Monday, 24 July 2017

Netlink Trust Strategy Update



I previously highlighted my strategy on Netlink Trust in my post here where i would like to buy 100,000 shares of Netlink. Here is the update for the trades done last Friday.

•  Mrs IPO managed to be allotted 13,000 shares from her application of 50,000 shares over the ATM. The IPO, as expected, opened weakly and I managed to get an additional 37,000 shares for Mrs. IPO at 80c. The entry price is a tad better than the ATM price

•  I also mentioned that i didn't apply for the Netlink Trust as i would like to use the cash from my SRS account. I managed to buy 25,000 shares at 80.5 cents for my SRS account on Friday but my other buy queue at 80c was not filled (I queued at different times from Mrs IPO). I was hoping that the stabliisation manager would run out of bullets and the price will drop further πŸ˜‚ In any case, i will decide on the balance 25,000 shares later depending on how the share price perform in the coming weeks.

Interestingly, both Daiwa and DB issued buy calls on Netlink NBN Trust in the last few days....


On a related note, since i have utilised around $20k for the Netlink purchase above, I have decided to top up $15,300 into my SRS account today for this year's tax deduction. This will bring my cash balance back up to around $69,000. 

Happy SRSing

Sunday, 16 July 2017

My "Strategy" for Netlink Trust IPO

I gave a one chilli rating for Netlink NBN Trust IPO this week. The write up is here.

Business Trusts haven't done as well as REITs in general in SingaporeπŸ€”  - probably because Business Trust started on a wrong foot and left a bad taste on investors. The first business trust to be listed was First Ship Least Trust and that left a very sour taste on investors as evidenced by the -19% since listing (ouch! see table compiled by Edge below). 


The Edge compiled a list of Business Trusts performance and those that performed well are "real-estate" linked like Croesus and Viva Industrial Trust as well as perhaps, Hospitality and Healthcare Assets. One of the worst performing was Hutchison Port (you just can't bet against LKS!). 

What can you actually glean from the above table? 

Assets that perform well have earnings that are more predictable and sticky. In other words, the cash flows generated are predictable (long term rental leases). Assets that relied on good weather (Accordia to play golf) or on ships visiting the ports (Hutchison) are less predictable and forecasting recurring revenue is challenging, not to mention rival golf courses or ports. Investors at the end of the day, like safe, consistent returns. Whether it is "sexy" or not is another matter altogether πŸ˜‹


How do i see Netlink NBN Trust IPO?

Is the revenue recurring and stable? It is like the gate keeper. All broadband players Singtel, Starhub, M1, MyRepublic (and what have you eventually) will need to pay the gatekeeper a connection fee and a monthly maintenance fee. These are big boys, so the possibility of bad debt is probably low. If consumers switch from one broadband provider to another, Netlink don't really care as long as they continue to use broadband. So i would say yes. Will government lower the regulated fee - the government will adjust the fee from time to time depending on the number of connections etc, but it is unlikely they will "kill this company" as too many local retail investors are vested in this. So net net, i think revenue is pretty stable, consistent and recurring but I am not going to price in any growth here.

Will the technology be replaced? Personally, i think Broadband is the way too go. It is hard to imagine using ADSL or other slower technology as now is the age of IoT (Internet of Things). Will there be a competing technology to replace fibre broadband? Probably one day it is possible but not in the next 20 years (according to the prospectus?). Assuming i invest 100,000 shares ($81,000) which generated 5.5% yield per year ($4,455), it will pay itself back in 18 years. 

Will it form part of my retirement portfolio? If this IPO has been priced at the top end of the range, the answer is a resounding no. Now that it is priced at 81 cents, i will actually consider applying for some. Given the huge public tranche, i give the placement tranche a miss (my broker promised to give me any number of shares i requested. Lol). Over the weekend, I managed to convince Mrs to part with her "secretly stashed away cash" to apply for some shares in the IPO.

How am i adding Netlink Trust IPO in our retirement plan?

