Confused and wondering what to do with $500K yearly.

Reader:

I read your blog and have a few queries on houses and all. Might be a long post.

Im would like your help to see whether u can talk to yourself? Hhahaah

My wife and i are grateful we have a few businesses giving us very decent cashflow.

We rent small and manageable house(follow rule of 15) and have abt 200k in stocks and a good allocation for gold and silver.

Where im stuck at is every year we will have 500k in cashflow that needs to be utilized. I would like to ask. If you have 500k every year net net. How would you allocate ah.

Thats for stocks. For house. Im also stuck. I would like to buy a small hdb and let my parent stay and be happy and all. But i feel if i do that. I was told by an agent then lose 2 opportunity to buy a property. Zzzzz

I would like to ask if you are free. Can talk talk to urself? Or if u prefer. Can i buy u large lunch?

Regarding cash my main concern is im hoarding cash and is that a good thing?

So many qn so confused. Whole new ball game outside of the biz world im familiar in haha.

Paiseh. Thanks ah

AK:

What people should always ask is what do they want? For me, I am concerned about having a comfortable level of cash flow since I am retired. So, most of what I do will have that in mind.

In your case, cash flow is not an issue. So, what are you looking for? When you know what are you looking for, you will know what to do with the money. Don't ask me how I will allocate the money because we have different circumstances and different aims in life. For example, I would probably allocate a huge chunk of the money to charities if I had an annual cash flow of $500K. ;)

If you know you want to invest the money to grow your wealth, there is nothing wrong with having an overflowing war chest while you wait for opportunities. :)

As for buying a flat for your parents, I think I understand your concern. Well, you could buy a small flat for them in their names. You won't lose the opportunity to buy a HDB flat or EC for yourself in future then. Consider it a gift. Or you could buy a shoebox condo for them to stay in but in your name. Of course, you won't be allowed to buy a HDB flat or EC for yourself then. With your level of cash flow, either option will be easy financially.

Related posts:
1. Get the most out of ASSI.
2. Enough for retirement and do charity?
3. Is it bad to receive dividends and sit on cash?

PREH is likely to continue trading at a big discount.

My experience with Perennial Real Estate Holdings (PREH) started from its days as Perennial China Retail Trust (PCRT).

PREH has a portfolio consisting mostly properties in China in terms of asset value (75%) and the balance being properties in Singapore.

Some numbers:

NAV/share= $1.68
Gearing= 0.45x
EPS=6.88c






At 90c a share, we are looking at a PE ratio of about 13x.

I believe that PREH is a long term value creator. 

The investment thesis is somewhat similar to that for CapitaMalls Asia which I had an investment in before. Similarly, PREH's Chinese investments will take time to deliver the goods. 





PREH is definitely not for the impatient investor. 

Although not comparable in many ways, for something similar in terms of gearing and EPS, the purist income investor might be more interested in Croesus Retail Trust (which holds Japanese commercial properties) and regular readers know that I have a significant investment in Croesus Retail Trust.

...

At the moment, I have a smallish exposure to PREH and I am likely to add to my position if its stock price should decline further.

I like PREH's longer term growth story and I am quite willing to wait for it to do better.

I bought into my investments in both OUE and Wing Tai Holdings at a 50% discount to NAV or more. 

So, I will probably add to my investment in PREH using the same yardstick.






Related posts:
1. Perennial Real Estate Holdings.
2. Perennial China Retail Trust.
3. Croesus Retail Trust.
4. CapitaMalls Asia.