Not an investment but it pays $3,400 monthly for LIFE.

In recent times, I have found it much easier to talk to myself on YouTube.

It is faster than blogging.

This explains the greater number of videos produced compared to the number of blogs I have published.

Although it is expeditious, YouTube is only good for sharing what would require less mental processing on my part

It is good for sharing content which I have at my finger tips which means I could simply ramble while still making sense.

For anything that requires me to think more deeply and to organize my ideas, I find writing to be more effective.

This blog is going to be about something which has required more thinking on my part.

This is really inspired by 2 comments in my most recent YouTube video.

If you have not seen the video yet, here it is:

One reader told me that I am growing older and I should spend more of my money before my health deteriorates.

I know the reader means well but I have very little interest in spending more money than I do now.

In case you are new to my blog and think that I live like a pauper, I don't.

I own a condominium apartment and I have a car, for examples.

Very big ticket items in Singapore.

Still, I must accept that I am growing old, not just older.

Another reader provided the numbers by saying I would be 55 years old in 2 years from now.

Then, he asked what would I do with my CPF money and if I would choose the FRS or the ERS?

Both these readers' comments got me thinking.

That's a problem I have always had.

I think a lot and some would say I think too much.

You know what people say about young people.

They think that they are invincible and have plenty of time.

Well, I am not a young person anymore.

Although I am still relatively sharp mentally, I can tell that my memory is declining.

According to the doctors, this is normal but I am more worried about dementia now.

So, although I have said before that if we are savvy investors, we would choose the FRS and invest the rest of our CPF money ourselves, I could change my mind.

This is really consistent with having a crisis mentality.

Always asks what could go wrong?

Although it is still true that if we are savvy investors, we could possibly do better investing our CPF savings in excess of the FRS, there is this question of age related issues.

What if we become mentally infirm in our old age or, worse, middle age?

For most of us, the answer to this would be to have a bigger stream of passive income which does not fluctuate with market conditions.

CPF LIFE would fill this role admirably and by choosing ERS, we would allow it to do better.

ERS is not just for those who are not savvy investors but for anyone who wants to have a greater level of certainty in retirement funding.

I am aware that the interest accumulated in the FRS or ERS in order for CPF LIFE to provide us with an income for the rest of our lives goes into a pool and would not go to our beneficiaries in case we should bid farewell to this world earlier than desired.

However, CPF LIFE is an annuity and it is an insurance product.

It is an insurance against longevity risk.

As with all insurance products, it is about pooling resources from many to protect against shared risks.

We might not like the idea of having interest accumulated on our savings going into a pool instead of our beneficiaries but if we should be blessed with a long life, we would be dipping into other people's money in the pool as our own would have been exhausted.

We must remember that CPF LIFE is a retirement funding tool and not a legacy planning tool.

Take the good with the bad.

With this in mind, I checked my latest CPF OA and SA balances.

CPF OA

$768,628

CPF SA

$350,678

I also checked what the FRS would be like in 2026 which is when I turn 55.

55th birthday in the year of 2026? 

The FRS would be $220,400.

ERS would be twice that sum or $440,800.

My CPF SA should grow to about $380,000 by 2026 just from interest earned, assuming no further contribution on my part.

If I were to go for the ERS, it would mean having the entire sum migrate to the newly created CPF RA plus $60,000 from my CPF OA.

This would give me a monthly income of about $3,400 from CPF LIFE Standard Plan from age 65.

This is quite possibly going to be more than enough to cover the basics in my life.

Of course, I am hazarding a guess here since who knows what the world would look like 10 years from now?

As I grow older, I find myself less inclined to tinker with things.

I value simplicity more and more.

In the last podcast I did with The Fifth Person, I said that I had little or no inclination to look at new stuff when it comes to investments.

I am just looking at what I already have and waiting to add to what I think are strong businesses which would pay me through good and bad times.

Having said this, true to the spirit of this blog post, there could come a time when I might not be mentally well enough to make such decisions.

Making full use of CPF LIFE would help to mitigate this risk.

Of course, all of us are different and what gives me peace of mind might be a source of discomfort for others.

If AK can talk to himself, so can you.

Relevant link: CPF LIFE.

T-bill? DBS, OCBC and UOB crashed? When to buy?

I produced a YouTube video yesterday after someone alerted me to buy some bank stocks.

I thought the stock market had crashed.

