Many friends have asked me to teach them budgeting, how to save money or where to save money. So today i will show you how to budget with Mvelopes, an online budgeting platform that I found recently.

Saving money starts from effective budgeting planning

Most folks who find themselves out of control with money because instead of letting the power of compounding work for them it lets the concept work against them.

If you build good money habits in your high school, college and university days, it compounds later in life in that you start off right and you will see good money flowing in.

In contrast, if you build bad money habits such as not finding out about personal finance, the benefits and repercussions of debt, the lack of these knowledge will compound when you come out to work, when you have more money to mismanage.

Most folks I encounter are not so bad that things cannot be remedied. It all starts from an audit of how you spend money in the past. Then they asked themselves where they want to be.

This follows by a plan how you will spend your money. This is the budget.

What I use and the problem with all these Apps

I have stated in the past that I practice virtual enveloping using Quicken as my main tool to male sense of my money.[Read my guide here] I also reviewed YNAB and it is a pretty great product as well.[YNAB]

In the current market, I find that there are many cheap/free budgeting software that just don’t measure up. The paid software are pretty well done up with the functionalities I am looking for. However, the people that needs the most help probably will not budge to spend 100 bucks per year or 60-80 bucks to acquire them.

What do I mean by not measuring up?

Basically I think there are a list of requirements that a money managing app should have to be able to monitor and control your money :

1. Create multiple accounts
2. Create recurring scheduled transactions and money transfers between accounts
3. Money transfers between accounts
4. Easy to understand and use
5. A transaction search function

Quicken fit that need. So does YNAB. The problem is all those online ones do not. They don’t do scheduling of transactions.

The focus for these apps is that they are very US centric and thus make it a point to integrate with various banks and financial institution to have automatic aggregation of bank transactions.

For international investors this is not a priority.

Thus it is great that I manage to find this online personal finance app call Mvelopes.

Mvelopes

Mvelopes is an online personal finance portal that enables its subscribers to manage their money using the enveloping methodology

This will enable them to make sense of their finance goals and be able to clear their debt.
There are many advantages of using Mvelopes:

• It used to cost $9.90 usd per month to manage your money. That’s hefty. Since January 2012 they have moved to a freenium model, but still keep the $9.90 plan.
• The free plan restricts you to 4 accounts, and 25 envelopes and do not have the debt repaying and bill payment functionality. That doesn’t sound so bad unless you have more than 4 banking accounts. 25 envelopes is alot for a starter to work with. Hell I couldn’t even cross 20 envelopes. As international investors we do not appreciate the integration to institution that much but think US folks with more accounts may want think of upgrading should they like it
• It most single use case is to perform envelope budgeting
• It allows recurring transactions
• It allows splitting your transactions into more than one envelope
• Its repository is in the web which means that you can review it anywhere you want
• Its for both android and ios app to enable easy review and input of transactions on the go

And that for the price of free.

Why Envelope Budgeting?

I believe that envelope budgeting is a more psychological way to manage and control your finances.

Recall the steps of envelope budgeting:

1. Identify your goals and how money is related to them. List down your goal-based money category
2. Create envelopes to let you control those goals
3. Come up with how much should go into each envelopes
4. When salary comes into your bank account, fund those envelopes
5. Spend based on those envelope
6. Periodically review your envelopes, goals and allocation

The beauty of enveloping unlike traditional money management is that it places review and setting limits  before consumption. The amount of money you fund gets depleted if you spend too fast and it builds up if you spend too little.

That way it is intuitive to tell whether you are over or underspending.

Drilling down to a detail level enables you to be able to know what are the accounts you can cut funding to.

Our example – Jack

Jack is your regular salaried Singapore worker. He just started work not too long ago and draws a salary of $3000. Jack does not have 13 month bonus, but this amount is divided into 12 months of $250 of performance bonus. He also gets a $550 allowance.

So Jack is an avid reader of Investment Moats and he decides to sign up for Mvelopes to be his money management platform.

He finally gets to the main screen and the first thing he does is go to Accounts. There he creates two savings account he use currently: POSB and Standard Chartered.

These are the two accounts which is pay will flow into and fund his future.

Identifying his life goals and the envelopes

Jack remembers coming across this Infographic on Investment Moats, and the life goals illustrated matches close to his.

Those will be his life goals. The next step is to come up with envelopes  linked to these life goals.

