Thursday, December 8, 2016

November 2016 Portfolio Update!

Hi all,

Firstly, there was a mistake with the Oct figures. Turns out I do not have as much cash on hand as I thought (-$20k), and my actual portfolio is sizably smaller :( I have updated that post to reflect the correct figures.

November has been a good month, with a splendid holiday to Japan with family. The trip did not cost a fortune, and will talk about it in a separate post in future.

Otherwise, spending has been quite reasonable the past month. Credit card bill increased to $605 due to paying $220 in NTUC vouchers to hit the $500 minimum (and the math-inclined among us would notice the figures don't add up. Yes, I overbought this month due to my poor arithmetic skills sigh).

Bought some Singtel at 3.69 early this month as I felt it was trading at a good price. It will form a decent long-term holding as it derives substantial revenue from other countries and is not overly dependent on the Singapore market. I do not anticipate too much effect on overall revenues even with the entry of a 4th telco.









Total Portfolio Size: -$368.3k
Total Portfolio Size ex mortgage: $143.7k

Slight improvement from last month, but largely due to the surge in prices recently. We will have to continue working hard to grow this slowly and steadily!

Andohbytheway, mortgage is a killer. Sigh!

Tuesday, November 15, 2016

Dual-Class Shares in Singapore

It looks like the authorities will be approving dual class shares (DCS) structures in Singapore soon. This move gained momentum in August with a vote in favour by the Listings Advisory Committee, and was discussed at a round-table discussion between the Singapore Exchange and the National University of Singapore Faculty of Law. 

Based on anecdotal evidence and experience, DCS would most likely be approved by the authorities in due time. 

Benefits of DCS

Would such a structure benefit Singapore? There are some who argue that having DCS would give Singapore an edge over the HK exchange, where DCS is not allowed. SGX would have the advantage of being the only exchange permitting DCS in the region, and could attract more listings from companies around the region.

There are others who argue that this is beneficial for rising tech start-ups where companies may require capital to grow further, and still allow the founding members to make key decisions for the company without having to focus on short-term gains to appease shareholders. This would allow the founding members to focus on long term growth instead.

Safeguards for DCS

One of the discussed safeguards to protect investors' interests is to make it mandatory for a dual class listed company to implement a code of corporate governance. Another safeguard would be to have independent directors voted in on a one-share-one-vote basis. Yet another proposed safeguard would be to increase investor awareness over the governance structure of companies.

Pitfalls for DCS

IMHO, I am against such a move. I believe that the pitfalls of having a DCS structure in Singapore would be detrimental to the investing environment here, and would further weaken investor interest in Singapore-listed shares.

Presently, all ordinary shares (excluding prefs) have equal voting rights. Despite retail investors holding a minuscule portion of voting power individually, this is commensurate with the amount of financial risk each individual takes when investing in a company. Even with the minuscule voting power, retail investors have the ability to band together, and as their combined financial risk increases, so does their combined voting power.

DCS would serve to destroy this. For a company with Class A ordinary shares and Class B shares with 10x voting power, having 10% of total company shares as Class B shares in the hands of founders would give them majority voting rights in the company. This would mean that with a 10% financial stake in the company, the founders would be able to enjoy full autonomy over most decisions in the company. The graph below shows how the voting power of higher-voting shares increase as the percentage of this higher-voting share increase with respect to the total company shares:

There would be little to prevent them from making decisions beneficial to them yet detrimental to the company, such as paying themselves exorbitant management fees. Such a structure would have the potential to fleece the investing public of their money. An example is given in Investopedia's article on dual class shares, where former CEO of Hollinger International, Conrad Black, controlled all of the company's class-B shares, which gave him 30% of the equity and 73% of the voting power. He filled the board of directors with friends, and paid himself huge management fees, consulting payments and personal dividends. Holders of the publicly traded shares were powerless to stop him, and the company suffered under his leadership, eventually going bankrupt.

The situation is even more acute in Singapore, where there is little recourse for retail investors when rogue companies make wanton use of public monies. Investor activism is not strong in Singapore, and we regularly hear of stories of retail investors losing much of their hard-earned savings to companies with poor governance (the point being that the investors possibly could/should have raised the alarm as the company goes in a downward spiral). With poor support for retail investors, companies with malignant intent could easily get away with daylight robbery of the public.

Failure of proposed safeguards

The proposed safeguards are a joke. Having a code of corporate governance sounds like using guidelines to govern citizens' behaviour. The proof of the pudding is in the tasting. There has to be suitable recourse and restitution for people invested in a companies in which they have little voting power. Or better yet, we can avoid the problem to begin with.

Independent directors voted in on a one-share-one-vote basis to keep watch over the company management is not an ideal solution. This is effectively control by proxy. However, when it comes to my money, I would rather control it personally than to hand it over to someone I do not know and have no say over. Moreover, when was the last time you've heard on the news of a director at loggerheads with a company's management?

