Lessons from Brian Banks

From time to time, I would come across movies that leave a lasting impression on me.

Recently, I watched the show “Brian Banks” on Netflix. Unfortunately, if you intend to watch it now in June 2022, the show is no longer available on Netflix Singapore.

It is a simple feel-good movie with a strong underlying message.

The show revolved around the inspirational true story of Brian Banks, an all-American high school football star who finds his life upended when he’s wrongly convicted of a crime he didn’t commit. Despite the lack of evidence, Banks gets railroaded through a broken justice system and sentenced to a decade of prison and probation. Years later, with the support of Justin Brooks and the California Innocence Project, Banks fights to reclaim his life and fulfill his dreams of playing in the NFL.

In June 2002, Wanetta Gibson, 15, accused junior Brian Banks, 16, then a standout football player at Long Beach Poly High, of dragging her into a stairwell and raping her. 

According to Banks, who was 17 at the time and being tried as an adult, he believed the plea deal was the less risky choice. This was at the urging of his attorney, who was hoping Banks would get probation, not the maximum of six years. The deal was that if he pled no contest to one count of sexual assault that he would undergo what’s called a 90-day observation at Chino State Prison.” His attorney assured him that after the 90 days, the counsellors and psychologists would give him a favourable report and the judge would agree to give him probation.

If Brian Banks didn’t take the deal, the true story confirms that he was facing a potential sentence of 41 years to life in prison if found guilty (California Innocence Project). He had just 10 minutes to make the decision and said he wasn’t permitted to speak to his mom. He was told there was no time.

In the end, he decided to plead no contest.

He did not get a favourable report, and the judge did not give him probation.


He ended up convicted of rape in 2002, Banks spent five years and two months in prison, in addition to five years of high-custody parole, during which time he was required to wear a GPS tracking device on his ankle. He also had to register as a sex offender, which significantly hurt his chances of finding a job.

So yeah, for that 17-year-old all-American high school football star… life served him a serious curve ball, and his once stellar future seems to be all but gone.

He was a frightened, fustrated, angry and confused teenager in a prison surrounded by men who committed actual crimes.

However, he did not give up.

A teacher Brian encountered at Juvenile Hall by the name of Jerome Johnson, who became a mentor to Brian. In the film, he tells Brian, “your despair can become a doorway” and that “all you can control in life is how you respond to life.”

Nearly a decade after his conviction, Gibson recanted her statements and has acknowledged she fabricated the whole story.  The California Innocence Project presented this evidence of Banks’ innocence to the Los Angeles District Attorney’s Office who launched an investigation into the case.  After a thorough review of the evidence, the District Attorney’s Office conceded that Banks was wrongfully convicted.

On Thursday, May 24, 2012, Judge Mark C. Kim of the Los Angeles Superior Court reversed Banks’ conviction and ended his nightmare of wrongful conviction. “There comes a time when you have to let go in order to move on. The only thing I wasn’t going to let go was this fight,” Banks said outside of the courthouse after his exoneration.

I don’t know about you. However, in recent months there are days or weeks or months for me when everything seems to go out of wack.

There are days whereby I woke up, peeked at the laptop screen, and just see this (see below). It makes me wanna shut the laptop down and go back to sleep (and never wake up).

I go to work, and everything seems to go against me.
It sucks. (probably like how Ronny Chieng would say it – SUCKS! – with capital letters).

After work, I go home… wifey told me that our neighbour downstairs complained that there are leaks coming from our toilet to her toilet. Groused about other stuff.

I again look at the stock portfolio with my tired eyes, and see that the losses for that day are more than what I can make in a month; on some days they can run up to five figures losses… and that has been happening consecutively for the past few days/weeks…. how much longer is this gonna last?

So yeah, I know the magnitude is nothing compared to what Brian Banks felt… but I can see the parallel in some of these.

Life like the stock market is something which I can’t control. Man, if I am not invested in stocks… and have my cash safely kept in the bank…markets’ volatility would mean nothing to me. I would be blissfully unconcerned about the rising interest rates, inflation fears, war in Ukraine, Fed reserve announcements, lockdowns in China, the recent ban on the export of Indonesian palm oil – and what these fears do to the stock markets.

But nooo…. it seems that I have to pay the ‘fees’ to stay invested.

And probably like Brian’s mentor said: “all you can control in life is how you respond to life.”

So when it comes to my stock investments, it is back to calmly looking through the recent companies’ narratives, financial reports, annual reports, the valuations, and free cash flows of the underlying companies.

Holding on to a diverse basket of stocks… and be thankful for the incoming dividends.

And to slowly add on to my investments.

It is what it is… life goes on.

Frankly, all stocks are risky. Different sectors (or even different markets) have different sets of risks and (from another angle) different sets of potentials.

If I look past the head-lines news (of doom and gloom), of the looming recession, rising inflation, rising interest rates, Russia-Ukraine conflict, Covid lockdowns, the social unrest in HK, regulatory risks (when it comes to China-related stocks)…

I can see that profits are rising for many of the stocks in my portfolio.

For my portfolio:

The recent results of The Trade Desk, Mastercard, Pinduoduo and many of the REITs, are improving.

Mastercard posted adjusted earnings of $2.76 a share on $5.1 billion in adjusted net revenue, well above estimates calling for $2.18 in earnings per share and revenue of $4.91 billion. Adjusted net income was $2.7 million, up 55% from the same period last year. Operating expenses increased 11% due to a 6-percentage point increase from acquisitions, and increased spending on advertising and personnel costs.

The Trade Desk earnings were 21 cents per share, up 50% from a year earlier. Revenue rose 43% to $315 million.

Pinduduo posted a solid quarter. Net income came in at 2.6 billion yuan ($410.1 million), a turnaround from a loss of 2.9 billion yuan last year. Both monthly active users (MAU) and active buyers reached all-time highs of 751 million and 882 million. The balance sheet remained strong with 95.2 billion yuan ($15.0 billion) in cash, cash equivalents, and short-term investments.

Google’s revenue came in at $68.01 billion, growth of 23% from the same period last year. That’s a slowdown from 34% growth in the first quarter of 2021, when the economy was reopening from the pandemic.

Better days ahead for Tencent and Alphabet, I hope.

HK Reits like Link Reit have improving financial results and their debt ratio (compared to their Singapore peers) is way low.

On 1 June 2022, Link Reit announced that its key performance indicators reflect resilient business performance despite the ongoing macroeconomic challenges and uncertainties. Occupancy has improved from 96.8% to 97.7% in Hong Kong retail as of 31 March 2022. Over 660 new leases were signed in Hong Kong retail portfolio in addition to renewals in full year. Excluding the discretionary distribution 7 cents, distribution per unit (DPU) for the year grew by 8.2% to 298.67 cents.

Sun Hung Kai properties and CK Asset also reported better results.

In Feb 2022, Sun Hung Kai Properties announced that reported profit and reported earnings per share attributable to the Company’s shareholders were HK$15,186 million and HK$5.24 respectively, compared to HK$13,578 million and HK$4.69 for the corresponding period last year.

For CK Asset, with the reopening of their pubs, the profit margins are improving. CK Asset has unitholding interests in three listed real estate investment trusts, namely Hui Xian REIT (stock code: 87001), Fortune REIT (stock code: 778), and Prosperity REIT (stock code: 808) – and their results are also improving.

In March 2022, CK Asset announced that the Group’s profit attributable to shareholders for the year ended 31 December 2021 amounted to HK$21,241 million (2020 – HK$16,332 million). Earnings per share were HK$5.77 (2020 – HK$4.42), an increase of 30.5% as compared to last year.

In May 2022, HongKong Land reported that underlying profit in the period was higher than the first quarter of 2021, principally due to a higher number of Development Properties completions on the Chinese mainland, while the contribution from Investment Properties was broadly unchanged.

Straco is starting to pay dividends again. Results have yet to improve. Hopefully, with the easing of lockdowns in China, it will get better.

Growth in income for Ascott Residence Trust and Mapletree Commercial Trust has improved.

For ST Engineering, in Feb 2022, ST Engineering announced that the group posted a 7.5% increase in Group revenue to $7.7b from $7.2b a year ago in the same period contributed by all its business segments. Group EBIT grew 13% year-on-year (y-o-y) to $673.6m from $596.4m. Group Profit before tax (PBT) grew 19% y-o-y to $637.6m from $534.4m. Group Profit attributable to shareholders (Net Profit) grew 9% y-o-y to $570.5m from $521.8m.


Banks (DBS, BOC HK, HSBC) – not stellar results – but steady. In general, they are achieving steady business growth with financial indicators remaining healthy. Dividends have gotten better this year.

May is typically a good month for dividends, and this year I had a ‘bumper crop’ in May.


Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

Use the above referral code to enjoy the below benefits.

FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Gemini

As stated by MoneySmart on Jan 22, if you’re looking to optimise trading your crypto with relatively low fees, simple-to-grasp expert UI and ease of purchase with Singapore dollars. then the best crypto exchange in Singapore is Gemini,

If you do not have an account, you can sign up here using my referral link. After you have signed up, once you buy or sell US$100 or more (or 100 USD equivalent of your domestic currency) within 30 days of creating your account, your account will be credited US$10 (or 10 USD equivalent of your domestic currency) worth of bitcoin.

