Author Archives: sgftfund

Portfolio Review 2013

stock-photo-28595310-financial-year-2014

Total Portfolio value grew $57,501.23 or 15.34% to $432,315.50 as of 2013. Dividends continue to main contributor to the growth which is in line to my long term strategy for this family portfolio.

I am hoping to grow this portfolio to at least half a million in 2014 with additional capital injection from my pocket if Mr Market gives me a good opportunity in any of the asset classes.

Current Asset allocation stands currently at 74% Equity, 7% Bonds and 19% Cash & Equivalent.

I am not in a hurry to deploy the cash until I am comfortable with the valuation of the investment I am currently eyeing. A sustainable passive cash flow is more important than growing them at all cost.

My philosophy is always to invest when I deemed there is a substantial margin of safety and when my instinct tells me to do so. Good or bad? After years of investing, I trust a lot on my instinct before decides to invest. You could see that the portfolio is considerably concentrated (less than 10 stocks) and I am not afraid to invest heavily in a single stock when I see opportunity. I trust myself more than anyone else.

Moreover, I am not seeing any FEAR currently and out of sudden so many people around me got so interested in the equity market, I sense BULLISHNESS growing among them so I am WORRIED! Maybe I worried for nothing but my instint tells me so.

Biggest Winner: Cordlife (Market returns: 118.34% + Dividends on cost: 3.68% = 122.02%)

Market leader in Singapore; Look around you, most of your friends (if they just have their first baby) if they could afford, they will definitely consider buying this product which I considered an “insurance”.

In fact, I started to notice this company when my colleagues around me started discussing which cord bank they should subscribed to store their newborn’s cord blood in Singapore.  I am not going into the FA in details; you can do your homework.

With Singapore Government pushing to increase the population growth domestically, Cordlife benefited heavily in this aspect and I believed this stock will continue to do well as it continues to diversify outside Singapore. I am not looking to add more long position since the initial investment had grown substantially unless there is a major correction. Maybe my newborn is giving me some baby’s luck?

Biggest Loser: PerennialCRT (Market returns: -6.19 % + Dividends on cost: 7.82% = 1.63%)

In line with the negative market sentiment for China as one of the worst performer in the global stock market; PCRT a business trust invest in China retail assets also got hit with negative returns for 2013.

Many of its retail asset in China will be completed in 2014 and 2015 so execution will be an important factor whether it make it or breaks it thus management leadership is extremely crucial. I am looking to add to long positions in 2014 as it continues to trade below NAV and I have very strong confident in the CEO and management as well as the China recovery. Can the worst market performer China bounce back in 2014?

Reference: http://www.abs-cbnnews.com/business/12/31/13/why-chinas-stock-market-one-2013s-worst-performers

Steady Performer: SPH (Market returns: 2.23% + Dividends on cost: 9.90 % = 12.13%)

An old guard in the portfolio and also the biggest investment so far which I held since 2009 and frankly speaking at my cost price, the capital growth is pathetic but the portfolio continues to get steady income (6-6.5% annually) as a form of dividends from this old guard every year.

In 2013, they finally decided to spin off their property asset to diversify their business to Reits in order to offset the declining revenue of their core business. With the special dividends that accounts for 4.46% of the total dividend received; I am lucky to get a few lots of SPH Reit through IPO to reinvest this dividend to continue to generate sustainable passive income.

I will continue to keep this old guard in this portfolio for a long time unless there are major shakeups in the business model. I simply love stability and believe the diversifying to become a Reit manager will benefit the company in long term. Meanwhile my family will continue to support SPH with my parents buying the hard copies Chinese papers and me subscribing to ST Online. We try to support abit lah!

First post in 2014, I wish all fellow readers and financial bloggers a healthy and meaningful year ahead.

If you haven’t take charge of your financial health, it’s not too late to start now! No one cares more than you!

Still the old reminder, don’t work too hard for money and make an effort to spend more time with your family in 2014! Life is BIGGER than money!

