Last Week Tonight John Oliver: Retirement Plans

If you have not watched John Oliver's talk on retirement plans. Watch it!

It is probably one of the most entertaining material on personal finance; albeit something which has been espoused so often by financial bloggers.

If you do not have 21 minutes to spend on managing your finances, just go to the 8 minute mark and watch till 11 minutes. It is one of the most important lessons you will learn on personal finance.

If what John Oliver mentions has truth; financial advisers often placing their interest before yours, it makes me wonder why some many countries are allowing it. One sunny island, home to a population of 5-6 million people, in fact has the highest financial adviser ratio to population!

I wonder how many residents on that island are aware their own actions are hurting their retirement. 

Portfoilo Update in June 16

This month I am on speculation mode.

I have covered my short on Sino Grandness at 0.62 using SBL. You can read my experience here. All in all, I feel SBL is a pretty lousy way to short shares due to the high fees and lengthy process.

In addition, I have purchased Yongnam's rights at 0.001. The company did a rights offering recently where new rights can be exercised at a price of 0.21. Given the company is trying to improve its balance sheet by way of equity raising, I will be watching how the company performs in the upcoming quarterly results. The margins in Q1 seems manageable and the company has turned cashflow positive. Hopefully, this good performance can be carried on to Q2.

Also, I have since sold off World Precision Machinery at 0.31 due to my less optimistic outlook of China. I think the financial situation at China is worsening. Hopefully, it does not turn too bad because demand for commodities (oil and Coal) will be adversely affected. This will indirectly affect my portfolio exposure to the O&G sector.

I am still optimistic on our government's continuous expenditure in infrastructure. I am now exposed to this sector via three companies - Yongnam, TTJ.

3 Takeaway from Shorting Sinograndness

Using the Securities Borrowing and Lending Scheme (SBL), I have successfully shorted Sinograndness (SFIG) today at 0.700. Here were some takeaway from this first experience.

1. Long Processing Time

Being my first experience, I asked to short SFIG on 7 June 2016 @ 1030 hrs, thinking I could execute the trade immediately at 0.770. Unfortunately, my trading representative informed me the process was not immediate and they had to put up inquiry with CDP to borrow the shares first and then deliver to me.

The whole process took almost a whole day and it was only at 8 June 2016 @0915hrs, was I informed the shares have been delivered to me. I had to endure the long wait and eventually settled for a short order at 0.700. All in all, I have learnt that using SBL to short is a tedious process. And if I needed shorting to be done soon, it is wise to borrow the shares from SBL, probably one day in advance and which you will incur an upfront $21.40/- processing fee.

2. Higher Rates

To short a share using SBL, it has to be done offline. This meant a higher commission incurred from brokerages (approx 0.5% of contract value or minimum of $40 + GST, whichever is higher), this is way higher than CFD/online brokerage rates.

3. Lower Finance Cost for Less Popular Shares

The saving grace was the finance charge for SBL at 8% p.a. It is less than CFD rates for less popular shares which can range from 8 -12%. For shorting blue chip stocks, my opinion is that using CFD is clearly the better choice; however be careful of the use of leverage as it can kill you dearly when things go wrong.

Conclusion

Nothing much, but in my opinion using SBL for even less popular shares is a tedious and expensive process; now I probably understand why CFD is still popular and why no single share of mine in CDP has been lent out since 2010.