Cory Diary : Cory's Investment Insights

Emergency Fund

Personalized Emergency Fund Calculation:

Individual Circumstances: Emergency fund needs vary based on personal circumstances such as age, job stability, housing loan, and other financial obligations.

Expense Coverage: While experts recommend 3 to 6 months of expenses, this may not be adequate for everyone, especially those closer to retirement age or with significant financial commitments like housing loans.

Long-Term Considerations: The emergency fund should be sufficient to cover expenses until the investment cashflow can reliably support your needs. For example, if it will take 6 years before your investments can cover your expenses, a 6-year emergency fund may be more appropriate. 

Housing Loans Impact:

Significant Financial Obligation: Housing loans can greatly impact the size of the emergency fund needed. A $1M home with a $5k monthly payment requires careful consideration.

Depleting Emergency Funds: Paying off a housing loan with emergency funds can leave you vulnerable. It's important to balance loan repayment with maintaining a robust emergency fund.

Income Streams:

Dependence on Income: If your financial plan relies on rental or dividend income, these should not be counted as emergency funds since they are intended for future needs.

Economic Stability: In regions with generally stable economic conditions, like Singapore, the likelihood of finding work is higher, but still, one must be prepared for the worst-case scenario.

Investment Risk

Young Investors and Risk:

Risk Tolerance: Young investors are often advised to take higher risks because they have time to recover from losses. However, this advice must be tailored to individual financial situations.

Critical Funds: For young couples, a significant sum like $100k might be needed for major life events (wedding, home, children). Losing this in high-risk investments could be devastating.

Weighing Risk vs. Needs:

Early Financial Milestones: Before risking essential savings, consider the importance of the funds in question. High risk can be suitable for surplus funds, not those needed for immediate, crucial expenditures.

Risk as a Percentage of Net Worth: As your net worth grows, the proportion of your portfolio you can afford to risk might increase. However, early on, preserving capital can be more crucial than seeking high returns.

Starting Small

Slow and Steady Growth:

Initial Capital: Starting with a small capital doesn't mean you should take excessive risks to grow it quickly. Consistent, smaller returns can be more beneficial in the long run.

Compound Growth: Over time, regular savings and moderate returns can compound significantly, leading to substantial portfolio growth without taking undue risks.

Incremental Growth: As your career progresses, your ability to save and invest larger amounts will increase, accelerating your portfolio's growth.

Personal Journey:

From Small Beginnings: Many successful investors start with modest amounts and focus on steady, incremental growth rather than seeking quick, high-risk returns.

Consistency: Regular contributions and disciplined investing practices build a strong financial foundation over time.

Conclusion

Investment strategies should be personalized, taking into account individual circumstances, risk tolerance, and financial goals. Emergency funds should be sufficient to cover unexpected situations without compromising long-term financial security. Young investors should balance risk with the need to preserve critical funds for life milestones. Starting small with a focus on consistent growth can lead to substantial long-term success.

Cory Diary

2024-05-28

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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 : Equity Portfolio Review

Equity Portoflio - 2024-0519

In this review, I'll provide a brief commentary on each counter.

REITs

There are 9 REITs in the portfolio after selling off United Hampshire. Ascott Trust yields look quite interesting. If there is a correction, there may be consideration to add a little more. This is despite strong bank yields, planning for necessary transition options.

Sabana Trust is in a more complicated situation as its share price could go either way due to ongoing internalization complexity. With current cash conservation needs, it seems a luxury to have exposure to this in my portfolio at this time. It poses elevated volatility risk. The pro is the strength of the REIT, which may mitigate some risk, but it's uncertain how much it can help.

Elite Commercial REIT is in a deep drawdown due to the ongoing UK macro situation. As the position is not significant in the portfolio and the REIT has mainly government tenants, I do not plan to relinquish the opportunity of a rebound if any. Currently, they aren't in distress and are well-capitalized from a recent rights issue. However, we can't say with absolute certainty there is no risk or surprise from what we don't know.

Mapletree Logistics Trust has recently been hit due to China exposure in their valuation and negative rental reversion reflected in it. Despite this, the REIT has managed the issue well. With management actions on how they position the REIT, it seems investors may take some comfort. Nevertheless, as an earlier article mentioned, asset sales to support income distribution are a fight against the Fed. They likely will pull through well. Planning for China macro-wise is much harder due to ongoing tensions between the powers. Technically, if we use MA 50/150, the chart has yet to reverse to an uptrend, so I will continue to monitor.

IREIT positions in the portfolio have been sized much smaller in proportion despite being popular among investors in foreign REITs. They have all the ingredients to be successful. This was the case before the interest rate spike and the Ukraine War. Unlike UK REIT, they are fortunate to have locked in their loans until 2026. Like most foreign loan exposures, the high rate spike and poor sector segment hit them hard.

Core Reits

There are currently 4 core REITs in the portfolio: AIMS APAC REIT, Ascendas REIT, Mapletree Industrial REIT, and FCT. They all have significant exposure to the local economy, which shields them quite well. Ascendas and Mapletree benefit from lower loan rates as well. Their well-managed hedging and fixed loans help keep their DPU stable.

