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Creating a retail bond portfolio

The opening up of the retail bond market is very good news for investors like you and I. Bonds are basically debt securities which a company promises to pay you a regular interest for borrowing money from you.

Hopefully more blue chip corporates will start tapping into this segment and not just targeting the high networth private banking market. 

The Perennial bonds was a case in point where a 3-year bond offering a yield of 4.65% were over subscribed by 4x with strong demand from retail investors! 

A James Bond Portfolio

I know of a lady lawyer friend who is extremely risk averse but over the last decade, she has built up a portfolio of bonds worth more than $2 million. 

I nicknamed her "bond gal"  (without her knowledge or approval). She uses her bonus and savings to purchase bonds in a disciplined manner, resulting in the fact that she has now managed to build up a sizable asset base. 

Of course you can argue that she has a high pay to start with that allows her to build up the portfolio as each bond outlay is at least $250,000 but nevertheless, I admire her perseverance to do that.

Creating passive income from retail bonds portfolio?

Most bonds pay coupons twice a year and repay the principal at maturity. 

Let's assume there is a decent bond issuance every month and it pays a 4.5% interest and you invest $10,000 each time. Over a 12 month period, you have created a $120,000 bond portfolio that pays coupon every single month from the second year onwards.  

Monthly Interest received = $120,000 x 4.5% divide by 12 = $450

Now you repeat that process over a long period of time and you will create a bond portfolio that will take care of your needs.

Whether you like bonds or not depends on where you are in your life cycle?

Different people go through life cycles at different points in time. I do admit that I never like bonds when I was much younger. 

People who have been following my blog know i have a high risk appetite. I invest in unlisted pre-IPO companies and punt IPO stocks. I invest or trade in stocks and shares but when someone mention bonds, I will usually sweep it aside as saying the yield is too low. 

As a side note - One of my unlisted companies is going to be listed soon... Fingers crossed... Not sure how it will perform post IPO as I am under moratorium. I will blog this story another time. 

The opening up of the retail bond market changed my view as I no longer need to set aside a princely outlay each time. I can decide the quantum that I want to invest from $2,000 onwards. 

As bonds has lower volatility (it should theoretically) and lower risk of loss (given it pays its principal back at maturity), it will be more suitable for risk averse investors and this comes with age ^_^

How the rich play the bonds game?

I didn't really want to blog much on this but if you think they are happy with the yield, it's not true. 

The rich will take leverage (through the private bank) on the rated bonds for up to 80% of the value and earned a levered return from their bonds investment. 

As such, a rated bond instead of yielding 3% may yield up to 6-8% via leverage. 

Happy retail bonding

I hope the retail market deepens. MAS has been trying to open up the retail market and perhaps we can even see a Temasek retail bond soon?

However, don't expect a high interest payout from a AAA-rated bonds. The higher the credit rating, the lower the interest but at least it opens up more options for smallish investors :)

My bond investment criteria

I am not going to kid you to say it is without risk. Let's take an example of Ezra bonds trading below its par value now. If it can refinance its bonds or repay them at maturity, then no issue. The unrealized loss is temporal. If it can't repay its debt, then the company will be in default and that will spell trouble for all investors alike. 

That is why some equity investors track the credit ratings of a company very closely. If the credit rating is bad, it means the bonds will go below par as there is a fear of default. Consequently, the share price will plunge as well. 

Let's run through some simple criteria I had for bond investing. 

• Yield of at least 3%
• Short tenure of less than 5 years
• Stable business with predictable cash flows or foreseeable revenue
• Decent balance sheet that is not overly geared

My investment target - A $2 million portfolio when I retire 

My target is to create a bond and stock portfolio of at least $2m over the next 10 years yielding at least 5% per year. It will be funded via cash or from my SRS portfolio. 

Not sure if I can achieve but at least I need to start somewhere :)  I want to retire while I am still alive and kicking!

I have kick started that goal with a placement tranche on Perenial Bonds. 

You should create your own goals too and work towards them too!

Happy bonding

SRS Portfolio - 30 Sep 2015

It has been a while since i last updated on my portfolio and one reason is that DBS stopped sending me the monthly SRS statements without notifying me! I was "gong gong" waiting for it to come into my mail box. The other reason is that i am consumed by a mega project that is taking away all my time and attention on my own retirement accounts. This project will not end for many more months...

Anyway, I will do a quick recap on the dividends that i received from July to Sep.

My wife's SRS account received a dividend of $534 in August. During this quarter, the accounts sold Semb Corp but re-invested into UOB. The share price of UOB has since rebounded to $20.40 and the portfolio is currently up 7%. I am contemplating buying some retail bonds from the open market with the remaining cash.

My own SRS received dividend of $500 from UMS in July. UMS pays dividends on a quarterly basis but i have not 'used' the dividends received to date of $2,000 to lower the cost. I bought Capitamall and sold Starbust in Sep but have since been "idle". 

