(SWAN stands for Sleep Well At Night, but it really alludes to a company that has strong underlying competitive advantages and financial metrics).
I realized that in 2018, I was too concerned with how the stock market was doing on a week-week, month-month basis. It didn’t help that I have a contrarian investing style and like to buy oversold stocks on trending bad news. Well 2018 was full of bad news.
It thus came as a good reminder when I read this article by Brad Thomas at Seeking Alpha about his SWAN stocks. He mentioned that in 2018, his selection of SWANS “beat ALL Seeking Alpha’s model portfolios as well as the DAVOS Index (+9.3% YTD).” It was no surprise that for last year the FTSE S-Reit index beat the STI too.
Brad also goes on to talk about how dividends forces management to be accountable to unit holders, you can read that here. While I never buy anything that doesn’t pay a dividend i realized that dividend investing forces me to look at the dividends received as part of my return. This also makes me more zen in the face of market volatility.
In 2018 other than hitting my savings and allocation target, It has otherwise been a flat year for me, especially in the areas of work and relationships. Thus, my hope is that in 2019 I would become positive which means worrying less and concentrating to achieve more at work.
One of the things that I wanted to do this year was to re balance my portfolio to include more SWAN stocks and REITs. Having said that I also know that it is possible to buy a SWAN at the wrong price!
For now my plan is just to continue to save and wait for the correction. Same as last year I am still looking to add more CRCT and MNACT at the right price. With Trump still at the helm, this looks to be a real possibility that chances might come again soon.
This is the second year into my financial investing journey and I think this blog has taken more of a financial planning tone rather than a purist investment blog. I also think that my blog can take on a more structured format, though I will be thinking about how to improve on this
Investment Income for 2018
Portfolio dividend income: SGD 1,793
Fixed income coupon: SGD 87
Equities: SGD 14,578
Bonds: SGD 5,500
CPF-MA: SGD 7,000
House: SGD 15,000
For this year, I decided to park a proportion of money into fixed income as a form of diversification. I subscribed to some Astrea IV bonds as well as SSB totaling about 5.5k with a blended yield of 3.86%. My intention for the SSB portfolio is to save towards a wedding and renovation related payments. My target for this fund is 30K come end 2020. Hopefully the government will come up with more similar volatility free instruments in 2019. 🙂
For fixed assets, I repaid part of the loan from the CPF board for the house. I still have another half remaining to be cleared. I am dragging my feet on this, as contributions to this fund is a diversion from the equity portfolio. At the same time, I have blogged about how we bought an expensive house and how I intend to reduce the mortgage to 80% of OA contribution. I guess this will be an ongoing work in progress.
Equities have had a rather lukewarm year. Other than Comfortdelgro which returned 30%, the other stocks were all caught in the minor bear that happened towards the end of the year. I took the opportunity during the dip to divest the smaller positions and focused on large cap contrarian plays such as Wilmar, Singtel and Keppel. I had intended to add more REITs during the dip, however none of the orders were fulfilled.
On the CPF side, For the first time I contributed 7k to CPF-MA instead of CPF-SA to reduce taxes payable. I decided to contribute to the MA instead as it has the same benefits of the SA (ie 4-5% interest and tax deductible) while having the added benefit of being used for medical emergencies.
I don’t think more could be done for this year, though I wished I could have increased my passive income streams. I had set out to increase my active income this year but 3 interviews later I am still at the same job. Sighs.
In the next year, I hope that I can increase my network and perhaps make a move in the right direction.
As someone who likes the idea of having multiple streams of income, I view the CPF system as the “bond” component of my portfolio with a 30-year maturity date.
The CPF system is my insurance should I choose to venture into business or early retirement. Knowing that the CPF funds are protected from creditors and continue to compound till the withdrawal age of 55 gives me priceless peace of mind.
For 2018, I am pleased to say that the CPF board has paid me a total of SGD 2,710 in interest payments across all 3 accounts. If not for the deductions made for housing, the curve would have been steeper.