I would be the first to own up to being a lazy person, the rat race has never appealed to me in the way some of my more ambitious friends do. That is the primary reason why I am so eager to get into investing, with a heavy focus on cashflow generation, so that I can achieve financial freedom as soon as possible.
Having said that however, financial freedom doesn't depend on just having a healthy cashflow. I'm sure everyone has read about or known someone who commands a high salary, yet always seem to be in need of money, living from paycheck to paycheck and worrying about losing his/her job. This shows that, much much more than income, financial freedom is dependent on our expenses. Someone earning $2000, but spends only $1000, is more financially free than someone who earns $10000, but spends $11000.
Thus, in the spirit of this blog, I'll be posting both about investments, as well as ways to reduce our costs of living, so that readers can accompany on my journey to achieve financial freedom as well.
To put things into context, I am in my late 20s, not married but with a girlfriend, salary in the lower mid 4 digits, no car.
We'll see how the next few months go then :)
Sunday 27 March 2016
Wednesday 23 March 2016
Why I'm not into the STI Index Fund
In recent years, index investing have become increasingly popular. Put in simple terms, index investing involves buying into an index fund exchange traded fund (ETF), which would replicate the performances of the specific index, such as Straits Times Index (STI), Standard and Poor 500 (S&P 500), either by actually holding shares of the companies, or through derivatives trading. Such funds are mostly low cost and passively managed, as fund managers only trades in the companies tracked by the index. Proponents of index investing tout its ease of investing, low management cost, and decent long term performance as some of its more outstanding advantages over actively managed funds. One such individual would be Kevin from Turtle Investor in Singapore.
However, to subscribe to this belief, such investors would also have to believe that the market is 100% efficient, and so to beat the market would be an exercise in futility. As value investors, we know that this is not true. We believe that the market is irrational, and opportunities can arise every now and then.
Also, an advantage that index investors like to tout, which is that investors are able to own a whole basket of companies by just buying into a low cost ETF, is also its greatest weakness, especially in the local context. The S&P 500 consists of the 500 most successful companies listed in the USA, as such, doing research and keeping track on each and everyone of them would be tedious and unlikely to yield any proper results. However, the STI has only 30 companies, a manageable number by any stretch. Also, the STI does not consist of what can be considered 'successful' companies, but rather the 30 largest companies by market capitalisation. What this means is that not every company on the STI is a good company, just that it is a big company, and liable to underperform from time to time. For every DBS or Singtel on the STI, we have a Noble. Thus it would make much better sense to pick and choose the stocks within the STI rather than to buy them all at one go. This is especially after the advent of lot sizes of a 100 shares, as well as the low brokerage fees offered by Standard Chartered. By sifting out the bad companies from the STI, you would by logic have an advantage over index investors in terms of portfolio performance.
Do note that I'm not saying all ETFs are bad, in my opinion bond funds are great for retail investors, giving us access to bonds that would normally require and outlay of at least $250k in capital. ETFs which track a great number of companies, such as the aforementioned S&P 500 are great for the novice investors as well. However, given the relatively small number of companies tracked by the STI, as well as the numerous bad apples we can find within, I would recommend that investors avoid buying into the STI ETFs, and do their due research on what are the companies that deserve their capital outlay.
TLDR: Index investing is a low cost passive way to market performances and has risen in popularity in recent years. However, I would not recommend it in the local context as there are only 30 companies in the index and not all of them are good. Investors are encouraged to do their own due research to sift out the wheat from the chaff to maximise their chances of outperforming the market.
TLDR: Index investing is a low cost passive way to market performances and has risen in popularity in recent years. However, I would not recommend it in the local context as there are only 30 companies in the index and not all of them are good. Investors are encouraged to do their own due research to sift out the wheat from the chaff to maximise their chances of outperforming the market.
Tuesday 8 March 2016
Portfolio Update Jan-Feb 2016
As promised, portfolio update for Jan-Feb 2016.
SGX:
Portfolio Value: $14,956.40
SGX:
| Stock Name | Units | Cost | Average Cost | Mkt Value | Dividends Collected |
| First REIT | 3267 | $4,128.07 | 1.264 | $3,871.40 | $198.92 |
| Keppel DC REIT | 1000 | $937.00 | 0.937 | $1,050.00 | $35.60 |
| Saizen REIT | 2000 | $1,724.21 | 0.862 | $2,240.00 | $89.60 |
| iReit | 400 | $225.11 | 0.563 | $274.00 | $11.41 |
| LMIRT | 700 | $244.59 | 0.349 | $224.00 | $12.09 |
| Hock Lian Seng | 1800 | $750.74 | 0.417 | $702.00 | $72.00 |
| OCBC | 300 | $3,077.40 | 10.258 | $2,592.00 | $54.00 |
| ABF Bond Fund | 300 | $343.22 | 1.144 | $348.90 | $0.00 |
| KingsMen Creative | 700 | $628.50 | 0.898 | $441.00 | $5.00 |
| NeraTel | 700 | $419.08 | 0.599 | $388.50 | $7.50 |
| Accordia Golf Trust | 1500 | $876.58 | 0.584 | $892.50 | $20.88 |
| AIMS AMP Industrial REIT | 500 | $659.65 | 1.319 | $672.50 | $0.00 |
| ST Engg | 200 | $563.35 | 2.817 | $602.00 | $0.00 |
| Singtel | 100 | $378.90 | 3.789 | $372.00 | $6.80 |
Portfolio Value: $14,956.40
Total Dividends Collected: $513.80
Total Dividends Collected in 2016: $31.88
Yield on Cost (%): 3.43%
Total Dividends Collected in 2016: $31.88
Yield on Cost (%): 3.43%
NYSE:
| Stock Name | Units | Cost /USD | Cost (Per Unit) / USD | Mkt Value / USD | Dividends Collected / USD |
| Berkshire Hathaway | 2 | $271.45 | 135.726 | $276.50 | $0.00 |
| BP | 3 | $111.75 | 37.250 | $90.74 | $0.59 |
| Omega Healthcare Reit | 6 | $191.93 | 31.988 | $199.92 | $2.37 |
Portfolio Value: USD$575.13
Total Dividends Collected: USD$2.96
Total Dividends Collected in 2016: USD$2.96
Yield on Cost (%): 0.51%
Total Dividends Collected in 2016: USD$2.96
Yield on Cost (%): 0.51%
2014-2015 Portfolio
As mentioned, I started investing back in Nov 2014, and have built up a modest portfolio. Since it would be troublesome to dig out all the transaction records, for this post I will just be posting the components of my portfolio up till Dec 2015. I will also be putting up another post for Jan-Feb 2016. Moving forward I'll be listing down monthly updates on the portfolio, any transactions done and dividends received.
