LifeSapling

November 2016 Portfolio Update!

2016-12-08T16:33:00.003+08:00

Hi all,

Firstly, there was a mistake with the Oct figures. Turns out I do not have as much cash on hand as I thought (-$20k), and my actual portfolio is sizably smaller :( I have updated that post to reflect the correct figures.

November has been a good month, with a splendid holiday to Japan with family. The trip did not cost a fortune, and will talk about it in a separate post in future.

Otherwise, spending has been quite reasonable the past month. Credit card bill increased to $605 due to paying $220 in NTUC vouchers to hit the $500 minimum (and the math-inclined among us would notice the figures don't add up. Yes, I overbought this month due to my poor arithmetic skills sigh).

Bought some Singtel at 3.69 early this month as I felt it was trading at a good price. It will form a decent long-term holding as it derives substantial revenue from other countries and is not overly dependent on the Singapore market. I do not anticipate too much effect on overall revenues even with the entry of a 4th telco.

ASSETS/$K
STOCKS	97.9
INVESTMENT CASH	4.8
EMERGENCY FUNDS	41

LIABILITIES/$K
MORTGAGE	512

MONTHLY INCOME/$K
COMBINED SALARY (TAKE HOME)	6.8
SIDE INCOME	1
DIVIDENDS COLLECTED	0

MONTHLY EXPENDITURE/$K
FIXED EXPENSES	2.6
OTHER EXPENSES	???

Total Portfolio Size: -$368.3k
Total Portfolio Size ex mortgage: $143.7k

Slight improvement from last month, but largely due to the surge in prices recently. We will have to continue working hard to grow this slowly and steadily!

Andohbytheway, mortgage is a killer. Sigh!

Dual-Class Shares in Singapore

2016-11-15T16:55:00.002+08:00

It looks like the authorities will be approving dual class shares (DCS) structures in Singapore soon. This move gained momentum in August with a vote in favour by the Listings Advisory Committee, and was discussed at a round-table discussion between the Singapore Exchange and the National University of Singapore Faculty of Law.

Based on anecdotal evidence and experience, DCS would most likely be approved by the authorities in due time.

Benefits of DCS

Would such a structure benefit Singapore? There are some who argue that having DCS would give Singapore an edge over the HK exchange, where DCS is not allowed. SGX would have the advantage of being the only exchange permitting DCS in the region, and could attract more listings from companies around the region.

There are others who argue that this is beneficial for rising tech start-ups where companies may require capital to grow further, and still allow the founding members to make key decisions for the company without having to focus on short-term gains to appease shareholders. This would allow the founding members to focus on long term growth instead.

Safeguards for DCS

One of the discussed safeguards to protect investors' interests is to make it mandatory for a dual class listed company to implement a code of corporate governance. Another safeguard would be to have independent directors voted in on a one-share-one-vote basis. Yet another proposed safeguard would be to increase investor awareness over the governance structure of companies.

Pitfalls for DCS

IMHO, I am against such a move. I believe that the pitfalls of having a DCS structure in Singapore would be detrimental to the investing environment here, and would further weaken investor interest in Singapore-listed shares.

Presently, all ordinary shares (excluding prefs) have equal voting rights. Despite retail investors holding a minuscule portion of voting power individually, this is commensurate with the amount of financial risk each individual takes when investing in a company. Even with the minuscule voting power, retail investors have the ability to band together, and as their combined financial risk increases, so does their combined voting power.

DCS would serve to destroy this. For a company with Class A ordinary shares and Class B shares with 10x voting power, having 10% of total company shares as Class B shares in the hands of founders would give them majority voting rights in the company. This would mean that with a 10% financial stake in the company, the founders would be able to enjoy full autonomy over most decisions in the company. The graph below shows how the voting power of higher-voting shares increase as the percentage of this higher-voting share increase with respect to the total company shares:

There would be little to prevent them from making decisions beneficial to them yet detrimental to the company, such as paying themselves exorbitant management fees. Such a structure would have the potential to fleece the investing public of their money. An example is given in Investopedia's article on dual class shares, where former CEO of Hollinger International, Conrad Black, controlled all of the company's class-B shares, which gave him 30% of the equity and 73% of the voting power. He filled the board of directors with friends, and paid himself huge management fees, consulting payments and personal dividends. Holders of the publicly traded shares were powerless to stop him, and the company suffered under his leadership, eventually going bankrupt.

The situation is even more acute in Singapore, where there is little recourse for retail investors when rogue companies make wanton use of public monies. Investor activism is not strong in Singapore, and we regularly hear of stories of retail investors losing much of their hard-earned savings to companies with poor governance (the point being that the investors possibly could/should have raised the alarm as the company goes in a downward spiral). With poor support for retail investors, companies with malignant intent could easily get away with daylight robbery of the public.

Failure of proposed safeguards

The proposed safeguards are a joke. Having a code of corporate governance sounds like using guidelines to govern citizens' behaviour. The proof of the pudding is in the tasting. There has to be suitable recourse and restitution for people invested in a companies in which they have little voting power. Or better yet, we can avoid the problem to begin with.

Independent directors voted in on a one-share-one-vote basis to keep watch over the company management is not an ideal solution. This is effectively control by proxy. However, when it comes to my money, I would rather control it personally than to hand it over to someone I do not know and have no say over. Moreover, when was the last time you've heard on the news of a director at loggerheads with a company's management?

