Cory Diary : Sustainability of Dividend Income

In this post I like to blog about how I try to rise and maintain my conviction in dividend investing. When we talk about dividend investing, the play is about total returns of the stocks. Therefore, DPU + Capital Gain/Loss. What this mean is the measure of shareholder total returns in any of this forms.

Realized gain is actually not so fruitful exercise other than incidental situation to rebalance the portfolio or when there is fundamental change in the company. If one does not have the main mindset of continuing run the dividend business through compounding the portfolio growth with long term skin in the game, this strategy will be painful to your Health. haha. So the first mindset is, we don't realised capital gain or cut loss unless specific condition as mentioned is needed.

Quality Companies come with a price. Reits performance are usually ties to Sponsor, Credibility, Capability and Business. A good sponsor provides support of low funding cost when Reits borrows from the bank. The Reit/Sponsor Credibility is the most important however but as long it satisfies enough returns in a Win-Win situation, investors will be willing to push up prices. Management capability play a big part too. Another key area is the business type. I won't be interested in Ship Business as their depreciation is real and heavy whereas investment in properties are much more robust and can even grow with inflation. 

Yield is tricky. Forward yield is more relevant than current yield when comes to long term investment. It helps to support price and if it doesn't, an opportunity to average down for higher dividend returns in the future with lower cost. Current yield can spikes due to decrease in stock price. So one must do their home work to understand the mechanics on price decrease reasons. If a Reit is sold down without good justification, is a gem to get them. However if we are anticipating consistent poor performance or ticking time bomb ie. First Reit sustainability of contract, high yield can also be a Warning to avoid. When a yield keeps going lower but DPU maintains well, this likely due to increase in stock price. That's mean the Reits are probably doing it right and if this can last over a long time it will look more expensive. There could be situation where the DPU drops with increasing stock price. The Market may feel good about the future but one has to make sure stock price can be sustained.

Business Risk comes in many form. Short Lease, Depreciating Currency, Poor Future Contract, Poor Cycles, High Borrowing Cost, High depreciation, High maintenance cost, High Perpetual Cost, High Gearing, Bad acquisition/Sales, High Taxes, ... . If we feel a specific event could change the dynamics significantly, we may need to re-balance or cut loss. This has nothing to do with whether I still make money from the current investment or not.

Diversification to me helps to mitigate my wrong choice. ie. Retail Reits. For example I use to have CICT mainly. But today FCT is more but I still retain some CICT. In-addition I have MCT on accumulation path for months. Many decision needs not be 1 or 0. Of course to maximize profit, we may have to do that and this are probably for Experts. Am I ? It also depends one's risk appetite. Between counters I may do within sector rebalance as needed with changing market situation. There is also need to look at broader and deeper diversification such as Industrial Reits due to Covid.

This result a Portfolio of Reits where we can play around the allocation with specific needs. If we do this right, we will see compounding growth in Value and sustainable Dividend over many years. After learning for many years, maintaining a dozen stocks of Reits are not really hard because the business usually are not difficult to understand unless one try to be picky say between 1.1 or 1.2 performance differences. And I could be wrong and still be ok and will not be left far behind. Will there be a day we will see a large fall in our portfolio. You Bet ! A 1M size on large crash say 50% drop, is 500k capital loss. A big test on you. Will you Hold, Buy or Sell ?

Thinking ....

Cory

2021-0611

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 : Weighted Average Cost of Capital ( WACC)

"Low-interest rates may also lead to NLT’s regulatory weighted average cost of capital (WACC) for the next review period (Jan 2023-Dec 2027) to be revised down from 7% currently, adversely impacting distributions potentially. In addition, there is no visibility on any acquisition by NLT which could be positive catalyst in the long term."

Bumped today on how people is concern with WACC. So I started to do some research into it. Basically this can helps to determine how regulator managed regulated companies.

" A high weighted average cost of capital, or WACC, is typically a signal of the higher risk associated with a firm's operations. Investors tend to require an additional return to neutralize the additional risk. ... In theory, WACC represents the expense of raising one additional dollar of money. "

The WACC formula is as such

Basically is the weighted amount of Equity Cost and Debt Cost.

Cost of Debt

2.87% of 509,120k and 1.2% 155,587k

= Weighted will be (14,612k + 1,867k ) /664707k

= 2.48%

Cost of Debt Variables

Gross debt 666M

Market Cap 3683M

Tax rate 17%

CAPM

CAPM model to estimate cost of equity.

Cost of Equity

Let's say Risk free rate 1.53% per Singapore Saving Bond

Expected Rate of return say 8.3%. ( 5.34% yield + 3% growth )

Cost of Equity = 1.53% + 0.3 x ( 8.34% - 1.53% ) = 3.573% ( 8.34% for Beta = 1 )

The calculation of Beta is tricky. Who should we use as reference for NLT ? Should we use STI Index ? Since NLT listed in Year 2017, their stock price has raised more than 21% compared to STI -1.3%. Yahoo put NLT beta as 0.3. Some other put 0.5. This one need another article to think about and compute !

If we assume Beta = 0.3,  plug in all this data into the model, we have

WACC = Weighted ( Cost of Equity + Cost of Debt )

= 3683M x 3.573%/(666M+3683M) + 666M x 2.48% x (1 - 17%) / (666M + 3683M)

= 131.59M/4349M + 16.52M x 0.83/4349M

= 0.03 + 0.00315

= 0.03315 or 3.315% ( or 7.3% for Beta = 1 )

Below is NLT model. There are other moving wheels such as Depreciation and Opex for Rev determination.

Interesting Exercise. However this is my First pass. Please DYODD.

