BT: Freedom at 44

Business Times - 03 Mar 2008

Freedom at 44

Last week, we discussed how retiring young and rich can be an attainable goal if one plans early and invests wisely. Today, we run a personal letter from RONALD HEE, who shows it is possible to become financially free as a hardworking salaryman, without needing to rob a bank or be a corporate high-flier

To the graduating class of 2008:

YOU are entering a world of amazing possibilities - possibilities that people of my generation barely believed would be possible. The world is, quite literally, your oyster. You also enter a world fraught with challenges and dangers, and ever rising costs of everything.

In our day, the options were limited, but inflation remained low most of the time, and there was job security. I still have friends who are in the same company since they graduated 20 years ago. For you today, inflation is roughly twice the interest the banks are giving you. You will probably change jobs every two to three years. And you can be fired from any of them at any time. Or, any company you work for could downsize or close down just when you least expect it.

So, for middle-class working Joes like us, does it mean that just to survive, we will be chained to our desks until the day we die - if we're lucky and not get replaced or downsized? Is financial freedom at the tender age of 44 - for you, 20 years of earning - an impossible dream? It really boils down to one simple formula. Earn more than you spend; invest what you save.

The first thing, of course, is to find a good job. There will be many, here and around the world. But don't rely on your company or your boss to take care of you. You have to take care of yourself, regardless of the profession you choose. Assuming you are not in the lucky handful who will inherit a fortune or get a job that pays you in the six figures, or win the lottery, the career you choose is what makes your path to financial freedom possible. But you have to plan that path.

Let's first look at the cost side of the equation. Buy what you need and some of what you want and know the difference. Do you really need a 200-inch high-definition plasma TV, complete with state-of-the-art home theatre system? And how many hours per day are you going to enjoy that system? Instead of spending tens of thousands on something you will use for a few hours a week, consider instead how that money could work for you.

One thing that surprises me about the younger generation is your propensity to spend on credit. Why buy things you don't need, with money you don't have? To impress people you don't like? Here's a crazy idea: Have the bank pay you interest for your money, rather than you pay the bank interest for their money. Twenty-four per cent interest? That's approaching loan shark rates. Always, always, pay your credit card bills in full. Can't afford to pay? Simple solution. Spend less. Be low maintenance.

At some point, you'd probably want to buy a car. With an excellent MRT and bus system, and taxis when you need them, is it worth getting a car? Unless you have a real need - you're a salesman, you have a family to ferry around, your child is sick all the time, your mum is old, your girlfriend will leave you otherwise - the reality is that a car is simply not worth it. Over 10 years, a $50,000 car will cost you about $130,000, once you factor in petrol, road tax, repairs, car payments and interest on the payments, parking tickets, a few minor accidents... Again, it's better for that money to work for you. (See Table 1)

Like most people, your biggest purchase will probably be a home. For most of us, our first home will be a government flat. Whether you buy public or private, consider buying something that you can continue to pay for, for at least six months, should you be suddenly out of work. If you don't mind the loss of privacy, consider renting out any spare rooms. It's not impossible for your rental income to match your mortgage payments.

Now let's look at the income side. Your basic fallback is your CPF account. Let's assume that by age 44, you've worked 20 years. Assuming an average of $1,000 a month, you will accumulate $240,000, not including interest. Invest it if you wish, but the main use of CPF should be to pay for your home, so your cash outlay is minimised. In 20 years, with $240,000, you could quite easily pay off your flat. With your spouse also chipping in 50 per cent for the flat, you should have more than enough.

If you've managed your expenses right, it's quite possible to save an average of $1,000 a month. This, of course, gets easier as you grow older and earn more. Put some away into a savings account as your rainy day fund, eventually building up enough to keep you going for six months or more. Put the rest in the hands of a good financial planner. This is someone who should be able to give you an average return of at least 10 per cent a year. The miracle of compound interest will yield you $756,030 at the end of 20 years, more than three times what you put in! (See Table 2)

It's now 2028. Twenty years have passed and it's your 44th birthday. You are into your second or third home by now, or maybe even have a spare house, each time either breaking even or making a small profit. You have a healthy CPF balance that covers basic needs. You've taken care of some health risks by buying insurance policies when you were young and they were cheap. And your investment portfolio is chugging along very nicely, yielding around $70,000 a year, without depleting your capital, so it's sustainable for the long-term. $70,000 a year is equal to a tax-free monthly 'salary' of $5,800. Not too bad.

CPF + savings + especially your investments = financial freedom. Work part time. Start your own business. Do something else that pays a lot less but fulfils you more, such as church or charity work. Become a beach bum in Bali. Or travel round the world for six months. Financial freedom means the freedom to make these kinds of choices.

