ValueBuddies.com : Value Investing Forum - Singapore, Hong Kong, U.S.

Debt IS money.

Dont we all love money?

(01-09-2013, 09:44 AM)NTL Wrote: [ -> ]Loan from life insurance carry 6-7% interest. Loan from stocks as collateral has a interest of (Sibor?)+spread %.

After some thoughts bout it, cost of borrowing from property to buy shares is not much difference from borrowing from shares to buy shares. However, I believe that borrowing from shares is not affected by the cooling measures and it is interest-only loan, it may be more advantages, if done correctly. Furthermore, it is a loan facility where you can drawdown just the amount you need. When have the money, can always redeem the principle.

Only CPF OA can be use for funding property purchase, and if it is the 2nd property, will need to set aside half the minimum sum, then can utilise the rest for property purchase. With all the CM right now, will need at least a 15% raise in price of investment property before making a profit. If considered the 2.5% interest from CPF, that's make it at least 17%. Is it worth it? I am staying out for sure.

Margin on stocks interest rate not low also afaik and its affected by stock prices. Life policy loan much safer.

No lah, not talking about property investment. Juz saying home loan against self stay property, assuming most of us have one. Then the interest is the lowest possible and the money can be used for long term stock investments.

'Crash Alert' Flag Still Flying

By Bill Bonner, Aug 30 2013

We hoisted our "Crash Alert" flag last week. So far, no crash. The US stock market came back a bit on Wednesday, with a 48 point gain on the Dow. Gold was flat.

The flag is not a prediction. It's merely a warning - like the flag at the beach that warns of a dangerous riptide.

[Image: jbtE2h6EkgQMT0.png]

You can still go in the water. But watch out. You could get washed out to sea.

Syria? Tapering? The return of the debt-ceiling debate? Anemic real economic growth? A preponderance of negative earnings guidance? Rising Treasury yields? A panic in the emerging markets?

And here's the Financial Times warning that central bankers may not be willing to protect investors from every danger:

The world is doomed to an endless cycle of bubble, financial crisis and currency collapse. Get used to it. At least, that is what the world's central bankers - who gathered in all their wonky majesty last week for the Federal Reserve Bank of Kansas City's annual conference in Jackson Hole, Wyoming - seem to expect.

Despite the success of unconventional monetary policy and recent big upgrades to financial regulation, we still have no way to tackle imbalances in the global economy.

A New Kind of Financial System?

Dear readers are urged not to pay too much attention to the FT. Its news is solid. But its editorials are mush. Robin Harding continues:

Five years ago, after the collapse of Lehman Brothers, there was appetite and momentum for a new kind of international financial system. That appetite is gone - but we desperately need to get it back.

What "new kind of international financial system" does he propose?

…boosting the IMF's resources and handing more voting power to emerging markets so they can rely on it in time of need…

A reliable backstop is impossible when the international system relies on a national currency - the US dollar - as its reserve asset. Only the Fed makes dollars. In a crisis, there are never enough of them - a shortage that will only get worse as the world economy grows relative to the US - even if the problem for emerging markets right now is too many of them.

The answer is what John Maynard Keynes proposed in the 1930s: an international reserve asset, rules for pricing national currencies against it, and penalties for countries that run a persistent surplus. After the financial crisis there was a flood of proposals along these lines from the UN, from the economist Joseph Stiglitz, and even from the governor of the People's Bank of China. None has gone anywhere.

The plan is to turn the IMF into a kind of super central bank ... with lots of "international reserve assets" that it can hand out to any country that seems to need them. Readers don't need to ask too many questions. We'll just put it into simple words. The world's money system would be based on paper money and managed by global bureaucrats. You see immediately that it is hopeless. A super bank run by super economists?

How long would it take for them to blow up the whole world's financial system?

But don't worry about it. The system will blow up anyway.

No paper-money system has ever survived a full credit cycle. Why not? Because paper money (a form of primitive, credit-backed money) is unlimited ... and undisciplined. That - and not a lack of international monetary reform - is why there are so many bubbles now. When interest rates are falling - often pushed by central banks to artificially low levels and held there for an extremely long time - credit expands and the burden of debt grows. That has been happening for the last three decades. And now, the entire economy depends on something that can't possibly continue. Debt can't grow forever.

As long as rates stay low, the system holds together.

[Image: jby750GdH7AdOT.png]

But as the quantity of debt increases, the quality of it decreases. Debtors' balance sheets get weaker and weaker. Eventually, the credit markets change direction. Rates start going up again.

Then the weight of all - that debt comes crashing down like an avalanche. And when it gets started, there is no stopping it.

[Image: jEtse726WzTHv.png]

All you can do is make sure you're NOT in the way.

http://seekingalpha.com/article/1666992-...oogle_news

(01-09-2013, 12:52 PM)smallcaps Wrote: [ -> ]

(01-09-2013, 09:44 AM)NTL Wrote: [ -> ]Loan from life insurance carry 6-7% interest. Loan from stocks as collateral has a interest of (Sibor?)+spread %.