Jack’s tasks is basically to decompose these life goals into smaller packages.

Expense will decomposed to Family Contribution, Household, Insurance, Meals, Medical/Healthcare, Personal Utilities, Transport.

Play will decomposed to Entertainment/Recreation,Gifts, Hobbies, Merchandise and Grooming, Vacation.

The task at hand is to balance how much control versus ease of management.

Budgeting Income

Jack goes to the Budget tab and selects Income. This is where Jack will list out his three sources of income.

Note that the income for each is higher than what I told folks on top, as these includes contribution by employers to your Central Provident Fund (CPF)

Jack can specify when he will be paid and when is the next pay date.

The data provided here will be made use of in his subsequent planning

Creating his spending plan

Next, Jack clicks on the Spending Plan Tab. Here he first click on the green plus on the left side where he will be able to create 2 things: Groups and Envelopes. The groups will be how the envelopes are grouped together, and in this case it will be Jack’s Life Goals.

The envelopes will be the envelopes Jack planned for previously.

The unique thing about Mvelopes is that Jack can specify whether the spending method is Average Amount or Monthly Detail, which lets Jack plan his spending in detail.

The result is something like the above. Jack has created many envelopes tag against life goal group and have assigned how much he should allocate to each envelope. Notice that he is able to change the allocation in this view and not having to go into the detail view by clicking on the edit icon.

At the bottom, the table shows a summary Total Incomes versus Total Expenses. It helps Jack to see if he is over allocating or under allocating.

How much should Jack allocate to each envelope?

The trick here is for Jack to allocate all his income so that he is left with zero.

1. Amongst his envelopes there are many constrained envelopes. These can be split into two categories: the Needs and the Strategic
2. The Needs are envelope who belong to life goals that supports Jack and his family. Without these or under allocating these will directly affect life. These envelopes has to be adequately funded. Examples are Household, Transport, Personal Utilities
3. The Strategic will be envelopes that in many ways provide a better future quality of life for Jack or Family. It will be very short sighted to ignore adequately funding them. Examples are the Investment Warchest, Insurance
4. There will be a time during reviewing where Jack have to see if there are alternatives to certain Needs. Can he switch to a scooter instead of owning a car? Would that save money?
5. There will be a time during reviewing that Jack have to think which Strategic Life Goal is more important. Perhaps he should put his own higher education above saving for his future child’s university fund
6. For the rest of the envelopes that are not constrained, It is up to Jack to decide

Allocate according to your funding plan

Next Jack clicks on Funding Plan to allocate his income into each envelope. Note that this is still a plan! This is not the actual funding.

Here Jack allocates which envelope gets funded by which income source. Do note that Jack here gets his income in all at the same time. It may matter more when the income comes in on different dates.

The goal here is to ensure all the envelopes are fully funded.  You can see that under Investment Pot the $950 actually comes from two sources.

Setting scheduled Income Deposits

Next Jack will need to deposit his income into his two accounts (POSB and Standard Chartered)

But Jack doesn’t want to do it every month during pay day. He can set up automatic recurring transaction for his income so that every month these income gets auto added as transaction during pay day.

Jack clicks on the gear icon to bring him to the Automation Manager.

Here Jack can set up his Recurring Transactions. These transactions auto inserts into the POSB account.

Note: Unlike Quicken, Mvelopes does not give you a scheduled recurring list and you have the option of approving the transaction. This gives you the opportunity to amend the transaction in case you don’t have the chance to login to Mvelopes.

This is also one area Quicken is much superior.

This means that if Jack got a raise or got his allowances cut suddenly, he would have to quickly change the recurring transaction before the pay date or amend the transactions for this month and update himself.

With the deposits automated, Jack can start funding his envelopes!

Funding his envelopes periodically

Recap: Jack’s income gets deposited into his POSB account every month. All his cash gets aggregated in total. This is the amount he can “Fund” his Envelopes.

Jack clicks on the dollar icon on top.

This is where it might get a bit confusing. The $6150 is the amount available. Why isn’t it $10405? That’s because Jack had already did one round of funding. So Mvelope automatically takes that portion off the equation. Jack only has 6150 to fund for the next round.

In the column amount to be funded, Jack can choose the amount to fund. He does not have to always fund the amount set aside in his funding plan.

Alternatively he can choose to check the checkbox next to Funding Remainder, which will automatically fund each envelope with the full amount.

