The Most Dramatic Day Of My Life

I just want to pen this down for now... maybe I'll fill in the blanks later when I'm in the mood.

Summary:

“很久很久以后我才知道，当一个女孩说她只把你当作永远的好朋友，不是真的只把你当作永远的好朋友。”

原来我们和爱情曾经靠得那么近

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Afternote: Things went back to "normal" after that fateful day.

Truthfully speaking, even I am not very sure of my own feelings - perhaps because I am so inexperienced in this.

The only thing to do now is to let nature take its course?

Why Does It Hurt...

I think I am really 犯贱。。。

It is like I did not realize the importance of what things mean to me until I lost them.

Haiz...

I really deserve to be forever alone haha...

Side Note:

Don't know if it is due to age getting on me, but I feel quite emotional with regards to some ridiculous things.

For example, even closing a bank account I used for 3+ years made me kind of sentimental...

I think it is somewhat true that the older you get, the more resistant you become to change.

Letter To Shareholders (16) - Performance Review 2019Q3

Economy Commentary
The insane Q2 rally was gone in an instant - led by continued trade war threats and Hong Kong protests.

Surprisingly, premium REITs continue to hold up.


Performance Review Highlights / Acquisitions & Developments
Fired one bullet on Eagle Hospitality Trust - while we understand the various risks, the near 10% yield is imply too tempting to ignore, especially when compared to current valuations of Singapore based REITs.

We also applied for Lendlease near the end of Q3 - hottest IPO in the past 5 years, 14.5 times oversubscribed , 30% chance and did not managed to get it. On the positive side, it means 1 extra bullet for the upcoming downturn.

The biggest surprise was Sembcorp Industries plunging yet another level to near $2. $2.4 was really historical low, and I really did not expect another 15% drop. Once again humbled by the market.

On a positive note, we distributed over $3000 (Singtel, STI and Kimly) worth of dividends this quarter! That's more than our annual dividends just 3 years ago in 2016, proving how far we have come.

Operating Highlights - Income
Income was about 15% YoY higher this time due to higher salary, proficiency incentive and of course dividends.

We also received a nice $200 marksmen bonus from MINDEF, and minor $100 profit from clearing old items on Carousell.


Operating Highlights - Expenses
Regular expenses were about 30% higher due to shopping expenses - multiple video & board game ($200), clothes & bag ($200), external hard drive ($150)

1-time expenses were essentially same YoY, just higher income-taxes.

Total expenses were about 20% higher.

Operating Updates
N/A. 

Outlook

Thanks to the record dividends, our saving total after salary this quarter is 99%! Continue to maintain total saving rate at around 80%. This year has been a rollercoater ride - bad Q1, insane Q2, bad Q3 again.

One big news coming up is the launch of IBKR Lite, should it become available in Singapore. From initial review:

"With IBKR Lite the commissions will be per IB's Fixed Pricing schedule, i.e. US$5 minimum per IWDA or VWRA trade. But that's way better than Standard Chartered's US$10.70 minimum, unless you happen to be a "Priority Banking" customer. There will be no monthly minimum commission with IBKR Lite, and you still get Tiered Pricing (and the ridiculously narrow bid-ask spreads) on your currency conversions."

IBKR is also setting up an office in Singapore, which hopefully means better support/promotion? 2020 could be the year we finally get started in the global market.

We will continue to maintain our strategy of investing for the long term - building our dividend portfolio bit and bit.

Waste of Resources

Chasing women, ie attracting them physically, mentally and pecuniarily is nowadays a unnecessary waste of a man's resources.

Having a wife at home, bringing up kids, paying for the home and vehicle; whilst slaving away at the grindwheel is crazy. Just ask yourself why you are putting yourself through all that for the next forty years?

Mostly it seems that you are doing it for parents, grandparents and because "it is what we do".

Truly Embarking on Minimalism

I've been speaking about it, but I haven't really take only concrete actions.

Lots of excuses like troublesome to sell on Carousell, etc...

Recently, I've started actually dumping old stuffs from ages ago. Things that I would definitely not use again, but still kept them for whatever sentimental reasons.

Now, I have began on my journey towards Marie Kondo joy sparking minimalism philosphy.

- Old Chinese / English Video Games
- TCZ Collectables
- 4 Years worth of University notes
- 10+ Comic book series
- Digitizing whatever I can and throwing away all physical copies of Old VCDs/CDs/DVDs (e.g. chinese albums, wwe ppvs, movies, educational audio tapes, dramas)

Even S.H.E stuffs - it finally came to this, but I have disposed all the posters, magazines, collections and lots of rubbish items like stationary and notebooks. Looking back, I have no idea why I brought these cause I really did not touch any of

Now, I can sort of understand why youngsters just want to collect every single item of their idols. Years and decade later, they will become useless and do nothing more than dust collecting.

