Sponsored Links

Medisave voluntary contribution in 2018.

I updated a blog on the CPF-MA yesterday: "For those under 65, the Basic Healthcare Sum next year will be S$54,500, up from S$52,000 ...

Past blog posts now load week by week. The old style created a problem for some as the system would load 50 blog posts each time. Hope the new style is better. Search archives in box below.

Archives

"E-book" by AK

Second "e-book".

Another free "e-book".

Pageviews since Dec'09

FOLLOW AK ON FACEBOOK.

Recent Comments

ASSI's Guest bloggers

Helping our parents invest their money.

Friday, March 14, 2014

This blog post is inspired by what I read at Bully the Bear. The blog master is now helping his parents manage some of their savings to secure higher returns. The money would have gone into fixed deposits, otherwise. Read: Why my parents are so eager to invest.

My parents also leave money in fixed deposits which they say give them a peace of mind. Whether it is a good idea or not is, of course, open to debate. However, peace of mind is priceless. If they do not wish to put their savings in "risky" investments, I won't go against them. This also gives me a peace of mind because if the "risky" investments turned out badly and I was the one who asked them to invest, then, it would be a nightmare of epic proportions.

Photo taken when I went on a cruise with my parents.

In recent years, however, my mom saw how my investments delivered regular income and instead of being purely a market speculator, she decided to have me help her invest some of her money. She now gets more than $1,000 in passive income from stocks per month which is a nice bit of extra money for a person in her 60s.

More recently, my dad asked me if I could help him invest some of his savings as well. Of course, I have to do it. Why? He is my father. No other reason needed.

I told him that I could possibly get an 8% yield for him but the principal sum will have to be locked up for at least 5 years. That was my only condition. So, he has to be sure that it is money he will not need. At the end of the 5 year period, he will get 100% of his capital back if that is what he wants or he could stay invested.

How am I going to achieve this over the next 5 years? Honestly, all things remaining equal, with great difficulty, I suspect.

I could consider investing in the following:

1. Sabana REIT
2. Croesus Retail Trust
3. SPH
4. NeraTel
5. Hock Lian Seng


There are many things we can say about Sabana REIT but the distribution yield is rather attractive with unit price just 1c shy of $1.00 and there is a chance it could go a bit higher with an occupancy level of under 92% now. This allows ample room for improvement.

Croesus Retail Trust has retreated in price since going XD. It is now close to my entry price. This Trust is going to deliver a higher distribution yield than Sabana REIT and if things go the way I expect them to, it could do even better in future.

SPH has always been a favourite of mine as a blue chip investment for income. With the listing of SPH REIT, I like SPH more now and increased my long position in the stock last year. SPH will increasingly morph into an asset light property play even as it tries to reverse the decline in its traditional print business.


Regular readers will remember how I increased my long position in NeraTel by 10x last year in an effort to divert resources into stocks which will not be affected badly by any increase in interest rates. NeraTel is still a net cash company with strong earnings which should see meaningful improvements over time as the company sets up offices in new markets.

Hock Lian Seng is an investment I have held for a few years now. I initiated a long position in the stock shortly after its IPO. It has a strong balance sheet and rather stable earnings. It pays out about 40% of its earnings as dividends. It is one of those stocks that I almost forget I have until it is time for it to pay a dividend again.

If I were to divide my dad's money into 5 equal portions and invest in the above, I estimate that I could possibly get a yield of about 7%.

So, how am I going to deliver the estimated 8% yield?

I am going to cheat.

OMG! AK is going to cheat!

Bad AK! Bad AK!

OK, I am so ashamed of myself. You can stop reading now.

Pause.

Pause.

Pause.

Er... Still reading? You really want to know?

Let there be light!

OK, then, my plan is to keep the money that my dad is entrusting to me in my war chest. Then, I will deliver the 8% yield from my existing investments while I wait for prices to go lower before accumulating with bigger margins of safety.

There is no hurry for me to buy anything from Mr. Market. Well, maybe I could increase my investment in Croesus Retail Trust which I believe is rather attractive if 87c should be retested.

