Passive Income. Alibaba. CPF. Bitcoin. Semi-retirement.

Time for another update.

First, on the personal front, I have been spending more time on other stuff in life as I have been feeling that too much time spent on social media is probably unhealthy for me unless I am doing it for a living, of course.

If it was a livelihood, then, rain or shine, I would have no choice but to do it, of course.

In my last YouTube video in the middle of June, I said I was taking the rest of June off from social media and I feel it has done me a ton of good.

I have spent so much of my time on social media since 2009 and although I have taken breaks from time to time, I always came back.

I think it is time I take a very long break or even retire from social media as it feels like an unhealthy addiction.

I know it is an unhealthy addiction because I could feel it feeding my ego and I am old enough to know I shouldn't like it.

Like I said, I am not doing this for a living and I do have a choice. 

I should choose better mental health.

Staying away from social media in the last two weeks has helped to clear my mind and I know what to do now.

More details on this at the end of the blog.

Now, for an update on money matters.

For readers who have been following my blog for many years, this year thus far probably looks very atypical as I not only invested in Alibaba, I increased my investment in Alibaba substantially.

Alibaba is now approximately 6.5% of my portfolio.

Strictly speaking, it didn't start this year as my first purchase was in December last year.

Anyway, for someone who is known for investing for income, Alibaba is an odd choice since its dividend yield is around 1% only.

However, if you are following me in my YouTube channel where I have been sharing my thoughts more regularly, you would know why.

I already have a relatively large portfolio of income producing stocks.

The passive income generated exceeds what I need in life by a big margin.

There is no urgency to further grow my exposure to these stocks, logically.

I also made videos about money in my CPF account and how that is going to generate passive income for me soon.

Although we earn interest income in our CPF account, realistically, we cannot count that as passive income until we turn 55 as that is when we can withdraw the interest earned from our OA annually.

I am going for the Enhanced Retirement Sum which would generate $3,400 in monthly income for me when I turn 65.

And the rest of the money in my CPF OA would generate about $20,000 annually in interest income which I can withdraw from age 55.

I turn 55 next year.

So, making further investments for income at this stage is really not a priority for me.

With policy risk in China largely gone, investing in an undervalued and growing AI and cloud computing infrastructure company like Alibaba is attractive to me.

Of course, most of Alibaba's business is still in e-commerce but that is what generates the cash for them to invest in the fast growing cloud computing infrastructure business.

I have talked about this many times in my YouTube channel.

So, I won't rehash.

The next thing I am going to talk to myself about might shock some readers but for those with better memory, it would not be all that shocking.

I have been buying more bitcoin.

About 3 years ago, I said that I changed my mind and bought bitcoin.

I was convinced that bitcoin was digital gold after doing some research.

Just like physical gold and silver, I think having some bitcoin as insurance against flawed fiat currencies is prudent.

It is a good insurance against monetary debasement as the world print more of fiat currencies non stop.

Bitcoin is a harder money than even gold and silver.

Hard as in hard to produce versus easy money like fiat money which can be printed infinitely.

Just like Alibaba, I have shared my thoughts on bitcoin in my YouTube channel regularly.

So, if you are interested, please search "bitcoin" in my YouTube channel and you will see those videos.

In one of the videos, I said I have become more comfortable with bitcoin after doing more research and decided to increase my exposure to it.

In that video, I said I would like to increase my exposure to 5%.

However, I have since then decided it should be 10% to 15% in order for it to be adequate.

Why?

Since I look at bitcoin as insurance, the way I decided that I was "under-insured" was to see how much coverage I had in traditional insurance.

In traditional insurance, I had to die for the benefits to be paid out to my family and the amount far exceeded my exposure to bitcoin.

So, I used that as a yardstick to accumulate more bitcoin and one advantage of bitcoin as insurance is that I don't have to die to enjoy the benefits.

Not something which matters too much to me but it is a plus.

I am very far from my newly set goal.

Since my last video on bitcoin, therefore, there has been a stronger will to accumulate more bitcoin.

Ever since Russia invaded Ukraine, we have seen more violence erupting in the world.

The Israel and Iran situation was the last straw for me and I bought more bitcoin when the price dipped below US$100K per coin like I said I would in one of my videos.

