Author: The Unnecessary Job

Mitigate the effects of inflation on your passive income

Hypothetical: Say the year is 2019, you have accumulated 2M in investible assets and retired at a ripe old age of 40. Let’s further say you are a somewhat conservative but competent investor, returning an average of 6% on your capital, i.e., 120k a year, or 10k a month. In 40 years time, at a 2% inflation rate, 10k a month would be more or less be equivalent to having around 5k a month in today’s value. As you can see, inflation is a real issue that wipes out the true value of your passive income, and with that,...

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FI is good; RE – not so much

This is not going to be one of those insipid articles telling you to pursue your passion after you FI. Or to warn you about the perils of the paralyzing boredom. Oh please no. You know, because I understand perfectly that we are all wired differently, and not every one has a calling to save dolphins, write novels, build schools in Cambodia, start a music band, etc. Some of us simply have no (great) passion for anything in particular. Like ASSI, i reckon my retirement would consist mostly of MMORPG-ing and trying out yet another build in Skyrim (only...

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DBS – a song of ice and FIRE

Oh how suddenly the mood has turned. Around one month ago, I had contemplated selling DBS. Before you know it, the window has closed and the tide has turned. I am still up around 11% including the dividends, so it is not entirely doom and gloom. If DBS sinks further below the $24 mark, it might be a chance to accumulate more. The $24 mark is where DBS’s $1.20 per share yield makes it a 5% yielding local SG bank. And history suggests that such occurrences are rare and one should never squander opportunities like these (thanks Trump!) to...

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Frasers Commercial Trust – Mixed Bag but with potential candies?

FCOT released results late April, which appears to be a mixed bag. The share price has been dented slightly, retreating below its 1.5+ level, and also partly due to the share going XD. THE BAD: 1) Microsoft is preterminating its lease at AHT 2 years  ahead of the original expiry date. The microsoft lease is 3.1% of gross rental income of FCOT. 2) The limp AUD continues to be a revenue drag for its Australian properties. FCOT has three AU properties, which represents around 50% of FCOT’s NPI. See factsheet here. 3) FCOT 2QFY19 NPI decreased 10% from 22M...

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Stocks that pay you to wait

What is better than earning a capital gain on an investment? Stocks that pay you to wait for that gain. SINGTEL is one example of a stock that is currently paying a relatively handsome “waiting fee”. SINGTEL If you had caught Singtel in early January, you are potentially holding a stock yielding 6.12% on your invested capital based on a $0.175 per share dividend payout. If you hold the stock for a single dividend cycle, at current share price ($3.15), you would have made about 9% capital gains + 6% yield for a total return of over 15% ....

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Is it time to consider selling DBS

This recent rally has been phenomenal. At last traded price (27.1), DBS has an effective yield of around 4.4%(@ $1.20 per share).  Based on an EPS of 2.14, that represents around a 55% payout ratio, which seems reasonable and sustainable to me.  It seems that a lot of investors may be looking to hold on to DBS at least until 2 May 2019, when the share will go XD. Once XD, the share price should theoretically correct to 26.5 (0.60 dividends). The big question on everyone’s minds is naturally: Will this seemingly unstoppable rally continue? Will we see DBS...

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How long will the S-REIT rally last

The current sentiment on S-REITs appears to be quite bullish. https://www.businesstimes.com.sg/real-estate/s-reits-tipped-for-further-gains-as-rate-hike-fears-subside “Reits have been very resilient and consistent in outperforming the broader Singapore market,” Mr Wong said, highlighting the defensiveness of the sector. “In uncertain times, they are pretty defensive because of the leases that are locked in. In bull markets… underlying property asset values and underlying rentals of the Reits also benefit from the up cycle.” The article further notes that OCBC is quite bullish on the retail sector, mentioning specifically the rejuvenation plans for Orchard road.  (As of writing, Starhill is trading at S$0.74 – heh).  Maybank...