What if prices did not retrace lower but stay at current levels or go higher?

Well, anyway, I have always planned on using a good part of the income that is generated by my portfolio to support my parents when they are no longer working. So, this proposed arrangement is just a matter of utilising my passive income earlier than planned.

It will make my dad happy and that gives me a peace of mind.

Note: If anyone is wondering whether to start an investment portfolio based on the 5 securities I have highlighted in this blog post, please read the disclaimer found at the end of the page first.

Related posts:
1. A strategy to grow wealth and augment income.
2. Hock Lian Seng: DPS of 1.8c.
3. Croesus Retail Trust: Luz Omori and Niz Wave I.
4. SPH: Results are within expectations.
5. Sabana REIT: Am I buying or selling?

32 comments:

Money Honey said...

you have done your parents proud.

well done!

AK71 said...

Hi Money Honey,

They have worked hard all their lives and I owe them so much. This is something that I can do for them to make sure they have a more comfortable retirement.

I have not always been a good son but they have always been forgiving. I am very lucky. :)

Gan Cassidy said...

I think I have a reference point now now on where to start. Thanks so much.

AK71 said...

Hi Cassidy,

A reference point? Er... You are welcome, I think. -.-"

Money Honey said...

Hey AK,

by any chance you have any intention to issue "AK Bond Series I" say, coupon rate 4.75% p.a. expiring 10 years?

you will definitely see a ginormous rate of over-subscription.

you have your fans at home and l am very certain there many individuals out there willingly entrusting you with their savings for a better-than-cpf returns :)

AK71 said...

Hi Money Honey,

I think you might be an undercover agent sent by the MAS. LOL.

Actually, I do have friends who admit that they are not very savvy when it comes to investment and despite me telling them that the kind of investment that I do is not the high calibre type, they refuse to learn. Basically, they can't be bothered.

They just want to pass their money to me. -.-"

IChing said...

Hi AK,
I have always been your reader since 2011. You are older than me by 2 years only, yet you have achieved so much in terms of your investment skill etc.

INVS 2.0 said...

I think there are far too many things to learn from you. :)

Btw, when do we know our results of the excess rights for Aims reit?

AK71 said...

Hi IChing,

I always like to remind readers that everyone's circumstances are different.

So, for example, we can share the same goal of achieving financial freedom but we don't have to achieve it in the same way or within the same time frame.

I would hazard a guess that you are accomplished in areas which I probably know nothing about. ;)

AK71 said...

Hi INVS 2.0,

Pretty much everything I know about personal finance and investment is in this blog. Honestly, I don't know much. Getting harder for me to find things to write about. -.-"

AIMS AMP Capital Industrial REIT's rights units should start trading sometime end of next week. I think we should know by then.

Dividend Hermit said...

You are my role model!

AK71 said...

Hi DH,

I am sure we are on the same journey to financial freedom. The choices we make in life will determine how we achieve our goal and how soon we achieve it.

Er... I don't think I am idol material. ;)

Singapore Man of Leisure said...

AK,

:)

Nightmare_Angel said...

HI AK71,

Any comment on the price retreat of Yongnam? It's gradually decreasing and hit $0.21 before recovering to $0.225 on Friday. Kinda missed the boat as I'd be keen to average down at $0.21.

Cheers
QL

AK71 said...

Hi SMOL,

Aiyoh. Why you smile? I worried now. -.-"

AK71 said...

Hi QL,

Missed 21c? That makes two of us.

I haven't been adding because technically 22c is a long term support. So, I have been waiting.

And when it happened, I wasn't looking. -.-"

Yongnam's NAV per share is about 25.8c now. So, 21c will be a good 18.6% discount to NAV.

I cannot tell if there will be more selling pressure or if 22c as a long term support would hold up. However, Yongnam's numbers are likely to remain weak in the coming months and more weakness in its share price will not surprise me.

I have heard from a couple of people who are trained in finance that 18c would be a good price to get in. 18c? Wow!

SnOOpy168 said...

AK. Did us proud.

