Route to Passive Income

Achieving Financial Freedom is my equivalent to an Olympic Gold

2016-08-12T20:50:00.001+08:00

First, I would like to wish Joseph Schooling all the best in tomorrow's final.

Joseph is truly inspirational. He made history becoming the first Singaporean man to reach an Olympic swimming final. What a race he had!?! Finishing with a time of 50.83 seconds.

What Jospeh told the media after the semis caught my attention?

"I feel fine. A little short on stroke but doesn't really matter that much. It was all about posting a good enough time to get into top eight. And come back tomorrow and try to do it. It's a good confidence booster but doesn't really mean anything... ...I don't care if I break the world record but I get silver or bronze. I still lost. It's all about winning (the gold medal)."

That is what I call a Champion's mindset.

He is hungry. He is determine. He worked extremely hard to be in the final.

Achieving Financial Freedom

Not everyone will be an Olympian. Not everyone will win an Olympic Gold.

It takes hard work, hunger for success, pure determination, sacrifices, and a very strong mindset.

In my own little world, achieving financial freedom is my Olympic Gold.

Did anyone tell you it was easy before?

Probably yes, especially before signing up for any get-rich-quick seminars/ courses.

It will take the same hard work, hunger, determination, sacrifices, and a very strong mindset.

I am still working hard on achieving Financial Freedom; waiting for my Olympic Gold moment.

Pokemon Go Gamers can be Good Investors

2016-08-10T08:12:00.000+08:00

The global Pokemon craze invaded Singapore a few days back. The streets were horded with people from all walks of life, lured to these PokeStops scattered all over the island. I do not remember Singapore's Park Connector Network (PCN) ever being this crowded. People could easily mistaken it for Pokemon Connector Network (PCN too!). *Pun intended!* Singaporeans were basically camping at places such as Yishun Park, Punggol Waterway, Bedok Reservoir, etc. to hunt for Pokemon!

Pokemon Go Gamers can be Good Investors. They should be!

I do believe Pokemon Go Gamers have the mental and emotional tools to be good investors. However, if only people were as crazy about their financial health, putting this obsession and their resources to achieve other results, they could be very successful in "retiring" earlier.

To clarify the term - "good investors", I am referring to investors that are investing to achieve financial freedom and retire early. I believe that investing is not all about the products. It’s about the process. A good investor has to be committed because it is a long marathon to see some results.

Diligent and Passionate

Pokemon Go Gamers have to basically Walk, Walk, Walk, Camp, then Walk, Walk, Walk, and Camp (again; repeat). Your chances of catching Pokemon increases as you walk around. If you were not diligent and passionate, chances are you would have probably given up.

Investing can be a lengthy and tiring process. This process includes continuous learning, being diligent in your savings, budgeting, risk & money management, patience in investing, learning from failures, and the list goes on.

People tend to like the easy way. After a few setbacks, they might think investing is not for everyone. What keeps them going? You have to be diligent. You have to be passionate about investing. Never giving up! Remember, it is a marathon.

Focus on their Mission

Pokemon Go Gamers are so focused, bowing their heads down, trying to collect imaginary pets. In fact, they were so focused that there were reports of people getting into accidents while playing Pokemon Go.

To myself and many others alike, achieving financial freedom is like a marathon. You have to stay focus. You have to focus on the mission. This mission (to me) is compounding my investment till my cash flow exceeds the expenditure of my desired lifestyle.

However Pokemon Go Gamers beware, avoid the herd mentality

I believe Pokemon Go is truly a phenomenon that transcends age, gender and culture. There are bound to be people just following the trend blindly. In human history, there is always the tendency of people mimicking or emulating the actions of other people in a large group. Often, herd behavior is the result of going with the crowd. This is especially true in investing.

Some people are heavily influenced by the actions of their friends or relatives. "If everybody around is investing in a particular stock, I should do the same." Beware! This might backfire. There is surely a reason why the world's greatest investor Warren Buffett said, "Be fearful when others are greedy, and be greedy when others are fearful!"

Summary

In summary, as mentioned earlier, if Pokemon Go Gamers were as crazy about their financial health, putting this obsession and their resources to achieve other results, they should achieve their financial freedom easily (if they choose to).

Transfer that diligence, passion and focus to investing early!

July 2016 Portfolio Update - Growing My Passive Income

2016-08-08T17:58:00.000+08:00

I am late with my July update.

Added the following counters in July:

500 shares of Keppel Corp.
466 shares of Nikko AM STI ETF.
3,000 shares of Soilbuild Business Space Reit.
4,000 shares of Kingsmen Creative.

I went on a small buying spree at the end of July (maybe because of the revision of Standard Chart's rates). My invested capital has surpassed the S$150,000 mark (like finally).

I am really keen on DBS and OCBC shares. Should I buy or should I just hold a little longer? This is always the most difficult question to answer. I am keen to add more shares of DBS when the price is below $15. However, when the price went below $15 (like last Friday), I hesitated.

Well, let's just wait and see whether the coming weeks create any opportunities to buy.

Without a car, one year on... Uberizing!

2016-07-21T22:38:00.003+08:00

After driving for the last 8 years, I decided to "throw in the towel" last year. It was a painful decision as I had to familiarize myself with the public transport again.

What have I gained? Money. More spare cash.

What have I lost? Some convenience.

After 8 years...

Taking the train was initially uncomfortable - the crowd during peak hours, the stuffy trains at times (when the air-con does not seem to be working), etc. There are always reasons not to like public transportation.

However, it has, technically saved time. The morning commute to the office is shorter now. I am working in the city and it is a direct station to station travel. There is no need for additional transfers, in my case.

