Dividend Machines Are Crucial As CPF SA Closes.

Been a while since my last blog post.

I have been busy with many things at home and I have not been looking at the stock market.

The last time I did anything in the stock market was in December last year when I bought some shares of Alibaba and Wilmar.

Fortunately, my investment portfolio is on "auto mode."

More or less.

It doesn't require constant attention from me.

It simply generates passive income for me regularly and all I have to do is to check my bank account on a monthly basis to see how much I have been paid.

This is still something I have to do since I don't want to overspend and I have to allocate excess capital.

In recent weeks, when it comes to excess capital, all I did was to maintain my T-bill ladder and this was something I have produced blogs and videos on.

T-bills are still a good place to park excess cash for now as I wait for better investment opportunities in the stock market.

Interest rates are likely to stay higher for longer as the Fed is no longer as interested in cutting rates as they were in the second half of last year.

This is of course good news for my relatively large position in DBS, OCBC and UOB.

All three banks are likely to continue paying meaningful dividends and they could pay more in 2025.

This is because they have plenty of excess capital.

Having said this, it is important to mention that I am not always flushed with excess capital.

There will be months when I don't receive any dividend or very little.

First and fourth quarters are usually drier.

January usually sees a drought!

I received zero dividend in January 2025!

However, my investment portfolio still generated 42% higher passive income in January, year on year.

This is all thanks to T-bills and Singapore Savings Bonds.

Fixed income.

I have been stashing more money in T-bills and SSBs.

To be sure, the passive income in dollar terms is not mind blowing.

January 2025: $1,491.93

January 2024: $1,046.20

It is an increase of some $450.

Enough to cover some of my routine expenses.

Of course, if I had mainly relied on something like this over the years, I would not have what I have today financially.

This is just part of my financial pyramid and it contributes to my portfolio's stability.

Of course, regular readers also know that I like the CPF system very much but with the CPF SA going away once we turn 55 years of age, we have to be less reliant on the CPF to fund our retirement.

Investing in the stock market is still something that every regular person should seriously consider in order to have a more comfortable retirement.

How to get it right most of the time?

I have shared my methods and philosophy here in my blog over the years and more recently in my YouTube channel.

Some have asked me if I could conduct investment courses but, of course, readers who have been following me for many years would know my answer to that.

However, it is that time of the year again and for anyone who is interested to learn how to invest for income, "Dividend Machines" is open for registration again.

"Dividend Machines" is the only course I have promoted yearly since its founding so many years ago.

It is not only well structured, it is also well priced and does not cost thousands of dollars.

It is run by my friends at The Fifth Person and some of you interacted with Victor who was the guest speaker during "Evening With AK And Friends 2025."

Anyway, if you are interested in growing streams of passive income and you should be, have a look:

Dividend Machines 2025.

If AK can do it, so can you!

1.2M53 Plan For CPF In 2025.

In my last blog post, I said that I have already made a $4,000 Top Up to my Medisave Account.

That would help to generate more interest income to pay for my medical insurance.

4% risk free return is really not bad and gives me peace of mind.

Then, the next thing to ask is what about the rest of the year?

Regular readers would know that for many years, I was making voluntary contributions to my CPF account.

Every year, I would make sure to hit the Annual Contribution Limit allowed by the CPF.

That was especially when interest rates were very low.

Risk free and volatility free with reasonably attractive interest rates, the CPF is a great option to help us build a safety net in retirement funding.

However, in the past 2 years, some things changed.

Bond yields moved higher and I blogged about how buying Singapore Savings Bonds might be more attractive than making voluntary contributions to the CPF for some members.

It was certainly the case for me.

With my MA maxed out, more of the money from voluntary contributions would flow into the OA which pays 2.5% p.a.

End result is an average of 3.0% p.a. interest rate for my voluntary contributions.

So, I used the money meant for my CPF to buy Singapore Savings Bonds whenever the latter offered higher than 3% p.a. in ten year average yield.

Towards the end of last year, I did make a small voluntary contribution of $8,000 to my CPF account.

Why?

With Singapore Savings Bonds seeing lower than 3% in ten year average yields, the CPF was more attractive again.

Today, I received a notice from CPF that the pie chart for my account is ready.

This,

1.2M53.

Such a mouthful.

So, with some help from higher yielding T-bills, the CPF OA money has grown faster.

