Jan 15, 2024

Cory Diary : CPF Top-Up

Last year, due to a rate hike, savers had a field day scooping up Fixed Deposits, Singapore Savings Bonds, and Singapore T-Bills. In the Singapore context, these options offer almost guaranteed returns, are SGD denominated, and provide strong interest rates ranging from 2.7x% to 4%.

Unfortunately, last year, I only managed to top up 5K into my CPF Account. I believe free cash is better invested elsewhere. That year marked the last two-year period during which I could benefit from a good SA allocation to my CPF account, enjoying higher CPF rates, as indicated in the table below.


At age 54, this is the last year to top up and get the most out of it before the Retirement Account (RA) is formed at age 55. What makes this year special compared to getting good rates in the age 55-65 band?

This is the window that allows me to hide most of my SA account funds, which enjoy a higher rate than OA, when Full Retirement Sum (FRS) deduction to form RA. Personally, I believe this should not be allowed to happen, but it does in today's scenario. Going back to Age 55-65 bands topic, there's compounding delay as it will start from age 55. Not only that, there is a larger allocation into the Medisave Account (MA), which is locked for medical use.

So, should I maximize my Voluntary Contributions to the Retirement Account (VC3AC) this year? Something to ponder about especially how's the rate will look like for next 10 years compared to OA, SA and MA accounts.



Cory Diary
2024-01-15

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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.


Jan 9, 2024

Cory Diary : Investment Ratios

Today played around Ratios with newly updated Asset numbers. We start with Asset Allocation. See below.



And then we do some interesting Ratios among them.



The first ratio is how much liquidity on current assets that i can move easily. This give me an idea if I am to ramp up my equity portfolio to support war chest.

The second ratio is how much resource into property. 61% of Equity size. This tell me how diversified is my income stream considering both are considerable income sources.

The third ratio is how much idle cash against equity which is 16% on opportunity cost. On the net worth allocation wise, cash is just 5.4% only. This surprising facts tell me there is more work to do to manage cash better after year end bonuses and stock option sales.

The final ratio is how much Fixed income allocated. They come from FD, SSB, T-Bills etc. In this ratio is whopping 53% of Equity. Am I really conservative ? On Net Worth allocation wise the fixed income ratio is only 18.5%.

I could rationalize that my Equity allocation has reach bottom so no more sales unless market really really tempt me. Cheers


Something to think about this month ! 



Cory Diary
2024-01-09

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Jan 6, 2024

Cory Diary : Year 2023 Net Worth

Just tally up on the most exciting figure of the year for me as this theoretically encompass year family expenses, incomes, pensions, parental support, investments,  etc. To cut it short, the year score is below. Net Worth 7.3% up YoY (ATH) which is kind of relief after seeing a reduction for first time in Year 2022 since I started tracking.


Net Worth YoY





The final data includes the CPF interests just credited. There is some ambiguity on the Net Property value estimation and more conservative approach is used based on URA transactions on similar asset and do a $50 PSF haircut from it.

After subtraction from equity returns, there is still sizeable saving for the year which could mean we have manage to control our expenses largely. I am not completely sure yet how this is done and this will be on another article to dive into as there are other factors coming into play such as bonuses, higher fixed returns and better rental income support that I can think of currently.


Net Worth Tracker

Year 2023 is full of macro risk situations in many fronts. So in my opinion is still the most hatred recovery for the market despite high rate and recession fear looming right after Covid. Is also in this situation that I am able to inject investment into Reits and Banks to achieve record dividend as my dollar is stretched with much higher dividend yield counters for basically the same business due to rate impacts. Sometimes I wonder why markets are so myopic to allow that to happen since high rate is not going to last very long. Why price the stock much lower due to higher cost of funding which is temporarily in nature? Maybe a lot of people is on leverage ?


























Not only that, this market behavior allow my emergency funds to achieve high yields from FD, MMF, SSB and T-Bills too. The last few weeks of the year saw the Fed dot plot to Pivot which reflected in strong recovery of Reit stocks. In the tracker chart, Non-Productive Assets ( NPA ) are mainly FD, MMF and Cash. The sudden increase is due to salary, bonus, stock options and some build up of warchest of the Reits from recent run-up.

There is no change in the property valuation but in net increases due to monthly paydown of the loan. This is seen in the Property stack of the chart. No wonder people says property is a way of force saving. In net, equity investment has came down slightly to be diverted into T-bills and SSB. Some Warchest towards the end of the year. However the total investment stream stack remains flat.

What do you think about Year 2024 be like for the market ? My hope is that it will continues to be great. All factors seem to point in that direction. Feeling wise, I do not have incline towards any direction yet. Meantime I try to hit higher in Net Worth for this vital years as I am no longer young and risk of it's growth, is that I am near the end side of my working lifespan.


