$$$ KPO and CZM $$$: September 2018

Monday, September 17, 2018

Expenses - August 2018

As usual, this should be my last post for the month before our big day! We will be having our 过大礼 (Guo Da Li - GDL) next week and it will be ten ten ten ten before we know it.

Current Profile: 28 years old male planning to get married this year and is still living with his parents


You can read more about how we manage our finances here. Removing our shared expenses which come out of our mutual fund (KPO Expense Fund), my expenses for August would be $3,008.64 - ($1,757.26 / 2) = $2,130.01.

Wedding
Banquet - We started making monthly installment payments to the hotel in order to avoid the lump sum pain.

GDL - Bought some cakes from Pine Garden. To be exact, 25 boxes of cakes -.-" The most ridiculous part apart from spending hundreds on cakes is that the bride (CZM) is not allowed to eat any of the cakes although she was choosing what she wanted to eat. LOL.

Photography - To save some money, we decided to make our own photo album and 3 12x12" Canvas through Photobook. It was supposed to be cheap until we realized that you cannot ship them in 1 order and had to pay $40+ for shipping. I got to say there are lots of hidden costs. Having said that, it is still slightly cheaper than the others.

Grooming and Others - CZM bought some hair accessory, decorations and suspenders from Carousell.

Parents
I previously blogged about my promotion and increment - Salary - You Are Your Best Investment and it was only effective from February so I gave my parents more allowance as well.

Insurance
This is a fixed monthly cost for the basic coverage - term life and hospitalization.

Gift
Attended a wedding at Crowne Plaza Changi.

Food
My food expenses are exceptionally low because I stay with my parents! Most of it is incurred when I am out with CZM. In addition, half the month we were in New Zealand and the food expenses were paid by the family mutual fund.

Transportation
I would always pay for CZM's cab ride home during night time since I am too lazy to send her home. That was one of our agreement. lol. EZ Link expenses were much higher this month which was probably due to the wedding preparation, hence we have been commuting a lot more apart from work.

Public transportation seems a lot lower because of 2 reasons:
1. I am no longer using EZ Link Auto-Reload. Account-Based Ticketing (ABT) is a much better choice as you pay what you use instead of triggering top up where the money is stored in the EZ Link card. The best part is miles can be earned too (using UOB PRVI Mastercard)!
2. $0.50 Discount for commuters who enter stations before 7.45am on weekdays.
3. Half the month I was in New Zealand driving a rental car. lol

Cab, on the other hand, was exceptionally high because the day when we returned, it was past midnight and had to cab from Changi to the west which cost around $40+

Me
The $69.97 is the installment for Surface Pro which I got about 2 years back.

Others (Vacation, Entertainment, Treat, Gambling, and Investment)
Vacation - Bought some food and drinks during our transit flight

Entertainment - Watched some movie

Treat - Either CZM or colleagues to some hawker food/drinks

Gambling - Bought ToTo, the fastest way to fulfill our millionaire dream

Investment - Commission for buying SSB (our ladder is almost completed! You might want to check this post out if you do not know what I am referring to - DBS Multiplier + SSBs + Joint Account = Higher Interest!)

Summary
January 2018 - $2,256.43
February 2018 - $1,759.01
March 2018 - $5,049.79
April 2018 - $1,572.54
May 2018 - $1,863.74
June 2018 - $2,282.07
July 2018 - $2,197.94
August 2018 - $2,130.01

Total expenses for 2018: $19,111.53
Average expenses per month for 2018: $2,388.94

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Friday, September 14, 2018

OUE Commercial REIT Rights Issue - Very Very Very Bad Deal

If you are an existing shareholder, you should be aware of the proposed acquisition of the office components of OUE Downtown. You might be aware that I actually do like rights issue as they present an opportunity to accumulate more shares at a lower price. However, I have sold all my OUE Commercial REIT today (8,000 units @ $0.605) and these are the reasons why I will not be participating this extremely bad deal (at least for my case).




Some important numbers to take note:
- 83 rights units for every 100 existing units
- issue price of $0.456
- TERP of $0.570
- Pro Forma DPU of $0.0354 vs Current DPU of $0.0467
- Pro Forma NAV of $0.70 vs Current NAV of $0.91


My average price was $0.70 and before the rights issue, the yield on cost was around 6.67% and with a NAV of $0.91, it was trading at >20% discount. However, after the rights issue, even with a huge oversubscription, I can no longer get back the same yield. Besides not being yield accretive, this proposed acquisition/rights issue reduces the NAV significantly! You can use my google spreadsheet/calculator to see how would this rights issue work out for you - KPO Rights Issue Calculator. Just fill in those in yellow and the rest are formula-linked.


OUE Commercial REIT IPO in 2014 and based on historical data since then, it has been trading at mean/median PB of 0.78/0.75 and mean/median dividend yield of 6.48%/6.59%. What does that mean? After the rights issue, with a lower NAV and lower DPU, the price will have to fall further in order for it to reach its mean/median PB and dividend yield. My REIT Scanner is predicting $0.54 which is lower than the TERP of $0.57.

