Motivations Behind Long Position

I am back writing. Well, this interval was due to a resettlement going on in my life. All very exciting stuff.

So as promised, the previous post shared about a counter that i bought or in more industry lingo, went long. Long is simply buying and conversely short is selling.

Hardworking and observant readers will know the counter is Starhill Global REIT.

It is an office/retail REIT that mostly deals with such real estate in Singapore and Australia. I am not new to this counter. I bought it with cash when i first started investing and that position will likely never see profits already. So because of legacy i do keep track of it's developments since 2013.

So the motivations behind the CPFIS decision.

#1. It was sufficiently cheap back when i made the purchase

#2. The counter is thankfully able to generate enough dividend to cover the additional holding cost that the agent bank charges.

#3. Like mentioned in the previous post, the yield (or yearly dividends divide by cost) needs to beat the minimum that CPF OA offers. It was going at upwards of 6.5%. So netting away the opportunity costs of 2.5%, i'll make around 4%.

Of course, there are other counters out there that can satisfy the above three motivations too. So there are actually more homework done to decide firstly, what is cheap and secondly, are the dividends sustainable.

But i'll save that for another day.

For now, it looks like the market agrees with me and have now pushed it up to 77c as at time of writing.

I'll try to generate more content but no guarantees. There's a lot to see in this part of the world.

Vigin Trade on CPFIS

So this happened since i last posted.

Now, i only just realized it is difficult to maintain a blog when it is not really a priority. I think i have to try to make it a point to create content on a more regular basis. In any case, for the few readers, you could subscribe to get notified of a post.

So this CPFIS account of mine have been created years ago when i first dip my baby toes in the market. But i had never bothered to utilize it because of several reasons.

1) I don't have that much in my CPF OA anyway.
2) The initial amounts in CPF earns higher interest (+1% based on some criteria)
3) The costs involve in using CPFIS account.

For those who are not so savvy, you could utilize your CPF monies to invest in multiple instruments. One of which is in shares listed on SGX. The caveat is that only CPF approved shares can be bought/sold. For a full list, do visit the CPF board website (Here).

You can head down to any of the three big local banks and approach them to open an account. This CPFIS account can be linked to any of the local brokerages. Trading is carried out the same way except that the order placement needs to indicate (usually a tick in a checkbox) that you are using CPF to settle this trade.

This is by no means encouraging readers to use CPF monies to invest. It is but a tool to be deployed when necessary.

So for point 1. You'll only able to invest up to 35% of your investible savings in shares. CPF Board has kindly provided an illustration of this 35% on the same link above.

On point 2. The monies you withdraw from your CPF stops earning that interest that CPF promises. It could be 2.5% or 3.5% depending on your balances. This becomes your pseudo risk free rate. If your investments perform worse than this, you essentially lost money.

On point 3. Each agent bank levies a set of charges for using them to administer your CPFIS account. This ranges from the commission taken per trade, as well as a quarterly service charge. Google "[bank name] CPFIS charges" and you should find information on these. So you lost money even before your investments made money.

Clearly, there is a lot more to consider than simply using cash to invest.

Do your home work, make the right decisions. After all, it is your hard earned money even though it's stuck in CPF for a long time.

So what did i buy using this?

Image Credit: Website of the Counter I Bought

Not difficult to guess.

Will reveal the motivations behind this counter in the next post.