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2012 full year passive income from S-REITs.

Thursday, December 27, 2012

After a few requests by readers for me to blog about my 2012 full year passive income from S-REITs, I was pleasantly surprised to receive advice from a reader that I should not blog about it. Since I was of two minds whether to go ahead, I started a poll on 11 December to see what readers want. The poll ran for two weeks, ending on Christmas Day.

Readers have spoken and here is the blog post by popular demand.

This year, I sold some of my investments in S-REITs as their unit prices moved higher and their distribution yields compressed. Of course, the plan is to possibly increase my long exposure again should their unit prices experience any significant correction. If their unit prices were to continue moving higher, my portfolio would continue to benefit from capital gains.

However, higher unit prices would create a problem as my remaining long positions in S-REITs are part of my core investments for income which means that if I were to further divest even partially, I might not be able to achieve my target annual passive income level. Some might say that this is a happy problem to have but it remains a problem.

I also made an opportunistic purchase of units in Saizen REIT when its unit price plunged 15% as its warrants expired middle of the year. So, I was able to increase my long exposure to the REIT again at a relatively attractive average price, locking in a rather high distribution yield of 9+% on cost, almost quadrupling my position in the REIT within a few days. This highlights the importance of having a war chest ready to seize opportunities when they present themselves. Saizen REIT is once again an important part of my portfolio of investments for income.

An apartment building in Japan owned by Saizen REIT.

My five largest investments in S-REITs are now:

1. AIMS AMP Capital Industrial REIT
2. Sabana REIT
3. Saizen REIT
4. First REIT
5. Lippo Malls Indonesia Retail Trust

I also have five smaller long positions in:

6. Cache Logistics Trust (CLT)
7. Cambridge Industrial Trust (CIT)
8. Frasers Commercial Trust (FCOT)
9. Suntec REIT
10. Keppel REIT (formerly K-REIT)

An advance distribution from First REIT was paid out on 26 December because of a private placement and this bumps up (and distorts) total income received in 2012 from S-REITs a bit.

Overall, despite some divestments to lock in capital gains, my larger investments in Saizen REIT (due to aggressive buying as its unit price plunged middle of the year) and LMIR (due to aggressive buying of nil-paid rights a year ago) resulted in higher total income from S-REITs this year.

Total income received from S-REITs for the year 2012:
S$ 123,873.80

In the year 2013, with regards to S-REITs, I will fill my war chest while waiting for potential rights issues as well as opportunities to buy more at lower prices.

With First REIT having made an advance distribution, I could receive less income from the REIT in 2013. There is also possible dilution of DPU from First REIT's private placement. The DPU dilutive actions of LMIR this year and the weakening JPY which should impact income from Saizen REIT in S$ negatively would all put some downward pressure on my total passive income from S-REITs in 2013.

Definitely, it is almost impossible now to get a 10% or even a 9% distribution yield from S-REITs. We could in fact continue to see yield compression as central banks around the world are bent on increasing monetary supply.

Any correction in the unit prices of S-REITs would probably see opportunistic buying as they remain a compelling proposition in the current low interest rate environment. Sentiments having turned decidedly positive on S-REITs. Mean reversions could become less probable.

To all readers on the same journey to passive income generation, this has been a very good year for our portfolio of S-REITs.


Related posts:
1. 2011 full year passive income from S-REITs.
2. $120K annual passive income from S-REITs next?
3. Saizen REIT: Why did I buy and would I buy more?
4. Staying positive on S-REITs.
5. Made and still making money from S-REITs.
6. REITs: When to buy?
7. Never lose money in real estate and REITs?


wirbelwind said...

Woah thats a lot of passive income! Anyway I was wondering if the 120+k includes the dividends from your SRS account.

AK71 said...

Income, if any, from my SRS account is not included here.

yeh said...

i have been Qing for saizen reit, but never get :(

EC said...

Hi AK,

Congrats on your achievement! Thank you for sharing.

Happy New Year and hope that 2013 will be a good one for you!

Best wishes,

opal said...

Thanks for sharing.
I think your journey towards financial freedom inspires a lot of us.

DTT said...

Hi AK,

Are you a full time investor or are you still holding on to a job?


AK71 said...

Hi yeh,

If the JPY continues to weaken, it is perhaps possible to see unit price of Saizen REIT weakening in future. :)

AK71 said...

