$$$ KPO and CZM $$$

Wednesday, January 2, 2019

Portfolio - December 2018

Our new year has been pretty exciting when we woke up to news of Cathay First Class bug/glitch and managed to snatch 2 return First Class ticket to Washington (IAD) from Vietnam, Hanoi (HAN) at ~1.4k USD each. Definitely not expecting to fly First Class again but let's see if Cathay will be honouring the fares/tickets.

Our portfolio decrease by -0.87% to $352,744 - $3,368.19 of capital injection and -$6,469.65 of capital gain. The one in blue is the StashAway portfolio, green is SGX and the total is in black.


If you prefer to look at numbers, this is the raw data used to generate the above bar graph. These numbers are as of the last day of the month.


"Cash Flow" is the amount of money being injected/withdrawn from the portfolio (buying stocks = +ve cash flow while selling stocks and collecting dividends = -ve cash flow)

SOLD
None

BOUGHT
- Lion-Philip S-REIT ETF (1,000 units) @ $0.983
- Geo Energy Resources (16,000 units) @ $0.177

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

The huge fall of Geo Energy has been pretty puzzling. When news of the TBR Coal offtake and equity investment by Macquarie Bank came out, it was definitely a piece of good news. The way I saw it was Macquarie was willing to "buy in" then at a price of $0.29. In addition, they were given free warrant that can be exercised at $0.33 within the next 2 years which meant that there is a possibility that the price will be higher than $0.33. At the price of $0.177 and a DPS of $0.01, its dividend yield is around 5.65%. So when we came back from our honeymoon and I saw the price at $0.177, I simply have to buy some.

Dividends
The total dividends collected this month is $518.00. The breakdown is as follows:

Company Symbol ExDate Shares Total
Singapore Telecommunications Ltd Z74 18-Dec-18 4,000 $272
Accordia Golf Trust ADQU 3-Dec-18 15,000 $246

Total dividends collected for 2018: $14,140.06
Average dividends per month for 2018: $1,178.33

StashAway


Capital: $15,000
Current: $14,557.57 (IRR: -6.6%)

On a side note, one can invest in StashAway using SRS and I have already blogged about our plan - New Strategy: StashAway + Supplementary Retirement Scheme (SRS)

Do like any of the following for the latest update/post!
1. FB Page - KPO and CZM
2. Twitter - KPO and CZM
3. Click here to subscribe using email :)
4. Instagram - KPO_and_CZM (Did you see those delicious food photos to the right -->)

Ten Lessons Learnt from the Wedding

Like any major project, I was discussing with KPO the other day whether we should have an After Action Review for our wedding. Of course we will not be holding any more wedding, but hopefully this can benefit other future couples who are intending to tie the knot. So below are the ten things which we feel that we have done correctly / it can be improved:

1. Choose your wedding venue early
We started looking for wedding venues a year and a half in advance. As such, we were spoilt with choices as all the venues we inquired were available. We started by attending the BOWS wedding fair and also emailed other hotels which weren't on BOWS on their perks. We maintained a spreadsheet of all the hotels/restaurants, including the prices quoted and their perks so that it is easier to compare.

Some words of advice:
(1) It will make things a lot easier if you have a date in mind when you want to hold your wedding before attending bridal fairs/emailing vendors. You won't want a case where you have spent massive amount of time haggling on the perks, only to realised that they are fully booked on your wedding day.

(2) Personally, I feel that couples should start with wedding venue first. You will probably be enticed to sign up other packages during the wedding fair such as bridal, photo booth, live band etc, but all these can wait.

2. Choosing banquet in a hotel (over restaurant)
Though restaurants may have better food quality over hotels, I think people generally feel that hotels are pricier/more "atas". While this may be accurate to a certain extend (especially for those atas five star hotels), some hotels are in fact cheaper than restaurants. For e.g., I was reading online that the wedding at Summerhouse will cost around $160 per pax, while wedding at some four star hotels will typically range around $100 - $150 per pax. Not to forget, hotels will typically throw in free hotel stays, and may also provide free flow beer and wine to attract customers. Hence, even if you are on a tight budget, you should not rule out hotel immediately.

On another more sensitive note for consideration:
(1) Given that people's general impression is that hotels are more expensive than restaurants, people may generally "bao" more for weddings at hotels, especially for the older generations who do not due diligence online prior to attending the event. Though I must emphasize that this is definitely not the most important factor and guests definitely do not have any responsibility to cover your cost. This is entirely up to goodwill. After all, wedding is about celebrating this important event with your relatives and friends and we are glad that all our closest relatives/friends/colleagues graced our wedding.
(2) Also, there may not be readily available angbao rate information available online for restaurants which are less "famous". So you may end up getting more or less than what you can cover.

