Cory Diary : Expensive Ventures

When embarking on our investment journey, we often experience moments of elation, whether from impressive returns on investments, a bolstered savings rate, or an unexpected inheritance. It's during these times that we may be tempted to dive into new ventures that could potentially be wasteful. In this article, we'll explore a few common pitfalls to avoid as you navigate your investment path.

1. Overseas Property Investments

Investing in overseas property can be an enticing prospect. However, before taking the plunge, it's crucial to consider the opportunity cost. Suppose you inject a substantial $300,000 into an overseas property investment. This could yield an annual income of, let's say, $15,000. Now, imagine if you had instead invested that $300,000 in a dividend stock, which could potentially generate a 5% yield. In this scenario, you would have earned $15,000 annually without the additional complexities of property management.

Moreover, if you remain committed to this venture for a decade, you would have missed out on $150,000 in potential dividend income. This calculation doesn't even account for the compounding impact, forex risk, or potential capital loss associated with property investments. So, it's essential to weigh the pros and cons carefully when considering overseas property ventures.

2. Premature Retirement

Retirement is a significant life milestone that many aspire to achieve after years of diligent work. While it's natural to dream of an early retirement, it's crucial to ensure you are financially prepared. Premature retirement, when not adequately funded, can have adverse consequences.

Consider an annual savings income of $30,000. Over the course of a decade, this amounts to $300,000 in total savings. However, if you had continued working and investing during this period, your net worth could have grown even further. Assuming stable income and returns from your investments, this $300,000 could potentially grow to $400,000 or more in missed net worth after a decade.

Retirement should be a well-planned and financially secure phase of life, where health and well-being take precedence. Rushing into retirement without adequate funds could lead to financial stress down the road.

3. High-Risk Dividend Investments

In the realm of dividend investments, stability and peace of mind are paramount. However, some investors are tempted by high-risk opportunities, such as foreign REITs or ventures in unfamiliar territories. While there's potential for higher returns, these investments come with added risks.

Foreign investments, especially in areas with different economic conditions and currency fluctuations, can be unpredictable. If these ventures don't align with your overall investment strategy, they can set you back significantly when things take an unexpected turn. The hit on your capital assets can be substantial, impacting your income for years to come.

In conclusion, while there may be other pitfalls in the world of investments, these are three key areas to watch out for. Investing wisely and staying true to your financial goals can help you achieve long-term success. Remember, it's essential to seek professional guidance when making financial decisions and to take full responsibility for your choices.

Cory

2023-0926

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Portfolio of Mainly Reits and Banks YTD Performance '23

Reits in the Portfolio

Investing in Real Estate Investment Trusts (REITs) can be a lucrative endeavor, but it comes with its unique challenges. In this article, we will explore the dynamics of REITs in investment portfolios and address common misconceptions.

Understanding REIT Vulnerability to Rate Hikes:

REITs, like any other investment, are influenced by market forces, including interest rate fluctuations. One key factor to consider is that rental contracts for REITs are often signed for years before renewal. Even if a REIT has rental escalations and triple-net leases built-in, rising loan rates can still affect their performance. It's worth noting that non-REIT companies can also face similar challenges due to loan costs.

Adapting to Changing Market Environments:

Some REITs face fundamental changes in their market environments. For instance, the rise of Work From Home (WFH) arrangements in the United States has impacted US Office REITs. In Singapore, there are a few US REITs with significant exposure to this trend. It's crucial to monitor such changes and be ready to adjust your portfolio accordingly. 

Performance of Different REIT Categories:

In the current environment, certain REIT categories have shown resilience. Local Retail Mall REITs and Industrial REITs have performed above average. Foreign Data Centers and Business Park exposure, such as Mapletree Industrial, have also weathered the storm. Year-to-date (YTD), many REITs are on the path to recovery from the rate spike costs incurred in 2022.

The Challenge of Foreign Exchange:

However, not all REITs have fared equally well. Take, for example, Elite Commercial REIT, which is UK-based. Despite strong tenant occupancy and double-digit positive rental reversion, foreign exchange fluctuations and loan costs have significantly impacted its distribution. When investing in REITs with significant overseas exposure, careful sizing and risk management are essential.

Dispelling the REIT Myth:

There's a common myth that US Office REIT crashes therefore all REIT are lousy investment using a few examples and paint a dark picture on the entire industry. This bias view is misleading, as many companies fluctuates on downtrend during rate hikes for the short term too. It's important not to oversimplify market dynamics. Evaluating a REIT's performance over a single year doesn't provide a complete picture.

