Financial freedom and a long break from public appearances. (Give me F.I.R.E.)

F.I.R.E.

Financial Freedom and Retiring Early.

This is something many people want.

The good news is that it is possible.

How do we achieve this?

There are probably many ways to achieve this and my way is only one of many.

I like to think that my approach is a holistic one that most average Singaporean workers would find practicable.

There is no hocus pocus nor are there promises of fast money.

It is about understanding how to make our limited financial resources work better for us.

It is about building a resilient investment portfolio.

This also means not taking on too much risk (i.e. limiting speculative positions).

This means being able to stomach some volatility with the help of risk free and volatility free CPF.

The journey to financial freedom is probably daunting for many of us but if we don't want to work until the day we die because we have to, it is a journey we should make as soon as possible.

While on the journey, we have to be financially secure every step of the way and that means not throwing caution to the wind.

Unless we are very rich, all of us need an emergency fund.

Unless we are very rich, all of us need insurance.

Understand our own circumstances and do not bite off more than we can chew no matter how delicious it looks or we might choke and some do choke to death.

Be aware of our mortality.

We are not invincible.

We have to remember that no one cares more about our money than we do and do not ask barbers if we need a haircut.

Be prudent.

Be pragmatic.

Be patient.

Yes, if AK can do it, so can you.

If we ever feel discouraged and we sometimes will, remember that many others have walked this path before and achieved F.I.R.E.

If WE can do it, so can YOU!

Now, what is this about a long break from public appearances?

If you are a reader who enjoys chatting with me in person, please don't be upset but there will not be another "Evening with AK and friends" in the next one year or two (or three).

Pause.

I can imagine some of you protesting now.

Pause.

Please, no screaming.

Pause.

Yikes, did someone throw a shoe at me?

Pause.

Hey, "Evening with AK and friends" really isn't that big a deal.

It isn't a big loss.

I didn't say this before "Evening with AK and friends 2018" because I was afraid of the outcry from readers interested in the event but did not manage to get a ticket. 

Yes, the event sold out in a day although we more than doubled the seating capacity (>300 seats) with a bigger venue.

This year's "Evening with AK and friends" was the largest ever.

It was epic!

Again, it isn't a big loss.

"Evening with AK and friends 2018" was just like past events.

It was an off the cuff chit chat session of epic proportions.

However, it was mainly an event to give as many readers as possible a chance to take a selfie with me.

What?

You didn't know that the main purpose was to take selfies with AK and you did not do it?

Alamak.

Hanor, if you did learn something useful regarding investment or money matters from the event, you were lucky.







Some readers who have been following my blog for a long time would say that AK is lazy and growing lazier.

Discounting the fact that I am a pretty hardworking MMORPGer, that is mostly true.

Think "NEVERWINTER".

OMG!

Bad AK! Bad AK!











Honestly, another important reason is that I have become rather reclusive with age.

OK, rather more reclusive.

In the local financial blogging community, I suspect I probably have a reputation for being rather aloof.

I don't mix around much.

This is true.

However, unlike Russell Lee who has vanished from his sphere of influence, AK will still be around in his for quite a while more.

Yes, like it or not, I am a social media influencer or so I was told by an old friend some time back.

To be quite honest, I started blogging out of curiosity and boredom so many years ago.

I did not start a blog with the aim of becoming an influencer.

I did not even know there was such a thing.





Anyway, don't fret.

I will not disappear from the blogosphere (yet).

I will continue to blog from time to time but I will shun public appearances for at least a couple of years.

I hope all of you will give me your blessings.





Finally, a big "THANK YOU" to everyone who came to "Evening with AK and friends 2018".

Of course, a super big "THANK YOU" to Kenji, Victor and Rusmin from The Fifth Person  for making the event possible.

Kamsiah you all plenty plenty and wishing all of you good health, prosperity and plenty of happiness.






Give me freedom. 

Give me F.I.R.E.

