I was unwell this weekend. Started developing a cold and cough on Fri before it got worse on Sat. Feeling better now on Sun after sleeping in for the past 2 days. Going for a more straightforward post about our net worth and passive income for June 2017 since I am still recovering.
Cash and Net Worth
If you looked at my expense blogpage, our cash savings for June 2017 is S$5,467 and the savings rate is 29.99%. It’s our worst performing month for the year. But what isn’t going to make sense is that our net worth went up by S$19,127 (i.e. +8.60%), which is our best performing month of the year. Much of this increase is attributed to our cash holdings rising.
I should explain this anomaly in more detail. Every month, I only add S$5,000 to our cash holdings in the Google Sheet regardless of what our savings rate is. This works because we usually save more than S$5,000 in cash each month and I’m too lazy to add the exact amount to our cash holdings. What happens is that every few months, I will restate the cash holdings figure in the Google Sheet to improve its accuracy.
I did this for June 2017 and our cash holdings in the Google Sheet went up by a lot more than the actual cash savings for the month. There should be a better way to do this but it will require more regular checking and updating of our cash holdings in the Google Sheet. And my preference is to keep it simple with less monitoring required.
Investments, Mortgage and Retirement
Watching our ETF and Stock portfolio go up slowly and mortgage balance go down even more slowly can be frustrating. I know progress takes time and I have to resist the temptation to speed things up by being reckless and taking unnecessary risks. Sometimes, I catch myself wondering whether we should have bought a less expensive apartment so we don’t have such a large mortgage balance. But then I think about all the benefits and advantages we have by living relatively close to my parents-in-law and that feeling of regret goes away. You can’t have everything your way in this world. Win some, lose some.
From my previous post about the drop in our monthly housing loan instalment, you should know we pay S$1,000 of this instalment from our CPF Ordinary Accounts. Given that our combined monthly employer and employee CPF Ordinary Accounts contributions come up to about S$2,600 every month, what happens to the remaining S$1,600? We don’t do anything with it and just leave it as our housing loan Emergency Fund.
We like the flexibility of the CPF and being able to use the Ordinary Account funds for housing is a big plus point. Having a safe, secure and evergrowing housing loan Emergency Fund in the form of the CPF Ordinary Account works well for salaried employees like us. Our CPF Retirement Accounts are also coming along nicely. As long as interest rates on the CPF Ordinary Account and Retirement Account balances can be maintained or even increased, our retirement funds should be sufficient provided we don’t get retrenched.
Dividend and Interest Income
We didn’t receive much dividends for the month of June 2017. Just from the 3 companies below.
- Kingsmen Creative (SGX:5MZ) – S$32
- Silverlake Axis (SGX:5CP) – S$21
- Raffles Medical (SGX:BSL) – S$36
Total dividend income for June 2017 – S$89
Interest income has gone up since we sold a significant portion of our investments and increased our cash holdings. I should highlight that a part of this interest income is spending driven i.e. meeting the minimum spending threshold on our credit cards tied to the high interest bank accounts. Once we start to reduce our spending, it might cause a drop in our interest income. Convoluted stuff I know.
- NAB and ANZ AUS bank accounts – S$160
- UOB One SG bank accounts – S$200
- OCBC 360 SG bank account – S$120
- Stan Chart Esaver Promotion SG bank account – S$130
- Other bank accounts – S$11
Total interest income for June 2017 – S$621
Average Monthly Passive Income for 2017
This figure is starting to cross S$1,000 earlier in the year and staying above it more consistently. But I expect the progress towards S$1,500 to be slow with my investment portfolio restructuring efforts hindering it. When we eventually start our robe-advisor portfolios with Smartly and StashAway, we might re-invest the dividends/distributions instead of receiving them as cash.
As we continue to focus on ETF investing, whereby the dividend yields are lower, it means that we might not be able to rely purely on the dividend income derived from such an investment portfolio. We would have to draw down on the capital base of our portfolio for this early retirement model to be sustainable. Should have known this was the case as we moved away from dividend stock investing and lowered the dividend yield on our portfolio. Just got to keep learning!