Diversity in the Local Market:

The local market offers a wide range of REIT options. While Capitaland and Mapletree family REITs are popular choices, there are numerous others to consider. For example, Ascendas has delivered impressive returns over the past two decades, even at its current valuation. While past performance doesn't guarantee future results, it's essential to understand that rate spikes take time for REITs to digest and can present buying opportunities and attractive capital gain or yield on cost in the future.

Only few are badly hit due to US Office Exposure. A good example of typical reit that many local investors buy are Capitaland or Mapletree family. They form bulk of many local investor interests and form components in STI Index today.

A good example will be Ascendas as below. More than 300% returns excluding dividends over 20 years even at current fallen price. While we cannot be certain Ascendas will continue to perform in the future we should understand rate spike takes time for Reits to digest and could be a good opportunity for one to collect. In no way we are recommending any Reit stocks and one should dyodd.

More than 300% capital gain over 20 years excluding strong dividends

Banks in the Portfolio

Incorporating banks into the portfolio has been a strategic move. DBS and OCBC, for instance, have demonstrated resilience, benefiting from high interest rates. They are poised to continue performing well in the medium term. Allocating a portion of your portfolio to banks can serve as a hedge against other segments, while still providing attractive yields.

Challenges in Bank Diversification:

Unlike REITs, which offer a diverse range of options, the local banking sector has limited choices. This concentration risk should be careful when expanding more into this sector. Recent forays into other segments, such as Venture, have posed challenges, reinforcing the need for caution and thorough research. The plan will then be to only further expand into banking sector when opportunity arises. This could mean reserving more dividend cash in the meantime.

Portfolio Performance

Year-to-date, portfolio has achieved a 9.3% XIRR return, with Q3 '23 expected to show a slightly better improvement. REITs are gradually recovering, and their returns may expand as new contracts are negotiated. The only caveat remains foreign exchange volatility, which is beyond our control.

In conclusion, navigating REITs in your investment portfolio requires diligence and adaptability. Market dynamics are complex, and one must not oversimplify the factors influencing REIT performance. Diversification and careful sizing are key strategies, whether you choose to invest in REITs or explore the banking sector. Remember that past performance is not indicative of future results, and it's essential to stay informed and make well-informed investment decisions.

Currently, I am pretty comfortable with what I have in the portfolio. And the feeling today is we should have a better performance before the year ended.

Cory

2023-0902

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Net Worth Tracking 2023-08

The longest 16 months. Net Worth has stayed flattest ever in Current High Inflation Environment. However, the losses in Equity market of last year is likely behind us, so far. Touchwood ! In this article I documented what I do so far that affects my Net Worth trend currently.

T-Bills

What I did is to continue be vested in market while expanding allocation in T-Bills and SSB during this flatten period. By now, it looks to me it could be time to unwind T-Bills in alternate staggered month fashion. What I mean is not to renew in first batch expiry but on the next in alternate step. This will spread out with lower allocation over time while allocating more cash move into Equity Market.

Banks

After thinking through, we still do not have any idea how long the high rate environment will last even though is near it's peak. Who know this could last much longer. This could lengthen Reits recovery and more benefits the bank longer. And when rates finally lowered, the bank will enjoy it too. In that perspective, bank segment seems to be a better play in-addition to 6% yield we could be getting from local banks. This is on the back of 50% earning retention without needs to face rights issue constantly in current environment.

So have we found ourselves the holy grail in our investment pick ? Let's no hoodwinked to think there is no downside. With China seems to be imploding economically their property segment has never been worst. We could see recession spreading to our shore. This may have some impact on the stock market and if worsen could spiral down. If this happen, neither Bank nor Reits will do well.

Therefore, in local equity market scene, Banks are likely the better bet than most with sustainable income and dividend. So the Portfolio continues to expand and right now hold more than 25% in bank allocation. This could grow to 33% as they don't look expensive at all. Nevertheless, sizing for balance mental state is still important to sleep well as market is in constant change.

Managing Volatility

The larger the volatility the smaller the allocation using commonsense. Which is what I did when Tesla ran up significantly. In hindsight, we could have sold more but that could mean the counter impact to the portfolio would be so small it wouldn't be worth our while. With the cash raised, we probably could do a forex gain to SGD with recent USD moves, and then buy local. Is quite rare that I have good luck in forex being local.

Finance

What do I think by end of the year. One thing likely will be smaller bonus and not much salary adjustment. Later part is probably what I wanted, to last longer if you understand what I mean ! The pandemic has implanted many of us the seed of laziness at home. Question is when will this be reflected in the broader economy. I mean something has to give, right ? hmmm

Probably those that could not adapt or manage their staffs will see upheaval change in their respective industry where companies get replaced by passionate start-up which are running much more efficiently and effectively. How can we tap on this ? Difficult to execute for most people I guess. One thing for sure my Net Worth aren't growing fast enough. Maybe is a good thing to have when after decades of investment, monthly salary saved slipping out finding it harder to push for the net worth growth as it gets larger.

