Wednesday, February 21, 2018

Are Your Friends or Families Supportive of Your Early Retirement Goal?

Early retirement is often a key word that is casually used in a conversation that interchangeably means the same as being financially independent.

For sure, the community knows we are not talking about a real time retirement that sits away your idle time staring at blank space.

Early retirement, until today, remains a relatively vague concept that most people on the street finds it unfamiliar.

When I started writing my first few posts on this blog about 8 years ago, it was a relatively new concept to the scene. For sure, there were some early warriors who were even earlier than me on this path and are now enjoying the fruits of their hard work.

But the community was not that crowded.

As years go by, you can see the community started to grow, including younger folks at the age of 18-19 who are convinced that this is the right goal for them.

One example is Sleepydevil, our own representative of the youngest folk in the small community.

That is generally a good sign, maybe not for the economy, but for the community.




Friends

Throughout these years, I've met with many new friends and received countless emails from peers of different ages of different groups asking about directions and priorities they should take.

I have been very careful in sharing and writing because I do not want to hardsell the idea of passive income, including laying on the beaches, sipping pina colada, countless traveling and all those stuff.

I've always believed that a person who's ready to take on the idea and concept of financial independence is a person that is ready on mission.

The next few years path is going to be rocky and bumpy, and all I needed to do is to confirm that was the case with my experience, so far.

I've had my fair share of skepticism as well.

There were friends, colleagues who looked at me with relentless disbelief, dissent because that wasn't what was written in the white paper. The traditional path taught us to do well in school, excel at work and grow the retirement nestegg until the age of 65, then you are entitled to the proper official retirement for the rest of your numeric life.

And I embrace that.

I get it that it's not a concept that is a walk in the park and people can come to the conclusion that this whole thing may be a scam after all.

The community isn't here to praise and dictate our own choir. This just means that there's so much for the community to grow even larger and with the ubiquitous of the social media and internet in the modern days, it is much easier to get contact with.

Family


I don't have to look far beyond to garner the support of my dream.


Let's start with parents.

My Dad is probably the only one in the family that embraces the concept of financially independent and early retirement.

We read the same book such as Rich Dad Poor Dad and Cashflow Quadrant and we discuss about the state of economy so I guess our mission and vision are aligned.

My Mum, on the other hand, is the more traditional type. She thinks a person should work for the same company for as long as they can and be loyal to one single employer.

You can see that I have plenty of work to do to convince her otherwise. I'm not expecting her to agree but I do hope to get her support someday.

My wife is not new to the concept and that is largely down to my nuisance every night talking to her about it.

I garnered support from my wife, which is important, but I do sense her insecurity about the numbers required to sustain our living lifestyle. We're still constantly working out on the numbers and it's always a moving goal-post, partly because as our kids grow up we have plans to shuffle our expenses around.

Luckily, we have a few role model in the community that could be a role example of just that. A good friend, Sim is one of those cases.

As for my kids, it's going to be a hard one convincing them simply because they are young and I'm trying hard not to give them the false impression of slacking. It's a very thin line that could go very wrong if I'm modeling it incorrectly. I'd focus on the importance and virtue of savings but I also want to show them that they need to work hard to get to what they are.

I'm keen to hear about how friends and families of you readers react when you talk to them about being financially independent and the likelihood of an early retirement.

Let me know!

Thanks for reading.

If you like our articles, you may follow our Facebook Page here.


Saturday, February 17, 2018

Why DCA Investing Singtel Can Be Bad For Your Portfolio

You might have attended many classes that advocate Dollar Cost Averaging method and thought DCA investing in a good company can be a sure win strategy over the long term.

Dollar Cost Averaging is a strategy where you spread out your money over a period of time, entering the company at different intervals. During good times where valuation is higher, you get lesser units while during bad times you get more units.

You can read this similar strategy employed by one of our community friend here. He's been doing it for over a year and has accumulated 7.5 lots so far.

The key here is to make sure you invest in a good and right company over the long term.

In this post, I'll try to attempt to provide a case for argument that it might not be always the case.

You might have thought that I will come up with some shitty company but the company we are using here is Singtel, a top favorite among investors.

O.M.G... What happens to Singtel?

Singtel is a company that has fallen through the roof over the years despite building its presence larger across the regional.

The share price has come under scrutiny, and it dropped massively this year with funds selling telcos in anticipation of a 4th telco coming this year.

I'm stealing this graph from an TA expert in Investing Note

Case Study 1 - Investing Singtel at the Peak 10 years ago

Let's assume you are new to investing back in 2007 and raring to go ahead with growing your money after listening to all the bull talk you attended in a seminar.

