Monday, 25 September 2017

Frasers Commercial Trust (FCOT) - HP Vacating from Alexandra Technopark

The much anticipated news is finally released. It is confirmed that HP will be vacating 178,873 square feet of space out of their current 191,846 square feet of space in Alexandra Technopark based on the expiration of their leases. This will also mean that they are vacating 93.2% out of the space they're currently occupying.

The space they are vacating will constitutes to about 17.1% of the total net lettable area in ATP and 6.6% of FCOT's total gross rental income for the month ended in 30 June 2017.


The manager of FCOT has secured commitment by a tenant of about 24,000 sqft (13.4%) of the space vacated by HP. As such, the drop of FCOT GRI at this point will stands at 5.71% and 14.8% of total net lettable area in ATP.

FCOT's announcement on 22 September 2017

Is their HP's departure good?
There's always two side to a coin. As FCOT is pretty dependent on HP's occupancy previously, their departure now will provide them with a chance to further diversify them self with other tenants to reduce concentration risk. It will be up to FCOT's manager to do it's job now to look for tenants. They have also initiated Asset Enhancement Initiative (AEI), which will improves property yield, value of property and occupancy, which will brings up the NAV. This AEI from FCOT on ATP is geared towards rejuvenating and transforming ATP into a vibrant, engaging and stimulating business campus.

Now how bad is it?
Do note that as 6.6% of FCOT's rental income is derived from HP and their partial-to-almost-full departure from ATP will result in a significant drop in their financial result in the coming year. The loss of income will also translates to a drop in their distribution which will affect the returns from a REIT as the returns from REITS are largely dependent on it's DPU.

With reference and taking the previous DPU in FY2016 into account of 9.82cents, the drop of 5.71% will gives me a rough calculation of 9.25cents in their FY2018 DPU. With the price that closed on Friday at 1.395, it will represents a 6.6% dividend yield, if they fails to secure a tenant with AEI going on for the next year.

Now this is a 0.4% drop in dividends.

Don't forget. This departure is only from HP Enterprise Singapore Pte Ltd ("HPE") and there's still 302,920 sq feet of spaces which HP Singapore Pte Ltd ("HPS") is currently sitting on which is constitutes to 11.1% of FCOT total GRI.

Now if HPS fully vacate in November 2017 when their leases is due.

Let's take a look at how it will further impact FCOT
Stripping another 11.1% of FCOT GRI off, similarly, taking FY2016 DPU into account, the drop will now gives me roughly (1-0.111+0.0571)*9.82 = 8.169cents in FY2018. And with the closing price of 1.395 on last Friday, the dividend yield will now be 5.85%. The drop is significant from it's yield of 7% now.

I do remember that HP had previously gotten themselves a built to suit facility from MIT of 824,500 sqft in Depot Road, which is just a stone throw away. Now, when HPE moves over, they're still left with 645,627sqft of space in Depot Road.

Mapletree Industrial Trust BTS facility for HP

So there's a great chance that HPS will be moving over to their new premises.

If HPS is totally vacating, they will need to look for tenants that will takes up 304,920 + 178,843 = 483,763 sqft of space in Alexandra Technopark. It seems like the worries about FCOT previously is now coming true.

Currently, at 1.395, FCOT is trading at a 9% discount to their NAV.




Saturday, 23 September 2017

A lookback into 1986 - 1991 Japanese Asset Price Bubble

Japan is a wonderful country that I'll be visiting in 1.5 weeks time, and also I'd be staying there for 3 months for my attachment program. Today, I will be looking back into the history of Japan's economy as well as a lookback into the Japanese Asset Price Bubble and the Lost Decade.

Japan's economy is the 3rd largest in the world by nominal GDP (a monetary measure of the market value of all final goods and services produced in a period of time) and the 4th largest by purchasing power parity (an economic theory that states the exchange rate between two currencies is equal to the ratio of the currencies' respective purchasing power). 

Tokyo Stock Exchange is also the 4th largest stock exchanges in the world by market capitalization as well as the 2nd largest stock index in Asia.

So what happened to Japan during 1986-1991??

Background
The Japanese asset price bubble, was an economic bubble in Japan from 1986-1991 in which real estate and stock market prices were greatly inflated. The Nikkei Stock Average finished at 38,916, an all-time high, which is almost double of it's price today.

Japan's economy grew largely. 
At an average annual rate of 10% in the 1960s.
At an average annual rate of 5% in the 1970s.
At an average annual rate of 4% in the 1980s.

