Above Water.. Finally

Shortly after my post slightly more than 2 years ago, my portfolio sunk with the market crash.. With the crash, I consolidated my positions into a handful of positions that I had highest conviction.

I ended up with a much larger position in crypto during this bear market because I became so immersed in the space.

Having gone through this bear market, I recognise how much stronger I am mentally and hardly affected by market prices. Hectic work also helped during the bear market because most days I don't monitor the market at all.

2024 looks great and I am looking forward to it!

Returning after 4 Years

 It has been 4 years since I last posted on my blog and a lot of things had changed. In fact, my whole portfolio had a revamp. My once dividend-centric portfolio had turned growth-centric during the initial phase of COVID lockdowns in 2020. And in 2021, I dipped my toes into cryptocurrency.

On hindsight, the pivot seemed to have been a good decision although market valuations at this point of time seem to be quite rich.

In terms of career, I am still with the same company, and I am quite blessed that I was only a little affected by the pandemic. I had also taken up an overseas posting and will be relocating in 2022. It will be a long commitment spanning a few years.

As the recent growth of my portfolio had provided me some cushion, I might decide to take a break from the hamster wheel after I return from overseas. Let's see.

I also do hope that I can keep the discipline of keeping this blog alive.

How Much Do You Need in 20 Years?

Recently, I've been going around asking many people how much do they need a month to survive comfortably on without any other income.

The range I've gotten was between $1,500 - $2,000 if you don't own a car, and between $3,000 - $4,000 if you intend to own a car.

As what I've written in my "About Me", I plan to retire at 45. This gives me a total of 20 years to accumulate my wealth. Yes, now you know my age *intense revelation music*.

From the above range on how much is necessary to live comfortably, what would that value be in 20 years?

Source: Trading Economics

Based on Singapore's inflation rate taken from Trading Economics, inflation rate average at 2.63% from 1962 to 2017. We can note from the graph above that there is an exceptional spike between 1973 to 1975, reaching a peak of 34% in March of 1974. As Singapore is now a developed country, it is very difficult for such occurrence to happen. Besides that, because our average inflation rate takes into account this spike, we can assume that is now on the higher end of the spectrum. And this can be proven by noting that majority of data points since 1962 has been below this average.

However, to be further on the safe side, we will multiply this by a safety factor of 1.1, giving us a buffer of 10% safety. The inflation rate (after safety factor of 1.1) turns out to be 2.89%.

Now, rewinding to our initial ranges, if we were to account for 20 years of inflation, this is how much a month we need to survive comfortably:

1) Not intending to own a car: $2,652 - $3,536
2) Intending to own a car: $5,304 - $7,072

Of course, I do not have any experience owning a car, and do not know how much it costs to own one today, however, the true intent of this post is for you to work out how much you need in future, based on today's cost of living.

Should we save aggresively?

We all know the importance of saving - for rainy days, for retirement, for financial independence, and the list goes on.. However, have you ever thought how much that extra $1.50 coffee everyday will cost you in the long run? The question then leads to how aggressive should we save, and how much would it cost us if we don't?

In this post, I'll try to put that into numbers.

Let's consider that our savings goal is $300,000, and the annual compounding rate is 3%. Based on everyone's different lifestyles, we might all achieve this goal in a different set time frame. So let's look at how much NOT saving aggressively will cost us:

Illustration of Compounding Effect - 3% Per Annum

We take into consideration three scenarios:

1. Saving $30,000/yr (takes us 10 years)
2. Saving $20,000/yr (takes us 15 years)
3. Saving $15,000/yr (takes us 20 years)

From the above illustration, at the end of 30 years, where we first save and let our savings compound after hitting our goal, it can be noted that a difference of 5 years taken to reach our savings goal will cost us around $40,000. 

Illustration of Compounding Effect - 5% Per Annum

But what if that annual rate was increased to 5%? Well, that difference of 5 years would cost us about $90,000-$100,000. And the difference increases as your savings goal increases, or your annual compound rate increases.

That brings us to the next question, should we all save aggressively? - by cutting down all the entertainment in our lives, stop eating out, and live as frugal as one can?

