Cory Diary : What Expenses to cut ?

Expenses have been talked about for some time among bloggers. We know saving is important. Ability to grow our income is even better. Taking care of our owns family cannot be forsaken. Neither can we do away with insurance.

What if I have multiple or huge loans and I got retrenched and I do not want it to be a life style changing event ? Here i will go about it. Total up my lifestyle expenses, work out the cash flow and finally filtered out the options.

EXPENSES

Monthly Expenses

Parent Allowances : 600 ( at minimum )

Hospitalization Insurance : 100 ( Saving/Life $250 )

Housing Loan : $1000 Interest ( $4000 Principal ) (arbitrary)

Utilities/Telco Bills : $200

Clothing : 200

Transport : 220 (Multiple of wife/kid will roughly be a car expense )

Food : 620

Cable TV : 50

Newspaper : 30 ( Prefer to read from paper. To me is quality of life )

Hobby : 50 ( Personal Interests )

Sports : 70 ( Exercise and Meeting with Friends )

Groceries : 180

Annual Expenses

Home Decoration and Appliances : 2000 (arbitrary)

Computer and Home Equipment : 1400 (arbitrary)

Travel : 2000 (arbitrary)
Medical : 500 ( Clinic )

Special Meals : $1200

This works out to  S$3912 monthly expenses after tax to support.


CASH FLOW

Monthly Cash Flow is important because some of our investments takes a longer term return path such as housing loan and "Saving" Insurance which requires monthly payments.

-3912 Expenses

-4250 Housing loan and Insurance
+2100 CPF Deduction to support home loan assuming i have a sizeable sum of cash inside.
+2600 Dividends ( Based on my current Passive Income )

I will need income of minimum $3462 monthly to support the above if I am retrenched. Luckily my dividends and CPF buffered the problem. Can you imagine without ?

What are my other big ticket options.

1. Find a job/ Part time that can fulfilled the gap at minimum. ie. Potential.
2. Married a hardworking wife ie. hmmm do i have to wait till retrenched ? Married up shiok right. Not an option since this negate the problem itself even though it is an option if you have options to choose a life partner. LOL
3. Increase my investment to double my dividends. ie Possible. Required large saving. I should work on it asap.
4. Get a cheaper home. ie. Down grade lah. Sian man. Move it lower. "Desperate" option. Can last some time.
5. Divest investment property. ie. Maybe can consider based on market condition. To sell at right time maybe important.
6. Borrow from Relatives and Friends ie. Not small sum ... Matter of principle not to tap them unless i have gone through desperate measures ie. Cut expenses ... and still not enough
7. Retrenchment Benefits. ie. Choose companies that values employee. This may mean going to Civil Service and MNC first in my early career. ie. if 1 year service equate to 1 month severance. 15 years is 15 months of salary. This can buffer many years of cash flow.

LIFE STYLE

Why am I not cutting down on expenses ? Back to the top. I want to maintain my lifestyle.
Need to anticipate to avoid this decision altogether in later life because is painful after a life time of work. So it comes to Saving and getting a job options. But I can't get another job if I am still with one now. That's left with me the only Option that is Saving. Obvious enough. :(

These narrowed to a few things I could focus on.

Saving => Increase Dividends
Extravagance must be avoided in my early years. Fewer travel. No car. Take bus. Fewer restaurants. No expensive celebrations. No smoking and drinking. No gambling. No expensive clothing. Don't buy unproductive things that will be kept in the store room.

Cash Flow => Increase Dividends

No wonder there is advise not to pay up our housing loan. Is the cheapest loan we can get to bump up dividends to support it. Cash is King only when we can use it.

CPF => Buffer home payments when needed. Meantime getting good interests and additional insurances.

Retrenchment Benefits => Good benefits is important. Choose your company wisely. And use the benefits to support your dividend income when possible. The last thing we want is to spend on holiday trip unless you have enough.

What others ? Tell me leh.

Cory
20160620

Cory Diary : Middle Age Crisis - do I have a plan ?

Remembered countless once running in the military with SBO, Helmet and Rifle. The run is like short 10 minutes but I swear is like forever. This is felt by most with varying fitness level. Reason being the pain to endure the gruelling training is agonizing. Time clicks at it slowest. After which when returned to bunk, an hour of rest time quickly past. Well I did feel good about my achievement after.

Time flies very fast when we are enjoying life. Most will likely earn good salary between age 35-45. And this is the time where we feel the power and the wealth generation capability of ourselves. The joy of family, car, kids, condo and vacations. But one thing fall to many folks especially those working in MNC. You can be made redundant at your prime for the very thing you have as the corporate renew itself with the business cycle with new blood and cost structure.

