My Market Transactions — Wk 3 2021

 

Photo by Chris Liverani on Unsplash

Dear Readers,

Thank you for coming here.

Another update on my transactions.

I might be enjoying the buying a bit too much. I think I need to slow down.

Over the past week, I made the following transactions:

Capital injection: ~16KSGD

1.Semiconductor Mfg Intl 

This is the leading enterprise for Chinese Chips. 

The share price kept shooting up. We have decided to buy more, at a much higher price than the first transaction of course.

We believe there is still potential and also this is the compare we are willing to bet on for the long-term.

The price did drop a bit after our second buy. Let's see how it performs going forward.

Photo by MayoFi on Unsplash

Capital outflow

None.

But I am seriously thinking of clearing my ES3 positions. The index is just not moving. 

We are still making the decision,

Happy Investing!

Till next time!

Monthly Net-Worth Update - May 2020

Dear Readers,

Thank you for coming here.

It is the end of May. How time flies!

It is the 4th month for which I have zero income. Life goes on though. Hope things improve soon.

Below is the summary.

Net-Worth increase from last month: 0.4K SGD

We had a few major insurance bills this month and that offsets our gain in the stock market and my wife's salary.

Investment: 0.66% annualized return, incl. dividend 

We are in the positive again. Both World and China market is doing pretty well this month.

We did not have any capital injection this month.

Till the next time!

How much money do you "Really" need to be completely "Financially Free"? Have you "Really" thought about it?

Dear Readers,

Thank you for coming here.

If we are asked how much money we need to be completely "Financially Free", I am sure many will say "a huge amount", like millions or billions or even an infinite amount. At least that was my answer until not long ago.

And that was a problem. That showed that I had not really thought about it and only had a very vague idea: I need a looooot of money.

What really got me into thinking about it was an article I read. That was an interesting article, in which the author split the population into 10 classes in China context. When describing the class with annual income 5-50 million RMB, the author stated (not exact words):

- Luxury was not an issue at all. Let's say you spend 10K RMB a day and that is only 3M a year. Do not think spending 10K every day is easy. Think about it, 10K, every day, pure consumption.

That clicked with me. It is not easy to spend 10K RMB or 2K SGD every day on pure consumption.

I recall my days as a consultant in the prestige firm. When I was serving a client in Toronto, my daily average spend was about 600-700CAD, aka 600-700SGD.

- Hotel: ~400CAD a day

- Meal: ~150CAD a day

- Transport: ~100CAD a day

This represents the highest daily average for me and that is only 30% of 2K SGD.

So there is actually an earning amount, exceeding which we will be free to enjoy "Luxury".

But what would be that "Amount"?

For me, I think 1K per day is enough for me. Of course, I need to consider my wife and kids. I think 2K should be enough. That would be equivalent to ~600K SGD a year. Double that, 1.2M sounds good to me.

For you, I can think of two ways to derive the "Amount".

1) Estimate a daily "hard to spend all" amount and basically do it in a similar way above

2) Look at your dreams. List them out, estimate the cost of each one, and sum it up. This will give you a lump sum amount you will need to fulfill your dreams. Divide that into each year, and add the "normal" annual spend, and then you will have the annual amount you need. Double that and there is your "Amount"

I am sure there are more ways to do this. But the logic behind is interesting: Once you are rich beyond a certain point or earn more than a certain figure, it would be hard to spend all your money.

Maybe that point seems far away. Stay at it and try our best. We will be there.

Till next time!

Monthly Net-Worth Update - Apr 2020

Dear Readers,

Thank you for coming here.

It is end of Apr, well beginning of May~. Actually, I updated my Net-Worth tracking sheet on 28th Apr. However, due to the tight schedule of the project I am currently on, I am only writing this post today. Apologies for the delay!

So lets get started. Again, below numbers are as of Apr 28th.

Net-Worth increase from last month: 21K SGD

The increase is due to stock market rebound in Apr and my wife's salary.

Compared to the drop (-56K) last month, we are still on our way to recovery.

Investment: -0.78% annualized return, incl. dividend 

Compared to last month (-3.76%), it is an improvement.

I emptied 2/3 of my limited war chest quickly during the beginning of the downturn, far from the bottom. I became very cautious about the remaining war chest. So when the bottom actually came, I was thinking maybe it would drop further. So I still have 1/3 of my war chest.

So I guess the strategy in the downturn is to set a target price and go all in after the target price is met. Again, the baseline should be DCA. If the average buying price is lower than DCA, I think one should be satisfied. I consider it the benefit we get by not entirely staying "Passive".

