Cory Diary : Year 2025 Strategy

With just three months left in the year, it's an exciting time to watch how our portfolio might perform as we approach the final stretch. It's also a good time to reflect and consider adjustments to our investments for the new year.

Earlier, I mentioned shifting part of our allocation towards the U.S. market. Increasing that exposure significantly will depend on higher returns from the U.S. market, which could provide the buffers we need after careful consideration. If those returns don’t materialize, this roughly 10% allocation may remains through 2025, as the plan is to rely mainly on internal growth.

Allocation of U.S. equities will be somewhat like a "peanut butter spread" across strong businesses, with varying weightings on a few. It's quite hard to predict which will perform best, but over time, the earning power of each should drive them forward. Minimum expectation is that these investments earning should outperform local banks. The risk lies in macroeconomic factors where the entire market could be driven down.

REITs and banks will continue to dominate the portfolio. Depending on market conditions, fresh funding may either stay invested or be redirected toward fixed-income instruments like T-bills. Another alternative could be reducing loan exposure.

For local portfolio adjustments, the focus will be on gradually weeding out underperforming companies, regardless of whether they are currently profitable. This will happen as opportunities arise. Releasing capital from these positions will allow reallocation to higher-yielding stocks, aiming to boost dividends, which are expected to remain flat for 2024 unless we take action. We have to be careful not to increase holdings just for the sake of it. Considerations include whether the price is running ahead of itself, yield returns, future expectations, and cash flow situations.

Here is a snapshot of current equity portfolio. The return of Microsoft (MSFT) to support the peanut butter strategy plan.

New Funding

Our goal remains to optimize and grow the dividend stream, even with a significant portion of funds tied up in T-bills, Singapore Savings Bonds (SSBs), and multiplier accounts that we try not to touch. The big catalyst is the boost of funding from retirement payments. There are a few options to consider, and the final plan may be a combination of these:

Pay Off Housing Loan: This can be reserved in case re-pricing does not work out. Ideally, we would continue to extend the loan so that we can use the money for investments with higher returns. For this reserve to work in the future, we probably need to park the funds in capital-protected instruments until utilized. The downside of this plan is potentially losing the key funds that can help generate significant income.

U.S. Equity Boost: U.S. market valuations seem relatively rich. There is reluctance to further increase exposure, as the "peanut butter strategy" has been completed. I would prefer to invest after a market correction for a margin of safety if we are to tap into these funds. Another concern is the lack of dividend play in this segment while we wait. The only situation where I would consider adding is if there is a rebalancing of the existing portfolio allocation towards weaker stocks.

Increase REITs Allocation: Earnings-wise, REITs are still not able to match the banks. While there is a lowering of Net Interest Margins (NIM) for the banks, there will be a lag in the implementation of lower loan costs for the REITs. Most of them won't see significant cost reductions, if any at all. The timing is not right for this yet, and there is a warchest of funding if needed.

Increase Banks Allocation: Currently, the portfolio has significant exposure to banks already. The appetite to further increase this segment may not be good as interest rates have started lowering. There is a limit to how much we can increase, and it may not work for the fund. If there is a major correction, it may be helpful to tap some of the funds, but this also means existing profitability will be impacted.

Fixed Returns: Current fixed returns are coming down; however, they are still relatively high. This option can also be considered an expanded warchest—a safer option with sufficient income. It's a good reserve to support major emergencies, such as paying down the home loan if forced to. There is a time factor in this for the housing loan. It appears that a large segment will probably be allocated here for opportunities or needs.

No Chinese stocks yet. Sleep well.

Cory Diary

2024-10-10

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Asset Allocation 2024

Asset Allocation Evolution

Asset allocation is a deeply personal process, shaped by changing circumstances and needs. It often reflects a combination of factors that influence the way we structure our finances. My current setup is no exception, and as time goes on, I anticipate shifting towards a more streamlined approach that better aligns with my evolving goals.

Idle Cash

Currently, idle cash makes up 2% of my portfolio, spread across multiple accounts. Managing these funds has become increasingly complex, and while I could reduce the number of accounts without impacting my overall strategy, I’m mindful not to add more, as it requires more time and effort to manage.

I primarily use two accounts: one for salary and daily expenses, and another to consolidate investments, insurance, and loan payments.

Simplification

As I age, simplifying my asset allocation is a priority. For example, I’ve been considering releasing the 4% allocation I currently have in life and savings insurance. This doesn’t mean I’ll go without insurance. One of the policies is linked to a rarely used savings account, which I’m also considering cutting.

With my recent retirement, my pension allocation will be dissolved and redistributed. However, I’m still contemplating how best to reallocate those funds.

Cory Diary

2024-10-05

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Retirement Reflections: A New Chapter

Retirement Reflections: A New Chapter

After 28 years in the workforce, I’ve finally stepped into retirement at the age of 54. Interestingly, I didn’t feel a big emotional release on the day I left, which surprised me at first. But looking back, I realize it’s because this decision had been in the works for some time.