And unfortunately for us, retail investors in Singapore do not typically keep ourselves well-informed. We have been brought up to trust the authorities, and we keep this mindset when investing. We do not question management intelligibly enough, and are more than happy to stay in the sidelines to avoid conflict. This is unlikely to change when we have DCS-listed companies in SGX.

How will this change affect us? There are generally 3 main parties involved, the founders/management, retail investors, and institutional investors. For institutional investors, this would represent a tremendous loss of voting power for them, and it is likely that they would stay away from DCS-listed companies, at least for the beginning. Therefore, it would appear that these lower-voting shares would be marketed towards the public, and the public would be over-represented in exposures to these new shares. In the most optimistic picture, management would wield their voting power appropriately, companies would grow in the long term, and all would be rosy when institutional investors decide to grab their slice of the pie. However, I am a little more pessimistic about the outcome...

What is your take on DCS in Singapore? Are you supportive of it?

October 2016 Portfolio Update!

2016-11-04T10:47:00.000+08:00

Apologies for the lack of updates! Life has been busy, and things have been relatively quiet on the personal finance side.

During this period, there have been a few occasions when prices for some stocks dipped enough to be tempting. Examples were Keppel Corp, M1 and even DBS. However, I held back as there were circumstantial reasons to avoid each of these stocks individually, and there is too much uncertainty with potential downsides outweighing potential upsides at this point in time. I've actually reduced my portfolio slightly by selling off CCT at 1.635 as it provided a 15% price increase over buy price, which should easily compensate for 2 years of estimated dividend income during which I may re-enter at a good price.

An update of my current portfolio:

Assets/$k
Stocks	81.7
Investment CasH	12.2
Emergency Funds	41

Liabilities/$K
Mortgage	513

monthly Income/$K
Combined salary (take home)	6.8
Side income	1
dividends collected	0

monthly Expenditure/$K
fixed expenses	2.6
Other expenses	???

Therefore, total portfolio size is -$378.1k, or $134.9k excluding mortgage, of which 9.04% is in cash.

Cashflow is $5.33k per month. We will need to keep better track of our other expenses.

As the holiday season approaches, we would like to wish everyone a happy year-end! We will be going to Japan for a short holiday trip for the coming week. This will be a breather from work, and good chance to relax and enjoy the good food and weather there.

Unhappy Singapore employees!

2016-09-07T07:00:00.000+08:00

According to the Randstad World of Work Report which surveys employees from Singapore, Malaysia, China, Hong Kong, India, Australia and New Zealand, Singaporean employees rate at the top of the "unhappiest" ranking. Moreover, 64% plan to leave their current job in the next 12 months.

Is this surprising?

I think anecdotally, in the mornings when I take the MRT, I can clearly see the general mood of the crowd as we hustle to work. The atmosphere is grim as everybody tries to avoid each other's faces and look busy, most opting to glue their eyes onto their handphones.

It is not difficult to tell that we are a unhappy lot!

But why is this so?

Many of us would throw out the usual suspects, namely, long work hours, horrible bosses, meaningless work and office politics. I am sure we are all familiar with these, and there is not need to elaborate on them.

But must this be so?

There is a popular acronym in the world of Personal Finance, which is FIRE. This stands for Financial Independence, Retiring Early, and embodies the concept of achieving sufficient passive income from assets to cover all necessary expenditure, and thereafter being able to retire, or choose to leave work if one so chooses.

Are you trying to be on FIRE?

I am unashamed to say to I am trying my best to reach this goal. The reasons are as such:

I was introduced to the world of personal finance by the very concept of FIRE. The idea intrigued me, but I did not believe it made sense, or was even possible. However, the math was indisputable, and I learnt the importance of having financial literacy that day.
I work in an industry where 80+ workweeks are common and 100+ workweeks are not unheard of. This is a line of work where not having a single day off in 3 weeks is simply an event one shrugs off. While I am sure there are those who may face similar challenges in their workplace, wouldn't we all wish to have a choice otherwise? I believe that time is worth so much more than money as time is a very limited (and unpredictable) asset. I would prefer to invest this limited asset with people who matter to me. To preserve more of this limited asset of time, achieving financial independence is my chosen strategy.
Having a family changes your perspective on life. No longer am I aiming for the extra dollar to pay for an extravagant lifestyle. Rather, I would seek additional income only for the sake of feeding my family, and enjoying their company. Hence, I do not seek to climb to the very top of the profession anymore (with the attendant sacrifices), and would prefer a conservative strategy to live within my means.

To achieve this goal, there are sacrifices to make as well. As a family, we will choose not to spend lavishly on restaurants frequently, go for exorbitant trips to exotic places and buy unnecessary but highly desirable items for ourselves such as a car. Instead, we choose to have a simpler lifestyle, occasional meals in mid-tier restaurants, conservative trips perhaps once or twice a year (coming up in Nov!) and saving regularly. With this, I hope to progress on my journey to be on FIRE.

Are you unhappy at work and would like to consider an alternative? Would you try to be on FIRE?

Cashflow Quadrant

2016-09-05T07:00:00.000+08:00

I spent the weekend reading through Robert Kiyosaki's Cashflow Quadrant. It was an awesome read, and very captivating, and there was no difficulty coming back over and over again to continue reading until I've completed it cover to cover.