Happy New Year Friend !


Cory Diary
2023-01-06

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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.


Jan 4, 2024

Cory Diary : Year 2023 Equity Learning Part 2

This is an update on the 2nd part of Equity Performance in Year 2023. The first part is the result. Link here. The Year 2023 XIRR return is 14.6%. For a portfolio that has 50% Reits (fluctuates between 40% to 70%) allocation, the dynamism is quite high (See below chart) . The key learning is how to manage drawdown, and profit from it.



Manage Risk

Reits are investor instrument for cashflow and have sturdy business that protects our investments. Therefore thoughts I have is that we need to minimize and careful when we select Reits denominated in foreign currency or majority returns in foreign rental income. In situation we cannot avoid, we hope to see careful hedging of foreign income and their loan by the Reits if is not natural hedge. 

Hedging for loan rates are a must with size varying to their business situation. Finally, investment sizing or allocation will be key to reduce the risk. With this I will probably add another lens to my current portfolio an adjust accordingly.


How to Profit

Assumingly, we have strong business in the stocks we hold, we could invest each time in bit size when there is draw down, and come out of top later. See picture above on the volatility. Is easy to say but normally hard to execute. To do that, I need to ensure we have warchest, strong reits, not to huge allocation on any single reit to allow upsize and hopefully strong sponsor in such counter. Make sense ?




Cory Diary
2023-01-04

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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.









Dec 31, 2023

Cory Diary : Year 2023 Equity Performance

The conclusion of 2023 mirrors my sentiments and hopes – a robust recovery in the market, a realization that the oversold conditions were a consequence of countering high inflation rather than a market bubble. As the Year-on-Year inflation rate recedes, the persistently elevated living costs and prices of goods and services remain, if not escalate.

The initial emergence of the year witnessed both high inflation and a spike in interest rates. Real Estate Investment Trusts (REITs) that failed to hedge their loans effectively suffered from a sudden increase in interest costs. Those exposed to currency risks were also significantly impacted, experiencing diminished rental income returns from overseas assets due to unfavorable forex rates. This dichotomy becomes evident when comparing strong and weak REITs during challenging times.

This scenario implies that companies may not experience reduced returns per se, but rather encounter higher operating costs. The looming risk is that the economy might face a downturn if the high-interest rate situation persists. Thus, the Federal Reserve's indication of lower rates in 2024 is a welcome move. However, luxury goods are the first to bear the brunt, exemplified by reduced orders for items such as Tesla cars.

Investors in US-centric REITs experienced a substantial decline due to various challenges—from the work-from-home trend to high-interest rates and forex impact. Europeans witnessed a reduced but still significant impact. Elite Comm, on the other hand, showed resilience due to renewed government tenants and robust rental escalation. Nonetheless, it could not evade the downturn in the UK economy affecting property valuations and weakening the pound.

Different REIT assets faced varying situations. United Hampshire, while not as severely affected as US Office REITs, demonstrated that its Retail/Storage assets were more resilient. They still grappled with high-interest rates and forex challenges. The CEO's decisions likely played a crucial role, as a swift rebound in their stock price occurred when the Federal Reserve executed a pivot.



How did the portfolio perform? For the year, the portfolio returned an XIRR of 14.6%, as illustrated in the chart depicting an absolute increase in dollars. XIRR, representing money-weighted compounding returns, was achieved through a 10% cash-out to build up a war chest and investments in Singapore Savings Bonds (SSB) and T-Bills returning an average of 3% to 4%.




The multi-year XIRR, calculated over 5 years, stands at 6.6%. This duration was chosen due to cash injections from increased work income and larger dividend reinvestment. The 10-year period seemed too extended, leading to a considerable delta in portfolio size. The 3-year period, on the other hand, could be easily skewed by a single year's performance. Nevertheless, the purpose is to provide a reference for assessing the compounding 5-year trending view.

Looking ahead to 2024, as mentioned in a previous article, the full impact of the rate hike may not have manifested yet, depending on each REIT's specifics. With increasing optimism but tempered by weaker reports, the market will proceed cautiously. I believe there is merit in being vested in banks to capitalize on hedge strategies while still pursuing income-generating investments.


Cory Diary

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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.

Dec 12, 2023

Cory Diary : Investment Plan for 2024, Navigating Through High Inflation

As I embark on my annual ritual of crafting an investment plan, the theme for 2024 becomes apparent: the persistent impact of high inflation. In contrast to the pre-COVID era's 1%-3%, we anticipate a sustained period of elevated inflation rates.

