Asked on 21 Jul 2020
I have decided to put in:
US$200 in VOO (DCA monthly vis FSMOne)
US$ 200 in VT (DCA monthly via FSMOne)
S$2000 in First REIT for dividends (lump-sum via DBS Cash Upfront)
First REIT would be a stock I will hold for dividends, because the yield and financials are pretty good imo.
Any thoughts on how I can improve this portfolio would be greatly appreciated. Thank you!
First Reit, or rather anything related to Lippo, is bad news. I think you should do more research on them. Read the comments on Singapore Stock, REIT and Bond Investments Facebook Group. Dividend yield can be a trap....I sold mine at a loss. Glad to put the balance in a better stock.
Great idea to do DCA. Let me help you out a little here to improve your DCA approach.
VOO:-There are 40 quarters worth of data in this fund (incepted in 2010)
-33 quarters are positive (including current quarter) - 82.50% of total quarters
-7 quarters are negative - 17.50% of total quarters
VT:-There are 49 quarters worth of data in this fund (incepted in 2008)
-37 quarters are positive (including current quarter) - 75.51% of total quarters
-12 quarters are negative - 24.49% of total quarters
By calculating the probabilities of both funds using their full historical data, you know that the odds are stack in your favour by DCA-ing gradually. Assuming you have $200 to invest every month. During periods of "normality" which is dictated as the range between the dotted lines (average (+) and (-) returns), stick to $150 per month. When the price goes above the average (+) return, reduce to $100 because it shows that the quarter is overextended and odds are that price may retrace soon. On the other hand, if the price goes below the average (-) return, increase your amount to $200 because such opportunities are rare. Of course, you can adjust your amount accordingly but stick to this framework.
Moving on to the lump sum investment into First Reit. I did a quick comparative analysis across Health Care REITs in the Asia Pacific Region (Developed Countries)
First Reit is trading at a discounted P/E at 10.43 against the regional average of 13.63. Worst 1 YR Rev growth (-0.78) and 2nd worst 1 YR EPS growth (-41.15). Since the majority of its business is conducted in Indonesia, it seems to be that they are having some issues there. Therefore, you should focus on building a strong thesis to support why other investors are selling First Reit while paying a premium above the regional average for stocks such as Parkway Life Estate. Hope it helps.
You can find a number of useful charts that I have used here:
VANGUARD S&P 500 ETF (VOO US Equity)_updated_250720
VANGUARD TOT WORLD STK ETF (VT US Equity)_updated_250720
I agree with Sharon and X_Y in terms of buying First REIT now for purely dividends. Do make sure that you've done your research if that's the only sg stock and reit you're going to be buying. Do not be enticed just by their "pretty good dividend yield". Because there are reits offering higher than that but are u confident of its growth and stability? If the reit crashes like Eagle Hospitality did this year, you might be in a bit of a financial setback if you're still a student (i'm assuming from the amount you're investing).
In terms of your DCA in VOO and VT, i think that's a good allocation and a great way to start. However, do understand that these are US-domiciled etfs and you're entitled to a 30% withholding tax. I'd recommend taking a look at IWDA instead of VT, and CSPX/VUSD instead of VOO.
First of all ask yourself, do you understand the characteristic of the management and companies your are investing in?
Do you understand the intrinsic value of the assets?
Do you understand your character?
If the answer is yes, it is a matter of finding MORE opportunities and priotizing those that are most attractive. Eg: Those with higher price to value gap.
So with regards to your current portfolio, you should ask yourself how much you understand those investments.
Asking from others in my view, can be tricky, because they may have different goals than you.
If you are interested, I teach the craft here
Ideas here (some very risky)
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