Military conflicts could become international, if not more commonplace.

Economic crisis could become global.

Ray Dalio said recently that we could be looking at something worse than a global recession and more intelligent people are thinking that way.

I think that it isn't as risky investing in Alibaba and holding bitcoin today.

Policy is very supportive now of tech companies in China.

Bitcoin is the hardest form of money known to mankind and it is, in many ways, better than gold and silver.

It is harder, cheaper to transfer and more portable.

To me, there is no risk in owning some bitcoin but it could be risky not to own it if we care about the value of our money and fighting constant inflation.

To fund my purchases of Alibaba shares and bitcoin, I have been dismantling my T-bill ladder which I have talked about frequently in the last two years.

Yes, that's my war chest.

This way gives me the funds to accumulate bitcoin every two weeks as the ladder matures but it will only last for a total of 6 months.

Lacking an earned income, I would have to rely on my passive income to further grow my exposure to bitcoin.

That would be a very gradual process as I consume a large part of my passive income.

What to do?

If bitcoin's price should decline significantly for some reason, I might sell some of my loss making or underperforming investments to buy more of it to hit my new target of 15%.

These are investments which I have not sold even though they have underperformed as they look undervalued to me at the prevailing market prices.

However, like I have said many times before, undervalued can stay undervalued for a long time and redeploying some of the resources to assets I am more concerned with currently is not a bad idea to me.

The investments I have shortlisted at the moment are IREIT Global, CLCT and Wilmar International.

Of course, if you have been following me for a long time, you would know that I have not found REITs attractive in recent years and much preferred putting more money to work by investing in our banks.

So, when I think about raising cash, it shouldn't be surprising that some REITs in my portfolio are considered likely candidates.

As for Wilmar International, the recent graft case in Indonesia which caused it to give up some 60% of its annual profit is, hopefully, a one-off event which means a correspondingly lower dividend for one year.

It isn't a structural issue and it doesn't change the view that Wilmar International remains deeply undervalued but it has been undervalued for many years and could stay undervalued for many more.

So, I decided that it is also a good candidate for a partial divestment in case I need more cash.

A side benefit in doing so is that I wouldn't have as many businesses to monitor and this frees up time for me.

However, it is not a given that I would do it.

Like I have always said, we must all have a plan, our own plan.

Over time, we could make changes but we should not stray too far from the original plan, especially if it is a good one which means not touching my rather substantial investments in DBS, OCBC and UOB, for the most part.

Let our winners run is the idea.

I have my own plan which I make changes to whenever necessary, eavesdropping on myself and eating my own pudding here.

Investing for income has worked well for me over the years and it is likely to continue chugging along.

Like I said in an interview with The Fifth Person, there are always big investment themes and my portfolio has morphed over the years.

I feel that the future is going to be very different and investing for income alone might be insufficient for regular folks.

If I were to go into hibernation today and wake up 5 to 10 years later, the changes I see in the world might shock me.

I am taking steps to help ensure that the shock would not be too nasty for me in such a hypothetical situation.

AI is part of the future and will bring more changes, both good and bad.

I suspect that many people will lose their jobs within the next decade or two, both white and blue collar, or have trouble finding jobs as AI and advanced robotics take over.

They need insurance as unemployment is likely to become a bigger problem.

Some businesses will struggle and some will fail in the face of such changes.

They need insurance as the business environment becomes even more competitive.

Then, there is the cost of living crisis which will only get worse especially for the common people as inflation is not going away.

Very flawed fiat currencies devalues our time and energy which means for most people, they would have to work much harder for money and might not be better for it as everything becomes much more expensive.

Job insecurity plus cost of living crisis.

It is a double whammy.

The world has not been peaceful for some time now and it is likely to be even less peaceful in future.

It would be a mistake to think that Singapore can stay insulated.

We need insurance.

Bitcoin is a good insurance in such difficult times.

It is pretty much future proof as it is the future of money.

What about the insane price volatility of bitcoin?

Like I said in one of my videos on bitcoin, when we buy a life insurance product, it is for the long term and it is the same for me when it comes to bitcoin because I view it as insurance.

Short term price fluctuations should be ignored and price declines are simply buying opportunities.

