Sunday, September 17, 2023

5-year dividend growth over 10%? Really?

I saw this piece of news in the Business Times that lists out companies with 5-year dividend growth of over 10%.

I wonder how accurate is this because I previously did an analysis on the Dividend Aristocrats in Singapore, which I found to be very few.

First Resources

 According to the newspaper article, the gross 5-year historical dividend growth for SBS Transit was 16.4%. However, my own analysis showed the dividends actually dropped from $0.086 in 2018 to $0.0264 in 2022, which translates to a drop of -69%!

SBS Transit

According to the newspaper article, the gross 5-year historical dividend growth for SBS Transit was 7.5%. However, my own analysis showed the dividends actually dropped from $0.129 in 2018 to $0.109 in 2022, which translates to a drop of -15%!

Raffles Medical

According to the newspaper article, the gross 5-year historical dividend growth for Raffles Medical Group was 11.1%. My own analysis showed that dividends increased from 0.025 to 0.038 from 2018 to 2022, which translates to an increase of 52%. This stock is actually pretty solid. 

Don't take everything you read at face value. Do your own due diligence. Caveat emptor. 

Tuesday, September 12, 2023

The Art of Thinking Clearly and How It Applies to Investing

the art of thinking clearly applied to investing

I read this book by Rolf Dobelli and there are many examples applied to investing. I compiled them below. Most of the below I have read it before here and there, but I guess this book compiles them all together. 

Survivorship bias:

Take the Dow Jones Industrial Average Index. It consists of out-and-out survivors. Failed and small businesses do not enter the stock market, and yet these represent the majority of business ventures. A stock index is not indicative of a country's economy. 

Clustering illusion:

Consider the financial markets, which churn out floods of data every second. Grinning ear to ear, a friend told me that he had discovered a pattern in the sea of data: 'If you multiply the percentage change of the Dow Jones by the percentage change of the oil price, you get the move of the gold price in two days' time.' ... His theory worked well for a few weeks, until he began to speculate with ever-larger sums and eventually squandered his savings. He had sensed a pattern where none existed. 

Sunk cost fallacy:

Investors frequently fall victim to the sunk cost fallacy. Often they base their trading decisions on acquisition prices. 'I lost so much money with this stock, I can't sell it now,' they say. This is irrational. The acquisition price should play no role.  What counts is the stock's future performance (and the future performance of alternative investments). Ironically, the more money a share loses, the more investors tend to stick by it. 

Overconfidence effect:

Overconfidence also applies to forecasts, such as stock market performance over a year or your firm's profits over three years. We systematically overestimate our knowledge and our ability to predict - on a massive scale. The overconfidence effect does not deal with whether single estimates are correct or not. Rather, it measures the difference between what people actually know and how much they think they know. What's surprising is this: experts suffer even more from overconfidence than laypeople do. If asked to forecast oil prices in five years' time, an economics professor will be as wide off the mark as a zookeeper will. However, the professor will offer his forecast with certitude.  

Regression to Mean:

Extreme performances are interspersed with less extreme ones. The most successful stock picks from the past three years are hardly going to be the most successful stocks in the coming three years.

Loss Aversion:

Loss aversion is also found on the stock market, where investors tend to simply ignore losses on paper. After all, an unrealized loss isn't as painful as a realized one. So they sit on the stock, even if the chance of recovery is small and the probability of further decline is large.  

Action Bias:

The action bias is accentuated when a situation is new or unclear. When starting out, many investors act like the young, gung-ho police officers outside the nightclub: they can't yet judge the stock market so they compensate with a sort of hyperactivity. Of course this is a waste of time. As Charlie Munger sums up his approach to investing: 'We've got ... discipline in avoiding just doing any damn thing just because you can't stand inactivity.' 

I particularly like this last one:

On how to have better thinking:

The pope asked Michelangelo: ' Tell me the secret of your genius. How have you created the statue of David, the masterpiece of all masterpieces?' Michelangelo's answer: 'It's simple. I removed everything that is not David.'

