Returns for fixed income investors have been very strong year-to-date in 2019. If you were invested, it is likely that you got a positive return. Every fixed income asset class, from the “risk-free” to the riskiest, has posted gains due to the steep decrease in long-term interest rates over the past six months. We expect returns to remain positive in the second half of the year, but not a repeat performance tof the first half’s sharp gains.
Source: Bloomberg, as 6/2/2019. Past performance is no guarantee of future results. Asset classes are represented by the following indexes: US Aggregate = Bloomberg Barclays U.S. Aggregate Bond Total Return Index; Short-term core = Bloomberg Barclays U.S. Aggregate 1-3 Years Bond Total Return Index; Intermediate-term core = Bloomberg Barclays U.S. Aggregate 5-7 Years Bond Total Return Index; Long-term core = Bloomberg Barclays U.S. Aggregate 10+ Years Bond Total Return Index; Treasuries = Bloomberg Barclays U.S. Treasury Index; TIPS = Bloomberg Barclays U.S. Treasury TIPS Total Return Index; Agencies = Bloomberg Barclays U.S. Agency Bond Total Return Index; Securitized = Bloomberg Barclays U.S. Securitized Bond Total Return Index; Municipals = Bloomberg Barclays Municipal Bond Total Return Index; IG Corporates = Bloomberg Barclays Corporate Bond Total Return Index; HY Corporates = Bloomberg Barclays U.S. High Yield VLI Total Return Index; IG floaters = Bloomberg Barclays US Floating Rate Notes Total Return Index; Bank loans = The S&P/LSTA U.S. Leveraged Loan 100 Index; Preferreds = Merrill Lynch BofA Preferred Stock Total Return Index; Int. developed (x-USD) = Bloomberg Barclays Int’l Developed Bonds (x-USD) Total Return Index; EM = Bloomberg Barclays Emerging Market Bond (USD) Total Return Index.
In the second half of 2019, returns are likely to be primarily driven by the income generated on bonds, and not as much by price appreciation. A slowing economy in the U.S., modest inflation and the prospect of easier monetary policy down the road should all contribute to keeping interest rates low. However, the market has already gone a long way toward factoring into current yields the likelihood of interest rate cuts by the Federal Reserve. Those expectations may be overdone.
Slowdown Or Recession?
The key question facing the market in the second half of the year is whether the economy is just slowing down, or if it is heading into recession.
In a slowdown scenario, the Federal Reserve will likely begin to lower interest rates as early as July , and 10-year Treasury yields would likely range between 2% and 2.5%.
In a potential recession scenario, the Federal Reservewill also likely begin to lower interest rates as early as July, and we would expect 10-year Treasury yields to fall below 2%.
We believe the former is more likely but worry that trade conflicts could be the catalyst for a recession in the longer term. Recessions are notoriously difficult to forecast because they often are triggered by some shock to the economy that is not easy to foresee. The risk from trade wars is apparent, but difficult to quantify given the uncertainty surrounding negotiations.
Recent data suggests that the U.S. economy’s growth rate has begun to slow, but it appears to be returning to a rate consistent with the long-run trend. After nine rate hikes by the Federal Reserve since December 2015, slower growth is to be expected. Also, the impact of the tax cuts and increases in government spending effected last year are starting to fade away. Recent data suggest that U.S. gross domestic product (GDP) growth will likely average around 1.5% to 2% in the second half of the year, after exceeding 3% for most of the past year.
The Fed’s Forecast For Long-Run GDP Growth Is Around 2%
Source: Federal Reserve. Longer Run FOMC Summary of Economic Projections for the Growth Rate of Real Gross Domestic Product, Central Tendency, Midpoint, Fourth Quarter to Fourth Quarter Percent Change, Not Applicable, Not Seasonally Adjusted. Quarterly data as of Q1 2019.
What About The Inverted Yield Curve?
There have been many discussions about the yield curve’s inversion as a key indicator of an impending recession. It is widely known that when short-term interest rates are higher than long-term interest rates, it is likely that recession will follow in the next 12 to 18 months. With the yield spread between 10-year Treasury bonds and three-month Treasury bills inverting recently, predictions of recession have been on the rise.
It is an indicator we are watching closely. However, it should be noted that the lag time between an inverted yield curve and a subsequent recession can be long and variable. There have also been a few false signals in the past. Lastly, the length and depth of an inversion historically have not correlated with the length or depth of the subsequent recession.
We would be more concerned about an imminent recession if other indicators, such as credit spreads—the difference between yields on corporate bonds and Treasury bonds—were also signaling increased risk. Currently, credit spreads are slightly lower than the long-term average. Consequently, the economy is not witnessing a major tightening in financial conditions.
The Federal Reserve has various models to estimate the risk of recession. The first is based on the yield curve which has shown the risk jump to 30% recently—the highest level since 2007. However, another model which is based on credit spreads, estimates the risk of recession at only less than 15%.
Signals Are Mixed On The Probability Of A U.S. Recession
Note: Smoothed recession probabilities for the United States are obtained from a dynamic-factor Markov-switching model applied to four monthly coincident variables: non-farm payroll employment, the index of industrial production, real personal income excluding transfer payments, and real manufacturing and trade sales.
Source: Federal Reserve Bank of New York and Federal Reserve Bank of St. Louis. Smoothed U.S. Recession Probabilities, Percent, Not Seasonally Adjusted. Monthly data as of April 2019.
Global Risks: Trade Is A Wild Card
The global economy is a source of potential risk for the U.S. economy. Economic growth has been slowing around the world in the past year, and central banks in major developed countries have moved short-term interest rates to zero or even into negative territory. Further policy easing abroad could be a catalyst for the Federal Reserve to lower rates to limit the spillover effect on the U.S. economy. Yield spreads between the U.S. and other major countries are already at or near record-wide levels, another factor keeping domestic bond yields low.
Trade conflicts heighten the risk of a more substantial global slowdown. If tariffs on goods imported from China escalate higher as threatened, and China retaliates with restrictions on U.S. companies, the risk of recession would increase. The U.S. economy is not as reliant on exports as most major economies, which provides some cushion, but some sectors of the economy are already feeling the impact. A widening of the conflict could increase the impact on the United States.
