Financial Freedom SG

Received my credit card bills and noted the dates for payment. If you had worked before in the bank you will know that credit card payment and processing has their own cycle. So the banks expects and knows that a flood of customers may call after the latest bills are posted.

I have a Maybank credit card which i signed on for recently. It promised a watch after spending a certain amount. So when the time came it ran out of stocks and it promised another date. Suffice to say the date has come and gone with no action the second time. Maybe 'it' forgot. But you can be sure that they won't forget any late payment or interest fees.

When I last worked in the bank I saw my share of people who were living on the edge and maximising their credit limit to the tilt. And these people were calling in to ask for increases to the credit limit so that they can continue with the spending binge.

Coming back to the Maybank story, I wanted to speak to their call centre officer, but even request for waivers were automated and they said that if successful, this will be credited in the next card statement. What if it wasn't?

Seems to me that banks have gone overboard with the cost 'efficiency' at the expense of the customer. You can bet that they'd lose some customers because of this. At the moment, I'd just stick to them. What's your experience like with the banks regarding credit cards?

Recently, a colleague of mine was remarking that she had obtained dividends from a local telco. This was the first time that she had bought shares.

For me, it is sort of a triumph because I had talked to her about buying and selling of shares and after thinking about what was said, she acted on the advice.

With the market bringing turmoil to the market, it is imperative for investors to realise that markets goes up and also down. Her timing may not be very good as she bought just before the market went south. But with patience and the steady collection of dividends from shares, she will learn to be an investor from this experience.

I had recently collected dividends from Valuetronics and another counter. I can't remember offhand which counter- another sign that age is catching up on me. And the reason why I invest is because of the dividends gain from investment.

The reason why I can go to Australia for my studies is because my dad is an investor. I remember vividly him talking about his experiences collecting dividends from a now defunct counter- Rothmans. They are a cigarette making company which issued high dividends but our government policies made them unable to list in Singapore anymore. Funny how they punish for the sin of smoking but allow two casinos in Singapore and one is even listed.

I get a rush from looking at the dividend statement for the previous year when the CDP collates a report for all of us each year.

It doesn't matter how the market moves as long as you have your regular dividends. If it is enough, you have your financial freedom to do what you will. One day, I hope that it will happen and I can blog full time :)

The recent news has been filled with topics of investors getting burnt by the falling markets.

I will like to think that these people who are getting burnt are primarily those who are buying on margin and using leverage to maximise their positions.

While the market is doing well, things are fine and dandy and they make enough to actually be able to make a living out of it.

However, as one of the Buffett quotes is good to describe this scenario when the market sinks.

"You only find out who is swimming naked when the tide goes out."

Thus, these investors have been caught with their pants down when the market sinks.

The best way to invest is with your own money so that your holding period is longer and you are able to ride out the bear period as the bull will always appear next. When it next appears is the million dollar question and answer.

Sources:

1. Burnt by the Markets.

2. Singaporeans feeling blue over the stock market turmoil.

Saw this interesting article from Motley Fool which states that a ratio that Warren Buffett uses says that stocks are cheap now.

In the article, it states that Buffett calls this "probably the best single measure of where valuations stand at any given moment." It goes on to present in table form the returns 2 years after the ratio hits below 80% or more.

And the returns from investment is 20% or more when this ratio goes south of 80%.

What is the ratio now? 79%.

So according to the ratio which Buffett champions, it is time to look at buying.

If you look closely at the chart in the same article, it shows the last time it went below 80%. It was around the 2007-2008 period when it went all the way to 60%. You never know when the market will start to turn, so this is a good time to go in. I would too, if not for the fact that my wife is due to give birth soon and need more emergency funds :)

Thus, if you need another reason to seriously look at buying stocks, this is a good time to start looking at them now.

Today's Yahoo Finance talks about the 7 Common Mistakes that Investors Make.

The last week has been very turbulent, with markets going down after the debt troubles in USA and Europe. Then at the end of the week, S&P downgraded the US government securities from triple A to AA+.

This basically makes US government securities, one of the safest in the world, more risky. It also makes it more expensive as investor will demand higher interest with higher risk.

In the short term, it could force the US treasury to increase interest rates while the US markets and unemployment are still mired in all sorts of trouble.

While the 7 mistakes that the Yahoo Finance article points out that we shouldn't pay too much attention to financial news, it doesn't mean that you should know it at all. Being able to filter out what is crux of the issue and what you should do as an investor is more important.

The last few days and most of the past few weeks, markets have been tumbling down. It's fascinating and scary at the same time. Start of a new government related debt crisis?

For this period, I would sit tight and wait for buying opportunity to go into the stock market for companies whose stock prices have fallen below their fair values. What are you looking to buy?

Source:

1. The US Credit downgrade