I have a cash balance of $88,559. I hope to deploy those idle cash soon! 

I will keep this blog post short as i am writing another post on creating a bond portfolio! Happy SRSing.

A bloodshed August

August turned out to be a month of "turmoil" for my SRS and IPO accounts and the month for paying school fees to Mr. Market. 

Let's start with my SRS account and the transactions. 


I have been wanting to sell Starburst, especially so after its Q2 results were released, where it had another quarter of declining profits.

I left a standing order to sell at 40c or better before I travelled for a weeklong assignment in different time zone. The only thing positive from the trip was that I took the A380 that has the SG50 flag ^_^

Alas, the trade was never done due to low liquidity even though i shifted my sell order down a few times. It kept "meandering" down slowly and closed below 30c. Urrgh...

I took a very painful decision to cut loss on this position and moved on. Sigh. 

There are so many lessons to be learnt from this investment:

• the initial investment thesis was flawed. It wasn't a fundamentally strong stock and it wasn't for recurring passive income either.  The company's founders probably cashed in when its earnings peaked last year - lesson learnt. Need to do more due diligence on management and fundamentals. Stick to companies with proven management that shows increasing profitability. 

• I should have cut loss early when Q1 seriously underperformed. Under normal circumstances, I would have cut loss when a key support gives way. I deviate from my usual discipline and now have to pay a price for it. *Ouch :( - lesson learnt. Be disciplined in risk management. Don't let the losses ballooned beyond control. 

• The liquidity of the stock is pretty bad. This creates a wide bid-ask spread whenever a crisis happens. Probably the small cap nature of the stock doesn't help. - lesson learnt. Stick to bigger cap or stocks with better liquidity. 

Capitamall Trust

The REITs have fallen to a level which I felt attractive and has priced in a rate increase. I shortlisted 4 REITs which are trading either at book or below book value and have a stable yield of more than 5% on last Thursday before market opens. I am happy to hold on those REITs for passive income in any case should prices stabilize. 

All gapped up above my order price on opening and I ended only buying 10,000 shares of Capitmall Trust at 1.905 :(

Let's see if I can find any more interesting stocks to add in September. 

I also bought 1,000 shares of UOB for wifey's SRS account at 19.27. This is a beta play. I am betting on a short term rebound in STI. 

Thoughts for SRS

The loss on Starburst is a painful one. It is all about the lack of discipline, wrong choice of stock and being complacent and I paid the price

Another thought that went through my mind was whether a pure equity portfolio is a right one. If I allocate a % to bonds, will it meet my objective of creating passive income from my portfolio with less volatility?

Should I change the strategy and style? 

The losses from Sembcorp and Starburst made me rethink my strategy on whether I should be a more active and responsive investor and whether I should allocate part of the portfolio to less volatile instruments like corporate bonds. 

However, unless the bond market develops further, there will be a lack of choices for bonds. 

I have no answers to my own questions above but it is a path that I need to spend more time pondering. 


I also lost a sum of money on the IPO of CMC Infocomm. I had previously told my broker that I don't like the fundamentals and don't want the placement shares. He assured me that the stock is well received and has the support of shareholders and against my own better judgment, I took the shares. 

Well, the rest is history. The stock tanked against a bearish backdrop and once again, the lack of liquidity resulted in a wide bid ask spread. 

Frankly, I am happy to live and die by the market. If I made a wrong decision, I am fine to "live with the consequences". I am also happy that I didn't let my position affect my IPO ratings. :) 

What i am more "upset" with is the subsequent reluctance to let me cut loss or sell. Although it may have been out of good intentions, they turned out to be disastrous and contributed to the August bloodshed. 

Ok that is all for a Sunday posting. Enough of my ramblings and time to stay focus. 

Good luck to your own pursuit of financial freedom. :)

Sembcorp - What could I have done better?

I cut loss on my wife's SRS position in Sembcorp on Wednesday when the $3.80 support gave way.

It is always good to do a recap on my investments to see what went right and what went wrong.

Let's do it on the pictorial view. Easier for everyone.

I bought the position in March with a stipulated cut loss around ~$4 thereabouts. The post is here.

A few mistakes made that i can usually avoid for trading but can't seemed to be able to avoid it for a longer term holding position.
  1. Letting a profit of 9% turned into a loss. In trading - i would be moving my stops up pretty closely and it will take me out automatically.
  2. I never cut loss when it broke $4. Again, violating my own stipulated principles ^_^
  3. Finally did it at when $3.80 gives way realizing a loss of around ~15%
Anyway this is my style of investing. I will gladly admit my mistakes and moved on. Let me see how i can further improved on my SRS investments.

The drop in oil continued to have an adverse impact on sentiments and fundamentals on O&G stocks.

