Portfolio Review (September 2023)

Review of my Portfolio (30/09/2023)

Total unrealized loss: -%1.5

YTD performance: +21.6%

Added in September

Goal 1: ( $62,996.50 / $66,186)⚔️

Growth Portfolio: XLK, QQQM, AMZN

Dividend Portfolio: United global durable Equities, 500, 558, BST

Portfolio Weightage

Dividend Recieved

Goal 2: ($8,424.18 / $11,000)❤️

Dividend recieved in Sep = $989.60

Opinons

• Portfolio back to the red.🥲
• Market had dropped ~6% from ATH, it is still a healthy correction. (Short term downtrend)
• Currently, forming a strong support at 150MA and is very far below the 50MA, is good to scoop up slightly more stocks this month, but not a shopping spree yet.

• The technology and the consumer discretionary sectors may offer a better discount.

MY ANTICIPATION

• Higher highs and higher lows, the uptrend is still intact, looking at weekly chart.
• It had also form a strong support with the previous lows.
• In addition , it forms a doji candle stick, it may be a potential reversal pattern, but yet to confirm.

• I am actually bullish for next month.😂

• Anything can happen in stock market. It may even go down to the next support line $415 (maybe) and $390 (unlikely🤔)
• But regardless of the price movement, i will be a net buyer of stocks. When expensive buy a little and when is cheap buy more.
• Anticipation is different from prediction as it gives you a mental preparation of the good and bad scenario so when it happens you can just act accordingly without emotion.

Why You Should Consider Property Investing

MY STANDS

• First, i fully support that HDB is not for investment. I refer to private properties in these article for investment.
• Second, i do not support oversea property as an investment, because you dont know the regulations, local market conditions and SGD is too strong.
• Owning a property, regardless own stay or invest, is something you cannot wait, even if you dont need it now
• It should always be the top priority in Singapore, so no matter how crazy the property market has become it will have minimal impact on you.
• So if you are in your 20s and have intend to be single, get a condo first, once you can afford, then rent out, you can always downgrade to HDB at 35, that will be the best hedge against increasing housing price.
• Unless you are confident your income can grow many time faster than the property price. I know i cannot 🥲.

INTRODUCTION

• Property investment in Singapore is always a controversial topic.😅
• Because a house can either be a consumer or an investment product.
• As a consumer product, the prices will seem to be unreasonable and overpriced, if treated as an investment the focus will be the potential and future value rather than the current price tag.
• Most financial advisors and planners who have a financial background, tend to lean toward stock investing to build wealth, property Investing are often discouraged.
• Getting into debt often make people feels uneasy.
• In addition, buying a property will usually involve using CPF.
• Thus, there will always be 4 group of people debating, property investors, stock investors, people who just want a house and CPF activists. 😂
• General financial advice always suggest us stay prudent. Buying private property are often portray as wasteful and unwise move.

SG PROPERTY WILL NOT CRASH

• Property is an inelastic asset class (a necessity) unlike stocks/bonds.
• Property market is closely related to our banking system, if the property market crash and people cant make the payment, the banks will crash, then the entire Singapore economy will crash, a credit crunch will occur.
• The price to crash the market is just too great for the government.

• Thus, it is call cooling measures not crashing measures.

• In my opinon, the government had actually done a good job taking progressive measures to prevent speculations, while avoid crashing the market.
• As an investor, we want the property price to grow in a substainable way. Singapore is still the best place to invest in property, as the market are constantly monitored by the government.
• A gradual increase of the housing price is actually good for the economy. The banks can earn more and the government can tax more. More revenue for the nation.
• Housing prices will never have a permanent decline, it can only be slowdown. Else it will affect the election.😂

• The government had promised an affordable housing, never a cheap one. What they can only do is to throw in more housing grant and subsidise to help Singaporean.

• The price gap of private and HDB had been widening over the years. This mean (1) the difficulty of upgrading will only increase over time and (2) condo price appreciate faster than a HDB, when downgrading during retirement you will have more money.
• If you want to increase your wealth quicker, get a private while you still can afford, if you cant, a new EC may be the next best option.

HOUSEHOLDS' NETWORTH

• Property contribute significant weighting to Singapore households’ Net worth.

• Usually, less affluent household will have a larger portion of their asset tied to property, this is very different from stock market.

• Because property is a necessity that required a huge capital outlay.
• Many people saved years for the downpayment. Then get into debt for the next 20-30 years just to own a house.
• Some may left with little to no cash to invest in equities after that, many people may be emotional attached to their house.
• However, most Singapore properties are lease hold, we are never a true owner but instead a long term tenant of the government.
• The value will eventually turn $0 when lease run out. Thus property age play a important factor in Singapore. So dont get too emotional attached to your house.