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Financial planning for my unborn child

father-to-be-20986067

You must be thinking this is a typical “Kiasu” Singaporean father to start planning even when baby is not borned yet!! I have to admit to my “Kiasunity” because I care!! Ho Ho Ho!!

Do note that I am not a professional financial planner. I am just using what I advocate for my own financial planning for my family and derive what I think is right for my baby.

You must and should look at your existing financial conditions before deciding what to cover for your newborn as every individual has different priorities in life.

Below are my own opinions but I will still like to hear from my financial planner as he is more experienced than me in this area. Only then I could further improve in this area in the future.

Why you should cover your newborn as quickly as possible?

The birth of a new child can be one of the most joyous experiences of your life. However, a number of serious concerns do accompany this happy occasion. One of these concerns is the question of health insurance for your child. Newborn babies face the possibility of developing health issues just like any other person.

Reference from: http://www.ehow.com/about_6685734_health-insurance-newborn-babies.html

What insurance coverage to buy?

These are a comprehensive of all 6 key areas Life, Total Permanent Disability, Critical Illnesses, Child Related Illnesses, Accident & Hospitalization Bills that you can take as reference when deciding what to cover for your newborn.

Lastly, many financial planners will definitely ask you to purchase a so called education endowment plan to set aside fixed savings to prepare your child for future education. To me, this is just a long term (15-20 years) pure fixed savings plan.

For financial savvy people, this is unnecessary as we know endowment plans returns are quite pathetic (most unable to beat inflations) and I am sure we can beat them by creating our own endowment plan which I will write a separate article on creating my own endowment plan for my child’s future education.

Depending whether you are savvy enough to invest on your own to beat the returns of the endowment plan. If not, you can buy as a form of savings for your child future education.

Listed in order of priority:

  1. Upgrade to a Private Shield plan – Designed to cover major/catastrophic events related to Hospitalization & Surgery (H&S). – MUST HAVE!
  2. Personal Accident plan – Designed to cover any unforeseen accidents. There are some accident plans that cover common child related illnesses like “HFMD” – Hand Foot Mouth Disease. – MUST HAVE!
  3. Critical Illnesses – Good to have but not necessary at this stage.
  4. Total Permanent Disability – Good to have but not necessary at this stage.
  5. Whole life plan – Not necessary as I always advocate buying term and invest the rest.
  6. Education Endowment Plan – Not necessary as I will create my own endowment plan.

If you can afford, please cover your child with at least the #1 H&S plan else you will definitely be poorer when the baby needs to get treatments in hospital which are not uncommon for newborns.

For #3 to 5, to me they are required when there is a need for income replacement which means they are working and since babies depends on parents to survive so they are not required. Instead, I think parents should insure themselves sufficiently in order to provide for the child when something unfortunate happens.

When the insurance coverage should starts?

Coverage should start as soon as they are able to be insured and most insurers have got waiting period like 3 weeks to 1 month after birth before they will provide coverage like hospitalization plans etc.

The earlier you cover them also means there are less chances of any exclusion in the plan. Insurance is a risk & probability game.

Who to buy from?

I suggest purchasing from the same insurance agent/financial planners that you have dealing with for many years. There are simply too many insurance plans in the market and each has its own competitive advantage.

For me I like to consolidate all family related insurances plan with the same person that had served me well all the years. This saves me a lot of time even if I need to pay a little bit more and when comes to claims (touch wood), it is also easier speaking to one person.

For those who like to DIY and understand more about insurance, I suggest you read up more online and form your own opinion as I always say “No one cares about you more than yourself”!

I personally like Mr Tan Kin Lian website as it provides a lot of insights about financial planning and insurance in local Singapore context; you may want to visit to educate yourself. http://www.tankinlian.blogspot.com

Wishing all parents or parents to be a very happy 2014 and enjoy the happiness brought to you by the newborn!! To me, money can never buy such happiness!!

As for myself, I and my wife are anxiously looking forward with excitement of becoming a first time parent in 2014!! It is going to be an exciting year for both of us!!!

Looking back at 2013 and looking forward to 2014

With 2013 coming to an end in a few days’ time, it is perhaps time to look back what I had achieved in 2013 and list down the New Year resolutions for 2014.

