What's with the rant against whole life plans?

I bought a whole life plan. In fact, 2 of them. One is a traditional whole life, where you pay until forever. The other is a limited payment whole life, where the payment period is condensed to maybe 5, 10 or 15 yrs, so you pay a higher amount but you can stop paying after.


There's so much vitriol against whole life that I thought I should make some statement FOR whole life, just to provide some yin to balance out the yang. The ultimate question is this: Will I buy a whole life plan now? The answer is no, but back then, I didn't know the following:


1. I'm a mighty saver. I can save a lot of my income away without external help. I know some people will spend a lot of their income away, so a whole life plan helps to 'lock up' that excess money away and give it back much much later. It's not ideal of course, but between a rock (not saving) and a hard place (not earning good returns on money), I think there needs to be a compromise. I know the rhetoric of buying term and investing the rest. But I think there is a group of people who will buy term and spend the rest. Whole life will help them a lot in this aspect. Back then, I didn't know which group I am in, but now I know. It's my hedge against my own 'money' character, if you will.

So, buy term invest the rest...but in real life, you might not save the rest. Nor invest it.


2. I can earn a respectable returns myself from investing. The second part about buying term and investing the rest is the investing part. Some people don't want to touch investment instruments at all, except perhaps for insurance and savings deposit. Not even bonds are under their radar. It could be ignorance, or fear or more likely a combination of experiential baggage that causes one to think like that. I'm sure you've heard of ultra conservative people like that. If so, then whole life presents a good investment for them. It might not be good enough for you, but it could be so for them. I don't buy into the idea that if you invest in a low cost fund, things will work out well for you. The stock market returns are never guaranteed. Nobody can guarantee you will earn 1% from the stock market if you put in for the long term. On the other hand, I've never heard of people losing money in whole life insurance, have you? The criticism is that one can earn better than whole life, but perhaps they forgot to mention they could have lost money in the process too.

So, buy term invest the rest will beat whole life returns, but that outcome is not guaranteed. A small guarantee might work better for an non-guaranteed but higher return.


3. I am disciplined. I think that sums up the characteristic of a term plan buyer. If you want to buy term plan, you better be disciplined in your spending and also your investments. If not, it's likely to reap the benefits of a buy-term-invest the rest strategy. It's like hiring a trainer for your gym. Can you do it yourself? Sure, all the information is out there, you just have to read and learn it on your own and execute it. But there will be days when you're not motivated and you just need someone to push you so that you can overcome the barrier. For a fee, of course. Not everyone is interested in financial and insurance matters and will gladly outsource it to others.



What I'm trying to say is that the process of discovering yourself takes time. In the meantime, you still have to work out the best decision based on the available information. Back then, my idea is to use whole life as a base and buy term to top up the coverage. When the term expires at 60 or 70, the whole life will still continue to provide coverage. I will then have to option to convert my whole life to annuity, cash out for retirement needs and/or continue the plan and provide a gift for dependents. Ironically, because of my whole life plan 'mistake' that everyone around me keeps telling me, I went to dig further into investment. I would say the 'mistake' started everything I know about financial stuff.

Interesting isn't it? Nothing is really 'wasted' in nature.

My philosophy now goes towards using term and self insurance. From whole life, to limited payment whole life, to term and to self insurance, I think I'm evolving just like a pokemon. I think life experience and mistakes are the candy needed to evolve yourself into a stronger pokemon with more CP lol!

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Gold and Silver investing guide

Bigscribe released a new free ebook again, and this time it's about investing in metals. I'm a lay person and I know nothing about investing in metals, so this guide comes as a godsend to fill up my knowledge base. We always hear people talking about investing in metals as a hedge against hyper inflation (like during extreme conditions in wars), so naturally I'm interested to find out more about it.

This book talks about buying physical metals, specifically the buying of physical investment grade gold and silver, and the other little details like where to store and so on. There are other ways to invest in metals, like Gold ETF, but in shit-hits-the-fan situations, buying in such intangible metals might not be good because you're subjected to counterparty risk. In physical gold or silver, you just take and run. From the guide, I even know that there are 2 other ways to invest in gold, other than ETFs and physical gold. I think it'll be a good guide for lay persons such as me to learn about such things, even if you don't necessary have the huge asset base to diversify into precious metals.


The last part of the guide talks about the different myths for and against buying of Gold and silver. I think this gives the guide a well rounded starting point to find out more about the investing of precious metals. Try and register for it here, it's free and set in the local context, unlike other sources from the internet or books.

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Using Investingnote's charting platform

I wanted to help those who are newer to Investingnote, my preferred charting software, hence I'm writing this post. I think the people over at Investingnote are really doing a fine job with a free charting software. It's actually quite powerful and I especially like the real time (okay, it lags by at most 2 minutes) update of the charts. Yahoo finance maybe lags by 10 to 15 mins? I've not seen a charting software that updates realtime too, perhaps except those by brokerage platform. But those are pretty laggy and buggy so I don't like to use them much.

This is not a sponsored post. I just think it's a great tool for people to use it, so I'm sharing it. This is also not a tutorial to show you how to use the charting software, but more of how I use the charting software at Investingnote.

