February 2016 Portfolio Update

Stock Name	No of Shares	Current Price	Current Value
Keppel Corp	1000	$5.160	$5,160
Accordia Golf Trust	9000	$0.585	$5,265
NeraTel	5000	$0.570	$2,850
Total Value			$13,275

This month portfolio recovered back 8.43% from the recent drop of 20% show here. But my portfolio is still down 12%. Things are slightly better this month as the economy start to recover from the January massive selling. However, there is still no strong indication whether the economy will be heading towards north or south moving forward.

There is no movement in my portfolio this month as I am on the wait and see situation. Another thing is I am waiting for my bonus to come in next month to inject more funds into my war chest. This month Accordia reported strong set of results for the 3Q as compared to 1 year ago, I am happy that it is doing very well and will be expecting more returns from them in the next income distribution. As for NeraTel, the full year result is not as promising as Accordia and they have reduced their income distribution from 2 cents to 1 cent per share. I will still keep a look out on NeraTel but will not be increasing my exposure on them for the time being until I see better result from the management.

Have you attended the 5th Singapore Airshow 2016?

Amid a global economy slowdown, the recently ended Singapore Airshow 2016 reported fewer major deals as compared 2 years ago. The trade segment of the 6 days Singapore Airshow has concluded on last Friday with 11 deals worth US$12.7 billion, down from the 20 deals worth US$32 billion in 2014. However there are 41 deals with undisclosed values, an increase from 24 deals in 2014. Commercial sales of air plane has dropped but defence sales is up.

The chart below show the deals value that had been reported since the very 1st Singapore Airshow in 2008. This year is the 5th Singapore Airshow being organised in Singapore. It was reported in 2008 US$13 billion, 2010 US$10 billion and 2012 US$31 billion.

From the chart, we can tell that in 2012 and 2014, the global economy pick up after the Global Financial Crisis in 2008. So in general, with strong sets of economy data and stock market booming period, the economy is doing better, same goes to the Singapore Airshow. This year, the economy is not doing that well due to rising interest rate, oil price slump crisis and the slowdown of the China's economy etc. triggered the drop in the number of deals being closed.

I do enjoyed the Singapore Airshow especially seeing the fighter planes flying around and creating lots of stunts in the air. Somemore we only got to see it once every 2 years. It is definitely a nice event you will not want to miss.

How much is enough to retire?

In my previous blog post show here I talk about keeping track of your monthly expenses. Why is it so important to keep track of your expenses? By keeping track of your expenses, you will know how much is your "fixed expenses" and also roughly know what is your spending habit and how much you spend yearly.

Once you got the sums, if you got retrenched one day or you declare yourself financial independence, you will know how much you need in order to sustain your current lifestyles. Of course, if you are retrenched and do not have sustainable savings or passive income to tide over the period, you got to adjust your lifestyles accordingly.

Beside keeping track of your expenses, it is still not enough. Why? Our age will keep on incrementing year after year. We need more money for medical expenses when we grow old. Our medical policy premium will be more expensive as our age is catching up. The medical policy premium you paid now will not be the same year after year.

Recently there is misleading news by Rebecca Lim, saying she is retiring from showbiz. In fact it was a collaboration between NTUC Income and Rebecca to promote on retirement.

So how much is enough? We must invest to generate more income. We do investment as we want our money to work hard for our retirement. Once our investment portfolio income able to generate an amount equal or higher than the expenses we spent yearly, we can actually declare ourself financial independence. We do not need our day job income to sustain our current lifestyles anymore. Isn't good if we are able to achieve that?

Keeping track of your monthly expenses

In order to know how much you have been spending on every month, you need to keep track of your daily expenses diligently so that, at the end of every month, you are able to tabulate how much you have spend and how much remaining is left for saving.