What do you think - will you bao more for a hotel vs restaurant? Leave your comments below.

3. Wedding venue - any pillar/restricted view?
One thing which made us felt very bad was that some of our guests had to sit with a partially blocked view as our venue had pillars. It was no fault of the hotel as our wedding coordinator did mention to us about the blocked view if we exceed a certain number of tables, but we simply have too many friends we would like to invite! I guess couples should either choose venues which are pillar-less or be really selective of who they invite (if the venue has pillars).

4. Choosing bridal package - do remember to try on their gowns before signing the package
I am glad that we did not choose our bridal package during the wedding fair despite seeing super attractive packages. I have read up horror stories of how people were "conned" to sign up packages at the spur of the moment, only to regret later when they realized that they have to pay extras for the gown they like, or when the bridal shop did not fulfil their promises.

The safer way is to set up an appointment to visit the bridal shop(s), try on a few gowns, before signing any package. The bridal booths at the wedding fair often do not allow you to try on their gowns naturally due to the limited space. Typically they will only show you their gown selections in their ipads but you will never know if you look good in them until you try it on.

I am glad that I have visited and tried on a lot of gowns before deciding on Rico-a-Mona. There was one bridal shop which sells its bridal package at less than $1000, including pre-wedding photoshoot and Actual Day photography. Though the price is really cheap, I was glad that I didn't take up because all the dresses look like they come from the 70s. Though Rico is pricey, I love their dresses and they will introduce new dresses frequently. They do not have any hidden cost, and any extra cost required is made known to us upfront before we signed the package.

5. Taobao, Carousell, Daiso are our best friends
Yes, wedding is a once-in-a-lifetime event, but many items required for a wedding will only be used once, e.g. bridal bouquet, xi wall stickers, brothers' and sisters' outfits etc. Hence, I don't agree with splurging on decoration items.

We started looking for our wedding photoshoot props and actual day items on Lazada as (1) online products tend to be cheaper (especially when Lazada has Taobao collection); (2) This is considered an online payment, hence we get 4 miles per dollar; (3) We have free delivery as we signed up for free 60-day trial Liveup Membership. We bought many items there, including paper cups for jing cha, wedding angbao etc.

Carousell was also another platform where we can get cheap second-hand items. And more importantly, you can haggle. We bought our groomsmen's bowtie there for $1.50 and suspenders for only $3. I also bought 5 xi wall stickers for $5 when retail outlets are selling one for $15 (and the owner decided to throw in a few more xi stickers for free as he wanted to clear stock).

When I first learnt that wedding flower bouquet typically cost around $100 - $200, I decided to DIY. The Daiso sells fake flowers at $2 per stalk and my entire flower bouquet costs around $25, which is a quarter of the market price. Of course real flowers will look prettier, but I think the difference is less significant on photos.

6. Join a Brides Facebook group
I was thankful that my friend invited me to join a Facebook private group for brides. It was a platform where brides shared their good and bad experiences, and also provide advice on things to look out for. I also bought several second-hand items there, including my kua shoes. It was also through that platform that I decided to approach Mr Tam Chee Wah to be our solemnizer, as many brides highly recommended it. Check out our review of Mr Tam here. Unfortunately, this group is only meant for females and only by invitation. Do check out with your female friends who had gotten married if they are in the group so as to extend the invite to you.

7. Check your vendors' schedules
One major improvement area for our wedding is that I failed to take into consideration my make up artist's schedule on our wedding. I only learnt on the actual day that she had three wedding venues to attend to and she was late for my make up. As such, everything was pushed back. Fortunately, I had some buffer time to play around with. Read more here.

I also learnt from some other brides that their solemnizers had agreed to attend multiple weddings. As such, the solemnizers were late for their wedding and made guests wait.

Hence, for brides with tight schedules, you may want to find out if your vendors have agreed to multiple weddings and either buffer time for any unexpected delays, or choose to look for another vendor.

8. Plan and allocate tasks equally among myself and KPO
Though KPO and I share many similar interests, when it comes to work, we can be very different. I like planning things in advance. KPO, on the other hand, loves leaving things to the very last minute. To avoid arguments and to ensure that we don't miss out anything, I decided to list down all the things needed to be done, and allocated tasks (including deadlines) to him and myself equally.

9. Ask for help
Don't stress yourself out! That's what the brothers and sisters are for! Set aside some time to go through your wedding day programme flow and you will be surprised that their opinion/suggestions may be very useful.