Acknowledging the inevitability of economic cycles, we must navigate through the highs and lows while thriving amidst higher inflation. The rate hikes are yet to be fully felt by Real Estate Investment Trusts (REITs), leading to a continued compression of distribution per unit (DPU). Eventually, as these adjustments take effect, tenants will grapple with increased rental costs during contract renewals. This, however, is a gradual process, allowing time to assess the economic landscape before making significant adjustments.

The looming possibility of a recession adds another layer of complexity. As rates potentially decrease to mitigate the impact, there is a crucial time lag in each step of the process. Therefore, strategic planning is imperative to safeguard our portfolios.

Personally, my top choice for this environment is banks. Their adaptability allows them to thrive in both high and low-rate scenarios. While recessions may impact banks, history shows they weather such storms better than many other industries. As long as banks are not directly hit, as seen in past crises like the Asian Financial Crisis (AFC), Global Financial Crisis (GFC), or specific industry collapses like oil, they tend to provide stability and robust dividends, currently at a manageable 50% payout ratio.

REITs, on the other hand, assume a secondary role due to the ongoing DPU risks and direct impacts. Despite a 90% payout ratio, they may offer capital gains potential when the bottom is reached and recession seems remote.

Another intriguing class of dividend stocks includes ventures like Sheng Siong and NetLink NBN Trust. These stocks present opportunities for good dividends based on their unique attributes. Sheng Siong, in particular, boasts a track record of both dividend and capital growth, making it a potential performer in a high-rate environment.

The strategy for the coming year involves allocating resources to protect capital, secure base dividends, and allow room for growth. This includes trimming specific REITs that have yielded substantial capital gains, rebalancing towards banks and non-REIT dividend stocks. Caution is advised when expanding positions in specific REITs or growth stocks. Finally, excess investment cash could be secured in a war chest, which can be parked in interest-bearing instruments such as Singapore Savings Bonds (SSB), Treasury Bills, or other similar instruments in the absence of compelling opportunities.

With that, the current portfolio did some re-balancing. Is not done yet and there are still some funds to deploy as the dividend has been lowered.




Cory
2023-1212

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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.



Nov 13, 2023

Cory Diary : Putting in a case for Reit today

Rate Spike

The whole issue of Reits share price being impacted for the past 2 years is due to Rate Spike.The volatility can be seen in Cory portfolio ytd P/L below. The ongoing battle between the yay and nay since the rise of the rate in Year 2022. 



For dividend investor, this is the first time we see significant spike in rate of recent times. Reit contract with different tenants take time to change over the years  therefore the cost of funding cannot be passed down fully to them. Inflation adjustment may also happen on annual basis if is part of contract.

Currently Rate is Peaking in this high rate environment. While rental contract such as Mall Reit could takes 3 years to cover all tenants. This will mean Reit investors will have to absorb the cost of funding differences even with Reit with strong moat. The good news are most Reits are still profitable. We are in interesting time because the irony is those reits with very short term contract will be able to raise their rental cost quickly and are much more nimble to react to rate hike.

Quite a few Reits are much more resilient due to high exposure to local economy in earning S$ and hedging. This shield them significantly while they bid for time. Larger Reits able to realise value in some of their properties with minimal impact to their recurring dpu or even sell in premium to cover the dpu shortfall.


Missing the Trees for the Forest

Interest Rate Trend - Decades is a down trend. While there is many prediction that rate will stay for high and longer, this is not the key factor that impact reits as cost will be passed down to clients in matter of time. However, long term when market stabilized, if that happens, we could see the lowering trend initiated again.


The benefits will be we could see significant rise in reits earning as contract takes time to unwind too and economy could be boosted in lower yield environment again. This is the upper optimism of hope. The fear could be  diving deeper into lower dpu such as the high rate causes recession to the broader economy hence nothing is riskless due to the other spectrum of negativity. 



Cory
2023-1113

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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.





Nov 3, 2023

Cory Diary : Netlink BNB Trust H1 FY24 Review


Currently, the business growth is peaking and there is no major catalyst. It has a Resilient business model. And a declared 1H DPU of 2.65 cents. A slight increase.

Most key question is the DPU sustainable ? If we look at below chart it appears they are paying out slightly more than they earn. The returns probably matches on the expectation of market returns for investing in the company with little upsides and rising costs. So technically it can last for years even in losses but this also mean is not healthy for investment in critical infrastructure which the country needed in coming future.



The NetLink Group has a stated policy to distribute 100% of its cash available for
distribution on a semi-annual basis.

Net Gearing 21.5%. Do note that is different definition from Reits Gearing Ratio.

Weighted average number of units (‘000) in issue for calculation of basic and
diluted earnings per unit 3,896,971 

Cash and bank balances 178,378,000. Reduction roughly 11M from previous comparison 1H.