There are 2 types of saving plan people commonly used to save their income. First is to set aside an amount of money every month to transfer into a saving account. This is called forced saving. Second is to spend whatever they have, any remaining left will be transferred into saving account. The latter type of saving plan is very dangerous as you are not in control of your expenses. You only save when there is any remaining. The first type of saving plan is a better option, as you know how much you will be able to save in a year. Any extra savings from the planned expenses can also goes into the saving account.

To find out how much you are able to set aside for saving every month, you need to record down what are the "fixed expenses" first. Example of fixed expenses are handphone bills, insurance premium, parent allowance etc. Next is to record down the daily expenses which are variable day to day. You can make use of Microsoft Excel to keep track of your monthly expenses or apps that can be downloaded from your handphone which I found most people are using it to keep track of their expenses. I know it is very tough to keep track especially you have to know how much you have in your wallet and also remember what you had spent on and how much. It is not easy but you still have to do it.

In summary, you need to do this if you planned to retire or to achieve financial independence. Without a saving plan, you will not be in control of your finances. Needless to say about retirement or even financial independence. I had been diligently keeping track of my monthly expenses since 2006, a good 10 years and many years to go until the day I achieve financial independence. So how about you? Have you start keeping track of your monthly expenses?

Accordia Golf Trust 3Q DPU up 12% at 2.16 cents

Accordia Golf Trust posted their 3Q FY 15/16 earning report in summary below.

• Available Distribution per Unit (DPU) for 3Q FY 15/16 of 2.16 cents, 12% higher than the corresponding quarter a year ago
• Operating profit rose 17% to JPY 4,234 million, attributed by the favorable weather conditions in October to December 2015
• Net Asset Value (NAV) stood at SGD $0.89
• Distribute back the 10% Retained Distributable Income from 1 Apr 2015 to 30 Sept 2015 back to Unitholders

Japan Economy Outlook
1. Economy recovered from the earthquake in 2011 and has been stimulated by Abenomics (refers to the economic policies advocated by Shinzō Abe since the December 2012 general election. Abenomics is based upon fiscal stimulus, monetary easing and structural reforms.)
2. Year 2020 Tokyo Olympics is expected to have positive impacts on the Japanese economy.

Sound demand from senior players
1. Golf continues to be a popular and good sport for seniors
2. Baby boomers have been retiring who have the money and more time to play golf

Inbound tourism in Japan
1. Estimated number of foreign visitors increase 47% y-o-y and reached 19.7 million in 2015 (I am sure alot of people would like to visit Japan as one of their choice for holiday.)
2. Potential to impact demand for golf in the mid-to-long term

Accordia Golf Trust has a very strong branding and is the largest golf operator in Japan. The operation team and management is very efficient in managing the golf course operation. Their strategy is to target middle class working people into playing golf in Accordia. They provide casual atmosphere with reasonable play fees. They had a large pool of loyal customers base that subscribed to their golf club membership.

With a strong set of good result from this quarter result, I am very happy to be vested in Accordia Golf Trust. If they continue to churn out good results on every quarter, I'm sure by Year 2020 when they hosted the Tokyo Olympics, the shareholders will be rewarded with the growth and stable income distribution by investing on them. 

What do you know about leap year?

This month we will be celebrating leap year. Those who are born on 29 February can only celebrate their birthday once every 4 years. So what is leap year? A leap year is a year containing one additional day added to keep the calendar year synchronized with the astronomical or seasonal year. Because seasons and astronomical events do not repeat in a whole number of days, calendars that have the same number of days in each year drift over time with respect to the event that the year is supposed to track. By inserting an additional day or month into the year, the drift can be corrected. A year that is not a leap year is called a common year.

Every 4 years, we are given one extra day (29 February) to spend on things we liked. Unfortunately, most of us are working, so it simply means that employers who pay fixed salaries get an extra day of work from their employees for free. It also means we get an additional day of trading for this year. So Happy Trading and I wished everyone here Happy Lunar New Year 2016! Huat ah!

 

4 steps to Financial Freedom

There are many ways that can lead you to Financial Freedom. All you need is to have a plan and execute it. Without a plan, you can never achieve something you want in life. In fact, in your working environment, your supervisor will always draft out a work plan for you on the start of every new work year, they call it Key Performance Indicators (KPI).