Investment

Fortunately, the base of the pyramid namely CPF, T-Bills, SSB ... or even rental income etc which are positioned way earlier fulfilled the basic living needs. See link Pyramid. This doesn't end there as we still need to constantly review the absolute amount is still meaningful after each year. If we execute properly over decades, the ever increasing basic amount over time will become larger while in percentage term be smaller as the portfolio grows, if it does grow.

What this mean is every cent earned after expense can be plough into Equity theoretically or psychologically keeps the investment size intact in down market through buying lows. Solidifying future growth of the portfolio. Sounds easy huh. Till you try to buy in ever lowing market and tearing your hair out. A believer of biting multiple small chunks to survive psychologically one has to be.

Snake Oil

Before ending out. Be aware of half smart thoughts. Not just me ok ! Commonsense tells use that 100 years of S&P500 performance may tell us the future performance. I am sorry to say this is the most dangerous statement because 100 years ago performance can have outsize influence when you annualised S&P500 returns. Is not like that you can have a time machine to go back 100 years to put a dime into your investment account. You can't, and therefore it does not translate to future returns.

Cory

2023-0828

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Compounding with Dividend Investing

Often the advise is to let you children invest as early as possible. But no one teaches us how to do it for them properly. The problem compounded when we based on investment on our own ability or disability.

Chance n this episode from - Our Rich Journey video - 

SECRET Revealed! Sisters Turn $16,000 to $65,000 in Stocks! Millionaire Family's Money Talk Exposed!

Thought this is quite amazing journey for their kids even when they have forgot about it. Maybe investing is that way !

https://youtu.be/qWp_4rXFWx0

Cheers

Cory

2023-0811

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Mapletree Log Trust Review

This post will be a start of my quick review on each Reit stock I am holding for this earning season results. The intent is to be my notes.

1QFY23

FIRST QUARTER ENDED 

30 JUNE 2023

YoY 3.1% reduction in NPI reflecting in YoY 13.4% increase in borrowing cost and foreign exchange. Into the mix is host of forex considerations and financial derivatives between the YoY comparison including perp, tax write back etc. Large gap if we look into operation return is -24.1% YoY. In net, there is higher distribution due to capital returns as well that tip it into higher distribution this Q. DPU flat. Trying to go through the Quarterly report is quite daunting tasks.

To simplified my perception, the DPU looks ok though not as high as Ascendas, MIT etc. There is PP/PO and there will be slight reduction in DPU assuming all else being equal which is typically not in every new quarter reporting.

In summary this is what I got into below table.

There are enough Pro to provide conditions to manage debt and high interest rate/hike. The yield is ok based on the DPU. There could be forex risk from China & HK combined. Not saying JPN and other developing economies won't. 

The comparison QoQ and YoY, tells me the business impact stabilizing this Q compared to previous Quarters.

Finally, the DPU may move up/down due to capital gains, issue unit etc however I feel we should not see significant move down more than 3~5% with the recovery, new divestments and acquisitions. This is up to the manager to manage them to ensure we stay above. A hallmark of quality manager which they are usually. We shall monitor.

Cory

2023-0731

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Reflections on the US Market and Singapore Investments

US Market ( Nasdaq )

In recent times, the US market, specifically Nasdaq, seems to have completed a significant run-up. Despite Tesla showing decent growth results, it experienced a correction on the second day. This reminds us that the market will always find a reason to sell. Microsoft also followed suit with lower volatility. Looking at the three-year performance of just these two US stocks, it appears that I am almost breakeven, with only a modest 15k gain if I were to consider all US shares held during the past three years. This experience has taught me that growing out of dividend plays in the SGX market is not as easy as it seems. Timing plays a crucial role in the US market, and its wild volatility can lead to valuation fluctuations with each reporting or news release. Consequently, it is wise to avoid chasing stocks, especially when there are no or little dividend gains for holding them long-term.

Singapore Market

On the other hand, Singapore banks have experienced some revival due to recent Fed hawkishness, balancing out the hits on Reits. I have observed that the recent rights issue on iReit and Aims Apac Reit have been profitable, but the discounts are not as substantial as in previous years, resulting in less impressive gains. My current allocation is as shown above, with some USD cash remaining from earlier sales. Given the current lower US rate, I am undecided on whether to hold it until the next bottom cycle and park it in a high-interest rate account or convert it back to S$.

