Investing in Japan's Shopping Centres - Croesus Retail Trust Retail Investor Seminar

Have you been to Japan or want to travel to Japan for a holiday? Do you know you can own a part of the many shopping centres in Japan? Yes, you can own shopping centres through a business trust called Croesus Retail Trust (CRT) which is listed on the Singapore exchange since May 2013.

I was at the retail investors day of Croesus Retail Trust (CRT) last Thursday and had the opportunity to listen to what the management team had to say with regards to the situation of the company and its plans for the future. It was quite a fruitful session as I learnt more about the Japanese retail real estate market and the company itself.


Portfolio of Croesus Retail Trust

I've been a shareholder of this trust since November 2013. Initially, CRT owns only 4 shopping centres in Japan, Now, they have 7 properties in their portfolio. 75% of their properties are in Tokyo and greater Tokyo. From last Thursday's session, I heard from the management team that the aim of CRT is in providing a resilient and robust income stream for its investors. It has suburban assets which are defensive in nature. Some of these shopping malls' main tenants are supermarkets and they are very family oriented. This results in the income stream being quite stable naturally.

A recent acquisition of One's Mall into CRT's portfolio

In recent months, CRT has been purchasing properties in Tokyo itself. The main reason for the purchases in Tokyo is to ride the asset appreciation wave in Japan. Property prices have been and are still going up in Japan as seen from the fall of the rental cap prices. The rental cap prices are what we know as rental yield in Singapore. As property prices goes up, the percentage of rental yield falls even as it remains constant in real value terms.


What are the returns like for investors?

CRT has been providing quite a good yield for investors since its IPO in 2013. It has consistently provided investors a yield of 8.4% and 8.7% for FY 2013 and FY 2014 respectively at a closing price of 95 cents. This is on the high side as compared to the other retail Reits in Singapore as well as Japan.

Other Japanese retail companies such as JRF has a yield of 3.6%, Activia 3.2%, Frontier 3.3% and Aeon 3.2%. As you can see, other Japanese retail companies on average only provides a yield of around 3%. One question we may ask is: "Why is there such a big gap between the yield of CRT and the others? Will the gap close?"

Growth of CRT and reassurance to investors

The answer given by CRT is yes the gap will close. They hope to grow the company by doing more acquisitions so CRT becomes an indexable stock which will hopefully drive the stock price up. When the stock price goes up and distribution per unit (DPU) or dividends maintains or grows modestly, the gap will close.

They have reassured investors that they will be responsible in delivering the DPU. They have promised on a 100% distribution for the first 2 years and at least 90% thereafter. They have also limited their gearing ratio to a maximum of 60% and swap all their floating rates to fixed rates to provide a more stable income stream. The gearing ratio is the amount of debt as compared to the equity of the company.

Gearing ratio too high?

The gearing ratio of CRT is around 50% now. Some of us may feel that it is too high. The management of CRT explained that the reason for the high gearing is because cost of borrowing in Japan is cheap now. Their borrowing cost is on average around 1.3% and are all on fixed rate. They reiterate that it is a good time to catch the property price appreciation wave in Japan now.

Also, as one of CRT's strategy is to ride the asset appreciation wave, an increase in the property price will result in a decrease of the gearing ratio.


What is going to drive the DPU?

If we're investing for income, then we have to ask ourselves how CRT is going to maintain and drive its DPU? CRT has given a DPU of 7.86 cents in FY 2014 and is projected to give a DPU of 8.5% in FY 2015. How are they going to drive DPU?

3 Acquisitions

Firstly, CRT has acquired 3 other shopping centres since 2013. This will provide more income stream for FY 2014 and 2015.

Tenant replacement and improvements to Mallage Shobu

Secondly, Mallage Shobu is one of the shopping centres in the portfolio of CRT. It contributes to 34% of the net property income (NPI) of CRT. The size of Mallage Shobu is approximately 2/3 of Vivo City in Singapore.

Mallage Shobu, the largest mall in CRT's portfolio

CRT has embarked on a significant movement in tenant composition with tenant renewal exercise for 155 out of 242 leases during FY2015 at Mallage Shobu. They have introduced 69 new brands, 28 refreshed store transfers, 58 renewed leases and also recent additions of new tenants such Muji, KOE (fashion apparel brand) and Jelly Beans (women’s shoe retailer); Toys R Us expected to commence in June 2015.

Improvements to Mallage Shobu will result in downtime in 2015. This will negatively affect DPU but the management has said that to minimize impact, they have spread the improvement works across different quarters. In 2016, we should see a 20-25% positive rental uplift which will result in a 4% rise in DPU.

Currency Hedge until June 2016

Since DPU is in Japanese Yen, it is subjected to fluctuations of the currency. The Japanese Yen has depreciated against the Sing dollar and this will affect DPU. But, CRT has hedged against it to stabilise the DPU.

However, once the currency hedge ends in June 2016, will DPU be affected? The management has said that they will hedge again when there's a good rate but their main strategy is still to focus on growing organically which is to acquire more assets to improve DPU.

In my opinion, there's still a lot of room to grow for CRT. The management seems to know what they are doing and gave a clear picture of their plans for the current and future growth of the company. During the seminar, someone asked if there would be a possible rights issue in which the management said they would consider it and it would be possible.

Also, they mentioned that 20% of the investors have chosen to reinvest their dividends which shows shareholders' trust in the company's future. If there are any rights issue or opportunity to invest more at lower prices, I would continue to invest in this company for a resilient and robust income stream which CRT provides.

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Related Posts:
1. Short interview with Jeremy Yong, Co-founder of Croesus Retail trust
2. Croesus retail trust and Saizen Reit - SG Young Investment
3. Looking to invest in Japan's real estate

How Delayed Gratification Can Determine Success or Failure?