I think back to almost 30 years ago when I graduated from university. That moment felt like a huge release from the pressure of exams and academic stress, even though I was always involved in extracurricular activities while staying in the university hostel. I still remember having nightmares for years after, dreaming that I was late for exams, only to wake up relieved to find myself in the working world.

Retirement feels different. It’s not just an ending but also a beginning. I’ve spent the last five years, largely due to COVID, building up buffers to ensure a robust retirement and family lifestyle. And although 54 isn’t that old compared to most people, it feels like the perfect time for me. I’m ready to invest more time in my kids and focus on what truly matters. The coming months will be full of activities centered around family, which I’m excited to embrace fully.

Interestingly, when I announced my departure, just two days before my last day of work, my team was completely shocked. It wasn’t something I had kept secret, but rather a decision that I’d been planning for weeks. I’ve received so many kind words and positive comments from colleagues, which has been encouraging. Given my macro management style, it’s no surprise that the company’s feedback system has been so effective in fostering a positive environment.

Now, I’m looking forward to diving into new experiences. I want to stay active and engaged, possibly even exploring passion projects that I never had time for before. There’s something liberating about having time again—not just for myself but for my family. The next chapter feels full of possibility, and I’m ready for whatever it brings.

Cory Diary

2024-0928

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : De-Cluttering our lifes

Declutter

Blog Articles

Did a clean up last week on my blog articles. Basically I deleted most of the dividend tracking posts. Reason i did that is because I feel is for the moment in time and when is over, a new article update will come for us to see the dividend increasing trend again. So kind of de-clutter.

Aquarium

A hobbyist in corydoras for decades. Decided to dried up my tank finally as family consume more of my time in-addition to others. There are at least 4 boxes of aquarium equipments left behinds in addition to few tanks. I guess more spaces too be available soon.

Office Cube

Is amazing how much stuffs i kept in the office. There is a disney doll which i never have a chance to give to my toddlers to play. A docking station decade old. An Intuit tablet for professional drawing which I happily give away. A company sleeveless jacket that has been buried for 5 years probably. Two desktop keyboards that could not remembered when i last use. Many others. All Cleared.

Large Baby Stroller

It has been with us for 5 years and occupy a large corner of the doorway. Is quite bulky and not easy to wield. The price aren't cheap but got it in a rush as i remembered. With our 2nd Child not needed it anymore, time to go. Lightning speed.

Pictures

Over the decades I have like "Tons" of photo that gave a lot of memories. They are acattered everywhere in different storages and devices. In all form of archiving methodlogy. Have all them dumped into my notebook, sorted them out be time order for family, categories of events and friends. There are probably 25% sorting to go which is too tedious to manage them singlely. This will be after i retired. They are all backup into different thumbrives storages which are quite cheap to get at today price.

So I've been doing a thorough decluttering across multiple aspects of my life, from blog articles to personal belongings and hobbies. Streamlining everything can be quite refreshing!

Here's a summary of what I've achieved:

1. Blog Articles: Cleaned up my blog by deleting outdated dividend tracking posts, making room for more relevant updates.

2. Aquarium: After years as a corydoras enthusiast, I decided to put aquarium hobby on hold to focus more on family and other responsibilities.

3. Office Cube: Cleared out a significant amount of accumulated items, like outdated technology and office supplies, creating a more organized and minimalist workspace.

4. Large Baby Stroller: Letting go of a bulky stroller that’s no longer needed with our children growing up.

5. Pictures: A big effort to organize decades of photos across various storage devices, though I am leaving the rest for a future project.

I am clearly making space in both physical and digital life, leaving more room for what matters to me, especially investing. Keep up the momentum!

Cory Diary

2024-0914

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Rising Tide Lifts All Boats

With the recent revivals of Reit how do strong reits compare with each other. This is especialy cloudy when most reits do rise in tandem. One way to look at it is on recent Rate Cut Plan events caused by Interest Rate hikes few years back using TA.

The period of back up 2 year will be a good gauging point to study. For the exercise of this, we use FCT, CICT, Ascendas, MIT and ParkwayLife Reits.

FCT, CICT and Ascendas are in Positive returns 2% ~5%. Mapletree Ind (MIT) slights negative which if we include dividends which will be good plus. Interestingly, Parkwaylife Reit has -19.25% capital loss. It also has one of the lowest yield which may not help reduce the losses much.

Something to think about Rising Tide Lifts All Boats when they start to recede.

Cory Diary

2024-0907

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Portfolio Equity allocation updates

Here's a quick update on what i did so far recently.