I last updated in March this year that the projected passive income for 2017 is around $40,717. The link is here. I recently "re-underwrite" my portfolio due to forex movements etc and I intend to add about 100,000 shares of Netlink Trust IPO in our retirement portfolio, using the assumed yield of 5.43%. This will add about $4,398 to my yearly income, bringing the projected annual income to around $45k (target for the year is $60,000, still a long way to go!). The "pro-forma" monthly income, assuming i managed to add 100,000 shares of Netlink is below (l have also learn how to use pro-forma from all the prospectus i have been reading πŸ˜‚): 


Since Mrs has applied for 50,000 shares and i have no idea how many shares she will be allotted (if it is none than it's fated. hahaha), i will adopt a "wait-and-see" attitude. The reason why i am not applying for the IPO using "cash" is because i have a lot of idle cash (around $74k before this year's contribution) sitting in my SRS account waiting to be deployed. If it opens below IPO price next week, i will use the cash in my SRS account to top up to 100,000 shares. If it opens above, then i will just continue to wait. After all, the next interest is only payable by June next year. I can afford to wait since the pricing is not going to run too far ahead. I will be worried if investors treat Netlink as a growth stock. I look at it more as a Broadband Perps.


Happy SRSing πŸ˜ƒ

Sunday, 9 July 2017

SRS portfolio - Q2 update

It has been a while since i blog about SRS account. Let me see if there are any interesting stuff happening to me in Q2 2017...

Dividend and Interest Income

Received about $8,854 in dividends this quarter
  • Received $2,975 from Hyflux 6% Perps 
  • Received $1,500 dividend income from UMS Holdings
  • Received $356 from Starhill REIT
  • Received $2,319 from Perennial Real Estate Bond
  • Elected to receive 567 units in Fraser Commercial Trust (Scrip Dividend) - Cash equivalent $752
  • Elected to receive 1,131 scrip dividend in Croesus Retail Trust (Scrip Dividend) - Cash equivalent $952
  • Wifey received some cash interest from her Aspial bonds (off my balance sheet - so not included here. lol)
I found that electing to receive scrip dividend is not that bad as it automatically "roll-over" the dividend into new units. It was available for Fraser Commercial Trust and Croesus Retail Trust but not for the rest. I will continue to build up my portfolio of REITs and dividend paying stocks here. 

UMS Holdings and Croesus Retail Trust has done very well for me, appreciating by 92% and 55% respectively and i have held them for years. Blackstone has since made an offer to acquire Croesus Retail Trust at $1.17 per share (see report here). We shall see if GK Goh manages to help increase the price from Blackstone! But if the privatisation is successful, i will have to find other stocks to replace this and it will most likely be dilutive since Croesus is giving me such a good yield.

CPF

I blogged about my intent to pay back CPF the amount drawn for my property in January this year. Well, i have done that in April this year in a "spur of the moment" and repaid CPF the principal plus the interest i owed them in one single cheque. I decided that repaying CPF is probably better than repaying the banks since CPF is charging me 2.5% while the bank is charging me SIBOR + spread.

IPO

I am actually "on-a-roll" here where i managed to get some meaningful placement shares for the last 5 IPOs - Kimly, Sanli, WCG, Shopper360 and Y Ventures! I am still holding on to them but will likely start to reduce some of these positions. I am also likely to turn down the placement for Netlink Trust. I was thinking of applying from the ATM tranche (save the 1% placement fee) or use my SRS account to buy them post listing. Netlink Trust will be more of a retirement portfolio and not for IPO punts.

Going Places

I mentioned that one of my goal in 2017 is to travel to 3 new cities or places - i have met them already! πŸ˜€ I will share with you next time... this is one crazy year of traveling for me

Happy Retirement Planning

Sunday, 9 April 2017

Using CPF for retirement

The Sunday Times ran a two-part series on CPF last Sunday and today. It's definitely worth spending some time to read through those articles and ponder on them regardless of your age. πŸ˜„

This will allow you to make informed decisions on CPF and whether you want to take "irreversible" actions when you are younger, such as topping up your CPF or transferring cash from OA to SA. (I didn't do any of the above when I am young, as I was not "well informed" or didn't bother to. πŸ˜†) 

CPF should form part of your retirement planning and help enhances your life after you retire. Since each one of us has different plans and uses and are at different stages of lives, I will touch on areas that affect me more. 