Of course, I am going to remind myself of the importance of doing our own due diligence before making any decision.

Please remember that I am not telling people what to do.

I am just talking to myself.

OK, now, the numbers.

Passive income for 2Q 2025 came in at 

S$95,974.56

This is almost 18% higher then passive income received in 2Q 2024 which came in at $81,339.05.

DBS, OCBC and UOB did most of the heavy lifting.

This year, looking ahead at 3Q and 4Q, in total, I should still receive more than enough passive income for my needs.

The higher dividends from DBS, OCBC and UOB will compensate for the reduced contribution from IREIT Global as their Berlin property is being redeveloped in the next two years.

2026 might not be as comfortable as OCBC and UOB are paying special dividends for one year only.

Take a deep breath.

I still have my CPF savings.

Always the worrier, I know.

Finally, I am announcing my semi-retirement from social media.

It is really for my mental health.

What does semi-retirement mean?

No daily, monthly or even quarterly updates.

I might produce 2 or 3 blogs and videos a year because I know that there are people who are still interested in following my journey because they find it entertaining.

Yes, no financial advice here.

Just entertainment.

Till the next one, stay safe.

If AK can talk to himself, so can you.

My YouTube channel: AK71SG.

1Q 2025 Passive Income, OCBC and Alibaba.

Been a while since my last blog post.

Hope everyone is staying calm as stock markets crash around the world.

I produced a video last night which I hope helped to calm some nerves.

Here is the link,

AK71SG 

I do enjoy buying things when there is a sale.

I am dipping into my war chest and nibbling at OCBC and Alibaba 

OCBC because I think it is still the cheapest amongst the three banks.

Annualising the regular dividend gives me a 5.5% yield.

Based on a 50% payout ratio, this is attractive to me.

Of course, there is also a special dividend on top of this but that is a bonus to me.

As for Alibaba, I have made videos on this and why I thought there was a good chance of seeing HK$160 per share again.

So, I added to my position as its price plunged to around HK$110 per share.

I will probably add if it goes to HK$100 per share as that is where I see a major support.

I always say we can never be too sure and that is why we need insurance.

A war chest is insurance.

Insurance has a cost.

In the case of a war chest, opportunity cost.

Some people don't like paying for insurance and prefer not to have it.

Well, different strokes.

As for my 1Q 2025 passive income, it amounted to $37,008.44.

This is a slight reduction from a year ago primarily because of a reduction in exposure to Sabana REIT.

Contribution from CLCT also reduced this year as China struggles to recover.

The reduction amounted to $2,000 or so which isn't a tragedy, to be sure.

However, I am aware that I will probably see a larger reduction next year as I expect lower contribution from IREIT as their Berlin property is being repositioned.

The expected higher dividends from DBS, OCBC and UOB should provide some relief as they form almost 50% of my portfolio collectively.

In closing, I apologize for not replying to comments as I do not have the mental or emotional capacity with stuff that has been going on in my life these few weeks.

All of us should have a plan, our own plan.

If AK can do it, so can you.

4Q 2024 passive income. Prep for 2025.

Happy New Year!

Another quarter is behind us and it is time for another update.

If you are following me on YouTube, you might have seen the update I provided in my YouTube community recently:

My dad is still in hospital.

I have yet to read the comments I have received in recent days on YouTube as I am not feeling very sociable.

However, recognizing the signs of oncoming depression, I decided to do some blogging.

Blogging is therapeutic to me.

I am sure there are many readers who are very concerned for me and would ask me not to worry about updating the community.

Don't worry.

I am doing this as therapy for myself.

So, 2024 has ended and on the investment front, it has been kind to me.

The stock prices of DBS, OCBC and UOB have outperformed.

As they form more than 45% of my portfolio, this has a big positive impact on my portfolio's market value.

The gains more than make up for the losses in IREIT Global and CLCT.

Of course, all of these are just on paper.

So, just saying as I am sure some readers, whatever their reasons, would be interested to know.

All positions are still generating income for me.

Some have asked me what should they do with their investment in Centurion Corp as the share price has shot through the roof.

It would seem like I have made a mistake by selling my investment in Centurion Corp and using the money to add to my investments in the local banks so many moons ago.

