Cory Diary : Late Night Chat - CPF

Last night I have a chat with wife like 2.30 am as she was tied up with work while I was trying to manage my CPF accounts in preparation for retirement plans. This aren't a systematic work discussion but kind of jumping in and out from one topic to another and then jump back to previous again. 

We talked about the worst case scenario like both of us decided to call it quit. How financially we able to continue to manage our expenses and taking care of our babies. And what outstanding to get our financials in order. 

Progress on CPF nominations which I have been procrastinating for a while, and how we can use CPF to supplement our expenses. I still have few years before hitting 55 so if we have to do something on topping up CPF using cash, is time.

I could release my fixed deposits that has been tied down. Singapore Saving Bond will be the core backup for emergency loan installments.

One of the possibility open up is for her to take 6 months leave-in-absence to take care of our household while continues to have nanny to care for the toddlers during our day time. She still want to keep her job.

She also propose to make active her saving available for future investment with my guidance. This will give our family a boost on dividend income. So I thought this is great. We have been reserving this option as additional emergency fund. However, this will take a while as we need to map this out more carefully.

Nominations

Long time since I last did my nomination so is time to update them. The Online nomination is cool. Hopefully it get processed. Few minutes job in the actual submission but need to get two witnesses with SingPass access for the declarations. I also found from 1M65 Telegram that if we nominated minors, they will have to wait till 18 before they get distributed. Here's the link if you like to find out more. (PTO)

Discounted Singtel Shares

Found some Singtel shares in my CPF which I just requested to be sold. Ouch ! for not managing them actively. Last traded my Singtel Shares in Year 2019 on some leftover shares as I do not see strong future of the business. This will simplify administration.

Singtel is one of best performing counter based on investment life of the stock. Today with the banking license, I have yet to see fundamental change that will improve the business significantly though it can still be profitable. 

CPF Interests

Have my SA Account Max to FRS mainly through OA to SA Transfers. And now exploring VC3AC(Top-up to all 3 CPF Accounts). This is interesting because is not via Retirement Sum Topping-Up Scheme ( RSTU) so we can do SA shielding later as I understand if we still can later. The main idea is that this option allows me to continue piling up my SA other than regular work contribution (MC). The downside is that some allocations depending on age group will  go to OA and MA. There is annual limits that we can contribute so every year before 55 counts.1M65 is great source of info in Telegram. 

My hope is that we could live off with some interests off CPF after 55 without touching the principals in OA and SA. What this mean is as someone feedback in my blog and from the Telegram Chat is that we should withdraw interests earned from OA and SA in the 2nd half of the year, preferably later months to allow interests YTD to accumulate before they get credited as principal in Jan next year. This will ensure the OA and SA Principals remain untouched. This is after 55 where the SA is FRS into RA and we have left over monies in CPF OS and SA.

Children CPF

Just requested for my children CPF details to be make available to me for verification. I have done some samples top-up into their accounts recently and would like to understand this further. Currently just nominal sum into RSTU. Some people prefer VC3AC as this will make the funds available to their children in their OA for housing and MA for their Medical. I thought this is neat idea.

Please DYODD as I am new to this journey. With that of my sharing, hope you have some ideas too.

Cory

2021-0113

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

Cory Diary : Net Worth Reporting

Year 2020 is one of my most expensive year to date. There's quite an amount of expenses. On top of this is the housing loan. in-additional the stock market has been challenging. After understanding Baby Bonus better, did Max Top-Up for both my girls and more.

Year 2020 is also one of more trying period I have encountered to manage family, taking care of newborn, working from home and sharing the house cores. There is so many things happening that I lose count of time and likely neglected some duties or expectation.

Year 2020 is where I am asked to take on additional new challenges in work to manage more international team members in different functional area on top of regular job tasks I have been doing. The experience is a lot of learning from it as different countries have different way and culture that they perform to.

As if above is not enough for Year 2020, on CPF side, completed Voluntary Housing Refund (VHF), did some Medisave Top-Up, shift loads from OA to SA.

On the positive financial side, I still have regular job, dividend income and housing funding to support. To top this off, a good bonus plus shares. Past years shares allocated record strong gains. I do not include allocated shares in my tracking.