What To Expect When You’re Expecting A Rate Cut
In our view, the Federal Reserve is likely to cut interest rates later this year, but the market may be pricing in more-aggressive policy easing than is actually likely to happen. Based on the futures market, expectations are for Fed rate cuts to begin as early as July, with a potential total of two rate cuts likely this year. We believe the Fed may be more cautious. It was only a few months ago that the Fed’s forecasts included rate hikes—shifting swiftly to rate cuts probably requires more evidence that the economy is at risk.
Based on past cycles, there are a handful of indicators that have tended to precede Fed rate cuts:
A rise in the unemployment rate
Tightening financial conditions
A decline in the Institute for Supply Management (ISM)’s manufacturing index toward 50 (an index score below 50 indicates manufacturing activity is contracting)
An inverted yield curve
So far, only one of these four indicators—the yield curve—is signaling an imminent rate cut. The ISM index is getting close but is not in contraction territory yet. Financial conditions indicate credit is widely available, and the unemployment rate is near a 50-year low.
Unemployment Remains Very Low Despite Slowing Job Growth
Source: Bureau of Labor Statistics. Civilian Unemployment Rate and Underemployment Rate, Total unemployed, plus all marginally attached workers plus total employed part time for economic reasons (U6 Rate), Percent, Monthly, Seasonally Adjusted. Shaded areas indicate past recession. Monthly data as of May 2019.
The Bloomberg U.S. Financial Conditions Index Remains In Positive Territory
Note: The Bloomberg U.S. Financial Conditions Index tracks the overall level of financial stress in the U.S. money, bond, and equity markets to help assess the availability and cost of credit. A positive value indicates accommodative financial conditions, while a negative value indicates tighter financial conditions relative to pre-crisis norms.
Source: Bloomberg. Bloomberg U.S. Financial Conditions Index (BFCIUS Index), daily data as of 5/31/2019.
The Outlook For Manufacturing Activity Expansion Has Softened, But Isn’t Contracting
Source: Federal Reserve Bank of St. Louis. ISM Manufacturing: PMI Composite Index. Shaded areas indicate past recession. Monthly data as of May 2019. An index with a score over 50 indicates that the industry is expanding, and a score below 50 shows a contraction.
Note: ISM Manufacturing Index: Index based on surveys of more than 300 manufacturing firms by the Institute of Supply Management. The ISM Manufacturing Index monitors employment, production inventories, new orders and supplier deliveries. A composite diffusion index is created that monitors conditions in national manufacturing, based on the data from these surveys.
Lower For Longer Is Back
For income investors, it looks like the “lower for longer” world is back. The opportunity to capture Treasury yields above 3% was fleeting last year, and we don’t see a rebound to those levels any time soon. Ten-year Treasury yields may bounce back to the 2.5% level if the economic news improves and trade tensions ease, but a move back to 3% seems unlikely in the second half of the year.
We came into 2019 suggesting that investors extend duration to lock in higher yields. For investors looking to enter the market now, is more challenging. It is tempting to hold most fixed income assets in short-term maturities, but that means investors risk having to reinvest at lower yields down the road.
With the Treasury yield curve inverted, we would consider barbells, holding some short-term and some intermediate-term bonds. The short-term investments provide liquidity and flexibility to reinvest if rates increase, while the intermediate-term bonds provide a set level of income in case yields move down. The barbell can be weighted more heavily to short-term bonds for greater flexibility if yields rise.
Intermediate-Term Yields Are Lower Than Both Short-Term And Long-Term Yields
Source: Bloomberg, data as of 6/5/2019. Past performance is no guarantee of future results.
We also continue to encourage investors to focus on higher-credit-quality fixed income investments. Whether it is an economic slowdown or a recession, we believe it is wise to avoid too much exposure to economic risks. Lower-credit-quality bonds, such as high-yield and emerging-market bonds, or leveraged loan funds, are more sensitive to the ups and downs of the economy and the U.S. stock market than Treasuries or investment-grade municipal and corporate bonds. Moreover, the yields offered compared to Treasuries are not high by historical standards, making valuations less compelling.
Investment involves risk. Past performance is no indication of future results, and values fluctuate. International investments are subject to additional risks such as currency fluctuations, political instability and the potential for illiquid markets. Investing in emerging markets can accentuate these risks.
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
All expressions of opinion are subject to change without notice in reaction to shifting market, economic, and political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.
Indexes are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly.
Diversification strategies do not ensure a profit and do not protect against losses in declining markets.
Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed-income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. Lower-rated securities are subject to greater credit risk, default risk, and liquidity risk.
International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, geopolitical risk, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate these risks.
The Bloomberg Barclays U.S. Aggregate Bond Index is a market-value-weighted index of taxable investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage backed securities, with maturities of one year or more. The 1-3 year, 5-7 year, and 10+ year indexes are all components of the broad U.S. Aggregate Bond Index.
The Bloomberg Barclays U.S. Treasury Index measures U.S. dollar-denominated, fixed-rate, nominal debt issued by the U.S. Treasury. Treasury bills are excluded by the maturity constraint, but are part of a separate Short Treasury Index. STRIPS are excluded from the index because their inclusion would result in double-counting.
The Bloomberg Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index is a market value-weighted index that tracks inflation-protected securities issued by the U.S. Treasury. To prevent the erosion of purchasing power, TIPS are indexed to the non-seasonally adjusted Consumer Price Index for All Urban Consumers, or the CPI-U (CPI).
The Bloomberg Barclays U.S. Agency Bond Index includes securities issued by US government owned or government sponsored entities, and debt explicitly guaranteed by the US government). It is a component of the Bloomberg Barclays U.S. Government Bond Index.
The Bloomberg Barclays U.S. Securitized Bond Total Return Index is part of the broad Bloomberg Barclays U.S. Aggregate Bond Index and is designed to capture fixed income instruments whose payments are backed or directly derived from a pool of assets that is protected or ring-fenced from the credit of a particular issuer (either by bankruptcy remote special purpose vehicle or bond covenant). Underlying collateral for securitized bonds can include residential mortgages, commercial mortgages, public sector loans, auto loans or credit card payments. There are four main subcomponents of the securitized sector: MBS Pass-Through, ABS, CMBS and Covered.