This is way higher than the annual growth of US which is at 3.07% back then. 

This is done by inflation, and the average inflation in Japan in the 1980s was 7.81% per year with the aim to curb the appreciation Japanese Yen. 

Curbing the appreciation of Japanese Yen is done as the economy of Japan was led by exports and capital investment for export purposes. When the yen becomes too expensive, there will be lesser trades which will directly impact on their economy. 


In the fall of 1989, Japan's equities and real estate bubbly began to burst with equity plunged 60% from late 1989 to August 1992, while land values dropped throughout the 1990s by 70% towards the end of 2001.  


Nikkei Stock Average 1989-1992


The bubble is caused by:
Credit Expansion: Excessive loan growth quota by the BOJ, lending to anyone regardless of the quality of borrower. BOJ in the late 1989, sharply raised the inter-bank lending rates. Overly leveraged companies has filled it selves with a book full of bad debts and has led to the bursting of bubble and stock market crash.

Uncontrolled Money Supply: In the attempt to prevent the strengthening the Japanese Yen, the BOJ has kept inflation high and printed more money The reluctance to tighten monetary policy, due to economic uncertainty related to Black Monday, it has indirectly caused the impact of the bubble to be more significant.

Over-confidence & Speculation regarding asset and stock prices: With the ability to easily loan money and the excessive monetary easing policy from BOJ, and the speculations of asset & stock prices due to the super-charged bull, investors are over-confident. This has caused the asset prices and stock prices to accelerate rapidly. 

In August 1990, the Nikkei stock index had plummeted to half its peak by the time of the fifth monetary tightening by the BOJ. By late 1991, asset prices began to fall. Even though asset prices had visibly collapsed by early 1992, the economy's declines continued for more than a decade, also known as the Lost Decade.


Over-confidence & speculations???

Aftermath
Lost decade, a period of time in Japan where the economy in Japan is stagnant 
In response to the bubble that burst, companies seek to cut debt and shift manufacturing overseas. This will results in a recession and wages stagnated. This crisis has affected the consumption and investments within Japan. As a result, there was a sharp decline in consumption, which led to long term deflation in Japan.

Deflation happens when interest rates fall below 0% and it increases the real value of money over time. It happens to Japan in the early 1990s to 2006 when the zero-rate policy ended. Japan return to deflation in late 2009 and has been battling with deflation till today for 20 years. This event also triggers liquidity trap whereby many people are holding onto cash instead of placing them into the bank as the interest rates is 0%, and when it is negative, it "eats" into your dollars inside.

It may sounds good that with deflation, my dollars on hand is worth more and that I will be having a greater purchasing power with the same dollar. However, it's good to note that with deflation, it will erode away all our bank accounts and investments, which will pushes many of us into liquidity trap.




Now is deflation a good thing?
Read: My S$1M 23 years before and 23 years later

Friday, 22 September 2017

Accumulating ComfortDelGro

CDG has declined sharply last Friday to a new low of 2.09, dropping further when the market open on Monday and this continues to the price of 1.965 today.

LTA has announced on last Friday that SMRT has clinches the operating contract for Thomson-East Coast Line (TEL). The bid SMRT submitted was however 30% below it's rival SBS Transit, a subsidiary of ComfortDelGro.


Map of Thomson-East Coast Line (TEL)

The response is very negative from the market for this, shredding 11% of CDG since the last closing price on last Thursday

I've taken this opportunity days ago to cash in and accumulate 500 more shares of CDG at 1.99, which is 10% down from my previous average price at 2.22. CDG has became my greatest holdings so far. After averaging down, my new average price for CDG stands at 2.07/share. The last time CDG is trading at 1.96 (the price today) is back in March 2014, a 3.5 year low. Market capitalization from the drop has resulted in a decline of $475.81m.

There has been a big controversial in CDG recently, with different individuals voicing out different concerns about CDG's drop such as:

Falling fleet and 2000 Comfort's driver switching over to Grab for the heavily discounted rental.
A rental of $120/day x 2000 x 365 = $87.6m fall in revenue for the next year. 
This may continue to worsen should more driver of CDG switches over to Grab/other taxi provider.

Grab is currently very aggressive in the war with Comfort, I believe that the taxi fleet would continue to fall.

Towards which approach would CDG take to overcome this problem - selling their taxi business/scrapping their unused cars/price-war or offering incentives to retain their drivers. This shall be left to the highly-paid executives to make their decisions.

