Wednesday, 1 August 2018

My Investment Portfolio (End Jul 2018)

Transactions made in Jul 2018:
- Bought 600 units of Keppel Corp at $7

I added on Keppel Corp as it had dropped a fair bit since reaching $8++. I doubt oil prices will recover and go back to over 100 dollars anytime soon. But I still chose to invest in Keppel Corp as its business is also in other sectors such as property and investment. Unfortunately, the share price took a hit when the government announced measures to cool the private property market. 

The month of Jul (and in Aug) will be exciting as many companies will be announcing their results and dividends will be paid out. 

Dividends received* in Jul 2018: $1,033.72 (Suntec Reit, Singtel, CapitaCom Trust, Keppel Corp, Keppel DC Reit, Singpost, First Reit)

Total dividends received in 2018: $4,737.23

Average dividends per month: $394.77

Total Portfolio Market Value: $163,200

* Dividends are recognised after ex-dividend (xd) date
# Excludes investments in Cryptocurrency since it is of high risk and with an investment fund which I am prepared to write off.

Thursday, 19 July 2018

Singapore Savings Bonds As Part Of Emergency Funds?

Singapore Savings Bonds As Part Of Emergency Funds? This is a question which I have been pondering recently.

I am sure those who follow financial blogs would have heard of Singapore Saving Bonds (SSB).

For those who are not aware of SSB, it is essentially a form of Singapore Government Securities (SGS) that is available for subscription by individuals. The aim of SSB is to provide individuals with a safe and flexible way to save for the long term. If you hold your Savings Bond for the full 10 years, the average return per year on your investment will match the returns of a 10-year SGS at the point of your investment. In the last 10 years, the 10-year SGS yield has generally been between 2% to 3%.

When SSB was launched in 2015, I did not bother to subscribe to it due to the following reasons: 
   1) The first year interest rate of 0.93% was lower than CIMB’s Fast Saver Account, which                        provides 1% interest. Also, the CIMB account allows me to withdraw my money immediately. 
   2) If I require more interest and want my funds to be locked up for a 1 year period, I would rather           go for fixed deposits (FD). Back then UOB’s fixed deposit interest rate was 1.6% for a period of         13 months. SSB’s average interest rate over the first three years was only 1.32% then.
      - Based on investment amount of $3,000
      - Calculations exclude SSB application fee of $2 and/or redemption fee of $2.

In recent months, SSB’s interest rate for the first few years have increased. This changes the context entirely. The SSB interest rate for the first year is now higher than most FD. If you are intending to park your money in FD, it is time to consider SSB. This is the reason why the SSB has been oversubscribed in recent months and has to be allocated.

As illustrated in the above table, the difference between the interest amount in the first 3 years when SSB was first launched and in 2017 compared to 2018 is huge. It is nearly a $70 difference! 

So should we park part of our emergency funds in SSB? 

Emergency funds are always used in an emergency which you can never predict. As such, it has to be readily available within a short period of time. Most people do not park such funds in stocks or FD because you may have to sell the stock at a loss or draw out your FD without interest. 

The wonders of SSB is that 
   1) it allows early redemption monthly, in multiples of $500 with no penalty. 
   2) accrued interest will be paid! In layman terms, accrued interest is the interest that you have               earned on your SSB since the last interest payment was made.

With that it is quite clear to me that I will be parking part of my family's emergency funds into SSB. As interest rate is likely to continue going up, it would be more feasible buying SSB over a 12 months period. While means splitting up the funds into 6 to 12 amounts and buying SSB each month instead of putting in a lump sum amount.

You may ask, why not park all emergency funds in SSB?

Well, SSB redemption application closes at 9pm on the 4th last business day of the month. Redemption proceeds will be paid by the end of the 2nd business day of the following month. So technically, you need at least 6 business days to cash out your funds. If you really need the funds immediately, within a couple of days, it is not feasible.

Is SSB safe?

SSB is fully backed by the Singapore Government. You can get your investment amount back in full - no capital losses any time. If this is not a safe investment tool, I do not know what is. In the extremely rare scenario, the government defaults, then Singapore's future would have already been jeopardised. By then, we would be facing high unemployment, MNCs would have pulled out from Singapore and local stocks sky dive down.

What are your thoughts?

Friday, 29 June 2018

My Investment Portfolio (End Jun 2018)

Transactions made in Jun 2018:
- Bought 4,500 units of First Reit at $1.33
- Bought 1,000 units of SingTel at $3.10
- Bought 1,800 units of Frasers Logistics and Industrial Trust at $0.967 (via rights issue)
- Bought 156 units of Raffles Medical at $0.99 (via scrip dividends)

The threat of a full blown global trade war has impacted the STI. No one knows for sure whether the trade war will happen and whether this will eventually lead to a bear market.  In addition, the interest rate hikes seems to be having some impact on shares and even reits. The cost of borrowing by businesses will increase, affecting profit. Also, investors will demand a higher yield for investing in business as interest rates go up since they can easily park their money else where. This will eventually cause the price of the stock to decrease till the desired yield figure. Since I do not have a crystal ball to foresee the future and the cause and effect of thing on stocks are too complicated, I will not time the market. I have no idea if this is the right method. I will know in 10-20 years time. What are your thoughts? It would be great to hear differing views in the comment section.

June has been exciting! Obviously the concept of sell in may and the fact that it is World Cup period does not resonate in me. I welcomed First Reit into the portfolio after queuing for months! In additional, I added Singtel. This should not be a surprise since I have been queuing for both shares and mentioned this last month too. I am still queuing for Keppel Corp.

I have bought Frasers Logistics and Industrial Trust (FLT) via rights issue too. I was lucky as I applied for excess rights of 2,000 units and got 1,800 units. This was on top of the 1,000 units which I was entitled to. So I 'sold' 1,000 units of FLT to my wife at the rights issue price. As for Raffles Medical, I bought the units via scrip dividends. Ironically, the price is now hovering between $1.00 to $1.03. 

The dividends received in Jun for Accordia Golf Trust has been disappointing, I was expecting at least $250, but received only $154. My dividends yield used to be 9% for this share, but now it has dropped to 6%. 

Dividends received* in Jun 2018: $154 (Accordia Golf Trust)

Total dividends received in 2018: $3,703.51

Average dividends per month: $308.63

Total Portfolio Market Value: $156,208

* Dividends are recognised after ex-dividend (xd) date
# Excludes investments in Cryptocurrency since it is of high risk and with an investment fund which I am prepared to write off.