Hi Eugene,

Thank you for the well wishes. :)

2013 could be a more difficult year for my portfolio of S-REITs. Hope that my investments in selected stocks will pay off to make up for the possible weakness.

FT said...

Hello AK,

Thanksso much for sharing. I have been following your blog for last 2years, and i have benefited greatly from your calls and views on few of the SREIT namely FIRST, LMIR, AIMS and Sabana. Here's wishing you another solid 2013 year ahead.

ps. 120+K annual passive income, is ALOT! What are your views for 2013?

Kyith said...

REITs are manufactured yields and leveraged. I am not sure how many here see it that way.

I worry for those that sees posts like these and get inspire to buy in now.

AK71 said...

Hi opal,

The primary aim of this blog post is to inspire. If it has indeed inspired readers to start on their journey or to stay the course if they are already on the journey, then, it has succeeded. :)

Everyone will have his own preference when it comes to specifics. Build and be comfortable with our own portfolio. If we are not comfortabe, we are more likely to make rash decisions which we might regret later.

AK71 said...

Hi Desmond,

These days, I think I have two full time jobs: a full time day job and also a full time investor. ;)

AK71 said...

Hi FT,

I am happy that my blog has been helpful in your own journey. :)

2013? I feel that it could be a more difficult year and I blogged about the possible bumps in the coming years.

Never lose money in real estate and REITs?

I have turned more cautious on S-REITs but, in no way, am I feeling negative about them. Good luck to all of us. :)

AK71 said...

Hi Drizzt,

REITs are leveraged investments. There is no doubt about that. As for "manufactured yields", this is the first time I have heard such a phrase.

I would think that all dividend yields or distribution yields are "manufactured", the base case being zero dividend or distribution.

The purpose of this blog post is not to push anyone to buy into S-REITs now. The blog post updates readers on my own journey thus far and hopefully will inspire anyone reading to plan for financial freedom.

You might be interested in my reply to FT above and the link to my blog post titled "Never lose money in real estate and REITs?" :)

EY said...

Hi AK,

Sterling results you have got. :) Happy for you!

And for your reply to Desmond, thought you missed out your 3rd full time job - blogging! Hahaha.

Above all, would like to say that you have been an inspiration - of frugality, prudent financial planning, and selfless sharing. Keep up your great work!

Wishing you a wealthier and healthier year ahead. Abundant happiness and good fortune too! :)


AK71 said...

Hi Endrene,

Thank you for the abundant well wishes. :)

I am mentally prepared for a leaner 2013. So, if my wealth building efforts in the new year should improve over this year, it would be a bonus.

I am happy that my blog has been a source of inspiration. As I really do spend quite a lot of time blogging, I am glad to hear that I am doing good.

Haha.. Yes, you are probably right about blogging being my 3rd full time job although a very unproductive one. Very bad choice for a job.

B said...


Madness but incredible journey.

S$200K next? It'll come sooner than you will think you can achieve :)

Best of luck and more posts from you in 2013!!!


coconut said...

wah haha, very impressive AK. not just the passive incomes but the reason behind your actions, well done!

but cannot use "passive income" la, that's some serious money.

by the way, to post or not to post really depends on yourself, if its helps your performance (like raising your confident etc) why not right?

AK71 said...

Hi B,

$200k? Haha.. I think not. I think $120k from S-REITs a year is good enough for me. That is about $10k every month.

What do I mean by good enough?

Well, you see how I am more cautious on S-REITs now? Their unit prices have had a good run this year and distribution yields have compressed quite a bit. While they are still rewarding enough now, they are not cheap like they once were.

To achieve another 80k of annual income from S-REITs now would mean more than doubling my investment in them. Sounds like diminishing returns? ;)

So, I have diverted funds into stocks like Old Chang Kee, Marco Polo, Yongnam, Sound Global and China Minzhong which I believe are undervalued and have the potential to deliver outsized capital gains in future.

Of course, unlike REITs, they do not have quarterly income distributions and their businesses are less easily understood. A lot more patience is required and I can only hope that I am right. :)

Anonymous said...

Hi AK,

Very nice! Despite divestments you managed to reach a new high in passive income!

Very inspiring I must say; now I'm eagerly building a small war chest
for opportunities.

Your plan to keep half invested despite uncertainties certainly paid off. I benefited too from your insight as I had to stop myself from divesting too much as prices rose.

