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!

List for 2024! CPF BHS. T-bills. 2023 passive income.

Happy new year!

Brand new month and brand new year!

I have been busy the entire month of December and now I have to plan my January.

I have so much to do in different worlds.

Neverwinter, World of Warships and Black Desert Online.

12 to 14 hours of time spent in virtual worlds.

Of course, I must not forget things I must do in the real world too.

January looks like it is going to be another busy month too.

Oh dear.

I wish I had 25 hours a day instead of 24.

Maybe, 26 or 27 hours would be better.

Yeah, bad AK!

So many things to do in my retirement and so little time.

Anyway, as I am growing forgetful in my old age, this blog will quickly outline the stuff I am going to do when it comes to money matters.

1. Top up my CPF MA to the new BHS.

The new BHS is $71,500 in 2024.

This is up from $68,500 in 2023.

Interest earned in my CPF MA will flow into my CPF OA since my CPF SA has already hit the FRS.

So, I will be able to do a $3,000 top up to my CPF MA this month in January.

I will do it earlier than later just in case I forget later.

2. Blog about my updated CPF balance.

My CPF balance will look very "weak" in 2024.

I published a blog last year where I reacted in "horror" that my CPF account was "hacked!"

The bulk of my CPF OA money is in a 1 year T-bill with a cut-off yield of 3.87% p.a. which is why my CPF OA balance is much lower.

That T-bill is maturing at the end of the month.

So, the money is coming back.

I must remember to transfer the money back into my CPF-OA.

3. 6 months T-bills.

I got both 6 months T-bills offered in the month of December 2023.

The cut-off yields were 3.74% p.a. and 3.73% p.a.

Not too bad.

The plan is to maintain my T-bill ladder in 2024.

The yields are still relatively attractive to me.

So, I have already made a non-competitive bid for the auction taking place on 4th January 2024.

If Mr. Market should go into a depression in 2024, it would be time to dismantle the ladder.

4. 2023 full year passive income.

I have been so busy in December that I have not been keeping up with things on the investment front.

I will have to spend some time looking at numbers to account for my passive income in 2023.

I am expecting a weaker Q4 2023 since UOB and OCBC pay dividends only twice a year in May and August.

Year on year, passive income could come in weaker as the REITs I hold are generating less income for me too.

There will be some income generated by T-bills in the portfolio but that won't move the needle much, I suspect.

Hmm.

I think that is all when it comes to money matters and blogging.

Lots of other stuff I have to do but I shan't clutter this blog post.

OK, maybe just this one thing.

I shared this screen-shot of the port of Velia in Black Desert Online in my YouTube community tab on Boxing Day.

You can see my ship docked in the extreme right of the picture.

I am working on upgrading it be like the taller and larger ship with the black sails in the center of the picture.

Work in progress and I should be able to get it in a few more days.

Makes me happy thinking about it.

Will be happier once it is done!

That is all for now.

Look out for upcoming blog posts on my CPF savings and 2023 passive income update.

I will be back!

If AK can talk to himself, so can you!

Unemployed AK grew his passive income from $100K to $200K per year.

I thought of making a video out of this but I am feeling a little under the weather.

So, I decided to blog about this instead while the thought is still fresh on my mind.

Something I do regularly is to blog about my passive income.

It is a digital record of not only the numbers but also my thoughts at those different points in time.

Of course, the blog posts are also to inspire readers.

Hopefully, more regular folks like me would make investing for income a part of their journey towards financial freedom.

Yes, if AK can do it, so can you.

While having a conversation with some friends recently, they asked me how did I continue to grow my passive income while lacking an earned income in the past 8 years?

One of them reminded me how my annual passive income was closer to $100K more than 10 years ago.

Now, it is more than $200K.

It isn't something I have given much thought to.

So, what did I say?

"I am just very frugal when it comes to money which allows me to continue investing more money although I lack an earned income."

When I left the workforce, the biggest disadvantage was losing that earned income.