Did not look at stocks for 2 weeks prior to the alert with all that has been going on in my life.

Anyway, if you have not seen the video, here it is:

It isn't a crash.

A steep correction but not a crash.

This blog post is more a reminder to myself what to do next because I am aware that apathy towards financial matters has set in for me.

If I don't put this down in writing, I might just let inaction take over.

1. Bank stocks.

I have said that it is a good idea to invest in our local banks because they are well run and well capitalized.

They have the ability to pay good dividends.

More importantly, they are willing to do so.

Further decline in their stock prices would be an opportunity to add to my positions.

For DBS, I am looking at $32.50 and $30.00 to add.

For UOB, I am looking at $28.00 to add.

For OCBC, I am looking at $13.00 to add.

I am already substantially invested in all three banks.

So, I will add slowly in case the unthinkable happens and prices go farther south.

2. T-bill ladder.

I will continue to maintain the ladder although the cut off yield has declined to 3.4% p.a. in the last auction.

3.4% p.a. is only slightly higher than the 3.3% p.a. I can get from a 6 months FD.

However, T-bills are backed by our government.

I don't have to worry about exceeding $100K in value.

SDIC. Remember?

The adjustment I have to make is when it comes to using CPF OA money.

Instead of placing competitive bids at 3.5%, I will be lowering it to 3.4%.

If the cut-off yield comes in lower than 3.4%, I will simply leave the money in the CPF OA.

The break even yield, if I remember correctly is 3.33%, in case we lose 2 additional months of CPF OA interest.

Nothing else for now.

Largest investments updated (mid 2024): Never run out of money in retirement.

It has been quite a while since I last blogged about my largest investments.

The last time I published such a blog was in January 2023.

So, it has been a year and a half!

Apart from being lazy, I didn't do very much to my portfolio and, hence, I did not see the need to publish any updates.

However, I think it is about time I do this even if it is just to take into account changes in market prices.

Many things have changed in the past 18 months.

Before we start, I want to share a YouTube video I produced on how not to run out of money in retirement which I feel is an important topic:

Anyway, here is the update.

$500,000 or more

1. CPF

2. OCBC

My CPF savings is a constant.

Being risk free and volatility free, it provides peace of mind.

I have not done any voluntary contributions to my CPF account in the last 18 months.

Instead, I have used that money to buy Singapore Savings Bonds and I shared the reason why here and also in my YouTube channel, of course.

I have also used money in my CPF OA to buy T-bills which grows my CPF OA savings at a faster clip.

In dollar terms, it is quite meaningful as I have quite a large amount of money in my CPF OA.

So, my CPF savings has grown in size in the last 18 months despite lacking mandatory or voluntary contributions.

Next is OCBC which is my largest investment in equities.

Since the last update on my largest investments, I added to my position in OCBC at about $12.30 a share in the middle of 2023.

The market value of my investment in OCBC has gone up significantly as its share price has also appreciated quite a bit.

This is very nice but as an investor for income, I am more interested in the passive income generation.

OCBC has become and will continue to be the most important passive income generator for me.

$350,000 to $499,999

1. AIMS APAC REIT

2. DBS

3. UOB

4. SSBs and T-bills

Unlike the top bracket, there are some changes in the second highest bracket in my portfolio.

DBS and UOB have both moved upwards to join AIMS APAC REIT in this bracket.

The spectacular increase in the share prices of DBS and UOB resulted in their promotion in my portfolio.

There is also the fact that I added to my investment in UOB in the middle of 2023 at about $27.90 per share.

I also added to my investment in DBS in November of 2023 at about $31.80 per share.

Together, OCBC, UOB and DBS account for more than 45% of my portfolio's market value.

Then, there are SSBs and T-bills.

Together, they jumped two brackets upwards from 18 months ago.

Yes, together, they were in the lowest bracket 18 months ago.

I can save money relatively quickly since my passive income exceeds my expenses rather significantly.

I have been socking away money in SSBs and T-bills in the last 18 months.

Money which would have gone into my CPF account was instead used to buy SSBs.

Excess money was used to buy 6 months T-bills, strengthening my T-bill ladder.

This provides me with more passive income without any price risk.

The money in T-bills also come back every 2 weeks which is useful if there are investment opportunities presented by Mr. Market.