Life do not maintain an even course of distribution. It is up to us to even them out. Uneventful things happens to many. Just like sickness and death, it will comes. Unlike something beyond our control, fall of income or no income is a logical expectation that it can happen to many and not a rare occurrence. Therefore one must always be prepared for it. There is no excuse of not doing the required for the rainy days when we are in the height of earning power.

I always think how can I manage my life if I am to be retrenched. Do I have the needed skills to find equivalent salary scale job. Will I have to start from basic from economic standpoint since i may not be much better than a fresh graduate hire. Should I try to be housing agent or taxi driver ? Attempt some business ? Or am I capable to call it quit and retire for good. This needs to be planned out especially so for those with kids and non-working partner.

If one has done some homework, even a 50% saving of a 10K job may not be enough after 15 years of  good salary to maintain certain lifestyle. Once we know the limits and expectations, we understand the problem better and manage our budget wiser at our prime. So when the day comes we are prepared. Once we reach our goal, every day is a bonus.

For myself, I prefer to call it quit for good at the minimum end. Wife no work. Children at University. Life till 90.  Outstanding loans. Insurances. Allowances ... And then work back with my family on what we should do. Using a semi-passive portfolio to sustain my family expenses, and work back all my asset class to determine how much is needed. Then I determine how much I need to save to support my plan. I also need to figure out what I can cut and reduce to be practical. And what I can put back as I work longer. I also need to make sure I have sufficient experience and knowledge to tie me through the up and down of the markets. This comes in handy as I can be very speculative and learned some lessons. Notice all the the "I"s. Is about owning the problem. Not the government, parent, company or god.


Cory
20160328

Cory Diary: 2015 Investment Performance

Every year I assess my performance and this year is no different. My wish is, this can be my sustainable alternate income that I can do alone as my own boss and hopefully supports my retirement meaningfully. I do not believe handing over my fund for investment purpose to friend, institution, insurance or unit trust. You have to learn to do it yourself be it passive or full time and no one will be more passionate than your own to make sure they are manage safely within your own parameters. I enjoy the experience and learning process.


There are 2 key metrics.

Year to Date Performance : Using Excel XIRR for total Stock Value on 31 Dec 2014 and 31 Dec 2015 (Closing Price). I like to use XIRR because it is simple to use and can also support assessing performance due to dividends, new entry and sales of my stock throughout the year at irregular time.

Whatever I earned in 2014 becomes part of my original capital in 2015. This mindset is important so that I won't lose them back to the market easily as the worst enemy is usually ourselves due to recklessness and overconfidence.

Life Investing Performance : XIRR again but across all trades and dividends throughout my investing lifetime. Is same as annualized performance multi-years. It becomes harder to understand as weight-age comes into play recent years as my Portfolio size grows much larger due to capital injections which skew the result towards recent years performances.

Both metrics do not include idle cash in the banks as I do not fully invest my capital. My intention is to measure my investing skill in counters traded in SG Equity which includes Bond and Preference Share. Therefore exclude Fixed Deposits, Pension, CPF, Insurance, US Stocks and Property.


Results

2015 XIRR : - 5.17% including dividends. If we use last day closing price of each year, STI is down -14.34% excluding dividends. Dividends for 2015 collected is $31,169.

Divested M1, Saizen Reit, Challenger, Marco Polo Marine, CMT Reit, Semb Corp Industrial, Lum Chang and Boustead. I did well in getting out from Semb Corp industrial and Marco Polo in the early part of the year. Unfortunately I was a little early on  Saizen Reit as I would have registered some gains due to the takeover. Bad luck I guess. I am a little late on M1 and have to cut loss on it. Missing out on transportation sector is a mistake too. And relative to my portfolio size, my dividends can be better.

What I am please about this year is my return to Bank stock and more Reits. Avoided shipping and commodity stocks. Expanded my Bond size which will provide added stability though will lower my potential returns. Will emerge with 17 main counters in 2016 which I feel is about right and near my bandwidth limits of 20.

Multi-Year XIRR : +6.51% (across 12 years. Total Dividends collected $147,829 ). Annualized return has come down due to the largest portfolio size accumulated into year 2015 and due to lower 2014 returns. 2015 portfolio is roughly 7.5 times larger than 2008 Global Financial Crisis period. I also found out despite the outsize portfolio of 2015, the absolute loss is lesser than 2008.


