Ever since the CPFB introduced a colorful pie chart of our CPF savings a few years ago, I would look forward to mine every year like a teena...
Past blog posts now load week by week. The old style created a problem for some as the system would load 50 blog posts each time. Hope the new style is better. Search archives in box below.
(4 things you need to know about your new CPF statement.) I hope my blog has not caused too much trouble for the authorities.
Just like my passive income numbers, my CPF-SA numbers seem to have garnered a following as readers reminded me on Facebook that it is time. Even Facebook reminded me that it is time.
I guess sharing my CPF-SA numbers is inspiring to many readers and it helps them to stay the course.
Er... OK, I am not quite sure what to make of the last comment (and some say I am cryptic). Anyway, although I thought I might skip it this year, a remark from a reader on FB gave me a nudge.
AK was old, fat and ugly. Now, AK is old, slimmer and ugly. If by revealing my CPF numbers again, AK can be old, slimmer and handsome, OK, I do it.
What? You surprised AK is like that? Alamak, you didn't know? I am human too! Hey, who wants to be old, fat and ugly? Cannot do anything about old but if can do away with the fat and ugly, that's two out of three! I win!
OK, the numbers:
How much has my CPF-SA money grown from the year before? See related post at the end of this blog. Worried about the projected 3% yearly increase in Minimum Sum (Full Retirement Sum)? Not me.
How did this "miracle" happen? If you have to ask, you must be a new reader. See related post at the end of this blog.
Ask why does having more money in our CPF-SA and as early as possible make sense?
How to do this? See the related post at the end of this blog. Then, go to the right side bar of my blog to read more of my blogs related to the CPF.
If you are a regular reader, you should be smiling now! Huat ah!
AK says: This is not about AIMS AMP Capital Industrial REIT. It is about AIMS Property Securities Fund which I blogged about in November last year. From the article:
"... Australian fund AIMS Property Securities Fund (APW), is currently under attack from minority unitholders who have convened a Jan 3 meeting to vote on a motion to wind up the fund.
"The motion was initiated by Samuel Terry Asset Management, a Sydney-based boutique investment management company, which claims to have amassed substantial support from other unitholders to go against APW's majority shareholder, AIMS Financial Group.
"However APW's executive chairman George Wang is confident of defeating the motion, pointing out in a recent interview with The Business Times that this is not the first time Samuel Terry (referring to the company) has tried to wind up APW; the previous unsuccessful attempt occurred in 2013.
"Samuel Terry's gripes with APW are similar to LIM's with AMP Capital's fund. First, APW's share price in December 2016 remains at a significant 23 per cent discount to its net tangible assets, although this is already an improvement from 72 per cent in 2009, when AIMS took over the nearly-insolvent MacarthurCook Limited.
"Another of Samuel Terry's gripes is that APW being a "fund of funds", there are extra layers of fees and costs, not all of them disclosed. Also, 71 per cent of the portfolio is now invested in other funds managed by AIMS, compared to just 18 per cent two years ago."
Now, the strange email I received last month makes sense:
Hello,
I am working with Fred Woollard to seek to wind up BVP (formerly A0P). I see you blogged about it recently. Might I ask how many units you own, and whether you currently intend to support Fred’s wind up proposal?
regards
Warwick Sauer
BVP. Oh, I see.
I remember telling myself I would look at the email again later but I totally forgot. Alamak. Growing old and forgetful.
Related post: AIMS Property Securities Fund.
Although there were not many comments in my blog when I asked if I should continue talking to myself in 2017, I received many emails and also messages in FB. They are all positive (so far).
I am particularly touched by a couple of emails.
First, this email from a reader of modest means: Hi AK,
As the new start of the year, first thing I want to do is to write this thank you note to you.
I have been following your blog since Aug2015 and benefit greatly from it. As an employee with salary below average, I couldn't have much to invest. However I value the awareness that you created among your followers.
I am started to be more responsible to my own financial management and learnt a little bit about investment. I believe many of them out there too. I feeling grateful to "meet" you through text.
Thank you very much. Hope u and ur family stay healthy , happy and wealthy always.
I will still following your blog as long as u still talking to yourself. Regards,
AK's reply: Hi, I am happy that my blog has been inspiring and helpful. All of us have different circumstances and all of us have different abilities to improve our financial health. If we diligently do whatever we are able to do in order to have a more secure financial future, it is always better than doing nothing.
I realised that many Singaporeans might not have the funds to invest with even if they want to. This is a reason why I decided to blog about the CPF as much as I had in recent years, sharing my own story. Making full use of the CPF will give us a measure of financial security in our golden years. Wishing you a very happy and rewarding new year, AK
Second, this email from a reader who is determined to effect a sea of change in her family and extended family:
Hello AK,
Happy New Year!
