Cory Diary : Life Insurance Policy - Updated

When we first graduated, many of us in our time will be asked to buy Insurance Policy. Not sure about now but possibly except that with Covid maybe harder to sell. Getting information to know about our insurance policy is much easier now than before through login using singpass.

Is great they have worked to integrate the login process with singpass. And that we could see all the policies with the insurance company. Here's a glimpse on a Life Insurance Policy. If the insurance company promise as planned, is a good diversification for the descendent .... . Why I say so.

Projected Death Benefit at age 50 : 173k

Surrender Value : 66k  ( Yield : 4% )

The surrender yield get lower as one aged. At 69 will be 3.35% Projected again.

Basically from the looks of it, will lose slightly more than 100k if we are to surrender it. Again all this is non-guaranteed since they are all projections.

-----------

Interestingly the policy also provide projection if we hold on to the policy till age 55.

Projected Death Benefit at age 55 : 189k ( Increase of 12k )

Surrender Value : 87k  ( Increase of 21k , Yield : 3.93% )

The surrender value increases much more than the death benefit but the yield gets lower.

----------- Part 2 -----

Decided to continue with my exploration after consultation with the agent because I feel is important. She provides me the guaranteed and non-guaranteed ratio on each age group.

The non-guaranteed portion is about 31% of the projected value. To get the compounded returns, this can be easily done using the monthly payment with the the final return ( Upon Death ) at 50 , 55 or 65.

So plugging in my monthly contribution of the Life Insurance Policy ( excluding rider ), the XIRR or compounded returns is near to 8.7%. This is quite a surprise even though there are non-guaranteed component is in there. In total it is even better than S&P500 Performance. If we surrender the Policy, returns drops to 2%.

Wow. Please Check on Me by login in to count your Life Insurance Policy.

Cory

2021-0704

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 : Asset Allocation - Mid Year '21

US Market is up last night. So I could see a few more Ks into my equity valuation today. Tesla reported strong volume increase shipment however news of a fire on a new tesla model broke out too. So coincidence. A check on my mobile app shows PE 680 with a Market Cap of 654B. 52 Wk high is 900 and current stock price is 678.90. Therefore 32% down from peak. People who has stayed the course since 2 years hits 10 baggers even with this correction and so is Elon Musk wealth.

For most people who is not running a business and drawing monthly salary to grow wealth, will need to active manage asset to reach financial goals. This is not saying bosses no need. However for average people, we need to find ways to utilize our asset and invest safely as they are hard earn money. Again not saying Elon money is not hard earned. Not investing basically put our retirement at risk. And the first step is to know our asset and the strategy we go about it on each stage of our wealth.

There has been some updates on asset allocation recently. Net worth has increased since last update so we need to view it with that in context. ( link )

1. Property Asset has recent transactions which ascertain the valuation

2. Consolidation of free cash to investment account

3. Emergency cash in Fixed Deposits but reduced.

4. Gov Securities reserved mainly for housing installments backup

5. Bonds reduced further

With above changes, cash saving allocation has reduced to 5.1%. Over time if there is no major change to living capital needs in percentage wise, it should get smaller with time. There is not much to do in CPF/Pension, Property Net value and Insurance allocation wise.

Total up equity, bonds and gov securities, they cover about 50% of asset in which more than half of which are gains or non-salary returns. The important part is not the gains but the future cash flow that it can generates for retirement. 

The Problem

The current investment account size can drives for a few years of expected dividends increase or allow one to increase in growth stocks that could earn multiples. Is it worth the cost to park so much here as War Chest for major correction use ? Let say dividend share each year 5% return. For 3 years will be 15% returns. Will there be a major correction within or right after 3 years ? Needless to say it has to be more than 20% correction to worth the while. Maybe even 25% minimum for one to take the risk as well.

People tend to be blind-sided on Equity Investment portfolio returns and forgot about idle cash impacting overall returns which is not measured. Moving idle cash to investment account therefore is a logical move and then assign some measure to it. Will need to think through this. What should the typical opportunity fund size be ? Maybe one should deploy the fund in stages whenever there is opportunity in the market and not due to major correction.