Therefore, with above in context, here's the Net Worth Chart.

,

Net worth hits a new level and hopefully by end 2021 will hit my new goal of next bold white horizontal line in the chart. Cross my fingers because the market in US side is really lofty.

Liquid asset,  thanks to some support from Home CEO, stock market and bonus, managed to register a cash flow increase. However the overall pace is noticeably slower due to completing full VHR and some Medisave Top-up.

Equity Investment, not much has changed in invested amount as I have prepared some warchest for investment opportunities similar to Year 2019. This is despite registering a higher record sustainable dividend portion. This is interesting phenomenon. Maybe If I have placed more I would have catch a better recovery gains. The fear of Covid must have gotten me so I focus more on rebalancing and churning stocks for capital gains that probably instead result in net dividend gains as well.

Subconsciously I maybe more careful with capitals as Year 2021 would expects higher dividend if bank cap and Mall rental rebates are reduced with same amount of invested. The Market has hit euphoria stage judging from Bitcoins 41k and Tech Stocks PE as high as 1700. This hit my fear of Tulip Mania. Hopefully it is not the case and will not pull down the broad market as well if it bursts. Should we position ourselves to kio Durian ? 

To end this, I could feel that if one do not have saving, regular income or income supports, the stress will be high and demoralizing. It will be real struggle trying to keep up with needs.

Cory

2021-0110

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

Cory Diary : Casting Wider Net for more stocks with $50k Budget

For the past months or weeks I have list of stocks that I like to get but did not. So in Year 2021, allocated roughly 50k to indulge myself by casting my net wider for more stocks for diversification and gain some exposure to segments that I have been missing out. Broadly for now, excluded hospitality and transport stocks that are tourists dependent. There could be a recovery theme but feel is not at the right pace. SAT, SIA Eng and STE have dependency too. Commodity, Oil and Shipping industries I have no interests.

Selection edge will be Tech, Diversification, Sustainable Yield, Currency consideration and if possible management.

1. Sheng Siong

Sold some of the this share last year to consolidate the number of my counters as the amount it not huge but to my regret because it shoots up after. This is one thing I learned that don't consolidate for sake of it. After going one round, decide to explore this gain. There is a significant correction from peak though. As a Supermarket business, they also support online order which I find it interesting. With Covid still in play, expectation is the next Q report expects to continue to be colorful. The question is what happen after ? Will they able to continue to perform ? Get some first.

2. Venture

Tech Solution company. Doesn't look like is cheap and do not have a good feel on the company. Will need to do more homework and education to know the company better. Quite opaque to me to understand their operation and future. I won't have much conviction even though I really wish to add a Tech company to my basket but this is out.

3. EliteComReit

This provides roughly 6% yield but there is currency risk due to their properties are in UK. Tenant wise is UK gov on triple net lease. The stock is traded in pound so there is need for special management on the invest money and rate. New IPO risk ?  Diversification from Singapore ? Most of the building I see from the photos seems quite old but to be fair freehold afaik. Risk play wise, with Brexit and leadership in the gov, there are good chance GBP will strengthen. For risk adjust a stake as we monitor will be nice. This will help provide a small boost to the average dividend if this works well.

4. Boustead or Boustead Project

With the recent fund setup to hold properties of Boustead project which Boustead is vested, value is unlocked. There is interest due to the high NTA after but the dividend yield is low based on past record. This could change ? I could try Boustead Project instead but risk could by higher but returns look much higher. We could see a re-rating but need to do more homework if going invest deep. A small stake first to keep up my interest up first in Boustead. Will need to do more homework in Boustead Project. 

5. Keppel DC Reit (KDC) or MIT (more)

The yield is very low but DC gives a nice story. Stock price has come down from high. Maybe 10% discount from peak. Is that cheap enough ? A better alternative could be MIT but still is not cheap. Their downside in rental during this period will likely be safe. I could wait a while longer but then missed an opportunity to ride on Tech related exposure which is sorely lacking in my portfolio for growth. A small initial investment in KDC. I already have some MIT in my portfolio.

What's your thought on my new selections ?

Cory

2020-0106

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

Cory Diary : Annualized Returns since Year 2007 and Earlier

One of the interesting way to measure share investor performance is to use XIRR for multi-years computation. And this can be done easily summing up all the years of transactions that we usually keep annually.

