Saturday, January 31, 2015

Jan 2015 Portfolio

Well, its the first month of 2015, STI started the new year 2015 with a big bang! And its not good too, on its first trading day, STI was -40 points. That was caused by oil price dropping below US$50 and Euro crisis with Greece threatening to exit Euro. And adding more oil to the fire, Switzerland suddenly announced that they are not pegging Swiss Franc to Euro, causing a big hoo-ha in the market. Well, not a good start for the stock market if you ask me. And that's just the beginning of the month. Near the end of the month, we have ECB announcing their QE plan which send Euro down and stocks up as investors are busy snapping up stocks. Pretty volatile month for the start of 2015. What a roller coaster ride, not for the faint hearted :)

This month I added Sabana Reit into my portfolio.
Sabana Reit has high dividend yield, low PE 9, below NAV. It was being sold down quite a lot when they issue placement share at below $1, this caused their stock price to plummet down quite alot. I think it is looking attractive now with its high dividend payout and low PE and below PBR. So let's include it into my portfolio :)

I now have 2 REITs in my portfolio which form about 18%. The next stock I am going to buy will be a non-REIT so that I will be getting my ideal sector diversification of having 20% REITs and 80% other stocks.

Also added CDW which is a semiconductor company with low PE 7, low debt and below NAV with high dividend. I have been monitoring this stock for a while and seems like there was some interest lately with a sudden increase in volume. Could be some smart money buying. Anyway it has been in my watchlist for a while so decided to buy first. Also with the rising USD, this stock will benefit because it is paying out dividends in USD. Overall it seems like I am quite heavy in the semiconductor sector. Will be taking note not to buy too much into this sector to reduce my risk.

STI vs my portfolio

This month, I beat STI! Just 3 months time haha. All thanks to my newly added CDW which surged up by 13%. No thanks to 2nd Chance which was bought last month. Right after I bought it, 2nd Chance released news that due to some issue, they have to terminate the disposal Of their properties To Celestine REIT. What was supposed to be a good news just turn out to be a bad one. This caused the stock price to drop by as much as 16%. Bad timing :( Or rather can anyone time the market? Looks like we are in a bull run now after announcement of ECB QE, there was a broad based recovery at the end of Jan 2015.

PeriodSTIMy Portfolio (Realised)Verdict
Jan 20152.71%3.21% I win

Total 9 stocks in portfolio

Saturday, January 24, 2015

About me

At this time of writing (Oct 2014), I am a 41 years old male, married with 2 beautiful daughters. I am not new to investing. In fact I have been investing throughout my life. My mum introduced stock investing to me. She still do stock investing sometimes buying at ridiculous time during bear market and penny stocks. Sometimes I would give her my puzzled look with her calls haha. But overall she did better than me, collecting dividends and win some tikams. I first started mine when I was doing my NS dabbling with IPOs and buying stocks etc. Now I still do. Just some of my ups and downs of my investment journey:

1. Bought lots of Creative Tech stock when Creative was fighting with Apple iPod. The stock fell from $20+ to $12+ and I thought that was very low already and got in. Dividend wasn't very good and now its only $2. :( And no diversification of stock :(

2. Worked in StarHub when I was younger, late 20s, early 30s, I was the pioneer batch and was proud to be involved in StarHub's start-up. I was offered stock options at $0.88. ex-CEO, Terry Clontz, told us not to sell and to collect dividends. At this time, dividend collection was not in my investment mindset, only capital appreciation. I sold all 20 lots of them at $1 :( Imagine if I still have it now and collecting dividend? haha

3. I am quite adventurous in trying out new things to earn money. Tried Forex, CFD trading not once but 3 times and all failed. I used to be fascinated by the beautiful dream of easy money day trading at home and earning big bucks. After 3 tries, I finally concluded that its not my cup of tea :(

1. For the past years, after recognising the risk free and high interest CPF SA of 4%, I have been diligently putting away $7k into my CPF SA and enjoy tax relief at the same time. My wife thinks (and still think so) that I am crazy locking up my cash into CPF haha. Proud to say that 2 years ago my CPF SA has reached the limit and CPF wrote to me that I am not allowed to top up my CPF SA anymore. CPF also very smart has a limit for this to prevent people like us from over-contributing to our CPF account. I thought they encourage us to contribute more to our CPF ? But I am happy to know that my CPF SA is compounding and rolling my CPF contributions and interest every year :)

2. 2008 to 2009 was a very fast market recovery caused by the fall of the Lehman bro. I still remember how we made the first decision to buy an extra property. I was driving home with my wife and I heard the radio saying the stock market crashed and things wasn't looking very bright. So I asked my wife, 'Hey I think its time to buy (property)'. She replied 'ok lor'. Wow, so swift and decisive I suan her haha. Its a big ticket purchase and we have been saving up for years, waiting for this opportunity. Bought our first investment property in 2009 and is still collecting rental up to today. About 6% return :)

3. In 2012, interest rate was low and many people switched from HDB loan 2.6% to floating rate bank loan such as SOR, SIBOR rate. At that time, there wasn't any opportunity on the market so we decided to clear our owner occupied HDB loan in 2012 (but still paying for investment property loan) and announced bad debt free. We got no owner occupied housing loan and car loan at all :)

Tuesday, January 6, 2015

2014 Year End Portfolio Review

Our performance must be measurable. We should have a plan, a target or goal and a strategy on how to achieve our target. If not, how do we know if we improve or not. Only then will we know if we are in the right track and continue doing what we are doing. If we are in the right track, then we can decide if we want to multiply or magnify the effect.