I have been your avid reader ever since my friend introduced your blog to me in end 2015. Hence 2016 is my first year of financial "spring-cleaning" project, applying whatever tips you advocate that make sense to me!
And the result - managed to increase income by 35% y.o.y. and cut expenses by 32% y.o.y.! And my family members start to buy into my nagging and becoming more of a saver than spender! (still long way to go, but I am determined to keep on brainwashing them)
Of course if I include paper loss in stocks (Singtel, AAReit & Comfortdelgro), it would be 33% improvement on income.
At the very least, reading your blogs serve as a reminder for me to always be mindful about spending, putting a lid on it before things go out of hands.
Just 1 thing I probably didn't listen to you - I bought a 30+ years old HDB in the East. As there are not much new 3-room flats in the East, I decided to go for convenience sake when selecting house (near future mrt, wet markets and other amenities). Don't have intention to sell in future, either. Hence it is fine to own an old house as it fits my purpose.
Last but not least, thank you AK, and pls continue to blog as I hope my young nephews could benefit from your blog posts and avoid the unnecessary mistakes in their path to financial freedom.
Take care!
AK's reply: Hi, I am so happy that you are getting your family and extended family on the bandwagon. I always say that financial freedom is a family affair! I am happier still that your financial health has improved after taking action. I am very sure your positive results and attitude will spur you on in 2017 to achieve even more. The journey towards financial freedom starts with financial prudence and if we become better savers, that is half the battle won.
Congratulations on getting your own flat. I share my thoughts in my blog but I am not dogmatic. I just nag a lot. Growing old, you know. Nagging is a privilege that old people have. As long as your purchase matches your motivations, as long as you are aware of the effects of your decision and as long as it is not going to cause you any problems, OK. Wishing you and everyone at home a very rewarding new year, AK
It is safe to say that most Singaporeans can be better off financially if we are willing to help ourselves. Although the strength to do so may vary from one person to another, most of us have the ability to do this. If WE can do it, so can YOU!
What AK thinks of the LRIS: "Since I treat my CPF savings as a risk free and volatility free component (i.e. AAA rated sovereign bond) of my investment portfolio, I am unlikely to take part in the proposed Lifetime Retirement Investment Scheme (LRIS). Of course, money in the CPF-OA doubles up as a war chest which could be deployed in the event of a stock market crash for possibly better returns than what the LRIS could deliver." Source: A cornerstone in retirement funding.
Reader: Dear AK, May I seek your wisdom?
1. Can CPF SA be invested on SDPR STI ETF? I have check in CPF website it stated yes.
2. However, I went to OCBC where I have CPFIS account to ask, OCBC staff not able to reply.
3. I ask approved CPFIS broker they cannot answer as well.
Is there some place I can seek clarification, please enlighten me. Thanks
AK replies to reader:
I don't think the questions have anything to do with wisdom. 1. Er. I dunno. 2. Er. I guess they dunno. 3. Er. Ask CPF Board. Now, I will share something which (hopefully) has something to do with wisdom. I wouldn't risk a AAA rated sovereign bond paying 4% to 5% coupon for an ETF. Best wishes, AK
A reader made a droll statement on FB and I decided to share some quotations from my favourite Science Fiction movie on the first day of 2017: Related post #1. There are many who do not believe in delayed gratification and the power it has to improve our financial health:
I find your lack of faith disturbing. Related post #2. For those of us who believe that saving more and investing in income producing assets for a more secure financial future is the way to go, remember, if a job is worth doing, it is worth doing well. Don't be half hearted.
Do or don't do. There is no try. Related post #3. We will do well to embrace our financial fragility. We are not invincible. It is better to be cautious even if we are strong. Why? Strong, yes. Invincible, no.
Don't get cocky.
Related post #4. There will be times when we feel like throwing in the towel. I know. Sometimes, life just throw us a curve ball or two. I have been there. Well, you might want to book mark this page and remember the X-wing fighter that destroyed the Death Star. Don't let the bad guys win!
Stay on target. Related post #5. Of course, there is always fear. There is fear that we can never beat the system (e.g. CPF). There is fear that we might grow old and destitute. There is fear that we can never retire. There is also fear in Mr. Market from time to time. Make use of Mr. Market's fear and build passive income!
There is something stronger than fear. The Force (of passive income).
For those who don't follow me on FB, the culprit:
BEWARE THE DARK SIDE which is usually full of bling bling stuff and other tempting objects disguised as needs and very often touted by self serving minions as such.