If you haven't listened to the song, listen, there is a hidden message.





Related post:
My holistic approach!

Gobbling APTT as its unit price plunged 50%.

APTT's unit price plunged by about 50% today, closing at 16 cents a unit.

Mr. Market was probably shocked by APTT's massive reduction in DPU to 1.2 cents a year.

I was surprised by the decision too.

However, I also applaud APTT for having the courage (and wisdom) to make such a drastic move.






Two years ago, I reiterated that APTT's 6.5 cents DPU was unsustainable.

I also said that a more sustainable DPU was around 4.0 cents.

In my blog on APTT last month, I shaved 10% off this 4.0 cents DPU to take into consideration the rising interest rate environment.






Then, I said that unit holders could see a lower DPU at 3.6 cents in future.

Of course, it was all speculative since I could not be expected to speak for APTT.

However, I thought a DPU of 3.6c was a pretty reasonable estimate.

On hindsight, that haircut should have been more in line with what would be required for BMT instead.







With future DPU now officially at 1.2 cents, distribution yield for my nibble is now a tad lower than 4% (instead of the expected 10.5%).

What to do?

Panic and dump?

Of course not.

I bought more today.

This time, I did not nibble.

I took a big bite.

Why?






Now, with the decision to reduce DPU to a third of what I estimated to be more realistic, APTT is going to have internal resources to manage its debt.

APTT would not only have some breathing room.

APTT would have quite a bit of outdoor space too.

If well managed and I am reasonably sure it would be, APTT's reliance on debt to continue as a business would eventually become a thing of the past (before it becomes a thing of the past itself).






At a unit price of 16 cents, we are looking at a prospective distribution yield of 7.5%.

7.5% is still a relatively high distribution yield.

I would even say that APTT is more attractive an investment now although the yield is not as high as before.

I will explain why I say this.









Basically, we have to bear in mind that this relatively high yield is going to be achieved based on APTT paying out only a fraction of its earnings.

This is unlike what happened in the past when APTT distributed much more than its earnings to investors.

Give this a moment to sink in and the picture should look better than it did before (despite the lower distribution yield).

Simply focusing on the reduced DPU would miss the big picture.






The big plunge in APTT's unit price today might signal Mr. Market's disappointment but I have actually become more optimistic about APTT as an investment with the massive reduction in DPU.

Still offering a relatively high yield based on an absolutely more sustainable payout ratio, as an investment for income, the risk of APTT imploding has reduced tremendously if not utterly dissipated.

Everything else being equal, any worsening of Mr. Market's depression would only be a buying opportunity for me.





Related post:
3Q 2018 passive income: APTT.

Sold First REIT to raise funds.

The plan was to blog about this together with my quarterly passive income report (4Q 2018) but I decided to take some time off from Neverwinter to do this earlier.

I have been invested in First REIT since before the Global Financial Crisis and, increasing my investment during the crisis and Mr. Market's bouts of depression, it became a rather significant investment in my portfolio.

First REIT has been an amply rewarding investment for income as I did nothing but received income distributions in the following 10 years and more, enjoying yield very much in excess of 10% per year.

As an investment for income, First REIT's performance has been stellar.

Why then did I decide to sell my investment in the REIT?

I said in my last blog on First REIT that if we feel that the REIT's income stream is in peril or if we are not ready for rights issues, we should not invest in the REIT.

The concern that LPKR (which accounts for more than 80% of the REIT's income) might default is a reasonable one as they are struggling with a weak Rupiah.

Although I do not feel that there is any risk of an imminent default and LPKR has also announced plans to improve its financial health which includes sale of assets, realistically, LPKR must negotiate to pay a lower rent to First REIT as long as the Rupiah remains weak.

Naturally, everything else remaining equal, when this happens, it should translate to a lower DPU.

Don't ask me when it might happen or how much the reduction might be but investors should be prepared for the eventuality.