Sold a small chunk of DBS. Taking profits. This shares were acquired during the recent correction of Yen Crisis. Free money must take else lightning may strike. LOL. The rationale is quite simple. 6% yield on one of the world safest bank is not hard to pick. Even if there is a reduction in NIM this not going to hit the dividend largely because the payout ratio is only slightly more than 50% of earning unless management really want to. What makes it even more attactive is the NII which is still growing.

One of the learning I picked up is if the position is for trading, we need to treat them so too when is time to sell. And this is what I did exactly for recent share sales. And my allocation for DBS on my equity portfolio reduced from 28.8% to 27.6%. Good move right ? Well, wrong. Reason being I am expecting new large fund inflow (hopefully) coming in next month. And if i am to deploy them, i could be buying back those shares I just sold.... Well, we human can't be perfect. We can learn to try to ... end of story.

That's all i did mainly. Ah yes, i did bought back alphabats at higher price. darn. The plan is to have kind of peanut butter spread on a small group of selected US Tech stocks. So I may buy back Msft when market allows. Trying to minimise my transaction as this group of shares are in cash management account that don't go easy on trading fees.

Finally, what's the score so far ytd ? Meaning, from closing value on the last day of trading last year till today.

August has been kind to my portfolio. Hopes this end well for everyone by year end.

Cory Diary

2024-0901

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Strategy for 2025

My hope is to have US Portfolio build up with some profit buffers before year ended and as synergy with my local income stocks. There is no targeted size for the US segment just that the stocks needed to be deployed and then allocation build or adjust in Year 2025. There is a dependency on how the macro market affects my available funds and stability of local portfolio to allow me to grow US Market fruitfully. Recent Yen Carry Trade Crisis nearly de-rail the plan this few weeks. However, the fast recovery put the invested fund into life time new investment high today. On a side note, USD weakened a few percentage points for the period which mean fund exchanged is down even before we trade in SGD term.

STI P/L YTD excludes dividend

With 4 months to go before the year ended, an impending rate cut, chances are we may see another ride up. This will put the portfolio in good footing in Year 2025 starts. Few things to watch is the over-exposure in local banks which i decided to reduce some of my trading positions for cash. Roughly 10% reduced. Is still quite sizeable and there is a small hit on final year record dividend hope as we are getting 5.8% ~ 6% yield from banks currently. There are no strong Reits of that range that i could deploy to mitigate the hit that I am willing to allocate increase size.

Currently, RMB is trading at low against Sing Dollar. There are stocks over there in HK that I can get greater than 7% yield with the on-going housing crisis and tension with US. One of such stock is Ping-An Insurance which just announced good result. This will be classic play opportunity. After second thought, decided not to proceed for now due to lack of familiarity. So my initials to enter Chinese market ends before it starts. With my last counter MLT has sufficient Chinese exposure ending badly which I cut quickly, most other counters have small exposure if any. China is becoming uninvestible.

Larger Cash buffer is not a bad option as market may flip with whim like what we see with recent Yen Crisis. This also tell me the shakiness or fragility of the financial system or economy which requires Fed to stabilise with cutting rate. Maybe a toppish sympton ? Maybe unchartered terriory ? whatever the case, emotionally we need to be ready. And the best way is to ensure our portoflio are.

In Summary,

Current

1. Complete build a portfolio of US Stocks

2. Risk-Adjust Income Portfolio

3. Strengthen Investment Cash Availability ( Not Warchest )

4. Maintain Dividend achieved in 2023 or more

Year 2025

1. Adjust US Portfolio allocation in measured pace

2. Continue Risk-Adjust Income Portfolio

3. Maintain Dividend achieved in 2024 or more

Simple Goals

Cory Diary

2024-0824

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Yen Carry Trade Crisis P2

Here's the Cory Equity Performance Chart on mainly still invested during the Yen Carry Trade crisis. This chart is for fun and educational purposes only.

Market is spooky and volatile. As Fed will likely do a first cut soon, the market will survive this year. However, unlike past cuts, they aren't in a situation to save the economy. So successive cut in short time may not be one. This time can be different but cutting consistently long term still rhyme.

Banks could well benefitted significantly and Reits will take longer to recover due to high rate cost staying high. Things may turn differently. Able to manage emotion has never been important as before.

Cory Diary

2024-0817

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Yen Carry Trade Crisis

The recent Carry Trade Crisis is a wake up call on how vulnerable our market is. It also reminded us we can't time it but will happen when it accidentally got triggered. The mosre important thing to me is what did I do considering I just recent expanded my US segment to 10% of Equity Portoflio.

My Nvidia position went negative together with recent addition in iBit and Tom Lee's favourite Russell 2000. Amazon took a beating as well but as most of the shares were acquired much earlier the impact today seems mute for recent days recovery. I sold off Msft to lock-in profit so as to mitigate the portfolio and now I have excess USD to content with. As the overall US positions are relatively small the impact is not enough to put a dent to the portfolio.

