Singaporean Talks Money: July 2022

Sunday 31 July 2022

Getting to generate cash flow and building that up for retirement | Syfe REIT+ or Endowus Income Portfolio?

I have been thinking a lot about my stock purchases in this bear market on how I want my portfolio to be, I have been learning as I see how my portfolio performs in a downturn versus when there was a bull market. It was great when it was a bull market as ATH were hit and the numbers just look amazing but in a market downturn, you start to have a lot of thoughts and might even doubt why you started.

If you read on why I started investing, it was to build up a portfolio that can provide me with cash flow as my capital builds up. As time passed, I saw that US stocks and crypto can provide me a better return on my capital and especially so when I am relatively young and have a longer runway.

However when 2022 hit and prices nosedived (where some nosedived to zero like LUNA), I realised that if I want to retire in the future, I will have to slowly rotate out a proportion of investments to put into things that I will be comfortable with and into assets that either provided guaranteed capital or cashflow. Hence, in the longer term (~5 years), I am considering either putting a sum of money into Syfe REIT+ or Endowus Income Portfolio and continuing to build that up as it provides me with a little cashflow towards my retirement.

Why am I wanting to build a cash flow portfolio?

Coming across an article from investmentmoat called, “The Risks of Planning Retirement With an Accumulator’s Mindset” where he wrote about a podcast episode from the Retire with Style series where Wade Pfau and Alex Murgia interviewed Michael Finke. He shared how advisor are usually in an accumulating mindset as to them, the market goes upwards and equities will always outperform bonds in the long run however the risk for your portfolio should decrease as you grow older and move towards retirement.

He also shares a case study for a couple with $1 million for retirement using the 4% safe withdrawal rate. They lose a portion of their portfolio due to the market downturn. With a high inflation rate currently as well, using the 4% safe withdrawal rate for retirement planning might not work for them and they will need to cut down to adjust. This all shows how the 4% safe withdrawal rate might not adjust to the different expectation realities and with the volatility of the market if the sum is invested in equities. It does however take into consideration inflation and having some cash flow is helpful in retirement. InvestmentMoat also wrote a piece titled, “Why the Safe Withdrawal Rate (SWR) is Important for Your Financial Independence (For Singaporean Investors).” I found it interesting and helpful.

So a dividend paying portfolio can act as a supplement or even better fund your retirement if you are able to build up substantial capital so let’s get into the choices I am considering!

Syfe REIT+

I came across Syfe through one of the ads online as there were many content creators and videos sharing on Syfe. Syfe REIT+ invest in Singapore REITs and provide dividends depending on the REITs payout. Do note that there are annual fees, the portfolio is focused on Singapore REITs hence if you like to have overseas exposure, you might have to invest in the individual REITs separately. However, the portfolio has about 20 of the largest S-REITs which is great as you can put your money in a diversified REIT portfolio.

The dividend yield adjust yearly as the share prices do fluctuate as well meaning your capital could drop or increase in value. Singapore REITs (S-REITs) are required to distribute 90% of income earned (mostly from rental income and capital gains when a property is sold for example) as dividends to unit holders and investors.

Read more on the report for Syfe REIT+: https://www.syfe.com/magazine/singapore-reits-whats-ahead-for-2022/

Endowus Income Portfolio

Endowus Income Portfolio help provide monthly passive payouts while growing or preserving your capital depending on the portfolio chosen. I won’t really talk too much in detail but there are 3 portfolios that you can invest in:

Stable income which invests in 100% fixed income, they do categorise it for retirees as capital preservation and there are regular payouts
Higher income which invests in 20% equities and 80% fixed income, this is more for higher payout
Future Income which has 40% in equities and 60% in fixed income, this brings more capital growth and lower payouts as equities generally perform well over the long run.

