Jul 17, 2021

Cory Diary : The Waiting Game - Dividend Investing

If you are thinking about holding on to the share to collect dividend long term then today Diary is not about it. I have mentioned many times the price of not being in the market. If we use absolute proportion in percentage term say 1 year is 6% yield. 5 years roughly 30% cost for staying away from the market. Therefore is quite risky strategy to play as it can be equivalent to a self create major crash to oneself.

However, there will be times market is so irrational that you wish to buy low to improve your future returns. This happens when there is great fear in the market. Even if one can overcome it, you must have the money to execute it. And this is a dilemma.

Here's an interesting chart on iReit global on the March'20 rout of the market for a fundamentally strong stock. Probably 50% discount. Why people sell after looking through the hindsight mirror is really amazing. What is damn wrong with this Reit stock which we are suppose to collect dividend that people sell at such a low price other than broad market issue.

Interestingly, the best opportunity happens when we could tap on some reserve funds just enough to push us ahead. For example I could reduce my housing installment buffers from 3 years to 2 years. Since I have such fund park in SSB, I would need to rationalise what I could lose doing that. It needs to align with better rates so that I can get them back later.

Releasing fixed deposits are obvious way other than saving. So maybe the best time to retire is when you can get your golden handshake or retirement package. The money has to come in time too. Very Risky ? Maybe so. Dyodd. Since every crash is different. Ideally you have some money lying around. Borrowing maybe interesting option but doesn't seems to align with my upbringing if is for stock market.

Rich ones may try to sell their home quickly if the property is still holding up well and channel the fund to stock market. Savvy ones may try margin borrowing. What are my options ? Maybe a fund that is available due to speculative trading. Is where we cut loss on our long quickly when there is market rout. What others ? 

Will the above chart happen again. You bet it will. Maybe investors will get smarter. Then it can be due to someone being force sold. And that can easily happen when we do leverage in stock market even on fundamentally strong stocks like Ascendas, DBS etc. People just go haywire in market crash. And is a Heaven for dividend yield player.

Articles in this Blog is personal take and educational purposes only. Reader should seek their own professional help when making financial decision and be responsible for their decision.

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