Monday, November 21, 2011

STOCKPILING - the way to maximise growth in your savings.

Stockpiling, what exactly is that? Many billionaires stockpile their shareholdings to success.

You may want to click on the link to see how it is done.

Stockpiling is an Art which requires courage to do it.

In general, the steps of stockpiling are as follows:
1.  Choose a company that you are interested to invest in it.
2.  Read the company's past annual reports and the chairman's or CEO's outlook on future growth.
3.  Make some calculations, so that you can set a target BUY price of the shares.
4.  Strike whenever the share price hits your target buy price.
5.  Save more money, so that you can purchase more shares when there is opportunity to do so, ie. the share price has dropped to your target buy price again.
6.  Update your target buy price annually, or after every quarter after results announcement. As earnings increase, your target buy price should increase and vice versa.
7.  Have enough money in your warchest, so that you can strike whenever an opportunity arises.

Like I said, stockpiling requires courage. You must build this courage in the course of trading shares.

For the past one to two years, I have practiced stockpiling on Popular Holdings. Since two years ago, I have personal valuation of Popular Holdings and I have my personal target BUY price. Every time I received dividends from Popular, I will save them in my warchest, together with my savings for investments. In these two years, there were many opportunities that I have taken advantage of and stockpile my shareholdings. You would have guessed that I have struck during the Japan's earthquake, the US credit downgrading, the current Eurozone crisis, etc.
I am still working hard to achieve my target of owning 2 million Popular shares.

Why is stockpiling one of the better way to grow investment savings?
1.  You just need to concentrate and monitor one company.
2.  It allows you time to save and grow your warchest.
3.  You will not be buying over-priced shares as you already have a personal valuation of the company.
4.  You will earn more dividends in the future, with the increased number of shares.
5.  With the dividends, you will be able to buy more of the company's shares at your target BUY price.
6.  This process of getting more dividends to buy more shares, to receive more dividends, to get more shares goes on and on and on.
7.  There will come a day when you can just use the dividends received to purchase more shares.

The only bad thing about the stockpiling is when you are holding a large amount of the company's shares. It will be difficult to sell all at one go. However, if you know that this company is going to last for the next ten to twenty years and give you good dividends for that period, then the risk to invest is this company is reduced to the minimum.


Happy investing.

Tuesday, November 1, 2011

Singapore Property : Buy or hold till recession?

Singapore property buying craze has slowed for the past 2 months. Has the cooling measures really taken effect? Although the transaction volume has decreased but the price is still climbing. The cooling measures did scare off the middle income Singaporeans who planned to park their savings into assets like property. Now these people can only see their savings earn less than 1% interest in the banks.

Like I have said in my first book, "Route to successful property investment in Singapore", property investment should be timeless. In fact, any type of investment should be timeless. All these while, I have been trying to convince my relatives and friends to buy some properties or high dividend stocks if they can afford it, but to no avail. All of them gave the same reason, "I will wait for recession to come. Recession is coming."

My question to them is, "How would you know recession is coming?" Nobody knows when recession is coming. When that happens, it will take everyone by surprise. A major recession was here in 2009, which is only 2 to 3 years back. Back then, stocks take a beating, property prices too. But what did they do? They did not invest in anything at all. So when the market picked up in 2010, they said, "Sigh, I have missed the boat."

Investment, indeed, is not as simple as it seems to be.
First, you must conquer your fear of losing the invested capital. The solution - invest a percentage of your savings. 10%, 20% or even 50%.
Second, you must have confidence in your investment. Once you have made a decision to invest in a certain property or stocks, have confidence that it can bring you better interest than the banks.
Third, you must have patience. Investment is a long term process. When you do an investment, look beyond 3 to 5 years.

Back to Singapore properties. Almost all the friends that I have talked to, are waiting for recession to come in the near future. Meanwhile, their savings are still in the banks. Many were also shocked that I have bought two properties in this year. My reason to buy is simple, "These properties are undervalued."
I am still looking around for wonderful properties to buy. However, when you do not like a project, do not buy, even if the property agents keep updating you how many units were left. Buy only when you like the project. I have seen more than 20 new projects and only one that I like and I have bought it, that is Vibes@East Coast. So, don't rush into buying any property.

These two properties were bought with the new rulings. I have to hold on to these properties for 4 years if I want to avoid paying seller's stamp duty. It's fine with me. That's my intention in the first place.

Singapore properties are valuable assets. It may seem to be expensive in general, there may be a few FIRE SALES, where the owner needs money urgently. The current volatility in the stock market may create some good chance for investors like us to strike in an undervalued property.

My personal view: "Our government will not allow property prices to fall more than 10%." So there is not need to wait for recession to come. It may or may not come at all. Strike when you have the bullet$ and when you come across a wonderful property.

Some pointers that may help you:
1. Look for 999 year/freehold properties.
2. Do not rush into buying, if you don't like the house, or project.
3. Bargain with the seller.
4. Get principle approval from the banks first.
5. Buy only when you can afford to hold it in the long term, say more than 5 years.
6. Do not fall into the agents' trap that it is going to be sold out soon. If that's the case, wait for next better one.
7. Initiate BUY only when you really like the place.

Have fun investing.