To carry out the round of funding, Jack can click on the Fund button.

But before we click the button, Jack can choose to save this funding set using the Save Customer Profile button.

In the future, Jack can choose Fund using a saved profile and choose this saved profile.

Start tracking the spending

With all that set up one time, all Jack has to do is track his spending

Jack can click on which envelope he wants to use, in this case, the Transport envelope since he made 2 trips of $1.03 each.

He will click the cross to create a new transaction. One thing I don’t like compare to Quicken is consistently being forced to put a Payee.

You can also make this transaction recurring.

Here, Jack has a scheduled transaction where Mvelopes will automatically insert an expense to the Insurance envelope assigned to POSB bank on every 24th of the month.

This is ideal for bills that is automatically debit from your bank account.

Mvelopes will also allow Jack to split a particular bill into more than one envelope. If Jack goes to the supermarket, he may buy items from more than one places.

Review and Add Transaction Via Smartphone

Mvelopes have Android and iOS Apps to allow Jack to easily add transactions to it. My only gripe about the apps is that they are very very unpolished . But still the ubiquity is great.

Reviewing Your Spending Plan

For the most part, Jack will be doing monthly Funding and Tracking of spending that’s all. On a quarterly basis, it will be good for him to review his spending plan.

Is he allocating too much to something? Can cash be free up to be allocated to somewhere needed? If not, perhaps he can increase his buffer cash?

These are some considerations.

Jack may want to cross check if the amount in Mvelopes are similar to his actual POSB and Standard Chartered account.

If Jack is not using some money in one of his Play account, and feels in the future he would not need to set aside money for that, he can always transfer to the Buffer Cash envelope.

That looks like a lot of work!

Many complain to me that they do not want to track their spending every day. It is a whole lot of work.

To me, I don’t think it’s a lot of work. The key here is to automate as much of the bill payments as possible.

All your income gets credited automatically via the system. So are most of your bills paid by GIRO.

So what u end up doing are

1. Funding. Probably once a month
2. Record items on credit card bills. 1 to 3 times per month
3. Groceries. 5 times per month
4. Daily meals and transport. 30 times per month

How long do you think these will take? I don’t think it is a lot.

What don’t I like about Mvelopes?

Here are some things I hope can be improved upon:

1. Flash. I cannot believe this site still runs on Adobe Flash when every one is moving to HTML 5. This would mean you cannot access Mvelopes on a Safari iPhone browser
2. Scheduled Recurring Transactions automatic. I would have prefer that they let us approve inserting the transactions into the database instead of automatic.
3. Slow Speed. Every thing seems slow. Perhaps because it was made free.
4. Crappy Smartphone Apps.Nuff said.

Conclusion

I really appreciate the team choosing to have a free version. Many folks who need something like this are already facing a financial crunch and asking them pay 120 per annum perhaps is not a sensible thing.

That said, great product. It is ubquitous and does a great budgeting method well.

I would probably still be on Quicken, but I will run Mvelope concurrently.

Do give it a try and tell me what you think.

Try Mvelopes Today! >>

To get started with dividend investing, start by bookmarking my Dividend Stock Tracker which shows the prevailing yields of blue chip dividend stocks, utilities, REITs updated nightly.

Make use of the free Stock Portfolio Tracker to track your dividend stock by transactions to show your total returns.

For my best articles on investing, growing money check out the resources section.

Vanguard have come a long way since the 1970s when John C Bogle worked hard to build a financial institution that sells index funds that have ultra low expense ratio. You would have asked if they do not have management fees and expense ratio so low how can they survive?

Well, they happen to manage a huge amount of money so despite having a low expense, they can still get by. Plus the fact that their majority of the portfolio have been passive indexing, they do not have to have too many star managers (although they do have an active fund portion for some time)

I always favor investing in low cost broad country or region exchange traded funds (ETF) over investing in unit trust. The advantages are

1. Your active unit trust depends on your star manager to beat the index. Most of them do not. There are some that do, but not every year. And the star manager leaves.
2. A good fund may not survive over the long run
3. Before you start counting your gains, you already lost big in front loading cost of 1% to 5%, and large expense ratios recurring annually from 1% to 5%. Remember, returns compound, cost do as well. Returns are not definite, costs are.  Take a look at the chart below.