What really hit harder is when SG Bank stocks are sold down as well. This drives the DBS yield to more than 6.5% range which i deem too attractive not to collect more bank stocks. Yes more .... .  It doesn't makes a lot of sense unless people are forced to sell. Probably many people do carry trades to buy local banks or on margin long. See below allocation.

However, it doesn't trigger my warchest yet and the market starts to recover after Japanese authority reassures the market they aren't Alan Greenspan. This guy has a sadist strategy that market has to bust before boom at national level.

What I sorely missed in this sell down is to buy more Meta. Otherwise I think we are good to hold on most of the portfolio. Do I miss Microsoft. Probably not yet. Will we see a V-Shaped Recovery ? hmmm

Cory Diary

2024-0815

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Retirement Equity Portfolio Size

In my Quest for FIRE, the journey has not been easy but fruitful. Why do i say that is because FIRE aren't the Life Goal. Is the Experience that is key. While is commonly felt Experience got to do with going on holiday, this aren't what I meant. Is too narrow.

Life experience is about family, learning, building, helping, gaming, vacationing etc and FIRE helps to facilitate that. Example the pain and achievement going through NS combat vacation or simply as getting a driver license. Not everyone can go through the same experiences. Some have their own preferences. 

Having work for more than 25 years, thought is time to try and focus on many other stuffs. Formulated ones and those not. One of the hardest thing to let go is that of salary which will be quite sizeable by now and hard to let go mentally. The middle ground maybe trying to reach work life balance. Maybe tilted more away from work on the expense of promotion and increment.

Nevertheless, i thought is time to do another exercise on - Do we have Enough to Retire ?

The angle we will do is to pre-determine the expense and then verify with corresponding Equity Portfolio Size. For a dividend income portfolio, estimating the annual dividend maybe easier. For a growth portfolio, then we need to estimate the growth. For our case, will be both since my portoflio is mixed and probably we can pro-rated them accordingly.

The scenario will be expense is 9k monthly with 3% inflation. Taking into many factors into consideration like age, loan, non-equity income etc we can determine the portfolio size than can last by adjusting the size to our liking for our age to last.

The assumption is non-equity income size is more or less fixed by my age to support basic needs. Expanding this segment on low return can be wasteful unless warchest which can lowered your portfolio amount. There maybe situation where people can live more on non-equity income such as rental. In that case, adjust the Non-Equity side accordingly.

Below a sample computation. Select the picture for clearer view. 1M Starting Portfolio size to support 9k monthly expenses at 3% inflation can last till age 96 for me. There is drawdown of Equity portfolio to zero. There will be some inheritance from some non-equity allocation and property after. Not that bad.

The parameters can be changed to suit ones condition. I tabled few permutations to see how this go.

The finding is quite interesting which I am so keen to share so that people can avoid the danger.

Scenario A and B, just 0.5% inflation difference can set you back 7 years of retirement.

Scenario A and C, for 200k more, you likely have excess after your last breath despite drawdown.

Scenario E, a situation where your children will love you deep deep. Portfolio is divergence. There is no drawdown and probably grow beyond your dream hopefully.

Scenario F, if expense go out of hand and inflation increases too. Portfolio can only last 28 years despite larger 1.5M Portfolio size. The danger of Lean Fire is obvious.

Cory Diary

2024-0805

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : An Insight into DBS CIO Hou Wey Fook

I chanced upon an article about DBS Chief Investment Officer Hou Wey Fook. I have noticed him since his appearance in The Woke Salaryman interview. As an engineer who has excelled in finance, his educational background likely provided a solid foundation. I admire his advice and thinking, so I wanted to do a quick comparison for reference.

Hou Wey Fook's Investment Strategy

1. The Barbell Strategy

   • Income Generators: Assets that generate consistent income, such as Singapore T-bills, government bonds, Singapore REITs (Real Estate Investment Trusts), and Singapore bank stocks for their dividends.
   • Growth Equities: Investments in companies that are innovators, disruptors, enablers, and adapters. These are best-in-class global companies with wide economic moats – competitive advantages that enable them to maintain profit margins and market share in the long term.

2. Measured Exposure in Gold ETFs

3. Additional Retirement Income from CPF SA income for retirement.

4. Well-Diversified Portfolio: Prefers bonds ETFs rather than single bonds.

5. Income and Growth Allocation: 60% of his portfolio is in assets that generate regular income streams, while the remaining is primarily in growth stocks. It is likely that, closer to retirement, the 60% weightage of income-oriented investments will rise further.

6. Universal Life Policy: Acts as a mortgage protector, ensuring that in unforeseen circumstances, his wife and children can continue living in the house without the burden of servicing the housing loan.