Of course, the government did most of the heavy lifting to grow my CPF savings.

My CPF savings could have grown a lot more had I made a bigger and earlier voluntary contribution.

Of course, that would have been a silly thing to do as I could get higher returns from another similarly rated bond.

Why didn't I use the money for equities instead if I was attracted to higher returns?

I believe in having a meaningful allocation to risk free volatility free bonds.

Exchanging CPF savings for equities goes against this belief.

Especially for a person of my age, a meaningful risk free and volatility free component in my investment portfolio becomes even more important.

If the equities market should crash and we happen to need the money, people would appreciate this point much more.

To be fair, I have a substantial exposure to equities and do not need a greater exposure.

For people who have a much lower exposure to equities and have a lot of money in their CPF accounts, it could be different.

It is all about sizing allocation appropriately for our circumstances.

Anyway, in 2025, I am likely to resume voluntary contributions to my CPF account with Singapore Savings Bonds likely to continue the recent trend of offering lower than 3% in 10 year average yield.

So, the CPF pie would grow much bigger with both the government and myself doing some heavy lifting.

I am 53 and I will have full access to my CPF savings in 2 years from now.

3% p.a. for a 2 years AAA rated Singapore government bond is not bad at all.

If AK can talk to himself, so can you.

Related post:
CPF or SSB?

Plans for 2025. Hoarding cash for a crash?

It has been almost a month since my last blog post.

I am serious about becoming more laid back and being less active in social media.

The garden which I used to enjoy taking strolls in has become a minefield.

What to say?

What not to say?

How to say what I want to say?

Talking to myself has never been more stressful.

I have enough stress to deal with in my life.

Don't want to have to deal with more stress especially when I am not being paid to do so.

Yeah, at least we are paid to deal with stress at work, right?

I believe that many local financial influencers will have to be licensed and regulated because they are being paid for promoting financial products and services constantly.

From an interview conducted by CNA, I believe that it was one of the tests set out by MAS.

In case you are you interested, here is the video by CNA:  

Not the best interviewer nor interviewee but just focus on the substance, I guess.

I think the blogger they interviewed is probably one of those who would have to be licensed and regulated as her content is heavily monetized.

Well, since she and other financial influencers like her make money constantly from doing what they do in social media, they shouldn't mind being licensed and regulated.

As for me, I rather not have to deal with the hassle.

So, I will restrict the frequency of sharing and also the things which I do share in my blog and YouTube channel.

For example, in this blog, I am also going to talk to myself about why I am hoarding cash.

2024, just like 2023, has been kind to me when it comes to my investment portfolio.

Well, there are still a couple of weeks left to 2024 but I guess I can close my books for the year early.

Unlike 2023, I have not put any money to work in equities in 2024.

Most of the passive income I received in 2024 has been put to work in SSBs and T-bills.

I also made a smallish voluntary contribution of $8,000 to my CPF account.

CPF money for me will become cash in another 2 years from now.

Well, the money in the CPF OA, anyway.

Being paid an average of 3.0% p.a. risk free and volatility free is not bad.

So, my cash position has grown in 2024 and looks set to grow in 2025 too.

It will grow even more in 2026 when I have access to my CPF OA money.

In the meantime, I get paid reasonably well for holding more cash.

The UOB ONE Account has been good to me.

Fixed deposits in CIMB have been decent in generating some interest income too.

Just to be sure, these are not investments and I do not include them in my quarterly passive income updates which are about passive income generated by my investment portfolio.

6 months T-bills are still paying 3.0% p.a. or so.

Singapore Savings Bonds I bought in the middle of this year had 10 years average yields of 3.2 to 3.3% p.a. or so.

I am already substantially invested in the stock market and do not feel any urgency to put more money to work there.

Does this mean that I feel that the stock market is going to crash soon?

I know that some financial influencers like to make predictions as to where stock prices are going but like I always say, we cannot predict but we can most certainly prepare.

So, people can think of what I am doing as preparing for a stock market crash.

I just don't know when it is going to happen.

Of course, I also say never to be overly optimistic nor overly pessimistic.

It is important to stay invested in bona fide income generating assets and be paid while we wait.

Someone who kept saying that the common stocks of Singapore banks were very overvalued in the last 12 to 18 months and said he would wait for a crash before buying might want to do a rethink.

The fact that I have been hoarding cash does not mean that I think the stocks were very overvalued.