Example:
Before the rights issue was announced, it was still trading at around $0.68 and with a NAV of $0.91, the PB would be around 0.747. Take this PB and multiply by the new NAV of $0.70 and we will arrive at the estimated price of $0.523.

In addition, note the falling NAV and DPU over the years since 2014. There was some safety margin when my entry price was way below the NAV but with the rights issue, it would simply disappear! One thing which I cannot understand is if there is a need to issue so many rights/shares and price it at such a low price. Theoretically, they can issue lesser rights at a higher price (e.g. $0.60 as compared to $0.68) to achieve the same result + the NAV/DPU would not have dropped as much @_@


On the bright side, after holding it for ~1,200 days (> 3 years) and including all the dividends collected over the years, the total return is 8.5% and the annualized return is 2.9%. Should have just top up this amount to CPF SA 3 years ago instead.

Good luck to the existing shareholders! Those that are planning to enter, my advise is to avoid it first and wait till it falls further. This rights issue is not attractive at all. Do not make the same mistake as I did previously - Mistake on Rights Issue - CapitaLand Commercial Trust.

Do like any of the following for the latest update/post!
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Monday, September 10, 2018

StashAway - August 2018 + An Unpleasant Experience

StashAway introduced 3 new portfolios last month and Financial Horse has done an excellent write up on it - The Weekly Horse: Review of StashAway’s new “High Risk” Portfolio. Do read it if you have not as it is definitely interesting enough for Michele, the CEO of StashAway to leave his comment.

Due to the introduction of the new portfolios, we had some unpleasant experience with StashAway. This would have been a post by itself if we did not go to New Zealand and gotten so busy with our wedding preparations. I am willing to take on more risks (stock picking, buy small caps, try out robo, etc.) while CZM is the more conservative one (STI ETF and blue chips). When I knew StashAway was introducing higher risk portfolios, I was pretty excited as I felt that the previous highest risk portfolio, P28 was still very conservative.

On the day it launched (16th August 2018), an email was sent out at 5:30pm. I WhatsApp CZM and after reading and updating the app, I flipped the switch to the highest risk portfolio. Around 7pm, CZM replied and said she's not comfortable with taking more risk so I flipped it back although I saw some pending transactions. I thought it should not be much of an issue since there were ~2 hours before the US market opens and the next batch job should correct/cancel the pending transactions or so I thought...

To my horror, the next day (17th August 2018), most of the shares were sold! The even more ridiculous part was there were multiple pending transactions to buy back the same shares and the transactions happened on the following day (18th August 2018). The shares were sold at a lower price and bought back at a higher price the next day. As a result, we now owned lesser units of shares than what we originally had. To be fair, it could have ended up either way (sold higher and bought back lower) but it was the more unfortunate way for us. Let that sink in...

Meanwhile, I was emailing StashAway to understand what exactly was going on. In short, the orders are consolidated only once at 6pm and there is no internal netting of orders if you are wondering. As usual, there is nothing to hide so you can read the whole email thread hosted here, word for word except for their emails and contact numbers which have been masked.

Having said that, it takes two hands to clap. I am at fault for not confirming with CZM first but it also shows the limitation of their system. In addition, given the limitation of the systems to consolidate orders only once at 6pm, such email communication should not have been sent out at 5:30pm. This would not have happened if it was communicated early in the day, after 6pm or even during the weekends.

Hopefully, you guys will learn from my mistake and not have to suffer :) Alright. Enough ranting, back to the monthly update!

1. ACCOUNT SUMMARY (as of the last day of the month)


Based on the statement (31 August 2018), we gain $370.75.


As of 10 September 2018, we gain $34.81 from investment returns with a huge currency impact of  $302.34. Not good! In our last monthly update, I said that I would have preferred the USD to be weaker because we will be going to the US for our honeymoon. Weaker USD meant that we can convert the same SGD for more USD to invest too.

SGD time-weighted returns: 6.9%
USD time-weighted returns: 0.7%

2. PORTFOLIO DETAILS 


3. TRANSACTIONS




SELL transactions - highlighted in yellow
BUY transactions - highlighted in blue

SGD $990.00 converted to USD $722.64 (USD $726.40 last month)
Exchange Rate: 1.3700 (1.3629 last month)

4. FEE CALCULATIONS


The actual fee as stated is based on the monthly-average assets SGD $10,662.31 x 0.8% / 365 days * 31 days = $7.24

I blogged about how the $5 fee credit in StashAway - April 2018. I was charged management fee despite having the referral waiver and was given this credit in return for their mistake.

StashAway VS STI ETF
Since there is no way to compare the performances among the robo-advisors, I came out with a spreadsheet to track our StashAway portfolio performance (General Investing - Risk Level 28) against that of STI ETF which I will be updating on a monthly basis. For simplicity, I shall assume that one can either invest in Nikko STI ETF using POSB Invest-Saver or invest in Nikko STI ETF/SPDR STI ETF using SCB Priority Online Trading (no minimum commission). These would be the opportunity costs while we continue to invest in StashAway.

