tag:blogger.com,1999:blog-693329366744164363.post2495682410896786361..comments2024-01-23T22:58:52.799+08:00Comments on AlpacaInvestments: November 2022 Portfolio Update and 2022 Dividends Alpacainvestmentshttp://www.blogger.com/profile/01722409152091295954noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-693329366744164363.post-9593271097011866612022-12-04T18:31:52.793+08:002022-12-04T18:31:52.793+08:003. My thoughts on CPF. I think we are in agreement...3. My thoughts on CPF. I think we are in agreement that CPF is a great tool. In fact, I will be contributing more to my CPF this year for the tax relief. But for things like VC3A, or OA to SA transfer, these are incompatible with FIRE. I am not willing to lock my capital up for 30 – 40 years, when this could instead generate passive income for me right away. <br /><br />Nonetheless, given my calculations, I will still hit FRS by the time I am 55, so no concern on this. This also means that when planning for my early retirement, I mainly have to plan for the period from 35 to 55 / 65 years old, because the money from CPF OA will be available from 55 onwards, and CPF Life payouts start from 65. These would make my retirement plan more robust.<br /><br />4. You may not have mentioned this explicitly, but my inference would be that your views against FIRE could be partly driven by the moral / societal / ethical perspective of people who are pursuing FIRE. I don’t want to get into a philosophical debate about the moral / societal / ethical perspective of FIRE, e.g. whether people who FIRE-ed aren’t “productive” members of society, or whether they are living without “purpose” and so on.<br /><br />Regarding stuff like “purpose” or “identity”, I have written about these extensively on my blog and they are too long to reproduce here. Basically, I think that these are extremely subjective and would depend on the individuals themselves. Simply coming up with an anecdote that “I have a friend who said he got bored after retiring early”, does not negate the fact that there could be many more people out there, who continue to lead fulfilling lives after attaining FIRE.<br /><br />In this case I am more liberal, my view is that people should be able to do what they want, as long as there is no direct detrimental impact on others. Ultimately, we are answerable for our own choices.<br /><br />To end off, I think I’m the type of person who’s able to find joy in the simplest things in life. I find joy writing about FIRE, and will continue to do so. Similarly, I’m sure you find joy leaving many of your comments on our blogs or sharing your thoughts on the 1M65 as well – sharing your perspectives as a veteran investor and alerting us to blind spots. On this note, I think we are on the same page.<br /><br />As always, I welcome your constructive feedback on my posts. Cheers Patrick. AlpacaInvestmentsnoreply@blogger.comtag:blogger.com,1999:blog-693329366744164363.post-85286450724050542402022-12-04T18:30:52.047+08:002022-12-04T18:30:52.047+08:00Thanks for your detailed comment. I’ve seen some o...Thanks for your detailed comment. I’ve seen some of your posts on the 1M65 telegram group, and I must say that I am very impressed by your achievements. I also respect your point of view, although I know you’re generally against FIRE. I believe that while we hold different views regarding FIRE, it is always good for us to hear contrasting views, so that we don’t stay in echo chambers. Thus, appreciate you taking the time to pen down your lengthy comment. Also note that you wrote another comment on my previous post on FIRE in Dec 2021. Here are my thoughts on some of the points you mentioned:<br /><br />1. A retirement plan based on dividends isn’t enough. I don’t agree with this assertion. A well thought out passive income plan from dividends can itself be sufficient. Let’s look at the dividend payouts for some popular ETFs, and compare the change in payouts during 2020/2021, the worst year of Covid when the world literally came to a standstill.<br /><br />SPY ETF: 2019: $5.62, 2020: $5.69. An increase of 1.2%.<br />DIA, Dow Jones 30 ETF: 2019: $5.95, 2020: $5.73. A decrease of 3.7%.<br />STI ETF: 2020: $0.115, 2021: $0.083. 2022: $0.112. A decrease of 28%. This is mainly due to MAS imposing dividend caps on our local banks.<br />CLR ETF, S-Reits: 2020: $0.05, 2021: $0.048. A decrease of 4%. <br /><br />What these examples above tell me is that even in a year of lockdowns, where many businesses were severely affected, dividend payouts remained largely stable, or declined by a manageable amount. Thus, if one plans to retire purely on dividend income, then buying a diversified basket of various global and local ETFs will be able to provide you with a reasonable stream of cash flows. <br /><br />All that needs to be done would be (i) ensuring a reasonable buffer between dividend income vs expenses, e.g 50k of dividend income vs 40k of expenses, (ii) keeping a emergency cash pile, e.g 6 months of expenses, and (iii) potentially continue working part time to earn additional income (aka Barista FIRE, which is my preferred option). <br /><br />2. It is a “waste” if high income earners choose to FIRE rather than continue working. Let me put forward some real-life examples. I have friends working in investment banking, private equity, hedge funds etc… where they earn 200k to 300k annually in total comp as fresh grads. By their early 30s, 500k annually is completely reasonable, and by their mid to late 30s, earning 1M per year is possible as well. <br /><br />My point is, let’s say someone reaches a $3 million portfolio at 35. To me, whether someone reaches $3 million at 35, or at 60, at that juncture, both of them should be able to retire comfortably. Determining when to retirement should be based on a targeted AUM / cash flow number, and not an age.