Hodlnaut

Hodlnaut is a crypto-borrowing and lending platform that helps investors improve the return on their assets.

If you do not have an account, you can sign up here using my referral link. After you have signed up, you will receive a US$20 sign-up bonus after making a deposit equivalent of US$1,000 in a single transaction on any supported assets within 1 week. Bonus payouts are paid in the same asset deposited. You may make a test deposit of any amount. The deposit equivalent of US$1,000 or more must be completed within one week of the first test deposit.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!

Posted in Investing methodology, Portfolio | Leave a comment

Stay calm, and keep buying…

As stated in this post by Ben in A Wealth of Common Sense, titled “Easy Money is Money Easily Lost” (read here).

To quote:

Jason Zweig discovered in the year following the bottom from March 23, 2020 to March 23, 2021, 96% of U.S. stocks had positive returns. That was the highest percentage of winners over any 12-month period in history.

It was too easy.

Everyone was getting rich investing in stocks, crypto, SPACs, IPOs, collectibles, NFTs, you name it.

…..

Most of those stocks have now completely given up those gains.

I compiled a list of 2020’s stock darlings to show the insane returns they had from the bottom in March 2020 along with the current drawdowns from the heights of those gains:

This was easy money that was money easily lost.” Unquote.

And not too long ago, we witnessed the crypto Terra Luna crash.

It isn’t easy swallowing losses, and many have been quietly taking the hits. Well, then there are others who chose to let it be known,

There is really no way to sugarcoat it, losing it all is darn painful. For myself, there was a time when I was heavily invested in certain individual speculative stocks and lost 5 figures sums. At that time, it was a huge sum for me.

So yeah it sucks big time, watching the stock prices drop weekly / monthly, and knowing deep in my heart that the turn-around will never happen. Whatever studies I made in the past will not change the stock price. The industry/company’s fundamentals (together with the stock prices) have changed for the worst.

I have been on the side line for the most part of the year 2022 so far. Partly because I have been dealing with the challenges at work and there have been a few big expenses required for my family. Hence my war chest is low.

In hindsight, it is perhaps a blessing… Since late last year, stock prices (mainly speculative growth stocks) have been in a generally downward trend. So I haven’t really missed much. I missed out on purchasing (a few months back) some Alphabet shares at around $2500 eg. the limit order did not get filled … and looking at the recent share prices of Alphabet now, it would seem like a bargain (compared to the $2500 to $3000 range back in the earlier part of the year).

However, we would never know really right?… what the short term price movements will be.

So why start buying, why start getting my feet wet again?

Well, in the long term stock prices for fundamentally good companies will always trend up.

JUST KEEP BUYING by Nick Maggiulli.

We can get a few pointers from the book JUST KEEP BUYING by Nick Maggiulli.

Most markets will go up over time.

The US markets have gone up by 160,000% since 1920.

There are primarily 2 fears keeping most people from buying stocks.

1) Fear 1: The market has peaked and may never recover.

Case in point: The Japanese stock market has yet to (ever) recover from its peak in 1989 (that is almost 33 years!). $1000 invested in 1989 would be worth $690 in 2022.

However, if one is to keep buying and investing $1000 per year over the last 33 years, The $33,000 will be worth $59,000 today. That is not a great return, but it sure beats keeping the cash in the bank and letting its value be eroded by inflation.

Then, there is no need to just stay in one market, one can invest across different stock markets (US, STI, HK, etc). After all, most markets go up over time, not one market.

In any 30 years period, 88% of the markets make a new high. If one is to invest across a range of markets, the chances of recovering from a crash over 30 years are almost 100%. Now with ETF / Index funds, it is easy to be sufficiently diversified (if one does not have the time nor the interest to study stocks).

Nick Maggiulli recommended income-producing assets that tend to have not that much volatility and the portfolio should not go through more than 15% decline.

2) Fear 2: The market is crashing, I will wait for things to get better before buying.

It is difficult for me to continue buying when stock prices are trending down – it feels like burning cash.
However, if one continues buying, over time, the money invested in a downturn will have supercharged returns,

For example, if the stock is down 20% and you bought it at the low point, and it recovers back to the original price, you don’t make a 20% profit, you make a 25% profit.

If the stock is down 33% and you bought it at the low point, and it recovers back to the original price, you don’t make a 33% profit, you make a 50% profit.

The bigger the percentage it goes down and recovers back up to the original price, the bigger the % increase.

It is tiny ‘victories’ like these overtimes, that I feel would give us an edge. Sure nobody can accurately time and buy at the exact bottom, but spreading the purchases over a period of time when stocks are beaten down would in the long run gives us outsize returns.

However, personally, I must add, that this will probably relate to fundamentally sound / solid companies, or diversifiedl ETFs. The underlying companies have issues and continue to be loss-making, stock prices might never ever recover.

If these are invested in speculative bets due to FOMO (with no underlying fundamentals)… cough … cough… Terra Luna… cough Peloton.. cough… Nikola…; then there is little hope that prices will bounce back up (By the way I have paid my fees numerous times personally).

In recent times, the stock market crashes rebounded faster. As in the case of the March 2020 and Dec 2018 crash, the former took 6 months to recover while the latter took just 4 months to recover.
if one is to hold off buying, one might just miss the bottom (or the crash altogether).

Recent moves

So what did I do recently?

Well, I made a couple of new purchases and did a tiny bit of reshuffling in my stock portfolio.

In May, I added to my positions in dividend stocks like Sun Hung Kai Properties and CK Asset holdings.

In addition, with the weakness in growth stocks, I added to my positions in Alphabet and Pinduoduo.

I also sold out of Alibaba and used that cash to purchase Tencent (which I think would have a better runway moving forward). Personally, I prefer companies with asset-light business models and higher profit margin growth stocks (and both Tencent and Pinduoduo are that compared to Alibaba). Having said that Alibaba is a force to be reckoned with, a solid company and in the long run, I am sure prices would recover.


Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

Use the above referral code to enjoy the below benefits.

FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Gemini

As stated by MoneySmart on Jan 22, if you’re looking to optimise trading your crypto with relatively low fees, simple-to-grasp expert UI and ease of purchase with Singapore dollars. then the best crypto exchange in Singapore is Gemini,

If you do not have an account, you can sign up here using my referral link. After you have signed up, once you buy or sell US$100 or more (or 100 USD equivalent of your domestic currency) within 30 days of creating your account, your account will be credited US$10 (or 10 USD equivalent of your domestic currency) worth of bitcoin.

Hodlnaut

Hodlnaut is a crypto-borrowing and lending platform that helps investors improve the return on their assets.

If you do not have an account, you can sign up here using my referral link. After you have signed up, you will receive a US$20 sign-up bonus after making a deposit equivalent of US$1,000 in a single transaction on any supported assets within 1 week. Bonus payouts are paid in the same asset deposited. You may make a test deposit of any amount. The deposit equivalent of US$1,000 or more must be completed within one week of the first test deposit.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!

Posted in Investing methodology | Leave a comment

Thoughts for March 2022

Truth be told, I haven’t been thinking about investing or my portfolio for some time now. Ever since my post in Jan 2022, whereby I mentioned that investing is more about being patient than being smart; I kind of just sit back and just watch my portfolio slide (esp. for my Chinese tech stocks). Or maybe it is just unpleasant looking at my portfolio (and am avoiding it) hahaha… Better to spend my time reading news, or binge-watching Netflix movies or Youtube videos.

Actually, it is not that bad (yet), since my growth stocks (Story fund) portfolio is still relatively small compared to my dividend portfolios (although the latter has been slipping as well).

I guess that is the beauty of being a small-time retail investor. I can choose to be inactive for extended periods, and have no pressure to buy or sell.

I initially wanted to build up my war chest however (as usual) life seems to have other plans. Wifey decided to do some renovation to the house, expenses for the children, while minor hiccups like handphone screen cracked; increase in expenditure on meals and transport (as I start to go back to the office more often to work), etc… sort of made it hard for me to accumulate much for my war-chest.

On a side note, after the recent renovation at home, the renovated rooms appear more comfy and nice. Not bad. If I have used the money to buy more Chinese tech stocks….’cough, vomit… cough…blood, cough’…

Work-wise, I am fighting hard on my current new project, so that kind of kept me mentally preoccupied (and rather stressed). In fact, the thought of quitting has crossed my mind numerous times. I have not been sleeping well for the past couple of months. Currently, having a good night’s sleep for me is of utmost importance. Nevertheless, I endeavour to face each hurdle with calm and a positive spirit.

The pandemic, anticipated increase in interest rate, the Ukraine-Russia war, inflation fears (and actual inflation here in Singapore), the continued delisting fears for US-listed Chinese Stocks (by the SEC); regulatory crackdowns in China continued to wreak havoc on my portfolio.

Occasionally I would average down on my Chinese Tech stocks like Alibaba (9988.hk) and Pinduoduo (Pdd) during my monthly DCAs. I last bought more Alibaba shares in Jan 2022 and late Feb 2022. I am well aware I probably would not see any gains in the near future or probably years down the road. So there is really no hurry to average down more.

In recent times I did add a bit to Singapore dividend stocks like ST Engineering. I have not been feeding the SG/HK dividend monster for quite some time. Yes, given the continued downward trend of Alibaba and Pinduoduo stock prices (and even US growth stocks like The Trade Desk, etc), they do look tantalising attractive. However, I would like to balance them out with more quality growth stocks (which are also beaten down but not as much) like Alphabet. Historically even in the worst times, the big tech growth stocks such as Apple, Alphabet, Microsft – seldom cross below 30% drop.

