More in equities or fixed income? Update on my health.

This started out as a reply to a reader's comment but it got pretty long.

I also feel that there are things which many people might want to eavesdrop on.

So, the reply is here as a blog.

Hi yuhui,

I like your phrase "super bloomers" more than "late bloomers."

Before I continue, I want to caution you about having only one meal a day which is the most extreme form of intermittent fasting.

I tried that for a few months last year and lost so much weight that my mom got worried. 

She told me I looked like Chew Chor Meng who was quite ill.

When I met Kenji and Victor, my friends from The Fifth Person, about 6 months ago, they were shocked by how thin I was.

Anyway, I have since gone back to having at least 2 meals a day, eating within a window of 6 to 8 hours each day.

So, I am still doing intermittent fasting but a less extreme form.

I have recovered from being borderline underweight, putting on 5 kgs in the last few months.

Anyway, please be cautious because it is very hard to get sufficient nutrition for a regular person by having only one meal a day.

As for what I have done in the stock market, I did nothing in April.

In January, I bought back some stock of ComfortDelgro.

In February, I sold my investment in SATS.

In March, I bought some stock of OCBC.

I have been mostly focused on increasing exposure to fixed income in the last few months.

The question is whether someone who doesn't have as much exposure to equities should be deploying more funds into equities or fixed income at this point?

To help with the decision making process, look at the prevailing risk free rates.

Please bear in mind that this is only one of many possible considerations and it is just a starting point.

If we have an investment horizon of 10 years, an idea could be to compare the 10 year average yield of the Singapore Savings Bond with the estimated returns from investing in a business.

The risk free rate is around 3% per annum.

So, if we were to invest in a business which is not risk free, we would demand a higher return.

Investing in Singapore's banks is not risk free but they are relatively safe compared to Centurion Corporation, for example.

Therefore, a sustainable 5% dividend yield from the banks would be more acceptable than a 5% dividend yield from Centurion Corporation which has a much weaker balance sheet and less robust asset quality.

A 5% dividend yield from ComfortDelgro is acceptable because they have a very strong balance sheet and, therefore, should be relatively safe.

A 5% distribution yield from a REIT which is highly geared is, in my opinion, undesirable, because a REIT distributes at least 90% of its income to investors.

If by distributing 90% of its income to investors, a REIT is only able to eke out a 5% distribution yield, to me, it is not an attractive investment, especially in today's high interest rate environment.

If I must invest in REITs, for a start, I would look for those with relatively low gearing, a high interest cover ratio and a distribution yield of 7% or more in order to be competitive.

The final mix of equities and fixed income we have in our portfolio will depend on what we believe is right for us.

We can only hope to be approximately right and by using some common sense, we should be able to avoid being absolutely wrong.

"What we do is not beyond anyone else’s competence." - Warren Buffett

This isn't an exact science.

If AK can do it, so can you!

Update on Evening with AK and friends 2023:

A few tickets left. Ticketing: HERE.

References:
1. Retirement adequacy for late bloomers.
2. Saving for income: SSB and T-bill.
3. Building investment in OCBC.
4. 1Q 2023 passive income.