What I think are my top three achievements for 2013:

  1. Stepped out of comfort zone and took up a 1-year overseas assignment in Australia. [Life is too short not to experience while you could]
  2. After months of trying, we finally going to have our first child in 2014 [A god’s gift]
  3. Family portfolio is able to generate sufficient passive income with excess to cover my parents’ household expenses. [Able to maintain portfolio yield of at least 5% for the past 5 years]

Resolutions listed in order of priority for 2014:

  1. Continue to make extra efforts to spend more time with my family when I am back to Singapore. (Includes my parents, wife and extended families)
  2. Draft up a financial plan for my first child. (Expected to arrive in this world in early Jan 2014)
  3. Renovate my new BTO apartment and be ready to move in before Christmas day. [Finally, our very own nest]
  4. Review overall family expenses and continue to build a sustainable passive income stream to cover all fixed household expenses. [Using a single income of mine to sustain the family expenses is my final goal]
  5. Start my part time Master of Business Administration (MBA) program in the 2nd half of the year. [Getting a sponsorship from my company is the key]

photo

Family will always be my top priority whenever I set my resolution; this is a big change of mindset as I used to think money is the most important thing in my life when I first stepped into finance industry. Do not be mistaken, money still important because I need it to survive but just that its no longer at the top of my list.

Just to share a real story, my millionaire auntie passed away in early 2013 at the age of early 60s due to stage 4 cancer, just very shortly after she retired from your civil service career. She was so looking forward to spend her retirement time travelling around the world after accumulating a substantial amount of fortune. Our families were with her all the time till her last moments and her last simple wish was to be discharged from the hospital and go home. We granted her wish and she passed away peacefully shortly after reaching home.

This incident affected me significantly and made me realized that we should never delay happiness and stop giving ourselves reasons like I am still young, I can do this or that next time. Who knows whether you will live to see “next time”? Example, if you want to kiss your mummy again after not doing it since you turned 18, do it now!! Hahaha.

Although I started this as a finance blog but I want to emphasize to my readers not to be too obsessed with the numbers of zeros of your portfolio value as this is just a small part of your life. Remember money will always be just a lifeless tool working for us and we must never work for money.

Pardon me as I may sound like an old man although I just turned 30 this year. Family and close friends will be there for you in time of crisis; kinship and friendship can never be replaced by money.

One day we will definitely regret if we happen to lose any of them because we are working too hard for money, spending countless of hours in the office to climb the corporate ladder and waste your life fighting the office politics.

As much as possible, we should always aim to have work life balance throughout our working life. Easier said than done but I believe that we have a choice in life to decide what’s the best for us.

Remember to put family time as one of your resolution for 2014 if you haven’t done so yet!

I would like to wish everyone to have a very blessed and fulfilling 2014.

Just sharing my overseas living experience with tips from my personal budgeting.

Earlier this year, I got an opportunity to take up an assignment in Melbourne, Australia. Without much hesitant, I took up the opportunity since I had just married without kids and always wanted to experience overseas life and step out of my comfort zone.

My wife joined me for a few months in Melbourne and recently just returned home so I am back to my “bachelor” life like before marriage for the rest of my stay. Since this was my first time living alone overseas after my wife left, I started my personal budgeting exercise to track my overseas living expense. I never used to track my daily expense in Singapore. Simply LAZY!

Melbourne was ranked number one for the most livable city in the world in 2013. Of course, world class living standards comes with high cost of living, most evidently was its food when you decide to dine outside. For someone like me who used to dine out frequently in Singapore Hawker Centre and “Kopitiam”, this was indeed a shocker. For example, average dining outside can set you back by AUD 10-25 per meal.

Below was my typical monthly expense inclusive of both fixed and variable living expenses. I included both total expense breakdown including and excluding apartment rental. As my company covered me for a big portion of my rental so my daily expense should exclude rental in reality. No transport expense as I am living 20 minutes’ walk to my office in the CBD.