If you are aware, in some measure, past year very old data may "cloud" years of recent performance. Some may practice 20 years cutoff as a compromise. For Cory Annualized Performance we can try as follows.

14 Years of Annualized Result

ANNUALIZED

Cory Annualized Performance ...

of last 14 Years will be 7% which starts from one year before 2008 GFC. This is captured in above chart. This returns pretty align with 3 Years and 5 Year benchmarks.

If we retain the recent years of data only,

Last 03 Years will be 7.1%

Last 05 Years will be 7.5% 

Last 07 Years will be 5.2% which reflects poor returns in Years of 2014, 2015 and 2016 periods

Last 10 Years will be 6.1%

GOALS

Therefore for Year 2021, the Goal is to be above 7.5 % Annual Return in order to improve in all the above levels. And therefore achieve consistent above 7% returns.

Stretch goal for Year 2021 will be 17.8% annual return to achieve 8% annualize of 15 years. That is how hard to move a needle of 1% on 14 years data. This will be a tough one to get for a dividend portfolio and may required some re-engineering on my part. I will need to put a thinking cap on this.

STI ETF

For STI, is -0.7% for 14 Years annualized data. STI Index has never recovered after Year 2009 rebounds. So if we are to include STI ETF dividends probably 3%-4%. We can try 3 Years and 5 Years data and I bet they will not be swimming well. This broadly defines the impact to Singapore Economy on Oils Sector follow by Covid-19.

I remember reading a challenge on re-investment of STI ETF every time dividends are distributed by STI ETF. What will the returns be like for the past 14 years then ?  To save time to do this. Allocated 11.5 cents dividend to each year and reinvest equally on 1st and last date of their respective year closing share price. The estimated answer I found is 3.2%.

Cory

2020-0105

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

Cory Diary : Long Term Investment Results

There are few tricks when come to investment and there aren't much magical about it so far from my experience. A lot is common sense and this comes with personal experience or read up of others. Here's my result so far. The drawdown has been low. Gains have been accumulating. Portfolio size has grown many times.

Here's pointers. I think Point 8 is most important.

1. Be Risk Adverse : Position Sizing of each stocks even if average down. One way is to buy another stock of similar traits and average down by industry or different segments. There are usually bad reasons for a high yield stock else is a gem. Again sizing is important.

2. Cut Loss : Never wait for breakeven. Say one invested in stock 50k and loss 25k. A rebound happens and now loss is reduced to 15k but still deep loss. Cut loss if fundamental has change for the worst. Of-course if one is confidence that we can sell with gain and not due to false hope, it could make sense.

3. Take profit/buildup in stages : A speculative stock I may take 50% off table first. In good fundamental stock maybe 15%. There is no hard rule on % range for each stage. Some stocks may never start selling till price point hits. Same for increasing the size in an equity that we do in stages over time. 

4. Use TA for guidance : For some human behavior reasons there are tendency for stocks to move to around resistance levels. Make use of them for entry or exit. Not always.

5. FA for selection : Something to fall back on when broad market is down. You want to bet on something that will be uptrend long term while short term there are fluctuations. Management integrity is important. If we sense or find there is suspicion of potential misconduct or legality, avoid.

6. Diversification : For risk adverse, this can reduce our gains but we also cover our down sides. We can have bonds to minimize portfolio fluctuations however make sure it does what you hope too and not increase your risk. Amount allocation depends on each.

7. Peace of minds : If any position cause me to keep thinking or have sleepless night. Act on it quickly. The actions may cost but in the long run we will have healthy minds and body. And this is needed to manage our portfolio and our life.

8. Treat your portfolio as a holding company : And each stock a company in your holding. Unlike real life owner running their own company, stock investors have the flexibility to adjust the percentage of each company to manage the risk and rewards. With this mindset, is really a business of managing your holding company.

The above best describe my investment behaviors.

Cheers

Cory

2020-0102

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

Cory Diary : Year 2020 Performance

Year 2020 has been quite tough. Both STI and Cory Performance have been underwater for most part of the year till early Nov when we see a significant breakout. The year is best remembered for Covid-19 freezing up the broad economy excepts for the Basic essentials, Medical Protective equipment  and technological companies.