Waiting for the crash to come?

Image result for waiting for durians to drop

On a related note - I injected $12,750 into my own SRS account in July. I am done with the SRS contribution for this year.

Many stocks on SGX are on a cheap sale now and on a strong downtrend. The cash of ~$115k will come in useful when the crash comes. 

Happy SRSing

Keppel DC REIT

Keppel DC REIT announced a decent set of maiden results that exceeded its forecast. Announcement is here.

I like the low leverage of 26.4% and there is much headway to take on debt should the need arises. It also has a long lease period of 7.2 years.

The detailed results is below.

I also like the fact that they purchase properties from Macquarie Telecom and build in annual rental escalations in the agreements.
This will allow for future upside growth to the DPU

I think the outlook remains healthy as cloud computing and data demand continue to grow healthily.

My portfolio of 15,000 shares in wife's SRS account will yield about $534 and be paid on 28 August.

Happy SRSing

SRS Portfolio - 30 June 2015

No action in June

The SRS portfolio continue to see no action in June. 

The statements are below and the portfolio is showing some unrealized losses. 

The only income received is the interest. I need to "buck" up on this account and start to add some positions when the opportunity arises. 

Investment Strategy

As a reminder to myself, I am supposed to add only long term positions. It should comprise of dividend stocks or REITs. The minimum yield should be at least 3% for stocks and at least 5% for REITs! 

Happy SRSing.

SRS Portfolio - 31 May 2015

Apologies for not posting for a while. Had been very busy closing a transaction while trying to get a holiday in between. 

May received dividend income from two companies. $275 from Semb Corp and $1,500 from UMS Holdings. I really like the dividend from UMS, need to find more such stocks and add to my passive income portfolio regularly. 

I haven't had the time to monitor or add new positions. Will try to do some serious thinking once i have the luxury of time. Fingers crossed but hopefully will have some down time soon!

My portfolio statements enclosed. The biggest unrealized loss comes from Starburst Holdings. I will hold it for one a while more and see if financial performances improve. 

Happy SRSing

Starburst just went burst today....

It was pretty ironic.

The stock that i wanted to buy but missed out, IPS Securex, ran up like crazy from 49c and the one that i managed to get, Starburst, went down the gutters after announcing a very poor set of Q1 results and now i am sitting on a unrealised loss of 3.8k within one day... ouch!! The stock chart looked super ugly

This is the perils of investing in small cap stocks with lumpy earnings..... Although the Company took great pains to explain that Q2 will get some revenue but i am not sure if it will be as good as Q2 last year...

I am so so so so upset with myself.... :-( 

I will need to re-look at how i select stocks for long term investing but first i need to find the time....

Starburst Holdings Limited

I added 50,000 lots of Starburst Holdings to my SRS account on Thursday at $0.555 each. I first covered this Company when it IPO last year and my article is here.

I will not spend too much time writing about the Company as you can find the annual report here.

The Company specializes in the design and engineering of fire-arms training facilities in SEA and the Middle East. The Company has been growing rapidly for the last three years and net profit hits S$13.159m in FY2014.

The Company has been generating impressive returns for its shareholders as seen by the ROE and ROA

and more importantly, the Company has little debt on its balance sheet and trading at a valuation of around 9.4x PE

The shares are quite tightly controlled with only 20% free float and each founder holding 40% of the Company.

If you want some out-dated research report, DBS and CIMB issued reports in Sep and Aug last year. The links are here and here respectively. While i like the uniqueness of this Company, my concerns will be the lumpiness of the contracts and it is good that they are getting recurring revenue now from range maintenance etc.

This shares hardly trades so if you want to cut loss and get out, it can be an issue. This is a medium term hold for me of about 2-3 years. Hopefully the Company will not disappoint and continues to fire at all cylinders.

Happy firing!

SRS Portfolio - 30 Apr 2015

There is nothing much to blog about about my portfolio as of end of April. I have been very busy with work but having said that, I added a position last Thursday. I will blog about it in my next post. 

UMS Holdings Limited

UMS holdings went XD on May 5 and the dividend of 3 cents will be paid on May 28. My shareholding of 50,000 shares will receive a dividend of $1,500. This definitely feels more substantial than the one coming from Sembcorp! 

Sembcorp Industries Limited 

Sembcorp went XD on April 23 and the final dividend of 11 cents will be paid out on May 18. Based on my wife's shareholding of 2,500 shares, that will translate into a dividend of $275. That sounds quite pathetic. hahaha. If i include the amount paid out during the interim, the yield will be around 3.95%. Maybe i should have 'created' my own dividend by selling at $4.80. lol....

