Friday, December 31, 2021

Reflections for year 2021

2021 has come to an end. The year flew by in an instant as there were quite a few major changes to my life. I got married earlier this year in Jan and moved to a new house in Oct. This was in the midst of a busy work schedule as I continued to work in a public hospital in Singapore. There were a few waves of COVID-19 infections and everytime there's a new wave, the hospital scrambles with everything its got to support the country in need. Every employee plays their part in this fight against COVID-19 no matter if they are doctors, nurses, allied health professionals or admin workers. 

I've learnt a lot through the experiences I've had this year. I learnt that life is fragile, I've seen deaths. I've seen how people come together to help each other when in crisis. These are the experiences I get from my work which can be emotionally draining sometimes but it helps me grow stronger. 

I've not written a blog post for quite a while now while I was busy settling my reno and moving to a new home. Its a transition in life and one thats well worth it to spend with someone I love. In a relationship, we learn to care for each other and not just think for ourselves. I'm not perfect but I'm learning as time goes by. 

On finances, I'm still doing relatively well. Despite spending on wedding and reno, I still manage to have extra savings after deducting all my monthly expenses. I got a promotion in Jan and continued to get good bonuses while working in the healthcare sector. All these helps grow my wealth. 

On investment, my portfolio continues to grow with more stocks being bought as COVID-19 continues to put a dampen on the stock market. However, total returns (calculated by XIRR) is only 3.54% for the whole year for me. This is largely due to a write off in a total loss in Hyflux, which has collapsed totally without any compensation. I'm lucky in a sense that despite the loss, my other stocks gains manage to cover the losses and still eek out some gains. Moving forward, my portfolio will continue to focus on building dividends and continue to sustain a 5 figure dividend annually. 

How has your year been so far? If its not so good, have faith that year 2022 will be better. If this year has been good for you, I sincerely hope that year 2022 will be even better for you. One last hope I have is that COVID-19 will be gone from our lives soon so that we may live normally again. Our world has changed because of it while we adjust to new ways of living. But as all things goes, it will one day come to an end and all will be good again. 

Stay safe and have a good year ahead everyone. Happy new year 2022!

Tuesday, October 12, 2021

Why Do I Keep Worrying About Having Not Enough Money?

The fear is real... the worry of having not enough money is causing me sleepless nights sometimes. Is this normal I ask myself? I have savings, I have a stable job and earn a decent fixed monthly salary. I have enough to live my life and still having savings every month. But there is one thing I am constantly worried about, and that is having not enough for retirement. 

No matter how much I budget and plan and forecast, there is still a lingering worry in me even though I try to assure myself as much as possible that its all ok. There is one reason I identified, the reason is the future is so unpredictable that there is no way to actually predict what will happen. Even if I plan all the way, the outcome may still be not what I want it to be. 

Life throws in all kinds of nonsense at you along the way. I'm lucky not to have met too much nonsense thus far but I've seen nonsense being thrown at people and depletes all their savings instantly due to high medical bills and long term healthcare cost. 

There are many Singaporeans who do not have to worry about money. We can see it on social media channels Youtube, Facebook, Instagram, Tiktok. Many people have the means to renovate their house nicely, buy a car, buy a luxurious condo, stay in 5 star hotels and eat good food all day. Some are spending beyond their means, some do not plan for the future but there are some who really have too much money to spend because they earn extremely a lot too. 

For me, spending money was a taboo all my life. Yes its hard to spend money because we always didn't have much anyway. When its my turn to spend money, I buy nice furniture for my house, eat good food, spend on luxurious staycations because I can afford it but guilt sets in. Its a funny feeling of enjoying but at the same time fear.  

Psychologically, I would think I need a breakthrough. Its like when you first started investing and you are brought on an emotional ride of thrill when the market goes up and fear when market goes down. Its not easy to overcome but as years goes by, you get better at it. 

I'm not sure if anyone has the same thoughts and experience as me but if you do, I would encourage you to keep going when it gets tough. The light is always at the end of the tunnel. Worry is a normal process and it should spur us to achieve more in life. 

Thursday, August 19, 2021

Shifting mindset from extreme saving to increasing income and investing

Saving money was my mantra all along in this financial journey. In my younger days when I started this blog, I wrote various articles about the importance of saving money for financial freedom and even wrote about why extreme savings is more important than investing. As I grow older pass my 30s and approaching my mid 30s, I realised my mindset have to shift away from just saving money. I am no longer just a young chap who is single, no commitments and my parents are getting older. I realised I have more responsibilities and I need to earn more money to survive life. 

Another part of me is tired of the frugal life. I have been questioning myself what's the point of saving so much money and in the end not being able to enjoy the finest things of life. 

Don't get me wrong. Saving money is still important if you're young. In fact, that's the only time we have to save a significant sum of money because as we grow older, we have more commitments and will definitely not be able to accumulate high savings rate anymore. 

Nevertheless, after saving money for the past 10 years, I've decided to shift my mindset to increasing income and investing to grow my money. This is a more sustainable way to live at this stage of my life. 

Increasing income is somewhat more difficult than saving money alone. I've been trying to increase my income for the past few years too and definitely its hard work. To get that promotion, I rack my brains to do many projects that will shine and devise a plan to let my bosses see my effort. I suffered burn out as a result of that even though I got what I wanted. Along with that, I still continue mortgage consultancy work, blogging and investing. Late at night, I'm still reading financial reports to plan what other stocks to invest in. 