I was inspired to read this book from millennial-revolution, who "LOVED" this book.

In the book, Robert identifies that there are 4 groups of people, namely, the E (Employee), S (Self-employed, B (Big business) and I (Investor), with E and S on the left side of the quadrant and B and I on the right side. These groups of people derive their income from different sources, with E and S working hard with their own effort and time to mind other people's business, while B creates the business and I uses money to grow money. The author also goes on to illustrate the different characteristics of the people in the different groups.

The book strongly emphasizes the different approach the groups have towards security and risk. In particular, the E and S groups prioritize security highly, while the B and I groups prioritize freedom and risk-management. The author also notes that the government treats both groups very differently, with oppressive tax regimes for the left quadrant and numerous tax breaks and exemptions for the right.

The author also advocates financial literacy, encouraging people who wish to transit from the E and S groups to the B and I groups to educate and change themselves, in the process of BE-DO-HAVE. Finally, he gives a short course on the baby steps one can take to make the move from the left to the right, including knowing oneself better, managing own cashflow, seeking good mentors, mastering disappointment and keeping the faith.

In this book, Robert Kiyosaki showcases his ability to present his ideas in a manner which is simple for his audience to follow. These ideas are then developed into more complex concepts, and illustrations are provided to present these concepts graphically.

One part of the book that stuck greatly with me was how differently we're treated by the government. The book shows that the cashflow for the left group goes as follows: Income -> Taxes (Income tax) -> Spend, while the cashflow for the right group goes as follows: Income -> Spend -> Tax. This struck me particularly because I've understood EBITDA in income statement for a period now, but the significance of how tax is calculated after spending in a business versus how we are taxed on our incomes as employees did not occur to me until I've read this book.

It was an inspiring book, and I hope to continue my reading journey as I seek to further educate and improve myself. I do encourage those of you who have yet to read this book to consider picking this up (perhaps in the library?), as it is an easy read and there may be good ideas that you may want to pick up and use.

Fixed Expenses

2016-08-31T09:55:00.000+08:00

I've been inspired by 15HWW to calculate our fixed expenses every month. This is part of the ongoing effort to understand our expenses more, so as to lower any unnecessary expenditure if possible.

This is important as basic math dictate that income does not matter towards financial independence, but savings rate does. Millennial-Revolution makes the math concise and upfront, which is helpful for understanding how she gets her figures and conclusion.

Of course, it can be assumed that there is a minimum expenditure that we have to make monthly to keep our bodies alive and fulfill our obligations. Therefore, this is the sum that we will seek to clarify and reveal to ourselves today, so as to better understand our financial standing.

In my case, I will define fixed expenses as regular expenses that are very unlikely to change after two years. This will be separated from semi-fixed expenses, that are defined as expenses that may change every year or 2 years (especially for telcos, taxes). Other expenses would be variable/discretionary expenses, which will be another post for another day.

Fixed Expenses

Mortgage Loan by Cash	$ 213.00
Mortgage Loan by CPF	$ 1,880.00
Conservancy Fee	$ 90.00
Term Insurance	$ 16.00
Whole-Life Insurance	$ 216.79
Total	$ 2,415.79

Semi-fixed Expenses

Taxes	$ 117.22
Internet	$ -
Handphone (Mr)	$ 35.00
Handphone (Mrs)	$ 35.00
Total	$ 187.22

To be clear, the internet bill is $0 as it was paid upfront.

Therefore, our fixed and semi-fixed expenditure monthly come to a total of $2603.01.

The Rule of 25, which is used to estimate the size of portfolio we'll need in retirement by multiplying your desired annual income by 25 (with the assumption of a conservative 4% return on the portfolio), can be used here. We like to adapt it as the Rule of 300 (300 = 25 x 12), as 300 is an easier number to work with, and regular expenditure is often calculated on a monthly basis.

Using the Rule of 300, our minimum portfolio size for our fixed and semi-fixed expenditure would be 300 x $2603.01 = $780,903.00

Woah! And this amount will grow as we take inflation into account!

A closer look at the figures show that the majority of our fixed expenses comes from our mortgage. Housing loan is truly a killer!

Another way to look at this is that we are still very far from reaching our portfolio targets...

Dividends

2016-08-29T09:50:00.001+08:00

Seeing as how we've collected all the dividends for this year, it is a good time for an evaluation of how much dividends our portfolio generated for this year.

Dividends for the year: ~$1670, approximating $139 per month

This is taking into account that the dividends for DBS is not in yet, but we're intending to take scrip for that counter anyway. Also, we missed out on the round of dividends in May.

We will be channelling the dividends back into the investment account for compounding when we find opportunities.

Health

2016-08-25T09:17:00.000+08:00

Hi all!

I was sick with fever recently. This, together with muscle aches, served as a good reminder to our own frailty. Life is fragile and we must treasure our health when we still have it!

Health is something that many of us take for granted everyday. This morning, you will most likely have woken up in the pink of health, and did you stop to be thankful that there are little to no impairments to your physical faculties? Indeed, as you hustle and bustle through another busy working day, there will be many things to worry about, but keeping healthy is unlikely to be a major concern for most.