Cory

2021-0703

PS. 51 on countdown to 55

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 2021 Mid Year Performance

Is quite "Miraculous" that for the past 1.5 years Portfolio has been registering reasonable profit despite how damaging Covid does to our way of life and therefore economy. The fortunate thing is that we still have our jobs. I am still able to get most of my stuffs online. Taking care of both our toddlers at home full time.

One key lesson I learned for this period is not to ignore growth stock therefore initiate my investment in Overseas market. To-date after some adjustment from my initial stakes, I have them consolidated to 4 which combined, is nearly 8% of my Equity portfolio. They have finally registered positive returns after my bad start in technological stocks early this year. I am still in long learning curve and will increase my stake over time. They keep me excited at night.

At the same time, I have released some bond shares to increase my warchest which now grew to more than 6 digit figures. I have applied excess for iReit shares and hopefully this will increase my dividend further. My goal is still to continue to push for higher dividend annually for cashflow which has been great on covering my housing loan. Property is a hedge against inflation plus rental support with comfortable leverage regulated from risk else MAS will not be doing their job. LOL.

One key concept I believe in is very hard for interest rate to increase. I have multiple articles mentioned on this. There maybe fluctuation in-between but the rate overall will stay low. So allocation wise, shares investment is about 40% of my Net worth. Depending on who we talk to, some may say I invest too much while others could feel is too little. I do not have a good answer yet other than reaching a balance level that I can sleep well. And that could well be the answer.

If you have read my earlier article, my focus is on Portfolio Size and Expense variables. ( link )

Which reminds me that I need to continue to find ways to grow my portfolio in a safe manner to support higher expenses.

For the first half of this year, absolute return finally hit near to 7% YTD and just 3 % away from STI Index which has been performing very well this year. Chart on the right. Is a creeping fight, back to back as my portfolio do not have enough Bank shares to grow with STI. Neither do I have enough growth stocks. So to able to close the gap over this time, I am happy. There is still more work to do.

Dividend wise Collected $30,729 which is on track to hit on sustainability basis more than $60k this year. ( 5k jump from Year 2020 ). Portfolio Size hits another ATH ( Chart on the left ) but that includes War Chest in trading account which has ballooned.

I am excited how this will end for Year 2021 with few surprises on my cards

1. Lifting of Bank Curb

2. Oversea Stocks Dynamics

3. iReit PO and Excess

4. Further recovery of Reit shares

5. Vicom result

6. Netlink BNB Tr surprise, if any

7. Currency as my portfolio now have many different exposures

Cheers

Cory

2021-0701

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 : Perpetual Portfolio - Legacy

In one of my earlier articles, I used Excel to compute how long the draw down of one's portfolio can last. Ideally we like to able to expense it till we died. The problem with this methodology is that we do not know when we will died and the portfolio may dried out before we do. There is also some who like to have legacy and uplift their children ahead. So Perpetual Portfolio design maybe nice to have.

There is also linearity issue as in certain year we may have higher expenses while in major market crash. Working on borderline is risky. Furthermore with advance in science and maybe space travel, our life may be much longer than we expected though saying this now is quite speculative.

Nevertheless, trying to attain a goal of ever lasting portfolio is not that difficult once variable points have been reached. The question is what are they.

1. Portfolio Size

The starting point is important at the point we retire because it gives us the critical mass needed to cover the expenses. Therefore able to compound them from young helps.

2. Portfolio Returns

If the expense is lesser than the portfolio growth and yield, we hit an inflection point where the portfolio will keeps growing.

3. Inflation and Expenses

Both of this are tied to purchasing power and needs. A low inflation couple with controlled expense will help in a long way to be below Portfolio Returns.

In today article, I will assume my performance maintain for the past decade, Inflation I cannot change, therefore the only key variables will be my portfolio size and therefore expenses I could afford.

Portfolio A : A design for middle class family. Probably upper. Lives in Condo. Simple Travel.

1.3M Portfolio Size

Portfolio B : Living standard upgrade to have longer distance travel. Better or more gadgets.

1.5M Portfolio Size

Portfolio C : Living standard further upgrade to have Car. More external activities.