The keys to success have finally been revealed by just one experiment done by psychologist Walter Mischel in the late 1960s to early 1970s. Walter Mischel was a professor at Stanford University. In the experiment, a child was offered a choice between one small reward provided immediately or two small rewards if they waited for a short period, approximately 15 minutes, during which the tester left the room and then returned. (The reward was sometimes a marshmallow, but often a cookie or a pretzel)

If you're still confused on how the experiment was done, watch this video and notice the reactions of the kids in the experiment:

See how the kids really struggle very hard to resist the temptation of eating that one marshmallow just to get another one if they wait patiently.

Some parts of the video were really funny looking at the kids faces of how they wait patiently.

The Results of the Experiment

In follow-up studies, the researchers found that children who were able to wait longer for the preferred rewards tended to have better life outcomes, as measured by SAT scores, educational attainment, body mass index (BMI) and other life measures. Those kids who were able to wait patiently were more likely to succeed in life. There is certainly a positive correlation between delayed gratification and success.

Delayed Gratification for Financial Success?

Now comes the point which I want to bring across. Having delayed gratification will result in financial success as well. Think about it, if we really can delay gratification and resist the temptation to spend money, we would have more savings. We would not unnecessary get into debt problems as well.

Also, having delayed gratification may mean we have the patience for investing and not the greed of wanting to get rich quick. We're less likely to burn our fingers in the stock market and less likely to fall into investment scams. It seems like there are so many benefits of delayed gratification.


Does it mean that people who are not able to delay gratification are set for failure? 

Looking at all the benefits of delayed gratification, we may wonder what if we are not able to delay it? Are we set for failure? While there are positive correlations between better life outcomes and delayed gratification, this does not mean those who cannot wait will be forever labelled as a failure. Delayed gratification can be taught and the process can be changed completely. How do we do it?

In a further experiment, the kids who were not able to wait for the second marshmallow were told to imagine that the marshmallow on the plate has a frame surrounding it. They were told that this is just a picture frame and it is not real. After this imagination process, researchers found that those kids were then able to wait patiently for the second marshmallow which they were not able to do so at first.

But you may ask, how do we apply it into our financial life? From the above example of imagining that the marshmallow is fake, we could similarly imagine that our money is fake or is not there. We must also remember that if we do not spend our money now, we will get more money later when we invest. One practical way I can think of is to transfer our money to a separate bank account and invest it prudently. We are doing a real life marshmallow test for ourselves now.

Try the real life marshmallow test on yourself and see what happens.

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Related Posts:
1. A generation of instant gratification - The cause of unhappiness
2. The search for a better quality of life
3. Getting Rich And Spending Money Without Looking At Price Tags

Help us improve our Medicare webpages!

We are in the process of conducting a usability study on the Insurance Commissioner's Medicare webpages. We want to hear from consumers how we can organize the pages and content in a way that makes sense to you. All it takes is 10-15 minutes to take a simple online survey. The survey is open through May 1. 

Your feedback is very important, so please take a few minutes to help us improve our site!

Online services unavailable Saturday, April 25

The Insurance Commissioner's online services will be unavailable Saturday from 6 a.m. to 6 p.m. Our website, www.insurance.wa.gov, will be available, but people will not be able to access the following applications accessed through our site:

• Licensing services
• Complaints
• SHIBA online
• Insurance company and agent lookup
• Rate transparency

The city is relocating the underground fiber network cables as part of a road construction project, which will disrupt our computer networks. 

4 Simple Steps You Must Know To Invest Smartly

- Brought to you by www.stockflock.co 

As a beginner in investing, it can be hard to understand complex financial statements. But in fact, there are only a handful of key points you should take note of.

Here are 4 simple steps for you to have a good picture of a company’s health.

1. Valuation. Is the stock too expensive?

Just like when you do your shopping, you want to find the cheapest store to buy from. The same principle applies for investing. You wouldn’t want to buy a company that is too expensive.

Here is the chart of Amara, a hotel operator of the luxurious Amara Sanctuary Resort in Sentosa. First, we look at the Price-earnings of Amara. It runs at 8.91, the lowest among the 3 competitors. That makes Amara the cheapest company to invest in as compared to its competitors.

2. Earnings growth. Is the company growing?

We want to invest in companies that are growing. Amara’s growth has been stagnant for the past 5 years, hence it does not have an exciting growth story. However, that could pick up once Amara Signature Shanghai opens in China. 

3. Returns for investors. How much can you make as an investor?

There are two important things we look at. We want to know how much returns can the company generate for its shareholders, and of course, the more the merrier. For that, we look at Return on Equity, also known as ROE. 

Amara definitely generates the best returns for its investors as compared to its peers. Over 8% returns for the past 5 years? That is a good business to be in. If they keep this up, the share price should increase year after year. 

The second factor to look out for is dividend yield. Amara gives only 1.87% dividend yield. If you are looking for passive income, then this stock is probably not for you. In fact, all 4 hotel companies give low dividends so investors should be looking for capital gains from rising share price.  

Insolvency risk. Will the company go bankrupt?

No matter how fast the company is growing, you must always pay attention to the risk of a company not being able to pay its debt. History has proven that fast growing companies often borrow too much and when they fail, investors suffer. Therefore you should stay clear of companies that borrow excessively.

As seen from the pie chart above, Amara has almost 50% debt and 50% equity (slightly more equity). This is on the high side. A safer proportion will be 30% debt and 70% equity. Nonetheless, it is manageable for now but investors should be mindful if Amara’s debts keep rising. 

Access to all the information on Singapore listed companies are now available for you to help you invest better. Simply log on to www.stockflock.co for a full suite of resources you need. 