Driving in the morning is not necessarily that convenient with the morning traffic jam. Taking the train also excludes the annoyance of paying the ERP and FINDING PARKING LOTS. Furthermore, I have began reading during the morning commute and this is something I appreciate a lot.

Uber, Grab Car, and Taxi

Apart from the train, I rely, occasionally, with taxi trips. At times, I will choose the mode that provides me with the earliest pick-up. But most of the time, I will just compare the prices and go with the cheapest option.

I like Uber and Grab because their pricing are pretty straightforward. Of course, having to choose the option of UberX and GrabCar (Economy).

UberX - Base Rate: S$3.00; Per KM: S$0.45; Per Minute: S$0.20
GrabCar (Economy) - Base Rate: S$3.00; Per KM: S$0.80.

Taxis, on the other hand, have so many sur-charges that even a Singaporean like me can't remember. There are peak hour charges (25%), midnight charges (50%), CBD charges ($3), booking fees etc.

Having said that, I do notice that Taxi fares might be comparable (or even cheaper) to UberX and GrabCar (Ecomony) during non-peak hours excluding the booking fee. If you flag down a taxi, chances are, the fare will be cheaper during non-peak hours.

For the record, I personally feel UberX has cheaper fares compared to GrabCar (Economy) as long as there isn't a massive jam. I will also stay away from UberX or GrabCar (Economy) if there is a price surge.

Money Saved

I never really knew how much exactly was it to maintain a car monthly. There are always the additional hidden costs in some months - maintenance, extra parking fees, ERP charges, traffic fines, parking fines etc. The total amount could range from S$1,200 to S$1,800 a month.

My transportation cost now, is down to only S$300 to S$400 monthly. It can even be as low as S$200 if I did not splurge on taxi/private car hire fares.

Conclusion

I do miss the convenience of driving - when I want and wherever I want. But, the money saved is definitely a big sum and it could be put to better use. I am still considering if it will be wise to buy a small weekend car when we have kids eventually.

Dilemma indeed. #firstworldproblems

Forgo Your Child Tuition; Invest the $ Instead

2016-07-17T21:42:00.001+08:00

Few days ago, I felt so lazy to get out of bed, with my sleepy eyes, I lazed in bed reading a blog post - My talk on Funding your child's University Education at the Lifelong Learning Library.

And this paragraph caught my attention - "Along the way, I was able to blend in some ideas from economists along with some statistics to get parents to start thinking about the opportunity costs of paying such a large amount of money to tuition teachers and enrichment seminars and think about how large this money stash can get if it was invested in the stock market instead. This forms the heart of my dangerous idea : Money paid to tutors and enrichment schools could have been used to pay off dividends starting from the day your child graduates from a polytechnic."

What really got my attention - Dangerous Idea?

Not that I have any kids. But I decided to download the presentation deck to find out more details. The dangerous idea was presented in the following 2 slides (Source: Funding your Child's Education):

I did not attend the talk. My assumption and interpretation will be a tuition-free education environment for the child, relying sorely on the school, the child and the parent (i guess).

Would Singaporean parents actually consider it?

I believe nearly eight in 10 parents with children pay for private tuition in Singapore. The paper chase begins really early and tuition is considered a means to improve their children's grades and to help them keep up with others. I came from a non-tuition background and I did not have really good grades (average student). However, in this current era and context, I am not sure how receptive parents are to not providing any tuition to their kids. In fact, some parents might put in the extra hours at work just to provide tuition for their kids.

Controversial indeed.

Would you consider investing the money for your child instead even though there might be a need for tuition?

Even though, I never had a tuition day in my life, I am not sure.

What about the child?

The child will definitely be very happy not to spend the hours on tuition. This is an assumption. I believe there are kids that genuinely want tuition for better grades.

If I had inherited a S$340,000 portfolio immediately after I graduated from polytechnic, I would be ecstatic. At that age, I would not have managed such a big sum of money before. $10,000 was already a big sum. The tendency of spending the inherited portfolio will be high. I probably would not know how to manage it in the first place. It might be a case just like how many millionaire lottery winners lose their fortune eventually.

Really wonder how many parents would consider this plan.

Salary in. Invest. Re-invest. Repeat.

2016-07-09T16:47:00.001+08:00

People are probably more familiar with "Eat, Sleep, Train, Repeat". More commonly heard and I believe it is the mantra of many fitness enthusiasts throughout the world. I do often hear it from my slightly "crazier" peers that wants to be fit with a nice body.

“Eat, sleep, train, repeat” really simplifies what is essential for every successful fitness program. In fact, it is essential for a successful fitness enthusiast.

Now, "Salary in. Invest. Re-invest. Repeat" is not exactly my mantra but subconsciously I have been doing the same for a long period of time.

Started with learning how to Save

It all started with "Salary in. Save. Repeat" many years back. We all know the inflation in Singapore can be a nightmare for Savers, particularly with the low savings interest rates in our local banks. However, "Salary in. Save. Repeat" gave me a good foundation to build a sizable portfolio when I started to invest.

Read: Did I Manage To Save S$100K Before 28?

Discipline is still the key

At the end of the day, a mantra doesn't mean anything if you do not have the discipline to execute it religiously. Ask any fitness enthusiast, their good fitness, good body and good health did not appear overnight. It was years of effort.

Many people will be entice by get-rich-in-months schemes or training courses. But I still believe in the most traditional method of taking a step at a time to build my wealth. This is just my personal opinion. I am not bashing any get-rich-in-months schemes or training courses. These trainers had put in years of effort to build such expertise. These courses could kick start your investment journey but you still have to build your expertise over time.

Discipline + Right Knowledge is probably a better way of putting it.

Salary in. Invest. Re-invest. Repeat.

To sum-up, reasons for doing it:

1. I can't rely on bank interest rates.
2. I need my money to work for me.
3. I really do not want to have to work during my retirement years.
4. Most importantly, it has become part of my DNA to do it.