Strangely, probably all of us know how to keep a healthy lifestyle generally, and rank it as something important to us, yet few put in much conscious effort to maintain it. This is evident by:

Obesity rate in schoolchildren rising from 10% in 2000 to 11% in 2013 and 12% in 2014.
Singapore has the 2nd highest diabetes prevalence among developed countries, rising from 4.7% in 1984 to 10.53% in 2015. This is only second to the USA

So, how does this relate to this blog? First, both health and financial knowledge are topics that the younger generation tend to give little thought to. Most do not take the time and energy to read up and gain knowledge on these matters. Despite acknowledging that keeping healthy is important, and working and striving hard to earn extra, many would consume excessive calories, and fritter cash away.

Secondly, financial health is a form of health. Many (I hope!) would agree that accumulating money is not an end-goal in itself. A goal that many may like to aim for would be good health. defined by the World Health Organization as "a state of complete physical, mental, and social well-being and not merely the absence of disease or infirmity", and I believe that financial stability serves as a support for this. However, one can easily see that being materially rich will not bring health by itself if one's health is poor.

Thirdly, being unhealthy is expensive! It is commonly said here that one can die in Singapore, but one cannot fall ill! This saying pays tribute to the high cost of healthcare in Singapore. Now, imagine the costs if one has a chronic problem, requiring regular medication and visits to the doctor. This may be little thought of and not planned for when saving for retirement. Moreover, poorly managed chronic conditions can lead to events such as a heart attack or stroke, which costs us further in health, and financially as well! A short stay in the Intensive Care Unit (ICU) and subsequent recovery in the general ward can easily cost up to a few thousand dollars.after subsidy.

So while we work on increasing our financial literacy, we should always keep in mind the purpose of it and not neglect other aspects of our lives that are at least as important.

Shifting house

2016-08-05T10:13:00.001+08:00

I've finally shifted over to my new place!

It has been a very tiring week. We elected not to engage a mover as we did not have many large, heavy stuff to move over, such as mattresses, TVs and other household appliances. Therefore, we made many trips to and fro, shifting our items in batches. At long last, most of our essential items have been brought over and we are able to move in permanently.

With most of the large-item purchases made, we expect that spending in August should start tapering down. There are still appliances that we will still need soon, such as a rice cooker and vacuum cleaner. Hopefully, after spending for these items, we will have some savings leftover in August.

At this point in time, we are significantly behind our financial goal for this year. We will have to aim to be more prudent for the latter half of this year to get back in track. To do this, we have been inspired by 15HWW to classify our expenses into fixed expenses vs discretionary expenses, and track it as such.

Meanwhile, the first round of dividends have mostly been declared! A small amount perhaps, but still better than it has been ever. Will be using the dividends as further ammo, and reinvest it to allow compounding to work.

SGX Outage

2016-07-18T15:54:00.000+08:00

As many would be familiar by now, trading at SGX halted at 11.38am on last Thursday.

It is reported that the cause was due to a "hardware issue".

However, as a long term investor, the outage did not bother me one bit. While i kept abreast of the news, it mattered little to me whether there was active trading or not.

Of course, this does not diminish the pain of shorter-term traders who live by every tick of the market. I can see how the exchange shutdown will hurt them. However, this method of investing does not square with my current investing philosophy.

As Warren Buffett famously said:

Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.

Are you confident with your purchases?

First CD!

2016-07-08T18:31:00.000+08:00

KSH Holdings Limited made the announcement today that it will be distributing a final dividend of $0.015 per share and a special dividend of $0.005 per share. XD would be 11/8/16.

At an average buy price of about $0.55, this would make it about 3.6% dividend yield.

And happily, this is my first declared dividend! Another milestone achieved! :)

Step-by-step we progress...

June 2016 Report Card

2016-07-04T11:26:00.003+08:00

Apologies for the lack of posts. I was struggling with an examination recently and that really sucked the life out of me.

Exams, you say? Yeah... such is life.

However, the exams are over!!!

Yaaaaay!

As we transit into the 2nd half of 2016 (how quickly time flies!), I would like to share a short report card on my current holdings, taken from the excellent site SGXcafe.com:

Currency	# Stocks	Day Change %	P&L %	P&L + Dividends %
SGD	4	0.53%	2.28%	2.28%

Name (Currency)	Port %	Current Yield	Div Strength	Avg Price	Close	P&L %	P&L + Div %
STI ETF (SGD)	60.84%	3.46%	N/A	2.835	2.89	1.95%	1.95%
CapitaCom Trust (SGD)	13.53%	5.75%	81.30%	1.412	1.5	6.20%	6.20%
KSH (SGD)	12.99%	5.65%	67.29%	0.55	0.54	-1.76%	-1.76%
OCBC Bank (SGD)	12.63%	4.11%	94.16%	8.394	8.75	4.24%	4.24%

And a pithy few hundred in cash.

Overall, I'm quite pleased with the results so far. This little start of a portfolio has endured its first (mini-)crisis and emerged reasonably unscathed.

Regrettably, I was unable to average down some of my holdings during the Brexit sell-down. After the initial purchase-burst in May, there was minimal savings that could have been used to take advantage of the low prices. Again, this is (largely) due to renovation and household items. Admittedly, there was some lifestyle inflation this month as we spent more in restaurants and an expensive NTUC trip. As it is, my credit card bills for this month may cross $3k. Sigh...

