Cory Diary : How much is enough before Happiness increases become marginal ?

Perspectives

In Singapore context, what is enough ? First of all we need to view it from personal experience perspective. If you have yet seen S$500 lunch on a daily basis, this aren't going to be your baseline of reference but if you are going to challenge that this is unrealistic, sorry to say you are not in that league yet to even hear about it. So where should we start with ? I think social norm or median average maybe a good starting point. And then we put a plus one or two over it.

Bucket List

Condo maybe the one. Why ? Well, 80% of Singaporeans probably lives in HDB. Don't get me wrong, HDB is really nice and comfortable flat and many are proud of it. However with so many Condo around in every town, is not uncommon to know someone or friends who stay in them. It has it's own facilities and atas feel of being in the "Inner Circle" kind of thing. Pardon my analogy because there are always inner of inner circles (iterations). The fact is Condo is much more expensive on average speaks volume. Will one be happy ? That's depend how affordable is it to you. If you slave for it, then maybe not. However if you able to manage it wisely to give you just enough in cashflow, that may work.

Car ya lah. Damn expensive but how come everywhere can see them. Carpark is usually quite full by late evening. So despite the cost and financial logic, many owns them. Is a lifestyle ok. The freedom and convenience are more important. Well, there are different class of cars and Tesla will be on the road soon. So much it will set you back ? Decade ? forget about it. You aren't earning the amount yet probably. However the time saving can be quite significant if one could afford especially for family.

Holiday lor. Hey I am not talking about Thailand Beach or Malaysia picking (plucking ) durian ok. The real thing like Climbing the Paris Tower or taking Thames River Cruise in London. To be shiok throw in 2 weeks on semi-annual basis will be Perfect ! Wah lao .... . The essence that able to get away to cool cool place, new perspective and out from routine and experiences makes life meaningful.

Family a Must. I say this because I already have one with 2 toddlers. Able to form a family and seeing your children grow certainly has some level of satisfaction and happiness. Of course if you like being Single this does not apply. I aren't going to stir the Hornet Nest which is an ever-growing in today world. Financially, this will definitely speed you up. Maybe that's the main reason why we are in this. But the number one devil is loneliness. Not easy to overcome.

Parental Allowance for those who are in sandwiched class. Able to take care of our old folks give happiness when we can afford. I heard of many stories. If life is hard for you, how about them ? Every family different and is not for us to judge. At least at minimum return what they have onto you. Inflation and Opportunity cost adjusted !

Medical Insurance could be critical for many. One never know what will happen the next day. If we are to worry day-in day-out due to medical cost, able to afford a good coverage is probably necessary insurance or mitigation. Never really believe one should use insurance as an investment tool. This only adds complication that clouds what is really needed. Being focus on Medical, and Life Insurance on the early part of our career helps family. Buying too much of it or wrong insurance products maybe detrimental to one investment finances and cause regrets.

Passive Income obviously needed for most people unless one has significant saving. For Cory case is dividend investing where we continuously compound the returns plus capital injection to grow the passive income annually. Ideally if we can hit a return at age 50 that is near to our salary income of Age 50 this should be very attractive. Yeah, not easy since is a moving target. Maybe a level where we can cover all the other points in the bucket list is a good target and be really happy. Anything more may become good to have. Interestingly there are people who keeps arguing many stuff such as this aren't really truly Passive Income. Dude ! It doesn't has to be. So stop wasting time on pointless argument  and get on with it.

Conclusion

For the Article Title, if we ask a 10 year old, maybe singing and no money is Happiness. For 20 year old yolo is Happiness. And each country could be different due to Education, Tax/Benefits and Culture. This are really multi-facets. However, enough Money can HELP.

From the Bucket List, Happiness level will taper off as checklists are met for specific individual. Looks like there are still much room for Happiness to Grow in this study.

Cheers

Cory

2021-0718

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 Waiting Game - Dividend Investing

If you are thinking about holding on to the share to collect dividend long term then today Diary is not about it. I have mentioned many times the price of not being in the market. If we use absolute proportion in percentage term say 1 year is 6% yield. 5 years roughly 30% cost for staying away from the market. Therefore is quite risky strategy to play as it can be equivalent to a self create major crash to oneself.