SMRT winning the tender to TEL.
This represents a "loss in possible revenue" to CDG's subsidiary, SBS Transit which will affect their earnings in the years to come when TEL opens.

On a positive note,

DTL3 will be opening in months time, and I believe that this will be able to slightly mitigate their pain in their revenue loss.

Healthy Balance Sheet - A good question will also be towards how Comfort is able to deploy their cash into generating more revenue for the group. With this destructive technologies, companies like SPH is also facing problem but has since diversified into other sectors such as properties. Will Comfort do the same thing? Again, This shall be left to the highly-paid executives to make their decisions.


With these in mind, the revenue losing businesses will translates to a falling EPS the next year. With the fallen share price, the price today at 1.96, it's priced at 13.25x their earning.

EPS now at 14.83c, assuming a 10% off it's revenue across all businesses in a terrible scenario, 13.347c of EPS will translates to 14.68x their earnings. To buy at the same 13.25x their earnings, 1.76 looks to be another price to enter.

Fortunately, my sizing are all extremely small. Should I catch a falling knife, it will be a good lesson for me.

There's still another blow to CDG should strategic alliance with uber fall through. I'll be reserving some bullets to accumulate more on the next blow, should it takes place and I will be looking towards to accumulating more shares of ComfortDelGro when opportunity presents :)

Fear, fear and more fear?
Read: A lookback into 1987 Black Monday


After the great correction of October 1987, the end of the world and the end of the banking system were widely predicted.
Peter Lynch



News on SMRT winning tender to operate TEL can be found here from CNA and here from Straits Time. TODAY report on ComfortDelGro's Taxi fleet here.

CDG's 2Q17 Report can be found here. 

Monday, 18 September 2017

Peep into the 19 year old student's CPF Account - Transfer from OA to SA

Years ago, I used to hate the concept of CPF deduction from my part time job, as I felt that it is eating 20% of my salary away which I could channel it into buying things I love. However, I do realize that after 3 or 4 years of working in part time jobs that has taken my CPF, lately I've fallen in to love with what it is able to do for me. Also the sweet 17% additional contribution from my employers is doing great inside too.

Let's have a look at the various types of CPF Account:
There's 3 different type of CPF Accounts:
  1.  Ordinary Account (OA)
  2.  Medisave Account (MA)
  3.  Special Account (SA) 
Adopted from CPF Website
 Now let's take a look at the different interests each account is able to offer you.

Adopted from CPF Website


Now, knowing that the OA offers 3.5% interest per year for the first 20,000 (2.5% for balances above 20,000) and MA & SA offering up to 5% interest for the first 40,000 (4% for subsequent balances). My OA to SA transfer will gets me 1.5% more of interests!! CPF Accounts are just like a "high-yielding bank account" and no risks is involved.

Earlier on yesterday, I've just done a CPF OA to SA transfer. Presently, I do not have any mortgages to be worried about that will require my CPF OA account. This is done to maximize the interest gain and allowing my money inside to work harder for me, while I do not need any funds from the Ordinary Account.


I've also stolen an excel from KPO to play around with the numbers. A strange coincidence that we've done the SA transfer on the same day! LOL. Here's a look at my forecast from the excel if I were to stop working and officially "retire", this is how much I'd have when I'm 47 in 2045.



Meanwhile to me, this account represents a high yielding retirement tap.

Using CPF to invest in shares??
To participate in CPF Investment Scheme (CPFIS), a minimum sum that is required in the OA (CPFIS-OA) is $20,000. Likewise for SA (CPFIS-SA), you will need to set aside $40,000 in your SA. Currently, I'm do not have the sum in the accounts, as such, the best way to maximize it is to transfer into my SA account.

At the same time, I'd also wish to express that, should I have enough money in these accounts, nothing beats the word "risk-free" and the ability to sleep everyday in peace without having to worry and do homework about your investments you've made with CPFIS. Nonetheless, should opportunities present themselves and due-diligence is done, CPFIS is a considerable option.

Now after so much words.. let's have a peep into my CPF account after I've done the full transfer of OA to SA.




Read: CPF Milestone ($40k in Special Account) and The Power of Compound Interest
Do note that OA to SA transfers are irreversible. 
More details can be found here from CPF's Website.