In fact, I have been quite consistent in saying that if we were not invested yet, we could buy some.

However, it is certainly harder to say that now.

When we look at PE ratios, it is mind boggling how the multiples have expanded for so many companies.

Earnings really have to come in much stronger in 2025 to justify these multiples.

For DBS, OCBC and UOB, their PE ratios have also risen pretty significantly.

They are now around 11x to 12x which is slightly higher than the 5 year average.

If we had a working crystal ball and if we could tell for sure if the earnings would grow enough to ensure these numbers are justifiable, then, we could buy more now.

Since I only have a bowling ball that thinks it is a crystal ball, I would rather err on the side of caution.

This is why I said earlier that my cash position is likely to grow in 2025 as well, all else being equal.

Well, it would probably grow more slowly as I am going to have higher expenses in 2025 with more money set aside for parental support.

That is another topic for maybe another day.

This is probably the last blog post before the year ends and maybe even before "Evening with AK and friends 2025" takes place on 15 January 2025.

If you are interested in the event, there are a few tickets still available and I blogged about it last month: HERE.https://singaporeanstocksinvestor.blogspot.com/2024/11/dbs-ocbc-and-uob-evening-with-ak-2025.html?m=1

Merry Christmas and Happy New Year!

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!

Expenses. T-bill. SSB. DBS, UOB and OCBC.

It has been more than a week since my last blog post.

Things have settled into a new normal for me.

In this new normal, my expenses have increased by 3x or 4x.

UOB should be very pleased with me as I exceed the $500 minimum spending required on the ONE Card by a large amount to get extra interest on my savings in the ONE Account.

The increase in expenses is going to be part of the new normal and not transitional, I suspect.

Fortunately, my passive income is buffered which means I am able to absorb the current higher expenses.

Crossing fingers that things do not worsen.

I am still not sleeping well but, fortunately, I am able to take refuge in virtual worlds.

This has saved me many years ago from going into a depression and it still works for me today.

Just spending time alone and being focused on things that have nothing to do with the real world.

Escapism?

Call it what you want but it works.

In a YouTube video I made not too long ago, I said that I could feel apathy setting in when it comes to money matters.

I can say that apathy has definitely set in.

It is next to me now, watching me as I pen this blog.

Apathy says, "What are you doing?"

AK says, "Listen to me, Apathy, you are just a guest. You should try not to get too comfortable."

Brave words.

Writing is therapeutic to me and I am just talking to myself which helps to calm my mind as I try to make sense of things.

Anyway, soldiering on.

1. T-bill yield dropping.

In the last auction, T-bill yield declined to 3.34% p.a.

It could have been worse, I suppose.

Anyway, I got my non-competitive bid filled.

Using cash, 3.34% is still better than what a regular savings account pays.

Of course, if we can get 4% p.a. like we get with the UOB ONE Account, we should maximize that first to $150,000.

With T-bill yields declining and this goes for interest rates in fixed deposits too, high yield savings accounts should have priority when parking our extra money.

There is, of course, the added benefit of liquidity.

I also use my CPF OA money to buy T-bills but I might stop doing this because the break even cut-off yield for 6 months T-bill is 3.33% p.a. in case we lose another 2 months of CPF OA interest.

I would just transfer the money from CPF IA to CPF OA when the T-bills mature.

One less thing for me to juggle.

So, it isn't a tragedy.

2. Singapore Savings Bonds.

10 year average yield on Singapore Savings Bonds is also declining. 

I bought some SSB offered last month.

That had a 10 years average yield of 3.22% p.a.

This month, the offer is for an average yield of 3.1% p.a.

It is still above the 3% average interest I would get for doing voluntary contribution to my CPF account, although not by much.

I think I will give it a miss.

Another less thing for me to juggle.

Yes, again, not a tragedy.

3. DBS, UOB and OCBC.

Things seem to have settled down for the stock prices of our local banks.

They have recaptured their supports.

DBS at $35.

OCBC at $14.

UOB at $30.

Mr. Market might have come to terms with the eventual weakening of net interest income as interest rates decline.

However, like I have said many times before, our local banks have other sources of income and they are likely to continue growing as they retain about half of their earnings.

This means that even for people who paid higher prices for stocks in DBS, OCBC and UOB, eventually, their investments will become much more valuable.

For me, being paid while I wait is not a bad thing.

