Investment advice

(16-04-2014, 09:35 AM)Dividend Warrior Wrote:

(15-04-2014, 02:54 PM)gzbkel Wrote: I think the phrasing in my original post is not very good. I should not use the word "advice", because naturally it makes everyone cautious. I would like to rephrase my question.

If you are in my position right now (heavily vested in REITs, not very experienced in investing), what would you do?
- Would you stay vested in REITs, collect dividend, and try to ride through possible capital drop due to rising interest rates?
- Or would you divest and go into some other investment that is less sensitive to interest rates?

Just hoping to know more about other people's views.
Of course views are just views. In the end, I still need to decide for myself and take full responsibility for my own investments

Hi,

This is my 2 cents worth opinion.

I am also heavily vested in REITs (around 70% of portfolio). I intend to stay fully-vested because:

-I am single. No children to feed. No housing loan. No car loan. So, I can take the risks.
-I am a net buyer of stocks at the current stage of my life. If prices drop, I will probably average down more. This requires discipline in saving and building up a substantial war chest of cash. I intend to use my salary, dividends and bonuses for this purpose.
-by staying vested, I can still benefit from the dividends while waiting for the correction to happen. If the correction takes a long time to come, at least I have the dividends.

Hope my opinion is useful to u. Do consider carefully before making a decision. I have the lowest reputation points in this forum. so u should take my advice with a huge dose of salt. Good luck!

Read below carefully again and see whether you are really prepared?
Please considered the time factor too. If you really are prepared, congratulations. It may works. Some of the REITS had worked for me before.
Nevertheless, always "CAVEAT EMPTOR"
Not vested in any REITS now.

"Saturday, 26 November 2011
The REIT myth busted
Whatever Reits pay out in dividends, they will take back a few years later in the form of rights issues"
By TEH HOOI LING

Or
http://wealthstory.blogspot.sg/2012/02/r...usted.html

(15-04-2014, 02:54 PM)gzbkel Wrote: If you are in my position right now (heavily vested in REITs, not very experienced in investing), what would you do?
- Would you stay vested in REITs, collect dividend, and try to ride through possible capital drop due to rising interest rates?

If I am inexperienced, I will not be heavily invested in any one asset class. You might want to read abt asset allocation and how different asset classes react to different phases of the business/credit cycles.

There's a big difference between theory and reality when it comes to human psychology. During the GFC, plenty of extremely experienced and highly paid blokes on the trading desk froze up and was unable to do the right things. It is easy for the amateur to say "Oh, I'll average down when stuff crashes by 50%!" - most of the time blokes will just sell out when there's a 20% crash. Know yourself and do not lie.

There are plenty of stories abt REIT holders during the GFC on the forum - you prob should spend sometime surfing and reading. Other than just capital losses, you might want to think abt the possibility of rights issuances at steep discounts when credit freezes and whether you have enough cash to fund these. (or risk needing to sell off assets at rubbish prices to fund the rights else facing massive dilution)

(16-04-2014, 10:08 AM)AlphaQuant Wrote:

(15-04-2014, 02:54 PM)gzbkel Wrote: If you are in my position right now (heavily vested in REITs, not very experienced in investing), what would you do?
- Would you stay vested in REITs, collect dividend, and try to ride through possible capital drop due to rising interest rates?

If I am inexperienced, I will not be heavily invested in any one asset class. You might want to read abt asset allocation and how different asset classes react to different phases of the business/credit cycles.

There's a big difference between theory and reality when it comes to human psychology. During the GFC, plenty of extremely experienced and highly paid blokes on the trading desk froze up and was unable to do the right things. It is easy for the amateur to say "Oh, I'll average down when stuff crashes by 50%!" - most of the time blokes will just sell out when there's a 20% crash. Know yourself and do not lie.

There are plenty of stories abt REIT holders during the GFC on the forum - you prob should spend sometime surfing and reading. Other than just capital losses, you might want to think abt the possibility of rights issuances at steep discounts when credit freezes and whether you have enough cash to fund these. (or risk needing to sell off assets at rubbish prices to fund the rights else facing massive dilution)

"Well put!
This is really in practice.

middle path....invest 50% enjoy life 50%.

Opportunity of investment is not just money. Include time, opportunity, energy.

e.g. Young has more opportunity to 'chase girls', 'lau kok kok' guys opportunities surely lesser...hahaha....

middle path...

(16-04-2014, 09:53 AM)funman168 Wrote: Dividend warrior, u r indeed a very smart young man.
Most ppl of ur age grp only knows how to splurge future income.

(16-04-2014, 09:35 AM)Dividend Warrior Wrote:

(15-04-2014, 02:54 PM)gzbkel Wrote: I think the phrasing in my original post is not very good. I should not use the word "advice", because naturally it makes everyone cautious. I would like to rephrase my question.

If you are in my position right now (heavily vested in REITs, not very experienced in investing), what would you do?
- Would you stay vested in REITs, collect dividend, and try to ride through possible capital drop due to rising interest rates?
- Or would you divest and go into some other investment that is less sensitive to interest rates?

Just hoping to know more about other people's views.
Of course views are just views. In the end, I still need to decide for myself and take full responsibility for my own investments

Hi,

This is my 2 cents worth opinion.

I am also heavily vested in REITs (around 70% of portfolio). I intend to stay fully-vested because:

-I am single. No children to feed. No housing loan. No car loan. So, I can take the risks.
-I am a net buyer of stocks at the current stage of my life. If prices drop, I will probably average down more. This requires discipline in saving and building up a substantial war chest of cash. I intend to use my salary, dividends and bonuses for this purpose.
-by staying vested, I can still benefit from the dividends while waiting for the correction to happen. If the correction takes a long time to come, at least I have the dividends.