Edited 18/09/17: 
Wondering if the transfer of OA/SA suits you? 
Read: The Dilemma of Young Personal Financial Investment Influencer

Saturday, 16 September 2017

A lookback into 1987 Black Monday

Dow Jones Industrail Average - Closing Price 22,268.34 points on 14/09/17. This is 3 times the price to pay for since Global Financial Crisis in 2008.

Dow Jones Industrail Average (DJIA) is a stock market index just like our local STI which consists of 30 major companies which includes: 3M, Amex, Boeing, Coca-Cola, ExxonMobil, General Electric, Goldman Sachs, Apple, Microsoft, United Technologies, Walmart and more.

I've never participated in any market crashes before. Throughout my life on earth, I've only been through GFC in 2008. However as DJIA is breaking its all time record high and closing at 22,203.48 yesterday. As such, I've decided to look-back into market crashes, economic crises and reading more about them. I'll look back into 30 years ago, starting with the Black Monday in 1987. 

On 19 October 1987, the stock market around the world crashes. DJIA fell by 508 points (22.61%) to 1,738.74. The largest one-day percentage drop in history. $500 billion in market capitalization was evaporated from DJIA. 

Impacts on Straits Time Index (STI)
STI shredded 12% or 170 points to 1,223.28
This is also the biggest one day tumble in local stock market history. The drop also translates to S$15 billion loss from the market in a day. 



What causes the Black Monday?
In 1985 and 1986, US economies began shifting from a rapidly growing recovery for the early 1980s recession. The 1980s recession is an event of severe global economic recession. One of the cause was the Federal Reserve's contractionary monetary policy which was sought to deal with the for high inflation.

The stock market then go on a super-bull run in the 1986-1987. The bull market had been fueled by the low interest rates, hostile takeovers, leveraged buyouts and merger mania. Many companies raises capital to buy each other out - the companies believe that they will be able to grow exponentially by constantly acquiring other companies. Back then, investors rushed to buy their stocks hoping to benefit from the super-charged bull market.

In early 1982, Dow closed at 776.92. Dow has peaked in August 1987 at 2722 points, a 44% increase over 1986's closing price of 1895 points.

Causes of market crash includes includes program trading, overvaluation, illiquidity and market psychology.

The crash was done by program traders. In program trading, computers perform rapid stock executions based on external inputs such as the price of related securities. Mass panic selling caused by the crowd has elevated the crash.  Panic selling causes a sharp decline in price as the investors just want to get out of the investment with little regard for the price at which they sell. Investors rush to calling their brokers to sell off their stocks with the fear of losing everything. This is caused by pure emotion and fear, rather than evaluating their fundamental. Almost every market crash is a result of panic selling.

Majority of the investors are selling did not know why they're selling for. The only thing they know is that everyone is selling. This emotionally-charged behavior has caused the stock market to crash.

Circuit breakers were introduced after the Black Monday to halt stocks from trading if they plummet too quickly.


I've done a deeper research on the behavioral economics to understand more about "emotions" in investing from the net.


Behavioral economics is the studies of effects in psychological, social, cognitive and emotional factor on the economic decisions.

There are 3 prevalent themes in behavioral finances:
1. Heuristics - Humans make 95% of their decisions using mental shortcuts or rule of thumb

2. Framing - The collection of anecdotes and stereotypes that make up the mental emotional filters individuals rely on to understand and respond to events.

3. Market inefficiencies - These include mis-pricing and non-rational decision making.

Now all these is done without consideration to it's fundamental of the business they're buying into. It seems that the many investors back then has been affected by the noises from the market to buy and sell. "Buying in bull, selling in bear"


Fun Fact: Buffett however, took the advantage of the lower price in Black Monday and began building his position in Coca-Cola. One of his most successful investment ever. No doubt his favorite stock. Buffett had cashed-in more than $1 billion of Coca-Cola stock in 1988 which is equivalent to 6.2% of Coca-Cola. Today, his stakes in Coca-Cola is worth $16.7 billion and it pays Buffett $560 million in dividends every year. Now, this is almost half of what he paid in 1987.

Friday, 15 September 2017

How many account does this 19-year-old student has?

The answer is 4. Different accounts are meant for different purposes.

  1. Expenses Account
  2. War-chest
  3. Emergency Funds
  4. The Dream Account

Let me break them into different parts now. Whenever, I receive a sum of money, be it my salary I’ve received from my part time job, some extra cash from occasions like Chinese New Year, I’ll allocate them into portions whereby it will go into my various different accounts.