$200,000 to $349,999

1. IREIT Global

For readers who have a keen eye, they would have wondered what happened to IREIT Global which was in the higher bracket 18 months ago?

The large decline in unit price since the last update means IREIT Global has fallen in its position in my portfolio.

Having declined more than 40% in the last 18 months means IREIT Global is no longer my largest investment in the REIT universe.

It briefly replaced AIMS APAC REIT as the largest REIT investment in my portfolio 18 months ago.

I made a video about IREIT Global several months ago and the decline in unit price is not unexpected.

Here is the video for anyone who might be interested:

I am still holding on to the investment and will be adding if its unit price declines further.

I find it easier to value IREIT Global because it isn't holding something amorphous.

It is deeply undervalued and more so now that Mr. Market is feeling very pessimistic about it.

In fact, I am getting a bit of that Saizen REIT vibe.

Readers who have been following my blog for many years would know what I mean.

Still, same same but different.

So, do not throw caution to the wind.

I made a video about this recently too:

$100,000 to $199,999

1. Wilmar International

2. ComfortDelgro

3. Frasers Logistics Trust

Membership in this lowest bracket of my largest investments has changed.

Wilmar dropped one rank as its share price declined significantly.

I know Mr. Kuok and Mr. George Yeo added to their investments recently.

However, I am still waiting for $3.00 per share before adding.

Wilmar is very undervalued if we look at the sum of its parts.

However, conglomerates always suffer from conglomerate discount.

So, buying with a larger margin of safety for a person of limited means like myself is not a bad idea.

Wilmar is still profitable and pays a meaningful dividend which means I am being paid while I wait.

This is true for all my investments.

ComfortDelgro and Frasers Logistics Trust are both chugging along fine.

Nothing much to say there.

Sabana REIT and CapitaLand China Trust have dropped out from this bracket.

I reduced my investment in Sabana REIT substantially not too long ago and I blogged about it too.

Don't like how the internalization process seems to be fraught with speed bumps.

Like I said in the blog, it is very different from my experience with Croesus Retail Trust.

CapitaLand China Trust has seen its unit price plunged.

Unfortunately, its fate is tied to that of the Chinese economy which is not in a good place now.

Specifically, the Chinese property sector which accounts for 30% of the economy will be a dead weight for many years to come.

So, this is the update.

Although there are a couple of investments which are underperforming, overall, the portfolio is doing well.

That is what matters to me.

Performance on a portfolio level.

Of course, all of us have different beliefs and we should all do what we feel is right for us.

If AK can talk to himself, so can you.

Related posts:
1. Sabana REIT divestment.
2. Largest investments (4Q 2022.)

Retire worry free in Singapore soon.

I have been thinking about really retiring in a couple of years.

Confused?

Didn't AK retire 8 years ago a few months before he turned 45 years of age?

Yes, I retired from active employment 8 years ago and I have been enjoying retirement so far.

However, I am not really retired because to me that would mean not having to look at growing my wealth anymore.

In the past 8 years, I was still pretty active in managing my investment portfolio.

Most notably, I made the move to increase exposure to DBS, OCBC and UOB.

I look forward to the day when I can be absolutely laid back.

Yes, I want to be more laid back than laid back.

Terrible, I know.

However, if I can achieve that, to me, I would be truly retired.

So, can I do it?

I think I can in another 2 years.

1. CPF money

Like I said in a recent blog, I would be 55 in a couple of years and that would be when my CPF account becomes a savings account.

Assuming that I stay with the FRS in the CPF RA, maintaining the prevailing BHS in the MA, I should have $800K or more in my OA.

Simply leaving it in the OA, that would generate an interest income of $20K per year.

I do not expect the low interest rate environment which lasted 15 years from the Global Financial Crisis to return anytime soon.

So, I could possibly get more than $20K per year from the CPF OA savings if I were to continue to buy T-bills with the funds.

Conservatively, if I could get 3% yield from T-bills, that would mean another $4K per year for a total of $24K per year in interest income.

2. Emergency fund money

In my recent blog post on how much cash I was holding, if I were to continue maintaining a $250K emergency fund held in fixed deposits, assuming a conservative 2% interest rate, I would get $5K a year in interest income.

This assumes that the UOB ONE account would have stopped offering a higher interest rate by then.

Seeing how UOB has already reduced the interest rate from 5% to 4%, this is a reasonable assumption.

