Cory Diary : Equity Performance Report Card Aug'21

Preface

Please spend some time to do a slow read and think else I rather you skip this article. The trading month ended for July and I am more excited on this report card. 

Wealth

If one has noticed, I have been sharing wealth information so that people of My Time benefits. I hardly care less of people who think negatively on such sharing for they are likely in the poorer category in which I could understand they likely will also think money is Evil.

Let me tell you this. You are what you are and money just amplifies who you are. (Says Benny from a youtuber of Café Money)  Just like sex, we Asian hardly talk much on the detail of money and asset as though is some devil schemes from hell. Fact of matters are Sex and Money are major part of our lives that provides the needed motivation and drives. Discussing them will help our life significantly.

Nice Surprise

This morning I got invitation to join Private Client. What a nice surprise though I suspect not much to do with my growing portfolio but consolidation of my accounts. Does it helps to join or more constraints in the future ? I will have to do some investigative work and for the matter is just an algorithm that trigger the invitation and then you get tied probably. When you hit my age with saving and growing salary income and investment, plus the printing thus higher inflation, hitting the amount needed to qualify maybe just matter of time. They probably will adjust the bar higher if it were before Digital Banking Age. To some readers, they would have it long ago so bear with me as I grow. And to younger investors, I have this to say, be patience ! Your time will come.

Digital Banking

With digital banking on the rise with competition, traditional banking no longer has monopoly edge over the consumers. The new frontiers will be Investment Banking and Wealth Management. So collecting clients will be a hobby necessity for survival considering the fixed cost to manage them will be reduced with the automated Digital World.

Report Card

Talk so much today. And here my Aug report card. Is a tooth and nail fight again with STI and manage to edge out a little bit again from last report. So the delta has narrowed to -2% from STI Index. Portfolio hits ATH not surprisingly as this helps to get the invitation. ( grin ). I am still quite positive on the fight till year end.

If one has noticed, I have Cory XIRR (Annualised YTD)  and Cory Yield for comparison and they typically do not deviate much. It should stay that way if fresh fund injection is not significant, and it is so far for my case.

The portfolio still has some room to move up so I am not surprise it will move higher provided there is no broad market correction. Again XIRR for my chart is ytd annualized so the end date of the formula set as 31 Dec'21 instead of today. So that it won't extrapolated the performance which could easily move my XIRR up by another 80% probably. If it happens then it will deviate significantly from my profit yield which is a "Good Checksum" I believe.

Profit yield basically is Total Profit YTD including dividend gained this year alone, divide by Initial investment cost valued on start of year. So XIRR for my YTD hits 9.4%. The stronger performance was due to : -

1. DBS share maintained above 30

2. AREIT moving up

3. MINT scaling up well

4. US stocks doing well

5. SGX is still growing

Foreign Shares allocation hits Stage 2 which is now 10% of portfolio allocation. I am glad so on the market diversification is showing traction.

Cory

2021-0731

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 : Sheng Siong 1H21

When I think of Sheng Siong. Here's what in my mind. One of iconic brand in Singapore that is doing well in Covid and Prior for a family run business. Reward shareholders and employees. Expansion in China. Outskirt supermarket.

Result 1H21

To sum it up the recent performance, table as above. If we do a fast look, one would think Sheng Siong has a terrible 1st Half but we need to remember that it benefitted disproportionately last year due to Covid lockdown and is not a normal year.

Profit

What we have to do is to view current half below and what is their possible future by skipping Covid Period. Operating Profit for 1st half is already 87% of FY2019 Pre-Covid.

And that's the power of Sheng Siong growth story and this is despite maintaining about 70% of dividend payout ratio. Another Good News is that the subsidiary in China continued to be profitable.

Cory

2021-0730

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 Secret Trick of Dividend Investing

The Myths

Often people uses DPU as yardstick for evaluation of Reit returns and this is perfect. Obviously nothing matter if the integrity or risk of the Reits are in doubts. If that is the case, why often we see top performer of Reit investor often has low yield Reit ? Many will argue it takes a huge portfolio to achieve the level of dividend needed. That's a huge misconception when one tries to reverse engineer and implied so.