Frankly, I have no idea how long the regulatory crackdown in China and the delisting fear in the US will last.

It reminds me of Peter Lynch’s quote: “It’s Always Darkest Before The Pitch Black”.

The concept of the flight to ‘quality’ (stocks) has been an enduring evergreen theme. Even during these times of fear …(increasing interest rates, inflationary fears, war, pandemic, etc).

a) Raging bull markets (no matter how one sees it, markets are over-valued): Choose the big techs, despite their high valuations, they are still undervalued compared to the speculative tech stocks peers which are not even profitable and generating positive cash flows.

b) Depressed markets during the start of the pandemic: Big techs with their strong moats will ride through the crisis. It is rare for such price drops.

c) Even more depressed markets with rising interest rates, soaring inflation and war: Big techs with pricing power and strong moat will be able to ride through the high-interest rates and soaring inflation with their strong balance sheets (low or zero debt) and will be able to pass on the rising costs to their customers by raising prices… The war has had little impact on the businesses of these big tech companies. Valuations are cheap from a historical standpoint.

Ok, I get the picture. Seriously, when was there ever a bad time to not buy big (US) tech companies .. excluding Meta (sorry Facebook, I am just not into you) …even the regulatory hiccups in the US did not stop them.

However, at the moment I am just holding back, taking tiny bites and still trying to build up my war chest (with one itchy finger hovering over the buy button), and oh yeah, it will be tax season soon. If I had more resources, I would probably add to my holdings.

I am still fully invested. I did sell out of my Ascendas Reit holding and used the cash to purchase Digital Core Reit stocks. Other than that, I did not really sell out of any of my stock holdings.

There is also another sector that I have been reading up on, and that is commodities or more specifically Palm Oil stocks. Malaysia’s benchmark crude palm oil prices have soared 45% so far this year, boosted by a cocktail of labour shortages, export restrictions by top producer Indonesia and disruption to sunflower oil supply from Russia’s invasion of Ukraine.

While the CPO (Crude Palm Oil) price has skyrocketed (palm oil future have reached an all-time high), many Indonesian palm oil stocks (eg. Golden Agri-resources and First Resource) have not really taken off.

This is probably due to the Indonesian palm oil policy whereby palm companies must sell 30% of their planned exports at home, up from 20% (read here). This is in line with the country’s aim to be more self-reliant and to produce more products higher up the value chain.

Indonesia tightens palm oil export curbs in new hit to global supplies (read here)

Regardless of the policies back in Indonesia, reading the recent quarterly earnings reports of the various palm oil companies, one would be aware that many of these companies have reported higher earnings (or are back in the black). With the continued high CPO prices, the coming quarter earnings should be good as well.

I have been a long time holder of Golden Agri-Resources stocks, and it has been underwater for the longest time (more than a decade). Looking through my brokerage account, I first bought Golden Agri-Resources stocks in Dec 2010. Subsequently, it did not go as planned. I kind of just left it there to rot in my portfolio. I was (and still am) reluctant to realise the losses and it is there to remind me never to invest in terrible commodities companies. Commodities stocks (including O&G stocks) are extremely cyclical (with mini-cycles and super decade long supercycles) and notoriously hard to invest in. Companies also have little or no pricing power, no strong or deep business moats and are highly dependent on the fluctuation of commodity prices. Be on the wrong side of it (or give in to FOMO after seeing everyone talking about the profits they made), and you could be like me, holding the losers for many many years. However, if one is on the right side of it…. like I said … supercycle. Another animal altogether.

Given the rally in CPO prices, I am surprised that Golden Agri-resource stocks have not rallied as much. Perhaps it is like a compressed spring waiting to bounce… I do not know.

When CPO prices crashed in 2008 and 2011, everyone naturally expected (Indonesian) palm oil stocks to crash, well… it does not always work the other way round I reckon. After all palm oil is still lumbering under its negative environmental impact image since the early part of 2010s (with the European Union lobbying against it, with Malaysian/Indonesian stating it was to protect their own agri-oil products). It would be interesting if the Ukraine war is prolonged and we shall see how it would impact their perception of palm oil …

EU bans palm oil to protect its own oil seeds, local producers say Malaysia (read here)

Whatever it is, it has been a crazy 2022 so far.

Hang in there.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

Use the above referral code to enjoy the below benefits.

FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Gemini

As stated by MoneySmart on Jan 22, if you’re looking to optimise trading your crypto with relatively low fees, simple-to-grasp expert UI and ease of purchase with Singapore dollars. then the best crypto exchange in Singapore is Gemini,

If you do not have an account, you can sign up here using my referral link. After you have signed up, once you buy or sell US$100 or more (or 100 USD equivalent of your domestic currency) within 30 days of creating your account, your account will be credited US$10 (or 10 USD equivalent of your domestic currency) worth of bitcoin.

Hodlnaut

Hodlnaut is a crypto-borrowing and lending platform that helps investors improve the return on their assets.

If you do not have an account, you can sign up here using my referral link. After you have signed up, you will receive a US$20 sign-up bonus after making a deposit equivalent of US$1,000 in a single transaction on any supported assets within 1 week. Bonus payouts are paid in the same asset deposited. You may make a test deposit of any amount. The deposit equivalent of US$1,000 or more must be completed within one week of the first test deposit.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!

Posted in Portfolio | Leave a comment

Where to earn the highest interest for your stablecoins now

As the crypto economy grows and evolves, there are more ways than ever to earn rewards for holding crypto, learning about crypto, or interacting with decentralized finance (or DeFi) apps.

To boost investment yield, long-term crypto traders are using one more way to make money off their investment — crypto interest accounts. In theory, a crypto interest-earning account works just like a regular savings account.

Most banks offer annual interest rates that do not exceed 1% whereas stablecoins interest rates go as high as 4% to 12% annually. Many lending platforms even offer daily interest payouts, enabling investors to earn on compound interest.

What are stablecoins?

Stablecoins are the answer to the calls from early crypto investors looking for a crypto-equivalent to fiat currencies like the dollar or the rupee. It needed to be something that could reliably hold value over time without volatility and allow them to easily transfer that value.

Because of the current financial system, the most used stablecoins are those that ‘peg’ their value to the US dollar.

Top 6 stablecoins in the crypto market — what are they, how they work and why they have governments worried (read here)

Note: All six are pegged at 1:1 to the US Dollar, and reside as tokens on blockchains that support smart contracts, such as Ethereum, Binance Smart Chain etc.


This post is primarily looking across the various online platforms that allow one to earn interest in the 6 best stablecoins (by market value as of Dec 2021), namely:

1) Tether (USDT)

2) USD Coin (USDC)

3) Binance USD (BUSD)

4) Dai (DAI)

5) TerraUSD (UST)

6) TrueUSD (TUSD)

Some of the popular and often mentioned platforms are:

1) Hodlnaut (Click here to see the latest rates)

2) Celsius (Click here to see the latest rates)

3) Crypto.com (Click here to see the latest rates)

4) BlockFi (Click here to see the latest rates)

5) Vauld (Click here to see the latest rates)

6) Nexo (Click here to see the latest rates)

7) YouHodler (Click here to see the latest rates)

However, before using the platforms, please do your own due diligence. Some of these platforms are relatively new. Do note that trading in cryptocurrencies is risky, please DYODD.

In general, the catch for the high yield is that there is no Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA) insurance. There are not as many regulations. In addition, there is the uncertainty of the firm itself getting into risky lending practices and going belly up. The interest rate isn’t high because the exchange is feeling generous. Rather, it is high because the exchange believes it can earn a higher return by using that cash for other lending practices.

Please refer to the below table (Information updated as of 25 Jan 2022) for the various interest rates offered. The highest rates are highlighted in red.


StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend / bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Friend of StocksCafe and test out all features for free for two months!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

Use the above referral code to enjoy the below benefits.

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FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Gemini

As stated by MoneySmart on Jan 22, if you’re looking to optimise trading your crypto with relatively low fees, simple-to-grasp expert UI and ease of purchase with Singapore dollars. then the best crypto exchange in Singapore is Gemini,

If you do not have an account, you can sign up here using my referral link. After you have signed up, once you buy or sell US$100 or more (or 100 USD equivalent of your domestic currency) within 30 days of creating your account, your account will be credited US$10 (or 10 USD equivalent of your domestic currency) worth of bitcoin.

Hodlnaut

Hodlnaut is a crypto-borrowing and lending platform that helps investors improve the return on their assets.

If you do not have an account, you can sign up here using my referral link. After you have signed up, you will receive a US$20 sign-up bonus after making a deposit equivalent of US$1,000 in a single transaction on any supported assets within 1 week. Bonus payouts are paid in the same asset deposited. You may make a test deposit of any amount. The deposit equivalent of US$1,000 or more must be completed within one week of the first test deposit.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!

Posted in Cryptocurrency | Leave a comment

The most underrated key to investing and time for me to revisit it in 2022

I always felt that investing is both simple yet difficult at the same time.

Terry Smith

In the below article, Terry Smith shared his investment strategy, Terry Smith is also known as the English Warren Buffett, Smith joined Barclays as a history graduate in 1974. He became prominent as the UK’s top-rated banking analyst throughout the 1980s.

