Cory Diary : Rental Income - Why I have to invest in property

Scenario of Rental Income

Property Price : $1,140,000

Monthly Rental : $3300

Yield at Cost : 3.47 %

Annual Net Income

After considering below

1. Condo maintenance cost : 400 monthly

2. Rental Agent fee = 0.5 month annual.

Monthly Net income  : $3300 - 400 - (0.5 month / 12) = $2763

However, usually people borrow quite an amount to finance the purchase. So there is leverage in play. And this is where Math becomes complex.

3.. How much you leverage

4. Stamp Duty & Fees : 2.72% one time

5. Interest Cost.

 

Let's assume item 4 in build into the condo valuation. Basically ignore.

Leverage resulting I need to pay $606 of interests portion monthly

Monthly Net income  : $3300 - 400 - (0.5 month / 12) - 606= $2157

Implied, Annual Net Income = $25, 884

YIELD

Now, let's talk about Yield. Yield at Cost based on net income : 2.3 %.  This Math sucks right ?

One thing to note. Property valuation can change with time. If property valuation increase 35% after 10 Years. The capital returns are  then plough  back into the monthly income in simplify manner.

Yield at today valuation approximately 4%. Basically doubled. And that's before property tax, tenant issues, empty months, .... alamak. Still no good enough.

However let's assume 33.3% of the property is my money injected. The rest are borrowed.

At current valuation yield will be 6.9%, or 12% if price increase by 30% 10 years later.

This are all rough estimation. Should I just stick with Reits or it can be another form of diversification that we cannot afford to miss as I like the Maths now.

Rental Income Tax (updated from feedback)

Depending on one tax status. Can varies widely between a retired and a director level salary income tax.

Please DYODD.

Cory

2020-1115

Cory Diary : The Interesting and the Exception - CPF Read

For the past couple of days I have been reading up on how to optimize my CPF. With multiple queries to CPF. Their service is top mark so if you have any question, they are the key folks to go to. Do note following is what i understand and could be wrong so please DYODD.

My notes.

1. CPF Transfer to loved ones

There is no Tax Incentives. Both Givers and Receivers need to meet certain condition for this to happen. From OA to either SA or RA depending on receivers age. The Givers also need to have certain amount of CPF before this is allowed.  One thing that caught my surprise is that they have a rule where if your love ones passed away, the unused portion of the CPF given by you will be returned back to your CPF. I thought this is interesting. (link)

2. Income Threshold for Spouse/Siblings

What is interesting is that "To claim tax relief for cash top-ups for your spouse or siblings, the spouse or siblings must not have an annual income exceeding $4,000 in the year preceding the year of top-up."

"Annual income includes taxable income (e.g. trade, employment and rental), tax exempt income (e.g. bank interest, dividends and pension) and foreign-sourced income regardless of whether it has been remitted to Singapore. This income threshold does not apply to parents, grandparents, handicapped* spouse or handicapped* siblings.

*Incapacitated because of physical or mental infirmity."

3. Tax Benefits can go up to 14K

"Cash top-ups can be made to any recipient. You can enjoy tax relief of up to $7,000 per calendar year if you are topping up for yourself and additional tax relief of up to $7,000 per calendar year if you are topping up for your parents, parents-in-law, grandparents, grandparents-in-law, spouse and siblings."

4. MediSave BHS (The Basic Healthcare Sum )

For CPF members aged below 65 in 2020 . The prevailing BHS is $60,000, and will be adjusted yearly. At current times, the interest rate at 4% will not be able to cover the annual increase even at max $60, 000 amount in MediSave. So if you are banking on overflow to other accounts by itself may need to take note that your cash flow will not happen currently.

5. OA and SA as Saving Accounts

There is limit on the amount allowed in SA account. Currently $181k. Basically cleared off when moves to RA. There is multiple articles on SA shielding such that the FRS is  fulfilled using OA monies so something you need to search about. For now before age 55, the interests from OA and SA are quite attractive than putting them in banks assuming you will meet the FRS amount regardless.

So why as form of Saving ? Because we are allowed to withdraw the monies as long FRS is met as we needed.

6. Basic Plan ( correction 14th Nov 20 )

If we intend to leave a sizeable amount of monies in our RA to our loved ones after we passed away, Basic plan (updated) will provide quite an amount left depending on when we get called, for an acceptable cut in our monthly withdrawal from 65. Check my earlier article on this. ( link )

7. Nomination

Can be done online. As I understand every time you get married, the earlier nomination gets invalidated. That's how I interpret ! What if I remarried ? hmm hmmm ... so better to do nomination again ?

Additional note. If marriage is not registered in Singapore ROM or ROMM, need to notify CPF. ( link ).

8. CPF Housing Refund

Can be done online. There is a limit of 5K each day using PayNow. Check my earlier article.

9. Discounted Singtel (ST) shares

Don't have to sell our shares.

