Monday, 20 February 2017

Unattractive Lunar New Year bank promo

Till end Feb...

The only low-hanging fruit promo that I could find is the DBS $28 Hong Bao giveaway for opening a new deposit account or SAYE account online. T&C applies. So I have gotten myself a Multiplier Account.

POSB is offering 1.45% for 4 months if you open a higher interest account with fresh fund deposit. Last year was 8 months.

Standard Chartered is offering a miserly 1.15% for 11 months FD tenor with minimum deposit of 25k. (If I didn't recall wrongly, new year period was 1.25%.)

CIMB is offering 1.25% for a 12 months FD tenor with minimum deposit of 20k.

Maybank's FD rates have also dropped markedly versus last year.

Where would be a safe haven for parking spare cash at a better yield this year? Bonds?

Sunday, 29 January 2017

Sequel to CAGR, XIRR simplified

A sequel to my previous post.

Can I make use of XIRR's value to help in my investment portfolio goal setting?

Think come, think go... cannot leh. :(


Because XIRR % is like a report card grade which shows how my portfolio has performed over a fixed period of time, say last year. However, it is not practical to set a goal based on the % or confer a meaning to it as the current market value of my portfolio is controlled by Mr Market (although you may argue investment timing matters *cough cough*). So on sunny days, XIRR is good and on rainy days, XIRR is bad.

Notwithstanding the fact that data punching is going to be tedious for the value to be accurate. Diligence... hmm...

Before I put XIRR completely out of picture...

XIRR calculation might be meaningful IF you want to compare some 'investment products' like structured deposit, RSP, Investment-linked insurance or unit trust to see how well their returns fair against stock, ETF or simply inflation within a fixed time period. (I should do that for my POSB Home Balance Fund!)

Another use for it - if you have been actively injecting cash into Investment A and did not inject / inject cash at different intervals for Investment B, you could use their XIRR figures to give you an objective idea of how your Investment A's annualized return compares with Investment B's.

You could also use XIRR to compare your overall portfolio performance last year versus this year. So you can chart a Y-O-Y XIRR hehe!

In my conclusion, the XIRR figure is not very useful on its own but is good to use as a comparison data. Do let me know if you have a different opinion. :)


Saturday, 28 January 2017

CAGR, XIRR simplified

Inspired by SMOL's post, I decided to do some reading and a short post on these "cheem cheem" terms that previously I do not use.

CAGR stands for Compound Annual Growth Rate. It is useful in measuring (in %) how much an investment has increased in value over a fixed period of time.

Watch the illustration in this video here - 

So if your investment grew from $1000 to $1500 over a period of 3 years, the CAGR is 14.5%. Which means the amount increased by 14.5% on its compounded value each year, as follow
Year 1: $1000+14.5%
Year 2: Year 1 compounded $$ + 14.5%
Year 3: Year 2 compounded $$ + 14.5% = $1500

This is provided no fresh fund is injected into the investment (the investment compounds itself) over the three years. So if investment A returns 14.5% and investment B returns 10%, obviously investment A is doing better and probably worth investing more money in going forward.

The problem is... we do not compound the returns back in all our investments. We may choose to take out the dividends and spend them on other things instead of reinvesting in that same portfolio. Therefore the dividends will not contribute to part of the CAGR and using this formula is not accurate or useful. Just a simple comparison of annual return rate is good enough for determining which investment is a better deal.


XIRR is just an excel function. It calculates the Internal Rate of Return for a supplied series of cash flows (i.e. a set of values, which includes an initial investment value and a series of net income values). Unlike the Excel IRR function, the series of cashflows for the XIRR calculation do not necessarily have to be periodic. [Reference:]

What is 'Internal Rate of Return'?

Internal rate of return (IRR) is a metric used in capital budgeting measuring the profitability of potential investments. Internal rate of return is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. [Reference:]

Don't understand what the above means at first glance?

Me neither. But wait...

