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

Bonds

Private equity

Real estate

Infrastructure

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: https://www.youtube.com/watch?v=coikUfKFH2M

Has There Ever Been a Property Crash in Singapore?

I was having lunch with my colleagues a while back and we were talking about property in Singapore. One of my colleagues claimed there was no crash in Singapore property prices before. 

How wrong he was!

Refer to the chart below, there were at least 3 property declines in relatively recent times.

1998 Asian Financial Crisis

Drop of 46%

Decline lasted around 3 years

2008 The Great Recession

Drop of 27%

Decline lasted around 1 year

2013 Cooling Measures

This is the introduction of TDSR, imposing ABSD on Singaporeans purchasing their 2nd property etc. 

Drop of 10%

Decline lasted around 5 years

Meanwhile, private home prices fell by 0.4% in Q2 2023, following a 3.3% gain in Q1 2023. This is the first fall in the last 3 years. 

URA also said price momentum is easing across all market segments. 

This fall in prices comes after several rounds of property cooling measures since Dec 2021, including an increase of additional buyer's stamp duty (ABSD) in Apr 2023 (from 30% to a whopping 60% foreigners, from 17% to 20% for Singaporeans buying second property). 

Meanwhile, SIBOR rates have reached highs since Dec 2022. No doubt the high-interest rates will put off some folks wanting to purchase property using loans. 

It may take a few more months before the full effects of the cooling measures can be observed. 

No doubt property prices will decline again. Until then, prepare ammo. 

References

Singapore Housing Index Chart

Singapore Property Cooling Measures

Singapore Private Home Prices Fall Q2 2023

Singapore SIBOR Rate Chart

Home Buyers Undaunted by Cooling Measures

Dividends for Feb 2023 [Financial Independence]

 Here are my dividends for Feb 2023:

So I collected $722.25 in dividends for Feb 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:

Let me know if anything else you want to know about my dividends?

Onwards!

Taking Stock of my Financial Independence 3.0 Journey

I achieved FI (Financial Independence) 2.0 in Jun 2021.

I have been aiming for FI 3.0 since Dec 2021 (see this post: http://financeopti.blogspot.com/2021/12/revisiting-my-fi-fi30.html).

As per usual during this period of the year, now is the time to take stock of my FI 3.0 journey and see how I stand. 

Firstly, a recap of what is FI 3.0. It has a few buffers baked in:

• CPF is not included in the Starting Balance - this is the first buffer
• Withdrawal rate is reduced from 4% to 3% - this is the second buffer
• Certain expenses are assumed to last till perpetuity, even if it may not be the case. An example is childrens' pocket money. 

This is where I am now:

Based on my tracking of daily expenses in 2022, I also made a few adjustments:

• Personal spending is increased from $50 to $100 a month
• Travel spending is increased from $50 to $100 a month
• Eating out spending is increased from $600 to $650 a month
• I have also increased the spending for CNY Ang Bao based on previous experience

With the above considerations, I re-calculated my FI, and found that I will need 1.5 million to achieve FI 3.0. I have 0.62 more months to go to achieve FI 3.0:

I'm excited! Have to be really careful with my spending and money now! It is close!

Dividends for Jan 2023 [Financial Independence]

 Here are my dividends for Jan 2023:

So I collected $2644.74 in dividends for Jan 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:

Let me know if anything else you want to know about my dividends?

Onwards!