I realised I'm not alone in this journey to earn more income. I know of people who have side business on top of their full time job and people who trade the US markets till the wee hours of 4am and wake up at 7am the next day for work. This is the sacrifice to take to increase income. 

I would think I have a comfortable income now to live my daily life but if I were to spend all my income to live this comfortable life, I would not have enough for retirement.  Increasing income and investing is thus important to live a comfortable life now and still have enough for retirement. 

I have my own financial spreadsheet which forecast how much one would have in xx number of years. The below forecast assumes a person with $300K savings, earns an income of about $5000 per month, spends about $3000 per month and invest with returns of 5% annually.

This is how the chart looks like if one does not invest the money. It'll take 22 years just to save up $1 million.

This is how the chart looks like if the money is invested with a 5% yearly investment return. It now takes just 15 years to save up $1 million. 

Now, when I combine the 2 charts, here's what you see. The difference is more noticeable as the years go by due to the power of compound interest.  

I can't emphasize the importance of investing your money but in order for investment to be a significant part of our financial plan, we need to have a substantial sum of savings first (300K for the example above). 

Saving money then becomes not so important once we reach this stage, which is somewhat the stage which I'm in now. Its time for me to shift my mindset but its never easy after saving money for so long and growing up in an environment where I was taught to be thrifty all my life. 

The next steps is to continue increasing my income and be patient with my investments, not giving in to greed which can wipe out any savings I can have in an instant. There are people who indeed lose millions of dollars in the stock market. 

Nevertheless, life is never a smooth sailing one. Having a sum of money and more income will enable us to be more prepared for rainy days such as a financial crisis and also if the needs arise (eg for family healthcare needs). While in this midst of struggle, I should remind myself to enjoy life a little and not be so hard on myself. This is how I should live my life forward. 

Its been awhile since I blogged but definitely I've not forgotten the existence of this blog. I hope all of you are doing well in life and thank you for your support if you've read till the end here. Till the next article we meet again. 

Wednesday, August 11, 2021

INVEST Fair 2021 - Growth story to invest in for the next 10 years

INVEST Fair is back in 2021. I first attended INVEST Fair many years back when I just started investing. I remembered they held the fairs at Suntec city convention hall and MBS and I've went for all before. As a young investor, it was eye opening to hear all the talks as it opened me up to the world of investing. Due to the pandemic, they are not able to hold a live event this year. However, they are back with their first virtual INVEST Fair from 21 to 22 Aug 2021. The 2-days event will bring about discussions and exchanging of ideas on 6 upcoming investment trends in the next 10 years.

Highlights from the first Virtual INVEST Fair

Live Sessions

The usual live sessions which we see at the conference halls will be brought online where you can listen at the comfort of your home. Here are the topics:

  • Wealth In China
  • Digital Transformation & Cyber Security
  • Gems in Small and Mid Caps
  • Environmental, Social and Governance (ESG)
  • Trends driven by Millennials
  • Asset & Portfolio Management
I'm particularly interested in wealth in China, digital transformation & cyber security and trends driven by millennials. These topics seems to be very much forward looking to give us some ideas on what we can invest in for our portfolio growth in the next 10 years. 

We all know that China is fast becoming a powerful economic powerhouse. They have companies such as Alibaba, the ecommerce giant which owns Taobao and Lazada, Meituan Dianping, the king of delivery services in China, Tencent, a world-leading internet and technology company and many other up and coming companies such as from the electric vehicle space and artificial intelligence. The wealth in China topic will be of interest to you if you're looking to invest in the next growth story in China. 

Digital transformation is another area of growth which is definitely happening in the next decade. COVID-19 has accelerated the implementation of digital transformation for many industries and companies. Companies dealing with robotics, sensors, AI, digitisation will be the next growth story. I'm quite sure with 5G coming in the next 2-3 years for many countries, devices will be more connected and possibilities of technological growth will be limitless then. With that, cyber security becomes even more important so companies in this space will do well also moving forward. 

Finally, trends driven by millennials is another topic of interest. Trends have changed over the past 8 years since I started blogging. Mainstream media was popular many years ago when internet was not so easily accessible. Then came smart phone which made internet so easily accessible and mainstream media becoming not so popular while new media such as blogs, internet sites such as mothership became the alternative choice of content for millennials back then. Facebook was hugely popular and is still popular now but I can see trends shifting towards Instagram, YouTube and now the latest craze is on TikTok. TV channels were once popular but now people have shifted to watch on demand content such as Netflix and Disney+. Retail shopping was once the norm but this has shifted to online shopping now. 

From all these trends driven by millennials, we can already decipher some great stocks to invest in. If we had invested in Netflix 5 years ago, we would have gained a 500% return, Facebook (which own Facebook & Instagram) would have returned 300%, Alphabet (which owns YouTube) would have returned 300% and lastly SEA (which owns Shopee) would have returned 1700% all in just 5 years. I will be interested to find out what is the next big growth story based on the new trends going forward. 

There will be a Q&A segment for all sessions, where attendees can post questions to each
speaker/panel. Digital Transformation & Cyber Security and Trends driven by Millennials will be panel discussion moderated by the guys from Seedly while the rest will be presented by individual speakers. 

