New holding list - Exit Giordano, Vtech holding , Added Charles Schwab, CK assets various rebalancing.
Saturday 26 October 2019
New All time High
New holding list - Exit Giordano, Vtech holding , Added Charles Schwab, CK assets various rebalancing.
Friday 25 October 2019
the 2 percent Alpha. (aspired by the 2 cents from Elizabeth Warren)
Wow, I just reached a new milestone. My financial assets just cross 2.5M.
I have asked my wife to tender her resignation 2 years ago as we are experimenting new stuffs in our life.
You see we have accumulated about 2M in our financial assets 2 years ago.
So i thought that her current job does not make sense for her to continue working as there are time cost for me to fetch her to work and to pick her up from work everyday. This is due to the fact that we are staying in a not well connected by MRT area to her workplace.
Bo bian - our BTO only cost us 350k (5 room) 7 years ago...
So i did my calculation and i told her let's try a new project, if our net worth drop below than maybe she go back to work lah. Anyway never try never know mah.. If we never try to walk we be on wheel chair now also mah..
Wah it was challenging as our thinking is like the ah siao type.. People will says that you are still young why retire why do nothing etc...
Actually we are not doing nothing, we are using our free time to keep accumulating knowledge we are doing research on stocks and how to allocate our wealth and read a lot of news books about successful people go out walk walk travel see see. is not doing nothing okay...
This bring us to the concept of the 2 percent more alpha ... that we are talking about it today .
You see below is the template of a 10% average return and a 12% average return this is what we hoped to achieve min. Long term average market return is about 8-10% in equities.
going forward this return will be much harder i think due to so much QE around the world that inflate everything..
I have been doing average 14% on average last 7 years. If i can do 16% on average going forward wah than hor seh liao ..
The opportunity cost
U see if you accumulated 2.5M of financial Assets (money that can be deploy must be liquid.)
below 40 years old it make no sense to work if you do not try to see if you can do it a not.
Base on a yearly return of 10% one can draw down 100k per year which i think more than enough to survive in singapore for 2 pax.. when i have a kid i budget 130k a year lah .... than i squeeze 0.5% more alpha... (thats the challenge for myself)...
one would have 26M by 70. you see the key is that when u have accumulated 2.5M the hurdle rate to breakeven is actually 4% thats why the 4% rules state that to withdraw 4% every year of your financial assets can hardly make you broke if you know how to invest.
The cost of not knowing how to invest... when u have 2.5M to start with ...
you will need to work as if you draw down 100k per year your wealth can last you only 32 years ... with a 1.7% FD rate so the different is like 26M in year 30.. if i do year 40 or year 50 i think we will puke lah but don't need forecast until so far lah ....
so if i were to get a job i need a job that can pay me 100k (drawdown plus the short fall) 26M
in total is about 29M lah round of become 30M .. == need a job that pay me 1.2M a year min as the income from job still need to be tax.
The 2% more alpha...
If you can do 12% average you get 47M instead of 26M another 20M to spend...
seeing the different in the wealth off we go to try to achieve that...
*note my wife will go back to work if our Net worth drop below 2M now we got 3+ that is net worth include car house cpf etc....
We are monitoring our progression ...
I have asked my wife to tender her resignation 2 years ago as we are experimenting new stuffs in our life.
You see we have accumulated about 2M in our financial assets 2 years ago.
So i thought that her current job does not make sense for her to continue working as there are time cost for me to fetch her to work and to pick her up from work everyday. This is due to the fact that we are staying in a not well connected by MRT area to her workplace.
Bo bian - our BTO only cost us 350k (5 room) 7 years ago...
So i did my calculation and i told her let's try a new project, if our net worth drop below than maybe she go back to work lah. Anyway never try never know mah.. If we never try to walk we be on wheel chair now also mah..
Wah it was challenging as our thinking is like the ah siao type.. People will says that you are still young why retire why do nothing etc...
Actually we are not doing nothing, we are using our free time to keep accumulating knowledge we are doing research on stocks and how to allocate our wealth and read a lot of news books about successful people go out walk walk travel see see. is not doing nothing okay...