*This is a sponsored post brought to you by the Stockflock Team

The Pitfalls Of Work Sponsored Life Insurance

Work Life Insurance

The Pitfalls Of Work Sponsored Life Insurance

As a life insurance agent, it is common to hear the misconception that people are fully covered and have adequate coverage with life insurance because their employer provides them with a plan. This however could not be further from the truth. Although employer sponsored life insurance is inexpensive and coverage is guaranteed to a certain limit, it is not something that can be counted on or relied on to take care of your family. Life insurance is the most important purchase you make in your life if you have a family that relies on your income. Listed below are some of the pitfalls of work sponsored life insurance:

The death benefit may not be enough for your family

Generally there are limits on the amount of coverage that can be purchased. The amount of coverage is usually based on your income. In some cases, you can purchase additional coverage up to four to six times your salary, but that may require a medical exam. Some professionals recommend a person carry as much as twelve times their salary, so life insurance provided by your employer falls way short of that figure. The exact amount of coverage needed varies from person to person and the exact plan varies as well.

If you are single, have no children, no mortgage and have no assets with a co-signer, then employer sponsored life insurance may be enough coverage for you,

When you leave your job, you lose your coverage

People every experience the loss of health insurance and the same generally applies to life insurance when you lose your job or decide to leave. Not having any life insurance during this time could be detrimental to your family, should something happen to you. Also, if during this gap you are diagnosed with a critical or terminal illness, you may become uninsurable. This is just another critical aspect to consider. Most work life insurance policies lack a convertibility option, but even when that is an option, the new policy is based on your current age and risk class at that time and premiums will reflect such.

The premiums may not be competitive

Depending on the plans offered by the employer, the policy's premiums may not be the best available for you. Most employer sponsored life insurance plans usually have an increasing premium that will occur in five year increments. If you are healthy and insurable, seeking personal life insurance is worth looking into. Just as you do with most other things you purchase and considering how important life insurance is, you should make sure you are getting the most coverage possible for the best possible price.


It is always important to make sure you meet with a qualified licensed life insurance professional to determine what options are available for you. Contact Family First Life to schedule a consultation with one of our agents, today!

Your Marriage or Your Investment?

This post was inspired by a chat with a friend recently. I was told that there were some young people who are investing the money which was meant for their marriage or wedding in the next few years time. With investment products easily available now, young people can just start their investments from as low as $100 per month.

An example is the POSB invest saver which invests into the STI ETF. Yes, the STI ETF is a good investment tool but the problem with the investments some young people are doing is they plan to invest a sum of money every month and take it out for their wedding in the next 2 years or so. Is this a wise move?


Is it wise to invest the money you need for your marriage?

The answer to the above question is probably a NO. There are a few reasons why we should not invest the money we need for our marriage. I'll elaborate on the reasons below.

1. Investment returns are never guaranteed

I'll focus on the investments of non guaranteed assets such as stocks, index ETF and even bonds. We can never be sure if we will make a profit or loss in investments. Moreover, if our investment time frame is only 1-2 years, its even worse.

When we invest the money we need for our marriage in the next few years, we may have to sell at a loss when the portfolio isn't doing well. Some of us may be thinking what if I make a profit? Then I can have more money for my wedding. We should immediately identify that this is a very dangerous thought to begin with.

2. Investment should be for the long term

1-2 years time frame for investment is definitely too short. 3-4 years is also short. We should probably look at more than 5-10 years time frame for any investments that we make. In fact, we should invest all the way to retirement. It is part of our retirement portfolio.

I know young people want to start investing as early as possible once we know the magic of compounding. Yes, the earlier we start, the greater the compounding effect but always remember that financial planning is not just about investments. It is planning our finances as a whole.


Getting Married and still achieve financial freedom

All of us want to achieve financial freedom and get out of the rat race. We want to grow our money through investments. But now, with marriage in mind, there seems to be a road block. How do we plan our finances such that we can get married and still achieve financial freedom?

In the next few paragraphs, I would share with you my personal plans for the past few years which is still ongoing. But first, there are two likely scenarios for most of us. One likely scenario is we are single and no plans for marriage. The second likely scenario is we are attached and planning for marriage in the next few years. Let's see what we can do for the two different scenarios.


Single and no plans for marriage yet

Being single now means you certainly have more time to plan your finances. Since you don't need a large sum of savings for marriage as of now, you can invest some savings which you have and grow it for the long term. This is the time to work hard, increase your income and save up aggressively.

Being single now doesn't mean you won't get married in the future. What happens when you get attached somewhere in the future? The key idea is this. Most of us will date and plan for marriage in about 3-4 years time when we get attached. Since your previous savings are already invested, you shouldn't rely on that for your marriage any more.

From the time you get attached, start saving up a portion for your marriage and never ever invest that portion into any non guaranteed investments. It is good to put that money in some guaranteed higher interest accounts which will allow you to take it out by the time you need it for your wedding.

I wrote an article on How much money is needed to get married and start a family in Singapore?. You can use it as a guide for your marriage cost or get some information from your friends or family members who have already been through that stage. You'll know roughly how much you need to save every year to get married in 3-4 years time. If you plan $60,000 for your marriage, just save $20,000 a year and you'll be on track to get married in 3 years time.


Attached and plans to get married

If you already have a partner, planning for marriage is inevitable if you feel he or she is the right one for you. If you've yet to save up for a wedding, start now and plan it out with your partner. Know the amount you need and set the targeted time frame to save up that amount.

Rushing into marriage without any planning is not advisable. You'll end up with a lot of financial problems later on. If you're really serious about this relationship, there is no point rushing into marriage without any planning. Of course, some unforeseen circumstances may happen and you may need to rush into it but I shall not go into that here.