You put all your hard earned money into possibly one of the safest company listed in SGX, and you got it at a peak of $4.22 back in Oct 2007.

Then the Great Financial Recession came.

Every stocks in the world fall and you are despaired with the decision to invest all your money at the top of the peak.

You try to convince yourself to remain calm and would come out of the bear alive and well. But since you are scarred by the recent experience, you decide to leave it and not invest further.



Singtel
DateTypeCosts ($)Dividends ReceivedNet Costs ($)
Oct-07Buy4.22-4.22
Jan-08--0.0564.16
Aug-08--0.0694.10
Jan-09--0.0564.04
Aug-09--0.0693.97
Jan-10--0.0623.91
Aug-10--0.083.83
Jan-11--0.0683.76
Aug-11--0.193.57
Jan-12--0.0683.50
Aug-12--0.093.41
Jan-13--0.0683.34
Aug-13--0.13.24
Jan-14--0.0683.18
Aug-14--0.13.08
Jan-15--0.0683.01
Aug-15--0.1072.90
Jan-16--0.0682.83
Aug-16--0.1072.73
Jan-17--0.0682.66
Aug-17--0.1072.55
Jan-18--0.0982.45
Today-3.33-
XIRR %2.63%

What happens here is that the dividends act as a panadol to eventually lower your average costs while waiting for the share price to recover.

In the 10 years you are invested, you received a total of $1.76 worth of dividends or 42% of your initial invested capital.

Taking into account today price of $3.33, your ROI over the 10 years came out to be 2.63% / annum.

You are pleased that the investment turned out to be positive at the end but yet not proud of it since 2.63% is only slightly higher than the risk free rate 2.5% of CPF (OA) and lower than the SA return you get.


Case Study 2 - DCA Investing From the Peak Until Today

In the second case study, we look at similar investing from the peak back in Oct 2007 but this time the investor did DCA investing evenly across a timeframe of twice a year.

For easier purpose, I am assuming the investor keeps on adding equivalent number of units every time after the company has paid out dividends.

What this means is during the GFC and Euro crisis period, his average costs would get lower as he continued to DCA and get more units, but on the other side he would get lesser units when Singtel recovered back to the peak sometime in 2015.

His average costs turned out to be $3.43 after taking into account dividend.


Singtel
DateTypeCosts ($)Dividends ReceivedNet Costs ($)
Oct-07Buy4.22-4.22
Jan-08Buy3.650.0563.91
Aug-08Buy3.530.0693.76
Jan-09Buy2.660.0563.47
Aug-09Buy3.140.0693.39
Jan-10Buy3.010.0623.32
Aug-10Buy3.080.083.27
Jan-11Buy3.10.0683.24
Aug-11Buy3.110.193.21
Jan-12Buy3.10.0683.19
Aug-12Buy3.390.093.20
Jan-13Buy3.50.0683.22
Aug-13Buy3.510.13.23
Jan-14Buy3.530.0683.25
Aug-14Buy3.890.13.29
Jan-15Buy4.080.0683.33
Aug-15Buy4.060.1073.37
Jan-16Buy3.510.0683.37
Aug-16Buy4.020.1073.40
Jan-17Buy3.870.0683.42
Aug-17Buy3.710.1073.43
Jan-18Buy3.610.0983.43
Today-3.33-
XIRR %-0.31%

To most people surprise, the ROI is actually even worse where it is slightly negative than what it is today.

You might have been better putting your money in a savings account, if it is that bad and it is the reality today.


Final Thoughts

There's a few thoughts and conclusions that I gather from this exercise.

We always talk about don't invest in shitty companies but hardly ever anyone points out that Singtel is one of those shitty company being mentioned.

You might have thought with Singtel only paying mostly 70% payout over the past decade, they are able to grow the company much larger with the remaining retained earnings.

Turns out that while the company did indeed grow their regional presence larger through increasing stakes in their associates , the valuation does not follow those of S&P large cap companies we see in the US market.

While book value has increased from $1.29 in 2007 to $1.81 in 2018, earnings per share has dropped from 24.8 cents in 2007 to 21.8 cents in 2018. That is to say that despite growing their businesses regionally, earnings have fallen organically.

Singtel is not valued on their book value, which is why the increase in their book value will not matter. If EBITDA has not improved, then the valuations is measured such that Singtel has not grown over the years.

This is different from other industries such as banks and developers where they are being valued straight from their book value. Low price to book value and high ROE is my preferred strategy in these industries.

Investing in Singtel is not a bullet proof strategy.

