Remember GameStop? That old shop where you would go to buy second hand video games? Well, yesterday they made big headlines…and here’s why.
Understanding a Short
A short position is a trading technique, whereby short-sellers will borrow a stock that they think will drop in price, and buy them back at this lower price. Short sales have an expiration date- which means that sometimes short sellers have to act fast.
A short squeeze occurs when the opposite happens; the stock sharply rises, forcing all those who predicted its downfall to buy to prevent even bigger losses. This inevitably drives the stocks even higher. Short squeezes can happen when there is an unexpected positive news story (like Tesla, for example), or anything that can excite new buyers.
So what does that have to do with GameStop?
In January 2021, a series of short squeezes ensued on several different stocks, including GameStop, AMC (remember, that cinema company?) and BlackBerry (everyone’s dream phone 15 years ago). Retail traders on Reddit page ‘Wallstreetbets’ banded together to drive the price of these stocks up, because they had found out that several hedge funds had short-sold them. This resulted in large price spikes, as the short-sellers were forced to buy back their stocks before incurring any more losses.
Many users saw this as a way of getting back at hedge funds for the economic crisis in 2008. (Side note, if you haven’t watched The Big Short- you should. It explains the property crash perfectly.) It was almost as if all these users had become vigilantes, taking on the Big Bad Wall Street. Some on the website even donated their earnings to charity- how Robin Hood-esque of them.
Robinhood; take from the rich give to the…rich?
What’s not so Robin Hood-esque is what Robinhood did. Robinhood is a stock trading app; on Thursday 28th Jan 2021 it announced that it would block trading of GameShop, AMC and Blackberry shares. The free stock trading pioneer only allowed clients to sell positions, not open new ones. This provoked outrage among users and US politicians alike. A class- action lawsuit accused Robinhood of market manipulation and there are calls for the company to be investigated. The Senate banking committee said it would hold a hearing into the volatility.
Many believe that this kind of move from Robinhood shows clear classism and bias in the financial world; that hedge funds in Wall Street can influence stock fluctuations, fat cats can reap the spoils of market volatility, but the average joe can’t. The users on Reddit merely played the short-sellers at their own game. What’s your opinion? Do you think that Robinhood was in the wrong? Or do you think that the stock market shouldn’t be manipulated by Reddit users?
It’s almost Chinese New Year! On the 12th February, the Year of the Ox will begin. Hopefully it will be a lucky year for you and you enjoy your days off. What do you do over Lunar New Year? And how do you plan to spend it this year?
Many expats (myself included) spend this time to relax, maybe go to the beach club, or hitting some bars at Haji Lane- but what about the local traditions? What could we take part in? What is the process?
Reunion Dinner
Similar to Christmas Day, on the Eve of CNY, people will gather with their immediate relatives, usually three generations, and catch up. Sometimes the matriarch of the family will cook their famous dishes. Single relatives are often berated with questions about their love life or when they’re getting married. Many who celebrate love the Reunion Dinner, as the food is normally the best, but some dread this day as it may feel like the Spanish Inquisition.
Chinese New Year
Normally people meet at one house, and the owner of the house is presented with two mandarin oranges. This is to signify good fortune and wealth. If you’re not married, the owner of the house normally gives you a red packet with money inside. If you are married, you are given good blessings. In Singapore, people will normally visit their older relatives’ houses. If you’re the oldest, you’re the host. The house will already be full of food and CNY snacks. Depending on how big the family is, there could be multiple visits.
Next up will be the Yu Sheng; the Prosperity Toss. This is a Cantonese-Style raw fish salad. The raw fish, normally salmon, is mixed with vegetables and sauces. Each ingredient represents something to do with good fortune. The Yu Sheng is tossed into the air with chopsticks; the higher the toss the more likely your wish will come true. So be prepared for some high-flying vegetables! Many people will shout their wishes out loud and is an integral part of CNY. If you’ve had a bad 2020, this could be a good start to your 2021.