2016 1H Dividend Update - Growing My Passive Income

2016-07-06T11:54:00.000+08:00

Why does Time fly as we get older? 6 months have past. In my last dividend update, 2016 Q1 Dividend Update - Growing My Passive Income, I was pretty sure I will be able to achieve the S$10,000 dividend mark annually (with or without the Saizen Reit's payout). So I am keep close watch on my progress.

Total dividends (2016 1H): ~ S$9,845.31

Total dividends (2016 1H without Saizen Reit's payout): ~S$4,423.81

Average Monthly Dividends: ~S$737

A breakdown of the dividends/ interest for April - June 2016 (S$2,795.04):

Keppel Corp - S$88.00
ST Engineering - S$50.00
Comfort Delgro - S$350.00
Soilbuild Business Space Reit - S$155.70
Keppel Infastructure Trust - S$142.66
Suntec Reit - S$284.52
CapitaMall Trust - S$54.60
Starhill Global Reit - S$189.00
Fraser Commercial Trust - S$25.25
Kingsmen - S$100.00
OUE Hospitality Trust - S$80.93
DBS - S$30.00
Accordia Golf Trust - S$862.00
Interest (from OCBC and UOB) - S$382.30

Another 6 months left to achieve the S$10,000 mark. I did project another ~S$3,400 of dividends in last half of the year - See Post: Confident To Reach S$10,000 Dividend Mark In 2016. Together with my interest collected, I might just fall short. We shall see at the end of the year.

June 2016 Portfolio Update - Growing My Passive Income

2016-07-02T19:08:00.002+08:00

I have been busy with work and have not updated the blog for 2 months. Various excuses before I got myself to sit down and archive all transactions in terms of purchasing and dividends for the last 2 months. Procrastination! Excuses - 1) Copa América Centenario; 2) Euro 2016; 3) Wasting time on Facebook videos; 4) Maybe tomorrow; etc.

Just got motivated by other bloggers and told myself I have to do it. They do not just pass on their knowledge but also motivated me to move towards my goal. A big thank you!

Added the following counters in May and June:

400 shares of Keppel Corp.

1,425 shares of Nikko AM STI ETF

On a separate note, I wanted to add more counters after Brexit. I waited for a few more days thinking I will get a better price but the market rebounded. Lesson Learnt!

Well, my invested capital is finally reaching the S$150,000 mark. A marked difference when I started to keep track 2 years back. Just have to keep doing the right things.

爱情保卫战 - Financial Issues of Quarreling Couples

2016-05-17T22:38:00.002+08:00

I have been watching 爱情保卫战 on YouTube recently. I can't believe such a show even exists. Comparing the shows on Channel 8 and 5, I think Singapore needs to be more creative in our reality shows. 爱情保卫战 is a China TV show featuring couples trying to resolve their issues. In fact, some couples featured in the show used it to validate their decision to the end their relationship.

Couples Quarreling Over (having different opinions on) Money $$$

There were various relationship issues showcased in 爱情保卫战. 3rd Party, Flirting, Lazy Husband, Lazy Wife, etc. And of course, quarreling over money.

Case 1: Husband / Wife controls all the finances. There were various examples of couples quarreling over this matter. However, in the example below, the Husband was the one "controlling the finance". The Wife had to hand over her monthly salary to the Husband. The Husband would then give her some allowance. But the Wife complained about her miserable allowance.

You will never imagine what was coming next? They were married for 13 years. The Husband's Mum managed their money throughout the 13 years. Wife passes the money to the Husband. Husband passes the money to his Mum for safe keeping. And the climax of the quarrel - the Husband doesn't even how much money has been saved by his Mum. *Applause*

Case 2: Girlfriend feels her Boyfriend is a Miser. They were just two different people having different opinion on money. One believed in quality (the Girl), the other believed in being practical (the Guy). I felt the Guy was overly practical and the Girl was overly spendthrift that led to their relationship issue.

This example should be quite common among relationships. Not being a miser but couples having different opinions on how to spend and save their money.

Case 3: Boyfriend believes buying 4D/ Toto is an Investment. I have heard people buying lottery as a form of hope. Buying lottery has an investment? We have to give this fellow (below) an award. The Girlfriend could no longer tolerate his gambling addiction and debts.

My Finance, Her Finance, and Our Finance

My Wife has always said, "Your money is my money, and my money is still my money. Understand!"

While she says that, our finances are managed separately (and individually). We do have a joint account for household expenses and savings.

Well, every couple has their own way of managing their finances. Although, I am unable to accept someone having total control over my finance or myself controlling my partner's money, it might work well for some couples. I do know that some of my friends' finances are managed by their respective partner.

How Should We Manage Our Finances

Some people can't even manage their own finance. Some couples have never communicated about management of their finances before their marriage.

I am not a relationship expert but I believe finance will be one important topic to have some common understanding and alignment.

To conclude, I think the best summary was given by this Love Expert on the show (See above).

Apr 2016 Portfolio Update - Growing My Passive Income

2016-04-28T21:56:00.001+08:00

STI is still hovering between 2,800 and 2,900 points. It was a slow April as compared to March.

Added the following counters:

300 shares of Keppel Corp.

2,357 shares of OUE Hospitality Trust (Rights Issue)

I have invested in the Nikko AM STI ETF, using a monthly investment plan, since Aug 2013. Till date, it is my biggest holding in my portfolio (25.8%). And till date, excluding the dividends, it is still down 8.39%. This is my biggest losing counter (No! Yongnam is my biggest mistake!).

Well, I will continue to invest in the STI ETF monthly. I personally believe this is the most passive investing method. Love the fact that it is automated.