Expense Include Rental

Expense exclude Rental

As I tracked my daily expense quite diligently so the data presented was accurate as far as I am concerned. Above was tracked for the month of November 2013.

Excluding rental and my fixed expenses which are out of my control, my variable expense that includes food (occasionally dine out), Groceries (90% of the time) and any other personal purchases for a typical month of 30 days was about $450 to $500 (Actual tracked Nov 13: $474.62) or daily $15 to $16.78. Its considered relatively low at Aussie standard.

How did I manage to keep my expense within control against the high cost of living in Australia? Because I choose to!! Basically, I cooked my own meals from home and bring to the office for lunch as well for dinner. But what’s really different from Singapore was that it was a “norm” to bring lunch from home in Australia. No need to feel “Paisay” at all!

If I could practice what I am doing here when I am back to Singapore in the future, I am sure I could save more money to grow my passive income.

Overall, I think Singapore is not so bad after all (discounting high property & car price); at least we can get a decent meal for under SGD5.

In life, we do have available options of what kind of life we want to lead; for example, everyday restaurant dining or home cooked food to save more to invest in order to attain financial freedom earlier. The choice is yours!

Having home cooked food is actually surprisingly healthy, also depends on what you cook. I lost 5kg since I arrived in Melbourne 8 months ago.

While building your portfolio of passive income and work towards financial freedom, do also practice personal budgeting with discipline, every dollar saved will count towards ending your rat race earlier than your peers.

Remember!! Remember!! You can have $3,000 monthly passive income but if your monthly expenditure is $4,000; you can NEVER achieve financial freedom with a budget deficit.

My first taste of investment at age 18

Suddenly I was thinking when I actually started my investment journey then I remembered I did made my first investment with OCBC at a tender age of 18 (too young right?) without any guidance; it was a “capital protected” structured deposit with a fixed investment period of 5 years.

Story begins 12 years ago back in 2001, I still clearly remembered that I walked into an OCBC branch in my neighborhood, wanted to put my savings into a fixed deposit account. When I told the bank officer, I had $10,000 (accumulated after years of savings through my weekly allowance from my doting father, working part time $5/hr sales man and “angpow” gathered each year) and wanted to put into a FD, he immediately referred me to a relationship manager (RM).

The RM treated me politely and with full respect like a matured adult (quite “high” at that moment) and tell me all the standard items “bla bla bla” and finally he took out a piece of paper and started drawing an investment plan of 5 years with beautiful returns of at least 1% every year plus “POTENTIAL” returns up to 4-5% if the fund performs well and the best thing, it was 100% safe and capital protected if I hold my investment till the end of 5 years.

I don’t even remember what was the fund strategy and what kind of instrument is the SD investing in but I am very interested in the total returns of total returns of 5% vs. FD of only 2-3% per annum.

When I told the RM I was only 18 (min age to sign the documentation is 21), he looked disappointed (maybe I look damn “chao lao”) as if he wasted 1 hr to explain the details to me. But he was persistent; he says why not you ask either of your parents to come over to the branch to sign the document as your guardian.

It was 3.30pm and branch closes at 4pm, I told him why not I bring my mum over to sign tomorrow but he said that the branch can wait for us, no worries on that. Damn sincere!!

Okay lah, I immediately called my mum and she rushes down from her workplace (workplace nearby) within 30mins and after I “assisted” the RM to explain this product like a “sales man” myself and with a total returns of 5% per year was awesome (my persuading skill also quite good after years of working as part time sales man), confirmed earn one and capital protected somemore.

Mum was eventually convinced and signed on the dotted line and by then it was already nearly 5pm. Power right, branch delayed closing because of me.

On the hind side; how I hoped my mum scolds me and don’t allow me to make investment at such a tender age? I knew “shit” about investment; I was only concerned about the 5% returns, that’s it.

So happy, I thought I made a superb investment decision and every year can have $500 (5% of 10k) returns, better than the returns of the FD my parents renewing every year at 2-3%.