Cory

2021-0606

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 Updates

Seems a long time that I last did my Net Worth report. Some time ago I do some revamp on my Chart to make it even more easier to manage with lesser time. During this period I learned how to use macro in Excel to do VBA. Quite excited about it as this add a layer of automation to my learning. It is much simpler than I thought it would be. Maybe I can start to learn to do some tool for my colleagues as automation is sorely lacking even though we have some power tools using VBA, BI and Power BI.

I added a trend line in my chart just for fun. Though it might gives the impression of exponential type of feel into my net worth growth, seriously I doubt it can last. I am going 52 and looking forward to age 55 as a milestone which I could ask for retirement. Frankly I am not sure I would when time arrives. Nevertheless is something I look forward to in the aging process as an option which is favorable by then.

Back of my mind is I could be "retired" before 55 but this seems less likely for now as the company business is doing well. They even give a special bonus to boost Work-From-Home Morale. When you are at my age, we are earning a much higher salary that is near the peak of our career. The cost of retirement would be costly. So there is always the motivation or to some fear factor in play.

I am thinking should I do a comparison against my previous net worth report but is quite a hassle when I want to go sleep asap. I am nodding off.... . Instead I would focus on a particular highlight in the chart and talk about it which is the securities + MMF line in the chart. Is getting more steeper which basically is the result of my action to optimize wealth generation. Therefore channeling idle fund to more active use. There is still some gap to fill except that sizeable amounts allocated for War Chest needs. So the easy picking is reduced.

Cory

2021-0603

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 : Investment Evolutions

Coming from below average income family of sandwiched class, foraying into investments is an evolution process. Basically I can't see it till it happens naturally "A common sense approach". It may not be the best but is suitable for me so far for a self learning investor who basic core believes is we must understand investment ourselves.

Started with years of education like all locals, and then started saving and basic life insurance. Thanks to my parents I am able to study in local University. When we save enough, start to play in stock markets. After a few years as the investment grow into sizeable amount, our bets get bigger and bigger. This after, we have our first HDB apartment.

As career progress, we have more saving for investment and it becomes a portfolio. To build up a sustainable second income stream, Dividend Investment becomes the plan of the day.  After few years, the amount is enough to sustain a reasonable annual income. This is when we explore property investment into Condo.

Money continues to roll in with continue salary income, dividend income and property income. By then I am already in my 50. Retirement clock starts clicking and started exploring funding sufficiency to support lifestyle retirement and this is when CPF kicks in as basic net investment returns while bonds are slowly kicked out.

This CPF investment phase is pretty quick because we will be at our peak earning capability phase. And then we can do the next leapt into growth stocks to maximize returns in a way after having the experience in investment knowledge, building sustainable earning and achieving asset net worth.

I stop here. This is where I am now.

So far, what I could do better ? Some people say I could do much better while others think I am lucky. Other than roll of luck jumbling up on which to go first, I am grateful of what I have so far. Life is not Bed and Roses, let's not make it Tougher. 

Ah Yes. I have two toddlers. God Grace to manage to have them in my 50s. What's my priority, them lah other than Health. Be Safe. I wish those who want to be wished.

Cory

2021-0530

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 : Recent Trades - Portfolio

There are quite a few Re-balancing going on  before Indian Variant Covid wave hits our shores.

1. Moving some shares from CICT to FCT. My Rationale is that Suburb will do much better in the long run to ride over Mall impact with recent outbreak. This is the second time I reduced my stake in CICT but for different reason. The result did not meet my expectation when price level was at 2.27. FCT stake is already much larger than CICT today but it can be more. Another reason is I want to reduce my dependency on Capitaland considering I have exposure to Ascendas Reit who they are also the sponsor. At current price, Ascendas is attractive but I would want to time my DCA for YTD Cost. With Covid in play more again, Industrial Reits are preferred.

2. Cleared my Cromwell Reit Position as they still have significant amount of office spaces. Their recent 5 to 1 share reduction leaves room for desire on not focusing on the business. The sale of asset also keeps me thinking why it was included into the IPO. This reflect badly on the sponsor. Since I am in profit year to date on this counter, gives bigger push for me to move on.  There is a small hit on my dividend as it gives more than 7%.  So why not iReit. Simply key tenants are much more sticky so their office will be hardly impacted in term of occupancy.

3. Started my process on averaging down Tesla by a few shares at a time. Even though is quite costly to use Poems for a few K value at at time as I want to do this over long period.  A very slow process after clearing off my HP Inc and APPL shares. With that I consolidate my positions to just Alibaba (HK), Microsoft, AMD and Tesla for Foreign Shares. Managing their returns due to rate changes can be quite interesting.

4. Increased Sheng Siong shares recently before the run-up due to Indian Variant. Still not significant position to benefit much in absolute amount even though percentage return wise looks nice. Still monitoring but considering position is not large I will be holding it long term for this amount as this will allow them more time to expand their stores and therefore chance are will be near to maintain high level of Covid returns.

5.  Managed to increase my Vicom holding to 4.5% of my equity portfolio. This is more a bang for the buck to worth my time to follow up on this counter. Long term wise I still find it relatively attractive as a defensive counter. Regardless gas or electric car, testing is still needed. So my thought process is this will be needed long term. The catalyst is other testing expanded which so far needs more focus.

6. Average down on Mapletree Commercial Trust. Surprising this counter is not performing well in price Year to Date compared to other reits despite it's strong fundamental. This gives me opportunity to average down at lower price. I think this stock will help drives future earning of the portfolio as I think Business Park is more robust and that Vivo City despite impact from Pandemic, will still do ok. 

7. After hearing DBS CEO sold some of his shares, I realized the price is quite good for me to offload a little as well. I think at this current price, it can go further but there is also a good chance it will fluctuates or even go lower with market condition. However DBS I am still hoping MAS will lift the cap on dividends. To be fair, there is many reason why one sells and to him is just a tiny portion of his DBS shares. Nevertheless the price must be quite good even though not representative of the future of DBS. Considering we are in good profits, is good to take some away from the table to build up cash. Still have to be careful not to offload too fast despite Fed repeated reminders that they won't raise rate near or mid term if I interpret they language correctly.

