3Q 2020 passive income: COVID-19 battle.

It has been 3 months since my last blog and I hope everyone is well. 

Blogging quarterly is something which is relatively undemanding and I will probably continue to do so as long as it is still interesting for most of us. 

So, please think of this as the new normal. 

If there are blogs apart from the quarterly ones, think of them as "extra service." 

Yes, from that phrase, some can tell that AK has been watching K-drama and reading lots of Korean manga too.

Of course, Neverwinter is still taking up much of my time and "Redeemed Citadel" is the virtual world's latest expansion.
 

The new normal.

This is something we hear a lot of these days. 

Although Singapore seems to have COVID-19 under control now, we should not think that we have conquered it. 

Just look at countries which have experienced second and even third waves of COVID-19 infection.

This tells us that COVID-19 is just waiting to strike again and again if we let our guard down.

The damage caused by COVID-19 to our country's economy so far is mind numbingly shocking and the deleterious effects are likely to persist as the world continues to battle the pandemic which, unlike SARS, has exhibited very strong staying power.

Even when effective and safe vaccines become available, it will take a long time to have adequate number of people vaccinated to achieve herd immunity against COVID-19.

Those of us with adequate financial resources at our disposal will be able to deal with the crisis better.

Still, we should not throw caution to the winds as this crisis is likely to be prolonged. 

How long will the crisis last?

When IATA says air travel is unlikely to recover fully until the year 2024, that is probably a good indication that the crisis could persist in the current form or another.

We should be prepared for more possible downside even as we hope that things get better faster.

Readers who have been following my blog for a long time probably know that I have a sizable emergency fund. 

This emergency fund has yet to be tapped.

Of course, I hope I would not have to tap it but if I must do so, I know the fund is there.

Warren Buffett famously said that he would not operate in a manner "that depends on the kindness of strangers or even that of friends (who may be facing liquidity problems of their own.)"

It is very important to have near money at all times and especially during hard times.

Those without an emergency fund should build one now if they are still able to.

Those without a sizable emergency fund might want to strengthen the fund.

Don't risk economic hardship by speculating on when the economy might recover fully.

Only after being well prepared for possible downside should we think of investing in the stock market.

Even if we have passive income, we should still keep an emergency fund.

There is no telling whether our passive income might be negatively impacted from time to time or, worse, for a prolonged period of time. 

If our cashflow is a like a stream of water, an emergency fund is like a water tank that will dispense life giving water in the event of a drought.

See: How much should we have in our emergency fund?

In 3Q 2020, my passive income took big hits and came in much lower than expected as businesses I invested in either reduced dividends paid to shareholders or suspended payouts.

Even so, compared to 3Q 2019, total passive income received in 3Q 2020 increased very slightly due to a much larger investment in IREIT Global and also an unexpected payout by Accordia Golf Trust.

Total passive income received in 3Q 2020 was:

S$ 32,023.29.

This number could have been higher but I accepted scrip dividend from OCBC which reduced the amount of cash dividend received for the quarter.

Priced at a generous discount to what was already a low share price, at $7.81 per share, I had to accept the offer.

After all, my strategy in this crisis is still to add to my investments in DBS, OCBC and UOB.

In 3Q 2020, I dipped into my war chest and bought more shares of UOB.

This is because I would like to have my investments in all three banks to be roughly the same in size.

There is still some way to go before my investment in UOB is as large as my investment in DBS or OCBC but I am taking it slow for two reasons.

The first reason is because although the stock market seems to have bottomed in March, much of the sharp rebound in stock prices has been lost as realization sinks in that the crippling effects which COVID-19 has on the economy will very likely last for a longer time.

The second reason is because of the rights issue by IREIT Global.

IREIT Global is one of my largest investments which has been made larger as I bought more at 42 cents a unit a few months ago.

The 454 for 1000 rights issue at 49 cents per rights share and also my intention to apply for excess rights means the exercise will significantly drain my war chest.

This must be paid for by 15 October 2020.

Does this mean that my war chest would be emptied by then and that I would not be able to add to my investments in the local banks?

Fortunately and unfortunately, another substantial investment of mine is being monetized and the funds will come in on 15 October 2020.

I am talking about Accordia Golf Trust, of course.

Most probably, some money will also be refunded in my application for IREIT Global's excess rights.

Funds will flow into my war chest then.

That is all for this blog.

Till the next blog, mask up, stay safe and keep all of us safe.

If we stay united, we will win the COVID-19 battle eventually.

We are #SGUnited!

Related post:

2Q 2020 passive income: COVID-19 crisis.