UPDATE (20 Jan 17): When I shared my full year results for non-REITs last year, I wondered if Religare Health Trust (RHT) might be privatised. Then, with Accordia Golf Trust's (AGT) sponsor being bought over by Korean investors, MBK, many asked what is going to happen to AGT? A reader, betta man, shared this with me:
As promised, this is Part 2 of a very long blog post. If you have not done so, read Part 1: HERE. Let us start this blog post with some gossip. Wah! Is Religare Health Trust going to be delisted?
You say, I say, they say. Hmm. ;p Anyway, three big things happened in the non-REIT space for me. 1. A big thing was receiving a much larger than usual distribution from Religare Health Trust (RHT) which I initiated a long position in sometime last year at 88c a unit. The special dividend (which gave me a yield of almost 30% based on cost) came from them disposing a share of an income generating asset due to regulatory requirement. Including regular distributions this year, RHT has been a very rewarding investment for me. I am quite happy to continue holding on to my investment in the Trust as it continues to generate income. See this chat with a reader:
2. Another big thing that took place in the non-REIT space was the internalisation of Croesus Retail Trust's management. There was a rights issue because of this. I took up my entitlement and also applied for excess rights. The rights units were priced at slightly under 80c a unit (and will enjoy a distribution yield of almost 9%). The size of my investment in the Trust increased by almost 6% as I took advantage of the exercise. 3. The third big thing is the offer to privatise ARA Asset Management at $1.78 a share. This is likely to be concluded by the middle of next year and based on my entry prices, I would get to enjoy reasonably attractive capital gains of 35% to 78% although I would miss the regular dividends.
As I had a fixed deposit maturing and with the much lower interest rates offered by the banks this year for fixed deposits compared to last year (1.1% per annum at UOB for 13 months, for example), I decided to buy more ARA shares at $1.71 a share in late November. I believe that this is possibly an arbitrage opportunity which could give me an "interest rate" of about 4% over a period of, maybe, half a year. It could be higher because ARA pays dividends twice a year and another payout could happen in April or May. If it should happen, I could see a DPS of 2c to 3c if the privatisation process is not completed by then.
Of course, to be realistic, there is a chance that the offer might not be accepted as I know some shareholders feel that the offer of $1.78 a share still undervalues ARA. In such an instance, I would be quite contented to hold on to my latest purchase to receive regular dividends (for a 3% dividend yield based on a DPS of 5c or about 50% of EPS) as I also believe ARA is worth more and that its shares should trade at a higher price. Delist or stay listed, I am happy with ARA either way. Total dividend income from non-REITs in 2016: S$ 105,641.29 This translates to S$ 8,803.44 per month. Apart from dividend income, regular readers know that I used to trade stocks more actively. Earlier this month, I revealed on my Facebook wall as well as the comments section here in ASSI:
Although I enjoyed some capital gains from a few trades this year (and the most recent trades being in DBS as its share price rose significantly for a few weeks), it is due to an emphasis on investing for income that has ensured further improvement in my financial health.
On this note, I will now say something about APTT because it seems that many readers were attracted to APTT by the relatively high distribution yield of 10% and bought into it. Now, many of them are worried because the unit price plunged.
If we know the value of a stock, we would know if the price makes sense. If we didn't know the value of the stock, we would never know if the price makes sense. If we don't know this, price movements would make us emotional.
I said before that APTT's past DPU of 8c was unsustainable. Although the management reduced DPU to 6.5c, I said that it might be more prudent to have a DPU of 4c which, I felt, was more sustainable. That was because 4c would be closer to APTT's EPS. At 37.5c a unit, I decided to add to my investment in APTT recently. I know what some people might ask and here is my answer: I don't know if the unit price will decline further but if it should, knowing what I know and all else being equal, I would probably be buying more. Investing in APTT, we are not investing for growth. We want its income generation ability. If you thought you were investing for growth when you got into APTT, you might have the wrong tool. Know what we want to do and use the right tools. For those of us who invested in APTT for income, ask if anything has happened which has damaged its ability to generate income significantly and, if something has happened, is the damage long lasting? Then, do what you have to do. Know what am I going to say? Yes, if AK can do it, so can you!
HAPPY NEW YEAR!
And I hope you have found my blogs this year to be inspiring and helpful on your own journey towards financial freedom.
Let me know if I should continue talking to myself next year. ;)
While the overhang from Brexit and the US presidential election is over for now, heading into 2017, we expect continued weakness in oil-related stocks, softness in the property sector and higher impairment charges for banks to be some of the factors that will dent investor confidence in the Singapore market. While interest rates are likely to head higher, we believe the hunt for yield is not completely over and investors are still likely to accumulate quality high-dividend stocks. We expect banks to report low- to mid-single-digit earnings growth, and the outlook for the residential property sector is still soft after numerous quarters of decline and with no clear pickup in demand or selling prices. The oil and gas sector is still saddled with refinancing issues as well as a lack of orders and earnings. The telecommunications sector is also facing the threat of a new player.