However, there will be times market is so irrational that you wish to buy low to improve your future returns. This happens when there is great fear in the market. Even if one can overcome it, you must have the money to execute it. And this is a dilemma.

Here's an interesting chart on iReit global on the March'20 rout of the market for a fundamentally strong stock. Probably 50% discount. Why people sell after looking through the hindsight mirror is really amazing. What is damn wrong with this Reit stock which we are suppose to collect dividend that people sell at such a low price other than broad market issue.

Interestingly, the best opportunity happens when we could tap on some reserve funds just enough to push us ahead. For example I could reduce my housing installment buffers from 3 years to 2 years. Since I have such fund park in SSB, I would need to rationalise what I could lose doing that. It needs to align with better rates so that I can get them back later.

Releasing fixed deposits are obvious way other than saving. So maybe the best time to retire is when you can get your golden handshake or retirement package. The money has to come in time too. Very Risky ? Maybe so. Dyodd. Since every crash is different. Ideally you have some money lying around. Borrowing maybe interesting option but doesn't seems to align with my upbringing if is for stock market.

Rich ones may try to sell their home quickly if the property is still holding up well and channel the fund to stock market. Savvy ones may try margin borrowing. What are my options ? Maybe a fund that is available due to speculative trading. Is where we cut loss on our long quickly when there is market rout. What others ? 

Will the above chart happen again. You bet it will. Maybe investors will get smarter. Then it can be due to someone being force sold. And that can easily happen when we do leverage in stock market even on fundamentally strong stocks like Ascendas, DBS etc. People just go haywire in market crash. And is a Heaven for dividend yield player.

Cory

2021-717

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 : Charlie Munger on Diversification

Get 3 best in town, is enough for diversification. He talked a lot of things. Only that rough idea gets into me. I decide to adapt his advise to choose the best few stocks oversea. Currently below what I have. Since US slots are full, I should have at least one more in the other "Town".

1. AMD

2. Microsoft

3. Tesla

4. Alibaba (HK)

There are few choices I know without need for in-depth study. While timing can be better, they are quite beaten currently.

1. TENCENT (HK)

2. Lion-OCBC Sec HSTECH

Enjoy !

Cory

2021-0712

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 : Comfort Delgro

Covid-19 hits Comfort Delgro badly. Basically the company has to reduce their dividend significantly. Maybe too much, resulting large cash currently. Before the Pandemic, most of the Revenue is in Public Transport however quite an amount of profits do comes from Taxi operation. Their dividends have reached their peak way before Pandemic. A hint of competition ?

Most revenue comes from Singapore follow by UK/Ireland. Rest of the countries are not seeing significant growth. In year 2020 till now the company has a lot of support from the government that basically cover their losses and we know this support will be reducing as we move past vaccination phase. 

In the new Normal, I think Transport Operation will not be same again. There is also a lot of WFH leeway provides by many companies. Is it obvious they have to scale down their operation ? Unfortunately their oversea market doesn't seems moving. 

Continuing to give good dividends without a good support on earning is like cashing out and unsustainable. No doubt their cash level can sustain the company for a period. However from dividend yield or growth perspective, neither looks exciting for years to come unless they manage to ignite their businesses which so far doesn't looks like it will.

With limited cash, do we want to lock-up cash here when we can have Giant Chinese Tech companies on the low ? Another question is transportation a worthy recovery play vs other contenders ? Maybe there is other type of play but likely not my cup of tea.

Just me thinking out loud. Pls DYODD. 

Cory

2021-0710

Not Vested. At least not yet.

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 : Crossing the Psychological 6 Digits Barrier

For the longest time, every-time a single stock cross over the 100k allocation mark, I would intuitively try to adjust down their exposure percentage psychologically. This ding dong went on for a long time and could only see one or two able to be maintained over it each year

This pose a problem as this may mean many of my stocks allocation will be closer together in value as the portfolio get larger. Therefor a lack of differentiation between them that will drive sufficient return on those which I have more confidence in. Another is the need for more stocks to absorb it or else remains undeployed which is another problem.

