UK Traded Endowment

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wchan8888
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Joined: Tue Oct 06, 2009 4:42 pm

UK Traded Endowment

Post by wchan8888 »

Since the investment and payout is in British pound, would like to seek some advise on following.
- how do we assess the currency exchange risk ?
- is the long term prospect for pound stable (at least) ?

Thanks for advise.
Dennis Ng
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Re: UK Traded Endowment

Post by Dennis Ng »

wchan8888 wrote:Since the investment and payout is in British pound, would like to seek some advise on following.
- how do we assess the currency exchange risk ?
- is the long term prospect for pound stable (at least) ?

Thanks for advise.
nobody has crystal ball and can predict exchange rates in 5 years' time.

As what I learned from Jim Rogers, is to have a historical perspective. After doing some homework, I realise that currently sterling pounds is trading at lowest level against S$ in the last 20 to 30 years.

There'll be Olympic in London in year 2012, thus, the next few years for UK should be better, not worse, and thus, in my opinion, the likelihood of sterling pounds going lower is very low, and of it going higher is higher.

Personally, recently I added my investment into UK Traded Endowment to take advantage of the current low exchange rate.

How to mitigate risks? I do so by putting my "eggs" (money) in different baskets. I invested about 11% of my money into UK Traded Endowment, so anything adverse happens, only affects a portion of my entire wealth (overall portfolio). The Rich invest on a Portfolio basis, this is something I learn from the Rich.


Even if sterling pounds drops, there is still a buffer, since the annual returns of 5% to 8% of UK Endowment can withstand some loss in exchange rate before you would really be losing money.

Assuming annual returns of 5%, and a 5 years UK Traded Endowment, means I have a buffer of 25% adverse movement of sterling pounds against S$ before I lose money. It is sufficient buffer for me. (Just my personal opinion).
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
wemakebread
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Foreign currency exchange

Post by wemakebread »

Forex is indeed a double edged sword.

Having said that, currency swap is in itself an interesting way to grow money.

For example, AUD/SGD was about 1.0 sometime in Jan 09, and has gained >20% gain by now. Historically, AUD/SGD has been between 1.2-1.3. See http://sg.finance.yahoo.com/q/bc?s=audSGD=X&t=5y

For people who believe that Australia has rich natural resources & fundamentally sound economy. the tendency would be for AUD to strengthen over time. The weak AUD in Jan 09 would have been a good opportunity to "buy low" in anticipation of "sell higher" later.


For a look at GBP/SGD 5 year chart
http://sg.finance.yahoo.com/q/bc?s=GBPSGD=X&t=5y

For more detailed technical analysis, free charts are available fromProrealtime.com.
The EOD (end-of-day) data is Free.
Web-based & runs on Java.
Dennis Ng
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Post by Dennis Ng »

Everyone has probably heard of the saying:"Do not put all your eggs in one basket". However, there are many people who still do this, abeit sometimes unknowingly.

How many of you are putting all eggs in one basket? Please answer honestly yes or no.

How many of you have investments denominated in Other Currencies?

If you do not have, you are putting all your eggs into this ONE Basket called the S$.

I can share with you people who have regretted making this mistake.

The Japanese who only have money invested in Japan before the bubble burst in 1989 would still be crying today. Why? Tokyo stock index peaked at 40,000 points in 1980, after waiting for 20 years for the market to turn around, NIKKEI is now only about 10,000 points, or still lost 75%.

The indonesians who put all their money into Indonesian rupiah before 1997 are still crying today. Why? In 1996, 1 US$ equals 2,500 Indonesian Rupiah. In 1998, at peak of Asian Crisis, 1 US$ equals 16,000 Indonesian rupiah. After patiently waiting for 12 years, now 1 US$ (even though US$ has weakend against most currencies, still equals about 9,500 rupiah. The indonesian still lost 74% of his money.

So by now, you probably understand why I have investments into UK Traded Endowment, French Fine Wine and Land Banking.

By doing so, I have investments into sterling pounds, Euros, US$ and Canadian dollars.

I do NOT put all my eggs into one basket. Do you?

If you still do despite my sharing of the painful experiences of Japanese and Indonesians, I really have nothing else to add.

Just make sure we all know that we are ultimately responsible for ALL our investment decisions.
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
wemakebread
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Post by wemakebread »

Just to share my views.
Personally I believe Fine Wine & Land Banking are generally good investment concepts.

But it is important to do due diligence & understand the investment before going in. Exit strategy is of paramount importance (always be aware of downside risk). These may need longer time horizon to rise in value.

Overall, these are good alternative asset classes for diversification purpose, if overall portfolio is big enough. However, for a person starting out with only a small investment portfolio, it may not be wise to go into Wine or Land Banking because of the long time horizon & complexity involved if ever need to cash out early.

eg. typical Land Banking investments start at around 10-15k SGD
For a person with only 50k to invest, this single investment would take up about 20-30% of his entire portfolio. In my opinion, this is too high and represents excessive risk. It also significantly reduces opportunities to invest in other things for the next 5-10 years or longer.


