Change in Asset Mix of Investable Funds – December 2018

Asset allocation of investable funds is an important aspect of investments. One should not put all money in one basket. The risk is too high should the single asset collapses.

2018 turned out to be a volatile year for investments as anticipated at the start of this year. Hence, 38.8% still remained in cash and cash equivalent items. This was up significantly from 24.3% in 2017.

Asset Mix in percentages (%) 10-Dec-18 Dec-17 Change
Equities (see below) 22.7 17.7 5.0
Fixed Income/Bonds 26.6 47.0 -20.4
Insurance related investments 11.9 11.0 0.9
Cash & Equivalent 38.8 24.3 14.5
Equities – Singapore 15.9 14.4 1.5
Equities – Others 6.8 3.3 3.5
22.7 17.7

Investments in fixed income and bond products came down from 47.0% to 26.6%. This was mainly due to the redemption of OCBC preference shares by OCBC. OCBC Preference shares were redeemed and returned in cash into my portfolio during the year. I have not invested this amount in any asset and it is still in cash.

Investment in Singapore equity was 15.9%, slightly higher than 2017.
Investment in overseas equity was 6.8%, an increase from 3.3% in 2017.
Investment in total equity was 22.7%, up 5.0% points from 2017.

Investment in insurance related products remained stable at 11.9%.

This was a cautious portfolio mix. Investments in equities and bonds were comparable (22.7% vs 26.6%). More amounts remained in cash because I did not want to risk my capital in a volatile investment environment.

Copyright © 2018, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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Calculating actual dividend yields for 2018

It would be informative to know what is the ACTUAL dividend yield based on cost of purchase.

I tracked actual dividend received each year by security counter. I have the actual cost of purchasing a security. With these two numbers, I can calculate the actual dividend yield based on my investments. Below are some of investments held with dividend yields for 2018.

Counter Avg Cost $  Dividend Yield
NetLink NBN Trust 0.81 7.0%
SPH Reit 0.95 5.8%
Singtel 4.03 5.1%
Keppel Reit 1.48 3.8%
StarHub 4.26 3.8%
STI ETF 3.23 3.6%
Comfort Delgro 2.93 3.5%
Lion-Philip S-REIT ETF 1.02 3.4%
SPH 4.12 3.2%
M1 3.68 3.1%
Keppel Corp 9.86 2.9%
SingPost 1.47 2.4%
     
Overall Portfolio   3.04%

Even when the shares/ETF/REITs were purchased at costs that were higher than the current market values, the dividend yields were still good. On an overall portfolio basis, the dividend yield was 3.04%.

I was surprised that NetLink NBN Trust topped with dividend yield of 7.0%. SPH Reit (5.8%) and Singtel (5.1%) followed on with very good yields.

SPDR STI ETF offered yield of 3.6%. This is better than my overall portfolio yield of 3.04%. Buying SPDR STI ETF is a good choice instead of picking up stocks on your own.

One may notice that some of these counters had declined drastically from the costs I purchased them. But they were still offering attractive to decent dividends like Keppel Corporation (2.9%).

Copyright © 2018, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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2018 – A year of volatility

The Straits Times Index (STI) reached two peaks over the course of 2018.

3,609.24 points on 24 Jan 2018
3,615.28 points on 2 May 2018

2018 started with STI at 3,402.92 points. After May 2018, it was on a downward spiral. It was at 3,115.52 points yesterday (6 December 2018). This was a drop of 8.4% year-to-date.

Back in February, ex-Chairperson for Federal Reserve (Fed) Janet Yellen said that the stock market valuation was high. On 6 February 2018, the Dow Jones Industrial Average (Dow) was at 24,912.77 points. The Dow went on to touch new high at 26,828.39 on 3 October. Since then it was brought down to 24,947.67 points (6 December). The Dow was back to February level when the warning by Janet Yellen was made.

2018 was that volatile reaching new levels before coming down hard towards the end of 2018.

2018 belongs to Donald Trump and his trade policies for US. The policy of trade tariffs on China export to US is one main cause of the poor sentiments of the investment markets. The other is Fed increasing benchmark interest rates to remove accommodative monetary policy of US since the global financial crisis (2008/09).

The other factors causing volatility was oil prices and Brexit outcome.

Oil prices reached US$82 per barrel for Brent Crude on 25 September and then declined sharply in November to now trading at US$53. (-35.3%). The outcome of Britain leaving European Union (Brexit) hangs in a balance. UK Prime Minister Theresa May is trying to clear the UK parliament with the Brexit deal she negotiated with EU.