Well, I cannot and don't want to give advice but the reasons I gave for selling back then are still valid.

Centurion Corp suspended dividends during the pandemic and was slow in restoring dividends even though they emerged from the pandemic with a stronger balance sheet.

However, they had no trouble with immediately rewarding their directors generously.

So, I decided to add to my investments in the local banks instead as they have a long track record of rewarding shareholders during good and bad times.

Their very strong balance sheets in comparison to Centurion Corp's help to ensure that their dividends would not be suspended if we should see another pandemic.

Our local banks have shown themselves to be more shareholder friendly too.

They are able and willing to reward shareholders fairly, if not generously.

Always revisit our reasons for investing in a certain entity and if the entity is unable to deliver anymore, it is time to let go.

So, sell, hold or buy would depend, to a large extent, on our motivations.

I thought I would end 2024 without making any purchase but I ended up buying more of Wilmar and also nibbled at Alibaba.

I talked about this in my last blog post and if you are interested in finding out more, have a read. 

I made a video about this too:

Not a big deal, really.

My investment in Alibaba now forms less than 0.5% of my portfolio.

My focus is still on passive income generation and Alibaba doesn't quite fit the bill.

As a retiree who depends on dividends from his investments for a living, Alibaba is an interesting and somewhat speculative position.

Nothing more.

I talked about this my YouTube community not too long ago as well,

If Alibaba should see its stock price decline 5% to 10% from here, I would probably add to my investment but it would remain a very small investment.

In my last blog post, I identified a weak uptrend with a gently rising support line but if that were to break, Alibaba's share price could go lower.

A retest of HK$72 support level is not impossible since we could be seeing the formation of a head and shoulders pattern which would give us an eventual downside target of HK$72 or so.

My charting skills are a bit rusty.

So, beware of tetanus.

Now, the numbers:

Q4 2024: $28,734.99

FY 2024: $ 234,439.46

This is more or less the same as FY 2023 which delivered $231,495.19

Despite having sold most of my investment in Sabana REIT in 1H 2024, passive income on a portfolio level did not reduce in 2024. 

DBS, OCBC and UOB really did all the heavy lifting in 2024 as they paid higher dividends.

In 2025, I expect passive income to come in lower due to a much smaller investment in Sabana REIT and also the expected 25% reduction in DPU from IREIT Global as they reposition their Berlin asset.

A 4% or 5% reduction in 2025 passive income on a portfolio level would not surprise me.

Of course, we could see higher dividends from DBS, OCBC and UOB in 2025 as they have excess capital which could be returned to shareholders.

Could be special dividends which means they are non-recurring but that would be good enough to provide some relief.

Once IREIT Global gets their Berlin asset up and running again in 2026, income generation should receive a leg up as the property has attracted 2 tenants so far offering to pay 100% higher rent than the master tenant which vacated the property.

Oh, I will also have to remember to top up my CPF MA before the end of the month.

That's $4,000 to be set aside.

Risk free return of 4% p.a. and the interest earned pays for my medical insurance.

Of course, if you have been following me for many years, you would know all about this.

Let the government pay for our insurance.

Finally, I will maintain my T-bill ladder and strengthen it whenever I have spare cash on hand.

I will only dismantle it when I see Mr. Market being overly pessimistic and offering to sell stocks of businesses I like on the cheap.

All of us can be and should be financially more secure.

If AK can do it, so can you!

Quarterly updates, expenses and social media.

For those of you who follow me in my YouTube channel, you would know that something unfortunate happened recently to my father.

So, I expect to have less time for social media.

I have also been told that I would have to be prepared for another $20,000 or so in annual medical expenses for my father.

This revelation came after I had a talk with my mother regarding her medical insurance coverage.

I decided that she should not downgrade her medical insurance coverage as we really don't know if we might be hit by large hospitalization bills in future.

This covers her preference for Class A ward if she should be hospitalized.

I have calculated that if she should be blessed with a long life, her coverage, including a rider, would amount to $20,000 per year from age 99.

Now, it is about half of that but it will increase every 2 years till age 100.

I will be paying for her.

I did an update last year on my expenses about how I need at least $136,000 a year.