This bring us to the concept of the 2 percent more alpha ... that we are talking about it today .
You see below is the template of a 10% average return and a 12% average return this is what we hoped to achieve min. Long term average market return is about 8-10% in equities.
going forward this return will be much harder i think due to so much QE around the world that inflate everything..
I have been doing average 14% on average last 7 years. If i can do 16% on average going forward wah than hor seh liao ..
The opportunity cost
U see if you accumulated 2.5M of financial Assets (money that can be deploy must be liquid.)
below 40 years old it make no sense to work if you do not try to see if you can do it a not.
Base on a yearly return of 10% one can draw down 100k per year which i think more than enough to survive in singapore for 2 pax.. when i have a kid i budget 130k a year lah .... than i squeeze 0.5% more alpha... (thats the challenge for myself)...
one would have 26M by 70. you see the key is that when u have accumulated 2.5M the hurdle rate to breakeven is actually 4% thats why the 4% rules state that to withdraw 4% every year of your financial assets can hardly make you broke if you know how to invest.
The cost of not knowing how to invest... when u have 2.5M to start with ...
you will need to work as if you draw down 100k per year your wealth can last you only 32 years ... with a 1.7% FD rate so the different is like 26M in year 30.. if i do year 40 or year 50 i think we will puke lah but don't need forecast until so far lah ....
so if i were to get a job i need a job that can pay me 100k (drawdown plus the short fall) 26M
in total is about 29M lah round of become 30M .. == need a job that pay me 1.2M a year min as the income from job still need to be tax.
The 2% more alpha...
If you can do 12% average you get 47M instead of 26M another 20M to spend...
seeing the different in the wealth off we go to try to achieve that...
*note my wife will go back to work if our Net worth drop below 2M now we got 3+ that is net worth include car house cpf etc....
We are monitoring our progression ...
Thursday 10 October 2019
the 4% rule
Doing one project known as the 4% rule.
assuming i start the year with 2M.
I withdraw the sum of 4% base on the principal of 2M at the start of every year.
This annuity will keep growing as i did not eat into my principal at all.
assuming average return is 6-8% for Equities.
The long term average return for pure alpha generating should be at more than 10%
my average return for the last 7 years is 14% P.A
If i base on a 6% return by the time i reach 68.
My net worth will still be 5.16M assuming a draw down of 80k every year.
if i do 8% my net worth will be 11M
if i do 10% 21M
so the effort now should be to spend time ensuring that i will juice out the 2% more Alpha than the market as i don't think i can make 5M... in 30 years time thru working.
which is 166k per year. min to 333k per year base on the 6-8% average return from the market.
hopefully this project can last.. anyway just try loh thats life mah..
assuming i start the year with 2M.
I withdraw the sum of 4% base on the principal of 2M at the start of every year.
This annuity will keep growing as i did not eat into my principal at all.
assuming average return is 6-8% for Equities.
The long term average return for pure alpha generating should be at more than 10%
my average return for the last 7 years is 14% P.A
If i base on a 6% return by the time i reach 68.
My net worth will still be 5.16M assuming a draw down of 80k every year.
if i do 8% my net worth will be 11M
if i do 10% 21M
so the effort now should be to spend time ensuring that i will juice out the 2% more Alpha than the market as i don't think i can make 5M... in 30 years time thru working.
which is 166k per year. min to 333k per year base on the 6-8% average return from the market.
hopefully this project can last.. anyway just try loh thats life mah..
Wednesday 2 October 2019
Sep 2019 portfolio update
Latest portfolio holding - Counter added HKland, Chow Sang Sang, HPH trust counter reduced Starbucks , Johnson & Johnson , Vtec holding average yield 3.81%
It has been a while since i last reported my performance and guess what ..
We are up 17.07% YTD....
Total assets for equities hit 2.37M so being focus in allocating of assets does help.
Below is a good article from Bloomberg on bill gates wealth allocation for him during 2019.
He had 60% of his net worth in equities. wow , i am glad that i shares the same thinking as him.. i am on the right track than.
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