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A lazy and fool proof way to investing for income?

Saturday, July 23, 2016

Dear AK,

I attended your AK with friends on Friday (15 July) and came away a bit disappointed. 

Not because you did badly (in fact you were the most impressive of the 3 presenters), just that I went into the session with certain expectations of what I could potentially learn from you which was met only partially. 

I didn't expect it to be a Q&A forum (this is my first AK session) and a session about specific stock/REIT question after question. I was hoping that there was a more in-depth discussion about underlying concepts or a mindset to approaching investments/income investing. Yes there were sprinkles of that but it's probably safe to say the session was dominated by the "what is your view of Centurion, or Sembawang, or Soilbuilt REITs....". You get the drift.

My goal is, like a lot of people, comfortable retirement and maintenance of my current lifestyle with a predictable stream of income. 

Objective - As I have a day job, and I suck at investing, I want to achieve my goal above by having a dummies methodology to invest in REITs or other income generating investments without a lot of decision-making (I'm lazier than you). I'm not looking at super returns, around 5-6% or so would do as long as they are predictable (more or less). 

Seriously, I am not suited to do investments and I have made a lot of investor mistakes (loss aversion, recency bias etc). What is in my favor is a fairly solid investment foundation and from there, I want to build on it by making a reasonable amount of return with reasonable predictablity, and without needing to make a lot of decisions.

That's why REIT investing appeals to me. My sense is the analysis for REITs is lesser than that of a stock such as DBS (which you mentioned quite extensively on Friday). I was hoping to narrow down the time and effort to do analysis on REITs.

I will continue to focus on your REITs related blog posts (especially those on the right hand side bar) but have already benefited from your advice on CPF (I'm going to top up my mum's CPF RA to earn a blended 4.45% returns and maintain some liquidity by drawing a monthly sum from her account over 5 years.) 

Regards,


Hi,

Oops. Yes, "Evening with AK and friends" is Q&A. I assume that the audience are all my readers and that they know my approach to achieving financial freedom. "Evening with AK and friends" is for further interaction, face to (masked) face. ;p

If you are a lazy guy like me, yes, make good use of the CPF which you have started doing. That is as good as it gets when it comes to fixed income instruments. It is really a AAA rated sovereign bond with an annuity thrown in.

REITs? Well, it isn't as simple as you think. Investing in REITs looks simple now because conditions are relatively benign for REITs. Of course, for the income investor, REITs are still relevant instruments. 


Keep reading. Keep learning. 

I am still learning too. :)

You might want to consider regularly socking away some money in an ETF that tracks the STI. ASSI guest blogger,
Matthew Seah, blogged about this strategy before and you will find his name in the left side bar of my blog. Click on his name and you will see all his blog posts.

Investing for income, focus on the business and its ability to generate income and willingness to share that income with you. Try not to be (too) emotionally affected by price volatility.


Start investing but keep a war chest ready to buy more if Mr. Market goes into a depression. Do this and, given enough time, you will do well enough. :)

Best wishes,
AK


Related posts:
1. Risk averse? STI ETF, REITs or stocks?

21 comments:

SMK said...

another guy looking to benefit from parents' RA.
at least it is not morbid.
PAP doing good work eh?
you don't even get 2% from 10 year US treasuries. not to mention half the negative yields from DMs.
how long can this last? I hope forever.

"I'm going to top up my mum's CPF RA to earn a blended 4.45% returns and maintain some liquidity by drawing a monthly sum from her account over 5 years."

good suggestion on STI ETF.
maybe I suggest reading http://www.turtleinvestor.net/ to your this reader?
I like Kevin's work on his blog.

he's an active passive investor if you can say that.

also, nice suggestion AK!

Lord said...

I am super lazy, I want to spend an evening with AK to find out the secret to investing and that's it. I want to have $30k of monthly cash flow to suit my lifestyle for the next 50 years even though I am earning less than $3k now. Plse don't ask me to read thru your blog, just tell me your secret formula or adopt me as your heir,whichevr is easier for me. Looking forward to the cheque in my mail. I am too lazy to give you my address too, possible to send your cheque to my email account?

AK71 said...

Hi SMK,

We Singaporeans are lucky to have the CPF. Luckier still are those who are able to max out the benefits. :)

Let me make it easier for readers to visit the link you provided:
Turtle Investor.

AK71 said...

Hi Lord,

:o

-.-"

er................ hmmm............

ahem.

Nice and sunny today. Good weather for a walk, isn't it? ;)

sy sy said...

Yes, nice weather for a walk.... but north west dark sky this morning, maybe will rain...

foolish chameleon said...

"I'm going to top up my mum's CPF RA to earn a blended 4.45% returns and maintain some liquidity by drawing a monthly sum from her account over 5 years."

how does this actually work?
top up your mum RA, and then draw out from her account? huh?

SMK said...

lord just being funny on your behalf lah ak.

millionfaith said...

Exactly the same sentiment I have!

I hope readers reading this blog do understand as much as the strategy works for AK, this strategy may not work for others. Taking NPV into equation, to achieve 5-6% net returns need some work. Even with the work, this does not mean risk free. The probability of failing is just somewhat lower hence we also need to pray for luck. And this is why I am keen to find out AK’s net return in percentage (if AK remember) because whether this strategy suits me, for example (for the additional returns). I respect your decision of not disclosing though.