The Company announced a poor set of Q1 results on May 7. The presentation slides are here. The Q1 net profit was down a whooping 23 % due to intense competition in Singapore. The Q1 EPS is 7.8 cents. Net Asset Value stands at $3.31. The outlook for the remaining 2015 continues to be challenging. While I don't like the outlook and smell of things, the share price may have already priced in the poor results. I will hold it for now unless the share price crashed below the major support of $4.05.

Happy SRSing. ^_^  Still have quite a bit of cash to deploy!..... 

Random thoughts for April

It has been a while that I have the luxury to sit down and blog. I have been on the road. Many things happened this month. 

A friend passed away

My friend who was around my age passed away this month, leaving behind his wife and young child. I was glad that I managed to see him one last time before I flew off. He has been in the hospice and suffering for a while. 

When I received news that he has passed away, I was filled with both sadness and relief for him. Life is short. Treasure your loved ones. 

A responsible family man
Although he died young, he had been a responsible man. He not only paid off the debt on his home, he has also managed to build up a portfolio of stocks that generates passive income for his family. This is what I call a responsible family man. 

I spoke to a very successful fund manager recently. He said he only recruits a family man for his team. When asked why, he said, "if a man takes good care of his family, he is a responsible person and you can rely on him to take good care of your investments too." 

Here you go. A little inspiration for you to start taking good care of your family. 

Private investments 

I have been making investments in private companies whenever the right opportunity arises. It was interesting that my IPO blog was recently the source of my upcoming investment into a start up company. This will likely be my 4th investment into an unlisted company. I will dedicate a blog post to it in the coming days and you might be able to benefit from what that company is doing in that post. 

Public markets

I haven't been following the public market too closely. Really getting rusty but I am just too occupied with a few projects. I will need to buy stocks for my SRS accounts. Those that I can buy and then throw inside kind and look at it once in a long while.... sigh... 

Time is indeed one of the most previous commodity. Where have the last 4 months gone to?

SRS Portfolio - 31 March 2015

No other transactions in March for my SRS account other than the 50 lots of UMS Holdings mentioned in earlier posts.

I have been very busy with work so haven't had much time to think about what new positions to add.  I still have quite a bit of cash to deploy here. 

Similarly for my wife's SRS account. No new transaction after Sembcorp as the cash is fully deployed. I may consider depositing $12,750 into her account in April. 

Keppel DC REIT announced its maiden results last week and it was better than forecasted in the prospectus. It should still be well supported for now. 

So long for now. Happy SRSing. 

SRS portfolio - 28 Feb 2015


I have nothing much to report for the month of Feb except a $130 distribution from Keppel REIT which I have since divested. At the end of Feb, I am holding $132,459 of cash.

Feb statement

March purchases

I have already shared with you my March purchase of 50,000 shares of UMS holdings which is still holding up pretty well despite the ongoing market corrections. 

Wifey's SRS

I was waiting for my wife's SRS Feb statement and before I can even asked her about it.... the statement has already "gone" into the thrash bin. 

There is no change to her SRS account. Still holding 15,000 shares of Keppel DC REIT and the March purchase of 2,500 of Sembcorp Industries

Happy SRSing

Two new positions for my SRS fund

I initiated two positions for my SRS portfolio today. 

Sembcorp Industries

I have been contemplating this counter since last week and was weighing the probability whether oil prices will "crash" further with Citi predicting it will fall to the $30 region

I bought 2,500 shares at $4.28 eventually and will spare you the details of how the price ran away from my various price queues ^_^ 

The key reasons for buying:

  • reasonable valuation of less than 10x PE Mulitple
  • stable utilities business giving a decent yield of ~3.6%
  • bet that oil prices have stabilized
Given its significant exposure to Sembcorp Marine, any further crash in oil prices will be disastrous. The picture below shows the various multiples at the point of acquisition (for my future reference)

With many STI Components stocks trading at high PE multiples, oil-related counters seemed like having a "fire sale" right now. 

As in all my investments, the cut loss for Sembcorp Industries is around $4 and that is likely to happen if oil prices crash below $50. My "target" for this investment is around $5.

With the above purchase, I have "maxed" out my wife's SRS account for now. 

UMS Holdings

I bought 50,000 shares at $0.52 today. This is my second time investing in this counter but it is a much bigger position than when I first bought it.

This is more of a yield play that hopefully can give me a stable and recurring income for years to come. I am more than happy if share price stays stagnant but delivers the dividend every quarter. 

Reasons for buying:

  • Company is debt free and generates high cash flow
  • Usually pays 1c dividend from Q1-Q3 and a higher dividend in Q4
  • Business seems to be recovering, especially in the semiconductor area

Again the PE is not overly expensive at below 10x PE. I haven't thought of a cut loss point yet but will be very concerned if it drop below $0.48.

So long for now. 

Happy SRSing.