Great for investors who wants low management

I talked to a lot of people who want to grow their money, but they don’t buy my dividend and stock investing crap haha. Its a lot of work they say!

ETFs on the SGX and NYSE

For these folks I would definitely recommend a ETF (not synthetic). ETF functions like a index fund that tracks a particular index but ETFs are traded on stock exchanges like SGX and NYSE.

Thus, even a Singapore investor can buy ETFs in US or Europe.

The ETFs in US tend to have lower annual cost compare to Singapore. Imagine they can have costs as low as 0.06% while for us 0.35% is considered pretty good.

Respectable returns for STI ETF

Andrew Hallam of Millionaire Teacher is another big advocate of this. And he favors you to invest in a broad home country ETF, a world ETF and a bond fund.

In Singapore’s context it will be the STI ETF. I talked about STI ETF and profile its total returns since 2002. Despite being in a big bear its annualized returns is 9% per annum. That’s pretty great. You can check out that report here.

For the world ETF, there is the DBXT MSCI WORLD TRN ETF and the Lyxor ETF MSCI WORLD listed on the SGX. The problem is that they are pretty illiquid.

Vanguard leading ETF inflows in 2012

Now we know that many companies like BlackRok, Powershares and Wisdom Tree are coming up with all sorts of ETFs to track different markets, sectors and strategies.

So why is it in this ETFTrends report, it seems that Vanguard is taking in so much more money?

Year to date through the end of April in the ETF business, Vanguard had gathered $21.6 billion so far in 2012, while BlackRock’s iShares collected $13.3 billion and State Street added $7.2 billion, according to data from the ETF Industry Association.

“Vanguard collected $4.4 billion in April, which was four times more than the next closest provider and nearly twice as much as the rest of the industry combined. The company’s ETF offerings last experienced a monthly outflow in February 2003,” says investment researcher Morningstar.

The difference could be in the ultra low expense ratios. Costs are definite and if u can achieve as close to frictionless u gain advantage.

VTI has an expense ratio of 0.06%, while BND charges 0.1%.

“The core is where you have the majority of assets, and that’s where investors are expecting the lowest-possible-cost products,” said Martha King, managing director of Vanguard’s financial advisory services division, in the article.

“Costs matter more when expected returns are low. If you’re expecting only a 2% or 3% return, a 1% fee seems a lot more expensive,” added Mike Rawson, an ETF analyst at Morningstar.

Any one here does low cost investing in ETFs?

I doubt a lot of people does indexing or manage a passive portfolio. I know one friend does but he trades in and out actively, which is not what I am refering to. If you are doing longer term investing with ETFs do share your experience with us

Saving money is hard as you grow older. Getting married, having kids and their expenses, needing a car and taking care of the parents. How the hell do  you find large sums of money for investing to grow your wealth?

6 years ago, I came across Richard Russell’s 4 valuable advice to folks all walks of life. The one that left the greatest impression was the difference between an investor who starts investing at 19 years old and stops at 25 years old, versus one that invest the same amount from age 26 all the way to 65.

Their record would have been equal.

Achieving the rate of return is the key, and probably what we discuss more on this site. This week, I cam across an article by Andrew Hallam, who wrote millionaire teacher. The key takeaways are a few things

1. We know that he does low cost indexing and rebalances his portfolio
2. We know the market moves in rough 20 year cycles. What are the chances after 45 years your money doesn’t grow? How about 39 years for the Investor A?
3. In today’s way of living, your dollar is going to be divided into more things that need your attention. If you want to make sure you got enough for retirement, perhaps it is imperative that you start at an early age (18?)
4. How many 18 year olds know this concept?

“Fifty six percent of 18-34 yr olds say they’re saving $0 for retirement! (via cnnmoney.com) How can young investors be encouraged to think long term?”

The answer is really easy.  To get young adults to think long term, they should strive to be lazy and spend more of their income during their lifetimes.  Who wants to scrimp in their 20s, 30s and 40s, so they can have bucket loads of money in their 60s, 70s and 80s?  What a waste.

I’m talking about spending more money during a working lifetimes AND ending up with more money for retirement.  Here’s an example:

Joe Smith studies law in college.

He becomes a lawyer at age 26, but he doesn’t know how to be lazy.  So he spends the money he makes.  OK, this might not make sense if you’re a “worker” who’s used to his or her nose on the grindstone, but stay with me.