As for rights issues, investors in First REIT should be prepared too because OUE's strategy is to go asset light and OUE Lippo Healthcare's relatively big portfolio of assets in Malaysia, China and Japan will eventually be sold to First REIT.

Although First REIT's current gearing level is relatively healthy and it will be able to take on more debt for acquisitions, it will still need to do some equity fund raising which means either private placements or rights issues.

Yes, in the plural.

In my last blog on First REIT, I said I was not adding to my investment in the REIT but I was quite happy to hold on to my investment.

My investment in First REIT has been free of cost for quite a while now and a lower DPU does not really worry me.

I am always ready for rights issues and the prospect of a rights issue or a few does not worry me either.

However, recently, Mr. Market made me too many tempting offers in the non-REITs space and unwilling to dig deeper into my war chest, I decided to sell my investment in First REIT to raise funds instead.

Why not reduce my investment in AIMS AMP Capital Industrial REIT which is quite a bit larger than my investment in First REIT?

Well, if I must choose, I would always choose to sell what I feel is a more uncertain investment and First REIT's future income seems less certain compared to AIMS AMP Capital Industrial REIT's.

What have I been buying recently?

Hint.






Back to Neverwinter for me now.

Related post:
Why First REIT and why worry?

Die faster if we retire earlier or die faster if we work harder?

Reader says...
This week my boss say should not retire early as based on some studies, people who retire early then to die early as well.

Reason being they have nothing to keep them going & occupied.

He quote an example of a colleague who at 70s still working etc

Er….is that a reason why you should not retire I wonder???






No one ask you to do nothing at retirement.

Is just that you must have passive income to have a choice

If you want to work by choice is fine.

Really sad if you work because no choice

I feel like telling him Warren Buffett say if you don make $ when you are sleeping, you will work till you die





AK says...
You have cracked the code. 😀

It is all about having choices in life.

Hmm.

Die faster if we retire earlier or die faster if we work harder?

Alamak.

Not that kind of questions lah.





Working shouldn't be like being forced to do National Service.

Work because we want to and not because we need to.

If you can do that and your boss cannot, you win. 😀






Related posts:
1. Why did AK want to retire early?
2. Free ourselves from wage slavery!

Fake ASSI AK71 HWZ account and you.

For those who do not follow me on Facebook, for the record, I do not have a HWZ account.

Laiye said...
someone with nick assiak71 posted in hardwarezone ...


Cassidy Gan said...
AK71 is just too popular to be ignored. Do you consider copying that to be the sincerest form of flattery or trickery to blasphemy? ;))


Tiang Wen Loong said...
Wow.. AK71 🔫







Kelvin Seetoh said...
It is a good thing but he better do not pester ur followers!


Joseph Benjamin Goh said...
When ppl start to fake you. Means you are good. 😉


Gabriel Tham said...
u need trademark liao


Dolce Goh said...
No wonder the fake person doesn’t sound like AK at all!






Kelvin Chua said...
It is a testament to your celebrity status. :)


Goh Kun Zheng said...
There's a saying... fake it till you make it. Maybe that what it means. Hehehe.

Donald Trump said...
'It's called fake news' - BBC News 





I will do less blogging in future and eventually I will stop blogging one day.

I don't know if that would lead to more fake ASSI AK71s being created.

However, if you remember 

1. not to ask barbers if you need a haircut 

and that 

2. nobody cares more about your money than you do, 

you and your money should be quite safe from the genuine and the fakes alike. :)

Related post:
Leaving a legacy as AK stops blogging.

Leaving a legacy as ASSI turns 9 and AK stops blogging.

Reader says...
I'm thankful for the positive impact u have on my life, up there with Warren Buffett and rich dad.

I hope in time I be able to pay it forward like u did

AK says...
I am glad my blog has been helpful 😀






Reader says...
That's an understatement, too many ppl and too much money this world, just not enough ppl who want and able to make a difference.