2Q 2020 passive income: COVID-19 crisis.

I thought of not blogging about my 2Q 2020 passive income till a couple of weeks later because Mod 19 of Neverwinter, Avernus, just went live this morning.

Yes, the world of Neverwinter just received another expansion.

Anyway, after an initial foray which lasted almost 3 hours in the new adventure zone, I told myself I should quickly pen and get this blog published so that I can continue adventuring without feeling terrible about myself.

Before I start, this is a peek into the world where I will be spending most of my time in the next few weeks:







Some might remember that in the title of the blog on my 1Q 2020 passive income was the phrase "COVID-19 disaster."

This time, in the title, I have the phrase "COVID-19 crisis."

Although economies are re-opening, we are not out of the woods.

The virus is alive and kicking and we are seeing many cases of resurgence.

The COVID-19 pandemic has been described as "a crisis of a generation" by our country's leaders.

The COVID-19 virus is showing some worrying staying power.

The pandemic has damaged economies around the world very badly, erasing years of progress, plunging countries into deep recessions.






Unlike the Global Financial Crisis some 10 years ago, this is a Global Health Crisis.

A recession that stems from a financial crisis can be ended with financial tools.

A recession caused by a health crisis like the one we have now cannot be ended with financial tools.

The aggressive implementation of supportive monetary and fiscal policies around the world has provided relief but it does not address the root of the problem.

As long as a safe and effective vaccine for COVID-19 is unavailable, a return of the global economy to pre-COVID-19 level in a short time is rather unlikely.

We would probably see more of the population suffering from joblessness and business failures in the meantime.

Not being pessimistic.

Just being realistic.

An important thing for us to do is to make sure we can definitely survive this crisis financially especially if it drags on for much longer.

Instead of chasing possible upside, it is more important to be prepared for possible downside in life.

If you are new to my blog or cannot remember, you might want to read this blog:
The most dangerous crisis and what should we do?





Now that I am done nagging, how much did I receive in passive income in 2Q 2020?

$57,395.95

I will say a few words about the entities which made more substantial contributions to my passive income in 2Q 2020.

Frasers Commercial Trust contributed a smallish 4 figure sum which will not be repeated.

This is because they have been bought over by Frasers Logistics Trust (now Frasers Logistics & Commercial Trust).

My investment in Frasers Logistics & Commercial Trust has also become bigger because of this and should continue to be a good income generator for me.





Other entities which made much larger contributions than Frasers Commercial Trust and Frasers Logistics & Commercial Trust to my passive income in 2Q 2020 were Centurion Corporation, DBS, OCBC, ComfortDelgro, VICOM, WILMAR, AA REIT and Accordia Golf Trust.

Of these entities, I expect Centurion Corporation and ComfortDelgro to be the most challenged during this crisis.

AA REIT reduced their distribution by about 20% in 2Q 2020 but I am reasonably confident that they will stay resilient.

WILMAR looks set to list their Chinese business before the end of the year which should result in a special dividend.

Accordia Golf Trust has revealed details of the offer by its sponsor to acquire all its assets and I blogged about this recently.

Although my passive income in 2Q 2020 looks healthy, I am aware that it was paid out by my investments from their strong performance in the past.

With their future performance likely to be weaker, I expect my future passive income to weaken in tandem, all else being equal.






Apart from the passive income received in 2Q 2020, my float has also been strengthened through selling a big chunk of my investment in Ascott REIT-BT.

Ascott REIT-BT is no longer one of my larger investments.

I have also received money from BreadTalk as they paid me 77c a share for my investment as they delisted.

This was a smallish investment but a profitable one.

As for the stock market, it looks like the dust has settled.

Although the economy is quite sick and will probably continue to be sick for some time to come, the stock market has found a bottom.

Technically, there is still a chance that the bottom could be tested in the next few weeks or months but the chance of that happening is slimmer now.

Having said this, if the COVID-19 pandemic has taught me anything, it is that low probability events could happen and they could pack quite a punch when they do.







I see the moving averages turning up and rising in many charts.

So, I am likely to add to my investments if prices should retreat to some of these moving averages as they should provide support.

I would not be throwing in everything including the kitchen sink because if the supports break, the fall might be another big one.

Technical analysis shows where the supports are but it does not tell us if the supports will hold.

No one knows for sure.

Oh, please allow me to nag again before I go.

Please continue to act responsibly and keep all of us safe.

We are #SGUnited.




Related posts:
1. Accordia Golf Trust: $0.732 offer.
2. AA REIT, IRET, Ascott REIT-BT.