KPO and I are really fortunate to have a bunch of super helpful brothers and sisters who not only gave us useful advice but also loan us lots of wedding props and this helped us saved quite a bit on the decoration.

On the actual day, I was actually quite blur as everything seemed to happen so fast. Fortunately, our brothers and sisters were a reliable bunch and ensured that everything went smoothly and on schedule.

10. Managing in-laws expectations
Sometimes your in-laws don't explicitly express their opinions or wants and it becomes very difficult to meet expectations. Hence, it is important to manage your own parents' expectations. I asked my parents about what they require for Guo Da Li and gave KPO a heads up way before our meet-the-parents session. Hence, KPO and his family were aware of the requirements even before the meetup and everything went smoothly on that day. We also asked our parents how many tables they require before looking for hotel venues so that we know roughly how many tables to set aside for our relatives. No shock, no surprises.

Wedding is a once-in-a-lifetime event and nobody wants to screw up his/her wedding. Hence, we hope that our after action review can help some of the brides-to-be and grooms-to-be out there! =)

Aside, KPO and I would like to wish our readers a Happy and Prosperous New Year! Huat ah!

You might be interested in these articles too:
An Honest and Brutal Wedding Vendors Review
Our Wedding Expenses is Within Our Budget!

Do like any of the following for the latest update/post!
1. FB Page - KPO and CZM
2. Twitter - KPO and CZM
3. Click here to subscribe using email :)
4. Instagram - KPO_and_CZM (Did you see those delicious food photos to the right -->)

Tuesday, January 1, 2019

New Strategy: StashAway + Supplementary Retirement Scheme (SRS)

One can now invest your money in the Supplementary Retirement Scheme (SRS) account with StashAway as seen here - Take your SRS funds further. If you are not familiar with SRS, I suggest reading up more first (Kyith from InvestmentMoats recently blogged about it - I Spent $1 to Open a SRS Account to Fix the Withdrawal Age). Generally, it is more beneficial for people with a higher tax bracket.


The statutory retirement age is currently at 62 and one can make withdrawals over the next 10 years after the first penalty-free withdrawal where only 50% of the withdrawal amount will be subjected tax. Based on the current income tax rates, the magic number - $400,000 would not be taxable then if one were to withdraw $40,000 every year over 10 years. What's the caveat? It is a long time (34 years for us) and the policies/tax rates may change, and most importantly, would you really have $0 income then? Rental income is considered a form of chargeable income! But dividends aren't (hint hint).

In addition to tax-free withdrawal in the future, one can save on tax immediately. I previously blogged about CPF RSTU - Is It Worth It? and the same calculator can be reused here to find out the tax savings one can get by topping up SRS. The fastest way is to simply take the amount you are topping up multiply by the tax bracket you are in but may not very accurate when there is a shift/change in the tax bracket.

Our Plan
Top up X amount to both our SRS accounts which will then be invested using StashAway. The ideal end goal is to have around $400,000 in each of our SRS accounts in 34 years time when we are 62 years old. The question is how much should we be contributing? I attempted to forecast this number using StashAway Portfolio Projection function.

Things to take note of:
Shaded AreaRange of results that can be achieved, with 90% probability.
Savings invested with StashAwayBased on historical performance, there is a 50% probability that you will reach or exceed this goal with this plan.


StashAway Risk Index: 13.0%
If the investment horizon is short (e.g. 1 year) or the risk is high, you will see the dotted line (savings not invested) falling into the shaded area which means there is a high chance of losing your capital/money.

StashAway Risk Index: 20%, $150 monthly for 34 years


Projected: $404,409
Savings not invested: $87,051

This seems to be perfect except that the projection assumes that one will be contributing $150 every month for the whole of 34 years which is not very realistic considering one may retire earlier and stop contributing at one point in time.

Using a finance calculator, one will be able to compute the annualized rate of return which works out be around 9.57%. As for the savings not invested, it is compounded at around 2.04% to account for inflation.

Let's look at increasing the monthly deposit to give ourselves more buffer.

StashAway Risk Index: 20%, $200 monthly for 34 years


Projected: $539,226 - annualized return of 9.57%
Savings not invested: $116,072 - inflation at 2.04%

Since there is a 90% chance your investment will end up in the shaded area, knowing what the lower and upper bound will be pretty helpful/important. Hence, I contacted StashAway and got them to generate the numbers for different risk profile based on $200 monthly for 34 years.