Looking back my earlier posts in 2018, I started to feel uncomfortable since February. Lesson learned was that stock markets gyrate with politics of nations. To stay with cash would have been a wise decision. It is almost impossible to time the market for investments or even selling them with this kind of market volatility.

Copyright © 2018, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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Advice we gave to our daughter on financial matters

We want our daughter to be self-dependent financially. Therefore we share our knowledge with her to set her on the path of financial independence.

The values of thrift and savings are the starting point. Next, with savings in the banks, what should she do to grow these savings? Current savings interest rate is way below inflation rate, hence there is a need to deploy these savings for higher returns.

Investing in equities and exchange traded bonds

When she was 21 years old, she had an on-line trading account and CDP account to trade in stocks and shares.

The shares she bought were mainly dividend stocks, exchange traded bonds, Reits and ETFs with well-established names. Investments include Singtel, Comfort Delgro, Mapletree Commercial, Nikko AM STI ETF, SPDR STI ETF, Astrea IV PE bonds, Temasek bond, among others.

Regular Savings Plan (RSP)

In June 2017, she applied for POSB Invest-Saver, a regular shares savings plan. Since then she had been putting $100 each month to buy Nikko AM STI ETFand another $100 each month to buy ABF Singapore Bond Index Fund.These two funds provide dividend and interest income.

Singapore Savings Bonds

She invested in Singapore Savings Bonds (SSB) when the interest rates were better, ie three tranches with start dates November 2015, January 2017, July 2018. Held-to-maturity interest rates are 2.78% pa, 2.18% pa, 2.63% pa respectively.

Insurance

My daughter is covered under

  1. GE’s Supreme Health Integrated Shield Plan (IP).
  2. Living Assurance Policy with CRB
  3. Whole life insurance with CB
  4. NTUC Income SAIL single premium plan

Concluding Remarks

By writing this blog, it is hoped that once someone has started work, it is important to manage his/her financial affairs in a responsible way. Investments need not be a gamble. There are investments that carry lower risks. Though equities are riskier assets, stocks purchased could be blue chip stocks with a history of corporate governance and a history of paying out dividends. Because, young people started early in investing, there is a longer time horizon to adjust the portfolio to mitigate the risks of stock investing.

My further recommendation is not to incur personal debts like unpaid outstanding credit card bills. Bank debit card serves equally well instead of credit card. Bank interest on unpaid credit card bills is too expensive.

Copyright © 2018, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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Mountains

Mighty, Majestic, Magnificent Mountains
Snow-capped for winter, lush green for spring
Beautiful autumn colours to behold

Clouds love to caress mountains so high
Imaginative people try to see forms and shapes
Give names like jade dragon snow mountain

Artists love to paint mountains
Whether Chinese ink, oil, acrylics or water colours
The result is equally beautiful

Mountaineers love to climb mountains
To reach the peaks of higher and higher mountains.
Where the air is thin for the adrenalin flow

Stand-alone or mountain ranges
With its valleys and dense trees
Left me enthralled

Copyright © 2018, limkimtong for Living Investment

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Water

Where there is water, there is life.
Water cleanses and quenches thirst.
Water flows from rain to streams, waterfalls, rivers and ocean.
From a single drop, it gathers more to become part of a big ocean.
The sound of water flow in a quiet forest is calming.
The noisy waterfall shows strength and power of nature.
The flow and ebb of water on the shores is meditative.
The reflections on the surface take on colours and brightness of lights.
Such is the beauty of water.

Copyright © 2018, limkimtong for Living Investment

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Loving the Trees

How often do we look up at the trees and admire them?

Trees outlive men. Some survive for thousands of years.
Sweet smells come from trees like the Tembusu trees.
Durians, rambutans come from trees.
Birds, insects, small animals live in them.
Squirrels scurry in them for food.
Woodpeckers peck on trees for insects.
The leaves change colours in autumn, shed leaves in winter.
You see colours in forest.
Trees can grow as tall as some HDB blocks.
The branches provide shade like the Rain Trees.
Cars are seen to park below trees despite bird droppings.
Trees prevent erosion of soil with their roots holding on to it.
Trees produce oxygen for human race to use.
Trees are part of the ecological system of mother earth.

Next time round, look up at trees and see the wonders of trees.

Copyright © 2018, limkimtong for Living Investment

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