The business return may need to be adjusted upwards to ensure they are confident enough to invest for future needs while ensuring DPU returns align to inflation to make it viable long term. This is especially so where we need to layout key infra on long term planning.



Cory
2023-1103

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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.







Oct 25, 2023

Cory Diary : Mapletree Log Trust 2Q FY23 Report

Did a quick run through of Mapletree Log Tr reporting. The result is quite strong imo in current high rate environment. DPU Quality seems good. Increase Rev, npi and distribution on the back of higher units.

Cost of borrowing low at 2.5% which is quite interesting. With added upside when there is China recovery, this stock gives me a 180 degree turn in perspective from negative view of it.


Have sold 1/3 of my position just recently before the major sell down and today report. Looks like I will be holding the remainder for quite a while. Quite happy with the Reit performance so will Hold and monitor due to many transaction of their properties.

Below ref. on coming dividend.









Cory
2023-1025

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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.




Oct 6, 2023

Cory Diary : Review of Current Reits Position in the Portfolio

There are 10 Reits in the portfolio of varying allocation which together take up about 50% allocation today. The current Top 3 Reits allocation are Ascendas, Aims Apac Reit and FCT. The Bottom 3 Reits allocation are Sabana, United HS and Elite Comms.

Ascendas Reit - Hold to manage size allocation
Aims Apac Reit - Hold to manage size allocation
FCT - Accumulation stage when opportunity arises
Mapletree Industrial Trust - Hold to manage risk allocation
Mapletree Log Trust - Allocation Trend will be lowered due to acquisition
iReit - Hold to manage risk and size allocation
Ascott Trust  - Allocation Trend will be lowered due to acquisition
Elite Comms GBP - Hold due to GB local issue. Monitor.
UtdHampshReit USD - Hold to manage tax and risk
Sabana Reit - Hold to manage risk. Monitor.


Predominantly Foreign Asset Reits

Foreign based SG Reits are iReit, Elite Comms, UtdHampshire. All three therefore has forex exposure and in recent times suffers from reduced income in SGD. On top of this, inflation is relatively much higher than SG and Interest Rates Cost have seen much higher impact on them. Business wise the basic fundamentals look ok though not perfect. They could be a lot worst if they are in US Based Office Reits as WFH in oversea countries likely can be a long drawn normalcy.

While most of the higher allocated Reit positions are well into positive territory YTD, the higher yield Reits are in deep losses. The only consolidation is their relatively smaller allocation in the Reit segment of the portfolio after suffering large capital losses last year as well. This is not surprising due to most of this are mainly foreign assets whom faces much higher cost in recent time.


Industrial/Business Park/Logistic Reits

Ascendas, Aims Apac, MIT, MLT and Sabana are all Industrial/Logistic Reits of varying degrees. They enjoy relatively good business in current environment. Strong Rental reversion in a number of them. Interestingly, the smaller Reits like Aims Apac and Sabana did very well in rental reversion. All of them has a good plan and control of their debts. DPU looks stable.


Retail and Hospitality Reits

FCT and Ascott are in Malls and Hospitality respectively. They also enjoy strong business. With FCT being a Core Reit in the Portfolio other than Ascendas. The strength of FCT is their suburb Malls on well located area. A key necessity meeting and transit points for most commuters and well positioned for daily necessities. Is a Reit that we expect to be able to weather all Emotional Storms from the Market. Recently they have managed to sell off some non-key assets which is quite a positive move in current higher cost interests impact.

Ascott Reit is more a recovery play from Post Covid whom suffered deep impact from lock down and lack of tourism businesses during Covid period. Recent rights issue has been disappointing as we are in current higher rate environment and therefore large asset acquisition do not benefits shareholders. This is reflected in recent poor share price performance.


Overall

Worst time of Reits maybe over for major part of it however there are hangover issues with fundamentally weakened reits that will drive them lower as time passes. For the past 2 years the banks have counter balances the weakness of Reits in high spike rate environment. This help to ride the Portfolio over this volatile period.

Is also time now that I plan to do re-balance my portfolio with the longer term view of their trend. As usual, i will put integrity of the reit managers and their alignment to minority shareholders as utmost importance even though is with the expectation that the sponsor will try to take some off the table for themselves.

And finally whenever opportunity arises, i will tap into some warchest. There are voices out there that the market may turn worst. I will probably adjust my pace slower when tapping new funding. The good thing about all this is that SSB and T-Bills which has grown sizeable for the past 2 years, help to retard my funding release.


Cory
2023-1006

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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.