Some couples take the short-cut and think they don't need to plan ahead because there are zero interest credit instalment plans available for their wedding in Singapore. But, always remember that you need to pay back the amount you borrowed later on in your married life and don't forget you probably need to pay for other things too such as housing loans, your own bills and all that. It is always easier to save up before marriage when you don't have much commitments yet.


My plans for marriage and financial freedom

Long time readers of my blog will probably know that I'm at the single and no plans for marriage stage now. This gives me a lot of space to plan my finances. My personal plan is to achieve a $100K investment capital base and start saving for marriage when I find a partner. I probably can save up for marriage in less than 3 years and still have $100K to invest by that time.

Do note that the savings amount for marriage and the $100K are two separate accounts. After catering to my marriage needs, I still have money which I can invest and grow for the long term. Never put your marriage needs and investment into one account. It becomes confusing in the end.

On the issue of financial freedom, passive income have to be created. I've written about passive income in quite a few of my previous articles. You can read all my articles on passive income from the link here. A fellow blogger, ASSI AK has also recently written a good post on How to get $50K in passive income by investing in stocks? If we can get $50K in passive income a year, we could quite possibly achieve financial freedom and choose not to work by then.

Ultimately, all of us have different lifestyle and needs. Plan accordingly to your lifestyle and you'll know whether its achievable. If you want a $100K wedding vs a $50K wedding, the planning will be completely different.

Your marriage or your investment? I hope you know the answer now.

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Related Posts:
1. Why extreme savings is more powerful than investing
2. How much money does a couple need to earn in order to afford a $300,000 HDB flat?

Why Would I Buy Life Insurance For My Child?

Child Life Insurance

Why Would I Buy Life Insurance For My Child?

When the topic of life insurance for a child is brought up with a parent, at first it is almost an uncomfortable discussion. They seem to feel as though a life insurance policy on their child would create a situation where they would profit off of the death of their child. I personally felt the same way when my first insurance agent brought the topic up with me and my wife, many years ago. However, to view life insurance as a profit making situation is the wrong way to view all life insurance to begin with. Life insurance is not meant to be purchased to make money off of the death of a loved one, only to ease a financial burden when a death arises.

With the average cost of a funeral near ten thousand dollars, and sometimes even more, the last thing you would want to do in a time of tragedy is figure out where you are going to come up with money for a funeral. Some people even find themselves going into debt if they don't have the money. It would be nice to take as much time as you wanted to grieve, without money being an option.

Guaranteed Insurability For Life

A person is usually their healthiest when they are their youngest. Purchasing a permanent life insurance policy would ensure that the child has guaranteed insurance for life. This is a huge benefit. No matter what ailments or disease may occur in the future, as long as the premiums are paid, the child will continue to have life insurance.

High Cash Value Life Insurance

Purchasing a policy such as Indexed Universal Life (IUL) could set the child up with a significant amount of cash for their future. A male, age 0, with a $900 premium per year, for 10 years would provide the child with a significant amount of money for their future. They would be able to use $20,000 at age 30 as a down payment on a home, take out $15,000 to help their child with college and then take out $30,000 per year from age 65 to 100 for retirement. The cash taken from the policy would be Tax-Free and all from a $9,000 investment that started at age 0. The child would have received $1,190,000 in Tax-Free money and still maintain a death benefit for his family of $3,516,298. Imagine if instead of $900 per year, it was $1,800 or more!

This cash accumulation growth alone makes life insurance a great idea for children! Contact a qualified insurance professional with Family First Life to discuss what options are available for you.

What Is Decreasing Term Insurance?

Decreasing Term Insurance

What Is Decreasing Term Insurance?

Decreasing term life insurance is a type of life insurance where the death benefit decreases over the term of the policy. The premiums stay constant; however, because of this the premiums are less expensive than a standard term life insurance policy. This is an option that is generally referred to and used for mortgage protection. The theory behind this, is that as a person's debt is reduced, their need for the life insurance reduced.

To determine if this type of insurance is best for you, contact a professional at Family First Life to schedule an appointment.

If Your Student Loan Has A Cosigner, You Need Life Insurance!

Term Life Insurance Can Ease The Burden

If Your Student Loan Has A Cosigner, You Need Life Insurance!

The last thing anyone is thinking about when preparing to go to college and seeking financing is what will happen if a death were occur. Neither the student nor the cosigner have usually contemplated what to do if either were to die. The Consumer Finance Protection Bureau (CFPB) has said that approximately 90% of student loans, that are not guaranteed by the Federal Government, have a cosigner. The last thing a family should have to endure is dealing with financial matters and collection efforts during the most difficult time of their life. This situation can be equally devastating whether the borrower or cosigner were to pass away.

What Happens If the Borrower Dies?

Loans that are not insured by the Federal Government, like those with Sallie Mae, will still require the money to be paid by the cosigner, even though the borrower has died. There are many horror stories like this on-line, like Steve and Darnelle Mason from California, where their daughter passed away from a liver disease and they were forced to repay the student loan. For them this proved to be financially devastating. In addition to having to deal with the pain caused by the loss of their daughter, their pain was compounded by this mountain of debt and a barrage of calls from Sallie Mae. Generally speaking, these debts are classified as a non-dischargeable debt under the Federal Bankruptcy laws, so they usually can't be removed through bankruptcy, making it even more difficult to deal with.

What Happens If My Cosigner Dies?