Endowus shows the equities breakdown namely in companies or markets (countries) and sectors. For the fixed income, there is also a breakdown of the different funds/bonds. They also do a deep dive into each portfolio showing the historical performance and risks involved as well as who it is generally suited for. Most importantly, your capital is not guaranteed and can end up with a lower amount due to fluctuations of the stocks and funds. They do also show the recent Q1 2022 performance of the portfolios as well as on Q2 2022.

Which am I leaning more towards?

I am leaning more towards Endowus Higher income Portfolio as I know that I am accumulating this for retirement. I did share my plans on Seedly and got a few response in return. One of the comments mentioned that since I am still young, I can get in at a later time and instead focus on building up my capital before aiming to achieve income investing as he finds that a smaller dividend might not prove to be efficient as there are other opportunities to grow the capital. Syfe REIT+ and the Endowus income portfolio are 2 vastly different portfolio that invest in different things so they actually should not really be compared side by side.

Of course, this is something I am planning in time to come and it is not something that I am thinking of getting in right now. But as with investing, time in the market beats timing the market and with the limited cash flow from my main income currently, I like to build up my stocks/ETF portfolio and crypto before plunging into a dividend or cash flow portfolio or once I have substantial profits. If you do have anything to share with me, do email or comment here although I might take some time to look at it but I will definitely check on it. Very interesting products that are being offered. Do remember to subscribe, like and share my content if you find it helpful!

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Sunday 24 July 2022

How do you feel about your current financial status? | HOW MUCH SAVINGS DO PEOPLE IN THEIR 20s HAVE?

I was scrolling through Facebook and came across this video. Watching it, we can definitely see a variety of savings habits and pattern but I would say most of the individuals in the video are doing pretty well. Most of them have achieved a 5 figure sum in their 20s which is impressive and great. One of the guy, who is a financial advisor even managed to have $140,000 both in savings and investments at the age of 26. Pretty impressive I would say.

Many of them though rated themselves pretty low in terms of how they felt they are doing compared to others their age. I think most them can rate themselves higher. Of course, the interviewees are a small sample size for people in their 20s however, I do think that many individuals in their 20s are saving pretty substantial amounts as planning for the future and the pandemic has changed a lot of spending habits.

People around me

I would say that the group of friends I hang out with are savers with them saving majority of their income currently since they do not have huge commitments at the moment like kids or mortgages. So naturally, we meet up normally not at restaurants or cafes but more like coffeeshops or hawker centres. Overall, expenditures are not high when we meet as we focus more on what we talk about.

I would say my family has also cultivated a saving mindset as we did not grow up spending much although we did have indulgences like overseas trip and also eating at restaurants during special occasions. I would say that my family uses more of a saving money method rather than investing hence the money saved were really precious and took long as well to accumulate.

I would say Singaporeans are naturally kiasu and we do save on some things and spend on others depending on individuals but most are able to save and know the importance of saving. I would say a good proportion of individuals in the video have good saving habits.

Upcoming commitments

Of course, in your early 20s, you have lesser commitments in that usually you will not have a mortgage or kids yet. However as you progress to late 20s and 30s, commitments tend to increase and your parents would age as well and if you are their retirement fund then there is a lot more financial commitments.

With the rising cost of inflation which I feel will be tough to remove due to the environment and ongoing situations in the world, it can feel stress having to plan your finances. But if you are able to start early and have a sense of how much you need and can attain over a period of time, it can ease up your stress and also have something for you to work towards.

Keep it in cash if you need the money in 3 to 5 years

Being in your 20s can mean marriage or having a BTO, if you have a big purchase coming up, make sure to always have liquidity for it to pay the bills.

Why you shouldn’t compare yourself with others, although it’s tough

It is really easy to compare and I have to say that I do that often myself but at the end, you have to align yourself to what you have and what you are doing while trying your best. No one is perfect and we chase after more especially in Singapore where work and career is a topic that is usually how people start the conversation.

