Reflections for 2018 - A Tough Year To Go Through But Ended Well

2018 A Tough Year

2018 will be ending soon. Its another year to reflect again. This is no doubt the toughest year for me but life still went through nonetheless. In the beginning of the year, I had to deal with the death of a close cousin of mine who passed away due to a road accident. It was extremely sudden and we even agreed to meet up 1 week later before the accident. I never got to see him again. This is my first experience in life of losing a close family member who was around the same age as me. It was not easy at all. At the same period, I also had to deal with other family issues as well going to the hospital a few times a week.

Through this tough period, I learnt to see life in a different perspective. I see how fragile life is but at the same time how resilient we humans can be too. While most of us rely on our own hard work and efforts to live through life, when faced with issues that are out of control, some support from people around us and a little prayer comforts the soul. Through it all, the people left in this world continues to live on in search for deeper meaning of life again. After all, its the people around us that matters more than our work, our achievements or our status.


I Changed Job Again..

The first half of the year was faced with struggles. The second half of the year was faced with changes. I decided to change job again in September 2018 after just 1 year plus in the new company I joined. Somehow, this came as a surprise because I did not search for this job but a headhunter called on a random day. I decided to go for the interview and after 2 rounds, they decided to offer me and I took it up. Changing job is not an easy thing to do as I have to relearn everything and build up my network again. The first few months was tough but things got stable after awhile. I went into another new industry yet again, this time in the healthcare sector. Its quite eye opening to me actually to see how the healthcare sector is developing. There are so many people I see everyday who need treatment and the healthcare worker work tirelessly to support all these needs. Not an easy industry to be in but quite a meaningful one with passionate people working here.

Spending More Money With 2 back to back trips

Before I changed job, I took the opportunity to have a good break. I went on an epic cruise trip experiencing the finest luxury of a suite package and then a few days later, I went on another trip to Taiwan. I must have been mad to spend money like nobody's business. Life is short after all right? However, I think this was the best decision I've ever made actually. I always remind myself it doesn't hurt to spend a little more money for enjoyment.


A bad year for stocks

2018 is a bad year for stocks. The STI is negative for the year at about -7%. My portfolio is down about -5% for this year. XIRR came is at -6.45%, a negative after the past 4 years of positive investment return.

I continue to increase my exposure in stocks and took the opportunity to buy the dip. Dividends receive for next year is forecasted to be higher than this year at $4K+.


Lesser Passive/Other Income for this year

Passive/Other income decreased this year as I had less time and energy to work on my side income having to go through tough times and getting more busy after I changed job. This side income still came in decent at $14K. This includes dividends from stocks as well.

Overall total income came in higher than last year as I had a good bonus from my previous job and higher salary from my new job as well.


Increased Savings and Net Worth

My savings for this year broke a new record even with more spending. The increase in income helped quite a lot in managing my finances. My net worth is now almost doubled from 2 years ago. This savings will come in handy when preparing for my wedding and new house in about 1-2 years time.

Life still goes on after all the things that happened. I learnt to cherish life even more. While some people may be gone and some people no longer the same, if we have the opportunity to continue living, we should make the most out of it.

May 2019 be better for you and for me as well. Wishing everyone a joyous and prosperous 2019 ahead! Happy New Year 2019!

An Undervalued Stock Closely Related To Christmas

Christmas is here and the year 2018 is coming to an end. Many people are buying gifts as its the season for giving. While everyone is busy shopping, have you noticed one stock that is undervalued and closely related to Christmas?

This stock is a REIT and most of its properties are located right at the heart of central Singapore. If you've been to Orchard road to see the Disney lights or to do some Christmas shopping there, chances are you might have passed by the properties owned by the REIT. This REIT is non other than Starhill Global REIT.

An Undervalued Stock Closely Related To Christmas - Starhill Global REIT

Starhill Global REIT has 2 properties in Singapore, 3 in Australia, 2 in Malaysia, 2 in Japan and 1 in China. 62% of its revenue comes from Singapore which is why the Singapore market is especially important for this REIT. Due to lower business sentiments and poor retail and office outlook environment in Orchard, the stock price took a beating and fell to a 5 year low as seen in the chart below.

With the stock price trading at this low, it offers investors like you and me to invest in this REIT at a much greater discount. Before we get into the valuation of this REIT, let us first look at its portfolio of properties to familiarise ourselves before we make any investment decisions.