The Bloomberg Barclays U.S. Municipal Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed tax exempt bond market. The index includes state and local general obligation, revenue, insured and pre-refunded bonds.
The Bloomberg Barclays Corporate Bond Index covers the U.S. dollar (USD)-denominated investment-grade, fixed-rate, taxable corporate bond market. Securities are included if rated investment-grade (Baa3/BBB-/BBB-) or higher using the middle rating of Moody’s, S&P and Fitch ratings services.
The Bloomberg Barclays U.S. High-Yield Very Liquid (VLI) Index measures the market of U.S. dollar-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. The U.S. Corporate High-Yield Index was created in 1986, with history backfilled to July 1, 1983, and rolls up into the Barclays U.S. Universal and Global High-Yield Indices.
The Bloomberg Barclays U.S. Floating-Rate Notes Index measures the performance of investment-grade floating-rate notes across corporate and government-related sectors.
The S&P/LSTA U.S. Leveraged Loan 100 Index is a market value-weighted index designed to measure the performance of the U.S. leveraged loan market. The index consists of 100 loan facilities drawn from a larger benchmark – the S&P/LSTA (Loan Syndications and Trading Association) Leveraged Loan Index (LLI).
The BofA Merrill Lynch Fixed Rate Preferred Securities Index tracks the performance of fixed-rate USD-denominated preferred securities issued in the U.S. domestic market.
The Bloomberg Barclays Global Aggregate ex USD Index provides a broad-based measure of the global investment-grade fixed-rate debt markets. The two major components of this index are the Pan-European Aggregate, and the Asian-Pacific Aggregate Indices.
The Bloomberg Barclays Emerging Markets USD Aggregate Bond Index includes USD-denominated debt from emerging markets in the following regions: Americas, Europe, Middle East, Africa, and Asia.
Source: Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). BARCLAYS® is a trademark and service mark of Barclays Bank Plc (collectively with its affiliates, “Barclays”), used under license. Bloomberg or Bloomberg’s licensors, including Barclays, own all proprietary rights in the Bloomberg Barclays Indices. Neither Bloomberg nor Barclays approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.
The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.
On 17 July 2019, the Singapore Exchange (SGX) will celebrate the 2nd anniversary of launching Daily Leverage Certificates (DLCs) in the market. DLCs are short-term trading products that allow investors to amplify their exposure to the market and offer both long and short positions.
Offered by Societe Generale in Singapore, the number of securities listed in the market has increased from just 10 initially to more than 76 today, covering both the Singapore and Hong Kong markets. This includes 56 single stock DLCs, such as Venture Corp, Yangzijiang Shipbuilding and Keppel in Singapore and Tencent, Geely Automobile, AIA and China Construction Band in Hong Kong, and the rest comprises indices such as the MSCI Singapore Index and Hang Seng Index (HSI).
Allowing traders to leverage their position up to 3x, 5x and 7x and offering both long and short positions, DLCs have become quite popular expanding from just 10 securities when it first listed to 76 today. This has translated to close to $5 billion in trading in the past two years.
In June 2019, SGX announced that six more securities will be added to the list (to make up the 76). They include Singapore-listed City Developments, Singapore Airlines and SGX, and Hong Kong-listed AAC Technologies, Sunny Optical and Sands China.
As usual, we will look at four of them.
City Developments Limited (SGX: C09)
Unlike the next three companies featured below, CDL is a well-known Singapore-listed company. With a market capitalisation of $9 billion, CDL is one of the largest property developers in Singapore with a network spanning 103 locations in 29 countries and regions.
Its stable of properties comprise residences, offices, hotels, serviced apartments, integrated developments and shopping malls. In addition, its London-listed subsidiary, Millennium & Copthorne Hotels is one of the largest hotel chains in the world, with over 135 hotels worldwide.
CDL is also one of the 30 largest and most liquid companies in Singapore, and is listed on the Straits Times Index (STI).
AAC Technologies (HKG: 2018)
The next three companies are listed in Hong Kong, and many investors and traders may not be as familiar with them.
With a market capitalisation of HK$51 billion, AAC Technologies offers cutting-edge technologies in materials research, simulation, algorithms, design, automation and process development in acoustics, optics, electromagnetic drives, precision mechanics, Micro Electro-Mechanical Systems, radio frequency and antenna.
Incorporation these technologies in everyday products, AAC Technologies is the world leading solutions provider for mobile devices, such as smart phones, tablets, wearables, ultrabooks, notebooks and electronic book-readers.
While the company is not listed in Singapore, its DLC product allows traders and investors in Singapore to trade the company.
Sunny Optical is another leading technology group listed in Hong Kong that investors in Singapore may not be very familiar with, or be able to trade. With the new DLC product, they now can.
Established in 1984, Sunny Optical is in the business designing and manufacturing optical and related products, such as glass and plastic lenses, prisms, mobile phone camera modules, microscopes, surveying instruments and other analytical instruments.
The company has four production bases in China, as well as strong research and development capabilities with R&D centres in China, Singapore, South Kore and USA.
Sunny Optical has a market capitalisation of $94 billion.
While Sands China may not be as available as a trading or investment, many would be familiar with its businesses – developing, owning and operating integrated resorts, retail malls and casinos, as well as convention and exhibition halls.
In essence, its business is similar to the Marina Bay Sands integrated resort in Singapore.
The company has a market capitalisation of HK$327 billion, and its properties include The Venetian Macao, The Plaza Macao, Sands Macao, Sands Cotai Central and The Parisian Macao.
Only SIP-Accredited Investors Can Trade DLCs
Now that we are able to trade some of the biggest companies listed in Hong Kong, on the DLCs, it may not be for everyone. However, there is definitely a group of investors and traders that benefit. This can be seen by the close to $5 billion turnover in the last two years.
Recognising this, only investors that are Specified Investment Product (SIP) qualified may able to trade DLCs. This means those who trade the product should be fully aware of the risks and have the required knowledge to do so responsibly.
‘These people aren’t just rich, they’re crazy rich.’ – Crazy Rich Asians
Singapore gets called many things: Garden City, Lion City, the Singapore Miracle, etc. Of its many nicknames, I’m sure the one the government hates most is “Nanny State”.