Sep 26, 2023

Cory Diary : Expensive Ventures

When embarking on our investment journey, we often experience moments of elation, whether from impressive returns on investments, a bolstered savings rate, or an unexpected inheritance. It's during these times that we may be tempted to dive into new ventures that could potentially be wasteful. In this article, we'll explore a few common pitfalls to avoid as you navigate your investment path.

1. Overseas Property Investments

Investing in overseas property can be an enticing prospect. However, before taking the plunge, it's crucial to consider the opportunity cost. Suppose you inject a substantial $300,000 into an overseas property investment. This could yield an annual income of, let's say, $15,000. Now, imagine if you had instead invested that $300,000 in a dividend stock, which could potentially generate a 5% yield. In this scenario, you would have earned $15,000 annually without the additional complexities of property management.

Moreover, if you remain committed to this venture for a decade, you would have missed out on $150,000 in potential dividend income. This calculation doesn't even account for the compounding impact, forex risk, or potential capital loss associated with property investments. So, it's essential to weigh the pros and cons carefully when considering overseas property ventures.

2. Premature Retirement

Retirement is a significant life milestone that many aspire to achieve after years of diligent work. While it's natural to dream of an early retirement, it's crucial to ensure you are financially prepared. Premature retirement, when not adequately funded, can have adverse consequences.

Consider an annual savings income of $30,000. Over the course of a decade, this amounts to $300,000 in total savings. However, if you had continued working and investing during this period, your net worth could have grown even further. Assuming stable income and returns from your investments, this $300,000 could potentially grow to $400,000 or more in missed net worth after a decade.

Retirement should be a well-planned and financially secure phase of life, where health and well-being take precedence. Rushing into retirement without adequate funds could lead to financial stress down the road.

3. High-Risk Dividend Investments

In the realm of dividend investments, stability and peace of mind are paramount. However, some investors are tempted by high-risk opportunities, such as foreign REITs or ventures in unfamiliar territories. While there's potential for higher returns, these investments come with added risks.

Foreign investments, especially in areas with different economic conditions and currency fluctuations, can be unpredictable. If these ventures don't align with your overall investment strategy, they can set you back significantly when things take an unexpected turn. The hit on your capital assets can be substantial, impacting your income for years to come.

In conclusion, while there may be other pitfalls in the world of investments, these are three key areas to watch out for. Investing wisely and staying true to your financial goals can help you achieve long-term success. Remember, it's essential to seek professional guidance when making financial decisions and to take full responsibility for your choices.




Cory
2023-0926

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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.


Sep 2, 2023

Cory Diary : Portfolio of Mainly Reits and Banks YTD Performance '23



Reits in the Portfolio


Investing in Real Estate Investment Trusts (REITs) can be a lucrative endeavor, but it comes with its unique challenges. In this article, we will explore the dynamics of REITs in investment portfolios and address common misconceptions.

Understanding REIT Vulnerability to Rate Hikes:

REITs, like any other investment, are influenced by market forces, including interest rate fluctuations. One key factor to consider is that rental contracts for REITs are often signed for years before renewal. Even if a REIT has rental escalations and triple-net leases built-in, rising loan rates can still affect their performance. It's worth noting that non-REIT companies can also face similar challenges due to loan costs.

Adapting to Changing Market Environments:

Some REITs face fundamental changes in their market environments. For instance, the rise of Work From Home (WFH) arrangements in the United States has impacted US Office REITs. In Singapore, there are a few US REITs with significant exposure to this trend. It's crucial to monitor such changes and be ready to adjust your portfolio accordingly. 

Performance of Different REIT Categories:

In the current environment, certain REIT categories have shown resilience. Local Retail Mall REITs and Industrial REITs have performed above average. Foreign Data Centers and Business Park exposure, such as Mapletree Industrial, have also weathered the storm. Year-to-date (YTD), many REITs are on the path to recovery from the rate spike costs incurred in 2022.

The Challenge of Foreign Exchange:

However, not all REITs have fared equally well. Take, for example, Elite Commercial REIT, which is UK-based. Despite strong tenant occupancy and double-digit positive rental reversion, foreign exchange fluctuations and loan costs have significantly impacted its distribution. When investing in REITs with significant overseas exposure, careful sizing and risk management are essential.

Dispelling the REIT Myth:

There's a common myth that US Office REIT crashes therefore all REIT are lousy investment using a few examples and paint a dark picture on the entire industry. This bias view is misleading, as many companies fluctuates on downtrend during rate hikes for the short term too. It's important not to oversimplify market dynamics. Evaluating a REIT's performance over a single year doesn't provide a complete picture.

Diversity in the Local Market:

The local market offers a wide range of REIT options. While Capitaland and Mapletree family REITs are popular choices, there are numerous others to consider. For example, Ascendas has delivered impressive returns over the past two decades, even at its current valuation. While past performance doesn't guarantee future results, it's essential to understand that rate spikes take time for REITs to digest and can present buying opportunities and attractive capital gain or yield on cost in the future.