My answer to that is a definite NO. However, everyone's lifestyle is different and therefore the responsibility is on ourselves to judge. Personally, I feel that we need to have a balance in our lives, and to find that balance is dependent on one self. As long as you know how much is a comfortable amount for you in the future, work towards that goal.

We are all humans after all, and humans need different forms of interaction and activity. If one were to stay home and save every cent they earn, one's mind might become idle and fall prey to the devil's workshop. Besides, for the young people out there like myself, how do you expect to find love if you don't go out and mingle/date?

The aim of this post is to therefore point out the cost we pay in the future from our spending in the current. I believe a better analogy to this is how much we spend on small daily necessities. For example, that morning cup of Starbucks that we love, can we substitute it with a much cheaper alternative? Or the morning Uber/Grab to work, can we substitute it by waking up earlier to take the bus/train? You'll be surprised how these little things can add up.

Cutting Down Daily Coffee Spending By $2.50

Based on the coffee example above, if we can substitute our daily Starbucks with a cheaper alternative and save $2.50 a day, this adds up to be $900/yr ($2.5 x 30days x 12mths).

Putting that into our table, if we had spent $900/yr for Starbucks, we would only save $14,100/yr and will take 22 years to achieve our savings goal of $300,000 compared to 20 years if we don't. Looking at the results, it amounts to a HUGE difference of $17,000 in 30 years! 

I hope this post gives you something to think about.

Resisting 11.11 Sale

Source: AliExpress

As much as I try to spend only on things I need, sometimes you just got to give in to some of the wants.

I always manage to restraint myself when it comes to brick and mortar stores that advertise huge discounts, because its easy, you just walk right past them and don't look back. However, when it comes to the context of online shopping, you get emails on offers and discounts, even if you turn away and delete them, a new one comes in.

That was the case for this week's 11.11 event. In the span of 24-hours on 11Nov17, I've received at least 3 mailers from each online store. Multiply that by a few online store, and.. well, you get my drift..

When you receive that amount of mailers about discounts and offers, no matter how rational you think you are, it gets thrown out the window - or maybe my resolve is not strong enough, kudos to you guys who can resist the temptation.

After all, these online shops pay a lot for marketing, and if it doesn't pull the crowd in, then something is really wrong.

I am only human after all, and it is natural to be drawn to such temptations. The challenge then lies with whether or not you can control the amount you spend. It took me 3 times the amount of time to thin my cart down to only three basic items, compared to how quickly I filled my cart with all the things I wanted to buy.

Even after checking out with those 3 items, I still felt that I had spent too much. Maybe this episode would strengthen my resolve for the upcoming future sales - Black Friday, Cyber Monday, Free Shipping Day, Christmas. All these sales that the consumer industry has come up with as marketing strategy.

What about you? Did you succumb to temptation as well?

DBS New Multiplier Account

You might have already heard word going around that DBS has a NEW multiplier account! They have revamped criteria to becoming more attractive for us consumers. You can get up to 3.5% per annum depending on how many criteria you can hit! WOW.

Being the thrifty Singaporean I am, I had to check it out and compare to the OCBC 360 account I am using right now that gives 1.55-1.85%, depending on my month's spending on OCBC 365.

Image Source: DBS Multiplier

The mandatory basic criteria is that you HAVE to credit your salary with DBS/POSB and a transaction in one of the categories above. Although it is advertised that no minimum salary or credit card spending required, when referencing to the breakdown below, notice how a total transaction of <$2,000 would leave you with only the basic interest rate of 0.05%? I would have appreciate it if DBS had been more clear that the minimum transaction has to be >$2,000 per month.

Image Source: DBS Multiplier

Take into example a monthly salary of $2,500 and credit card spending of $500 (with DBS/POSB), you would get a 1.85% interest! (total amount transacted: $3,000).

Now, taking this into my own perspective, I usually use SC Unlimited Cashback Card or Amex True Cashback Card for my purchases because most months I would hardly hit >$500, let alone >$600 (OCBC 365 credit card criteria). Therefore, for most months, I usually earn 1.55% on my OCBC 360 account.