Of course that depends on whether u become even more lazy in blogging hehe.

This blog will be your legacy to those who wants to design their life, we can only help ppl who wants to help themselves like you always talk to yourself

AK says...
Aiyoh. You gave me such a big hat to wear.

I think I prefer my current hat. 😛

Thank you very much for the compliment.

I wasn't looking for one but I appreciate the kind words. 😀

I suspect I will get lazier when it comes to blogging and other things related to my blog.

However, I won't stop doing it if I still enjoy it.

The day I stop is the day I no longer enjoy it or when I am no longer able to do it. 🙂





Reader says...
My bet u will, actually gardening is Zen to my mind.

Learning much thru movies, history and human psyche.

Hope I can be 闲云野鹤 by 45

Enough faith thou not of the religious kind on this journey





AK says...
Unless severely disadvantaged, all of us can aspire towards financial freedom.

I am sure you can make your wish come true!

Yes, have faith and believe it! 

Gambatte!





Reader says...
U have shown what's possible mere mortals can achieve ... 

(and) make a positive and meaningful difference like what you have for many others like me, much appreciated and with gratitude AK, if AK can do it so can I!

AK says...
That is the spirit! 

Huat ah! 😀




ASSI is 9 years old this year.

To be quite realistic, one day, I will stop blogging but that day is not today.

However, I will probably be blogging less often from now.

When I do blog, it might be just to share my CPF numbers and my passive income numbers (as long as I still find it a meaningful activity.)

Remember that everyone's life can be and should be better.

As long as we continue doing the right things, the right thing should happen for us.

If AK can do it, so can you!





Related posts:
1. Getting the most out of ASSI.
2. To retire by 45, start with a plan.

Why First REIT and why worry?

I get asked from time to time why I invest in First REIT and not Parkway Life REIT?

Actually, more accurately, people should ask why did I invest in First REIT and not Parkway Life REIT?

Yes, asking when a decision was made matters.






When I was deciding between First REIT and Parkway Life REIT, the choice was a much simpler one.

First REIT was trading at a big discount to NAV and its distribution yield was much higher compared to Parkway Life REIT.

Money should go to where it is treated best, I told myself then.






So, if you guess my entry prices were very low, you are right.

Actually, no need to guess because I have blogged about this before.

As First REIT's unit price has been declining, many readers have asked me if it is a good time to buy more.

My response was rather predictable.






"I don't know if it is a good time to buy more for you.

"I only know it is not a good time to buy more for me.

"Have a plan, your own plan."

It does not fit into my plan to buy more First REIT but I am more than happy to hold on to what I have.








Even if First REIT should see a 20% decline in unit price or even a 30% in unit price today, it would still be higher than my entry prices.

However, for someone who decides to invest in First REIT today, surely, he would not feel indifferent if such big declines in the REIT's unit price should happen.

A big decline in unit price could happen if First REIT's largest tenant, LPKR, which is feeling the strain of a falling Rupiah, should default on rental payment

For sure, I do not know if this is going to happen.




I do know that investing in First REIT, more than ever, investors have to be ready for rights issues with a new pipeline of assets in Japan, China and Malaysia from OUE Lippo Healthcare which is taking over the management of the REIT.

If we believe that First REIT's income stream is in peril and if we do not like the idea of a big rights issue, then, we should not be investing in First REIT.

Why worry?





Related post:
Free income producing assets.

3Q 2018 passive income (S-REITs).

In 2Q 2018, there was a bit of action in the S-REITs space for me and one of the things I did was to add to my investment in Starhill Global REIT at 64c a piece.

In 3Q 2018, I was ready to add to my investment in Starhill Global REIT if Mr. Market's pessimism should worsen.

However, Mr. Market felt better about the REIT's prospects and the unit price rebounded.






To understand why I bought more of Starhill Global REIT when I did and how it became one of my larger smaller investments, go to the related post at the end of this blog.