As I review my equity portfolio, it is becoming harder to rotate stocks, particularly since Fed rate hikes may have already peaked. The sell-off in Reits, however, presents a promising opportunity for investors as we could see significant capital gains alongside regular dividends in the future. I plan to maintain a cash reserve for the last one or two rate hikes or potential recession sell-offs, if any. This strategy could lead to another record-level annual dividend, and the opportunity is quite apparent.

Passive Income Reporting

Additionally, I've noticed a new trend in my financial planning that better suits me. I have shifted away from reporting Net Worth Pie Chart segment allocations to focus on Passive Returns ( Non-Salary based returns or other returns). This change comes from the realization that using asset methodology doesn't directly help me with my expenses. However tracking Passive Income gives me a gauge on income once I retire. Currently reporting excludes my partner.

Using the listed amount in the table, I have a good idea how they fit into my expenses. And how much I need to grow or control.

In the past three months, I have invested more into T-Bills, primarily adding an additional $2,350. There was also a slight increase in my CPF investments, though I am cautious about doing so since I am nearing 55 to fit my personal plan. I've learned to avoid this unless there is a significant boost in cash levels from an euphoric market. Please note that CPF is not tracked in this table and is currently treated as a bonus retirement amount at 65.

While there have been upticks in equity dividends from rights issues, I've sacrificed a significant amount of cash for safer investment allocations in the past three months. Currently, I am monitoring my cash levels carefully to ensure my T-Bills are adequately spread out to support property loans or meet any cash needs comfortably.

Overall, my experiences in the US market and the shifts in my investment approach have provided valuable lessons, which I hope will continue to guide my financial decisions moving forward

Cory

2023-0724

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Managing Volatility Emotion

Managing Emotion

Emotions can have a detrimental effect on average investors who have worked hard to build up their portfolios over a lifetime. These investors typically have a monthly income ranging from $4,000 to $6,000. Through frugality, investments, and perhaps even inheritance, they may have accumulated a million-dollar portfolio after 30 years of employment.

However, when the global financial market experiences a downturn, these investors can face significant drawdowns, sometimes as much as 50%. This means that they could see half of their lifetime of effort evaporate, or $500,000 vanish into thin air. When portfolios experience such losses, it can be financially devastating if investors are unable to maintain their composure. Assuming the fundamentals of the portfolio remain intact, realizing these losses can be detrimental to one's financial well-being.

To manage these challenges, diversification becomes crucial. I personally employ a diversified portfolio consisting of property, stocks from SGX/US markets ( 15 - 20 stocks ), pensions, SSB/T-Bills/FD, as well as funds in my Multiplier and investment accounts. Throughout my investment journey, I make adjustments to the allocation of these assets to effectively manage my emotions and, hopefully, improve my ability to overcome them.

Successfully managing emotions allows me to adopt an investment mindset even when the market is experiencing a drawdown. This mindset enables me to seize investment opportunities. It is important to be mentally prepared for such scenarios and be willing to make necessary adjustments.

Conversely, during bullish market conditions, it may be prudent for me to accumulate cash reserves, known as a "warchest," if the need arises.

In conclusion, I wanted to share these insights to encourage thoughtful reflection. Cheers to overcoming the Monday blues!

Cory

2023-0717

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : 1st Half 2023 Dividend

As we reach the halfway point of 2023, it's time to assess our dividend performance. Over the past few months, we have seen several REITs issuing private placements or rights issues, which has resulted in some of the REIT dividends being pulled into the first half of the year. Consequently, we can expect a lower score in the second half.

Note : Duel Scale Chart

Despite this, the overall dividend performance has reached a new high. I have recently subscribed to shares in Aim Apac and plan to do the same for iReit. Year-to-date, the portfolio has achieved a return of over 7% XIRR, mainly driven by the rebound in stocks such as Tesla, Microsoft, and REITs. However, looking at a two-year perspective, the foreign REITs listed on SGX in the portfolio have not performed as well, and their dividends have fallen short. One of the key reasons behind this is the strength of the Singapore dollar and the decline in office property values in those countries.

Cory

2023-0701

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Quick Snap on YTD Equity Returns 2023

The year 2023 has been an interesting time for my investments, with a focus on FD likes, SSB and T-Bills while neglecting CPF. In light of the challenges faced by dividend stock investors last year, I have been diligently monitoring my returns this year. Personally, I believe that diversification remains crucial for long-term success, as it allows for a stable portfolio that helps me maintain a calm and steady mindset, even if it means potentially sacrificing higher returns in the long run.

Investments in US Stocks

One area that has been particularly fruitful for me this year is the US stock market. However, I am still in the process of identifying my third stock there. I must admit that it might be a bit late to make a move, considering the significant run-up the market, particularly the Nasdaq, has already experienced.