So, my young friends, my wish for you as you embark on the next stage of your life is that you will plan from the beginning to be financially free. May you have the discipline and luck to accomplish it!

Ronald Hee, 44, is a freelance writer, and just a little shy of financial freedom

BT: Retire young, retire rich

Business Times - 25 Feb 2008

Retire young, retire rich

JASON LOW shares some tips on how you can turn this dream into reality

ACCORDING to the annual world wealth report compiled by Merrill Lynch and the Capgemini Group last year, Singapore registered the fastest increase in the number of US-dollar millionaires in 2006. More than 11,000 people joined this wealthy club that year, raising the number of high net worth individuals to a total of 66,660.

With more and more people making it into the group of the wealthy, it appears that joining their ranks is no longer as unattainable as once thought. No wonder many young professionals and undergraduates here are dreaming of joining that select group sooner rather than later. If you are one of those with that goal in mind, it may be timely to start planning how to get there. After all, the earlier one starts, the higher the chances of getting there in time. Here are some tips culled from various sources.

Start saving now and let compound interest work your way

'Tip number one is you have to start saving immediately,' said James O'Shaughnessy, founder of O'Shaughnessy Funds and author of How to Retire Rich in an earlier CNN Money report. 'The younger you are when you start, the better chance of retiring in style.'

Easy as it seems, most people have trouble saving for the long term. 'Saving is often a vicious cycle for most people. They are only disciplined enough to save in the short term before blowing all their savings away in a big ticket item like a car,' said Alvin Chia, a private investor who turned financially free at the age of 27. 'It is important to live below your means and avoid splurging on unnecessary items if you want to achieve the retirement dream early.'

Both early savings and living below your means allow you to take full advantage of the power of compound interest. If you save $2,000 a year starting at the age of 20 until you are 30, you will still have more money than a person who saved the same amount between the ages of 30 and 60. Enough said.

Pay yourself first

Taken from David Bach, who shared the powerful concept of automated savings in his book, The Automatic Millionaire, the trick to this is to have money automatically channelled from your payroll and deposited into your savings account before you even have access to it.

Invest for the long term

Equities offer the best form of long-term growth among most classes of investments. From 1926 through 2004, stocks - using the S&P 500 index as a measure - have posted an average annual return of 10.4 per cent versus a mere 5.4 per cent for bonds, according to Ibbotson Associates.

Both Mr Chia and Laura Oh, a 26-year-old home tutor, have their investments mostly in equities as well. They both have achieved their financial freedom.

Interestingly, they are both long-term value investors who invest in undervalued companies that pay high dividend yields and use these dividends to re-invest again when the right opportunities strike. Miss Oh, for one, started paper trading at the age of 19. 'Starting to invest early and putting your money into the right class of investments definitely helps you grow your money faster than putting it in fixed deposits,' she said.

Have a detailed game plan and monitor your progress

Set realistic goals by projecting your retirement expenses based on your needs. 'Know how you want to live in retirement and be honest about it,' said Mr Chia. 'Then calculate how much savings you need to put aside a year to achieve your ultimate goal.' One rule of thumb is that you will need at least 70 per cent of your annual pre-retirement income to live comfortably.

Review your status at least every couple of years to make sure you are still advancing towards your goal.

Don't be discouraged by failures and remain focused

It is not uncommon to meet with obstacles along the way. Don't lose faith or be daunted by the goals that you set for yourself. Break that impossible goal into a million achievable bite-sized goals and conquer each one at a time. As Mr Chia recalled, he was relentless in the pursuit of his retirement dream and took small steps to build up his investment pool. He said: 'When I was 19, I worked as a security guard at night to make sure I was making money sleeping. My main duty was to open the gates for the staff every morning and in that process, I earned myself $1,400 extra a month just from sleeping.'

Find a mentor to guide you

Having a mentor to constantly give you personal advice on your financial state and the allocation of your investment portfolio is a major plus. Very often, your mentor should also be someone who shares the same life and investing philosophy as you. Only then can the mentorship be very successful.

What is your ideal retirement age? And what are you doing now to help you achieve that goal? Share with us in under 150 words by emailing your views to btnews@sph.com.sg, with 'YIF' in the subject heading. Selected responses will be published in next week's Young Investors' Forum.

BT: Spot on with the near-term calls

Business Times - 27 Feb 2008

Spot on with the near-term calls

The principle behind technical analyst David Bensimon's accurate forecasts lies in the symmetries in markets,

reports GENEVIEVE CUA

MAKING forecasts is a tricky business, as many analysts and fund managers will tell you, but it does not faze technical analyst David Bensimon. Some of his calls on the markets have been so precise that on one of his speaking engagements, it spurred an impromptu bidding war among some in the audience for an on-the-spot copy of his award winning tome on markets, Polar Perspectives.