Everyone can have their bad days.

Thanks for reading.

If you like our articles, you may follow our Facebook Page here.


Monday, February 12, 2018

Snackfirst - Review

I've known Jes for a long time since she started blogging donkey years ago.

The good thing about being in the community is you get like minded people who goes through different stages of life together.

When we became parents, we shared tips on where to get the cheapest stroller, and how to get a good nanny and babysitter and many more.

Last year during the Investfair, I even had a chance to share the same stage with her. We talked about the segment investing in our 30s.

Jes left her job last year and started her own snack business.

I've always wanted to give it a try but did not manage to do so until recently when I decided to purchase a few snacks from her site.

It's an old school type of snacks that has various different types of flavors.

You can choose to look around and order via her website here if interested.



I have a personal weakness for snacks.

I always love something to bite when I'm writing or watching the news and I try to find for good quality snacks most of the time.

So when I chanced upon Snackfirst, I bought a packet of Satay Sunkissed Cashew (1kg), a packet of the normal Sunkissed Cashew (200g) and a packet of the Cheesy Cashew (200g).

Personally, I feel the cheesy cashew has a very unique taste and is a close proxy if you like to eat pasta. The taste grows on you after a while and you just cannot stop eating.

The satay cashew is the most popular among all and both my wife and children enjoyed them too, taking turns to take bites at the crunchy peanuts.

I also love the packaging very much because it helps to keep the nuts crunchy while sealing them closely.

As a friend, I'd like to see her business flourish but I think she and her team deserves it not because of that but because of the efforts and quality of the products they've put in.

With chinese new year just around the corner, perhaps you can give it a try for you and your family. Just make sure you don't get addicted!

Thanks for reading.

If you like our articles, you may follow our Facebook Page here.


Saturday, February 10, 2018

"Feb 18" - SG Transactions & Portfolio Update"

No.
 Counters
No. of Shares
Market Price (SGD)
Total Value (SGD) based on market price
Allocation %
1.
Comfortdelgro
85,000
2.00
170,000.00
27.0%
2.
M1
75,000
1.80
135,000.00
21.0%
3.
Fraser Logistic Trust
100,000
1.08
108,000.00
17.0%
4.
Ho Bee Land
30,000
2.43
72,900.00
11.0%
5.
ST Engineering
20,000
3.24
68,400.00
10.0%
6.
Vicom
8,000
5.83
46,640.00
8.0%
7.
Tuan Sing
40,000
0.44
17,400.00
3.0%
8.
Singtel
4,000
3.38
13,520.00
2.0%
9.
Warchest
-
-
  2,000.00
1.0%
Total
633,860.00
100%

What I thought to be an easy January month turned out to be different as we head towards the month of February.

Volatility in the market is back and already we've seen the DJI drops more than 1000 points in two sessions. The STI index has also given all its returns back this year and is currently marginally negative year to date.

This is actually a great period to accumulate some of the companies who has been impacted by the market selling and you can see that I have used up much of my warchest for this month to add on further. While it's still early days, my strategy is to continue adding for as long as they look attractive to me. And at 5% yield, it's hard not to add some blue chips into the portfolio.



First, I added a small portion of Tuan Sing which I blogged over here. The results were well expected and with contributions from the completed Robinson in FY18, I think they'd do pretty well. In terms of share price, it gets affected like most other companies during the market selling over last couple of days so in theory, valuations only get cheaper there. I'm rather skeptical though adding it aggressively because the company pays out so little dividend to shareholders and it's not part of my larger strategy. I'll monitor though how this pans out over FY18.

Second, I made a reallocation from EC World Reit to adding more FLT during the market selling. I think this was a bit of hasty decision because I have a clear plan in my head about not getting into Reits as valuations are not attractive at all but the hand took over faster. I think this is something I am still learning how to handle. On the same news, the CEO of EC World Reit has just resigned so I think there's something to be looked on there. Perhaps, the sponsor has their own ideas.

Third, I made a purchase of Singtel which I thought to be a good one over the long term. I know we are talking about the drop in earnings, especially coming from their regional associates in Bharti and Telkomsel but this is not something we've heard for the very first time. Back in 2013, earnings are so competitive in Indonesia and India as well but they've managed to come out of it stronger. I think we'd see something similar coming out of telcos over next couple of years. At 5% yield, I really think investors don't have to seek far away for what I thought to be a pretty decent return to park their money.


Net Worth Portfolio

The portfolio has increased from the previous month of $615,330 to $633,860 this month (+3.1% month on month; 28.6% year on year).