Virtual Booth

ShareInvestor, along with 4 Gold Sponsors will each have a virtual booth where attendees can visit
virtually to join in the live webinars, promotions, and activities across 2 days.

e-Goodie bag

Just by registering for the fair will get you an e-goodie bag with research reports and freebies from shareinvestor's partners.

The research report will cover topics on:
  • Top 5 Asset Management Funds and their Holdings
  • Investment Trend for the Next 10 years
  • A definitive Guide to ESG Investing
  • 2 Undervalued small and mid caps companies for your watchlist
Sign up now for free to get your e-goodie bag. 

Lucky Draw

There will even be a lucky draw consisting of 8 prizes, ranging from $88 to $388 cash. Just login on that day to stand a chance to win the lucky draw. 

The first virtual INVEST Fair is happening from 21 to 22 Aug 2021, 930am to 1pm. Join in for an insightful 2 days of learning at the comfort of your home. You might get some ideas to really grow your portfolio in the next decade. 

Register for free below:

This post is sponsored by ShareInvestor but all views are of my own

Sunday, June 13, 2021

Is Air Travel Coming Back Soon?

Its been 1.5 years since COVID-19 struck us. Air travel had completely come to a halt when many countries announced border closures. Airports were left empty and airlines had to cut flights and retrenched staff as a result. 

However, things seem to changed recently with higher rates of people being vaccinated. In the US, their government have started to relax measures and air travel is definitely back in the United States. Their airports are full again and flights are also full.

This is a stark contract from last year where airports are empty and flights were relatively empty too. Studies have shown that higher vaccination rates reduces COVID-19 infection rates significantly as seen in the chart below.

Minister Lawrence Wong has also said that "With a higher vaccination rate, compliance with social distancing and safe management measures, regular testing, and faster and more comprehensive contact tracing, Singapore will ease restrictions and gradually restore "our normal lives, both within Singapore and at our borders", said Mr Wong, who is co-chair of the multi-ministry task force tackling Covid-19. Mr Wong said: "As we progress through these stages (of reopening), we will ease our restrictions and gradually restore our normal lives, both within Singapore and at our borders. Then we will move to phase three, and even beyond phase three, to a new normal phase of living with endemic Covid."" This was reported in the Straits Times article here. We have a chance of going into endemic mode once we achieve vaccination rates of above 75% in October, which is the target set by the government. 

Shares of US airlines such as Delta Airlines and United Airlines have went up steadily in the past 1 year. It may still have some run up over the next 1 year as air travel progressively resumes. 

Here's a video on the situation of US airports and its airlines where we can see clearly how packed and crowded it is currently:

Elsewhere in Singapore and Asia, it doesn't seem that air travel is resuming soon as COVID-19 infection rates is still high in countries such as Malaysia. But, as vaccination rates pick up, more air travel bubbles will be formed in the next few months and we will see some form of air travel and tourism back in action. 

As an investor, it may probably be a good time to accumulate some travel related stocks such as Hospitality REITs. Their prices are still depressed and those who are early in the game may be able to reap some rewards in the future. We shall see how situation develops from here on. 

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Tuesday, June 8, 2021

Identifying Buying Opportunities In The Stock Market Using Investor One Portal

Many investors will find it difficult to research on stocks as we often have to go to different websites just to get the required information. For myself, I often have to manually go to the company's investor relation page and search for information such as financials and key ratios to make the right decision for my investment. 

With Singapore going back to phase 2 of the circuit breaker again with more COVID-19 restrictions, some stocks have went down which present buying opportunities again. Recently, I was introduced to a content portal by ShareInvestor called Investor One. This is something like a one stop platform for all our investment needs. To be honest after I found this platform, I would personally use it to find all the investment information I need because its easy to use and really has all the considerations on the information which an investor would want access to. 

Investor One Main Page

The Investor One main page is simple and easily accessible. As you can see from the top bar, there are 5 different tabs: Editorial, Performance, Quick Facts, Social and IPOs.

These are information which are useful for investors to find stock buying opportunities or find out more about the stocks they want to invest in. 

Let me dive briefly into what each section has which I found to be useful. 

Firstly, under Editorial, it has this academy page which new investors would be able to read up on how to value stocks. From its front page, you can already see 3 solid articles on how to evaluate a REIT, common characteristics of quality growth stocks and how to understand business models.  

Secondly, they also have bloggers insights and C-suite interviews with CEOs of listed entities. These interviews are useful to know more about who the management are and the direction of the company moving forward. Hearing from the management is often important for investing as the wrong management team can often lead a company to destruction. 

Thirdly, also under editorial, there is a company insights page where we can find information on companies to invest in. 

When we run out of stocks to invest in, sometimes we will use a screener to find stocks. Investor One has a performance page where we can screen for the top 5 stocks in various categories such as lowest price to earnings ratio, highest dividend yield, highest discount to book and highest revenue/earnings growth. These are all good metrics to screen a stock for. 

I especially like the quick facts page where I am able to key in a stock name which I want to find information on and it will display most of the information I need to evaluate a stock for investment. 

