Thursday, September 29, 2016

Phillips money market fund (MMF)

It's been a while since I've talked about Phillips money market fund (MMF). A quick search revealed three articles:

1. POEMS money market fund (MMF) (2008)
2. Phillips money market fund (2009)
3. Phillips MMF (2010)

I know, from first look, they are all the same or similar sounding titles. No creativity on my part in choosing a title, haha!

For those who do not know, money market fund is a collection of short term bonds, deposits and savings. They don't give out interest like what stocks or even banks do. It's more like a unit trust where there's a NAV posted every day. If you buy say at 1.002 and after a month the NAV rises up to 1.012, then you have a return of 0.998% ( [1.012-1.002]/1.002 x 100%). The NAV keeps going up as the deposits and savings are capital protection upon maturity and even during the worst financial crisis, the NAV is steadily increasing.

Here's the returns I've tracked in the past:
2007: 2.01% pa
2008: 1.33% pa
2009: 1.04% pa

I didn't really track after that because it keeps dropping down as the interest rate environment is dropping also. But this yr and the last, the returns had been increasing again.

2015 Aug to 2016 Aug: 0.908% pa

If I take the more recent months, the returns will be even higher (but still less than 1% pa). It's time to take a look at this again to put your spare cash or emergency cash in. The process of taking in and putting in money is very fast, about 1 day usually (depending on time) and 2 business days latest.

What's the catch you ask?

It's not guaranteed by the bank deposit insurance, unlike fixed deposit (up to $50k per bank per pax, regardless of accounts in the bank). So, if Phillips MMF is to close down, then the money might not be able to recover. Well, in that case, don't put your whole networth in lah, just put in a suitable amount. You can use this is pay for your equities purchase using POEMS too, and that's what I do. The good thing about this is that it doesn't require you to jump through many hoops like minimum credit card spending etc. It's very good for people like me who don't have a fixed salary so I can't use those ocbc 360 accounts that people are raving about.

Friday, September 16, 2016

It's 3 am I must be lonely

Restitutive, Retributive and Reformative.

These 3 words keep rolling around in my mind as I woke up in the middle of the night to think about this. It must be around 3am, because that's the time my aircon timer is set and I usually wake up due to the difference in temperature. I must have read it somewhere, but I'm not sure why this suddenly cropped up.

Restitution means to restore or repair something to its original state. Retributive effectively means an eye for an eye. Reformative means to correct or adjust for re-integration into society.

Your kid hits another kid in the playground. As a parent, what do you do?

Restitutively, you should pay a small sum of money to the other parent to restore the 'state' of the kid to its original one. Retributively, you should let the other kid hit your kid back. An eye for an eye. Reformatively, you should get your kid to apologise first (no violence no matter who is wronged), find out why they are fighting, and seek to correct the behaviour of using violence to vent out one's frustration or anger and instead seek other avenues to address the wrong.

As you can see, it's hardest to reform and easiest to seek retribution. There's always 3 ways to approach matters, and it's a good reminder to me as well. The right tool for the right situation.

Thursday, September 15, 2016

CPFIS-OA investors shouldn't invest? Really?

There's always a big hoo ha about CPF investors being unable to hit the 2.5% interest rate of ordinary account CPF. The statistics mentioned in this recent news is that over the last 10 years, more than 80% of those who invested their money in CPF would be better off leaving their money in the CPF OA. It's also stated that 45% of the investors made losses in the scheme.

I don't buy this. I dug further and saw this link for actual report of CPFIS-OA investors in the year ending 30th Sept 2015. For easier reference, I screenshot it below:

The first picture shows that really, for the year ending Sept 2015, 38% of CPFIS-OA investors lost money with returns of less than 0%. 46% of members earned a return of 0 to 2.5%, which means a total of 84% of investors might be better off not touching them and earning the 2.5% OA rate. And so it appears that the newspaper article is correct.

 But let's look at the small footer, where all the important details are hidden

In pointer 2, it says that the data do not include unrealised profits and losses. This is not mentioned in the news article!

Imagine I have 3 positions:

1. Company A, bought 30 shares at $1, still holding on at $1.30
2. Company B, bought 40 shares at $1, but cut loss at $0.80
3. Company C, bought 30 shares at $1, sold at profit at $1.20

Out of the 3 positions, only 2 and 3 is realised and position 1 is still 'running'.

Total amount invested = 30*$1 + 40*$1 + 30*$1 = $100
Realized profit/loss = (40*-0.2 + 30*0.2) = -$2 (loss)
Realized profit/loss percentage = (-2)/100 x 100% = -2.0%

Oh no, so I'm one of the members with losses since my realized profits/loss invested is -2%

But if I'm counting my total profits/losses for that duration, I should include BOTH realized and unrealized profits marked to market, so

Total realized + unrealized profits = -2 + 30*0.3 = $7
Total realized/unrealized percentage = $7/100 x 100% = 7.0%

That's a far cry from my realized losses of 2%. Isn't it?

