Total Passive Income (2020) - CPF Interests + Stock Dividends + S&P 500 Index Fund ($42.5k)

 

Don't you just love logging into your CPF account on 1st Jan to find out how much interest has been deposited? Last year's (2020) interest income from CPF is $13,751.

I also made the decision to purchase the S&P 500 index fund via Endowus with $40,000 of my CPF Ordinary Account (OA) funds in Sep 2020. It has since generated $2,859.92 (+7.15%) returns within a short time frame of 3 months, beating the 4% Special Account (SA) annual interest rate.

Add that to the dividend income of $25,917  generated by my stocks portfolio would bring the total passive income received to $42,529 for year 2020 (excluding capital appreciation of the stocks portfolio).

Not bad for doing nothing and earning money while sleeping, aye? It's like having a son earn money and him giving you all his paycheck as an allowance, haha. My goal is to earn $50,000 passive income annually because that's how much I think I will need to stop working and live a reasonably comfortable lifestyle.

Dividends Update (Year 2020) - $26K

 

With the final dividends announced by the various REITs in for 2020, I can finally tabulate the total dividends received for the year. I've received a total of almost $26K of dividends in 2020, five  thousand more than 2019. This is why I invest in REITs, the amount of dividend income received is relatively constant even in a year hit hard by COVID-19.

Thanks to my strategy to invest mostly in Industrial REITs, the portfolio has been quite robust in churning out dividends. Think about it, even in times of turmoil, businesses still need space to manufacture goods, store logistics and house data centres. I plan to grow the amount of dividends received next year to $30K, which means I will need to add another $100K in value to the portfolio with an average dividend yield of 5%.

With 42 REITs listed in the Singapore stock exchange, I can't possibly invest in them all or spread my investment too thin for sub-par returns. I'm going to stick to the 4 horsemen of Ascendas REIT, Mapletree Industrial Trust, Mapletree Logistic Trust and Frasers Logistic & Commercial Trust. I'm really tempted to jump into the US stock market and maybe I will in 2021, because the opportunities of growth stocks there are too hard to ignore.

For now, FLCT has been identified as the lead horseman to help propel this portfolio to the million dollar mark within the next 5 years. I'm crossing my fingers for it to be listed as a constituent stock in the Straits Times Index at the December quarterly review. It's time for FLCT to shine!

Stock Watch - Mapletree Logistics Trust (Oct 2020)

Did Mapletree Logistics Trust shock everyone with the announcement of its plan to add more than $1 billion worth of assets to its portfolio, in the midst of a pandemic?

I missed the boat on MLT in the past because I wasn't paying attention to the market as a casual DIY investor, but I'm definitely adding this REIT to my portfolio now and building it up to become one of the core stocks - together with A-REIT, FLCT and MINT.

It has the potential to become a $3 stock like A-REIT and MINT!

Likes

• Strong sponsor & pipeline
• Industrial REITs are less prone to economic downturn compared to retail/hospitality
• Giant REIT (component of STI) with economies of scale
• Multinational diversification (SG, MY, CN, VN, AU, UK)
• Appreciating share price and DPU

Dislikes

• Dividend yield is less than 5%
• Majority leasehold properties

REITs Portfolio Update (Sep 2020) - $543K

 

Transactions in Sep 2020:

• Accumulated 5,000 shares of Ascendas REIT at S$3.20
• Accumulated 14,000 shares of Frasers L&C Trust at S$1.35
• Accumulated 15,000 shares of Prime US REIT at US$0.815
• Portfolio Market Value: S$542,652

I'm a huge fan of Dividend Warrior (dividendsrichwarrior.blogspot.com) and his dividend portfolio strategy. While I probably started buying REITs on my own, following his blog over the years gave me confidence that such a strategy would work if I hold on to the REITs and reinvest the dividends received consistently.

I realized that the current portfolio market value of my REITs exceeds his REITs market value of $522K. This is because Dividend Warrior had focused more on non-REITs investment such as banks, since 2019, to diversify his portfolio. His total portfolio market value today is an impressive $643K over 10 years. I hope to be able to catch up with him soon, haha.

He had paid much more attention to the REITs market, and was able to catch the rapid growth of the Mapletree REITs and Keppel DC REIT. I've only managed to buy a small amount of Mapletree Industrial Trust back when it was still $1.50 (today's price is $3.27), and completely missed out on Keppel DC REIT. Part of the reason is that I only research which stocks to buy when I accumulate enough savings, or during bonus periods, which is probably only about 3 to 4 times a year.

I guessed I've never thought that attaining F.I.R.E. (Financially Independent, Retire Early) is possible, and that investing is only to help me accumulate sufficient retirement funds. Catching up and reading all your investment blogs during COVID-19 circuit breaker has changed my mind, maybe it's possible to dream about F.I.R.E. when this REITs portfolio hits $1 million.