Did the same for my parents almost 8 years ago, but putting the cash from their FD & that few lots of stocks into 2 NTUC immediate annuity which pays about 7+ % yield with a profit participation & a guaranteed payout of 10 years.

While I haven't checked the actual payout these many moons, but it felt good to hear mom says "boy, I have enough to spend and don't need your $. Go & enjoy life, don't worry about me."

liewxun said...

Hello! I have been investing for my parents over the past few years, and yes I agree that having a 'sleep-easy' portfolio with little or no risk and pays out a good dividend stream is the best way to go.

For me my portfolio includes
CDL HTRUST
olam 6.75% bonds
hyflux 6% shares
keppel corp
SGX

Its always good to see more people helping their parents invest!

AK71 said...

Hi SnOOpy168,

I like the old NTUC Income products. I think they give pretty good value for money.

I think such an annuity plan is probably no longer available today. I don't know this for a fact. Just a feeling.

See: An annuity plan for retirement needs.

My mom is still working. So, I just give her a token sum of $350 a month now. Just for my reference, when your mom says she has enough to spend, how much is it on a monthly basis? Do you know?

AK71 said...

Hi liewxun,

I don't have any of the stuff you are vested in. Haha... It doesn't matter as long as what we have do the job we want them to do for us, of course.

Thanks for sharing. :)

SOLIDCORE said...

Hi AK,

Your parents have been blessed to have you, and now you are taking good care of them. :)

The cycle of goodness stays strong in your household :)

AK71 said...

Hi Solidcore,

I will try to live up to the glowing assessment you have made of me. That is all I can do. :)

FoodieFC said...

I am watching sabana closely, hoping to re-enter into the stock. before reading your post, I was looking at a price just below $1. I wonder if it will go bellow $1 =)

AK71 said...

Hi FoodieFC,

Fundamentally, all else being equal, at $1.00 a unit, we are looking at a distribution yield of more than 8.5%.

Technically, the possibility of Sabana REIT's unit price going under $1 exists although $1 should be a strong immediate support.

If support at $1.00 should break, it must be a sign of some serious trouble. The next supports will then be at 96.5c and 93.5c.

E H said...

I'd better tell your dad :p

Clement Quek said...

Hi Ak..

Thank for sharing.. What you think about singpost?

Thanks

AK71 said...

Hi E H,

OMG! You know my dad? -.-"

AK71 said...

Hi Clement,

Singpost? A company that is trying to transform itself. :)

For income investors, the primary attraction of this stock is probably the 6.25c annual DPS paid over 4 quarters.

I am also looking at this but at the closing price of $1.305, the stock is trading at a PE ratio of some 17 to 18x. This seems rather rich.

Dividend yield is 4.79%. This is fairly good since it is still a net cash company. However, I will be more comfortable with a 5% dividend yield, all else remaining equal. So, I will wait. :)

Rolf Suey said...

Hi AK, I am new in the blogging world. I had been reading your blogs and impressed by your effort and unselfishness in sharing all the good info.

Instead of trying to invest for my parents, I persuaded my wife on that, but seems like she is always short of money and prefer to spend it elsewhere.

I will continue to read your blog.

I also just started my blog and its focus is on Personal Developments, basically something I hope to inculcate into my children aside from normal school education.

I also focus on Investment in Oil and Gas which I am familiar in.

Do also follow me at http://rolfsuey.blogspot.sg/

AK71 said...

Hi Rolf,

Welcome. Always good to hear that people are trying to influence immediate family members to become financially savvy. :)

Please share your views on O&G generously since you are familiar with the industry. ;)

cindy tan said...

Hi AK,

Vard has been rising. Any views on whether it's time to add or sell cos I note you have Vard and you do trade around your core counters.

Appreciate your views on Vard.

Thanks!

AK71 said...

Hi Cindy,

I sold my investment in Vard some time ago and locked in modest gains. I am uncomfortable with the persistent problems they are facing in their Brazilian yards.

From a top down perspective, however, Vard should do better over time.

Monthly Popular Posts

 
 
Bloggy Award