As we grow older, I think it is important to be contented but also work hard and take a break when needed. Millionaires and billionaires have their own set of problems and I think as long as you are comfortable, money can always be made, focus on your health and happiness😃. There are many videos that talk about how much you should have in your 20s but it only serves as a guide as you still have your 30s, 40s and 50s. Life is about experiencing and exploring!

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Sunday 17 July 2022

Millennials around the world are becoming huge savers but is saving sufficient?

As the pandemic savaged through the world in 2019 and 2020, many millennials realised the importance of saving and having an emergency fund as job security was gone for certain sectors. Some in the tourism sector could not even foresee any form of recovery as lockdowns were imposed and travelling became so tedious and almost impossible.

At that time, passive income and investing became popular as the market was being propped up by people working from home or not working and receiving stimulus checks from the government. Saving and investing was how some managed to multiply their net worth. Of course, there were losers as well. The investing craze was also propelled by companies that gamified investing and introduced “commission-free” trades.

Going into 2022, so many more uncertain and depressing news are happening from the Russia-Ukraine war to China’s lockdowns, food supply and security issues coupled with inflation for everything from food to gas to electricity. 2022 is going to be challenging and we can see many individuals strapping their belts and preparing to spend less as prices goes up and uncertainty increases. We can also see many companies having layoffs and restructuring to have a better balance sheet.

Is saving enough?

If you asked me before 2022, I would say it might be sufficient (depending on your spending habits) however entering into 2022 with prices being up everywhere, I would say saving is a huge first step but investing based on your risk appetite and goals are equally important to ensure your money does not deflate in value over time unless your income really far outweighs your expenditure by a huge proportion. With Singapore facing a fresh chicken import ban from Malaysia recently, it has exposed the vulnerability of Singapore as chicken now does come with a premium and many stores having to close temporarily or make changes to the source to continue operations.

Of course, investing is a luxury as it means you have disposable cash left after paying for bills and necessities, including having an emergency fund. If you are already saving a portion of your salary, congratulations, that is already something to be proud of. I would say based on my circle of friends and family, saving is necessary and everyone does save on a monthly basis after getting their salary and we are privileged to be able to do so. But we all know that our money in the bank is deflating in value so a portion of it should be put to work.

Investing in volatile times

During times of uncertainty, it is exceptionally difficult to press that buy button as media outlets and social media paint a gloomy outlook and to be honest, the situation now is really a tough nut to crack. We all know that the Fed is trying to bring down prices of assets so that people will feel pain when looking at their portfolio leading them to spend less. This will allow supplies in stores to build up over time as demand lowers and shop owners will need to sell their items at a lower price to clear out inventory but as we face more supply issues, inflation just doesn’t seem to budge. Hence we can see that people are predicting that the FED will be more aggressive in raising the interest rate to curb inflation.

I read a book recently called, “Just Keep Buying” by Nick Maggiulli and it is a book that really brought me back to the basics of why I started investing, as I have wasted so money in the last few months trying to speculate and just not sticking to the principles I set for myself. Besides revisiting the basics purpose of why I am investing my money, the book provides an insight and data to back why time in the market beats timing the market.

Investing in volatile times for me will be less screen time as the media post eye-catching and sensational headlines to catch your eyes and that might not necessarily be the best for your portfolio if you are planning for a long term approach like me. So I do choose not to be affected by the recurring depressing news on all time lows, instead I have borrowed a few books from the library and started reading up. It helps me understand the different situations and how the markets eventually will recover although everyone always says,”This time is different”. Of course, I do feel that this time is different as the situation we are facing affects the world and the middle class and working class are most affected as wages do not keep up with inflation and job security is threatened as inflation goes beyond the roof. But if the world ends, I guess my portfolio would be the least of my worries.