Planning for your retirement

CPF announced a series of changes in February that, in my view, make it more flexible for individuals to design their own retirement plans according to their own circumstances. The link is here

You should plan early so that you can design the lifestyle you want (assuming we all live to a ripe old age! ^_^)

Do you know which plan you are going to choose when you turn 55?

There are currently 3 plans to choose at 55 but note that the monthly payout only starts from 65 onwards. This is basically an annuity plan to pay you "till you die". 

The reason why the govt allow "property" to be "mortgaged" against the minimum sum is to prevent social issues so that you have a roof over your head while using "$650-$700" per month payout for the monthly expenses for life. 

The "normal" package is to keep $161,000 for a full payout of $1,200-$1,300 per month for life. 

Frankly I have not explored if it is a good idea to opt for "enhanced retirement sum" where I will get $1,750-$1,900 per month for life until I know how much I will get back if I "die early". Hahaha. If it makes sense, I will then opt for it. No point giving my money to govt right?

However, if you think you will live to a ripe old age, you may want to consider topping up to enhanced retirement sum using your personal savings. In that way, you can have an enjoyable retirement travelling the world! :)

Will you have enough in your CPF accounts to meet the "normal" package? 

This is one way to let compounding work harder for you. If you have no use of the cash in your CPF ordinary account and have yet to hit the "minimum sum", you should transfer them to the CPF special account up to the maximum allowed each year. 

The earlier you transfer, the better the compounding effect, so plan your retirement early and let time help you, especially when the returns in these accounts are risk-free! You can view the slides from CPF on how to transfer the balance here.

If you haven't read this post from AK, you should. He has shared how a lot of his money in his CPF SA balance is from the government by transferring the OA balances in to the SA balance early in his working life. Similar to AK, i have hit the minimum sum so there is no reason why you couldn't too. You can max out your voluntary contributions of ($31450 less mandatory contributions) if you don't mind having your money "stuck" in the CPF balances till you retire. Here is a little peek at my CPF SA, i managed to hit the minimum sum of $161,000 in December last year.

Ability to withdraw some cash at 65!

There are further flexibility to withdraw from retirement account at 65. You can first draw $20,000 at 55 and up to 20% of the balance at 65. You can also top up your spouse CPF so that he or she can have higher payout and both parties benefit for life.

This is one area which you should seriously consider because retirement planning is a family matter if you want your loved ones to be well taken care of too! Some other ways to top up the CPF of your loved one are listed here

More interest for the silver generation!

Seems like the government wants to "reward" the pioneer generation by giving those above 55 years old a higher interest and a higher CPF contribution rate.

Higher contribution limit for SRS from 2016 onwards

In a bid to encourage more Singaporeans to plan for their own retirement, the SRS cap will be increased from the current $12,750 to $15,300 next year. This is good news for those who have been taking advantage of the scheme and are in a position to contribute more. The link from IRAS is here.

Stock picks by Singapore Edge in 2014 - No horse run

The year of the horse stock pick by the Edge outperformed the index and really "no horse run" - in hokkien means done extremely well. I also include its 2015 stocks picks for the year of the Goat!

Click here for the link to a better picture and some brief reasons for the stock picks.

The reason why included the table above is for my SRS account as i could have constructed a similar portfolio using my SRS account. I keep it here for record keeping purpose, so that i can refer back and kick myself in the butt if it outperformed STI again in 2015! :-P

That is it for now. Happy retirement planning and do something your future self will thank you!

Do you benchmark your portfolio?

The above article appeared in Saturday's papers. For DIY investors like me, there is always a "competitiveness" to see if you are performing better than the indices or the professional fund managers. Otherwise, you might as well hand over your money to them or invest in ETF.

According to the returns presented in the picture above, the professional fund managers and the STI ETF managers seemed to be doing a pretty good job where they generated a return of at least 11% last year. 

Benchmark my portfolio?

Since my SRS portfolio is primarily invested in locally listed stocks, the STI ETF and unit trust focused on the Singapore market are probably the correct benchmarks if I want to use them. 

I haven't benchmarked the returns on my SRS portfolio but if I do, the returns is probably lower than the ~11% recorded by the fund managers last year. My SRS portfolio has seriously under performed last year...sob sob... :(

Do you benchmark your portfolio?

Do you benchmark your portfolio? If you do, what is the rationale for doing this? Is it for information only or does it determine how you allocate your investment capital?

What is the inherent problem with using a benchmark?

The inherent issue with benchmarking my portfolio is that I am not vested all the time. I hold cash as part of my plan to deploy them during a crisis and I do "time" the market in some sense and it is causing a huge "drag" on the performance since cash is only yielding 0.5% per annum.

Similarly, holding cash is not an option for the fund managers.  They are paid to be "invested" all the time and holding cash in excess of redemption needs will invite questions from investors that they are paid to do "nothing". 

