Investment Growth

Growth investing is a style of investment strategy focused on capital appreciation. Those who follow this style, known as growth investors, invest in companies that exhibit signs of above-average growth, even if the share price appears expensive in terms of metrics such as price-to-earnings or price-to-book ratios. In typical usage, the term "growth investing" contrasts with the strategy known as value investing. 

However, some notable investors such as Warren Buffett have stated that there is no theoretical difference between the concepts of value and growth ("Growth and Value Investing are joined at the hip"), as growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive. Buffet has recognized the influence of his business partner Charly Munger on this view, which is best expressed by the famous Buffett saying "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price".

The valuation of the investment is pegged to the current valuation of the ward bed (please refer to the current valuation entry).

If nothing special happens, the investment is expected to grow by 2-5% per year. It is therefore not unexpected that the investment value may hit 2 times its original investment in 20 years' period.

Utility

Utility is a measure of preferences over some set of goods and services. A good is something that satisfies human wants. Since one cannot directly measure benefit, satisfaction or happiness from a good or service, economists instead have devised ways of representing and measuring utility in terms of economic choices that can be measured. In the simplest sense, economists consider utility to be revealed in people's willingness to pay different amounts for different goods.

The investor may choose to utilize the ward bed him/herself. In such eventuality, the discount applicable to the investor is 30% of the gross ward bed rental per month (This is better than the 25% investment returns given for the ward bed). There would be no investment returns given during his/her period of stay.

Current Valuation

Valuation is the process of determining the current worth of an asset or a company; there are many techniques used to determine value. An analyst placing a value on a company looks at the company's management, the composition of its capital structure, the prospect of future earnings and market value of assets.

The current valuation of each ward bed is defined and marked at 50 times that of the rental of the ward bed per calendar month.

Over the years, if the rental of the ward bed is increased, the current valuation would also be increased in-step.

For example, if the current ward bed rental is $2,000.00. Then, the current valuation would be marked at $100,000.00 ($2,000.00 x 50).

In the event, the ward bed rental is increased to say, $3,000.00. Then, the current valuation would be marked at $150,000.00 ($3,000.00 x 50).

Redemption - Divesting Policy

Redemption by the investor can be made in 1 of the 2 options listed below:

Option 1:   Through the home, the redemption rate is 50% of current valuation. The general processing time is 1 month from date of redemption. There is no other administrative charges. Once the home has obliged its payment, there is no more relationship between the investor and the home henceforth.

Option 2:   Through a third party. The assignor can transfer his/her share to a third party assignee, whose transfer value is negotiated in privacy between the assignor and the assignee. Once transacted, the home would levy a transfer fee of 1% of the transfer value each from both the assignor and assignee or if the transfer value is lower than its original investment price, $10 per thousand of its original investment. The home's register is updated henceforth.

As option 1 is greatly unfavourable to the investor, the investor is advised to procure his/her own assignee privately.

Investment Returns (ROI)

Return On Investment - ROI

A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. ROI measures the amount of return on an investment relative to the investment’s cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment, and the result is expressed as a percentage or a ratio. 

The return on investment formula: 

Return On Investment (ROI) = (Gain from investment - Cost of Investment) / (Cost of Investment)

In the above formula, "Gain from Investment” refers to the proceeds obtained from the sale of the investment of interest. Because ROI is measured as a percentage, it can be easily compared with returns from other investments, allowing one to measure a variety of types of investments against one another. 

Based on the price of investment at $1,000.00, the immediate recurrent investment return is 6% or 1.5% per year (Conditions apply).

At every 1st Jan, 1st Mar, 1st May, 1st Jul, 1st Sep & 1st Nov, investment return of $10.00 would be credited directly into the investor's designated local bank account. If the investment is not made 2 calendar months prior to the pay-out, the payment would be pro-rata.

If a full year investment is maintained, the total pay-out would be $10.00 x 6 = $60.00. ROI = $60.00/$1,000.00 x 100% = 6%.

If the ward bed is not rented out during the preceding period, the total pay-out is reduced to $2.50 per 2-month period. If the ward bed is not rented out continuously for one calendar year and a full year investment is maintained, the total pay-out would be $2.50 x 6 = $15.00. ROI = $15.00/$1,000.00 x 100% = 1.5%.

The principal value is maintained at all times. The principal value can be retrieved via the investment divest policy.

Sale Price

Each treaty is private and confidential and determined individually; but all treaties do follow the guiding principles as listed in this blog.

The sale price of each ward bed type is taken to be $1,000.00 for simplicity of calculation of returns. If the finalized sale price is a multiple of the above said sale price, then all numbers deliberated henceforth are merely the same simple multiple of this said sale price.

The price is fee-simple and estate-in-perpetuity, until it is closed by mutual agreement according to the terms and conditions of the signed contract.

To determine the sale price of each ward bed, it is marked at 50 times that of the gross collectible from the bed renter.

For example, if the ward bed is rented out to a client at say, $2,000.00. The sale price of the ward bed would be marked at $100,000.00.

Even in the event that the said ward bed is not occupied, the said investment returns would still be given.

Bed Classification

Standard Ward Class A1 

Single air-conditioned room attached bath room and toilet

• television 
• telephone
• fully automated electric bed 
• choice of meals 
• day bed for accompanying guest at additional charges 

Standard Ward Class B2

2-bedded air-conditioned room attached bath room and toilet

• television
• telephone
• semi-automated electric bed 
• choice of meals. 

Standard Ward Class B4

4-bedded air-conditioned room attached bath room and toilet

• television
• telephone
• semi-automated electric bed 
• choice of meals. 

Standard Ward Class B6

6-bedded naturally ventilated room with shared bathroom facilities

• semi-automated electric bed 

Standard Ward Class C

10-bedded naturally ventilated room with shared bathroom facilities