There is more capital injection this month as I reallocate a bit more from the emergency funds into the equity portfolio.

I think we'll see a lot more up and down over the next month or so but all we can do as investors is to stay calm and pounce on opportunities. The last thing you want to do is to panic sell in a market like this. If you have been buying on contra or leveraging, then I think this exercise is a good preview of what's to come during consecutive sessions like this.

If your investing horizon is a long time, there's really nothing to fear on markets like this. In fact, wealth are made when there are opportunities like this. Often, my wealth creation builds up exponentially from coming out of market correction like this.

Do get into good companies with good valuations. The rest will take care itself.

Lastly, I'd like to wish everyone in advance a happy CNY and a great start to 2018.


Thanks for reading.

If you like our articles, you may follow our Facebook Page here.

Tuesday, February 6, 2018

10 Thoughts On Panic Market Selling Today

It's been a long time since we saw markets behave the way they are like this.

The last time was sometime during 2014 if I recall but the volatility fell short as market continues to go up thereafter. Since, it's been an easy ride for investors as the stock market goes one way higher and higher.

I promised to keep moments like this so that I can look back a few months or years later.



Here are 10 of my thoughts of the market today:

1.) The market goes up in a steady manner but goes down jumping a cliff.

The way up is usually slow and steady but when there are panic selling, all hell breaks loose as the market slumps within a few hours.

2.) Actually, we are back to pre 2018 levels. No big deal.

It is only a big deal because of the way it drops within the past 2 days or so. Actually, we are back to the pre level before 2018 just 2 months ago. The bull trend is still very much intact. A correction pullback is healthy to move further upwards.

3.) In the first hour of panic selling, good stock bad stock all get whacked down heavily. 

Regardless of the type of companies you are holding (banks/telcos/reits/oil/energy), all hell breaks loose in the first hour. But you can quickly see that the stronger companies rebound quickly thereafter before market close as traders close their short position or funds buying in.

4.) My own portfolio is not spared, down by $13,475 as reported by stockscafe. 

My portfolio is not immune to panic selling or correction. It goes down approximately in line or slightly lower than the index.


5.) Dad texted me to be careful of the stock market, as news spread throughout the media everywhere. 

I replied by telling him I bought Singtel.

6.) This is the type of prelude to a bear market.

In a severe bear market like the Great Depression, Dotcom or GFC, we'll see consecutive days like this. It's not as easy as it may sound to stomach a few consecutive losses of 5 digits at one go.

7.) Chatgroup becomes very active during market selloff like this.

We have a chatgroup among the financial bloggers who discuss about stocks. It is days like this that most are excited and are pouring support to one another reminding the path we choose to walk together.

8.) Almost all asset classes are down, including equities, bonds, crypto, currencies.

Only gold are marginally up as people flock to safe havens in search of protection hedges. Gold mining stocks are a bad hedge as they are correlated to both equity and gold.

9.) Cash and CPF came out among top in class.

It is on days like this people appreciate how important cash is in one's portfolio. They do not yield much over the long term but when utilized properly, they can bring about super returns in one opportunity.

Your money in CPF will also not be impacted as they continue to earn 2.5% and 4% respectively regardless of market condition, at least for now.

For those who are savvy, you can also double up your warchest in the form of CPFIS on days like this, when you are about to go into shopping mode.

10.) Networth or Dividend

If you are trouble facing markets like this, you must have think of your portfolio in terms of networth.

One quick remedy is to think your portfolio in terms of dividend. When the markets get cheaper, you buy more units and therefore your dividend increases. Hoila... just make sure you buy solid fundamental companies.


Thanks for reading.

If you like our articles, you may follow our Facebook Page here.

Friday, February 2, 2018

Child Portfolio - "Feb 18 - SG Transactions & Portfolio Update"

Back in 2014, we created a dividend portfolio for Baby B1.0 when he was born.

The whole idea was pretty simple - we wanted to take advantage of the power of compounding by investing early and reinvesting all the dividend income received into purchasing another basket of dividend companies.

Our idea back then was to eventually instill a habit and lead by example by teaching him the importance of investing from young which we will be certainly be involving him as he gets older. Since it is evident that his time horizon is longer than us and it is his money that we are helping to invest, we think that it makes sense that the investment is made towards a blue chip stock. After all, when he gets older and started to understand basic things about investing, it's probably more prudent to start with blue chips than small caps. At least, when things get tough, we have a powerful backing behind some of these selected blue chips.

Baby B2.0 was born in 2017 last year so we decide to follow through the same idea that we have with our first kid.