Except for very few memorable items, I am intending to dump them all.

Letter To Shareholders (15) - Performance Review 2019Q2

Economy Commentary
The market continue to fluctates on the wimp of Donald Trump and his tarriff wars. Fed's 180 degree turn to a dovish outlook was a huge surprise that led to an incredible REIT rally.

As an example, I thought CMT was quite fully valued at $2.20+. It's now at $2.60+. Almost all REITs had an  insane run making me so tempted to sell my long-time REITs.


Performance Review Highlights / Acquisitions & Developments
We managed to fire a few bullets during the May downturn; strengthening our STI position, subscribing to Frasers Centrepoint rights and finally averaging down on Sembcorp. In the long term, we still believe in the value of Sembcorp's utilities business. As long as the Marine segment can "pull through", there is more upside to come for the energy market.

Singtel and Kimly remains our largest holdings. Kimly unexpectedly announced a doubling of dividends payout despite their business growth is still weak. Personally, I feel it is a move to support the share price by attract yield investors. Hopefully, we can see some light in the 2nd half of 2019 when they start rolling out more innovations.

We distributed $1200 dividends this quarter, lower from $1900 in the same period last year largely due to absence of M1 and Capitamall Trust. 

Operating Highlights - Income
Despite lower dividends, our quarterly income remains roughly the same due to an enlarged base salary.

We would perhaps have to make a huge decision on whether to switch our operational income. It's a tough decision, much tougher than the previous time. In terms of monetary benefits, it comes down to the long-term vs the short-term.


Operating Highlights - Expenses
Regular expenses were about 10% lower than last year and in-line with long term average. Essentially, this fluctuates at around $2000.

1-time expenses were also much lower than average, with basically only Taiwan vacation (spend less than $700SGD for the entire trip, tickets and accomodation inclusive). 

This made 2019Q2 our lowest expense quarter in 2 years.  

Operating Updates
N/A. 

Outlook

We continue to maintain our total saving rate at around 80%, and saving rate of salary after passive income at 90%.

The huge recovery proves once again how unpredictable the stock market is. Just 2 months ago, it was all gloom and doom due to the trade war. Now, the DOW is once again breaking all-time high.

We will continue to maintain our strategy of investing for the long term, that time in the market beats timing the market. 

Shiny Things II

Some additional tidbits from Shiny Things Thread since 3 years ago

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How To Transfer To Interactive Brokers:

Basically you want to pick SGD, and choose "Wire" as the funding method. You can optionally enter your sending institution name or SWIFT code if you know it (pro tip: DBS's SWIFT code is DBSSSGSG, OCBC's is OCBCSGSG, UOB's is UOVBSGSG), and the account number you'll be sending from; this helps them match the incoming deposits to the funding notifications. 

Once you've created the funding notification on IB's website (which tells them "I'm going to send you $1,000 SGD from account 12345 at DBS, please watch out for it"), then you need to do a FAST transfer from your bank to the account number that IB gives you. Once that's done, it's usually a day or so tops before the cash shows up in your account. 

Anyway, yes you want to fund in SGD; yes, "Cash" is usually the right choice. 

Benefits of & FAQ Interactive Brokers:

- On the "$10USD Minimum activity fee", the commission for converting currency is counted for activity fee. For anything monthly, IBKR is always better because the fees will be US$10 (assuming less than US$16k per month), whereas with SCB it will be US$10.70 + 0.9% (assuming less than US$4k per month).

- "Beginning January 1, 2019, accounts with a Net Asset Value (NAV) of USD 100,000 (or equivalent) or more will be paid interest at the full rate for which they are eligible. Accounts with NAV of less than USD 100,000 (or equivalent) will receive interest at rates proportional to the size of the account. For example, an account with a NAV of USD 50,000 will earn credit interest at a rate equal to one-half the rate paid by IBKR to accounts with a NAV of USD 100,000 or more." (See "Interest Paid On Idle Cash Balances")

- Aside from everything else, Saxo's commissions are higher and they (last I checked) have started charging ridiculous custody fees.

- How long does it take for IB to transfer money to ur local account after initiating the transfer on fund withdrawal? Around 2-3 business days.

What pricing structure to use?
Short Answer: Tiered is almost always the best answer (99% of the time) for everyone

Long Answer: Fixed is not subject to LSE exchange fee and clearing fee. If you are mainly buying USD denominated ETFs (such as IWDA and EIMI) in LSE, the below applies. 

Tiered
- 0.05% commission, min USD 1.70, max USD 39 (under "EUR, CHF, USD, PLN, ILS and HUF-Denominated Products Tiered")
- 0.0045% LSE exchange fee, min GBP 0.10
- GBP 0.06 (~USD 0.08) LSE clearing fee
(Note: USD1.70 is only the execution fee. There are other fees such as the exchange fee, regulatory fee and third party clearing fee. All these add up to the total commission of USD1.90+.)