1.7M Portfolio Size

One could do some item exchange as needed depending upon preference such as switch to HDB, and this will provide a good uplift elsewhere such as fully paid loan, better renovation and other upgrades listed in B and C. And this is where physical asset is very useful. Frankly this is my Plan "D" as my wife preferred to live in HDB for living space. I prefer in case my performance screwed up.

Touchwood.

Cory

2021-0629

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 : Jolted in my Sleep

I have this Fear again. Remembered the series of relapse after graduating of occasional lingering dreams that I am late for exam, not ready on certain subject, missing important classes etc. So I am fully aware on my emotional fear deep down coming to formulate my dreams.

The recent fear is in similar situation where after the human mind is conditioned to do things resulting in stress accumulation. And when it ended or plan to end in this case, the dark side appears in our lingering dream. Is something like PSTD though probably in milder form.

I have been working for more than 20 years and now towards early retirement and semi is not in the card yet. Knowing myself psychologically, I need to be mathematically safe before I take the leapt. Yes, the binary problem which I just blogged in my last article. Is pretty hard to shake it off. That's the angle that may come useful to explore too.

For now what are the things broadly. Is basically Money. How many people is not ? Money cannot solve everything but no money definitely cannot.

1.    Young Family

2.    Home Loan

3.    Portfolio Safety and Returns

4.    Maximize CPF VC Contribution till 55

So probably occasional jolts won't subsides till I get my Math right on my income generation asset or robust plan to get it through. And maybe after will still have few instances of recurrences.

Financial Status

Working Expenses Fund

Two years of working expenses in cash

CPF

CPF RA will kick in on Age 65 which will supplement my income after 14 years. This also align my daughters age to college. To optimize my returns, I need to maximize VC till 55 where SA allocation is at it's highest. This potentially means tapping on free cash that I am reluctant to make. The plan is to ensure my investment bonds are reduced accordingly to zero except for SSB. Fortunately, the amounts will match what I needed and likely more. 

Whether I will contribute further after 55 will depends on Free Cash Flow and CPF policies. It will be interesting to know by then.

Non-Salary Income

Dividend Income today is capable to cover annual Home Loan. So technically speaking, there is no worry of paying housing loan. Whatever additional free cash will be for living expenses. And that's the point. Living expenses sufficiency. So the crux of the matter is I will be quite dependent on this dividend income for living expenses if I am to retire today.

I still have rental income support as well that I have yet bring onto the table. Well I have decided this income leftover will be buffer since I am not allocating Loan payment on it.  Rental income covers Maintenance, Tax, Repairs, Upgrade, Insurance Payments and Parental Allowances. As you can see, Rental income is quite sizeable therefore I think is a bad idea not to let local benefits from rental market which can well support their retirement.

14 years of Home Loan Outstanding

Currently,

Reserved Two years of Home Loan Installment in cash

Secured Three years of Home Loan Installment in Bond

I could eliminate the Two years of reserved cash to 6 months, this will optimize my returns. The three years in bonds will be use for general emergency long term as the returns are reasonable. 

Opportunity Fund

10% of  Portfolio Opportunity Fund currently. This fund is critical because is active managed and helps to grow my dividend income. How to maximize it returns will be tougher as I may need it quickly. Putting them into bond or fixed returns that affects my response time or sell price won't be good either.

Maybe maintaining 15% of portfolio value for Opportunity fund seems a better balance and not too much idle. One way is to sell some of my portfolio when the market is in euphoria stage. This will secure 15% needed with shrinking portfolio value and growing cash. Dividend will be reduced. However since I have some idle free cash now, I should have them injected to increase my opportunity fund instead.

Market Returns

Well after going through so much on managing my finance, it looks like I am set to go. The final is the broad market returns. Frankly Speaking, Investing in Stock Market has been fruitful exercise. See below chart on over the years return. Absolute Profit vs Year.

The cumulative gains switching to dividend play has been amazing. To be be truthful I don't see myself getting rich from it versus the Net Worth I have accumulated. The gains likely mirror similar to a landlord. 

Even though I have stepped into US market a little. Most of my Portfolio gains over the years are still unrealised gain being a dividend player.