But there is an upside to living in a Nanny State: Singaporeans are one of the best prepared for retirement in the world. All Singaporeans and Permanent Residents are forced to save a part of their earnings in the Central Provident Fund (CPF).
In 2018, a new university graduate is expected to earn S$3,500 per month. With an average bonus of 2 months and a 37% CPF Contribution Rate, they are saving more than $18,000 in their first year of work. By the age of 25 (+2 years for men), the average Singaporean female university graduate should have accumulated more than S$100,000 in their CPF account. By 36, she should have about S$500,000 in her CPF!
Compare this with the US, where “the median American household currently holds about $11,700… almost 30 percent of households have less than $1,000 saved.”
Not all of us buy a hotel as part of the standard London shopping spree, but as far as Americans go, Singaporeans are probably all Crazy Rich Asians. As far as nicknames go I personally prefer the Singapore Miracle.
There are few lessons for all of us in this.
#1 Start Early
CPF makes you start saving the moment you start working. When you start early, you give yourself a long runway to build your retirement savings and allow compound interest to work in your favour.
#2 Have A Plan
Being forced to set aside savings into a tightly controlled account helps – i.e. we can’t dip into it to pay for an impromptu weekend trip to Bali. Indeed, if we did not have this discipline forced upon us, we might end up broke like Mike Tyson or the British retirees who used “‘pension freedoms’ for alcohol and gambling”.
#3 Invest Your Savings Wisely, And No, Don’t Keep It In Your Savings Account
As much flak as the Singapore government gets for the low CPF guaranteed interest rates, it is pretty decent taking into account that Singapore is one of the few truly AAA-rated countries left in the world. It is also much better than what Singaporeans (who often keep their savings in cash) are used to getting in deposits.
This is a discussion for another time, but imagine that instead of earning 2.5% on your Ordinary Account, you were earning MSCI World type returns (more than 7% per annum since inception), compounded for 40 years. The numbers are mind-boggling: You would have $19.44 for every $1 invested, versus $2.69 for every $1 invested at 2.5% per annum.
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To start investing in Singapore, we typically need two types of accounts – a Central Depository (CDP) account and a stock brokerage account. The CDP account is to hold our investments, be it stocks, REITs, ETFs, bonds or other types of listed securities on the Singapore Exchange (SGX).
Before we start holding the investments in our CDP account, we need to buy them. This is what our stock brokerage account does for us. Majority of the stock brokerages in Singapore also offer custodian accounts, and while this means the stocks we buy are held with the brokerage firm, they also maintain a sub-account with CDP on our behalf.
Consolidation In The Stock Brokerage Industry In Singapore
The first thing we will notice is that several of the bank-linked brokerages in existence were non-bank stock brokerages in the past. For example, UOB Kay Hian was the result of a merger between Kay Hian Holdings and UOB Securities in 2000.
Similarly, Maybank Kim Eng was formed when Malaysian bank, Maybank, acquired stock brokerage firm, Kim Eng Securities, in 2011. RHB Securities also acquired DMG & Partners Securities to create a larger entity in 2015.
This consolidation in the brokerage industry is still ongoing with China Galaxy Securities buying a 50% stake in CIMB Securities to create CGS-CIMB Securities in 2017. Even KGI Securities was recently renamed from AmFraser Securities after being acquired by KGI Group in 2015.
Non-Bank Stock Brokerages In Singapore
Referring to the list above, there remain three non-bank stock brokerages in Singapore. The obvious question many of us would ask is whether we should use a brokerage account that is associated to banks, or whether we should use non-bank brokerages.
The short response is that non-bank stock brokerages should not be viewed as inferior simply because they are not associated to a multi-billion-dollar banking institution. The reason is that these banks themselves have shown that they acquired similar stock brokerages to beef their services in the past.
We take a look at the individual non-bank stock brokerages to find out more about their services.
Phillip Securities provides its stock brokerage services primarily via its online, and more well-known, POEMS platform. The brokerage firm began operations in 1975 (on Phillip Street!) and has strong presence in key financial markets in India, Dubai, Turkey, Cambodia, Thailand, Japan, Australia, Sri Lanka, Malaysia and Hong Kong.
It was also the first company to offer CFD trading in the Singapore market in 2003.
Phillips also offers account for Contracts For Difference (CFD), Securities Financing and Prepaid account (also known as cash upfront account), Regular Savings Plan (RSP), Forex/Futures, Phillip Wealth (which incorporates unit trusts, corporate bonds, insurance and estate planning) and Phillip SMART portfolio (an actively managed low-fee portfolio, based on your online risk assessment).
The company was founded in 2000. The online brokerage firm allows investors to plug in their entire financial portfolio in a single platform, offering investments in bonds, funds, robo-advisory and insurance, on top of its stock brokerage platform.
There really isn’t a big difference between the non-bank and bank linked stock brokerages. In fact, in some areas, non-bank brokerages may be more innovative. We should choose the stock brokerage account that we feel are able to meet our needs best.
For example, Lim & Tan Securities offers an innovative in-house rewards programme, coupled with both CDP-linked and custodian accounts, as well as a well-received trading platform for its clients.
Phillip Securities is one of the three remaining brokerages that offer a regular savings plan for investors, via its Share Builders Plan, with the other two being the DBS Invest Saver and OCBC Blue Chip Investment Plan (BCIP). It also offers innovative solutions across the financial services spectrum.
FSMOne, while not a bank, can boast to offer many of the other services also offered by banks. In fact, in its version of the cash account, it offers 0.4% per annum returns on Singapore dollars held in the account, as well as an interest rate for multi-currencies account. This allows investors to earn an interest return while parking their funds with the stock brokerage firm, which may not be the case with other cash upfront account. In addition, it charges one of the lowest stock brokerage fees for clients.
This is not to say stock brokerages that are linked to banks are behind non-banks brokerages. At times, it may be more convenient to link our savings accounts and tap on our existing relationships that we already have with the bank. At the end of the day, we need to choose the stock brokerage account that is right for us.
The response among Singaporeans was understandable and expected – expressions of how high that number was, followed by the concern whether the majority of working Singaporeans could realistically afford that sum.