And unfortunately for us, retail investors in Singapore do not typically keep ourselves well-informed. We have been brought up to trust the authorities, and we keep this mindset when investing. We do not question management intelligibly enough, and are more than happy to stay in the sidelines to avoid conflict. This is unlikely to change when we have DCS-listed companies in SGX.

How will this change affect us? There are generally 3 main parties involved, the founders/management, retail investors, and institutional investors. For institutional investors, this would represent a tremendous loss of voting power for them, and it is likely that they would stay away from DCS-listed companies, at least for the beginning. Therefore, it would appear that these lower-voting shares would be marketed towards the public, and the public would be over-represented in exposures to these new shares. In the most optimistic picture, management would wield their voting power appropriately, companies would grow in the long term, and all would be rosy when institutional investors decide to grab their slice of the pie. However, I am a little more pessimistic about the outcome...

What is your take on DCS in Singapore? Are you supportive of it?

Friday, November 4, 2016

October 2016 Portfolio Update!

Apologies for the lack of updates! Life has been busy, and things have been relatively quiet on the personal finance side.

During this period, there have been a few occasions when prices for some stocks dipped enough to be tempting. Examples were Keppel Corp, M1 and even DBS. However, I held back as there were circumstantial reasons to avoid each of these stocks individually, and there is too much uncertainty with potential downsides outweighing potential upsides at this point in time. I've actually reduced my portfolio slightly by selling off CCT at 1.635 as it provided a 15% price increase over buy price, which should easily compensate for 2 years of estimated dividend income during which I may re-enter at a good price.

An update of my current portfolio:


Investment CasH
Emergency Funds



monthly Income/$K

Combined salary (take home)
Side income
dividends collected

monthly Expenditure/$K

fixed expenses
Other expenses

Therefore, total portfolio size is -$378.1k, or $134.9k excluding mortgage, of which 9.04% is in cash.

Cashflow is $5.33k per month. We will need to keep better track of our other expenses.

As the holiday season approaches, we would like to wish everyone a happy year-end! We will be going to Japan for a short holiday trip for the coming week. This will be a breather from work, and good chance to relax and enjoy the good food and weather there.

Wednesday, September 7, 2016

Unhappy Singapore employees!

According to the Randstad World of Work Report which surveys employees from Singapore, Malaysia, China, Hong Kong, India, Australia and New Zealand, Singaporean employees rate at the top of the "unhappiest" ranking. Moreover, 64% plan to leave their current job in the next 12 months.

Is this surprising?

I think anecdotally, in the mornings when I take the MRT, I can clearly see the general mood of the crowd as we hustle to work. The atmosphere is grim as everybody tries to avoid each other's faces and look busy, most opting to glue their eyes onto their handphones.

It is not difficult to tell that we are a unhappy lot!

But why is this so?

Many of us would throw out the usual suspects, namely, long work hours, horrible bosses, meaningless work and office politics. I am sure we are all familiar with these, and there is not need to elaborate on them.

But must this be so?

There is a popular acronym in the world of Personal Finance, which is FIRE. This stands for Financial Independence, Retiring Early, and embodies the concept of achieving sufficient passive income from assets to cover all necessary expenditure, and thereafter being able to retire, or choose to leave work if one so chooses.

Are you trying to be on FIRE?

I am unashamed to say to I am trying my best to reach this goal. The reasons are as such:

  1. I was introduced to the world of personal finance by the very concept of FIRE. The idea intrigued me, but I did not believe it made sense, or was even possible. However, the math was indisputable, and I learnt the importance of having financial literacy that day.
  2. I work in an industry where 80+ workweeks are common and 100+ workweeks are not unheard of. This is a line of work where not having a single day off in 3 weeks is simply an event one shrugs off. While I am sure there are those who may face similar challenges in their workplace, wouldn't we all wish to have a choice otherwise? I believe that time is worth so much more than money as time is a very limited (and unpredictable) asset. I would prefer to invest this limited asset with people who matter to me. To preserve more of this limited asset of time, achieving financial independence is my chosen strategy.
  3. Having a family changes your perspective on life. No longer am I aiming for the extra dollar to pay for an extravagant lifestyle. Rather, I would seek additional income only for the sake of feeding my family, and enjoying their company. Hence, I do not seek to climb to the very top of the profession anymore (with the attendant sacrifices), and would prefer a conservative strategy to live within my means.
To achieve this goal, there are sacrifices to make as well. As a family, we will choose not to spend lavishly on restaurants frequently, go for exorbitant trips to exotic places and buy unnecessary but highly desirable items for ourselves such as a car. Instead, we choose to have a simpler lifestyle, occasional meals in mid-tier restaurants, conservative trips perhaps once or twice a year (coming up in Nov!) and saving regularly. With this, I hope to progress on my journey to be on FIRE.