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Q1 2019 Dividends

Another 25% of the year has gone by. The fleeting passage of time is sometimes worrying. Every year, I feel my general fitness going down.  By the time I stop working, would I lack the requisite health or energy to enjoy the activities financial freedom was meant to provide? This is a constant debate raging in my head.  Delayed gratification is good but how much delay is reasonable? Time is wasting away and FI cannot come soon enough to remove the shackles of work from my callused wrists. Time to take stock of where my passive income levels are...

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Q1 2019 Portfolio and FIRE progress

Market has been buoyant and has helped to lift the value of my portfolio. Current portfolio: March 2019 AIMSAMP Cap Reit $173,602.00 Ascendas-hTrust $206,800.00 Cache Log Trust CapitaR China Trust $54,950.00 $25,280.00 First Reit $39,600.00 $346,320.00 Keppel Corp $31,050.00 $55,100.00 $144,480.00 StarhillGbl...

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Frasers Commercial Trust – A quick comparison

 Extracted from https://fcot.frasersproperty.com/financial_information.html Quick Look at ratios Yield 6.7% based on last traded share price of 1.43 Gearing 28.4% Price to book0.916 How does this compare to similar REITS? Yield Gearing  P/B Capital Com Trust 4.48 34.9 1.1 K Reit 4.45 36.3 0.9 Mapletree Commercial Trust 5.11 34.8 1.2 OUE Com REIT 8.16 39.3 0.7 Average 5.55 36.325 0.975 FCOT 6.6 28.4 0.92 FCOT has significantly lower gearing than its counterparts after recently disposing of its stake in 55 Market Street.  In any case, the Fed has turned decidedly less hawkish and we might end up seeing no rate hikes...

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Tuan Sing – severely undervalued?

Is Tuan Sing overly discounted? At at a price to NAV of just 0.445, investors are paying 41 cents to own a share having a net asset value of $0.9217. How does this compare with other property developers? 0.444830205 Frasers Property 0.689789556 Capitaland 0.771010023 0.819331527 Clearly Tuan Sing is a bit more undervalued compared to its peers. What about its level of debt? Debt/ Ebidta Frasers Property Capitaland  However, Tuan Sing seems to have a very high level of debt relative to its peers. One reason for its comparatively higher debt/EBITA ratio may be due...

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The Art of Selling

There is an oft-cited aphorism: you should sell at prices you would not buy at. Such “advice” has limited utility in practice because it contradicts another frequently-discharged gem of wisdom: let profits run. There is no robotic algorithm for selling Whether one should lock in capital gains, or wait for a multi-bagger,  a useful consideration here might be the type of asset you are invested in. If it is a growth stock, it may be worthwhile to “let profits run”. If it is a blue chip stock like a bank or telco, you may want to lock in some...

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Should Singapore adopt a wealth tax

There was a piece in Todayonline by former AO, and current academic, Donald Low, which suggests that it may be time for Singapore to consider implementing a wealth tax. As I understand it, wealth tax may include taxes on capital gains, dividend income, and/or inheritance. Such a wealth tax, if applied, would surely adversely affect a significant fraction of the FIRE community, many of whom rely on dividend income as the primary pillar of their FIRE plan. I must say I do not quite understand the rationale for such a tax. The primary goal of such a tax appears...

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Sold Sasseur REIT

Sasseur REIT experienced quite a rebound in share price, and surged from 0.64 (Jan 30) to 0.78 (Feb 20). The reported results were a bit better than forecast. But the rebound seems to be motivated by reasons other than the slightly better than forecasted results. I have no idea for this price surge. But it did present an opportunity for me to liquidate this position. As mentioned in earlier posts, this is merely part of my rebalancing strategy to get out of high yield (but high risk) stocks.  Nothing against counters with businesses domiciled in China, but their rep...

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Singtel – More trouble ahead?

Singtel continues to show weakness with yet another set of disappointing results. For the three-month period ending Dec 2018, EPS declined from 5.88 cents to 5.04 cents. In other words, the EPS for the full year may decline to 20.12 cents. If so, the expected dividend payout after the 2020 may decline to 12 cents to 15 cents a share. At current share price ($3), this translates to a yield of 4% to 5%. To be fair, this is by no means terrible for a blue chip stock, but it is a far cry from its current 17.5 cents...

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