Finally, what I like to see my Radar chart coming to be. If there is opportunity, more Sheng Siong, Elite, Tesla and Alibaba. I also plan to acquire more MIT through Rights. Theoretical Annual Dividend Max 57k allows me to focus more on growth stocks which has been going through correction phase.

thanks

Dennis W.

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 : Netlink NBN Trust : Bao Jiak Business ?

Half Yearly Report just out. 5.1 cent dividend. Respectable returns. Far from Tech and Crypto and slightly lower than average reits returns iirc of different level risk. With a yield of 5.2% annualized, this is 1.2% higher than government guaranteed CPF SA account.

Netlink NBN Tr is a regulated business on how much they can profit. At current rate, is not significantly overvalued and I would think regulatory will continue to let it move along current direction for the foreseeable future.

Residential growth slowed to a crawl in this Q4FY21 but filled by NBAP/Segments during this Covid period. This mean leaving rooms for future residential opportunities. People who want stable income with some level of capital protection, this maybe good stock to be in considering most of it businesses are sole managed for practicality.

The current risk is 5G technology which may derailed their consumer side on last mile profits if they are not going to tap on their home fibre network. Nevertheless this tech is still far from many homes which has denser connect points, immediate needs for the next few years at current media download, normal use and gaming are quite sufficient for majority of people.

There is mention about more debt head room and new investment opportunities. This sounds interesting.

Note from report

"NetLink Group’s distribution policy is to distribute 100% of its cash available for distribution (“CAFD”), which includes distributions received from its wholly-owned subsidiary NetLink Trust (“NLT”). NLT’s distribution policy is to distribute at least 90% of its distributable income to the Trust after setting aside reserves and provisions 

for, amongst others, future capital expenditure (including the funding of a capital expenditure reserve fund pursuant to regulatory requirements), debt repayment and working capital as may be required. Distributions by NetLink Group will be made on a semi-annual basis, with the amount calculated as at 31 Mar and 30 Sep each year for the 6-month period ending on each of the said dates"

Cory

2021-0512

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 : Information familiarization work of SPH 2021-0510

SPH 1st Half '21

119M Operating Profit (16% Increase from last year ).

The increase is smaller if we consider more than 6M divestment gain (Buzz), and 3M lesser retrenchment cost therefore lower staff cost. There is also lesser interest cost about 1.6M, and about 700k foreign exchange gain which I am not exactly sure count towards operating profit. However there is a statement which indicate it is from "1(a)(ii) Notes: Profit after taxation is arrived at after accounting for:" which are there misc saving/cost.

SPH has net asset of 5.2B after account for 3.5B of borrowing. If we use gear standard to measure gearing, is very roughly 40%. Net Cash equivalent about 959M.

Shares Structure

As at 28 February 2021, the Company had 1,591,512,137 ordinary shares,

16,361,769 management shares

On a fully diluted basis 1st half earning is 5 cents. NTA increase significantly to $2.24 from $2.06 at group level.

Media

".. Media advertisement revenue fell by S$46.5

million (27.9%) with Newspaper print advertisement revenue declining by S$36.3 million

(28.8%), and magazine advertisement revenue declining by S$8.5 million (55.5%) partly

due to the cessation of the operations in Malaysia. ...

... accelerated by the impact from the Covid-19

pandemic. Pretax loss of 9,7M if we exclude JSS.... "

SPH to restructure media business into not-for-profit entity

Transfers all media assents including leasehold New and Print centers, Digital Investment asset and Intellectual property rights and publications. 80M cash and 30M of SPH shares/ Reits units. That's what I got from listening to Chairman from you tube.

Q&A

The two questions by CNA digital in the press conference are quite interesting.

The first is about editorial integrity. Even at today structure, the gov has close reach if they find something not ok with SPH being a profit enterprise. So this is really puzzling question as she seems to indicate today SPH put advertisers more.

The second question is on earlier retrenchment has failed and who should be accountable. In corporate management, is not unseen that poor performing unit can undergoes many rounds of cost cutting. And if still not enough, it can be closed or sold. So to mention about accountability is insinuating something else which I find not really fair and unfortunate. Even if Media finally spinoff the cut earlier is still necessary as some departments like LBY said on advertorial side will be permanent and investment can be channeled to elsewhere.

In both questions, that Journalist imo makes two serious mistake. Did she put journalists of SPH lower and using SPH conference to judge SPH CEO that earlier retrenchment is unnecessary and he needs to bare the consequences ? Frankly she has no right. Is up to the management board.

All the others questions by other journalists are very professional. This also attest to us that SPH management board is right to spinoff Media to ensure high quality of journalism continues to remain despite business difficulty.

The CEO response was not so gentleman but he was hit below belt. Key takeaway, both the Chairman and CEO pretty aligned in the direction of where SPH should go. And I also find LBY performance impressive. I said my piece.

Investment

The spinoff is to cut losses quick as likely the advertisers won't be coming back unlike Retail Malls. One my think there is potential the stock price might reflect quick rebound like many turnaround. However this spinoff action sounds more like saving SPH rest of businesses rather than unclipping their wings since most property counters today are below NAV valuation significantly.

Cory

2021-0509

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 : When Bad News come, it Pours

The Virus finally hits the fan on the less developed countries. I was wondering why the situation so bad in America before the election. Probably the focus of the Media was on Trump to "Engineered" his down fall. Now with the Virus fanning strongly in India, Malaysia, Indonesia, .... this is indication that humanity may be reaching herd immunity while vaccinations are being deployed. There will be lots of sorrow and concern. 

