Plotting my Investment Strategy for 2024 - 5 Pots of Gold

Now is a good time to re-think my investment strategies and plan the way forward. 

I started off by thinking about the eventual goal I want to achieve. It is clear that I would like to achieve a certain amount of dividend income every month for perpetuity.

The question is: what should this amount be to be realistic?

Let's start off with $5,000 in monthly dividend income and run some numbers.

As of the end of 2023, I am pulling in SGD 1791.39 in dividend income every month, which gives a shortfall of $3,208.61 as you see above. 

From the above, we see that to achieve $5,000 in monthly dividend income, I need to invest an additional $1,048,184.06. 

Obviously, I do not have this much amount to pump in at this moment since I am no longer earning a monthly salary. 

I figured that I could invest at most $300k, by rotating money from some of my other investments (ie. china stocks, robo-advisors, etc.). This gives me the below:

Ok, the above numbers seem more realistic! It will take me 3 years to achieve a monthly dividend income of $2500, by which I will be around my mid-forties. 

So the next question is which funds to invest in? Note that I have stopped buying individual stocks - it is difficult to get it right. Buying funds are much less risky and have a higher probability of profit. Also, there is 0 chance of the counter going to zero, unless the country collapses. I considered the below funds. Those in green are those I am already actively investing in, those in yellow I am considering whether to start. 

In the end, I decided to invest in TLT. Reasons:

• iShares MSCI World ETF is very similar in composition to SPDR SP500 ETF, which I already own
• QQQ Trust has the highest returns but is volatile. What is more, my goal here is to earn dividend income, for which QQQ is very low
• TLT has a decent dividend yield. Returns are low, but I am looking for stability with a consistent income stream ie. perpetual income. Less volatility is especially important for my profile now as I do not want to sell stocks when there is a crash and lose tons of money. Further, bonds have dropped a lot in this high-interest rate environment. Bonds are expected to rise in 2024. 

It is also worth considering the various funds I am accumulating now - I call them my 'pots of gold':

The barrels you see at the bottom of the diagram are those that I am building up. The STI ETF pot is already full. The S-Reit, ABF S'pore Bond, and SP500 pots are around half-full. TLT pot will start this year. The eventual goal is to fill all of them up to the brim. 

The above is not drawn to scale. Below I created a chart that is to scale, based on my current holdings. All bars should be full in 3 years. 

What do you think? Does it make sense to you?

Onwards!

How much do I have in stocks? | Financial Snapshot - Dec 2023

This is a snapshot of my finances at the end of 2023.

Naturally, I do not want to disclose too many details or my net worth, the amount I have in banks, etc. so I will just share the following:

Not included in the above are bank savings, insurance policies, CPF, SRS, etc. The above is just the amount of stocks and cash in my 3 stock brokerage accounts, the stocks in my BCIP, SRS, and Robo-advisor accounts, and the bonds I am holding at the moment. Since I worked in the US before, I also added my 401K and Wealthfront investments to the above. For completeness, cryptocurrencies are included in the Stocks portfolio (though only a small percentage). 

For 2023 my stocks increased 18.53% from last year. This is a pretty decent amount. With the current economic situation, the US market is expected to rise further. This is because the Fed has indicated they will stop raising interest rates, as inflation is cooling off. 2024 is expected to be a good year for stocks, bonds, and REITs:

https://www.businesstimes.com.sg/international/global/us-stock-market-rally-likely-carry-through-2024

https://www.businesstimes.com.sg/opinion-features/2024-shaping-be-better-year-invest-s-reits

Some basic rules of thumb:

• As interest rates fall, stock prices will increase - this is because now folks can make more money by investing than putting money in banks
• As interest rates fall, bond prices will increase. Follows the same logic as above. Also, note that long-term (10-year or more) bond yields have a positive correlation with interest rates - so if interest rates fall, bond yields fall, which means bond prices must go up
• As interest rates fall, REITs prices will increase - this is because now REITs are easier to get financing from banks with lower interest rates ie. fewer costs on their books
• As interest rates fall, bank stocks will fall. This is because they earn less from loans with lower interest rates. 

Clearly, the above relationships are deliberately put in a basic manner so that it is easy to understand and remember. What goes on in the backend is much more technical and complicated - not possible to remember for the long-term unless you do this as a job every day. 

Here's a visualization of the Stocks (SGD) and Bonds (SGD) over the years: 

Onwards!

Portfolio Returns for Dec 2023

I felt it would be good to track the returns on a regular basis since the returns will fluctuate from time to time depending on the stock market.

Here are the movements for this month:

Portfolio returns for Dec 2023

The USA portfolio, SPY Fund, and the SGP portfolio rose. 

Cryptocurrency portfolio rose, though still heavily negative.

Here's a recap of the major market events (positive events in green and negative events in red):

Bad: The Ukraine war has no end in sight - in fact, both sides are talking of a 'stalemate'

Bad: Israel has now moved into the Gaza Strip, causing much suffering for the residents of Gaza

Good: the Fed has turned dovish, signaling rate cuts in 2024: https://www.reuters.com/markets/us/investors-cheer-feds-dovish-pivot-focus-shifts-2024-risks-2023-12-14/

Wrapping up my Sixth month of FIRE

I just finished my fifth month of FIRE in Nov 2023.