While still receiving an earned income, I was able to reinvest all of my passive income and also some of my earned income.

Retirement has definitely slowed the pace of wealth building.

A friend told me that being able to continue to grow my wealth even in retirement is quite impressive.

(Most people see their wealth dwindling in retirement.)

How did I achieve this?

In a nutshell, this is the beauty of investing for income.

I consume the income generated by my investment portfolio.

I do not consume my investment portfolio.

I do not eat the chicken but the eggs laid by the chicken.

However, this isn't the full story.

Remember how my friends did a CSI on my passive income and reminded me that my annual passive income was closer to $100K more than 10 years ago?

Wasn't $100K a year already enough to F.I.R.E. for someone like me?

Well, it probably was more than enough.

So, what was the problem?

I am a worrier.

Hard to change.

I needed a buffer and a significant one too.

How significant a buffer?

Well, consider this.

Even today, with inflation being as high as it is, I recently blogged about how I would probably be quite comfortable with $48,000 a year.

See how significant the buffer is?

If I had retired more than 10 years ago instead of 8 years ago, I would have had a smaller buffer.

If I had spent money more freely, the behavior would have probably carried into my retirement years.

I would not have been able to continue building my wealth to what it is today then.

For most of us, it is far easier to curb the outflow than to grow the inflow of wealth.

So, it isn't just about not eating the chicken but the eggs.

It is also about having more than one chicken or having a buffer.

Don't consume all the eggs so that we can sell some of the eggs to buy more chickens.

Of course, there were also times when buyers offered much higher prices for my chickens.

I used the proceeds to buy even more chickens.

Not all chickens thrive but most of them do.

So, how did AK the early retiree grow his passive income from $100K a year to $200K a year?

No earned income but can continue growing passive income?

Confirm and double confirm!

If AK can do it, so can you!

Related post:
Inflation, passive income and budget.

Increasing bond exposure on higher yields.

In my last blog post, I shared how much passive income I received in the first 9 months of 2023.

My investment portfolio is still bringing home the bacon.

However, there is more variety to the bacon now.

Why do I say this?

Over the years, I have been very consistent in saying that I want to maintain a meaningful percentage of investment grade bond in my portfolio.

For a long time, I said that I treat my CPF savings as the investment grade bond component of my portfolio.

Risk free and volatility free, there really isn't a better option for a person like me.

I have a blog post titled "Unless we are very rich, CPF is all we need" to share my perspective on the matter.

This is the link to that blog post: HERE.

Of course, I share my CPF numbers at the start of every year, showing how much interest income is paid to me.

This interest income is not included in my quarterly passive income update.

Why?

The CPF interest generated is not immediately available for withdrawal to be used in any way we like.

We will be allowed to withdraw any CPF savings in excess of the Full Retirement Sum and the Basic Healthcare Sum when we turn 55 and not earlier.

My quarterly passive income report has always been about income generated by my investments in the stock market.

This year, however, my investment portfolio also includes bonds.

In the last one year or so, with bond yields much higher, I have also been buying Singapore Savings Bonds and T-bills.

So, my quarterly passive income report this year has another flavor.

A sprinkling of fixed income.

With bonds being much more rewarding now than 1 year ago, I am going to continue strengthening my T-bill ladder and, hence, enlarge the bond component of my portfolio.

I am a lazy fellow and would always go for low hanging fruits first.

Taking advantage of the CPF-SA and the CPF-MA was an easy decision so many years ago.

Taking advantage of the higher bond yields now is another easy decision for me.

To be sure, the coupons received from bonds will not make an earth shattering difference to me even as they nudge my quarterly passive income a little higher.

However, if we focus on this difference, we are missing the point.

What's the point then?

This is risk free and volatility free.

There is assurance that we will get paid during good and bad times.

This is very comforting to me.

Having such a component in my investment portfolio helps to smooth out rough patches which are bound to appear from time to time.

All else being equal, I will continue to increase exposure to this asset class in 2024.

If AK can do it, so can you!