Comparing to them, TTSH outbreak is really miniscule however we can't afford to let our guard down for it can also get out of control. In the past days restriction and quarantine procedures hitting the Island nation. It was dramatic change of event from Oasis of the East. With the virulent of the virus many could not afford to take it likely.

Unfortunately the contagious nature of this virus that keeps mutating, it has been a constant battle going on and on.  We can't have our life be on constant On/Off every few months even though we have basic standard to upkeep. Is like doing "Cha cha Dance" every time there is an outbreak. We probably may need to reach a point of have to hit 100% vaccination target and reach a stage where we allow virus a free pass through to return life to normal. This probably would need to take more concrete data to make sure the assumption is reliable on the safety and impact if any. Mean time my Mall Reits took some cutting .... .

While the country is trying to vaccinate the population, a smaller groups of Singapore and PR stationed oversea have been forgotten. How many will want to take the risk to fly back considering the daily infection rate from oversea coming to Singapore and the quarantine periods back and fro- in dedicated hotels. Neither do they have priority in the host countries when comes to vaccination. Maybe this is what embassy is for. They need to do something especially so for countries that are so badly affected.

Then Yellen mentioned about possible rate hikes. And the market starts showing cracks. She slips out what they all think in the bottom of their heart. However America is a nation widely dependent on the stock market for their retirement. Everyone purses will be much smaller if the market is derailed. I think rate hikes will come. .The issue is when such that the condition is right. The pivot point could be when crypto gets out of hand challenging the might of US dollar. My US stocks jitter a bit and then fall back to normal volatility routine.

Ascendas Reit was cruising well and then they do another private placement at the lower band of the offering therefore higher discount. They seem to try to exhaust their ability to raise fund till no more. I think this last round has reflected some fatigue on the market or are investors missing something of the Reit. No doubt the price will recover with the dividends however are we gone with the days with minimal or no discount placement. Savvy investors may find this great opportunity to average down. However we need to be cautious to not just look at acquisition accretion but also the dilution of share with discount, resulting lower DPU in Net is worth the effort or the whole exercise is just about fattening Capitaland pocket ? Will Ascendas Reit continue to be of high standard as before or Investor needs to start crunching their numbers to micro level.

Started exploring Dogecoin Wallet recently. Take me days to install DogeCore. After it is done, comes to a halt when I could not install XMRIG .... to start easy mining ... to get some coins to try out. Seems like Anti-Virus treats it like a plague. I have a constant fear that my PC will be compromised as well. Will probably give up trying.

Lastly, portfolio year to date hits 5% returns. That's is like more than 7% behind STI Index ( Best Regional Stock this year so far ). It has been a long time that I am beaten so soundly. Interestingly, I am still feeling upbeat about my shares. That's conviction I guess or what's left of the hope I have ... ... ...

Cheers

Cory

2021-0508

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 : Frasers Cpt 1H2021

FCT has solid properties mainly in key locations next to MRT. Their returns grow with the Singapore economy and the mass population reside near to their malls.  The remarkable ones are Northpoint north wing and Waterway point which have Condo residences above their malls in Integrated concept to transport hub and community services. See below. Basically community revolves around this malls. They are basic necessity and which benefits further from WFH. Both malls are huge and for new comers therefore getting lost in there is normal.

In last week half year report, 1st half DPU 5.996 cents. In which 0.132 cents already distributed last year. If we annualized the result, is about 4.9% at $2.45.

If we roll back to year 2019, FCT hits 5.7% annualized at today price. DPU 14 cents. This is pre-covid. Logically speaking 2nd half will also see better result unless macro factor or .... . So it looks like a given in next half yearly amid expectation will be smaller increase.

Interestingly, the stock price did not manage to held up and fall back to $2.45 last week. We are talking about 28.4% dpu increase compared to last year where retail was in deep covid. Now with Vaccine deploying to masses and we getting to new normal, is not unreasonable to see stable 5% yield returns. That's like 12.5 cents of DPU annual. So if the market further corrects to $2.33 roughly a support point, that's will almost be a full year dpu. This will certainly make it easier to meet pre-covid yield LOL.

Question will be what will you do as a dividend player on a well established businesses ? Uncle Cory will have his grenades ready. Bazooka will probably be next.

Cory

2021-0426

PS. Current Bank loan rate is roughly 1.5%. FCT giving out stable 5%. Make sense to max out your home loan ?  There is always risk so DYODD.

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 : What keeps me worry at night

Beside money, yes besides money ... Is Not Investing Enough. If one has done their Maths, they will know that to meet specific lifestyle, how much is needed to grow our asset financially to achieve prudently and lasting our lifetime. Of course one could live like a "Beggar" but this is after we failed to achieve the goals we want and still shout out that we are still financially free because we can live within our means.

However do not need to be too perturbed about the use of word "Beggar" as in context is meant to not meeting the level of standard deep down in our heart we hope to have but likely much further from our dream. Now, to throw our weight or asset into investments, we need to look further ahead. How far depends on one attributes. I would say after investing for more than a decade, 6 months are pretty good estimate of where we going to be. Is still not 100%. Maybe 7 our of 10 will be a good number that we will be ok if we are to use number of stocks as measure. Which means ... we need to diversify.

A month ago I sold some of my DBS shares before Ex-dividend. A small bet that I am able to get it back cheaper. Do this a few rounds. The last one waited past Ex-dividends. And I manage to buy most of it back yesterday. Phew. This keeps me awake at night for kopi money.

Next, are you a dooms day person even when we are on recovery path ? I happen to read some articles while walking home. In year 1918 pandemic, the world recovered in about 2 years without vaccine. Basically stronger strain dies off and population immunity. Probably 100 Millions died. Will this be a good estimation for Lesser Devil Covid 19 ? 