StashAway Risk Index: 6.5%


Lower bound: $223,962 - annualized return of 5.46%
Projected: $289,600 - annualized return of 6.71%
Upper bound: $356,497 - annualized return of 7.69%

StashAway Risk Index: 13%
Lower bound: $231,825 - annualized return of 5.64%
Projected: $413,274 - annualized return of 8.38%
Upper bound: $592,156 - annualized return of 10.02%

StashAway Risk Index: 13.5% 
Lower bound: $226,840 - annualized return of 5.52%
Projected: $420,655 - annualized return of 8.46%
Upper bound: $624,995 - annualized return of 10.27%

StashAway Risk Index: 20%
Lower bound: $161,678 - annualized return of 3.81%
Projected: $539,226 - annualized return of 9.57%
Upper bound: $925,325 - annualized return of 12.01%

StashAway Risk Index: 26%
Lower bound: $62,433 - annualized return of -1.69%
Projected: $542,032 - annualized return of 9.62%
Upper bound: $1,056,796 - annualized return of 12.60%

StashAway Risk Index: 36%


Lower bound: $15,556 - annualized return of -15.38%
Projected: $639,588 - annualized return of 10.37%
Upper bound: $1,508,913 - annualized return of 14.15%

Notice the difference in the shaded region between the least risk (6.5%) and the highest risk (36%) portfolio? As you increase your risk, the portfolio will be subjected to higher volatility. Interestingly, the lower bound return increases as one take on more risk until 13.5% and beyond, it starts to decrease. Some of the annualized return for the lower bound is even lower than CPF SA! 

CPF as a Baseline?
Another alternative is to top up CPF SA. Although they are completely different in terms of the possibility to withdraw (SRS - confirm can withdraw vs CPF - excess of minimum sum), the age that one can withdraw (SRS - 62 vs CPF - 55) and the return one is getting (SRS - 0.05%/unknown vs CPF - 4/5%), they are all part of one's retirement planning.

For simplicity, let's assume that we are able to hit the minimum sum and delay our withdrawal to 62 instead of 55. As stated on the CPF site, Withdrawals of CPF savings from 55 - The withdrawal of your CPF savings is optional. If you do not withdraw at 55 years old, you can do so anytime later.

$150 monthly or $1,800 yearly compounding at 4% for 34 years ~ $125,744
$200 monthly or $2,400 yearly compounding at 4% for 34 years ~ $167,658
$250 monthly or $2,400 yearly compounding at 4% for 34 years ~ $209,573

It only makes sense to pay a fee and invest using StashAway if it can beat CPF SA return.

CPFIS/SRS Charges
One of the annoying thing that is stopping us from investing in stocks using SRS/CPF is due to the various fees/charges imposed by the banks e.g. services charge of $2 per stock per quarter on top of the transaction costs which is based on the number of shares purchase?! Oh, they charge $10 per rights application and $5 if you want to apply in excess too.

You can take a look at them here:
DBS SRS Charges
UOB SRS Charges
No SRS Charges for OCBC based on this thread in HardwareZone - OCBC SRS Account - What are the charges?

Having said that, it seems that these charges were all waived (DBS/UOB) as reported by various people in HardwareZone/Seedly. Regardless, we have decided to give it a miss because they can start charging/stop waiving anytime and there is nothing you can do about it.

Conclusion
We are currently contributing $1,000 every month.

My proposal to CZM was to contribute $250 each to our SRS and invest using StashAway (13% risk index). $250 into our current portfolio (20% risk index, not changing the risk profile of it again to avoid the bad experience) and $250 to the max risk profile (36% risk index). This allows us to take on lesser risk with the 13% risk portfolio while maximizing the returns in order to have a higher chance of beating the CPF risk free interest of 4%. At the same time, there is a small portion (1/4) of our investment which will either be gaining/losing more than 10% >.<"

CZM response was "I am surprised you want to take on lesser risk. Nope, 36% is too risky." lol.

My SRS ---> StashAway 13%: $250
CZM's SRS ---> StashAway 13%: $250 (I can refer CZM and save $10,000 on fees for the next 6 months!)
Current StashAway 20%: $500

With that, we will be saving ~$420 (7% x 250 x 12 x 2) on taxes next year :)

What about you?

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
StashAway - August 2018 + An Unpleasant Experience
StashAway - September 2018
StashAway - October 2018
StashAway - November 2018

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

Do like any of the following for the latest update/post!
1. FB Page - KPO and CZM
2. Twitter - KPO and CZM
3. Click here to subscribe using email :)
4. Instagram - KPO_and_CZM (Did you see those delicious food photos to the right -->)