Setting aside the retirement sum in exchange for a lifelong "passive income"

When I turn 55 (based on current rules), I have to set aside the prevailing Full Retirement Sum of $166,000. I can start "withdrawing" monthly payout of between $1,270 and $1,410 for life from aged 65 till my demise. 

If I want more monthly payout, then I can set aside more cash, up till the Enhanced Retirement Sum of $249,000 for a monthly payout of between $1,850 to $2,050. 

πŸ–πŸ» (I haven't yet to find out what happens to the "cash" if I die early 英年早逝. This will be quite important in my decision in selecting the different plans!) πŸ€”

How much can I withdraw from CPF at age 55?

You don't have to protest at Hong Lim park really. You will be able to withdraw part of your CPF at aged 55 or anytime thereafter if you choose to keep the cash in the Retirement Account. 


For simplicity, you can withdraw the higher of $5,000 or amount in excess of $166,000. 

πŸ‘‰πŸ» Implication: If you already have combined OA and SA balances above $166,000, you can treat CPF as a long-term fixed deposit bank (provided the rules or FRS amount don't change πŸ˜‚). 

Example - if i already have the FRS and I have withdrawn $50,000 from CPF to pay for my monthly mortgages, I can consider "repaying" CPF the $50,000 from my savings and year end bonuses. This will allow me to get that $50,000 back when I am 55 and allow me to earn 2.5% p.a. In addition, I don't have to pay myself "interest" back to CPF on that amount drawn! 

Example - if I have sufficient cash or passive income to cover for my daily expenses, I can consider keeping those cash in the Retirement Account. After I turn 55, the first $30,000 earns 6%. See graphics below on the interest earned. 

How much interest does balances in CPF earns?

Interest in CPF balances earns "risk-free" returns of between 2.5% to 6% depending on your age group. 

Topping up CPF accounts 

As you can see from the graphics above, there are a few things which you can do for retirement to earn a higher interest rate. 

Example - you can top up your own Special Account with cash each year or you can transfer cash from OA to SA. This earns you 4% interest instead of 2.5% each year. Over the long run of more than 10 years, the compounding effect of that extra 1.5% can become very material! 

Example - I top up $3,500 cash each to the Retirement Accounts of my parents every year. I get a tax deduction and they earn a higher interest and get a monthly payout ($3,500 divide by 12) ! Win-win situation πŸ˜‚

Example - if your spouse isn't working, you can also consider transferring your CPF savings to him or her. This will ensure both have higher "life-long" passive income! I always believe that retirement planning is not just for you alone, but for all your loved ones. 



Example - during CNY, instead of putting red packets of your kids into meager earning bank account, you can consider depositing the cash into their special accounts. A $500 contribution when your child is 5 years old can turn into $3,553 after 50 years at 4%! Meaning a $50,000 will turn into $355,300. I will probably start depositing their Ang Pow money into their special accounts from this year onwards. 

Medical expenses 

Medisave account balance will remain to pay for future healthcare expenses. The current Basic Healthcare Sum we need to set aside is $52,000. 

The Sunday Times provided the graphics for using your medisave. 


That's it for today. Happy CPF planning. 

Saturday, 8 April 2017

SRS March 2017 update

There is not much update in March except that UMS holdings has actually gone "crazy"! The price started moving after some analysts tout it as the next privatisation candidate. My only "regret" is that i didn't load up on it when i intended to in Jan this year. Procrastination is bad in this case!  


My SRS portfolio is doing well due mainly to UMS holdings and is up 22%. I have blogged about my purchase of Starhill and Fraser in Feb 2017.


In case you are wondering, for the non SRS portion, i am still holding on to the Hyflux Perps (yielding 6%), the Aspial bonds (yielding 5.3%) and the Perenial Bonds (yielding 4.65%).

Happy SRSing.



Saturday, 4 March 2017

SRS Feb 2017 update

On Valentine's Day, I used the cash in my SRS portfolio to buy presents - 2 REITs for myself. My criteria was pretty simple:

1.  Yield of REIT is more than 6% (both yield more than 6.5% at my purchase price)
2.  Price/NAV is less than 1.0x (both trading around 18-20% discount to its book value at my purchase price)

From that list, i bought 30,000 units of Fraser Commercial Trust (yield of 7.6%) at $1.29 and Starhill Global (yield of 6.9%) at $0.755 each on 14 February.