I once spoke to a professional fund manager with a reputable asset management firm. He said this to me "you must decide for yourself when you want to exit the unit trust because we have to be invested all the time. We can't sell and hold cash even if we believe the market is toppish and over-valued, otherwise we risk underpeforming against the benchmark.

Lesson: while investing in ETF and Unit Trust enhances the diversification effect and helps you solve the "stock picking" problem, you must be aware they will be more suitable for investors who want to stay invested at all times or investors who don't time the market and use dollar cost averaging as a strategy. (Pls note that I am not saying this is a bad strategy. It really depends on your time horizon and investing temperament). 

I seriously need to buck up and start investing...

I am not sure if you already know the blog - Lady you can be free. It is always inspirational to see a true investor, who against all odds, build up a millionaire portfolio over time and she is definitely enjoying her fruits of investment now. I would aspire to be like her. The reason why i say she is inspiring is because, she has done it and is not a 'slave' to the market. She lets time and compounding play to her advantage but of course, saving up for that initial capital is key.... 

Traders are always in and out of positions and spending time looking for the next trading idea while here we have someone who couldn't care less if the market moves up or down today or tomorrow. She can go travel in peace and then check her portfolio at the end of the month. 

I guess as i grow older, this is the lifestyle which i would want to pursue. Travel the world, sip a glass of wine, enjoy the sunset and let the portfolio takes care of your daily needs. This will be the picture which i am painting for the next 10 years.

My ten year plan

I want to retire by March 2025. By which time, i should have build up a portfolio worth more than $1m generating at least $50,000 in dividend each year.

I record my thoughts and plan down so that i can strive towards that and I want the make investing a part of my habit and hopefully, i can do it and inspire someone else to do it too

Will you walk this journey with me? 

Maybe we can encourage and motivate each other along the way! ^_^  Happy investing.

SRS portfolio - 31 Jan 2015

I am still trying to construct a portfolio that I can hold for a longer term with my two SRS accounts. 

Seems like I made better progress on wifey' account where the Keppel DC Reit moved way above my entry price. I can moved the "stop" to around $1 with enough leeway to let it fluctuate. 

The 50 lots in my Keppel REIT is probably more frustrating. I had previously blogged about my desire to sell down part of it due to its highly levered position (~42%) should the price go up. On hindsight, letting go partially at $1.25 (from my entry price of $1.205) would have made some sense. 

Anyway the share price dropped futher last week and I decided to sell them at ~$1.22. Back to 100% cash again. 

I wish I have more time to do some research and deeper analysis into the stocks and I am actually trying to focus on more "exciting" growth stocks. 

Maybe the Chinese New Year break can allow me to do it... 

Time versus Money

Is it true that when you have time, you have no money and when you have money, you have no time to spend it. 

Worst still, what if you have no time and no money haha. Ok. Need to move to the top right quadrant of having time and have money. Pressing on. ^_^

What is the most lucky "M" in investing?

Many of you must heard of the 3Ms in trading (which I first come across in the book Trading for a Living by Dr. Alexander Elder) and now used by many to conduct "wealth creating" seminars:

• Methodology
• Mindset
• Money Management 

The above 3Ms are applied to you, the individual. Things which you are in control of. I have come up with the 3Ms of investing which are equally important but they are things which are beyond your control and which you should also think about when you invest. 

Today I will write about the 3Ms of Investing and one of which is a lucky "M". See if you can guess it before you read futher down...

For long term investing, you need the following 3Ms

First M - Management 

I don't think I need to spend time on this. You know the importance of management. With a good management, you can trust them with your hard earned money. There are many examples of why good management is important. Apple got a new lease of life when Steve Jobs returned. Berkshire Hathaway's Warren Buffet invests only in companies whose management he trusts. Good management creates value and bad management destroys it. 

Second M - Macro Environment

The second M is the macro environment and trends which the company is in and that affects the Company no matter how good the managent is. 

NOL and SIA were in doldrums because of the competitive macro landscape in which they are in. The share price only got a reprieve and went on a rally when the oil prices crashed. It doesn't mean the fundamentals have changed but a cheaper oil price definitely will help. 

Li Ning and other offline retailers in China suffered when the retail trend and habits changed. The new generation took online shopping with Alibaba to the next level and brick and mortar retail stores started to bleed. The anti corruption drive also impacted luxury dining and retail, so in that regard, do take note if you are currently exposed to such companies in China (maybe Osim?). 

Similarly Sony Ericsson, Nokia and Blackbery couldn't react fast enough to the changing competitive landscape caused by Apple, Samsung (and now Xiaomi) smartphones. 

Third M - Mulitple Expansion

This M can be your lucky (or unlucky) M. It doesn't depend on you or the management. It depends on the market. Let me give you a simple example. 