Just to share a real life example on wine investing:
A friend of mine invested in Australian wine, but later found out that it is not very easy to liquidate/exit at his desired price at certain point in time.
This is because of low liquidity in the market, as Australian wine is much less popular than French wine, in the wine investment market.

Similar to many scenarios in real life, if you want to sell, you need to find a wiling buyer or get the broker to buy from you. Some brokers will buy back, but at a huge discount :-(

Based on my limited knowledge, it is better to go for "investment grade" French wine which are from reliable chateaus, and produced in limited quantity. To arrive at above conclusion, there is actually a lot of information and learning to go through.
After that, we still need to find a good wine broker.

It is also possible to invest in wine index, but that is another story altogether.
Dennis Ng
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Post by Dennis Ng »

wemakebread wrote:Just to share my views.
Personally I believe Fine Wine & Land Banking are generally good investment concepts.

But it is important to do due diligence & understand the investment before going in. Exit strategy is of paramount importance (always be aware of downside risk). These may need longer time horizon to rise in value.

Overall, these are good alternative asset classes for diversification purpose, if overall portfolio is big enough. However, for a person starting out with only a small investment portfolio, it may not be wise to go into Wine or Land Banking because of the long time horizon & complexity involved if ever need to cash out early.

eg. typical Land Banking investments start at around 10-15k SGD
For a person with only 50k to invest, this single investment would take up about 20-30% of his entire portfolio. In my opinion, this is too high and represents excessive risk. It also significantly reduces opportunities to invest in other things for the next 5-10 years or longer.


Just to share a real life example on wine investing:
A friend of mine invested in Australian wine, but later found out that it is not very easy to liquidate/exit at his desired price at certain point in time.
This is because of low liquidity in the market, as Australian wine is much less popular than French wine, in the wine investment market.

Similar to many scenarios in real life, if you want to sell, you need to find a wiling buyer or get the broker to buy from you. Some brokers will buy back, but at a huge discount :-(

Based on my limited knowledge, it is better to go for "investment grade" French wine which are from reliable chateaus, and produced in limited quantity. To arrive at above conclusion, there is actually a lot of information and learning to go through.
After that, we still need to find a good wine broker.

It is also possible to invest in wine index, but that is another story altogether.
yes, doing homework is important. For instance, after learning more, I will not invest into Australian wines at all. Australian Wines are like "penny stocks with no earning track record".

Also, please avoid any Land Banking investments in UK, as there are many UK Land Scams, just search "UK Land Scams" in search engines to see the results yourself. Before you invest, ask for the company's track record. If the company has none, I personally will not invest a single cent.

Currently about 35% of my investible money (S$1 m) are into Alternative investments, such as Land, French Fine Wine, UK Traded Endowment and Gold/Silver, I'm actually quite comfortable with my allocation.

For Land Banking, the main uncertainty is Time, you don't know exactly when you can make money, typical time period is 4 to 6 years though. For UK Traded Endowment, the KEY things is Certainty of Time (Maturity date is fixed) and Capital Guarantee equivalent to the Cash Value of the policy.

Thus, by investing into both Land Banking and UK Traded Endowment, I sort of balanced out the "shortcomings" of each investment.
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
wemakebread
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Post by wemakebread »

Since we are on the topic of Alternative Investments, I wonder if anyone has come across "Oil Ports"? They claim some sort of monthly payout (wow! cashflow) if they hit oil deposits. But the downside is that there could be nothing & the investment goes kaput and becomes worthless. Personally I am quite skeptical. The monthly cashflow sounds too good to be true & probably is.
Dennis Ng
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Post by Dennis Ng »

wemakebread wrote:Since we are on the topic of Alternative Investments, I wonder if anyone has come across "Oil Ports"? They claim some sort of monthly payout (wow! cashflow) if they hit oil deposits. But the downside is that there could be nothing & the investment goes kaput and becomes worthless. Personally I am quite skeptical. The monthly cashflow sounds too good to be true & probably is.
This is a scam, already exposed more than 1 year ago. Yes, if we use some common sense and what I shared in my seminar, it is easy to spot a Scam and avoid them.

To reach financial freedom, avoiding losing money to Scams is one important element.

I have friends who are graduates and working as managerial positions in MNCs get conned in Sunshine Empire scam. Quite unbelieveable, when I already warned my friend but he didn't heed my warning and decided to go ahead to "invest" his money.
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
FunkyPeach
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Alternative Asset

Post by FunkyPeach »

Along the lines of alternative assets .....

Lately, I heard about this opportunity by a US private mortgage company. It is said to work this way (unless I understand it wrongly)... They assist investors to buy up houses in US at prices below replacement cost (ie., the price of re-building the house) and to sell it to people who needs a home. The house will be registered in the name of the investor. It is said that the person who needs a home in the US will be willing to buy this house as it is sold at a very low price. The interest to be paid by this person is quite high. The guaranteed return is at 10% per annum and payout is from the month following your investment till the end of the mortgage. (I suppose the payment to be made by the hopeful home owner would be much more than 10%.)

