Cory Diary : A Short Story for my Daughters - VC MA Contribution

To be frank I only learn this term VC MA quite recently. This refers to Voluntary Contribution to Medisave Account. Few weeks ago I tried out VC MA with $1K via mobile transfer. And today after reading another blogger doing contribution and as a reminder, I decided to add another $5K. The process is very similar to CPF Housing Refund which I blogged few months ago.

There are few reasons why I am doing this. 

Firstly, my MA is not max obviously and I missing out 4% returns without risk of capital technically for years. This week trying to find an investment return in the last week of December seems quite tough. Nothing looks cheap enough for me in the stock market despite my search for the past couple of hours. The market is as listless as ever. So frustrating.

Secondly, total S$6K contribution amount pale in comparison to the fund available for equity investment. What's holding me up is liquidity if I do need the cash which I find rather silly now.

Thirdly, unused amount of CPF MA will be passed on to family when I expired. 

(The remaining Medisave balance, after the payment of the last medical bill, will be distributed to your nominees upon your death. You can nominate those you want to receive your CPF savings by making a CPF nomination)

Fourthly, of-course CPF MA can be used for medical bills and for my loved ones. And for technical matters Tax Benefits.

Dear Daughters, this is the way. My legacy to you.

Cheers,

Cory

2020-1229

Cory Diary : Wealth Accumulation

Saving is key to wealth accumulation else whatever we earned is spend away. And if we get addicted, we could fall into debt spirals. Therefore to most families, we are often taught to learn to save when young.  Culturally we have been conditioned to save.

However people often do not realize that in order to save we need to earn. To put it simply, how much we earn gives us the needed runway to save. However, to most people like me that being a worker to earn monthly salary, it is the typical process that forms bulk of the earning.

We only have one life. How can we break through from here ?

1. Side hustle : Unless you enjoy doing this not easy. There is no risk to capital as salaried man unless you are defined in item 3. Is a temporary measure to help boost some saving but scaling is tough.

2. Stocks : Risks. You could lose your pants and set you back for years following tips or herds. A place where knowledge and skills are tested out together with lucks and experiences. This is a viable alternative income than doing business oneself.

3. Busines : Mentor or understudy in family business I would think will be great. Outside the bubble, risk of failure is high. Most are not fortunate to have the luxury to be born or work in a family business.

4. Gamble : The fact works against you. How do you think Genting and Marina Bay Sands survived on ?

5. Career : Generally getting a career in MNC or Gov related gives a good boost to your income. To top it off the annual bonus and benefits are much higher. This is a really good place to start.

6. Property : With ABSD and TDSR in force, a lot of cash has been held idle. A new generation of locals with only one property. For living and investment, one probably has to buy one with the largest affordable range and then scale down with the hope of making profit out of it. The alternative will be two private properties under separate names.

Not surprisingly item 5 is something I am most comfortable with. And here's how I got my First Million. Hard work and working smart.

However it took more than 30 years to hit my first million in Net worth considering we have to go through growing up, education, learning and working with starting salary. 

Less than 8 years to hit 2nd. It gets easier with time due to increase earning power and investment allocation. And that's when item 2 and 6 come in for me which are Stocks and Property namely. To do them we need to avoid pitfalls. Is not something we like to experience with, even though some time we may. So always risk mitigated.

Typically I go for things that are more transparent, more accountability and better recourse. I do not believe in hearsay and rather do my homework reading quarterly reports. Trust is cheap. And it took me slightly longer before I got into local property investment.

Whatever we do put health as first priority. This can be mental or physical. Else whatever we earn is for nothing. I have added one that it has to be ethical too.

Cory

2020-1227

Cory Diary : Assets Allocation 2020-1224

With the year coming to end soon, I want to provide finishing touches on my overall assets allocation. And this is with context that I will continue to spend more time oversea for a few more years before my first kid will starts schooling which I would then decide should they go to private and then international school or be back for good.

There are few good news and bad ones. The good news is that I have been informed about my year end bonuses and glad that it is better than last. Really Christmas Presents I told my Boss. To top it off there will also be shares which will only be vested in stages. While the value of the stocks have risen which result in smaller number of shares given out, prior years company shares already vested will see a good capital appreciation.