Can't wait for the next few months to accumulate more shares.

Confident to Reach S$10,000 Dividend Mark in 2016

2016-04-25T23:48:00.000+08:00

In my last 2016 Q1 Dividend Update post, I highlighted that I will definitely be able to cross the S$10,000 dividend mark in 2016 with the Saizen's payout. Some bloggers did mention to me that they will not have considered the payout as dividends. Each has its own case.

Read: 2016 Q1 Dividend Update - Growing My Passive Income

Well, without considering Saizen's payout, the total (dividends / interests) was only at S$1,628.77 for Q1 2016.

It just got me wondering how far am I from the S$10,000 milestone.

Tracking dividends has somehow become an addiction and, at the same, I do want to know how much income to expect going forward.

Dividends to be paid in 2016 (Estimated)

Confident to Reach S$10,000 Dividend Mark in 2016

Estimated Dividends in 2016 - S$7,196.60
Estimated Interests (from OCBC and SC) in 2016 - S$1,575.00

Total in 2016 (Estimated) - S$8,771.60

Seeing this estimate, I am pretty confident that I am able to reach the S$10,000 milestone in 2016. The total estimated amount excludes dividends expected from DBS and Keppel Corp. It also does not include the stocks that I will be adding in the next 9 months.

Slowly, but Surely...

I can finally feel the compounding working its magic. It has been a long journey. I’m increasing my income level at a much faster pace now due to the dividends and a constantly growing portfolio.

S$10,000 Dividend Milestone - Achievement Unlocked (Soon!).

How long will your 'Interest Bucket' take to generate $2.4K?

2016-04-23T00:44:00.003+08:00

I believe many will not be interested to know that it will take slightly more than 7 years to generate S$2,400 of interest (total) with the following plan - Investing S$200 monthly on an investment product that yields 4% interest.

However, if you leave your investment alone (after 8 years of hard work) for another 30 years, your investment portfolio will have grown to ~ S$72,000. This amount will probably catch more attention.

Crucial Element to Growing Your Investment is Time

The maths is simple. You invest S$200 monthly (works out to be S$2,400 invested annually). With an investment product that yields 4% (plus compound interest), here are the results:

The more time your money has to accumulate compound interest, the larger your investment portfolio will be. Simple Logic! This investment portfolio could be a source to pull out when you retire.

Getting started early makes the difference in your retirement fund. If you choose to stop investing after the 8th year, and leave your money to accumulate the interest, it will have grown to ~S$72,000.

What should you be doing?

First, commit a percentage of your income you will invest each month or year. With just 10% of your income, you can still slowly grow your investment to a considerable sum. A case in point is the example above.

Second, choosing an investment. This is much trickier. There are various blue-chip stocks, REITs, ETF and the list goes on. Read GiraffeValue - 17 Singapore Investment Options That Will Grow Your Money NOW (Step-by-Step!) on the different investment options available.

Least Work and Risk Free Returns

Well, you could also park your money in CPF-SA and earn 4-5% risk free returns. You will be almost guaranteed the S$72,000!

Read - My First Transfer from CPF-OA to CPF-SA

Conclusion

Even with a modest income, it is still possible to grow a sizable retirement fund. Start early. Save more. Invest smartly.

2016 Q1 Dividend Update - Growing My Passive Income

2016-04-11T21:49:00.001+08:00

This post is to update my 2016 1st Quarter Dividends. As mentioned before, 2015 was the first year that I have tracked my dividends diligently. This will be my second year and hoping to see the (incremental) progress.

Total dividends (2016 Q1): ~S$7050.27.
Average Monthly Dividends: ~S$2,350.09.

A breakdown of the dividends/ interest for 2016:

Nikko AM STI ETF - S$461.72
Keppel Infrastructure Trust - S$142.66
Suntec Reit - S$330
OUE Hospitality Trust - S$85
Fraser Commercial Trust - S$25.85
CapitaMall Trust - S$57.60
Starhill Global Reit - S$132
Interests (from OCBC and UOB) - S$393.94

Special Payout from Saizen Reit - S$5421.50

I am pretty sure with Saizen Reit's payout, I will definitely cross the S$10,000 mark for 2016. I decided to invest in Soilbuild Business Space Reit using the Saizen Reit's payout. Hopefully, it will be a good investment like Saizen Reit.

Read - Previous records:
Final 2015 Dividend Update - Growing My Passive Income
1H 2015 Dividend Update - Growing My Passive Income
9M 2015 Dividend Update - Growing My Passive Income

Thirteen (13) Common Stocks Held By Financial Bloggers

2016-04-04T22:07:00.000+08:00

I have been following various financial bloggers over a period of time already - both to stay motivated in my goal and also to learn more from them. Over time, I realized that there were some similarities (in terms of holding to certain stocks) in our portfolios. I was wondering what were the common stocks being held by these financial bloggers and myself.

Let's begin by saying that this post should not be construed as a reference to buy any stocks mentioned.

13 Common Stocks in the Portfolio

In no priority:

1. Suntec REIT

Suntec Real Estate Investment Trust is a real estate investment fund launched and managed by ARA Trust Management Limited. The company invests in income producing real estate assets which are used for commercial purposes. The company operates in three segments - retail, office and convention. Some of the assets in their portfolio consist of office and retail properties in Suntec City, one-third interest in Marina Bay Financial Centre Towers.

2. CapitaMall Trust

CapitaMall Trust invests in income producing retail properties. Its portfolio comprises many shopping malls, which are located in the suburban areas and downtown of Singapore. Many of these shopping malls are familiar household names - like Tampines Mall, Junction 8 etc.

3. DBS
4. OCBC

Both DBS and OCBC provide various commercial banking and financial services in Singapore.