3. T-bill ladder money

Now, I have about $200K in T-bills, if cut-off yields were to be 3% and this is not unlikely in an environment of higher for longer interest rates, that would generate some $6K in interest income.

However, if I continue to grow this since passive income generated by my investment portfolio exceeds my expenses by about $100K a year, with $400K in T-bill in 2 years from now, I could get $12K a year from T-bills then.

4. Fixed income

Fixed income was not attractive in a low interest rate environment and I had to look for more reasonable returns elsewhere.

Obviously, this has changed in the last 2 years.

From all the numbers I have crunched so far, 2 years from now, if I were to simply continue to buy more T-bills, I could receive passive income of $24K (CPF) + $5K (Emergency Fund) + $12K (T-bills) per year.

That is $41K in total.

5. Investment portfolio

If my investment portfolio continues to bring home the bacon and I am inclined to think that it would, I would be very comfortable.

My investment portfolio generated some $230K in 2023 and this included passive income from T-bills.

If I were to exclude this component, the portfolio would still have generated more than $220K in passive income.

Assuming income generation takes a 10% hit because REITs continue to underperform, I would still see $200K from my investment portfolio.

If we should see disease X striking, resulting in another pandemic, income generation could take a hit like what we saw during the lockdown.

Banks paid less dividend.

So, knocking 40% off passive income generated by 40% of my portfolio would still see $170K generated by my investment portfolio.

This includes the assumption that REITs would perform poorly too as said earlier, if you crunch the numbers yourself.

Assuming that I am still comfortable with living on $48,000 a year and setting aside another $48,000 for parental support, even in such a scenario, I shouldn't have to worry about money.

6. Total passive income

Looking at the above points, with the aid of fixed income in an environment of higher interest rates, in 2 years from now, I would have a truly worry free retirement.

Well, worry free when it comes to money at least.

There will be other worries, I am sure.

7. Conclusion

Having come to this realization, I have decided that I don't have to look at the stock market as much as before in the meantime.

Unless there is another stock market crash, simply hold my stock positions and continue to buy more T-bills.

This is naturally going to translate to fewer blogs and videos on related topics.

This is something I have been thinking of on and off.

It is the first time I have sat down and really looked at the numbers more carefully, projecting into the future.

To be fair, it is the near future I am looking at.

I will have to talk to myself again when I turn 55.

To anyone who is eavesdropping, this isn't a miracle and it isn't a dream either.

I have talked to myself extensively since 2009 here in my blog on the things I have done to make this possible.

Stay prudent.

Have patience.

Be pragmatic.

If AK can do it, so can you!

Some stocks do nothing for us!

I shared a photo of one my favorite ships in World of Warships in a video yesterday. 

Bismark is a ship I enjoy a lot and I have had many hours of fun playing it. 

There are some ships I have which are really beautiful to look at. 

Unfortunately, that is the only thing I find them good for. 

They are not fun to play, for various reasons. :( 

It is just like investing in stocks. 

Some stocks, we might think they are undervalued and good to invest in. 

However, they do nothing for us in terms of dividends. 

They don't even give us peace of mind. 

One starting with the letter "T" comes to mind. 

Bad AK! Bad AK! ;p 

The names of the "only nice to look at" ships below, for those who are wondering: 

Cherbourg, a French cruiser.

Gneisenau, a German battleship.

Loyang, a Chinese destroyer.

Try World of Warships on the Asian server. 

I am having a lot of fun and have not spent a single cent. Use my referral link and both of us will get some freebies in game. https://wows.asia/steam/Uther_Kaze 

We can both F.I.R.E. at some enemy warships!

SRS portfolio in 2024. What did I do?

SRS was a topic I used to blog about pretty often.

I have not been blogging about it as much since I have not been making contributions in recent years.

Reason is because I no longer pay income tax.

See:
Income Tax payable?

If we are still paying income tax, contributing to our SRS account makes sense to enjoy some tax relief.

Of course, we want to put our SRS money to work or we would get a very miserable interest rate.

For many years, I used the SRS money to buy plain vanilla endowment policies.

They were savings plan with some insurance thrown in.

In fact, I still have one or two of those with NTUC Income using SRS money.

In recent months, I also used the money to buy T-bills with yields being so much higher than a couple of years ago.

Dividends paid by my investments in stocks using SRS money are used for this purpose.

Yes, I also use SRS money to buy stocks of businesses which I think make good investments for income.

