Humbly seeking your advice

[davidsim]

Hi everyone, I have been here for sometime just reading everyone’s postings and I hope that you guys could offer me some advice on what to do with my portfolio. I am retired (victim of the recent car loan curbs) and hence earning no income but I have my wife, 3 children (aged 19, 18 and 16) and my mother to support.

My investment objectives are (in order of preference):
1. to generate an average of $13,000 per month from my investments annually (including property)
2. to achieve a nominal CAGR of 4% over the next 5 years

Right now my current investment portfolio excluding my main residence includes
a) SGX stocks: 2.3 million – Net yield 3.34%
b) SGD Bonds maturing in 2017: 0.5 million – Net yield 4%
c) SGD Cash (excluding emergency fund): 0.8 million – Net yield 1.1%
d) SGD Property: 2 million – Net yield 2%

This gives me a net income of about $11,700 per month which results in a shortfall of about $1,300 which I am trying to find ways to make up.

I know the obvious answer would be to use the cash I am holding to purchase short to medium term bonds (<7 years) yielding about 3-4% or stocks yielding about 4% (e.g. Singtel) but I am wary that the prices of these 2 assets in particular bonds have risen so much that their risk return trade off is no longer attractive. In addition, I was thinking maybe it would be good to maintain the flexibility to take advantage of corrections in the market (<20%)

I’m actually quite clueless about the stock market and my main source of wealth is actually 2 properties I bought a long long time ago…. 1 of which went en bloc last year. My stock portfolio actually resembles the STI. With high weights in DBS, UOB and Singtel… I have made money but I am very aware that I am just lucky.

I also have a $500,000 loan against my main residence which I took out last year fixed at 1.5% interest for 5 years. Currently hedging this off with the bonds maturing in 2017. Would not cost effective to pay off this loan as I am locked in for the 5 years. Also the cost of holding this loan is only 0.4% pa given that I cash at 1.1% with ANZ.

A humble thanks in advance for any advice offered. Would really appreciate any advice and new insights offered.

[paullow]

I see that u are quite well off. not sure how much is ur own residence worth. but the figures u state makes ur net worth at least 5m.

how old are u and how is ur health?

if its just that shortfall of $1300 which you are unable to reduce some of ur expenses to make up for it nor willing to make drastic adjustments to ur longstanding investments, may i suggest u find a simple job which pays 1-2k. this would also keep urself occupied.

i myself have retired, but not totally as i think it's important to keep oneself occupied.

just my 2 sen thoughts

[greengiraffe]

You have done well... don't miss the forest just because of a tree.

Anyway, there are not many stocks with decent fundamentals that are yielding 5% or more after the amazing rally...

Hi everyone, I have been here for sometime just reading everyone’s postings and I hope that you guys could offer me some advice on what to do with my portfolio. I am retired (victim of the recent car loan curbs) and hence earning no income but I have my wife, 3 children (aged 19, 18 and 16) and my mother to support.

My investment objectives are (in order of preference):
1. to generate an average of $13,000 per month from my investments annually (including property)
2. to achieve a nominal CAGR of 4% over the next 5 years

Right now my current investment portfolio excluding my main residence includes
a) SGX stocks: 2.3 million – Net yield 3.34%
b) SGD Bonds maturing in 2017: 0.5 million – Net yield 4%
c) SGD Cash (excluding emergency fund): 0.8 million – Net yield 1.1%
d) SGD Property: 2 million – Net yield 2%

This gives me a net income of about $11,700 per month which results in a shortfall of about $1,300 which I am trying to find ways to make up.

I know the obvious answer would be to use the cash I am holding to purchase short to medium term bonds (<7 years) yielding about 3-4% or stocks yielding about 4% (e.g. Singtel) but I am wary that the prices of these 2 assets in particular bonds have risen so much that their risk return trade off is no longer attractive. In addition, I was thinking maybe it would be good to maintain the flexibility to take advantage of corrections in the market (<20%)

I’m actually quite clueless about the stock market and my main source of wealth is actually 2 properties I bought a long long time ago…. 1 of which went en bloc last year. My stock portfolio actually resembles the STI. With high weights in DBS, UOB and Singtel… I have made money but I am very aware that I am just lucky.

