Due to adverse publicity over the Lehman Brothers saga, DBS stocks have fallen sharply. More than 2 billion dollars worth of value vaporized in a short week or two.
My system had told me to short DBS 3 weeks ago using CFDs. At that time, I think the price was $14 or $15 plus. However, I set my stop loss price a little low, so I was stopped out too quickly in a day or two. However, after that, it continued to free fall all the way until $10 plus yesterday. That would have been 5 times my initial investment.

Jardine C&C was another stock that appeared on my system. However, I was too busy that few days to short it, so when it fell by a few dollars, I thought it had fallen too low. My system did not give the signal to buy it back, so I could have taken that opportunity to sell it. It fell until $9 plus at a low, so again, my initial investment could have multiplied by a few times.

I was on a good trade for UOB, but I got a little nervous about seeing the numbers change rapidly, and decided to take early profits. It fell a further $2 in the next few days. But anyway, this is my first successful CFD trade.

The best CFDs to short are those that cost more than $5. They need to have market volume to move. So forget about penny stocks when you try to short them.

You are only trading with the brokerages and you do not own any physical stock. Do look out for brokerages that charge obscene amount of money. Some of the cheaper CFDs brokerages include Saxo Traders and CMC Markets.

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When I watched the news last night, one woman admitted that it was greed that led her to put her money there. She was attracted by the 5% interest rate, instead of the less than 1% offered by Singapore fixed deposits. True, many were retirees and some were not highly educated. However, there is no such thing as free lunches in the world. The risks would have been considerably higher if the interest rate was higher.

Of course, it is sad to read about a cobbler in his 70s who had invested his life savings into the funds. I have heard of younger people who invested $100000. The positive thing is the younger professionals still have the ability to earn the amount again.

What DBS, Maybank and Hong Leong are doing now is to look at the profile of the investors, to decide who should get help. Maybank is looking at retirees and those with primary education or less. Hong Leong will look at ‘vulnerable investors’ while DBS is not coming forward with their criteria.

One costly lesson I’ve learnt is that you should know what you are buying into, and not what other people tell you to. You have to take responsibility.

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I’ve been using the various online banking services from DBS, UOB, and Fairpriceplus, supported by OCBC. I always thought that I needed to get the PIN from the bank, so I never used Citibank’s online banking services. However, I wanted to check my account balance and so I found out that it wasn’t that hard I had imagined it to be, and I could have used it long ago. 

The PIN required for Citibank online banking is your ATM PIN. For added security, you will key in your PIN by clicking on the numbers instead of keying in from the keyboard. At the same time, your account numbers will not be seen by any hackers, because most of the numbers are covered up by asterisks ***.  

So far, UOB, Fairepriceplus and Citibank will send a second round of security number to you via SMS. This means you can check your accounts anywhere you want.  UOB is also able to separate joint account holders’ individual accounts, and yet giving access to the account for both holders. I’m not sure about other banks though. 

 Fairpriceplus is an online bank that operates mainly via the Internet. You may access the ATMs from OCBC to deposit or withdraw money, or you can just transfer money from other accounts. Because of this, it is able to give 1% interest on normal saving account. I think this is a great deal compared to what many other banks are offering. At the same time, if you are a frequent NTUC shopper, you get to earn more points when you use the credit or debit facility, as the card has 2 in 1 functions. 

 By moving everything online, we can avoid meeting the pesky bank officers who try to sell us all sorts of structured products, especially when they aren’t making the money themselves, and the products promoted are recommended not based on merit, but based on what the company has for the product of the month. 

 DBS wants to save money on SMS bills, so it has issued a token to its customers. This means you have to carry that small token with you, which is quite inconvenient. At the same time, since many of us are afraid to lose it, we will probably leave it at home, which limits the ease of portability.

One newspaper columnist had already spoken out against this a few months ago, citing it as a reason for him to close the accounts and then move on to other banks which offer more convenient services. I guess banks have to watch out for the bottom line by lowering its operating costs, but at the same time, it should ensure that customers are well served without having much inconvenience. 

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How do you know whether you can use your SRS money to buy unit trusts? Make use of free instruments on the Internet. At fundsupermart.com, you can use the fund selector. Just select ‘SRS available’ at the ‘CPF/SRF?’ section. You will find a list of unit trusts that allow you to tap on your SRS funds. If you plan to use your CPF-OA account, you can also do the same thing. Remember that you need to have a minimum sum of $20000 from April onwards, so you may want to use part of it to invest.

Next, to find the best-performing funds, just sort out the list according to the criteria you want. You may sort according to weeks, months or years. After that, just go to your usual online trading platform to execute your trades. Make sure your account details for CPF-OA and SRS are updated at the online platform.

So far, many of the CPF-OA approved funds are not doing as well as the other funds. Hence, do make sure you make your selection carefully. If not, you may be better off putting your money in the CPF account, earning that paltry 2.5%, subject to an additional 1% interest on your first $60000 in the accounts. Only up to $20000 in your CPF-OA will receive that additional 1%. Again, with the high inflation rate, the value of your money has actually decreased. Therefore, to beat the inflation rate, your returns have to be higher.