Thinking more clearly and acting more shrewdly means adopting Michelangelo's method: don't focus on David. Instead, focus on everything that is not David and chisel it away. In our case: eliminate all errors and better thinking will follow.


Friday, September 8, 2023

Dividends for Aug 2023 [Financial Independence]

Here are my dividends for Aug 2023:

Dividends for Aug 2023

So I collected $4,309.81 in dividends for Aug 2023.
In case you are wondering, some stocks are repeated because I have 2 brokerage accounts.

Here are my monthly dividends over the last 5 years:

Monthly dividends over last 5 years

This is the largest monthly dividend I collected thus far!

Here are the dividends I collected every year until the current day:

Yearly dividends

Additionally, I share the interest I received from the various banks this month (referring to Aug):

Bank interest

So I collected $359.60 in interest payments this month. 


Friday, September 1, 2023

Wrapping up my Third Month of FIRE

The third month of FIRE came and went like the wind. 

Below are what I ate, what I did for fun, the amount of exercise I managed to do, and a record of my expenses. 


Heng Long Teochew Porridge
Heng Long Teochew Porridge

Beef noodle
Beef Noodle at Zion Hawker Center

Some workshop at a hotel I attended

Some workshop at a hotel I attended


I didn't specifically go anywhere for fun, but my weekdays were spent going to workshops and conferences, keeping myself up to date in my technical field. 


On the fitness side, I definitely walked more than in my previous desk-bound job. 


I busted some of my expenses this month. Hardly surprising I guess, since you got to spend to have fun...

Eating Out Target: $650
Eating Out Actual: $547.12

Household Target: $600
Household Actual: $437.10

Travel Target: $100
Travel Actual: $44.20

Entertainment Target: $50
Entertainment Actual: $0

Personal Target: $100
Personal Actual: $165 (Bought a business shirt for a ceremony I have to attend, subscribed to chatGPT,...)

I only managed to find time to do a few food deliveries this month. All in, I only managed to earn $15.20 this month.

Onwards to the fourth month of FIRE!!

Sunday, August 27, 2023

Creating a Bond Ladder

Creating a Bond Ladder to generate Passive Income

I am creating a bond ladder.

The aim is to create a perpetual (as long as possible) revenue stream every month. 

Here's how it is going to work. 

I plan to buy 6 months time deposits or 6 months T-Bills, one at a time, once every month. 

At the end of 6 months, the first time-deposit/bond will mature, and I collect the interest. At the same time, I put the capital back into another 6 months time deposit/TBill. 

Conceptually it looks like this:

Bond ladder, time deposits, TBills

And it continues as long as the interest rates are above 3.5%.

I have already set up the first 3 tranches.

The first 2 tranches were set up using StashAway Simple Guaranteed, at the interest rate of 3.5% p.a.

Stashaway Simple Guaranteed, Time Deposits

The third tranche was set up using 6-month TBill, at the interest rate of 3.73% p.a.

So why did I use Stashaway Simple Guaranteed when TBills offer higher interest rates? No particular reason, but when I saw 3.5% in Stashway Simple Guaranteed, I thought it was good and I put money in - the process was easy and straightforward. Later I thought since TBills offer slightly higher interest rates, I should switch to TBills instead. 

So from now on, I will be able to earn $175-$184 every month, as long as interest rates stay above 3.5% p.a.

If you have spare cash, set up your own Bond Ladder today!

Any flaws with this method? Comment below. 

Monday, August 21, 2023

Ultimate Guide to Financial Independence, Retire Early (FIRE)

Financial Independence, Retire Early

In an era where the traditional retirement age seems to be pushing later and later, a movement is gaining momentum, advocating for financial independence and early retirement. It's called FIRE, and if you've been curious about what it entails, this comprehensive guide is here to light the way.

What is Financial Independence, Retire Early (FIRE)?

In Singapore, the traditional retirement age stands at 62. However, there's a rising trend among millennials who wish to retire as early as their 40s or even before 35. Historically, people saved patiently to achieve financial independence in their later years. Nowadays, a significant number are rushing towards early retirement, driven by the aspiration to live life on their own terms. This trend has given rise to the FIRE (Financial Independence, Retire Early) movement.