For example, when I key in Lendlease REIT, here's what the page displayed:

In one look, I'm able to see its chart, and key ratios such as price to book and dividend yield which is what I look for when investing in REITs. With dining-in restrictions in place, shopping mall REITs prices have dropped from a high and are becoming attractive again. Lendlease has a price to book of 0.88. At the price of 0.74, it is at a discount to its book value. However, yield looks low due to the rebates given to tenants during this COVID-19 situation to help them. Yields should gradually increase as COVID-19 situation becomes better but it may take awhile as we see some swings in the market for the next few years. As Lendlease is still a relatively new REIT listed only in Oct 2019, it does not have the growth figures. 

Let's look at another company, Micro-Mechanics, which is benefiting from the demand on technology growth as they are in the semiconductor industry. 

As we can see from above, the growth figures of Micro-Mechanics can be seen now as this stock has been listed for quite some time now. We are able to see its revenue and profit growth in one glance. We can even see other ratios of this company where you will find that it is quite fairly valued.

If you think that's all for the quick facts page, you would be surprised that there are more information such as other key ratios like return on assets or equity, total shareholder returns, links to annual reports where you can easily read up more on the company, latest news and and even a link to its investor relations (IR) page where we can easily retrieve financial reports and presentations on the stock we are looking for.

You can try out the quick facts page and find more companies you are interested in. 

Perhaps, the most interesting thing is its collaboration with Investing Note where we can see what other investors like us are saying about the stocks we are looking at. Investing Note is like the Facebook of the investing world where investment ideas are discussed actively by thousands of investors on this social media platform. They even dedicated a social page to consolidate all the buzz in the Investing Note social media platform. 

All in all, Investor One is a good portal which I will use moving forward. It lets me easily find stocks information which I do not have to search on multiple sites anymore. You may check out Investor One page here which is free to use and no subscription needed. 

You can also check out the Telegram page below:

This post is sponsored by ShareInvestor but all views are of my own

Wednesday, May 26, 2021

How Much Does It Cost To Own A Car In Singapore?

Buying a car in Singapore is a dream for many. The problem is cars are getting more expensive in Singapore with the cheapest new car at around $75,000 now. Recently, I've been pondering on the idea to own a car and still meet my financial targets for retirement. Can this be done? 

Its a fine line between planning for retirement and owning a car. It took me awhile to finally pend down my thoughts and perhaps finally be able to plan to own a car while still achieving my financial goals. In this post, I will list down the cost of owning a car and how it is still possible to plan for retirement. 

My initial financial target was that by the age of 48, I will be able to save up a million dollars in cash excluding CPF. With owning a car, the financial target will be pushed back by about 5 years to 53 years old. Doesn't sound that bad isn't it? Let's get straight to the numbers.

Cost of car in Singapore (2021 May)

The first thing is the cost of the car itself. Looking through several websites, the few lowest price cars you can get are probably the Mitsubishi Attrage at $74,000 and Honda Fit at about $75,000. These prices are inclusive of COE. If you look at other models such as Hyundai Avante, Honda Vezel or Toyota Vios, these will cost about $85,000 to $95,000. Any other higher end models will cost you close to or above $100,000 easily. 

If you have the cash to pay for it, then it will decrease your savings by one lump sum but you don't have to incur a monthly instalment cost. Let's say you don't have the cash and have to take a loan:

Car cost: $91,000
Loan amount: $63,699 (70% max loan)
Interest rate: 2.78%
Loan term: 7 years

Monthly loan installment: $906

If you decide to buy a lower price car at $74,000, the monthly loan installment will then be $737.

Monthly loan installment for car: $737-$906 per month

Road Tax

The next cost is the cost of road tax. For a car with 1500cc and age of car is less than 10 years, the road tax is $686 per year. If the car is 1600cc, the road tax will be $744 per year.

Road Tax: $686-$744 per year 

Car Insurance

Insurance is important for a car to protect you against liability for any accidents. If you've not met any accidents before and never claimed from any car insurance and have more than 3 years of driving experience, insurance cost will be lower at $800+. It can go up to $1600 if you're a young driver with less than 3 years of experience or have claimed from car insurance before. 

Insurance cost: $800-$1600 per year 

Petrol, Parking & ERP

The daily running cost will include petrol, parking and ERP. For HDB season parking, it is priced at $110. If you go to your parents or in laws house often, you might have to buy another family season parking at $55 x 2. Total cost of season parking will be about $220. Other miscellaneous parking cost such as when you drive out for meals or outings will probably cost another $50 per month. For petrol, let's say your car fuel efficiency is about 20km/litre and you drive about 40km/day, with average pump price at $2.40/litre, petrol cost will be about $144. For ERP, let's put it at around $40 per month. 

Petrol cost: $144
Parking: $270
ERP: $40
Total: $454 per month

Maintenance cost

The general recommendation is to send your car for servicing every 10,000km driven or every 6 months which every is early. This will set you up for a cost of about $600 per year. 

Maintenance cost: $600 per year

Summary of cost to own a car in Singapore

After listing out all the different cost, we are now finally able to add it all up. 

Cost per month
Car Loan$737
Road Tax$57
Petrol, Parking & ERP$454

If the car is paid in full without any loan, then the monthly cost for car will be about $628/month.

Can you afford to own a car? How does it affect your retirement planning?

Now, we come to the tough question of can we afford to own a car? If owning a car causes you to have little to no monthly savings from your income, then its definitely a no. If after deducting the expenses to own a car and you still have savings, then it may be a yes. Question is, how much savings you should have in order to retire in Singapore? 