Portfolio Returns YTD

Here are the Year-to-Date (YTD) returns of my portfolio as of December 31, 2023. Do note the YTD Return percentage is against the stock allocation and not portfolio level returns.

Impact of Inflation and Fed Decisions

Recently, the inflation report was released, indicating another significant dip in rates. This leads me to believe that the Federal Reserve (Fed) is likely to pause, which, in turn, may drive the REIT market higher in the coming weeks. Additionally, if the economy can effectively mitigate any recessionary impacts, the banking sector is expected to benefit as well.

Conclusion

As I reflect on my investment strategy in 2023, it is evident that a cautious and diversified approach has served me well. While the US stock market has been a source of positive returns, I acknowledge the importance of thorough research and timing when entering such markets. With an eye on inflation and the decisions made by the Fed, I remain optimistic about the potential for further gains in the REIT and banking sectors.

Cory

2023-0614

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Portfolio Updates

Introduction

In the current high-interest-rate environment, various Real Estate Investment Trusts (REITs) have begun raising funds. While the reasons behind these actions vary, one potential factor is the possibility of earning fees from these transactions for REITs. However, it's important to note that the exact motivations of the REITs and investors may differ, and a comprehensive understanding requires further analysis. Considering this situation, it may be worth exploring whether regulatory measures, such as requiring a significant shareholder consensus (similar to an en-bloc sale), could be implemented. Additionally, it is crucial to ensure that any deals undertaken by REITs are truly accretive.

Strategic Deals

One notable example is the recent deal executed by Mapletree Industrial Trust, which leveraged low-cost funding from Japan to acquire local properties. This approach appears to be a sensible strategy, allowing the REIT to make the most of favorable borrowing conditions while expanding its portfolio. Another REIT worth mentioning is Aims Apac Reit, which maintains transparency by openly communicating its intentions and strategies. It is worth noting that a significant portion of the funds raised by REITs is allocated for future Asset Enhancement Initiatives (AEIs), which is a valid allocation given the chairman's personal investment in the REIT when the share price dropped. These recent market conditions have displayed considerable volatility. As for iReit, the right issue seems straight forward accretive deal based on proforma detail. This will help reduces concentration in Germany.

Evaluating Accretive Deals and Dilution Concerns

Interestingly, some REITs provide explanations for the dilution of their distribution per unit (DPU) resulting from share dilution. This raises questions about the necessity of such explanations, as accretive deals should ideally enhance overall value for unitholders. 

Portfolio Adjustments

In terms of my own portfolio adjustments, I have initiated the process of increasing back Ascendas, Sheng Siong, Mapletree Industrial Trust, and Aims Apac, alongside diversified investments such as Microsoft (MSFT), and Banks. Conversely, I have decided to release my holdings in CDG back to the market.

As always, readers are advised to seek professional assistance and take responsibility for their financial decisions.

Cory

2023-0607

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Navigating Crisis - Net Worth

The COVID-19 pandemic brought forth unprecedented challenges, impacting economies and individuals' net worth worldwide. As I reflect on my own financial journey, I can't help but recognize the profound influence of property value increases, strategic investments, regular income, and the responsibilities of parenthood on my net worth during this crisis. In this article, I will share my experience and highlight the significance of these factors in shaping my financial well-being.

Real Estate Market Challenges and Surprising Property Value Increases:

Like many others, I faced uncertainty during the pandemic, particularly in the real estate market. However, amidst these challenges, a remarkable trend emerged - property value increases. As I owned residential properties in desirable locations, I witnessed firsthand the unexpected appreciation in property values. This surge greatly contributed to the improvement of my net worth, as individuals sought larger living spaces and took advantage of favorable mortgage rates during the crisis.

Mitigating Volatility through Diversification:

Diversification played a pivotal role in safeguarding my net worth amidst market volatility. By diversifying my investment portfolio across various asset classes, including real estate, stocks, and bonds, I minimized the impact of losses in one sector while benefiting from the property value appreciation in another. This strategic approach not only stabilized my net worth but also provided me with opportunities for growth during uncertain times.

Cash Reserves, Emergency Funds, and Regular Income:

Another crucial aspect of protecting and growing my net worth was maintaining adequate cash reserves and emergency funds. The availability of liquid assets provided me with a safety net, enabling me to handle unexpected expenses, job instability, or business disruptions caused by the pandemic. However, it is important to note that regular income from salary played a significant role as well. Despite the challenges in the job market, having a stable source of income allowed me to maintain financial stability and meet my ongoing expenses. The combination of regular income and strategic investments helped offset any stagnant growth in non-productive assets, ensuring a positive net worth trend.

