Cory Diary : Assets Allocation 2020-1224

With the year coming to end soon, I want to provide finishing touches on my overall assets allocation. And this is with context that I will continue to spend more time oversea for a few more years before my first kid will starts schooling which I would then decide should they go to private and then international school or be back for good.

There are few good news and bad ones. The good news is that I have been informed about my year end bonuses and glad that it is better than last. Really Christmas Presents I told my Boss. To top it off there will also be shares which will only be vested in stages. While the value of the stocks have risen which result in smaller number of shares given out, prior years company shares already vested will see a good capital appreciation.

The bad news are my elder daughter got enterovirus after few days of high fever which finally subsides with rashes mainly on her lower limbs. We are still puzzle how she got it considering no one else had it. Now we need to make sure it doesn't spread to the newborn. So for this past week has been quite tiring to ensure this won't happen. The first born was smooth sailing. The 2nd birth was to give me the true experiences of fatherhood. But I would recommend Nobel Prize to anyone who can produce Vaccines for this Viruses.

Regarding my assets allocation, if we are to take a peek on Nov report ( link ) , the pie has increased with stronger stock market performance. Key changes are as follow.

Equity allocation has risen from 29.9% to 31.2%.  Bond has also increased from 7.7% to 9.5% which is temporary due to one of the investment is going to end soon.

Investment Account has reduced after I am able to find enough replacements for the funds from AGT which was suspended for delist.

Closely related to it is my saving account which has seen some reduction due to CPF Housing refund completion. I have also tried out VCMA and still deliberating whether should I max out my CPF MA. Keeping in mind of year end salary and bonuses coming in soon which will expand my saving. I will probably do in stages over a few quarters if decided to proceed.

To top it off, I have match 3K to my newborn CDA account. I will probably not add more before I have my own CPF accounts manage right.

Merry Christmas

Cory is now a year older ...

2020-1224

Cory Diary : Expenses Year 2020

As the year come to a close soon, is a good time to estimate my expenses for the year. Previously I blogged about my expenses in Year 2019 which is kind of "shocking". 

This year the expense is quite bewildering for Year 2020 too recording more than $140k for me alone excluding my wife credit card and cash expenses. There is a large portion due to Housing instalment. Maybe near to 40% which is smaller this year due to higher total expense. Even then this is quite huge considering the average local income for the remainder of expense size.

However interestingly, my Net Worth continues to keep up despite the spending. One of the key component that manage to help support it is due to stock market dividends or net gains supplementing my income. The other will be the principal of the home loan is counted towards my Net worth. And finally year end bonus if any. So it doesn't look like I will feel completely safe without a job. And to acknowledge help given, Baby Bonus do chip in some.

Major Expenses

Year 2020 is larger due to 2nd baby. Even though we buy fewer items as she can use the leftover from our first, there are items we cannot forego. One of the key item will be month long confinement period ($12k) which I reward my wife for her labor in delivering our second child ($6k). And then we have additional nappies and more expensive ones for my elder as she grows. My wife is very particular that it has to be made in japan to avoid allergy for their sensitive skins.

The other major expenses are taxes which I help to cover for is my wife income as well. Our combined taxes are "frightening" LOL for an average couple like us.

As usual, I take it as a responsibility to provide my parent allowances. It is a big ticket item which I would not reduce as my family grows as their expenses will not change significantly due to them. 

As said earlier, housing expense is the largest and that is because it consists of two components. One is the interest expense and the other the down payment of the principal. I am still deliberating should I include both but they do hit my cash flow. So read my expenses with context as we included both. To be frank  I am not perfectly consistent here as we do not include insurance expenses and it does has returns. I also do Not include CPF Housing Refund which is excluded from expense else it will be another balloon.

Finally this is followed by Food/Fruits Expenses which easily take-up more than $20k. This works out about minimum $55 per day for the family.

Cheers

Cory

2020-1216

Cory Diary : Misconceptions of Dividend Investing

From experiences that I had so far, here's the collection that one should watch out or be reminded on the misconception of Dividend Investing.

1. Yield is Everything

This cannot be right. If Yield is all that's matter, investment of such can be automated to the highest yield and nothing left for other lower risk assets. Does this make sense ? Money where got so easy to earn. Want to gamble, go Casino better because better odds !

In reality, one needs to filter out High Risk from the portfolio before allocation of different other risk levels before yield. As you notice, I do not have EHT, Lippo in my portfolio. High Risk Reits are a Time Bomb. Is a matter of when.

First Reit is managed out from the portfolio in Year 2019 with cut loss at 0.945 when the risk is not worth to hold. And that is at a year where the Portfolio has a Record Profit of 20% XIRR. A mindset of never ever feel rich to lose money.

2. Rights are bad for dividend Investing

Any old time Reit players will tell you there is good opportunities to profit from Rights Issue. And if we are to go this dividend path, one should not be feared of Rights Issue. Is it exactly this fear that allow people to profit from you.

In solid Reits so far such as FCT, CICT, Ascendas, Mapletree etc even without subscribing to Rights does not mean your DPU will be materially impacted. Do nothing can still be ok.

3. NAV Valuation

Can be quite misleading. One recent example is First Reit where their NAV is off rental income from the property. However how is the rental derived can be from complex negotiations between the Reit Manager and the Sponsor or the Tenants where there can be consideration for other compensations that is material. This is make worst if there is credibility issue with the Sponsor who artificially jack up the property prices to the Reit they controlled.

4. Gearing

The formula for Reit is Total Debts / Total Asset. Any other formula that you read from Quarterly, Half Yearly or Annual Reports are just to communicate a better result view. Another way to give the impression of lower gearing is through Preference Shares which is not counted into debt therefore one has to be careful.

5. Capital Gains

Dividend investing doesn't mean we lose out in Capital gain or loss. While the stock price tends to come down upon ex-dividend, due to constant earning of the underlying businesses, the stock generally will fill back the gap. And with ever decreasing rate, the attractiveness of profitable businesses can push up the stock prices. But one do have to remember they aren't tech stock and should never have such mindset on their performance. Like many stocks, they also float with the market tide but with varying degrees. There will always be good and badly run Reits.

6. Cost of Debts

Ability to raise fund with lower cost makes running a company much easier. So this helps in your stock selection when we are ranking similar companies except cost of debts !

Cory

2020-1213