• If you treated your property as a consumer product and never sell, huge portion of your wealth will be "locked up".

• Salary will never outpace inflation and without sufficient investment, how ready are you for retirement?
• As we can see, currency and deposit also have a significant percentage in the networth, alot of money are not invested and eaten away by inflation.

RETIREMENT FUND SOURCES

• An article from Dollars & Sense (2019) shows majority of the living expenses of retiree living in HDB is still from family support.
• Not to get too distract by the numbers, from the breakdown, we can see there are really only three sources for retirement funding, if you want to be self reliance, (1) Personal investment, (2) CPF and (3) Property.
• We can forget about family support, time had changed i.e. depend on your kids for retirement, some kids even expect parents to leave behind inheritance. You should already feel blessed that your kids dont try to cheat your money. 😆
• Thus, It is important to build a portfolio in these 3 area to optimise retirement.
• I prefer a more balanced approach and not too lopsided to any one type.

SOME PROPERTY STRATEGIES

• Similar, to the stock market there are different strategy in investing in singapore property.
• Three most common way that i know.

1 HDB + 1 Private

• People will either do a owner+occupier or take the bullet and pay the ABSD.
• Then, they will payoff the mortgage of the HDB, so they can apply for a new loan.

• HDB will be rent out and the rental will just to service the private property loan.

2 Private

• The couple will get 1 private property each.
• One property will usually use for living, the other will be rent out to offset the instalment of the second property.
• The objective is not about the rental but mainly focus on capital appreciation.

• They will usually sell one when price is right, then repeat the process.

1 Private (asset progression)

• This is a normal way of investing, which i used because i am not as rich as the others 🥲.
• Basically, is just keep upgrading the property and before 55 just downgrade to an old hdb and retire with a lump sum.
• In every transaction, you will be able unlock some cash.

• Couple can either live in the condo and pay the monthly instalment OR live with parent/in-law and rent the whole unit out and let the tenant pay, practice delay gratification of getting a house.

INTEREST RATE

• Interest rate are often a major concern for many property investor.
• But actually, it wont have much effect if it is a rental property.
• Tenancy agreement usually last 1 to 2 years. The rental are secured during these period, if you go through proper legal procedure.

• Just a simple comparison for a $1.6 milion property, which can still get a 2 bedroom condo, monthly instalment vs the average rental price.
• The rental will still be able to cover 80 to 100% of the monthly instalment. The shortfall can either top up by cash or use CPF. Divided between your spouse and you is only a few hundred dollar.
• Why is the rental today so outrageous? Because owner have to offset the cost somewhere.😆
• Singapore have lot of foreign workers thus no need to worry about no rental, unless the government ban all foreign workers, which is not possible.
• Some people may think in high interest enviroment, all property investors are in dire financial situation, but obviously not true.

MY THOUGHT ON THE STRATEGIES

• The main objective for property investment should always be capital appreciation, if i have the ability to hold 2 property i wont hold a HDB.
• In my opinon, If i want passive income, stock market is a better place.

• Holding 2 private is the best for maximizing returns provided you have the financial capability, not all people can do it. Is definitely beyond me. 😆

• On the other hand, asset progression is a slow and steady way to invest prudently in SG property.
• The first property is usually the most difficult because you have to fork out from your own saving, but subsequent property upgrade will be much easier as you are just reinvesting portion of the profit from previous property.

• It is definitely do-able, as long you and your spouse are in the median income range, have the patience, proper planning and the holding power.

• Basically, asset progression is just making money by moving to a better house.
• Since we are going to buy a property anyway, might as well buy a good one.

• I am not a hardcore property investor that have all my assets in properties, to me is just a "might as well" (顺便) investment.

• House, transport and food are the three major expenses of Singaporean. If we can cut down on it, we will be able to save alot of money.
• The main advantages of investing in property, is that i would be able to (1) cut down a huge portion of the expense i.e. housing, and invest into the financial market, (2) accumulate my CPF and (3) increase my networth+cashflow simultaneously.

Conclusions

• The key of property investment is to understand your financial capability and not to be overleveraged.
• Similar to stocks, we should adopt a long term perspective, able to hold through market cycle and when is a time to take profit, we must take.
• When you ask people who make money in the stock market they will tell you stocks are the best wealth builder tool.
• But when you ask people who make money in the property market they will often tell you otherwise.

• There will always be an inherent bias, but the fact is both asset class will be able to generate very good returns with proper planning.

Previous Review

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