Expenses Account
This account is used for general expenses like food & beverages, clothing, transportation etc. Expenses should only be spent from this account. As such, if this account is running low, I will have to ensure that my spending is lesser until my “next paycheck” comes in. However, I do realize that even in this account, I manage to accumulate a little savings here as I do not empty my expenses account totally every month. For this account, I’m using my POSB Savings Account I had since I’m a kid. This is because POSB/DBS offers great convenience in locating their ATM for easier withdrawal.

War-chest
Funds that are allocated into this account will be used for investment purposes. No withdrawal will be made by this account. Dividends received from shares I own will be credited into this account as well as payments for shares transaction. I make it a point that I’ll transfer a certain percentage of any “cash inputs” I’ve received to this account. I’ll maintain a certain balance for reserves to be deployed in a depressed market.

Emergency Funds
The emergency fund is an account used to set aside funds needed in an event of any personal financial dilemma. It will be dependent on the average living expenses over a period of time (3-6 months).  The account will be reviewed accordingly when I progress with age, as I would have larger expenses. This will also mean that I’ll need a more funds in that account to be able to sustain myself for 3-6 months. At the present moment, the emergency funding account has sufficient amount of money that will be able to sustain myself for at least 3 months. I do plan to slightly increase the funds in the account so that it will allow me to sustain myself for 6 months. This is not a lot of money, as my expenses are pretty low currently. The funds in this account must be a liquid asset.

The Dream Account
This is an account whereby the funds that are inside will be used to buy the “want” things or for expenses such as a vacation. The percentage of allocation to this account is lesser as compared to the other account. The day this account hits a certain amount which Is sufficient for me to get what I “want”, that will be my reward day.

It’s a pretty simple system. I personally feel that with this system, I’m able to do things I want without having to worry if I have sufficient for the latter. Why do I need to complicate myself and create so many different accounts for myself? 

Well, because it provides me with the comfort to shit in peace, knowing that:
-      If I’m in a deep-shit, I’ve my emergency funds to back me up.
-      If my investment turns sour, it will not cause me to jump down from a building
-      When I’m getting my “wants” or going for a vacation, it does not break my bank

Peace of mind is indeed priceless.

Thursday, 14 September 2017

My S$1M 23 years before and 23 years later.

I've always been told by my grandmother that a plate of char kway tiao used to cost $0.10, and the same plate now would easily cost $3. Who is the culprit behind this...? The vendor? My grandmother? The plate? Or the char kway tiao?? No.. It's actually something called inflation.

So what exactly is inflation?
Inflation is the increase in prices of good or services over time.


Inflation leads to higher prices and lower purchasing power. It is a monetary phenomenon that is caused by a country printing more money that it's justified by the country's wealth. When more dollars are issued for a limited amount of assets, the value of each dollars is decreased.
 
Let's see what is Warren Buffett says..


As mentioned in my earlier post about my goals of wanting to have $1,000,000 by 42 (which is 23 years later). I went to do a check on the inflation in Singapore from the past years and was directed to the MAS website. From the website, I'm able to find the Inflation Calculator, which I proceeded to calculate how much $1,000,000 would be 23 years ago.


As our purchasing power is affected by the inflation, our purchasing power of $1M (23 year ago) will be equivalent to only $689,556.24. This also mean that for every of my dollars I've kept over a year, it provides me a negative return of 1.6% 

This also means that with the interest rates bank are providing for your savings in a normal savings account of 0.05%, your money is being eroded by the increasing prices of goods.
 
Now the core inflation for Singapore at about 2%, and factoring in it, $1,000,000 will only gives you $641,170.69 of the purchasing power in 2040.

Stocks can beat inflation over time because companies can raise prices to account for rising costs brought about by inflation. When companies increase their prices, their revenues and earnings also increase. The higher the earnings, the higher the valuation, which leads to higher share prices. However, should your investment turns out other wise, not only does it mean that you'll be further away from escaping the rat race to be financially free, it also means that your savings is further eroded by the bad choice you've made. There's many different types of investments that's available in the market apart from stocks. 

As such to beat the core inflation your investment will have to generate a return of >2%. This will only prevents your dollars from going smaller in the next years. To generate more out of your investment, it will mean that your investment returns has to be 4% or 5% or even 6% (a conservative returns for your investment). 

Without investments, Buffett will not be as wealthy as you see today. So is inflation a good thing?? 

Saturday, 9 September 2017

Cromwell European REIT follow up - 7.5% dividend?