With all the printing to support Covid Packages around the world, will there be a bubble ? I think we have not seen Euphoria yet despite US market reaching ATH due to K Recovery, and market steering to businesses that do well during this pandemic. Maybe Crypto will ignite it. Maybe SPAC will. Maybe WFH will. Maybe .... Blockchain will ... ... . By now you know all this doesn't keep me awake at night.

thank you for reading. Good night.

Cory

2021-0422

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 : Growing Kiddo Wealth

One of the famous concept today movement I heard past months is 1M65. And if we are to inject 65k into our baby account and let it compound for 65 years, the account will grow to 1M. 

From Mr Loo,

"To make baby millionaires, you first need quite a sum of money: S$64,350 to be exact for each baby at birth, to be contributed into their CPF SA."

For Cory that will be 130k. Ahem ! Even for a millionaire, to cough out this sum is not like a walk in the park. This sounds more like headline grabbing rather than practicality riches of wealth. After 65 years, $1M probably be good enough after inflation, if we still have the purchasing power to pay full for a 2 room BTO if such unit still exist.

I could also use that money to pay for the down payment for another investment property increasing my alternative income. However in this environment, the idea of ABSD, TDSR... etc will kill it.

Maybe it will be way faster if I spend the money now on 1 BTC which could grow to 1M in 2 years if BTC supporters expectations are met. Or it could go to zero if the governments start to ban them. Turkey ban moves shade few percentage off BTC value just this week. Imagine this is by EU or US.

On another perspective, 1M65 looks like modern way of saving for children. If 4% compounded is not sufficient to attract my money which is almost riskless, not many investment could anyway. One thing likely could happen is my vote will be biased against any political party that try to rock my Kiddo 1M65 boat for the next 65 years. LOL.

If we take this movement as an idea, 1M is just Mr Loo idea of compounded saving. We need not necessary have to narrow the concept and kill ourselves. We can start with any amount and build it up over their years and have it topped up as kiddo grows up. For a start on accountability, after talking to my wife, we have their Ang Pao money thrown inside matched 1 to 1 by their father. It takes some work to tear up their packets .... but topping up SA for the kids are a walk in the park through PayNow. They now have 1K each.

Cory : "Honey, there is some anypao money I forgot to top up into their SA accounts. Anyway I have done 1 on 1 matching. I should keep this balances."

Bee : " What you matched is theirs. The balances is still theirs."

Cory : " ... ... ... "

Cheers

Cory

2021-0418

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 : Where are we now on Reits ?

Many of our quality local Reits are now in the range of 4%-5% yield. This is still much better than keeping the money in the banks enjoying miserable returns. One could say that well the stock price can fluctuates therefore potential for capital loss. However this is true if we trying to time our capital returns through trading and not about investing in the business.

When we look into our investment holistically, is a businesses that provides us returns in addition to recovering markets from Covid Impacts. Therefore chances are we will also have capital gains in near to mid terms. However such gains are in the mercy of the market sentiments and macro conditions. If one is to own a business, does it really matter whether how the auditor value your NTA (Stock price) or the criteria should be how much cash flow it is generating into your "CEO" pocket.

On this perspective, a well established business, can provide constant positive returns way above bank saving, fixed deposits or even CPF interests rate. The key measure will be sustainability of the business, growth and income. What if we continue to wait it out. The risk is lowering rates and therefore lower yields. Every quarter or half yearly reit investors still receive the dpu in which the returns could be buffered up for further compounding against market direction.

For the more savvy reit investors, we could look into Reits dominant in oversea markets denominated in US, Euro or Pounds. This Reits are views more risky due to currency, foreign market condition,  regulations and signs. Why "Signs". EHT has taught investors a big lesson on how screwed up it can be and that just looking at yield is a recipe for disaster. Taking a rear mirror view, a young unknown mgmt team, major shareholder selling, a depleted ship, poor travel reviews on its hotels, ....

We can go further on with Sabana, Lippo or First Reit. That we need to monitor our investments on what Sponsor or Management do. Sometimes integrity go a long way than just initial years of good returns track record. It can be their long fishing line too. Don't be their fish ! Always be prepared to Cut loss.

Now I look at the few riskier reits using Elite Com as an example. Elite - Con - old builds, limited contracts. Pro - Has started paying dividends. Government tenants. Premium rights issue. Weighted the Pro and Con. Based on current information, I could put some. This will help push up the portfolio yield a bit. And that's the bit we need. However don't be a sleeping investor. We have quite a number of screwed cases. Do our Maths. Close scrutiny on the management and sponsor. Track records. Be less forgiving.

Final note, look at Reit as a Simple to understand Business you would like to own for long term, and chances are we will do well in the investing journey.

Cory

2021-0416

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 : Things I found out from Property Ownership

Not in any specific order, I am writing them down as notes as it comes off my mind for the past few days. No right or wrong but welcome to correct any errors.

1. Using CPF to pay for the housing

I think every couple should own their first property a HDB. Is the most affordable and one should only buy the right size that fits their income. If overstretch, relationship can be bad. And couple could be stressed.  Happy family, happy life, and good health. 

Question will be should we tap on CPF to purchase the property ? No right or wrong imo due to different circumstances. Just to be aware that there is accrued interests that we need to pay back to our own CPF account generally. Reason being I view CPF guaranteed returns are attractive and it makes sense for me to refund using idle money in the bank.

For my case, my SA account is not filled therefore VHR makes sense as I will do OA to SA transfer immediately after. So now hit FRS. After which I can do VC3AC to build up my SA further. There is annual limit of $37740 for MC+VC.

2. Condo Maintenance is sizeable

Let say $300 monthly. This is equal to $3600 annual ! And as I know this is generally paid by landlord if you rent out. So if one has no plan to use the condo for investment returns rather home stay, there is cost attached. In-addition there are gov benefits that ties to type of housing you live in. However life on earth is limited and each one has their own lifestyle. Make the full use of it.

