Portfolio Review (May 2024)

Review of my Portfolio (31/05/2024)

Total unrealized profit: + 8.2%

YTD performance: + 3.9%

Added in May

Goal 1: ( $41,440.18 / $81,594) ⚔️

Growth Portfolio: QQQM

Dividend Portfolio: OV8, 558, M44U, BUOU, United Global Durable Equities

Portfolio Weightage

Dividend Recieved

Goal 2: ($ 5,724.63 / $14,212) ❤️

Dividend recieved in May = $ 1,882.95

Why Do We Earn Money?

The 3 main reasons why we earn money, after our basic needs are covered:

Quality of Life

• Everybody have something they want in life, a big house, a car, travel oversea twice a years, dinning in restaurants once a week.... consumerism.
• We want to enjoy life, experience new things and eat good food, all these required money.
• If we are not careful and enjoy too much this will lead to lifestyle inflation. 😂

Prepare for Future Expenses

• Because we had already accustom to a certain lifestyle in our working life, it will influence our lifestyle expectation for retirement.
• Then we will calculate and derive a figure we need then start working toward it.
• Some of us will become more conservative with our retirement lifestyle as we aged, when we compare our actual financial situation to our expectation. 😂

Unforeseen Circumstances

• 20 - 30 years is a very long period, anything can happen in between and derail us from our plan.
• Thus, we build cash buffer to withstand any unforeseen circumstances.
• How much do we really needs? Some suggest 6 to 12 month of expenses as emergency fund.
• But the truth is we dont know 🤷, else it wont call unforeseen circumstances.
• The fear of not able to tide through the uncertainties drive us to earn and save more for rainy days.

A Happier Life

• Everybody have 3 resources, time, money and energy.
• Time is the only resource that is irreplaceable.
• And the 3 ingredient to happiness is enjoyment, satisfaction and purpose

• To have a happier life we can practice one of the three strategies:

Work-Life Balance

• This involve setting priorties between work and life to help us make decisions and set boundaries.
• It is about finding the rhythm that help us to be successful in both area without burn out.
• However, today where work cultures glorify overwork can make us diffcult to switch off.
• You may seen as lack of dedication in a competitive enviroment which may impact your career advancement.

Do What You Love

• Following your passions can lead to greater enjoyment and satisfaction in our work. We'll likely be more motivated and engaged, leading to better results.
• When you're truly interested in what you do, you're more likely to put in the extra effort and excel in your field.
• However, even beloved activities can become mundane or stressful with daily routines and deadlines.
• Not all passions translate directly into high-paying or stable careers. There might be a need for compromise or finding ways to monetize your passion.

Get Rich Quick

• Building wealth take time and effort. Instead of risky get rich quick scheme, we can develop skills, start a side hustle and reduce expenses; so that we have more retain income.
• We are always told about delay gratification in investing, but we have to prioritise on immediate income when earning money.

• Although money cant buy back the past, but money can definitely trade for future experience.

• However, the price to pay for get rich quick is to work longer hours and put in more energy in exchange for money, especially at the start.
• We may even have to do things we dont like to get things we want. Burn out will be frequent.
• Thus it is important to have a target and know when to stop and enjoy life.

How to Get Rich Quick?

Truth About Compound Interest

• Most financial guru will tell us that by investing $x per month into S&P500 for x amount of years and let it compound at 8%p.a. for 20-30 years, we will all become a millionaire by then.
• We had already fallen into the trap of exchange time for money when we believe compound interest is the key.
• Secure a job, upskill, climb the ladder, earn more money, save more, invest more. Give the money time to compound, delay gratification... Sound familiar?

• We have to stay employed, save up and invest; hopefully able to retired.

Problems

• First, it always assume the market will always give us 8% p.a. returns.
• 30 years is a very long duration, market dont just go up, it may go sideway or down and we will never know how long it can last.
• Second, we must be alive and healthy to enjoy the money 30 years later.
• Can we really become rich by investing? Sure we can, but it is not 100% guaranteed.
• Investing is still important, but is not the key to get rich quick.

Key is to Increase Our Income

• Most people have only one source of income, our job.
• Common advice is to upgrade our skill, be more valuable to the company, gain experience, get promoted and increase our salary.

• The question is when will my salary increase? By how much?

• There are indeed some profession that are well compensated (<$10k/mth) but they are the minority.
• These high paying jobs often comes with high demand, long hours, extensive education and experience.
• As an average person, who do not have an unique skills, the key is to build multiple stream of income, it can be passive or active.
• As shared, a job give certainty of getting a paycheck every month, but luck play a major role when climbing the ladder.
• Achieving a total income over $10k/mth is possible even for an average person.
• It will take time to build these income streams, but we will still be able to achieve our goal faster than just rely on a salary.
• With a higher income, then we will have a higher capital to invest. Is easier to achieve $1,000 profit with a investment capital of $100k versus $1k.

How Much Is Enough?

• A common question "how much is enough?"
• Everybody have an active income curve and a expense curve.
• The objective is to widen the gap between the two curves and invest the difference.
• When we invest in a cashflow generating assets, we then create a passive income curve.
• Financial Independent is achieved once the passive income is able to cover the expenses, we dont actually need millions.
• The key to retirement is always having sufficient cashflow and having surplus cashflow to reinvest to create a buffer and fight inflation.
• Once we have achieve that, we can have the option to stop and enjoy life.

Previous Review

https://seedly.sg/opinions/portfolio-review-april-2024/