We need to first understand what a formula or tool does, in order to use it correctly.
If don't understand, then mai serng (don't calculate) lor!

But my spirit of never-give-up prompted me to do some experimentation on excel. And wallah! I found out that XIRR is a function that can calculate the CAGR mentioned :D

Amount($) Date
Initial -1000 01-01-15
Final 1500 31-12-17
XIRR 14.47%

And it can factor in cashflow. E.g. contribution (negative) and withdrawal (positive) amounts from EXTERNAL source throughout the investment period in calculating the annualized return rate.

It can also factor in TIME...

Initial -1000 01-01-15 Initial -1000 01-01-15
Injected -100 01-01-16 Injected -100 01-09-17
Final 1500 31-12-17 Final 1500 31-12-17
XIRR 11.23% XIRR 11.77%

Because time holds value*, $100 injected at a later timing gives you a higher return rate at the end date than $100 injected at an earlier timing even though your final values of investment at 31 Dec 2017 are the same.

*Your $100 not invested can be used to do something else before you invest it here to give you X returns.

The more money you inject throughout the investment period which gives you the same $1500 return, the lower the annualized return rate. Say if at any point in time you injected $500, and your return at Year X is $1500. What would be your XIRR value?

Answer: 0%


Cos you didn't yield anything from the original capital amount throughout the investment period.

Hope this post managed to shed some lights for those who thinks that CAGR and XIRR are too cheem for you. May we all yield high CAGR and Huat ah in the Rooster Year! =)


Monday, 26 December 2016

Time to contribute $$ to CPF for tax relief again

It's the time of the year again - time to contribute money to your CPF or your parents' CPF accounts if you are looking for some income tax rebate. Better do it soon too, because there are less than 5 working days to new year (and to qualify)!
Another way of getting the tax rebate is to do some good by donating back to society. :)

Here is the IRAS link to check out the top-up relief limits: CPF-Cash-Top-up-Relief

(For self is $7000 and for family members is $7000 too. So the maximum rebate amount is $14000.)

And not forgetting, there is also the elusive Supplementary Retirement Scheme (SRS) which you could contribute to...
What is SRS?
More on SRS contributions

If you are lazy to analyse for yourself on whether you should put your money into the SA or SRS, here is a good article that can help to shed some light.

It might be a good alternative to annuity or perhaps even life insurance (if you are already quite aged and need to pay very high premiums).

Note that SRS member can withdraw up to $40,000 per year from his SRS account tax-free from age 62 onwards. Early withdrawal would result in penalty. (If you make a withdrawal before the retirement age of 62, 100% of the sum withdrawn will be subject to income tax. You will also face a 5% penalty for premature withdrawal. - source POSB website)

IMO, if you have no idea on how to invest your SRS money for better returns (than your cpf money) then there is no point in putting the money in the bank's SRS account. The only good thing you can reap out of it is the tax benefit, which would appeal more to the higher earners with spare cash to park somewhere.

For me, I prefer liquidity (and I am terrified of penalty!). So I chose to put the money in my parent's RA since the money can be activated as monthly payout anytime.

Happy New Year! (I think my next post would be in 2017.)

Friday, 16 December 2016

Past tense, Present tense, Future tense of stock market

Past tense = dividends, P/E
Present tense = current share price, NAV, news
Future tense = prospect / business analysis, projected earning, speculation

Some people like to make decision looking at the rearview mirror, some people like to make decision based on trend and gut feel, some people like to analyse and try to foresee things.

Which describes you?


My stocks portfolio adventure in 2016:

- Earned an ok dividend of 4.3% by year end
- My worst paper loss this year was -29% in January
- Rode through the boring market period and terrible paper loss by not capitulating and just taking dividends as panadol
- Did some diversification of portfolio as it was over-concentrated in certain equities
- Paper loss (current) is about double the amount of absolute $ of my dividends gained

Looking to do some rebalancing of my portfolio to welcome 2017.
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