2016 Strategy

More Capital Injection, Add Transportation Stocks, More Financial Stocks. More dividends focus.
Will need to re-look as it goes. The key is staying nimble.

Cory
20151231

Cory Diary : Expenses needed for Retirement

First of all, calculation is futile if we do not consider Inflation and Reasonable Lifestyle. This is not saying Medical is not important but major expenses are covered by Insurance and/or CPF Medisave/shields. Getting the right coverage on hospitalization cost is important in my opinion. But trying to jack up your retirement amount to anticipate payment for serious illness that cost say $300 K direct from pocket is not meant to be as typical retirement plan that is realistic to be prepared for many.

For the start i will not retire till i meet my minimum requirement lifestyle. After working so hard for years and to retire like a "beggar" is not an aspiring thing to do. However i am willing to trade off some big ticket items to derive the core expenses.

Transportation
Doing away with private car, i should save a big chunk. Taxi is a reasonable alternative and do save a lot of hassle. For couple/family it may be more efficient to have a car. Do note the table is for a person but that doesn't mean we should go integral multiple by family size.

Holiday
Mainly regional. $2000 annual is high side. Reason being i like to take into consideration for more expensive occasional continental tour after accumulating unused expense allocation over the years. I thought this is needed lifestyle i wish to maintain.

Medical
This portion is more for normal sickness. Critical illness or hospitalization should have more dependency on insurance and CPF medical coverages. In-addition saving up some Emergency Fund i feel should be allocated but separate from the table.

Loan
For typical family i think likely to be our home or investment property. For Singaporean, most people should be able to pay off their HDB loan by mid 40s if they want to. They are quality housing at affordable prices.
For those with Condo or investment property, the outstanding loan maybe heavy but rental returns should cover. So for most this is well covered. There maybe those in negative territory but this is more like investment losses as to stock markets.

Children
Once they finish their studies, child should be on the own. It doesn't make sense to me that we have to care for them or their families in retirement table. Is your job to make sure they can as Parent. If they can't today, what's make you think they can after you are gone ? Often many parents are proud of their children. What use if they are scholar or doing well if they need you to support them ? Those parent who are truly proud is when their children is taking care of them and subsiding their retirement !

Retirement Sum
This works out to about $3200 monthly ( $38,400 annual ). Do adjust for inflation annually as the amount is today money. Assuming CPF life gives minimal $1 K. We only need about $2200. A $700 K Portfolio with just 4% returns would have cover it easily. And we Only needs $450K for 6% annual returns ! And you are doing all this with your main capital still intact on the day you die. So theoretically, there is even more room for us to play with after topping up for inflation.

Enjoyable Retirement is not hard if we are willing to let nature takes it course. Well, at least for Singaporeans.

Cory
1st June 2015

Cory Diary : Measure of Success in Life

There's an online discussion recently on the measure of success in life.

Someone say able to spend like $2M annually ...

Another conclude from Warren Buffet still lives in his old home while Bill Gate in Huge mansion.
Gate succeed ...and Warren a failure

One says  "live simple life better; got money spend; no money save up to get what u want...then tats your achievement fulfilled"

Most people probably want to measure by marriage and children. Maybe with a car and home thrown in.

When I was young, i do quite badly. Normal Streamed and still last 10 in class my earlier years.
Local University is my goal. Somehow I did it. Get a good job next which i did. When i was younger, able to achieve financial freedom is. Sadly is not. My goal changed when i am there. Frankly living on other dreams, one after another. So what's next ? Here's what i am coming at.

Seek our inner self. Do some soul searching. Life is short.

Measure of Success = Living the life you want to live

And go away peacefully. :)


Cory
26th May'15

Cory Diary : Save Your Saved

Trying to control my excitement this afternoon in staff meeting. Just as soon i have gone through the weekly agenda, i pulled up the Compound Interest Formula to the projected screen. A 10 minute effort before the meeting started while i was waiting for everyone to arrive.

"I like to show something to all of you today. Here's the formula of compound interests for $1000.

Year 1, 3%, $1030 ...
Year 5, 3%, $1159 ...
Year 24, 3%, $2033

Your money just grow and doubled just with 3% annual compounded after 24 years. Now think it this way, if you do nothing with your money and let the inflation monster eats them 3% annually. Yes you still have $1000 absolute on paper but you are actually left with only $481 in real material term that you can use.