It sounds very good. I just hope to hear if there is anything an investor should be aware of. I suppose the reliability of this company would be of a concern. Otherwise, is there anything else ? (Does it sound like sub prime loan ?)
Dennis Ng
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Re: Alternative Asset

Post by Dennis Ng »

FunkyPeach wrote:Along the lines of alternative assets .....

Lately, I heard about this opportunity by a US private mortgage company. It is said to work this way (unless I understand it wrongly)... They assist investors to buy up houses in US at prices below replacement cost (ie., the price of re-building the house) and to sell it to people who needs a home. The house will be registered in the name of the investor. It is said that the person who needs a home in the US will be willing to buy this house as it is sold at a very low price. The interest to be paid by this person is quite high. The guaranteed return is at 10% per annum and payout is from the month following your investment till the end of the mortgage. (I suppose the payment to be made by the hopeful home owner would be much more than 10%.)

It sounds very good. I just hope to hear if there is anything an investor should be aware of. I suppose the reliability of this company would be of a concern. Otherwise, is there anything else ? (Does it sound like sub prime loan ?)
I think you need much more information than this to really assess the Opportunity. Many things can still go wrong.
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
wemakebread
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Post by wemakebread »

This sounds interesting.
Without any other supporting info, I am just thinking aloud ...

... the private equity mortgage company seems to be assuming very little risk, while structuring a very handsome profit for themselves (difference between what home-stayer repays, compared to the 10% given to investor).

On the other hand, the investor probably has to bear the risk of default, admin/transactional costs, inability to rent at favourable price after some time, possible repair to property, etc.

Some of these are quite difficult to ascertain without being physically there to examine the actual conditions.

One more point that I remembered from Dennis' seminar ... the guaranteed 10% return (most probably for limited period) could have been factored into the investment price already. The company can well afford to pay the 10% from the sum being invested.
ein55
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Re: UK Traded Endowment

Post by ein55 »

Just decided to purchase 2 TEP as a replacement for Singapore FD based on consideration of 90% guaranteed and relatively low exchg rate (2.05).

First one focus on higher return. Personally I will take the %return projected by insurance company, cut into half for reasonable return and cut into quarter for worst case analysis. Even so, it is still better than FD with max 1% interest and come with 90% principal protection.

Second one focus on high guaranteed value (GMV), it is so high that even if the insurance company collapse tmrw (pay 90% of GMV), I will still earn money (more than policy$). However, the return for this type of TEP is not as high as the first one, a compromise for stability, but it is the closest form of alternative to FD.

Past 12 years of GBP-SGD record, varying from 3.2 to 1.99, assuming worst case of 1.5 exchg rate and best case of 3.0 exchange rate, the upside (+1) is 2 times higher than downside (-0.5) for the next 5-10 years. Even if pound goes down to less than 1.5 (1 SGD = 1 GBP?), I can reinvest in other TEP or put in GBP FD while waiting for exchg rate to come out, waiting period shd be relatively short. SGD unlikely to be too high value in future as it will hurt its export.

Even for normal projection of 5% return per year, it is not bad to earn 25% return in 5 years. 5 years is avg stock market cycle, assuming one person can earn avg of 50% return (if buy low sell high), TEP although is half of value, it is a form of diversification.

From TEP, it brings me to a new interest of exchange rate for GBP-SGD. US stocks also brings my attn to USD-SGD exchg rate. Using the right strategies will help to increase the winning chances.


wchan8888 wrote:Since the investment and payout is in British pound, would like to seek some advise on following.
- how do we assess the currency exchange risk ?
- is the long term prospect for pound stable (at least) ?

Thanks for advise.
uris
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Location: Singapore

Post by uris »

Wish I could put some funds in UK Traded Endowment but the minimum deposit is $20k :(

If I want to put 5-10% of my funds into this, I need to have 100k-200k in investment funds. Unfortunately I don't have that yet although I aim to hit 100k in 2 years time.

My only regret was not to be financially savvy earlier on.
Dennis Ng
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Post by Dennis Ng »

uris wrote:Wish I could put some funds in UK Traded Endowment but the minimum deposit is $20k :(

If I want to put 5-10% of my funds into this, I need to have 100k-200k in investment funds. Unfortunately I don't have that yet although I aim to hit 100k in 2 years time.

My only regret was not to be financially savvy earlier on.
Hi uris,

How much to allocate to different investment would be different for different people, affected by factors such as age, years to retirement, and risk profile of the person.

For instance, for people who are more conservative and risk averse, they might allocate as much as 50% or more of their money into an investment with Capital Guarantee, such as, UK Traded Endowment.

On the other hand, becose I'm only 41, (at least another 20 years before I want to retire), plus I'm very comfortable investing into stocks, thus, I would put less money (in my case, about 10% into UK Traded Endowment).

You can invest in Joint Names in UK Traded Endowment, so if 2 persons jointly invest, it would only work out to S$10,000 per person instead.

Cheers!

Dennis Ng
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
jamestai
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Post by jamestai »

Hi Dennis,

Today Sunday Time Pg 32 of the Invest Section, the reporter introduce about the TEP. Are your company still the only one in Singapore that sell this product? Because the report never mention how and where they able to invest TEP product, so I think the public may start calling insurance company in Singapore for enquiry.

James Tai
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