The amount required for retirement in Singapore is always increasing. Some say its $1 million, some say its $2 million, others can afford to retire with just a few hundred thousand or some just totally give up and rely on their kids in the future to give them allowance. Let me put this forward, retirement planning is hard. I've struggled through it a lot the past few years finding a balance towards spending and planning for retirement to the extend I can be pretty stressed up. Its no wonder people do give up planning for retirement. 

To make things easier, let's set the retirement amount to be $1 million. We have the below profile of person to see if he can afford to own a car:

Person A
Salary: $5000/month
Salary increment: 3% annually
Salary Bonus: 3.5 months
Monthly expenses: $2500 (without car), $3100 (with car)
Monthly expenses increase: 3% per year
Savings: $100,000
Investment returns: 5%

For person A with $5000 monthly salary and the above expenses, he still can save up $1 Million in 16 years without a car, 21 years with a car. Owning a car pushes back retirement by 5 years so it doesn't seem that bad. This is assuming the person does not buy another car after 10 years which is the end of life for cars in Singapore. 

Using the same parameters, if we bring down the salary to $4000 per month, this person will take 21 years to save up $1 Million without a car and 26 years with a car. Do take note the above parameters assumes the monthly expenses per household member and probably will be for a person without kids. For a couple, the expenses will be higher but if your spouse is also working and contributing to household expenses, then its still affordable. In the 2018 household expenditure survey, it was stated that Singaporeans with a family of 4 spends an average of $4906 per month. This may have included owning a car but the figures here are still quite high.

If you're a single income earner supporting a family of 4, you definitely need to earn above $7000 to afford a car and still have enough for retirement. 

Can you afford to own a car in Singapore? Its better to work out your own financial plan before committing to buying a car. If your income is relatively high above $5000 and don't have much other commitments, you might be able own a car without affecting your future retirement plan. 

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Tuesday, April 13, 2021

How To Achieve Your Toughest Financial Goals - $100K dividends is it achievable?

In the financial blogging space, many new bloggers set their financial goals as achieving their first 100K by the age of XX. This age is getting younger from 30 to 28 to even below 25. Many years back, I also set this similar goal and achieved it at the age of 28. 

Something miraculous happens when we start to set goals. When you set a goal, your brain first evaluates the goal and start to plan how to reach there. Somehow or another, you'll realise if you're focused on your goals, your subconscious mind will think of new ideas and strategies to achieve it. When I was a secondary 4 student about to take my O levels, the school sent us on a motivational camp in a spur to help us achieve better results. I was from a neighborhood school (which surprisingly is no longer there now due to school merger in a short 10+ years), my results were average and often failed in many of my subjects. The worse thing is while I failed some of my subjects, I sometimes could still be the top 5 in my class. That's how bad all my classmates results were too. 

I had low self confidence and didn't think I would achieve much in life, same for the friends around me who are all just happy with average results. We didn't even think if we would have a future. 

During the motivational camp, the instructor asked everyone what all of us want to do for our future. He specifically went round each one of us to ask what's our ambition. One by one, each of us shared what we wanted to do. There are people who say they want to be admin staff, teachers, security officers, police officers etc.. Each one of the ambition, he challenged us to aim higher. For example, when someone says he wants to be a security officer, then he'll say why not you aim to be a security supervisor. When it was my turn, I said I just want to be a technician. He looked at me and said, "why not an engineer?" This sentenced changed the way I think. It triggered a response in my brain to think higher. Eventually, I passed all my subjects and went on to be an engineer for 6 years. I may have been just a technician if not for that challenge. 

The key to success is opening up our minds to greater things. If you've watched Bling Empire on Netflix, you'll realise the 2nd generation kids, who have rich and successful parents, are also very good in earning money themselves. They have seen their parents make a lot of money and believed they too could make a lot of money themselves. On the contrary, a child from a poor family may be limited by their thinking as they see their parents struggling to make ends meets. They would think they can only make a limited amount of money in life. But, the good news is this can be changed by changing the way we think and conditioning our mind to see greater things. 

Failure is not when we set too high goals and can't achieve it but it is when we set too low goals and achieve it. This phrase changed the way I think into believing greater things. Setting higher goals can really propel us to reach it even if it seems impossible. 

How To Set Goals To Achieve What You Want?

1. Think about what you want to achieve

This first step may seem like common sense but it is critical as this is the stage you should open up your mind and imagine the impossible. There are many advise out there which recommend setting realistic goals but this will again limit our minds. 

If you want to set a goal to achieve $1 Million in your 40s, put this in your mind first and don't think about how it is impossible or how tough it is to achieve it. Just put in on paper first and start imagining the possibilities.

2. Make your mind believe it can happen

When you set a goal and make your mind believe it can happen, your subconscious mind will start to think of ways to achieve it. The best way to make your mind believe it can happen is to look at other real life people who have done it before. Source from the internet those who have become millionaires at a young age and this will make your mind believe it is possible as others have done it before. 

3. Set milestones to know you are on track

The next crucial step is to set in between milestones so that you can review every 3-5 years to see if you are on track. Setting a goal of 1 Million by your 40s can have $100K, $300K, $500K in your 20s, 30s as milestones. For example, you can set $100K by age 28, $300K by age 33, $500K by age 38 before hitting $1 Million in your 40s. This is just an example of financial goals setting but the same principle can be applied for any other personal goals which you can to achieve. If you want to be healthier, you can set a goal to lose 10kg in 5 years and achieve 2kg in year 2, 5kg in year 3, 7kg in year 4. 