Another key believes is that they buy early in the dividend game, years ago. And so people hope for a big crash before they will consider the same to stretch their dollar. Hello ? did you buy significantly in Mar'20 Covid crash ? If so why is your portfolio still not big ?

Reit Valuation

Valuation of Reit in addition to current yield there is another critical factor which I did not blogged much about and that is price growth. Never mind what's behind that drive it in this article. The essence I want to share is price growth. huh, isn't that blasphemy ? Please hear me out.

In March'21 this year, Mapletree Industrial Trust hits low of 2.52. At this price the current yield is about 5.2% in which DPU roughly 13.2 cents. Some would even say 5%. Not that great and many will ignore it. Fast forward today, less than 5 months later, is now last traded at 2.92 on 7/28. Yield 4.5%.

Now, if we add 13.2 cent and the price delta from Mar to end July of 40 cents, that is 53.2 cents. Now work back the math if we use 53.2 cent / $2.52 = 21% for 5 month works. Think it in yield term this is easily 10 times of March'21, 5.2% yield annualized.

Real Life Example

And this is an example on why I bought Mapletree Industrial Reit this year from Feb to Jul'21 this year. I have a price expectation that it can go higher while I am prepared to wait to collect 13.2 cents annually.  That's the Magic on why Portfolio can compounded fast because is just not dividend even though we are prepared to sit on it. So next time someone tell you his portfolio is small and will take forever to grow, ask him to think again.

I have challenged two huge misconceptions today that most do not know about. And how I grow mine. How much we understand is up to individual. Next, how I know the price has the potential to go much higher ?

That's another Story Telling which sprinkles across in all my articles.

Cory

2021-0729

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 : Tesla 2021 Q2

Tesla

Spectacular Result from Tesla yesterday. Best Quarter so far.

YOY

Net Income 1.4B from $104M

Non-GAAP earnings per share of $1.45 ahead of $0.98 expectation

Revenue rose 98% to $11.96 billion, from $6.04 billion a year ago

Operating cash flow of $619M

Produced 200k Vehicles

Operating Margin of 11%

Bitcoin-related impairment of ($23 million)

Solar and energy storage business rakes in $810M Rev. 116% from same Q last year.

The business is damped by ...

The chip shortage “remains quite serious,” Chief Executive Elon Musk said in a call after the results. “The chip supply is fundamentally the governing factor on our output,” and it’s hard to say how long it will last because it’s out of Tesla’s control, he said.

 “To better focus on these factories, and due to the limited availability of battery cells and global supply chain challenges, we have shifted the launch of the Semi truck program to 2022,” it said.

and today by Chinese Tech and Education Stocks sell down. Tesla PE has come down from 1200 range many months ago to less than 175 ! with it's  growth. That's how amazing the business ability to scale.

Took the opportunity to do a little DCA on Tesla Shares in a Sea of Red Tides. 

Cory

2021-0728

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 : Returning to MNACT (Updated)

Mapletree North Asia Commercial Trust

After significant sales in Aims Apac Reit, the portfolio needs some higher yield Reit to compensate for the dividend. One of the consideration is MNACT due to Maple Story ... and of-course the yield. The main concern is the potential rights issue. Nevertheless, no harm to go ahead to initiate some token purchases.

The Business update is out today so I thought is good to take a peek. The table below looks quite ugly. Not sure is an understatement. The reversion -34% on 44% of leases in Festival Walk. Not sure there is more contract focus on earning from sales which are in good recovery phase.

Do note the ICR is Trailing 12 months basis. However much lower rental reliefs of S$4.0 million granted to retail tenants at FW in 1Q FY21/22 compared to the corresponding period last year (1Q FY20/21: S$17.9 million )

Personally I feel MNACT is racing against time before the full impact of FW is felt such that DPU will continues in a reasonable manner with rising retail sales and timely acquisitions. There is also another equation which is the insurance proceed. There seems to be so many unknown and I am glad that currently my stake is small. After reviewing the information, probably to halt further increase till we have more concrete results. But I have no doubt the Manager is capable and doing the best they can.

(Updated 7/28: Decided to clear my small position ~cut loss and move to HST)

Cory

2021-0727

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 : Why is Reits affected by Interest Rate

Often we hear analysts or in forum the perception that Increasing Interest Rate will affects the cost of Reits Loans therefore profitability. However the correlations on table below tells a different story that Reits do generally well in high rate environments .  Hope this settle once and for all, the myth or maybe there is deeper issues within.