Now that I must set aside another $30,000 per year, increasing to $40,000 per year over time, I would need at least $166,000 to $176,000 a year in passive income to cover everything.

I won't have as much surplus money to invest with.

Well, I haven't been doing much investing in recent months apart from parking more money in T-bills.

So, no big deal, I guess.

Then, we also have the recent speech by Alvin Tan in Parliament on financial influencers in Singapore.

They must be licensed and regulated.

See: The Straits Times.

That got me thinking.

Together with all the things which have happened recently in my life, I really don't need more stuff to worry about.

Blogging and, now, YouTube video making, are hobbies to me.

Hobbies must be enjoyable and not make me worry.

I thought of giving up these hobbies but I still enjoy them.

I also like interacting with most of my readers and viewers as I think most of them are nice people and they also understand that I am not giving financial advice.

Unfortunately, doing what I do, it is too easy for my content to be misconstrued.

Like I have said many times before, I am not running a blog or YouTube channel as a business.

If I do them for a living, then, I would not mind the hassle of being licensed and regulated.

At this stage of my life, I just want to have more fun and have less to worry about.

So, what am I going to do?

For my own sanity, I have decided to have a compromise.

I will continue to blog and make YouTube videos but only on a quarterly basis.

This would be for the usual quarterly portfolio updates where I talk about what I have done to my investment portfolio and how it has performed.

This should be pretty safe from being misconstrued as financial advice.

Depending on how things go, this could morph into a bi-monthly or monthly update but that is up in the air for now.

Going to be rather unlikely, I feel.

Why?

With all the additional expenses I am saddling myself with, I doubt there would be much happening on the investment front as I have less surplus cash to invest with.

A bit overwhelming?

No one expected these developments but things happen.

I am sure there are many people who will continue blogging and making YouTube videos in this space.

Money is an important topic, after all.

So, with many more content creators in this space than there were when I started this blog 15 years ago, I am sure my leaving isn't a big deal.

I will end this blog by saying that we should always remember what Warren Buffett said before.

"Never ask barbers if we need a haircut."

Also remember that no one cares more about our money than we do.

If AK can do it, so can you!

Related post:

F.I.R.E. AK still needs $136K yearly.

3Q 2024 passive income: Banks to the rescue!

Another quarter has gone by and it is time for another update.

For a change, I will reveal the numbers first.

3Q 2024 passive income:
$85.223.17

This is a slight reduction, year on year, as 3Q 2023 passive income was:
$85,307.78

Almost negligible difference but it is still a dip.

The reason for this is the much lower contribution from Sabana REIT which I drastically reduced exposure to.

The REIT was one of my largest investments but this is no longer so.

Losing one of my largest investments is bound to have a big impact on my passive income.

However, as the title of the blog suggests, thanks to higher dividends received from my investments in the banks, the impact is mitigated.

The money from the sale of Sabana REIT was used to strengthen my T-bill ladder which is, of course, my war chest.

I am in no hurry to deploy the money since I am already substantially invested in the stock market.

Looking at the investments which contributed the most to my passive income in 3Q 2024:

1. OCBC

2. DBS

3. UOB

No surprises here since OCBC is my largest investment at almost the same size as my investments in DBS and UOB combined.

DBS is going to generate more passive income for me because of the bonus issue which in effect gives a 10% uplift to dividends received.

UOB is, well, UOB. 

Conservative and plodding along but still more than decent enough return.

In a recent video, I said I would not be adding to my investments in the banks as their share prices hit all time highs.

I would wait for a pull back in prices before adding.

To be fair, at 1.2x or 1.3x book value or so, the common stock of OCBC and UOB do not look expensive.

So, if I were not invested in the local banks yet, those would be where I put money to work first.

4. IREIT Global

In a recent reply to a comment on the REIT, I said this:

"IREIT's Berlin property will be vacant for 12 to 18 months very soon. 

No income to be generated by that asset then. 

So, expect income to be impacted. 

There is also the point that you (the reader) raised and it is a point I have made many times with regards to REITs. 

They will be refinancing in a higher interest rate environment although as many as 6 or 7 rate cuts are coming by end of 2025. 

I made a video almost a year ago to talk about all these and said I would not be adding to my investment in IREIT unless unit price went down much lower. 