4. Make it specific to visualise how it can be achieved

Achieving goals now lies in the details of the specific ways to achieve it. Let's go back to the example of achieving $1 Million in your 40s. You'll need to know exactly how much income, how much you need to save and invest to actually reach this target. Without this visualisation, you will not know what to do. If you look at my financial goals, I break it down into specifics of how much income I should be earning, how much I can spend, how much I should save and how much investment returns I should be getting. 

Once you write down the specifics, for example, earning $5K income, your subconscious mind will think of ways to achieve it and go along that path. In the midst of your journey, your mind will let you know which is realistic and which is not. For example, if you put an investment return of 15%, then along the way you may realise that it is not sustainable and focus on earning more income or controlling some spending instead which is more attainable. Your specific steps on how to achieve your goals will change along the way and that's ok because your end goal is still the same, just the strategy changed. 

Setting a goal of $100K annual dividends. Is it achievable?

I now have a dividend income target set for myself below. The dividend income goal should reach $60,000 per year, equivalent to $5000 per month when I reach the age of 50. If I continue working till my 60s, I would be able to achieve a more than $100K dividend income. Is this achievable? Yes it is as I've seen many people who have achieved it and I've also put it in a spreadsheet on how much I need to earn, how much I can spend and how much investment returns I need to get to achieve it. The dividend yield is based on 5% to achieve what I have set out below. 

Anything is possible as long as we set the goal to achieve it. It may be a long journey and many people will give up halfway. The one who persevere till the end will reap the rewards of achieving that goal. 

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Tuesday, March 2, 2021

Building a 5 figure dividend portfolio

7 years ago when I started this blog, I wrote about the start of my financial journey towards financial freedom. Being consistent is not easy, painstakingly building up my net worth and investing in boring stocks throughout the years. The financial goals I set for myself in my financial goals page were met surprisingly even without me actively tracking it. As I approach age 33 this year, I am thankful for all the knowledge I've learnt through other blogs, friends and learning while writing too. 

Back in 2013, I was inspired by financial bloggers who manage to have 5 and 6 figure dividends from stocks annually. While most people just save enough money for retirement in their old age and start to draw down their savings during their retirement years which can probably last about 10-20 years only, this group of bloggers were able to retire earlier with 6 figure ($100K+) annual dividend income which can last for a lifetime. I thought this was a good method to journey towards financial freedom. It is easy to visualise and plan for the future with dividend income method. After 7 years, I managed to finally achieve a 5 figure dividend portfolio from stocks although this is still many years away from the financial freedom target. 

While this 5 figure dividend income may seem like its a lot for many people, it is actually just a basic requirement for financial planning. Moving forward, I expect most of my savings to come from dividend income as expenses will take up almost all of my monthly net take home pay. I can imagine people who do not invest will have problems reaching their retirement goals in the future as inflation continues to kick in and cost of daily living goes up even higher.

My dividend income from stocks is projected to surpass $10K for the year 2021. This is done base on conservative estimates as most stocks have cut dividends starting from 2020. The dividends may come in higher if economic recovery happens this year and beyond. Let me share how is it possible to build a 5 figure dividend portfolio.

Build up your investment capital

When we first started out investing in stocks, the dividends from stocks will definitely be low. On a conservative basis, most investors should aim for around 5-6% dividend yield for your portfolio. Higher yield doesn't mean its always good as there is risk investing in high yield stocks too. 

With 5-6% dividend yield, a $100K portfolio will give you $5000-$6000 in dividends annually. To build up a 5 figure dividend portfolio, you need $200K and more. It is therefore important to set goals to build up a sizeable investment capital when you first start your financial freedom journey. This can be done through finding ways to increase your income, saving up more and investing in growth stocks to compound your money. 

At the start, my dividends from stocks was only $1K+. It steadily increased to $2K, $3K, $4K before hitting more than $10K. Dividends from stocks can only go up with more investment capital. This is why it is important to focus on building up a sizeable investment capital for dividend investing. 

Invest in good dividend stocks

After you have a sizeable investment capital, you can look to invest in good dividend stocks. Take note that a dividend portfolio is built up over the years and not when you have a lot of money then you start to invest in stocks. The reason is that when you have the money, stocks may be at high valuations and thus dividend yields may be lower too. It is important to invest consistently to build up our dividend portfolio as stocks valuations become depressed. 

Most investors looking to build a dividend portfolio will invest in REITs or business trusts. The more common ones are shopping malls, commercial offices and industrial buildings. REITs need to payout at least 90% of the rental they collect from tenants to shareholders. A good dividend stock should be able to grow distribution per unit (DPU) consistently. For REITs, they can do so through asset enhancement initiatives (AEI) or DPU accreditive acquisitions. REITs also grow their DPU is their rental reversion is positive. This means they are able to increase the rent charged to their tenants when renewal comes. REITs which have properties at good locations are able to command higher rents over the years. 