Goals for second half of 2016:

1. After settling down, I hope to be able to start saving again, as per usual habit. It would be great not to have to look at 3-4 digit spendings every few days or so. Still debating whether we should purchase a TV hmmm......

2. I would also hope to start building some holding cash aside from my emergency funds (typically referred to as warchest). The recent market dip has taught me 2 things (i) Holding power is important, one should not be forced to have to sell your investments, especially during times of crisis (ii) Opportunities do not come knocking frequently. Take advantage of them when they come.

3. Related to the above point, purchase appropriate insurance for the missus, and getting a better grasp on mine. We have been procrastinating this for almost half a year. It is time to figure out what we are covered and how much we are paying for this cover. Yes, I have been paying for insurance without knowing what I am covered for (at an expensive cost per month!) as many of the plans were passed to me from my parents when I started working. And for her, I believe she has been procrastinating as well (typical Singaporeans we are). I think it is time to sort this out.

4. I hope to blog more regularly as well. As mentioned before, this blog helps to record my thoughts and remind me of my own plans as I start to take charge of my own financial health. I hope to be able to look back some time down the road, and identify my strengths and learn from my mistakes during this journey, and be able to educate my daughter as she begin her own journey as well.

FLT IPO and Brexit

2016-06-17T19:17:00.001+08:00

Frasers Logistics And Industrial Trust just closed its IPO on Thursday 12pm.

This is a pure-play Australian REIT which offers the following:

Majority (60%) free-hold
Relatively long WALE
Properties are mostly young

However, there are the following considerations that we made as well:

Exposure to forex risk - AUDSGD is relatively low currently
Pricing of 2.9% above book value
Australia's industry is currently at a peak level. Is this sustainable?

With the following considerations, we decided not to apply for this IPO as there are REITs in Singapore that offer good historical yields, good management, and at considerable discounts. It would seem wiser to invest in properties that can be seen and evaluated more accessibly, and at a discount, than something that is relatively more expensive, and harder to evaluate.

Moreover, as per my portfolio on SGXcafe, REITs currently form 13.12% of my portfolio, which is already comfortably within my planned allocation which can be found here. I have plans to diversify my REITs holding slightly in the near future, but I would think that adding a foreign REITs to my portfolio would complicate portfolio rebalancing.

The referendum for Brexit will be held next week on 23/6/16. With the numerous events recently, markets would likely be extremely volatile, and it would seem to be a good time for bargain hunting. It is unfortunate that I am already largely vested in with not much cash holdings to deploy, so I will likely be sitting this one out until the dust settle.

Even though Brexit would probably cause turmoil in the market, I do believe that it is the best decision the UK can make for itself.

It appears that EU is evolving gradually into a financial (mostly done?), political (partially done?) and military (early traces?) union. With such a system, UK with its numerous opt-outs would likely be playing a lesser role anyway. They would face the difficult choice of a closer union (and giving up of more sovereignty such as the pound), or to be tied to a union it has little to no influence over.

The EU also appears to be inherently undemocratic. It is difficult to support a supranational institution that can determine the policies of a country without the ability to put it to the test with an election. Such an institution will grow corrupt and self-serving. As the adage goes, power corrupts, and absolute power corrupts absolutely. With no one to answer to, the bureaucrats would only answer to each other, and would most definitely be looking out to their own interests as top priority. Initially, the policies drafted may benefit the constituent countries, but when the rot of corruption sets in, as it will undoubtedly do so, there will be no escape.

Nevertheless, I do suspect that the Bremain camp would likely prevail in the end as the undecided voters would likely vote for status quo, if we consider previous experience.

Of course, the above is only my personal opinion. Feel free to disagree!

Next week would be a very interesting week!

Financial Goals

2016-06-10T15:22:00.000+08:00

It's been quite a while since I've posted. My apologies!

In the last 2 weeks, I've made a few other purchases, namely, OCBC at 8.38, KSH at 0.550 and Keppel Corp at 5.3.

Subsequently, sold Keppel at 5.55, only to see it rise further to 5.9 on that very same day. Stuff happens.

So today, I shall reveal what is my financial goal for the future. This will be a conservative estimate with the following assumptions:

Only my take home income is considered for salary, with no future increase
Assuming current spending for the future*
Assuming no major tragedies or necessary spending occurs
Portfolio grows with 4% capital gains/dividends each year
No inflation is accounted for (since salary does not increase as well)

*: This will be a difficulty in the future as my daughter grows up, as spending on her may increase significantly

Based on these estimates, I should manage to save $1,800 every month, which should make $21,600 every year.

