Cory Diary : CPF Minimum Sum 155K

The minimum sum has been increasing for years. Based on my earlier rough estimation is certainly moving faster than the inflation. My logic is that there is an initial growth phase to close the gap as the current minimum sum lags significantly behind the minimum needs for basic retirement. Once this is met or politically so, i would expects the the growth to follow inflation trend.

Singapore is one of the lowest tax countries in the world. This do not happen by chance but by the expectation that retirement is mainly self-funded, and CPF is a commitment to the society that we meet our minimum obligation.

Considering the retirement needs in future dollars, releasing CPF money will not going to help much to our financial wealth being. This is not hard to deduce considering a million dollar without investment will easily be expended in 15 years in earlier article. Even with 2.5%-4% returns, the minimum sum will not be enough to meet my personal retirement needs. If we understand the concept, will people still care about not meeting the minimum sum less the purpose is to withdraw them asap, and this can be worrying.

The logic is simple after i did my own lifestyle count. By the time I retire, my  investable should be at least 10x of the minimum sum of today money. If i am not achieving that yet, is time i find a way to earn more and be Accountable for my own financial well being before is too late.

I start to draw out all my investments. And soon realised that CPF money sits very well as the guaranteed portion of my portfolio that provides stable and min. baseline returns. Withdrawing CPF is certainly not an answer to it. Is our money safe ? Last i check our government prints their own money so this should not be an issue. Is better to be locked away till 65 from anyone or even myself. The monthly withdrawal feature provides an additional layer of protection for my golden years. Once we put further thoughts into it, CPF is actually a safety net insurance scheme at national level.


Cory
13th July'14

Cory Diary : Retirement Amount

Retirement Amount

One of the misconception about saving is how long it can last once we retired.
Assuming no investment and just plain saving bank. See Table 1.

Table 1 : Without inflation adjustment

Above is a simulation without inflation. How will this impact me ?
Assuming 3.5% inflation rate, the monthly absolute amount increases as Table 2.

Table 2 : With inflation adjusted

So how long can my S$1M last actually ? See Table 3.

Just  below 16 years. After that i am on my own ...

For those who are curious on whatif Inflation hits 5%. The answer is 14 years.
That's how long S$1,000,000 can last.


Cory
22nd June 2014

Cory Diary : Property Crazy Question

Let say i have enough budget for either.
Apply value investing and quality of life, which should i go ?

Property 1 : Condo (New)
Region: RCR
Area: 850 sqf
Price: S$1 M
Rental Value: S$3000
Proximity: School, NE MRT/CIRCLE

This leave me with heavier loan, small family, less money for equity and need more loan for car.

Property 2: HDB Re-Sale (10 yrs)
Region: NE Region
Area : 1200 sqf
Price: S$600K
Rental Value: S$3300
Proximity: School, Coffee Shop, Supermarket, NE MRT/LRT

This leave me with 400K to do stock investment, larger family, major renovation and a car.

Cory
20 April'14

Cory Diary : Dividend Dimension

Why Dividends ?

Keep my CEOs on their toes
Best proof of returns
Income sustainability

(updated for privacy)

No turning back on the Twin Pillars Strategy - Dividends & Growths.
Q1 2014 has been slow due to divestment of some Reits counters. Of course is still in the earlier part of the year. Building portfolio back up with strong cash companies. I will have to catch up to beat 2013 dividends but not going to lose an arm or leg for it.

Cory

17th April 2014

Cory Diary : Contemplating Retirement

Retirement has been in my mind for a long time. If i make that move there is no turning back. Two key concerns in the back of my mind.


Net Worth Hurdle

First to lose is the monthly income. In addition to that, bonuses which always pull my net worth a mile. Will I be able to stomach possible decrease psychologically ?

Left is the investable net worth chart captured over the years.What can we understand from the annualized return rates compared to investment return rates.








Social Hurdle

The connection with colleagues.What can i do so that my experiences will not be lost. How can I continue to be relevant to the society ?


Cory
23 Mar 2014

Cory Diary : Reits 2014

Despite my preference for "fixed income" and being a "landlord", the leverage mechanism of Reits and Management have been trying this days. Facts - Reits are mainly in downtrend and is hitting home with starts of QE. Interest Rates are not even in the picture yet. Things will be tough this year as well if the strong ones are also doing fund raising.

There are still few gems out there but is not a guaranteed profitability net-net. Meaning after Rights, Placements, Dividends and Market Value, are we better off is a big question mark.

Managers are securing funding to lower their gearing. Meaning no additional returns from the funding exercise. Isn't this much worst than investing in a lower yield property than current DPU ? Not sure i should classify it as one of ultimate worst sins.

The Property Market has hit the ceiling. We should be expecting book value hitting north but the market pricing seems ahead on that giving us a value proposition that is actually sliding with lower price and value.

