Portfolio Review (July 2023)

Review of my Portfolio (31/07/2023)

Total unrealized profit: +%5.8

YTD performance: +28.9%

Added in July

Goal 1: ( $49,383.01 / $66,186)⚔️

Growth Portfolio: AMZN, GOOGL, KWEB, BABA

Dividend Portfolio: OV8, CLR, AJBU, M44U, C2PU, T82U, Allianz income & growth, United global durable Equities

Sold in July

BTOU, CMOU, OXMU

Portfolio Weightage

Dividend Recieved

Goal 2: ($5864.92 / $11,000)❤️

Dividend recieved in July: $423.40

Opinons

• No dip for the whole month. The price just keep inching up, but there is not much momentum. 😨
• The price may just continue to inch up or there may be just a 5% dip, if there is no major bad news, and find support at the 50 MA.

• Meanwhile, some of the "magnificient 7" still remain fairly priced or slightly undervalued.
• i will be looking to add some individual Mega cap companies, provided it dont suddenly rocket 🚀 next month.
• I had also started adding a little bit of china stocks since last month, because it is relatively cheaper compared to US.
• It seem now china are trying to attract foreign investors again, is a coincidence to catch the bull.🤣. But can the bull last. 🤷

Networth is not a good indicator for your financial health

• It is estimated Singapore will have the most millionaire per population by 2030, also Singapore is the second richest country in Asia.
• If you had fully paid property, you probably have a million dollar networth, do you feel rich?
• You might worth millions on paper but you just dont feel rich, because you dont actually have the money in your pocket.
• There is a different between having a million dollar networth, a million dollar in cash and a million dollar of assets that pay you.

• Your networth is depend on what is going on in the market.
• Just because you are a millionaire today doesnt mean you are a millionaire tomorrow.
• Networth is just like stock prices.
• The networth of the billionaires fluctuate daily, but what have actually changed? Nothing. Billionaire's wealth are heavily tied to assets value and market fluctuate everyday.

• These fluctuation usually wont be a problem until you start living a millionaire lifestyle.
• Therefore, networth is not a good indicator of your finance health, but it definitely make you feels good knowing you worth millions. 🤣

• There are two ways to realize your millionaire status either to sell your investment or use debt to pull money out of your investment without selling.

• Debt is just an instrument that let you access your future earnings, the price to pay is the interest.
• This is the time when your networth is important, because you can pledge your assets to get a loan. But if you are unable to pay back, the bank will have the authority to liquidate your assets.🤣
• We always heard that there are good debt and bad debt, this is a false statement.
• Debts are inherently bad, it is just that some debt can make you money.
• Even "good" debt can turn bad very quickly if you cant pay up.
• This doesnt mean you should avoid it completely, just use it with caution, with some leverage it can help accelerate wealth building.

• On the other hand, if you choose to sell your investment. You will now have $1 millions of buying power, in your bank.
• Once you stopped working, you wont be able to enjoy the benefit of high interest saving account because usually they have minimum monthly spending or monthly salary credit.
• Your networth will start to drop once you start living off your saving.
• In addition, inflation will eat away the value of the money even you just let it sit inside the bank.
• When the inflation is 6%, you may think "The price had increased! Save more money!"😨.
• But what it actually mean is it will take approximately 11 years for your $1000 to become $500. (Rule of 70)
• You should instead be thinking " How can i grow that money more than 6%?"

• Sound simple? But difficult to practice, when market crashed everybody rush into SSB, T-bill, high saving account, money market fund.... with money that should be invested.

• Thus, to build and preserve wealth you will have to own assets at all time, hoarding cash is a bad idea.
• Playing too safe, is a guaranteed to cause you loss money over the long term.
• And as you get more wealthy your networth will become more volatile, because the assets price fluctuate, that is beyond our control but we just have to accept it.
• However, asset rich and cash poor is also not a good idea.

What to focus to be assets rich and cash rich?

CURRENT ASSETS

• Networth is simply total assets minus total liabilities
• In accounting, assets are sub-catagorise into current and non-current.
• Should property, CPF, gold be included in the networth?
• The answer is yes. But just have to catagorise into current and non-current assets.
• Current assets is important as it demostrate your short-term liquidity and ablity to pay for short-term obligation.
• In my opinion, If the current assets is greater than all the debt, 1.2 to 2 times, then you are doing well, this will take time. It means you have the ability to clear all your debt if you choose to.
• This doesnt mean you should not own any non-current assets e.g. property, as long the non-current asset is able to generate income or appreciate in value which you can cash out in the future, you should still own it.

NET INCOME (开源节流）

• You need money to grow money.
• If the only source of income is from 9-5 job, then revenue = salary.
• Of course, the low hanging fruit is simply just cut expenses, but if you want to achieve $1 million at relative young age, it wont be sufficient.
• Whats important is not how much you earn now, but rather the ability to grow your net income consistently every year, in my opinon, 8 to 15% p.a. is ideal.
• Even a 9-5 job will have at least a 1- 3% inflation adjustment for the salary every year, it is not great, but is something.
• 1% p.a. increment just means that it will take 70 years for you to double your salary.
• You may feel your life is comfortable now with your current income, but it doesnt mean it will remain the same.
• The net income need to outpace inflation, not just your cash reserve, else sooner or later the inflation will catch up with you and you may start thinking of selling your assets to assists in your daily expenses or take on more risk than you can handle for higher returns, which usually dont end well.

• Different people may employ different strategies to achieve the goal, upskilling, side hustle, rental, freelancing, start a buisness, job hopping, budgeting, routinize lifestyle, cash stuffing... etc
• It doesnt matter what you do, as long the numbers keep growing every year at a meaningful rate.
• There wont be any harm being idealistic or being a perfectionist if you have ample of resources to chase your dream, follow your passion and find your purpose. But for those who do not possess such resources is best to be practical and realistic.

• Honestly, It is much easier to grow net income if you have a side hustle, a 30 to 40% income jump is common. If your salary is very low, a 70% to 80% jump may also be possible.
• A side hustle do not need to be complicated. Often when i saw the expectation of a side hustle, "it has to be scalable", "must be something you are passionate about", "have skill development" and "have a potential able to replace the full time job"..... i am 😨, 🤯, 😅 those are good to have criteria, the main goal is just to make money.

• Having too much expectation and dream will only cause procrastination. Weigh your options then just do it!

• However, we only have 24hrs, we will eventually reach a point when we need to have some cashflow generating assets to help continue to grow our revenue.
• Revenue from equities (dividend) are usually much slower compare to getting a second job, especially at the beginning before the snowball effect kicks in.
• You may think of trading option, but that involve too much risk for me. i am actually a conservative investor.🤣
• Thus a safer approach is simply just "pour" money into your investment to increase the portfolio size ASAP in order to experience exponential growth (substainably) in your net income soonest.
• Capital injection rate is usually the least emphasized factor to increase your overall investment returns, in term of an absolute amount.

Conclusions

• In my opinon, (1) current assets, (2) debt level and (3) net income growth (not only cash reserve) is a more accurate reflection of your financial health. It is similar to reading company financial statment.
• Focus on improve liquidity by accumulate current assets and owning non-current assets that produce income.
• Dont be afraid to leverage if need to, using debt can accelerate wealth building.
• Focus on increase your net income beyond the job market salary cap.
• Dont hoard too much cash for no reasons, always hold assets.

Previous Review

https://seedly.sg/opinions/portfolio-review-june-2023/