Fixed
- 0.05% commission, min USD 5

This means that Tiered is better for trades below USD 9,028 (commission of USD 5), and trades above USD 85,890 (commission of USD 42.945).
It's unlikely that retail folks would do a single trade as large as USD 86k (well, unless one has been building a big warchest and markets go into meltdown), hence the decision point is really on the USD9k.

TL;DR
Go with Tiered if your LSE IWDA trade size is less than USD 9k.
Go with Fixed if your LSE IWDA trade size is greater than USD 9k.

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On worry that Interactive Brokers aren't regulated by Singapore/MAS:

IBKR is regulated by the US Securities and Exchange Commission, and the US Commodities and Futures Trading Commission, both of which are (in my opinion at least) a lot stricter than the MAS’s light-touch regulatory regime.

One characteristic of U.S. brokers is that they’re SIPC insured. That means among other things that the cash, in any currencies, you might have on deposit at IB is insured up to US$250,000. And that’s good, of course. SIPC membership requires significant regulatory oversight.

How about cash held at a broker in Singapore? Is there any equivalent to SIPC? Nope, sorry.

But let’s consider banks in Singapore. Surely they’re safer, right? Well, U.S. deposit insurance (FDIC or NCUA) has a US$250,000 limit, and it’s not all that hard to raise that limit effectively. (That involves strategic account title variations and, if that’s not enough, CDARS.) The limit in Singapore is S$75,000, only recently raised. And that limit in Singapore is much tougher to lift (basically impossible) and only applies to Singapore dollar deposits. All other currencies on deposit at a bank in Singapore are completely unprotected. FDIC and NCUA coverage, just like SIPC, will make all depositors whole up to the insurance limit and at the current U.S. dollar exchange rate. And they do it over a weekend.

Anyway, while I and others think U.S. regulators need to be even better, they are very good at these basics — and much better than the Monetary Authority of Singapore is.

It’s a big world out there, and there are some — OK, many — better, stronger regulatory protections than the rather weak ones in Singapore. If you’re looking for greater regulatory safety then you really ought to transfer most of your wealth out of Singapore as fast as you can and put it some place safer.

I have phobia dealing with institution not domicile in SG & not subjected to SG laws. When things go wrong with IB you have no recourse in SG.

That's your hang-up, and it's not rational. The Singapore government has already told you that you're entirely on your own if anything should happen to your U.S. dollars (or any/every other foreign currency) held at every bank in Singapore. This government won't lift even one finger to help you.


In contrast, the SIPC, FDIC, and/or U.S. Treasury (as applicable) are 100% guaranteeing your U.S. dollar and even non-U.S. dollar denominated wealth held in those vehicles I've listed. The very safest places and ways to park U.S. dollars are most definitely not in banks in Singapore, where there's absolutely no protection at all.

And when things go wrong with any bank in Singapore you have no recourse in Singapore. The SDIC only insures Singapore dollars, not anything else. You become an unsecured creditor. By keeping USD in Singaporean banks you have zero insurance coverage. You have no FDIC coverage, no Singaporean deposit insurance. If the bank goes down you have nothing. 

IB is a brokerage & all around the world, banks are much more strictly regulated & enforced than brokerages. Will My Money Get Stuck If IB Goes Down?
The brokerage is simply facilitating your investment in particular assets. Below SDIC limits there's no "stuck." The absolute worst case ever was MF Global, and every MF Global account holder was made whole at fair market value. Every single one, even above SDIC coverage limits. It was the account holders with assets above SDIC coverage limits that had to wait a fairly long time for recovery, but they were all made whole.


SDIC covers up to US$500,000 in securities positions with a sublimit of up to US$250,000 in cash holdings, in any currencies. At or below those limits and you're extremely well protected, and those checks are cut very quickly. This is U.S. government protection. There is no SDIC, FDIC, U.S. Treasury, MAS, Singapore government, or anybody else that'll save your U.S. dollars at any Singapore bank. Absolutely zero protection.

You can take risk if you wish, but you're seriously deluding yourself if you think parking U.S. dollars at Singapore Banks/Foreign Banks SG Subsidary (note: this is the reason why they have to offer higher interest for your deposits, because there's no deposit insurance) at all comparable in risk to, say, U.S. Treasuries via IB or via any other SIPC covered broker. That's literally insane in financial terms.

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IB Charges For Deposits / Withdrawals

IB does not charge anything for deposits.


Your first withdrawal per calendar month in any currency you wish in any amount is free of charge. IB charges nothing for that, not even for the wire transfer. If your receiving institution charges, that's all on them (and you).

The spread at Interactive Brokers (convert SGD to USD and back) is 0.01% (practically free). You have to buy USDSGD to convert SGD to USD.