Only few are badly hit due to US Office Exposure. A good example of typical reit that many local investors buy are Capitaland or Mapletree family. They form bulk of many local investor interests and form components in STI Index today.

A good example will be Ascendas as below. More than 300% returns excluding dividends over 20 years even at current fallen price. While we cannot be certain Ascendas will continue to perform in the future we should understand rate spike takes time for Reits to digest and could be a good opportunity for one to collect. In no way we are recommending any Reit stocks and one should dyodd.

More than 300% capital gain over 20 years excluding strong dividends


Banks in the Portfolio


Incorporating banks into the portfolio has been a strategic move. DBS and OCBC, for instance, have demonstrated resilience, benefiting from high interest rates. They are poised to continue performing well in the medium term. Allocating a portion of your portfolio to banks can serve as a hedge against other segments, while still providing attractive yields.

Challenges in Bank Diversification:

Unlike REITs, which offer a diverse range of options, the local banking sector has limited choices. This concentration risk should be careful when expanding more into this sector. Recent forays into other segments, such as Venture, have posed challenges, reinforcing the need for caution and thorough research. The plan will then be to only further expand into banking sector when opportunity arises. This could mean reserving more dividend cash in the meantime.


Portfolio Performance

Year-to-date, portfolio has achieved a 9.3% XIRR return, with Q3 '23 expected to show a slightly better improvement. REITs are gradually recovering, and their returns may expand as new contracts are negotiated. The only caveat remains foreign exchange volatility, which is beyond our control.

In conclusion, navigating REITs in your investment portfolio requires diligence and adaptability. Market dynamics are complex, and one must not oversimplify the factors influencing REIT performance. Diversification and careful sizing are key strategies, whether you choose to invest in REITs or explore the banking sector. Remember that past performance is not indicative of future results, and it's essential to stay informed and make well-informed investment decisions.

Currently, I am pretty comfortable with what I have in the portfolio. And the feeling today is we should have a better performance before the year ended.


Cory
2023-0902

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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.


Aug 28, 2023

Cory Diary : Net Worth Tracking 2023-08

The longest 16 months. Net Worth has stayed flattest ever in Current High Inflation Environment. However, the losses in Equity market of last year is likely behind us, so far. Touchwood ! In this article I documented what I do so far that affects my Net Worth trend currently.


T-Bills

What I did is to continue be vested in market while expanding allocation in T-Bills and SSB during this flatten period. By now, it looks to me it could be time to unwind T-Bills in alternate staggered month fashion. What I mean is not to renew in first batch expiry but on the next in alternate step. This will spread out with lower allocation over time while allocating more cash move into Equity Market.


Banks

After thinking through, we still do not have any idea how long the high rate environment will last even though is near it's peak. Who know this could last much longer. This could lengthen Reits recovery and more benefits the bank longer. And when rates finally lowered, the bank will enjoy it too. In that perspective, bank segment seems to be a better play in-addition to 6% yield we could be getting from local banks. This is on the back of 50% earning retention without needs to face rights issue constantly in current environment.




So have we found ourselves the holy grail in our investment pick ? Let's no hoodwinked to think there is no downside. With China seems to be imploding economically their property segment has never been worst. We could see recession spreading to our shore. This may have some impact on the stock market and if worsen could spiral down. If this happen, neither Bank nor Reits will do well.

Therefore, in local equity market scene, Banks are likely the better bet than most with sustainable income and dividend. So the Portfolio continues to expand and right now hold more than 25% in bank allocation. This could grow to 33% as they don't look expensive at all. Nevertheless, sizing for balance mental state is still important to sleep well as market is in constant change.


Managing Volatility

The larger the volatility the smaller the allocation using commonsense. Which is what I did when Tesla ran up significantly. In hindsight, we could have sold more but that could mean the counter impact to the portfolio would be so small it wouldn't be worth our while. With the cash raised, we probably could do a forex gain to SGD with recent USD moves, and then buy local. Is quite rare that I have good luck in forex being local.


Finance

What do I think by end of the year. One thing likely will be smaller bonus and not much salary adjustment. Later part is probably what I wanted, to last longer if you understand what I mean ! The pandemic has implanted many of us the seed of laziness at home. Question is when will this be reflected in the broader economy. I mean something has to give, right ? hmmm

Probably those that could not adapt or manage their staffs will see upheaval change in their respective industry where companies get replaced by passionate start-up which are running much more efficiently and effectively. How can we tap on this ? Difficult to execute for most people I guess. One thing for sure my Net Worth aren't growing fast enough. Maybe is a good thing to have when after decades of investment, monthly salary saved slipping out finding it harder to push for the net worth growth as it gets larger.


