tzlee.com/blog

Month: March 2013

  • BMW Buyer vs Public Transport Fan?

    I read this article and couldn’t resist my urge to bang wall.

    http://ride.asiaone.com/features/opinion/story/bmw-buyer-versus-public-transport-fan

    Comparison of extremes

    First, the example of an expensive $220K BMW 3-series is a little way off the charts as a basis for comparison against public transport. The author could have used a cheaper car, for example, a Kia Forte (which is a very decent family sedan, by the way.) He also failed to mention that a secondhand car market actually exists. Willful omission?

    And for a $2,000/month installment, assuming this is over 10 years, then $240K is the full amount including, not excluding, interests. The author seems to be clueless about the tax structure and rebates. (Business Times article, really?)

    The author also seems to have conveniently forgotten about all the recent complaints about queueing, waiting, squeezing, breakdowns, smelling people’s armpits, getting drenched in the rain, having people rub you all over, getting scolded by random aunties and having uncles with a laptop watch porn withbeside you.

    Where the hell are the taxis when you needed them most?

    Has anybody also forgotten about SARS?

    Can you or do you really want to bring a family of 5 onto a crowded bus with bags of groceries?

    What about the time and opportunity losses of the aforementioned Public Transport Fan (“PTF”)?

    There is indeed “a huge price to pay for convenience.”

    Anyway, let’s just take that as that, and that the BMW driver has a $340K hole in the bank as the author of the above article described.

    Invest, invest, invest!

    The author brought up investing! Why am I not so damn surprised?

    I haven’t seen my investments yield as much as the author has described. The truth is there are risks associated. The markets have been very volatile for the past four years, and I do not see it correcting anytime soon. All I can say is, invest with care.

    And for a regular investment of $2,000/month, a 3-4% dividend yield would return $720 every year. That is per year! Or about $60 per month.

    Condo… in Pulau Ubin?

    And as described by the author, if these dividends have been reinvested, i.e. with the effect of compound interest, the eventual sum of $999K would buy the PTF a piece of “suburban condominium” in 25 years. Really? With all the talk about investments, what ever happened to inflation?

    Anyway, I will put this theory to the test. I am investing fixed monthly sums into dividend yielding stocks starting this year. My portfolio should be growing as quickly, or even more quickly than my car installments. Unlike some book or article writers, I walk the talk.

    Will you really save that $2,000 a month if you didn’t drive a car?

    Sometimes money that goes around comes around. If you don’t spend on one thing, you end up spending on another — food, clubs, branded goods, gadgets, etc. Sure, maybe you won’t spend all of that 2 grands, but some of that is going to be spent somewhere, somehow.

    Public transport (and Taxi for that matter) will always be cheaper. Private transport is a lifestyle choice. If you are single, maybe it’s still OK. For those with a family, sometimes a car can really be of much help.

    And for those looking for a girlfriend… need I say more? 😉

    Just for laughs:

    Just for Laughs - Where's your F***ing Ferrari?

  • On car loans again

    I just read this article.

    I found this statement by Tan Huey Min, general manager of Credit Counselling Singapore a little misleading:

    Over the long run, if you pay off the loan in eight years, the amount you have paid is much more than if you had paid the loan off in five years.

    First off, back when 100% 10-year loans were allowed, the interest rate was 1.88-2.8%. EIR 3-4%.

    Now that MAS capped loans to 50% 5-year, banks raised interest rates to 3.25%, or EIR 6-7%.

    Given an arbitrary amount of $100,000. This is how it works out:

    10 years, 100% loan @ 1.88% = $18,800 in interests
    5 years, 50% loan @ 3.25% = $8,125 in interests

    Sure, the interests would have reduced by over $10k+ but these have not taken into account the time value of money, i.e. inflation.

    Singapore’s inflation rate averaged around 4% over the last 5 years. Given that the old EIR was 3-4%, it was actually cheaper to take the loan.

    Note also when you stretch a car loan, the real EIR decreases.

    Here’s what $50K (the down payment amount) if hedged against inflation would work out over 5 years at 4%:

    $50,000 (P) x 4% compounded (r) x 5 years (Y)
    Future value = P(1 + r)^Y = 50000 x (1.04)^5 = $60,832.65

    Amused? No. It is exactly that. The interest rates have risen taken into account the reduction in banks profits.

    So to the cash-rich savvy investor, down paying 50% may not make sense with the revised interest rates then.

    However, if one does not invest wisely, sure… avoiding the debt would be good.

    Now with this blog post I did not say to go right now and take a full loan on a car while you still can. Taking on loan with leverage need to be weighed against risks. The most important risk to manage is the ability to bail out at any time.

  • Writing reinforces knowledge

    I haven’t been blogging for a while. A lot of blogging activities actually shifted to Facebook. The same goes for many of my friends who used to blog; their blogs have been deserted and their last posts date way back to 2011.

    I think that my writing is starting to suck. I can’t seem to form grammatically correct sentences or write complete paragraphs without going back to edit them again and again. I actually spend a lot of time looking through and editing my blog posts. The art of writing is starting to fade.

    I think that writing stories or articles reinforces knowledge. It helps people put ideas into words, and in turn help people verbally articulate an idea or transfer a piece of knowledge, for example when giving a presentation or when teaching/guiding a colleague.

    So to my friends who are reading this — if you haven’t blogged in a while, do find some time to do it.

    However, don’t just blog for the sake of blogging; the difference between a diary and a blog is that the former is for your own consumption, but the latter has a public element. Blogs are better used to share ideas and thoughts than one’s daily experiences, or, aheem, sexperiences.

    If there’s no intent for public sharing, then just write a diary. If you want to write a public blog then you must find pride in your writing, be willing to share knowledge and accept criticism.