Still, there were readers who added at between 32c to 36c per unit. 

To be fair, it isn't just IREIT, I am not interested in putting more money in any REIT now. 

My recent video on banks and REITs made this very clear. 

My focus is on income and valuation, not so much the prices."

I recently did a podcast with The Fifth Person and there was a segment on whether banks or REITs are more attractive as investments for income.

In case you are interested, here is the video:

In the latest update, IREIT Global said that they are in the final stages of pre-letting the Berlin property to a hotel and another hospitality operator. 

They expect to double the asking rent which I believe is realistic as the Berlin property is very much under rented.

I feel that the Berlin property is currently undervalued and if the REIT's management does a good job, we should see value unlocked.

IREIT Global's gearing ratio is still very low but their borrowing cost would most likely increase in 2026 when they refinance.

This is although we are likely to see many rounds of cuts to interest rate before then as the interest rate would still be higher than what we saw in the years following the Global Financial Crisis.

However, the REIT's relatively low level of debt should help to reduce the blow higher interest rate brings.

I revealed not too long ago, my investment in IREIT Global is nursing a big paper loss.

I use the word "nursing" and not "suffering" because the REIT is still paying me a meaningful dividend even as Mr. Market feels pessimistic about it.

At the current unit price, the distribution yield is about 8% and as I feel it is undervalued, there is no reason to sell.

I am quite contented to be paid while waiting for things to improve.

However, if Mr. Market should go into a huge depression and offer me a 10% distribution yield, all else being equal, I would probably buy more.

This would be very similar to the earnings yields offered by our local banks then.

All investments are good investments at the right price.

The right price is not a static number.

It should change if circumstances affecting it should change.

5. AIMS APAC REIT

I cannot end this blog post without giving AIMS APAC REIT a mention.

Still one of my largest passive income generators after so many years.

To me, this is a risk free investment as I have recovered all my capital many years ago.

The unit price can go up or down and it wouldn't affect me at all.

For people who recently invested in the REIT, please be aware that the REIT has perpetual bonds which means that their effective gearing level is higher than the gearing level reported.

Invest in the REIT only if we are comfortable with this.

Having said this, the REIT is well run and enjoys a tail win as logistics real estate which the REIT is mostly about remains in high demand.

Remember, if AK can do it, so can you!

2Q 2024 passive income: Steady boat.

This month is going to be a very busy one for me.

I recently shared this with my YouTube community and if you are wondering how to be a part of it, here is the link:

https://www.youtube.com/@A.Singaporean.Stocks.Investor./community

So, before I get too busy, I decided that I should get this quarterly update out pronto.

Many hobbies and not enough time.

I suppose this is how retirement should be like.

Doing things not because we have to and not because we depend on them to make a living.

I mean if I were churning out blogs and YouTube videos daily because I need the money, it isn't retirement or at least it isn't a retirement I would want.

Oops.

I have to step on the brakes or this would be turn into a blog about F.I.R.E. instead.

Before I go off track, how much passive income did my portfolio generate for me in 2Q 2024?

$81,339.05

This is more or less the same as 2Q 2023 which saw $79,774.61.

Some investments such as AIMS APAC REIT, Frasers Logistics Trust, VICOM and Raffles Medical Group generated less income for me.

So, although I received more income from my investments in DBS, OCBC and UOB, the uplift is less noticeable.

As the title of this blog suggests, I am quite happy to be a captain of a steady boat.

Not seeking greater growth but a steady stream of meaningful passive income.

As revealed in my last blog post, I have been socking away more money in SSBs and T-bills, growing the risk free bond component of my portfolio.

This will contribute to my passive income, although not by much.

Even as interest rates gradually reduce into next year, I see our local banks as better investments than most for investors for income like me.

With DBS, OCBC and UOB accounting for more than 45% of my portfolio, I expect a steady stream of passive income, barring the unthinkable.

The question is what if something were to go wrong?

Well, I have already gotten a taste of it during the pandemic years.

I blogged about how I was worried back then when passive income reduced as dividends were slashed or suspended.

The takeaway was the importance of having a buffer.

This is so that even with reduced passive income, we can still be quite comfortable.

In 3Q 2024, I suspect my passive income would reduce, year on year.

