Portfolio allocation as of August '23.
• SG Shares: CDG, DBS, Haw Par, SGX, Valuetronics
• SG Reits: Syfe Reit+, DigiCore Reit
• US Growth: BABA, INMD, PYPL, SHOP, TDOC, UPST
• US ETFs: SCHD, QUAL
August was a decent month for adding to my existing
positions. I bought more of 2800HK amid the China real estate fears, and added
to my Syfe Reit+ portfolio multiple times.
In my previous posts, I have shared about having an asset
allocation target of 50% Singapore, 30% rest of world and 20% China. Recent
events have led me to rethink this allocation, thus I have made the following
adjustments to my allocation targets.
|
|
Previous
Target |
New Target |
|
STI ETF |
10% |
20% |
|
SG Stocks |
20% |
15% |
|
S-Reits |
20% |
15% |
|
HSI ETF |
20% |
15% |
|
Global ETF |
30% |
35% |
Reasons for the change:
- I want the portfolio to be even more passive,
hence actively managed SG Stocks will be reduced to 15%
- Having
a higher weightage towards global stocks (35%) versus China exposure via HSI
(15%) to reduce single country risk
- S-Reits
are under pressure recently due to higher rates, but taking a step back I believe
that there’s a significant principal-agent conflict of interest when it comes
to the structure of Reits. Reit managers are incentivised to grow the AUM of
the Reit via acquisitions, which may not always be in the interests of unitholders.
Additional, Reits are more highly leveraged as compared to an average equity index, thus the impact of “mistakes” can be more costly, e.g. if a Reit has a relatively high gearing ratio, a small drop in asset values may cause the Reit to be in default as debt covenants are breached.
FIRE Musings
Last month’s post regarding “what is work” was rather
well-received. Hence, this post would be a continuation along those lines – dispelling
the notion that “working” should be the default for everyone, eliminating the
fear of (early) retirement, and reaching our early retirement dreams via
dividend investing.
Why is work the default?
When someone talks about wanting to retire early, and shares
that part of their retirement plans involves some volunteer work, pro-work
folks love to say “why can’t you volunteer while working?”.
That’s such an absurd question. I would challenge you to
think, in the first place, why should “work” be the default? Because society
tells us to? Because there’s a stigma against retiring early?
At some level of wealth, work becomes optional. If someone
tells me they’ll retire early and volunteer twice a week, I’d say that’s great,
rather than try to suggest that they should somehow fit volunteering into
their current busy schedule.
Think about it this way:
How volunteering fits into an early retiree’s week: Wakes
up naturally without an alarm. Perhaps spends 1 or 2 days per week working part-time
in a freelance role in an area they’re passionate about, and maybe another 2
days volunteering. The remaining free weekdays can be spent exercising while
the gyms are empty, sitting at a café reading a book or relaxing by the beach
without the weekend crowd. Weekends then can be entirely devoted to family. A
slow pace of life, living intentionally.
How volunteering fits into an ordinary worker’s life: Wakes
up at 7am, 5 days a week. Spends their mornings in rush-hour public transport
packed like sardines. Monday to Friday in the office, juggling their workload,
bosses’/clients’ high expectations, office politics… and then travel back home
in the evening rush-hour, assuming one is lucky enough not to work overtime.
After an exhausting work-week, perhaps set aside 1 day during the weekend to do
volunteer work, which would mean that some family time is sacrificed.
Let me be clear – the above comparison is not to
diminish the efforts of people who manage to carve out time for volunteering
while being employed in a full-time job. I think these people are truly altruistic
and deserve our respect.
My point regarding the above comparison, is that if someone expresses
their view that they want to volunteer as part of their early retirement lifestyle,
that should be celebrated. Rather than questioning why
can’t they fit volunteering into their current lifestyle, because obviously
volunteering while holding on to a full-time job involves massive trade-offs,
that not everyone is prepared to take.
Eliminating the fear of (early) retirement
Recently, I had a conversation with ourmoneydreams – a
Singaporean couple in their early 30s who would likely reach financial independence
in within the next year (in their early/mid-thirties). They wondered if their account
would still be worth following if they retired early (rather than posting updates
about their journey to early retirement, which is what most finsta
accounts do).
I’d say that posting about the life of an early retiree is
probably far more interesting, simply because so few people actually get to retire
early! It would be wonderful to get insight on how they spend their time, but
equally as important, their fears and insecurities and how they manage
them.
Many people fear early retirement because it is so unusual. There’s
even a fear of traditional retirement, because people who’ve worked for 30 to
40 years reach the point where their jobs becomes their identities! Articles
fear-mongering about losing “purpose”, losing “structure”, and the like… are
extremely hilarious to me. Thus, I believe that sharing the lifestyle of an
early retired couple would be extremely beneficial to those looking to achieve
the same dream.
There was a reddit post on SGFI asking “Those who achieved
FIRE, how are you passing your days?”.
I shared this blog from a fellow Singaporean blogger, RB35,
who managed to retire at 33 in 2018. He continued blogging to share about his
early retirement lifestyle, which I found extremely inspiring.
There was a response to my comment that “he went back to
work in the end”, as if to point out something went wrong with his early
retirement plans.
In reality, RB35 went back to “work” for 2 more years because
he couldn’t travel freely due to Covid, which was how he spent 2018-2019. Not
because of monetary issues. RB35 retired at 33, went back to “work” for 2 years
at 35/36, and has now retired again at 37/38. Which is still way earlier
than most folks and I’d say that’s still pretty amazing.
Pro-work folks like to jump up and yell “checkmate” whenever
FIRE folks face the slightest of setbacks. What’s the obsession with what other
people choose to do with their lives? Do you spend your entire life hoping that
some early retiree will screw up their retirement plans, so that you can jump
in and say “I told you so”?
If people get to retire early, I genuinely feel happy for
them. I think it is fantastic to be work-optional. People who reached financial
independence are generally happier. And having more happy people is good. There’s
zero envy from me. It really doesn’t matter to me how they came to that
wealth.
Whether you retired early because you won the lottery,
received an inheritance, built and sold a business, made 100x your money in
crypto… or for the rest of us in the 99%, through working and investing
aggressively, it doesn’t matter to me. As long as we reach financial
independence, I don’t think there’s a difference how we got there. What
matters would be, at that level of wealth, how do we plan for a sustainable
retirement?
Criticism of dividend stocks
Another warped perspective that I’ve seen is someone questioning
why Singaporeans prefer dividend stocks, rental income, or generally any cashflow
based instrument, rather than investing for “growth”. I am not sure what’s the
issue here. What I can say is, I’m certain that someone like AK71 with SGD 200k+
of dividends annually, would definitely not be complaining.
I am more than happy to continue to perpetuate this
preference for dividend stocks on this blog. The irony is that from a dividend
investor’s perspective, it would be fantastic if these naysayers choose
to shun dividend stocks, if there’s less demand for dividend stocks, we get
higher yields on our investments – please don’t buy dividend stocks, so
that I can get them at cheaper prices!
If I were to summarise the above 3 points into a sentence,
tying together my views regarding work, retirement and investing for dividends,
it’d just simply be:
I’d rather be unemployed with 5k/month of passive
income, than be employed and earning a 5k/month salary.
The former is (almost) permanent, the latter is not. I don’t
think it gets simpler than that.