7. Drafted Wills: This saves his children from unnecessary emotional stress.

8. Real Estate and Lifestyle: He bought a landed home 20 years ago and owns a Tesla.

My Portfolio and Comparison

It looks like we have a similar strategy regarding the Barbell approach. Recently, I added Russell ETFs and iBIT. These are small positions, but I hope to grow the Russell ETF smoothly, in addition to the similar growth stocks we have. iBIT is an insurance product that seems to match his measured exposure in Gold ETFs.

He is 61, which is seven years older than I am. However, my growth assets are significantly lower at only 11%. I think my allocation is too conservative on the income side and may not be less risky considering the amount of REITs in the portfolio. This is something I need to address.

Regarding insurance and wills for the family, this is something I need to plan for the mid to long term. I don't think I can do much about owning a landed home as he does.

His top investing tips

Time in the market beats timing the market. Frequent traders often fall prey to anchoring bias, a cognitive bias where investors place excessive emphasis on an initial value, and fail to adjust it adequately as they acquire new information about the company or market conditions.  

Conduct thorough due diligence and invest in securities with strong long-term potential. With comprehensive research, investors are less likely to panic over short-term market volatility and make impulsive decisions that could harm their portfolio.

Start investing early, and limit what you borrow. To borrow the words of physicist Albert Einstein, compound interest is the eighth wonder of the world.

Cory Diary

2024-0728

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Ascott Trust Investment Review

Ascott Trust

Ascott Trust just released their result. The DPU reduced about 8% YoY but is only 1% if we exclude forex. The table to explain as follow. Base case 5.4% yield. Include other gains 5.7% yield at price 0.895. Price did not drop much after result which likely priced in somewhat currently.

The business is robust and growing at 11% growth. Compared to Bank which give similar dividend range. Is a good diversification from high bank allocation portfolio. High rate seems like has much lower impact to them as they can adjust their cost better. Their loan currently is not expensive which may not be always will be my assumption.

Debt management looks ok and Well staggered.

Cory Diary

2024-0726

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Personal Finance Ratios

Updates on Recent Financial Ratios

Started focusing on financial ratios to better assess personal financial situation and hopefully avoid unnecessary distress. Here’s a summary of the key ratios I'm monitoring:

1. Net Property Value (NPV)/Equity Ratio

67%

This ratio helps in determining how much allocate to equity with acquired property. Typically, we can manage fluctuations in equity over time. However, Property values usually increase locally, and based on this ratio, actions might be needed on either side of the balance.

For a single property, having a larger equity base seems logical to maximize returns and ensure diversification. This helps avoid being property-rich but cash-poor. However, this might not suit everyone, especially those wary of equity investment risks. In our case, the property value has been rising, which positively impacts this ratio.

2. Bond/Equity Ratio

43%

Common in many investment books, this ratio for us, includes Singapore Savings Bonds (SSB), Fixed Deposits (FD), Multiplier, and Treasury Bills (T-Bills) for the bond portion. Working cash is high enough for us to include Fixed Deposits. For us, the 43% includes housing loan emergency funding, which is substantial. This ratio has been decreasing due to increasing capital gains in equity to our surprise as we have invested consistently into T-Bills and SSB.

3. Pension/Net Worth Ratio

15%

This ratio measures dependency on pension funds as a safety net for managing our lifestyle. It also indicates available funding for investment. We prefer not to allocate beyond required contributions from work, focusing instead on the necessary safety net amount. This ratio can also be applied to equity or property instead of net worth. We aim to understand how much we invest in higher-risk assets. For us, meeting the Full Retirement Sum (FRS) is sufficient, though some might prefer a higher amount for added security.

4. Loan/Reserve Fund Ratio

145%

This ratio considers funds reserved for housing loans that don’t affect our emergency funds. These reserve funds can partially serve as a war chest. Our 145% ratio indicates the reserve fund cannot fully cover the outstanding loan but good enough to last us to get things in order.

In essence, Reserve fund need to be safely invested and so it could be a liability if we are confident to get much more than typical guaranteed investments. So it becomes our Bond fund.

Is a little tricky what is the idea ratio be. Defintely we want to have enough runway when there is need to unwind. But we also hope it can last as long as possible till say our cashflow can handle the monthly instalement. So this can be quite different between individuals.

As I want to retire early if possible, the goal certainly will be full reserve coverage of the loan. However, I am comfortable to handle loan as long is sustainable to drive more returns. Full coverage also mean other variable ratios may go out of whack. Which means larger networth needed or we have to pay down the loan to somewhere.

Current loan at 1.5% Fixed is a steal. It won't be in the next renewal.

5. Emergency Fund/Annual Expenses Ratio

162%

I recently calculated our annual expenses and multiplied them by 1.15 to include additional support from my partner, and we have about 19.5 months of buffer when the ratio is computed.

This buffer excludes SSB, Multiplier, and T-Bills. Includes working cash, as we don’t have a dedicated account for emergency fund. Funds are spread across various cash and fixed deposit accounts.