5. Fraser Commercial Trust

Fraser Commercial Trust is a real estate investment trust with a portfolio of commercial real estate assets. Some of their commercial assets in Singapore are 55 Market Street and Alexandra Techno-park etc.

6. ST Engineering

Singapore Technologies Engineering provides solutions and services in the aerospace, electronics, land systems and marine sector. Singaporean serving the military in Singapore would be familiar with this company and their products/ services.

7. AIMS AMP Capital Industrial REIT

AIMS is another real estate investment trust and they invest in a portfolio of income producing industrial real estate located mainly in Singapore. Some of the industrial assets include 1 Kallang Way 2A, 8 Senoko South Road, 10 Soon Lee Road etc.

8. Keppel Corp

Keppel Corporation is engaged in 4 segments - Offshore & Marine, Infrastructure, Property and Investment. Its Offshore & Marine segment, which most people know better about, offers offshore oil-rig construction, shipbuilding, and ship repair and conversion.

9. M1
10. Starhub
11. Singtel

Another 3 household names that I think everybody knows.

12. SGX

Singapore Exchange (SGX) is engaged in operating integrated securities exchange and derivatives exchange in Singapore.

13. Soilbuild Business Space REIT

Soilbuild Business Space is another real estate investment trust. The company is engaged in investing in a portfolio of real estate assets which are used for business space purposes (includes Business Park and Industrial) in Singapore. Some of the assets in the portfolio includes Tuas Connection, Solaris etc.

Saizen REIT would have been in the list

Lastly,

14. Saizen REIT

Saizen REIT has completed his divestment of its entire portfolio of real estate assets to Triangle TMK. Most investors, including myself, will miss this REIT which invests in a diversified portfolio of real estate located in Japan (used primary for residential purposes).

Let me emphasize again, these stocks were bought at different times / prices by different financial bloggers. This should not be construed as a reference to buy any stocks mentioned above. Please do your own homework.

Mar 2016 Portfolio Update - Growing My Passive Income

2016-04-03T10:33:00.002+08:00

STI has been hovering at 2,800++ points and I wonder if there will be any Great Singapore Sale soon. My portfolio is still down less than 2%.

In terms of adding stocks to my portfolio, it was a busy month. Added the following counters:

471 shares of Nikko AM STI ETF.
5,000 shares of Starhill Global Reit.
300 shares of Keppel Corp.
100 shares of DBS.
10,000 shares of Soilbuild Business Space Reit.

Hope to accumulate more Keppel and DBS in April.

Buying 1 Lot of the Same Stock Monthly is not DCA?

2016-03-30T21:32:00.000+08:00

A reader emailed me asking me the difference between buying 1000 shares of one particular stock monthly and buying a fixed amount (i.e. S$3000) of a particular stock. The email exchanges got pretty confusing as you can imagine.

Simplifying the discussion, using this example - the difference between:

Option 1 - Buying 1000 shares of SPDR STI ETF (ES3) using Standard Chartered Trading Platform

Option 2 - Buying a fixed amount of S$3000 worth of SPDR STI ETF (ES3) using POSB Invest-Saver

He wanted to highlight to his colleagues that buying 1000 shares of the same stock monthly is not Dollar Cost Averaging (DCA). The concept of DCA seem to have confused some people.

Definition of Dollar Cost Averaging

Going back to basic and definition, DCA is the technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares are bought when prices are high.

So Option 1, buying 1 lot of the same stock monthly is not DCA.

Any difference in terms of performance?

The conversation went on to compare the performance or trade-off of both options. To be honest, it did not really matter to me. Both options will mean growing your portfolio and that is more important.

Nevertheless, I just did a simple calculation without including the transaction fees, any other cost and dividends (See below).

Good news is both portfolios have grown substantially over a period of 2 years

As of 30 March, the price of ES3 is S$2.88. Option 1 Portfolio is valued at S$72,000 and Option 2 Portfolio is valued at S$67.685. The good news is both portfolios have grown substantially over a period of 2 years.

So which is a better option?

The above is just an example based on a snapshot of 2 years. I personally feel the convenience of investing via (in this instance) Invest-Saver far outweighs having the discipline to buy 1000 shares of ES3 monthly via a trading platform.

With DCA, more shares are purchased when prices are low, and fewer shares are bought when prices are high. I believe not only in the power of DCA but also the simplicity in a product like Invest-Saver.

Would you start to time the market?

Would you miss out on your monthly purchases because of the higher stock price?

Would you stop buying according to your plan when the market starts turning Bearish?

Would you just forget to buy the stock for that particular month?

#WhatsYourPlan (for Retirement)

2016-03-13T16:43:00.001+08:00

I believe I am not the only one noticing the #WhatsYourPlan (hashtag) all over social media. The Government's initiatives have definitely caught my attention, especially on the retirement front.

Educating the public, Gov.sg has mentioned on their site - What's your Plan? (click here) - that "saving for retirement can seem like a daunting task, but it need not be that way. Let us help you with tips to better manage your finances, grow your savings, and plan for your golden years."

I applaud Gov.sg for such initiatives to get people to think about their retirement. It ain't easy to get people to think for their retirement early (let alone plan for their retirement early). So since Gov.sg has been asking about our plans, here is my plan.

#WhatsMyPlan

1. Continue growing my CPF-SA to a Substantial Amount

In my previous posts - Minimum Sum of S$564,797 In Year 2047? and Four Building Blocks For My Retirement - I have mentioned that CPF is a fundamental part of my retirement. Will I totally rely on it for my retirement? NO! However, it is still a pillar to most Singaporeans in terms of retirement savings.