I did some analysis and broadly categorize as follows:
1. Passion, time, hardwork
Hard work requires time, which to some of us, can be precious because they have spouse and children (AK does not need to spend time on spouse and kids). Additionally, passionate about investing is also important for the commitment. We simply cannot put the investment in a folder after the investment is made. We need to constantly read and understand the economic situation, the business, and its market condition of the business we now own. And so, will I be able to devote time and energy, and if I have the knowledge onto these areas.

2. Fat war chest, no liabilities, personality
AK’s strategy might have work perfect for him. Besides his fat war chest and no liabilities, he is a man with strong character. He does not over greed or over fear when Mr Market goes crazy. He is able to carry out his strategy without changing route. Can I do that?

3. Luck
Even everything being same same with AK’s, will God bless me? Of course, AK’s suggestion is to buy when Mr Market becomes depressed. Here I like to share an experience from an acquaintance who exercise this strategy when the Mr Market gone crazy in the last GFC. He almost lost his pants when he started buying in Jan 2009, after about 3 months of correction.

At the end of the day, so it is not so easy.I am not trying to be negative but it is important for us to know the truth about returns, risk, and our personality etc before we step our foot into investment. There is a lot of money to be made in investment, the question is: have we prepare ourselves adequately. Of course, I will neither disagree nor agree with anyone who believes it is easy. It is all in the statistics.

Anyway, just my rambling. By the way, I also spot several readers looking for “tips” here. While some asked pretty “simple” questions, for example, when the dividend is paid etc.. honestly, to these investors, if you do not take time to find out these simple facts, do you expect yourself to research the business the company is in?

Just my view, hope I did not offend anyone. My hope is to provide an unbiased view on investing in stock and shares. I have learned several things from AK and his guest bloggers and I am thankful for everyone sharing. I am still learning, and all these views help to broaden my perspectives.

Millonfaith

AK71 said...

Hi sy sy,

And my laundry is a casualty in such unpredictable weather... :(

AK71 said...

Hi chameleon,

That's the general idea. See related post #4. ;)

AK71 said...

Hi SMK,

And I enjoyed it. A rather droll comment which I failed to match with my attempt at irrelevance. ;p

merxantia said...

Actually during the AK and friends session, AK did make an effort to cover about CPF and even the types of insurance that one should focus on but i guess he has them covered extensively on the blog and probably did not want to repeat too much.

He claims that he is lazy, but if you read the printout given and his sharing of examples (e.g. AIMS AMP Reit), you will realise there is a lot of homework that he does to see the tenant mix, lease of properties, asset enhancement initiative and quality of management. So actually he is anything but lazy :)

In all, i guess there is a diverse range of readers and AK brought his friends to share their experience on what they look out for and how they analyse even though views were asked on specific counters so that everyone can learn something new.

P.S. He did share his top secret, which is all about timing into entering the market to get the best deal based on the homework done.

AK71 said...

Hi Millionfaith,

You have inspired a blog post. Thank you. :)

A wealth building strategy that has worked for AK.

AK71 said...

Hi merxantia,

Sounds like you enjoyed "Evening with AK and friends". I am glad. :)

As I grow older, I am prone to repeating myself and this can be quite irritating. However, my concern that evening was time. We only had 3 hours and it was probably a better use of time to pick Victor and Rusmins' brains. I simply assumed that the audience were already familiar with my philosophy and strategy when in comes to wealth building.

In light of this feedback, I might consider giving an overview of income investing in the next session. I see how. ;)

RayNg said...

Hi Millionfaith,

Allow me to add...

AK has also shared his bad investments during the early years... and how he turn it around.



AK71 said...

Hi Ray,

I have had my share of wormy investments, for sure. -.-"

millionfaith said...

Hi Ray,

I did not join the AK evening, so I am not commenting based on the AK evening. My purpose of posting is mainly for the big group of stock investors out there. Many are unaware of their action when they "invest" in the stock market. I was there before, but sometime, I still subconsciously go back to my old way, the danger zone.

In my investment journey, I can consider myself being very blessed. Maybe God bless the hardworking. Success is 99% hard work and 1% luck (but I think investing in the stock market need more than 1% luck).

It is ok to ask views, address the concerns on the companies we invested because this means we have read up and form some analysis and we would like to ask others views. This is one of the learning path.

I am aware of AK's past records. There is no 100% winners. The reason I look at his strategy more closely is because he lists his not so rewarding transactions. If every entry is winner, I am in serious doubt and would have closed the tab. We have to be sceptical, especially in investment. This was taught by a friend super successful in stocks investment. His words has helped in my stocks turnaround.

Anyway, AK blog is a good blog to learn from, is a step by step slowly and surely way of growing money. But are we ready to learn or looking for get rich quick way?

AK, by the way, I am having a tough time reading the posts using the blog archives because the files are so huge and the computer hangs. Would you be able to break down into months for the older posts?

Just rambling, but I know I am long winded. I am older, so this is nagging :(


millionfaith said...

Hi Merxantia & to the other readers,

AK is definitely not a lazy person. Remembered he said he held several jobs? Anyway, if he is lazy, he can never achieve success in stocks investment. I can assure that.

AK71 said...

Hi Millionfaith,

For the first time in a long time, I visited my archives. Apparently, it only breaks down into months for the current year and not the past years. :(

And I was less lazy in the past. ;p

millionfaith said...

Hi AK,

I found my way around already. It does break down into months for past years. Nevertheless, still slow. Thanks anyway

AK71 said...

Hi Millionfaith,

It does? Oh, that is good news.

Happy trekking in the ASSI jungle!

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