Applying value investing principles to buying a car in s'pore...read on...

I think most people might ask how are they related??

As usual, I shall keep this post as brief but precise as possible.

We shall use the very common car- a toyota corolla altis as an example.

For those who would use the car till the end of the coe life, good for you. In today's market, a brand new corolla altis would cost you $121,888. So if nothing happens and one uses it for the next 10 years, one will expect to lose $11k plus per year. This excludes other costs such as petrol, maintenance, repairs, taxes, insurances etc. The total cost for an average 20,000km pa could come out to be $20kpa.

Hey, this is for folks who use the altis till the end of the car life, which is the exception rather than the rule...correct me if I am wrong.
1) most people change car after their family expands...ie to a MPV
2) other change car when they get a promotion
3) some unlucky chaps might have accidents(touch wood) or encounter a flood which render a car void!

So in conclusion, most of the people will have annual depreciation of the altis well in excess of $11k pa. Add the other expenses in as mentioned above, the total figure might go to $25kpa....yes...not kidding! That's for the altis. If you are talking of a benz or a bmw...the figure is higher still.

Now, how to apply the value investing principles?

Facts to know first

1) Every car has a paper value. For older parf cars, this value would go down average 10% pa. Add this to the body value and you will have the base value for the car. The figure can be easily be obtained from the onemtoring website and the body value by asking a few dealers for quotes.
2) New cars also have a paper plus body value, but they do not sell at such low prices, simply because they still have years of usage to account for the higher prices.
3) Every car at end of life will be worth this : paper rebate plus body.
4) Car's paper value will suffer 10% hit afte its birthdate.

It is imperative to work out the paper plus body for the vehicle of interest. In the event of total loss of the car, at least there is the paper value to get back.

Unlike stocks, it is IMPOSSIBLE to buy a car below this book value of the car. The key is to know the book value and NOT to overpay.

Thus tips for a good deal:

1) buy a 7-9yr old car, which is just above this book value.
2) buy the car just after its birthdate (car suffered hit in paper plus new road tax would have been paid)
3) insist on sending car to own mechanic for evaluation for peace of mind.
4) inspect outside of car, as external appearance not covered by lemon law
5) settle in full to avoid interest or 78 rule.

If anything goes wrong, at least one can get back most of the money.

Good luck!

My Portfolio - plan for 2015

1) St Eng
2) Singre
3) TCIL
4) LeeMetal
5) Hupsteel
6) Noel Gifts
7) Nam Lee
8) Stamford Land
9) Taisin

Features of this portfolio:

1) Dividends every month, except Feb, April and July. Four quadrants of the year are fixed up with dividends.

2) No need to wait till end of calender year to reinvest dividends.

3) Except for St Eng, all are bought below book value, but only the former is a blue chip.

4) All pay dividends faithfully for the past decade without fail. Most pay dividends with discernible trend. Dividends represent cold hard cash and over a decade tell a truth that surpasses annual reports, analysts reports and brokers recommendation etc.

5) Some counters have hidden gems to be unlocked, but that is should be the bonus to holding them, not the main deciding factor.

6) Works on market uptrend as well as downtrend. No need to time market. Dividends are there when the time comes and even if lehman repeats.

7) REITS and Trusts not present as high gearing and rights issue are associated with it.

8) However, if a certain counter runs up so much such that the yield goes down significantly, will consider cashing out to fill up other counters, or new counter where possible.

9) No need to close monitoring. Can monitor if wish to but otherwise once a month look is more than enough. Financial reporting can view every 6monthly. To me, a decade of discernible trend dividend paying tells a lot more than those financials. The important part is mainly deciding on the entry price of the stock as the holding period is mid to long term.

10) Boring strategy...don't you think so, LOL !!??!!??

My trip to Nanyang Primary School

Don't give up

Don't look back

Education is the key to change a person's life

These were the words from Mr Koh Boon Hwee in a recent interview.


How true there are.

It was my son's first day at NYPS today. He had just been transferred there after clearing his Gifted Programme (GEP) last year.

I decided to give him a surprise my popping by during his recess break at 9.30am. I had arrived earlier just in case.

I met an old university friend whose child had also enrolled in NYPS. Then I bumped into Mark Lee, the funny man who is a usual face in our TV show. He was talking to another friend. I do not know him personally, but as I walked past, I heard him say in mandarin "education is very important... " And I suppose that's why his child is there.

I met my son at about 940am. He seems to be adjusting well. He told me that his teacher was the disciplinary master, so cannot play play. First day at school so not much real teaching yet. More of getting used to the place.


I guess so:

whatever you do, whatever route you take,  and wherever you are, you need to be educated enough to make the right decisions(maybe not all the time, but at least most of the time)