-lead of investing team for the Motley Fool Singapore, Jan 2013 - Oct 2019. Blogs at www.thegoodinvestors.sg

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Former Writer/Analyst at The Motley Fool Singapore

Chong Ser Jing

Former Writer/Analyst at The Motley Fool Singapore

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REITs

Stocks Discussion

Investments

Savings

Hello! I answered a similar question previously in Seedly, but I thought the answer is worth reproducing below! I helped to develop the investment framework for a Singapore-REIT-focused investment newsletter with The Motley Fool Singapore. The newsletter has delivered good investment returns, so I thought I can offer some useful food-for-thought here. The REIT newsletter was launched in March 2018 and offered 8 REIT recommendations. As of 15 October 2019, the 8 REITs have generated an average return (including dividends) of 28.8%. In comparison, the Straits Times Index's return (including dividends) was -3.1% over the same time period. The average return (including dividends) for all other Singapore-listed REITs that I have data on today that was also listed back in March 2018 is 17.2%. The investment framework we used had four key pillars. First, we looked out for long track records of growth in gross revenue (essentially rent the REITs collect from their properties), net property income (what’s left from the REITs’ rent after paying expenses related to the upkeep of their properties), and distribution per unit. A REIT may fuel its growth by issuing new units as currency for property acquisitions and dilute existing unitholders’ stakes. As a result, a REIT may show growth in gross revenue, net property income, and distributable income, but then have a stagnant or declining distribution per unit. We did not want that. Second, we looked out for REITs with favourable lease structures that feature annual rental growth, or REIs that have demonstrated a long history of increasing their rent on a per-area basis. The purpose of this pillar is to find REITs that have a higher chance of being able to enjoy organic revenue growth. Third, we looked for REITs with strong finances. In particular, we focused on the gearing ratio (defined as debt divided by assets) and the interest coverage ratio (a measure of a REIT’s ability to meet the interest payments on its debt). We wanted a low gearing ratio and a high-interest coverage ratio. A low gearing ratio gives a REIT two advantages: (a) the REIT is likelier to last through tough times; and (b) the REIT has room to take on more debt to make property acquisitions for growth. A high-interest coverage ratio means a REIT can meet the interest payment on its borrowings without difficulty. At the time of the REIT newsletter’s launch, the eight recommended-REITs had an average gearing ratio of 33.7%, which is far below the regulatory gearing ceiling of 45%. The eight recommended-REITs also had an average interest coverage ratio of 6.2 back then. Fourth, we wanted clear growth prospects to be present. These prospects could be newly-acquired properties with attractive characteristics or properties that are undergoing redevelopment that have the potential to deliver higher rental income in the future. It's important to note that there are more nuances that go into selecting REITs, and that not every REIT that can ace the four pillars above will turn out to be winners. But at the very least, I hope what I’ve shared can be useful in your quest to invest smartly in REITs. To sum up, keep an eye on a few factors: (1) Growth in gross revenue, net property income, and crucially, distribution per unit. (2) Low leverage and a strong ability to service interest payments on debt. (3) Favourable lease structures and/or a long track record of growing rent on a per-area basis. (4) Catalysts for future growth.

Stocks Discussion

Investments

Hello! The answer to your question will depend on what your investment timeframe is. If it's anything less than 3-5 years, my answer won't be useful for you. But if you're looking to invest in companies for multi-year periods, I'm happy to share my investment framework. The framework's foundation is first built on what exactly is the stock market, and it is a place to buy and sell pieces of a business. Having this basic but important understanding of the stock market leads to the next observation, that a stock’s price movement over the long run then depends on the performance of the underlying business. In this way, the stock market becomes something easy to grasp: A stock’s price will do well over time if the underlying business does well too. The next logical question then follows: Is there a way to find companies with businesses that could do well in the years ahead? I think there is. I've been investing for 9 years, and I tend to look for companies with the following characterisitics: 1) Revenues that are small in relation to a large and/or growing market, or revenues that are large in a fast-growing market. 2) A strong balance sheet with minimal or a reasonable amount of debt. 3) A management team with integrity, capability, and an innovative mindset. 4) Revenue streams that are recurring in nature, either through contracts or customor-behaviour. 5) A proven ability to grow. 6) A high likelihood of generating a strong and growing stream of free cash flow in the future. I'll keep the discussion brief in this forum answer, but you can head here for a deeper look at the six criteria. Hope this is helpful! Happy to continue the conversation here!