For Dividend Players, depending on the specific segment we focus on, have range of impact to performing ones. Hospitality stocks are significantly hit. Retail Malls are bad. Industrial and DCs are doing well.

STI dives deep into negative territory and at it worst more than -30% in Mar'20. It then do a surprise leap from -25% to -10% range before settling at -11.7% for the year. Including dividend probably around -8% range.

Cory Portfolio do a further rise in a not-so-tandem to STI index and ended up with +5.4% beating the Index by 17% margin or around 13% if we include STI ETF dividends. Do keep in mind Cory portfolio has about 23% allocated to fixed return investment in low yield bonds. All this is relative. Compared to significant Tech rise, Bitcoins and medical stocks who benefitted from the Covid-19 situation, the Portfolio returns is mediocre.

The disappointment for this year is the dividend cap on the banks and the rebates by the retail malls which directly hits Cory Portfolio. While the banks have recovered in stock price, I still wish the cap to be removed. The malls have yet returned to their previous price level. It will takes some time and hopefully we get to see it in Year 2021.

What I did well is to clear hospitality stock before the march crash which have my down side protected. Investment in AGT bears fruit as well. What not so good is to clear all my STI ETF right before the Nov Climb which mute my recovery a little. However this put the portfolio in better yield position in the future.

Right now It appears the Portfolio has reached certain limits and for a breakthrough in Year 2021 the banks need to have the caps removed and Retail Reits will need a more robust business recovery. I may also consider exploring for more growths.

With limited risk mitigated option, Year 2020 investing in CPF is not a bad idea at this moment but we can only do so much as funds are basically locked away for long time. Do we have to explore more in Year 2021 ?

Happy New Year !

Cory

2021-0101

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

Cory Diary : A Short Story for my Daughters - VC MA Contribution

To be frank I only learn this term VC MA quite recently. This refers to Voluntary Contribution to Medisave Account. Few weeks ago I tried out VC MA with $1K via mobile transfer. And today after reading another blogger doing contribution and as a reminder, I decided to add another $5K. The process is very similar to CPF Housing Refund which I blogged few months ago.

There are few reasons why I am doing this. 

Firstly, my MA is not max obviously and I missing out 4% returns without risk of capital technically for years. This week trying to find an investment return in the last week of December seems quite tough. Nothing looks cheap enough for me in the stock market despite my search for the past couple of hours. The market is as listless as ever. So frustrating.

Secondly, total S$6K contribution amount pale in comparison to the fund available for equity investment. What's holding me up is liquidity if I do need the cash which I find rather silly now.

Thirdly, unused amount of CPF MA will be passed on to family when I expired. 

(The remaining Medisave balance, after the payment of the last medical bill, will be distributed to your nominees upon your death. You can nominate those you want to receive your CPF savings by making a CPF nomination)

Fourthly, of-course CPF MA can be used for medical bills and for my loved ones. And for technical matters Tax Benefits.

Dear Daughters, this is the way. My legacy to you.

Cheers,

Cory

2020-1229

Cory Diary : Wealth Accumulation

Saving is key to wealth accumulation else whatever we earned is spend away. And if we get addicted, we could fall into debt spirals. Therefore to most families, we are often taught to learn to save when young.  Culturally we have been conditioned to save.

However people often do not realize that in order to save we need to earn. To put it simply, how much we earn gives us the needed runway to save. However, to most people like me that being a worker to earn monthly salary, it is the typical process that forms bulk of the earning.

We only have one life. How can we break through from here ?

1. Side hustle : Unless you enjoy doing this not easy. There is no risk to capital as salaried man unless you are defined in item 3. Is a temporary measure to help boost some saving but scaling is tough.

2. Stocks : Risks. You could lose your pants and set you back for years following tips or herds. A place where knowledge and skills are tested out together with lucks and experiences. This is a viable alternative income than doing business oneself.

3. Busines : Mentor or understudy in family business I would think will be great. Outside the bubble, risk of failure is high. Most are not fortunate to have the luxury to be born or work in a family business.

4. Gamble : The fact works against you. How do you think Genting and Marina Bay Sands survived on ?

5. Career : Generally getting a career in MNC or Gov related gives a good boost to your income. To top it off the annual bonus and benefits are much higher. This is a really good place to start.