A very nice target to aim for, 5 year target maybe?

Congrats on the harvest!

Tree :-D

AK71 said...

Hi coconut,

If a subject is worth blogging about, it is worth blogging well. ;p

Going by the poll, readers seem to think that it is worth blogging about. So, any half hearted effort would be disrespectful to readers and a disgrace to me as a blogger. Wahahaha.. that sounds really good! :p

Anyway, why is "passive income" not serious money? Funny money? ;p

Initially, I had no intention of blogging about my 2012 income from S-REITs. It is just the way things turned out. Go with the flow, I guess. Zen. :)

AK71 said...

Hi tree,

With ridiculously low interest rates and relatively high inflation, to stay in cash would have been a grave mistake.

Of course, the argument for staying in cash is usually a strong believe that the stock markets will crash soon which is, of course, trying to predict market direction, a most difficult art.

I always say that I don't believe in being overly bullish or bearish, I believe in being pragmatic which, to me, means to stay invested but have a war chest ready. :)

Always good to have a target to aim for. Baby steps but think big. :)

coconut said...

ops my mistake, i forgot about the world outside me.

yes, passive income is serious money big or small. i'm just not used to them as i'm not in investment (although i try haha) nor part time work.

still learning, still learning...

Howard said...

You're the man, AK! Your passive income triumphs those working full time!! AHHHH...

Hope 2013 will be a better one than 2012 to all.

AK71 said...

Hi coconut,

I cannot help but feel that there is some hidden message in your comment. Haha.. ;)

You are trader extraordinaire. I try to understand what you and SMOL are talking about in his blog sometimes but I end up totally clueless. You guys are deep!

AK71 said...

Hi Howyuan,

I just found out a few moments ago someone I know earns $20k to $30k in his full time job! Wow! That is something! Thanks to beary for opening my eyes. This makes me feel more humble about what I have achieved. ;)

Indeed, let us hope that 2013 will be a better year. There is always hope. :)

TangoXray said...


Impressive result to end 2012. Inspired!

Can I just KPO to ask the annual yield of your portfolio? Reason for asking was because for the past 6 yrs of investing, my portfolio had an average annual yield of 5-7% which I think is okay result to beat the inflation but not extrodinary of cos. I am trying to see how i could further improve to increase the yield & not the risk.

Lastly, happy new year 2013!

AK71 said...

Hi TangoXray,

I will not reveal the exact yield of my portfolio. Anyway, I don't know exactly either. ;p

As an estimate though, I believe it could be double of your 5% to 7%. :)

Sage Bears said...

Congratulations AK!

$120k as passive income is something many of us dreamt of. But you showed us it is possible through hard work and determination (and a lot of research hours and courage).

Looking forward to your followup post in the end of 2013!

INVS 2.0 said...

Hi Ak71,

The $120k is not completely surprising. :)

As much I want to buy more of REITs, they are too expensive as of now. Hope the fiscal cliff in the US can help to depress prices next year.

I have been eyeing on Olam and bought its shares recently. I know this company is still solid and backed by a state investment firm. Hope my decision doesn't fail me. :)

INVS 2.0 said...


This one is just 3/4 of the iceberg. You still have contributions from blue chips and some local companies!

Unknown said...

Congrats! That's a lot of $$$! I just started reading your blog few weeks ago. I'm a newbie and I hope can learn more about S-REIT from you. I somehow read an article saying current S-REIT are overvalue. Take for example Sabana, is it ok to get more positions on it at current price? Thanks and respect :)

JJ said...

AK....... so....... very impressive !!!

Be our financial advisor leh!

Happy New Year to U & family & continue HUATING all the way ............. ('@')

AK71 said...

Hi Sage Bears,

The journey up till now has been an eventful one. By all accounts,2013 is likely to be a more difficult one. We will have to be prepared to capitalise on any opportunities while bearing in mind that our portfolio could suffer some losses if circumstances become less benign.

Having a constant stream of passive income will help to cushion any downside. :)

AK71 said...

Hi INVS 2.0,

I am not surprised that you are not surprised since you are one of my blog's regular readers. ;)

I do not hope for any economic downturn as it would cause immense hardship for many people. If the cliff could be avoided, that would be best. :)

You are a brave one to buy into Olam. You are rubbing shoulders with Temasek Holdings now. Can't go wrong in the right company, right? ;p

It is really too difficult for me to understand Olam. So, it is best that I avoid it. :)

3/4 of the iceberg? Oh dear, I don't know about that. Hahaha.., ;p

AK71 said...