Its the end of 2014, let's just do a little checkpoint to see how much am I closer to my target :) I started building my portfolio in Oct 2014. So only 3 months of results.

STI vs my portfolio:
My portfolio is still not able to beat STI at this moment. But as time goes by, with the collection of dividends and some capital appreciation, it should be no problem :)

Portfolio by stocks:
I am currently in the process of diversifying my portfolio such that they should not exceed more than 5% of my total portfolio. I am still looking out for more high dividend stocks to buy so that I will be more diversified. For the case of Global Investment, I was too excited and bought too much in it. But its ok, it will be slowly diversified when more stocks are added in.

Portfolio by sector:
We should not be looking at just stock diversification, sector diversification is equally important. I hope to have a 20% allocation for REITs and a 80% allocation for the rest of the stocks. Probably not more than 20% for each sector of the other stocks. The reason why I was willing to allocate a slightly higher % for REITs is that REIT has a policy to pay out 90% of their distribution and will be what I want.

TargetTargetted Portfolio sizeTargetted Monthly dividendsPeriodYearly CONDividends Reinvested
1st target$85,000$495 2015$30,000$5,900
My 1st target is to invest up to $85,000 and receive monthly dividend up to $495 per month.

Total dividend is $450
Dividend per month is $450/3 (pro-rated) = $150

My worst performer is UMS Holdings (-5.3%). This stock pays consistently good dividend but its quite volatile as I noticed that their CEO disposed his shares quite frequently and Applied Materials which is their major customer and investor also disposed its share quite recently. This may be the reason of the volatility.

My best performer so far is Asian Pay TV trust (4.9%). Maybe its because I bought it at a good price during Oct 2014 when market was in a bear mode.

Overall, my portfolio still ends positive in 2014. Maybe that's the benefit of diversification. My risks are spread out throughout my list of stocks. However, diversification is also a double-edged sword. It will also not amplify your winning too. Your results will not be the best and not be the worst, somewhere in between. That's something you have to give and take too.

At end of 2014, I already invested close to $39,000 and receive monthly dividend of $150. Based on the projection of my expected annual dividend of this current portfolio, I should be getting around $3,600 which is about $300 per month. So I am almost half way there. If I continue to follow my strategy of allocating $5000 each month to buy high dividend stocks and assuming no hiccups or unforseen circumstances, I should be able to meet my 1st target with ease :)

Friday, January 2, 2015

My Strategy

In 2010, I bought 10 lots of Starhill Global at $0.50 and Suntec Reits at $1.24 for divdend but was scared of the Tsunami/Nuclear crisis in Japan 2012, so I sold all of them thinking that there will be another crisis just like the 2008 Lehman Bro crisis. But the correction was short lived, I waited for further correction but it didnt happened so I waited waited and waited.

In 2014, I waited for correction but it didnt happened. I just kept on building my warchest. I am also cautious about the current SG stock market which is running high and am afraid of any correction happening in the near future. So this time I cannot tahan anymore. I bought some Global Investment. Its my first buy since 2012, haha about 2 years ago. This time I am buying for keeps.

My Strategy:
I called it 'myCreative' to remind me of my bad move in 2008 when I bought huge amount of Creative Technology stock at sky high price $21+ when Creative was successful with its ZEN mp3 players. There was no diverisification of stocks and I put all my eggs into one basket. Its not creative at all. There was a lot of hype at that time when Creative ZEN was challenging Apple iPod. The stock at that time was highly priced and very low dividend. I add on to it and only to see this stock go lower. Now we all know the story. It is currently trading at $2.

I got my inspiration from ghchua and sanye who are constantly buying into the market now and holding on to them to collect dividend. They do have growth stock but I am going to stick to those high dividend stocks first.

In this strategy, there's no stop loss so during bad times, we have to bite the bullet and see our paper loss each day the market goes down but we shall not falter and hold on to our strategy. Try to buy different stocks each time or same stock at different time. The key is to build a diversified portfolio of high dividend stock so that we can still collect dividend during bad times and to continuously add more stocks when its cheap. In fact its going to be boring because its a buy and hold to collect dividend strategy and to be able to tahan any market correction, its going to be robust and diversified.

This is what I will do, to save up $5k of cash and invest on 1 new stock ea month (This is because of the brokerage rate of 0.28% or mini $25 imposed by broker. Not worth it if you buy 1 lot and still pay min $25). This will continue, my first target is 30 stocks. This is little as compared to ghchua and sanye as I think they hold hundreds of stocks.