One known fact (hard truth) is that the Minimum Sum (now known as Basic Retirement Sum) will definitely grow / increase. Another known fact (hard truth for the next 5 years at least) is that I will continue to contribute to my CPF as long as I am employed. The Plan is simple. Just like every normal Singaporean, 1) I will continue to stay employed, contribute to my CPF and slowly grow my CPF accounts month by month; and 2) I will do micro-transfer of funds from my CPF-OA to my CPF-SA (Read - My First Transfer From CPF-OA To CPF-SA).

I have to do my part to accelerate my CPF-SA to a substantial amount and then let CPF Board do their work to compound the interest in my CPF-SA. Under the CPF Life scheme, I will then be provided a monthly payout for life from the time I turn 65. This is a form of retirement savings plus annuity.

2. Supplementary Retirement Scheme (SRS) to build a Bigger Nest Egg

I am in my 4th year of contributing to my SRS account - 4th Installment (Another S$12,750) In My SRS Account. I will not explain more about the SRS account in this post.

I have mentioned about my plan (many times) in various posts in this blog. 20 years of contribution and using the funds in the account to invest in the STI ETF. I would have contributed S$255,000 after 20 years.

In all investments, we are unable to predict how well our investment is going to pay off. With a simple calculation of an average annual return of 4%, this sum will be ~S$379,600. There will be years with big drops and years with big growth. As such, I still believe the 4% is rather conservative.

3. Generating Passive Income with Dividends Paying Stocks

I am building a portfolio of dividend paying stocks. I personally believe the stock market is one of the best source of passive income through dividend paying stocks. In my last post, Five Bloggers Collecting > S$10,000 of Dividends Yearly, I have highlighted several bloggers that have achieved it.

While I am still far from my goal of exceeding my monthly paycheck, I have seen progress over the last 2 years (see below). The next milestone is to reach the S$10,000 mark.

Conclusion

I have highlighted Three Big Components of my Plan.

Planning for your retirement is an important issue, but it is also something we often procrastinate on. I, totally, resonated with a featured video by Gov.sg (Watch it below) because I have seen with my own eyes family members that are suffering.

Jimmy: "Ready to retire?"
Uncle: "I've been getting ready since I was your age."
Jimmy: "You're joking right? Whatever I can earn, I just spend."

The video went on to share Uncle Lim's story about how he was once like Jimmy.

To my partner (that will never be reading this post), in my vows, I did mention the promise to save and grow old together in our own home.

So everyone, #WhatsYourPlan for your retirement?

Five Bloggers Collecting > S$10,000 of Dividends Yearly

2016-03-12T00:51:00.001+08:00

Here is a list of financial bloggers with dividends exceeding the S$ 10,000 mark. Going through this journey, I personally know it is not easy. I just have to continue to believe and work on it. With these bloggers inspiring me, I believe I will hit this milestone soon. Till then, I will just continue to monitor their journey and work on mine.

1. Passive Income Farmer

Total Dividends in 2015 - S$ 9,189.49 (almost reaching the S$10,000 mark)

His report card - My Stock Portfolio @ end Dec 2015

2. Dividend Knight

Total Dividends in 2015 - S$ 16,835.00

His report card - Dividend Knight Portfolio Update (Dec 2015)

3. A Path to Forever Financial Freedom

Total Dividends in 2015 - S$ 21,600 (S$ 1,800 per month in 2015)

His report card - 2015 Review & 2016 New Year Resolution

4. Lady, You Can Be Free

Total Dividends in 2015 - S$ 60,349.15

Her report card - My Stock Report Card for Dec 2015

5. A Singaporean Stock Market Investor

Total Dividends in 2015 - S$ 167,149.50

His report card - 2015 Full Year Income from Non-REITs and 2015 Full Year Income from S-REITs

In 2015, I collected S$ 6,206.76 of dividends. It has been a slow process but I am seeing the progress with each passing month.

Read - Final 2015 Dividend Update - Growing My Passive Income

These are the bloggers (above) I will have to hashtag - #Inspiration, #YouHaveDoneIt, #ICanDoItToo, #HardWork, #Patience, #SlowAndSteady.

Obviously, there are more financial bloggers, out there, exceeding the S$ 10,000 mark.

So please leave a comment about those bloggers too.

Four Building Blocks for My Retirement

2016-03-07T21:21:00.001+08:00

Everyone wants a comfortable retirement. Nobody wants to be old and still have to worry about their daily expenses. There are so many roads (or methods) leading to a final destination. I have been laying bricks and building "4 blocks" for my retirement. I wish it could be completed ASAP and maybe, just maybe, I will consider retiring at 45 and venture into a new experience.

Essential Building Blocks

1. CPF

The Central Provident Fund (CPF) is a compulsory savings plan for Singaporeans and PRs. Since CPF is compulsory, it is definitely many Singaporeans primarily way to fund their retirement.

For me, the CPF Special Account (CPF-SA) is my essential building block that solely focus on building up the funds for old age. Leveraging the guaranteed interest rates of 4% per year, I hope to quickly meet the Minimum Sum (now known as Full Retirement Sum) and let the magic of compound interest do its work.

My CPF-SA building block is currently close to 50% completion (based on the Minimum Sum in 2015).

Once my CPF-SA reaches the Minimum Sum, I know I will be receiving a monthly payout once I reach 65. Not fantastic payouts we are talking about, payouts for very basic expenditure. So if anyone is just relying on their CPF for retirement, please think again.

2. SRS

According to Ministry of Finance, Supplementary Retirement Scheme (SRS) is part of Singapore government's strategy to address the financial needs of a greying population by encouraging Singaporeans to save more for their old age. The SRS complements the CPF; however it is voluntary. The voluntary contributions (subject to a cap) to the SRS are eligible for tax relief. These contributions can be used to purchase various investment instruments too. Well, there are some drawbacks too - like your funds will be locked away for a few decades and 50% of your withdrawals are still taxable at retirement.

