Thursday, May 25, 2017

A random post

Been awhile since I last wrote. Some of my colleagues actually came to ask me if I am the blogger behind Singapore Blue Chips. While I am often in denial (obviously!), the reflection is such that the values (if any) that I espoused in investment and life are largely mapped onto my daily work and spending habits. Yes, this blog is a diary I share and only people who are in the same frequency can understand the heart in it. :)

7 years have passed since I left my civil service job. Looking back, it was one of the best decisions in life; my investment skills and market acumen enhanced exponentially when I moved into an investment related position. Every day it is my job requirement to read between the lines of news, balance sheet and credit quality of companies; my role has remunerated me handsomely as I have accumulated a good amount of savings and I am proud to state that I have accumulated more than SGD1M net asset thus far. The returns of 6% P.A has also been realistic; most of my investments are on a leveraged basis, for instance purchasing a Fraser Centrepoint 4.15% 2027 bond with upfront of $100k and bank financing of 150k. The leveraged and cashflow yield works out to be 4% x 250k - interest cost 3k = 7k (yearly cashflow)/100k (outlay) = 7%.

I have some hits and misses in my investments as well. Some losses in shares (like SCI) and options while gains in blue chips like DBS, GLP, Wingtai. Most of them are in the money after adjustments for dividends but I would prefer to keep them as a reminder that shares do not appreciate in the long term, but only a diversified portfolio does.
I continue to be prudent in my spending. I still drive an extremely humble vehicle, despite peers around me at the porsche league, I am comforted by the fact that I can lose my job today and continue to rely on my investment income for expenses without stress. Yes, I can go back to a $3000 a month job if I want too! :)

Currently the 2nd biggest expense stems from housing requirements. I am considering to move back to a 4 Room HDB flat on a fully paid basis when I reached my MOP. This is to treat housing as a consumption product rather than a stored value of wealth. I am unlikely to sell off my house in my retirement years to fund for retirement. However, there are many people who are relying to cash out on their homes upon retirement 20 years later to fund their retirement. I have a bad feeling that the property market we are seeing may hardly rise above annual inflation rate. Hence, after selling one's home and paying accruals to CPF, there is hardly any cash left.  The local economy is doing well at certain segments. However, unemployment will continue to creep up and wages have to come down due to fintec disruption in EVERY job.

As for investment, I am in the view that cashflow and yield continues to be the backdrop of my investment thesis. Yes, I know CFA people advocate otherwise and dividend is just a function of share price, you can make your own dividends by selling piece meal of your shares. Well, that is text book theory. Cashflow makes me more willing to hold on to the asset and I continue to assess its future cashflow potential everytime it makes payment to me.

I am also trying to spend more already. Some luxuries in life makes life more worth looking forward. Simple economy class travel, good food and self improvement courses make me a better person. I will continue to spend money on areas that are able to retain its value, on a monetary basis and personal/spiritual basis.

Ok, what's my biggest expense? It is a happy problem. Income tax! I hope the problem comes every year!


Ben said...

Hi Sgbluechip,

So nice to see you back. I also started my career from the civil service and left the sector a few years. I am glad to say that it has been a worthwhile experience in private sector for me.

I have gained a lot of experience in my time with the private sector. I also face the possibility of retrenchment at any point of time. However, I have no regrets leaving the civil sector.

The retrenchment has reinforced the need for me to save and invest for rainy days.
I adopt the approach of a minimalist lifestyle. No car, property for me. Yes, I rent the current premise which shelters me. The passive income generated from my share investment pays for my monthly rent as well as expenses. I take public transport to commute to and from work.

I believe that you may have some lingering curiousity thought on my approach to rent. This is not a typical Singaporean style of living. To each of its own, I advocate such style of living and will not be owning property for the rest of my life. One of the reason of owning a property in singapore enhances my mobility to work abroad if the opportunity arises in future.

I note that your friends have asked whether you are the blogger behind this blog. I opin that you should remain annoymous which minimises the hassle of unnecessary attentions.

My two cents of thought.


Sgbluechip said...

Hi Ben, thanks for sharing. Glad to know of like minded people who have taken the same path as me.