A huge thanks to the investment bloggers community out there who are sharing your investment journey and portfolio data. It has given me renewed interest in taking my investment more seriously, and the possibility of leaving the rat-race one day to pursue my other interests.

COVID-19 Stock Market Crash (Mar 2020) - Missed Opportunities

What was your strategy during the big market drop in Mar 2020? Did you load up more shares or did you cut losses?

I wasn't pleased with how I reacted but then again hindsight is 20/20. I might have been pleased with myself if it was a prolonged bear market. This is why you should have a strategy on what to do when the market tanks, not just in a bull market, so you can execute your plans swiftly and calmly when the time comes.

I was shocked and paralysed when my portfolio not only lost its gains for the past 5 years, it also experienced a 50% loss in capital. Imagine waking up to a chart like the above! I knew I wasn't going to sell and incur all the losses, but I didn't want to buy either because I was unsure on how the market might react further.

What I should have done was to buy more positions of my two core portfolio stocks - Ascendas REIT and Frasers Logistics & Commercial Trust. At some point FLCT dropped as low as $0.665, if I had bought some I would have been sitting on more than 100% gains on those shares now. I managed to regain some composure in Apr 2020 and starting stocking up on Keppel Pacfic Oak US REIT and Prime REIT, but absolutely missed the opportunity to expand my holdings in A-REIT and FLCT.

I have been accumulating A-REIT and FLCT for years, they are good stocks, yet I couldn't bring myself to buy more during the crash in March 2020. Next time this happens again, I bet you know what I'll do - take a cold shower and open my war chest.

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” ― Warren Buffett.

StocksCafe - Tracking Stock Dividends Automatically ($20K Milestone)

I have a new toy!

StocksCafe is a website/app that helps you track and monitor your stocks portfolio and dividend income. Check out the full suite of functions at www.stocks.cafe.

Thanks to some of the other finance bloggers who have been using this nifty little piece of software at their blogs, I went to StocksCafe and started tinkering around. I loved it so much I purchased a one-year subscription at $39.

This thing is so idiot proof - all you have to do is key in your historical stock trades and it will automatically calculate your profit and loss, returns and dividends received over the years. Thankfully, I was able to pull out the trades information from my POEMS account and transpose them into StocksCafe.

This was what I found out.

I have received in total $70K worth of dividend income over the past 5 years from REITs. Wow!

I have reached the milestone of $20K in annual dividends in 2019. Yay!

Dividends received have added +16.8% points returns to the portfolio, when combined with the P&L. Not arguing with that!

If you are a serious dividend growth investor, you really should be tracking these statistics to help you refine your holdings and strategy along the way. For example, I have sold off SPH and Singtel as they can no longer match the growth and returns of REITs.

We are living in volatile times where disruptive technology and COVID-19 can change the fate of traditional blue chip stocks in a matter of years - think SPH, Singtel, Keppel, Sembcorp, SIA. We should manage our portfolio actively to pick up the stars and let go of the non-performing ones.

It is very important to protect your capital and not get caught up in a dividend yield trap.

"Rule No.1: Never lose money. Rule No. 2: Never forget rule No.1." -- Warren Buffett

Net Worth Update (Sep 2020) - Central Provident Fund (CPF)

Long before the 1M65 ($1 million in your CPF by 65 years old) movement became viral (watch video above), I was already transferring my CPF Ordinary Account (OA) to my Special Account (SA) every month once I started working. To me it was a no brainer, the government is giving you a higher interest rate of 4% compared to the 2.5% in OA, just grab it!

It didn't bother me that I would not be able to use the funds in my SA to purchase my own home. I grasped the concept of CPF - it's meant to be your retirement fund at 65 years old so just leave it alone. If you use it or withdraw it for anything else, you are reducing your nest egg when you retire and no longer have an income. Everyone knows how high the cost of living in Singapore is, we need to be prepared.

When I bought my flat, I had to take a loan on the entire mortgage because you can't use your SA for property purchases. This was fine by me because any HDB or commercial home loan will not exceed the 4% interest rate earned by leaving your money in SA. Therefore I would be earning more money on interest by taking a home loan versus paying the flat purchase price outright. Not all loans are bad.

However, once I reached the Full Retirement Sum (FRS) in SA, I wasn't able to transfer any more money from OA to SA. At this point I was quite happy to use my OA to pay the monthly housing loan installments, since I can invest my cash in REITs which can yield more than 5% returns.

Today, my CPF has accumulated about $365K and is earning an annual interest of $13K as of 2019. With continual contributions from my salary and the power of compounding interest, this sum is expected to reach the goal of $1 million when I reach 65. Since the CPF is a relatively "risk-free" savings account guaranteed by the government, I can afford to take more risk with my stocks investment portfolio to earn higher returns. At the end of the day, I will still have the projected $1 million savings in my CPF to fall back on for retirement.

Total current net worth = $890K. Your CPF can be your second risk-free dividend portfolio yielding 2.5% to 6%.

Let the time value of money be your friend in your F.I.R.E. journey!