The idea of experimenting and making mistakes

The life expectancy we have in Singapore is probably around 80 years old. By then, irregardless of what happen during the course of our life, we probably have to bid farewell to our tiny little earth when time is up. Because of this, many people are advocating us to live life each day to the fullest and at the same time to embrace happiness in everything we do. But it's only as easy as it sounds. In reality, not many people can go out there to experiment new things and live their dreams, especially not if you are in a country like Singapore where one small mistake you make and your dreams can be dashed.

I remembered when I had to choose those courses during my secondary school days to go into - Science or Humanities stream and I ended up choosing combined Science and Humanities in order to have both pathways still open at that time for my future. I thought it was an early decision that you have to already make when you are only probably 13-14 years old. As often, if one doesn't know what to do, then the most natural choice would be the Science stream, which is for obvious reason that the future is brighter being a doctor. This is probably the reason why it is only until recently that liberal arts are starting to be more visible in our little island.

In our ideal lives, we like to travel around, experiment new things and make mistakes. But often, we pause a moment, think twice and then back off from our ideas. This is because we are afraid to take risks that will jeopardize our chances. We always go for the safe route in everything we do. Take a graduate for example, we tend to choose to work for others instead of going the entrepreneurship route, where the risk is potentially higher. Boring boring Mourinho chants for those who are more familiar with soccer terminology.

The idea of experimenting and making mistakes still goes a long way before we see more of our society shapes up to embrace the change. Even for our financial planning, most of us tends to go for defensive dividend yield stocks instead of cyclical growth stocks to begin with and historical data trends with this. Maybe this is human nature or maybe this is just us...living in this society.

First time is always the most difficult but special moment

First time in doing anything is never easy.

You get the tension and nervous syndrome that came out random from your body system sending special moments of spiral when you do things for the first time. First time is also special because it is the one moment in your life that you could probably remember as you grew older.

I remember my first time entering the workforce. It seemed upon like the whole world is awaiting for my grand entrance into the new office. I checked my shirt, ties and shoe-lace again and again making sure that everything is perfect coming into the first day. When I stepped into the office full of human cubicle, it appears like all eyes were on me, awaiting for my presence to enter the fray. It was probably common and normal for everyone in the office but it was a special special day for me, the one unique feeling that I could still remember until today.

The same goes when I executed my first purchase of stocks. I remembered it was a proud moment - a moment when I decided that I would put my past away and start on a special journey with people and other bloggers that share the same path. I monitored those stocks like a hawk day and night, looking after news and corporate announcement that are related to the company. It was a trial and error at times in the beginning as I began to realize what I should do and what I should not do. But it was a special moment and 4 years down the road to this very day it remains the most special day for me.

My wife gave birth to our son last Wednesday and finally I am a proud Dad. The first touch and interaction with him was very special though it feels more like a one-sided interaction from my side. It was a moment when I saw someone with the very same blood and flesh that looked exactly like myself, I am amazed and I thank God for keeping him delivered safely into this world. The hospital bill at TMC came out to be slightly under $10k and with the addition of other consultation charges we probably hit through somewhere in the mid $12k range. I knew this wasn't going to be easy financially but under strict supervision of budgeting preparation we had during the year we managed to clear it off without utilizing any credit card debts. I was proud to be able to give a good hospital care support for my wife and son during the 3-days overnight period and a warmth care from inside. It was a nice smiley moment that came out from the heart.

I look forward to the first time of many other things during the course of my life. There are many first time which I have not encountered yet at this point in time. The first time of traveling together with my wife and son, the first time I will hear my son calling me "Daddy", the first time my role requires me to become a management position, the first time I am going to reach financial freedom, etc. And I know it is going to be special, for when I grow older the happiest memories I will cherish are these moments in my life - a special moment that nothing else can ever replicate.

What about you? Any special first time moment that are extremely memorable to you?

$250K - First Milestone Target Reached!!

I started out my journey some 4+ years ago and back then I had set out a 10-year projection target for myself. I tried to review them at the every interval of my birthday month to see how I was doing and if the target was overly ambitious.