One of the bidders paid for his copy with a gold coin. Worth about US$700 then in November, it was about equal to the price of the book. But the coin has since appreciated, as Mr Bensimon notes with amusement.

The book last year won a gold medal as the 'best book in finance/ investment/economics' at New York's annual independent publishers awards.

Mr Bensimon's fundamental view is that most of the world - Asia in particular - is in for a 'prosperity-driven inflationary era' over the next few years, notwithstanding the jitters over the credit crisis. His long-term view, for instance, is that the Straits Times Index (STI) will hit 9,000 and the Hang Seng Index 100,000 by 2012; and gold will climb to US$2,600 an ounce by 2014.

He has set up a fund to invest according to the themes of his book. One of his first investors is Stephen Riady of the Lippo Group.

His forecasts may sound quite incredible, until you learn of his near-term calls on markets which have turned out uncannily right. Last October, for instance, he told an audience in Singapore that the STI would fall 15 per cent from its level of 3,900 then to 3,300 shortly. The index fell from 3,906 to 3,306 within six weeks of his call. In The Business Times in August, Executive Money quoted him as saying that the STI would fall to 2,800; the index was then at 3,300. It fell to a low of 2,866 in January.

The principle behind Mr Bensimon's calls lies in the proportionalities and symmetries in markets, which he sees as functions of 'phi', also called the 'golden mean'. This is expressed in the number 1.618 and its inverse 0.618. As he sees it, these symmetries permeate markets, and this is evident in the scale of market rises and even in the pattern of retracements across time. His calls have gained a following among banks, traders, hedge funds and private individuals.

The outcome of a forecast, he says, is not cast in stone but is based on probabilities. 'The power comes not from saying that markets will do this or that. It comes from recognising that different alternatives can unfold,' he says. 'The benefit is not to say the market might go up or down, that's not of value to anyone. The value comes from being able to say that if the market chooses this northward path, it will go this far and no more. If it takes the southward path, it will go this far to a target.

'My speciality is to provide clients with a magnitude of duration and time, of price and specific levels and dates . . . March does provide a broad turning point that crosses different markets, not just the STI or equities but across a spectrum.'

He believes the STI, currently trading at the 3,077 level, could still face yet another downdraft. It needs to exceed 3,300, he says, to confirm that it is out of the woods. Until then, there is a 'distinct risk' that it could fall another 15 per cent to 2550, which will be a buying opportunity. 'In Singapore if we break the 2,850 level, the next level down is 2,550 which seems a little far and rather cheap. But these motions are driven by panic and over-extension on the downside. But I'd be happy to invest anywhere from 2,800 to 2,600 because at those levels, it's really very cheap.'

He said: 'One of the benefits of looking at the very big picture history is that it provides a degree of comfort and confidence that when we are in a corrective mode, instead of being worried and panicking, we can be comfortable that we know what the rhythm is and can recognise the relationships. We know we'll get to the ultimate target of 8,800 or higher several years from now, and there are natural levels to re-enter the market.'

His view is that Asian markets - Australia, Shanghai, Singapore and in particular, Hong Kong - will move in synch upwards. 'Asia will benefit from the huge fundamental growth and prosperity sweeping across the region, that is not in any way harmed by the slowdown in the US. Asia now has enough internal demand and intra-Asian trade and infrastructure and consumer spending that it has a life of its own.'

He notes that historically, in past US recessions, the stock market has anticipated a recovery and rises well before the recession ends. 'There is no impediment to have markets bottom in March, and have them recover sharply even if a recession technically continues in the next few months.'
His views on oil and gold are positive but not equally so. He expects oil to reach US$125 a barrel this year and to move sideways for two years. 'We're still en route to US$125, but the big story is that once we reach US$125, everyone will scream that we're on the way to US$200 and that's not what's going to happen. '

The catch, too, is that consumer prices will not be adjusted downwards during the consolidation period. 'The margins for products will be fabulous and will power the stock market to much higher levels because the reduction of the oil price will translate directly into the bottom line for corporates in the industrial and financial sectors, telecom and blue chips. They'll all be lifted by prosperity.'

He is bullish on gold in the long term but expects some consolidation this year before it moves to US$1,030 an ounce in 2009, and eventually US$1,220 in 2010. But the most rapid rise is expected between 2011 and 2014 when he expects the price to hit US$2,600.