Terry Smith’s tips for picking exceptional businesses and getting hefty returns (read here)

To quote the article (emphasis mine):

Investment strategy
Smith says investors should have a high quality, concentrated portfolio of 20-30 resilient global growth companies which are held for the long term.

As per him, investors should follow a simple three-step investment strategy, which is-

1. Buy good companies
2. Don’t overpay
3. Do nothing

Warren Buffett - Jeff Bezos

Investing is a long-term prospect, the benefits of which come after many years. Patience, too, is a behaviour where the benefits last a long time. Patience endures temporary hardships for the future reward. Warren Buffett also considers patience – or lack of it – a defining factor in investment success.

There is a saying that investing is more about being patient than being smart. Yes, it takes a fair amount of intelligence to pick good companies, know valuations (and not over-pay). However, I reckon the hardest part (for me at least) is to do nothing. Some people are born with this character trait, while others need to work hard to achieve it.

Put it in another way, it does not take me very long to churn out a ‘buy’ list of good companies, whose stocks I would like to own. I have plenty of time to do that, to study their economic moats, past financial performance, and current/past valuations… it is what happens after I have that ‘buy’ list.

I reckon Charlie Munger said it the best.

Waiting helps you as an investor and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.” Charlie Munger

The story about the 3 monks

Then there is the story about 3 monks. 3 monks were staying in a temple, but all needed to make a trip to another temple. However, the weather during that time was cloudy and rain is imminent. The first monk took with him an umbrella, the second monk took with him a walking stick, while the last monk did not take anything. All 3 monks arrived at the other temple the next day.

The first monk who took the umbrella, arrived covered in mud; while the second monk who took with him the walking stick arrived soaking wet. Oddly, the third monk who took nothing arrived clean, dry and proper. The first 2 monks were puzzled. They have rushed here in the rain (one fell down in the rain, and ended up muddy, while the other braved through the rain without an umbrella).

Both monks questioned the third monk. The third monk simply replied that while on route to the temple, when it started raining, he simply waited at a pavilion, and only continued the journey when the rain stopped.

I reckon we can do all sorts of analysis, planning; but in investing it really pays to be just that bit more patient.

Typically, for most people going about their normal day-to-day tasks, it pays to have a sense of urgency, to not leave things to the last minute. However, in investing, time in the market is more important than timing the market.

Jack Bogle’s market advice: ‘Don’t do something; just stand there’ (read here)

Year 2022: The year to be patient?

The year 2022 is still a blank canvas for me. I don’t really have a concrete plan as to how to invest just yet. It could be due to the various events that have happened in 2021, for instance, the regulatory announcements in China (from the banning on crypto mining, crack-down on private education, escalating property curbs – including the Evergrande crisis, continued crack-down on Chinese techs, the notion of common prosperity, etc)…and the impending rate hikes by the US Fed in 2022.

To put it in another way, there are many known unknown risks. We are aware that there will be 3 or 4 rate hikes in 2022 by the US Federal Reserve but we do not know when and to what extent (how many basis points). We are aware that there is an on-going risk of delisting of Chinese companies stocks from the US stock exchanges but do not know exactly when (and what will be the full extent of it, and what will be China’s actions). We are aware of the escalating property curbs in China which appear to be affecting more developers, and recently Country Garden is in the news, but we have yet to understand the full extent of it. And also, will China continue to insist on its zero-Covid policy in 2022?

Fed’s Harker calls for ‘action on inflation,’ sees 3 or 4 rate hikes likely this year (read here)

China’s property crisis reaches biggest builder Country Garden (read here)

Then there are the unknown-unknown risks. If we can turn back time, and be back in Dec 2020, I am sure very few of us would have anticipated the harsh crackdowns in China on private education, property developers, tech companies etc in 2021. And let’s not start on the Omicron covid-variant or the continuing free fall of Alibaba stock price since late 2020 (after the failed Ant IPO).

Even the brilliant minds in Temasek and GIC probably did not foresee China’s curbs on its US$100 billion private tutoring and online education sector.

China’s edtech assault hits investors from Singapore’s Temasek and GIC to SoftBank (read here)

So yes, given what has happened in 2021… 2022 is really ‘hard to say’ (for lack of a better word). There are just too many unprecedented events.

Tips for myself to be patient

So that brings me to this notion of being patient. I reckon there are some tips in being patient (well at least to me).

Let me be honest with you, I am not the most patient person around to start with (I am not born with that gene). I don’t think I can survive staring and waiting for the wall paint to dry (then again having spent close to 2 years working from home, and on most days alone in a room.. this has given me new meaning to the phrase ‘watching paint dry’).

I reckon I have digressed. As I mentioned earlier, I am not the most patient person to start with. However, since we are talking about investing our hard-earned money here…

“The stock market is a device to transfer money from the impatient to the patient.” Warren Buffett

online shopping waiting GIF

1) Learning from past experiences. Perhaps it is the past (bad) experiences, whereby I have been badly ‘burned’ by being not patient. We are all familiar with the term FOMO (Fear of missing out), and I have my fair share of jumping in quickly for fear of missing out (only to be badly burned afterwards).

Some of my worst investing decisions are made when I am both mentally tired or preoccupied with work, and when I made investing decisions rashly.

2) Valuation: It could also be the fact that from many valuation indicators, the US markets do appear overvalued (from a P/E valuation perspective). Singapore market (from a P/B valuation perspective) appear slightly below or full valued, while the Hong Kong market is undervalued (from a P/B valuation perspective) if we can accept the regulatory risks.

I still believe that if the US markets sneeze, the other bourses will also catch a cold. Well, these days, when the China markets sneeze, many markets elsewhere also appear to be affected.

So with the 3 or 4 impending rate hikes in the US; and high valuation and potential pull-backs… I would say the odds are good that we can find better opportunities moving forward in 2022 and even 2023.

A stock market decline is as routine as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.” Peter Lynch

3) Ways to sock away idle cash while earning passive income. I still believe that in the long term, buying good companies at fair valuation is the way to go. It is also important to build up a dividend income stock portfolio. After all, this is a great way to beat inflation. And raging inflation is now in the news. Idle cash in the bank will just lose its value quicker. So yes, that could be the driving force why some of us rush to invest our idle cash. We just can’t bear to see our hard-earned money value eroded over time.

Nevertheless, building up a war chest is still important. Cash in a way, like patience, in investing, is often under-rated. In times of crisis, cash is king.

It is often during this time of building up a war chest, that I often start looking for ways to sock away my idle cash. I have tried putting them in Singapore Saving Bonds, Money Market funds, P2P loans, using it as a reserve to sell cash-reserved put options, and more recently trying out purchasing stable coins (crypto) and earning higher interests in sites like Nexo, Hodlnaut, BlockFi or Celsius. Not all strategies turn out good – for instance, my experience with P2P loans and Amazon FBA selling in the past did not work out well.

In retrospect, I don’t think P2P loans are worth the time and effort. Did not exactly lose much money, just wasted time and effort.

I also think I am not well suited to sell call or put options regularly (my mind cannot adjust well to leverage snd the time limit/decay that easily).

For me, I am only using a small amount in starting a new strategy of purchasing stable coins. I will probably put more as I get more confident and comfortable with it over time. Nevertheless, crypto investing/trading is risky and is not for everyone. I am not advocating crypto to anyone, pls DYODD.

Crypto Shadow Banking Explained and Why 12% Yields Are Common (read here)

Lending Your Crypto Could Generate Attractive Yields. But How Safe Is It? (read here)

To quote the above article: “The hedge fund, however, needs cash to buy the spot Bitcoin, so would be willing to pay what seems to be exorbitant rate of 12% for the loan as long as it can earn 21%, or a 9% profit, on the trade. The spread between spot and futures has been even higher in recent months.”

I initially wanted to purchase USDC, however, Gemini does not allow that. I am also not keen to purchase USDT (I have a huge suspicion on Tether based on what I read online): I eventually ended up buying DAI.

Top 6 stablecoins in the crypto market — what are they, how they work and why they have governments worried (read here)

In some remote corner of my mind, there is this thought of using stable coins parked in Nexo earning daily interest which can easily be converted to SGD as cash reserves for the occasional selling of cash-reserve put options….just a crazy thought so far. Hmm…. too many dimensions and steps. And yes, need to consider the (gas) fees involved.

Below is from Nexo.

Sure the interests from Singapore Saving bonds (SSB) and Money Market funds are low when compared to the yields from dividend stocks/Reits (or even crypto interests), but well, they are a lot ‘safer’, and it beats leaving the money in the banks. It does not eliminate the feeling of ‘devaluation’ from hyperinflation, but it sure helps to smoothen it off.

So far I have been treating the funds in SSB as my ‘last resort’ fund… when armageddon happens. It is just too lengthy to convert it to cash :p

Well, ultimately, what works for me, may or may not work for you.


StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend / bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Friend of StocksCafe and test out all features for free for two months!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

Use the above referral code to enjoy the below benefits.

This image has an empty alt attribute; its file name is image-1.png

FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Gemini

As stated by MoneySmart on Jan 22, if you’re looking to optimise trading your crypto with relatively low fees, simple-to-grasp expert UI and ease of purchase with Singapore dollars. then the best crypto exchange in Singapore is Gemini,

If you do not have an account, you can sign up here using my referral link. After you have signed up, once you buy or sell US$100 or more (or 100 USD equivalent of your domestic currency) within 30 days of creating your account, your account will be credited US$10 (or 10 USD equivalent of your domestic currency) worth of bitcoin.