"You may only apply to transfer your discounted Singtel (ST) shares to your own Central Depository account after you have reached 55 years old and have set aside the Full Retirement Sum (FRS) in the Retirement Account. The FRS can be set aside fully with cash, or with cash (i.e. at least the Basic Retirement Sum) and property"

10. Silver Support Scheme

Often we hear about old people clearing table but not much is mentioned how much help was given from Silver Support Scheme. I thought this is interesting and that our gov is not as heartless as we think it is. Singaporean only. ( Link ) . What is good about this scheme is you do not need to apply ! 

I think there will be more interesting find in CPF website. Strongly suggest people visit them.

Cory

2020-1114

Cory Diary : Asset Allocation Updates - 2020-1110

What I see ...

With the American elections kind of over, the Win by Biden is not clean unfortunately. There could be rounds of litigations. So this may linger longer than expected. Will there be blackswan ? 

At the same time, appears the world is emerging out from Covid-19 as Vaccines started making large progress. Interestingly, each major countries have their own "Sputnik" to show off. Maybe time to get off the rubbery stocks if one is invested. I don't have such issue. ha ha. .. .. ...

Across the causeway, things aren't getting better. While locally here, the progress on green lanes is on the way. Hopefully, our neighbor do not add more complexity to the situation as the island is getting back to the New Normal. This will help the Reits and basic social services. Will banks suffer the same fate as Telco when introduced with uneven competition ?

As I grow out of 50th, retirement financials will be key as I have two toddlers to care for. Some people may feel why that late. Frankly I feel timing has not been better. We come to this world to experience life and given the opportunity and affordability, I would try. I do not want to miss something and wasted the chance in this life when we can. 

There will be now more focus on getting CPF sized right with the right characteristic suitable for the family. At the same time maintaining the right balance on equity front to generate enough dividends and hopefully growth in risk mitigated manner. I still have housing loan to pay up so cashflow from rent will be something to watch. This is in addition to making sure our parents are cared for. Quite a delicate balance.

Lastly, do I look forward for grandkids ?  No lah.  Think I have what is needed to experience life full circle already. Maybe just to make sure the girls are given the best chance to succeed. Since young, I have always been self aware of my limited ability so already feel blessed in achieving something I never dream of today.

Finally, never takes thing for granted. Treasure what I have. Don't make the mistake that the Grass is always greener on the other side. 

Cory

2020-1110

Cory Diary : Equity Allocation - Radar Chart

Has been quite some time since last report in equity allocation. With the clean up done and funds raised, we have less than 2 months to have the portfolio finalize for next year. One minor change is the addition of the slider lines in the chart which may help with the visualization of % allocation that I used to do without needs of it myself.

It has been quite a fun ride this year and how the rebound immediately after the reits sell down in the last couple of days. Again this attest to the need to be constantly vested in the game which 70% suits me so far for dividend returns. And if the market is to swing down, I have sizeable cash for opportunity. Nevertheless the cost of holding cash is there which therefore I have been diverting some to CPF housing refund while we wait for monthly salary to re-fill it back. 

At one time I cast the net wider and scoped more than 10 reits which then funneled it down to 8. I also did quite a number of re-balance while at the same time diverting more shares to DBST for lower cost structure and Rights management ease.

The major change is the clearing up of STI ETF and investing directly to fund. This will helps improve the yield of the portfolio further while the Bonds of roughly 20% allocation remains unchanged.

Cory

2020-1107

Cory Diary : Wash my Cards ( 大洗牌 ) - US Election Fever

This week has been nothing but tumultuous. The past few days market drop send worrying reminder on what happened in this year March. People who time it well that time or yield play has a record recovery while those who left and never seen again have only regrets. This time round is likely due to re-resurgence of Covid 2nd Wave in EU and US Stimulus Talk held up prior to US Election.

The Market has been in the mode where sell down happens very quickly while the climb back up is over a long period of time. Therefore it seems that is usually good that we have opportunity funds or so called War Chest when such event happens. Alternatively, what I do is to reduce my holdings on non-core stakes this week regardless of profit/losses so that I could re-deploy them later. Cash is King as said. I would think about 30% of Non-Fixed portfolio probably.

This time round, Reits are slightly harder hit as you can see from the chart on the dive for reason I think is due to past weeks relatively directionless market. Many of this business are earning good money just lesser due to Covid rebates or lockdown. So in that perspectives, correction could happen but that should be relatively mute compared to businesses that are in long term downtrend. So technically speaking, we should buy more as it goes lower. Just watch the bullets and pace to do it.

Considering we have been working from home for months, robin hood and robo-investing are aplenty dabbling in the stock markets. Property curbs not helping. In all historical crashes my feel is that the market has new players who are not adverse to risk finally meet their fear inflection point who are not in tune of what recession actually means. With a bigger influx this time round driving up DJIA and Bitcoins as we can see in US Markets. With Covid Salary support package reducing, we could see more retrenchment locally. And this could mean a longer trend of poor job prospects.