The bad news are my elder daughter got enterovirus after few days of high fever which finally subsides with rashes mainly on her lower limbs. We are still puzzle how she got it considering no one else had it. Now we need to make sure it doesn't spread to the newborn. So for this past week has been quite tiring to ensure this won't happen. The first born was smooth sailing. The 2nd birth was to give me the true experiences of fatherhood. But I would recommend Nobel Prize to anyone who can produce Vaccines for this Viruses.

Regarding my assets allocation, if we are to take a peek on Nov report ( link ) , the pie has increased with stronger stock market performance. Key changes are as follow.

Equity allocation has risen from 29.9% to 31.2%.  Bond has also increased from 7.7% to 9.5% which is temporary due to one of the investment is going to end soon.

Investment Account has reduced after I am able to find enough replacements for the funds from AGT which was suspended for delist.

Closely related to it is my saving account which has seen some reduction due to CPF Housing refund completion. I have also tried out VCMA and still deliberating whether should I max out my CPF MA. Keeping in mind of year end salary and bonuses coming in soon which will expand my saving. I will probably do in stages over a few quarters if decided to proceed.

To top it off, I have match 3K to my newborn CDA account. I will probably not add more before I have my own CPF accounts manage right.

Merry Christmas

Cory is now a year older ...

2020-1224

Cory Diary : Expenses Year 2020

As the year come to a close soon, is a good time to estimate my expenses for the year. Previously I blogged about my expenses in Year 2019 which is kind of "shocking". 

This year the expense is quite bewildering for Year 2020 too recording more than $140k for me alone excluding my wife credit card and cash expenses. There is a large portion due to Housing instalment. Maybe near to 40% which is smaller this year due to higher total expense. Even then this is quite huge considering the average local income for the remainder of expense size.

However interestingly, my Net Worth continues to keep up despite the spending. One of the key component that manage to help support it is due to stock market dividends or net gains supplementing my income. The other will be the principal of the home loan is counted towards my Net worth. And finally year end bonus if any. So it doesn't look like I will feel completely safe without a job. And to acknowledge help given, Baby Bonus do chip in some.

Major Expenses

Year 2020 is larger due to 2nd baby. Even though we buy fewer items as she can use the leftover from our first, there are items we cannot forego. One of the key item will be month long confinement period ($12k) which I reward my wife for her labor in delivering our second child ($6k). And then we have additional nappies and more expensive ones for my elder as she grows. My wife is very particular that it has to be made in japan to avoid allergy for their sensitive skins.

The other major expenses are taxes which I help to cover for is my wife income as well. Our combined taxes are "frightening" LOL for an average couple like us.

As usual, I take it as a responsibility to provide my parent allowances. It is a big ticket item which I would not reduce as my family grows as their expenses will not change significantly due to them. 

As said earlier, housing expense is the largest and that is because it consists of two components. One is the interest expense and the other the down payment of the principal. I am still deliberating should I include both but they do hit my cash flow. So read my expenses with context as we included both. To be frank  I am not perfectly consistent here as we do not include insurance expenses and it does has returns. I also do Not include CPF Housing Refund which is excluded from expense else it will be another balloon.

Finally this is followed by Food/Fruits Expenses which easily take-up more than $20k. This works out about minimum $55 per day for the family.

Cheers

Cory

2020-1216

Cory Diary : Misconceptions of Dividend Investing

From experiences that I had so far, here's the collection that one should watch out or be reminded on the misconception of Dividend Investing.

1. Yield is Everything

This cannot be right. If Yield is all that's matter, investment of such can be automated to the highest yield and nothing left for other lower risk assets. Does this make sense ? Money where got so easy to earn. Want to gamble, go Casino better because better odds !

In reality, one needs to filter out High Risk from the portfolio before allocation of different other risk levels before yield. As you notice, I do not have EHT, Lippo in my portfolio. High Risk Reits are a Time Bomb. Is a matter of when.

First Reit is managed out from the portfolio in Year 2019 with cut loss at 0.945 when the risk is not worth to hold. And that is at a year where the Portfolio has a Record Profit of 20% XIRR. A mindset of never ever feel rich to lose money.

2. Rights are bad for dividend Investing

Any old time Reit players will tell you there is good opportunities to profit from Rights Issue. And if we are to go this dividend path, one should not be feared of Rights Issue. Is it exactly this fear that allow people to profit from you.

In solid Reits so far such as FCT, CICT, Ascendas, Mapletree etc even without subscribing to Rights does not mean your DPU will be materially impacted. Do nothing can still be ok.