Looking at the chart carefully since 2018, if we include this year, there will be 3 years of strong profitable returns. The chance of 4th in the Year 2022 is lesser based on my track record. Maybe time for me to be prepared for a curve ball. So my take is I will hold on to the larger Opportunity Fund amount more stringently.

If the market continues to move up in my 4th year, I am happy else I have a larger Opportunity fund to buy in. Sounds like an exciting plan though mitigated.

In summary

The plan will be as follow except that the stage in blue will need to be very careful.

2 Year cash reduced to 6 months -> 15% Opportunity Fund -> Invest fund greater than 15% opportunity allocated -> Grow dividend well above annual home loan -> Support living expenses

Retirement where Living Expenses is covered by Increase in Dividend Income above loan and returns outside Shares dividends. No draw down planned.

End Goal

15% opportunity fund

Home loan covered by dividend income

Living expenses covered by additional incomes

2 years of living expenses

3 years of general emergency fund

6 months of cash buffer

Quite sure this will not be the end of it. I will be back again to straighten things out.

Cory

2021-0627

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 : Exchange Rate Matters

Something strikes me today when I was thinking whether S&P500 ETF is the way to go that many financial experts recommended besides Warren Buffett who is an American.

So what I do is to pull up the historical exchange rate for the past 30 years. Basically, USD has depreciated roughly -25% against Singapore Dollars. So what-if I have invested say $1M starting 1990s. What is my compound returns for S&P500 ETF in Singapore dollars be like ?

Long term is 5% for Singapore Investor ?

Any investment in Oversea Market need to consider the risk of exchange rate. I am sure there are other considerations as well but I stop it here. BTW, the figures are ROUGHLY.

Cory

2021-0626

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 : The Elephant in the Room

From the day we are born and going through years of educational learning (Some take it further ), the whole idea is to get a good job so that we have enough money for our family and retirement. That's like basic needs in life. 

What-if we push ourselves further and achieve earlier the monetary needs can be covered ? Will grinding for one more million make sense ? And here's the take. When we do call it stop and do things that we truly like ? And here is the crux of the matters. We procrastinate on many things, get them postpone intuitively but unfortunately only the top few percentage will able to meet the biologicals deadline. We have limited lifespan and productive years.

Life is not 1 and 0. However many people thinks that way including myself. For example, some people may only want to marry the pretty lady or handsome man that everyone is also hoping for else will not get settled. But time do not wait. Soon you will find yourself in mid 30s, 40s, 50s .... . You really want to remain single for rest of your life? Deep down most will not if they can. Who is going to care for you when you on wheel chair or sick. Do we think this scenario is improbable or most likely ? Living in a luxurious apartment but only have yourself in it. What for ?

Personally for myself, I want to make sure I have enough before getting married and having kids. For many, by then we are too old. Fortunately, I am a guy so no problem. But for the ladies once you hit near 40, is really pray for miracle to have one. Even then there maybe health issue and both parent can be contributing factors. The best time to have babies probably is in early 20s.

Same with Retirement we want to make sure to have all it needs before we call a day. We truly forgot how to live our days before that. If there is not enough we can do part time for few hours and enjoy the process of socializing with others. Is not a clear cut retired line that has to be drawn which places the bar too high. People who get retrenched in late 40s or early 50s, maybe is not a bad thing after all. The key is how we manage our finance before and after. Delay gratification helps but Procrastination is not.

Life is Now. Don't be 1 or 0. We cannot turn back the clock.

Cory

2021-0623

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 : Interest rates - Saver Alert

I remember many years ago, accidentally decided to put $10k into a fixed deposits for 5% annually. Think nothing much of it then. Financial Literacy is non-existence especially from a family of below average where investing in stock market is equate to Gambling. If we think 5% will happen again, is highly unlikely, and we will probably be in trouble if indeed it happens.

Interest rates on average has been coming down for the past 40 years. Savers are thoroughly burned. Long term wise, chances are interest rates won't be high even in between there maybe rate fluctuations that confuse investors for a tiny moment in time.

Therefore, any bet of interest rates impacting Reits long term or benefitting banks are likely hallucinations in the long run. Bottom line is how each of this businesses are run. So for opportunists, any news of rate hikes one could benefits from trading due to market sentiment driving respective business sector.