Joe starts saving at age 40 for his retirement.  And he socks away $2000 per month for 20 years.  In total, he “saves” $480,000 ($2000 per month x 12 months x 20 years).  That’s a lot of money to save.  And what Joe saves, he doesn’t get to spend.

If he makes 8% per year on his investments, he’ll grow his savings to $1.18 million.  The poor guy isn’t much of a thinker.  To build a $1.18 million investment portfolio, he has to save $480,000 of his salary.

Call Joe a sucker for punishment.

Tim isn’t really smarter than Joe. But he’s lazy.

There’s no way he wants to save $480,000.  He works at the same law firm as Joe, makes the same annual income, but wants to spend more over his working lifetime AND end up with more money than Joe.

Tim starts investing just $200 per month ($6.66 per day) at age 18, which he puts together from the odd weekend job.  From age 18 to 26, he keeps investing the same amount.  If he makes 8% per year on his investments (the same return that Joe makes) he’ll have $27,570 at age 26.

When the law firm hires Tim (at age 26) he starts investing $600 per month and keeps it up until he’s 60.  He earns the same salary that Joe did.

By the time Tim is 60 years old, he has $1.6 million—nearly half a million dollars more than Joe.

Tim ends up with $1.6 million, compared to Joe’s $1.18 million.

But Tim was able to spend nearly $100,000 more than Joe while he was working…on fun things, like holidays, toys, and dinners on the town.

Joe is a worker.  He saves more and ends up with less money.

Tim is lazy.  He saves less (spends more) and ends up with nearly half a million dollars more than Joe.

It pays to use your head and be lazy, like Tim.

Now this is seldom heard of but I noticed this at Jeffrey Gundlach’s bloomberg interview where he draws the similarity of the World Trade Center Tower becoming the tallest building in New York.

Why does this matter? Apparently building of huge tall infrastructure seems to be a psychological indication of human ego at its peak and normally precedes big market draw downs.

If you think this is born out of Drizzt’s fantasy, Barclay issue a report on this as well. You can read an article on it here.

In 1929, the opening of 40 Wall Street and the Chrysler Building were harbingers of the worst-ever U.S. meltdown, the Great Depression. A year later, the Empire State Building became the world’s tallest building, presaging years of gloom.

The 1970s saw the completion of New York’s World Trade Center and Chicago’s Sears Tower. They opened amid stagflation in the U.S. economy, a fiscal crisis in New York and the breakdown of the Bretton Woods monetary system.

Malaysia’s 1,483-foot Petronas Towers were being completed during the Asian crisis.

Can we find some examples to disprove this theory?

In deep corrections like this, investors are more worried about protecting their capital. My portfolio cannot take a 50% draw down. Should I get out of the market?

Things like this run through your head.

Managing your head

How long does an average bear last? Can be from 6 short months to 2 years based on recent historical.

If you are young, you would want to see more draw downs.

Don’t you want to buy SingPost at 80 cents? Starhub at $2.00? KepCorp at $4.00?

It’s a dilemma when things are dear and you are afraid if you buy it, there is no margin of safety there.

So why don’t you want to pull your money out totally? If you have a knack for market timing then by all means do it. But if these are just noises and the market goes back up, you probably forced to buy back at a higher price.

Just like my previous post, know the nature of your investments, whether they are cyclical and the valuation you got them at, if you feel sad seeing profit go to waste, establish a few profit taking targets such as break in trends, a minimum %.

The WORST thing that can happen in such scenario is LOSE YOUR PSYCHOLOGICAL CAPITAL.

Now is a good time to see how risk adverse you are.

Capital Injections are important

What is important, is sound budgeting and establishing “Pay yourself first”.

Visualize where your portfolio will be in 10 years time. How much you will add to it. What kind of average portfolio yield you are looking for.

I have a useful Dividend Portfolio Projection spreadsheet that you can make a copy of to help you visualize. [Spreadsheet here]

My take is that many young folks have probably started building up their portfolio.

The size of it can range from 20k to 40k.

And if your portfolio is small, 2 years of 12k per annum contribution will add 24k to your portfolio at a LOW price.

To get started with dividend investing, start by bookmarkingmy Dividend Stock Tracker which shows the prevailing yields of blue chip dividend stocks, utilities, REITs updated nightly.

Make use of the free Stock Portfolio Tracker to track your dividend stock by transactions to show your total returns.