6. Property : With ABSD and TDSR in force, a lot of cash has been held idle. A new generation of locals with only one property. For living and investment, one probably has to buy one with the largest affordable range and then scale down with the hope of making profit out of it. The alternative will be two private properties under separate names.

Not surprisingly item 5 is something I am most comfortable with. And here's how I got my First Million. Hard work and working smart.

However it took more than 30 years to hit my first million in Net worth considering we have to go through growing up, education, learning and working with starting salary. 

Less than 8 years to hit 2nd. It gets easier with time due to increase earning power and investment allocation. And that's when item 2 and 6 come in for me which are Stocks and Property namely. To do them we need to avoid pitfalls. Is not something we like to experience with, even though some time we may. So always risk mitigated.

Typically I go for things that are more transparent, more accountability and better recourse. I do not believe in hearsay and rather do my homework reading quarterly reports. Trust is cheap. And it took me slightly longer before I got into local property investment.

Whatever we do put health as first priority. This can be mental or physical. Else whatever we earn is for nothing. I have added one that it has to be ethical too.

Cory

2020-1227

Cory Diary : Assets Allocation 2020-1224

With the year coming to end soon, I want to provide finishing touches on my overall assets allocation. And this is with context that I will continue to spend more time oversea for a few more years before my first kid will starts schooling which I would then decide should they go to private and then international school or be back for good.

There are few good news and bad ones. The good news is that I have been informed about my year end bonuses and glad that it is better than last. Really Christmas Presents I told my Boss. To top it off there will also be shares which will only be vested in stages. While the value of the stocks have risen which result in smaller number of shares given out, prior years company shares already vested will see a good capital appreciation.

The bad news are my elder daughter got enterovirus after few days of high fever which finally subsides with rashes mainly on her lower limbs. We are still puzzle how she got it considering no one else had it. Now we need to make sure it doesn't spread to the newborn. So for this past week has been quite tiring to ensure this won't happen. The first born was smooth sailing. The 2nd birth was to give me the true experiences of fatherhood. But I would recommend Nobel Prize to anyone who can produce Vaccines for this Viruses.

Regarding my assets allocation, if we are to take a peek on Nov report ( link ) , the pie has increased with stronger stock market performance. Key changes are as follow.

Equity allocation has risen from 29.9% to 31.2%.  Bond has also increased from 7.7% to 9.5% which is temporary due to one of the investment is going to end soon.

Investment Account has reduced after I am able to find enough replacements for the funds from AGT which was suspended for delist.

Closely related to it is my saving account which has seen some reduction due to CPF Housing refund completion. I have also tried out VCMA and still deliberating whether should I max out my CPF MA. Keeping in mind of year end salary and bonuses coming in soon which will expand my saving. I will probably do in stages over a few quarters if decided to proceed.

To top it off, I have match 3K to my newborn CDA account. I will probably not add more before I have my own CPF accounts manage right.

Merry Christmas

Cory is now a year older ...

2020-1224

Cory Diary : Expenses Year 2020

As the year come to a close soon, is a good time to estimate my expenses for the year. Previously I blogged about my expenses in Year 2019 which is kind of "shocking". 

This year the expense is quite bewildering for Year 2020 too recording more than $140k for me alone excluding my wife credit card and cash expenses. There is a large portion due to Housing instalment. Maybe near to 40% which is smaller this year due to higher total expense. Even then this is quite huge considering the average local income for the remainder of expense size.

However interestingly, my Net Worth continues to keep up despite the spending. One of the key component that manage to help support it is due to stock market dividends or net gains supplementing my income. The other will be the principal of the home loan is counted towards my Net worth. And finally year end bonus if any. So it doesn't look like I will feel completely safe without a job. And to acknowledge help given, Baby Bonus do chip in some.

Major Expenses

Year 2020 is larger due to 2nd baby. Even though we buy fewer items as she can use the leftover from our first, there are items we cannot forego. One of the key item will be month long confinement period ($12k) which I reward my wife for her labor in delivering our second child ($6k). And then we have additional nappies and more expensive ones for my elder as she grows. My wife is very particular that it has to be made in japan to avoid allergy for their sensitive skins.

