Finance Smiths

Personal finance apprentices-in-training

Dividend income for Apr 2017

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Another long weekend to enjoy and we are busy going for our various personal care appointments & shopping for stuff that we need for the upcoming 2 week trip to West Coast USA. It’s going to be a short week for us since Mon is a public holiday and we will be flying off to San Francisco on Fri morning. Just a 3 day work week for us to get through before we can get away! Anyway, we are catching Guardians of the Galaxy 2 later and thought I will squeeze in a post in the meantime.

A regular end of the month update about our dividend income for Apr 2017.

SGX

  1. Phillip APAC REIT ETF S$ (BYJ): S$82

LSE

  1. Vanguard ETFs (World, US, Europe, UK, Emerging Markets and Asia Pacific): S$136

DIVIDEND INCOME FOR APR 2017: S$218

Due to the recent sale transactions, our dividend income for Apr 2017 is about 15% less than that for Apr 2016. We are expecting a big dividend income month coming up in May 2017, but it is expected to be less than May 2016 as well for the same reason. It’s frustrating in the short term to watch our dividend income progress stall and even take a step backward due to our portfolio restructuring efforts. Eventually, the increased income from the fewer but larger value ETFs should make up for this in the long term.

As we get older, I find we get more impatient with our wealth-building or financial progress. We try to look for higher returns on our limited capital and tend to underestimate the increased risks involved in doing so. I reckon it has to do with us spending more time in the workforce and building our careers. It leaves you tired, wanting a change and you eventually try to supercharge your savings & investments as a buffer to take a break. The slow and steady approach is not going to sell to someone who is trying to maximise his returns to get out of his current lifestyle. Because it means he still needs to spend more time working and planning a way out even if it is a more sustainable strategy.

These push and pull factors are affecting us more now. We have started discussing the possibility of having a kid next year but can’t seem to give up on our current lifestyles. We know we will need a bigger 3-bedroom apartment that continues to be relatively close to my parents-in-law but it would be an expensive endeavour given the area we live in. Plus we are not sure whether we should sell our current smaller 2-bedroom apartment to free up the home equity or we should try to lease it out as a rental property.

We are okay to slow down in our careers and give ourselves more time with each other, our families & friends. Especially if we have kids. But we enjoy the luxuries that we indulge in and we have not been successful at managing our expenses. Which means to make up for the loss of higher salary income, we will need more dividend and interest income. The thing about ETF investing is that it is slow but sustainable with market returns and decent dividend income. It takes a long time to see results, which conflicts directly with our plans for the next decade to achieve early retirement.

I guess this is what the journey to financial independence is like. Uneven, messy, conflicting priorities, a constant balancing act with many ups and downs. But this has always been my aim with this blog. It should chart all the successes we achieve, failures we endure, challenges we overcome and uncertainties that make us doubt. The issue is whether we are doing enough, too much or we should be doing more. And this is something that has been occupying my mind lately. Maybe we might have more clarity after our trip to the US. Time to get away.

Buy transactions for Apr 2017

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It’s time for the monthly post on our investment purchases for the month of Apr 2017.

Automated Investing

Maybank Kim Eng Monthly Investment Plan (Maybank KE MIP)

  • Buy 30 units of SPDR STI ETF (ES3 on SGX) at S$3.19 per unit on 10 Apr 2017
  • Transaction cost of S$1

POSB Invest-Saver

  • Buy 30 units of Nikko AM STI ETF (G3B on SGX) at S$3.24 per unit on 13 Apr 2017
  • Transaction cost of S$1

OCBC Blue Chip Investment Plan

  • Buy 466 units of Nikko AM STI ETF (G3B on SGX) at S$3.21 per unit on 24 Apr 2017
  • Transaction cost of S$5

POSB Invest-Saver

  • Buy 86 units of ABF SG Bond ETF (A35 on SGX) at S$1.16 per unit on 25 Apr 2017
  • Transaction cost of S$0.50

Total invested amount in ETFs of about S$1,800 using Automated Investing for Apr 2017 with transaction costs of S$7.50.

Manual Investing

Nil for Apr 2017.

Once the new S$100 monthly investment into the Nikko AM REIT ETF (CFA on SGX) using the Maybank KE MIP starts from May 2017 onwards, our monthly automated investing amount increases to S$1,900 with transaction costs of S$8.50.