Monday, September 12, 2016

How we react to other's success story

Someone mentioned his success story. You immediately start to think of what are the circumstances that makes him different from you. Maybe he comes from a rich background. Maybe he don't have NS so he starts working earlier by 2 years. Maybe his parents help him pay the downpayment of his property and his car. Maybe he is single so he don't have to pay as much as a married couple with child. I'm sure you have thought of this, and so do I.

The issue about such thinking is that you start to form a hundred and one reason why you cannot emulate the success story. You start thinking that he is different from you and since you don't have the advantages that he had, you cannot have the success that he is having too. I find such thinking highly toxic and even as I'm still struggling to get over such jealous thinking, sometimes it'll start to creep onto you insidiously. 

I think it's part and parcel of being a human. We have our ego and a damaged ego is very hard to swallow. But it's important to turn such discomfort into a strength and motivation to succeed. You already have a role model who had been there and done that, so your learning curve is going to be reduced. If anything, you have a stronger chance of reaching the same success level in a much shorter time. I believe, self delusional or otherwise, that the purpose of sharing success story is more motivational than boasting. We just need to keep an open mind to learn and not close it off and say he is different from me, and I don't have this or that, hence I can't do it. It's important to accept the discomfort arising from the discrepancies and start closing the gap right now.

It seems like my whole life is trying to prove others are wrong:

1. When I'm in JC, there's this teacher who keeps telling me I should drop Further maths. I didn't and I succeeded in getting an A.

2. When I'm in university, my friends and family told me I can't get 1st class. I didn't believe it and I took extra modules to chalk up the score necessary to get it.

3. When I'm working, friends and family told me I can't work as a self employed private tutor. I won't be able to survive. But I did and I continue to do so.

4. When I'm saving 50k a yr after I woke up from my 'financial slumber', there are folks who told me when I get married and start having to pay for my own property, I won't be able to make it. Well, I'm married and I save even more now. 

Iron-teeth. I get highly motivated to reach my goals in order to prove a point. That's who I am. The quality of my motivation changes from being the angry, vengeful, the in-your-face kind of motivation when I'm younger, to a quiet strength where action speaks louder than words when I'm older. Both are pillars of strength when trying to traverse through the obstacles and road blocks in my path, but the second one is one that springs from self confidence. Not angry anymore, just self assured. I think age tends to do that to you. 

You no longer have to prove your 'worth' to anybody.

Friday, September 02, 2016

Principle of Non-equality of Equal magnitude numbers


Equal numbers a and b of the same magnitude need not be equal
i.e 1+1 is not necessarily equal to 3-1, even though numerically they are both equal to 2.

Method of proof:

By contradiction

Proof A:

I have 3 million dollars, but I lost 1 million dollars, so I still have 2 million dollars. I might go jump down. If I have 1 million dollar and I made another million, I now have 2 million dollars, instead I jump for joy. The former makes me jump down, the latter makes me jump up, possibly with fist pumping and with occasional shouts of joy. Thus they are clearly different, even though it's the same.

Proof B:

I have 3 bad debts (all of equal amount), and I tried all ways to get rid of 1, so now I have 2 bad debts. I'm overjoyed. If instead I have 1 bad debt, and I incurred another one so that I now have a total of 2 bad debts, I'm overburdened with sadness. The former makes me overjoyed, the latter makes me chained in debts. Thus they are clearly different, even though it's the same.

Proof C:

I have 3 multibaggers in my stock investment. But one of them turned from multibagger to multibeggar and eventually goes to 0. I feel stupid and adopt the 'take profit is never wrong' principle. If instead I have 1 multibagger, and I held another investment until it too became a multibagger, such that in the former and the latter case, I earned the same amount of money, I will feel clever and adopt the 'investment is for the long term' principle. Both are the same result, yet they are different.


Hence the principle of non-equality of equal magnitude number is verified.


1. The journey to the result is as important as the result. If the final result is equal, and the journey to reach the result is the same, then it might be equal in all aspects. But I doubt the journey can be the same. Even if the journey is the same, the person might be different. Even if the person involved is the same, the mental state of the person might be different. Hence, it's safe to conclude that equal results need not be equal to the person carrying out the journey.

2. Aversion of loss is stronger than the greed for gain. If I managed to lose more, I will feel more sadness compared to the happiness I get from gaining more. Conversely, that should mean that if I manage to avoid losing, I should feel more happy than losing the opportunity for gains. This explains why when a counter I'm eyeing doubles in price, I can rationalise it off and say it's just not for me or I'm busy or at that point in time I act on the best of my knowledge. But if I managed to avoid buying a counter that halved in price, I shout HENG AH.

3. Comparing against another person is a very silly thing. You're 30 years old and I'm 30 years old. You have 100k but I only have 30k. So? You might have gone from 200k to 100k while I might have gone from 15k to 30k. Our journey is vastly different. Comparing against your past self might at least reduce the number of variables by one,