Excited when I saw the first letter from OCBC, telling me my returns for first year was 1% and $100 was credited to my savings account. God damn disappointed, I was thinking at least also have $300-$400 right, how come only $100? Worst thing was, the current value of my SD was below $10,000.

Shocking, I thought he says it was capital protected. I went back to search the document that we signed, it did clearly states that the SD will be “mark to market” at an ongoing basis. The RM never say this to me leh when drawing the superb returns on that piece of paper.

Cut the story short, 3 years later; at age 21, a matured young man serving National Service (NS).  Well more matured than 18 years old right? I received another letter from OCBC at the end of 3rd year and it was 1% again, the return for 2nd year was also 1%. This means my total returns for past 3 years were 3% and current value was below my initial investment amount.

Angry and about time to make a decision, I decided to go to the same OCBC branch to terminate the SD and take back my investment. This time doesn’t need my mum to sign anymore, “heng ah” else sure get an earful of nagging by her.

Although I can’t remember what the SD value was when I made the redemption, but I vividly remember that including the miserable 3% or $300 I received for the past 3 years, I did not lose out much.

This also meant that I didn’t earn a “shit” out of the investment because of my early redemption and still loses out on inflation. Of course you might be thinking if the RM was around when I returned to the same branch. Long gone already!!

Scared and worried of making any further investment, I only dare to put my money into FD account earning 3-4% (interest rate was definitely higher than current) till I turned 23 years old before started my REAL investment journey.

Nothing to fault OCBC or the RM, it was my own decision back then but this will always serves as a good reminder throughout my investment journey. On the hind side, luckily never lose my capital else it will be a really costly lesson.

Lesson learnt!! Read properly before you sign anything including fine prints. When making any investment decision, do your own research and trust only yourself and not hearsay by others.

What’s your first investment and at what age? Lets learn from one another by sharing lesson to avoid making the same mistake again.

Happy weekends!

Portfolio hedge using insurance protection

Many people will think that hedging risk against portfolio means buying put option or any derivatives to protect downside when market goes south. I think to protect capital and portfolio gains, we should be buying insurance instead. Of course not any insurance, I am referring to purely insurance for protection.

Since I am managing the family monies which mean I need to hedge the capital risk of the portfolio against any illness of which my parents may encounter when they grow old.

Choy Choy Choy! But in reality this is happening to people around us, have you heard about XXX parents contracted cancer and did not have any hospitalization coverage?? Plenty of examples around us, we are just praying this isn’t happening to us anytime sooner!!

Instead of praying, I will hedge against any potential calamity which might happen to my parents whether it’s personal accident or major illnesses where they will draw capital from their retirement nest to pay off the hefty medical treatments.

Like many others, my parents in their generation doesn’t really believes in insurance and did not have enough insurance coverage especially hospitalization plans. They used to tell me, got cancer then die lah!! But I always reply what if you don’t die and illness drag for years … they say they will die!! Hahaha, that’s their mentality.

For me, I don’t need them to leave me what big insurance payout after they “move on” but just ensure they have enough to pay their hospitalization bill when their time comes. No need to buy what whole life plan, endowment plan etc

I reviewed their existing insurance when I started managing the family monies 3 years ago and added some protection “hedge” like upgrade their medishield to private shield plans up to govt A ward and also included an accident plan. Old people can get into accident very easily even at home like sprain back etc, this plan covers TCM (Traditional Chinese Medicine) as well.

As you see, there are already exclusion because they have existing illnesses already so private insurer had excluded them totally. These are the risk the portfolio have to take since they can no longer be insured but at least I cover any others that might happen. Insure early, my friends!

The game plan is easy, I used the passive income generated from the portfolio to pay for their insurance premium and in that case they don’t need to touch their savings or my savings.

In short, the portfolio is funding the “hedge” itself if it continues to generate passive income

For those who have aged parents like me, do consider reviewing their existing insurance coverage and take action today to avoid any regrets and “what-if” situation.

Eventually they cannot afford to pay? Who pay? Government pay? Fat hopes!! You will be the one paying for bills!!!