Hodlnaut

Hodlnaut is a crypto-borrowing and lending platform that helps investors improve the return on their assets.

If you do not have an account, you can sign up here using my referral link. After you have signed up, you will receive a US$20 sign-up bonus after making a deposit equivalent of US$1,000 in a single transaction on any supported assets within 1 week. Bonus payouts are paid in the same asset deposited. You may make a test deposit of any amount. The deposit equivalent of US$1,000 or more must be completed within one week of the first test deposit.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!

Posted in Investing methodology | 1 Comment

Digital Core Reit vs Keppel DC Reit

Data centres are a growing asset class within the REITs space

The drought in the initial public offering (IPO) of real estate investment trusts (Reits) on the Singapore Exchange (SGX) through the later part of 2020 and into much of 2021 ended with the successful listings of Daiwa House Logistics Trust (DHLT) and Digital Core Reit (DC Reit) towards the end of 2021. The former owns logistics assets in Japan, while the latter own data centres in the United States (US) and Canada.

For Singapore retail investors, prior to the listing of Digital Core Reit, their only investment choice for pure-play data-centre Reit has always been Keppel DC Reit.

Why?

To invest in stock markets elsewhere, beyond the Singapore and Hong Kong stock markets would incur dividend tax. This is especially so for the US stock market which has a thriving and big Reit market. Non-resident aliens are subject to a dividend tax rate of 30% on dividends paid out by U.S. companies.

Taxes Tax GIF

For dividend income investors like myself, data centre Reit seems to offer the best of both worlds, being part of a sun-rise growth segment of the digital economy while providing ‘stable’ dividend income annually. After all, data centres are an important component of the digital economy. Its demand is underpinned by the increasing adoption of cloud-based services as well as the shift towards 5G. The pandemic has only accelerated the adoption of these services.

For retail investors who have ‘missed the boat’ by not being an early investor of Keppel DC Reit (eg. during the start of the pandemic or way before the pandemic), they can only watch in dismay at the meteoric rise of Keppel DC Reit share price. See below.

There are also a few other Singapore-listed Reits with data centre properties in their portfolio, namely Mapletree Industrial Trust and Ascendas Reit.

Data Centres represent 52% of Mapletree Industrial Trust AUM (Asset Under Management). The majority of these data centres (49.4% of the 52%) are located in North America, the rest being in Singapore. See below.

Data Centres represent 10% of Ascenda Reit total Investment Properties. In early 2021, Ascendas Real Estate Investment Trust (Ascendas Reit) acquired 11 Europe data centres for $904.6 million; boosting the Reit exposure to data centres to 10% of its total investment properties, from 4%. See below.

The stock prices of Keppel DC Reit, Mapletree Industrial Trust, and Ascendas Reit have climbed since the March 2020 lows.

In 2021, there are other Singapore-listed Reits that have likewise increased their exposure to this growing segment (data centres).

S-REITs with Data Centres Amongst World’s Strongest in 2020 YTD (read here)

With the listing of Digital Core Reit at the end of 2021, Singapore retail investors now have another choice for pure-play data centre Reits. They can now choose between Digital Core Reit and Keppel DC Reit.

Please note that I am currently vested in Digital Core Reit.

Metrics Comparison between Digital Core Reit and Keppel DC Reit

I think both are good Reits, and if one has sufficient funds to diversify and invest in both, why not?

There are many articles pertaining to the review of Digital Core Reit and comparison to the other Data centre Reit (eg. Keppel DC Reit), and I do not think I need to add further to the analysis. Please see below for the key metric comparison between Digital Core Reit and Keppel DC Reit.

In terms of occupancy rate, Digital Core REIT wins on this aspect with a full 100% occupancy rate for its overall portfolio as compared to Keppel DC REIT’s 98.1%. Nevertheless, Digital Core REIT has a much smaller portfolio with only 1 tenant across most of their assets whereas Keppel DC REIT is more diversified with several tenants across most of its assets.

In terms of Weighted Average Lease Expiry (WALE), Keppel DC REIT wins on this aspect but by a small margin. Both REITs do have long WALEs which is a great point to take note of.

Moving onto key metrics, wuth the increase in Digital Core Reit stock price since IPO, we can see that Digital Core REIT has lower PB ratio but slightly lower yield as compared to Keppel DC Reit.

Digital Core REIT also has a very low gearing at 27% as compared to Keppel DC REIT’s 36.2%. Based on the IPO prospectus, Digital Core REIT has debt headroom of US$160m, US$424m, and US$596m before reaching a gearing of 35%, 45%, and 50% respectively. This represents many opportunities for Digital Core REIT over the next 24 months as they start acquiring from their sponsor’s ROFR pipeline.

Beyond the figures…

Beyond the fundamental metrics, I think many articles did not actually address the elephant in the room.

Now, with the pandemic technically still not over, one would expect data-centre centric Reits stock prices to be still resilient, if not rising.

In the US markets, there are a number of data-centre centric Reits, and according to the National Association of Real Estate Investment Trusts (NAREIT), there are only four REITs focused primarily on owning and operating data centres in late 2021. Namely CoreSite Realty, CyrusOne, Digital Realty and Equinix. The biggest is Equinix followed by Digital Realty.

Digital Core Reit is sponsored by Digital Realty, one of the largest owners, operator, developer and acquirer of data centres globally.

Now let us look at their 1-year stock price performance.

For these 4 data-centre centric Reits, in general, their stock price has been (nothing but) trending up for the whole of 2021, although there is a stock price dip for Digital Realty and Equinix on Jan 22.

If you are an investor vested in any of these Reits, good for you.

On the other hand, when we look at Keppel DC Reit share price chart, it paints a totally different picture.

For the most part of 2021, the share price has been trending downwards since Feb 2021. In fact, it is aound 22% down from its peak in Feb 2021.

To add on, Keppel DC Reit assets are spread over 8 countries (not solely limited to Singapore). In terms of the properties’ values, around 43% are in Europe and Australia.

This downward trend is especially glaring when seen from its long term share price performance. Moreover, like I said earlier, the pandemic is technically not over yet. And compared to its US counterparts, the share price performance is even more puzzling.

In fact, over a 1-year period, the share price of Keppel DC Reit has underperformed compared to the share prices of Mapletree Industrial Trust, Ascendas Reit and the STI ETF.

If you visit online forums or posts by retail investors of Keppel DC Reit, it would not be surprising to read many unhappy comments from disgruntled investors who are vested in this once stellar Sg Reit.

Stock markets are forward-looking, and as retail investors, we are all too familiar with the term that past performance does not guarantee future performance. There are many examples of stock darlings that suddenly ‘lose steam’ and subsequently crash or drop indefinitely, leaving current investors holding the bag.

A dive into what caused the price drop

Keppel DC REIT (SGX:AJBU): 5 reasons why its share price is still down and should you be watching? (read here)

I think Tan Zhi Rong from Dr Wealth wrote a good article highlighting the potential reasons on why Keppel DC Reit stock price dropped. You can read his article as listed above.

I feel among his many points, 2 key points stood out.

1) Failure to meet investors’ expectations

2) Expansion of mandate (which is linked to the Proposed investment in M1 network assets)

1) Failure to meet investors’ expectations.

Investors in general are a pragmatic bunch. After all, there are many other alternative investments / Reits in the market. A lousy year or a lousy quarter can adversely affect the sentiments of investors, leading to drops in stock prices.

Keppel DC REIT did perform admirably in the first quarter of 2021. For the first quarter of 2021, it achieved $42 million in distributable income, up 17.5% year on year.

Similarly, its Distribution Per Unit (DPU) has risen 18.1% to 2.462 cents year on year. With a long Weight Average Lease Expiry (WALE) of 6.6 years, its portfolio occupancy has remained resilient at 97.8%.

However, if you compare this performance to its FY2020 results, it will tell you a different story

In FY2020, Keppel DC REIT’s earnings recorded 38.6% growth in distributable income to $156.9 million and DPU increment of 20.5% to 9.17 cents. This growth is way higher than its Q1 2021 growth, which signifies that Keppel REIT growth has slowed down.

While its occupancy remains high at 97.8%, its WALE has seen a slight drop from 6.8 years to 6.6 years.

In a year, with the tailwind of the pandemic still intact, Keppel DC Reit’s growth appears to be decelerating. For investors used to the stellar growth of the past year, the ‘good’ performance of 1st quarter 2021 appears to be ‘bad’.

2) Expansion of mandate (which is linked to the Proposed investment in M1 network assets)

Maybe I am a bit biased, but I think as an asset class, Reits generally appeals more to the older generation of retail investors (eg. retirees), who look forward to steady and growing dividend income annually. They generally do not like sudden drastic changes as compared to the younger generation who are more into growth stocks or crypto. Well, there is no hard truth in this, just a thought.

The recently proposed merger of Mapletree Commercial Trust (JMCT) and Mapletree North Asia Commercial Trust (MNACT) in a S$4.2 billion deal, has probably resulted in many disgruntled investors (who are currently vested in MCT).