Still, do not throw caution to the wind.

The world is not in a good place now.

So many things have gone wrong and could get worse.

We are fortunate to be in Singapore but we are not shock proof.

Mr. Market could go into a depression suddenly, without warning.

That is when we roll out our war chests.

Remember what I always say.

Don't be overly optimistic.

Don't be overly pessimistic.

Be pragmatic.

Be prudent.

Be patient.

If AK can do it, so can you!

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.)

AA REIT, T-bill, SSBs, CPF, UOB, OCBC.

I have been thinking of taking another long break from social media to focus on other things in life.

Tentatively, I am thinking of coming back in June.

So, this might be my last blog until then.

1. AIMS APAC REIT

This is probably my most rewarding investment for income.

I have been holding to the relatively large investments made during the Global Financial Crisis till today, enjoying a distribution yield in excess of 10% on my cost.

The price appreciation is nothing to shout about but as an investment for income, it has been very good to me.

I would liken it to a bond that has been paying me a very good coupon.

As at 31 March 2024, the REIT has a gearing level of 32.6% which is on the low side.

However, I am mindful of the fact that it has some perpetual bonds which are due for a relook next year and those would likely increase in financing cost.

This is because interest rates and yields are significantly higher now than a few years ago.

This is a good reason to stay cautious if we are thinking of plonking more money in the REIT.

Offering a 7.4% distribution yield, it isn't much higher than what our local banks offer in dividend yields.

The REIT also has to distribute all its income in order to achieve this.

I simply will continue to hold on to my investment since it is already free of cost.

I am partial to receiving "free" money.

2. T-bill

The latest 6 months T-bill auction had a cut-off yield of 3.7% p.a. which wasn't too bad.

I made a video about why CPF OA money should go into T-bills, especially those with auctions in the first half of the month.

Someone told me it was all my fault that non-competitive bids were only 80% filled this time.

OMG!

Bad AK! Bad AK!

Well, like I mentioned recently, my plan is to simply grow my exposure to T-bills unless there is another stock market crash.

This is something I have given some thought to.

I really don't have to do too much on the investment front which is what I plan to do when I turn 55.

So, this is a taste of what's to come, maybe.

I would probably be sending dividends coming in from DBS, OCBC and UOB in Q2 and Q3 into T-bills.

3. Singapore Savings Bond and CPF

This month's SSB is tempting with a 3.33% p.a. 10 year average yield.

In a blog post many months ago, I said it would make more sense for me to buy SSBs with 10 year average yield in excess of 3% p.a. than to do voluntary contributions to my CPF account.

I have already front loaded this and bought enough SSBs to replace voluntary contributions till this year.

With the bombshell dropped by Lawrence Wong on how the CPF SA will vanish once we turn 55 years old, I took a hard look at my CPF savings.

In a recent blog post, I said I would have some $800K in my CPF OA by then and I think that should be enough for me.

I could use it to buy more T-bills if yields stay high or I could simply leave the money in the CPF OA.

Use the interest generated as spending money.

By extension, I don't think I need more SSBs now.

Well, I could change my mind if the 10 year average yield goes to 4% p.a. ;p

Right now, I would rather have a stronger T-bill ladder which means a bigger war chest while waiting for the next stock market crash.

Although it is true that we can redeem SSBs, we wouldn't be able to get the higher 10 year average yield in such a case.

So, T-bills are more attractive for my purpose.

4. UOB

In my video on DBS, I said that it was clear that DBS would continue to do reasonably well even if interest rate were to decline.

DBS does not depend solely on net interest income but has other sources of income.

The same is true of UOB.

Net interest income dipped 2%, year on year.

However, fee income increased 5%.

Other non-interest income increased 3% due to record trading and investment income.

Non performing loan ratio is at 1.5% which means asset quality remains stable.

CET-1 ratio is at 13.9% which is the lowest amongst the 3 banks.

So, little chance of a special dividend from UOB. ;p

By next year, UOB will complete the integration with Citibank's Vietnam consumer banking business.

Of course, the integration with Malaysia and Indonesia was completed last year.

The integration with Thailand completed recently.

Trading at about 9x PE and 1.2x NAV, UOB is offering a dividend yield of some 5.5%, paying out 50% of its earnings to achieve this.

It doesn't look as attractive as DBS but it is attractive enough when I remind myself that DBS pays out a higher percentage of its earnings as dividends.