If this occurs, it triggers an automatic default and the full amount of the loan becomes due. Sallie Mae has been under fire for this practice, but it still happens. In cases where a grandparent cosigns for a loan, the death of this person prior to the loan being repaid happens more often than you would think. Just when the borrower is trying to establish themselves, the last thing they would expect to happen is to get a call from Sallie Mae demanding payment in full for the entire balance of the loan. The CFPB has issued urgent warnings to the public about the dangers posed by auto-defaults and the practice of lenders placing borrowers' loans in default because the cosigner has died.

How Can I Protect Myself, My Cosigner And My Family?

Luckily there is a very simple solution. Term Insurance is the lowest cost life insurance there is. The borrower will generally be young and in great health. Therefore, obtaining a term life policy for the term of the loan will have very low premiums. As for the cosigner, there are many options that are available for them as well. A term life insurance policy may be their best option as well. If either the borrower or the cosigner were to pass, prior to the loan being paid back in full, the life insurance will provide the necessary death benefit to extinguish the debt.


To determine what options are best for your specific situation, contact a professional at Family First Life, today.

Have You Ever Looked At The Living Benefits Of Life Insurance? Amazing!

Living Benefits

Have You Ever Looked At The Living Benefits Of Life Insurance? Amazing!

Many people think of life insurance as something that pays out only upon the death of the insured. Although this is true and the most significant benefit of life insurance, many people overlook all of the "living" benefits of life insurance and what those benefits can provide. The question you have to ask yourself is not, "What happens if I die?", but "What happens if I live?" The living benefits for some people, in some situations, find the living benefits of life insurance far more valuable than the death benefit. Below I will go over the different options that may be available to you.

Cash Back Option

Most people know of term life insurance as a product that you pay of a specified period of time and at the end of that time period, the insurance if not used, the money is gone. This for some people seems like a waste of money. For those people, or people that would like to get something back, the Cash Back Option is a great benefit. It is an option that is available on a term product and at the end of the specified period of time, the insured is able to get 100% of the money paid into the policy as a lump sum disbursement. This is generally a great option for people with a mortgage and would like to provide protection to their loved ones and at the same time would like to payoff their mortgage early.

Disability Income Rider

This is a great rider for people that may have a concern in meeting their monthly financial obligations, including their mortgage payments, in the event of becoming disabled. Generally there is a 90 day waiting period and this disability income can be generally received for up to two years. It is a great supplement to an existing disability insurance policy and can provide additional much needed cash during this difficult time.

Chronic/Critical Illness Rider

This is a rider that will pay you, while still living, a portion of your total death benefit should you be diagnoses with a Chronic/Critical Illness. This amount can be significant if the policy has a large death benefit. Being diagnosed as chronically ill can be a difficult time in a person's life and having access to to a large sum of money upfront, or monthly payments, can ease the burden of having to deal with financial obligations.

Terminal Illness Rider

This is a rider that provides the insured with a portion of the total benefit if the insured is diagnosed with a Terminal Illness and has twelve months to live or less. The benefits can be used to help you cover medical costs, replace lost income or pay whatever expenses you see fit. This can be a significant amount of money and can help ease the burden of having to deal with your financial obligations during this difficult time in your life.

Tax-Free Retirement

Using the cash accumulation of a high cash value life insurance policy, like an indexed universal life policy allows the insured, at a specific period of time, chose to have the policy begin to pay them back and receive this money as a Tax-Free benefit. This is a great option that may not have the option to enroll in a 401K, do not qualify for a Roth IRA, people concerned with the state of social security or anyone that just wants to ensure they don't outlive their retirement nest egg.

Contact a qualified professional with Family First Life today, to schedule an appointment to review your life insurance needs.

Fixed or Variable Rates for Home Loans?

In recent months, there has been a lot of news on interest rates and indeed the rates are changing at a much faster pace than before. Interest rates on the international level are all changing. US interest rates are changing, Singapore's interest rates are changing too.

With the ongoing changes, now it’s a good time to look at the benefits or disadvantages of both fixed rates and variable rates for our loans.Most of us will be taking loans when we buy a house. When interest rates change, we will get affected, big or small, depending on the home loan packages we take.

Credit: pixabay.com

In Singapore, there are basically 2 typical types of home loan packages offered by the banks. The first is short term fixed interest rates and the second is variable interest rates or SIBOR dependant rates. Interest rates are generally low in Singapore so a lot of people go for variable rates packages. But we have to take note that if interest rates rise, the monthly instalment we pay will go up as well.

If you own properties or is planning to buy properties in countries like Australia, the situation is different. Some of the fixed rate packages in Australia actually have lower rates as compared to the variable rate packages for a short period of time. It is important to do our own research to get the best deals when buying properties in Singapore or Australia. Newcastle Permanent is an independent, mutual, retail financial service provider which provides home loan packages in Australia.

Let's take a look at some of the benefits and disadvantages of fixed vs variable rates.

Fixed Rate Home Loan

A fixed rate home loan can provide you a sense of financial certainty because the interest rates and repayments will remain the same for the set period of time of your choosing.

Benefits:

• Consistent monthly payments
• Best for long term loan payments
• For home-owners who expects interests rates will go up and would want to lock in a lower interest rates now
• Protection from interest rate hikes

Disadvantages:

• Monthly payments are higher than Variable rates
• Home-owners cannot take advantage of any interest rate decreases that might occur during the life of the loan
• Most plans incur a fee when breaking out of a fixed rate before end of the loan term. This happens when there is transfer of home ownership due to sale or refinancing over to another lender.

Variable Rate Home Loan 

With variable rate home loan, market forces and the economic climate affect the amount of interest you pay for your mortgages. 

Benefits:

• Monthly payments are cheaper than fixed rate loans
• Best for those who plan to keep the loan for a short period of time

Disadvantages:

• No protection against interest rate changes
• Monthly payments will fluctuate in line with market interest rates

What happens when interest rates change?