The deal could raise MCT’s leverage, considering MNACT’s weaker leverage profile and the incurrence of incremental debt and perpetual securities to fund the merger’s cash consideration,

With the merger, MCT is no longer a pure Singapore play Reit, namely with the inclusion of: Festival Walk (Hong Kong Mall) and Gateway Plaza (Beijing Office) from MNACT.

Mapletree merger: Moody’s reviews MCT for downgrade, MNACT for upgrade (read here)

Why I am not buying Mapletree Commercial Trust at $1.84 (read here)

Consequently, after the above announcement, MCT stock price has been on a downward trend.

In the case of Keppel DC Reit, on 28 April 2021, with the announcement of the Expansion in Investment Mandate, its stock price started to slide.

With this announcement, Keppel DC REIT would no longer be a pure Data REIT play as it will now include real estate and assets in the digital connectivity sector. Keppel DC REIT’s official reason was that this expansion of mandate would allow Keppel DC REIT to continue to invest in assets with stable cash flows, attractive yields, and accretive returns.

Earlier in my article, I have been using the term pure-play data centre Reit loosely…as technically, Keppel DC Reit is now not a pure-play data centre Reit.

Together with this announcement, Keppel DC made another announcement on a proposed investment in M1. M1 is a subsidiary of Keppel Corporation. Likewise, Keppel DC REIT can be linked all the way back to Keppel Corporation.

With the announcement of its expansion of investment mandate, Keppel DC REIT has signed a non-binding term sheet on the proposed investment in M1 network asset.


For current investors with the original intention of being vested in the high growth data centre segment, they are now also vested in the telecommunication segment. In general, telecommunication stocks like Singtel has not performed well. Although Keppel DC Reit management has indicated that such infrastructure investment will unlikely exceed 10% of its asset. Nevertheless, rules can change again… and well, for an individual retail investor, on his own, he has very little voting rights. And if he cannot change the proposal which he dislikes, he will ultimately vote with his feet (eg. by leaving/selling off his holdings).

I do not have a crystal ball but given the choice…

As highlighted earlier, I am currently vested in Digital Core Reit.

I am unable to predict the future and I reckon there are many moving parts, and narratives could well change in the future. This is especially so for newly listed Reits; there is really not much historical data we can infer from.

With the above points highlighted, there remains one very important factor for dividend investors like me: The sustainability of the dividend payout / DPU – Distribution per Unit (growth).

Pay Me Bitch Better Have My Money GIF

Digital Core Reit is a newly listed Reit, so there is no past performance to speak of. The best we can do is to look at the past performance of its sponsor Digital Realty (and it really is a very strong sponsor).

The dividend growth of Digital Realty Reit has been good (if not stellar). As stated on its website, Digital Realty Reit is committed to a secure and growing dividend. It has 16 consecutive years of growing dividend increase (at 10% CAGR). I will probably be vested in this Reit if not for the 30% dividend tax.

In comparison to Digital Realty Reit, Keppel DC Reit is a relatively young Reit. Keppel DC REIT was listed on 12 December 2014, and it has been paying dividends. Its dividend yield has not been stable (perhaps because it is a young Reit), and the historical trend is far from upward trending. See below.

Digital Realty Reit stated that it is committed to a secure and growing dividend. Can Keppel DC Reit state the same?

Nevertheless, I may be wrong, as past performance is not indicative of future performance.

Is it a coincidence that Digital Realty chose to list Digital Core Reit at the end of 2021 when Keppel DC Reit share price has been sliding for most of the year 2021?

With the listing of Digital Core Reit, and perhaps other future potential pure-play data centre Reits, together with existing SG Reits increasing their exposure into the data centre segment, Keppel DC Reit is no longer the one and only data-centric Reit in the Sg Reit market. In fact, it is not even a pure data-centric Reit. The only pure data-centric Reit in town (Singapore and Hong Kong stock markets) is Digital Core Reit.

There will potentially be more investment options for retail investors looking to invest in this growing sector, and Keppel DC Reit needs to do more to stay ahead.


StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend / bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Friend of StocksCafe and test out all features for free for two months!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

Use the above referral code to enjoy the below benefits (Campaign Period: 9 August 2021 12:00 – 10 January 2022 12:00 (SGT))

This image has an empty alt attribute; its file name is image-1.png

FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Gemini

As stated by MoneySmart on Jan 22, if you’re looking to optimise trading your crypto with relatively low fees, simple-to-grasp expert UI and ease of purchase with Singapore dollars. then the best crypto exchange in Singapore is Gemini,

If you do not have an account, you can sign up here using my referral link. After you have signed up, once you buy or sell US$100 or more (or 100 USD equivalent of your domestic currency) within 30 days of creating your account, your account will be credited US$10 (or 10 USD equivalent of your domestic currency) worth of bitcoin.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

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Posted in REITS | 1 Comment

Short post for the start of 2022

Happy new year everyone! This will be just a short post.
During the end of 2021, I have been really busy at work, and will also be busy in 2022.

Portfolio (same old same old)

There isn’t much change in my portfolio. Nevertheless, the key change which I will be doing in the early part of 2022, will be divesting from Ascendas Reit and transferring the cash into another dividend counter. I have not really decided on the counter yet. However, I see more promising REITs than Ascendas REIT.

Being a shareholder of Mapletree Commercial Trust, I am not entirely happy with the proposed merger between Mapletree Commercial Trust and Mapletree North Asia Commercial Trust. If I am keen to invest in Festival Walk in Hong Kong and Gateway Plaza in Beijing, I would have already done so in the past, by investing in MNACT.

With the rich valuation of the US markets, I do not foresee much investing in the coming weeks or months.

For months of Oct 21, Nov 21 and Dec 21, I have only nibbled on some dividend counters (eg. Straco, ST Engineering, Mapletree Commercial Trust) as well as the Chinese Tech counter Pinduduo. I guess I was counting on the re-opening of economics (and the subsequent uptick in recovery stocks)… until the Omicron virus derailed it (for now).

Meeting up with friends/relatives

December is usually a month for meeting up with friends and relatives. This year, however, I did not meet up with many, just a few.

Well, being in my mid-40s, I tend to know people who are either doing very well (financially) or those that aren’t. Those doing well would be thinking about early retirement, while on the other hand there are those who are hit hard by pandemic, in between jobs or in struggling in jobs that do not pay well.

On the other hand, there are people who did not even need to work, with their finances well taken care of by their parents. Or there are people near retirement age (or past retirement age), still at the pinnacle of their career… but beyond work, they are unmarried with no kids. They will probably donate most of their savings to charities or to their nieces or nephews once they pass away.

Personally, for me, the industry which I am in (construction), is hit hard by the pandemic. I often heard the news of people resigning from my company. Projects are getting fewer and smaller, and we are tasked with my projects. I do not see many job openings in this industry. Having said that, I guess I am lucky to still have a job.

Having worked from home for close to 2 years, I can see many benefits (and cons) of it. Have heard and read that many companies are permanently adopting this WFH system for a certain number of days per week, with the reduction of office spaces.

Plan for 2022 (Investment)

To be frank, I do not have a very clear plan at the moment. I reckon I am still waiting for the markets to direct my actions.

I will still do some DCA to increase my passive dividend income. I have increased my annual dividend income by 1/3 in 2021 (compared to 2020).


However, I do believe if opportunities pop up in cryptocurrencies, I would probably add a tiny fraction. I missed the May 2021 correction… but am sure there will be another chance.
However call me superstitious, as per my horoscope (fire dragon) reading for 2022, it is not advisable to bet big on risky assets in 2022.

StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend / bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Friend of StocksCafe and test out all features for free for two months!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

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FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

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40s, I tend to have friends who are doing well (financially) and are looking forward to early retirement in the near future. I am happy for them.
On the other hand, there are others who are hit hard by the pandemic and are still in between jobs, or took heavy pay cuts or struggling in jobs that don’t really pay that well. That is the other spectrum.

Of course, there are always people whom we know that does not even need to work (coming from well to do families), with their parents footing the bills. Or people who are near or well past retirement age, unmarried, with no children, but still at the pinnacle of their career, earning top dollars. They probably will donate their savings to charities or their nieces or nephews when they pass away.

Personally, for me, the industry which I am in (construction) is hit hard by the pandemic. Many people have resigned, and projects are getting fewer. I guess I am lucky to still have a job. With more than a year of WFH, it still feels surreal. I guess it is difficult to find new opportunities in the industry which I am currently in.

I have been hearing and reading about companies permanently adopting the WFH system for a certain number of days per week (eg. every week, 3 days are WFH). I guess with the reduction in office spaces, quite a number of companies are seeing the benefits of doing so.

Posted in Investing methodology | Leave a comment

Daiwa House Logistics Trust vs Mapletree Logistics Trust

This will be just a short post.
Basically, I view Mapletree Logistics Trust (MLT) as a bellwether logistic S-Reit listed in Singapore. Hence, the recent announcement of the Daiwa House Logistics Trust (DLHT) IPO made me think about how it (DLHT) compares to MLT.

Daiwa House Logistics Trust’s (DLHT) public offer will close on Wed Nov 24, 2021) at 12.00 pm. The REIT will commence trading on a “Ready” basis on Fri Nov 26, 2021 at 2.00 pm.

Disclaimer: I am currently vested in MLT.

Please refer to the simple comparison table below.