With this new DBS multiplier account, I only need to make one small purchase on a DBS/POSB credit card and I can get 1.85% interest (even charging $0.01 to my card is considered a transaction). Since the minimum spend for DBS/POSB credit cards are pretty unreachable for me - $600-$700 minimum spending, I will still stick to my no minimum cashback cards. In conclusion, DBS multiplier account is definitely better than my OCBC 360 account because of how much easier it is for me to earn a higher interest rate!

Also, comparing this new DBS multipler account to UOB's One account, if you are able to transact in 2 or more categories, then DBS multipler is definitely the way to go.

DBS is pretty aggressive, let's watch and see if the rest will play catch up.

After 3 Years

Disclaimer: This post turned out to be more about my history, rather than my portfolio.

I started dabbling in stocks during the second half of 2014, which I also made it a point to keep an extensive record of my gains and (losses) - which turns out to be mostly losses; I will get to that. Fast forward to today, it has been a little over 3 years since I began my journey.

My dad was the catalyst to my introduction into stocks. He always said to "make your money work for you, don't leave it in the bank", and he frequently tried and sit me down to listen to him talk non-stop about how to read financial reports of companies... yada-yada-yada. BORING.

However, the idea of using money to make more money stuck with me. I went online and search for "best stocks to invest in singapore" - how blunt. I did get results (thanks Google), and that was how I learnt about Sheng Siong - my first stock. At that time, I didn't understand the financial reports, and I was limited to the information I could get from fellow investors online.

My first few stocks were Sheng Siong, Croesus RTrust, Mapletree Com Tr. I felt a rush through my body whenever I made a Buy (it felt a little like a gamble because there were many things I did not know about the companies - and it brought me adrenaline). The process of buying and waiting for these investments to mature was too long, and I soon found myself searching for quicker alternatives.

I ended up drawing down my investments to fund my CFD trading account, and I started making lots of technical trades - which ended up in huge losses). It took me 2 years to learn that trading wasn't for me, and I closed my account at the end of 2016.

With an income after graduation, I now am able to inject capital to build up my portfolio. I am extremely happy that as of April 2017 I am finally out of the red. I do hope that I can continue this performance for the years to come (not just because of the bullish market this year).

Looking back, I do not regret the loss I made because it thought me valuable lessons (albeit a little painful).

As Benjamin Franklin once said: "He that can have patience can have what he will."

Should you buy an Investment Linked Policy?

Recently, while I was on a grocery run, I was stopped by a lady who acted really pitiful and requested 2-minutes of my time to help her complete a survey and hit her quota of the day. Feeling a little kind that evening, I gave in to her request. Turns out, the 2-minutes became 20, and the so-called survey was actually a one-to-one date with an insurance agent. A brief flashback of similar occurrences hit me, and I was sitting there wondering how I, again fell into such a ploy. I made yet another mental note of never to fall for such traps again.

I sat there planning my great escape while the agent went on to ask questions to understand my financial situation. I told her I dabbled a little in stocks, and she immediately recommended me an Investment-Linked Plan (ILP).

I'm sure many of you who have spoken to an insurance agent before have heard of the product. ILPs have been aggressively pushed by insurance companies to consumers, and I'm sure many of you heard a lot of talk about the product. Truth be told, I sat there knowing I wasn't interested, and I was sorry I wasted the poor lady's time, as well as mine (I must say she was pleasant to the eyes though, haha).

What are Investment-Linked Policies?
As its name suggests, it is an insurance policy that provides the policyholder the ability to also invest. Simply put, the policy is the "best of both worlds". Yet ironically, it feels more like a "jack of both trades, master of none".

How the product works is the premiums paid by the policyholder is used to acquire units in a fund of their choosing. Some of these units are then sold off, to pay for the insurance component of the policy.

The marketed "GOOD" side of ILPs
Taking a look at the brochure I was provided, I was sold that there were tons of benefits of the plan:

1) Flexibility to increase or reduce your regular premium anytime
There are certain months where we feel financial tight (your other half's birthday, anniversary, etc), or other months where we have spare cash sitting around (year end bonuses, etc), this allows us to increase or reduce our "investment" anytime. You may even take "premium holidays" without compromising your insurance coverage.
Note: The brochure I was provided stated that this was allowed only after premiums have been paid for the first two policy years. Non-payments during the first two policy years will terminate the policy automatically.