Anyway, time really flies and I have to admit I haven’t been maximising my time but a break is nice after some time. There have been a lot of distractions recently from my personal life as well as the markets as crypto markets are filled with liquidations and 3 digits ETH and Bitcoin has fallen below $18,000. These are prices I entered in at when I first started, I entered BTC when it was $18,000 and when ETH was $500, prices in USD. What is different is that it was an upward market at that time where everyone was talking about the adoption and good news. This time round, lesser people are taking about crypto and more so about the dropping prices and liquidations taking place. It is scary thinking about all the events happening and people talking about stagflation, to just keep buying feels funny too as people would doubt your choices but it’s after all your money so you should learn to handle it yourself.

I am hoping to churn out more articles of course depending if I can have more ideas, videos on the Youtube channels might take a pause as they do require so much more effort but quarterly portfolio updates will still be uploaded as that’s the least I can do for me to look back and hear my voice haha. Hoping that this tough environment goes past soon in the meantime, save and survive!

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Sunday 10 July 2022

Review and Summary of “Just Keep Buying” by Nick Maggiulli [Part 2]

Continuation from the first part

Retirement is about more than money

I think this is a very important point and I find it the thing that makes your retirement time fulfilled. A lot of people know why they want to retire and work towards that by managing their finances well but knowing what you will retire into eg volunteer work or hanging out with a group of friend or basically how will you spend all that extra time you have is important. Having money can make your retirement more interesting but you need to also know how you will be spending all that money.
Invest to replace your waning human capital with financial capital

I am sure if you are reading my article, you definitely have started or is wanting to start investing. So yea, you know the drift.
Buy quickly, sell slowly

As the markets over the long term perform better based on past data hence buying quickly and selling slowly is the optimal way to maximise your wealth hence explaining why most would advise to have a long term horizon for your investments.
Invest as often as you can

Of course, as often as you CAN, don’t overstretch yourself and always ensure that you have the foundation ready eg, emergency funds, liquidity for short-term payments, insurance. Also, there are many kinds of investments available depending on whether you are investing for capital growth, cash flow or a little growth and more on capital preservation. Once you have the right and suitable vehicles, invest as often as you can.
Don’t fear volatility when it inevitably comes

As we have seen in the past, the market eventually recovers from the lows although the past does not necessarily predict the future. Volatility is something that you have to experience if you invest in the stock market for the long term and keeping your emotions in check is very essential.
Market crashes are (usually) buying opportunities

I guess so but make sure you have enough or incoming income to supply your buying purchases as no one knows how long the dip/bottom might last. Market crashes are usually good opportunities to build up positions as you can buy more when prices are down but if you have no cash flow or available cash, holding on is also equally important. Do not panic sell as you would be selling at a bottom unless the investment thesis has changed or you need to cut losses.
You’ll never feel rich and that’s okay

We will always think we do not have enough especially in a competitive and expensive city like Singapore as there will always be someone richer. We are usually humble in nature and hence will think that we are not rich and even if we are really not rich, to be honest, if you have good health and friends and family around you, it really is all you can ask for as money can be earned again and again. But good health and relationships are much harder to regain if they are lost.
Investing isn’t about the cards you are dealt, but how you play your hand

Being born rich might give a head start in being able to invest earlier as you have the capital but it doesn’t mean that not being born rich means you cannot invest and work towards being financially free. Especially so in the age and time where investing is available to most. Of course, there are many macro-environmental factors that make it tough to have available cash to invest but if you are able to slowly build up, remember you are not competing with anyone but just trying to achieve your goals. As the rich can also lose money if the risk is not properly managed as we can see in the cryptocurrency space in recent times.
Time is your most important asset

Time and again, I am sure you have heard Albert Einstein once said “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it”. Compound interest can make you reap the benefits on a long term horizon so starting early is key so that it compounds.

Conclusion

The book definitely brings back a lot of basic theories on why people start investing and over time I have to admit that I forgot about why I started investing as I look for assets that are riskier and might not bring about that growth that I am anticipating. After revisiting this book, it has made me rethink on how to position my portfolio for the long term. I will be introducing some changes in my portfolio allocation and will be sharing them so that I can see if they really will benefit me in the long run as I visit back this decision. Do give this book a read and wishing the world peace and stability.