In order to achieve Financial Freedom, you must have a plan. The following are 4 steps that I believe can lead you to Financial Freedom.

1. Save your income

You need to have a saving plan to save a portion of your earned income into a saving account. It is very important to have a saving. In the event, something happens to you and you need a sum of money urgently, you have the money to solve the problem. Here's an example if you save $500 per month, 1 year later you will have $6,000. In 10 years time, you will have $60k of savings. This is assuming you are not promoted and has no salary increment which I don't think it will happen to anyone.

Period	Savings
Year 1	$6,000
Year 2	$12,000
Year 3	$18,000
Year 4	$24,000
Year 5	$30,000
Year 6	$36,000
Year 7	$42,000
Year 8	$48,000
Year 9	$54,000
Year 10	$60,000

2. Lower down your expenses

First of all, you need to keep track of your expenses monthly. Next is to allocate what are the money that can be used for your expenditure, example insurance premium, handphone bills, allowance for parent etc. Then work on the expenses that can be lower down or cut away. Spend on items that you "needs" rather than you "want" if you get what I mean.

3. Work on passive income

Brainstorm on what additional income you can bring in to increase your income? For example, giving tuition or teach swimming lessons. These can bring in extra income to build your saving nests. Having multiple streams of income definitely can grow your savings even faster. So think about it and see what works well for you.

4. Invest for income

The last thing is to invest the savings in the stock market for income. By putting the money in a saving bank only earns you miserable interest. Invest in high dividend yield stock with 5-7% annually can leap frog your net worth substantially. Not forgetting to reinvest the dividend collected annually into the market to compound it even faster. You will see the effect of compounding once your portfolio starts to grow bigger.

In conclusion, if you do these 4 steps diligently, you will achieve financial freedom one day. It is only a matter of time when you will achieve this milestone. There is no right or wrong when you start this journey. Someone who started the journey earlier gets to enjoy the fruits earlier. Those who started late does not mean you will never reach the destination. The key point is to start early. If you never start or is still deciding whether you should start this journey, my advise to you is to do it now.

Buy Low, Sell High

It is always investor's mindset to "buy low and sell high" to make money in the stock market. Who doesn't want to do that? You can always say you use fundamental analysis to decide a stock's intrinsic value so you know when is low and when is high. But in reality it is never that simple in investing.

What does it mean by buy low? Investor usually uses 52 weeks high/low as an indicator to tell a particular stock is trading at which level currently. First of all, they will set their investment time horizon to be 6 to 12 months. If the stock is trading at 52 weeks low, they will think that the price now is low which signal a buy call when that is not the case. Usually, when a stock is trading close or below 52 weeks low, it often show weakness in the stock, people are selling that's why it causes the price to keep on dropping. Normally the stock will test its 52 weeks low or even go lower if poor set of financial results come out to make the matter even worse.

If buying low is difficult, selling high is even harder. In a rising market, everybody make money. People who sell later, however, make much more money than people who sell early. Sell too early, you will have the tendency to jump back in to ride on the momentum.You buy back what you sold at a far higher price. Once the bull market ends, you will be caught in a situation whereby you are buying at 52 weeks high.

It is always good to research more on the stock that you are interested to buy currently. Ask yourself these 2 questions before you act on it.

1. What is your investment time horizon for that stock? 
2. Are you looking at the stock for its growth or dividend?

If you are investing for dividend and the current price matches the yield you are interested in. Just buy and keep it for dividend and income. However, if you are investing for growth, it will be more difficult to know how low is low. You have to judge yourself, what is the comfortable price you would enter, should it hit your buy call? Buy in batches. At least you can still buy if the price keep going down after you had bought.

Now for sell, as long as you hit a profit. I guess it does not matter how much you had made. You probably will grumble if you sell too early. However, it is still better when you want to sell, you are not selling it at a loss.