6. Cash Flow / Annual Expenses Ratio

122%

Cash flow is obtained from investment, income, rental support, fixed returns etc. With this number, theoretically Networth should climb consistently as long we keep working and investment not badly affected. However, this value likely varied annually as portfolio size gets bigger whereas salaried income is at much slow pace.

Actions

The Ratio that may need to watch is Loan/Reserve Ratio. Not that the reserve amount could not cover the loan but cash flow ratio needs to manage like any other business.

The whole idea of the loan is to drive or leverage for more returns elsewhere. So if they are fully locked in reserve to minimise the loan risk, then we need to ensure they have sufficient returns. 

The easy way out is not to retire voluntarily. Each month income is a boost to the reserve.

Cory Diary

2024-0708

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Family Expenses 1H24

Have done a few blog on Expenses. Another half year has passed, and I am excited to table another review on how we progress in escalating expense containment. We have some discussion on why out expenses keep growing and it will good on how we progress after 6 months.

As table shown, it appears we have managed to stop the problem. 1% expense increase for 1H24 compared to 2H23. This is on the back of additional Travel and Private Tuition Fee.

There is a special bill exception that we allocated to 2H23 and 1H24 instead of amortizing across say 5 years. Even if this is considered in the last two halves, the expenses look ok.

Can safely say our expense range between $9.6k to 10.6k range. Do note as in previous article, partner supported probably additional 15% expense. This work out to 132k annual expense. Interestingly we do not feel we have lavish lifestyle.

With this expense amount, we can work out passive income, investment return, rental support etc to ensure we can manage our financials.

Cory Diary

2024-0705

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Portfolio Re-Balance and Result

From time to time, we may need to re-balance for the better or worst. There are people who swear we should do nothing but bear that in mind that doing nothing is a deliberate action too as is solely tied to one expertise. How often we trade depends on our capacity, knowledge, cost and likely emotional state.

The hardest to master is managing our emotional state so personal preference is to keep it at the most stablised level aka "Sleep Well Test". This could mean more re-balancing effort and regular monitoring of reports to contain unexpected risk level increase.

So what are the changes so far for 1H24 Portfolio ?

Deleted : Venture, Google, UOB (add/del), SABANA, UTD HAMPSHIRE

Added : iFast, TheHourGlass, Nvidia, OCBC

DBS/OCBC are the key profit drivers in-addition to dividend. Their large allocation shielded the portfolio. US Market is in net profit ytd. Reits are still in special care. A few of them such as iReit and Elite see large reduction in capital.

Currently,

Equity Portfolio XIRR YTD +4.5%

Investment Account Cash 7.4%

In-Progress,

US Market expansion, Nvda etc

Reit on-hold mainly otherthan special exceptions

SG Non-Bank opportunity

Cory Diary

2024-0704

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Emotional Management

Managing emotions in the stock market, especially during periods of market highs or when a particular stock like DBS is at an all-time high (ATH), requires a disciplined approach. Here are some considerations and strategies I can think about using this portoflio below as an example :

P/L YTD

1. Assessing DBS Investment

Current Portfolio Allocation: Evaluate how much of my portfolio is currently allocated to DBS. If it's a significant portion, consider whether this aligns with my risk tolerance and investment goals.

Risk Mitigation: DBS is sized to mitigate high-rate scenarios. Assess if increasing your DBS allocation further fits within your risk management strategy.

2. Criteria for Decision Making

When deciding whether to sell, hold, or buy more DBS shares, consider the following criteria:

Fundamentals: Evaluate DBS's financial health, growth prospects, and market position. If fundamentals are strong and justify a higher allocation, holding or buying more might be prudent.

Valuation: Assess whether DBS is overvalued or undervalued relative to its historical metrics or industry peers. High valuation might warrant caution. For this case sustainability of the dividend.

Portfolio Diversification: Ensure overall portfolio remains diversified across sectors and asset classes to mitigate risk. Limited alternative.

3. Taking Profit

Profit-Taking Strategy: If DBS has generated significant profits for the portfolio, consider taking partial profits to lock in gains and rebalance your portfolio. This can help manage risk and reduce exposure to a single stock.

Reinvestment: Reinvesting profits into other assets or sectors can help maintain diversification and potentially reduce emotional attachment to a single stock.

4. Managing Emotional Threshold

Establish Rules: Define clear rules or thresholds for when to buy, sell, or hold based on investment strategy and risk tolerance.

Stick to Strategy: Avoid making emotional decisions based on short-term market movements. Stick to  predetermined investment strategy and criteria.

5. Long-Term Perspective

Quality Investments: Focus on investing in fundamentally strong businesses with good long-term prospects. Quality investments can provide stability during market fluctuations.

Patience: Markets fluctuate, and stocks go through cycles. Having a long-term perspective can help reduce the impact of short-term emotional decisions.