A simple arithmetic on Saving in Fixed Deposit vs Stock in reliable Reit. We don't even want to talk about growth stock.

From table above, a saver takes more than 8 years what a stock investor can do with just a single year to achieve. Yes the later has Risk but what doesn't in life ? The Risk in fixed deposit will be much higher due to inflation is definite. Saver anchoring to mental fixed number in bank account could be detrimental to their financial well being.

However, a saver who has no interests in Fundamental of Business could be a tall order able to choose the right Unit Trust or Stock Picking. Even Insurance Investment and Bank Products could be even worst for them as they have significant vested interests to profits from the sales. Many Bonds are mediocre and not easy to understand and assess by Savers with potential to even risk away their coffin money.

What else can a saver person do if they have no interest to pick up on stock investment ? Personally I feel that's left with CPF and Broad Market index such as STI and S&P500 with preference to the later due to Wider Market. I would probably fill all three if I am them. 

Just reminder this is Not replacement for insurance which I feel is critical. And all above is just my personal view and not advise as I am not qualified. But who else can they seek advise from that is whole heartedly helping them  ? Maybe we need a National Reach system.

So Please DYODD.

Cory

2021-0620

Cory Diary : Changing Expectation

I have faint memories of my first home, a one-room HDB flat in Toa Payoh more than 45 years ago. As a child, I rarely ventured beyond our block and spent most of my time in the long, dark common corridor that was flanked by units on both sides. The building itself was a long block with a central area connecting two blocks. In those days, chewing gum was abundant and unsightly patches of gum stuck to the cement floors.

Our entire floor, which had more than 20 units, had no lift. It only stopped on specific floors, so we had to climb the stairs for the rest. Once or twice, someone urinated in the lift, and the smell was unbearable. Often, one of the corridor or stairway lights would be spoiled, and if we were lucky, it would be dark for that segment of the corridor, otherwise, the flickering lights would blur my vision. Thin railings fenced off both ends of the corridor, and from our end, we could see the open space carpark below. Owning a car was a luxury in those days.

One interesting social behavior was that neighbors would leave their doors open, and there were no gates then. A small hump on the entrance prevented water from flowing in or out of the unit when the cleaner washed the corridor. I would often visit my Malay neighbors across the walkway just to explore, and they were always welcoming to a three-year-old Chinese boy's "intrusion" visits.

It was also the first and last place where I witnessed my father and his friends praying in the direction of Mecca. I loved the carpeted area where my elder sister and I would lie down and watch TV. Our black-and-white TV was large, almost like a table, and watching it too much probably resulted in my having to wear glasses at an early age. I still remember the cartoon with the song "Gu Gua Gu Gua Xiao Qin Wa...", about the story of a frog. The entire unit size was probably the size of a living room space of a 4-room flat, so there was no separation between the bed and the living room.

There was a narrow pathway connecting the kitchen to the backyard, and the narrow side was fenced with a railing at the bottom, so I could see what was happening on the ground floor. Once, I was naughty and dropped an eaten apple stem a few floors above, hitting a young girl's arm on the ground floor. She shrugged it off and walked away.

Right at the back of the backyard, we needed to make a U-turn to get into the toilet. The door was made of flimsy metal sheet, and it made a cranking sound every time we used it. We had to squat to get our business done, and I never really understood which direction I should face, but squatting was easy then. It would be a feat for me to try today. Back then, you could slip and have your feet stuck inside the shit hole if you were not careful. There was also a rubbish chute in our backyard, but it smelled.

Doing laundry used to be a strenuous task for housewives, involving rubbing clothes on a washboard in the toilet. It seemed like my mother did this all day. However, I found the process interesting. The long bamboo pole used to hang the clothes was heavy and angled, making it a challenge to handle when it was loaded with wet clothing. It required a certain level of skill to hang them out to dry under the hot sun. I still recall the practice of our neighbor, who lived one floor above us, slamming the bamboo pole against the outside wall to notify us that she planned to hang wet clothes. My mother would then quickly collect the dried clothes.

Our home was simple, lacking a table, with only a master bed neatly tucked against the inner wall. The floor was polished cement. Across from the bed was a window where my mother placed her vintage sewing machine.