In YTD performance, the portfolio recovered very well to parity in Mid-Oct but the last few days of volatility basically pulls it back down very quickly to -4.2%. This starts with almost 1K drops in DJIA. ( Pelosi not helping ). Even though the portfolio outperform STI ETF by more than 20%. (STI YTD is -24.7% YTD), there is no celebration budget out from it. The bleeding is fast and furious even though is more a cashflow in nature till we start getting out of market. This is despite the portfolio has about 21% bond allocation. ( Excluding SSB ).

The stop gap measure is  to do a major shake up of the portfolio eliminating non-core stakes such as Koufu, Ascendas-i Trust, and even MNACT which I was just building up... %@^%$(*. The final nail is the just released last Quarter result doesn't look pleasing as seems like the impact is worst than expected. So after deducting all the costs, is kopi money ytd for it.

Another major change in the portfolio is to clear-off STI ETF in my nominee account as banks stake in the portfolio are sizeable enough today. This will help improve the yield further when I re-invest the money.  One other shake-up is to reduce Aims Apac Reit by half (2nd Tier). In YTD perspective, is cut loss but risk lowered significantly for the portfolio. Feel comfortable about it since the DPU is no longer in significant advantage over say some of the core and larger reits can provide.

The goal is to protect capital, maximise dividend, risk adjusted.

Bazooka Ready.

Cory

2020-1031

Cory Diary : Widening Wealth Gap - What can we do about it ?

The World we are in today is changing fast during Covid times to those who managed to get onboard and those who are left behind. By logics the result is more due to demand/supply economics at play rather than purposeful conspiracy cronyism broadly.

In the past I have wondered why would one want to study till degree just to work in service industry on specific segment where higher education seems not so practical unless we go up management level or specific role in communications where is not aplenty and may need.

Say for 2 different positions. One in Restaurant Service and the other in MNCs. Salary gap is like a gulf as in $2K to $6K respectively as an example. Imagine one has to work like 3 months to get equivalent salary to one in MNCs or Civil sector. Is it no wonder most of this work has to go to foreigner as the specific skill sets can be picked up by average person without needs of higher education abroad. The situation is even worst when we try to compute the saving rates between them as it is aren't directly proportional. Which implied if you are in low band salary, hardly any saving so don't even think of investing.

One would argue to push up the salary of this bottom which is kind of no brainer on surface but the cascading nature will pull everyone up too resulting null effect by inflation and make things worst destroying the little savings we have. And if it does  go through artificial means,  we will have brain drain ... . And the social on the whole will be downgraded in value with escalating cost. This hidden cost is real.

 

Covid basically accelerates the situation to be more pronounce. If we look at many other service sector like Insurance, Cab, Food delivery and even property agents. There will be a day many deals can be done online or autonomous vehicles. Where people can arrange house visits online in 3D view themselves without need to go through agents. The goods days could be gone. So don't be too hang up on why some of this jobs get paid relatively well for now or near future.

The World is moving towards Lao Ban, Entrepreneurs, Management or in practical term for many to be a shareholder if we want to do better. There will still be good jobs around just that it get smaller by the day as automation and efficiency kicks in. And the demand for specific skillset in-depth goes up. As in is a good thing to human kind as more people becomes more developed to do higher value added things and that's provided we educate and equip ourselves with the necessary skillset to learn continuously. 

Sadly most people is not cutout to be Lao Ban,  Entrepreneurs or Management. Shareholder is the easy path but risk is not less in stock market as there is a lot of room to go wrong. Sometimes I feel Time is running out for many in our generations and later, to catch on the bandwagon else you or your offspring's will be condemned for eternity spiral at the peasant levels. This sounds like a very negative notes. However is exactly such fear that keeps us on edge. Survival the fittest ? Situation is bleak for those who do have fallback plan and lives like YOLO and so to speak to their generation coming will ends badly in probability. The world is constantly moving ahead while they are left behind.

So is there really no hope for General Services, Hospitality and Airlines ? Maybe we need to make very bold decision to overcome. Example Northern Hemisphere winter is coming and Europe has entered huge second wave.  Singapore strength is our Hot Weather. Can we promote Covid-Escapee Travel with 6 months Visa with special rights ?

This could be a huge draw to foreigners. How can we manage the risk to general population. Charge one time entry special fee ? One thing is our Hotel and Malls could be filled to the brink if is successful. We may requires special travel only by SIA with proper partitioning and cleaning for each one-way trip. There will also be staycations initially. We may even allow this group to rent our condo and hdb to make it more feasible. Do we need to consider medical support that is slightly more expensive than residence with no subsidy but at more affordable rates. Many questions but time is running out.

Feeling Bold.

Cory

2020-1026

Cory Diary : Exercising Rights Allocated and Access Shares Application using Nominee Account through DBST

This is my first time applying to Exercise my Rights and Excess Shares application through Nominee Account. And I want to have this blogged for future reference.

In Investopedia definition " A nominee account is a type of account in which a stockbroker holds shares belonging to clients, making buying and selling those shares easier."

