Asked on 30 Oct 2019
Want to strive towards a $24k Dividend a year portfolio... Within the next 2/3 years, I should have the $480k capital for a 5% portfolio. Minimal investments now, only bonds and high yield savings.
I'm going to make an inference here and assume that you won't have any issues with regards to an emergency fund or insurance coverage. With that said, let's look at the considerations for your question.
$24K/yr dividends at 5% can be achieved through a combination of high yield bond funds, balanced funds, REITs and equities. You will want to analyze which holdings can give you sustainable and consistent payouts, have strong fundamentals and good management. This will be doable for REITs and equities, less so for funds, but still not impossible.
Once that's done, have an idea of how you want to allocate your portfolio in terms of position sizing. You should not have too much concentrated in a single stock or UT, but not so many holdings that managing and monitoring become difficult.
Once you have an idea of which holdings you want, you can then look at your entry prices. It is better to wait for a good price rather than jump the gun and deploy all $480K at one go. It might take a few years to deploy your funds, but there's no harm in treading with caution. Once you have achieved $24k/yr dividends, it's a matter of monitoring and adding on when opportunities allow or taking profit if your holding has run up. Over time, saving part of your dividends and re-injecting into the portfolio will allow you to increase your payouts.
Just note that by going with a fully variable investment, you are exposed to market risk, so there will be times that your dividends may be reduced, so in time to come you will want to take your variable payouts and convert them to guaranteed sources of income to increase the reliability of your payouts as you approach retirement.
31 Oct 2019
31 Oct 2019
Hi Anonymous, firstly, it would be good to ensure you have adequate insurance coverage and emergency savings (at least 6 months worth of expenses). For the emergency savings, you can consider putting them into the Singapore Savings Bonds as they give higher returns than banks do.
After that, you can look into buying ETFs, REITs or stocks with the money you don't need for the at least the next five years. If you need the money in the next five years or so, it would be better not to put it in the stock market as stocks are volatile for the short-term.
To get a 5% average yield on your portfolio, you would need to pick stocks or REITs that offer a dividend yield of around 5% (if you invest the exact amount of money into each stock). You can look at Seedly's article on "20 Singapore Shares You Should Watch In 2020" here for some investment ideas.
In any case, it would be good to run through your investment plan with a professional financial advisor to ensure all your financial bases are covered.
If you are a savvy investor, you can invest in ETF, REITS or certain stocks of your choice with the proper research and analysis done.
Otherwise, you can speak to your financial services consultant about assisting you in placing the money using investment tools such as iFast or investment products, that invests in funds. These funds are managed by a professional fund manager, so you don’t have to worry about what stocks to buy etc.
Hope this helps! Let me know if you need further information, I will be happy to assist