2) Allow you to invest in a range of funds
As a policyholder, you can build your own financial portfolio by allocating your money in a range of funds provided by the insurer. I was also sold that you could switch funds at anytime, subjected to the bid/offer spread of the funds.

3) Adjust your coverage based on your priorities
Since the units in the fund of your choice is sold off to pay for the insurance component of the policy, you can adjust your coverage depending on your priority on the weight-age of investment-insurance.

4) Enhance your protection cover with optional riders
You can even customize your plan by adding on optional riders such as critical illness, disability, and terminal illness. In the event you claim for the aforementioned, your coverage and investment values from your basic plan will remain unaffected.

What is not mentioned in their marketing
As with all financial products, these factors are usually quickly brushed through, or are not even mentioned to the consumers:

1) Low Allocation Rates
If you are getting an ILP, request for the document that indicates the allocation rate of your policy. Below is an example:

Source: MoneySense

What this means is that for Year 1 of the policy, only 15% of the premium paid by the policyholder goes to investing in the fund of their choice. The remaining 85% is used to pay the insurer for the insurance component of the policy. Thereafter, as the years progress, more of the premium paid is apportioned to the investment component. Of course, this is just an example, and you can check with your agent if you intend to get an ILP.

2) Small, Substantial Costs
i) Bid/Offer Spreads
Similar to stocks, mutual funds that you decide to invest in has bid/offer spreads. Based on the Funds Fact Sheets provided to me, this spread is typically 5.0%. Compare this to the tick size for equities listed on the SGX, the biggest spread you can pay when you purchase a stock is 2.5% (Price Range: 0.20 to below 1.00):

Source: daytradetheworld

ii) Fund Management Fee

Unlike stocks, which your get charged a one-time commission for buying/selling, when investing in a mutual fund, you will incur a management fee. These are fees charged by the fund manager to investors of the fund. The typical management fee is around 1.5% per annum.

iii) Other Fees Not Made Known to Me

Besides the above mentioned costs, I believe that there should be more "fees" and "charges" that a policyholder will incur. Of course, since I am not able to validate this point, this will be kept out of my analysis.

How does ILP compare to managing your own investments?

This is what we have all been waiting for.. So how much are you losing out when you get an ILP compared to actively investing by yourself? We will let the numbers do the talking.

Taking only the management fee into consideration, and selecting the best performing fund from the Fact Sheet provided to me, below is the comparison against the performance of the SPDR STI ETF:

	Best Performing Fund	SPDR STI ETF
Annualized Return Since Inception (Net Fees)	6.03% (as of 30 June 2017)	7.27% (as of 30 June 2017)

Note: Not all funds might provide market beating returns.

To give a better picture in terms of numbers, let's assume a person invests $6,000 a year for the next 40 years. Based on the annualized returns above, these are the results:

Years	Best Performing Fund	SPDR STI ETF	Percentage Difference
1	$6,000.00	$6,000.00
2	$12,361.80	$12,436.20	0.60%
3	$19,107.22	$19,340.31	1.22%
4	$26,259.38	$26,746.35	1.85%
5	$33,842.82	$34,690.81	2.51%
10	$79,196.28	$83,963.46	6.02%
20	$221,426.66	$253,347.74	14.42%
30	$476,861.42	$595,056.35	24.79%
40	$935,602.48	$1,284,404.68	37.28%

Note: This is not factoring in the selling of fund units in the ILP to pay for the insurance component of the policy. The difference would be even more substantial if included.

By Year 40 of investment, the portfolio made up of just the SPDR STI ETF would be a WHOOPING 37.28% more in value compared to the ILP fund. With this difference you could have gotten a much more comprehensive and value insurance policy compared to the insurance component of an ILP.

One last negative about ILP
All funds have their ups and downs. In the event your fund is not performing well, more of your units will have to be sold to pay for the insurance component of your ILP. For example, your insurance component costs $100. With a bid price of $1.00, you would have to sell 100 units in your fund. However, if your fund is not performing well, and has a bid price of $0.90, you would have to instead sell 111 units to pay for this insurance component.