Below are what I ate, what I did for fun, and a record of my expenses.

Eating

Home-made pizza

Looks good but the chicken was cold

Prefer the one below

Quite sweet

Home-made lunch. Burp!

Some buffet thing

One of the best I have tried. 

Fun

My rosella bloomed!

Brought my kids to see the Landing Ship Tank

Concert at Esplanade

Expenses

I busted some of my expenses this month. All in all, I think it is reasonable. 

Eating Out Target: $650

Eating Out Actual: $387 (ate more home lunches)

Household Target: $600

Household Actual: $297.68

Travel Target: $100

Travel Actual: $22.80

Entertainment Target: $50

Entertainment Actual: $0

Personal Target: $100

Personal Actual: $131.39 (bought shoes and shirt)

I only managed to find time to do a few food deliveries this month. All in, I only managed to earn $10.70 this month.

Whats significant in this month is that I started my own business!!

Onwards to the next month of FIRE!!

Dividends for Nov 2023 [Financial Independence]

  Here are my dividends for Nov 2023:

So I collected $918.43 in dividends for Nov 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:

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

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

So I collected $611.16 in interest payments this month. 

Onwards! 

Misleading Article that suggests path to FIRE is by Trading

 

There is a misleading article in the news on last Sunday, about an executive from the Saxo trading platform that seems to hint trading enabled her to retire by her early 40s.

Yet her top investing tip is:

If you are not investing, get started now because with each passing day, you are losing out on your share of the world's eighth wonder: compounding.

True enough, she set up investment accounts for her children, so as to make them more interested in investing at an early age. 

I believe she said what she said simply because she wanted to promote the company she works for and keep her bosses happy. 

Trading and investing are totally different things. In investing, you hold for the long term and reap the benefits slowly, most likely benefiting from the periodical dividends as well. Trading, however, you hold for a short-term maybe days, weeks, or at most a couple of months.

I started off with trading in my early journey, thinking I could 'beat the market'. Took me a while to realize I could not do it consistently. Moreover, the roller coaster ride gave me undue stress and made me lose a bit of focus on my regular work. I believe the sooner one realizes this the better. 

I have since switched to long-term investing and never looked back. 

My Monthly Passive Income - Nov 2023

Sharing my passive income for the year 2023:

Basically, I am collecting $3101.26 in passive income monthly this year, compared to $1922.07 last year.

This is cumulative sum from stocks, bonds, ETFs, SSB, TBills, fixed deposits, bank deposits, MMF.   

Here's what it looks like on a chart:

The increase in my monthly passive income is going as planned. 

Particularly cool to see the upward hockey stick curve.

Onwards!

Portfolio Returns for Nov 2023

I felt it would be good to track the returns on a regular basis since the returns will fluctuate from time to time depending on the stock market. 

Here are the movements for this month:

The USA portfolio and SPY Fund rose, but the SGP portfolio took a small hit. 

Cryptocurrency portfolio rose, though still heavily negative.

Here's a recap of the major market events (positive events in green and negative events in red):

Bad: The Ukraine war has no end in sight - in fact, both sides are talking of a 'stalemate'

Bad: Israel has now moved into the Gaza Strip, causing much suffering for the residents of Gaza

Good: Inflation is coming down - https://www.forbes.com/advisor/investing/current-inflation-rate/

Good: F2F meeting between Biden and Xi - https://www.channelnewsasia.com/commentary/snap-insight-biden-xi-meeting-us-china-ties-trade-military-communication-taiwan-3925446

Wrapping up my Fifth Month of FIRE

 I just finished my fifth month of FIRE in Oct 2023. 

Below are what I ate, what I did for fun, and a record of my expenses. 

Eating

As I age, I've come to realize that home-cooked food is the most delicious.

Home-made salad!

Fun

There wasn't much fun this month. I was engaged in a 10-week course. But I did celebrate a birthday:

Expenses

I busted some of my expenses this month. All in, I think it is reasonable. 

Eating Out Target: $650

Eating Out Actual: $726.36 (some family dinners)

Household Target: $600

Household Actual: $560.44

Travel Target: $100

Travel Actual: $0

Entertainment Target: $50

Entertainment Actual: $15

Personal Target: $100

Personal Actual: $150 (made a donation to charity)

I only managed to find time to do a few food deliveries this month. All in, I only managed to earn $14.40 this month.

Onwards to the next month of FIRE!!

Dividends for Oct 2023 [Financial Independence]

 Here are my dividends for Oct 2023:

So I collected $319.25 in dividends for Oct 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:

It is clear from the above that traditionally Oct is a low-dividend month. 

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

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

So I collected $428.80 in interest payments this month. 

Onwards! 

After 5 months of FIRE, can I still FIRE?