Besides REITs, we can also invest in other stocks too. Some big companies do pay good dividends too with growth potential also. Stocks such as Comfort Delgro and Jardine Cycle & Carriage are currently trading at low prices due to the COVID-19 pandemic. Comfort Delgro has dividend yield of 6.5% whil Jardine C&C has dividend yield of 5.5% based on their 2019 dividend payout. If we believe that their stock price and dividend will recover back to 2019 levels after the COVID-19 pandemic, then these are good opportunities to accumulate such stocks to have both good dividend yields and capital gains as well. 

Manage risks by diversifying

Some investors may not believe in diversifying into multiple stocks to manage risks for a dividend portfolio. For me, I would think this is important as without diversification, the dividend portfolio may be destroyed in future. 

There are some dividend stocks like Eagle Hospitality Trust and Lippo Mall Trust which had their value depressed to point of no return. These stocks were trading at impressive yields of 8-10% at a point in time. But their stock value decreased by more than 50%-80% which negated all the dividends collected for many years. Eagle Hospitality Trust was even halted. If we had heavily invested into the wrong dividend stocks, the dividend portfolio would be destroyed. 

We would want our dividend portfolio to be as stable and as sustainable as possible for the longest time possible. Ultimately, the dividend portfolio is suppose to supplement our income for financial independence and the end goal is to achieve financial freedom living on a substantial 5-6 figure dividend income for the rest of our life. 

Final words - Don't just focus on dividend investing only

While dividend investing is a slow and steady way to build wealth with about 5-6% yields, we should not focus on dividend investing only when we are younger and do not have a sizeable investment capital. We should also include a mixture of growth stocks in our portfolio to compound our money faster. With a combination of dividend and growth stocks, we should be able to aim for 8% or more investment returns on a sustainable basis. This will enable us to build wealth faster through investing. 

I have done many projection before and have proven that without investing, it is very hard for many of us to build wealth enough for retirement unless we earn an extremely high income of more than $10K per month and save enough of it. Investing is an important part of wealth building and so is increasing our income. With an extremely low income, it is also hard to accumulate enough for retirement even if we are very good in investing. We need to have a balance of both.

If you're looking to build a sustainable investment portfolio, patience is key and staying invested in the market will enable us to build wealth and compound it over the years. In this way, we will definitely have enough for retirement and even more for financial freedom. The journey towards financial freedom continues.... 

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Tuesday, February 2, 2021

Is The Market At Euphoria Stage Now?

The stock market is going through some crazy ride in the past few weeks. I'm seeing lots of new investors entering the market to make as much money as they can for fear of losing out. When I look through Facebook, I can see some friends who have not invested before coming into the markets and showing how much money they have made through stock trading. Just yesterday, the Straits Times reported a NUS undergraduate who accumulated $100,000 gains through the hot stock, GameStop, by investing only $20,000. These are signs that the market is going through a Euphoria stage.

With social media and the internet, information spreads very fast where people will follow news and get into the market without researching much into a company's fundamentals. This was seen from GameStop where the stock price rose from about $18 at the end of December 2020 to $347 at the peak in Jan 2021, all these >1000% returns in a short span of less than a month. However, as with any markets, what goes up will definitely come down when there is no fundamentals for it. There are already people who tried to invest in GameStop at $300+ and got burnt when the price now is only $100+. 

In market psychology, this is known as Euphoria which is the riskiest time to invest in. 

The stock market is often deceiving and any profits can be gone in an instant. Paper gains will forever be on paper only unless we sell the stock and lock in the gains. Seeing the excitement in the market growing stronger, I've began to take profits on the stocks I have and lock in the gains. I believe there will be some retracement soon but the general market sentiment will still be up as we recover from the COVID-19 pandemic. This may take awhile though so while we await the recovery, there will still be opportunities to invest in good stocks.

In the span of less than a year, we have seen some stocks recovering back to their pre-covid levels for the STI. Those who have invested at the low would have gained around 30% returns. While this investment returns is nothing as compared to the 1000% made in some Euphoria stocks, we are at least assured that what we are investing in has fundamental value for the long term. 

In times of market mania, we should remind ourselves that what matters is long term investment returns as opposed to fast money from short term gains. While it is tempting to join in the excitement and get fast money, we should limit our exposure for speculative investing to money which we can afford to lose. It is ok to join in the fun but remember this fun can burn anyone if they're not careful. 

This market mania will certainly end one day. When the time comes, we will be happy we did not throw in our life savings and lose it all to speculative investing. 

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Sunday, January 17, 2021

My Experience Planning A Wedding During COVID-19

I breathe a sigh of relief that I could hold my wedding during the COVID-19 pandemic. So many things happened in the past 1 year which troubled and worried me so much. Firstly, our wedding had to be postponed from July 20 to Jan 21. It was the hardest decision I've ever made. We didn't even know when to postpone our wedding to as we're not fortune tellers and do not have a crystal ball to see what is going to happen for this pandemic. 

Making the decision to postpone the wedding was coupled with the mad rush to contact all the vendors to check on the availability of dates. I had the fear that many couples are also postponing so it will be hard to get any dates in 2021. We contacted about 5 vendors we had engaged and luckily all were able to accommodate our new date in 2021. 

With postponement, cost increase is also a factor and the fear of any of the wedding vendors going bust and thus losing our deposits. I have paid a few thousand dollars in deposits to several vendors already including the bridal shop where I had sign up a package for the gowns, suits, actual day photography. Thankfully, non of our vendors went bust by the time we held our wedding. 