Hi CW Yong,

Valuation is quite subjective. You have to question why people say something is undervalued or overvalued. Then, arrive at your own conclusion. :)

Look at Sabana REIT's numbers and decide for yourself if they are good enough for you. If a distribution yield of 8% is good enough for you and the rest of its numbers are acceptable, then, to you, it would be a good investment even now.

You might want to go through my recent blog posts on Sabana REIT as a primer. Good luck. :)

AK71 said...

Hi JJ,

Cannot! Haha.. I am not licensed to do so. I can only share my little ideas here in my blog. Take whatever you read here with a pinch of salt, ok? ;)

AhJohn said...

Hi AK, really popular post. A little Buffett annual letter style, but maybe can share more on what you learn this year, good or bad decision :) of coz, congratulations!
Btw, really curious about your average dividend yield on cost.

Kyran Tan said...

Hi AK, quite a feat to have $120k of passive income! But of course in order to achieve this sort of level, I suppose u have close to or more than a million dollars worth of shares. Knowing that u are not that 'old', I believe there may be readers like me who would be interested to find out how did u manage to amass such a significant war chest. I believe it can't be coming from just a high income job? Inspire us further! ;)

AK71 said...

Hi Ah John,

I blog about almost all of my decisions this year, good and bad. ;)

If readers should be interested, they would have to go and read my blog posts for the entire year (minus the advertorials and "Tea with AK71" blog posts).

It would be a bit too much for me to recapt everything. Please forgive me for not obliging. ;)

As for the size of my total capital and the yield on cost, this is something that will remain a secret but for anyone who has been very meticulous in reading my blog posts in the last three years, very good estimates could be made. :)

AK71 said...

Hi Kyran,

Your estimate is a fair one. ;)

I blog about wealth accumulation quite often. You will find the relevant blog posts in the right sidebar under "Wealth Creation". You will also find some relevant blog posts under "My methods and philosophy". I hope they won't fail to inspire. ;)

Frankly, there are people in my age group who earn a lot of money. $20k to $30k a month is not unrealistic. For these people, what I have achieved is too easy for them if only they set their minds to it. Some would even laugh at me. I have people telling me before that $10k a month in passive income is not that much.

Anonymous said...

This year, i sold most of my Reits too early. i see you are selling some Reits and buying into other non-reits business.
Congratulations for your impressive dividends on REITS, this year.
To me a dividend is a dividend whether it is from Reits or any other busineses.
When the tide goes out all boats will sink lower. Only i have to be very careful of those boats that may beached and may never float again. Everyone of us, hopes he will not be caught in those beached boats.

i opt for taking capital gain more than dividend this year. For some counters, i did it a bit too early. i am very afraid of Bear's pall. i am still in this process. But actually i have not see Market goes crazy yet. IMO.

AK71 said...

Hi temperament,

I always enjoy reading your comments. Full of good humour and wisdom. :)

Personally, I have had little luck reading Mr. Market's mind accurately. So, I try not to do it. I do what I feel is the pragmatic thing to do given the circumstances we are faced with.

Just like how the late Dennis Ng would tell everyone not to buy into private properties this year, he admitted that he was still invested in a private property he bought much earlier. So, why did he not divest totally? It was a hedge in case he was wrong.

I share his pragmatism. :)

Unknown said...

Dear AK,

After much hesitation, I've decided to post my first comment. It is relatively pleasant in reading quality dividend articles and other topics on Food, Events, Discounts. I'm absolutely positive on this blog post as rightfully, you're not here to spoil market nor you can ever predict Mr. Market's movement.

By providing S-Reit(s) article, you're enlightening the younger generations and providing FREE yet Quality Financial Education. I don't see any point on the reader deterring you from writing this article.

I've enjoyed reading your blog since mid financial year 2012.
Kudos and Salute!

Warmest Regards,

Cory said...

Assuming 10% that's like S$1.2M investment. Excellent investing result if you have include capital gains of your reits as well.


JCK said...

Congrats on your achievements! :)
$20k to $30k per month!
Must be in biz?