I have contributed for 4 straight years - 4th Installment (Another S$12,750) In My SRS Account - into my SRS account. The plan is to contribute for 20 years.

My SRS building block is currently close to 25% completion.

As mentioned, the contributions can be used to purchase investment instruments. And since the money is locked for a few decades, it gives me the opportunity to invest for the long term and that is exactly what I am doing.

3. Stocks Portfolio

I want to create a portfolio that is able to give me dividends that exceeds my expenses. Building such a portfolio takes time. I have categorized my progress in stages:

Stage 1: Dividends of S$2,000 (monthly) - That will pay for one of my biggest expenses monthly - housing.

Stage 2: Dividends of S$5,000 (monthly) - At this stage, I believe it pretty much covers all my expenses monthly.

Stage 3: Dividends of S$10,000 (monthly) - A goal I would like to achieve. Really inspired by AK - How did AK create a 6 digits annual passive income?

My Stock Portfolio building block is currently only in Stage 1 and it is just 25% completed.

It took quite some time just to receive slightly more than S$500 of dividends monthly. Building this block is a long marathon. It feels like an Ultra-marathon.

4. Insurance

The bedrock! Not for investing in Investment-Linked Insurance Policy. But for policies that cover the cost of medical treatments and for policies that my beneficiaries are taken care of in some ways financially from my sudden dismissal. Anything can happen; accidents or illnesses could wipe away my savings.

Conclusion

In summary, these building blocks are not exhaustive. Your retirement plan or building blocks could consist your own personal savings or your housing etc. Each building block will take time to complete. So do plan for your retirement blocks early and work on it.

This Book kick-started another 'Fund (2nd Property)'

2016-03-05T10:10:00.004+08:00

Just a month back, I was browsing at Kinokuniya and I was, of course, at my favorite section - Investing, when I came across this book - The Ultimate Guide to Real Estate Investment in Singapore. Many Singaporeans will definitely know Ismail Gafoor.

Ismail Gafoor is the CEO of PropNex - one of Singapore's largest local real estate agency. He started his career in the SAF as an Army Officer. Back then, he was on pensionable service. In the mid 90s, forgoing the stability and security of a civil service job, he resigned from the SAF. The rest was history.

I met Ismail 12 years ago and we had a causal talk. He was really a friendly CEO. I doubt he could remember me or even the conversation. Nevertheless, he inspired me, even for that 5 minutes of discussion.

So when I saw the book, I picked it up and eventually decided to buy it. This book is simple (to understand); yet a comprehensive sharing of real estate investing.

Owning a 2nd Property in Singapore

It has always been my dream to own more than one property in Singapore. I believe it is many Singaporeans' dream. I recently purchased my first BTO and I am already dreaming of being able to purchase the next private property - "renting the 2nd property, collecting the rental, and then servicing my mortgages".

Yes, there are REITs. REITs might give a better yield. But it is just different. Owning that 2nd property is something I would like to achieve since I was in my teens.

Kick-started my "2nd Property Fund"

With a Minimum Occupation Period (MOP), I will have no choice, even if any opportunities arise in the next five years (till 2021). Prices of properties would likely have gone up. In additions, no one knows when all these cooling measures will be removed or enhanced. These measures include the Additional Buyer's Stamp Duty (ADSR), Loan-To-Value, etc.; just means more cash down payment.

Well, the honest truth is that I may never be able to buy a second property. So put it this way, without starting this "2nd Property Fund", I will never have enough cash for down payment. Having said so, if the funds just isn't enough for any viable opportunity, I will just use it as my War Chest Funds in future.

In short, 5 years to save!

Save-Then-Invest - Dollar Cost Averaging

Each month I will set aside S$ XXX - Paying myself First - from my salary. And purely invest it in STI ETF (immediately and automatically). No excuses of forgetting to invest.

I have started with a S$5,000 one time investment to kick-start this fund!

May the odds be in my favor at the end of the 5th year.

Feb 2016 Portfolio Update - Growing My Passive Income

2016-03-02T23:07:00.000+08:00

Another slow month. STI has been hovering at 2,600++ points and slowly inching up. My portfolio is currently down less than 2%.

Added the following counters:

511 shares of Nikko AM STI ETF.
500 shares of ST Engineering.

Looking and feel like taking small bites on Keppel, Ho Bee and DBS. We shall see how the market unfolds in March.

Did I manage to save S$100K before 28?

2016-02-26T23:19:00.000+08:00

I was reading Budget Babe - How to Save More than $100,000 before 30 (Without working in Finance) and was just trying to recall whether I did manage to save S$100,000 before 31, 30, 29, 28 or 27. Honestly, I really can't recall.

No Plan. Just Save.

Back then, I did not really plan for an amount I needed to save or an amount I needed to save by a certain age. I just knew I needed to save.

When I started my first job, I remember I was paid close to S$2,000. I did not have any commitment and told myself I should be saving really hard. I had close to S$8000 from the savings during my NS days, part-time job,savings since when I was a kid etc.

I clearly remember how happy I was when my savings crossed the S$10,000 mark. I guess my goals just grew bigger.

What did I do?

Since many people want to hit the S$100,000 mark before the age of 30, I am trying to backtrack and recall what I actually did. Looking back, there were 3 main things that I know I did for sure.

1. Saving S$500 monthly from my salary

I remember using the OCBC Monthly Savings Account (OCBC MSA) which allowed me to fix a regular monthly contribution to be saved. This regular contribution remained unchanged for the next 24 months.

I fixed the monthly contribution to S$500 (maybe S$600-700) and did this for at least 6-8 years (3 to 4 cycles on the OCBC MSA plan or a similar product). The OCBC MSA would then offer higher than normal interest rate of 1% or slightly more. I feel so "cheated" now. 1% ?!?