Are you unhappy at work and would like to consider an alternative? Would you try to be on FIRE?

Monday, September 5, 2016

Cashflow Quadrant

I spent the weekend reading through Robert Kiyosaki's Cashflow Quadrant. It was an awesome read, and very captivating, and there was no difficulty coming back over and over again to continue reading until I've completed it cover to cover.

I was inspired to read this book from millennial-revolution, who "LOVED" this book.

In the book, Robert identifies that there are 4 groups of people, namely, the E (Employee), S (Self-employed, B (Big business) and I (Investor), with E and S on the left side of the quadrant and B and I on the right side. These groups of people derive their income from different sources, with E and S working hard with their own effort and time to mind other people's business, while B creates the business and I uses money to grow money. The author also goes on to illustrate the different characteristics of the people in the different groups.

The book strongly emphasizes the different approach the groups have towards security and risk. In particular, the E and S groups prioritize security highly, while the B and I groups prioritize freedom and risk-management. The author also notes that the government treats both groups very differently, with oppressive tax regimes for the left quadrant and numerous tax breaks and exemptions for the right.

The author also advocates financial literacy, encouraging people who wish to transit from the E and S groups to the B and I groups to educate and change themselves, in the process of BE-DO-HAVE. Finally, he gives a short course on the baby steps one can take to make the move from the left to the right, including knowing oneself better, managing own cashflow, seeking good mentors, mastering disappointment and keeping the faith.

In this book, Robert Kiyosaki showcases his ability to present his ideas in a manner which is simple for his audience to follow. These ideas are then developed into more complex concepts, and illustrations are provided to present these concepts graphically.

One part of the book that stuck greatly with me was how differently we're treated by the government. The book shows that the cashflow for the left group goes as follows: Income -> Taxes (Income tax) -> Spend, while the cashflow for the right group goes as follows: Income -> Spend -> Tax. This struck me particularly because I've understood EBITDA in income statement for a period now, but the significance of how tax is calculated after spending in a business versus how we are taxed on our incomes as employees did not occur to me until I've read this book.

It was an inspiring book, and I hope to continue my reading journey as I seek to further educate and improve myself. I do encourage those of you who have yet to read this book to consider picking this up (perhaps in the library?), as it is an easy read and there may be good ideas that you may want to pick up and use.

Wednesday, August 31, 2016

Fixed Expenses

I've been inspired by 15HWW to calculate our fixed expenses every month. This is part of the ongoing effort to understand our expenses more, so as to lower any unnecessary expenditure if possible.

This is important as basic math dictate that income does not matter towards financial independence, but savings rate does. Millennial-Revolution makes the math concise and upfront, which is helpful for understanding how she gets her figures and conclusion.

Of course, it can be assumed that there is a minimum expenditure that we have to make monthly to keep our bodies alive and fulfill our obligations. Therefore, this is the sum that we will seek to clarify and reveal to ourselves today, so as to better understand our financial standing.

In my case, I will define fixed expenses as regular expenses that are very unlikely to change after two years. This will be separated from semi-fixed expenses, that are defined as expenses that may change every year or 2 years (especially for telcos, taxes). Other expenses would be variable/discretionary expenses, which will be another post for another day.

Fixed Expenses

Mortgage Loan by Cash
 $     213.00
Mortgage Loan by CPF
 $  1,880.00
Conservancy Fee
 $        90.00
Term Insurance
 $        16.00
Whole-Life Insurance
 $     216.79
 $  2,415.79

Semi-fixed Expenses

 $     117.22
 $             -  
Handphone (Mr)
 $        35.00
Handphone (Mrs)
 $        35.00
 $     187.22

To be clear, the internet bill is $0 as it was paid upfront.

Therefore, our fixed and semi-fixed expenditure monthly come to a total of $2603.01.

The Rule of 25, which is used to estimate the size of portfolio we'll need in retirement by multiplying your desired annual income by 25 (with the assumption of a conservative 4% return on the portfolio), can be used here. We like to adapt it as the Rule of 300 (300 = 25 x 12), as 300 is an easier number to work with, and regular expenditure is often calculated on a monthly basis.

Using the Rule of 300, our minimum portfolio size for our fixed and semi-fixed expenditure would be 300 x $2603.01 = $780,903.00

Woah! And this amount will grow as we take inflation into account!

A closer look at the figures show that the majority of our fixed expenses comes from our mortgage. Housing loan is truly a killer! 

Another way to look at this is that we are still very far from reaching our portfolio targets...

Monday, August 29, 2016


Seeing as how we've collected all the dividends for this year, it is a good time for an evaluation of how much dividends our portfolio generated for this year.

Dividends for the year: ~$1670, approximating $139 per month

This is taking into account that the dividends for DBS is not in yet, but we're intending to take scrip for that counter anyway. Also, we missed out on the round of dividends in May.

We will be channelling the dividends back into the investment account for compounding when we find opportunities.