From Vickers on SREITs.
Apologies first. Its from the Low Yat its an attachment.
Happy Reads!

Unknown said...

my sincere thanks for sharing it.

Happy New Year 2013.

kind regards,

AK71 said...

Hi Ken,

Welcome to ASSI. Why the initial hesitation? :)

Although this blog is primarily about generating income from the stock market, it is not a newsletter. Comments from readers enrich the experience of blogging.

Also, because it is really a personal blog, I talk about stuff unrelated to the stock market too. What I find interesting, I try to share here in my blog too.

If readers learn new things, make money, find bargains, win prizes and save more money through my efforts, I am happy. :)

I am glad that you have enjoyed my blog and I hope you continue to do so. Happy 2013. :)

AK71 said...

Hi Cory,

Yes, I left out capital gains as the purpose of this blog post is to report on income generated only. :)

By coincidence, the front page of The Business Times today listed top dividend stocks of 2011 and how they have performed in 2012.

Of my 5 largest investments in S-REITs, 4 are listed together with their 12 month return.

LMIR (41.2%)
AIMS AMP Cap Ind REIT (62.9%)
First REIT (48.6%)
Sabana REIT (39%)

I know you bought into Saizen REIT middle of the year at a low too. So, you have made some good money there as well. Congratulations. :)

AK71 said...


Nope, he is an employee of a large MNC. I believe he is a Sales Director and he is only a few years my senior. These people are not so uncommon. :)

Thanks for sharing the link to the research paper by DBS Vickers. I read that a few days ago too.

I share their sentiments as encapsulated in this statement:
"While a weak global macro backdrop and low interest rates
plus high inflation environment will provide support for
remaining invested in S-REITs, we highlight that the sector is
fairly valued at this point."

We have to be more cautious towards S-REITs at this point. Although no longer cheap, they are not expensive too. Fairly valued is an apt description.

AK71 said...

Hi sj,

You are welcome.
Happy 2013. :)

Anonymous said...

Yes! Whenever you could, you should hedge. It's a skill by itself. But hedging means something like sitting on the fence; but not necessary 50/50 O. K. Either way the market goes, you make some money; provided you hedge correctly. Clever isn't it?
i guess Dennis NG should have more then 1 private properties. Another words, he hedged by selling some and holding some.
So i am doing hedging in a way; by selling slowly some of my stocks earlier rather than shorting the STI ETF or some equivalent to my stocks holding. But i never like shorting. i prefer selling some of my stocks before the tail ends appears in the market.
To me when you sell some of your reits and to invest in other businesses; you are hedging in a way. Or you like to call time to diversify some capital away from Reits?
Ha! Ha!

AK71 said...

Hi temperament,

Hedge. That's the word. We want to make money whichever way the market goes. How much money we make is not the crux. To make money and not lose money is the crux. ;)

I read that Dennis Ng net worth was some $3m when he passed away. I think Musicwhiz provided the information. Since he had other assets like precious metals which was about 7% of his total net worth, I guess he couldn't have more than 1 private property but I could be wrong. Perhaps 2?

My shorting days are long gone. I used to do naked shorts in my younger days. Shamelessly naked. Terrible, isn't it? Hahaha...

Now, now, you are not going to trick me into telling you what to do. ;p

I just feel that there is little room for appreciation in S-REITs' unit prices now unlike a year or 2 ago when I was in an aggressive accumulation mode. Another 10% upside is possible. Maybe, 15% in some instances. Nothing stellar is my guess.

Now, I find some neglected stocks which look like value propositions. Hopefully, they will be able to deliver some signifiant capital gains in 2013. ;)

Chun Siang (Jacky) said...

hi AK71,
May I know do you reinvest your dividend?

if you do I feel your portfolio can be set to autopilot mode with the annual dividends reinvested, lowering the average cost and increasing the yields.

Good job! Truly inspirational.

AK71 said...


I certainly do. There is no way I could have grown my portfolio to what it is today if I did not. :)

Savings from earned income, capital gains and annual dividends from investments over the years help to grow my portfolio.

I like to more actively manage where and when I reinvest my dividends. So, auto pilot mode does not sit well with me. Haha.. So, perhaps, my income from the stock market is not truly passive since I am a control freak. ;p

Anonymous said...

