The Most Valuable Thing Money Can Buy

Came across another awesome article from My Money & Me about the importance of savings, and benefits of living a minimalist life.

“The most valuable thing money can buy is freedom from having to worry about money.”

I share many beliefs with the author, and I'm glad there is someone who can put across the point so well. If you hadn't notice - In Singapore, you must be a freaking "weirdo" if you have no desire to buy a car. You must be living a miserable life if you do not consume much. You must not have much ambition if you do not want to buy or upgrade to a Condo/big house.

Don't get me wrong. It is not that I do not have desire for such things - it's just that I do not see how they are worth their prices.

We work on a job we hate, so that we can buy a car to more easily get to work?

We spend years of our working life to upgrade to a bigger and better house, but leave the house vacant most of the time because we are at work?

How does that make sense?

If it doesn't, then maybe you are simply making luxurious purchases to prove something. To prove how "successful" you are, or maybe just to fit into society norms.

Do you know if you save just 5% more of your income each month, you can cut your working years by as much as 4-8 years? [See links below]

How much % of your income does a car installment cost you? 20%? You are willing to extend your retirement by 20 years just to own a car?

Remember that when you are purchasing a liability for, say $100K. You are not only losing that $100K. You are losing all the compounded money that could have grown out of that $100K for the REMAINING of your life (40+ years).

To me, their costs are far too high. I will consider them if one day I strike $10M toto and their costs become negligible compare to my networth. Until then, I find such things frivolous.

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"If you are spending 100% (or more) of your income, you will never be prepared to retire, unless someone else is doing the saving for you (wealthy parents, social security, pension fund, etc.). So your work career will be Infinite.

If you are spending 0% of your income (you live for free somehow), and can maintain this after retirement, you can retire right now. So your working career can be Zero.

In between, there are some very interesting considerations. As soon as you start saving and investing your money, it starts earning money all by itself. Then the earnings on those earnings start earning their own money. It can quickly become a runaway exponential snowball of income. As soon as this income is enough to pay for your living expenses, while leaving enough of the gains invested each year to keep up with inflation, you are ready to retire."

Mr Money Mustache 

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"But to some people, wealth is the most important thing in their life, and they are forever endeavouring to accumulate more wealth. Whenever they gain more, it is never enough, and they then plan or plot to gain even more. It is an endless pursuit in self-gratification with no meaningful purpose in life.

Happiness, in whatever form one sees it, becomes more elusive the harder one tries to pursue it.

That’s why my personal aim is much more realistic: All I ask for is calmness and contentment. These at least are partially within my control."

Pursuit of Happiness (Dr Lee Wei Ling)

Quarterly Results Review - 2015Q4

From this year onward, I shall commit to writing brief quarterly results review for several reasons:

1. Regular evaluation ensures the company still have fundamentals and meets my portfolio goals.
2. Keep a long-term record of basic valuation metrics to help future decisions.
3. A deterrence to myself rashly purchasing businesses I do not understand.
4. A good training for increasing my investment aptitude.

I will be using the calendar year to perform this review. (2015Q4 will be reviewing the results from Sep 2015 to Dec 2015)

For this time only, I will use rough figures from the previous year. Subsequently I will use the previous quarter's numbers. For prices, I will just use any value in the period when I was writing the update.

These review will be very brief and only highlight the most important developments for that company. This is so that I have the motivation/time to regularly update them.