In summary, the Price/NAV of Daiwa House Logistic Trust appear low. Its gearing ratio should as stated by its CFO drop to 33.1% (read here).

Daiwa’s WALE (by NLA) at 7.2 years is long.

The forecasted distribution yield is high at 6.3% in 2021.

The above-mentioned are all good points.
However, as with all IPOs, there is a lot of unknown (which will be played out in the longer term). Moreover, Daiwa House Logistics Trust’s dividend yield will probably drop once its distribution policy change from 100% to 90% from 2023 onwards.

Let’s go a little further into the details (below).

Geographical Diversification vs Concentration risk

For Daiwa House Logistics Trust’s (DLHT), given its comparatively small portfolio of 14 logistic and industrial properties in Japan, there is a fair amount of concentration risk.

Nevertheless as stated in the IPO prospectus, the assets are well diversified across Japan, located in both Greater Tokyo as well as core regional areas, mitigating concentration risk. These are strategically located properties closely interlinked with transportation and shipping networks


For MLT on the other hand, Japan logistics properties account for only 11.2% of Assets under management and 10% of the gross revenue. That is 18 of its 163 properties are located in Japan.
Nevertheless, as a retail investor from Singapore, I would probably like a significant portion of the assets to be in Singapore (which I am more familiar with). In the case of MLT, Singapore assets account for almost a quarter of the assets under management. Overall, MLT’s Singapore assets portion still account for the major portion of its gross revenue.


In addition, for MLT’s Japan properties, the occupancy rate is 96.2% on Sept 21 (see below).

Tenant base

Pertaining to the major tenants of Daiwa House Logistics Trust’s (DLHT), it was stated in the prospectus that the high occupancy rates across the IPO Portfolio are anchored by a diversified blue-chip tenant base. See below table.

With the exception of one 3PL operator, no single tenant accounts for more than 10% of NPI of
the IPO Portfolio, translating to low concentration risks. Moreover, the tenant base is well-diversified across multiple sectors including 3PL, E-commerce, retail and manufacturing.

None of the top 10 tenants are related to the Sponsor, or to each other. The aggregate contribution of the
top 10 tenants as a percentage of NPI of the IPO Portfolio for FY2020 was 71.1%.

Nevertheless, it can’t be compared to the diversity of MLT’s tenant base. Whereby the top 10 tenants across different geographical locations account for only around 25.4% of gross revenue. See below.

Lease Expiry Profile (by NLA)

Looking at DLHT’s lease expiry profile is fairly decent (see below); with the majority (75.2%) being under multi-tenant assets.

See below for MLT’s Lease Expiry Profile (by NLA). Likewise, for MLT, the majority of the gross revenue is from multi-tenant buildings (67.6%).

I would argue that DLHT’s lease expiry profile is better (which is more backloaded to FY2026 onwards as compared to MLT’s).

DHLT Future Expansion pipeline

In the DHLT’s prospectus, there is the mention of a visible growth trajectory in the future, which may possibly (more than) triple the IPO GFA. The expansion will be via assets in Southeast Asia (namely Indonesia, Vietnam and Malaysia) and Japan. And yes notably, there appear to be no plans for Singapore.

It is like the start of MLT, although it will still be less diversified than MLT (which include assets in Singapore, Hong Kong, China, South Korea, Australia and India). Nevertheless, MLT’s asset mix may change in the future as well.

Final Thoughts

There are many good points about Daiwa House Logistics Trust’s (DLHT).

However, for me who is already vested in MLT, which already have properties in Japan, I do not see any compelling need to further invest in Daiwa House Logistics Trust (other than the higher yield and WALE perhaps).
Nevertheless, ultimately that is just my personal view, please DYODD.


StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend / bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Friend of StocksCafe and test out all features for free for two months!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

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FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
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Happy shopping!

Posted in REITS | 1 Comment

Thoughts on my Portfolio (Nov 21)

I have not blogged about my portfolio for some time now. I guess it is probably because StocksCafe did such a good job at tracking my portfolio that I do not really need to record it down in my blog.

Nevertheless, I guess I will just like to pause, pen down some of my thoughts for my current portfolio and my plans ahead.

Income Stream

I wrote a post about my thoughts about the importance of income streams from my portfolio at the end 2019.

Income Streams (read here)

I still think it is important. StocksCafe does a great job at tracking the dividend payout (from stocks) and interest payment (from bonds). See below.

Technically, I am receiving more than $2000 per month (on average) of dividends for the year 2021 (from my Singapore and Hong Kong dividend portfolios, and Singapore Saving bonds).

In addition, the total dividend payout in 2021 has already exceeded that of 2020. With Singapore (and the rest of the world) slowly re-opening, I foresee more of the old-economy dividend stocks’ payout to recover and even exceed the pre-pandemic level.

While the focus is on growth stocks (for the past few weeks), I guess like many I am also expecting better days for recovery stocks (within my portfolio). They do help in contributing to the dividend income. In fact, many of these recovery stocks have already trended up in the month of Oct 21.
I have added small portions of Straco, BOC Hong Kong, ST Engineering (and also Mapletree Logistic Trust), to my portfolios.

On another note, with reference to the report by a team of researchers from Lee Kuan Yew School of Public Policy, which stated that a couple with two children (one teenager and one younger) will spend $6426 per month. Even if I exclude housing purchases from the equation (eg. $6128.03), I guess I myself need to continue to contribute in building up my passive income. Although personally, I don’t think as a family of 4 we spent that much.

Some people consider selling Options (on a regular basis) as having an income stream. I personally do not consider that as an income stream. Likewise, StocksCafe does not have a function of tracking premiums received as part of the passive income tabulation.
Nevertheless, I generated a small chart (below) for the 2021 passive income and added in the premiums received from Aug 21 onwards. Nov and Dec 21 income payouts are not in yet, hence I did not include any in the chart. I do not really trade Options often.

Usually, I take very small positions with far-out strike prices and short durations (less than 2 weeks), which also translate to very low premiums. I guess I am just risk-adverse in that way (not much of a trader or technical analysis type).

Branching Out

Now that I have covered the passive income portion, now let’s think about my Story Fund (Growth portfolio). I am not really a ‘purist’ eg. 100% dividend income investor. Part of my portfolio consists of growth stocks.
The barbell strategy by DBS is not new. I do believe that in the long term, I am able to further develop my overall portfolio by adopting a barbell strategy, eg. investments are heavily weighted at both ends of the risk spectrum. This means being overweight on high-growth stocks on one end of the portfolio, while having stable, income-generating investments on the other end.

Although I doubt it will ever be equally weighted as I am more tilted towards income-generating investments. It is not easy, as I essentially like the idea of passive dividend income… however, on the other hand, I also do not want to miss out on the upsides of the growth stocks.

Having spent much of my time from 2019 to 2021 building up the income-generating (dividend/bond) portfolios, I am slowly looking at the growth stocks.

In a way, I am using the income-generating portion as a ‘base’ from which to slowly grow the other portions. Although, almost every month I do reinvest part of the dividends/interests received into dividend stocks as well.

Generally, I feel that valuations in the US Growth stocks are rich, and values can be found in Chinese tech stocks at the moment. Many renowned investors (Charlie Munger, Monish Prabai, Ray Dalio, etc) have waded into this sector in 2021.

Why Mohnish Pabrai Loves Tencent : (I Bought More Tencent Stock) (Watch here)

In recent months, I have added to my positions in Pinduoduo and Alibaba (9988.HK, P/E: 19.61, and seriously thinking about Tencent (00700.HK, P/E: 19.84). However, 100 shares of 00700.HK is not cheap (more than SGD 8000)…. maybe will come down lower :p…. Well, from a fundamental point of view, be it Revenue growth, Income growth, EPS growth … growth stocks such as Alphabet, Alibaba and Tencent are just all ‘green’ (ever-growing). Although I would probably rate Tencent’s growth as better than Alibaba’s (less CAPEX, more aggressive/higher net income growth).

Alphabet’s growth is spectacular (excluding 2017 due to a one-time charge of $9.9 billion for repatriating foreign earnings). However, compared to the mega Chinese Tech stocks, Alphabet’s valuation is higher (P/E:28.65), then again, it is probably due to my own anchor bias.

The Trade Desk and Pinduoduo are still in the early stages … However, revenue growth is good. The Trade Desk is reporting earnings today (8 Nov 21).

Portfolio Performance

The month of Oct 21 has been a good one in terms of capital appreciation for stocks in general, and I am just enjoying the ride up.

I don’t really focus on the capital appreciation portion of my portfolio, partly because most of them are dividend stocks (rather than growth stocks). A good way is to look at the time-weighted rate of return (TWR) which is a measure of the compound rate of growth in a portfolio.


For my Singapore Dividend Portfolio, the 3-year TWR of the portfolio (in red) still lags behind the STI Index ETF TWR (in orange). Nevertheless, it has been trending up nicely. I am comparing it to ES3: SPDR Straits Times Index (STI) ETF. Please see below.

For my Hong Kong Dividend Portfolio, the 3-year TWR of the portfolio (in red) still lags behind the Hang Seng Index ETF TWR (in blue). I am comparing my portfolio to 2833.HK, Hang Seng Index ETF HKD (not really Apple to Apple since some of the top holdings of 2833.HK are tech stocks like Alibaba Group Holding Ltd Ordinary Shares, Tencent Holdings Ltd, Meituan, Xiaomi Corp Class B).