Investment

Fortunately, the base of the pyramid namely CPF, T-Bills, SSB ... or even rental income etc which are positioned way earlier fulfilled the basic living needs. See link Pyramid. This doesn't end there as we still need to constantly review the absolute amount is still meaningful after each year. If we execute properly over decades, the ever increasing basic amount over time will become larger while in percentage term be smaller as the portfolio grows, if it does grow.

What this mean is every cent earned after expense can be plough into Equity theoretically or psychologically keeps the investment size intact in down market through buying lows. Solidifying future growth of the portfolio. Sounds easy huh. Till you try to buy in ever lowing market and tearing your hair out. A believer of biting multiple small chunks to survive psychologically one has to be.


Snake Oil

Before ending out. Be aware of half smart thoughts. Not just me ok ! Commonsense tells use that 100 years of S&P500 performance may tell us the future performance. I am sorry to say this is the most dangerous statement because 100 years ago performance can have outsize influence when you annualised S&P500 returns. Is not like that you can have a time machine to go back 100 years to put a dime into your investment account. You can't, and therefore it does not translate to future returns.


Cory
2023-0828

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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.


Aug 11, 2023

Cory Diary : Compounding with Dividend Investing

Often the advise is to let you children invest as early as possible. But no one teaches us how to do it for them properly. The problem compounded when we based on investment on our own ability or disability.

Chance n this episode from - Our Rich Journey video - 


Thought this is quite amazing journey for their kids even when they have forgot about it. Maybe investing is that way !

https://youtu.be/qWp_4rXFWx0


Cheers


Cory
2023-0811

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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.

Jul 31, 2023

Cory Diary : Mapletree Log Trust Review

This post will be a start of my quick review on each Reit stock I am holding for this earning season results. The intent is to be my notes.

1QFY23
FIRST QUARTER ENDED 
30 JUNE 2023

YoY 3.1% reduction in NPI reflecting in YoY 13.4% increase in borrowing cost and foreign exchange. Into the mix is host of forex considerations and financial derivatives between the YoY comparison including perp, tax write back etc. Large gap if we look into operation return is -24.1% YoY. In net, there is higher distribution due to capital returns as well that tip it into higher distribution this Q. DPU flat. Trying to go through the Quarterly report is quite daunting tasks.

To simplified my perception, the DPU looks ok though not as high as Ascendas, MIT etc. There is PP/PO and there will be slight reduction in DPU assuming all else being equal which is typically not in every new quarter reporting.

In summary this is what I got into below table.



There are enough Pro to provide conditions to manage debt and high interest rate/hike. The yield is ok based on the DPU. There could be forex risk from China & HK combined. Not saying JPN and other developing economies won't. 

The comparison QoQ and YoY, tells me the business impact stabilizing this Q compared to previous Quarters.

Finally, the DPU may move up/down due to capital gains, issue unit etc however I feel we should not see significant move down more than 3~5% with the recovery, new divestments and acquisitions. This is up to the manager to manage them to ensure we stay above. A hallmark of quality manager which they are usually. We shall monitor.


Cory
2023-0731

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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.


Jul 24, 2023

Cory Diary : Reflections on the US Market and Singapore Investments

US Market ( Nasdaq )

In recent times, the US market, specifically Nasdaq, seems to have completed a significant run-up. Despite Tesla showing decent growth results, it experienced a correction on the second day. This reminds us that the market will always find a reason to sell. Microsoft also followed suit with lower volatility. Looking at the three-year performance of just these two US stocks, it appears that I am almost breakeven, with only a modest 15k gain if I were to consider all US shares held during the past three years. This experience has taught me that growing out of dividend plays in the SGX market is not as easy as it seems. Timing plays a crucial role in the US market, and its wild volatility can lead to valuation fluctuations with each reporting or news release. Consequently, it is wise to avoid chasing stocks, especially when there are no or little dividend gains for holding them long-term.




Singapore Market

On the other hand, Singapore banks have experienced some revival due to recent Fed hawkishness, balancing out the hits on Reits. I have observed that the recent rights issue on iReit and Aims Apac Reit have been profitable, but the discounts are not as substantial as in previous years, resulting in less impressive gains. My current allocation is as shown above, with some USD cash remaining from earlier sales. Given the current lower US rate, I am undecided on whether to hold it until the next bottom cycle and park it in a high-interest rate account or convert it back to S$.

As I review my equity portfolio, it is becoming harder to rotate stocks, particularly since Fed rate hikes may have already peaked. The sell-off in Reits, however, presents a promising opportunity for investors as we could see significant capital gains alongside regular dividends in the future. I plan to maintain a cash reserve for the last one or two rate hikes or potential recession sell-offs, if any. This strategy could lead to another record-level annual dividend, and the opportunity is quite apparent.