No such intention lah. i don't like to trick people as i dislike very much people who trick me. i like straight-forward-talking kind of characters. i always feel out of place when people talk with a lot of insinuations. i am afraid of such people.

Singapore Man of Leisure said...

Double :)

AK71 said...

Hi temperament,

SMOL is a wordsmith and a bard. Lots of hidden messages in his blog. You seem to enjoy it. Now, now, don't be shy. ;)

You have more substance than you would let us believe. This, I believe. :)

AK71 said...


Wah! Long life. Just talking about you. Haha...

See, temperament? Another enigmatic comment from SMOL. ;)

Double? I am totally lost...

Anonymous said...

Ha! Ha!
We all sometimes forget about the pot calling the kettle black, don't we? Especially now you are doing it to SMOL. You are a wordsmith and bard too.
i am the blur like sotong one though i can understand some insinuations.
Ha! Ha!

AK71 said...

Hi temperament,

Oh, no, no, I am definitely not a bard like SMOL. I found out that I am a druid/wizard. See:

If you can understand insinuations, you cannot be blur like sotong. You are smart to hide behind sotong skin. Still water runs deep. ;)

Anonymous said...

Ha! Ha!
Seriously more than 90% of the time, i am "快 人 快 语;"
10 % may be reserved for talking to people who like to insinuate. Then i try my best as much as possible not to be with them if i can.
i remember you had blogged about your trying of your best not to be in the company of certain characters.
i think we have something in common here. Don't like, don't have to pretend you like. Ha! Ha!

LCF said...


Happy New Year in advance, and thank you.

When my readers asked me about S-REITs in REITMethod, I tell them - "This is what you should refer to - ASSI"


AK71 said...

Hi temperament,

I am also fast person fast talk. Haha.. ;)

For sure, we might understand some people but it does not mean that we have to associate ourselves with them. If we don't enjoy their company and if we have a choice, stay away. :)

AK71 said...


Thanks for the referrals. Happy New Year! :)

Singapore Man of Leisure said...

Ah choo! Sniff sniff. You getting better?


Times 2 performance over last year?

Double happiness? (capital gains and income!)

2 fingers up in a V sign?

Take your pick!

Don't listen to temperament! Go slow. Fast no good. Foreplay important! (snigger snigger)

AK71 said...


Thanks for asking. Still ill but better. :)

Double happiness? I like. ;p

I am definitely slowing down as I grow older. I don't live life in the fast lane anymore. I have a weak heart. ;)

opal said...


Next year, will you be blogging less on reits and high dividend stocks, and more of those with high capital gain potential? :)

AK71 said...

Hi opal,

I really can't say because I don't even know what is going to happen next year.

I will continue to blog about anything which I know of that I feel is worth the time and effort to do so. ;)

Lee said...

Hi AK,

Thanks for sharing. I join the game of Reits two months back and I feel that I'm late :~~

It is blog like yours that give new investor like me with so much good info. I'm waiting to see how Yen will affect Saizen payout. And also having a war chest is really good advice. Hopefully I can fulfill my austerity plan next year with a moderate war chest to participate in the next correction.

Anonymous said...


不 要 害 我 lay!
i am a loyal admirer. You are one of the best wordsmith & "Super- Saleman around.
快 人 快 语; can mean very close to "Happy Go Lucky" too.

AK 71 not like that one.
i believe he is a loyal friend too.

We all knows there is a time to go slow and a time to go fast. There is no such thing as one size fits all in real life. No?

AK71 said...

Hi Lee,

If you are investing for income, comfortable with the numbers and pleased with the distribution yield. Then, it is still a good investment for you. :)

As for having an austerity plan, I had so many in the past. When I first joined the workforce, for example, I gave myself only $10 spending money every day. ;p

Unless we are born with a silver spoon, delaying gratifications is definitely a necessary step to wealth creation. :)

AK71 said...

Hi temperament,

Today's weather not bad hor? Sunny day. Not too wet. ;)

ryan said...

Hi AK,

Thanks so much for sharing your knowledge with all of us. You truly had the power to inspire many people, including me. Take an example of saizen REIT. Yesterday, all of sudden, the stock price hit 0.178 high. Possibly many readers here were inspired and went out to buy after reading your blog post? ;)

AK71 said...

