Cory Diary : Year 2021 Mid Year Performance

Is quite "Miraculous" that for the past 1.5 years Portfolio has been registering reasonable profit despite how damaging Covid does to our way of life and therefore economy. The fortunate thing is that we still have our jobs. I am still able to get most of my stuffs online. Taking care of both our toddlers at home full time.

One key lesson I learned for this period is not to ignore growth stock therefore initiate my investment in Overseas market. To-date after some adjustment from my initial stakes, I have them consolidated to 4 which combined, is nearly 8% of my Equity portfolio. They have finally registered positive returns after my bad start in technological stocks early this year. I am still in long learning curve and will increase my stake over time. They keep me excited at night.

At the same time, I have released some bond shares to increase my warchest which now grew to more than 6 digit figures. I have applied excess for iReit shares and hopefully this will increase my dividend further. My goal is still to continue to push for higher dividend annually for cashflow which has been great on covering my housing loan. Property is a hedge against inflation plus rental support with comfortable leverage regulated from risk else MAS will not be doing their job. LOL.

One key concept I believe in is very hard for interest rate to increase. I have multiple articles mentioned on this. There maybe fluctuation in-between but the rate overall will stay low. So allocation wise, shares investment is about 40% of my Net worth. Depending on who we talk to, some may say I invest too much while others could feel is too little. I do not have a good answer yet other than reaching a balance level that I can sleep well. And that could well be the answer.

If you have read my earlier article, my focus is on Portfolio Size and Expense variables. ( link )

Which reminds me that I need to continue to find ways to grow my portfolio in a safe manner to support higher expenses.

For the first half of this year, absolute return finally hit near to 7% YTD and just 3 % away from STI Index which has been performing very well this year. Chart on the right. Is a creeping fight, back to back as my portfolio do not have enough Bank shares to grow with STI. Neither do I have enough growth stocks. So to able to close the gap over this time, I am happy. There is still more work to do.

Dividend wise Collected $30,729 which is on track to hit on sustainability basis more than $60k this year. ( 5k jump from Year 2020 ). Portfolio Size hits another ATH ( Chart on the left ) but that includes War Chest in trading account which has ballooned.

I am excited how this will end for Year 2021 with few surprises on my cards

1. Lifting of Bank Curb

2. Oversea Stocks Dynamics

3. iReit PO and Excess

4. Further recovery of Reit shares

5. Vicom result

6. Netlink BNB Tr surprise, if any

7. Currency as my portfolio now have many different exposures

Cheers

Cory

2021-0701

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

Cory Diary : Perpetual Portfolio - Legacy

In one of my earlier articles, I used Excel to compute how long the draw down of one's portfolio can last. Ideally we like to able to expense it till we died. The problem with this methodology is that we do not know when we will died and the portfolio may dried out before we do. There is also some who like to have legacy and uplift their children ahead. So Perpetual Portfolio design maybe nice to have.

There is also linearity issue as in certain year we may have higher expenses while in major market crash. Working on borderline is risky. Furthermore with advance in science and maybe space travel, our life may be much longer than we expected though saying this now is quite speculative.

Nevertheless, trying to attain a goal of ever lasting portfolio is not that difficult once variable points have been reached. The question is what are they.

1. Portfolio Size

The starting point is important at the point we retire because it gives us the critical mass needed to cover the expenses. Therefore able to compound them from young helps.

2. Portfolio Returns

If the expense is lesser than the portfolio growth and yield, we hit an inflection point where the portfolio will keeps growing.

3. Inflation and Expenses

Both of this are tied to purchasing power and needs. A low inflation couple with controlled expense will help in a long way to be below Portfolio Returns.

In today article, I will assume my performance maintain for the past decade, Inflation I cannot change, therefore the only key variables will be my portfolio size and therefore expenses I could afford.

Portfolio A : A design for middle class family. Probably upper. Lives in Condo. Simple Travel.

1.3M Portfolio Size

Portfolio B : Living standard upgrade to have longer distance travel. Better or more gadgets.

1.5M Portfolio Size

Portfolio C : Living standard further upgrade to have Car. More external activities.

1.7M Portfolio Size

One could do some item exchange as needed depending upon preference such as switch to HDB, and this will provide a good uplift elsewhere such as fully paid loan, better renovation and other upgrades listed in B and C. And this is where physical asset is very useful. Frankly this is my Plan "D" as my wife preferred to live in HDB for living space. I prefer in case my performance screwed up.

Touchwood.

Cory

2021-0629

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

Cory Diary : Jolted in my Sleep

I have this Fear again. Remembered the series of relapse after graduating of occasional lingering dreams that I am late for exam, not ready on certain subject, missing important classes etc. So I am fully aware on my emotional fear deep down coming to formulate my dreams.