Foreign Currencies in Local Banks

DBS is charging you for an inbound fund transfer. If you absolutely insist on landing U.S. dollars (a foreign currency) at a bank in Singapore, pick a different bank. ICBC, BOC, Citibank, and CIMB are among the banks in Singapore that don't charge. 

Note there's no equivalent to FAST (i.e near instant transfer) for U.S. dollars or for any other foreign currency.

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Which Bond Fund? A35? MBH? 
Just use Singapore Savings Bonds (SSBs)! A35 is holding Singapore Government Securities, so it's the same basic holding (Singapore government bonds), except with SSBs you've lowered your costs. There's no fund management fee to pay, and the maximum you'll pay to buy and hold a SSB is 0.4% ($2 on a $500 minimum per SSB purchase).


A35 is no longer interesting at all for most savers/investors. Just buy your government bonds directly from the government using your DBS/POSB, OCBC, or UOB bank account, that's all. And if you're buying at $100/month, just wait 5 months and buy a $500 SSB. Loop, repeat.

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Replacement For IWDA? (July 2019) VWRA
The big V launched a new ETF that might be a better option than IWDA without the hassle of EIMI.

Ticks all the boxes, domiciled in Ireland + Accumulative, just launched 2 days ago.

FTSE All-World UCITS ETF (USD) Accumulating (VWRA). 
TER is 0.25%, AUM is US$2.7b, same as VWRD.

https://www.vanguard.co.uk/adviser/investments/product.html#/fundDetail/etf/portId=9679/assetCode=equity/?overview

Interesting note: The A in IWDA means Accumulating, the D in VWRD means Distributing.

Compare Expense Ratio of the Irish domiciled funds: IWDA(0.2%) + EIMI(0.18%) = VWRA (0.25%)

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This is how and why most retail investors lose money. 

a) They buy in when the market is in a clear bull run, which usually means that the market is probably in the later part of the bull run. They sell when the market is dipping and it finally crosses their pain threshold, which is usually towards the near end of the crash.

b) They keep a tonne of cash waiting for the stock market to crash. When a crash comes, they hesitate to catch the bottom. When the market bottoms out and turns, they worry if it is a dead cat bounce. By the time they are convinced that the market is recovering, the good deals are over.

c) Humans are pattern seekers, even when none is present and we will convince ourselves that a pattern is there.

Why do people lose money on the stock market? Human psychology. Plotting out and staring at the market only exacerbates it. 

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People have been saying that markets are overvalued since at least 2010. For that matter, I remember hearing a fair bit of it in 2009, and we've done nearly 17,000 Dow points since then. Even Tyler's admitting it these days (and don't say "who's Tyler", I know you read ZH). 

The truth is that there's always doomsayers; there's always people saying "oh no, the crash is right around the corner". A better strategy is to buy, regularly and in small amounts—because that way, if you're wrong, and the market rallies right in your face for a decade like it did from 1988 to 1999, you'll at least be participating in the gains. 

People who say "oh just wait for the plunge and buy it then" (and I've made fun of wahkao and others for saying this before) are handwaving away three very important questions: 

1) What's "the plunge"? Was it the 3% selloff last December? Singapore stocks have risen nearly 14% since then, so maybe that was "the plunge" that we should all have bought. What about the 2015 emerging-market panic, when Singaporean stocks dropped 25%? What about the 2008/09 GFC, when stock markets around the world halved? I mean, in hindsight, March 2009 was a sensational buying opportunity, but...

2) When "the plunge" comes, will you have the balls to buy it? Buying the dip is hard!. Buying in March 2009 felt sickeningly awful, because it felt like the world was imploding around your ears, but in hindsight it was the best buying opportunity that our generation is ever going to see. (I mention this a lot, but I still have the confirmation for a clip of SPY I bought at $72 on March 6th, 2009.) The entire point of dollar-cost averaging is that it takes the emotion out of investing; it's a lot easier to press that buy button if there's a hard-and-fast rule telling you to press it.

3) And what if "the plunge" never comes? US stocks sextupled between 1998 and 2000 with basically no pullback; if you waited for "the plunge" you'd have been sitting in cash for over a decade, missing out on dividends, and missing the opportunity to buy SPX in the 200s, 300s, 400s... those are levels that we never saw again, even after the tech wreck and the GFC. 

And here's the thing. I've said it before, I'll say it again: a balanced stock-and-bond portfolio is the single best long-run investment that regular people can invest in. It performs better than straight bonds, with lower volatility than straight stocks; it's more liquid than real estate, and it's better than commodities in every respect. Putting your money in stocks and bonds, and leaving it there—resisting the temptation to over-trade, to chase winners, to panic-sell at the lows—is the single most reliable way to invest for retirement. 

