HSBC Preference shares 8% USD

A consumer sent me a prospectus about the HSBC preference shares denominated in USD and asked my views. I asked an investment expert to study the prospectus. He gave his comments on this investment, compared with OCBC preference shares (which pays a lower yield in SGD). His analysis will be posted in the inside pages of the  FISCA website and will be available only to members after login.  See: www.fisca.sg.


Comments

You should avoid investing in financial products that you are not familiar with. The advisor who recommends the product to you should explain the risks to you, rather than push you a complicated prospectus to read. After all, the adviser is earning an attractive commission by selling the product. You should ask the adviser to give you a Product Highlight Sheet, which is now required by MAS, but I am not sure if the requirement has already come into effect.

Direct communcation

This article shows an example of the problem that a consumer can face, when they buy insurance from a financial advisory firm. It is usually better to deal directly with the insurance company, to avoid any breakdown in communication.

Promotion of TKL books

Several titles of my books are available on promotion up to 31 July 2010. Discounts of more than 15%. Go to www.tankinlian.com and click on "iShop" tab.

Wait for market correction

If you have cash that is earning 0.5% per annum, and you are worried about the current level of the stock market and the uncertainty in the global economy, which option would you prefer?

• Invest the money for 5 years to get a guaranteed return of 10% (i.e. 2% per year)
• Keep the money in cash and wait for the market to drop by 10%, i.e. ST index of 2,600
• Wait for the market to drop by 20%, i.e. ST index of 2,350
• Invest in preference shares or REITS to earn a yield of 4% p.a. or more

In my view, the chance of the stock market reaching 2,600 within the next 5 years is quite high and reaching 2,350 is moderate. However, when the market does reach 2,600 or 2,350, are you prepared to plunge in, or would you be too scared at that time?

Take part in this survey. It is fun.

Research

If you are familiar with the stock market, please send me the preference shares and REITS that can give a dividend of at least 4% per annum. Send to kinlian@gmail.com

Here are some information about REITS
http://reitdata.com/

Here are inforamtion about preference shares
http://www.google.com/search?q=sgx+preference+shares&rls=com.microsoft:en-US:{referrer:source?}&ie=UTF-8&oe=UTF-8&sourceid=ie7&rlz=1I7ADBR

Save for the future

Hi Mr. Tan,

I was discussing with a friend on a entry in another blog (http://tinyurl.com/2ueorzv) advising readers to concentrate on saving for their retirement instead of children's school fees.

We tend to agree that we should not be worrying too much about supporting our children's education, since they have other options like scholarship, bursary, study loan or even part time studies. May I have you opinion on this please?

HLK

REPLY

I agree with your views. I advise people to save for their future, and to use the savings for education, retirement and emergencies, e.g. loss of employment. They should not lock up the savings just for children's education. 

Read Practical Guide on Financial Planning.

POSB Money Smart Kids

Hi Mr  Tan
I need your advice.  What are your views on POSB MoneySmart Kids?  The financial advisor told me that the interest rate is 4% better than the interest on savings account.  I need to grow money for my kids' education.  

Pls refer to attached link.  http://www.dbs.com/posb/insurance/edusmart/moneysmartkids.aspx  Thanks for your help.

REPLY

As this is a life insurance policy, you should ask for a benefit illustration and look for the two key factors (i.e. distribution cost and effect of deduction) as explained in my FAQ and my financial planning book.

HDB prices

Read this article.

My view
Although the prices keep going up, I want to encourage Singaporeans to be patient. Do not panic and pay high prices for HDB flats. It has to come down to a level that is supportable by the average wage in Singapore. It is now far too high. In the meantime, stay with your parents or rent a room or flat.