You can either speak to an insurance agent or DIY the insurance plan yourself like what I did. Remember keep it simple (separation between protection & investment). Buy what you need and not what the agent wants to sell you!!

Be happy and healthy always!!

Mum’s Insurance Type Insurer Plan Coverage Exclusion
MediShield CPF CPF C

 As charged

 
Supremehealth CPF+Cash Great Eastern A

 As charged

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
TotalShield Cash Great Eastern A

 As charged

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
Accident (Deluxe) Cash AIA  

 $100,000.00

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
DPS (Till 60) CPF Great Eastern  

 $  50,000.00

 
ElderShield CPF NTUC  

                –  

 
           
Dad’s Insurance   Insurer Plan Coverage Exclusion
MediShield CPF CPF C

 As charged

 
MyShield CPF+Cash Aviva A

 As charged

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
MyShield Plus Cash Aviva A

 As charged

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
Accident (Deluxe) Cash AIA  

 $100,000.00

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
DPS (Till 60) CPF Great Eastern  

 $  50,000.00

 
ElderShield CPF NTUC    $             –    

 

Fund Performance table 2012

Just some historical data to start the first virgin post for this blog.

I started tracking the performance of the fund with a NAV of SGD$1 since start of 2012 with initial asset injection of a mixture of high yield stocks and cyclical stocks from my parents.

My on-going aim was to fine tune the asset allocation to decrease portfolio volatility and increase stability with more dividend yielding stocks since the primary goal was to generate positive cash flow to cover monthly family expenditure. I will be cutting down on cyclical stock as I am not comfortable in their high volatility and low yield.

Absolute fund returns: 19.28% vs. STI: 19.68%

Yield on portfolio: 4.96% per annum

Passive income: $15,446.90 per annum or $1,287.24 per month

Current family fixed expenditure: $6,000 per annum or $500 per month

*Fixed expenditure includes all parents household utilities and insurance coverage only*

*I am supporting my parents by giving them monthly allowance for their meal expense thus meals expenditure not included*

Exchange (SGX) Sector Market Price Holdings Market Value (SGD$)
SPH MFG  $              4.03 27000  $              108,810.00
SGX FIN  $              7.01 15000  $              105,150.00
HL Fin FIN  $              2.53 6000  $               15,180.00
PerennialCRT PROP  $              0.57 20000  $               11,300.00
Noble Grp COM  $              1.16 13000  $               15,080.00
GLD 10US$ COM  $           196.92 20  $                 3,938.37
Olam COM  $              1.56 10000  $               15,600.00
Cordlife SERV  $              0.55 29000  $               15,805.00
         
                        290,863.37
         
Assets      
Cash        $83,950.91      
Securities        $290,863.37      
Total Asset        $374,814.28      
         
Price / Unit Units YTD STI Relative
               1.1928        314,230.40 19.28% 19.68% -0.40%
         
         
   Dividends   
  Stock Date Payout  
  SGX 14-Feb-12  $      600.00  
  LippoMalls 16-Mar-12  $      132.50  
  ST Engg 24-Apr-12  $   1,125.00  
  ComfortDelGro 15-May-12  $      594.00  
  SGX 16-May-12  $      600.00  
  SPH 23-May-12  $   1,890.00  
  LippoMalls 24-May-12  $      172.50  
  HL Fin 25-May-12  $      480.00  
  LippoMalls 30-Aug-12  $      197.50  
  ComfortDelGro 31-Aug-12  $      522.00  
  ST Engg 13-Sep-12  $      270.00  
  HL Fin 14-Sep-12  $      240.00  
  LeeMetal 14-Sep-12  $      115.00  
  SGX 12-Oct-12  $   2,250.00  
  SGX 5-Nov-12  $      600.00  
  Cordlife 14-Nov-12  $      522.00  
  Olam 20-Nov-12  $      200.00  
  LippoMalls 3-Dec-12  $      277.40  
  LeeMetal 16-Dec-12  $        69.00  
  SPH 21-Dec-12  $   4,590.00  
         
         
  Total Dividends  $      15,446.90    
  Dividend Yield 4.96%