With a current portfolio of about $80k, a simple calculation on excel shows:

Year	Portfolio	Dividends based on 4% of portfolio	Monthly Spending based on dividends
2016	$80,000.00	$3,200.00	$266.67
2017	$104,800.00	$4,192.00	$349.33
2018	$130,592.00	$5,223.68	$435.31
2019	$157,415.68	$6,296.63	$524.72
2020	$185,312.31	$7,412.49	$617.71
2021	$214,324.80	$8,572.99	$714.42
2022	$244,497.79	$9,779.91	$814.99
2023	$275,877.70	$11,035.11	$919.59
2024	$308,512.81	$12,340.51	$1,028.38
2025	$342,453.32	$13,698.13	$1,141.51
2026	$377,751.46	$15,110.06	$1,259.17
2027	$414,461.51	$16,578.46	$1,381.54
2028	$452,639.98	$18,105.60	$1,508.80
2029	$492,345.57	$19,693.82	$1,641.15
2030	$533,639.40	$21,345.58	$1,778.80
2031	$576,584.97	$23,063.40	$1,921.95
2032	$621,248.37	$24,849.93	$2,070.83
2033	$667,698.31	$26,707.93	$2,225.66
2034	$716,006.24	$28,640.25	$2,386.69
2035	$766,246.49	$30,649.86	$2,554.15
2036	$818,496.35	$32,739.85	$2,728.32
2037	$872,836.20	$34,913.45	$2,909.45
2038	$929,349.65	$37,173.99	$3,097.83
2039	$988,123.64	$39,524.95	$3,293.75
2040	$1,049,248.58	$41,969.94	$3,497.50
2041	$1,112,818.53	$44,512.74	$3,709.40
2042	$1,178,931.27	$47,157.25	$3,929.77
2043	$1,247,688.52	$49,907.54	$4,158.96
2044	$1,319,196.06	$52,767.84	$4,397.32
2045	$1,393,563.90	$55,742.56	$4,645.21
2046	$1,470,906.46	$58,836.26	$4,903.02

In other words, I should minimally work towards reaching a portfolio of $104.8k by the beginning of next year.

Target by 2017: $104.8k

Current Portfolio size: $81.4k

Percentage achieved: 5.645% (calculated by 1.4/24.8 * 100%)

Oh dear...

That being said, we have yet to save significantly for this year as we are moving towards our new apartment this year. Shifting to a new place is expensive business! We are still finishing up on payment for our contractors, have yet to purchase our fridge/washing machine etc, and have yet to complete payment for our mattress. All these are costing a bomb and placing a huge dent on our saving rate.

Hopefully, this is only considering the worst case scenario. Considering savings from my wife's income, plus income increment over the year, we should aim to hit and surpass our targets yearly.

Will have to continue to work harder!

Green!

2016-05-27T20:09:00.004+08:00

At long last, my portfolio is green!

It definitely took quite a while, but I guess learning to have patience is important on this journey.

I've also managed to catch OCBC at 8.38 this week too.

So... what are my plans for the coming months?

In view that prices might be on the upward trend, I might focus on saving more money for this period and only investing on/off for now.

After all, for this period in time, I expect most of the growth in my portfolio to be largely from savings, and minimally from the dividends/growth.

Patience is key!

Manulife US REIT IPO

2016-05-20T18:17:00.003+08:00

Was watching with interest as this new REIT counter launch this week.

This is the first IPO for SGX mainboard this year.

I was deciding whether to subscribe to it for quite a bit. Did a brief research on them and did not find anything too unsettling.

However, I decided not to go in in the end due to the following considerations:

If I am planning to subscribe to this REIT, the intention would be to hold this for a long time, say few years at the minimum.
This would expose me to forex risk, which isn't too bad as the SGD is likely to depreciate against the USD in the near future with our new monetary policy.
However, looking at the risk of US election coming this November, there is a very real risk of a market shock should one of the contenders become the POTUS.
I am not familiar enough with the US market to mitigate against this risk.

Hence, I decided to sit it out and focus on looking through local investment opportunities for the moment.

There is still so much to learn!

Being positive

2016-05-13T18:43:00.002+08:00

I cannot say it is without a tinge of sadness that I see the STI is going down and down. This is especially so after you are vested.

Worse, the temptation to trade gnaws in the background, thinking that one can easily buy at current lows and sell. All this without doing proper homework.

I must consistently remind myself that I should not be treating this as a playground, and do the hard work of studying and understanding what I am investing in, and put money wisely into places which I believe in.

It is easy to lapse into thinking that I can outsmart the market.

That being said, it is Friday!

There's been some talk here that some have noticed more younger people are taking up investing, and have their theories on the phenomenon.

It may very well be true that the younger generation (getting hard to think of myself as young at this age though!) desire instant gratification.

Am I seeking a way out of traditional employment?

Being really honest with myself, there is no doubt that I have serious reservations about my current profession. As my friends and colleagues relate their experiences to me, it is easy to notice a strong undercurrent of dissatisfaction in many of these conversations.

Or perhaps, it is just another manifestation of the Singaporean penchant for complaining!

Unfortunately, it is difficult to share these reservations with most people outside the profession. Most would simply brush it off as "You've had it made already!" without seeking to understand more.

Nonetheless, I do see many positives in my current job. In fact, I can say that I generally like where I am like now.

Which is why I will probably stay where I am for now.

But I am under no illusion that investing will be a quick get-rich scheme. Thankfully.

In fact, thus far, I've only enjoyed paper loss. Have yet to see green in my portfolio.

But I understand the importance of investing. I understand that that will come with risk.

And I am prepared to size that risk, and take it.

And I look forward to the day, perhaps 3 decades from now, when I can look back at myself today and say "I am glad I began this journey".

And I am glad my wife agrees with me.

The thoughts of a new investor

2016-05-10T16:07:00.000+08:00

So... I've taken the first steps and invested for the first time, and bought the STI ETF at the beginning of the month.

