How high a dividend yield is worthwhile etc.?

Hi AK!

Reading your recent post on your 1H 2016 income is very inspiring and I hope one day to be able to reach your level. I have a few questions that I hope you can help me with in planing my portfolio

1) How much of your portfolio do you allocate to growth stocks and how much for income stocks?

2) If looking at income stocks aka dividend yield, what % and above do you deem it worth your while to invest in?

3) Whats your average yield for your whole portfolio currently?

Thanks!

Cheers,

Lewis

Remember the pyramid?

Hi Lewis,

Such blog posts are meant to inspire readers to embark on their own journeys towards financial independence. They are not meant to instruct. I am glad you are inspired. ;)

Allocation would depend on a person's motivation. Since I am more interested in income, I allocate more resources towards investing for income, for example.

When investing for income, a higher yield is always attractive but we have to bear in mind that other factors must be considered too. Always ask how is that income generated and also if it is sustainable (for how long)? We might not always get it right but if we ask these two questions, we should get it right most of the time.

One objective of investing for income is to beat inflation. If a stock is able to generate a yield that beats inflation rate or at least equals it, I might consider.

I never tell people what is my portfolio's average yield since I have revealed my annual passive income in absolute dollar value. However, this does not stop some readers from doing some CSI in my blog to get an estimate. ;p

Gambatte!

Best wishes,
AK

Related posts:

1. 1H 2016 income from S-REITs.

2. 1H 2016 income from non-REITs. 

Read only if you want to be closer to heaven.

Heavenly!

Why I suddenly like that say?

I have been a bit more lax when it comes to my diet in recent days and readers who follow me on Facebook know this as I post photos of what I cook on my Facebook wall frequently.

I decided to have something that is extremely unhealthy this morning, so unhealthy that it will elicit screams from the most health conscious of readers.

Ingredients:

A prata.
A slice of cheese.
A scoop of ice cream.
Some nuts.

Step by step instructions:

1. Pan fry prata on both sides.
2. Press warm and crispy prata into a bowl.

3. Apply cheese so that it melts slightly into prata.
4. Wait for a while for this to cool.
5. Add a scoop of ice cream.
6. Add some nuts.

There! Heavenly breakfast!

I call it "Nutty Cream PrAKta". 

Sounds cheesy? 

Aiyoh.

Why do you think there is a slice of cheese?

Duh...

Now I must do the socially responsible thing and apply a health warning label (just like what they have on cigarette packaging):

This will bring you to closer to heaven (in more ways than one). You have been warned!

Bad AK! Bad AK!



Related post:
Being fallible in dieting and investing.

Invitation from the National University of Singapore.

I have been making donations to NUS to help needy students for years, always making sure that my donations go to bursaries but this is the first time I am being invited to the award presentation.

Last year, I donated much more money than in previous years as I donated the proceeds from the many sessions of "Evening with AK and friends" I had last year as well.

"It is our honour to host this dinner to recognise our donors..." Professor Tan Eng Chye.

It is nice to be appreciated but I don't think I will attend the function.

Must go in office attire. 

I am so used to my comfortable shorts, t-shirt and flip flops these days.

Yes, I know.

Bad AK! Bad AK!





If we have money to invest with, we are probably more fortunate than most. 

If we can afford to help the needy, why not?

Can't donate much? 

Well, honestly, I am more impressed with a $20 donation from a regular middle income employee than a $100 donation from a multi-millionaire towkay.





If you would like to make a donation to help needy students too, please read the related post below. 

十年树木，百年树人.

"The best thing a human being can do is to help another human being know more." Charlie Munger

Related post:
Helping needy students.

What did AK tell a reader who aims to save $1.8K a month?

Hi AK shifu,

I have been following your blog for quite some time now (2-3 years)! I am 26 this year and have recently graduated and will be starting work next week. Over the past few years, I have made some money from trading physical goods and right now I have a warchest of about 30k. Once I start work, after accounting for all expenses, I will foresee myself saving around 1.8k a month.

Over the last one year, there have been a couple of corrections and on hindsight, its easy to say "damn! i should have bought some". However, a part of me is telling myself to hold on to the bulk of my money till the market crashes so that I start off at a good position. I think that is important. 

I see myself as a 'lazy' investor, so I am looking to invest in telecomms, various gov linked services and perhaps some reits for passive income which I believe to have upside in the next decade or two (healthcare and retail). Could I get your opinion on how to time my entry with this little money I have?

On a side note, I like what you have been doing with your CPF monies....

Why are cacti able to grow in deserts?

Hi,

You sound like a very down to earth kind of guy when it comes to money making. You are also financially prudent.

As for investing for income, timing the market is difficult. Time in the market is easier unless you are not the disciplined or patient type or if you are using money not meant for investing.

Timing the market is not impossible though. It boils down mostly to luck. Did I know that the GFC was going to happen? No, I could not have predicted it. However, I could prepare for it. That is where our war chest comes in.

We cannot predict but we can prepare.

However, if we keep waiting for another GFC to happen (and quite a few people I know have been waiting for years now), all the while leaving our money in our savings accounts, then, it is a little silly.

While waiting for that big crash to come along which inevitably will happen one day, put some of our money to work with each correction in the stock market.

Do you believe in having some assets that do not move in the same direction as the equities market? My CPF money, I treat it as the investment bond component of my portfolio. A risk free, volatility free component which pays relatively good dividends.

I treat my CPF-OA money as the ultimate war chest only to be used in the event of a huge crash in the stock market as the opportunity cost of using it is quite high. I treat my CPF-SA money as the ultimate in investment bonds with an unbeatable coupon plus the magic of compounding.

I believe you will do well, given time. Gambatte!

Best wishes,
AK

Related post:
Graduating soon?