In fact, we just celebrated our son's birthday this past week so I thought I'd update the child portfolio since I've used this good opportunity to add a bit more into their funds.

You can see how over the years the number of units have grown steadily and how compounding has takes off nicely.



Baby B1.0 Portfolio (Age: 3 years and 8 months)

We've added 700 shares of Singtel this past week as we saw some opportunity to load them into a nice 5% yield over the long term. It's not a huge investment but over 20 years, I have no issue just letting it sit in the portfolio and receiving dividends after dividends. I am on the side that the dividend payout can be maintained over the next couple of years.

No.
 Counters
No. of Shares
Market Price (SGD)
Total Value (SGD) based on market price
Allocation %
1.
Comfortdelgro
6,500
2.15
13,975.00
85.0%
2.
Singtel
700
3.50
2,450.00
15.0%
Total SGD
16,425.00
100.00%


Baby B2.0 Portfolio (Age: 1 years and 0 months)

We've also accumulated 700 shares of Singtel into our Baby B2.0 portfolio to make it into a nice round lot.

No.
 Counters
No. of Shares
Market Price (SGD)
Total Value (SGD) based on market price
Allocation %
1.
Comfortdelgro
1,000
2.15
2,150.00
38.0%
2.
Singtel
1,000
3.50
3,500.00
62.0%
Total SGD
5,650.00
100.00%

You can see that the two companies are one that I am more familiar myself so I am able to manage the funds and adjust them if necessary. For the next few years, I'd still be actively managing the portfolio on their behalf.

Looking back, I think it was a good idea to create a portfolio for them since they were born and get this habit out both for them and ourselves so we make sure we allocate a good percentage of their income to it.

Thanks for reading.

If you like our articles, you may follow our Facebook Page here.

Tuesday, January 30, 2018

The Days Are Long The Years Are Short

The days are long but the years are short.

This is what parenthood has to offer and those who are parents yourself will understand where I am coming from.

My younger son turns 1 tomorrow and coincidentally he shared the same birth date and year as the son of one of the community blogger, LP (Happy birthday Zef!).

4th year of parenthood

This is technically my 4th year of parenthood since I become a parent in 2014 when my elder son was first born.

Back in the days, some days feel extremely long with the changing of the diapers, frequent visit to the doctor, constant worry of endless fever and many more.

Gradually, time passes and our second son was born in 2017. We were glad to have him onboard because he brings smiles to the family.

My younger son has a totally different character than the elder. The younger is more extrovert and he likes to eat fruits more. He also likes to bully his elder brother by taking and snatching the toys most of the time. They also quarreled often when they cannot get their way by using their baby language so we have to step in.

From our side, we became a lot more experienced with the routine stuff like buying and changing diapers, fishing for milk powder and burning energies for indoor playground during weekends.

We also recycled many of the clothes and toys so there are definitely economies of scale.

Split Time

Unfortunately, with two children, we have to split our focus and attention for one each.

The elder son now goes to the nursery class, so his schedule is more fixed like mine going to work but he still needs plenty of attention when he gets home.

Often, me and my wife have to take turns taking care of one each and this takes a toll on our body as we became more tired and have less personal time for everything else. We had to hire a personal nanny to take some of that time away so we could balance our allocation of the lives we want to live.

We have plans to send the younger one to a basic beginner music class, just for him to mix around with the other children and expose him younger to different musical instrument.

Moment To Cherish

It's been an incredible moment having the past 365 days with him as part of the family.

We haven't manage to spend the night sleeping together because we cannot afford to have a vicious cycle of one child crying over another in the middle of the night so we leave him mostly with the nanny.

For his special occasion, me and my wife have decided to celebrate by booking a private event photoshoot so we could commemorate this moment. So I have taken leave from work and that's where we are going to spend our time together.

And for many more moments to come in the future because the years are short.... We have to cherish them and not take them for granted.

~ 1 day old ~
~ 1 month old ~
~ 2 month old ~

~ 3 month old ~

~ 4 month old ~
Staycation at Shangrila Rasa Sentosa

~ 5 month old ~
Baby Spa Swimming Lesson

~ 6 month old ~

~ 7 month old ~
Entopia Butterfly Park @ Penang

~ 8 month old ~
Learning Monkey & Other animals

~ 9 month old ~
Palawan Pirates Ship @ Sentosa

~ 10 month old ~
Learning how to play pool

~ 11 month old ~
Kids Club @ Phuket

~ 364 days ~
1 more day to the full birthday


Thanks for reading.

If you like our articles, you may follow our Facebook Page here.

UA-57154194-1