After selling a chunk of my iReit Global Shares. I am left with 23,000 shares in DBST which works like a nominee account that I would like to try out the experience.

First Step

Receive a notification from DBST in the online Wealth Management Notification Icon. 

 Notification

Second Step

Is important step as any mistake may render application erroneous with unintended consequences.  I heard layout can be different between different brokers and ATMs. So do be very careful and consult your banks or brokers. For my case is as follow.

A) Enter how many shares I like to buy of the entitled shares.

For my case is 10,442. Price at 49 cent. Since the stock as that time is trading at about 71 cents, obviously I like to subscribe all of it. This will cost me only $5116.58 which they deduct later. A discount of $1253 ! as share price lowered to 61 cents.

B) Enter how many shares I like to apply for Excess.

For my case is 60,558. The 558 shares are to round it off to the entitled. It may not be necessary from what I heard but I am not sure. So to play safe I have it make whole. In total I applied 2.63 times excess of what I have. And this cost me $29,673.42.

Kiasu me applied on 2nd Oct which I realised is too early and probably risky because we never know how do market react to the rights issue. And there are rules after you have submitted so I am not going to take any risk to change. Fortunately, nothing serious as the stock price  holds up relatively well and close down around 61 cents.

In total $40,115.42 Cash needed just for the shares to be available for both deductions in my trading/wealth account else  may have problem in the application.

Excess Application

Third Step

As below debit date is15th Oct. In my case the entitled 10,442 shares are allocated to my main holding and cash deducted. Does that mean I can trade the share immediately ? Something to find out ....

Debit

Fourth Step

For my excess application, I get to know on 23rd Oct. Excess 5,558 Shares awarded at 49 cents.

Unawarded remaining cash is returned to my account on same day. What this mean is I gained a delta of 12 cents (Stock price 61 cents) per share which equates to $667. Kopi money !

Finally my total shares count at the end of the exercise is 39,000 Shares. That's 70% increase from initial 23,000 shares holding. hmm hmmm. And a total claim of $1920 from entitled and excess application.

Hope you like my sharing. And as usual DYODD. Warning again ! System application may change over time and process/format can be different between different brokers and ATMs.

Cory

2020-1024

Cory Diary : CPF Life Retirement Study

Key financial thing I have done this month is to do Housing refund 50% to my CPF. Probably will completely pays it off before end of this year. From -2.5% to 4% that's a 6.5% swing from cost to profit.

And this can be done electronically through internet which is what's so amazing about today world. This boost my Pension quite a little for it to compound to age 65 producing a base monthly sum to my future retirement. Which comes to my next investigation on CPF Life.

CPF Life Retirement Study

While I was doing above, it strikes me how much should I put into my RA. Will doubling it provides me double monthly income at age 65 or more ?

As you can see from the estimator almost double. Probably slightly lesser if we try to be a little stingy about it.  The escalating plan is interesting to beat inflation but seems not for me as CPF is not my key dependency ( specific to me ).

While studying it strikes me why would anyone want to choose a Basic withdrawal plan. Not that's it is a lot ( roughly 130 lesser than Standard )? The answer lies with Bequests ( see below chart ).

At age 80, there is almost no money left if we choose Standard or Escalating Plans. However Basic will provide about half the money to beneficiaries upon passing. Now, Basic plan do looks interesting. However doubling the RA Amount initially only double my Bequest. Something I need to watch if I do my step correctly ....

So my preference is Basic 192K for now and depending how I do well in my investment financially, this may change. However once is selected, can't change after 30 days. oh dear. I need to make a note on this.

Watch for any error as I am new to this. As usual DYODD.

Cory

2020-1021

Cory Diary : Repricing Home Loan Package

In a few more months time, my current package will be available to be repriced which was on package based on 2.38% Fixed for 2 years after which FHR8 + 1.88% (0.6%+1.88% =2.48%) where FH is the Period 8 months reference to the column above.

The current DBS Fixed Deposit is as follow.

Since May, DBS announced the FHR8 revision, my total loan repayment has not been reduced s it is fixed package and instead will increase to 2.48% if I do nothing.

What-if I Reprice ?

Per DBS website, home loan accounts are out of lock-in or will be out of lock-in in 3 months’ time are allowed to do repricing. I do not like floating package so will only look into the new reprice Flexi-Fixed package as follow. There is a re-price cost about $300 for Promo.

Fixed in years at 1.5% depending on the flexi-Fixed package which I am interested, follow by FHR24 + 0.9% = 1.8% thereafter. So should I go for 3 Year or 5 Year ? 

That's depend how soon we get over Covid aftermath I guess which could take 2 years. Since there is a free conversion I could ask for contract change per table above if the ever decreasing rate happens once I sign up on the new Contract.

However, if the rate increases then I would want to continue the new contract as long as possible. So looks like 5 years Lock is better option. The 5 years contract states " We will waive the Commitment Fee if such full repayment is made upon the sale of your entire interest in the Property, and no event of default under the Conditions has occurred." (updated).