SGX:
SGX:
| Stock Name | Units | Cost | Average Cost | Mkt Value | Dividends Collected |
| First REIT | 3231 | $4,128.07 | 1.278 | $3,828.74 | $173.84 |
| Keppel DC REIT | 1000 | $937.00 | 0.937 | $1,050.00 | $35.60 |
| Saizen REIT | 2000 | $1,724.21 | 0.862 | $2,240.00 | $89.60 |
| iReit | 400 | $225.11 | 0.563 | $274.00 | $11.41 |
| LMIRT | 700 | $244.59 | 0.349 | $224.00 | $12.09 |
| Hock Lian Seng | 1800 | $750.74 | 0.417 | $702.00 | $72.00 |
| OCBC | 300 | $3,077.40 | 10.258 | $2,592.00 | $54.00 |
| ABF Bond Fund | 300 | $343.22 | 1.144 | $348.90 | $0.00 |
| KingsMen Creative | 700 | $628.50 | 0.898 | $441.00 | $5.00 |
| NeraTel | 400 | $253.63 | 0.634 | $222.00 | $7.50 |
| Accordia Golf Trust | 1500 | $876.58 | 0.584 | $892.50 | $20.88 |
| AIMS AMP Industrial REIT | 300 | $400.00 | 1.333 | $403.50 | $0.00 |
| ST Engg | 100 | $285.66 | 2.857 | $301.00 | $0.00 |
| Singtel | 100 | $378.90 | 3.789 | $372.00 | $0.00 |
Portfolio Value: $14,253.61
Total Dividends Collected: $481.92
Yield on Cost (%): 3.38%
Pilot
Hi All,
I'm starting this blog as a form of tracking for my semi-retirement dreams. First things first, my dream is to achieve financial freedom by the age of 40. Hopefully by then I will be able to work because I want to, and not because I have to.
I purchased my first stock in Nov 2014, and have since slowly (sloooooowwwwwllllllyyyyyy) built up my portfolio. Portfolio value is still currently low, but I am looking to grow it exponentially in the coming years, by reinvesting dividends and injections of fresh funds.
I am primarily an income investor, and my investing philosophy would be that of a long-term investor with time frame of 30-40 years. To me, investing is all about cashflow, and any transactions I make in the market will be regarded as purchasing cashflow and not worrying about the fluctuations of the stock price. For example, buying Stock A at $10 with a dividend yield of 3% gets us $0.30 in cashflow per share per year. Subsequent fluctuations in stock prices will not affect this cashflow, only future company performances will. Thus this portfolio will follow a fundamental analysis approach, all technical analysis will be done solely on the basis of 'buy at/near support'. Selling will be done only when the company shows an inability to keep up with its dividends payout, or when valuations get too crazy, ie 60x P/E ratio etc
The portfolio will be SGX heavy, mixed in with stable US stocks such as Dividend Aristocrats/Kings, companies with 25/50 years of consecutive dividend increases respectively.
I'm starting this blog as a form of tracking for my semi-retirement dreams. First things first, my dream is to achieve financial freedom by the age of 40. Hopefully by then I will be able to work because I want to, and not because I have to.
I purchased my first stock in Nov 2014, and have since slowly (sloooooowwwwwllllllyyyyyy) built up my portfolio. Portfolio value is still currently low, but I am looking to grow it exponentially in the coming years, by reinvesting dividends and injections of fresh funds.
I am primarily an income investor, and my investing philosophy would be that of a long-term investor with time frame of 30-40 years. To me, investing is all about cashflow, and any transactions I make in the market will be regarded as purchasing cashflow and not worrying about the fluctuations of the stock price. For example, buying Stock A at $10 with a dividend yield of 3% gets us $0.30 in cashflow per share per year. Subsequent fluctuations in stock prices will not affect this cashflow, only future company performances will. Thus this portfolio will follow a fundamental analysis approach, all technical analysis will be done solely on the basis of 'buy at/near support'. Selling will be done only when the company shows an inability to keep up with its dividends payout, or when valuations get too crazy, ie 60x P/E ratio etc
The portfolio will be SGX heavy, mixed in with stable US stocks such as Dividend Aristocrats/Kings, companies with 25/50 years of consecutive dividend increases respectively.
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