When you logged in and click on the "Charts" option on the upper right corner of the platform, you're going to see something like this screen:

I like to add a few indicators to my chart. I mouse over the symbol with the charts, and you'll see "Indicators" appearing.

Clicking on it will bring you to the list of indicators available for you to add in. I proceeded to add in MACD, Elders Force index and Moving exponential by clicking on the names. It'll automatically be added to the charts.

Now my charts look like this:

I don't like the Elders Force index (EFI) in a line form. I prefer the histogram format, so I'm going to change it. I mouse my cursor over to the gear symbol just to the right of the word EFI. It's the middle icon. You're going to see the word "Format" appearing. Click on that. You'll see "Inputs" and "Style" menu above.

Play around with the options. I changed the colour of the plot to blue, line to histogram, and thickened the width of the histogram, as shown below:

If you're satisfied, you can click OK and it'll be shown on the chart. I did the same format adjustment to MACD too. Let's say you don't want to see the MACD appearing, you can hide it by clicking on the first icon next to the indicator:

You can also shift the order of the indicator up or down. Let's say I want to move my MACD indicator right at the bottom of the chart. I'll press the down button on the top right corner of the indicator box:

Once you've pressed it, the indicator can move up or down according to your liking. You can also draw trendlines, horizontal support, fibo etc by looking at left side of the chart:

Let's go ahead and choose the fibo retracement lines:

It's the second symbol, click on that small arrow and you'll see a whole host of options available. Let's go ahead and choose Fib retracement and draw it out. You'll see the results below:

If it's too small and too much things happening on your chart, you can click full screen and blow up the chart to see it clearer:

Okay, here's the important trick. How do you save the nice charts and drawings you've done? There are two ways:

1. Saving individual charts:

Click on the Save chart layout symbol and save everything you're working on for that particular chart. They will ask you to give a chart layout name.

Once you've entered the chart name, you can retrieve it back anytime by pressing the Load chart layout

You can save your work this way.

2. Saving template:

I prefer saving template, so that I can apply this particular set of template (with this set of indicators and format) to different charts. So here's how to do it:

Click on the study template:

You will see the option to "Save study template as". Click on it, give the template a name and you will be able to put this set of layout onto any charts you want easily.

I saved two template (as shown above by the red arrow), the first is "without RSI" and the second is "with stoch RSI".  If I clicked on the template "Without RSI" and click on the box (marked by the black arrow) and type the name of the counter (e.g. SHENG SIONG), I will apply this template onto the chart of Sheng siong.

Of course there are many more functions that I didn't illustrate but I think this is a good starting point to explore the platform yourself.

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The difference between preferential offer and rights

I just received the booklet from Croesus regarding their preferential offer of 10 new units @ 0.797 for every 259 shares owned on ex-offer date of 3rd Aug 2016 that I blogged about here. I initially thought this is like rights exercise, which I'm very familiar with. But on closer inspection, it is not. Let's explore what's the major difference.

I think the most important difference is that rights are usually renounceable. This means that if you do not want to take part in the rights and subscribe to it, you can do so by selling it. If you're a shareholder, you'll be entitled to rights shares. These are called nil paid rights, because you haven't gone down to the ATM to pay the subscription price for it to be converted to ordinary new shares. There's a nil paid rights trading period, about a week or so, where people can buy or sell their nil paid rights. If you do not want to take part in the rights, you can sell the nil paid rights in the market during the nil paid rights trading period, so you're sort of compensated for the eventual dilution in your shareholdings upfront.

So, renonuceable means you can sell/buy and transfer to others, and there'll be a nil paid rights trading period to facilitate this. The nil paid rights counter is usually accompanied by a letter R, so there's no question that this is the rights share you'll be buying or selling.

Preferential offer is non-renounceable. Well, at least the one offered by Croesus is not, so I'm not sure if I can extend it to all other such preferential offerings of other companies. Non-renounceable means you cannot sell/buy and transfer the new units to others. This also means that there will not be a nil paid rights trading period. You either subscribe to your entitlement by going down to the ATM to pay for it (in this case, $0.797 each) or you can walk off. But what you can't do is to sell your nil paid rights away, unlike a proper rights exercise. In other words, you either subscribe or you get diluted because of the injection of new units that you refuse to participate in.

To summarise, in all purpose, a preferential offering is like a rights exercise without the ability to buy/sell your nil paid rights because it's non-renounceable. 

If you really don't want to take part in the preferential offering, I see only a few options available:

1. Sell off the mother shares before the ex-offer date (I did sell off a part as I don't want to be over exposed here). But it's kind of late for Croesus now, since the XO date is over on 3rd Aug.

2. Ignore the entire thing, and let your rights expire without paying the $0.797. This is not a wise thing to do though.

3. Subscribe to the rights by paying $0.797 by 17th Aug 2016 and then sell it on the market when the new units gets listed on 26th Aug 2016. I am even going to apply for excess to see if I can get back cheaper for the holdings that I sold before XO.

I suppose those people who are really forced to put in more capital will be doing number 3. Might expect the Croesus price to drop after 26th August 2016.

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