Conclusion

In summary, managing emotions in the stock market, especially with a stock like DBS at ATH, involves assessing portfolio allocation, using objective criteria for decision-making, considering profit-taking to rebalance, and maintaining a disciplined approach aligned with your investment strategy. By focusing on quality investments and diversification, you can better navigate market volatility and emotional biases.

Currently, doing nothing. The logic is simple. Bank is to hedge Reit. So sell at this time seem bad idea as it may or not get worst for Reits. Adding more DBS is no too as it may exceed my mental treshold should DBS got hit.

Cory Diary

2024-06-15

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

 

Cory Diary : Turnaround of Reits

With the current high rate and coming Fed meeting announcement soon when will it be a good time for Reits turnaround in stock price ? Looking at the Rate (below chart ) which max spike in Aug 2023 and probably well felt by end of 2022, when will rental reversion be able to catch up assuming no more rate increase ?

If we are to take Mall Reit example assuming 3 years cycle of contract, full update maybe Aug of 2026. There are variables on reit types, management ability and probably loan cost which varied with their own renew or expiry. There is no definite answer we can know unless we are insiders.

To be safe, I would think early next year 2025 will be a good timeframe to review Reits allocation increase. Anything before will need good conviction, sizing and unique Reits performance.

Will rate cut helps ? Maybe shorten the wait accordingly. This could be a slow process of unwinding. So may not help much near term.

Cory Diary

2024-06-10

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Net Worth Update and Milestone Achieved

With the help of Equity and Income, Networth reached a new milestone. Just a week ago I was wondering what it takes to cross the networth line firmly. I don't have Nvidia to help elevate ( Sibei Fomo ), Tesla not moving (at least not crashing. Touchwood) and I decided not to adjust the Net Value of my property to be more conservative.

As it turns out, bank stocks, salary and some benefits pushes it over. There is no celebration or anything. I keep it quiet at home as it arrives quietly as I feel there is a need for more to support family expenses.

Still watching the Non-Productive Assets (above chart) size which has sizeable amount in Fixed Deposits. I should have them split out from regular low interest saving accounts but too lazy. Anyway not so worried because some of them is denominated in USD FD enjoying good rates.

Property may have gone up another notch $PSF in low volume. So decided to put this increase in valuation on-hold till we see a stronger number. With the cost of building new apartment costly the market somehow need to reflect them into the equation.

So what it takes to be euphoria. Maybe much higher sustainable dividend income returns.

Cory Diary

2024-06-02

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Cory's Investment Insights

Emergency Fund

Personalized Emergency Fund Calculation:

Individual Circumstances: Emergency fund needs vary based on personal circumstances such as age, job stability, housing loan, and other financial obligations.

Expense Coverage: While experts recommend 3 to 6 months of expenses, this may not be adequate for everyone, especially those closer to retirement age or with significant financial commitments like housing loans.

Long-Term Considerations: The emergency fund should be sufficient to cover expenses until the investment cashflow can reliably support your needs. For example, if it will take 6 years before your investments can cover your expenses, a 6-year emergency fund may be more appropriate. 

Housing Loans Impact:

Significant Financial Obligation: Housing loans can greatly impact the size of the emergency fund needed. A $1M home with a $5k monthly payment requires careful consideration.

Depleting Emergency Funds: Paying off a housing loan with emergency funds can leave you vulnerable. It's important to balance loan repayment with maintaining a robust emergency fund.

Income Streams:

Dependence on Income: If your financial plan relies on rental or dividend income, these should not be counted as emergency funds since they are intended for future needs.

Economic Stability: In regions with generally stable economic conditions, like Singapore, the likelihood of finding work is higher, but still, one must be prepared for the worst-case scenario.

Investment Risk

Young Investors and Risk:

Risk Tolerance: Young investors are often advised to take higher risks because they have time to recover from losses. However, this advice must be tailored to individual financial situations.

Critical Funds: For young couples, a significant sum like $100k might be needed for major life events (wedding, home, children). Losing this in high-risk investments could be devastating.

Weighing Risk vs. Needs:

Early Financial Milestones: Before risking essential savings, consider the importance of the funds in question. High risk can be suitable for surplus funds, not those needed for immediate, crucial expenditures.

Risk as a Percentage of Net Worth: As your net worth grows, the proportion of your portfolio you can afford to risk might increase. However, early on, preserving capital can be more crucial than seeking high returns.

Starting Small

Slow and Steady Growth:

Initial Capital: Starting with a small capital doesn't mean you should take excessive risks to grow it quickly. Consistent, smaller returns can be more beneficial in the long run.

Compound Growth: Over time, regular savings and moderate returns can compound significantly, leading to substantial portfolio growth without taking undue risks.

Incremental Growth: As your career progresses, your ability to save and invest larger amounts will increase, accelerating your portfolio's growth.

Personal Journey:

From Small Beginnings: Many successful investors start with modest amounts and focus on steady, incremental growth rather than seeking quick, high-risk returns.