Of course, it is much harder done than said. I knew not to time the market from the very beginning of my investment journey, yet I am still trying to do it. And the benefit vs the time and emotional investment? Not sure...

I do not know what will happen next. With the ease of isolation measures, maybe the stock market will continue to recover. Maybe the fundamentals that can support this kind of market level are long gone and we will have another crash.

Whatever happens, life goes on. If you are in your early 30s or younger, I doubt this downturn will have any material impact to the overall financial success of your life. So relax and enjoy!

In the end, I would like to ask for a favor from my readers: can you recommend a good way to DCA? By good, I mean cheap and simple. I will choose what to DCA into and transfer money in just before the DCA date. And the platform or tool will DCA for me.

I knew the "Regular savings plan" staff from the banks, but they are too expensive to me. The robo-advisor is still too expensive and I am not sure about their selection of portfolio. What I am looking for is essentially IB+the DCA functionality, with the same rate. Haha, maybe that does not exist.

The reason why I am asking is as below:

• I more and more inclined to go all "Passive" with DCA to further reduce my time and emotional investment and to eliminate the opportunity for me to try to time the market all together
  
• I started feeling it a drag manually updating our Net-Worth tracking sheet. In my post "Basics 02: The tracker tool I built and am using", introducing the tracker, I actually said I kind of enjoyed updating it. I did. But with the new work, free time is much harder to find and updating the tracker has lost its attractiveness.

Thank you!

Wish us all all the best! Till the next time.

Basics 03: My investment journey and outcome

Dear Readers,

Thank you for coming here.

This is going to be the third post in the "Basics" series. And I am going to briefly describe my investment journey and the path we intend to take going forward.


A bit of history

My investment journey really started from beginning of 2018.

Before that, I was buying stock based on what I heard without knowing anything else. 

Not surprisingly, the stocks I bought did not perform well. One of them remains the counter with biggest loss both in percentage and absolute value after almost 3 years, even though the amount I invested was very very small compared to my portfolio now. Just an idea, the stock price has dropped 62% by end of Jan 2020.

Coming to 2017, I switched to a stable job from management consulting. After the initial few months, I started to have spare time. And the pay was enough for us to have savings every month. Combined with the fact that stock market was doing super well in 2017, we decided that it was high time for us to take investment seriously.

We started by reading quite a bit. Special thanks to "Hardware Zone" "Money Mind" forum, especially the two active "Teachers" in that forum, "BBCWatcher" and "Shiny Things". We find the theories of the two teachers agreeable given our circumstances and the time we wanted to put into investing.

So we were quick to decide on our investment strategy:  

Take a long term approach and avoid timing the market.

The way we do it:

Dollar Cost Averaging (DCA) into World ETFs on a monthly basis 

Specifically, we decided to divide our investment into two parts based on the currency our cash was in:
- SGD: DCA into DevWorld ETF (80%) [IWDA] and SGD ETF (20%) [ES3]
- RMB (on-shore): DCA into A-share ETF

I thought the strategy was good and I still think so now. However, the execution was, well, pretty bad.

First, we first bought ES3 at the beginning of 2018 and soon afterwards, the stock market went into correction mode.

Initially, every time we saw a drop in ES3 prices, we treated it as an opportunity to buy. And the more it dropped, the bigger amount we invested, trying to bring our average price down.

Before we realized it, our war chest run dry around May 2018 and we had not started buying IWDA. By the way, May 2018 was way before the ES3 reached the bottom at the end of 2018 or the very beginning of 2019.

Then we decided that it was more important to widen our portfolio. So we stopped investing in ES3 and started in IWDA, trying to come back to 80/20 split.

So that was pretty much what happened in 2018. Our portfolio performance in 2018 was btw -13% and -1%, with no month with positive performance.

Coming to 2019, we pretty much stick to the "DCA into IWDA" plan, well for the first few months. And as the stock market started to recover, our portfolio performance finally entered into the positive area.

However, as the market continued to go up, we started to feel IWDA was getting too expensive and we again violated our strategy and stopped buying in the 2nd half of 2019.  Well, the market continued to go higher.

So now we have some cash. And our portfolio time-weighted performance was ~6% for 2019.


Going forward

From a long-term perspective, we would like to stick to our strategy and benefit from the development of the world. 

Short term, I really do not know. 

For a start, with all the changes and uncertainties with my career, we intend to keep some cash. 