Nevertheless, it has been trending up slowly (esp, in Oct 21). Please see below.

For my Story Fund. the 3-year TWR of the portfolio (in red) is above the S&P500 ETF TWR (in green). I am comparing it to SPY: SPDR S&P 500 ETF Trust. Please see below.

I would like to spend more time with the family for the rest of the year; and yes, saving up for my parents’ allowance for next year (normally give a yearly amount at the beginning of the year). I reckon it is too late to start planning any year-end Staycation… well shall see.


 

StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend / bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Friend of StocksCafe and test out all features for free for two months!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

Use the above referral code to enjoy the below benefits (Campaign Period: 9 August 2021 12:00 – 31 Oct 2021 23:59 (SGT))

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FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!

Posted in Portfolio | 3 Comments

What is your mojo in your quest for financial freedom?

When I have time, I like to read.

Most of the time I would catch up with business news. This is essential especially if I intend to buy stocks at a discount (due to some news which I view as ephemeral).

Personal finance books by Thomas J. Stanley

Beyond business news, I like to read investment blogs and personal finance books. I am sure if you are like me who like to read personal finance books, you would have come across books written by Thomas J. Stanley.

I am sure we have our favourite personal finance books, and I do have my own list. However, what struck me as different about Thomas Stanley is that he made millionaires (themselves) the subject of his study. Perhaps there are other authors who do the same, just that I have yet to come across their books.

I have read the following books:

The Millionaire Next Door by Thomas J. Stanley

Stop Acting Rich by Thomas J. Stanley

In his work, he has conducted surveys of millionaires and decamillioanires (people with a net worth of more than US 10 million). His surveys, go in-depth into their income, their profession/businesses, assets, where they live, to the little personal details like the clothes they wear, the food and drinks they consume, cars they drive, are they married, been divorced before, and their upbringing and beliefs. The study is not heavy on numbers, but rather it delves into the psychology and what fundamentally drives their quest into millionaire status. Nevertheless, he is aware of the magic figures whereby one need to reach to achieve financial freedom, but there are many paths to this goal.

Put it in another way, if Stanley is a researcher and his workplace is a laboratory, the ‘lab mice’ would be the millionaires themselves.

Trending topics

I think for the past few days/weeks, I have been reading a lot of articles from Kyith and Christopher Ng.

How to find your core motivation to be financially free? (read here)

Motivations matter in Personal Finance (read here)

Commentary: Single and secure? Does family life come at the expense of financial freedom? (read here)

How much to LEAN FIRE for parents with two teenagers in Singapore? (read here)

There have been many talks, news and discussion on the topic of how parents (with 2 teenagers) can achieve financial freedom, how one can leave their toxic workplace with financial freedom and what ultimately drives oneself to achieve that goal.


The source of these discussions could be attributed to the report by a team of researchers from Lee Kuan Yew School of Public Policy, which in summary stated that a single elderly Singaporean will need $1421 a month while a couple with teenage children will spend $6426. In addition, for a single parent with a young child, the monthly budget will be $3218.

Another topic is the issue of toxic workplaces and this invariably led to the discussions on achieving financial freedom so that one can leave this environment for good.

To quote Christopher Ng: Seven years later, sick of the toxic workplace I worked for, I resigned without a new offer and entered law school when my family had no breadwinner for four years.

Recently, the production firm Night Owl Cinematics (NOC) saw a spate of anonymous and unverified allegations posted on social media, purportedly showing its co-founder and chief executive officer (CEO) Sylvia Chan being verbally abusive towards one of the firm’s on-screen talents. 

The Big Read: Toxic workplaces more common than we think but when do we say enough is enough? (read here)

The 2 kinds of millionaires

If I can summarise Thomas Stanley’s ideas into 2 very broad parts, at the risk of over-generalising, it is that there are basically 2 types of millionaires/decamillionaires.

Actually, when I first started on my path towards financial freedom, I seldom thought about this. To me, rich people are just rich people. At that time, there are (visual) signs which I generally felt pointed to what defines a rich person. It could be a large private property, expensive continental cars (esp. so in Singapore’s context), a high paying job with a well known MNC, sporting the latest gadgets (by them or their kids), country club membership, etc. These are ‘obvious’ visual clues……Which I felt was unattainable to the (younger) me then.

Then over the years, while reading up more, observing more, and then going through Thomas Stanley’s books… I realised that there is actually another version of millionaires.

The first type:

Generally, they are high-income earners. They could be professionals (eg. lawyers, surgeons, tech specialists), start-up founders, star athletes or actors, talented individuals, top executives at banks, etc.
They typically achieve high net worth and financial freedom at a relatively young age eg. in their 30s, or early 40s. They are also generally big spenders, although their income can more than compensate for it.

There are always exceptions. However, the general reason is probably due to the environment they are in (where they work and where they live). For instance, if you are a top executive at a MNC bank, you would probably be very aware of what your colleagues wear, eat, drive and where they stay. There is a certain amount of peer pressure and the need to keep up with the Joneses.
However, he did mention one exception to the various professions – Teachers. Teachers are generally rich, not due to their high income, but due to their frugality. Probably because their profession frowns upon expensive and flashy apparel, cars, etc. How true that is… well, he did mention he did surveys.

In addition, probably due to the fact that this group generally reach high net worth freedom at a younger age, they generally feel that they can always earn more to keep up with their lifestyle further down the road. Money comes easier at a much younger age.

The second type:

This group of millionaires is what I typically come across in the investment bloggersphere, and in the investment forums like InvestingNote. Having said that, there are also a group of financial bloggers that hit high net worth status at a young age (eg. via crypto investments, growth investing, business owners, etc).

Singapore Investor Bloggers with min. 1 SGD Million Stock Portfolios (read here)

The Five Titans of InvestingNote (read here)

Generally, this second group of millionaires are more common, and in fact, with the right will-power and determination, it is within reach to many. Thomas typically considers people like business owners or even people with modest income under this group. They are generally practical and frugal. They are to him (and as the title of his book), the millionaire next door.

Generally, this group of millionaires are in their 50s, business owners, married to the same partner (not gone through a divorce before).

As a group, the net worth of this group is generally lower than the first group, they take more years to attain a high net worth status and yes, their spending amount is much lower. Thomas puts it that their ability to convert every $1 of earned income to wealth (that sticks) as being much higher than the first group (because they saved much more and invest much more).

In addition, because they reach high net worth status at a later stage (eg. after mid or late 40s and beyond), the frugal habits and beliefs tend to stick. This is so even after they reach decamillionaire status. They don’t all of sudden acquire expensive taste (for the sake of it).. they were happy the way they were in the past and they continue to derive the same pleasures from their usual hobbies or work.

It is within reach to many, because one does not need to have a special talent or have a super high income; it just boils down to the simple act of saving more, spending less, investing more (rinse and repeat) and having great work ethics.

In fact, many of these people are in the so-called unglamorous business, however are themselves, business owners. They could be the boss of a cleaning company, a butchery, laundromat business, etc…. unglamorous could be a good thing, in fact, there is no peer pressure to dress or drive flashy, or live in an upscale neighbourhood.

Nevertheless, there are always exceptions, it does not mean that all millionaire surgeons will fall under the first type, or millionaire owners of cleaning companies will fall under the second type… there are the frugal ‘millionaire next door’ type of millionaire surgeons, and vice versa.

AK from A Singaporean Stocks Investor (ASSI) probably epitomises this second group.

How did AK create a 6 digits annual passive income? (How did AK achieve financial freedom?) (Read here)

To quote: “Hi AK,

I am a new follower of your blog. I have questions which are a bit sensitive if you don’t mind. If you do not answer, I understand.

You said you make mid to high 4 figure monthly salary. 

I estimate $60,000 to $100,000 a year. 

Actually, there is a third group of ultra-rich people. They are the very pinnacle of rich, where they can well afford to spend without having to worry. However, this group is extremely rare. Thomas defines them as a ‘freak of nature”. They are either super talented or own mega listed companies. Often it is the wannabes (or the first group of millionaires) who try to emulate them, by dressing and acting the part.

Motivations

Why bring up these two topics? For example, the trending topics of attaining financial freedom with kids or without kids, leaving a toxic workplace, etc and understanding the mindsets of 2 types of millionaires…

I guess the keyword would be motivation. What is your mojo?

As Christopher would define it – the software (behind the hardware). The hardware would probably be the numbers, magic of compounding via investing and achieving that magic passive income amount.

To quote Christopher:

– What is your core motivation to succeed?

– Does this core motivation align itself with what you think financial freedom is?

It is the software that drives the hardware.

For me, as a parent with 2 kids, it is my duty to provide for the family. And yes, I have my fair share of experience working under unreasonable bosses and client representatives. Yes, there are incidents of shouting, banging on tables, even throwing of files and chairs… Deadlines which were yesterday or last week, phone calls on weekends and ‘invitation’ to urgent meetings Now.

I do not consider myself exceptionally talented, nor is my active salary exceptionally high… that is my current hardware…so my mindset to attaining financial freedom would be more aligned to the second group.


StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend / bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Friend of StocksCafe and test out all features for free for two months!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

Use the above referral code to enjoy the below benefits (Campaign Period: 9 August 2021 12:00 – 31 Oct 2021 23:59 (SGT))

FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!

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