Consistency: Regular contributions and disciplined investing practices build a strong financial foundation over time.

Conclusion

Investment strategies should be personalized, taking into account individual circumstances, risk tolerance, and financial goals. Emergency funds should be sufficient to cover unexpected situations without compromising long-term financial security. Young investors should balance risk with the need to preserve critical funds for life milestones. Starting small with a focus on consistent growth can lead to substantial long-term success.

Cory Diary

2024-05-28

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Disclaimer

The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Equity Portfolio Review

Equity Portoflio - 2024-0519

In this review, I'll provide a brief commentary on each counter.

REITs

There are 9 REITs in the portfolio after selling off United Hampshire. Ascott Trust yields look quite interesting. If there is a correction, there may be consideration to add a little more. This is despite strong bank yields, planning for necessary transition options.

Sabana Trust is in a more complicated situation as its share price could go either way due to ongoing internalization complexity. With current cash conservation needs, it seems a luxury to have exposure to this in my portfolio at this time. It poses elevated volatility risk. The pro is the strength of the REIT, which may mitigate some risk, but it's uncertain how much it can help.

Elite Commercial REIT is in a deep drawdown due to the ongoing UK macro situation. As the position is not significant in the portfolio and the REIT has mainly government tenants, I do not plan to relinquish the opportunity of a rebound if any. Currently, they aren't in distress and are well-capitalized from a recent rights issue. However, we can't say with absolute certainty there is no risk or surprise from what we don't know.

Mapletree Logistics Trust has recently been hit due to China exposure in their valuation and negative rental reversion reflected in it. Despite this, the REIT has managed the issue well. With management actions on how they position the REIT, it seems investors may take some comfort. Nevertheless, as an earlier article mentioned, asset sales to support income distribution are a fight against the Fed. They likely will pull through well. Planning for China macro-wise is much harder due to ongoing tensions between the powers. Technically, if we use MA 50/150, the chart has yet to reverse to an uptrend, so I will continue to monitor.

IREIT positions in the portfolio have been sized much smaller in proportion despite being popular among investors in foreign REITs. They have all the ingredients to be successful. This was the case before the interest rate spike and the Ukraine War. Unlike UK REIT, they are fortunate to have locked in their loans until 2026. Like most foreign loan exposures, the high rate spike and poor sector segment hit them hard.

Core Reits

There are currently 4 core REITs in the portfolio: AIMS APAC REIT, Ascendas REIT, Mapletree Industrial REIT, and FCT. They all have significant exposure to the local economy, which shields them quite well. Ascendas and Mapletree benefit from lower loan rates as well. Their well-managed hedging and fixed loans help keep their DPU stable.

AIMS APAC REIT used relatively expensive perpetuals before the rate spike, which tied them over well for the past years. With the perpetuals scheduled to expire, it may face much higher costs for their loan or perpetual rollover. Being a small REIT, I decided to reduce the position by roughly 40%+ to reduce portfolio volatility from top REIT allocation to the last of the core REITs. FCT is strong in suburban malls. They too face daunting loan costs over time. Nevertheless, it has a strong business, and I am happy to hold it through its current allocation.

US Stocks

Amazon, Microsoft, and Tesla roughly make up 3% each. They are all strong in their respective markets with world-leading businesses. Currently, they hold less than 9% of the portfolio in total. If opportunities arise, there may be consideration to expand in this segment. I am quite comfortable with what I currently have. Microsoft and Amazon are expected to provide a strong base support that will keep this group steady. Tesla is quite volatile but can have explosive upside if they execute their developing projects well. The hope is not to further inject fresh funds into US stocks unless there is a good rationale. The main reason is I already hit my 50s and view cash flow from dividend stocks as a key priority.

Banks

DBS and OCBC have outsized allocations in the current portfolio. UOB, which had a small allocation, was sold just before results. As mentioned earlier, they are a hedge against REITs due to high rates impacting them. So far, they have nicely filled the capital loss gap on the REIT side well—too well, as high rates continue to prolong. There is temptation to inject more funds into them due to the high yield they can provide over the REITs. What's more, they have a good business environment. Unfortunately, this could put the portfolio at higher exposure risk to one segment. Not my time.

Non-Bank Local Stocks

Venture, Sheng Siong, and Netlink NBN Trust. Venture is a test with a very small allocation. There hasn't been much investigation into it, whereas Netlink and Sheng Siong are more familiar. Both latter stocks are sized to support the portfolio if the economy goes into distress. There is no motivation to expand their allocation further.

The latest report from Netlink is within expectations but also reminded me there aren't catalysts out there yet that can mitigate their direction long term on cash flow. This can grow into a problem if not managed carefully. Sheng Siong is boring but awesome as usual. They have a lower yield; however, there are opportunities.

Cory Diary

2024-05-20

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.