This year, there are 4 over 100k with 3 of them near to 150k. Maybe this mark a new beginning in my mental model on allocation size as I feel quite comfortable with it. Hope to hit 5 to 6 depending on the market condition moving forward. 

Is this a New Milestone in my Investment journey ?

Cory

2021-0709

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 : CDP and Custodian Accounts

There are mainly two ways brokerage can manage our shares in SGX Market. My first trading account in Poems is cash management account and has the shares held in CDP. This mean I can sell the same shares with another brokerage which manages my shares with CDP.  Another thing I like about Poems is the stock price interface feels timely and able to access for more functionality free like market depth (not always), market summary etc. Foreign currencies management is a breeze for me at least. I like this account because there is a face I know for many years whenever I need help. She even gave me an Ang Pao for my first born.

The much cheaper way in fee is through Custodian account. However as the name suggested, the shares are held by brokerage and not CDP. Due to that, we cannot trade the shares managed through this broker with another. For service, mine is Treasures Account and has Relationship manager. They are quite busy however reaching her is not difficult with WhatsApp but it takes time. The interface is not as good for detail portfolio summary however when come to Rights Issue and tracking balances they are Top. Transfer of fund is also a breeze with saving accounts in the same bank.

Recently, CDP has upgraded to able to use QR Code which allows me to use PayNow instead of mailing in through the mail system which will be bad. As I travel oversea often, ATM is not a good option either. So I am glad they have finally implemented a better way to do this. Glad to know and happy to be a shareholder of SGX shares !

For the recent Preferential Offering, decided to apply excess in both Poems and DBS Treasures as I have shares in both accounts. Wish me luck. Maybe I should get few more Custodian accounts to improve my chance ?

Cory

2021-0709

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

Cory Diary : A Peek into Net Worth Growth Rate

A glimpse on Net Worth Growth Rate Table. Like to be upfront that this is not representative of general population. Gives a rough background on one with Graduate education, relatively good job, not new to equity value investment, supporting wife, two toddlers, from a generation of sandwich class, hardly pub, owned apartment, give sufficient parental allowance and a value saver.

Net Worth grows from a low base but it can be compounded quickly to sizeable amount in a decade. So do not think starting from a low base is impossible to reach.

In year 2008, investment relative to saving is not much. So GFC impact is relatively minimal. Interestingly 2015 growth is worst than 2008 as more cash is ploughed into investment that do not yield good result that year. The jump in 2019 is amazing because the portfolio size is already large by then. For the year 2021, if the recovery continues 2nd Half, it could be a good double digit growths.

Net Worth returns do not equate equity returns. Not surprisingly, Net Worth returns are lower due to home property, savings/cash , emergency fund or lower returns asset. Net Worth surely amplifies if we fully invest our assets however this comes with Risk. The key question is how to manage this Risk and why is it needed, as allocation of investment goes higher will we be putting our family well-being into jeopardy.

At the end of the day, from the rate it compounds, we probably won't be able to expense it down to zero if we maintain reasonable lifestyle till we passed. So in essence there is no point taking too much risk just to have the opportunity to achieve too high rate of returns. A lot of wealth do not passed three generations probably as the saying goes What we need is to manage it in a way there is sufficient growth at reasonable comfortable pace and not to compete with others who may have take higher risk based on their own circumstances. Ensuring our future generations are strong enough to compete and not spoon-fed should be the way.

The challenge with higher Net worth after years of compounding is how to maintain the pace and capturing low hanging fruits. Chances are salary and investment will grow it larger as personal expense and emergency funds in absolute term may not grow as fast. Of-course there will be situation such as once we reach retirement, medical expense or "Trip to Mars ticket" etc where there could be drawdown instead if the outflow is large enough. Regardless, no matter how much we earn, if spending habits requires more, growth won't happen.

Cory

2021-0706

PS. Market moves ahead again. Looks like my table needs to be updated. :)

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 : 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.