Tuesday, June 28, 2022

Fighting Insurance Balloon Snatchers with Dividends Investing

 


There's been quite a outrage lately against the latest stunt financial advisors are pulling against parents of little children. Mothership has an article that contains the details here : 

https://mothership.sg/2022/06/aia-roadshow-balloon/

The company has since apologized and then word was circulated over the web that a particular group in trying to deny that they are behind the balloon stunt in Tampines had inadvertently admitted that they pioneered the maneuver.

The follow-up actually even reflected even more badly on FAs as some seem to be more sympathetic towards the balloon snatching maneuver. This was reported on CNA as FAs cite rents as some kind of justification to bully a small child over a balloon : 

https://mothership.sg/2022/06/aia-roadshow-balloon/ 

My friend suggested that I talk about how to generate dividends to pay for balloons so that parents will never be subject to the marketing tactics of insurance agents. I think we can take a step further to use the dividends coming from retail landlords to pay for these balloons. 

Because... natural justice.

If I am an FA, I'd really hate S-REITs and will find a way to paint REITs negatively in any way I can. This is because older Singaporeans often will not switch investments once they have a way of getting >5% every year. The benefits illustration of longer tenured endowment plans cannot exceed 4.25%.  

So in this mental exercise, we will begin with a quad of retail REITs and their current yields taken from Stocks Cafe:

  • Capital Integrated Commercial Trust - C38U - 4.75% 
  • Frasers Centrepoint Trust - J69U - 5.34%
  • Starhill REIT - P40U - 6.58%
  • Suntec REIT - T82U - 5.56%
If you build a Balloon Portfolio by blending these four REITs in equal shares, you should expect a portfolio that yields 5.56%. By buying shares of retail retail malls, you can be assured that part of the rents from these insurance booths would get into pockets over every calendar year.

( Disclaimer: A well-diversified portfolio should contain much more than four stocks. This is just a way to show how you can pocket the rents paid by insurance agents to buy balloons for your own kids. ) 

So imagine you open a brokerage account and invest $1,000 into each of the four REIT, you should expect $4,000 x 5.56% or $222 a year. 

The next step is to figure out how much it costs to get a balloon. I found a link to buy a penguin balloon filled with helium at $9.90. (link)

$222 would pay for 22 balloons a year or almost 2 every month.

And the beauty of this is that you get $222 to deal with any of the antics insurance agents will attempt on you or your family. Maybe it's just balloons targeting kids today, but it may also be cosmetics for the wife in the future or health center massages in Geylang for the husband. Financial advisors will never stop bothering you the moment you step into a mall since atrium sales are now allowed again. 

More importantly, you gain agency over your own lives (pun intended). 

The insurance agencies has been fighting a war of brand positioning over concepts like early retirement and nothing infuriates them more than a person who can buy equities on their own to make investment income a reality. 




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