 I wanted to check after 5 months of no pay, can I still afford to FIRE.

Especially with the recent market downturn. Currently, both SP500 and Nasdaq are in correction:

https://www.wsj.com/livecoverage/stock-market-today-dow-jones-10-27-2023/card/the-nasdaq-composite-is-on-track-to-enter-a-correction-btCPOJVi7uczdASFmhlr

The main culprits are the Israel-Hamas war, high inflation, and the stalemate of the Ukraine-Russia war. 

I did my spreadsheets and arrived at the below:

So my starting balance is still > required savings, which means I am still FIRE.

What happens if my starting balance falls below the required savings? Hmm I'm not sure actually...

Portfolio Snapshot - CAGR and Breakeven Price Oct 2023

Here's a snapshot of my current SGP portfolio:

The column 'cagr' represents the compound annual growth rate of that stock.

The column 'cagr_inc_div_drp' shows the compound annual growth rate including dividends paid out and additional stocks obtained through distribution reinvestment plans.

The column 'cagr_benchmark' shows the compound annual growth rate of the benchmark. The benchmark is the SPDR STI ETF, stock code 'ES3'.

The column 'cagr_benchmark_status' shows yes if we beat the benchmark.

The column 'returns_one_year' shows the returns in the past year.

The columns 'cagr', 'cagr_inc_div_drp', 'cagr_benchmark', and 'returns_one_year' are shown in percentages.

Here's a comparison of the stats with previous years:

Here's another snapshot of my portfolio based on the breakeven price:

The column 'price' indicates the current price of the stock.

The column 'breakeven_price' indicates the breakeven price of the stock with dividends and stocks from the distribution reinvestment plan included. As long as the price of the stock is above the breakeven price, I can sell the stock for a profit.

The column 'breakeven_price_status' indicates if the stock price is above the breakeven price.

Here's a comparison of the stats with previous years:

Here are the returns of my portfolio versus the benchmark:

If 2022 was a bad year for stocks, 2023 is even worse. Mainly due to the ongoing Ukraine war with no end in sight, and now with the Israel-Hamas war. Interest rates are still at an all-time high. On the other hand, as long as interest rates start to fall, my bond and REITs are in position. 

Portfolio Returns for Oct 2023

I have been sharing the returns of my portfolio in the previous posts:

http://financeopti.blogspot.com/2022/05/this-too-shall-pass.html

http://financeopti.blogspot.com/2022/07/this-too-shall-pass-part-2.html

http://financeopti.blogspot.com/2022/10/this-too-shall-pass-part-3.html

http://financeopti.blogspot.com/2022/11/portfolio-returns-for-nov-2022.html

I felt it would be good to track the returns on a regular basis since the returns will fluctuate from time to time depending on the stock market. 

During the time period from Jul - Oct 2023, most of my portfolios took a hit:

The USA portfolio looks like its moving upwards, but it is mostly because I sold off 2 of my most unprofitable stocks (digital payments) in the last month. 

Here's a recap of the major market events (positive events in green and negative events in red):

• Sep 2023: It is now 18 months into the Ukraine war with no respite in sight. 
• Sep 2023: US Fed signals one more interest rate hike at the end of the year, and high-interest rates will persist for some time
• Sep 2023: Conflict between Armenia and Azerbaijan. Thousands of refugees are fleeing into Armenia after Azerbaijan claimed control of an Armenian enclave inside its territory. 

• Oct 2023: Conflict between Hama in the Gaza Strip and Israel broke out after Hamas launched a terrorist attack by sneaking into Israeli territory. Now Israel is preparing for a ground assault into the Gaza Strip. 

• Oct 2023: US Senate Majority Leader Chuck Schumer met with Xi Jinping and noted 'serious engagement'. This is the first f2f meeting between high-level US-China leaders in a while. 

Is there any more good news? I can't think of much to be honest...

After writing these posts for some time now, I realize there are more bad events than good...

As I have insinuated a few times, as long as I do not need the money, the plan is to hold even if there is a WW3. Though of course, I wish that will never come. 

Wrapping up my Fourth Month of FIRE

I just finished my fourth month of FIRE in Sep 2023. 

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

Eating

I've eaten this a few times already. I believe this is a hidden gem. 

A lot of newspaper clippings about their chicken wing. 

I think the chicken wing was OK, but the rest is pretty standard. 

Fun

This month was the September school holidays! Below are the places I went to:

Jubilee Park

No prizes for guessing this one

Sunway Big Box in JB

Cycling along rail corridor

All the way to Pang Sua Woodlands

Exercise

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

Expenses

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: $615.88

Household Target: $600

Household Actual: $643.77 (some enrichment classes for my kid)

Travel Target: $100

Travel Actual: $137.49 (petrol, some grab rides to airport)

Entertainment Target: $50

Entertainment Actual: $58.48

Personal Target: $100

Personal Actual: $1,290.70 (Signed up for a course)

I only managed to find time to do a few food deliveries this month. All in, I only managed to earn $10.50 this month.

Onwards to the fifth month of FIRE!!