With the new contract, monthly saving will be $293. That's $3,518 annually. Most importantly is the peace of mind. That's the key point of the plan other than the saving.

Cory

2020-1015

Cory Diary : CPF Housing Loan Refund Experience

In earlier article there is an Issue mentioned regarding low interest rate from the bank (1.1 % DBS Today for 11 months Fixed Deposit ) and higher Accrued Interest to pay back to CPF. It makes sense for me to do something.

The CPF Housing interest is computed on the CPF principal amount withdrawn for housing on a monthly basis (at the current CPF Ordinary Account interest rate) and compounded yearly. If this OA money is put inside SA it would be even higher at 4% !

Therefore  I decided to work on the CPF Refund process. There are 2 methods that I can do online. One is via PayNow and the other eNets. The later I have given up due to some issue getting the code to my oversea mobile. However I am pleased that PayNow works perfect for me.

Selections in CPF WebSite

The steps I took to do it for my case.

Completion Screen in iWealth

CPF Website

1. Login to CPF

2. My Requests > Property > Make a Housing Refund with Cash ... etc  (Decide the amount you like to payback)

3. Select PayNow

iWeath SG

4. Login to your mobile app (I use iWealth)

5. Select Scan & Pay

6. Scan the CPF page QR code

That's it. Upon completion ... the CPF website will reflect the repayment into OA Account.

Cory

2020-1007

Cory Diary : Performance YTD - Trump Tests Positive for the Coronavirus

The STI market was going well till it's decided to change downward course again today. This time for very different reason. The News is that Trump Tests Positive for the Coronavirus. He must be very disappointed that DJIA manage to held up (updated with table) as I typed. 

The talk about IN THING nowadays is the K-Shaped Recovery Economy.

What this may mean is 

1. The wealthy are recovering and the lower-earning are not.

2. The professional workers are largely fine and everyone else is doing awful.

3. Different parts of the economy recover at different rates, times, or magnitudes. 

Well, the wealthy usually does better in most recovery. And you can be a pilot and seriously out-of-job. So the first two points are more divisive opinions between the Rich and the Poor which will drives resentment against the Rich or Rightist view. Likely not going to help the poor but make it worst as this will pigeon hole their thinking. Driving ever increasing wealth gap.

I am more inclined on the last definition in general and this is best seen in stock market. A good example will be Cory Portfolio this year.

As you can see above, the general STI Index performs relatively bad. An understatement frankly not because of the heavier weightage of the Banks but in general in the index.

Relative to Cory which also has large amount of banks and STI ETF, comparatively still drives large gap from the index. The performance has widen by 21.3 points (updated) gap. It would have been even wider have I indulge myself in some tech or medical stocks that I have been consistently avoiding. Oh ! my pain.

So YTD, XIRR -1.3% whereas STI has fallen to -22.5% (corrected). Dividend wise it has been crazy because AGT do a major distribution from the golf sales so YTD more than 89K ... That's a huge jump one time in exchange for capital reversion.

Cory

2020-1003

Cory Diary : Frasers Cpt Tr - I am back !

Opportunity .... to Kio Durian.

Frasers Cpt Tr

On double barrel shotgun this few weeks as right after the return of investment into Mapletree NAC Tr, found myself needing to tap on my War Chest to buy into Frasers Cpt Tr. The opportunity came when the Reit price drops nearly 6% from $2.52 to $2.37 after the announcement.

"The manager on Monday afternoon announced an equity fundraising comprising the private placement and a non-renounceable preferential offering."

In addition, this is discounting the price decline prior weeks from high of $2.72 that is almost 13% discounted price. So in term of relative price point is cheap. Did I really "Kio Durian"  ? Well that's depend on perspective. I last sold my position at $2.07 for just 7 cents profit this year excluding trading cost in May'20. So ya, I am buying back at higher price.

Well, Sept'20 is very different animal from May'20. Covid situation is now a lot better and well under control locally. The malls are opening up and the crowds are returning. So is pretty unrealistic to see a drop below my last traded price.

At current price, abt 5.2% yield probably and with some dividend bonus. Not too bad. Something I can sleep with unless they are asked to do rebate and mall closure again ....

Cheers

Cory

2020-1002

Cory Diary : Mapletree NAC Tr - I am back !

This counter is my 2019 lover. After selling all around 1.3x to 1.4x range I am finally back in the game which is slightly more than a year wait. The timing on the counter has been relatively good though would have been better. Here's my my post on the sale in Year 2019. 

Cory Portfolio Re-balance - aftermath of MNACT sale

Now I am in the process of building it back. Looks like with the draconian law in place, protests are much more restricted and tamed in Hong Kong or at least the perception I have as there is much lesser media reporting within my sphere of easy reach. On top of this, the Covid situation is now under control.

Today the Reit is in the news again on Korea acquisition.