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Frasers Centrepoint Trust (FY2015)	DPU in previous vs current: $0.114 -> $0.116 Price in previous vs current: $1.78 -> $1.87 Yield in previous vs current: 6.4% -> 6.2% BV in previous vs current: $1.77 -> $1.91 Woodlands Regional Hub in 2020, Northpoint City in the next 18 months and Downtown Line 3 will bring massive crowd and growth to their top 3 malls. In the short term, DPU may be affected due to asset enhancements (i.e occupancy drop) at Northpoint, their 2nd biggest mall.
Super Group (FY2015)	EPS in previous vs current: $0.0617 ->$0.0424 DPU in previous vs current: $0.031 -> $0.023 Price in previous vs current: $1.73 -> $0.73 Yield in previous vs current: 1.8% -> 3.2% BV in previous vs current: $0.446 -> $0.468 Results continue to disappoint with EPS falling over 30%. Its saving grace lies with its robust operating cash flow, improved margins (mainly from lower material costs) and strong balance sheet. Management and analysts are betting on China growth (which is showing some momentum) and new products innovation.
	EPS (HKD) in previous vs current: $0.6731 -> $0.4376 EPS (SGD) in previous vs current: $0.12 -> $0.08 DPU in previous vs current: $0.07 -> $0.07 Price in previous vs current: $1.0 -> $0.78 Yield in previous vs current: 7% -> 9% BV (HKD) in previous vs current: $0.586 -> $0.532 Quite bad results with payout ratio skyrocketing from 63 to 96%. Management gives a challenging outlook, but still believe in the long-term growth of China toll road industry. They are proposing to adopt scrip dividends to save cash, but dilution will not benefit minority shareholders. If there's no turnaround, they will not be able to sustain 7c dividends next year. I may look to off-load this should the chance arises.
Sembcorp Industries (FY2015)	EPS in previous vs current: $0.443 -> $0.292 DPU in previous vs current: $0.16-> $0.11 Price in previous vs current: $4.8 -> $2.5 Yield in previous vs current: 3.3% -> 4.4% BV in previous vs current: $3.15 -> $3.6 (~$3.0 excl. pref shares) Expected horrible results with Marine provisions dragging down the entire group. Even Utilities, to my dismay, registered lower profits (-19%) if you exclude 1 time divestment. Singapore Utilities are facing immense pressure as well. ROE plunged from 15.2% to 9.4%. Interest cover more than halved from 20.8 to 7.2 times and debt ballooned by $2 billion. Overall it's very very jialat. Only hope is on overseas contribution to step up from 2016 onwards.
M1 (FY2015)	EPS in previous vs current: $0.191 -> $0.191 DPU in previous vs current: $0.189 -> $0.153 Price in previous vs current: $3.51 -> $2.3 Yield in previous vs current: 5.4% -> 6.6% Dividends were slashed to their minimum payout of 80%, but luckily not due to reduced earnings. Company is conserving $ to bid for the new spectrum and "fight" against the 4th Telco. When they come onboard, EPS might fall by 10% as an estimate, consequently resulting in a 6% yield. Painful reminder to myself to evaluate the payout ratio. Note that after looking at Starhub results, M1's does not look as bad.
Capital Commercial Trust (FY2015)	DPU in previous vs current: $0.085 -> $0.086 Price in previous vs current: $1.55 -> $1.3 Yield in previous vs current: 5.5% -> 6.6% BV in previous vs current: $1.73 -> $1.73 No negative or positive surprises. Do not forsee office-supply glut in 2016 to negatively impact DPU. Growth may stagnant but should not fall.
Accordia Golf Trust (9M2015)	DPU in previous vs current: $0.0571 (9M, 100%)  -> $0.0232 (6M, 90%) Price in previous vs current: $0.63 -> $0.56 Yield in previous vs current: 7% -> ~10% (If 100% distribution) BV in previous vs current: $0.87 -> $0.89 After a disastrous 2Q, results were a huge positive surprise with 17% more profits compare to previous year 3Q, mainly due to good weather and strengthening yen. Management also decide to "release" back previous retained 10% distributions back to shareholders. Costs were controlled and visitors/utilization remain stable. Overall great results but what bother me is that the main catalysts aren't exactly recurring or dependable. To take a conservative stance with 90% distributions and a worst case DPU of $0.04, yield is 7.1%, which provides a good buffer.
ST Engineering (FY2015)	EPS in previous vs current: $0.1706 ->$0.1705 DPU in previous vs current: $0.15 -> $0.15 Price in previous vs current: $3.6 -> $2.84 Yield in previous vs current: 4.2% -> 5.3% Given the previous guidance, results were slightly better than expected. They managed to achieve comparable profits despite being dragged down by Marine. Management expects 2016 profits to be comparable.
Straits Times Index (FY2015)	DPU in previous vs current: $0.098 -> $0.102 Price in previous vs current: $3.4 -> $2.6 Yield in previous vs current: 2.9% -> 3.9% Half year dividends increased from 0.048 to 0.051! P/E of 10.54 and P/Cashflow of 9 makes it near historical low. This is the deal of the decade right here.