Stocks Discussion

Investments

Hi! The answer to your question will depend heavily on when you need the S$10,000 you have set aside to invest. If it's money you very likely need any time in the next 5 years, then it's best that you do not invest this money. The stock market is volatile over the short run (anything less than 5 years) and the worst thing to be during a market downturn is a forced seller. I can share how I look at the situation. I'm investing with money that I do not need for many years. I also invest in individual stocks, as opposed to investing in funds that track broad market indexes. When I find a company I think has bright long-term prospects and a decent valuation, I'm happy to invest. I invest knowing that a market downturn will surely happen in the future - I just don't know when. I protect my portfolio in a few ways. First, I diversify my portfolio among a wide number of companies (at least 30). Second, I invest in companies with strong balance sheets and a high level of free cash flow. These traits improve the chance that a company can survive an economic downturn, or even win market-share when financially weaker competitors stumble. Third, I invest in companies with high levels of recurring revenues, either from customer-behaviour (think credit-card companies and coffee shops!) or contracts (such as subscriptions). The recurring revenue ensures that a company has a certain base of revenue that will continue to flow in even when the economy is weak. By doing these three things, I protect my portfolio over the long run and ensure that it can survive strongly during the downturn period, and continue climbing when the downturn inevitably ends.

Investments

Hello! Note that my answer to your question will be an over-simplification, otherwise you'll be reading a novel-length answer =) Simply put, value investing is the investment philosophy of approaching a stock as representing partial ownership of an actual, living, breathing business. As a result, value investors rely primarily on a company's financial statements (though many value investors also assess a company's qualitative traits, such as the integrity and capability of the company's management team) to understand the intrinsic value of a business. If a company's stock price is significantly lower than its intrinsic value, that would interest value investors. Famous value investors include Warren Buffett, Benjamin Graham, and Walter Schloss. Stock market trading, on the other hand, typically involves the use of a stock's historical price-charts to predict its future movement over short timeframes. There is a lot less emphasis placed on the study of a stock's underlying business fundamentals compared to value investing. There are many ways to do well in the stock market, but I personally find it easier to approach stocks as representing a piece of a living, breathing, business.

Stocks Discussion

Investments

Trading

Finance Savvy

Personal Finance 101

Hello! I don't know anything about chart-reading (a.k.a technical analysis), but I have some suggestions on good sources of knowledge for analysing stocks based on their business fundamentals. For courses, you can check out what's provided by Dr Wealth and Fifth Person. I've never been to their courses, but I know the people running the show and have heard or briefly seen the content shared in the courses. All good stuff. Dr Wealth and Fifth Person approach fundamentals-analysis from different angles, but both are useful. Best thing is, their courses are wallet-friendly! For books, I think any new investor should start with learning about accounting. A great book for that will be "How to Read a Financial Report" by John Tracy. When you're done with that, you can start exploring two books: "The Littel Book of Common Sense Investing" by John Bogle, and "One Up on Wall Street" by Peter Lynch. These 3 books should serve as a very strong foundation for your development as an investor.

Stocks Discussion

Chong Ser Jing
Chong Ser Jing
Level 5. Genius
Answered 2w ago
Hello! It seems like you're referring to the following preferred shares issued by DBS: https://secure.fundsupermart.com/fsm/bonds/factsheet/SG2C54964409/DBSSP-4-700-Perp-Callable-2020-Pref-SGD-Retail Am I right? If I'm right, then this particular preferred share issue can only be called back (or redeemed) by DBS on or after 22 November 2020. DBS has the right to choose when it wants to call back the preferred shares after the aforementioned date - meaning there is no guarantee that DBS will ever call back the preferred shares.