I've written about the IPO of CEREIT earlier in August when SGX has nodded for it's ETL.



Cromwell has since lodged it's preliminary prospectus to listing in SGX and their plans to start trading on 28 September. Being the 14th IPO of 2017, CEREIT is also the largest IPO since Netlink Trust with an offer size of S$2.3 billion. This will also be the first Euro dorminated REIT in Singapore, by which

What type of real estate do they hold?
CEREIT holds 81 properties from a diversified mix across six gateway cities in Denmarm, France, Germany, Italy, Netherlands and Poland which is valued at 1.83 billion euros. Their portfolio consists of office (35%), light industrail assets (33%) and retail (27%). Occupancy rate is ~89%

However, when being compared with the closest REIT (IREIT) which compromises of asset in Europe, CEREIT only has 69.1% of assets that is freehold. IREIT on the other hand has a portfolio that consists of only freehold properties. NLA is about 1.4sqm.

When will their IPO take place?
The public offering will open at 9pm on September 21 and close at 12pm on September 26. Trading will start on September 28.

Shareholders
Sponsor Cromwell will holds an 8.7% stake in the REIT if greenshoe option is fully exercised and 12.7% in the worse scenario.
Cornerstones investor includes Cerberus (7%) and Hillsboro Capital (8%) which will takes up a combined of 15%

Price/unit
1.58 billion units of CEREIT is expected to raise about 1.25 billion Euros (S$2 billion)
The offer size consists an international placement tranche of 1.2 billion units, a Japanese public offering of 268 million units, and 79 million units that will be offered to the Singapore public.
Prices/unit are between EUR0.55-0.57.

Goldman Sachs and UBS are the joint managers. DBS joins them as joint global coordinators

Gearing
The gearing of the REIT is between 34.3-36.6% which is below the ceiling of 45%. This is not exactly a low gearing when compared to FLT and definietly not as high an European peer, IREIT with gearing at 41%.

Dividend Yield:
The REIT has a forecast of 7.5% (EUR0.57) - 7.7% (EUR0.55) dividend yield for 2018 and distribution are declared in Euros by which investors can opt to receive their dividends in EUR or SGD. CEREIT also has a decent WALE of 5.1 year which suggests that their leases will expires mostly on 2021.

My take
- As CEREIT is a REIT that is dorminated in EUR, a depreciating euro against SGD will also impact the returns negatively. Hence, apart from the performance of the REIT, the country's currency also plays a risk in the investment. However if Europe's economy were to recover to the days when EUR2 = SGD 1, this will aso mean that the gains are amplified. EUR has appreciated ~6% since the start of this year to 1 EUR = 1.614 SGD today.
- The issue price offers a discount of 13% to its NAV which provides a margin of safety.
- Gearing of 34-36% do allows the REIT to take up some loans for acquistion in the future without the need to constantly issue rights for any acquistion.
- CEREIT compromises of assets that is of a diversified field, which allows the pain of declining sectors to be slightly mitigated. Also, they're diversified across different countries in Europe, which will reduce the concentration risk if one of the countries were to perform poorer. The economy in Europe however, will determine the performance of CEREIT heavily as all the assets are based in Europe.
- Distribution yield forecast in 2018 is pretty attractive at 7.5-7.7%

More details can be found here from Business Times and here from Straits Time.

Thursday, 7 September 2017

The 19 year old investor - Part 2

As mentioned earlier, this part will be about identifying my goals as a 19 year old investor.
So what goals do I have in mind? What do I plan for? What do I want to be in my future?

Goals
23 years later: 42 year old (year 2040) - $1,000,000
15 years later: 35 year old (year 2033) - $500,000
12 years later: 31 year old (year 2029) - $250,000
7 years later: 26 years old (year 2024) - $100,000
5 years later: 24 year old (year 2022) - $50,000
1 year later: 20 year old (year 2018) - $10,000

Assuming a conservative returns of 5% per year, excluding capital gains. From playing around with excel functions, this is what I have in mind:


Wow.. now it seems a little bit tough here.
I've also increased my targets for this year slightly to $7,000 as well as setting another goal to achieve $10,000 before my 20th birthday (by 1H2018). As a male in Singapore, I'll be conscripted to the National Service next year. This will definitely be something memorable. Keeping that in mind, with the allowances, it will restrict me slightly for my injection in 2019 and 2020 when I'm serving the army.