I would be quite surprised if there isn't a reduction.

This is because I reduced my investment in Sabana REIT significantly and I mentioned this in my last blog post too.

Sabana REIT was formerly one of my smallest largest investments.

So, there should be some impact.

Of course, one quarter does not make a year.

I would just have to wait and see.

I would be quite happy if full year passive income comes in more or less unchanged, year on year.

Don't believe investing for income works?

If AK can do it, so can you!

Reference:
1Q 2024 passive income.

1Q 2024 passive income: Wilmar, REITs and banks.

Time flies and it is time for another quarterly update.

Before I start on the update proper, I just want to say a few words about Wilmar International.

I received a few comments from readers on Wilmar and they asked if I had any updates on the business.

Some would like to know whether it is a good time to add to our investment in Wilmar.

Wilmar remains deeply undervalued and my past analyses are still valid.

Value is easy to see but where stock prices would go is much harder.

In terms of valuation, buying Wilmar today is inexpensive.

However, cheap could get cheaper and since I already have a significant investment in Wilmar, I do not feel any urgency to buy more.

I am simply waiting and if the stock price hits $3 a share, I would buy more.

That is an important support level and it is also where insiders typically add to their positions.

Undervalued could stay undervalued for a long time.

So, I like that Wilmar pays meaningful dividends while waiting for value to be unlocked.

Now, I will talk to myself about passive income received in 1Q 2024.

Like I have said before, 1Q and 4Q of the year are always weak in passive income generation as most businesses pay dividends in 2Q and 3Q of the year.

 

1Q 2024 is no exception.

It is even weaker this year because I received lower income from my investments in REITs which is not unexpected.

I did not take part in the rights issue to strengthen the balance sheet of AA REIT.

IREIT Global generated lower income as they their property in Darmstadt is still mostly vacant.

Sabana REIT generated lower income as they retained 10% of distributable income to cover costs of manager internalization. 

Capitaland China Trust generated lower income as China struggles even as the RMB weakens.

1Q 2024 passive income came in at $39,142.25

This is some 5.4% lower than the $41,364.36 received a year ago. 

In terms of absolute dollars, it is a reduction of $2,222.11 or $740.70 per month.

I think I will live. ;p

Before I forget, I should also say that I expect to receive less passive income a year from now, all else being equal, as I sold a significant portion of my investment in Sabana REIT recently.

Since Sabana REIT pays half yearly, my passive income 6 months from now should also be impacted but higher dividends from my investments in DBS, UOB and OCBC should provide a cushion.

Although passive income in 1Q 2024 came in lower, I am still quite comfortable.

I was worried during the pandemic because dividends and interest income reduced and pretty drastically too.

Regular readers know that I have a big emergency fund but if the pandemic lasted much longer, even that could get depleted.

Savers are fortunate that interest rates are higher now which means we are receiving meaningful interest income.

This isn't something I have blogged about before because for most of my blogging years, interest rates were too low to make any meaningful contribution.

These days, I receive interest income of approximately $20,000 a year.

This is not accounted for in my quarterly update.

I thought this is worth a mention because a higher interest rate environment isn't all that bad.

Charlie Munger said before that it takes character to sit on money and do nothing.

There are worse situations to be in.

So, what am I doing as my cash position grows.

I will just wait for the next investment opportunity.

If AK can do it, so can you!

Reducing risk and volatility on portfolio level.

I have picked up Yu Gi Oh again!

Found that I could play it for free online.

It was something I played but only for a bit and I enjoyed the anime.

I didn't have a deck of my own as it was too expensive to build one.

I had to use a friend's deck.

It was so long ago.

Old brain.

So rusty.

It is a strategy game that really tests my ageing brain which is a good thing.

Helps to slow the onset of dementia, maybe.

Anyway, like I said in a previous blog post, I have been contemplating just buying T-bills and bonds from now on.

Of course, if the yields decline, I could always go back to making contributions to my CPF account.

Regular readers know that I treat my CPF savings as an investment grade bond component of my portfolio which pays reasonably attractive coupons.

This way, I would continue to grow the risk free component of my investment portfolio.

I must realize and embrace the fact that I don't really have to take on more risk anymore although I could still buy more stocks if Mr. Market goes into another severe depression.