I have blogged about this before and shared what kind of stocks I would buy with SRS money.

Basically, the businesses must be good income generators with strong balance sheets; nothing which is likely to do rights issues.

The very practical reason is because we must have the excess funds in our SRS account to take part in rights issues.

This can be difficult to ensure.

I shared my SRS portfolio of stocks before but that is outdated by now.

See:
Win and win again with SRS.

I had SATS in the portfolio.

Of course, regular readers would know that I sold it shortly after it announced the decision to buy WFS.

SATS just didn't have sufficient resources to do what they suggested.

They had to raise funds from shareholders.

It was something unexpected.

So, I took the opportunity to sell when there was a bounce in the stock price.

In place of SATS, there are ComfortDelgro and OCBC in my SRS investment portfolio now.

This is what the portfolio looks like now:

Based on the purchase prices, it is not difficult to guess that DBS and ST Engineering have been in the portfolio for some time now.

So, like what I did?

Paid less income tax and put the money to work to generate more tax free passive income?

We can certainly win and win again with SRS.

If AK can do it, so can you!

Reference:
How AK used his SRS money?

Added to position in DBS. T-bill 3.8% p.a. cut-off yield.

Just a quick update on what I have done in recent days to my investment portfolio.

For anyone who is following me on YouTube, it is no secret that I have been looking to add to my investment in DBS.

I identified the immediate support to be at $32.00, and if that should break, then, $31.80 would be next.

I added to my position at closer to $31.80 a share but it is just a nibble.

I see longer term support for DBS at between $30.00 to $30.50 a share.

So, that is where I would like to buy more.

DBS continues to impress me with its much higher ROE of 18% to 20% when compared to UOB and OCBC which have ROE of around 14%.

So, I feel that this justifies DBS trading at a higher price to book.

There is also the fact that DBS pays dividends quarterly and as a retiree who lives off his passive income, this is also attractive to me.

Next topic is T-bills.

The auction happened yesterday and the cut-off yield was 3.8% p.a.

I estimated it to be 3.88% p.a. but 3.8% p.a. is good enough to make me happy.

What also makes me happy is that non-competitive bids were fully allotted.

T-bill ladder is intact!

Next auction is happening on 7 December.

So, nothing earth shattering happened, really.

Just sticking to my plan.

Always have a plan, your own plan.

If AK can do it, so can you!

How to transfer from CPF-IA to CPF-OA? Must buy T-bill?

In my last blog post, I made a passing mention about a 6 month T-bill which I bought using money in my CPF-OA maturing in the same week.

I made a request to transfer the money back to my CPF-OA when I saw the funds sitting in my CPF-IA a day later.

It was all rather easy with DBS online banking.

I simply logged in and went to the "Invest" tab and selected "More investment services."

Then, I chose "Refund to CPF Board."

Clicked on "Refund Full Amount", and it was basically done after clicking "Next" and "Submit."

Today, I checked my CPF account and found that the funds are back in my CPF-OA.

Now, I am wondering whether I should buy another 6 months T-bill with the money.

To be quite honest, I am not as enthusiastic as before because the cut-off yield has reduced so much since the start of the year for 6 months T-bills.

In January, it was as high as 4.2% p.a.

The T-bill that matured last week had a cut-off yield of 3.93% p.a.

I am hazarding a guess that the cut-off yield for this week's auction is probably going to be around 3.7% p.a. or similar to what we got in the last auction.

For a sum of $50,000, we are looking at an additional interest income of less than $200 compared to what the CPF-OA would pay for a 7 months period.

Nothing to write home about.

Anyway, with CPF-OA money, I will not go the path of non-competitive bids just in case the unthinkable happens.

I will put in a competitive bid of 3.5% p.a. because I don't think I am interested in anything lower than that.

If the cut-off yield should come in at 3.5% p.a., the difference in interest income is going to be less than $120.

The cut-off yields for 6 months T-bills are declining but the CPF-OA still pays 2.5% p.a.

So, the difference is shrinking and it is really not a big deal.

There is quite a bit of talk in social media that we should all use our CPF-OA money to buy T-bills.

To be honest, unless the sum of money is relatively large, it isn't anything to worry about.

If we do not have a large amount of money sitting in our CPF-OA, we really are not missing out on any meaningful passive income.

I think some people would say don't sweat the small stuff.