Surprisingly, our home did not have a fan or air conditioner, but I hardly ever felt hot. Perhaps we were conditioned to the climate in those days, or the room temperature was much lower. Life was simple back then because we did not have mobile phones, computers, or washing machines. However, we did have a charcoal oven in the backyard for cooking Chinese medicine for hours. It was also the place where my mother would slaughter chickens, which was quite gross, with blood dripping down.

I just remembered that we did not have a water heater, but I never felt very cold while taking a shower. In the kitchen, we had a medium-sized fridge, which was already common and invented by the 1970s. Other than that, I can only recall the washing basin next to it. We hardly ever ate outside, as my mother would cook all our meals, visiting the wet market, which was within walking distance. Supermarkets and coffee shops were unheard of, and our expenses were very low.

Living like we did back then would make it much easier to raise a family with less money, even after adjusting for inflation. However, I could never live like that today unless I had no other choice.

Cory

2021-0616 - First Pass

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 Updates

Last week we seen a change in tone in the market. There appears to be more buys of Local Reits than Banks/Index. So their performance charts is closing in. If this trend continues we will see good result for the local market.

Sheng Siong

One of the stocks I am keenly interested in is Sheng Siong. It has been in and out of my portfolio for years as I never view it as long term holding even though I invest based on long term expectation of returns. This time round after the significant correction from high $1.85, it has seen 15% correction today. Decide not to wait further and increase my investment in Sheng Siong. Allocation wise is now 3.8% of my portfolio. Still not large enough. We will see is there further opportunity.

SGX

Blogged about SGX a few times I guess. Elaboration of one is here. ( Link ). Price has increased from 8.71 to 10.73 at today trading. 23% increase for 10 months wait. Current yield is about 3% but if we are to value based on this we cannot be further from the wrong as the rational we buy has more weight in its growth and steady returns. Currently allocation has grown to 6.3% from market capital gains as I have not manage to buy more this year. While it is not in the same business as iFast, both has the Financial, Technology and Moat themes. Basically fintech businesses. Their future will last a long while than the 3 major banks. 

So how to assess the situation. At this yield, as mentioned above, people who are willing to buy at this price is looking mainly for capital gains through growth now. How I wish they setup crypto exchange wing instead of collaborating with DBS. Oh well I am vested in DBS but that is not the same. To estimate the growth takes too much work for me right now as I have to read up more as is no longer low hanging fruits though I am confident is not high high up there yet. Hold for me now. 

MINT

On current right issue. Allocated slightly more than 1lot (old system ... ). Excess yet known. Hopefully I can get a lot more than anticipated. At price 2.64 is rather cheap for a Reit with good amount of DCs and good yield. Having say that I could potentially buy more from the market if necessary to further build up my allocation in the portfolio. If I am to rank all the strong reits, Mapletree Family is number one imo.

The next move of my action in the counter if there are will likely be right after Excess allocation as there could be opportunities. There should be some meats for upside supported by good DPU.

VICOM

So far this year, this counter price is a little boring as it is not moving much. Not much News since I last reviewed. I do not have a good grasp of the situation to be sure should I play more or others. I am more engrossed with many other counters and has neglected it. Dividend wise is ok but not great. Maybe it is still absorbing the 1 to 4 splits. What I don't see enough here is the growth story compared to SGX. Vicom is quite behind in this aspect. I would rank it long term safer than Net Link BNB Tr however Vicom is much less dynamic. Another Hold in my Portfolio.

Astrea 3.85%

Cleared all finally. I blogged earlier on shift to CPF focus for my bond segment and this month I have the opportunity to do just that. At 1.049 after Ex-dividend, it has 2.2% yield after cost. Still good lah. Do note this yield calculation can varies between people but I sold mine with this data in mind. So pls DYODD as usual. CPF is giving me 2.5% for OA. 4% for SA. If I have a lot of spare cash, I could continue to hold till each year CPF Top-Up however I may not get the sell price I want since this proceed is for funding my warchest. I may regret so there is no right or wrong. Is still a good place to park money.

Cory

2021-0614

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 : 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.