After some thoughts bout it, cost of borrowing from property to buy shares is not much difference from borrowing from shares to buy shares. However, I believe that borrowing from shares is not affected by the cooling measures and it is interest-only loan, it may be more advantages, if done correctly. Furthermore, it is a loan facility where you can drawdown just the amount you need. When have the money, can always redeem the principle.

Only CPF OA can be use for funding property purchase, and if it is the 2nd property, will need to set aside half the minimum sum, then can utilise the rest for property purchase. With all the CM right now, will need at least a 15% raise in price of investment property before making a profit. If considered the 2.5% interest from CPF, that's make it at least 17%. Is it worth it? I am staying out for sure.

Margin on stocks interest rate not low also afaik and its affected by stock prices. Life policy loan much safer.

No lah, not talking about property investment. Juz saying home loan against self stay property, assuming most of us have one. Then the interest is the lowest possible and the money can be used for long term stock investments.

Most of us will have a HDB, and is unable to take a loan against it.

Anyway, each one of us will have own way to manage money, loans and risks. Can't comment which is best.

Shall ends here.

No leh. Was talking abt home loan, not equity loan. As long as never repay the home loan but instead use the money for stock investment, that means using home loan as leveraging tool for stock investment...

Home ownership is the only way to unlock cpf OA fully before retirement age isnt it?

(02-09-2013, 03:12 PM)shoeboxlife Wrote: [ -> ]Home ownership is the only way to unlock cpf OA fully before retirement age isnt it?

Not really. Investing in stocks when it's to your advantage to do so. And selling when it's time to sell. Of course you must consider the "pow chiat" 2.5 % interest rate you have to forgo when you invest in the market. But the "time factor" is to your advantage since you can't take out your money until at 55 years old.
i have been there. And still trying to do it even at 65+. But in case, Papies lose their majority in the next GE 2015/2016.....? What's going to happen to our CPF's money???

Or you think Papies is "WAN SHUI, WAN, WAN, SHUI"
Because of 4Ks Singaporeans are always more than "Boh K" Singaporeans?
Anyone any idea or opinion?
Thanks

(02-09-2013, 08:44 PM)Temperament Wrote: [ -> ]

(02-09-2013, 03:12 PM)shoeboxlife Wrote: [ -> ]Home ownership is the only way to unlock cpf OA fully before retirement age isnt it?

Not really. Investing in stocks when it's to your advantage to do so. And selling when it's time to sell. Of course you must consider the "pow chiat" 2.5 % interest rate you have to forgo when you invest in the market. But the "time factor" is to your advantage since you can't take out your money until at 55 years old.

Hi,
Assuming investments are profitable - any profits from CPFIS is still locked up (trasnfer back to CPF). However, any realised gain from property investments can be taken off after amount plus accrued interest is returned to CPF accounts. Therefore property investment (and divestment) has some advantage if the intention is to get some cash out for purposes other than stocks or property.

(02-09-2013, 10:03 PM)fat al Wrote: [ -> ]

(02-09-2013, 08:44 PM)Temperament Wrote: [ -> ]

(02-09-2013, 03:12 PM)shoeboxlife Wrote: [ -> ]Home ownership is the only way to unlock cpf OA fully before retirement age isnt it?

Not really. Investing in stocks when it's to your advantage to do so. And selling when it's time to sell. Of course you must consider the "pow chiat" 2.5 % interest rate you have to forgo when you invest in the market. But the "time factor" is to your advantage since you can't take out your money until at 55 years old.

Hi,
Assuming investments are profitable - any profits from CPFIS is still locked up (trasnfer back to CPF). However, any realised gain from property investments can be taken off after amount plus accrued interest is returned to CPF accounts. Therefore property investment (and divestment) has some advantage if the intention is to get some cash out for purposes other than stocks or property.

Don't even need to divest. Just use CPF to pay for the monthly installment, rent out, and collect monthly CASH in return. An almost "CPF-to-Cash" conversion.

(02-09-2013, 10:03 PM)fat al Wrote: [ -> ]

(02-09-2013, 08:44 PM)Temperament Wrote: [ -> ]

(02-09-2013, 03:12 PM)shoeboxlife Wrote: [ -> ]Home ownership is the only way to unlock cpf OA fully before retirement age isnt it?

Not really. Investing in stocks when it's to your advantage to do so. And selling when it's time to sell. Of course you must consider the "pow chiat" 2.5 % interest rate you have to forgo when you invest in the market. But the "time factor" is to your advantage since you can't take out your money until at 55 years old.

Hi,
Assuming investments are profitable - any profits from CPFIS is still locked up (trasnfer back to CPF). However, any realised gain from property investments can be taken off after amount plus accrued interest is returned to CPF accounts. Therefore property investment (and divestment) has some advantage if the intention is to get some cash out for purposes other than stocks or property.

Ya loh. Basically bobian since the rules r like that. Tried using cpf for stock investment for a number of years but in the end still felt its better to use it for property. Cashing out for the 2nd time.