The recent fear is in similar situation where after the human mind is conditioned to do things resulting in stress accumulation. And when it ended or plan to end in this case, the dark side appears in our lingering dream. Is something like PSTD though probably in milder form.

I have been working for more than 20 years and now towards early retirement and semi is not in the card yet. Knowing myself psychologically, I need to be mathematically safe before I take the leapt. Yes, the binary problem which I just blogged in my last article. Is pretty hard to shake it off. That's the angle that may come useful to explore too.

For now what are the things broadly. Is basically Money. How many people is not ? Money cannot solve everything but no money definitely cannot.

1.    Young Family

2.    Home Loan

3.    Portfolio Safety and Returns

4.    Maximize CPF VC Contribution till 55

So probably occasional jolts won't subsides till I get my Math right on my income generation asset or robust plan to get it through. And maybe after will still have few instances of recurrences.

Financial Status

Working Expenses Fund

Two years of working expenses in cash

CPF

CPF RA will kick in on Age 65 which will supplement my income after 14 years. This also align my daughters age to college. To optimize my returns, I need to maximize VC till 55 where SA allocation is at it's highest. This potentially means tapping on free cash that I am reluctant to make. The plan is to ensure my investment bonds are reduced accordingly to zero except for SSB. Fortunately, the amounts will match what I needed and likely more. 

Whether I will contribute further after 55 will depends on Free Cash Flow and CPF policies. It will be interesting to know by then.

Non-Salary Income

Dividend Income today is capable to cover annual Home Loan. So technically speaking, there is no worry of paying housing loan. Whatever additional free cash will be for living expenses. And that's the point. Living expenses sufficiency. So the crux of the matter is I will be quite dependent on this dividend income for living expenses if I am to retire today.

I still have rental income support as well that I have yet bring onto the table. Well I have decided this income leftover will be buffer since I am not allocating Loan payment on it.  Rental income covers Maintenance, Tax, Repairs, Upgrade, Insurance Payments and Parental Allowances. As you can see, Rental income is quite sizeable therefore I think is a bad idea not to let local benefits from rental market which can well support their retirement.

14 years of Home Loan Outstanding

Currently,

Reserved Two years of Home Loan Installment in cash

Secured Three years of Home Loan Installment in Bond

I could eliminate the Two years of reserved cash to 6 months, this will optimize my returns. The three years in bonds will be use for general emergency long term as the returns are reasonable. 

Opportunity Fund

10% of  Portfolio Opportunity Fund currently. This fund is critical because is active managed and helps to grow my dividend income. How to maximize it returns will be tougher as I may need it quickly. Putting them into bond or fixed returns that affects my response time or sell price won't be good either.

Maybe maintaining 15% of portfolio value for Opportunity fund seems a better balance and not too much idle. One way is to sell some of my portfolio when the market is in euphoria stage. This will secure 15% needed with shrinking portfolio value and growing cash. Dividend will be reduced. However since I have some idle free cash now, I should have them injected to increase my opportunity fund instead.

Market Returns

Well after going through so much on managing my finance, it looks like I am set to go. The final is the broad market returns. Frankly Speaking, Investing in Stock Market has been fruitful exercise. See below chart on over the years return. Absolute Profit vs Year.

The cumulative gains switching to dividend play has been amazing. To be be truthful I don't see myself getting rich from it versus the Net Worth I have accumulated. The gains likely mirror similar to a landlord. 

Even though I have stepped into US market a little. Most of my Portfolio gains over the years are still unrealised gain being a dividend player.

Looking at the chart carefully since 2018, if we include this year, there will be 3 years of strong profitable returns. The chance of 4th in the Year 2022 is lesser based on my track record. Maybe time for me to be prepared for a curve ball. So my take is I will hold on to the larger Opportunity Fund amount more stringently.

If the market continues to move up in my 4th year, I am happy else I have a larger Opportunity fund to buy in. Sounds like an exciting plan though mitigated.

In summary

The plan will be as follow except that the stage in blue will need to be very careful.

2 Year cash reduced to 6 months -> 15% Opportunity Fund -> Invest fund greater than 15% opportunity allocated -> Grow dividend well above annual home loan -> Support living expenses

Retirement where Living Expenses is covered by Increase in Dividend Income above loan and returns outside Shares dividends. No draw down planned.

End Goal

15% opportunity fund

Home loan covered by dividend income

Living expenses covered by additional incomes

2 years of living expenses

3 years of general emergency fund

6 months of cash buffer

Quite sure this will not be the end of it. I will be back again to straighten things out.

Cory

2021-0627

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