<br /><br />And related to your point of dividends being insufficient, a $3 million portfolio today, put into a AAA-rated 10Y Singapore Government Securities can yield around 3%, or close to 100k a year. Surely, this should be “safe” enough, in your view.<br /><br />The paradox I want to point out would be that, on one hand, those earning a lower income may not be able to retire at 65, even if they wanted to, because of financial constraints. And if we were to apply your perspective, even those earning a higher income should not retire because it would be a “waste”. Either way, is it that both groups shouldn’t retire? Then, what amount of money would truly be enough?<br /><br />If you ask me whether I would choose between getting 50k/year of passive income at 35 years old and retire, or work till I’m 65 to get to 250k/year of passive income, I will choose retiring at 35, for sure. I would rather live on less and enjoy the next 30 years!<br /><br /><br />AlpacaInvestmentsnoreply@blogger.comtag:blogger.com,1999:blog-693329366744164363.post-24928520441768305172022-12-03T18:42:00.108+08:002022-12-03T18:42:00.108+08:00Good for you 👍😊Good for you 👍😊Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-693329366744164363.post-58435783277425417512022-12-03T17:27:01.023+08:002022-12-03T17:27:01.023+08:00Hi Alpaca,
Good start to your passive income inve...Hi Alpaca,<br /><br />Good start to your passive income investing journey. As a fellow passive income investor, hope you dont mind my sharing on our 12 year journey on passive income investing. What we encountered, lessons learnt and what we achieved.<br /><br />As wage earners all our lives, the lure of passive income is strong. Cash flow without effort on your part! Whats not to like?<br /><br />Intrigued by it, We started to build our own passive income streams in 2011 (comprising dividends, rental and interests from CPF) at the tender age of 50. It was good that we started late because the first lesson we learnt was you need capital to generate passive income. Starting late in life meant we have decent capital to play with.<br /><br />Year 1 (2011) passive income came in at a grand total of $46K. And it gradually grew to an all time high of $196,800 in 2019. Then Covid struck, and it all came tumbling down... to $182K in 2020. Lesson number 2 - dividend and rental incomes are not reliable. And interest from CPF is. (Lesson number 3). Thus DO NOT plan a retirement on dividend nor rental income. Doing so will result in a retirement with anxieties. Instead plan a retirement lifestyle base on steady income streams. For us, that source of steady income happens to be the CPF savings.<br /><br />If you build up your CPF Savings well, it can create two dependable passive income streams; namely the interests from your OA&SA savings as one, and the payout from CPF Life. Plan your retirement lifestyle around the dependable income streams and treat those not so dependable income streams as bonus incomes. <br /><br />2020 was the time I went into the market and bought more stocks on discount. With that, the following year 2021, the passive income grew back to $196,700. And this year 2022, it hit a new ATH of $226,000.<br /><br />This would be the projection of our passive income down the road (to sustain our retirement) :<br /><br />What we achieved in 2022:<br /><br />Dividend : $88,000 ($7,300 pm)<br />Rental : $3,500 pm<br />Interest from CPF : $99,000<br /><br />From 62 (2023) to 69<br />Gold Tap <br />1. OA&SA interests : $65,000<br /><br />Silver Tap<br />1. SRS drawdown : $52,000<br /><br />Bonus Taps<br />1. Dividend : $80,000<br />2. Rental : $40,000<br /><br />Annually : $237,000<br /><br />From 70 onwards<br />Gold Tap <br />1. OA&SA interests : $65,000<br />2. CPF Life : $60,000<br /><br />Bonus Taps<br />1. Dividend : $80,000<br />2. Rental : $40,000<br /><br />Annually : $245,000<br /><br />We are planning on a lifestyle supported by the gold and silver taps only, that is, on $10,000 per month. If our bonus taps are doing well, we would most probably not be touching the OA/SA interests and let it compound.<br />mysecretinvestmenthttps://www.blogger.com/profile/16700632508434787208noreply@blogger.comtag:blogger.com,1999:blog-693329366744164363.post-91051744364761379782022-12-03T13:02:28.701+08:002022-12-03T13:02:28.701+08:00Congrats on your path to fire! Congrats on your path to fire! Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-693329366744164363.post-29625364744434617762022-12-03T11:58:32.409+08:002022-12-03T11:58:32.409+08:00You have long runway and you will be successful fi...You have long runway and you will be successful financially as long as you stick with your growth and dividend portfolio.GlobalPassiveIncomehttps://www.blogger.com/profile/12985690137386589654noreply@blogger.comtag:blogger.com,1999:blog-693329366744164363.post-57967166539773824612022-12-03T11:40:42.123+08:002022-12-03T11:40:42.123+08:00Pursue FI as our financial goal and not necessary ...Pursue FI as our financial goal and not necessary FIRE. CreateWealth8888https://www.blogger.com/profile/04870750974362417154noreply@blogger.com