Passive Income Reporting

Additionally, I've noticed a new trend in my financial planning that better suits me. I have shifted away from reporting Net Worth Pie Chart segment allocations to focus on Passive Returns ( Non-Salary based returns or other returns). This change comes from the realization that using asset methodology doesn't directly help me with my expenses. However tracking Passive Income gives me a gauge on income once I retire. Currently reporting excludes my partner.


Using the listed amount in the table, I have a good idea how they fit into my expenses. And how much I need to grow or control.

In the past three months, I have invested more into T-Bills, primarily adding an additional $2,350. There was also a slight increase in my CPF investments, though I am cautious about doing so since I am nearing 55 to fit my personal plan. I've learned to avoid this unless there is a significant boost in cash levels from an euphoric market. Please note that CPF is not tracked in this table and is currently treated as a bonus retirement amount at 65.

While there have been upticks in equity dividends from rights issues, I've sacrificed a significant amount of cash for safer investment allocations in the past three months. Currently, I am monitoring my cash levels carefully to ensure my T-Bills are adequately spread out to support property loans or meet any cash needs comfortably.

Overall, my experiences in the US market and the shifts in my investment approach have provided valuable lessons, which I hope will continue to guide my financial decisions moving forward


Cory
2023-0724

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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.

Jul 17, 2023

Cory Diary : Managing Volatility Emotion

Managing Emotion

Emotions can have a detrimental effect on average investors who have worked hard to build up their portfolios over a lifetime. These investors typically have a monthly income ranging from $4,000 to $6,000. Through frugality, investments, and perhaps even inheritance, they may have accumulated a million-dollar portfolio after 30 years of employment.

However, when the global financial market experiences a downturn, these investors can face significant drawdowns, sometimes as much as 50%. This means that they could see half of their lifetime of effort evaporate, or $500,000 vanish into thin air. When portfolios experience such losses, it can be financially devastating if investors are unable to maintain their composure. Assuming the fundamentals of the portfolio remain intact, realizing these losses can be detrimental to one's financial well-being.

To manage these challenges, diversification becomes crucial. I personally employ a diversified portfolio consisting of property, stocks from SGX/US markets ( 15 - 20 stocks ), pensions, SSB/T-Bills/FD, as well as funds in my Multiplier and investment accounts. Throughout my investment journey, I make adjustments to the allocation of these assets to effectively manage my emotions and, hopefully, improve my ability to overcome them.

Successfully managing emotions allows me to adopt an investment mindset even when the market is experiencing a drawdown. This mindset enables me to seize investment opportunities. It is important to be mentally prepared for such scenarios and be willing to make necessary adjustments.

Conversely, during bullish market conditions, it may be prudent for me to accumulate cash reserves, known as a "warchest," if the need arises.

In conclusion, I wanted to share these insights to encourage thoughtful reflection. Cheers to overcoming the Monday blues!


Cory
2023-0717

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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.


Jun 14, 2023

Cory Diary : Quick Snap on YTD Equity Returns 2023

The year 2023 has been an interesting time for my investments, with a focus on FD likes, SSB and T-Bills while neglecting CPF. In light of the challenges faced by dividend stock investors last year, I have been diligently monitoring my returns this year. Personally, I believe that diversification remains crucial for long-term success, as it allows for a stable portfolio that helps me maintain a calm and steady mindset, even if it means potentially sacrificing higher returns in the long run.


Investments in US Stocks

One area that has been particularly fruitful for me this year is the US stock market. However, I am still in the process of identifying my third stock there. I must admit that it might be a bit late to make a move, considering the significant run-up the market, particularly the Nasdaq, has already experienced.


Portfolio Returns YTD

Here are the Year-to-Date (YTD) returns of my portfolio as of December 31, 2023. Do note the YTD Return percentage is against the stock allocation and not portfolio level returns.



Impact of Inflation and Fed Decisions

Recently, the inflation report was released, indicating another significant dip in rates. This leads me to believe that the Federal Reserve (Fed) is likely to pause, which, in turn, may drive the REIT market higher in the coming weeks. Additionally, if the economy can effectively mitigate any recessionary impacts, the banking sector is expected to benefit as well.


Conclusion

As I reflect on my investment strategy in 2023, it is evident that a cautious and diversified approach has served me well. While the US stock market has been a source of positive returns, I acknowledge the importance of thorough research and timing when entering such markets. With an eye on inflation and the decisions made by the Fed, I remain optimistic about the potential for further gains in the REIT and banking sectors.


Cory
2023-0614

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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.