The other major expenses are taxes which I help to cover for is my wife income as well. Our combined taxes are "frightening" LOL for an average couple like us.

As usual, I take it as a responsibility to provide my parent allowances. It is a big ticket item which I would not reduce as my family grows as their expenses will not change significantly due to them. 

As said earlier, housing expense is the largest and that is because it consists of two components. One is the interest expense and the other the down payment of the principal. I am still deliberating should I include both but they do hit my cash flow. So read my expenses with context as we included both. To be frank  I am not perfectly consistent here as we do not include insurance expenses and it does has returns. I also do Not include CPF Housing Refund which is excluded from expense else it will be another balloon.

Finally this is followed by Food/Fruits Expenses which easily take-up more than $20k. This works out about minimum $55 per day for the family.

Cheers

Cory

2020-1216

Cory Diary : Misconceptions of Dividend Investing

From experiences that I had so far, here's the collection that one should watch out or be reminded on the misconception of Dividend Investing.

1. Yield is Everything

This cannot be right. If Yield is all that's matter, investment of such can be automated to the highest yield and nothing left for other lower risk assets. Does this make sense ? Money where got so easy to earn. Want to gamble, go Casino better because better odds !

In reality, one needs to filter out High Risk from the portfolio before allocation of different other risk levels before yield. As you notice, I do not have EHT, Lippo in my portfolio. High Risk Reits are a Time Bomb. Is a matter of when.

First Reit is managed out from the portfolio in Year 2019 with cut loss at 0.945 when the risk is not worth to hold. And that is at a year where the Portfolio has a Record Profit of 20% XIRR. A mindset of never ever feel rich to lose money.

2. Rights are bad for dividend Investing

Any old time Reit players will tell you there is good opportunities to profit from Rights Issue. And if we are to go this dividend path, one should not be feared of Rights Issue. Is it exactly this fear that allow people to profit from you.

In solid Reits so far such as FCT, CICT, Ascendas, Mapletree etc even without subscribing to Rights does not mean your DPU will be materially impacted. Do nothing can still be ok.

3. NAV Valuation

Can be quite misleading. One recent example is First Reit where their NAV is off rental income from the property. However how is the rental derived can be from complex negotiations between the Reit Manager and the Sponsor or the Tenants where there can be consideration for other compensations that is material. This is make worst if there is credibility issue with the Sponsor who artificially jack up the property prices to the Reit they controlled.

4. Gearing

The formula for Reit is Total Debts / Total Asset. Any other formula that you read from Quarterly, Half Yearly or Annual Reports are just to communicate a better result view. Another way to give the impression of lower gearing is through Preference Shares which is not counted into debt therefore one has to be careful.

5. Capital Gains

Dividend investing doesn't mean we lose out in Capital gain or loss. While the stock price tends to come down upon ex-dividend, due to constant earning of the underlying businesses, the stock generally will fill back the gap. And with ever decreasing rate, the attractiveness of profitable businesses can push up the stock prices. But one do have to remember they aren't tech stock and should never have such mindset on their performance. Like many stocks, they also float with the market tide but with varying degrees. There will always be good and badly run Reits.

6. Cost of Debts

Ability to raise fund with lower cost makes running a company much easier. So this helps in your stock selection when we are ranking similar companies except cost of debts !

Cory

2020-1213

Cory Diary : Performance Nov'20

In my earlier blogging which I mentioned that it is better for me to be in the Green than to widen the lead against STI with Portfolio still in the Red. And my wishes is awarded as such by end of October. The gap final close down to 15.7% which reflects remarkable STI returns within a short span of time cutting it losses just below 13% and probably single digit after dividends. My portfolio returns almost 2.8% in the black on the last day of the month.

If we look how the year started with Covid-19 and how the bleak the situation is, many people would be surprised that we could end in the black for STI. Nothing impossible. We shall see how it performs in Dec. Currently, after a good run, there is some correction.

 

What is hindering STI is probably Vaccines solutions in which countries are rushing them out in record time. The damage to the economy specifically to the Airlines are long term even if the economy recovers. I am also a little reluctant on Hospitality as they will need to do much more to repair their balance sheets. I would think some how we need to price in Virus risk into their stock price.