The CPF Full Retirement Sum for members turning 55 in 2019 is $176,000. According to the CPF LIFE Estimator, having this Full Retirement Sum will give us around $1,383 to $1,528 in Standard Plan monthly payouts from age 65 onwards.
This is remarkably close to the amount of month the study concluded as being sufficient for retirement ($1,379).
We thus set out to find out whether Singaporeans at various income levels can actually hit the Full Retirement Sum by the age of 55, or if they will be a large surplus or shortfall.
As you will see in the subsequent sections, making such a projection by hand isn’t so straightforward, as we first have to grapple with differing CPF contribution rates over the course of our careers, with different proportions of our CPF contributions going into our Ordinary Account (OA) and Special Account (SA).
Obviously, most of us will start our earning lesser at the start of our careers, and steadily increase our earning potential, before either reaching a plateau or suffer a dip if our productivity goes down as we age. We may also have periods of unemployment or sabbaticals during our decades-long career.
Keeping the income fixed for the entirety of one’s career in our calculations is reasonable, since the upsides of increments and increase in earning potential is cancelled out by the effects of inflation, periods of unemployment, and possibly having to start from an entry-level position for those making mid-career switches.
We assume that we start work at age 24, and that CPF interest rates remain the same.
For the purposes of this projection, we will also ignore the 1% in bonus interest earned on the first $60,000 in combined balances, since this was only introduced in 2008, and there is no guarantee it will continued to be granted. This will give us a very conservative view for our CPF accumulation.
CPF Contribution Rates Over The Course Of One’s Career
We first need to know how much CPF monies we’re contributing over the course of our career based on various income levels. Even though our income remains the same in each case, the actual contribution percentages and amounts differ based on our age.
Based On Monthly Income of $1,500:
Percentage Of Salary To OA
Percentage Of Salary To SA
Amount Of Salary To OA
Amount Of Salary To SA
24 to 35
Based On Monthly Income of $4,437:
Percentage Of Salary To OA
Percentage Of Salary To SA
Amount Of Salary To OA
Amount Of Salary To SA
24 to 35
How Much CPF Monies Would We Have Accumulated By Age 55?
We can now calculate how much we would have accumulated by age 55, taking into account the different interest earned by our OA and SA savings.
Based On Monthly Income of $1,500:
Monthly OA Contribution
Total In OA
Monthly SA Contribution
Total In SA
Total CPF Accumulated (Including Interest)
24 to 35
Based On Monthly Income of $4,437:
Monthly OA Contribution
Total In OA
Monthly SA Contribution
Total In SA
Total CPF Accumulated (Including Interest)
24 to 35
Looks Simple Enough, But Why Doesn’t Reality Seem To Match Up To The Math?
As we can see above, it is quite possible, simple even, for Singaporeans on an income of $1,500 to accumulate enough to meet the Full Retirement Sum, thanks to risk-free guaranteed interest, the power of compound interest and consistent savings.
However, in reality, most Singaporeans would aspire (or even require) to buy a flat to live in, and a large portion of their CPF monies during their most economically productive periods of their lives is spent on servicing their mortgages, and not earning interest for them.
This wealth remains locked in their homes, until they choose to sell their homes, at which time they would need to use the proceeds of the property sale to return back to their CPF accounts, with accrued interest.
Given that many Singaporeans would need to home to live in, it is easy to see how they may have difficulties meeting the Full Retirement Sum by the age of 55. Thus, in Singapore, our property financial decisions has a huge impact on our retirement, and it is crucial to plan today with an eye decades down the road.
Other (smaller) obstacles to one’s Full Retirement Sum include using CPF for one’s children’s tertiary education and making investment losses when investing their CPF monies.
It was an eventful week for SGX-listed companies. On a policy level, the Monetary Authority of Singapore announced that it is looking into the possibility of raising the amount of leverage Singapore REITs are allowed to have from the current 45%.
For individual companies, there have been plenty of news and interest as well. For this instalment of 4 Stocks This Week, we highlight 4 companies with developments this week that may have long-standing repercussions in the weeks and months to come.
On 3 July 2019, Ascott Residence Trust and Ascendas Hospitality Trust jointly announced that they will be merging, creating the largest hospitality trust in Asia-Pacific with a net asset value of $7.6 billion.
Under the proposal, Ascott Residence Trust will establish Ascott Hospitality Business Trust, and all units of Ascott Residence Trust will be stapled with units in Ascott Hospitality Business Trust to form a stapled trust.
Ascott Residence Trust will then acquire all Ascendas Hospitality Trust stapled units for a consideration of S$1.0868 per unit, comprising cash and Ascott Hospitality Business Trust stapled units.
The planned merger is subject to approval of unitholders of both REITs at their upcoming respective extraordinary general meetings. CapitaLand is a major unitholder in both REITs, owning about 45% of Ascott Residence Trust and about 28% of Ascendas Hospitality Trust.
Ascott Residence Trust closed flat $1.31 this week.
ST Group Food (SGX: DRX)
On 3 July 2019, the Singapore Exchange welcomed the listing of the Australian-headquartered ST Group Food on the Catalist Board.
ST Group Food is a food and beverage franchisee that has exclusive master franchise rights to well-loved brands like Gong Cha, NeNe Chicke, Ippudo,.PapaRich, and Hokkaido Baked Cheese Tart, as well as its own brand concepts of PAFU and KURIMU. It has outlets in Autralia, New Zealand, Malaysia and the United Kingdom.
Shortly after listing on Wednesday, ST Group Food announced that it has secured exclusive rights to the NeNe Chicken brand in New Zealand, where it already has 15 outlets under other franchise brands like Gong Cha, PapaRich, and Hokkaido Baked Cheese Tart.
The company closed at $0.275 this week, after initially debuting at $0.28.
SIA Engineering (SGX: S59)
SIA Engineering provides Maintenance, Repair and Operations (MRO) support to both SIA and third party airlines, among other aerospace engineering solutions.
On 5 July 2019, the Singapore Exchange queried SIA Engineering for unusual price and volume movements.
News reports suggest that the increase in price and interest in the stock came on the back of renewed talk of possible privatisation by parent company Singapore Airlines, which already controls close to 78% of the company.