Investments

Dividends

Hi Rasyad! Tax issues may be tricky because each individual's circumstances can be different. But in general, Singaporeans living in Singapore who want to invest in US-listed stocks have to sign the W8-BEN form (something your broker should be happy to help you with). The form declares to the US government that the individual is a non-US resident. Once the form is signed and submitted, the individual will have to pay WHT (withholding taxes) of 15% on dividends from US-listed stocks. Typically, the WHT will already be deducted by the time your broker passes you the dividends from your US-listed stocks, so there's nothing you have to do. There will also be no capital gain taxes on US-listed stocks once you've signed and submitted the W8-BEN form.

Stocks Discussion

Investments

ETF

Hello! I wrote a long answer to a similar question on Seedly on what to look out for when choosing ETFs. For the sake of your convenience, I've shared the answer again below. Kenneth and Kelly Trinh have both mentioned the 2800 HK Tracker Fund. It does well against all of the points I shared regarding the things to look out for when choosing an ETF to invest in. "There are a few things to keep in mind when searching for ETFs to invest. 1) The gap between a positive macro-economic trend and stock price returns can be a mile wide. For example, gold was worth A$620 per ounce at the end of September 2005 and the price climbed by 10% per year for nearly 10 years to reach A$1,550 per ounce on 15 September 2015. But an index of gold mining stocks in Australia’s market, the S&P / ASX All Ordinaries Gold Index, fell by 4% per year from 3,372 points to 2,245 in the same timeframe. In another example, see the chart below on the disparity between the stock market returns and economic growth for China and Mexico from 1992 to 2013. Despite stunning 15% annual GDP growth in that period for China, Chinese stocks actually fell by 2% per year; Mexico on the other hand, saw its stocks gain by 18% annualised, despite its economy growing at a pedestrian rate of just 2% per year. So when finding themes to invest in via ETFs, make sure that the macro-economic theme you're betting on can translate into commensurate stock market gains. ! 2) ETFs can mimic the performance of a stock market index through two broad ways: Synthetic replication, or direct replication. Synthetic replication involves the use of derivatives without directly investing in the underlying assets. It is the less ideal way to build an index-tracking ETF, in my view, because there is more complexity involved and hence a higher risk that a large proportion of the underlying index’s performance can’t be captured. Direct replication has two sub-categories: (a) Representative sampling, where the ETF holds only a sample of the stocks within an index; and (b) full replication, which involves an ETF buying the same stocks in nearly identical proportions as the weights of all the stocks that make up an index. Try to look for ETFs that utilise full replication if possible. 3) Look for an ETF that is managed by a reputable fund management company. For example, Vanguard, SPDR, iSHAREs, Blackrock are just some examples of reputable providers of ETFs. 4) Ideally, an ETF should have a listing history of at least a few years, so that we can see how the ETF has actually done, and not just rely on the performance of the underlying index. 5) The expense ratio (essentially all of the fees that an investor has to pay to the provider of the ETF) should be low. There's no iron-clad rule on what "low" means, but I think anything less than 0.3% for the expense ration can be considered low. Having a low expense ratio puts an ETF on the right side of the trend of investment dollars flowing toward low-cost index tracking funds, which lowers the risk of an ETF’s manager closing the ETF down for commercial reasons. 6) The amount of assets under management for an ETF should also be high (ideally more than US$1 billion). Having high assets under managment for an ETF would also lower the chance that the ETF will close in the future. It's not uncommon for ETFs to close. When a closure happens, it creates hassle on the investors' part to find new ETFs to invest in. 7) Lastly, look for a low tracking error. An ETF's returns should closely match the returns of its underlying index. If the tracking error has been high in the past, there's a higher chance that the ETF can't adequately capture the performance of its underlying index."
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Stocks Discussion