I understand that this goals are pretty far stretched and looks very unrealistic. However, I'm still giving it a go, and work towards my targets. Should the investment turns other way, it will also means that I will need a longer time frame to achieve my goals. Understand with the inflation, it will possibly mean that the $1,000,000 may not mean the same as the $1,000,000 today.

Fingers crossed....

Wednesday, 6 September 2017

The 19 year old investor - Part 1

Hmmm.. exactly. What is this 19 year old fella doing here?

As much as people would be wondering.. why am I here?
Why is this 19 year old guy doing this? Why do he needs to be in this situation, living in a 19 year old body while having a 30 year old mentality? Shouldn't this fella be enjoying himself?

Is age really just a number? So many questions on the list though.

Many times, I've wondered myself too. Why is there a need for me to start my financial journey at this age. Why do I need to start this young when everyone is enjoying themselves. Argh.. too much noises.








I guess I'm 4th in the picture!

I believe this is up to one's self to define what enjoyment truly is. Some people love to be indulging in LV bags, AP watches, condominium, an Aston Martin and probably a first class air-tickets to Las Vegas.

So what is enjoyment to me?
Enjoyment to me is simple - I'd love to know that I'm doing something, that in a long run it would be productive for myself, for my future, for my kids, for my mother, for my family and for my partner. I would love to spend more time with them in the future, rather than having to work my heads off and rarely get to see them. I'd love to learn new things and I'd love that what I learn will be placed into a good use. I will also not forget to have a fair balance in having some fun as a youngster too when I'm still young!!

So why did I started this young?
I constantly reminds myself of this - the journey of a thousand miles begins with a single step. 
Instead of contemplating, why not do something? So what about the criticism I've received, so what about the people who are thinking that you're acting like an adult? I'm taking my first step.


Why did I blog?
As much as people around me are wondering, people who may chance upon this may wonder too.. What is this guy doing? Quite honestly, I did not manage to find anyone whom I may be able to talk about this to. About their future. Why? We're just too young. Hence, I've decided that, this platform will serve as a personal diary for me to write down what I've learn, what I've chanced upon, and perhaps the day I becomes a millionaire, I would be able to allow my kids to know what their father has been doing since he was a teenager, and hopefully, it will be something that is meaningful enough for them to learn something from. Also, being exposed to the financial blogging community, it will also allows me to learn from wise seniors along the way. Like what I've just said, I enjoy learning.

Why not save first, and invest later when you've got more capital? 
Oh well. That's simple. I feel that experience is just something that money will never be able to quantify. I believe that with perseverance, I will be able to scale the inverse pyramid. Nothing is impossible. As I'm still very young, time is with me. This will also means that I'll have more time in the market. This will plays a very big part in compounding my gains for the next few decades. I will also progressively building my portfolio to a much much bigger one that is capable of generating me meaningful returns in the future.

So what goals does a 19 year old investor have? This must be interesting.. I shall leave it to part 2.

A very big thank you to all the wise seniors for the kind advises as well as motivation given to me.

Monday, 4 September 2017

FY2017 Q3 Dividend Updates

This is my first time doing an update about dividends that I'm receiving.

Dividends is a sum of money paid by a company to its shareholders out of its profits (or reserves).
Throughout the year of 2017, I've received dividends from several companies such as AA REIT, Singtel, FCOT and Starhill Global REIT. AA REIT will be paying their dividends on the 21/09/17.
It's good to note that dividends do play a significant role in the returns from a company (especially REIT). Love how REIT gives out quarterly dividends.







Throughout the 3rd Quarter of 2017, I've received dividends from:
- Singtel
- FCOT
- Starhill Global REIT
- AA REIT

Singtel
Singtel has paid a dividend of $0.107/share, translating to 2.83% of my entry price at 3.77, which I've received $14.98 on 17/08/17. This is the usual final ordinary dividend that Singtel have been giving out for the past 3 years.

Frasers Commercial Trust
FCOT has declared and paid a distribution of $0.024/share which translates to 1.85% of my entry price at 1.295. I've also subscribed to their script dividends whereby I'm allocated 4 share of FCOT and the balance of $1.72 being credited back to my bank account. There should be an impact on HP's departure from Alexandra Technopark which has yet to be confirmed by them however, I'll be happy to accumulate more shares of FCOT during price weakness.

