29 Dec 2014 10:29 by CAI HAOXIANG

Another year has passed and a new one is starting, each an opportunity to save, invest, and do good things with your money. We round up the topics discussed this year in the Business Times-Citibank Young Investors Forum, for the benefit of readers who might have missed out on some. The forum is a long-running series of articles in The Business Times exploring issues concerning personal finance, as well as topics relevant to the do-it-yourself investor willing to plunge into balance sheets and earnings ratios

• RETIREMENT should be thought of as an inflation-protected flow of income to maintain a standard of living, suggested MIT Sloan School of Management finance professor Robert Merton at an event in Singapore. He said three straightforward choices a retirement fund should allow people to make are: whether they want to save more, work longer or take more risk with their money.
• Singapore’s utilities sector sounds like a stable industry, but the reality of non-guaranteed demand and higher borrowing costs can bite.

• A Singapore household earning the average S$10,000 a month can save and invest its way to S$1 million within anywhere from 10 to 30 years, depending on how much is invested.
• Budgeting has its quirks. Giving yourself a fixed amount to spend each month might not be a good idea because it encourages more spending.
• Reits overcome the liquidity and large financial commitment issues faced by a residential property buyer. We examine Reit structure and fees.
• To evaluate Reits, one key indicator is yield, which is related to risk and growth potential. A Reit is not necessarily attractive just because it is trading at higher yields. Higher yields and larger discounts to net asset values might just mean higher risk.

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• Overseas retail Reits can give investors exposure to fast-growing consumer spending power, but investing in them can come with currency-related downsides. Earnings overseas can translate into weaker results if the overseas currency depreciates. Share prices will be hit if the assets are valued less in that situation. Cashflows coming in from a weak currency might not be enough to cover repayments of money borrowed in a stronger currency.

• An annuity is useful in providing a stream of guaranteed income. Retirement is not about accumulating a magic number, but ensuring lifelong cash flows. Think about a money pyramid, with subsistence needs at the bottom matched by regular, sustainable and guaranteed income flows. Higher tiers of wants can be satisfied by income from more volatile investments.
• The shipping industry is a barometer of the world economy. Ever since 2008, Chinese, South Korean and Japanese shipyards have grappled with a downturn. Over-capacity, defaults and write-offs plague the industry.
• You can go on a financial fast even if you are financially independent. A form of recreational denial, the exercise of abstaining from non-essential spending for a period of time can make life more interesting. Putting in effort to find the most efficient way of spending can make life more meaningful in the same way that depriving oneself of food temporarily gives one a fresh perspective.

• Compounding interest sounds wonderful in theory. In reality, its effects are painstakingly slow, and only becomes truly spectacular right at the end, when people might not be alive to enjoy the money. Younger savers and investors should draw some lessons from the way compounding works. Don’t expect to see results early. Ensure your return assumptions are conservative. And work hard to boost returns early on.

• Healthcare stocks sell at justifiably rich valuations because of how long-term fundamentals are in their favour. There is an ageing population and healthcare costs are getting passed on to consumers.
• It is getting harder to find value opportunities as yield stocks such as ComfortDelGro, SingTel and banks become more expensive.

• Accruals are one of the most important financial accounting concepts that investors have to understand. Revenues are typically recorded once a sale is made and a customer is billed. Whether the customer has paid is irrelevant.

Similarly, once expenses are incurred — that is, once you are billed by a supplier — you record down the spending as an expense, regardless of when you plan to pay the supplier.

A landmark study in 1996 found that share prices of companies with low accruals outperformed companies with large accruals, due to the earnings of companies with large accruals reversing and sparking a selloff.

• Estate planning is crucial in financial planning to make sure assets are passed on efficiently and fairly. Otherwise, one’s assets are distributed according to intestacy laws. There, your spouse and children take precedence over your parents.

• Can auditors be trusted to detect fraud? Ultimately, the onus is on investors to read through the disclosures given by a company in its financial statements and annual reports, and to make their own judgment on whether the company can be trusted. There is a conflict of interest at the heart of the audit business, where auditors are paid by the companies they are supposed to assess objectively.
• Look at segmental revenues and profit margins to understand how a company’s business is changing. Get a dose of reality by talking to customers, suppliers, rivals as well as fellow investors about the company you are buying.
• To understand the income statement, checking marketing, administrative and financial expenses can yield insights.
• Comprehensive income is a broader measure of net income that includes currency fluctuations.

• The rich are different in their spending habits. Data from Singapore’s latest household expenditure survey show how they don’t smoke or gamble as much as the rest.

• Latest fads in asset management are liquid alternatives, smart beta, actively managed exchange-traded funds, unconstrained bond funds and outcome-oriented multi-asset funds. Investors should scrutinise whether they are paying more fees to take on more risk and complexity than necessary, for returns that might just be as elusive.
• There is more to dividends than meets the eye. Investors have to pay attention to the payout ratio and associate/joint-venture contributions when assessing stocks. SIA Engineering is a case in point.
• China’s A-Share market has opened up to retail investors around the world with the launch of the Shanghai-Hong Kong Stock Connect. While blue chip firms are worth examining as investments, what could be also fascinating are smaller companies. They might not be good investments due to disclosure issues, but they make interesting case studies.
• Beyond the tax carrot, think of the Supplementary Retirement Scheme (SRS) as having insurance against no income.

• Property price indices can serve as a good guide in negotiating prices. A serious investor will nevertheless drill deeper into micro-data, such as prices and rental yields in specific locations, before deciding whether it makes sense to buy.