It is believed that what you eat is coming your way that year.
The night is normally the fun part. This is when friends will gather and secretly gamble and play games. After eating, chilling and watching shows together, locals will often play Blackjack, Mahjong, In Between, 3 Kings or Bacarat. Those who do not want to gamble can still sit and join in with the tradition; watching others gamble with their Ang Bao money. If your luck is good for the new year, you can win yourself some extra cash.
A Day To Relax
For all those relatives that weren’t visited on the first two days, they will be visited on the third day. Still expect some snacks, but the best food has already passed. Others who don’t have such big families, will just spend this time to chill.
You could use this time to visit Chinatown, maybe you may even catch some fireworks.
Chinese New Year is one of the biggest and most important festivals to many in Singapore. It’s something that we may not experience in our home countries. Instead of the usual this year, why not spend time with your local friends and colleagues and try and immerse yourself in this local tradition? You may try some food you’ve never eaten before; learn a new game or just see a point of view that you never normally would.
We’ve all been stuck here for a pretty long time. Singapore is a small city, so you may feel like you’ve ran out of things to do. But fear not! I have complied a short list of awesome and exciting things to do on this little red dot. Perhaps you may find something that takes your fancy, or end up doing something you’ve never tried before.
HydroDash, Sentosa
Located in Sentosa, the HydroDash is Singapore’s first floating aqua park. This inflatable obstacle course is a thrilling challenge that also has discounts in January! You can use SingapoRediscovery vouchers, or Klook has $20 tickets right now.
Skyline Luge, Sentosa
Keeping on the Sentosa theme; the Luge is also incredibly fun. It’s like go-karting but without electrics; you can drive your luge round several courses, then take the skyline back up to the top! Not for those who are afraid of heights (trust me!), but racing your friends is a lot of fun. One person costs about $23.
Art Jam Session with drinks, 313 Somerset
If you fancy something a bit different and the weather isn’t as sunny as you’d have hoped- you can consider unleashing your creative side. For just under $50, you can spend a few hours chilling, vibing and being as artistic as possible, with a group of like-minded people. Coffee in included, as well as supplies.
HomeTeamns, Adventure HQ, Khatib
I went here the other day and, although it was terrifying, in retrospect it was a lot of fun. Inside you will find many height-related activities, such as Singapore’s longest indoor slide; a 16-element ropes course; and loads of things that you climb and jump off of. For the adrenaline-junky, this is a perfect day out. Treat yourself afterwards to a few beers at Orto down the road.
Boulder+, Kallang
If that wasn’t enough fear-factor for you, try bouldering at Kallang. Rock-climbing without harnesses, bouldering is a high-intensity workout. Day passes are $24, with youth passes at only $19. It’s a fun day out for all, and something to try if you’ve not done anything like this before.
Holey Moley, Clarke Quay
If you haven’t tried this indoor golfing experience, you really must. I don’t even like golfing that much but this is honestly so much fun. There are 27 holes, each with a different theme (my personal favourites being Jaws and Bat Out of Hell). Not only that, there’s a range of cocktails; a cool dining area and good music. There are even a few vegan-friendly options on the menu, so don’t be put off by the bar food. Plus, it’s pretty affordable, with different deals on throughout the week.
Haw Par Villa
If you’re looking for something a bit stranger and more bizarre to do on your day off, why not try visiting Haw Par Villa. Apparently, people used to bring their kids here to frighten them into behaving. There are over 1000 statues depicting Chinese legends, with my personal favourite being the Ten Courts of Hell, where you can go and see for yourself what happens to those in the afterlife. Best part, it’s free.
Timezone, various locations
Unleash your inner kid with this indoor arcade. You can find something for everyone here, with all your classics like claw machines, shooting hoops and even bumper cars. Most games win you tickets, which are uploaded to your Timezone card. The prizes are also pretty good, too; not only can you get all the usual kids’ stuff like sweets and plush toys, but you can even get slow cookers, toasters and coffee machines. Plus, they frequently have promotions when you top up your card.