Projection Target

Year	Year	Starting Capital	Cumulative Annual Capital Injection	Dividends on Starting Capital	Total Yearly Dividend Payout	Monthly Passive Income
0	1/9/2012	$100,000.00	$60,000.00	$6,000.00	$6,000.00	$500.00
1	1/9/2013	$166,000.00	$60,000.00	$9,960.00	$13,920.00	$1,160.00
2	1/9/2014	$245,920.00	$60,000.00	$14,755.20	$19,190.40	$1,599.20
3	1/9/2015	$345,030.40	$60,000.00	$20,701.82	$25,453.25	$2,121.10
4	1/9/2016	$469,594.05	$60,000.00	$28,175.64	$33,302.84	$2,775.24
5	1/9/2017	$627,460.53	$60,000.00	$37,647.63	$43,245.80	$3,603.82
6	1/9/2018	$828,572.82	$60,000.00	$49,714.37	$55,909.12	$4,659.09
7	1/9/2019	$1,085,594.23	$60,000.00	$65,135.65	$72,090.20	$6,007.52
8	1/9/2020	$1,414,705.83	$60,000.00	$84,882.35	$92,807.76	$7,733.98

I started out really wasteful when I started working, always buying the latest trend of clothes and gadgets to keep up with the world. By 25, I realized that I had wasted piles of years of savings that could be used to fund greater needs for the future. One day, right around my 25th birthday, I started to ponder on my financial future. I had a good job and a good income but technically my net worth is still zero. I was eagerly awaiting for the next paycheck to come, only to find myself doing the same thing the following week. The euphoria moment I get when I saw those money hitting my bank account died off very soon. Realistically, I was only 25 years old at that point in time, so maybe I was doing relatively well I thought. Or maybe I was not. I wasn't really sure of my situation.

One day, I decided that I had to be more sensible towards my financial situation if I were going to be successful and so I decided to pen my every thoughts and plans into this blog. I have also been aggressively saving and investing my way toward financial independence for the most part of the past 4 years. I have purchased shares in great companies like ST Eng, SIA Eng, SPH, Singtel, Sembcorp Ind, Vicom, Neratel, Reits and many more on market dips in order to build up my arsenal of solid dividend payers. Slowly but surely, day by day, I continue my ascent to the top and hope that with time and persistence on my side, I will be able to reach the summit - the end goal of my financial independence.

Today, and on this very day, I'm proud to reach my first milestone of hitting $250k in my stock portfolio. It's an achievement that doesn't comes easy, with plenty of ups and downs along the way and I will be the first to admit that the idea of giving up often ponders inside my mind. Fortunately for me, luck and persistence take the better off me and so here I am still alive, kicking and pushing closer to the end goal. I've tried various methods on both defence (savings) and offence (higher income) and it seemed obvious that both are equally important. I've also thought that with the world's best defence but with very little offence to attack things were not going to be easy. So I've decided to upgrade myself with skills that are relevant and can improve on my productivity at work. I guess this is where the value of my MBA comes in - a very debatable tangible and intangible costs and benefits it can offer. The learning and interaction with the other bloggers have also pushed me to understand more towards financial goals. 

Achieving my first milestone now does not mean that I will achieve my end goals in 6 years time easily. In fact, it is going to be even more difficult than ever. But now that my goals are in place and I'm on a designated path for financial independence, I live my life everyday with these end goals in mind. Hopefully, the desire and hunger to achieve the goal is still there by then.

For those who strives to achieve financial independence but does not know where to start, I hope this will give you some motivations and directions. Things are not going to be a replicate of what you see here because each of us has a different set of story but this is my story - and hopefully it can bring the changes to those who needs it.