And that's what I'm doing here. I'm not offering a get-rich-quick scheme. I'm saying "this investment strategy is simple, and it works, and it won't line the pockets of unscrupulous insurance salesmen".

Trip to Taiwan (Taipei) & My Thoughts On Traveling

It's been over 4 years since I last took a plane overseas.

Incredible for a Singaporean, right? Isn't the love for traveling imbue in our DNA? Isn't this our national hobby? Many of my friends/colleagues find it weird when I say I don't like to travel. Contradictory to what people may think, money is not a big factor. People think I don't travel to save money, but that is really the result, not the reason.

Anyway, it is not to the extend that I hate to travel, but it is not something I would actively pursue. I simply don't have the urge to go traveling like most people do. And this trip definitely confirms that.

Nevertheless, I'm still thankful to my DS mates for jioing me on this trip - it's a nice break from the autonomy of office life. We stayed at an AirBNB (first time!) near the Taipei Main Metro which was really convenient and cheap (~$120/pax for 5 days!). All in, I spent less than $700 for a 5 days Taipei trip.

Roughly off the top of my head, we went to:

Day 1
- Took a nap at Qtime, a 24 hour 'comic shop' to make up for the midnight flight before we could check in.
- Chiang Kai-shek Memorial Hall at the freedom plaza. Had to climb a huge flight of stairs.
- Ximen District, ate some famous food like the Ah Zhong Mee Sua
- Ningxia night market, did not eat anything LOL.

Day 2
- Chiang Kai-shek residence
- Xinbeitou hot spring area. Went for some foot massage.
- Ate at their local mcdonalds (they have pork burgers)
- Stroll near the 'Danshui old street' and tried the 'big intestine cover small intestine'.

Day 3
- Visited the nearby land bank museum and taipei art museum
- Xing Tian Temple
- Went to chill for almost the whole afternoon at my friend's friend's cafe, chat with their barista, etc...
- Sun Yat San memorial hall (国父纪念馆)
- Songshan cultural district
- Went up to Taipei 101 for almost $30... reminded me of the Pearl of the East I went a long time ago.

Day 4
- Had brunch at a more atas local cafe
- Went to Palace Museum (故宫)... quite a disappointment as it was not exactly what I expected. I thought it would be more 'rise of fall of dynasties' and 'kingdom succession' history, but it's more of seeing pottery, glassware, calligraphy, painting etc... yes, I admit I am too uncultured to appreciate these.
- More atas cafe hopping
- Stroll near "Da-dao-cheng' docks
- Walk the huge underground malls all the way back to Taipei metro

Day 5
- Lunch at restuarant
- Longshan temple. Went and got the first divinition lot of my life. I am astonished at the accuracy of the prediction.
- Very relaxing and chilling final day. Went back to rest by late afternoon.

As you can see, it's a super chill schedule which we all agreed on prior to the trip. Instead of cramping in many destinations, we often tire out be early evening and choose to head back to rest. Seriously, tell me who goes back to hotel at 7pm to watch TV when overseas?

Even during my cruise trip last month, I often prefer to stay onboard to relax (instead of disembarking). After these 2 trips, it really made me believe I'm not built to be a traveler.

There are many reasons why I do not love traveling, and it has everything to do with how sheltered we are in Singapore. Yes, I admit I am pampered by how developed Singapore is.

In no particular order:

1. I hate extreme heat or cold weather. During the trip to Phuket, I cannot wait to return back to an air-conditioned room. I do not get the appeal of subjecting myself to the blazing sun.

2. Food and toilet hygenie is a big concern to me due to 'health issues' (Let's just say I do not have a strong tummy). Even a pretty developed city like Taipei, there are still restrictions like not being able to flush paper down the toilet. I also cannot overcome things like eating 'roadside stalls'. I always carry a 'standard medical pack' of panadols, po chai pills, etc... because of this.

3. Anyone who knows me would know I have a smaller than average appetite and many food restrictions. I do not eat exotic food. I do not eat beef, or lamb, or most kind of non-standard meat. I think that already removes one of the biggest joy of traveling. Often when my companions want to order more food, I have to reject simply cause I really can't eat anymore. It kind of makes me feel bad.

4. On top of that, I also don't like shopping - another big reason for people loving to travel. On average, I definitely spend less than $200 a year on average on clothing. After I started practicing minimalism, I have even less desire for 'stuffs'.

5. I find the preparation to travel a HUGE hassle and pain. Just how much work have to be done. Researching the locations to go to, deciding the best time, camping the best price, booking the flight, booking hotel, packing your lagguage, etc... Even the actual traveling itself is a huge drain on the body. When we take leave, aren't we suppose to relax? To me, all these feels like additional work. When I return, I don't feel re-energize. I feel even more tired.

6. I think this reason might be because I have not travel a lot, but I do have a slight fear of flying. I always imagine the worst that can happen, to the point I wrote a will when I left for the trip (ha!). It could be due to the recent Boeing crash and my lack of flight experience.

