4Q 2018 and FY 2018 passive income.

It has been a pretty long break since my last blog.

I have also been spending a lot less time engaging readers both in my blog and on Facebook.

I know that many readers are not used to this.

However, this will continue to be the case as I devote a lot more time to other activities.

This was something I talked about before and it is the new normal.

So, please don't be surprised if you do not hear from me for weeks (or months) at a stretch in 2019.

Now, with that out of the way, I shall wrap up 2018 with a blog on my full year passive income.







Mr. Market went into a depression in 4Q 2018 and made me too many tempting offers.

Spoilt for choice, with my limited resources, I added to my investments in several stocks in 4Q 2018 even as I sold my entire investment in First REIT.

To understand why I sold my investment in First REIT, please refer to related post at the end of this blog.




Stocks (with hyperlinks to my earlier blogs where available) which I added in 4Q 2018:

1. Accordia Golf Trust.

2. Centurion.

3. ComfortDelgro and SingTel.

4. OCBC.

5. APTT






Due to the fact that I sold my investment in First REIT as its unit price bounced up when it went CD, my 4Q 2018 passive income from REITs reduced.

Readers who have been following my blog for many years might remember that I didn't share details of my passive income from non-REITs until it became a more significant percentage of my total passive income a few years ago.




As my passive income from REITs have steadily declined in recent years as a percentage of my total passive income, I will consolidate the numbers for both REITs and non-REITs, henceforth.

4Q 2018 passive income (REITs and non-REITs):

S$ 38,884.64






As I have blogged about the reasons why I added to my investments in Accordia Golf Trust, Centurion and ComfortDelgro in 3Q 2018, I will not repeat myself.

I also did an update on APTT as its unit price plunged and also explained more in detail during "Evening with AK and friends 2018" the rationale for buying at what I thought was a distressed price.

In the list of stocks above, I have hyperlinked those blogs for anyone who might be interested in reading or re-reading.






As APTT's unit price plunged under 13 cents a unit after it went XD, I took another bite.

Accepting an offer from what I believe was an overly pessimistic Mr. Market, it was quite simply a price I would not have sold at.

Readers who have been following my blog for many years would know how I size my more speculative positions.

With this last purchase, I would stop increasing my position in APTT as I keep it at a size that my passive income could cover within a year or less.

If you do not know what I am talking about, please read this blog from 2014:

How to size our more speculative positions?




Now, I will briefly explain my decision to add significantly to my investment in OCBC.

With interest rates rising, logically, banks will do better.

Already invested in DBS and OCBC at lower prices two years ago, I have been waiting for another opportunity to increase my investments.

In 4Q 2018, I increased my investment in OCBC significantly.

Why OCBC?







OCBC's stock experienced stronger selling compared to DBS and UOBs'.

A back of the envelope calculation indicated that OCBC was trading at a much smaller premium to NAV while DBS and UOB were trading at a richer premium to NAV.

The same back of the envelope calculation indicated that OCBC's dividend payout ratio is about 40% which is very undemanding and is the lowest of the 3 banks.




OCBC also had the lowest PE ratio.

So, I took several bites of OCBC as its share price plunged in 4Q 2018.

The funds from the sale of my investment in First REIT certainly came in handy.

Of the three banks, OCBC just seemed to be a better value for money offer at the time.






Some people asked me for a forecast of what 2019 has in store for the stock market.

Honestly, I don't know.

I cannot predict.

I can only prepare.

Remember?

However, what I can say is that, a bit more or a bit less, I will probably be receiving a meaningful amount of passive income from my investment portfolio.




Regular readers know I really am more concerned with receiving a meaningful stream of passive income from my investments than whether stock prices are moving up or down.

As long as my investments continue to pay me, I am usually quite happy with holding on to them.

The best investments could be those that I don't ever want to sell because they are able to pay me year after year.

Peace of mind is priceless.







How much did I receive in FY 2018?

FY 2018 passive income (REITs and non-REITs):

S$ 188,735.86

On average, about $ 15,727.00 per month.

I was also fortunate to have more capital gains than losses in 2018.


So, 2018 has been a pretty good year for me and I hope 2019 will be kind to me too.





Remember this if you choose this path.

I do not know if stock prices are going up.

I do not know if stock prices are going down.

However, I do know that I am collecting more dividends and the total amount has increased year after year.






Finally, remember that the best time to start is always now.

It is never too late to start walking the path to financial freedom.

If AK can do it, so can you!

Watch this video on what Gurmit Singh has to say about his income and what he would have done differently:





Related posts:
1. 3Q 2018 income from non-REITs.
2. Sold First REIT.

What should mom do with $200k inheritance?

Reader says...
My mum was given an inheritance to the tune of $200k.

Not knowing what to do with the money, my mum deposited it in the bank without our knowledge and of course, she was “invited” to speak to a bank’s representative and...






I experienced some difficulty convincing her to put a significant portion of the remaining sum into her CPF as she is apprehensive that the money will thereafter be “locked up” for life and she can only get a small portion of it every month.

I do not think the sum in her CPF RA is anywhere near the BRS.






Unfortunately, every individual is only limited to a maximum of $100k in SSB.

What do you think are good alternatives for someone like my mum (62 this year) to park her remaining sum?

I take it upon myself to find out more about the most logical way to optimise the growth of this sum of money while still keeping it safe for her later years.





AK says...
I think you have to explain to her the importance of an annuity and CPF LIFE.

We will not always make the most prudent financial decisions in our old age.

Having a dependable monthly income for life in her golden years will provide peace of mind for her and the family.


"What if I live longer than expected?"







Related post:
Retirement adequacy for late bloomers 101.

Voluntary contribution to CPF MA in 2019.

Reader says...

AK sifu.. Wah next year MA up to 57200...

Excited siah..

Can top up again to get tax relief.

Can I ask u if the interest from the existing MA for 2018 will flow back to MA to meet the 2019 BHS?

If yes then sian.. Cos I cannot top up in cash in Jan 2019 to MA.

Many ppl said why increase nearly 5%..

I think if they don't increase..

Health care inflation in Singapore will eat up our BHS eventually.

I do welcome such increase. Give me a chance to earn more interest n tax relief. 😂






AK says...

Interest earned this year in MA will go to SA if MA is full and will go to OA if MA and SA full.

So, beginning of 2019, you can top up the MA $57,200 - $54,500 = $2,700 😀


Reader says...

Song song Gao jookoon

It's your fault..

Make me so excited every Jan lol








AK says...

Sorry for giving your heart stress. 😛

Bad AK! Bad AK!


Reader says...

I also say.

Nvm I got sufficient MA to do body checkup and buy free insurance 😂






So, do you want free medical insurance in Singapore?

If you still don't know how, read the related posts at the end of this blog.

If AK can do it, so can you!




Related posts:
1. Medisave voluntary contribution in 2018.
2. How to get free medical insurance in SG?

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.