Hi ryan,

I think that you have grossly over-estimated the influence my blog has. Hahaha... I would be very worried if people are indescriminately buying into Saizen REIT just because of my blog. ;p

Yesterday, in reply to an email from a reader who is somewhat worried that my portfolio of S-REITs consists mainly small caps which are perceived as riskier, I replied that all investments are good at the right price.

Readers who bought into Saizen REIT middle of the year when I did would now be sitting on a 35% or so capital gain plus they would have seen a 4.9% distribution yield shortly after. Not too mean, right? However, to think that it will always be rosy would be a mistake.

I will continue to keep a war chest ready in order to make opportunistic purchases in 2013. :)

land said...

Hi AK71:
Will you please introduce your opinion on overall finance Portfolio by percentage? say if you have overall one million, like how many percentage you like to keep as cash at bank, how many for REITS, how many for capital gain stock, how many for bond? How many for property? etc.

Thanks&Best regards

AK71 said...

Hi land,

This is a very difficult question to answer...

Depending on a person's age, risk appetite, existing commitments, reasons for investment etc, there would be different preferences.

Personally, I believe in staying invested and having a war chest ready. 50/50 would be a rough guide but whether it is optimal or not depends again on individual beliefs.

In fact, I am closer to being 80% invested now because of my belief that certain stocks are undervalued. So, I want to take advantage of this.

There are no hard and fast specifics for me. Circumstances are quite fluid and so should be the way we respond.

You might want to see a personal banker in a local bank. They can do a profiling for you which is compulsory before they sell you any product. You will be able to better understand your temperament and what kind of investments are suitable for you. :)

land said...

try to learn from you to build the passive income from reits and high dividend stock. at present level. hesitate to long too much. consider to buy some bond like genting bond 5.1% and OCBC preference
share, waiting for pull back. to get in. what is your opinion for such arrangment?

Best regards

AK71 said...


Certainly, everyone has his own threshold for risk. So, if putting your money in bonds and preference shares is a more comfortable option for you, give it serious consideration.

When we put money in bonds and preference shares, we are more lenders than investors.

You want to make sure that the companies you lend money to are credit worthy. So, it still requires some research on your part.

Decide if the yields are enough to compensate for the risk you would have to take on as lender.

OCBC, I feel is rock solid. Genting, I have not looked at their numbers in a while but the last I looked, their leverage is quite high and it seems that their business has been suffering. You want to look into all these yourself.

I only had experience with DBS NCPS 6% which I bought and held to maturity 10 years later. That was at the turn of the century, iirc. Not a bad place for excess cash especially when inflation was not 5% per annum like it is now. :)

AhJohn said...

Hi AK, can share how you get the numbers? Eg. EPS. From certain website or from financial report directly? Or self calculated?

AK71 said...

Hi Ah John,

Er.. Is this a question directly related to this or another blog post? I am having trouble making a connection.

Could you provide me a reference?

AhJohn said...

Hi AK, sorry to confuse you. It just a common question, as I saw you always have clear numbers in mind, especially for earning change projection, eg. EPS, so I just wonder how you get the numbers, or how you get the numbers to start your FA?

AK71 said...

Hi Ah John,

Oh, I see. :)

If I do provide numbers in my blog posts, these are usually derived from readily available information in companies' financial reports.

For example, in the case of Second Chance Properties Ltd, the EPS was taken from its latest report. Of course, take the current share price and we can work out the PER as well.

See:Second Chance Properties Ltd.

I hope this helps. :)

K-Enterprises said...

Hi AK71,

You really remind me of this guy.

And once again my heartfelt thanks for sharing your knowledge and analysis. I was lucky enough to follow you and now have a stream of passive income that have exceeded my monthly pay. Hope to continue to grow that further.


AK71 said...

Hi Kelvin,

Now, everyone is going to click on that link to see what AK71 is like. ;p

No, no, I am nowhwere close. Warren Buffet is not only in a different league, he is right at the top. :)

Anyone who believed in my little ideas and followed 3 years ago would have done well. Even those who followed 1 year ago as the stock market had a correction would have done very well. However, I believe we have also been lucky that things went the way I expected them to.

Expecting 2013 to be rather more difficult, I can only hope that Mr. Market will be kind to us. :)

Anonymous said...

Congrats on a good 2012! Have a great 2013 too! :)

AK71 said...

Hi Rusty,

Thank you very much. I hope you have had a good 2012 and will have an even better 2013. :)

anon said...