What is the solution to ILP?
You might be screaming this question for awhile now. My personal opinion is to not mix your investments with your insurance coverage. It does not take much effort to open an account with a broker and dollar cost average the SPDR STI ETF (most brokers even have monthly investment plans on the SPDR STI ETF - although the do charge a higher commission).

Starting with SPDR STI ETF might even be a stepping stone into the world of investments for you. Doing it yourself and understanding how your money grow can provide a huge sense of achievement.

Note: This is my personal take on Investment-Linked Policies. Of course some people would rather purchase an ILP because it is fuss-free and it provides the "best of both worlds" scenario for them. Everyone has something that works for them, you just need to know what works for you.

For or Against Croesus Retail Trust Acquisition?

I vaguely wrote about the possibility of an acquisition of Croesus Retail Trust by Cyrus Bidco Pte. Ltd. (managed by Blackstone Group) few months back here. What I did not elaborate on was my opinion regarding this acquisition.

I had Croesus Retail Trust in my portfolio since Year 2014, and it has given me generous returns year on year. I do acknowledge that with this acquisition, it would be sad that my portfolio would lose a good dividend stock, but at the same time, you can say that the next 2-3 years of dividends have been paid to us in advance. The proposed offer of S$1.17 per unit is slightly more than 20% of the market price back in April, which, to my opinion is quite a generous offer in relation to its NAV.

The scheme meeting will be held on 13 September 2017. Personally, I would love to attend this meeting; seeing it would be my first experience, but like most people, I hold a full-time job and my position for this counter isn't significant enough to justify the time off work.

I am looking forward to know the outcome of this meeting. Whatever the outcome, I am satisfied with either. Perhaps it is time to look out for the next stock I can redeploy my capital gains to.

Blackstone Group to acquire Croesus Retail Trust

Croesus Retail Trust(CRT: S6NU) requested for a trading halt today (27 Jun 2017) pending the release of an announcement. This comes after a announcement back in April 2017, stating a possibility of a potential transaction of an acquisition of all the issued units in CRT. Leading up to today, they have also released update announcements with regards to this potential acquisition. Since the announcement, CRT share price has risen from S$0.94 (closing price on 25 Apr) to S$1.055 (closing price on 23 Jun).

According to this article published by Straits Times, "Private equity firm Blackstone Group is in the process of buying Singapore-listed Croesus Retail Trust, which operates retail properties in Japan, Dow Jones has reported citing sources".

I have a mixed feeling about this acquisition. On one hand, I would be losing a good dividend stock which gave me a good 7.2% dividend last year. However, on the other hand, an acquisition would normally see share prices gap up around 30%.

Let's wait for the official announcement from Croesus Retail Trust..

Crowd-Lending: MoolahSense

MoolahSense is a lending platform that connects SMEs (small-to-medium enterprises) who seek short-term business loans from investors. They work on the principle of crowd-lending where investors make income returns from the repayments made by the loan borrowers.

The popularity of crowd-lending in Singapore is growing as an alternative investment class for Singaporean investors. For MoolahSense, their minimum amount for investment starts as low as S$1,000. This allows retail investors like you and me who don't want to risk too much of their portfolio, a diversification. Also, the campaigns listed on MoolahSense typically give an upwards of 10% interest per year (amortized interest). That is a very attractive rate for retail investors!

However, nothing comes for free. With the high interest rate, comes the high risks with it. The biggest risk for investors is the loss of their capital in the event the loan borrowers default on their payments. You could lose your entire invested capital! Besides the risk of losing your capital, you also have the risk of your funds being illiquid due to late repayments.

I had created an account with MoolahSense way back in Jan 2016. Initially I was skeptical about the rewards from the risks required to be taken by the investor. However, seeing so many successful campaigns throughout the year, I recently decided to dabble in one of their campaigns as well. I took out the minimum S$1,000 and subscribed to one of their campaigns.

Needless to say, for every campaign, you need to do your own due diligence by looking up the company as well as the provided financial information on MoolahSense. The financial information provided are sometimes not verified and maybe even undisclosed.

I will be sharing my experience moving forward. I do hope that my campaign goes well. I might just go for a few other campaigns if I see good feedback from this trial!