Interest Rate Impacts

A well managed Reits will pass the cost to tenant. A too drastic increase within a short period do affect Reits short term as majority of tenancy agreements are still in force but that's not the argument here. Some Reits have build-in rental escalation tied to sales and inflation. Nevertheless, cost is able to pass down to tenant mitigating the impact.

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Yield Compression

What we know is that when investing in Reits, we looks for yield therefore it is logical that we compared it to other products to decide is it worth the risk or seek better returns. In the scenario movement of Interest Rate upwards, it can cause Yield compression. This make us less willing to invest in Reits unless the yield improves further therefore lowering the stock price.

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Competition Examples

Singapore Saving Bond (SSB ) gives 1.5% annualized (each year) for 10 years. Say the rate doubled to 3% and this allows SSB to give higher rate say 2%. Some people who invest in a Reit logically will switch to SSB considering it is basically riskless to capital. Reit price will naturally falls as there will be more sellers.

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In situation of no good alternative, REITs price will generally rises with strong economic and stability as investors are willing to take larger risk. Another comparison though not necessary guaranteed is CPF giving 2.5% and 4% to CPF OA and CPF SA respectively. Though riskless, there are limitations and restrictions.

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Not all Reits are the same. Some Reits risks are insane. Be careful of Yield Traps and Pitfalls. However, if a Strong Reit is unfairly sold down, remember to "Koi Durians" ! This differentiate Veterans from the Green as Fundamentally, the business unchanged.

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If you are interested to know more about Reits. Try this books !

Making your Millions in Reit

Passive Income from Singapore Reits

Singapore REITs as An Asset Class

Playing the REITs Game

You could be well on the journey to Financial Freedom like me. But please DYODD.

Cory

2021-0725

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

Cory Diary : Equity Allocation Jul'21

iReit Global

Recent change includes the long awaiting Preferential Offering (PO) finalized. The excess allocation result is kind of surprise yet not. CDP share has more than 2700% excess allocation in term on original rights allocation. This is in consideration that share size is minuscule.

On Custodian account side which is where main bulk of iReit shares are, it is slightly more than 100% excess allocation again in term of original rights given. If we have applied for double the excess, there is likelihood we would have got it as well based on others feedback. This is a surprise. On hindsight, which is a bitch, PP is quite small relative to PO. Well sometimes it takes experience to get through. And then proceed to shade a little off the portfolio to right size the exposure assuming the trading price maintains.

SGX

Is on the tear again. Blogged many times on the significant undervaluation. It has keep growing. Unfortunately we couldn't chase as valuation is an Art especially so when we have sizeable exposure already. It is also one that provides the balance factor on different market sentiment days. It has the potential to grow to join the big 5 of the portfolio allowing more diversification and stability needed to compensate on smaller bond size.

Allocation

Bond investment reduced to 11% but in actual there is expansion in CPF allocation which is not part of this scope. Any interests on Bond/CPF can read ( Here ). Reit allocation lowered to 48% despite recent PO. This is mainly due to reduction of Aims Apac Reit from recent run up. I was second guessing potential rights issue which I have no plan to take up hence the change but on second taught there is possibility of merger which has been rumored for a long time.

We have seen good gains of the portfolio this year. However, there is still room to grow till the end of the year as it has laggards such as Malls and Industrial Reits which will benefit from the recovery of Covid-19 despite hiccups. Maybe we will see 15% allocation if all stars aligned.

Dividend Returns

Dividend generation at sustainable level for the portfolio hits 60k. ( If we leave as it is without injection and say 2% growth, and some dividend growth as well, we will see 4k more dividends each year. This is rough estimate as we need more data with time to get the trend right. The formula will be portfolio value x 2% growth x 5% yield + 2% growth x annual dividend. ) Some injections will push the annual dividend increases to 5k. What this mean is it will take 7 to 8 years for dividend to grow to 100k annual on conservative estimate if we let the portfolio runs on with limited intervention. However, the portfolio which has been living on 7% annualized returns for past decade. So it can be done in 5 years or less. A long stretch goal. Wishful thinking ?

Cory

2021-0722

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 : 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.

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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.

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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.