Hi AK,
Congrats on your brilliant return for 2012.
Thanks very much, also, for your inspiring blog.
I need some clarification re your selling some of your investments in S-REITs in 2012, due to their unit prices having moved higher and their distribution yields being compressed.
As your yields from reits already invested are based on the historical BUY price, and assuming no change in future distribution yields, why would you be concerned with compressed yields due to higher unit prices (I understand unit prices to be the current REIT share price)? Yields will always move with the current price, so surely it shld not matter after you have bought the reit as your yield is already locked in. Is there other reason(s) for selling, like expecting lower future payouts?
Hope to hear from you, as I learn alot from your blog. Thanks very much.

AK71 said...

Hi jojo,

We make decisions on whether to buy based on current numbers. I believe we should also make decisions on whether to sell based on current numbers.

Loosely, this conforms to my belief that we want to buy at prices we would not sell at and to sell at prices we would not buy at.

So, everything remaining equal, if we bought in at a distribution yield of 13% and if prices have gone up so much as to compress yields to, say, 7%, the decision to sell has to be based on the current yield. Otherwise, we would never sell and could miss out on opportunities to lock in gains.

For example, if you bought a condominium at $500k which now gives you a gross annual rental income of $40k for an 8% gross yield, would you sell the condominium if someone were to offer you $1m for it? If you did not sell, it would still generate a gross income of only $40k per year or only a 4% gross yield.

If by selling, we could free up the capital and allocate it to potentially more rewarding investments, would we do it? If we believe that we could possibly buy another condo with better value with the money, would we do it? ;)

We have to make investment decisions based on current prices and current values. :)

anon said...

Hi AK,
Thanks so much for explaining your reasons for buying & selling.
It's very helpful, as while I find it easier to buy, the sell decision is, ofttimes, difficult due to fear & greed ... typical emotions ruling new retail investors who are still learning the ropes. I am learning everyday to overcome this via books, bloggers like yourself, & practice. Thanks again for your clarification.

AK71 said...

Hi jojo,

I am happy to share and happier still if you think my sharing has helped you in any way. :)

Unknown said...

Hi AK,
I have been following your blog for early a year and I benefit a lot from your analysis and reasoning. Achieving $120 K of passive income is extraordinary . Well Done and keep it up. Prior to reading your blog , I have set a target for myself and I have achieved 1/3 of what you had achieved in terms of passive income through both high yield stocks and S-REITS in 2012. However, I shared the same view as you, 2013 is more difficult to achieve the same quantum..... I hope to learn more from you in 2013...

AK71 said...

Hi Kheng Seong,

I am happy if you have found my blog to be helpful in any way. :)

I will try my best to continue to share my little ideas here on a regular basis.

SnOOpy168 said...

"To achieve another 80k of annual income from S-REITs now would mean more than doubling my investment in them. Sounds like diminishing returns? ;)"

Was pondering about this part. At this moment, at the given shares held, the dividends are $X annually. If the DPU do not get diluted or reduced, then heng heng, we get the similar amounts annually. But then, unlike rental. this amount stays fixed, more or less.

While $10k (or whatever amount) pm of dividends looks cool and plentiful today. Will the same amount be acceptable pocket $ 20/30/40 years down the road ? Yes, it is income for my retirement's spending.

Bottom line is , will the DPU grow over time ? Or we need to constantly expand our holdings to enjoy growth ?

AK71 said...

Hi SnOOpy168,

Be careful now, this is how I get all my white hair. Hahaha.. ;p

Yes, I know what you are saying and these questions are not easy to answer. For want of a better plan, I am gonna stick to what I am doing now while keeping one ear close to the ground. :)

SnOOpy168 said...

White hairs. So thats how they came about. Seems that i have to seriously build up my cash reserve. Always not enough or that something tempting in front & I bought. Yup, luckily, it is in the money & I sleep better at night.

AK71 said...

Hi SnOOpy168,

Coincidentally, I am now putting in the finishing touches to a new blog post on savings. :D

I don't think it applies to you though as you have done a very good job growing your annual passive income from a few hundred dollars to a respectable 5 figure in a short period of time. :)

Informative Blogger said...

Is capcom good div stock ? CD soon at 3.75+3.9+0.02 cents last 2 rounds .
near 8 cents

AK71 said...

I have absolutely no idea what capcom does. :(

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