The addition helps bring my projected passive income to around $40,717 each year. Based on my historical cost of $610,349 (without accounting for revaluation gain), the portfolio is yielding around 6.7% and you can see from the chart below that i have some cash coming in every month except for Feb and Aug.

 

I have in my goal for 2017 to reach $60,000 per year by end of this year and at $40,717, i am close to the 68% mark. Assuming I am able to utilize my cash of $75,000 cash in the SRS account, i should be able to hit the 75% mark. My eventual target is more than $100,000 per year, so i still have some way to go. I will continue to add on to dividend or interest paying counters when the opportunity arises.

Happy SRSing ^_^



Monday, 16 January 2017

Moolahsense / Trading Update - Jan 2017

I first blog about Moolahsense in May last year. My blog post is here.

Since then, I have met up with the management team of Moolahsense and decided to increase my allocation to $75,000.



My interest earned for 2016 was around $4,335. Having said that, the potential delinquency has gone up in recent weeks and currently, i have about 3 cases of late/no repayments currently.

Let's see if it turns out well eventually but with the economic downturn, i am expecting higher delinquencies in the coming months. 

Goal 2 - Generate trading income of $1,000 per month

I mentioned that one goal of 2017 is to generate about $1,000 per month. My blog post is here. January has turned out to be a good month so far.  Let 's see i can meet the goal by end of the year. As of mid Jan, i am slightly higher than my $1k per month goal. This is a 12 month journey so let's hope i can keep this up.



I haven't shared my trades as i am still not sure if i should but my current trade is in SGX made a few days back.



Happy swinging. Make the hay while the trump rally last! 

Saturday, 7 January 2017

Passive Income Update - Goals for 2017

I spent the first weekend of January setting the goals for 2017. I do track my goals regularly and 2016 was a mixed bag where i managed to hit 50% of the goals set (quite an achievement already! lol)

Your goals will depend on the life cycle which you are in and i have set some very "stretched" goals for myself for end 2017 (not all are listed here):
  • Achieve passive income of $60,000 per year
  • Achieve trading income of $1,000 per month 
  • Travel to 3 new places or cities 
Goal 1 - passive income of $60,000 per year

My eventual target is about $120,000 per year so i am still a long way from this. The idea is to build up a portfolio of bonds and dividend paying stocks. My existing portfolio is projected to generate around $36,000 for 2017 on a blended yield of 6.6%, so i still have some way to go. 

I will probably add more dividend paying stocks and REITs as well as some corporate bonds. I may consider using leverage to achieve this. This is probably a stretched goal but i need to "just do it". 

Goal 2 - generate trading income of $1,000 per month

This is just to keep me in tune with the market. I will use a $100,000 portfolio to trade anything under the sun. Stocks, Futures, Forex. This is of "moderate" difficulty. The difficulty is that i hardly have time to monitor the market due to my travel and work commitments. Let's see if i can meet this target.

Goal 3 - Travel to 3 new places or cities

I aspire to travel round the world one day (need to build up that stream of passive income still) so in the meantime, i will try to visit 3 new places or cities every year. This should be an easier goal. 

CPF Accounts and Mortgage Repayments

I have decided in December last year to stop using CPF for our mortgage repayments. From this year onwards, I will use cash to pay down the monthly mortgages.



You must have read about AK47's CPF account balances. The inspiring post is here. I too, have decided that it is probably better for my CPF balances to earn that 2.5% from government then to "pay for it" myself. As you can see, the interest is $17,933.23. 

Come to think of it, it is probably better off to pay down the amount drawn from CPF then to pay off the bank. Otherwise it is a "double whammy" since bank interest rate is lower and doesn't require you to "pay back" the interest. Wifey's withdrawal from CPF is almost similiar. I will try to pay off my CPF portfolio if i have excess cash and can't find a good use on them.


Ok, that's it for today. 

Happy CPFing

Related Posts Plugin for WordPress, Blogger...

Google Analytics