Compound Effects are double edge sword. Doing nothing is quite a damaging no action move. What can make this worst ? A saver who holds $1,000,000 for 24 years. The effect is multiplied 1000 times up / down according to her action. ( In-between if saved overtime ). If  you are a super passive saver, you are just working your ass off to fight inflation in your twilight years to Save your Saved. You aren't Saving.

Step back from your work and think for a moment. "

Two of them walk off before the session ended for another meeting. One excited. Two others not sure...
Maybe i should try again ...

Cory
21st May 15

Cory Diary : Portfolio Segments

Thanks to Tony Robbins new book called MONEY Master the Game: 7 Simple Steps to Financial Freedom, I get to know Ray Dalio. He has strong believe of 4 seasons portfolio that can weathers across the economic cycles at all times.

Here’s the asset allocation that Dalio came up with for this strategy:

30% Stocks
40% Long-Term Bonds and 15% Intermediate-Term Bonds
7.5% Gold and 7.5% Commodities

Here's mine.

Cory Portfolio

Structured : Preference Shares and Bonds.
Ray's bond  ~55% in total. If i include relative higher fixed returns from  RMB and AUD, probably about 25-30% range which is about half from it.

Commodity: This is a little tricky to gain exposure to it.Using commodity and energy related counters from my stock equities assuming their close relation to represent the segment, i am not far off in percent wise. This do reduce my equity portfolio volatility indirectly.

Four Seasons

Gold : Investment is virtual with reputable banks. Why single out gold from commodity can be easily referred to rationale on why National Banks hold Gold. In this segment i am pretty low (1.5%) compared to four season portfolio (7.5%).

Stocks : Align in percentage term after deducting commodities and energy related counters.

Cory Portfolio Re-Calibrated

So how do i measure up after re-calibrating my definition and removing other cash components ?


Conclusion

I can see that my portfolio has slightly higher volatility and less down side protection with fewer gold for higher chance of better returns.

Few questions in my minds. I would presume Ray based off US currency which i am not and secondly what if we have hyperinflation, will this strategy continues to work ?



Cory
24 Jan 2015

Cory Diary : Spending

One of the most darning task to me is to track my expenses. Tried a number of times to track it but just do not have the patience to continue despite being a fan of spreadsheet with the formulas everywhere to compute my investments and net worth almost instantaneously with currency fluctuation, equities, bank saving to pensions.I do spend little on myself materialistically. I do buy computers and gadgets occasionally. Some travels, books and gifts, relatively expensive restaurants, taxi, good massage and parental allowances...da da da de da.

Then it dawn on me that since i have high saving rate naturally, there is no need to track them at all. Silly me !

In 2014, my Net worth increase is more than my Annual Salary Income including AWS. Technically speaking i save every penny i earned. I did this before but what so special for 2014 is not due to my investment returns but Annual Variable Bonuses. To top it off i have a strong increment as well for a person planning to retire early....

You see, I have been putting in some amount of "Strategic Investment" into my work and was duly rewarded by my bosses for leading some alignment tasks and supporting transformation works. Though this pulled me off from focusing in my investments and some white hairs to show. However there's some synergy moving my portfolio to be more passive based which should works out well in years to come.

Privately though i do have a problem of over saving (by nature) which needs to be fixed in 2015. A good problem. :)











Cheers

Cory
2 Jan'15

Cory Diary : Dividend Returns

When i started investing many years ago it was for the gamble and quick money. Dabbled in Warrants in the days when they are extremely popular. Made some good money ~ (updated for privacy)  in/out trading them despite my business work schedule. It was days where the market only knows how to climb.

Danger of Warrants

I did fell once where my "Tang" expired and went with my $1500 in smoke. I remembered my broker screams at me pondering whether i know what the hell it is but i kind of laughed it off in my head. I learned later that 6 months before expiry, i need to be careful. She is still my broker today.

As i got bolder over the years, i plough into larger part of my little saving. Those days I had colleagues who lamented to me how desperate they are to get into the market but they just do not have enough saving. I learned from it.


Soon after, i got burned in an S-Chip counter.16K lost LOL. Why i laugh ? Well, by then i learn to read announcements and annual reports. Despite all the indications that is a "FRAUD" even from public announcements, i continued to hold. I was hoping that the CEO can't be that stupid to give silly excuses. I learned it does.

As my salary goes up, so are my knowledge in the market. My investment grows till 2008 GFC Epic. Even then i was numbed to the daily horror news. I learned about market timing.

S-Chip Scandals

2008 GFC

When the market recovered, my 2009 profits doubled my 2008 losses. Then i entered 2011 and see the how rocky the market can be and chance encounter with Value Investing. I learned to rebalance my portfolio. By then my portfolio has already skyrocketed with my saving and profits.