7. I also don't like huge crowds. When I go to their local night markets and see flood of people, I just feel like going back to rest. Yep.

All in all, think of all the above as the "cost of traveling". To me, the "rewards" I get, such as thrill of seeing a new scenary or tasting local food, just isn't worth the "costs" above.

Maybe it is because Singapore is too "comfortable" that traveling often feel like "suffering" to me. Ha.

Perhaps one day I might find a country that I really love (or a really good traveling companion), which would make me change my mind about traveling.

Letter To Shareholders (14) - Performance Review 2019Q1

Economy Commentary
The market largely recovered in Q1, with STI raising from 3100 to 3300 against major expectations, proving how once again how you can never predict the market. Our portfolio recovered all losses incurred in Q4 2018.

In local market, the implosion of Hyflux dominate the news - a good article I came across on how you can't always trust "independent valuation report". You cannot depend on the authorities to do the governance for you - look at Noble, Ayondo, Midas, etc...

Remeber: "Every asset on the balance sheet needs to be dilligently questioned and verified, but every debt and liability is real."


Performance Review Highlights / Acquisitions & Developments
REITs valuation exploded after the Fed announced no further hikes. We mistakenly sold Capitamall Trust early, but this was impossible to see coming.

M1 is finally off our hands - we made capital loss of almost $2800 and a total loss of $850 after dividends. As one of our earliest holdings (for nearly 5 years), it's a educating lesson at a relatively small cost. Defensive industry are only defensive until the moat is broken. We have seen the collapse of all 3 major telcos over the years and it is the best example of technological disruption effect. Your dividends comes from cash (payout ratio), and to get cash you need free cash flow. 

For now, Singtel and Kimly remains our largest holdings. $2100 of dividends for another record-breaking quarter!

Operating Highlights - Income
Our income grew 10% YOY with slightly larger bonus. base salary and dividends. Nothing much else to add.


Operating Highlights - Expenses
Even though regular expenses were lower than average, the large 1-time expenses made this our highest ever -
totalling almost 50% higher than Q1 last year.

Biggest item were our Genting Dream Cruise trip, CNY angbao gift to mum, several board games and some social events.

Operating Updates
N/A, except manage to avoid giving up DBS Multiplier Feb salary thanks to my colleague's advice!

Outlook

With the sale of M1, Capitamall and March bonus coming in, we are getting extremely cash-heavy that exceeds all the high interest account limit

We are reluctant to invest in this market, but it seems I have no choice but to get some STI very soon to rebalance our assets.

Gambling In Casino

Went to a cruise ship recently and of course visited the casino on board.

I think the enjoyable thing about table games is really the crowd dynamic and social aspects. This happens even if you are just an onlooker, but becomes much more intense when you're putting your money on the line.

If you're trying to make a killing, then you got your priorities wrong. With the house edge, that is impossible in the long run. Your only hope is to come out lucky in the short run.

Instead, treat it more as entertainment expenses, like how you spend on an air ticket or watch a movie. Allocate a fixed amount of money that you are willing to spend as entertainment. Then find a table with good dynamics.

It's hard to explain until you experience it yourself.

Trying to play 1 on 1 against the dealer is foolish in my opinion. In this case, there is no social aspect to enjoy (and you also get to lose money much faster).

The feeling of the whole table shouting "PICTURE!" in hope of the dealer busting in Blackjack, or the intensity at the Bacarrats when a player is squeeze-peeking the card. I think there is a funny "bond" that starts to develop among the gamblers. A group of degenerates fighting against the dealer. It also helps when you get a dealer that is entertaining, or at least interact with the players.

If you do visit the casinio, here's my advice.

Find a table with a good group, never fight the house alone.
Enjoy your time - ask for drinks, talk to others if they are friendly.
And most importantly, quit while you are ahead :)

Year In Review 2018 - Annual Financial Report

Presenting 2018 (5th) Annual Financial Report!


Key Highlights & Notes From CEO

"Financial Freedom Is Not About Money, It’s About Living Your Best Life"

Every day, we build our portfolio bit by bit, brick by brick, for the ultimate goal of escaping the rat race in the not so distant future.

This has been arduous year with many challenges in the market, but despite the setback we still took significant steps towards FIRE. We completed our 2nd year in the new job, continued steady capital injections and broke multiple financial milestones.

Our Achievements (2018)
1. Total net asset value grew 16%
2. Highest ever annual saving rate of 80.8% (80.5% in 2017, 78.2% in 2016)
3. Safety passive income now cover 65% of our recurring expenses (41% in 2017, 28% in 2016)
4. Portfolio market value grew 38% (inclusive of capital injection and gains)
5. Portfolio XIRR for 2017 at -10.17% (20.8% gain in 2017, 15.6% gain in 2016)
6. By XD-Date, distributed over $7800 worth of dividends ($4900 in 2017, $3200 in 2016)

Our Balance Sheet (2018)
Going forward, we would measure our balance sheet by how long we can sustain ourselves if all cash inflow were to stop today. All figures are based on trailing 12 months average.