"Apr 14" - SG Transactions & Portfolio Update"

No.	Counters	No. of Lots	Market Price (SGD)	Total Value (SGD) based on market price	Allocation %
1.	FraserCenter Point Trust	30	1.795	53,850.00	21.0%
2.	Vicom	6	5.95	35,700.00	14.0%
3.	SembCorp Ind	5	5.40	27,000.00	11.0%
4.	SPH	5	4.13	20,650.00	8.0%
5.	Ascott Reit	15	1.235	18,525.00	7.0%
6.	FraserCommercial Trust	14	1.295	18,130.00	7.0%
7.	Mapletree Greater China Commercial Trust	20	0.86	17,200.00	6.0%
8.	Neratel	20	0.78	15,600.00	6.0%
9.	First Reit	13	1.14	14,820.00	6.0%
10.	ST Engineering	3	3.95	11,850.00	5.0%
11.	China Merchant Pacific	8	0.95	7,600.00	3.0%
12.	Second Chance	13	0.455	6,045.00	2.0%
13.	Ascendas Hosp. Trust	7	0.705	4,935.00	2.0%
14.	Mapletree Logistic Trust	1	1.085	1,085.00	1.0%
	Total SGD			252,990.00	100.00%

Stocks made a run-up in the month of April which is why you see most of the value in a lot of the stocks rising up. Because of this, I also took the chance to liquidate my holdings in Plife Reit at a price of $2.47. Plife Reit stock price, in particular, made a run-up due to their announcement of the acquisition they've made recently. I thought it will be wise to take them off the portfolio for now due to their squeezed yield as a Reit.

I also took the chance to accumulate Mapletree Greater China Commercial Trust when there are news that a huge rainfall caused some leaking and breakdown in the mall infrastructure. Price fell upon the news which I feel was quite irrelevant to some extent, so decided to take the opportunity to get some.

There's been some late news recently regarding China credit crunch with billionaire like Li-KaShing liquidating their assets in China. I hope that won't happen as it will trigger some serious pandemic economic flow to the other countries. For now, I'm keeping my cash holdings from my Apr bonus to see if there are any opportunity I can accumulate. I'm keeping a close tab particularly on the placement pricing issue from FCT announced recently for their acquisition of Changi City Point.

Because of the run-up in stock prices recently, my portfolio has also breached my first milestone of $250k for the first time. I am quite pleased with how things are going this year and hopefully it can only be better.

What about you? Did you reallocate your portfolio position now that the stock has run-up quite a bit?

Be Prepared for the Loss of your Job

When corporate firms signal their intention for restructuring an organization, there will always be uncertainty that sends their employees morale down their spiral. In today's context, we see pressures coming in from top management and shareholders on how they can come up with a leaner processes that will drive up their profit margin and lower their overhead.

No levels are secured - from the junior assistant to the Director level. Anyone at any point in time can be retrenched at the mercy of where the company direction is going. That's what happens recently to SPH who undergo restructuring in order to have a leaner processes and eliminate inefficient resources.

I've spent two years at my current company and now I've probably undergone two major restructuring within an organization itself. Some people who are close to me are directly affected and it is never easy for an organization to go through that in the short span of time. Morales are down, employees are uncertain and productivity to a certain extent goes down in the short term. The overall direction of the company may be going the right way, but as an employee you never are going to relate the same way as a shareholder does.

In these circumstances, the question people usually ask is how well are you prepared for such a retrenchment? Do you have an alternative plan on how are you going to cover your basic expenses for the family? Do you have any transferable skills that will enable you to find another job elsewhere? Maybe here are a few things to get you started:

1.) Have an Emergency Funds

This is where the importance of emergency funds kicks in. You should be prepared to work around your finances well even when things are going well for you. The idea is you never know what is going to happen next to you as long as you work being an employee depending very much on that paycheck at the end of the month.

2.) Regular reviews of monthly expenses

Conduct regular reviews of your monthly expenses and see which of the expenses you can easily strike off from the lists and which is the more important ones. You should be able to segregate the necessities from the luxuries and work on covering the basic necessities expenses while you are still working.

3.) Enhance your productivity

Consistently enhance and upgrade your skills in order to meet the requirement the world needs. Always remember that CHANGE happens within our world whether we like it or not. It is always up to ourselves on whether we want to change for the better that can improve on our productivity and marketability.