By the way, have you read the news articles about the 843-unit Seaside Residences condominium at Siglap Link launching over the weekend and selling about 392 units of the 560 released units (70% sold)? Apparently, more than 50% of these buyers live in the East and there were quite a number of visitors to the project’s show suite. The average sale price was said to be about S$1,700 psf. Might have something to do with the project being walking distance from the upcoming Siglap MRT station and the East Coast Park.

New residential property launches in the East Coast region of Singapore, especially around the Siglap/Marine Parade/Amber area, tend to interest us a lot more. If we are planning to have a family in the next few years, we should be looking to move to a bigger apartment. Maybe a 3-bedroom one with more space. It would be more convenient to continue to stay near my parents-in-law as well if we have kids.

The main problem with trying to find an apartment in the Siglap/Marine Parade/Amber area is the high prices. We drive past the location designated for Seaside Residences almost every weekend since we take the Siglap exit on ECP to get home. It’s beside Victoria School, near Victoria Junior College but the Siglap MRT station will still take a number of years to come up. We were expecting an average sale price of S$1,500 psf but the property market seem to be pricing all current and future benefits in for the average sale price to hit S$1,700 psf.

This goes to show how much liquidity Singaporeans have. If you are looking to blame the foreigners for the high property prices, don’t bother because the Additional Buyer’s Stamp Duty (ABSD) really filtered a lot of them out already. It’s us Singaporeans keeping the property price levels at where they are at now. Which is not surprising considering how we have been in a low unemployment rate and low interest rate environment in Singapore for a while now. We are not in any rush to buy a new property but there are many people like us playing the waiting game too. The same applies to the developers and sellers as well, whom can continue to hold even in a weakening rental market and stagnating job market. Our concern is that we can exist in this state for a long time and we might be forced by circumstances to pull the trigger too early. Let’s wait and see what happens.

Add Nikko AM REIT ETF to Maybank KE MIP

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It’s the end of the work week and the weekend is here! Going to be a busy one as we will be catching up with some ex-colleagues and friends over lunches and dinners. We are thinking of watching The Fate of the Furious, which if you are not familiar with, is the 8th instalment of The Fast and the Furious franchise. My wife still reckons it’s crazy that I have watched all of the first 7 instalments of the franchise. What can I say. It has a simple concept that works every time. Fascinating stuff!

Anyway, I got an email today about a change to the Maybank Kim Eng Monthly Investment Plan (Maybank KE MIP). The Nikko AM REIT ETF (CFA on SGX) has been added as one of the available counters I can invest in via the Maybank KE MIP. My wife has been manually investing in the Phillip APAC REIT ETF S$ (BYJ on SGX) using her Stan Chart online equities trading account. In fact, she just received her distributions in US$ and it’s a decent amount after converting to S$. I was planning to start investing in a REIT ETF but I didn’t want to go with the same one. I also didn’t want to make a significant purchase at this high price level.

This update came at the right time and I was happy to add an automatic monthly S$100 investment into the Nikko AM REIT ETF (CFA on SGX) via the Maybank KE MIP from May 2017 onwards. Slow and steady accumulation of the ETFs based on Dollar Cost Averaging (DCA) has always been our preferred approach in times like these. Keeping ourselves vested in the equity markets is key to preparing ourselves for the next big market event. Whether it shoots upwards, flattens or crashes for a sustained period of time. Setting a long investment time horizon of 10 years should help to better manage this.

Our expenses have gone up this month and will increase even further next month. As we celebrate special occasions, pay the quarterly maintenance fees for the condo, pre-book show tickets in Las Vegas and get ready to spend a lot on our 2 week holiday to West Coast USA. We like travelling and are willing to pay higher prices for better flights, accommodations, tours, shopping, transport and food. In short, we do not try to control our expenses when we are on holidays. And considering how we are trying to travel more often, it makes for a tough time reducing our expenses when it spikes every few months. Plus there are upticks every alternate month from our spending pattern.

Which is why I have been keeping a close eye on the sustainability of our salary income. It’s important for us to monitor the economy, job market, retrenchment exercises and cost-cutting measures at our banks. The good news is that the situation is starting to stabilise but the bad news is that things are not improving. Same goes for the housing market since it impacts the home equity we have built over the years. We may not include it in our net worth calculation but that doesn’t mean we like watching all the hard work and effort in making the mortgage payments so far evaporate.  We just have to ride this phase out until we can restructure our expenditure levels and have a clearer idea on the direction we are headed.