Parenthood: Balancing Expenses and Prioritizing Future Security:

Over the past four years, the addition of two children to my family significantly impacted my overall expenses. The responsibilities and costs associated with raising children, including healthcare, education, and daily essentials, necessitated careful financial planning. While these expenses undoubtedly had an impact on my net worth, they also brought immeasurable joy and fulfillment. It became imperative to strike a balance between providing for my children's needs and ensuring long-term financial security.

Adjusting Financial Strategies and Priorities:

Parenthood prompted me to reevaluate my financial strategies and priorities. I became more focused on building a solid financial foundation for my children's future. This involved adjusting my investment portfolio to include long-term savings and education funds. While these changes may have temporarily slowed down the growth of my net worth, they provided a sense of security and peace of mind, knowing that I was taking the necessary steps to provide for my family's future.

Conclusion:

The COVID-19 pandemic presented significant challenges to net worth growth, with stock market volatility and stagnant growth in various sectors. However, my journey taught me that property value increases, strategic investments, regular income from salary, and the responsibilities of parenthood all played pivotal roles in shaping my net worth during this crisis. By owning residential properties in desirable locations, I experienced firsthand the positive impact of property value appreciation. Diversifying my investments across asset classes, maintaining cash reserves, and having a stable source of income further fortified my net worth.

Parenthood brought increased expenses and prompted adjustments to my overall financial strategy. The costs associated with raising children, such as childcare, education, healthcare, and daily necessities, added a significant burden to my monthly budget. However, I recognized the importance of prioritizing my children's well-being and future prospects.

To manage these increased expenses, I implemented several strategies. First, I carefully reviewed my budget and identified areas where I could make savings without compromising the quality of our lifestyle. This involved cutting back on discretionary spending, negotiating better deals on necessary expenses, and seeking out cost-effective alternatives.

Additionally, I explored other financial instruments that could potentially benefit my children's future. I researched and invested in low-risk investment options that would gradually accumulate value over time. This approach not only allowed me to grow my net worth but also provided a source of funds that could be tapped into when necessary, such as for college tuition or other major expenses.

In conclusion, the COVID-19 crisis has highlighted the importance of various factors in shaping my net worth. Property value increases, strategic investments, regular income from salary, and the responsibilities of parenthood have all played instrumental roles in my financial journey. While facing challenges, such as stagnant growth in non-productive assets and increased expenses due to raising children, I have learned to adapt, adjust my strategies, and prioritize long-term financial security. Through careful planning, diversification, and a focus on both short-term stability and long-term growth, I have been able to navigate these uncertain times and continue on a positive net worth trend.

Cory

2023-0519

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Cory Diary : iReit Review

During a recent conversation on Telegram, someone asked me about the risks associated with iReit Global, a Singapore-listed Real Estate Investment Trust that invests in income-producing properties in Europe. While I had previously done some due diligence on the investment, I had put it aside and couldn't remember when. However, in today's economic climate, debt management is more critical than ever due to rising interest rates. While not all REITs have felt the full impact yet, those that have will likely need to weather the effects for several more quarters.

Fortunately, iReit Global's management has taken steps to mitigate risks, as shown in a slide shared by the company. They have identified and addressed risks such as interest rate risk, refinancing risk, and concentration risk. However, it's important to note that all investments carry some level of risk, and forex risk, in particular, may impact the REIT's earnings as it is listed on the local exchange and the SGD has appreciated by approximately 7-10%.

The COVID-19 pandemic has also impacted the real estate market, including the office segment where demand has decreased. While this may affect iReit Global's portfolio, it's important to note that their properties are located in Europe, where the situation may differ from other regions. 

Overall, iReit Global may be a suitable investment for those seeking exposure to European real estate, but it's important to consider the risks and monitor the REIT's performance regularly. It may be helpful to seek the advice of a financial professional to determine if this investment aligns with your investment goals and risk tolerance.

Cory

2023-0513

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Cory Diary : Property Curbs

Investing in property in Singapore has been a popular choice for retirement planning due to the rental income and capital appreciation it can provide over the long term. However, it's important to recognize that past trends and government policies do not necessarily guarantee future performance.

An analogy that can be used is that of a kettle whistle. When the pressure in the kettle gets too high, the whistle sounds, and the heat is lowered to prevent the water from boiling over. However, over time, more energy is added to the kettle, and it will boil again. This is similar to how government cooling measures can temporarily slow down the real estate market, but economic conditions, population growth, and consumer preferences can impact the market over the long term.

Personal experiences with property investment can vary. For instance, I have an investment property that I purchased more than a decade ago when the government introduced curbs. In addition to the possible rental income, the capital appreciation of my property has probably resulted in strong 6 digits in capital gain excluding costs.