4.) Build up your passive income

The idea of passive income is to allow you to eventually do nothing but still receive a stream-flow of income, for whatever use you want it for. To start young means you will have a much longer time to build up your sandcastle so that you will have a canon stream of income when you get older while your employability does get lower.

Most people in Singapore are tied down to major necessities expenses such as housing, cars, renovations, education loans, parent allowances, school fees, maids and so on. This is why money management is even more important for these people who knows that they cannot absolutely afford to lose their job. Working on the above 4 points will at least gets you the start they need, but it needs to start early - when your job is still relatively "Safe".

FCT finally acquires Changi City Point

FCT has finally announced a proposal to acquire Changi City Point at $305 Million to inject the abovementioned asset into their existing sub-urban malls portfolio.

 

 

I’ve got a feeling that investors have been waiting for this acquisition for some time now, given the recent lacklustre organic growth opportunities especially on their performance for YewTee and Bedok Point in the recent months.

 

My take on Changi City Point

For those who have not been to Changi City Point, they are a sub-urban malls located in the heart of Changi Business Park and is close proximity to the residential estates of Simei, Bedok, Expo and Tampines area. Strategically, they are well placed on the heart of the more congested sub-urban areas, so crowd will not be an issue. More details on Changi City Point is as follows:

 

Gross Floor Area (sq ft)	306,375
Net Lettable Area (sq ft)	207,237
No. of Committed Leases	134

 

Breakdown by Types	Percentage (%)
F&B	39.0
Retail	50.0
Service	8.8
Committed Occupancy Rate as of 28.02.2014	97.8%

 

The one thing I wanted to highlight if you have not been to Changi City Point is that I always feel their malls are too concentrated with F&B. As you can see the breakdown from the above table, F&B alone makes up 39% of the entire leased area. Comparing this to other FCT malls like Causeway Point and Northpoint, their F&B only makes up 23.5% and 28% of the entire netted lease respectively. That is not to say it is bad for Changi City Point to have such a large concentrated F&B as part of their committed lease, but the higher gross rental they can derive from these and you can probably understand why they do so.

 

Based on the table below for the other 2 FCT malls, we can see that F&B, Fashion and Beauty are consistently the main income generator while Department Store, Education and Supermarket are consistently the main income destroyer for FCT. Having said that, we cannot have a mall that is full concentrated only on the main income generator as it will defeat the purpose of having a diversified mall. A right mix of tenants is desired. I just wonder with the high F&B concentration for Changi City Point will have an impact on competition and a drop-out from these high numbers in the future that will impact DPU.

 

Causeway Point
Top 5 Leased by Trade Mix	%	Top 5 Gross Income by Trade Mix	%
F&B	23.5	F&B	28.8
Fashion	18.0	Fashion	25.7
Department Store	14.4	Household	10.6
Household	12.0	Department Store	6.6
Leisure/Entertainment	9.2	Beauty	6.5

 

NorthPoint
Top 5 Leased by Trade Mix	%	Top 5 Gross Income by Trade Mix	%
F&B	28.0	F&B	31.7
Service/Education	17.1	Fashion	27.7
Fashion	16.3	Service/Education	12.2
Supermarket	8.7	Beauty	7.2
Books/Music	7.0	Healthcare	5.0

 

My take on the acquisition

Management have indicated that the acquisition will be yield-accretive for investors.

 

As part of the equation to finance the acquisition, management have decided to go with the private placement instead of issuing rights issue which supposedly can benefit the larger minority crowds.

 

Given that the acquisition will most likely be funded by half equity half debt, we probably will see gearing rising up to around 35% (739/2135) which is still prudent in management’s view.

 

While I most probably cannot participate in the private placement exercise, I hope they do not set its price too low to institutional investors as it will affect the market sentiments of the stock price which currently sits at $1.78.

 

Given FCT management track record of maximizing shareholder’s value in the past years, I have no doubt that they are well on track to achieve another round of high record DPU for the company as well as the shareholders.

 

 

Vested with 30 lots of FCT as of writing.