Starhill Global REIT
Starhill has paid a $0.0118/share dividend on 29/08/17, and from my holdings, I've received $5.90. This is about 1.58% from my entry price @ 0.745. Currently, Starhill is trading around my entry price, which comes into my watch-list again. Should the price go lower, I'll be accumulating more shares of Starhill. Currently, SGR is trading at 20% of their NAV.

AIMS AMP Capital REIT

AA REIT has declared a $0.025/unit distribution, of which I will be receiving $10.00 from them on 21/09/17. AA REIT has been a REIT that is paying significant dividends and from my entry price at 1.37 earlier this year, this distribution will be giving me a 1.82%. A slight decrease in distribution that they're usually giving out. However, I remain positive about AA REIT.

Wilmar & CDG has paid their dividends on August, however as I've only initiated a position with them on XD, I will not be receiving any dividends from them. I'll be looking forward to their dividends next year.

In the next quarter, I'll be likely to receive dividends from:
Guocoland, AA REIT, SGR, FCOT.

Total dividends received in Q3 = $38.08
Total dividends received in 2017 = $63.70
Average dividends/months = $5.30

The dividends I'm receiving per month currently is only sufficient to buy myself a meal every month. I will be working towards to build a strong portfolio that is capable of buying myself 2 meals, 3 meals and so on. I'll also soon be writing about my short term targets that I plan to achieve. 


Friday, 1 September 2017

Portfolio - August 2017

Current Portfolio (31/08/2017)
No.
 Counters
No. of Shares
Market Price (SGD)
Total Value (SGD) based on market price
Allocation %
1.
Wilmar Intl
300
3.32
996.00
26.17%
2.
AIMS AMP Cap REIT
400
1.405
562.00
14.76%
3.
Singtel
140
3.70
518.00
13.61%
4.
Guocoland
200
2.38
476.00
12.50%
5.
ComfortDelGro
200
2.29
458.00
12.03%
6.
Frasers Com Tr
304
1.395
424.08
11.14%
7.
Starhill Global REIT
500
0.745
372.50
9.79%

Total SGD


3,806.58
100.00%




In the month of August, I've initiated a position in ComfortDelGro & Wilmar on their price weakness recently and has blogged about it here. August is also a dividends harvesting months whereby most the stocks I own, pays out dividend. Purchased CDG & Wilmar on XD, hence I will not be receiving dividends from them.

I've accumulated 200 shares of CDG at 2.17. Understand that the amount of shares I buy is extremely small and fees incurred will plays a part in my average price. However, as I'm adopting a buy-and-hold approach, sales transaction will not exactly takes place. Whenever possible, I'll add onto my holdings. 

After the news about the possible alliance between Uber & CDG has been announced which the market is very positive about, ComfortDelGro's share had a run up to 2.3

I've also accumulated 300 shares of Wilmar at 3.10, which in turns become my greatest position. Wilmar has been falling sharply after they announced their results, and piercing through their 50D and 200D MA. It's good to note that Wilmar's business is very extensive which I believe will do well in the future, and the price I paid for is below the it's NAV, which provides a margin of safety. I'll be keeping a look out on their coming financial reports. Similarly, they had a run up to 3.3 recently.

A good investment is one at the right price.
 
Guocoland, a position which I've initiated in April this year had a significant run up too. However, It's still trading at a significant discount to its NAV. It's also good to note that TPC/Guoco Tower has commenced it's leasing has since secured tenants such as ING Bank and Uber. With office's market in Singapore bottoming out, as well as it's other developments such as Martin Modern, Wallich Residence, Changfeng residence, this will translate to a greater earning power for Guocoland. By any chance, if there is a correction for their recent run up, I'll be more than glad to add onto my holdings with Guocoland. I've also blogged about their recent FY2017 results here. Currently, they're still trading at a significant discount to their adjusted NAV of 3.18 and RNAV of 3.63. They've also declared a 7 cents dividend that will be paid on 21 November 2017.

Singtel and Starhill Global REIT has also paid dividends this month amounting to $20.88
I've subscriber to their script dividends for FCOT, which I've received 4 units (DRP @ $1.37/share) and $1.72

Hence, a total dividends received for this month (including script dividend from FCOT) = $28.08 ($22.60 cash + 4 units of FCOT)


Current Portfolio Value: S$3,806.58 (+65.26% m.o.m due to capital injection, dividends and portfolio performance)

Capital Injection for August: S$1,364.00
Total dividends received in 2017: $63.70
Average dividends/month: $5.30
  

“ Price is what you pay, value is what you get. ”

Warren Buffett