Properties owned by Starhill Global REIT

The first property owned by Starhill Global is Wisma Atria. This shopping mall should be familiar to most Singaporeans. From Orchard MRT, if you take the underpass and walk towards Takashimaya, you will definitely have to pass by Wisma Atria. When I was there about 2 weeks ago, there were so many people that it became difficult to walk. At the link-way of Wisma Atria, crowds have to be stopped by security in order for the mall to control the human traffic flow.

The next property it owns is Ngee Ann City. This property is also located near to the MRT with direct underground links. The largest tenant inside Ngee Ann City is by Toshin Development Singapore Pte. Ltd. They own Takashimaya in Singapore which most of us should know that they take up quite a huge area of retail space. Toshin development Singapore has a master lease with Ngee Ann City till 2025 so this will keep the rent they receive steady for the next few years.

Occupancy rate for retail in Singapore is 97% as at 30 Sep 2018 and committed occupancy will rise to 99.7%. For its office portfolio, occupancy rate is 92.9% with committed occupancy at 95.3%. Its top 10 tenants contribute to 58% of portfolio gross rent as seen below.

For Australia, which is Starhill's second largest portfolio contribution to its revenue, its occupancy is not that good at 88.6%. It owns properties in Perth and Adelaide.

Singapore office recovery for Starhill Global REIT

Besides retail, Starhill Global has an office portfolio too. Occupancy for office portfolio was at a low of 83.5% in Sepember 2017 and recovered to 95.3% in 2018. NPI jumped 9.7% year on year which is quite impressive.


Attractive Dividend Yield and Valuations

Investors of Starhill Global REIT get quite an attractive dividend yield on their investment. Dividend yield is about 6.67% at current price of $0.675. It is trading at a price to book ratio of 0.75x which represents a 25% discount to net asset value. Its NAV is at $0.91.

Of course when investing, we can't just look at dividend yield and book value. Although at current valuations, this stock is definitely attractive, there lies risks in this investment. It is largely dependent on the retail outlook in Singapore as this makes up most of its rental income stream. Not just retail outlook in Singapore but retail outlook in Orchard in particularly.

Orchard is a tourist area and the retail environment is very much dependant on the number of tourists arrival and visits to Orchard in Singapore. Tourists arrival and spending is still on an uptrend which I believe will benefit Starhill Global REIT. Moreover, the Singapore government has said there are plans to reinvent Orchard road to attract more locals, visitors and tourists to come.

The bottom may be near for this REIT as its stock price has fell significantly over the past few years. At current valuations, I think this is a REIT to watch out for any potential recovery and catalyst to propel it upwards. One of the catalyst is the proposed development at Wisma Atria where there is unutilised GFA of up to 100,000sqft. This is pending approval from the relevant authorities and partners.

I have initiated a position in Starhill Global REIT as the dividend yield is decent and it is trading at a discount to book value. At this level, I believe the risk reward ratio is within my tolerance level and I will look to see for future recovery and developments around the Orchard area. Rental from its Singapore properties should also remain steady as the master lease from Takashimaya continues and the occupancy for both retail and office remains high. Will also have to take note of its Australia properties which are not doing that well. That will be a drag to its performance moving forward if it doesn't improves.

Lastly, Merry Christmas and Happy New Year to everyone! Thank you for supporting my blog for another amazing year. I will be writing on my investment performance and also my review of the year in the next few post. Have an awesome last week of 2018!

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Is Passive Income Just A Fluff?

How easy it is to create passive income in our life so that we don't have to depend on our active income anymore? To be honest, it takes time and its not easy but its possible if we take one step at a time. Many years back, when I first got to know the concept of financial freedom and creating passive income, I was inspired and motivated to achieve it. However, after awhile, reality sets in and I realise its not as simple as it seems. There are some lessons which I learnt over the years which I thought will be good to share in this article.

Is Passive Income Just A Fluff?

Passive income is money earned even when we are not working on it while active income is money earned through exchanging it with time. All of us have jobs to earn money for our daily living. We use time to exchange it with money. It may be 8 hours or 10 hours a day. While passive income also requires time to build, the time spent is not fixed to certain hours and more often than not, the time spent to create passive income should be much lesser than active income.


Passive income can come from dividends from stocks, rental income from property, online marketing etc. I've seen people who actually have more than enough passive income to sustain their lifestyle without depending on their active income. This is achievable but what does it take to achieve it? Let's look at dividends from stocks as a form of passive income first.


Dividends from stocks as passive income

One of the most common form of passive income is dividends from stocks. There are people who are already getting a few thousand dollars from dividends every single month on average. This is like getting a salary every month without going to work. However, when we look at their stocks portfolio, it is often at least $500K or more.

