Building Wealth Through REITS

BuildingWealthThroughReits

 

Building Wealth Through Reits by Bobby Jayaraman is a book dedicated to the study of Real Estate Investment Trusts. It covers issues pertaining to different types of Reits, eg. Retail, Industrial, Healthcare and Commercial. Reits are basically a form of property investment where the investor, as a part owner of the assets under the Reit, acts as a mini landlord, receiving rental fees for the properties being leased out. In order for Reits to not pay corporate tax, they are mandated to pay out 90% of their earnings, which provides regular dividends to the investor. The MAS has also restricted the gearing level of Reits to 35%, and 60% if they are able to obtain credit ratings from the credit agencies. In addition, Reits are only allowed to develop properties up to 10% of the total value of properties held on their book, which keeps their business model as a landlord clean. These rules help prevent Reits from taking excessive risks, and serve as a form of protection to the investor.

The book also covers how to go about analysing and valuing a Reit, and includes interviews with the management of a few Reits, which gives a glimpse into their management quality and mindset. In essence, the strength of a Reit lies in the quality of assets it owns, and the capability of its management.

I believe that Reits present a strong case for the income investor, and are here to stay. Nevertheless, one still has to be careful and perform due diligence as monetary easing across the world has inflated asset prices which may overstate the value of assets under Reits.

 

 

The Secret of Happiness

Secret of Happiness

 

This morning, I chanced upon this article “Secret of Happiness” while reading the Straits Times. In it, the writer, Arthur C. Brooks, argues that the main reason people are unhappy is because the things we search for – fame, wealth, sex, are stuff that we use to fill our inner emptiness. These things may bring about a brief satisfaction, but they never last, and are never enough, which leads to us craving for more. As a result, we get caught in a cycle of craving and grasping; which in essence is captured in the following formula – Love things, use people.

The writer contends that the way to happiness lies in inverting the formula – Love people, use things. He advises that a way to deny things that are actually objects is to practice charity – giving away to others what we hold dear. Lastly, to not give in to these impulses as the day we do, we start getting unhappier.

He quoted the Dalai Lama, saying “it is better to want what you have, than to have what you want”. A quote so true, yet so hard to achieve in today’s world. If we should one day find ourselves unhappy, maybe we have been following the wrong formula all along.

Small Change: Investment Made Simple

Small-change-cover

 

Small Change: Investment Made Simple by Goh Eng Yeow is the first book written by a Singaporean that is under my reading list. Goh Eng Yeow is a well-known Straits Times journalist and money correspondent who writes frequently on personal financial matters.

I believe the book targets those who are too busy or find themselves struggling with understanding how to invest. The author espouses the usage of simple investment methods like index investing, where one puts a fixed amount of money into buying the index at regular intervals. In such a way, also known as dollar-cost averaging, the investor does not time the market (a common mistake of many investors); he buys more when the index goes down and less when the index goes up. This helps save the average investor from the effort and time required to study individual companies as he is investing in the overall market.

Other snippets of his advice are to not overtrade, buy for the long term, start investing early, don’t let emotions cloud our judgement, don’t bank on the ‘greater fool’ theory, buy low beta stocks, and more importantly, don’t get obsessed with money.

In conclusion, I find his sayings peppered with many truths. The book has only 98 pages, but is filled with principles that could help a novice investor along his way. The rules of investing are not hard to understand, but rather, hard to implement as I often find ‘myself’ getting in my own way. The principles laid out in this book will serve as a good reminder to me throughout my own investment journey.

 

A Gift To My Children

a-gift-to-my-children

A Gift To My Children by Jim Rogers is a light book which can be finished in a seating. However, digesting the bundles of wisdom might take a while. The book doesn’t only pack Jim Roger’s accumulated knowledge regarding investments which he is more famously known for, it also holds life lessons he learnt over the course of his adventures.

Some of those which spoke out to me would include:

1) Know Who You Are.
“The important thing about making errors in judgement is the ability to admit those errors. If you grow into adulthood unable to acknowledge your mistakes – in life, as well as in investing – you will learn your lessons the hard way. Only when you recognize your mistakes will you be able to make the corrections necessary to put yourself on the right path.”

2) Be Who You Are. Be Original! Be Bold!
I want you to pursue your own desires and aspirations with that kind of courage and devotion. Your father succeeded as an investor, but that doesn’t mean that you must be investors too. What I want is for both of you to be your true, original, unique selves. No one ever became a standout success by imitating others.”

3) Live Your Life With A Dream.
“You see, when you begin something, you may not always have a concrete picture or vision of the future. But if you continue to be passionate and work hard at what you truly love to do, then you will eventually find that dream. Which may morph into yet another dream. And another.”

As you can see, most of the lessons that spoke to me were more related to life than investing. I find the author’s writing style down to earth and real to the reader. Jim Rogers also shares his perspective on the future of the world, eg. regarding the growth of China, and how countries will come apart. Overall, I find it an insightful read into the habits, thoughts and life of a successful investor and an adventurer.

The author is a renowned investor who was previously a co-founder of the Quantum Fund, a Professor of Finance at Columbia Business School, and a media commentator worldwide.