However, this OCBC MSA instilled the discipline and I slowly grew my savings, month by month.

Looking at today's context, I will probably save in banks providing higher bonus interest. For example, OCBC 360 or UOB One Account etc.

Read:

2. Investing S$500 in an Investment-Linked Insurance Policy

I started my first job when I was 21-22 years old. The first purchase I did with my salary was to buy an Investment-Linked Insurance Policy which allowed me to purchase some "Singapore Growth" unit trust monthly. I invested S$500 monthly on that plan.

Why an Investment-Linked Insurance Policy? I did not know much about investing then. I only knew I had to invest in something. Looking back, if I was to advise myself 12 years back, I would have invested in STI ETF.

Read: For Beginners, Invest in STI ETF

After 5 years into the plan, I decided to reduce my monthly investment to S$200. I started to invest by myself believing that I will make better returns. I am still holding this Investment-Linked Insurance Policy till date.

3. Saving 70-80% of my bonuses

This is probably the most important action I took which saw my savings grew at a faster rate. I saved almost 70-80% of my bonuses in the first 3-4 years. Till date, I still do save a big portion of my bonuses which goes into buying more stocks. I do spend more on holidays now. However, I will still try my best to maintain it at 50%.

Conclusion

Unknowingly, I have always been "paying myself first". The concept of "paying yourself first" is one of the pillars of personal finance and has been considered the number 1 rule by financial bloggers and planners. The basic idea is simply putting money into your saving account first before spending the rest.

Unknowingly (also), I have automated my "pay myself first" and investing. Basically, it just forces me. Month by month, then year by year, my money grew.

I strongly believe saving S$100,000 in less than 8-10 years is possible. There are sacrifices. Are you willing to action on "paying yourself first" and "automating"?

Who doesn't love the 'rental $$$' from your REITs?

2016-02-24T20:45:00.001+08:00

Most of us will know that the S-REITs (Singapore Real Estate Investment Trust) are trust manged by REIT managers to invest in income generating real estate properties such as shopping malls, offices, hotels, etc. REITs generate their revenue mainly from the rental income of their properties and it is a mandate to distribute at least 90% of their net income to their investors.

As such, who doesn't love the Rental Income from these REITs?

REITs are known for their high distribution yield of 5-8%.

To those who want to learn more about REITs, please download Giraffe Value - The Complete Guide to REITs Singapore Investing (7 Chapters, 15,322 word):

Chapter 1 - REITs Singapore
Chapter 2 - Investors' Expectation & Risks
Chapter 3 - Understanding REITs Structure
Chapter 4 - REITs Growth, Basic, Risks, Tricks
Chapter 5 - REITs Sectors, Retail and Office
Chapter 6 - Industrial REITs, Hospital REITs, Hotel, Cross border and FTSE ST REIT Index
Chapter 7 - REITs Resources & Tools

A special shout-out to Giraffe Value. Thank you for this wonderful REITs book! I enjoyed it and thank you for giving me the permission to share this.

S-REITs: Important Component in my Portfolio

Put it this way, owning S-REITs / REITs in general is akin to becoming a Landlord of multiple properties. Although real estate prices (even REITs' prices) may not appreciate as fast as share prices of companies , it still has a big advantage of providing a regular stream of passive rental income.

If you still do not get the picture, imagine being the owner of several properties and earning a constant stream of rental income every month. S-REITs puts this dream of owning several properties and collecting rental income within your reach (unlike owning several individual properties / apartments in Singapore which is beyond many Singaporeans' reach).

Conclusion - continue to buy REITs on the dip

S-REITs is such an important component in my Portfolio to earn a constant stream of passive income. And I believe it offers the highest passive income among all asset classes. I may be wrong. I will continue to slowly add on more REITs counters or shares each month. Hopefully, one day, I do own enough REITs that generate enough passive income to cover my monthly expenses. I will then become financially free!

Passive Income Trooper on Facebook (like finally)

2016-02-23T20:49:00.003+08:00

Finally, we have a Facebook page. (Shamelessly) Asking the readers to Like the page (the Like button is on the right of this blog). Hope those that have visited this blog over the last 1.5 years will continue to show their support. This blog is about documenting my investing journey and I really hope it could inspire anyone, any Singaporean, to think about investing and their retirement. If there was just one person that started this journey, I would be equally happy.

Thank you all! (Shamelessly again!) Please Like my page and follow my journey!

Letter (to self) to be open on 31st Dec

2016-02-20T16:52:00.000+08:00

I just did my year-end appraisal for 2015 last month. Exactly, a year ago, at the start of 2015, my boss wanted us to write our business and personal goals for the year on a piece of paper and sealing it in an envelope (before passing it to him for safe keeping). He did not want to know the content of what was written. The envelope was handed back to us a year later during our appraisal. I could not remember much of the content in the letter. At that point of time, it was more of a self reflection, Anyway, my boss still do not know the content of what was written. I always thought he had secretly opened the letter.

Self-fulfilling Prophecy

Reading what was written a year ago was a strange feeling. So much had happened in 2015. Some of it was what was expected, other things came as a surprise. Reading my business / career goals I have set myself in 2015 and looking back on how far I came trying to accomplish those goals had a tremendous effect. I exceeded some goals. I felt short in other areas. The letter seem to have a self-fulfilling prophecy effect that directly or indirectly cause my goals to become true.

A self -written letter

This year, I have decided to adopt what my boss did. I wrote my goals and sealed the envelope. I can't wait to open the sealed enveloped on New Year's Eve. I really hope I will have exceeded the goals I have set for myself. The goals include the amount of saving, target for investing (Invested Capital), and some really personal goals I would want to achieve this year.

Feeling excited for 2016!