The top 3 income contributors from my investments in S-REITs in 3Q 2018 were:

1. AIMS AMP Capital Industrial REIT

2. First REIT

3. IREIT Global

I often get asked whether we should continue investing in S-REITs since interest rates are on the rise.

I am aware that this is really another way of asking what is going to happen to the unit prices of S-REITs in future.

I don't know how the prices will move in future.

I only know that investing in bona fide income producing assets has been rewarding and it should continue to be rewarding.






If we believe that real estate has intrinsic value, then, buying at a discount to valuation, we should have some margin of safety.

Also, we have to ask whether the management is honest and capable enough to unlock value for shareholders too.

Of course, S-REITs are not perfect nor are they the only tool available to investors for income.

We also want to be careful not to be overly reliant on S-REITs as the higher yield comes at a price.

Remember, S-REITs pay out 100% of their cash flow most of the time and have no retained earnings.

So, investing in S-REITs, we have to be prepared for the possibility of rights issues.

Those who are fully invested and dependent on S-REITs for income should beware.





This is especially if the dependence on S-REITs for passive income is absolute and critical.

"Absolute" means that these investors have no other sources of passive income.

"Critical" means that any reduction in passive income from S-REITs would be a life altering event for these investors.





Remember, how we invest and what we invest in should depend on our personal circumstances and what we hope to achieve.

It is never my way or the highway.

You should have a plan, your own plan.

However, to have a plan that works for you, you must know what you want and what you are capable of and willing to do.




For example, in middle of September this year, a reader asked me about investing in Soilbuild REIT again.

blazingruby60 said...
I remembered you mentioned that all investment is good investment at the right price.

looking at soilbuild i have sold after reading this article here and wondering would you consider buying soilbuild again at 58 cents?

considering soilbuild has ventured overseas to australia to acquire some properties and all.

thanks n cheers.






AK said... 
I was thinking about it but I decided not to invest in Soilbuild REIT now because

1. I already have a pretty large exposure to industrial property S-REITs which also have exposure to the Australian economy (AIMS AMP Capital Industrial REIT and Fraser Logistics Trust).

2. I would like to have a much bigger percentage of my portfolio in non-REITs to reduce reliance on S-REITs for income.

Of course, things could change in future. :)

Investing in S-REITs for income, we have to take in a bigger picture and, to be realistic, your picture could be quite different from mine.

My total 3Q 2018 passive income from S-REITs was:

S$ 19,884.80

AA REIT 10-year Anniversary 
- Celebrating 10 years of Partnership!

On a per month basis, it works out to be about S$6,628.00 a month.

Related post:
2Q 2018 passive income from S-REITs.

SG BONUS for all Singaporeans.

I received an SMS earlier today to say that I am getting a $200 red packet.

Wow! There is such a thing as a free lunch, after all!

Actually, $200 could probably buy me lunch 50 times over!

What am I talking about?

SG BONUS, of course.

Eligible Singaporeans will get a minimum of $100.

How much we get depends on our income in 2016 (YA 2017).

See the table here:

All eligible Singaporeans will be paid by end of this year.

Now, if only income in 2017 (YA 2018) was used instead, then, I would get $100 more and could include some ice cream for lunch.

I was still doing some part time work in 2016.

A short video on Budget 2018:

If you are a Singaporean and have yet to receive notification, you can use your SingPass to check online as to how much you will be getting.

Check with your SingPass: 

HERE. 

3Q 2018 passive income (non-REITs): Conclusion.

Many things happened in 3Q 2018 in the non-REITs space for me.

Mr. Market made me many attractive offers and I was hard pressed to take advantage of all of them in a meaningful manner.

This is why having a war chest, big or small, matters.

Without a war chest, we would not be able to take advantage of Mr. Market's pessimism.

Even with a war chest, we would have to decide how to allocate our limited funds.





So, what did I do?