Of course, I am just talking to myself.

If AK can talk to himself, so can you!

High yields to stay? T-bills paid 3.73% to 4.2% p.a. so far.

The next 6 months T-bill's auction is happening this Thursday.

So, if we are building or maintaining a T-bill ladder, don't forget to put in a bid.

I will be putting in a non-competitive bid again.

No reason to agonize over how much to bid for in a competitive bid when chances are any cut-off yield is likely to be higher than offers from the banks for a 6 months fixed deposit for now.

I just produced a video on a 3.6% per annum offer for a fixed deposit but that is for a 9 months tenure.

This is the link to the video for readers who do not follow me on YouTube:

Locking in 3.6% per annum for the next 9 months.

Cut-off yields for 6 months T-bill so far have stayed above 3.7% per annum.

However, it seems to be declining.

In January, we saw a 4.2% cut-off yield.

This month, we saw 3.73% which was the lowest cut-off yield this year.

Like I said in a podcast, interest rates are higher now but they are unlikely to stay high forever.

As investors for income, I did not get to where I am by relying on fixed income to grow my wealth.

However, I am not going to reject relatively attractive risk free and volatility free returns while they stick around.

If AK can do it, so can you!

How to get $200K dividends yearly? Simpler than you think.

The sequel to the podcast I did with The Fifth Person last month is here.

I just watched it and I thought it would be good to tie up a few loose ends.

If viewers should spend some time ruminating on what I said in the follow-up podcast, they would not need to read this blog post.

So, this blog post is more for my benefit since I have a need to talk to myself all the time.

AK is mental.

1. My response to a viewer who said most regular folks would have to speculate in order to generate sufficient capital to get a $200K dividend annually from investments.

There is no need to speculate although we could certainly do it and in the podcast I shared my view on that.

There are other ways to make more money and regular readers know I did some trading and I also had side hustles to make more money.

I also blogged about how we should not wait until we have a larger amount of money before we start investing for income.

Dividends made in the early days, no matter how small, would grow our wealth, and could be used to invest for even more income.

2. Possible to make $200K dividends annually with $2M and how to get $2M in capital?

In the podcast, I said that my capital wasn't $10M, $5M, $4M or $3M.

It could have been closer to $2M.

And that is giving me $200K in yearly dividends now?

How is that possible?

Elementary, my dear Watson.

A lot of what I bought was bought during crises, when Mr. Market was suffering from severe depression.

By now, my experience with AIMS APAC REIT should be quite well-known.

It is one of my largest investments and probably my oldest one.

It generates a distribution yield of more than 10% on cost for me, year after year.

As I got into it in a big way during the Global Financial Crisis, it is a major contributor to my yearly passive income. 

Of course, my investment has been free of cost for many years too.

I have recovered my capital and I am still receiving income from my investment.

So, of the $200K in dividends received last year, a big chunk of it was actually free money.

It is money generated from nothing.

How did this happen?

Time happened.

It is possible to get higher dividend yields during crises if we invest in the right businesses that would survive the crises.

Of course, we could choose to sell these investments if their stock prices should recover later on.

I used the examples of Lippo Mall Trust and First REIT in the podcast.

Regular readers of my blog would know there were others like Saizen REIT, Croesus Retail Trust and Accordia Golf Trust as well.

Selling for significant capital gains grew my wealth.

It gave me more capital to invest with.

We could also choose to sell a portion of our investments like what I did with Old Chang Kee and Hock Lian Seng.

I sold half of my investments in them when their share prices doubled.

So, whatever I am still holding now is free of cost.

And they are still paying me dividends, year after year.

More free money.

This brings me back to the earlier point on speculation.

Why is there a need to speculate in order to grow wealth?

Simply wait for the next opportunity to make significant investments for income like what I did during the Global Financial Crisis.

Invest in good businesses which are able and willing to pay us.

That opportunity came in the form of the COVID-19 pandemic not too long ago.

Of course, regular readers would know that I emptied my war chest during the pandemic and got into UOB at $19 a share.

That is one of my largest investments today.

It is rewarding me with a dividend yield of almost 9% per annum now.

I also talked about how I started buying into DBS at $13 and $14 a share back in 2016.

At $13 a share, the dividend yield is almost 15% per annum today.

Now, coupled with free money I get from AIMS APAC REIT and some other stocks, do you see why I say the capital deployed isn't as much as what some people say it is?

What I have done over the years isn't simply putting some of my monthly salary in fixed income instruments unless we count the CPF.

If that was my method, then, yes, to generate $200K yearly in dividends now, I would need around $4 million in capital today.

I agree this would be insurmountable for most regular folks.

So, I remind myself of what I did over the years and how I made what seemed impossible happen.

This might be a lot for some people to take in.

There is also the fact that my skill as a wordsmith has regressed in recent years.

So, maybe, read this blog post a few times.

Ruminate on it.

I know I had to.

AK is talking to AK here, after all.

Please don't let people tell us what AK has achieved is not possible for regular folks because the capital required is enormous.

It is simply not true.

This blog post is the truth.

Go share this with people you care about and tell them this.

AK is a regular folk too.

If AK can do it, so can you!

68% expects downturn! CPF POFMA! Distressed REITs!

I have three things to say.

Since I am lazy, might as well put them all in one blog post.

1. Two thirds of Singaporean consumers expect an economic downturn.

There is plenty that is not well in the world and this is probably not unexpected.

However, if we end up just feeling worried about how life could get tougher, then, that is a waste of energy.

I would shore up my cash position even more aggressively.

Make sure I have an adequate emergency fund.

Fill up my war chest and be prepared to buy from Mr. Market when he feels depressed.

I have blogged about such topics many times before and many blog posts are consolidated in this one blog post:

Survivability and opportunity in times of distress.

2. Fake news on CPF!

A Tik Toker has been spreading fake news about the Singapore election system and the CPF system.

POFMA has been served to him twice.

Yet, he is stubbornly sticking to his views.

If he is looking for fame, this isn't the way not only because he harms himself and possibly his family.

He is also harming ignorant Singaporeans who watch his clips and believe what he says.

I like to help people but some people are beyond help.

Like what I said before in this blog post:

A river called CPF and stubborn horses.

3. I made a lot of money buying distressed REITs before.

I recently published a new video on how Manulife US REIT could possibly be an opportunity to make a lot of money.

It reminds me of the time when I bought Saizen REIT and AIMS APAC REIT when they were in distress donkey years ago.

If you are not subscribed to my YouTube channel, here is the link to the video.

How to make money buying distressed REITs?

Be prudent, patient and pragmatic!

If AK can do it, so can you!

AK sold SATS and Centurion? More T-bills for AK?

For readers who do not follow my YouTube channel, I produced a new video yesterday.

It was a video about investing for income.

I covered a few things in the video like what to focus on when investing for income?

I also gave a brief explanation on why I sold my investment in SATS and Centurion Corp.

You might want to subscribe to my YouTube channel for free and timely notifications.

This is the link to the said YouTube video, produced and voiced by AK himself. 

AK's YouTube video:

Do you want PASSIVE INCOME?

Another 6 months T-bill auction closed today.

Cut-off yield is 3.73% p.a.

Can't complain.

This is much higher than what DBS, OCBC and UOB are offering for their 6 months fixed deposits.

I increased the quantum in my non-competitive bid and I am pleased to get 100% of my application filled.

Getting some income from risk free and volatility free fixed income investments isn't a bad idea.

This is especially when interest rates have become much more interesting in the last year and a little more.

I am sticking to my plan to stay invested in income producing businesses while also strengthening my income producing T-bill ladder.

This way, I continue to get paid even as I wait for Mr. Market to go into another depression.

AK cannot predict when Mr. Market might go into another depression.

However, AK can certainly prepare for it, and fill up his war chest in the meantime.

If AK can do it, so can you!

UOB: Interim dividend 85c per share! Huat ah!

During "Evening with AK and friends 2023", I said that UOB would continue to grow its earnings very strongly. 

This is thanks in a large part to its acquisition of Citibank's consumer business in 4 South East Asian countries.

UOB has delivered and in terms of dividends, it has exceeded my expectation.

85 cents interim dividend per share has been declared.

Huat ah!

Source: UOB.

Although I only started investing in UOB during the COVID-19 pandemic, it grew into one of my largest investments within a few weeks.

"When it's raining gold, reach for a bucket, not a thimble."

Warren Buffett said this, not me.

Since then, I have been adding to my investment in UOB, most notably when the price of its common stock languished at around $26 a share for a while last year.

This enlarged investment in UOB is going to bring home a larger portion of bacon.