$500,000 loan on 5 year fixed rate

If we take a $500,000 loan at 5 year fixed rate, we will not be affected when interest rates increase,. However, when interest rates decrease, we can't take advantage of it. 

$500,000 loan on variable rate

If we take a $500,000 loan at a variable rate in Australia, the variable rate loan will adjust accordingly if interest rates increase and we'll be affected. If interest rates decrease, we can take advantage of it and our monthly repayments will be adjusted lower. 

1% increase on a $500,000 loan

If interest rates increase by 1% on a $500,000 loan package for a 25 years term, the monthly repayment would increase by around $295. Those on the fixed rate package will not be affected while those on variable rates packages will be affected by this rise in interest rate. 

There you have it, the benefits and disadvantages of fixed vs variable rate home loans. Choose your loan packages wisely and you could save quite a bit of money on your monthly home loan instalments. 

*This is a sponsored post by Newcastle Permanent

Insurance needs are a factor in retirement planning

This week is National Retirement Planning Week, organized by the National Retirement Planning Coalition. The group aims to help people create a comprehensive plan for retirement, which can seem daunting or, for some, too far away to contemplate. Its website, www.retireonyourterms.org, offers tools based on your age, retirement and saving calculators and plenty of information about ways you can be prepared for retirement.

Insurance needs also should be factored into your retirement plans. Medicare plans carry a cost for premiums, doctor visits, prescription drugs and hospitalizations. However, Medicare typically does not cover long-term care, so some people opt for long-term care insurance to pay for home health care, adult day care, nursing home care or group-living facility care.

If you are considering annuities as part of your retirement planning, we have information about the benefits, the types of annuities and payouts.

Questions? You can contact our consumer advocates online or at 1-800-562-6900.

Religare Group Health Insurance for Employees

Religare Health Insurance Corporate - Group Health Insurance Policy for Employees

To Buy Click here http://www.religarehealthinsurance.com/hp/satyendrakumargupta

Lippo Malls Indonesia Retail Trust - Is 8.1% Yield A Good Investment?

A reader emailed me asking about Lippo Malls Indonesia Retail Trust. Is it a good time to buy now? Base on FY2014 DPU, the yield works out to be 8.1% at the price of 0.34. The yield is definitely quite high and seems like an attractive investment. I got interested in it and took a good look at the company's financial statement. I'll share with you my findings below.

Introduction to Lippo Malls Indonesia Retail Trust

Before I dive deeper into the financial analysis of the company, here's a short introduction of the company. Lippo Malls Indonesia Retail Trust owns 16 retail malls in Indonesia with 6 of them in the capital city, Jakarta. I went to Jakarta in December 2014 and visited a few of these malls during my trip. I took pictures of this particular mall located at the North of Jakarta near to the coastline.

It was Christmas time and they were having some Christmas events there. The malls of Lippo Mall are like the suburban malls we have in Singapore. They cater to mostly the middle class population in Indonesia.


Is it a good time to buy?

Net Property Income and Distribution Per Unit (DPU)

The net property income in 2014 decreased by 12.1% as compared to 2013. The DPU for 2014 decreased by 15.1% as compared to 2013. This makes the annualised distribution at 8.1% base on the price of 34 cents. In constant currency terms, net property income only decreased 1.2%. The currency depreciation of the Rupiah has affected the DPU by quite a significant amount. If Rupiah continues to weaken, then DPU may continue to get affected in the next few quarters.

Concern of loans maturity

Looking at its loans, most of it will expire by 2017. The closest one will expire in July 2014. This is $200 Million of the total $630 Million loan which is quite a significant amount. Once this loan expires, they will have to refinance it and probably will face higher interest rates in July. This is not a good sign for that $200 Million loan. If they can't refinance, they will have to find other ways to raise funds such as issuing rights which will dilute current shareholder's value.

Another scenario is they could pay back the loans in cash but it would reduce its assets by a large proportion. However, LMIR's current assets as at 31st December 2014 is only $171.6 Million. Cash and cash equivalents stand at $103.92 Million. It is not enough to repay the $200 Million loan so some form of refinancing or equity raising is expected when the time comes.

One thing to note is that on 18 December 2014, LMIR was granted $180 Million term loan facility with interest rates at 3% + SGD Swap Offer Rate (SOR). This loan is on variable interest rates and will be subjected to interest rates movement. As we know, interest rates have started to increase and this has affected LMIR's DPU and will continue to affect DPU when interest rates continue climbing.


Conclusion

Even though this stock is currently trading at a discount to its NAV of 42.4 cents, I expect NAV to decrease and DPU to decrease further also. This is in view of the currency risk and interest rate risk, This may cause a drop in the stock price if it happens.

If we want to invest in this company for income, we must ask ourselves is the Rupiah going to be stronger or weaker and will they have a lower or higher interest rate when they refinance their loans up to 2017? For now, I'll be staying on the sideline before I decide to invest in this company. Not vested at the moment.

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Thank you to our SHIBA volunteers!

Insurance Commissioner Mike Kreidler meets SHIBA volunteers from South Sound Outreach in October 2014

In honor of National Volunteer Month, we’re recognizing the more than 400 people who volunteer their time to our Statewide Health Insurance Benefits Advisors (SHIBA) program. SHIBA's outstanding volunteers are an integral part of the consumer protection work we do at the Office of the Insurance Commissioner. In 2014, they helped nearly 65,000 Washington consumers understand Medicare in plain English, resolve Medicare disputes and choose a plan that best fits their needs in a timely manner.

Our volunteers donated nearly 90,000 hours in 2014 to helping their fellow citizens. We honor and celebrate our volunteers for their dedication and kindness. Thank you SHIBA volunteers for your time, dedication, commitment and service.