CSC: INCORPORATION OF A MALAYSIAN SUBSIDIARY - CSCGE

26 Feb 2008

The Board of Directors (“Directors”) of CSC Holdings Limited (the “Company”) wishes to announce that it has on 25 February 2008 incorporated a wholly owned subsidiary in Malaysia under the name of CSC Ground Engineering Sdn Bhd (“CSCGE”).

CNA: S’pore Sports Hub’s tentative calendar of events ready by year-end

Channel NewsAsia - 25 Jan 2008

SINGAPORE : The Singapore Sports Hub consortium is setting up a working committee to plan activities for the upcoming Sports Hub.

Their impressive programming calendar was the main reason the “dome-shaped” design was picked for the project.

In 3 years time, the Integrated Sports Hub, which will boast a retractable roof stadium, will also be a hive of activity - as numerous programmes have been lined up for the new facility.

These include annual international football tournaments, tennis and badminton events, and even the return of the Rugby Sevens.

An ASEAN Football League is also being planned to help bring back the Kallang Roar.

Seamus O’Brien, President and CEO, World Sports Group, said, “The national teams come together every two years in the ASEAN Championship, which has obviously been a big success.

“Now we are going to take that further into the club game and make sure that ASEAN, on a region-wide basis, is able to generate strong club sides, and good footballers that can compete with the rest of the region and hopefully in years to come, further afield.”

Another popular Asian sport - cricket - will also be making its presence felt at the new stadium.
For the man-in-the-street, Community Days will see free coaching clinics for the public to take up sports.

The fun does not end there.

Mr O’Brien said, “All of the activities of the Park on a daily basis can then be taken back out into the community in all forms of new digital media, which will give everybody a sense of belonging.”
The consortium will also engage experts and work with National Sports Associations to organise the multiple activities planned.

The consortium’s tentative calendar of events for its opening year will be ready by the end of this year. - CNA/msSource : Channel NewsAsia - 25 Jan 2008

ST: Sports Hub - Singaporeans Like The Dome Design

The Straits Times, Jan 21, 2008

They praise its iconic design, functionality but voice concerns over hefty price tag

SINGAPOREANS have given the design of the new Sports Hub at Kallang the thumbs up, praising its iconic design and functionality.

Their only concern: the project's hefty price tag.

However, the $1.87 billion figure is not only for the cost of building Singapore's new National Stadium and its surrounding facilities, but also for running the Hub for 25 years.

The figure had increased from previous estimates of $800 million because of rising construction costs and extra features like a public watersports centre, which was added last year.

However, some people fear that the high cost of the project may translate into high usage fees.

'If it's going to cost so much, I hope ordinary people will not have to pay through their nose to use it,' said marketing executive Genevieve Loh, 28.

But, even if they have to fork out more to watch a sports event or swim in a pool, Singaporeans are getting a world-class sports facility in return. For the new 55,000-capacity dome-shaped stadium will have a retractable roof to cater to all weather conditions, a first.

Two other unprecedented features are the indoor aquatic centre and the whitewater rafting facility.

There will also be 41,000 sq m of leisure, shopping and dining facilities.

On Saturday, the Government announced that the Singapore Sports Hub Consortium (SSHC) was the preferred bidder for the project.

It beat two other consortia - SingaporeGold and Alpine.

To be completed by 2011, the Kallang development is believed to be the world's first integrated sports public-private partnership project.

Once the contract is signed in March, the Government will pay $1.87 billion to SSHC over a 25-year period.

The consortium will, in turn, foot the bill for the construction and operating costs, estimated at $1.2 billion.

This means that it will pay for the project's capital expenditure, and take on risks involved, like the rising cost of materials or labour.

Third-party revenue such as ticket sales and rental of facilities will be shared between the consortium and the Government.

At a press conference on Saturday, Minister for Community Development, Youth and Sports, Dr Vivian Balakrishnan, assured Singaporeans that the money will be well spent.

'In the sporting arena, we will become a key node in a global system where events are held, where you will participate and watch top international sporting events,' he said.

'People will come to Singapore and Singaporeans will also be able to find jobs, pursue their passion in sports.

This will therefore be a project which will open up many more opportunities for our people.' Cost aside, readers gave full marks for the new design. Said engineer Dennis Png, 40: 'I think the best design won.

The dome looks futuristic and gives the sense that Singapore is moving forward with the times.' But, some, like corporate communications executive Kevin Tan, felt that the money for the Sports Hub could have been put to better use.

'It's a steep price given the current economic climate,' said the 32-year-old. 'Perhaps the money could have been channelled to enhance our existing sports programmes.' Businessman Paul Ong, 30, also questioned the need for such 'extravagance'.