The company’s stock closed at $2.93 this week, up 7.721%.
Sembcorp Marine provides offshore and marine engineering solutions around the world. The company is a subsidiary of Sembcorp Industries, which owns about 61% of the company.
On 3 July 2019, Sembcorp Marine’s stock tumbled after news broke that Brazilian authorities raided its Brazilian subsidiary, Estaleiro Jurong Arazruz.
The investigation was connected to the ongoing Operation Car Wash, a wide-ranging anti-corruption probe that also led to the discovery of the Keppel Offshore & Marine bribery scandal, in which company representatives were found to have given bribes of USD $50 million to Brazilian officials over 13 years in exchange for business deals.
Sembcorp Marine put out a release that said that it has co-operated fully with the Brazillian Federal Police, and is “committed to the highest standards of compliance with anti-corruption laws and does not condone and will not tolerate any improper business conduct”.
The telco sector in Singapore has been through a competitive business landscape over the past few years. The incumbents – Singtel, StarHub and M1, have found their profits threatened by new players such as MyRepublic and Circles.Life, forcing them to slash prices in order to retain their market shares.
Consumers are naturally happy to have more choices on which telco to choose but are investors better off? In this edition of 4 Stocks This Week, we look at 4 main players in the telco industry to find out how they have been performing.
Singapore Telecommunications Limited (SGX: Z74)
It was reported earlier this week that Singtel CEO Chua Sock Koong had her salary nearly halved, taking home ‘only’ $3.5 million for the last financial year, as compared to $6.1 million the year before. This coincide with Singtel reporting a net profit of $3.1 billion for the last financial year, its lowest annual profit in 16 years.
Based on its current net profit and share price, the company is trading at a price-to-earning (P/E) ratio of 18.5, which is at a premium compared to its competitors.
It’s worth noting that having stumbled to a low of $2.88 at the start of the year, Singtel has bounced back and is currently trading at $3.50. This gives investors a year-to-date return of 17.4%.
Also, Singtel recently shared that it is considering the option to “unlock value” from its digital business while also suggesting that it could be exploring the feasibility of looking to apply for a digital banking license. If either of this materialises, it would be worth relooking Singtel once again.
StarHub Ltd (SGX: CC3)
From a market capitalisation standpoint, StarHub is more than 20 times smaller than the juggernaut Singtel. This means that its margin of safety is a lot lesser and it needs to be well prepared for how the telco sector in Singapore develops over the next few years.
An SGX market update writeup earlier this week reported that for the first quarter ended 31 March 2019, StarHub reported a net profit after tax of S$49.3 million, down 23.3% on a year-on-year basis due to lower revenues from its mobile and pay TV operations as well as higher operational expenditure from its cyber security joint venture.
Since the start of the year, total return for the company is -8.9%. It’s currently trading at $1.54, down from $1.73 since the start of the year. Return over the past 3 years is -47.8%. Based on current price, the company is currently trading at a P/E of 14.5.
NetLink NBN Trust (SGX: CJLU)
NetLink is an interesting business as it builds, own and operate the passive fibre network infrastructure for homes and non-residential premises, and non-building address points (NBAP) in Singapore. This is the same fibre network which the other telco providers (i.e. Singtel, StarHub, M1, etc) use to provide broadband access to you. It has approximately 1.3 million residential end-user connections and more than 45,000 non-residential end-user connections.
NetLink generates a large part of its revenue from residential connections. It’s worth pointing out that NetLink is essentially a monopoly in the residential fibre network business. Its revenue source primarily comes from one-off installation and a monthly recurring connection charge.
Since its IPO in July 2017 at $0.81, share price for NetLink has remained relatively stable (to no one’s surprise). It’s dividend yield is currently at 5.5%.
We are going out on a limb here by including M1, which was delisted earlier this year.
The company, which was privatised after a buy-out offer of $2.06 continues to be scrappy after recently announcing its streamline mobile plan into just two products – 1) a contract-free, SIM only plan and 2) a contract plan with device. Both plans come with free-flow weekend data, free caller ID, unlimited free talk calls to 3 M1 numbers and unlimited music streaming on Spotify.
Our point is that while the company have been privatised, this could even allow them the leeway to be more innovative than they were before, without having to worry about shareholders desire for higher profits and dividends. So keep a lookout for what M1 does, even if we are not able to invest in it.
Singaporeans are willing to spend hours queuing for food that is said to be good. It’s been 2 months since Shake Shack opened at Jewel and the hype has yet to die down as Singaporeans continue to stand in line for more than an hour to get their hands on the famous burgers.
BreadTalk has multiple well-known brands under their name. This includes restaurants such as Toast Box, Din Tai Fung, Food Republic and Song Fa. Outside of Singapore, BreadTalk also has presence in countries like China and Thailand.
In 2018, BreadTalk brought Din Tai Fung to London. This June, BreadTalk brought in the globally recognised Wu Pao Chun bakery from Taiwan. The first Wu Pao Chun bakery in Singapore, their two award-winning breads are selling at $20.80 a loaf (and Singaporeans are buying it). BreadTalk has an 80% stake in this joint venture with Wu Pao Chun Food Ltd.
BreadTalk reached a high of $1.260 in April this year and closed higher at $0.775 on Friday 21 June.
Japanese restaurants can be found in malls all over Singapore. Japan Foods operates a chain of more than 40 restaurants in Singapore that serve authentic Japanese cuisine.
Japan Foods has an extensive list of franchise brands under them including popular Japanese restaurants such as Akimitsu, Ajisen Ramen, Menya Musashi and Osaka Ohsho. Other than Japanese cuisine, Japan Foods also has brands such as Fruit Paradise and New ManLee Bak Kut Teh. Outside of Singapore, Japan Foods has also ventured into countries such as Malaysia, Vietnam, Hong Kong and China.
Japan Foods has been consistently giving out dividends to its investors since 2009. In 2018, Japan Foods dividends totaled $0.021 per share, a dividend yield of 4.77%
In Singapore, Tung Lok operates 16 different restaurants, including TungLok Signatures, Dancing Crab, LingZhi Vegetarian, Lao Beijing, Tong Le Private Dining and Lokkee. Besides their many restaurants, Tung Lok also offers catering services for events.