Jurong Bird Park
This attraction is so underrated in my opinion. It is such a good day out, with regular shows, a nursery full of baby birds and even the chance to feed the penguins yourself, there are lots of cool things to do. One of the highlights in the giant greenhouse aviary that has a massive waterfall inside. I also would recommend feeding the paraquets, although be careful, they tend to bite!
Tiger Brewery Tour, Joo Koon
I have saved the best till last- the Tiger Brewery. For only $20, you get an hour-long tour around the brewery, which includes the chance to win free beer if you answer questions correctly about beer. At the end, you are shown to the on-site pub, where you can cash in your free beer coupons for lots of different beers (not just Tiger). The pub has pool and darts, but the best thing is that the beer (if you purchase) is only 4 bucks a drink! So cheap!
Comment what’s your favourite thing to do in Singapore!
Do you find that there are just too many financial terms to remember, putting you off even considering investing? Well, there is a lot, and at first glance it is definitely overwhelming. So, I have complied a list, a mini dictionary, if you will, of all thing’s money- from hedge funds to dollar cost averaging. At the end, a lot of these term won’t seem so formidable anymore, allowing you to start investing with a lot more confidence.
Stocks
The first word that everyone thinks of when they hear the term ‘investment’, is stocks. Hence, why it is first in this list. But what even are stocks? And how do they work? A stock, also known as equity, represents the ownership of a part of a company. Imagine a company is like a big pie, and you want a piece of the pie. You can buy a slice, known as a share, and essentially you own a small part of that business’ assets and earnings. (Do note, however, this does not mean you own part of the company’s furniture, building or whatsoever you choose).
Shareholders (people that own the stock) can vote in shareholders’ meetings, sell said shares to others and receive dividends- more on that later.
Stocks are bought and sold on stock exchanges, although some can be sold privately. Historically, stocks out-perform other types of investments, which we will delve into further later.
But why do companies sell stocks? Don’t they want the whole pie to themselves? Simply put, companies sell stocks to raise funds so that their business can operate.
Bonds
You may have heard of a bond before when the topic of investment comes up. A bond is a fixed income instrument that works similar to an I.O.U. It represents a loan made by an investor to a borrower- just like an I.O.U. Its details include the loan due date and includes the interest and terms for payment.
They are normally used by corporations or government entities to pay for projects. Imagine you are a contractor, wanting to build a block of flats. You need equipment, materials, not to mention staff to carry out the job. All this costs money, sometimes more than a bank is willing to loan. So, you can instead ask many investors to lend the money to you. This is a bond.
Like stocks, bonds can be bought and sold, publicly or privately. They pay out lower than stocks, but are a safer option; if you hold your bond until maturity (the date it was supposed to end), you will get all your principal back. Principal is the amount you paid in the first place.
Mutual Funds
All these different ways of investing can seem a bit confusing. And doesn’t it require a lot of time, sitting and watching how my stocks are doing? And how do I know which stocks to buy? Or even if I should just stick to stocks! Well, that’s where mutual funds come in. A mutual fund is a pool of money that can be invested in different investment types, such as stocks, bonds and money market instruments. They are managed by professional money managers, who will decide how much money goes into what, and will shuffle funds if necessary. This is a great investment vehicle for those who do not want to invest hands-on, or do not have the expertise to do so. Money managers will try to make profit based on the investment objective. However, remember that these managers will charge a fee for doing all this for you.
Hedge Funds
Hedge funds are very similar to mutual funds; they both are actively managed and both use a pool of funds to invest. However, they face less regulation than mutual funds, and sometimes use non-traditional investment strategies. They are more expensive than other funds, and are normally specifically for high net-worth investors.
Index Funds
The last type of fund I am going to talk about is index funds. These are a portfolio of stocks that are ideal for saving for retirement. They have cheaper fees and expenses than actively managed funds.