'Tan Howe Liang won an Olympic medal without any fancy facilities,' he said. 'The money could have been spent on the 'software', like the people and the athletes.'

But others believe the benefits brought about by the new Sports Hub will outweigh its initial cost. Said sales manager Michaes Chan, 28: 'It sounds very expensive, but I believe the Government has done its homework.

'The Sports Hub should boost the economy in the long run, which will also benefit me.'

Singapore Sports Council: Singapore Sports Hub Consortium, Led By Dragages Singapore Pte Ltd, Selected as Preferred Bidder For Sports Hub Project

Singapore Sports Hub Consortium, Led By Dragages Singapore Pte Ltd, Selected as Preferred Bidder For Sports Hub Project

Singapore, 19 January 2008 - The Singapore Government announced today that it has selected the Singapore Sports Hub Consortium (SSHC) led by Dragages Singapore Pte Ltd as the preferred bidder for the Singapore Sports Hub Public-Private-Partnership (PPP) project, subject to finalisation of contract details.

2 Making the announcement at a press conference, Minister for Community Development Youth and Sports, Dr Vivian Balakrishnan said: "We are pleased to announce the selection of the Singapore Sports Hub Consortium, led by Dragages Singapore Private Limited, as the preferred bidder for the Singapore Sports Hub Public-Private Partnership project. The Consortium displayed significant strengths in programming, team culture and partnership, functionality and layout. It also offered the best value for money solution for Singapore."

3 Dr Balakrishnan added: "SSHC provided a holistic strategy to promote sports participation, leisure, entertainment and lifestyle activities via a focus on community and grassroots sports. Its integrated approach will create foot traffic and promote vibrancy at the Sports Hub. Their strategy is supported by a comprehensive sporting calendar that guarantees at least 90 event days at the National Stadium and 46 at the Singapore Indoor Stadium. It consist of a well-balanced mix of local, regional and international sporting events and activities targeted at various different target segments."

4 Examples of innovative and sustainable programmes and events include onsite media broadcasting services, organising an ASEAN clubs soccer league, a Singapore national games and international cricket matches.

5 The SSHC has also proposed setting up a 'Premier Park Foundation' or PPF, which reinvests a significant portion of Sport's Hub's commercial revenues into the project. The PPF will be used to fund future events, activities and facilities.

6 The PPF ensures a sustainable programming model and is a testimony of SSHC's long-term partnership commitment to the project. SSHC's venue operator, Global Spectrum, has also taken an equity stake in the project, further highlighting the consortium's commitment to deliver world class programming to the Sports Hub.

7 SSHC has provided a circular design layout with the various sports and commercial facilities surrounding the dome-shaped new National Stadium. The design is well integrated with the consortium's events and programming strategy, and has the flexibility and scalability for hosting large-scale events, including the National Day Parade. The Sports Hub's critical mass of facilities and attractions would ensure that the venue is teeming with activity and buzz on event and non-event days.

8 "We believe the strength of the SSHC's proposals, together with SSC's Sporting Singapore initiatives, will place the Sports Hub alongside the world's best and most dynamic sports, entertainment and lifestyle venues. With the advantage of a 25-year legacy planning horizon, and the best of breed team from the SSHC, the Singapore Sports Hub can create the same buzz like other world class venues such as the Reebok stadium in Manchester, Sydney Olympic Park in Australia and Madison Square Gardens in New York." added Dr Balakrishnan.

9 With the appointment of the SSHC as the preferred bidder, the project will now enter into the Financial Close stage, during which details of the contract will be ironed out. The signing of the project agreement is scheduled for end March 2008.

10 Post-Financial Close, the existing National Stadium is expected to be demolished, and construction for the new Sports Hub will start. This is expected to take place from April 2008. SSHC will also take over the operations of Indoor Stadium from April 2008.

11 The Sports Hub is expected to be ready in end 2011.

12 The Net Present Value of the total costs the government will pay over the 25-year tenure amounts to S$1.87b.

13 The Sports Hub is believed to be the first and largest sports facilities infrastructure PPP project in the world and is also Singapore's largest and flagship PPP project of this nature.


ANNEX D – Sports Hub Project Milestones

15 Dec 2005 - Launch of pre-qualification stage of tender process
28 Feb 2006 - Submission of pre-qualification documents
26 Apr 2006 - Pre-qualification of short-listed consortiums
Jul 2006 - Launch of invitation to Tender (ITT) stage of tender process
28 Feb 2007 - Close of ITT – consortiums submit their proposals
Jul 2007 - Sports Hub tender enters Final Clarification Stage
19 Jan 2008 - Preferred bidder appointed
31 Mar 2008 - Financial close, construction start date
End 2011 - Sports Hub operationally ready