Value Investing

Is only in 2012 that i really think about stability and more predictable growing returns to support my retirement. This is tougher to grasp for me but i learn more about Reit and the power of strong business model that can protect my investments.

Dividend Play

Learning never stop as i continue to seek new ideas and knowledge. I have become less risk averse actually. And Fd, Index, Wider Portfolio, Bonds and fixed instruments, Large Blue Cap, Currency Balance and Reits have a good present today in my investment. I am still working and mind you ! Is great to see bonus. :)

Last but not least, my Dividends. Manage to swing it back to a little new high.
Looking forward to 2015.

(updated for privacy)

Cory
27 Dec 2014

Cory Diary : STI Index

If you have yet notice, STI Index ended this week 3324.39. STI Jan 1st Jan'14 was 3167.430. That's mean about 5% returns. If we include roughly 3% dividends conservatively, that's 8% for 2014. This is despite of Current Oil Bear, Interest Rates going up, Property Curbs and Commodity Crash.

Quite amazing huh ? Do your math and tell me am I right ? So why ? why ? why ? why ?Maybe is the Singapore Story or thanks to the liquidity.

How many of us can beat that on annualized basis ?
Are your Unit Trusts beating this values. What do you think ?
How about those who put your money with Private Fund Managers after cost ?  How do they perform ?
Do you have concern with scam or time bomb ?

Things i like about STI Index so far is as follow

1. No rights issue
2. Reasonable Dividends ( Cover Core Inflation )
3. Capital Gains annualized results are strong ( Cover Inflation )
4. Low management fee
5. No manager risk
6. Transparent Tracker
7. Singapore Dollar
8. Participate in Singapore Key Industries
9. Risk Spread across companies
10. Do not need active management
11. Do not need a lot of money to invest


Cory
7th Dec 2014

Cory Diary: How much is considered too much cash for rotting?

A friend pose this interesting question to me over my concern with inflation eating into our hard earn money. To point out how serious the problem is, i have it structured below.

Let's think of a scenario. I have idle cash of $1M. Considering inflation of 3%, that's 30K loss annually. We know how rich we are is how much we save. Using this basis, if I save 30K annually from my monthly earning, i am just working my arse off just to level up my networth. The curse of being a millionaire ?

Let's go further. For those who are more financially awakened, potential returns may average 5% annually. $1M sitting idle is 50K loss. Has risk adversity reached a new height in stupidity ?

Not surprising for those Savvy Investor who hits 10% return. That's 100K average. If you have this money and they are not working because you are so busy with work, do yourself a favor, sit down and do some Maths. What the hell am I talking ? A Savvy Investor will not have this problem.

Now where am I ...

Cory

9th Sept 2015

Cory Diary : Retirement Amount

Retirement Amount

One of the misconception about saving is how long it can last once we retired.
Assuming no investment and just plain saving bank. See Table 1.

Table 1 : Without inflation adjustment

Above is a simulation without inflation. How will this impact me ?
Assuming 3.5% inflation rate, the monthly absolute amount increases as Table 2.

Table 2 : With inflation adjusted

So how long can my S$1M last actually ? See Table 3.

Just  below 16 years. After that i am on my own ...

For those who are curious on whatif Inflation hits 5%. The answer is 14 years.
That's how long S$1,000,000 can last.


Cory
22nd June 2014

Cory Diary : Dividend Dimension

Why Dividends ?

Keep my CEOs on their toes
Best proof of returns
Income sustainability

(updated for privacy)

No turning back on the Twin Pillars Strategy - Dividends & Growths.
Q1 2014 has been slow due to divestment of some Reits counters. Of course is still in the earlier part of the year. Building portfolio back up with strong cash companies. I will have to catch up to beat 2013 dividends but not going to lose an arm or leg for it.

Cory

17th April 2014

Cory Diary : Contemplating Retirement

Retirement has been in my mind for a long time. If i make that move there is no turning back. Two key concerns in the back of my mind.


Net Worth Hurdle

First to lose is the monthly income. In addition to that, bonuses which always pull my net worth a mile. Will I be able to stomach possible decrease psychologically ?

Left is the investable net worth chart captured over the years.What can we understand from the annualized return rates compared to investment return rates.








Social Hurdle

The connection with colleagues.What can i do so that my experiences will not be lost. How can I continue to be relevant to the society ?


Cory
23 Mar 2014