----------------------------------------- Watch from the 22nd minute for the discussion on Singapore banks:
During an "Evening with AK and friends", someone asked if I was going to sell my stocks as market guru Hu Li Yang was expecting a stock market crash. I said we should stay invested as the market was still awashed in liquidity and money will go to where it is treated best. See: Evening with AK and friends.
So, what did I do in 2H 2016 in the non-REITs space? I made various purchases but, mostly, I was buying DBS shares. Besides DBS, I also bought some shares of OUE Limited, PREH, Wilmar, OCBC, Breadtalk and Starhub.
(I am impressed by DBS' cost management. Their cost to income ratio keeps declining.) The narrative for investing in OCBC was similar to the one for DBS. Although all three local banks' stocks looked cheap to me, my preference was for DBS because of the perceived cheaper valuation.
The reason for me putting some money in OCBC's stock was mostly because my long position in DBS grew so big (and I do mean BIG) that it was prudent for me to step on the brakes.
Using a strategy I employ frequently for stocks which I am highly confident in, my relatively large position in DBS included both a core position for income as well as a trading position.
Why not UOB?
Well, I think UOB has been a bit laid back. I am not saying that it is a bad thing, mind you, but its growth story seems less exciting. Of course, some might say that DBS and OCBC have been more "adventurous" but I like to think that they are more enterprising. I feel that growing their wealth management business more aggressively will continue to set them apart from UOB as that business contributes more and more to their earnings.
Next, Wilmar. I continue to like Wilmar's business strategy and their very impressive scale of operations. It is an amazingly complex business and, to be quite honest, I have no way to analyse most of its operations.
However, when Mr. Kuok thinks their shares are cheap and bought more at $3.00 a share, that was a pretty clear signal to me. At that price, we would also be buying at around its NAV which seems conservative.
Source: RHB.
Having accumulated a rather significant long position in Wilmar in recent years, I am quite happy to wait while being paid to do so.
Now, for OUE Limited. I blogged about my rationale for increasing exposure to OUE Limited when I shared my numbers for 1H 2016 (see related post #1). Back then, I added at $1.51 a share. In 2H 2016, I added more at $1.53 a share.
Twin Peaks.
My decision to increase exposure was mostly driven by the even larger discount to NAV from the time I initiated a long position. There is much value in OUE Limited but waiting for value to be unlocked requires a lot of patience. Well, remember, a wise man did say before that the big money is in the waiting.
Along similar line of reasoning, I also added to my investment in PREH at 80c a share a few days ago. This is the lowest price I have ever paid for PREH. The last time I bought any PREH shares was more than a year ago. It is interesting to me that Mr. Ron Sim, Mr. Pua S.G. and Mr. Kuok K.H. have been increasing their stakes in PREH on price weakness. PREH is an asset play but it is also a growth story. It is not for the faint hearted.
PREH
As for Breadtalk, I have a more recent blog post on my decision to initiate a position. I compared it to Old Chang Kee and QAF Limited, both of which I have been a shareholder of for many years. If you are interested to know why I had a change of heart and decided to initiate a smallish long position in Breadtalk, go to the related posts at the end of this blog post (see related post #2).
Starhub. In June last year, when I did a technical analysis for Starhub, I said:
"The widening of the Bollinger Bands indicates increased volatility. The OBV shows selling pressure. The MACD is declining and shows no sign of a positive divergence. These are all on the weekly chart which suggests that continuing weakness in the longer term should not surprise us." Read blog post: here.
We saw Starhub's stock price sinking and I nibbled again in late November. I feel that Mr. Market is right to be concerned but might be overly pessimistic about Starhub's prospects with the introduction of a 4th telco. There is plenty of speculation now but, to be realistic, it will take time for the new entrant (which is expected to enter the market in 2018) to gain traction and it remains to be seen how successful it will be.
Back in June 2015, I also said that SPH and Starhub were similar: "They could see earnings come under pressure for different reasons but that makes them similar too as the challenges are very real.... I would like to have some buffer in terms of dividend yield buying into SPH and Starhub because I am investing in them primarily for income and not growth." Read blog post: here.
I believe I am getting a much thicker cushion buying Starhub at under $2.80 a share and that was what I did.
As for SPH, let me share here a recent conversation with a reader:
I have been a SPH shareholder for many years and I am happy enough to be paid while I wait. --------------------- As this turned out to be a very long blog post, I chopped it up into two parts. Read Part 2: HERE. Related posts:
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