Like I said several times before, that would be the time to dismantle my T-bill ladder.

Doing this, buying T-bills and bonds in the meantime, price volatility on the portfolio level would reduce over time.

The last T-bill auction saw a cut-off yield of 3.74% p.a.

Until the Fed reduce interest rate, I am expecting similar cut-off yields for the time being.

I have put in a non-competitive bid for the upcoming auction happening on this Thursday, 18th of January.

That's all for this update.

If AK can talk to himself, so can you!

Related post:
SSB, T-bills, banks and plan.

4Q 2023 passive income: Why the smile?

In my first blog post of the year, I said that 4Q 2023 passive income should come in weaker.

This is because OCBC and UOB only pay dividends in Q2 and Q3.

So, missing these major contributors, it is only reasonable to expect lower passive income numbers for me in Q4 2023.

Also, I expected Q4 2023 passive income to be lower, year on year.

This is because my investments in REITs and property developers were generating less income for me in 2023 compared to the year before.

High interest rates are pretty challenging for some entities.

Fortunately, DBS pays dividends quarterly.

Being another substantial investment in my portfolio, hopefully, this would provide a bit of a cushion.

This is especially when DBS increased their dividend per share not too long ago.

My persistence in building and strengthening a T-bill ladder in an environment of higher yields should also help.

All of that went on in my head.

So, how did things turn out?

Total passive income generated by my investments in 4Q 2023 was:

$ 24,849.44

This is some 2% lower, year on year.

It was $25,331.81 in 4Q 2022.

Hmm, the decline was not unexpected.

Still, like the title says, I smiled because it wasn't too bad.

2% decline on a relatively smaller sum.

Not too damaging.

Thanks to strong Q2 and Q3 numbers, full year 2023 registered an improvement.

Q2 and Q3 saw larger percentage gains on relatively larger numbers, after all.

Everything taken into consideration, pretty decent.

Full year 2023 saw a 12% increase in income generated by my investment portfolio, year on year.

Total amount: 

$231,495.19

This compared to $205,999.73 for full year 2022.

To new readers of my blog, this is probably all very impressive.

However, readers who have been following my blog for many years would know that blog posts like this is more to inspire than to impress.

If AK can do it, so can you!

I am not just saying this.

I mean it.

It is about being prudent with money.

It is about keeping our needs simple and our wants few.

It is about being patient and getting rich slow.

It is about being pragmatic and staying invested in bona fide income generating assets.

If it all sounds very boring, well, it is.

It is all about staying grounded and marching towards that pot of gold we know is waiting for us to unearth.

Unearth?

That sounds like work.

Yes, it is.

There is no free lunch in this world.

It is not about going after what could be there but what we know is there.

So, what is my strategy for 2024?

More of the same, really.

I expect my investment portfolio to continue generating income for me this year, barring earth shattering events.

If another pandemic strikes or if war happens on a global scale, expect income generation to slow down or stall.

I can only hope that sanity prevails and that more people in power are willing and able to avoid war on a larger scale.

War is fully avoidable unlike pandemics.

Unfortunately, many human beings are selfish and narrow minded.

When they are put in positions of powers, they could then influence the gullible to do the unthinkable.

This is not a problem exclusive to less developed countries or politically less stable regions in the world, of course.

I am spending some time to talk to myself about this because compared to economic challenges, this is a bigger problem.

Where economic challenges are concerned, high inflation has been tamed or so it seems.

Expectations are for interest rates to start declining sometime this year and there are some experts who think that the Fed will bring interest rate down to under 3% in order to ensure a soft landing.

This is good news for REITs, especially those which are highly leveraged as well as those which have a big part of their debt on floating rates.

For banks, it would mean moderating earnings as rapid interest rate hikes end a strong tailwind.

Still, banks have proven again and again that they have been able to deliver earnings growth over time.

So, staying invested is what I will do.

Before I end this blog post, I will remind myself of the following.

"There will come a day when my passive income generated exceeds my earned income doing what I do.

"If I have always been prudent with money, that is probably the day I become financially free.

"That is when I no longer have to work for money."

No more unearthing to do.

So, believe me when I say this.

If AK can do it, so can you!