The term ‘indexing’ itself means passive fund management; instead of a fund manager picking and choosing investments, or deciding when to buy and sell, the fund manager will build a portfolio (a range of investments), which mirrors a particular index. The idea is that mirroring the stock market, the fund will match the performance. Nearly every financial market in existence has an index and index funds, the most popular index funds track S&P 500.
Overall, index funds are great for diversification (coming up) and offer strong long-term returns. But, beware, they are vulnerable to market swings and crashes and lack flexibility.
Diversification
This may be a common phrase that you have heard. The term ‘diversification’ is the opposite to ‘putting all your eggs in one basket’. If you decide to invest all your money into one stock, say from Company X, and the stock crashes, you have risked it all and lost all your money. However, if you invest in several different stocks, in Company X, Company Y and Company Z, and Company X’s stocks crashed, at least you would still have your shares from the other companies. What’s even better than this is if you spilt your investments between different types of vehicles, like bonds, stocks, commodities (such as gold). This way you are not solely relying on the stock market doing well.
Diversification is also why mutual funds and index funds are so attractive- your investment is spread out between lots of different asset classes. This massively reduces risk whilst aiming to maximise returns on investments. Diversification also includes geographical location. Investing 100% in a US market is less diverse than investing in US, Asian and European markets.
Managing a diversified portfolio, with assets from different classes and foreign markets can be confusing and time-consuming, which is why mutual funds are available for the layman to purchase.
Dividends
Some companies will offer dividends; the company will distribute some of its earnings to its shareholders. Dividends are the investors’ reward for putting money into the company. They can either be paid in cash, or in additional stock. They are non-guaranteed, so if the company’s profits slump, so will the dividends (this is unlike coupons, which are a fixed amount).
Dividends are good for those who have short-term investing goals and like to see the benefits of investing instantly.
Capital Gain
If you buy a house for $100,000 and sell it for $200,000, you have a capital gain as you have sold your asset for more than you bought it for. This goes for investments too. If you buy stocks and hold onto them, selling them a year later at a higher price, you have a capital gain. Many countries will tax capital gains the same as regular income, but will tax long-term investments less. This encourages long-term investments that benefit the country’s economy. If you wish to benefit from lower tax on your investments, a long-term strategy is better. One thing to note is that there is no capital gains tax in Singapore!
Risk
Life is full of risk, and so goes the same for investments. Every investor is tolerable to a certain amount of risk. If you are a high-risk taker, you are willing to take a risk for potentially a high return. If you are quite safe with your investments and invest in say a US treasury bond, then be prepared for lower returns. Generally, in finance, the greater the risk the greater the gain. However, this means that you might risk losing all your investment that you initially put in.
Risk is measured by historical behaviours, although historical behaviour is not indicative of future outcome. Below are some investment types, ranked from low to high risk.
It is generally thought of that low risk = low reward, high risk = high reward. However, there are some ‘hidden gems’ that are low risk with a high reward, these often are too good to be true. Any investment that is high risk, low reward, is generally not worth it.
Dollar Cost Averaging
This concept really is a life-saver for those who do not wish to time the market or sit watching their stocks. The idea is that by putting the same amount of money into investments for the same period (once a month, once a year), you will gain more in the long run than if you tried to time the market.
For example, you spend $20 a month on coffee for 4 months. In January, the value of the coffee drops to $5 each- so you get 4 coffees. In February, coffee is worth $4 each, so you get 5. In March and April, coffees are worth $2.50, meaning you get 8 each month. In total, you purchased 25 coffees for an average price of $3.20. If you would have spent all your money at the same time, you would have only bought 16 coffees, for an average price of $5 per cup.
This method reduces risk and reduces the overall impact of market volatility.