Once you have selected the option to use your SRS or CPF-OA funds to pay for the unit trusts, you may leave it to the company to contact the agent banks (DBS, OCBC and UOB) for transactions. If your company is a CPFIS-Registered Investment Administrator (IA), then you pay less on your transactions. Remember that you have to pay additional charges on the number of transactions. Hence, you may want to consolidate your transactions to save on charges, if yours is an IA. According to Fundsupermart, it is still cheaper than if you have gone to a non-IA company.

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However, if you can earn more money from unit trusts and stocks, then you should take the money out. Besides, if you are planning to buy a HDB flat, HDB will wipe out all the money in your OA. Hence, to have a buffer when you make your repayments, just in case you are in the midst of changing jobs or taking time off, you will be able to sell your investments and use that money to continue to pay for your flat. This will reduce the possibility of you forking out cash to service your loans, especially when you do not have a job. Even if you have a job, the repayments may be quite high, and when you sell your investments after making money, this sum of money can go towards refinancing your loans and you will pay less interest.

With the new ruling, quickly go and apply for a CPFIS-OA with any of the three banks in Singapore: DBS, UOB and OCBC. There is no difference. What I recommend is just to get the account from them, and then you use your own other trading accounts to make your trades.

While making your trades, take note of the percentage of sales charge. Some of my friends recommended using POEMS for unit trusts, but the lower sales charges (1.5%) only apply to certain unit trusts. The rest cost 2.5%. Fundsupermart still allows me to buy them at 2%. So, just check before making your purchases. Anyway, for those who like getting freebies, by retaining at least $10000 in your Fundsupermart account, you can get a free quarterly magazine from them.

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There are many vouchers available in the redemption rewards catalogue for DBS. Immediately I set up a spreadsheet to determine which vouchers had the best deals, according to the value and the number of points required.

A few shopping vouchers were good. According to my statement, I would miss getting an extra voucher from the same departmental store by less than 100 points. Hence, I had to look for an alternative. However, when I called, I had 100 more points than required. I must have spent a lot of money within a few days. I just checked and I had spent close to $500 on dresses two days ago. Shhh, don’t tell others.

Some food vouchers were quite worth it, but since I seldom eat at restaurants, I didn’t really want them. By getting vouchers of the same type, you can buy more expensive things. Some movie tickets were value for money, but that meant that I couldn’t book tickets through Internet.

Another store vouchers were value for money, but my father had just changed his points for them, and he’s giving them to me, so I’ll buy shoes when I need them. The only problem is he must be there to sign the bill. I’d better check the rules again.

Have you checked your points yet? I think I’ve never redeemed my points for my credit cards from other banks. That’s because I use cards mainly from one bank, and they can be counted together.

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Muslims are prohibited from engaging in any form of investment related to interest-bearing financial services such as banks and insurers, haram (forbidden) things such as alcohol, tobacco, gambling, pornography, production of military weapons, trading of gold and silver as cash on a deferred basis, and others such as advertising and media. So, what is there that is left to invest in?

Plenty, actually. So long as the securities and investment tools do not go against the Islamic philosophy and laws, they are allowed. These include stocks in the energy, technology, oil and gas as well as infrastructure sectors. These sectors have done extremely well in recent years. Perhaps this is one reason why you hear of oil sheiks more often than not, because this is one sector they can totally invest in.

Despite the recent volatility due to subprime losses in the US markets, Shari’ah-based investments have been protected since they do not engage in the financial markets.

One such fund that you can get locally is the DBS Mendaki Global Fund. These are the companies that it invests in. Apple is a great stock they are holding on to. In addition, the annual management fee is extremely low at 0.5%, which they attributed to corporate social responsibility. It has gained 33.5% in a year, which is extremely decent.

Companies they invested in
APPLE COMPUTER INC
ISHARES-MSCI JAPAN INDEX FUND
TRANSOCEAN SEDCO FOREX INC
SUEZ
OIL SERVICE HOLDRS TRUST
MIDAS HOLDINGS LTD
NVIDIA CORP
PHILIPS ELECTRONICS NV
NEW ORIENTAL EDUCATIO-SP ADR
SINGAPORE PETROLEUM CO

Research: Fundsupermart: Investing, A La Shari’ah by Wallace Goh.

Sarah Tan – SingaporeProfit

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*The information here is based on what the websites say as of the published date. Please check with the banks personally if you wish to apply for any of the above services. 

Sarah Tan – SingaporeProfit.com

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The NZ government does not want to hurt the exporters, but with the increase in dairy prices, they are still doing well.

According to Bloomberg, the NZ finance minister has said that the NZ dollar has reached its peak and will continue to decline. This does not look very good because the high percentage in interest rates may not offset the fall in the value of the NZ dollar, when it is sold against the Singapore Dollar. Thus, you may want to reconsider buying NZ dollar now if you had not earlier done so.

Currently, the key rate for NZ dollar is 8.25%, which is at a record high. Based on this, it is a little puzzling that the interest rate at the bank is not as attractive.

Given the uncertainty of the NZ dollar, the breakeven rate is S$1.13. Currently, DBS offers it at $1.15, which is lower than it was at its peak. Hence, if the NZ dollar falls beyond that, it might be wiser to keep the fixed deposit in NZ dollars until it increases again, unless it falls beyond what you have bought the dollar at.

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