Survival Burn Rate = Recurring expenses needed for essential survival
LEAN FI Rate = Expenses needed to maintain our current lifestyle
FI Rate = Lifestyle with built-in buffer that we want to achieve in Financial Independence

Our next milestone goal is to attain the holy grail of "25 years annual expenses" - the classic and minimal definition of Financial Independence. Numbers fell in 2018 due to significant increase in our expenses, which is likely to continue rising every year. Despite this, we are confident of reaching this milestone latest by end Year 2021.

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Income Statement
Total income was 27% higher than last year - our highest growth rate since inception. Operating income was 22% higher, driven by higher base salary and bonus.

Passive income increased 40% and now makes up >13% of our total income - thanks to huge dividends growth, switch to DBS Multiplier and increasing SIBOR rate for Maxigain.

Expenses were around 25% higher and also our highest year mostly due to 1-time expenses, especially from April vacation and insurance policies. We expect 1-time expense to trend even higher in 2019 as we take over all policies.  Recurring expenses were in-line at right around the average of past 3 years.

*All figures exclude CPF and investment capital gains/losses.

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Saving Rate For 2018
2018 marked our highest income, expense and saving rate year ever. Saving rate inched up another 0.3% from last year. Assuming no change to main revenue, we expect our saving rate to remain above 80%.

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Recurring Expenses Breakdown
Categorical expenditures remained pretty much the same as every year. Top expenditures were the essentials - food, travel (transport) and utilities (internet and phone).

Random discovery time!

1. Lottery spending in 2018 was around $350 ($50 higher than 2017), yet I won back much lesser at $15 ($80 in 2017). There goes my annual $300 donation to Singapore Pools.

2. I ate fast food 64 times (70 in 2017, 81 in 2016), counting only lunch, dinner, supper, with an average of $7.5 per meal. It is getting lesser, and I am hoping to keep it below 60 in 2019.

3. I brought 22 (11 in 2017, 31 in 2016) cups of Bubble Tea (i.e Koi, Gong Cha) this year. This was probably due to more brands entering the market and the "need" to try them all... Still I think this number is consider low among my friends.

4. I brought 4 cups of Cafe drinks (Starbucks, Coffee Bean) but this figure is high distorted. There are many "lower-end starbucks" and "pop-up stores" that I brought drinks from which were not tagged.

5. Visited restaurants 32 times (20 in 2017), but a handful of trips were just to utilize vouchers. Discounting these, each restaurant trip only averaged $14 - proving that I mostly stucked with "low-class restaurant" like Ajisan and Swensens. Even the most expensives meals cost just $20+.

6. Only 10 KTV sessions this year! Anyone want go sing? :(

7. Spent less than $100 on Taxi/Uber/Grab for the whole year.

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Passive Income VS Recurring Expenses

Passive income grew more than 60%! Equities valuation were definitely more attractive compared to 2017 and granted us good opportunities to take huge leaps forward.

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Portfolio Performance

Our worst year since inception with a XIRR of -10.2%, underpforming the STI by almost 4%. Despite this, we still grew the size of  by 38% thanks to the staggering amount of capital injection.

Year	Portfolio	ES3
2014	-2.94%	7.00%
2015	-8.17%	-10.95%
2016	11.97%	3.08%
2017	22.00%	21.11%
2018	-10.40%	-6.63%

We made some major acquisitions this year on the back of more attractive valuation, grabbing Starhill Global REIT and Kimly, averaging down on M1 and increased our stakes substantially in Netlink Trust, Singtel and the STI. Trade-wise, we made some small money and distributions from CapitaMall Trust.

Majority of our losses came from Kimly and Singtel, offset by the privitization offer of M1.

Our major holdings currently are Singtel, Kimly and the STI. Excluding the STI, we have a healthy and diversified portfolio of 11 holdings (up from 10 last year and 8 in 2016).

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Review of 2018 Goals
We far exceeded our 2018 goal of $500/mth of dividends and hit over $600/mth.

Expenses were 25% higher (projected 10%) on the back of insurance policies and major loss in 2018Q1.

Outlook For 2019 
We will continue our core strategy of building up a divesified income portfolio backed by index foundation. We are more than 10 year into the bull-run and the music got to stop one day.

Once again, our ammunition have replenished entirely after December, and would fatten even more in March. Hopefully we have opportunities to deploy them before the dividends season come in Q2.

This year goal would be to exceed $10,000 worth of dividends - an ambitious and lofty goal, so hopefully we get some Great Singapore Sale. Current SGXCafe projection stands at $8000.