For my best articles on investing, growing money check out the resources section.

Drizzt: long term market analysis is a series once or twice a month where we take a look at longer term trends in the market to get our bearings right on the general direction of where market prices is going.

How are you guys doing on the investing front? Missed out on the January run up? Got a lot of profits? Europe problem is not solved yet? What should we be doing?

Weekly S&P500 and STI

The long term indicator we use is the cross over between the 17 week EMA and the 43 week EMA. A cut of the 17 week EMA below the 43 week EMA from above signifies an underweight and risk management position. A cut of the 17 week EMA above the 43 week EMA from below signifies an overweight position in equities.

The 17 week EMA and 43 week EMA are still not forming the death cross, but looks to be turning down. MACD is also heading down. The technical picture for the bulls do not look to be broken yet if we look from a 5 years perspective.

And up till this point, the price movement daily looks more like a correction then a full blown draw down.

The STI is more problematic. First it didn’t go above the highs in late 2010, this recent upward move taking it to only 3000. The STI looks to be following whatever is happening on Wallstreet. The 17 week EMA looks to cross the 43 week EMA much earlier than the US market and  MACD looks to be going below zero if the next two weeks don’t turn out well.

What should you do?

If you are a trader trading on momentum, this is probably not an in depth analysis to help you see if the momentum are broken.

For the investor, you would have to look at your holdings into whether they are stocks you wish to keep and whether the stocks are cyclical and opportunistic buys.

Don’t ever get confuse which is which to begin with!

For the long term holdings, corrections like these are good to accumulate more. Think about the age you are. If you are 20++ to 40++, you would WANT more of these. This enables you to accumulate stocks you researched well and are good but at prices that offers little safety.

Buy in batches. You do not know how deep is this draw down. The chart gives an indication we may reach 2500, or it may just resume the uptrend.

There were so many folks waiting for a magical number like 2000 or 2200 and it never came to it. 

Control your head from running wild. These are the time when investors need to do the right thing instead of losing their psychological capital.

For those cyclical plays and opportunistic buys, you may want to take more money off the table. Understand the nature of the company and historical price movement. If you can collect them lower and they don’t offer much in dividends while you wait for it, pare down.

My recent changes

I haven’t bought much this year. Just very small nibbles but looks like I will get my chance soon.

I have sold off some of the stocks that are more correlated to draw downs like Yangzijiang and Keppel Corp. I wanted to get out of Asia Enterprise Holdings but that is still under evaluation.

Will be keeping the rest. Looking forward to seeing my gains get wiped out and going negative.

For those interested in tracking my most current holdings, you can review my portfolio over here. Learn to use our Free Stock Portfolio Tracking Google Spreadsheet to track stock transactions.

We recently had a conversation on how accountants have an upside over us normal human beings in that by training they have to be acquainted with numbers much better than us

Able to interpret financial statements

For one, we have a problem interpreting balance sheets. I took a module in university so I am a little privileged, but for many friends it looks daunting for them.

The ability to interpret statements will go in a long way to recognize the fundamental nature of what officially the company declared.

You will be able to pick out profit and loss, cash flows and whether the company is overly leveraged

Sampling your life as a balance sheet

I also think that since they learn about this in tertiary or secondary education, it puts them on a good footing of not getting into debts, able to recognize that they are overleverage and to build up good assets

Not always the case

So my friend was telling us that this is not always the case. He has a friend who believes Jurong Technology, to him a blue chip, will always do well. Well Jurong Tech went on some really good runs, and to be honest when you see such a 2-3 years sustain runs supported by good profits you will think that way.

Well the story ends that he continued to stay invested right up to when its share price fell from dollar plus to near zero and got delisted.

Another accounts train fella got invested in Chartered Semi conductor which we all know was a Temasek holding (big brother won’t let them die right?) . Chartered went the same way as Jurong and the person probably loss a huge portion of their investments

What do you think? What about the accountants around you?

To me, fundamental reading is only part of the game, these guys fell into the trap of forming a picture that large and blue will always stay that way. Cutting losses are painful but if you have the skill to evaluate that the business proposition is failing or is not what you thought to be, you better do the same thing.