5. OCBC

OCBC is my largest investment in the banking sector.

Alone, it is larger than my investments in DBS and UOB combined.

I really like OCBC because I think it offers the best value for money.

Well, more accurately, it did.

With its stock price having risen quite a bit, it now trades at about 9x PE, 1.2x NAV while offering a dividend yield of some 6%.

It isn't as cheap as it was, for sure.

Paying out about 50% of its earnings as dividends, it offers a dividend yield of 6%.

So, like DBS and UOB, OCBC grows in value as an investment over time.

Like I said several times recently, there is no need to worry about OCBC's exposure to the Chinese property sector.

Non performing loan ratio is at 1.0% which is even lower than UOB's 1.5%.

Like DBS and UOB, OCBC has demonstrated its ability to generate higher non-interest income.

Net fee income increased 4% while net trading income increased 67% to a new high.

With a very high CET-1 ratio of 15.9%, I am still crossing fingers that we might see a special dividend in future.

As OCBC is the largest investment in my portfolio, it would be something to celebrate if it should happen.

This is a pretty long blog post which I hope it enough to satisfy anyone who is eavesdropping until my proposed return in June.

Until then, if AK can do it, so can you!

AK is on YouTube too:
AK71SG

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.

CPF savings, SSBs & T-bills in January 2024.

Last year, I published a blog post with a very eye catching title regarding my CPF savings.

"More than $1.1m in CPF savings!"

Well, this time, it is a whimper, in comparison, at less than half a million dollars. ;p

So, how much exactly?

Here is my CPF pie chart at the end of 2023:

Some readers might say that for the first time in a long time, my CPF savings look "normal." ;p

CPF OA savings less than CPF SA savings.

For people who use most of their CPF OA savings to fund a flat purchase, this is probably normal.

Of course, regular readers of my blog would know that most of the money in my CPF OA went to buying T-bills.

Two T-bills.

A one year T-bill is maturing end of this month.

A six months T-bill is maturing in the middle of March.

So, the money will come back.

I will transfer the money from the CPF IA to the CPF OA when it happens.

Then, if yields stay relatively high, I would probably buy T-bills again.

Of course, with CPF funds, I do competitive bidding.

3.5% p.a. is a reasonably sensible bid to place.

I produced a video on this topic before too and, in case some are interested, here it is:

Hope the video is helpful.

Of course, another reason why my CPF savings did not grow as quickly as before was because I did not do voluntary contributions last year.

The money earmarked for that went to buying Singapore Savings Bonds instead which offered higher than 3% p.a. in 10 year average yield.

For those who didn't know this, here is the link to the blog post:

"SSB: Mission accomplished."

I won't be doing voluntary contributions to my CPF account this year in 2024 either.

Why?

I front loaded the "contributions" last year, buying more Singapore Savings Bonds later in the year.

See this blog post:

"SSB: Missions update!"

All as well.

The latest Singapore Savings Bond is offering only 2.81% p.a. in 10 years average yield.

So, that is an easy skip for me.

In any case, I am in no hurry to buy more Singapore Savings Bonds since whatever I want to buy to replace voluntary contributions to my CPF account in 2024 was filled last year.

If the yield remains low for the rest of the year, I will go back to doing voluntary contributions to my CPF account in 2025.

Easy.

Till the next blog post, mask up and stay safe!

If AK can do it, so can you!

SSB, T-bills, DBS and UOB. Plan for December. Easy.

This is probably going to my final blog post for 2023.

Planning on taking it easy for the rest of the month when it comes to social media.

Have been a little too active in the last few months on YouTube.

Now, going to spend more quality time with myself.

Being able to play three games everyday on my new gaming laptop makes me very happy.

That is what retirement is about.

It is about being happy.

A few things to talk about.

1. T-bills and SSB.

The Singapore Savings Bond being offered this month is offering a stunning 3.07% p.a. 10 year average yield.

Stunning for the wrong reason since last month's offer gave an attractive 3.4% p.a. 10 year average yield.

I think I will give this one a miss.

Am I veering away from my plan to keep buying Singapore Savings Bond as long as the yield is above 3% p.a. or not?

Well, the plan was to replace CPF Voluntary Contributions with Singapore Savings Bonds.

I have already done it with money meant for the CPF in 2023 and 2024.