FIRE advocates aim to save a staggering 70% or more of their full-time income. The ultimate goal is to save 25 times one's annual expenses and limit annual withdrawals to 4% for living costs. Practicing FIRE demands rigorous planning, stringent frugality, and wise investing. While some extreme adherents cut out all luxuries, including dining out, more moderate followers simply want to amass enough savings to maintain their current lifestyle without the regular 9 to 6 job.

The growing traction of FIRE is attributed to two main factors. First, financial insecurity is rising in Singapore due to inflation and stagnant growth, leading many, especially the younger generation, to prioritize financial stability over milestones like marriage or home ownership. Second, job disillusionment is rampant among millennials. Studies indicate low workplace engagement both in the US and Singapore, with millennials particularly feeling disconnected.

For FIRE, the goal isn't necessarily to never work again but to have the freedom and flexibility to choose how you spend your time, without being tied down by financial constraints.

In short, FIRE is about having options. 

What is your 'FIRE' number?

The FIRE number is essentially the amount of money you need to have saved and invested to live off the returns without ever touching the principal amount. Determining your FIRE number is a crucial step in the journey. This number varies based on your personal living expenses, desired lifestyle, and the rate of return on your investments.

To calculate your FIRE number, consider the annual expenses you expect to have in retirement. Using the 4% rule (a common guideline in the FIRE community), multiply your yearly expenses by 25. For example, if you expect to need $40,000 a year to live comfortably, your FIRE number would be $1 million. 

Note that this $40,000 is mean to be increased along with the inflation rate. As an example, if the inflation rate is 2%, in the second year you will withdraw 1.02*40000 = 40,800.

The number 25 is simply calculated by taking 1 divided by 4%. If your withdrawal rate is dropped to 3%, then you need to save up to 1/3% = 33 times your annual expenses. 

Types of FIRE

There isn't a one-size-fits-all approach to FIRE. Over time, enthusiasts have identified different flavors of FIRE to suit varied lifestyles and goals:

Lean FIRE: This is for individuals who prioritize retiring as soon as possible and are willing to live a minimalist lifestyle to achieve it. They aim for a lower savings amount and are frugal both before and after retirement.

Fat FIRE: On the opposite end, Fat FIRE enthusiasts aim for a more luxurious lifestyle in retirement. They save and invest more, targeting a higher FIRE number to support more lavish expenses.

Barista FIRE: This is a middle-ground approach where individuals achieve financial independence but choose to work part-time jobs (like a barista) to cover some expenses and maintain social connections.

Coast FIRE: In this approach, individuals save enough early on, then simply let their investments grow without adding more funds, coasting into retirement without the pressure of aggressive saving.

I believe I practice Lean FIRE, though I will say it is a mild form.

Pros of FIRE

FIRE offers millennials an escape from jobs they never truly enjoyed. With sufficient savings, FIRE followers can chase their passions, opt for less stressful jobs, or leave a once-dreamt job that turned constraining. It encourages people to rethink their careers, emphasizing the pursuit of a true "calling" over mere monetary exchange.

In short, the pros of FIRE are:

Flexibility: Achieving FIRE allows you to decide how you spend your time, whether that's traveling, pursuing hobbies, or even starting a passion project.

Less Financial Stress: With a substantial nest egg, financial worries often diminish, leading to better mental well-being.

Opportunity to Re-invent: With the need for a 9-5 removed, you can explore new careers, learn, and grow in different directions.

Cons of FIRE

However, FIRE isn't flawless. Some practitioners, despite achieving financial independence, remain anxious about money. Others feel trapped in high-paying jobs that hinder their financial aims. An overarching sentiment is that over-frugality can sap life's pleasures. While financial prudence is commendable, moments like splurging on memorable vacations or treating oneself occasionally can enrich life in immeasurable ways.

In short, the cons of FIRE are:

Sacrifices: To save aggressively, you might need to forgo certain luxuries or experiences in the present.