If you have not read the earlier 7 parts by now, here are the links:

1. Centurion.

2. RHT.

3. WILMAR.

4. SingTel and CDG.

5. Accordia Golf Trust.

6. QAF.

7. APTT.





Please remember that I am just talking to myself, as usual.

What works for me might not work for you.

Remember not to bite off more than you can chew which means

1. Don't use money you should not be using to invest with

and

2. Don't invest so much money that you worry all the time.





Investing for income will help us become financially stronger over time.

However, we should pace ourselves and not throw caution to the winds.

So, how much passive income did I receive from non-REITs in 3Q 2018?

3Q 2018 passive income from non-REITs:

S$ 33,924.70






It works out to be about $11,308.00 worth of passive income a month.

Some might find this figure too lofty an achievement.

Just remember that Rome was not built in a day and not all of us need to live in a big city like Rome. ;)

If AK can do it, so can you!

3Q 2018 passive income (non-REITs): APTT.

In August 2018, I also received questions about APTT as its unit price plunged.

In one way or another, I was asked whether I was buying APTT again like I did when its unit price plunged in the past.

Regular readers might remember that I said APTT's 6.5c DPU was unsustainable and a more realistic DPU was 4c.





When I bought more APTT in the past, it was based on what I thought a reasonable and sustainable DPU would look like.

The purchase was not premised on what APTT was distributing at that point in time.

Please keep this in mine as I continue talking to myself.





Although APTT's very high debt level and the fact that they are running a deficit is worrisome, again, I remind myself that all investments are good at the right price.

The last time I bought into APTT, my premise was a realistic distribution yield of around 10.5% based on a sustainable DPU of 4c.

If we were to consider the higher risk that comes with an environment of rising interest rate, shaving 10% off what I thought was a more sustainable DPU then is not unreasonable, given APTT's highly indebted nature.

Now, a DPU of 3.6c is surely more sustainable.





Then, if we were to demand the same 10.5% yield like before, we would only be buyers at about 33.5c a piece (or lower).

Therefore, I wasn't interested in buying APTT in August 2018 as I didn't think it was priced attractively enough.

I also had a feeling that APTT's unit price might drift lower upon going XD as Mr. Market was feeling rather pessimistic.

Finally, weeks later, in late September, I took a bite of APTT.





If I didn't have anything else to invest in, I would have taken a bigger bite as I believe closer to 30c a piece, APTT compensates me sufficiently for the risk I am taking.

Having said this, everything else being equal, I would probably be accumulating APTT if Mr. Market should make me even better offers in future.

APTT is not going to implode anytime soon.

A safer distribution yield in excess of 10.5% is rather difficult to ignore.

3Q 2018 passive income (non-REITs): QAF.

In 3Q 2018, I also received questions from readers on QAF and they were similar to this comment from 9 August 2018:

Reader said...

at the current price weakness and offering a dividend yield of almost 6%, will u still considering nibbling??


AK said...

QAF is now trading at a discount to NAV and there is also some insider buying activity.

I would buy some if I weren't already invested and if I didn't have other investments that are tempting me to buy more as well. ;)







Revenue and earnings have been declining at QAF as they face rather challenging conditions.

They are spending more on advertising to defend their bakery business while their pork business in Australia continues to face oversupply pressure.

Having said this, QAF is rather conservative and has a pretty strong balance sheet.

Although I feel that QAF is still able to sustain a DPS of 4c or even 5c based on the strength of their balance sheet while waiting for improvement, I am prepared for a lower DPS which is probably a prudent thing to have.





Although tempted to add to my investment in QAF, with limited resources, I decided that other investment opportunities in many ways were more attractive in 3Q 2018.

For example, both from an earnings and relative dividend sustainability perspective, Centurion is more attractive.

Another example, from a discount to NAV and prospective dividend yield perspective, Accordia Golf Trust is much more attractive.

However, if Mr. Market is to become even more pessimistic about QAF, all else being equal, I might buy some.