3. Monthly Instalment there are 2 portions

Why I mention this is because the impact from interest rate is mitigated as time past due to large portion of our monthly installment is for paying down the principal loan. One reason why I refinance to a Fixed rate loan for 5 years. Lock lower rate on surface but also bought 5 years.

4. Property Tax

Yes, there is a cost. Period. In-addition I missed my 2nd payment because they switch to paperless without my explicit approval. They then allow me pay up without penalty for this time only. I feel like kenna kick and still have to bow to them. Life is Brutal next to Arrogant. 

5. Employment/Income Risk

You will be tied down. Risk of unemployment. Age risk. At age 51, if I am out of job, what is the chance that I can find another similar paying job within one year ? And if I could not, maybe is unlikely 5 years down the road. To mitigate this, do you think 1 year emergency fund enough ? So chances are is either get another job quickly at much lower pay of mismatch skillset or plan to be retired regardless I like it or not. Yes, is a waste of my skill but bo pian. 

6. Loan Year Restriction on Age

This is big for me because of my older age I can only borrow for 14 years max today. What this mean is my monthly amount will be much larger due to shorter loan period and need to meet the TDSR the same time. So if I plan to buy my next property,  I will need to pay much more in cash.

7.  Rental Income

For $3000 monthly rental, annual income is $36,000. This is good amount to offset loan payment for investment property at my age. Therefore I would only own more properties if regulation is more relaxed. There is risk if we do not have stable income or saving asset, we could panic. So we need to plan right as at current yield for my age, many properties are cash flow negative due to shorter loan period even though long run I will still be on top.

8. HDB or Private Property Loan

1% rate difference for $500k in simple term is $5k annually. Not cheap. So if I am to take HDB loan, make sure is worth it as it is much more expensive. I don't think it makes sense that people take HDB loan to minimize their chance of returning HDB flat if they failed to pay up. Either they overspend or cannot afford it in the first place.

9. Condo Space

Space is much smaller for New and Private. So if want to stay in one make sure we buy the size we want in number of rooms and total psf. If cannot afford, think twice. However if target rental, not sure 1 or 2 bed rooms are better. I do see quite a number of rent for 3 bedrooms just not as many. Due to gov curbs on number of properties,  getting the larger affordable unit will be a better choice.

10. Home Ownership

Shifted homes from HDB 1 room, 3 room, 4 room, 5 room and Condo. Can be due to family size, estate renewal, working distance, upgrade, etc. home is not forever because is not my experience. We move and change with times and needs. However each time we move, is for better.

11. Invest in Property or Reit ?

I do both. I think maybe good to have at least one rental property income for diversification. Do be prepared for cash flow negative periods due to increasing price. Currently I use a chunk of the Reit dividends to top up the differences.

12. Location Matters

for OCR, Integrated central location, the psf is much higher than 5 min or 10 min away apartment. Delta can be more than 300 psf. However once top, the psf increase for good location increased by 30% with good rental value. So rental investment wise, a key consideration ?

13. Renovation Cost

As condo is half furnished, there is some saving. I do the fan, lighting and curtains. However due to limited space, customized bedding needed for smaller room. In total less than 15k i think. 

14. Store room

Being used to store room in HDB, quite surprise the Condo unit I have do not have one. Many things are thrown before we move in. Minimalist by circumstances ?

15. Weather

Choose the NS direction. There are swimming pools below about 30m away to the side. So is not noisy.

As the unit is inward facing and unblocked, the temperature is quite cooling. However clothing takes longer to dry.

16. Leverage " Demon "

Property is high leverage considering for first property say we pay only 20%. So any gain or loss, magnifies. However there is cushioning from Rental income. Say over 5 year we make 250k for 1M apartment, the money put down including cost could be only 230k. So returns easily 15% annual for past 5 years excluding Rental Support. If we include say 30k annual rental income after cost, the returns  will be roughly = 34% annual ! The range can be between 30% to 40% due to actual sell price 5 years later cannot be confirm .(updated)

I put item 16 the last because I want people to think hard about it. 

Cory

2021-0413

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 : Portfolio Fund Tracker 2021Q1

New chart series for totaled Equity plus investment cash to form the investment portfolio. Since Mar 2020 crash, the market has recovered above the peak level of Pre-Covid. Again time in market is so important. It was early Jan 2019 that the fund crossed 1M mark and now we are already marching towards $1.4M.

Unrealised and Realised P/L since 2017: $355,491

Div since 2017 : $256,415

2021 P/L YTD : $52,784

2021 Div YTD : $9,561

Started testing out in HK market after US Market experiences. So now have exposure in 3 Markets. Next destination will be LSE.

Cory

2021-0409

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 : Retirement Income Sources

Has been squeezing my brain cells a little on how I can stay liquid if I am to retire despite my financial status and investment returns due to my expenses. I am really hard pressed on expanding the list of possible ways. Fact of the matter is I am in good financial health today is because I have a regular job to boost my annual income. Tax will be reduced so I would think my expense will come down if I am retired. So keep this in mind.

In this article I decide to list down all possible practical income sources I could think of excluding discretionary types such as Life Insurance and post retirement salary incomes. They will be more like buffer and back up plans.  Obviously personal loan is not income. Raiding parent home is not counted as it's on parent expenses to generate Rental income but maybe the delta. Inheritance no count as well though the sum could be really good to some.

How about profit from stock market ? I think no as is not guaranteed and I could lose in down years. The return is inconsistent for the past 20 years even though I have relatively sufficient track record as income source. But this can be the engine to build up my dividend base which I could count on.

After listing them in the table, I find it rather interesting. It shows how constraints I am  without regular source of salary income. There are basically 3 main types. Equity dividends, Rental and CPF. Of all of them Equity Dividend is rather important to me. It forms the basis of my retirement funding. Without it in which most locals are adverse to stock market, I wonder how they can do without it.

The 2nd major source of income is Rental. So ability to get more apartment helps except that property curbs have put a stop to this charade. With Covid and constraint on immigrants, this has put a lid on a practical source of retirement income for Singaporeans. No wonder many locals want to try oversea. Maybe I should when I can ! Nevertheless this is a playground to middle income and above generally.

The final major source of income will be CPF. Yes good old CPF except that I won't be able to touch the RA till 65. We could get some interest out from the leftover of FRS to supplement from age 55 though. Keeping in mind BHS will increase till Age 65 so this portion of interests will unlikely be touch for now.

And then lightning strike me that Reverse Mortgage could be a potential source as well. Wonder why this is not popular locally or maybe I am out of touch which is likely. Nevertheless I have no plan currently so is 0 for now. ( Option available )

SSB listed and which provides a baseline stability. It has a cost attached to it though as I could get 5% yield in market today. So the cost probably 5k annually today. If I can plan something, maybe this can be de-commissioned such as additional rental income. 

Others miscellaneous. Anything else ?  Is good to have things listed. 

Thinking.

Cory

2021-0403

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 : Equity Allocation April Review

DBS

Did a couple of key trades recently. One of them is partial sell off of DBS which enjoyed sizeable runs up that also push up STI Index. This is after I have cleared my OCBC after a period. DBS now is less than 10% of my allocated pie in which I still have quite significant exposure. I wouldn't want to sell all because there is good possibilities that it could hit 30 with recovering market in which I am generally positive on the banks. While some other fallen counters recovered in reasonable tandem as well I view them as fundamentally much weaker. So far sale of Bank stocks are more of mitigation moves. If there is fire sales, I would be back at reasonable level. Digital Banking and Blockchain do pose a torn that we have to live with in this investment. This is traded off with potential dividend cap release which might provide a boost to dividend.

ASCENDAS REIT

Ascendas recently weakness provided some opportunity for me to push it slightly above 10%. I am happy with the current yield primarily and of course the recent DCs acquisition. This provide a new dimension or growth opportunities after KDC and then MINT. And only with the backing of strong sponsor do we get to see such opportunity. The only misgiving I have is the merger into CPL as we need to absorb the culture or management which may not be align to Ascendas past glory. So we have to see before any plan to move the allocation further up.

MINT

Continue to pile on this counter on recent weakness as well and together with Ascendas has seen some recovery in prices. Current allocation still has room for more but I won't be increasing much with recent run-up. Is in a sizeable sweet spot in my portfolio allocation above Elite, Cromwell and Aims Apac Reit which are higher yield riskier asset class.

IREIT Global

There is an update few days ago with Deutsche Telekom subsidiary.  At Münster Campus, key tenant will consolidate its operations at Münster North building from 2022 onwards with additional one year lease. Münster South building 4 floors released. The "Pain of Expansion" of footprint into Spain has reduced reliance on key tenants in Germany. Glad that this is done early and not procrastinated. That's what manager is for. We will see how the rest of properties pan out. So far has been positive and I have further increased my allocation into this Reit as their sponsors are more stable. And for the matter, this is also in AK portfolio and my ride with him on AGT feels good. 

Frasers CPT

Have been adding monthly on FCT. Quite positive on suburban mall relevancy to town design. So far their operation is nothing but impressive. Any weakness is good for collection especially in recovering Covid period. If we are to look back at this period in good economic times, the current price will be cheap.

In addition I am also looking into expanding below counters with increasing cash level to increase my current dividend theoretical max of 56k.

Namely,

Elite Commercial Reit - Waiting for opportunity to increase allocation slightly

Vicom - Review next Q report on next more. Potentially increase in allocation

Cory

2021-0402

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 : Saving and Frugality

To start in proper - Saving is the act of spending less than you earn in income, and placing the remainder into a reserve account for later use. How much ability to save ties somewhat to frugality.

Being Frugal

To me it could means minimize wastage. It can be avoiding large wastage of uneaten food. Imagine the amount of saving from uneaten food of each meal as it forms a large part of our basic cost. However, we cannot trade it over balance diet else illness may visit us which will cost a lot more. Fortunately I do not have crave for titbits and soft drinks. So on both health and saving wise, stars are aligned for me.

If we do often enough, drinking Starbuck instead of KopiTiam where the marginal utility may not be very wide for me, saving could be quite significant. Probably 3 times.  So frequency matters in this case. If it provides high satisfaction for your life, do go ahead for your daily Starbuck, while I enjoy my kopi siew tie !

There are items in home we should never brought home. Unused bulky exercise equipment. Souvenirs or tons of  fur toys that we never really appreciate when brought home. I would go as far to include massage chair. That's doesn't mean you should if it does bring you big comfort. Being frugal also means able to focus on big ticket items. If Tesla car design is what you need, while it could be luxury for some, may not be for others. Maybe we can go for Model 3 instead of X. 

To some others could be stringent control of expenses. I find this unnecessary "suffering" for myself. What we need to take is a balance approach in life before our mind get conditioned to think is ok. Some could think that's the way however I beg to differ. People who track down to tiny expenses daily, for years. Take a step back and think, are you the character type that will  spurt or time is better spend else where to grow your income unless you telling me your life is to keep track of such. I close my case.

We should still go for occasional social, cab when is not convenience to use the rail and short holidays. And no way I want to be late for work or appointment just to save on taxi fares. Being early for a meeting may put me in a better shape to kickstart my working day and further my career and therefore income. Once in a long while maybe a delayed major trip. Delay gratification helps but don't push it out too far out. What this mean is we should try to expand our life to some extend to appreciate and enjoy within reasonable budget constraints while we compound our money but not to stop us on to get better on appreciating humanity and cultures.

Things I valued is like walking out in the morning through the garden to freshen up my mind on the way to nearby kopi shop to take my breakfast. I could spend like $5 and enjoy slightly finer things in life. I know some would try to cut down to $2 or have it at home eating bread from QAF. If that's is what one preferred is ok too if that's what you enjoy to do but make sure you do ! A short chat with the stall employees and cleaner brighten up the day.

As one may remember I got a notebook recently after many years till if I find the efficiency beginning to be a drag. Is not like I am stingy to get a new one in a shorter time period but the old unit I had was a power itself for my needs till auxiliary parts start to weaken. And I decided to look for medium range value or better. 

Being excessive in saving habits or subconsciously could have unintended consequences when ones life in earth is limited. And yes we live only once ! So don't waste our life time just to skim in everything or for argument sake in most. Often we are so busy we miss out other aspect of life which form our existence in this world instead of enjoying the process of it. I was single for a long time. While people admired the freedom I had which I do have, deep down in my heart, if I could married and have kids, making like full circle, I would. But I am not going to trade it without getting the right partner. Luckily, I did but is ok if we are not as we will find different option paths of different life and my expenses rocketed. Yup, it REALLY does but I am happy. That's what matter.

Personally, the best way is to find ways to improve our earning and this could be spending more to improve ourselves, skillset and broadening our perspective in life. Looking for way to improve our value in the company and leading project to improve efficiency. Time is money too so we need to watch the fine balance between them.

I come up 2 scenarios of different people just to give us a thought in perspectives. Is not trying to convey spending beyond our means definitely or trying to achieve FI by ensuring lifestyle remains the same after salary tripled. I do not think is ok for one to do that. There is no prize saving the extra Million to beat the others when our life is limited. I am more like Scenario 1 Person 3 in the past. Now working towards Scenario 2 Person 3. Not the exact amount of salary though but you know what I mean. 

To sum up my idea using above table. Using Scenario 1 assuming varied income with same expenses. Person 3 saving is 13 times ! of person 1. This is a little extreme of higher earning but continue to maintain low expenses of one who only draw 3k years ago.

Scenario 2 is where as one income grow, we adjust our spending. Person 1 in this scenario tried many means to squeeze saving.

Scenario 1 of person 1 and Scenario 2 of Person 2 and 3 are options we could possibly choose. Lesser saving when one is earning less, by proportion. And adjusting for better lifestyle when people earns more. We still ride on larger absolute savings. That's what earning more is about, winning both ways. The Way of life.

Cory

2021-0104

Cory Diary : Historical Milestone - Net Worth

Asset Class diversification is important for peace of mind. It can be Equity, Bonds, Property, Cash, FD and diversification within like for example recently I expanded to Euro and Pound denominated Reits in Europe properties. I also developed a plan entering into US market by mini portfolio even though timing could be better. Bonds wise I have SSB Max and in the work to reduce Company Bonds for CPF.

One of the challenge will be how to Simplify my operation while achieving the Diversification needed. This means reducing errors, market volatility with poor quality assets and getting better in my investments. And therefore more time for family and work.

To combat inflation, having investment returns and also a shelter over my head when needed, I decided to invest in Property. This allows me to sold off all my gold position which serve inflation purposes. In my earlier article I have worked out the Math on why property investment is attractive due to Rental income and leverage. TDSR and ABSD have also limited over speculation so one is unlikely impacted by installment arrears. Even if one got their timing wrong, over the long term the return from rental or own stay which avoid paying rents, will likely gives property buyer a high chance in the black and probably good returns on average. 

To add for residential property, I feel is very unlikely to have EHT or Noble events that we see in stock market as long we can hold our property. Being in equity market over decades, property is certainly the easier path to go and imo for most people who can afford, within the current regulatory constraints that interesting help largely minimize the risk of default. The stock market is not a level playing field even though over the years we are getting better. Is much tougher to profit from it with many learnings needed to stay in the game even though I have profited some amount. 

Why all the write up above with the subject line. I just checked URA transactions, and PSF wise there is another increase on recent month. Is a surprise. Covid ? What Covid ? This bring my Net Worth to another magical milestone level. Interesting just yesterday, I told my wife that if I hit the Net Worth milestone, we can afford to buy another larger de-humidifier. It was a passing remark as it will be our 3rd in the home. So if we going to get it, and the stock market doesn't look like will push it that far in the next month or so, it could be far fetched. Looks like is not far enough ....

Cheers

Cory

2021-0331

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 : Home anytime ?

When I was developing my retirement datasheet, one of the most influential item is housing loan. It takes a big chunk off my saving. Therefore if I could, I would prefer to borrow for the longest period like 30 years whenever possible so that it reduces my monthly or annual drawdown as I build up my others. And that's me. Of-course like many things in life, people have choices to their preference. Some want to pay up asap. Some won't even buy a home unless they can fully paid a home upfront. They are either from Mars or never able to execute to the plan they wanted. Obviously I do not mean either only. There are many options and rationales and I wouldn't feel like stepping on anyone toes.

Spikes follow by corresponding reduction Chart

There are also others like me that are more conservatives ( Relative term for one who invested more than a 1M in stock market ) or them ( looking at property agents ) who will tell you that for stay, buy anytime. Personally, anytime ? Absolutely rubbish imo.

Home is the most costly and one of the most important asset to most people.  Just have to give an example. If you see a price chart where the price spikes like a needle, good luck to those who follow through their life time deal. Hopefully you won't have to work on the remainder or big chunk of your life time to save the differences !

So is it a good time to buy now ? Your guess is as good as mine. I like to know too ! but I would take a home anytime for a reasonable price after glancing the chart or table or whatever ....

Cory

2021-0321

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.