Market Dependency: Your financial health becomes closely tied to market performance. Downturns can be stressful, especially if they impact your FIRE number.

Social Implications: Early retirement can sometimes lead to feelings of isolation or disconnect from peers who are still in the traditional workforce.

Is FIRE for you? Personally, I found pursuing FIRE to be worthwhile and enriching. There is nothing wrong with living frugally. 

You may want to check out more articles below:

Investing for retirement

How to FIRE movement goes beyond extreme sacrifice

By wanting to retire early, millenials are subverting conventional ideas of work and finances

Wednesday, August 16, 2023

Level-Up my Investment Kung-Fu with Guru Ng Kok Song


Singapore is holding its Presidential Elections on 1 Sep 2023, and a few presidential candidates have popped up. 

The contenders are Mr. Ng Kok Song (former Chief Investment Officer of GIC), Mr. Tharman Shanmugaratnam (former Deputy Prime Minister of Singapore), Mr. George Goh (Entrepreneur, CEO Harvey Norman Ossia), and Mr. Tan Kin Lian (former NTUC Income CEO).  

Who will win the race is still unclear. However, out of the 4, I will think Mr. Ng Kok Song, former GIC Chief Investment Officer, is the most interesting one, offering a breath of fresh air. 

I have watched a number of his interviews and am impressed by his clarity of thought and his eloquence. He is able to explain complicated things in simple terms. I learned a lot by listening to him speak. 

Truly, he is the closest we have to a Warren Buffett in Singapore. 

Below are some of his sharings which I feel are good learnings.

How to become a good investor

1. Take a long-term investment horizon e.g. GIC takes a 20-year rolling average, for individuals he recommends a 40-year horizon

2. Know what is your risk capacity - don't invest with money you cannot afford to lose. Must be prepared with a mark-to-market loss ie. need holding power.

3. Have realistic expectations of rate of return - e.g. SP500 returns a nominal rate of return of 7-8%. If inflation is 2%, then real returns are 5-6%. Don't expect 12% returns. Note that 5-6% returns are nothing to scoff at - 5-6% returns compound over time to deliver big returns. 

4. Minimize transaction costs - don't erode your compounding power with 1-2% transaction costs. Don't jump in and out of the market. Invest steadily in low-cost index funds. 

What does GIC Invest In 

Stocks - both developed and emerging markets
Private equity
Real estate

Why are our national reserves important

1. For use in times of war to liberate/rebuild the country

2. Financial crises such as recession, covid to save jobs

3. Backing behind the strength of the Singapore dollar - important because it helps us bring down the cost of living especially in times of inflation - this is related to financial defense

Views on SP500

The American stock market is now 70% of the global market cap, but the American economy is only over 20% of the global economy. This is a sign that it is at an inflated level, pushed up by tech stocks and recently by AI and ML stocks. 

So need to avoid overconcentration on SP500. Suggest to buy MSCI World Index to achieve diversification.

Views on Market

Investing is to anticipate changes in what is already discounted in the market. 

There are 4 key variables in investing you need to watch out for:

1. Economic growth or growth in EPS

2. Inflation - a rise in inflation is bad for stocks or bonds

3. Risk premium - are people more risk on or risk off

4. Interest rate - high the level of interest rates are bad for stocks

Take for example China - there is a lot of pessimism in China now due to Ageing population, and the US challenges in the tech sector. But sometimes people can get over pessimistic. Inflation is low in China. Risk premium in China - people are scared. Americans are reluctant to invest in China because of career risk. For China, it could get worse or it could get better. Across the world, interest rates are more or less set by the US market. In the bond market, people are expecting interest rates to fall. This is because the 10-year interest rate is at 4.5%, but the short-term interest rate is higher at around 5% - this is the inverted yield curve. 

The Formula for Keeping Healthy

SHIELD acronym:
S - sleep
H - how to handle stress: Meditate
I - interaction/relationship/friends
E - exercise
L - learn
D - diet. Low carb/low sugar, plenty of fruits and vegetables

You can watch the entire Youtube video here: