Chinese New Year of the Dog (2018).

This is going to be a quick blog post before I head back to my parents' place for dinner.

It is time for Reunion Dinner again.





Mom:
"Ah boy, come back earlier for dinner, OK?"

AK:
"(Playing Neverwinter) Yes, mom."

Mom:
"Er, you sharing any 4D in your blog? Any zhen zhi?"

AK:
"(Busy killing cyclops) No inspiration this year wor."




Now, I wonder what was my mom's primary reason for calling?

Yes, I know.

Bad AK! Bad AK!

Anyway, I know I haven't been blogging much but I really don't have anything new to say anyway.

Mr. Market seems to be in a slightly depressed state and I have used the opportunity to buy some SingTel and Wilmar from him.





Of course, I do not know if prices could go lower.

I only know there is a lot more value after a 10% correction in their prices.

I invest mainly in relatively strong companies for income and I know that they will pay me.

That is what really matters to me.







I have received some emails from readers who are concerned about prices falling and I will tell anyone feeling the same way that if they do not have the stomach for volatility, stocks might be a bad place for their money.

We are all wired differently and if we want peace of mind, we must know ourselves.

Having said that, take a break and have a happy Chinese New Year!

Woof! Woof! Wang! Wang!

As we grow our wealth, always remember that there are more important things in life than money.

Still, GONG XI FA CAI!
Related posts:
1. Don't have to be smart. Be rich.
2. What to do when prices fall?

We must pay a premium for "best" healthcare.

Reader says...
I would like to ask you regarding H&S insurance. I have spoken to a few agents to understand more about the H&S products that they are offering.

They would frequently mention “Do you want to stay in private for the best healthcare?” “With riders, you don’t have to worry about co-insurances or deductibles..”






Sounds enticing but I got a shock when I looked at the premiums I have to paid in the long term run and also, I am wondering how am I be able to pay for the premiums once I stopped working in the future. Premiums are highly likely to increase in the future.

So, I asked myself do I really need the ‘best’ healthcare? I am quite contended with decent healthcare that has government subsidies.

As such, I thinking of getting a H&S + rider that has coverage for B1 and below.





The reasons being:
• The premiums paid in the long run is still within my range

• I don’t want to be slapped with a huge bill that cannot be claimed and end up worrying about it

• I hope to have affordable out-patient treatments as a subsidised patient. As some illness need permanent follow ups and not everything can be claimed. 






For Ward B2 and below, one will be considered as subsidised patient. The rest will be considered as private

Can I ask for an unbiased third party view? I am ok with staying in B1 and below + decent healthcare from the public hospital. 

Do think the coverage is sufficient for my requirements? Or am I missing something? Thanks for talking to yourself again.

AK says...
If you are OK with staying in B2 or C ward, then, you only need Medishield Life.

If you wish to stay in B1 or better ward, then, you need a private shield plan.

I am inclined to believe that a higher class ward will provide a more comfortable stay which could help promote recovery.





However, whichever class we are warded in, I believe that we would have access to the same quality of healthcare. :)


Related post:
Is my insurance agent scaring me?

When not to do voluntary contribution (VC) to CPF?

Reader says...
It's the first time I did a VC to my CPF as I have already hit my FRS.

I was surprised to see that part of my VC actually went into my SA account.

I thought all of it will go into my OA.






I am still employed and I will be getting Mandatory Contribution to my OA and SA.

But after going through my last year's CPF statement, I realised that I am very close to the $37,740 annual limit.

I know that any excess will be returned to me interest free next year.






My questions are,

What happens when my MC reaches $37,740?

How is the interest in my OA and SA affected?

This $2,378.20 will be earning 4% compounded interest in my SA for the next 12 months.

How will this interest be affected when I hit $37,740?

Do they stop paying interest?





Let's say, for easy calculation my yearly MC is exactly $37,740. And in this case, I did a VC of $11,000 in Jan.

I know that they will return to me $11,000 next year. But what about the compounding interest of $2,378.20?

From your experience when you were working, what happened to your CPF interest when you did VC?

If the compounding effect of a VC in January is not affected.

A working person can earn more interest by doing a VC of $37,740 every January and get the VC back the next year, only to do it all over again.

AK says...
In the past, having met the CPF minimum sum, I would wait for closer to year end to see how much my year to date MC was and I would then do a VC to hit the CPF annual limit for the year if possible and if I had the spare cash.

Some years, I would estimate my MC for the year and do a VC earlier in the year.






In such cases, usually, I ended up overdoing it and CPFB would refund the excess contribution and also deduct any interest earned by the excess.

This is also something I have blogged about before.

Related posts:
1. CPF is a PONZI scheme!
2. Know how to grow our CPF.

Largest investments updated (Early 2018).

My last blog on this subject was published in October 2017.

If you don't remember, see the related post at the end of this blog.






After making some changes in 4Q 2017, with the addition of two new members, this is the new A-list of my investment portfolio:

From $350,000 to $499,999:
AIMS AMP Cap. Ind. REIT
SingTel
ComfortDelgro

I certainly look forward to the dividends from SingTel and ComfortDelgro in 2018 which would hopefully make my primarily income focused portfolio more robust and less dependent on S-REITs.

Next up are the smaller but still rather significant investments in my portfolio. 

They are members of the $100K to $350K club:

From $200,000 to $349,999:
FIRST REIT

From $100,000 to $199,999:
ASCENDAS H-Trust
WILMAR Int'l
Centurion Corporation Ltd
ACCORDIA Golf Trust
Development Bank of Singapore







Some might notice that there is a new member in this club.

DBS was a business I kept buying into at around $15 a share and bought more of when its share price sank below $14 a share.

As its share price recovered over time, in several transactions, I reduced my investment to the point where my remaining investment became "free of cost". 







Of course, one could say that if I did not sell any of my investment in DBS, I would be sitting on a much bigger paper gain now. 

Ouch.

Well, I always say that hindsight is perfect and seller's remorse is pretty pointless.

I reduced my investment in DBS because it was no longer the undervalued proposition that it was when I bought its stock.

I had a plan and I stuck to it.







Having said that, doing something I often do with businesses which I have good reasons to like, I held on to my remaining investment in DBS which had become "free of cost".

Some regular readers might remember I have described this as trading around a core position before.

Mr. Market could be quite irrational and high could, of course, go higher.

How long could Mr. Market stay irrational for?

Your guess is as good as mine.

Meanwhile, as the share price has almost doubled from my lowest purchase price, my remaining investment in DBS is now one of the largest investments in my portfolio.








I am pretty comfortable with my portfolio now and, all else remaining equal, it is unlikely that I would be making any changes anytime soon.

If lazy AK does not change anything in his investment portfolio this year, the above investments are most probably going to contribute the bulk of his passive income in 2018.






As I have rationalized the moves made in 4Q 2017 when I shared my full year passive income in  blogs published towards the end of last year, I shall not repeat myself.

You might want to read those blogs if you have not done so (or to refresh your memory if you have read them before), starting from Part 1: HERE.






I know some might be tempted to shadow my moves but please do your own due diligence.

Even after doing your due diligence, remember you are not me and I am not you.

Remember the importance of position sizing, taking your own financial situation into consideration.





It is rarely a good idea to throw everything including the kitchen sink into investments no matter how attractive they might look.





Related posts:
1. Largest investments in my portfolio.
2. Position sizing, nibbles and gobbles.
3. AK was buying DBS shares.