I also have a $500,000 loan against my main residence which I took out last year fixed at 1.5% interest for 5 years. Currently hedging this off with the bonds maturing in 2017. Would not cost effective to pay off this loan as I am locked in for the 5 years. Also the cost of holding this loan is only 0.4% pa given that I cash at 1.1% with ANZ.

A humble thanks in advance for any advice offered. Would really appreciate any advice and new insights offered.

[pianist]

can see u r a seasoned sophisticated person..so humble..it seems like MAS indeed did the right move to tighten the car financing requirement which was left too freely & easily amid the wealth inflow & boom from many hot money.

thanks for sharing the post..i guess a bigchunk of us here have benefited from yr strategy and past moves.

looking to learn more from u sir

btw i heard that there a lot of dirty money flowing through the automotive industry, is that true?

[arthur]

Anyway, there are not many stocks with decent fundamentals that are yielding 5% or more after the amazing rally...

I fully agree.
Am having a hard time now sieving.
Wish I can trust the banks' products offering but no thanks.

[safetyfirst]

Having a target of 13k per month is one thing, the available capital that you have to generate the 13k is another. If your current portfolio is what you feel comfortable with, then i think you just have to adapt to the 11.7k per month now.

Dont think it is a good idea to take on unnecessary risk just to achieve the target of 13k. You may end up losing more than you gain

[HitandRun]

I think the obvious answer would be to sell lower yielding instruments for higher yielding ones.

Potential investments to liquidate would be your cash and property. If you do not like stocks at the moment, I guess you can consider bonds like Courts (3 yr paper recently issued at 4.7% or so) or Olam (if you believe in Temasek's support).

[greengiraffe]

Aiyo of all why Olam... if it is Olam, I rather park it with Ow's companies - boring, frustrating but stable - go read up on Singapore Shipping and St****** threads.

NB: Vested but certainly not an inducement to trade...

I think the obvious answer would be to sell lower yielding instruments for higher yielding ones.

Potential investments to liquidate would be your cash and property. If you do not like stocks at the moment, I guess you can consider bonds like Courts (3 yr paper recently issued at 4.7% or so) or Olam (if you believe in Temasek's support).

[specuvestor]

You have a lot of capacity to improve yield but do look at stable companies with strong operating cash flows instead of just simple yield per se. You only need to improve yield by 150bps on a $1m portfolio to achieve your target.

Since u are retired you can do a lot of research by "walking around". Look at retailers. You may want to check out Sheng Siong if you shop there often.

[davidsim]

Hi Paul,

I am 57 this year. Thankfully health is great but I know I'm slowing down. Sigh... A job is what I have been thinking of as well. Unfortunately I only have an O Level cert and the auto industry is all I have ever known.... Have been entertaining thoughts of starting as a taxi uncle but am still considering whether the risks are worth it. My wife seems to think it isnt and has been recommending I join her at NTUC (have you seen a checkout uncle before?). Could end up as a security guard as well but don't think I could take on the responsibility of guarding those million dollar condos....

Hi greengiraffe,

Honestly I am just lucky. I bought property because "land is scare" and the stocks I have because they were names I was familiar with and happened to have a good yield. Quite embarrassed to admit it here as everyone seems so sophisticated.

Hi pianist,

Yes I think the car loan and housing curbs are good responsible measure by the government. However, it is sad that people like me have to pay the price for someone's past mistake. A lot of the people in this industry have little or no qualifications and will have an extremely hard time finding another job that pays as well. No complains for me though as I already have more than a young O level grad could ever ask for.

I am not too sure about the dirty money. As far as I am concerned all money is good money. I don't question and just do what I am supposed to.

Hi safetyfirst,

Thank you for your advice. I definitely agree with you about unnecessary risk. In fact avoiding a lot of 'investments' I didnt understand and was sceptical of is something I feel helped me preserve my wealth so well. Perhaps I am being too greedy by trying to stay in the wealth accumulation phase for as long as I can and should learn to be comfortable with my small monthly deficit. What do you think?

Hi HitandRun,

I have thought of that. I am actually not against investing in stocks or bonds at the moment. Just wondering if the risk/reward is attractive or would keeping cash to maintain flexibility and reduce volatility be a better idea. If you were me what would you do?