I have my own experience in thinking Interroller (Pteris) was a good blue chip paying dividend stock. When the management leaves, all hell broke lose. The business never recovered. My stock went from what I purchased at 80 cent to 13 cents currently (And I bought after a massive drawdown)

You guys should have encounter your fair share of accounts train people. Do they do well in their personal finance or manage their portfolio well? We would like to hear your stories.

If there are some blue chip stocks that I would snap up in a further draw down, Sembcorp Industries (SCI) would be one of them.

For a bit of its total return history you can view it here.

Sembcorp is undergoing some sort of mini transformation. It owns 60% of SGX listed Sembcorp Marine (SMM), which builds oil rigs and drill ships. This have become its main profit generator and made it a darling among speculator.

In recent years, Sembcorp have aggressively try to build up its utilities portfolio. What happens is that SMM generates the cash flow, pays out the dividend to SCI, SCI leverages on this to build and develop utilities around the world.

Utilities are probably more recurring in cash flow, and perhaps they are preparing for the inevitable when the oil rig craze die down.

The recent 2 quarters have evidently show the cash flow from the utilities coming in. So much so that its full year utilities profit should be able to pay for its existing dividend. The dividend payout ratio is around 30%.

That is rather good. And probably more utilities coming online.

Debt wise we know that that SMM is net cash, this utilities assets is estimated to amount to 3.3 bil and their net debt is 1.1 bil. This make their debt to asset ratio of 33%. This is much lower than many utility and infrastructure plays such as MIIF, SP Ausnet and Cityspring on my dividend stock tracker which typically hovers around 50-60%.

Its trading at a PE of 10 times. really undemanding for a blue chip. Although the dividend yield is low, we view SCI as a growth stock, which will give the odd special dividend.

The upside of this switch to utilities, is that in the future, these utilities may be spin off into infrastructure or utility trusts, which SCI will further stand to benefit from.

Do a bit of homework into this to see if you agree with me.

I have added SCI to my dividend stock tracker as well, so you guys can tune in daily to its change in valuation and yield.

I run a free Singapore Dividend Stock Tracker . It  contains Singapore’s top dividend stocks both blue chip and high yield stock that are great for high yield investing. Do follow my Dividend Stock Tracker which is updated nightly  here.

Here is one Singapore stock often mistaken as a S-Chip listed on the SGX. STRACO is a developer and operator of tourism-related attractions. It operates 2 main attractions, Shanghai Ocean Aquarium (SOA) and Underwater World Xiamen (UWX).

This sounds like a shitty investment

1. 4.1% yield
2. 9.43 times PE or 10.6% earnings yield
3. 59% of asset in cash,  51% of market cap in cash
4. Its interest from its huge cash holdings pays for the capex!
5. Free Cash Flow 13.4%
6. The dividend payout  is 30%

You can view the Q1 results here.

I have a rather small stake here as I thought tourist attractions do not have a strong moat. But the results are  proving other wise.

Macquarie International Infrastructure Fund is a 9% yielding infrastructure stock listed on the SGX. I am invested in this and talked about my sweet and sour relationship with this stock a fair bit (read here)

MIIF just announced their latest quarter results. There are some good news in that the tax issues of Taiwan Broadband Communications (TBC) have been settled and the expected losses are immaterial.

However, it was still not clear how the expected moderation by the Chinese government over toll charges for Hua Nan expressway (HNE) will affect MIIF. I have asked for a sensitivity analysis from the Investor Relations but judging by their record they should not do anything about it.

I am positively surprise by the surge in traffic for HNE. Still the level of debts in this stock can be crazy and what we know is that most are not amortized which means that somewhere down the line, earnings by TBC and HNE may need to scale down to pay the massive debts or to get them refinanced.

Still, I read this report from AmFraser with their projection on how the cash flow of the 3 major assets will progress to.(read report here) I find them a tad optimistic. I would rather estimate based on the worst case scenario.

MIIF probably need 75 mil from the 3 assets since they need 65 mil to distribute the 5.5 cents annual dividend. The closest projection is 43 mil + 22 mil + 6 mil equating to 71 mil. We are still a bit short there but not that big of an issue since MIIF still have a cash horde.

Still I will watch this stock closely since the management in the past have made some rather questionable moves, its underlying have debts that could cripple distributions.

I run a free Singapore Dividend Stock Tracker . It  contains Singapore’s top dividend stocks both blue chip and high yield stock that are great for high yield investing. Do follow my Dividend Stock Tracker which is updated nightly  here.