Read more about SHIBA services and where to find help in your area.

What Is The MIB And How Does It Affect You?

MIB

What Is The MIB And How Does It Affect You?

The medical Information Bureau is a company based in Massachusetts that maintains a database of extensive medical information to help underwriters determine if a client qualifies for life insurance or health insurance. If an applicant applies for life insurance and there are any discrepancies between the answers a client has given on an application, the underwriter may ask for additional information, or may decline the application based on the data received from the MIB.  In addition to a client's medical information, the MIB also keeps record of the number of times a request has been made. Insurance companies want to ensure that when issuing a policy, the client fits the risk class they have applied for. This helps keep premiums in line with the risk taken by the insurer.

Fraud

The MIB is also able to help determine fraud. If there are an abnormal number of requests from the MIB, it could alert the company to a "murder for profit" scheme. If there are many requests coming through on many small applications or a few large applications, it alerts them to a possible scheme. If they feel this is happening, at that point they would contact the authorities. It will also give insurers information as to the risk class an applicant may have been given by another insurer and if a consumer attempts to falsify information on an application, it would immediately be caught on an MIB report. Based off this is false information, the application may be declined or the insured may be offered the same risk class.

Can I view my report?

Yes. It is possible that the information on a report was reported erroneously. An insured has the right to view what is on his/her MIB report. You can submit written notice to the MIB or call them and get a free copy of what has been reported. All declines on a policy will trigger a disclosure to the applicant with the necessary information to obtain a copy.

Ultimately, the MIB is able to ensure that risk-based premiums remain in-line with the risks taken by an insurance company and allows insurers to meet the financial obligations to their policy holders.

Contact our office today, to schedule an appointment to meet with one of our agents to determine what life insurance products you may qualify for.

Accidental Death Life Insurance - Will It Pay?

Accidental Death Life Insurance - Will It Pay?

All too often, in a first-time meeting with a client, we discover that the life insurance that they had in place to protect their family was Accidental Death Life Insurance (AD&D) only. As with most things in life, anything that is too good to be true, almost always is. Generally speaking, all carriers' premiums are within 10% of each other, so when we see a premium that is not inline we know there is an issue. When someone says they have $100,000 worth of coverage for $8 a month and they are 40 years old, it sends up an immediate red flag. These policies aren't necessarily bad due to the inexpensive premiums, but it is an issue when they think they have a full coverage policy and they do not. These are great supplemental plans along with a traditional life insurance product. We will always recommend a full coverage policy with an accidental death rider.

What Is Accidental Death Life Insurance?

These are policies that will only payout the death benefit if the person's death arises as a result of an accident. This is only a problem, if the person's death is due to anything other than an accident and this is the only type of life insurance that the person has. 

Policy Review

It's important that you meet with a life insurance agent to review all of your policies to determine exactly what types of policies you have, when or if they will expire and the risk class you were given. It's best to figure out early on that you may not have what you thought you had when it comes to life insurance. Life Insurance premiums are always at their lowest when you are your youngest and in your best heath.

Contact us today to schedule a review to make your your family is protected for years to come!

Are You Taking Advantage of Tax-Free Retirement?

Tax-Free Retirement

Are You Taking Advantage of Tax-Free Retirement?

At the end of the day, it is not how much you make that counts - it is how much you keep! Building a million dollar or five million dollar nest egg is great, but no one knows where taxes will be in the future and how much of that nest egg you will keep. The fact of the matter is, you could end up paying up to 40% or even 50% taxes, or even more in your retirement years This could significantly decrease the long-term value of your nest-egg you've built for retirement.

Currently, the government’s only solution to the failing social security system are tax-deferred accounts, for the most part. However, these accounts have inherent issues that most people do not think about. Other than a Roth IRA, you have either a traditional IRA or a 401K plan to invest in for retirement.

Fortunately, there are strategies you can use today to enjoy more money in your retirement years. A successful tax-free retirement strategy could ensure you have more money in your retirement years. At the moment, most of us are relying on traditional retirement plans like an IRA or a 401(k), but these plans have their limitations and also have inherent risks that most people don’t consider.

Risks

There are two major risks that are usually not talked about when using tax-deferred accounts for retirement. The first being market risk. This becomes more of a problem the older you get. It comes down to how much you can afford to lose in the market. How many years can your retirement handle a year like 2008? How many years would your retirement be postponed with 38%+ losses. If you are in the beginning of your career and you are young, you may have time to make up these losses when they occur. This is not the same for a person at or close to retirement.

The second major risk is tax risk. With the state of social security, our national debt on the rise and health care, the chances of taxes rising significantly is a real threat. Because you put money into a traditional IRA or 401(k) plan, on a tax-deferred basis, not only is your original investment is taxable, but the entire growth of the account as well. If your money has grown significantly, this could mean a huge tax bill due to Uncle Sam. Some experts think future tax rates could be as much as 50% to 60% or even more.

During your retirement years have fewer tax deductions to lower your tax liability. If your home is paid off, you will no longer have the mortgage interest deduction. Also, chances are your children will be older and you will no longer get that deduction well.

RMD's

Another issue with the current retirement vehicles is your RMD’s (Required Minimum Distributions) that will start at age of 70-1/2. You will be required to take a required minimum distribution from your taxable retirement accounts. You must take that RMD, and pay taxes your money which now affects the compounding interest on your money. Your RMD's must be taken whether you need the money or not. There is a significant tax penalty if you fail to take the money out of your account, so there is really no choice. This is not the case with a tax-free retirement vehicle.