I still view Reit a key segment in my portfolio but there is also a time for everything. At the mean time, do look at the trend chart and draw your own conclusion.

Happy Reit'ing !

Cory
19th Feb 2014

Cory Diary : Part 2 on Base Lining

I just read a thread and decided to think aloud.

Here's the background.

Someone bought Sabana and now sitting at a loss. Advisor came and said this.

If you have buy at a low last year around 90. Is ok to hold on. However those who buy at high, meaning lately, chance of return is remote.

Saying it another way.

Since you have capital gain when you enter at 90, is ok to lose those gains. Those who got recently be prepared for further loss if continue to hold.

Hello ? Hello !!

To hold or not should not have dependency on price entered at different times.
This is why I need to base line my portfolio to avoid falling into the feel "rich" gap.

Cory

8th Feb 2014

Cory Diary : Base Lining my Stock Investments

What do i mean by that ?

The goal of investment is to be able to generate more and more cash. We do not want to go up and down equally or similarly. In the long run, is useless and time wasted. And worst, loses all your capital.

In summary, base lining my profits/losses is resetting my Capital in a regular manner. A fresh start and perspective into my portfolio. And re-evaluating all my holdings.

For example I have 100K capital. Earned 30K by the end of year. In the new year, I have 130K capital. Zero out my profits/losses in every counters. Doing so i am basically treating 130K as my own money from my "saving" account as though is a fresh fund. I do this annually.

Upon doing that, I am resetting my stock initial investment cost to the price of the new year in a new page. And then i re-start to re-evaluate my holdings at this cost level which then kickoff a re-balancing of my portfolio.

This put my thought into a more balance approach with no baggage. To know whether we have execute this mental method successfully, you would have forgotten your initial buy price of prior years like me do.

Ok ! You can call me absent minded. :P


Cory
1st Feb 2014

2013 Portfolio Review

2013 Measure
SG Stock XIRR figure for the year ended up 11.74%.Compared to STI which is -0.85% (2 Jan'13-2 Jan'14) excluding dividends, performing above after taking into account STI 2-3% dividends.

Annualized Performance since 2007 will be 11.6%.
Dividends received this year $28, 940.

Did well in expanding my dividends and performing above STI. Another key area is the punch (Invest amount) approximately doubled. Net Worth reached a new milestone despite spending is up significantly.

Another area i am happy with is that Reits did not do significant damage to my portfolio. Looks like trading them helps to negate their impacts this year. They will remain a key segment for re-balancing my portfolio for a long time.

Portfolio details
Reit returns flat after consideration of capital loss. In the aspect, on the bright side, they will be position to be better in 2014.
Fixed return continues to maintain good stability.
Growth and SME stocks see large rises.

2014 Focus
Still under invest last year despite some step-up in absolute amount added, my wish is to add more counters and depth for specific counters. However i will continue to exercise caution steps.
Goal : 20% more

Dividends wise, with tapering reduction, contribution from Reit can be lesser. Higher business cost may also means lesser distribution. Goal: Maintain 2013 at minimum.

To reduce impact from any single stock, number of counter has to increase but this will tax my mental bandwidth. Therefore stock selection has an angle of less risk priority.

Re-balancing of my portfolio still required and needs to be watched closely.


Cory
1st Jan 2014

$1M Home Goal

Over this weekend, i have decided $1M (Today Price) home features will be the goal i hope to achieve. So this is what i want.

- Private Condo
- More than 1K sqf
- OCR
- Retirement and Recreational facilities
- Low Pollution and Traffics will be ideal
- Close to ammenties
- Reasonable rental income is a nice option

Next is can i afford ?
- 20 Years Loan (Using 20 for this example. There is a constraint on age: 65. So if you are 45, only 20 years)
- 1.5% Interests Rate

With 20% Cash and CPF, i will need $800K loan to be re-paid in 20 years with interests.
And about 3% stamp duty with cash. Assuming i have no problem with cash and cpf on the 20% and fees.
At 1.5% rate, monthly payment : $3,860
At 3% rate, monthly payment : $4,437 (up 14.9%)
At 5% rate, monthly payment : $5,280 (up 32%)

Total Cost excluding stamp duty, renovation and lawyer fees.
At 1.5% rate, $926,400. Total interests paid = $126,400.
Effective compound rate : 0.74%

At 3% rate, total interests paid = $264,880.
Effective compound rate : 1.26%

At 5% rate, total interests paid = $467,200. Almost half my condo price. I love Banks. :)
Effective compound rate : 2.33%

Investment Return
If I can achieve 3% on average annual property appreciation long term and with rental support bonus, this deal may makes sense. Anything more, else what am i waiting for ?


Cory
20th Jan 2013