Showing posts from February, 2011

Buy assets to create wealth

Recently, I have round of drinks with my friend, Terry. Terry works in the FMCG sector. He is single and stays with his parents.

One of the topics we touch base upon is wealth creation.

Terry says "Hey Ken, do you know I have a pay raise of 10%?"
Sounding happy for him with eyes light up, I reply "Great! Now your earned income base rises!"

Terry retorts back "As delighted as I am, strangely I just do not feel satisfied"
My voice chokes back - "Is it you want more? Humans are not easily contented financially"

"It's not that. It seems my personal wealth depends very much on my take-home pay. There is a price to pay when the management gives me a pay raise; that is I have to perform and meet my new responsibilities. I will work hard but the problem is, I am worried about my main source of income being cut should my boss finds me redundant. It's very competitive here. Also, my salary is taxable. I hate taxes!"

"You see Ken, I am …

My opinion on AIMS AMP Private Placement

On Valentine's day, AIMS AMP Capital Industrial Reit publishes an announcement that they will like to buy NorthTech through a Private Placement exercise.

The brief details:

To acquire NorthTech, a 4 storey high-tech facility with underground parking and loading/unloading facilities from Prime Properties.

Private Placement - Gross proceeds of S$43.5 million
Debt Finance - $30.9 million

Issued price to institutional investors:
Between S$0.1976 and S$0.2041

Aggregate leverage:
Pre transaction: 32.7%
Post transaction: 33.6%

NPI yield
AIMS AMP existing property portfolio: 7.2%
NorthTech: 7.6%

Therefore, it is yield accretive with gearing about 33.6% after the private placement exercise. The units are sold to a discount of about 8%, given the last done price is 21.5 cents today. Post-exercise, DPU (Distribution Per Unit) will be diluted.

Advanced Distribution to existing shareholders is estimated to be 0.285 cents; books closure date is on 22 Feb and payout on 28 Mar.

So do you …

Top 5 Personal Finance Tips

In my opinion, I will like to post my top 5 personal finance tips:

1. Pay yourself first

I think this is one of the most important. You will commonly find this advice in finance books, newspaper articles and magazines.

For me, at the current moment, I pay myself 40% of my net income (after 20% CPF deduction), leaving the rest for extra savings and the reminder includes a mix of fixed and variable expenses.

And this amount paid (40% of my net income) should be left untouched till my financial objectives are met. I do keep track on the records.

Should it be used for share investment purposes, it will be recorded in my personal financial books as "Accounts Payable", meaning it will be paid off once profits realized or if not other sources of income streams.

2. Monitor your budget for specific key areas and put a ceiling if there is a need to

I do place a budget limit for my credit card and debit card expenses. Unless there is a one-off need to spend (for example medical bills an…

Bought ICBC (1398.HK) - Industrial and Commercial Bank of China

Bought ICBC - Industrial and Commercial Bank of China (1398.HK) on Monday, 1 Feb 2011- specifically to ride on the overseas expansion plans. I have blogged an article on ICBC.

To my opinion, I believe there is more room to grow, given the fact that Chinese companies are setting up offices worldwide. ICBC is able to offer familiarity and value-added banking services to the local Chinese firms or state-owned enterprises. On the consumer banking segment, we do see a trend for rich Chinese consumers buying up international luxury goods and high-end properties. There is demand which ICBC will be happy to fill in. Hopefully in the long term, ICBC could grow to be a well-received and valuable brand, not only catering to the Chinese but all nationalities round the world. It is not easy, given the sticky in-country banking regulations, the Chinese government intervention and policies, the trust and confidence, corporate governance and structure etc.

Risks assumed, I have made a decision to in…