2025 is work in progress and there is really no hurry.

In the meantime,  I will continue to strengthen my T-bill ladder.

The last T-bill auction had a cut-off yield of 3.8% p.a.

Hopefully, it stays there for the auctions happening this month too.

2. DBS and UOB.

I still want to increase my investment in the local banks.

OCBC is already a very large position.

So, the idea now is to grow my positions in DBS and UOB.

For me, the stock prices to add would be between $30 to $30.50 for DBS and closer to $26 for UOB.

3. Taking it easy.

I have been thinking of taking it easy when it comes to investing for some time.

However, after a recent recording with The Fifth Person, I have been thinking about it even more.

The decision to retire early was a big step for me.

I was always a worrier and I still am a worrier.

Still, I convinced myself that I had sufficient financial resources to retire early.

Then, in retirement, I began to question if I really did have enough.

I continued to invest for income and increase my passive income in retirement.

In recent years, I have been telling myself to take it easy and that I have enough financial resources not to have to worry.

I have had some success but something Adam said during the recording hit home.

So, I could simply just buy more Singapore Savings Bonds and T-bills from now on and still be quite comfortable.

Risk free and volatility free.

Don't have to do anything else.

This would be another phase in my life, if I should do this.

To be honest, I rather like it.

Anyway, that's all the talking to myself for now.

If AK can talk to himself, so can you!

Merry Christmas and Happy New Year!

SSB missions update! Redemptions! SSB I forgot I had!

I don't usually look at my CDP statement these days because I really dislike looking at it online. 

So uncomfortable.

I miss the paper statements so much.

Yes, I know the argument for going green but I am not sure that going from chopping down trees to guzzling energy in data centers is a good trade or not?

After all, we can replant trees but unless we are using renewable energy, data centers are big polluters, if we think about it.

1. SSBs

Anyway, I had to check my CDP statement just to be sure that my paper records are accurate for Singapore Savings Bonds.

As it turns out, there was a Singapore Savings Bond which I thought of buying but wasn't sure if I could.

I blogged about it but it wasn't very clear.

See:
SSB 3.06% p.a. 10 years average yield.

Well, I could not find any trace of this in my CDP statement.

Blessing in disguise, maybe.

After all, this month's offer is for 3.4% p.a. 10 years average yield.

2. SSB redemption.

I am redeeming SBMAY23 which I did buy.

That offered a 3.07% p.a. 10 years average yield.

That was bought to partially replace CPF voluntary contributions in 2024.

See:
Saving for income 3.07% p.a.

Will use the funds to apply for SSB this month.

But the funds will only come back to me next month!

How like that?

I will have to use money in my war chest first and the returning funds will go back to my war chest next month.

Like I said in the previous blog post, AK can juggle money.

3. Forgotten SSB!

While going down the list of investments in my CDP statement online, I found an SSB that I forgot I had!

This was bought in 2018!

OMG!

10 year average yield of less than 3% p.a.

Alamak!

OK, I am redeeming that too.

The funds will go to my war chest next month.

More money for T-bills, maybe.

4. SSB mission for 2023.

Anyway, this is a blog post to remind myself of what I have done and what I am doing in the SSB space.

Mission accomplished in replacing VC to CPF with SSBs in 2023.

See:
SSB mission accomplished.

5. SSB mission for 2024.

For VC to CPF in 2024, I am (re)applying for SSB this month with funds from the redemption of SBMAY23.

Together with another SSB purchased in March, this will (re)complete the mission for 2024.

See:
SSB March 2023 3.15% p.a.

I thought of redeeming the SSB bought in March too but I have a feeling that the SSB this month is going to be oversubscribed as well.

So, I could end up being only partially allocated if I applied for a larger amount.

Anyway, my war chest doesn't like being depleted even if only temporary.

With yields at the long end of the curve rising, like I said in an earlier blog, there is no hurry to lock in higher yields.

Famous last words? Maybe.

6. SSB mission for 2025.

If I get what I apply for this month, it would be $15K of SSBs in total for the year 2025.

Since this is a mission for 2025, I have plenty of time to complete it.

Crossing fingers that 10 year average yields for SSBs will remain relatively high.

See:

SSB 3.16% p.a.

SSB 3.32% p.a.

SSB 3.4% p.a. (and 6 months T-bill ladder.)

If AK can buy SSBs, so can you!