Assuming a company has $70m profits in year 1 and the market gives it a multiple of 10x PE. That translate into a market cap of $700m at end of year 1. The company still makes $70m at end of year 2 but the market sentiments have somewhat improved and investors start to be more bullish on its future prospects in general. They decide that a fair value of 20x PE is more appropriate and because of that, the company now trades at $1.4 billion market cap. 

Without any change in anything, the company is now worth twice as much "magically". This is called Multiple Expansion. 

In a lot of cases, you never understood why or bother to find out which component contributes the most. Let me give you a simple example, Breadtalk. 

I am not sure you noticed that Breadtalk is now trading at multi year high and at a PE of more than 30x (if I recall correctly). 

It is a combination of good management, favorable macro trend of rising affluence and multiple expansion. You can actually compute the effect of multiple expansion. Just use the latest EPS and multiple by the difference in PE multiple from one year ago. That will give you the "wealth created" to you by the lucky M

Why do some sectors such as healthcare have a higher mutiple versus others such as the construction sector? Can anyone control this? Probably not. You just have to "thank your lucky stars" when you benefitted from it. 

Happy investing. 

Keppel REIT and Keppel DC REIT

Keppel Corp continued to hog the headlines with the privatisation of Keppel Land. The chart also left behind the foot prints on people who are in the know... as evidenced by the increase in volume and share price prior to the halt and announcement. There are just too many people who may have "access" to the information, such as lawyers, investment bankers, corporate insiders etc and to be fair, such information are too difficult to control. The only thing the company could do was to suspend the share trading early and they did that 2 days ahead of their earnings announcement.  Anyway, I will leave that story for another day.

Keppel REIT announced its full year results for FY2014.

While the headline figures may not look good with DPU dipping by 8.2%, in my view, the results are actually ok. Currently i have 50,000 shares invested at $1.205 late last year.

Key Positives
  • The last quarter results only consist of 2 weeks results from MBFC Tower 3. It will have full quarter contribution going forward
  • Commercial rents continue to stay resilient and the rental revisions are done at higher prices.
  • Keppel REIT has one of the youngest and largest portfolio of Grade A office space
  • All in interest rates continue to be manageable at around 2.23%
  • NAV per unit is ~ $1.41 (versus the last trading price of $1.235)
Key Concerns
  • High gearing of 43.3%
  • Weakening of AUD against SGD from its Australian portfolio
  • They only partially own some of the key buildings. Asset enhancement projects will be more difficult if they don't have the controlling stakes in those buildings
Distribution Details

I like the quarterly distributions from Keppel REIT. Based on the announcements, i will get a distribution in February.


The feeling is not bad... as if you owned some prime office buildings in downtown Singapore.

Share price chart

Keppel DC REIT

Seemed like this stock is off to a good start after my entry at 96.5 cents.

Happy SRSing.

SRS Strategy and Portfolio

As mentioned in my IPO blog yesterday, I updated the investment strategies for all my blogs and today i cover the SRS strategy. You can find the updated strategy here and it will be constantly updated over time.

Let me reiterate the key concepts and mindset so that you can appreciate it better.

  • Fundamentals - Stocks are chosen primarily using fundamental analysis in terms of valuation, macro outlook and earnings potential.
  • Longer time horizon - The stocks are held over a longer time horizon and not intended for short term trading. 
  • Volatility - is actually not appreciated. I would prefer to see the share price creep upwards over time.
  • Cut loss - Protecting my downside or my profit is a must and equivalent to saying "I am wrong or Thanks for the ride up" depending on the situation. In any case, I would rather lose face than lose my capital! The rule #1 of Warren Buffet. I will keep my cut loss level to between 8-10%
  • Passive income versus capital gains. I am hoping to strike a balance between investing in stocks for the dividend income and investing in them for pure capital gains.
  • Targeted returns - My targeted returns for the portfolio is actually quite simple and straightforward. I hope to achieve portfolio returns of between 5% to 15% annually.
  • When to sell ? - I will sell the stocks when they hit the "intrinsic value" or when the valuations become too rich (or if i loses patience)..
Stocks that i missed out from my SRS accounts

I missed a few stocks that i was monitoring closely in December. They are UG Healthcare at 23.5 cents and Chip Eng Seng at 85 cents. No point crying over spill milk. Stocks that are in my watchlist include Nam Chong, CWT and Ezion. These are the stocks that "passed" my FA analysis in late December last year. The thesis should still hold. 

My current portfolio

My current portfolio consist of yield stocks. I will add some fundamentally strong stocks when the time is ripe.

Yield stocks
Keppel DC REIT 15,000 shares at $0.965 (data center REIT which i blogged about)

Keppel REIT 50,000 shares at $1.205 (office sector still the bright spot but this is highly geared and i may rebalance it later)

Cash ~$82,918

Ok so long for now. Happy SRSing.

Put your CPF money to work

There is an article in the Sunday Times today on how to maximize the use of your CPF. 