I decided not to do any DCA for the initial investment as I knew if I delayed or took my time putting in the money, I would naturally try to time the market and will never commit myself.

So I took the plunge...

And naturally, the market immediately turned against me.

Watching the STI drop recently reveals that I am not as detached from my emotions as I initially thought. It was with some dismay that I watch the lines drop lower and lower.

Therefore, I must remind myself that having the right psychology is most important.

I am not a trader.
I am in for the long haul.
I am not as detached from my emotions as I think I am, hence, I must keep myself in check.

There is the reassurance of having a small amount of cash still on hand, to be put in when appropriate.

Meanwhile, I'll be reading up on some investing books to understand myself and the market better.

Anyway, my portfolio can be seen at SGXcafe, for those that are interested. Of course, it is very simple for now.

Investing in... what?

2016-04-29T18:30:00.003+08:00

So, I have yet to take my first step into investing.

At the moment, everything is more or less set up. I have a broker account, a CDP account, and the money ready.

Due to a simple oversight, I forgot to bring along my security token and as a result, I am unable to make my first step into investing today before the long weekend.

Therefore, I will make a theoretical timeline of how I am intending to invest. Hopefully, this will serve as a reminder and guide for my wife and myself as we progress along.

We currently have a sum of $80k to start off with. With this, I am intending to put $50k into the STI ETF to start off with.

Therefore, we intend to begin with this:

STI ETF: 100%
Warchest $30k

Thereafter, with our regular savings, I intend to purchase in batches till I achieve this:

STI ETF 40%-60%
REITS 0-20%
Bonds ETF 40%
Warchest $30k

I am still deciding how much to put into REITS, seeing as it is more defensive in nature. Should I take the allocation for REITS from the bonds portion instead of taking it from the STI ETF portion?

Saving for a rainy day

2016-04-28T08:55:00.001+08:00

So we previously talked about savings for wealth growth.

However, having a sum set aside for unexpected events is at least as important, if not more so.

Surprisingly, many Singaporeans don't save, as reported a few years ago.

Why is having a sum of money for emergencies important? I'd like to give a few reasons:

Emergencies are probably unexpected and urgent. It can be sudden ill health, accidents, fire, unemployment etc. In such a time, the need for ready cash is sudden and substantial, and dipping into the remaining cashflow for the month is probably not going to be sufficient. Therefore, having a sufficient stash put away for such situations is necessary.
Having a sum saved for unexpected events keeps monthly cashflow steady. Even during an emergency, there are still regular payments that needs to be paid, such as mortgage, bills and taxes. One would not wish to be a situation where he has to default on these payments which may lead to further problems
Most importantly, it steadies the mind. With an emergency stash, one does not need to worry so much about not being able to feed oneself during such unexpected events. This will allow him to be less inclined to make foolish decisions in times of crisis, as he will be less panicky, having the reassurance of a sum to tide him through.

In fact, due to the above reasons, there are many who would recommend saving for a reasonable emergency sum first before seeking to pay off all debts.

How much is enough?

Many recommend having six months of monthly salary locked away as the minimum sum, with a view of holding a one-year stash value in time to come when one is more secure. I believe that this is a reasonable value, but I will be modifying it slightly for my own context.

For myself, I will be keeping $30k for my initial emergency stash, which will be locked away as a deposit in the bank. This is not quite 6 month salary level for our family, but I believe it is sufficient for now.

Firstly, it is fortunate that my job is relatively stable. Despite the poorer upcoming economic outlook, I do not expect to be unemployed anytime in the near future, and this would allow a slightly riskier emergency stash for the moment.

Second, as we tighten our family spending, we are able to save more. For now, this savings will be going into investment purposes. However, in times of crises, I should be able to divert this sum into whatever emergency it may be.

Third, besides mortgage, we do not have any debt. Using our past savings, we were able to pay off our renovations, housing spendings and credit card bills without getting a loan. Hence, our liabilities are minimal and we are able to take more risk.

As we proceed on in our financial journey, I do aim to increase this amount slowly but surely. As it is easy to forget, I will have to keep reminding myself of this periodically.

Busy busy busy!

2016-04-25T22:46:00.000+08:00

Today, we settled most of the remaining obstacles to completing our renovation. We decided on the design we want for our towel holder and toilet roll holder, and will purchase these probably tomorrow.

Such busy days recently getting the bits and pieces in place for our new apartment. I hope all this work will finally be rewarded when we can move in!

Meanwhile, we are still discussing how we will be splitting our cash assets into the various segments for different purposes. This is our first time doing it, and it is such a challenge to decide how to allocate everything appropriately!

HDB loan

2016-04-22T23:50:00.000+08:00

Much ink has been spilt over our housing loan in Singapore, which is not surprising considering that the housing loan is probably the singular largest debt most Singaporeans will get into in their lifetimes. Most Singaporeans would simply max out the amount of CPF money they can draw on to pay for the house, leaving the OA basically near flat zero for thirty years. This includes yours truly.

There are also those that would question using CPF to pay for housing.

I was giving this some thought when I realized that this housing loan is not as cheap as commonly thought.

