Friday, July 31, 2009

Phillips Money Market Fund

I started to put my money back into the Phillips money market fund (MMF) again. I withdrew the bulk of my money from it when the monthly returns for the MMF dipped to 0.053%. Since the money placed in MMF is not insured by the govt (unlike the bank deposits, which is insured up to 20k), I thought the miserly interest isn't worth the risk, so I placed the bulk back into my savings accounts (which gave me an equally miserably rate).

Here's the returns from the MMF so far:

* The monthly returns are calculated by subtracting the MMF NAV of the last day of the month from that of the first day of the month, divided by the NAV value of the first day of the month, in percentage terms

As you can clearly see, during May, the returns per month dipped to 0.053%, giving an estimated returns of 0.64% per annum. It's better than savings, but not much better. I started putting my money back into MMF again during June, when I noticed a rise in the returns to 0.089%, which gives roughly 1.07% per annum. That is more acceptable for the risk that I put into the MMF. Though I say that, do take note that MMF is as safe as savings deposits, since most of the capital is placed in time deposits, treasury bonds, bills etc.

The heydays where the monthly returns of 0.15% and above is over. That happened in mid 2007. At that time, the stocks are breaking new high, so who the hell wants to put into MMF. Given an average monthly returns of 0.15%, it'll add up to 1.8% per annum at least. I didn't include compounding.

Here's how the MMF returns tracked since May 2007 to present looks like:

For this month of July, the returns for this month is 0.089%. Just one more day to go, shouldn't be too far off from there.

Monday, July 27, 2009

Out of action

There's something very wrong with my blogger. I think from what I goggled, something wrong with singnet internet, proxy, blah blah...basically it makes the blogger posting site misaligned. I tried everyday since last Thurs to post something but I can't attach pictures.

I still can't attach any pictures now. BUT at least I can post something.

Looks like I'll be out of action till this thing recovers itself. I've no time to remedy it.

Tuesday, July 14, 2009


I know I've not been blogging for some time, so here's my feeble attempt to do that.

Blogging has always been a reflection of myself. Though I've not been writing, I've always been reflecting. So, maybe this blog article will just log in some of the things that I've been thinking about since the myriad things I reflect are too short to exist as an individual article by itself.

1. Most dominantly on my mind is how to make more money. Ya, I sure know how it sounds like. But that's the truth. I'm still trying to meet my 50k target by this year end, and am most happy to say that for my target set per month, I managed to do it. But it's getting tougher and tougher to do that. Hey, setting a goal is the first part. Relentlessly pursuing it is the next part. Who ever said it's going to be easy?

Sometimes the only motivation for me to keep doing work at the pace I'm doing is the elusive utopia that I won't be doing this forever and I'll be financially free from the burdens I'm carrying now. I need to remind myself why the hell am I saving for.

2. Time and money. I need to leverage my time more. I NEED to earn more but work less. I know it can be done and I just need more time to do it. That would be one big goal settled, if I managed to pull it off successfully. This will really seriously accelerate my goals of being financially free.

3. Endowment plans... I always try to separate my insurance from investment. For example, I never try to use whole life as an instrument for investing and will not compare the returns of whole life to say a fund returns. I've no intention to cash out my whole life policy to get the cash returns (though it's good to have an option if I have to) hence will not launch into the big debate about buy term invest the rest philosophy.

What I want to say is that endowment plans does have its uses as a savings plan. Endowment plans have a lock in period, maybe like 10, 15, 20, 25 yrs, which you have to pay premiums for a certain period (like maybe for 5 yrs only). I think a typical endowment policy will give returns of like 3-4% projected. But for planning purposes, I suggest taking a look at just the guaranteed part. If you put in 50k in premiums, if I get back say 70k guaranteed, I'm fine. Any extra coming from non-guaranteed part is bonus to me.

Ever though this will severely underestimate the returns from endowment policy, it will prevent disappointment when the policy matures in the 10-25 yrs later. I'm trying to protect the downside here, because while investment returns can yield higher (maybe 6-10% pa?), investment returns are non-guaranteed at all. Can I bear the consequences of not being able to meet my savings target?

So, if I have a child today and want to save up for the education needs of say 70k in 20 yrs time, perhaps I will subdivide the 70k savings target into two. The first will be dumped into endowment but looking only at the guaranteed part only. The second will be to do my own investment.

To illustrate, I'll do 60% in endowment, meaning 42k. I'll go hunting for an endowment that gives me 42k guaranteed in 20 yrs time. Then for the remaining 40% (28k), I'll do my own investment. I just need to start off with around 9k (8,730 to be exact) and earn a compounded annual growth rate of 6%. I think that can be reasonably achievable.

Mega downside: I'm in heaven, but at least with the endowment policy that I bought, it can still continue saving after I'm gone. You can get a lump sum payment...that's the best I can do. Love you, kiddo, will be watching over you from up here. Take care of mummy.

Super downside: Daddy can't work after the accident. At least with the waiver of premium, the endowment policy can still carry on. Sorry kiddo, you might have to borrow some money.

Downside: I lost all my 9k and I have a shortfall of 28k. Hey, daddy tried his best, I'm sorry kiddo, you have to loan the remaining 28k yourself. At least daddy can sponsor you 42k of your fees, representing 60% of the amount you need. Be thankful.

Upside: I have more than 70k because the endowment gave me an extra 3% returns and my own investment generated 10% returns. Hey kiddo, you can keep the money to start your own little venture and own stock investing.

I'll rather protect my downside. It'll be sucky not to be able to give your child a good education. I'll seek to minimize my maximum regret.

~I'm not a financial advisor. If you act after reading this personal ranting about my life, you seriously need to find a qualified one. Run, don't walk.