3. NAV Valuation

Can be quite misleading. One recent example is First Reit where their NAV is off rental income from the property. However how is the rental derived can be from complex negotiations between the Reit Manager and the Sponsor or the Tenants where there can be consideration for other compensations that is material. This is make worst if there is credibility issue with the Sponsor who artificially jack up the property prices to the Reit they controlled.

4. Gearing

The formula for Reit is Total Debts / Total Asset. Any other formula that you read from Quarterly, Half Yearly or Annual Reports are just to communicate a better result view. Another way to give the impression of lower gearing is through Preference Shares which is not counted into debt therefore one has to be careful.

5. Capital Gains

Dividend investing doesn't mean we lose out in Capital gain or loss. While the stock price tends to come down upon ex-dividend, due to constant earning of the underlying businesses, the stock generally will fill back the gap. And with ever decreasing rate, the attractiveness of profitable businesses can push up the stock prices. But one do have to remember they aren't tech stock and should never have such mindset on their performance. Like many stocks, they also float with the market tide but with varying degrees. There will always be good and badly run Reits.

6. Cost of Debts

Ability to raise fund with lower cost makes running a company much easier. So this helps in your stock selection when we are ranking similar companies except cost of debts !

Cory

2020-1213

Cory Diary : Dividend/Interest Nov Report

We are few weeks away before the year ended and I think is a good time to update where we are on dividend this year. There are a number of Preferential Offerings, Scrips, Merge and Delist. So to put the base comparison right, distribution from merge and delist are tracked separate as the amount is quite large and won't be meaningful or sustainable annually.

Therefore for below table for Accordia is only dividend from regular distribution. Ascott Trust distribution is a little tricky which I have accorded Ascendas-h tr cash compensation in year 2020, so will be excluded from Year 2020 annual dividend as well.

Do note as investing is fun for me, some of the counter can move in and out of the portfolio in large amount as I learn the rope through experience and experiment. So table 1 is by all means a reference capture at a particular point in time while dividends being collected through out the year. 

Table 1: Dividends in % of Year 2020 Sustainable Total Dividend

This year we see some some swings in the portfolio which I think my have help net some shares before Ex-dividend positively. However, the portfolio also suffers sizeable loss of dividends due to cap on the banks. Furthermore the rebates by Retail malls reduced the dividends of the portfolio as well.

Despite all this, glad to find that by end Nov, for sustainable dividend portion, the portfolio is already way past last year annual dividends. And this is done with the portfolio in good positive returns so far.

I have also bought more Bonds this week with growing cash level. So yield wise will pull the portfolio lower but I think good balance is important. The last time I did this we encounter Covid-19 turbulence immediately after. Hopefully we don't have to go through the same experience of Mar 2020 again.

Currently still busy making sure Year 2021 will have a good chance to beat Year 2020 at risk mitigated level. Considering current cash level, beating this year achievement will not be too hard.

Cory

2020-1206

Cory Diary : Performance Nov'20

In my earlier blogging which I mentioned that it is better for me to be in the Green than to widen the lead against STI with Portfolio still in the Red. And my wishes is awarded as such by end of October. The gap final close down to 15.7% which reflects remarkable STI returns within a short span of time cutting it losses just below 13% and probably single digit after dividends. My portfolio returns almost 2.8% in the black on the last day of the month.

If we look how the year started with Covid-19 and how the bleak the situation is, many people would be surprised that we could end in the black for STI. Nothing impossible. We shall see how it performs in Dec. Currently, after a good run, there is some correction.

 

What is hindering STI is probably Vaccines solutions in which countries are rushing them out in record time. The damage to the economy specifically to the Airlines are long term even if the economy recovers. I am also a little reluctant on Hospitality as they will need to do much more to repair their balance sheets. I would think some how we need to price in Virus risk into their stock price.

As for the laggards, Retail Malls which are quite cheap for those that support daily necessity. So this are ones which I am positioning. Others possible contenders will be SBS Transit, SATS and ST Eng. There is some trading play on the Banks but it will remains a key stake as I have emptied my STI ETF.

There are also a few others like MLT and MIT which I decided to KIV unless they comes down enough to improve their yield. I really likely to own them but the situation has to be right. Maybe I will kickstart with small positions if there is further reduction in their prices as AGT has make it way out of the portfolio after the 2nd tranche has been distributed.

Lastly I am tempted to return to Sheng Siong .... except that valuation is not cheap. Perhaps I need to be more patience. 

Cory

2020-1202