Considering that the HDB loan is currently pegged at 2.6%, the interest on the total loan is at minimum 2.6%.
By drawing the money out of CPF OA, this portion of money does not earn the baseline 2.5% (or 3.5% for the first $20k!) interest. Instead, at the point of selling the property, one would have to put back the principal + supposed accrued interest back into CPF. With the assumption that the money in CPF is still mine, and the money is safe, we can take it that the accrued interest paid is effectively paid to ourselves. However, this does not negate the fact that for this portion of money, I will have to pay the interest to myself instead of the government paying it for me.

Compared to person A who uses his current capital to pay off the mortgage, I am effectively paying a minimum of 2.6% + 2.5% = 5.1% additional interest! If I take into account the addition 1% for the first $20k of CPF, this percentage would go even higher!

In order to avoid making a huge loss here, whatever I invest in will need to grow by a minimum of 5.1% in order for me to simply break even!

Since signing the papers on the fateful day last year, I have the impression that the loan was only 2.6% interest rate!

Of course, there are advantages to keeping cash on hand. Appropriate investment will grow in a compounded manner while the interest on the debt will not as long as payment is made regularly.

Oh dear...

On a side note, I started on the book "The Intelligent Investor" by Benjamin Graham. It is proving to be an interesting read.

Financial goals in life

2016-04-21T19:35:00.002+08:00

Everyone knows that goals are important. Without goals, one loses purpose in their daily activities. Without goals, there is no focus, no energy, no drive.

This applies to the financial dimension as well. I'm surprised that not too long ago, my financial goals were so limited in scope. To be sure, I was servicing a significant debt, and I gave minimal thought to my money except to repay that loan.

So, what are my financial goals?

I come from humble origins, staying in a simple HDB flat from young. Coming from a single income family, we live comfortably, but not extravagantly. Meals are home-cooked food, and overseas holidays usually once every few years.

Upon graduating, I saw myself simply working to make ends meet. In my mind, work was absolutely necessary to bring food to the table, and this will need to continue as long as possible till retirement or even after.

Therefore, even today, my financial goals are simple:

To live thriftily, and save amply (how much to save?)
To invest my savings wisely into instruments (what instruments?)
To save enough for retirement (how much is enough?)
To have sufficient to support my children in future if possible

To be frank, I am just beginning my journey. All I have is a stable job, a small amount of cash and zero investment vehicle.

But I have something so many do not, from past and present - the ability to find information at my fingertips, at the click of a few buttons.

As such, I seek to share my journey with you. There may be some of you who are also just starting out, and wondering where to go. Not to fret, I am in THAT situation right now. Join me as we strive for a better future.

Savings

2016-04-20T16:42:00.004+08:00

In my previous post, I learnt that having substantial savings is key to financial stability. Having looked at my family’s finances, I am starting to work out a budget that is sustainable and will achieve my goals.

So firstly, looking at cash inflows:

My wife and I have a combined monthly income of $8.5k, and after deducting CPF contributions, a take-home pay of $6.8k. According to this article, this puts us just under the median household income in Singapore in 2015. I am thankful that we have stable jobs to put food on the table.

Now, for expenditure, I’d be the first to admit that we were rather profligate with our spending for the longest time. Having regular dine-outs and travelling appear to be our biggest weaknesses. No doubt, travelling keeps us together as a family, where we get to spend time together without any work distractions or pressure, and eating out together is enjoyable, especially after stressful days.

Understanding this, we discussed and are now striving to keep spending to a more sustainable level. What are some of the changes we made?

We choose to eat at cheaper dine-out areas more regularly, such as hawker centres, where previously, we would frequent restaurants whenever we desire.
We have not made plans for the next holiday overseas, unlike previously when we would plan for the next holiday immediately after the previous one comes to an end.
We are striving to take the taxi less often if unnecessary, opting for public transport.
We record our spending so that we are aware of where our money go to monthly.

We are hoping that with the above changes, we will be able to reduce unnecessary consumption and save the unneeded spending. These are early days still, and we are only just beginning our journey!

Asset growing

2016-04-18T19:53:00.003+08:00

As mentioned in a previous post, I want to grow my assets and pay off my liabilities as best as I can. How would I go about it?

What are some get-rich-quick schemes that are popular ?

Gambling?
Stock market?
Buy and sell property?
Throw a coin into the wishing well?

I must be thankful that one of the earlier reads I did was this post from SG Young Investment. In it, he convincingly argued for saving with a purpose. Namely, if one can save 75% of his income and invest it for 4% dividend yield, the dividends generated would be able to cover his expenditure in 7 years time.

Hence, the key to financial stability lies in consistent and substantial savings!

Analysing other get-rich schemes, they are unreliable and fluctuating, and should not form the backbone of my financial future. In other words, it is not wise to depend on them for something as important as my financial future.

And I don't advocate gambling!

Saving aside a portion of my salary regularly is something that can be done with good budgeting and planning. It is generally reliable and it promotes a good habit of not squandering wealth, and there are times I am surprised where the money all went to every month.

However, it does take a lot of discipline to record my spending diligently. There are also hiccups and unplanned-for spending that does make the budget record look awry. For example, as mentioned before, I will be moving to my new apartment soon, and am in the process of purchasing household appliances. This has easily wiped out all of my salary and savings for this month, and made a sizable dent in my savings.

The difficulties of keeping to a budget!

PS: The place I mentioned in my last blog post here is Nemuiro Hanamaru, located in KITTE at Tokyo main station. This and the aforementioned post are NOT sponsored posts.