SRS Portfolio Update - 5 June 2019

Time really flies and 6 months have flew by. May and June are probably the busiest month for me where I had to fly for a bit. This is a picture of one of my trips taken from the plane... 

The only "upside" from these business trips is that i get to accumulate the KF miles for my holidays. It is funny that when the kids are very young, your wife would complain and don't want you to be away for too long. Now that I get older, the wife and kids  probably don't mind half as much . . .  😀  . . . i guess it is because they get to benefit from those air miles as well. 

Let's see if i can get to enjoy a free upgrade in the coming months. 🎉

Passive Income

My pursuit for passive income has never stopped and in May, I decided to do something "riskier". After paying down my home mortgage for 9 years, i have decided to borrow against the equity. The borrowing rate is 1M SIBOR + 30bps (based on current rate, it is around 2.18%. Assuming I borrow $1m and use it to invest in high grade bonds paying at least 4%, I get to arbitrage 1.82%. After 10 years, i get to make $182,000 and still be able to repay the principal back. 

I am going to use this to levered up the returns in my bonds portfolio and based on my projections, the levered return is in excess of 8%. 😎 The use of leverage obviously adds to the risk. Credit is like "fire" 🔥. Use it wisely, it can speed up your retirement. Use it wrongly and you get burnt. So you shouldn't pursue this strategy unless you know perfectly what you are doing and the risk that you are undertaking. 

My projected income will be getting a boost in the second half this year once i implement the above strategy. I will be executing the above strategy through a private banking account that i am going to open in June. I will update you again when i execute this strategy.

The reason why i choose bonds is because i want less volatility and i am happy with a minimum return of 8%.  

SRS Portfolio

In terms of the SRS Portfolio, i received $2,000 dividends from UMS Holdings in May as well as 827 shares of Frasers Commercial Trust through the stock dividend reinvestment plan. I only paid for 45,000 shares of Fraser Commercial Trust, the additional 6,036 was accumulated slowly over time! 

With the cash dividend of $2,000, l have around $55k cash to be deployed into new positions for SRS.

Happy SRSing on Hari Raya!