Forms of Money

There are various forms of money that are available to you. It's important that you understand each. Most people will always take the free money, which is what you should do, but they then immediately skip over the tax-free money and will immediately go to the tax-deferred money. To understand the each of the forms of money, let’s take a look at the options below:

1. Free Money 
• 401(k) match from your company 
• Inheritances 
2. Tax-Free Money
• Roth IRA (tax-free withdrawals) 
• High cash value life insurance 
3. Tax-Deferred Money
• 401(k) 
• Traditional IRA 
• TSP 
• SEP-IRA 
• Retirement accounts 
4. Taxable Money
• Wages 
• Capital gains 
• 1099 interest 

If you have an opportunity to take free-money, you should, but the next best option, tax-free money is always overlooked, by most.

Government

It is no secret that the government is deep in debt. In order to to cure that debt, they have the ability to increase taxes to be able to generate income from the 16+ trillion dollars that is currently in retirement plans. If you want to enjoy a financially successful and stress-free retirement, you need to start planning now - not just for wealth accumulation, but adding a tax-free option to your retirement strategy as well.

Indexed Universal Life

What many savers do not know is that the IRS already provides a vehicle to individuals to accumulate wealth on a tax-free basis. This strategy has been used by the wealthy, our banks and our largest corporations in America for a very long time.

These IRS tax codes for tax-free retirement withdrawals take a number of forms, including:

• Internal Revenue Code IRC 7702 -- accessing money tax-free through a life insurance policy. 
• Internal Revenue Code IRC 101 -- how a life insurance death benefit passes tax-free. 
• Internal Revenue Code IRC 72e - how money accumulates in High Cash Value Life Insurance tax-free. 

Two Tax-Free Options

When it comes to tax-free retirement, there are really only two choices. Let's see how they both stack up:

1. The Roth IRA 
• There are strict limits on how much you can contribute 
• The money grows tax-free 
• Money is withdrawn tax-free 
• The account is subject to market losses 
• The money cannot be withdrawn until age 59-1/2 
• Income limitations on who can contribute
2. High Cash Value Life Insurance - Indexed Universal Life (IUL)
• Unlimited contributions 
• The money grows tax-free 
• The funds do not affect Social Security 
• The money is withdrawn tax-free 
• Provides a generous death benefit for your family 
• There is no loss of principal even in a down market 
• You can access the funds at any time 

As you can see, using an Indexed Universal Life policy has a number of important benefits over a Roth IRA, including the elimination of stock market risk, freedom from future tax rate increases, the avoidance of future taxes on the money you worked so hard to earn and put away and no caps on the amount of money that can be put into the plan. In addition, using an Indexed Universal Life policy allows you to take out money whenever you need to. There is no need to wait until an arbitrary age to access the funds in your account. This is a particularly powerful advantage for men and women who hope to retire early.

When you use this strategy, you do not have to worry about withdrawals affecting your Social Security benefits. The money you take fro your Indexed Universal Life policy does not affect your Adjusted Gross Income (AGI) for Social Security purposes. This allows you to keep more of your Social Security, if it still exists when you retire.

A major benefit when using an Indexed Universal Life policy that is not available with any other retirement option is that upon your death, from day one, there will be a death benefit that is passed tax-free, probate-free to your heirs!

It’s important to understand all strategies that are available to you and if you currently have a retirement vehicle, supplementing that vehicle with an Indexed Universal Life policy, makes solid financial sense.

Contact us at Family First Life to schedule an appointment to learn more about this option that may be available to you.

What are Singaporeans Looking At Outside of Equities?

What are Singaporeans Looking At Outside of Equities?

brought to you by Call Levels - Your Personal Market Assistant

After launching the public beta version with only FX and Metals in late November, we have grown 15% weekly, with several thousand users now using us regularly in Singapore. Thank you for your patience and feedback! We had users thanking us when the Swiss Franc spiked and they were informed via Call Levels faster than any other professional system or person, and we hope to remain as useful and relevant for young investors as they navigate through the world of trading.

We started with a Singaporean core group of users, but as the word spread we have been adding users especially from Europe and the USA, and they now count for 20% of our user base. We expect to grow more internationally now we have added US stocks and even more in the future, but now is a great opportunity to take a look at what our (mostly) Singaporean users have been looking at on Call Levels.

66% of Our Users Look at Forex

This is no surprise as we launched with 930 crosses real time on FX, and indices and commodities came a few months after.

Users have requested for equities, and we are happy to announce that we are offering 500+ US stocks at launch, and this allocation will change in time as we cover many more assets.

Singaporeans Look at a Diverse Array of Currencies

A quarter of our users monitor the SGD on a very regular basis, and against the USD and JPY. Call Levels launched at a time when volatility for commodities and the US dollar was extremely high, with the Euro and Singapore dollar making multi-year lows. Users who have used Call Levels to keep track of their investments in FX would have felt safer sleeping at night knowing that Call Levels was constantly monitoring the market.

Gold and Oil Dominate the Futures Market

With the USD soaring to highs and the Federal Reserve predicting a US rate hike soon, gold prices were in the news, and more than 60% of users’ attention was focused on gold. Oil prices also tumbled to new lows over the past few months, dominating more attention than both US stock indices combined.

Key Level to Watch: USD / SGD @ 1.4000

The recent spike of the US Dollar against the Singapore Dollar has left all Singaporeans concerned about the weakness of the currency. We see a lot of attention placed on 1.40 - 1.41 level in USD / SGD, and there may be a lot of volatility at that level if the US Dollar move continues.

To ensure that you will be notified immediately when USD / SGD reaches 1.4000, use Call Levels now. We’ll watch the market so you don’t have to.

Download the free Call-Levels App on iOS and Android below:

For Android Users, you can download the app here

For iOS users, you can download the app here

*This is a sponsored post by Call-Levels