The fee structure is quite transparent. And seem quite align to shareholder.

Threshold DPU of 7.124 cents has provided the baseline for reference which translate to 7.96% yield from a Maple family. The gearing slightly exceeded 41% IIRC.

Are you excited ? I am.

Cory

2020-0926

Cory Diary : Trading Log 2020-0925

Long time since I last post on Trading Log. In my portfolio when I last did on this log series, I venture a bit far on the risk side for higher dividends. So sometimes I get a little nervous. Next is my build-up in SGX has pulled off in Diary of Trading Log 2020-0814. Often act as counter balance to down trend stocks.

Accordia Trust

As earlier articles, I have reduced my position 40% on this. Is still sizeable but I no longer in "fear mode" :P .  AGT is Golf Trust nevertheless with "sibei" good dividends as we wait for the final offer that since arrived. And soon it will be Ex-dividend and then finally delisted. Good returns and not bad for a stock I know so long and suffer the mental rides of the prices this year as position grew.

Ascendas Reit

Continue to build up on this position which I have cleared some time back. I am waiting for a big gap down if any before willing to average down else I will leave my cash in War chest. At around 4.5% yield, this is one counter I can afford to hold for long term and sleep well. Not sure why but I feel the last dividend seems a little low. Is it just me for an accretive deal to be given a reason that there is now more shares in the market from the last acquisition to have lower DPU ? Interesting to know.

IReit Global

I have decided to take profit 80% (CDP) with remaining 20% remains with another broker for the rights issue. I could use this to try out custodian broker for rights issue and learn something from it.

This sales put a large dent in my dividend returns so I am still in the work on mitigation mode before Year 2020 ends. The concern with this counter is the rights issue is discounted so much that I feel the management has taken investors for a ride. Furthermore the Spanish investment doesn't seem a good deal. I miss the previous CEO. I may still find opportunity to increase my position after as the they will have another chance but just smaller chance in my portfolio. Need to remind myself credibility is very important.

Mapletree Com Tr

Manage to build up some positions past few months. So now we have driven a gap of capital profits. I am still considering whether it worth to expand the allocation. This is Quality Reit in my opinion so unlikely will sell any in mid-long term. Is not everyday we can secure a position in the famous Reits at good price. So hold tight tight ....

Cromwell Reit

When it first listed I am pretty negative on the reit. I still do not have full trust in it. However it has dual currency denomination listed which I want and also act as a hedge being mainly listed in Europe. Small position so far.

With all this, I end up with much more net cash position for War Chest build up at lower theoretical dividend of-course.

Cory

2020-0925

Cory Diary : Feeling stuck in current Portfolio growth momentum

This post stuck with me for weeks in draft mode before I have the courage to release it. Reason being I feel stuck in current portfolio setup. This is finally released when iReit Global release the rights issue today. Read on ...

For the past few weeks, I was wishing to squeeze more juices ( cash ) out of my portfolio lately but feeling quite difficult. On one hand I need to watch for dividend returns and the other holding to some core positions that I don't want to sell. However with current listless market in SG and turmoil in US Market, there maybe opportunity for some low hanging fruit pickings if we are to see major tech correction happening which may pull the whole market along.

Still in Transition Chart

In-addition, the lines blurred between what can be use for investment aka War Chest and what is Reserve for Emergency or other needs. Therefore I decided to create a segment called Investment accounts. This will be my War Chest which is also primarily cash holding area for stocks sold as they are separate accounts from saving. In POEMS account situation, it is also Money Market Fund therefore not idle in returns. Above is still in the work. Here's previous update ( link ).

With this iron out, is clear to me what I can do with each accounts.

Saving and Fixed Deposits

I could explore some of my fixed deposits and see which I can terminate earlier now. After reviewing the 4 batches I have with DBS Bank, one of them expect to expire next month. Remainder on Year 2021. Since there is a large one near expiry, i will wait it out. This will release some funds. 

In-addition, I also have some cash saving in foreign accounts and some amount will be moved to investment accounts. 

Reprice my Housing Loan

Just found out the deal today. Is quite a significant downward adjustment by DBS. Other than the lowering interest rate another reason I suspect is the coming competition of Digital Banking. Not surprisingly the lock-in period extend to 5 years but the fixed package is attractive now with flexi after. This do gives peace of mind for years to come.

The downside is that FHR24 after 5 years can be tricky as such a long period usually drives higher rates even though currently is lowered. I guess mitigated by one free conversion. Overall this will reduce my monthly repayment loan some but won't see a sudden cash saving. However the cash reserves need to support this loan will be reduced quite drastically as I have more than 5 years of emergency funds currently parked for it in SSB, Cash and Fixed Deposits.

DBS just told me i need to wait a few more months more before I could re-price as the penalty for breaking current loan contract is high. I will wait out as is not pro-rated. Expects to Save $333 monthly or $3996 annually !