Apart from the absolute P&L, we should also look at the Reward-to-Risk Ratio where risk/volatility is taken into account. For more information, do read StashAway Clarifications - Reward-to-Risk Ratio. StashAway has the highest ratio of 1.25 which is significantly higher than the other 2 STI ETFs (< 0.4). Let me quote Freddy Lim (Co-Founder & Chief Investment Officer of StashAway), "for every dollar of risk taken, StashAway P28 is producing 1.25 times the return".


This month commentary: StashAway is the only one making money with an XIRR of 5.34%! One year later, we finally see StashAway's fees > SCB Priority Online Trading commissions. The difference will only continue to get bigger and if such performance can continue, we certainly would not mind paying more fees for a higher return. Like I mentioned previously, those that are already doing DCA on STI ETF, do not be disheartened and stop your investment. Try as much as possible to stick to your plan and in the long run, it will turn out well.

Going forward it will be even more interesting when the commissions/fees incurred by StashAway exceed that of POSB Invest-Saver. This will be a battle between cheaper/lesser fees and asset allocation/diversification...

I believe there is a need to redo/regenerate the volatility used to compute the Reward-to-Risk Ratio. Do take it with a pinch of salt for now. I have been compiling some data in order to do so :) 

You might be interested in previous months update too:
StashAway - January 2018
StashAway - February 2018
StashAway - March 2018
StashAway - April 2018
StashAway - May 2018
StashAway - June 2018
StashAway - July 2018

Which is the best? Only time will tell :)

This is the link to our spreadsheet - KPO & CZM StashAway Portfolio VS STI ETF which I have also added to Our Portfolio page.

StashAway Referral Link for Our Readers
Here you go: KPO and CZM Referral Link

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Monday, September 3, 2018

Portfolio - August 2018

Time flies! We just came back from our 2 weeks vacation to New Zealand and there is only about 1 month left to our big day! I guess I will be blogging lesser this month as well in preparation for the big day. We have yet to make our photo album or prepare our script >.<

After doing a 2018 Mid Year Review, I decided to make some changes to my spreadsheet to track/include investment into StashAway too. The one in blue is the StashAway portfolio, green is SGX and the total is in black.

Our portfolio increase by 2.41% to $358,792 - $12,315.89 of capital injection and -$5,039.41 of capital loss.


If you prefer to look at numbers, this is the raw data used to generate the above bar graph.


SOLD
- None

BOUGHT
- Capitaland (1,000 units) @ $3.130
- City Development Limited (1,000 units) @ $9.940
- Lion-Philip S-REIT ETF (1,000 units) @ $1.012

I blogged about Capitaland - An Undervalued Blue Chip? and the price has gone up quite a bit since then.

With Capitaland being the 2nd largest investment in our portfolio, we were looking at other opportunities and decided to buy some CDL. The interesting thing about CDL is that its properties are stated at cost while the others/majority of the developers state them based on the fair value determined by internal valuation or independent professional valuation. As a result, CDL should be trading > PB 1 and it can be deemed as undervalued if it is below its NAV or < PB 1. In addition, CDL has started share buy-back in the last week.

We bought 1,000 units of Lion-Philip S-REIT ETF as part of our new strategy - New Singapore Budget, New REIT Strategy!

Dividends
The total dividends collected this month is $2,521.23. The breakdown is as follows:

Company Symbol ExDate Shares Total
QAF Ltd Q01 29-Aug-18 3,000 $30.00
Lion-Philip S-REIT ETF CLR 29-Aug-18 9,000 $162.00
APAC Realty Limited CLN 27-Aug-18 12,000 $240.00
Raffles Medical Group Ltd BSL 27-Aug-18 14,000 $70.00
Geo Energy Resources Limited RE4 27-Aug-18 25,000 $250.00
City Developments Ltd C09 23-Aug-18 1,000 $60.00
Wilmar International Ltd F34 20-Aug-18 2,000 $70.00
Singapore Post Ltd S08 15-Aug-18 7,000 $35.00
OUE Commercial Real Estate Investment Trust TS0U 8-Aug-18 8,000 $174.40
Sheng Siong Group Ltd OV8 7-Aug-18 18,000 $297.00
Far East Hospitality Trust Q5T 6-Aug-18 10,156 $102.58
Mapletree North Asia Commercial Trust RW0U 3-Aug-18 5,000 $55.85
Starhill Global Real Estate Investment Trust P40U 2-Aug-18 12,000 $130.80
SPDR STI ETF Units ES3 2-Aug-18 13,000 $780.00
Parkway Life Real Estate Investment Trust C2PU 1-Aug-18 2,000 $63.60

Total dividends collected for 2018: $10,897.38
Average dividends per month for 2018: $1,362.17

StashAway


Capital: $11,000
Current: $11,419.10 (IRR: 8.8%)

Do like any of the following for the latest update/post!
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4. Instagram - KPO_and_CZM (Did you see those delicious food photos to the right -->)