Let me summarize the key points and share with you a tip on how to reduce your tax bill while doing something which you do anyway. 

Key Points
• CPF OA earns a guaranteed interest rate of 2.5% and can be used for housing, investing, education and approved insurance. 
• CPF SA and CPF MA earned guaranteed interest rate of 4%. 
• The first $60,000 of your combined CPF earns an extra 1%. 
• When you turn 55, a Retirement Account will be created and you will need to transfer the minimum sum in and for me, that will be $155,000. 
• You can enjoy tax relief of up to $7,000 if you contribute cash into your own CPF SA and another $7,000 if you top up the CPF SA of your spouse and parents (and loved ones)

How to reach your minimum balance of $155,000 faster and with less cash?

• If you want your CPF balance to reach the minimum balance faster and with less capital due to compounding effect, consider transfering excess lump sum cash from your CPF OA to CPF SA when you are younger. This will allow the compounding effect to take place as CPF OA compounds at 4% (without considering the effect of the extra1%). 

Tax Savings Tip: How to "magically" reduce your tax bill without any additional efforts? 

This is something which too many people are not aware of it or just plain lazy. Let me share them with you. 

Key assumptions:
• your parents are over 55 years old 
• you give them a combined allowance of  more than $583 each month. 
• please check with CPF if your parents have met the necessary conditions for cash withdrawals from the CPF-RA

Action required on your part
• Using the CPF portal, use Internet banking to transfer a lump sum $3,500 to each of your parent (my preference is at the end of each year when you get your 13th month AWS and you get to enjoy the tax savings for that year). 

Your parents will get $583 per month in cash for the next 12 months. 
• You get a tax deduction of $7,000 for the tax year that you make that contribution. 

Happy tax reducing. Like my facebook if you are going to use this tip :-P

Think and Grow Rich

I read many blog posts on their reflections for 2014 as well as the goals for 2015.

There are many noteworthy goals and aspirations by fellow bloggers which are highly commendable. 

End December is always the time where I slow down, reflect on the year and set actionable goals for 2015. 

Reflections for 2014

I have a few passions in life and one of them is to travel. I love to visit and explore new places and will travel a few times each year. Actually that is what keeps me motivated.... by having something to look forward to.

2014 has been a rewarding year in terms of travelling to new places.  I visited the following places for the first time. 

Greece - Athens, Santorini, Mykonos, Nafplio, Corinth. 
Turkey - 4 hours transit in Istanbul (Blue Mosque) 
Japan - Kusatsu, Karuizawa, Nozawa, Yokohama
United States - San Francisco  

I would have loved to share my travel diaries with you except that I need a lot of time to write them and time is indeed the most precious element. Otherwise, the theory of compounding will be rendered useless. 


My goal for 2015 is to visit more new places and as I grow older, I start to look for more unique and exotic experiences. After all, we only live once, so love your life and live it to the fullest. 

Another passion of mine is to share with people my real life experiences in my journey for financial freedom (be it good or bad). You learn more things from the bad experience and it also helps make the good experience sweeter. So enjoy the journey. (I will leave out the parts on donating to charity and doing good etc. Remember to do good too). 

Financial Freedom

In case you still have doubts, I haven't reach there yet. This is because I equate financial freedom with having a regular passive income (from non work related) that is more than the daily expenses for my family. 

I am at a stage where I am still very focused on building my net worth rather than creating a portfolio for passive income. As such, capital gains from investing or income from trading and IPO punting will not be considered as passive income but will add on to the net worth (if I haven't spend it).  

I am glad that my net worth goal for 2014  hit my target last year. It was a pleasant surprise given how much I spend on food and travels. (Probably the target is too low. Haha)

My definition of net worth includes the property which I am currently staying but I included my wife's share as well since financial freedom is a family affair and I am the family's chief investment officer. 

However to inspire the younger readers, it is definitely possible to hit $1m before you turn 40. You just have to believe that you can, especially if you are below 30 now. There are a few cycles and opportunities in one's life, so grab it when it comes but you can only do that when your eyes are "opened" up to the opportunities that present themselves and you must have some capital to take advantage of them, so save up diligently when you are young and are just starting out.  

Think and Growth Rich ?

I am not sure whether you have read the classic book by Napoleon Hill. I am too lazy to read the original classic, however, I spent the last few days reading the comics version. There are 13 steps to it but i just briefly summarize in a paragraph as follows. 

You must first have the desire and belief to achieve financial freedom and the belief will open your mind and translate into actions which then create a virtuous cycle into achieving your objective. 

Simple enough to understand but you have to constantly remind yourself to practise it. 

Goals for 2015

I will cover that in a subsequent post. I am still trying to make sure the goals are actionable ones and not the fluffy big picture kind. I have read or write enough of those "crap" in the appraisals. ^_^

Happy goal setting.