Beyond Singapore, Tung Lok has presence in other Asian countries including Indonesia, Japan, China and Vietnam.
Tung Lok closed higher at $0.160 on Friday 21 June.
The name Koufu has become synonymous with food courts in Singapore. The brands under Koufu fall under 5 main categories: food halls, concept stores, café & restaurants, shopping mall and overseas.
Besides Koufu food courts, there are other food halls under Koufu such as Cookhouse, Happy Hawkers, Rasapura Masters, Fork & Spoon and Gourmet Paradise. This totals more than 60 food courts in Singapore. Cafe & restaurants include 1983, Elemen and Grove. Both Elemen and Grove offer meat-free dining concepts that focus on natural, healthy ingredients.
Koufu has in recent times entered the bubble tea market in Singapore with concept stores like R&B tea and SuperTea. A widely popular bubble tea store, R&B Tea already has 16 outlets in Singapore.
Since its IPO, Koufu reached a high of $0.825 in April this year. Koufu closed lower at $0.680 on Friday 21 June.
When we save money, we put it in the bank. This is because it is 1) more convenient to access our funds than putting it in one place, 2) safer than leaving it at home, and 3) in hopes we may get a certain interest return.
If we think about it, we are entrusting the bank with our money. However, we all know that we shouldn’t just save our money, we should also invest it, to beat inflation and grow our retirement nest egg.
When we invest, we don’t actually hold the securities or assets physically. Similar to entrusting the bank with our money (regardless of where we earn or receive it from), we entrust a financial body or institution to hold our investments (regardless of which broker or platform we invest with).
Even though we may invest in stocks via our brokerage firm, embark on a monthly investment scheme with robo-advisory platform, put our funds with P2P-lending platform or invest with other platforms, we will ultimately have to keep our investments with a financial institution.
There are a few main types of financial institutions that we can trust to hold our investments – Central Depository (CDP), Custodians, and Escrows.
Here’s what each of them are.
Central Depository (CDP) Account
The Central Depository (CDP) is a wholly-owned subsidiary of the Singapore Exchange (SGX) that provides integrated clearing, settlement and depository services for a wide range of investments in the Singapore Securities Market.
When we invest in SGX-listed companies, exchange traded funds (ETFs), bonds and other securities, we can store them in our CDP account. Of course, to do this, we also need to have a brokerage account to buy and sell the investments.
We can also store our Singapore Government Securities (SGS), including SGS bonds, Treasury bills (T-bills) and the Singapore Savings Bonds (SSBs) in our CDP accounts.
SGS bonds are listed on the SGX after its initial issuance, which means we can buy and sell it on the secondary market, with a brokerage account. T-bills, while also stored in our CDP accounts, can only be bought and sold on the secondary market via the three local banks (but not via brokerage accounts). Lastly, our SSB investments cannot be bought or sold, but can be redeemed, are also stored in our CDP accounts.
A custodian account is an account, administered by a financial institution, that holds securities investments on our behalf. These financial institutions tend to be large and reputable firms that we trust to safeguard our investments.
Most commonly, we may come across custodian accounts when we invest in stocks. This is because most of the brokerage firms in Singapore offer their own custodian accounts, with more competitive trading fees and charges, for us to store our investments with them.
For overseas-listed stocks and on regular shares savings (RSS) plans, we generally need to store our investments in a custodian account with the brokerage firms. Our brokerage firms, if it is a CDP Approved Depository Agents, would typically also maintain a sub-account with CDP on our behalf.
Another way many of us come to own custodian accounts is when we invest via robo-advisory or other investment platforms. While popular robo-advisory platforms such as Endowus, MoneyOwl, StashAway, AutoWealth and Smartly, offer a compelling and contemporary investment solution, they do not store the underlying investments.
To add further credibility to their solution, they work with reputable and established custodian service providers which give us greater peace of mind, knowing that our investments are safe regardless of what happens to a robo-advisory service provider.
Custodians They Use
UOB Kay Hian
Saxo Capital Markets (Securities)
Saxo Capital Markets
Saxo Capital Markets
In the scenario the robo-advisory platform that we are investing with shuts down or goes bankrupt, our investments are still safe, residing in our custodian account. We can simply go to our custodian account providers to execute any trades we want on our behalf. Even in the scenario both our custodian account providers shut down or go bankrupt, our assets reside separately from their assets, and will still belong to us.
As other types of investment platforms may also use custodian accounts, we should verify the firms behind the custodian accounts. We can look up the Financial Institutions Directory (Capital Markets) on the Monetary Authority of Singapore (MAS) website.
Escrow accounts allow us to hold assets with an third party. In this case, there is an independent entity to ensure that investors’ funds are only used in accordance to agreed upon conditions.
This is especially relevant for those investing in Peer-to-Peer (P2P) schemes, offered by Funding Societies, Capital Match, MoolahSense, SeedIn, Minterest, CoAssets, Validus and other P2P companies, as they use our investments to lend to other companies for a return.
With an escrow in place, they typically do not handle our funds. Rather our funds sit with the escrow, and are used to lend to companies. On the other hand, companies also pay the interest and capital to the escrow to ensure that the funds are channelled to the lenders, and not managed by the P2P companies.
In this case, investors are assured that even if the P2P platform that we use go under, our funds remain safe. We can also check whether the escrows are licensed trust companies on the MAS website.
Escrow Companies They Use
Does not specify
Does not specify
These Accounts Are Safeguards For Investors
Whether it is the CDP account, custodian account or escrow account, they are there to protect investors. This is why it is imperative that investors do their parts to protect their funds, but checking on the MAS website, asking the relevant companies questions to clarify their doubts, and understand the investment risks that they are taking on.
This article is written in collaboration with dollarDEX. All views expressed are the independent opinion of DollarsAndSense.sg
As the prices of goods and services continue to increase due to inflation, leaving our money in a regular savings account which earns us only 0.05% in interest per annum just isn’t good enough. Not only will our savings earn us barely any money from the interest, our spending power will be eroded over the years as inflation will outpace the interest we earn in these bank accounts.
This is why it is crucial for us to invest our hard-earned money, not just to preserve our wealth against inflation, but also to continuously grow our pot of wealth over time.