AIMS APAC REIT used relatively expensive perpetuals before the rate spike, which tied them over well for the past years. With the perpetuals scheduled to expire, it may face much higher costs for their loan or perpetual rollover. Being a small REIT, I decided to reduce the position by roughly 40%+ to reduce portfolio volatility from top REIT allocation to the last of the core REITs. FCT is strong in suburban malls. They too face daunting loan costs over time. Nevertheless, it has a strong business, and I am happy to hold it through its current allocation.

US Stocks

Amazon, Microsoft, and Tesla roughly make up 3% each. They are all strong in their respective markets with world-leading businesses. Currently, they hold less than 9% of the portfolio in total. If opportunities arise, there may be consideration to expand in this segment. I am quite comfortable with what I currently have. Microsoft and Amazon are expected to provide a strong base support that will keep this group steady. Tesla is quite volatile but can have explosive upside if they execute their developing projects well. The hope is not to further inject fresh funds into US stocks unless there is a good rationale. The main reason is I already hit my 50s and view cash flow from dividend stocks as a key priority.

Banks

DBS and OCBC have outsized allocations in the current portfolio. UOB, which had a small allocation, was sold just before results. As mentioned earlier, they are a hedge against REITs due to high rates impacting them. So far, they have nicely filled the capital loss gap on the REIT side well—too well, as high rates continue to prolong. There is temptation to inject more funds into them due to the high yield they can provide over the REITs. What's more, they have a good business environment. Unfortunately, this could put the portfolio at higher exposure risk to one segment. Not my time.

Non-Bank Local Stocks

Venture, Sheng Siong, and Netlink NBN Trust. Venture is a test with a very small allocation. There hasn't been much investigation into it, whereas Netlink and Sheng Siong are more familiar. Both latter stocks are sized to support the portfolio if the economy goes into distress. There is no motivation to expand their allocation further.

The latest report from Netlink is within expectations but also reminded me there aren't catalysts out there yet that can mitigate their direction long term on cash flow. This can grow into a problem if not managed carefully. Sheng Siong is boring but awesome as usual. They have a lower yield; however, there are opportunities.

Cory Diary

2024-05-20

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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 : Sell in May and go away logic

As a dividend investor, this principle has never crossed my mind. It seems more aligned with a timer or short-term investment rationale. Coincidentally, many REIT and BANK stocks go ex-dividend in May. As you may be aware, stock prices typically drop upon going ex-dividend. This might give the impression that the local SGX market is down, especially for counters that offer substantial dividends in this region.

What makes this time particularly noteworthy is the market's response amidst an environment of inflation and high rate, where banks are performing well, while REITs have already rebounded from lows. This trend holds, with the exception of US REITs, which are experiencing a serious downturn.

The portfolio is invested in several markets, which can be categorized as follows [positioned at the bottom right].

With REITs and banks combined comprising more than 76% (after selling off UOB before ex-dividend to raise cash), the portfolio was expected to experience drawdown symptoms as they went ex-dividend. However, the portfolio returns achieved another all-time high. Perhaps this is simply a positive market pump, but I foresee further potential in the banks as they report record profits this quarter.

Note : Top Left, Year 2022 drawdown but not as deep as Year 2020 Covid year which aren't reflected in the chart due to it occurs in the mid of the year which then closed up before the year ended.

Nevertheless, it's a good time to capture a snapshot of today for future review.

Cory Diary

2024-05-012

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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 : MLT Result Review

MLT is one of the smaller allocation in the portfolio which I intent to grow when opportunity arises. However, this is on the premise that the Fundamental of the Reit, the Returns of the investment and Risks are better understood before ploughing more and more into it each time. This review is a quick and dirty fast way to get a basic understanding too.

The Reits are relative large and seen recycling of assets in their managed properties during this high rate environment period. A possibilities of DPU support too. Currently 6.6% DPU Yield.

They are also exposed to Weaker China Environment. About 20% of the Reit. But if we include HK that's about 40%. They are well diversified across asia regions.

The result has been "well managed" looking at the footnote. Good thing about large branded reit. So the question is this sustainable. Currently NAV 1.4 which looks quite align to the traded price. Will they have more recycling to go ? Possibly.

Debt Management

Low cost at 2.5%. Quite surprising. No weakening in ICR.

Added 5/12 to better reflect debt profile

Conclusion

When i first start the review, I am quite concern with the HK/China exposure. And a quick reflex is a Hold of this counter. However, the financials, the size and the stability the management provided so far do bring some comfort that there maybe enough Risk/Reward ratio to ride the dragon returns. One thing to note is not sure how effective or duration on the recycling part as I am not familiar with this but I guess this maybe something to monitor and learn.

Cory Diary

2024-05-03

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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 : Sheng Siong Result Review

No surprises. Do well as usual. Operation data excellent. High cash level helps to boost their fixed returns which is quite substantial. Their total return in my perception typically lower than banks but strong stable returns. A good diversification from portfolio heavy in other sectors. A boring and steady company.

Foreign Operation

This is something like the growth engine of the company. Which may spring surprises one day.

They are very careful on the expansion not to derail the company profitability.

Dividend

Continue to grow. Annulised 4.13%. ( Local banks currently range between 5.5%~6.5% range )

It has the basic essential attribute and can do ok in poor economic situation. 

Cory Diary

2024-05-01

CoryLogics Invest Chat - No Coin, No Porn, No Penny ( Limited to Invitation )

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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.