Compound Interest
We’ve come to the end of the list, and I’ve saved one of the most important ones until last. Compound interest is essentially interest on interest. Interest is added to the initial amount, and then also on the interest already earned. It makes any sum of money grow faster than simple interest, and is the beauty of investing. Money that you invest over time can compound interest either annually, monthly or any increment of time. There are many financial calculators online you can use, to see how your investment can grow over time. It’s not as simple as just multiplying your initial investment by the rate of return, as it takes into account all the interest gained over a set period of time.
I hope you have found this useful. By now you will know all the basic terms. The investing world is your oyster! Please share this with those you know who are keen to invest. Feel free to comment your questions below!
Everyone wants to make money, and more and more people are starting to realise that working a 9-5 is just not going to cut it anymore. But if you don’t have the luxury of running multiple businesses from home, or being your own boss, the easiest way to grow your money is to invest.
Investing is the concept of allocating assets, usually money, into different financial vehicles, such as stocks, bonds or mutual funds, to create a profit. The bare minimum investment should be doing is beating inflation. Inflation is a measure of the rate of rising prices of goods and services in an economy. In short, over time our hard-earned money is worth less, due to the rising cost of products. It sounds somewhat bleak, and with average inflation currently working at 2.5%, the chances of saving decent money in a savings account that offers 0.5% seems slim. But a lot of investments are offering high non-guaranteed returns, often from the rate of 8% upwards. But what are the three things to consider before you put your money into investments.
1.Build an Emergency Fund
At a glance investing may seem like an obvious choice when it comes to saving money. Why not just throw all your savings into investment if it means high returns? The answer is that investment returns are NOT guaranteed- even the safest investments come with some risk, and sometimes the lock in periods are high, or the penalty for withdrawing early is expensive. To ensure that you are not over-investing, make sure that you have an emergency savings fund that is easily accessible. That way, should an emergency arise (like a large hospital bill or having to pay for car repairs), you can use your emergency money instead of jeopardising your investments.
The recommended amount you should have in your emergency fund is 3-6 months of your monthly salary. This should be a healthy buffer should the worst happen. If you already have more than that, then that’s a great time to consider investing.
2. Be Debt-Free
Before you do any investing, you should really consider paying off your debt. Having a credit card bill is fine, but having any large or bad debt will hinder you in your long-term goals. It seems counter-productive attempting to make lots of money with investments, whilst paying off lots of debt. It may be difficult paying off student debt or large loans, but you will reap the benefits in the long run when your debt isn’t eating into your assets.
3.Set Your Investment Goals
This step may seem unnecessary but it is honestly THE most important step- defining your goals. What is the reason for investing? If you are doing it out of pure greed then your judgment will become clouded when it comes to riskier investments and you risk losing it all. So have a long and hard think about why you want to invest. You are putting your money, that you worked hard for, somewhere that could give you high returns, or give you nothing. Therefore, it’s best to have a long think and define some clear goals for your future. Do you want to plan for your retirement? Save for a house? Pass something on to your children? Whatever it is, decide how much you would need and by when. Most investments are a longer-term commitment, so it’s OK to think big. If you have no clue and are just investing for the sake of it, you will quickly lose your drive and passion for making money.
These steps may seem simple, but they really are the key to an effective investment strategy. If you found this article useful, comment below your favourite tip. Don’t forget to share it with your friends who are thinking about investing.
First of all, thank you for visiting the site. On this page, I will be sharing with you some tips that expats should consider before making the big leap to invest in Singapore.
Thinking about money is often quite daunting, and we frequently put dealing with it to the bottom of our to-do list. I will be trying to make everyone’s lives a bit simpler, by addressing the main questions surrounding investing, along with dispelling some common myths.
Not only that, stay tuned for posts about my favourite places in Singapore; fun things to see and do; the best food and even local deals you might be interested in.
I moved to Singapore close to three years ago now, and I really wish that someone had given me a few pointers when I moved here. I’m happily settled now, and working in the finance industry- so I hope to share some insiders knowledge and insight with fellow expats here in Singapore!
Investing for Singapore Expats 