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Saturday 9 July 2022

Review and Summary of “Just Keep Buying” by Nick Maggiulli [Part 1]

[This is a 2 part summary on a book I recently read, I have some main points and elaborations from the book and wrote more on my perspective, do give the book a read if you are just starting out as I found really useful]

I read a book recently and found it brought me back to the basics of investing and why I started investing. This book is a good refresher for experienced investors in this volatile market and a great starter pack for beginners.

There are definitely some chapters that Singaporeans can skip, those about the Roth 401k otherwise most of the chapters are pretty informative and explains why time in the market beats timing the market and of course, there might be instances otherwise.

If you like to know more in-depth on the pointers below, do give it a read but I like to bring up some of the important highlights which Nick has also emphasized on his last chapter. I will then provide some of my insights, for more in-depth explanation on the pointers, do read the book as I didn’t cover every point mentioned in the book.

Saving is for the poor, investing is for the rich.
As you start saving, your capital grows and investing helps to grow it although there is a chance for you to lose your money. Saving is a huge step towards handling your finances. Of course, if your income and savings are very much sufficient, saving alone could be sufficient.
Focus on income, not your spending.
I think this has been mentioned by many as they worked to build up their main income sources first or a business or side hustle could help add income. Building up your income whether on your main income or side hustle helps in the long term as you would have more to work with.
Use the 2X rule to eliminate spending guilt

Remember when spending to also invest the same amount into income-producing assets. This will ensure that you don’t spend frivolously.
Save at least 50% of your future raises and bonuses

Having a little lifestyle inflation if you have a raise or bonuses is all right, just remember to save at least 50% of that raise or bonus that you are getting.
Debt isn’t good or bad, it depends on how you use it.

I am sure you know this, the rich uses debt as a way to never touch their own money and use the debt to produce more income. Of course, the interest rate of the debt is important and making sure that you have the capability of paying it back is important as well.
When saving for a big purchase, use cash

Liquidity for upcoming purchases in 3-5 years is important to ensure that you can settle the bills on time and usually in the short term, investing your money is more volatile and you will usually need it invested for a longer period to see good returns. Imagine that you need the money for a down payment or for a wedding, it is best to keep it in cash or explore capital guaranteed vehicles like the Singapore Savings Bond.
Only buy a home when the time is right

Having your own personal space is nice and during the pandemic, many millennials realised that working from home was not conducive as there might not be sufficient space or that your parents might not be accustomed to you working at home. There were a number of millenials who move out by considering renting a place with their friends or a co-living space to have their own personal space.

Renting is a great way to gauge your expenses and whether you are ready to buy your own home, if you find yourself struggling to make rental payments or your expenses > pay-check, you might have to adjust according. As buying a property will be a huge financial decision, down-payments, monthly mortgage payments as well as renovations and furniture, there is a huge financial commitment once you buy a home so careful thought needs to be put into it.
I do have a part 2 that I am working on and will be sharing it in the next few days.
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Sunday 31 July 2022

Getting to generate cash flow and building that up for retirement | Syfe REIT+ or Endowus Income Portfolio?

Why am I wanting to build a cash flow portfolio?

Syfe REIT+

Endowus Income Portfolio

Which am I leaning more towards?

Sunday 24 July 2022

How do you feel about your current financial status? | HOW MUCH SAVINGS DO PEOPLE IN THEIR 20s HAVE?

People around me

Upcoming commitments

Keep it in cash if you need the money in 3 to 5 years

Why you shouldn’t compare yourself with others, although it’s tough

Sunday 17 July 2022

Millennials around the world are becoming huge savers but is saving sufficient?

Is saving enough?

Investing in volatile times

Sunday 10 July 2022

Review and Summary of “Just Keep Buying” by Nick Maggiulli [Part 2]

Conclusion

Saturday 9 July 2022

Review and Summary of “Just Keep Buying” by Nick Maggiulli [Part 1]