Experience with Hotel venue
COVID-19 has affected the hospitality business in a huge way. For hotels, they do not have any tourists coming to stay and events were also not allowed to be held. For weddings, the number of attendees was limited to 50 initially then increased to a max of 100 now. 

We chose Hilton Singapore as our wedding venue 3 years back. This became the best decision we ever made. We were served by the wedding sales executive at the point of signing the contract and paying the deposit. Few months before our wedding, the sales executive went on maternity and we were than served by the sales manager. We postponed our wedding to 2021 and never heard from the sales executive nor the manager anymore from then on. I guessed they were either laid off or transferred to other roles. Blessings in disguise, we were now served by the sales director, Anthony, who provided us the best service we could ever ask for. 

We heard of many hotels starting to increase price or cut the perks as the number of tables were reduced. Many people decided to cancel their banquet but could not get back their deposits at all. Some had their 1 night stay in the bridal suite cancelled, others had their price per table increased by 20% or the wine and beer perks taken away. Hilton did not increase our price per table or take away our perks. Instead, we got more perks and experienced the most flexibility in table arrangement which we could ever ask for. Due to social distancing, the number of pax per table could only be a max of 8. Hilton used our per table price which we signed up back then and divided by 10 to derive the per head cost. They then allowed us to be flexible in assigning any number of guests per table and only charge us base on per head. So, I had some tables with 5 guests, some with 6, 7 or 8. They even went the extra mile to not charge for toddlers as long as we tell them not to serve food for them. This could not have happened in the past as most hotels will charge by per table of 10 persons regardless of how many guests were seated on each table that day. 

Besides being flexible with the table arrangement, the sales director often calls me to assure me and update me on any changes to government regulations. We wanted an additional night before the day of the wedding so that my wife could do the make up at the hotel itself on the actual day and were prepared to pay for the extra room night. To my surprise, Hilton offered the additional room without any charge. It was initially using the day use room which we have in our package for the additional 1 night but the sales director once again thought for us and mentioned it will be difficult to move our things from the day use room to the bridal suite so he initiated to let us have the additional night on the day before at the bridal suite instead. This made it so much better for us on the actual day as we had many items in the room. If we had to move the items from one room to the other, it would not have been a good experience. 

We had a live band package which we signed up for and this was converted to virtual live band instead due to government regulations of no live performance for weddings. Hilton initiated to help us contact our virtual live band vendor to test the connection just in case it doesn't work. On the actual day, our banquet manager Hasan and sales director Anthony were there to ensure everything is ok. They took care of our solemniser to ensure he has a space to park at L1 VIP lot so that he can arrive on time and contacted my sister in law to pick up my parents in law when they arrive. I'm not sure if this is the practice for most hotels in Singapore when it comes to service excellence but I really felt like a VIP on that day. I felt that Hilton has way exceeded my expectation on service standards and would like to express my appreciation for all that they have done for us in the midst of having our wedding during COVID-19.

Experience with virtual live band
Many wedding banquets have live bands nowadays to make it more lively. Me and my wife signed up a package for live band with Musical Touch more than a year back. Unfortunately, due to COVID-19, live band was not allowed but virtual live band was proposed for us. So, our vendor actually rented a studio and had the live band livestreamed to our wedding venue. I was initially skeptical of whether such arrangements would work as there are many considerations such as whether it will be as engaging, whether the sound quality will be good and whether the internet connection will be stable etc. To my surprise, everything went well that day. The virtual live band had good sound, it sounded like they were there on that day. There was no lagging or cut in internet connection also.  

We initially signed up for a 2 piece band only with emcee service. The singer was supposed to double up as the emcee for our wedding. However, as the singer could no longer be here at the venue, the vendor had to arrange for a separate emcee to come down. There were additional cost due to this arrangement. We were initially not too happy about this as who would like to fork out additional money when its not what you wanted but Musical Touch patiently explained to us the reasons. We had several exchanges before we came to the decision to fork out the extra cost to continue with the virtual live band and emcee service. This vendor was sincere and really provided good services on that day. They even had an additional coordinator came down that day to ensure the coordination for the march in songs and accepted songs dedication as per normal. I would definitely recommend Musical Touch for anyone who wants a virtual live band for your wedding during this COVID-19 pandemic.  

Cost of wedding
A wedding is often the first money bomb in our lifetime. I wrote an article 6 years back in 2014 on how much money is needed to get married and start a family in Singapore. Here is the article:

The cost of wedding I calculated back then was: 

Cost of wedding after collecting Ang Baos: $19,000-$26,000. 

This cost included honeymoon which we couldn't go for due to COVID-19. If we add in a honeymoon cost of $5K-$10K, the cost I would have spent for wedding is in the range of $13K-$18K after deducting the ang baos collected. Yes it does cost 5 figure to get married in Singapore but I think all these cost are worthwhile to spend for your once in a lifetime occasion. I could also afford this amount as I've saved up significantly over the years since I wrote the above article and am fully prepared for the cost needed. It would not be advisable for anyone to take a loan for a wedding if you do not have the savings for it. 

All in all, we did not regret having our wedding at a 5 star hotel with all the good services which we needed to make the day better. We were happy, our guests were full of praise for the food and service and were happy too. This will definitely be something memorable when I look back in the future. 

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