Secondly, my wife is abssessed now with some A-share active investment course. She has paid quite a bit tuition and is really eager to try. I don't know how to stop her. Guess I will just let her try it out. 

However, whatever we do, you will read it in this blog. 

Till next time. 

Monthly Net-Worth Update - Dec 2019

Dear Readers,

Thank you for coming here.

Wish you a belated Merry Christmas and Happy New Year!

It is the end of the month, which means it is time for another monthly Net-Worth update.


Net-Worth increase from last month: ~34K SGD

This is a pretty good month for us. Apart from our salaries, the increase mainly comes from our stock investments. Again, these are ETFs tracking World, Singapore and China markets.

I hope this trend can continue. However, I might be out of a job after January next year. Finger crossed that I will find something by then. Otherwise, our Net-Worth will probably be declining until I find my next income sources, be it a job or a business or anything else (not breaking any laws for sure).


Investment: 6.47% annualized return, incl. dividend 

Compared to the annualized return of 5.49% last month, this month is a very good one. We are actually thinking whether we should sell our position to take the gains, even though the absolute number is not big. This is also due to the possibility of me being out of a job after Jan and that we might need the money for our monthly cash flow.


Anyway, shit happens in life and no one can say they have complete control over it. We believe this is a temporary set-back that reminds me to learn the lessons in the hard way and thus positions us for greater greatness. But at the same time, it is still damn scary and worries me a great deal. No more holiday mood, that is for sure.

My wife has been really supportive and always trying to ease my worries. I am lucky to have her. My two kids as well. I will do my best to make sure they are not affected. They deserve what they have now and more.

Till the next time.

Basics 01: How our Net-Worth is calculated

Dear Readers,

Thank you for coming here.

As the 1st post of the "Basics" series, we will introduce how our Net-Worth is calculated.


Net-worth, by definition, is "Asset minus Liability". We, of course, follow this definition. What we might do a bit differently is that we divide our Net-Worth into different categories and we calculate "Asset minus Liability" for each category before integrating them all to get the total Net-Worth, instead of calculating the total Asset minus total Liability.

We think there are three advantages to our way of calculating the Net-Worth.

First, it makes it easier to account for all assets and liabilities.

When we look at category by category, the chance of missing out one or more components in that category is smaller, compared to when we try to think of all the assets and liabilities in one shot.

The challenge, if there has to be one, is that we need to ensure the categories are MECE (Mutually Exclusive, Collectively Exhaustive), a term frequently used in my previous job as a consultant.

• "Mutually Exclusive" means the categories cannot overlap with each other. Otherwise, you will double-count. 
• "Collectively Exhaustive" means the categories listed need to cover everything. 

How we did it was first list out all the categories we can, by braining-storming and going through all related channels, such as broker accounts, banking accounts etc. It was not as easy. It took us a few months to get all categories listed. For example, we only realized that we did not count the CDA (Child Development Account) balance until the 4th month of tracking.

Then, we examined all the categories listed and adjusted the calculation to make sure they do not overlap and double-count. For example, we cannot include dividend income in both our "Stock" category and the "Cash-equivalent" category.

Second, it makes the calculation easier.

In some cases, Liability and Asset are connected and it is easier to calculate them together. For example, the "would-be" fee of selling our stocks is dependent on the market value of our stock portfolio, once we have chosen the broker. Yes, we deduct the "would-be" selling fee from our stock portfolio when calculating Net-Worth.

Third, it enables us to get more clarity.

With everything split into categories, we can easily do analysis by category, tracking their percentage in our overall Net-Worth and changes month-over-month. We also split by region inside each category, which enables similar analysis over region as well (like SG and Overseas etc).


OK. So what are the categories we include in our Net-Worth?

1. Stock/bond portfolio - market value minus the "would-be" selling fee
2. Real Estate - conservative estimation of market value minus the remaining loan (I know I do not consider the interest expense on the loan here, because when you sell your property, the reaming loan is what you will pay back to the bank. We do not have the early-payment penalty problem)
3. "Fix-term" asset - this is like fix deposit. No liability here
4. CPF
5. Cash-equivalent - balance of bank/broker accounts minus credit card balance and other loans other than housing loan

We track both our investment portfolio and Net-worth in the same tracker we built ourselves, with investment portfolio numbers automatically transferred to the Net-Worth tracking. We update monthly, towards the end of the month, and take a snapshot to build the below graph




I hope this post helps you understand how we calculate our Net-Worth. If you are thinking of starting your own Net-worth tracking, hope the details above can help you get started and then you can refine your own model based on your own situation and needs.

Till the next time.