As for the laggards, Retail Malls which are quite cheap for those that support daily necessity. So this are ones which I am positioning. Others possible contenders will be SBS Transit, SATS and ST Eng. There is some trading play on the Banks but it will remains a key stake as I have emptied my STI ETF.

There are also a few others like MLT and MIT which I decided to KIV unless they comes down enough to improve their yield. I really likely to own them but the situation has to be right. Maybe I will kickstart with small positions if there is further reduction in their prices as AGT has make it way out of the portfolio after the 2nd tranche has been distributed.

Lastly I am tempted to return to Sheng Siong .... except that valuation is not cheap. Perhaps I need to be more patience. 

Cory

2020-1202

Cory Diary : Singapore Market 400 points climb - 人算不如天算: Man Proposes but God Disposes

Man Proposes but God Disposes

When I post on 31st Oct, on Wash my cards, basically as I said " The goal is to protect capital, maximise dividend, risk adjusted." The market looks like going for another deep dive like in March 2020. Therefore the learning will be how to mitigate the situation. The main change is  removal of STI ETF due to expected lower yield coming distribution because of banking segment dividends have been restrained.  And a few counters. However most the portfolio I was prepared to go with the swing and considering the amount of cash raised that can be quickly put to pick Durians. LOL

On exactly the next week trading day, STI ETF starts it maiden climb. Roughly 400 points !

In Cory Portfolio, the swing is $88K from negative loss to positive returns. What-if STI has stayed in the game ? About $11k additional gains. However during this period , I have put some of cash  into Vicom and a few counter changes which help to alleviate few K returns. So in total the mitigation cost me probably 6 to 8K of returns. I would have hit a few more if manage to buy SPH in time which I was about to prior yesterday .... omg ... the rise is crazy ... to my frustration.

So here we are with higher yield dividend portfolio but slightly lesser net returns from past 3 weeks. What notably is the STI pace may not be always align with the banks so is broad based economy that the market was pushed higher into. This is rare in recent times and I am not sure it that a new direction which big money is buying into a broad index concept. Nevertheless the gap is now much smaller in the range of 15% against Cory Portfolio. I am still happy as I rather to be in positive than winning STI huge but with negative returns.

Singapore broad economy is still weak while Japan and HK go into another Covid spins. So a pull back is possibility from the capital flow injection which is blunt imo. Nevertheless I will rather take a 3% Positive returns anytime for the portfolio. Staying vested in market in sizeable manners help me this time again though I still find it could have been better to me ......

Cheers

Cory

2020-1121

Cory Diary : CPF Life - FRS or ERS

Some period ago I have decided Basic Plan is the way to go considering my age and investment portfolio I have that choosing moderation will be preferred. What I did not mentioned is should I default FRS or go for ERS. And in this article we will try to find out.

" For members who turn 55 in 2020, their Basic Retirement Sum (BRS), Full Retirement Sum (FRS) and Enhanced Retirement Sum (ERS) are $90,500, $181,000 and $271,500  respectively."

To hit ERS, I need additional $90,500. So basically multiples 1.5x of FRS.  Let's use FRS to see the returns.

Current FRS = $181, 000

Current Basic Plan : $1,272 - $1,404 starting at Age 65

Take note the Basic Plan payout is based on below notes form CPF through CPF Life Estimator Calculator.

"The monthly payouts, total payout received, and bequest amounts shown are estimated based on the Retirement Account balance provided, current CPF interest rates, and current mortality assumptions. They may differ from the actual figures. The displayed ranges are based on interest rates between 3.75% and 4.25%, and do not represent the lower and upper limits of the payouts"

Let's say lifespan of 80. (updated chart to correct year error)

Counted slightly more using 1st Jan for Bequest. Roughly XIRR of 4.4 %. Is that of any surprise to you all ? Do note that for worst case is 4%.

One thing to add, if you manage to live to Age 99, XIRR will be 4.9% which is investment returns equivalent of 4.9% for best case.

Should I go ERS ? Maybe I can do Top-Up after 55 to decide. CPF is more like a reasonable good safe harbor in case I become senile.... :)

Again DYODD as we explore the journey.

Cory

2020-1117

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