A $500K stocks portfolio with 5% dividend yield will generate $2083 in dividends per month. This most likely will not be enough for a family to get by, so to depend wholly on dividends to sustain our lifestyle, we will need a $1 Million stocks portfolio. This is the reality which we need to accept and then we can work towards this target step by step.


Rental from properties as passive income

The next common form of passive income is rental income from properties. In the past, people who bought properties at a low price and rent it out are earning good passive income from their properties now. Because of the low price back then, those who bought good properties will most likely get quite a good positive cashflow even after paying their property loans.

If you've read the book "Rich Dad Poor Dad", you'll learnt that properties need to generate positive cashflow for it to be a good asset. Assets put money in our pocket while liabilities take money out of our pocket. Nowadays, its getting harder to generate positive cashflow from properties in Singapore as price is high and rental is not as good anymore. Also, with multiple government cooling measures, it makes it even more difficult to invest in good properties now. Yes, we can still earn money from renting out properties but the yield may only be a low of 3%-5% per year.


How to start creating passive income?

Focus on active income and saving more first

We need capital to create passive income, the more the better. with $10,000, there is only so much passive income you can create out of it but with $100,000 or $500,000, the passive income we can create is much greater.

Building active income requires time and effort but the more we earn and save, the faster we can create more passive income for our future. Active income will always be lower at the start of our working life and only increases as we get more experience and upgrade our skills. I'm in my 3rd job now and have made a conscious effort to plan and upgrade my skills in order to earn higher income.

Start small in building passive income

We have to start somewhere in building passive income no matter how small it is. Even when I just had $10,000 savings, I started investing in stocks. The dividends I get is probably only less than $50 a month back then. Starting small is important as we will make mistakes and earn along the way. Its better to make small mistakes at the start, losing a bit of money, than losing a lot of money when we start investing only when we have more money.

Back then, losing a few thousand dollars in the stock market seems like a lot of money to me when my savings were little. It forced me to learn the hard way and get better in investments. Thinking back, if I had started investing when I had more money now, my losses could have been tens of thousands.

Make the passive income sustainable

The key to building passive income is making it sustainable. This can only be done over the years by building a strong foundation. Finding the right stocks to invest in which has sustainable dividends is important. This requires some research and monitoring to be done. For example, when investing in REITs, we have to look at the location of properties it has, the industry it is in, the dividends track record, the rental reversion and many more. All these will help us determine if the dividends given out will be sustainable.

Even for investing in properties, if we bought the property at a bad location, we may not even get enough rental income to cover the loans we have to pay. It requires some homework to do the math and get our sums right before investing in it.


Creating Passive Income Instead of Active Income - How Easy It Is?

Creating passive income takes many years to build. It may take 10 years, 20 years or even 30 years to create passive income which can sustain our lifestyle indefinitely. We can start small, work towards a goal and see it happen before our eyes in the years to come.

After years of increasing my active income, I've made myself more busy and I realised time is always not enough if I continue creating active income. There is a limit to how much active income I can create or increase. Even with a higher salary, it often comes with more work and many more hours spent on the work itself. With this, I would be shifting my focus more towards creating passive income again for next year.

Its not a difficult task to create passive income but it definitely takes patience and sone work to see it being fulfilled.

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Weekend Video Sharing - Dr. Bruce Lipton Explains HOW WE ARE PROGRAMMED AT BIRTH

Poor people stay poor and rich people stay rich. Is this true? This video explains how our minds are programmed at birth before the age of 7 and how we can change this even in our adult life. A short 5 min video to inspire you for the weekend. Watch it below:

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Singapore Savings Bond Interest has Hit above 2%

Good news for those who are seeking to get higher interest on their savings. Singapore savings bond is now at 2.01% for first year and continues to increase thereafter. Here's the interest payment schedule for the December SSB at a glance:

Singapore savings bond is a capital guaranteed plan and there is flexibility to sell the bond every month where you will get back your capital and any accrued interest. There is no price movement for SSB so you will definitely not lose any money for this. Just take it as a savings account with good interest and no risk. 

Application will open on 3rd December 6pm and close on 26 December 9pm. Applications can be done on ibanking or ATM machines of DBS/POSB, OCBC AND UOB. 

I may be getting some of this bond this round. The last time I bought the bond the interest was only 1.55% earlier this year. How fast the interest has moved up since then. 

You can refer to this link for more information on this month's bond.