 

CPF

I borrowed a little money from my own CPF account that time to give myself a slightly larger boost in cash flow when I purchase my investment property. The more i look at it especially at current low interest rate, the more I feel the decision is bad as the Accrued Interest i need to pay back is growing as the cost is widening. I should return the borrowed back to my own account. It doesn't make sense for me to earn fixed deposit of less than 1% and need to pay back 2.5% to CPF Account. And if I have to  shift the returned money to SA account, the cost is even wider ! What am I waiting for ..... . Ok need to work on clearing it. Maybe 10k at a time till zero. First I need to get my eNets working ...

CASH LEVEL

On conservative level, I am able to generate about $58k ( comes down to 53.5k after some iReit Sales ) of dividends and with the additional $4k contribution from SSB will then totaled $62k (57.5k). SSB is where I reserve for housing loan, with current dividends, I reckon there is no need to have too high a bond allocation now. Hence I plan to reduce my Fixed deposit and Cash level amount instead since SSB provide better rates.

Dividend Re-Investing

Usually i don't specially manage the reinvestment of dividend received. It will just go into my saving pool and manage as portfolio injection. So is opportunity based. I will be slowing down my procurement and keep most of the juices in Investment accounts.

Child Development Account

Just top up $6k through account transfer recently. However only the first 3K will be matched.  For POSB CDA, up to the first $50k will enjoy 2% Interest rates. So currently she has at least 12k after Baby Bonus Matching and initial 3k grants.  There are restriction of use so this cannot be classify as emergency fund. Unused sum will continue to progress to different level of account as the child grows. So is a long term thing but the rate will change. Something to note of. In-addition I have propose to my wife on possible CPF top-up for the kids as she is wanting for some form of saving for them.

Cory

2020-0922

Cory Diary : STI Index that I understand ...

STI Index is Straits Times Index

The Straits Times Index (STI) is a market capitalisation weighted index that tracks the performance of the top 30 companies listed on SGX. It is jointly calculated by Singapore Press Holdings (SPH), Singapore Exchange (SGX) and FTSE Group (FTSE).

What this mean is when you buy ETF shares of this Index, you have exposure to this 30 companies. Below table obtained from SG Investor link here.

The Index regularly updated with new companies which replaced some companies in the index. Recent times, the Index has not been doing well. One of the reason I feel is lack of Tech stocks that we see in NASDAQ while Covid-19 do it's work on traditional companies. Another reason is that the process of company selection is not as fast as I feel it should. For example strong Reits comes in after they have risen much for years before they get to replace companies that should have been replaced long ago. Restricting to only 30 companies may have some constraints. Finally the last spanner  is the dividend restriction on the 3 main banks in the index which dampen the market further on STI Index.

Theoretically, the ETF of the index will be kind of perpetual. So I find this quite passive in management as there is no expiry or right issue in my experience. The more diversification nature also protect investor from significant losses as is mitigated by poor performance of a few.  The STI ETF I often use is ES3. To trade, the stock quote is ES3. At current time,  in my personal view rather than long term hold, ETF is more good for Timing Trade on lows such as down trend or when is tuning up. STI ETF shares are traded like any other equity. Last Friday it closed at $2.527. So for 1000 shares will be $2,527. 

Lastly, this ETF do give dividends. Usually Feb and August periods. In comparison to Reits, the yield is lower however the risk is that one could hit with EHT or Sabana ... and have your portfolio blow up. One don't view the risk high till really got hit. Nothing is free in this world .... maybe except fatherly (bias) loves.

Cheers                                                                                                                                                                                                                                                                                                                                

Cory

2020-0920

Cory Diary : Subconscious Thought

When Trump got elected the first time he really do not have much backing from Media or even his own party members initially. He fought through nomination before winning the presidential election. So his win is quite historical considering he is up against Hillary Clinton who has Obama, Nancy and many supporters that we thought it is a walkover considering Trump has so much bad press from foul language to dirty talk. If one is to read through the forum or media, hardly many people supported him. Now with next term coming up for election, his relationship with the press or media is at it lowest still but personally I feel he will be re-elected again.

Why I say so is because many supporters of his afraid of being identify with him publicly. The intense pressure or fear is so great most will vote with their feat in secret of their view because many of his views are very controversial but is deep seated with many Americans. This is best summarize of Jim Cramer interview that is now famous.

Extract...

“What deal can we have, Crazy Nancy,” Cramer said before catching himself. "That was the president, I have such reverence for the office I would never use that term."

“But you just did,” Pelosi shot back.

“You know what I mean, the reverence I have for the office is so great that I think it’s a travesty to ever call, look, you’re,” Cramer, seemingly aware he made a major gaffe, said before Pelosi interrupted.

Pelosi said, "I know what you mean,"

I think Poor Jim knew he has sub-consciously stepped on the Mine and were trying to crawl back. Is a career ending move. Even though he apologized profusely during and after, the very act he do this make it even harder to swallow for Nancy who probably trying to put up a brave face. 

https://www.foxnews.com/media/cnbcs-jim-cramer-apologizes-after-calling-pelosi-crazy-nancy-during-live-interview

Learned a new word today. Is called Pandering.

