Adsense 970

SRS Portfolio Update - May 2019

This will be a quick update on the transactions.

Since my last post, I added a new position in my SRS Portfolio - 30,000 of Suntec REIT at $1.80 last week.

Suntec REIT has been sold down in recent week due to a placement exercise and at $1.80, it is trading below its book value and the yield is around 5.5%.

The 30,000 shares will add around $3,000 in passive income annually.

However, for the non SRS portfolio, I sold off my position in Keppel KBS REIT at 73 to raise USD for some USD bonds that I am thinking of acquiring in the coming weeks.

As such, the contribution from Suntec was more than offset by the loss of income due to sale of Keppel KBS US Reit. The projected passive income dropped slightly to $80,731. The drop is temporal and will pick up again once the bonds are acquired.

That's all the update for now. The remaining cash in SRS stands at $53,742 as of today.

Trade or Invest ?

Last week I wrote an article on Portfolio Construction - Bonds or Stocks where i wrote that instead of using REITs and Stocks, the bulk of my portfolio to create passive income built up over the last few years had been using bonds. At this stage of my life, I wanted to build a substantial portfolio that has lower volatility, more certainty of cash flow and somewhat better risk-adjusted returns. I was also able to borrow against the investment grade bonds to juice up the returns to ~8%.

The previous time I wrote another article on credit card - Cashback or Miles where i said that whether you prefers to be "rewarded" for your spending with cash rebate or air miles also depend on the stage of your life. Choose one that meets your lifestyle preferences. In life, it is all about choices and what is important to you. 

On that note, my friend invited me to the "by referral only invitation" UOB Reserve chard where the metal card can literally injure you if you drop it on your toes. 

Basically, it's just using cash to buy miles. The "un-waivable" annual fees is $3,852 and you get 100,000 miles each year when renew. Each local $1 pays 1.6 miles.  

After working through the sums of benefits, i think it is at most as good as the UOB Amex Privi Miles card since I don't play golf 🤣 In any case, I sign up for the card in my moment of weakness. 

Trade or Invest 

Since I promise to write more frequently at the start of this year (see Goal 7), this week's topic is Trade or Invest ? It is almost similar to the constant argument of whether you use technical or fundamental analysis. 

I started trading when I was in my 20s and it didn't started off well. Then after paying a lot of school fees and through many self learning (i.e reading a lot of books on trading), I made back all the losses and trading became profitable. If there is one thing I can teach you about trading, it is to learn how to cut loss and cut loss quickly. Knowing when to cut loss and move on is important. 

I started managing money for close friends and started a $100k trading account. I doubled the account after a few years. 

While it feels good to double the money through trading, it can be a "zero sum" game. You are making money because someone else loses it to you. 

It is also highly stressful managing other people's money, especially when the account size became larger, any losses are now magnified even if you take the same position sizing. I have no regrets trading. It gave me a strong foundation for my portfolio today. 

What are the benefits of trading?

I enjoy trading. It makes me nimble and more in tune with how the market is moving (or feeling). 

It gives me a lot of satisfaction but the most important takeaway is it makes me know myself better. Knowing yourself is very important. 

Trading helps me better understand what kind of person I am, whether I can stomach losses and I learn how to cut losses and move on. In the process, it made me a better person and eventually helped me made money from the property cycle as well. 

I appreciated the different life lessons taught by trading. Today, if I really need to fish for myself, I am confident that I can trade for a living full time. However, I also recognise that there are limitations to trading. It is not for everyone - so choose a style that fits your personality. 

What are the downside to trading?

Trading is usually quite short term in nature. As a result, each trading position is usually for days or weeks. While trading allows you to "time the market", you don't have the benefit of having "time in the market". You will likely miss out on strong market days that generates multi-baggers. 

Questions I have asked myself :

Trading can be profitable but is it sustainable over a long time? 

Do I want to sit in front of the computer screen every day to look for trading opportunities or do I want to do something more enjoyable when I retire?

Do I feel happy or is it stressful when I take on positions larger than my risk tolerance? 

Does the "satisfaction" from making a good trade exceed the "sadness" from making losses?

As my portfolio size became bigger, my risk tolerance actually came down. 

As the account size increases, I started suffering from "trading paralysis".  This is because more is at risk now as I want to deploy large amount of cash. 

As a result, i started to lower my return expectation, look for better quality boring yield stocks to buy and hold or put them into bonds. 

My change of role at work also require me to travel a lot, so I no longer have the luxury of trading everyday and I stopped managing money for others as well. I re-looked at my priorities and over the last few years, focused on building up a sizeable bond portfolio to generate passive income for my retirement. 

Now that I have build up a decent bond portfolio, what is next ?

Regular readers know that I have build up a portfolio that generates ~$82,000 per annum and I am going to reach my target of $100,000 this year. The bond portfolio has taken a life of its own and I will let it grow and reinvest the bond proceeds to new bonds. 

SRS portfolio - I will continue to build up the SRS portfolio in dividend-paying stocks and REITs. This is the next phase of portfolio building in equities since I secure a decent bond portfolio base. I will share the positions taken in this portfolio as it happens. I have decided to take a more active approach and has recently sold off Netlink Trust and Starhill Global. I am taking money off the table and have created a dry powder of -~$108,000 to be deployed when market corrects. I am more comfortable sharing this portfolio as it is longer term in nature. 

Little Ninja Fund

Unknown to readers, I also restarted my Ninja fund beginning Jan this year. 🤣 

While I am still busy traveling round the world for work, I miss the vibes of trading. Trading helps keep me on top of market movements. With the advanced in technology, i don't have to be at my screen all the time and I can also be a global trader as I am no longer restricted to SGX. 

I seeded my little ninja Fund with a small capital using Saxo Platform and I love the revamped simplified platform. I can trade global equities, CFDs, options, and forex. I also keep a personal trading journal on this little ninja fund but I am not comfortable sharing trade ideas as I already stopped managing money for other people for a while now.
Trading decisions are made swiftly and a lot of times, loses money because I cut losses fast when the trades doesn't work out. The baggage of making readers lose money because of my "trading recommendations" are too much for me to bear and will cause me trading paralysis. In addition, I only trade when I am free. I may open my journal next time when I retire and for little ninja disciples only 🤣. 

Saxo Platform

The Saxo web platform is simple to navigate and use. I can now trade (or invest) globally and I am no longer restricted to "buy" only. I can short using CFDs (which I did on two SGX stocks last Friday).  It also has advanced charting tools as well as orders management system. I can put in advanced orders to "either take profit or cut loss". To be fair, Saxo had the features for the longest time, I just decided to "restart" my trading life in Jan 2019. 

How has my little ninja fund performed so far ? 

Here are some snapshots of the revamped website below. 

You can trade anything under the sun and it has advanced charting capabilities. 

They even generate monthly returns for you! Jan and Feb has been good but I went for a short break in March. See post here

Q1 has been good. Fingers crossed for Q2.
You can even choose a global benchmark against your returns! 

How does my trading journal looks like? 

If you are serious about trading, always keep a journal when you enter or exit the trade. My trading journal is quite simple. It records the entry date, target price, position sizing, cut loss level and why i enter the trade. (See sample of a CFD trade that i am contemplating below). Happy trading.