There is a good chance of a income source switch which would definitely have impact on revenue. For now, we would let nature take its course.

2019 is the year we completely take over insurance policies from our parent company, so we expect expenses to rise quite signicantly. Holidays are on the card as well, but nothing too lavish.


Long Term Goals
Depending on when the great correction/meltdown occur, we intend to soon diversify into the global markets. By the end of this year, we should have solidified our local portfolio. Letting it grow any larger would placed great exposure and expections on Singapore Economy.

Although I am personally confident in Singapore, I still could not risk placing all our money in 1 basket. What if we experience a lost decade like Japan?

Some long term directions, likely to start in 2020:
- Open Interactive Brokers Account (Start with DCA and within 2 years grow it to more than $100K USD when we can enjoy $10 platform fee waiver)
- Indexing World ETF via IWDA + EIMI (Currently near 1-year low and we would definitely go in should it drop to lower $40s). Both ETFs automatically reinvest dividends (i.e accumulating units).
- Indexing for China via Heng Seng Index (HK 2800). China growth in the next 20 years should be immense.
- Local portfolio reached substantial size to start lending shares for extra income

Our long term roadmap:

Year 2019: Continuing to build up recurring expense buffer.
Year 2020: Start diversifying into global markets.
Year 2021: Reach "25 Years Expense" Networth.
Year 2022: Eligibility to buy HDB.
Year 2023: Passive income completely cover all-expenses. Save 100% of salary annually.
Year 2025: Financial Independence.

Letter To Shareholders (13) - Performance Review 2018Q4

As usual, the Q4 review will be shorter in preparation of the Annual Report.

Economy Commentary
Singapore market and essentially the world markets all face severe pressure in the past months, mainly from Fed interest hikes, trade war and geopolitical risks. STI went down 6.6% YTD, and world indices dropped 9%.

In local markets, we saw the implosion of Asian Pay TV Trust (risk of blindly chasing yield without consideration of sustainability), value destructing rights issue from KBS UBS REIT (stock price fall to rights issue price, highlighting the importance of good management) and Lippo Malls (risk of foreign REITs).



Performance Review Highlights
A falling tide sinks all boats, and our portfolio was not spared. The crash of Kimly was a massive blow to our performance and taught us valuable lessons. YTD, our portfolio is down almost 10.2%. The absolute figure is much more terrifying compared to the correction back in 2015 when our asset size were much smaller.

Lessons Learnt:
We knew Kimly was a speculative position (but still based on fundamentals) right from the start, and we made money initially. Instead of cutting losses after the tide turned, we stupidly held on. Cut your losses as soon as you are proven wrong. Don't 心存侥幸 and "hope", especially for such a substantial position.

Evaluating What To Do Now:
While the investigation was unfortunate, Kimly fundamentals actually did not change at all. They are still basically debt free, sitting on mountains ($70m) of cash and still very much profitable (slow growth). The criminal case will no doubt be a huge hangover on the stock price. With with same business, 30% lower price, and no indication of something serious like dishonest management/falsifying accounts, etc... there is really no justification to sell. 

The management subsequently released a long list of initiatives, probably meant to calm investors. Centralized kitchens, tablet ordering at zi char stalls, customer rewards programme, own brand of coffee/tea, etc... pushing on with their growth strategies. They are all good, but action speaks louder than words - It all depends if they can execute and show results now. 

On the good news side, we distributed $1200+ dividends in Q4 for a record-breaking year!

Operating Highlights - Income
We reached new heights once again, attaining almost 10% higher income than last year - driven by higher base salary (same bonus multiple) and passive income. SG Bonus and IPPT Pass with Incentive were the icing on the cake.


Operating Highlights - Expenses
No special one-time expenses aside from usual Tax and new Insurance payments.

Regular expenses were slightly higher due to several items: Renewal of Stocks Cafe membership for 7 years, health checkup package, and a new pair of Creative Gigawork speakers (could not resist the 12/12 deals).

Utilities cost will increase significantly going forward due to higher recontract mobile and fibre plans. 

Acquisitions & Developments
We traded Capitamall Trust one more time to earn some loose change ($600+), and also fire a bullet on STI after the recent drawdown .This is the closest STI has been to 3000 for more than a year, and valuations are definitely on the cheaper side. Not dirt cheap yet, but a fair price to pay.

As of now, we are most concerned with Singtel and Kimly, and will be monitoring them closely.

Operating Updates
All good times must come to an end - Citibank finally caved in to the raising SIBOR and admended the terms of Maxigain account (from 80% of SIBOR to 70%).

Despite this, calculation shows that we am still able to get at least 2.3% interest (compounded) which makes it competitive against other products and even SSB. 

Good for you Citibank, but do not take it too far. 

Outlook

More in the annual report.