Cory

2020-0917

Cory Diary : Hyper Inflation Thoughts

Hyper-Inflation is when prices of goods rocketed so high that our saving in the banks has it's purchasing purchasing power deteriorate exponentially. A cup of coffee costing $1.20 today may cost $5 tomorrow. And probably $100 by end of the week. As you can see, basically our saving got burnt through like toilet paper literally.

So for folks out there who's complaining about inflation that a cup of Kopi that only cost $0.40 more than 20 years ago, compounded across 20 years is actually only 5.6%. This is not really a big deal considering this is small price item relative to our salary even though it may not enjoy same amount of rise in percentage. So we see nothing yet on what Hyper-Inflation can really do to our cost of living But it can happen if our country is mismanaged.

One of my kiasi theoretical thought is what-if we have a Hyper-Inflation or something that is large enough which are of concern. To clarify I aren't anticipating one but at the same time we can't guaranteed it won't happen in our lifetime. Say we decided to migrate to a less developed country where the financial management may not be as robust.

In the olden days probably from recent major wars to more than thousand of years ago, people will probably keep physical gold. In modern time, physical Gold is still quite relevant but I feel that we have much better option today than in the past to have too much gold or silver in our home.

First thing I would ensure is to have a property under my name. Basically it will just hedge through the increasing cost and I will still have a roof over my head with no escalating rental worries. The interesting thought process will be what happen to our housing loan while Hyper-Inflation do it's work ? Right, if you think as cunning as me, our payments to the bank will be drastically reduced in purchasing power term so it works wonder to have loan.

However, if the contract allows the banks to adjust the payment rate terms, we could also be receiving revision of interest rates at exponential level too ! Regardless the Gov will step in too to ensure the banking system remains sound. What this mean is the banks will still Win. This could mean the outstanding loan will be re-stated and we may be even larger hole after.

Secondly I would do better is to ensure I have stocks. This do well when inflation is moderate but in Hyper-Inflation scenario, any loans could also put the companies in big trouble as the loan could also be re-stated destroying shareholder values. So just with this two cases, if we are expose to country specific risk, then we will do well with diversification.

If we try to deduce and stay ahead in the game, don't face the Hyper-Inflation at all. Is not a game we can afford to play. If we have to go through it. No loans. Have foreign bank account and currency exchange and remit process tried. Maybe this will work ?

Cory

2020-0913

Cory Diary : Net Worth - Fighting Mode

Generally Year 2020 has been quite trying for people who try to increase their net worth. 

I would expect many people pay reduced, on unpaid leave, retrenched, mute property and likely poor equity investment returns, 

This is particularly true for me because we have added expenses for additional member in the team. In Year 2019 I have estimated at least 140K expense which includes Home Loan that is well supported by investment returns.

For Year 2020 I don't think we deviate much expense wise however I am glad that she has chip in to help support baby clothing, shoes, Nappies, Toys, books, baby powders and food supplies. Dual income is so cool in bad times.

Here's the Net Worth chart. I won't go through the details.

Looks like the expense has not damaged the lines and able to hold-off so far. Rumor has it that we may not have increment and bonus this year so if that's the case we won't see a slight spike later on. Frankly speaking 2nd half could see better market condition.

There are a few new expenses this year.

The hot weather did add one addiction which is ice dessert. And I am getting a kick out of it recently. Hopefully this aren't permanent .... ... ... before the sweetness get my health.

$2 Serving

Have been using hotspot for a long time. With WFH in great play this year, Home Internet connection will be better serve but nevertheless an added expense.

Cory

2020-0822

Cory Diary : Aug Performance '20

Is already Mid-Aug and I was pondering whether to do a performance tracker update. The reason I did not do one early part of the month because I knew the coming price adjustment with Accordia Golf Trust and I am also in the process of mitigating the dividend income loss from the Golf Course sales. So with the news more or less definite near term and coming up with a plan on driving returns the chart may returns.

As below Chart, the gap widens to 19.1% against STI Index. I think one partial reason is due to ETF dividend just distributed. Cory returns -1%. Theoretical fund annual dividend has come down to 59k Covid returns.

Chart : Returns Comparison

As the yield gets lower with recovering market, new fund injection has to work much harder for the same dollar amount. However I need to compensate the dividend loss from AGT, and that's easier said than done. For one I try to avoid USD denominated counters as I find it a hassle which Reits are driving higher yields. Then I have enough banks exposures so any increase will be over allocation percentage. I also have same issue with increasing my stake in CMT.

There are few things I could do now.

1.    Increase my fund injection to drive higher dividends

2.    Re-balance my STI Index ETF to something else of higher yield.

3.    Not renew my Fixed Deposits that expired

4.    Reduce my cash holdings

5.    Exchange my foreign fixed deposits to local currency

I hope to do all above partially in measured ways.

Cory

2020-0818