However, it's worth noting that the current state of the market may not be ideal for investment. The Singapore Property Index, which tracks the performance of the residential, commercial, and industrial sectors of the real estate market, has risen significantly in recent years. While past performance does not guarantee future success, the high market prices suggest that property investment in Singapore may be more challenging than in previous years.

While property investment can provide benefits, it's important to consider the risks involved. There are costs involved in maintaining and managing a property, and rental income and capital appreciation are not guaranteed. Additionally, factors such as location, property type, and market trends can impact the performance of an investment.

In conclusion, property investment can be a viable option for retirement planning in Singapore, but it's important to approach it with a clear understanding of the risks and considerations involved. The kettle whistle analogy highlights the temporary nature of government cooling measures, but it's important to research the market, consider the risks, and make informed decisions based on your individual circumstances and experiences. While past performance and personal experiences can provide valuable insight, it's also important to consider the current state of the market and whether it may be too high to invest in.

Cory

2023-0506

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Cory Diary : Equity Portfolio - Rate Spike Readiness

As I review my portfolio recently, there are quite a few changes that I would like to share. First, I presented a customized radar chart to help me visualize the performance of each stock. However, if you find it hard to understand, you can skip it and go straight into the highlights of each stock that I am interested in. 

As an investor, I recently made some changes to my portfolio that I'd like to discuss. Firstly, I decided to sell all my shares in Mapletree PanAsia Com Tr. Although I had a net positive return after 5 years of investing, I wasn't happy with the company's recent merger and management's actions. Additionally, the mall asset in Hong Kong is performing poorly, which doesn't bode well for the company. Given the current macroeconomic situation in Hong Kong, I felt it was time to move on and raise some cash.

On the other hand, I've decided to build a new position in Mapletree Log Tr. Although the macroeconomic headwinds make me unsure about investing in logistics, this company has a strong track record and is likely to do better than its peers. The investible REITs market in Singapore is also quite limited, especially with the recent high-interest-rate environment. As a result, I'm prioritizing debt management for any new investments I make.

Mapletree Log Tr's total debt as of March 31, 2023, is S$4,877 million, which is slightly lower than the previous year. Although the weighted average annualized interest rate has increased slightly from 2.2% to 2.7% over the past year, the company's interest cover ratio of 4.0 times is still relatively healthy, indicating it has sufficient operating income to cover its interest expense. However, the adjusted interest cover ratio has decreased from 4.2 times in the previous year to 3.5 times in 2023. Overall, the company's debt level and leverage ratio seem manageable.

The company has taken steps to manage interest rate risk, with 84% of its total debt hedged or drawn in fixed rates. Every potential 25 bps increase in base rates1 may result in ~S$0.49m decrease in distributable income or -0.01 cents in DPU per quarter. Additionally, about 77% of the amount distributable in the next 12 months is hedged into or derived in SGD, mitigating forex risk.

Moving on to my stock holdings, I've added to my stake in Microsoft incrementally. While I used to think that we couldn't do without Google search, I've recently been impressed with ChatGPT and have reduced my usage of Google search. The recent acquisition of Blizzard further boosted the stock price, although it remains to be seen if this will help Microsoft. Nonetheless, I've learned that it pays to wait when investing in growth stocks, given their volatility.

I've also secured a position in OCBC to balance my portfolio's REITs exposure, as my portfolio currently has DBS as its top position. While UOB is also an option, I found  OCBC's yield more attractive. All three banks are currently in a strong position, but we have to be mindful that their P/B ratios aren't cheap. Thus, I don't plan to add a significant stake immediately to rival the top 5 positions of my portfolio. As I focus annually on building up my dividend size, I'll be diligent in my investment choices. Currently, OCBC's management is flexible on future dividends, which means that the recent dividend may be volatile depending on the business.

Next, Sabana Reit has been performing well under the current management, delivering good returns. However, given its small size, it may be prone to volatility. The latest report shows that the Reit's returns may be negatively affected by a spike in interest rates. Therefore, a significant portion of the portfolio position was sold. If the high rates persist and the impact is not fully reflected, the next report could be negative too. As a result, the decision was made to take profits when good opportunities arose. 

Capitaland Ascott Trust

Finally, I've initiated a position in Capitaland Ascott Trust, which appears to be a well-managed REIT with a diversified portfolio of properties across multiple geographies and solid capital management position. As with my other investments, I'm prioritizing debt management in this position as well.

I've also made some adjustments to my stock holdings by trimming the top positions of Ascendas and FCT to achieve adequate diversification at the current portfolio size.

Please note that this is not financial advice, and I encourage you to do your own research before making any investment decisions.