Hope my opinion is useful to u. Do consider carefully before making a decision. I have the lowest reputation points in this forum. so u should take my advice with a huge dose of salt. Good luck!

I still believe in not losing money, a conserative portfolio i will try to maintain the following options,
1) 33 counters with 3% each of total investible money - Most conserative - Bull Market
2) 16 counters with 6.25% each of total investible money - Medium conserative -> Mid Market
3) 11 counters with 11% each of total investible money - Mild conserative -> Bear Market

Or just buy STI ETF.... heehee..

Still looking to setup portfolio at Option 3.

Some people may say i am doing it backwards depending on bull / bear! haha!

The truth is almost always somewhere in between.
I personally don't invest all my molaa in Reits.
Balance is key.

YMMV

My Reits size about 11% of my portfolio currently. Maybe should push higher a little.
Yes, need to be prepared for rate hikes and dilution due to rights. Despite all this, rates will stay low for long period i believe.

gzbkel,

You realising that you need to rephrase your own question means you know a little about the art of asking questions

Maybe the answer lies in your post instead

I've written my cattle prods in brackets.

Perhaps the better question is why do you want to retire early? To escape from what? Would doing what you like and getting paid for it change your opinion on early retirement?


1) At the start I mainly invested blindly based on advice of family/relatives, so I am not very familiar with my own investment, until recently. (You let others think for you)

2) I started reading books, websites, look at prices and so on. (Good. You verify for yourself)

3) What worries me is that some people on the net (analysts, bloggers, etc) are saying that the 10 year SGS yield may rise more to stabilize at about 3.5%. (You let others think for you again)

4) I did some very rough calculations using excel, and I estimate that REIT prices may drop another 15-20% with another 1% price in bond yield (assuming that the risk free spread and DPU stays the same). (Great! You verify for yourself again)

5) I read the posts on this forum with interest, but I think it is a long hard road to get the level of skills required to profit from value investing. (I not really into fishing; is there a short-cut?)

6) Instead, I am thinking of just buying the STI ETF whenever there is a dip (Like last Sep or this Feb). (You thinking for yourself; you have a plan)

7) I would like to hear your views on... (You want to outsource thinking again)

8) Back to the last of your sentence 1) "until recently". (Only you knows what "until recently" means. Perhaps look at YOUR past DECISIONS here you know a subject with full conviction versus those that you were half sure. How did they turn out? How well did you sleep at night?)

Very hard to balance.
It is mostly dependant on ur peer group.
I only become "wiser" after mixing with elderly investors

(16-04-2014, 10:14 AM)opmi Wrote: middle path....invest 50% enjoy life 50%.

Opportunity of investment is not just money. Include time, opportunity, energy.

e.g. Young has more opportunity to 'chase girls', 'lau kok kok' guys opportunities surely lesser...hahaha....

middle path...

(16-04-2014, 09:53 AM)funman168 Wrote: Dividend warrior, u r indeed a very smart young man.
Most ppl of ur age grp only knows how to splurge future income.

(16-04-2014, 09:35 AM)Dividend Warrior Wrote:

(15-04-2014, 02:54 PM)gzbkel Wrote: I think the phrasing in my original post is not very good. I should not use the word "advice", because naturally it makes everyone cautious. I would like to rephrase my question.

If you are in my position right now (heavily vested in REITs, not very experienced in investing), what would you do?
- Would you stay vested in REITs, collect dividend, and try to ride through possible capital drop due to rising interest rates?
- Or would you divest and go into some other investment that is less sensitive to interest rates?

Just hoping to know more about other people's views.
Of course views are just views. In the end, I still need to decide for myself and take full responsibility for my own investments

Hi,

This is my 2 cents worth opinion.

I am also heavily vested in REITs (around 70% of portfolio). I intend to stay fully-vested because:

-I am single. No children to feed. No housing loan. No car loan. So, I can take the risks.
-I am a net buyer of stocks at the current stage of my life. If prices drop, I will probably average down more. This requires discipline in saving and building up a substantial war chest of cash. I intend to use my salary, dividends and bonuses for this purpose.
-by staying vested, I can still benefit from the dividends while waiting for the correction to happen. If the correction takes a long time to come, at least I have the dividends.

Hope my opinion is useful to u. Do consider carefully before making a decision. I have the lowest reputation points in this forum. so u should take my advice with a huge dose of salt. Good luck!

Hello everyone

Thank you for all the advice.
Really helpful for me to hear the thoughts of other investors.
I will keep rights issue in mind.

I think I will pare down some of my more vulnerable REITs that has high debt and/or low % of fixed borrowing rates. Hopefully that would reduce capital loss from rising rates, as well as the chance of undesirable rights issue. I will keep the safer REITs to maintain some passive income.

The Fed chairperson said that interest rates may rise 6 months after the end of tapering, so I will adopt a wait and see approach this year with regards to REITs. May accumulate a little more if there are dips to the level in Feb.

Dividend Warrior, nice to see someone in the same situation as me.
I looked at your portfolio on your blog and noticed that you are holding a fair amount of industrial REITs.
I think industrial REITs are generally regarded to be higher risk because:
- The property lease is shorter, so the manager need to keep rising equity to recycle their property
- Difficult to increase rent, so more vulnerable to interest rates increase
May I know what is your take on this? (If you do not mind sharing)

Thanks!