While it’s important to start investing as early as possible, there are also some factors we first need to understand before we start investing our first dollar. These factors will help us to get a better understanding of our investment style, purpose and ultimately the type of investment decisions that we make.
#1 Your Current Financial Situation
Before you start investing, you first need to understand your own financial situation.
Do you have any debts to clear? As you embark on your investing journey, one of your early goals should be to clear any outstanding debt. Be sure to pay off the loans that incurs high interest. Credit cards are an example of bad debt that charge you high interest rates. The sooner you pay off your debts, the lesser you pay in interest.
On the flipside, there are types of loans that we take up such as housing loans and education loans that charge relatively low interest rates. In these situations, investing the excess cash that you have makes financial sense if you are able to earn higher investment returns as compared to the interest rate that you are incurring for your loans.
For example, if your investment yields 5% per annum while your loan interest is 2% per annum, you are still earning an investment return of 3% per annum. Hence, investing while you have these low-interest loans to pay can help you to come out of debt faster while accumulating your wealth.
Do you have enough savings in your emergency fund? Your first steps into investing should not involve emptying your bank account. Good financial planning includes having an emergency fund that will be able to tide you and your family through six to nine months of unemployment.
There are a few ways for you to store your emergency funds. The key is to ensure that your emergency funds is in an accessible and highly liquid investment instrument that allows you to withdraw your funds quickly in times of need and at the same time, earn you a reasonable interest. You can hold these funds in liquid investments such as Singapore Savings Bonds and Unit Trusts or in a high interest savings account.
Do you need these funds for big-ticket purchases? If you have a big-ticket purchase coming up, such as a wedding or your home renovation, the sum of money you intend to invest should be set aside for these expenses. It would be wise to keep this money in a high-interest savings account or an investment that protects your capital and still gives you decent interest, such as the Singapore Savings Bonds or Money Market Funds (MMF).
MMFs refer to mutual funds that invest in short-term and low-risk debt securities. Commonly compared alongside fixed deposits, MMFs provide investors with a vehicle to preserve their wealth while ensuring high liquidity and low-risk. This could be a great way for you to grow your savings which is sitting idly in your bank account, waiting for the big-ticket item to come along.
When you invest from a younger age, time is on your side. The investment horizon of a 25-year-old that is just starting out in the workforce looks vastly different from a 50-year-old who is just beginning to invest for his retirement.
Make the power of compounding work for you. When you start at a younger age, you have more time in the market to ride out volatility and stay vested. Your investments have more time to compound itself and you will receive higher returns over the years as compared to an older investor.
At a younger age, you are also likely to have fewer financial commitments. This means that you can channel a higher percentage of your salary towards investing. As you get older, even as your salary increases, you may find yourself saddled with more financial responsibilities that increase your expenses significantly, making it difficult to invest more at an older age.
Your investment goals will shape the kind of investments you take on. These goals can be categorized into short, medium and long-term goals. A few common investing goals include wealth preservation, wealth accumulation, financial independence, paying for your child’s education and building a nest egg for your retirement.
To help you plan for your retirement, dollarDEX has a retirement calculator to help you find out how much money you may need to retire based on your lifestyle needs. All you need to do is to input a range of factors such as the age you want to retire at, your current portfolio value, your monthly investment as well as the estimated annual returns. This provides you a quick overview of your portfolio size at the point of retirement as well as how much your retirement income will be in today’s value.
Your risk profile is dependent on two main components, your risk appetite as well as your time horizon (i.e. your ability to take on risk)
If you want higher returns, you have to be prepared to take on more risks. Understanding your risk appetite will help you to narrow down the types of investment instruments you should be looking at. Your risk appetite will also affect the asset allocation within your investment portfolio.
For example, a conservative investor who is risk-averse may prefer to have a portfolio that is heavy in bonds. For an investor who is willing to take on more risk in exchange for higher returns, a portfolio heavy in equity could be of choice.
dollarDEX offers all investors a free risk assessment after you open an account. You will discover your investor profile, whether it is: Conservative, Moderate, Balanced, Growth or Aggressive. This risk profile depends on your inputs to the questions which seek to determine your risk appetite and time horizon.
After your risk profile has been determined, dollarDEX will recommend an investment portfoliothat suits you. This includes your asset allocation as well as the different funds that make up your proposed portfolio. Here is how the dollarDEX Balanced model portfolio currently looks like:
This recommended portfolio also breaks down the specific percentage that will be invested in each fund. From there, you can dive deeper into each specific fund and read up on the fund performance and fund factsheet.
#5 Your Opportunity Cost
What is your opportunity cost of not investing?
If your money is kept in a high interest savings account that gives you a decent interest rate of about 2% per annum, your opportunity cost is lower compared to someone who is keeping their money in a bank account earning just 0.05% interest per annum. This means that you can afford more time to weigh your investment options before deploying your funds into an investment.
For those that are holding your money in a bank account earning a meagre interest rate of 0.05% per annum, your opportunity cost of not investing will be higher. Not only is the money in that account not growing your wealth, you are also missing out on potential market returns.
What is important is not timing the market, but rather time in the market. Rather than stalling on your investments, you should start investing as early as possible.
Once you have taken these factors into consideration, you will better understand yourself as an investor and be more prepared to get started on your investment journey.
Unit trusts are one of many investment vehicles investors can consider to invest in. dollarDEX, established in 1999, is one of the first online platform in Singapore, that allows investors to easily access unit trusts. One concern some investors have when it comes to investing in unit trusts is the fees charged. dollarDEX does not charge investors additional fees for their investments, this means no platform fees, switching fees and sales charges. Your money is fully invested.
dollarDEX also helps you to narrow down your investment options by recommending an investment portfolio that suits your risk profile. You can also use dollarDEX’s fund finder to search for a fund based on your preferences. Find out more about investing with dollarDEX here.
To help you get started, dollarDEX is holding an investment seminar for beginners on 20 June. Get your tickets to the seminar to learn more about the basics of investing, why you should start investing, and how to meet your savings goals with regular investments. You will also get financial planning tips to help you meet your protection, wealth accumulation and wealth preservation needs. More details here.