Cory

2023-0501

Cory Diary : Family Income Stress Test

In light of the ongoing COVID pandemic and the economic restructuring that has followed due to high interest rates, I am concerned about the possibility of both my partner and I losing our regular sources of income. As I am not as young as I once was, it may be difficult for me to find alternative income streams that are suitable for my level of experience, which is why I have been considering what would happen if we were forced into early retirement income before reaching the official age.

To better understand our financial situation, I decided to calculate the passive returns we would receive assuming that neither of us is working. 

To prepare for this scenario, I calculated the passive returns we could expect from our assets assuming we are no longer working. The table above shows our asset allocation and the expected annual returns for each type of investment.

Please note that the table does not include expenses such as property tax, loans, and maintenance. The figures presented are based on the minimum return scenario and possible current returns given the dynamic nature of the market. The maximum return is not relevant to our situation.

Assuming expenses in the range of $8k to $11k, we hope that this simple table provides a sense of our financial situation. As always, readers should seek professional advice before making financial decisions and take responsibility for their choices.

Cory

2023-04-23

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Cory Diary : Dividend 2023 Q1

As someone from a family with a history of below-average income, securing a strong financial foundation is a top priority for me to prevent future generations from moving backwards. This means avoiding risky business ventures or jobs that take up too much time, as it's up to future generations to build upon the progress I've made.

To achieve financial security, my focus is on a steady job with a good salary and saving as much as possible. Once I have built up a solid savings base, my next income stream will come from dividend investing, which I have been doing for many years. In the first quarter of 2023, I received $19,000 in dividends, as shown by the ex-dividend guidance from the stock exchange.

Year 2023 Q1 Ex-Dividends

Looking at the trend of dividends received over the years below, I am off to a good start for 2023 Q1 and hope to continue this success throughout the year.

Stock Dividends

Cory

2023-04-14

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Cory Diary : You only young once

It is important to note that the decision to retire is a personal one and depends on individual circumstances, financial goals, and personal preferences. However, here are five reasons to retire as soon as you can, as suggested by Azul:

Health: Stress can have a significant impact on our health, and working longer may exacerbate stress-related health issues. Retiring earlier can provide an opportunity to prioritize health and well-being.

Time: Time is a limited resource, and as we age, it becomes increasingly important to use it wisely. Retiring earlier can provide more time to spend with loved ones and pursue passions and hobbies.

Build Relationships: Building and maintaining relationships requires time and effort. Retiring earlier can provide more time to invest in existing relationships and build new ones.

Passion and Hobbies: Retiring earlier can provide the freedom and time to pursue passions and hobbies, which can bring joy and fulfillment to our lives.

Avoid Procrastination: The desire to work one more year can lead to procrastination and delaying retirement. Retiring earlier can help avoid this tendency and provide a sense of accomplishment and satisfaction in achieving retirement goals.

Cory

2023-04-10

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Cory Diary : Net Worth Allocation

Millionaire

In 2023, achieving millionaire status in Singapore after 20 years in the workforce is not an unattainable feat for those with reasonably good jobs and savings. The compounding effects of CPF and Property appreciation have made it easier to reach this milestone. However, missing out on either of these can have a significant impact on one's finances.

For those who have not yet reached millionaire net worth, this could be due to personal or family commitments. However, it is important to note that a million dollars today is not the same as 20 years ago. Assuming a typical job that allows for annual savings of $24k, a 3% annual increase with no investment or a 4.5% return on investment can make a significant difference over 20 years.

Below table tells you the differences in total after 20 years. 

Managing Risks

Investing in something that provides a 4.5% return, such as CPF SA at 4%, is a good base as the capital is protected. Reits, stocks, properties, SSB, and FDs are also options, but it is crucial to ensure that the principal is not compromised and to understand the cost of capital if investing outside of CPF.

Recent research on millionaires shows that equity is not the primary path to wealth. Cash, bonds, property, and business also play a significant role. As a salaried worker, it may not be possible to have a business, so it is essential to allocate net worth across different categories. The chart below shows a typical allocation for net worth, but it is important to note that movement between categories over time is necessary to arrive at this point.

Overall, achieving millionaire net worth is achievable with discipline and smart investment choices. Building a diverse portfolio and allocating net worth appropriately can help achieve financial goals and provide peace of mind in the long run.

Net Worth Allocation

Below is chart that I am tracking into. As a typical salaried worker I do not have business. There is minimal buffers in my computation so no sandbagging. What we don't see is the movement overtime between the categories to arrive at this point. For example one could have sold a property and realised large amount of cash previously. So read it as current status on allocation.

Chart allocation of Net Worth

Broadly speaking, this looks quite similar to peace of mind plan. I would like higher value in property allocation and this take it's own time to materialize as in possible property appreciates while other categories reduces through expenses when we step into retirement mode.

Cory

2023-03-29

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