I remind myself that UOB retains 50% of its earnings which means that it is growing more valuable over time.

If the constant buying back of shares by UOB is anything to go by, this is probably going to be the case for some time to come.

Investing in UOB is not just investing for income, it is also investing for growth.

We can have our cake and eat it too.

If AK can do it, so can you!

Related post:
Banks: Even higher dividends?

From MUST to DC REIT to MINT, signs that US commercial real estate is in trouble. ARA Hospitality Trust to be spared?

This is the transcript of a YouTube video I produced recently.
-----------------------

During "Evening with AK and friends 2023", someone came up to me and asked what I thought of US Hospitality REITs listed in Singapore.

He asked that question since I kept reminding myself to stay away from US commercial real estate REITs, and in particular the US office REITs.

Of course, now we know what just happened to Digital Core real estate investment trust, a data center Trust listed in Singapore.

They lost their second largest customer which contributed 23% to their total rental income.

That customer was also Mapletree Industrial Trust's third largest customer.

So, Mapletree Industrial Trust would be taking a hit too although not as badly as in the case of Digital Core real estate investment trust.

Mapletree Industrial Trust announced that their 3rd largest tenant by gross rental income has initiated bankruptcy proceedings in the US Court.

The data center tenant is a global co-location provider and accounted for 3.2% of Mapletree Industrial Trust's gross rental income.

Quick to follow, we saw Manulife US REIT's fifth-largest tenant by gross rental income exercised an early termination of its lease.

This was for 500 Plaza Drive, also known as Plaza, in New Jersey USA.

Wait, there is more.



This is in the news today.

Park Hotels and Resorts, a real estate investment trust in the USA, has made the "difficult, but necessary" decision to stop payments on its $725 million commercial mortgage-backed security loan secured by two of its San Francisco hotels.

They are Hilton San Francisco Union Square and the Parc 55 San Francisco.

They are giving up on these hotels and would see them removed forcibly from their portfolio of hotels.

The problem has partly to do with overly optimistic valuations during the years of ultra-low interest rates.

The two downtown San Francisco hotels were valued at a combined $1.56 billion in an appraisal at the time of the loan underwriting in 2016!

This means the current Loan to Value, if the valuation is still valid, is around 46%.

Think of it as a gearing level of 46% for a REIT.

That does not sound excessive, but it seems like it is. ;p



It is very likely that the valuations of those two hotels could have seen a decline, which would bump up the Loan to Value number, of course.

We would not be wrong to question if the valuations of assets held by ARA US Hospitality Trust are still realistic today, compared to what they were pre-pandemic.

Of course, this is but one question to ask.

ARA US Hospitality Trust has seen its gearing ratio increased and is relatively high at about 41%.

This is even as its proportion of debt which have fixed interest rates declined significantly from 82% to 73%.

With weighted average debt maturity at only 1.3 years, the Trust is going to face the challenge of refinancing in an environment of not only higher interest rates, but also tighter credit conditions.

Why is this important to note?

Well, the question sometimes is not how much the loan would cost, but whether we could even get a loan?



Shoes are dropping.

More shoes are going to drop.

And it feels like it is raining shoes in the US commercial real estate sector.

Now, apparently, the next shoe to drop could be US Hospitality REITs.

To be sure, I am not talking about excessive financial engineering or possible fraud here, which seemed to be the case for Eagle Hospitality Trust, another US hospitality Trust which was listed in Singapore.

I am talking about something which affects the entire commercial real estate sector in the USA.

Credit is tightening in the USA and more so for commercial real estate.

In a recent interview with CNBC, a commercial real estate developer in the USA said he sent out 48 enquiries recently, and he received quotes from only two banks.

He said that was highly unusual, and he followed by saying it seemed that the commercial real estate sector in the USA was being strangled.

That interview gave an idea of how bad the credit situation for commercial real estate is in the USA now, and it could get worse for the whole sector.



During "Evening with AK and friends 2023", I reminded myself that I was painting the entire US commercial real estate sector with a broad brush.

I don't know enough to be able to invest comfortably in those REITs.

Those who have enough knowledge and savvy to invest well in the sector should follow their own plan.

Always have a plan, our own plan.

If AK can talk to himself, so can you!

References:
1. Digital Core REIT.
2. Manulife US REIT. 

3. Smart money exits US hospitality.

4. How to invest in REITs?