Investments

ETF

SAXO Markets

DBS Vickers Securities

Hello! It's great that you're looking at ETFs as a way to gain exposure to equities (another word for stocks). ETFs typically allow wide diversification easily. There are a few things to keep in mind when searching for ETFs to invest. 1) The gap between a positive macro-economic trend and stock price returns can be a mile wide. For example, gold was worth A$620 per ounce at the end of September 2005 and the price climbed by 10% per year for nearly 10 years to reach A$1,550 per ounce on 15 September 2015. But an index of gold mining stocks in Australia’s market, the S&P / ASX All Ordinaries Gold Index, fell by 4% per year from 3,372 points to 2,245 in the same timeframe. In another example, see the chart below on the disparity between the stock market returns and economic growth for China and Mexico from 1992 to 2013. Despite stunning 15% annual GDP growth in that period for China, Chinese stocks actually fell by 2% per year; Mexico on the other hand, saw its stocks gain by 18% annualised, despite its economy growing at a pedestrian rate of just 2% per year. So when finding themes to invest in via ETFs, make sure that the macro-economic theme you're betting on can translate into commensurate stock market gains. ! 2) ETFs can mimic the performance of a stock market index through two broad ways: Synthetic replication, or direct replication. Synthetic replication involves the use of derivatives without directly investing in the underlying assets. It is the less ideal way to build an index-tracking ETF, in my view, because there is more complexity involved and hence a higher risk that a large proportion of the underlying index’s performance can’t be captured. Direct replication has two sub-categories: (a) Representative sampling, where the ETF holds only a sample of the stocks within an index; and (b) full replication, which involves an ETF buying the same stocks in nearly identical proportions as the weights of all the stocks that make up an index. Try to look for ETFs that utilise full replication if possible. 3) Look for an ETF that is managed by a reputable fund management company. For example, Vanguard, SPDR, iSHAREs, Blackrock are just some examples of reputable providers of ETFs. 4) Ideally, an ETF should have a listing history of at least a few years, so that we can see how the ETF has actually done, and not just rely on the performance of the underlying index. 5) The expense ratio (essentially all of the fees that an investor has to pay to the provider of the ETF) should be low. There's no iron-clad rule on what "low" means, but I think anything less than 0.3% for the expense ration can be considered low. Having a low expense ratio puts an ETF on the right side of the trend of investment dollars flowing toward low-cost index tracking funds, which lowers the risk of an ETF’s manager closing the ETF down for commercial reasons. 6) The amount of assets under management for an ETF should also be high (ideally more than US$1 billion). Having high assets under managment for an ETF would also lower the chance that the ETF will close in the future. It's not uncommon for ETFs to close. When a closure happens, it creates hassle on the investors' part to find new ETFs to invest in. 7) Lastly, look for a low tracking error. An ETF's returns should closely match the returns of its underlying index. If the tracking error has been high in the past, there's a higher chance that the ETF can't adequately capture the performance of its underlying index.

Investments

Stocks

Stocks Discussion

Savings

STI ETF

Congratulations on wanting to start investing at such a young age! You're giving yourself plenty of time for compounding to work its magic. And it's wonderful that you have capital that you won't need for the next 5 years. Investing money in stocks will mean that you will have to go through periods when stocks fall. This is inevitable. Stocks have done very well over long periods of time (developed economy stocks have climbed by 8.2% per year from 1900 to 2018), but they don't go up in a straight line. There will be severe ups-and-downs along the way. So before you actually invest your capital in the STI ETF or any other stock for the matter, I will suggest that you start an investing journal. Spend a few minutes to write down a few key reasons why you're choosing to invest in this stock now. in your journal. The reasons can be simple. In the case of the STI ETF, it could be: "I see the STI ETF as a proxy for Singapore's economy, and I think that Singapore's economy will continue a slow march upwards over time, even though I recognise that there will be recessions from time to time." By writing your reasons down, you can always refer to your investing journal when your stocks fall and see if your reasons for buying the stocks still hold. If the reasons still hold, then there is a good case to be made for continuing to hold onto the stocks - more importantly, having the journal on hand will also make it psychologically easier for you to handle market declines. I will also encourage you to read books on index investing written by John Bogle (a.k.a Jack Bogle), who is the legendary figure behind the birth of the whole phenomenon of index investing. Bogle has written numerous books, the easiest of which would be "The Little Book of Common Sense Investing." The book should give you context on what investing in an index-tracking ETF means, and what you can expect from this activity. All the best in your investing!
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