The magic of compounding

Invest, earn income from it, add the income back to capital, now earn more income, add that income again back to capital. Rinse and repeat. Your capital grows at accelerating rate, along with the income it generates, even if returns is a fixed % of capital.

Make every dollar work hard for you tirelessly while you enjoy life. They are your little minions...

The hardworking minions generates some more dollar/minions, which are immediately added to the "workforce" to start working for you, so you have more and more minions working for you over time.

This is how rich people get richer and richer, not without effort, but with less and less effort as the workforce grows. You'll never run out.

I blame hawker food and hot weather

 Felt really sleepy about 30mins after lunch. Had a bowl of dry prawn noodles from nearby hawker stall. As with such hawker fare, it is mostly carbo with little protein and veg. Tried reading on my computer in my cubicle room with a/c on, but 30mins into it, zzz monster struck!

Went to take a nap for 1 hour and typing this now. 

I don't think I have health issues. So I am attributing (i.e. blaming) it on:

1. Carbo heavy lunch

2. hot weather/AC stuffy

Did my usual bicep curls and took a banana and went for a walk and go to lounge to read.

I need to switch/watch my lunch food

rates, reits, banks, what else

 Next week, FED is likely to cut rates, but there are also other possibilities

- cut rate

- doesn't cut rate

- cut rate by larger than expected

- cut rate by smaller than expected

Specifically for SG counters, REITs are going through some wild swings, but mostly up. 

Looks like everyone is buying REITs, based on common logic that lower rates will result in REITs earning more as they refinance their loans at lower rates, thus resulting in high DPU. And of course this will not happen overnight, as it depends on the rates that each REIT can get, as well as their loan expiring/renewal schedule. This also assumes rental revisions are same or higher for the REITs. Assuming no recession, we can expect rents to inch up over time. So, does it mean the current REIT unit prices are already at the level we expect for the expected rate cut, i.e. it's already priced by market?

So if FED did not cut, or cut smaller than expected, we can expect REIT to correct down, and Banks to inch up as market emotions swing again. I always wonder how much of such swings are real or just heard mentality. 

While I always think REITs will go up as rates get slowly cut, I am hesitant to put all my eggs into REITs to ride this potential wave. First, they probably won't go up to pre-covid levels, since rates won't go to near zero. 2nd, we could go into recession, less employment, hence less rental income for REITs, which could more than offset the rate reduction impact on loans, resulting in lower DPU at last and REITs price will drop a lot. 

I can't predict future just like everyone else can't, so I cannot take extreme ends of this equation. Need moderation but also some risk taking. No risk no gain. (but high risk , high loss)

So REITs will continue to be a large portion of my SG portfolio, but I will slowly nibble at each counter when prices are steady or down 2% or more, slowly DAC up, while keeping my average price below market as much as I can, to give a safety buffer. Meanwhile, continue to hold some cash for opportunities should things turn south. I think buying the big brand REITs should be ok. And time to put some $ into UOB or DBS, instead of all on OCBC. This should cover me on banks to balance off the REITs exposure 

iPhone 16, 16 pro

better battery life, slightly bigger screen, faster processor. Isn't that expected when you produce a new iPhone model? 

I think I'll stick to my current one until IP17 or IP18 is out, and not because those will be much better than 16, but because by then my current IP will require a battery replacement and also probably a little too old. But as usual, IP has resale value, so I will be able to sell mine for a decent few hundreds to offset the new one. No need to change every 1-2 generations, unless Apple comes up with something revolutionary. 

The folding phones from HONOR and Samsung are much more interesting. They really present something different. But for now, Uncle cannot see why he needs to use a large screen when out and about. 

TOTO winnings

 Wah finally win something for kopi 

Rate hikes and rate cuts

FED started raising interest rates from March 2022 to curb inflation. Rates were near zero, and the hikes bring it to above 5% over a period of 1.5 years.

During this period, banks enjoyed increased profits since they can loan out money for more interest earnings vs what they pay to depositors. This helped the 3 local banks that have large savings deposits. 

At same time, REITs suffered as they had to set aside more money to cover higher intest payments for their loans as they refinance during this period, moving money to the banks coffers instead of paying out as dividends to unit holders. 

So Uncle think its always good to balance a portfolio with REITs and Banks. When rates are high, dividends from REITs drop because the money goes to Banks. But dividends from banks goes up, so this goes back to you as investor.

I expect banks to lose some earnings as rates get cut gradually over next 1.5-2 years, while REITs will start to recover as they refinance loans with lower rates.

But I don't think rates will go back to pre-2022 days of near zero. So REITs won't go back to previous highs, while banks won't go back to earlier lower prices. But they will balance out. 

End of day, as long as the dividends continue to come out from the portfolio at 5% rate, uncle very happy liao. 

SG stocks portfolio milestone S$1M

 

After adding slightly over $400k into the SG market since May 2024, and the recent price recovery for REITs, uncle's portfolio hits $1M milestone today.  Frankly, I am investing for income, so this doesn't really matter to me since I am not selling. But just for vanity sake, as well as for memory sake in case I go senile soon, I'll put a screenshot here for Internet to see hahahahaha.

Slowly accumulate, don't get swayed by emotions, or fancy get-rich things, avoid following trendy thing (bitcoin, options etc), buy low, sell high (or hold), Uncle can do it, so can you. 

Going forward, I will continue to add more to increase the income flow. But will retain double-digit percentile of cash and US equities for balance

EV vs ICE on normal day to day driving

 It's funny when some clueless drivers of ICE cars, typically those older than 50yr old, have no idea how fast most EVs can take off from stop. You'll see such drivers thinking their 2.0/2.4L IL4 petrol cars (usually Japanese MPVs/SUVs) can easily overtake/cut-off all other "small" sedan cars on the roads (except those which are obviously sportscars/super cars), and hence they tend to not want line up early on the correct lane to make a turn, thinking their big and powerful family mobiles can just zoom out first and overtake any car from stop lights. 

Then you'll see their disgruntled face in your rearview as your EV left them many car lengths behind within 2-3 secs, as they end up having to filter behind to change lane in order not to miss their turn.

Yeah, you clown, now it's time to have a taste of your own medicine. Plan your route properly, the roads are no longer a playground for you to any how drive, as your stupid petrol car isn't the fastest dog now. Listen : ANY EV can outrun your stupid car from stop at least for first 2-3 secs before you can catch up, so on normal roads with many traffic lights, you have no chance to cut off EVs unless they let you pass. Eat the humble pie. Oh, I also think you won't upgrade to EVs, because its probably out of your budget to get a 6-7 seater EV to replace your petrol one, or more likely, you are too dumb to know what is EV and too fearful of new things. 

On a more serious note, once most cars on the roads are EV, I believe the driving situation in SG will become much more tolerable. Why? Because of the democratisation of car power. If everyone drives EV, everyone knows their car isn't always going to accelerate faster than others, it's as if everyone is driving the exact same car. Yes some sub 4 seconds EVs will still be ultra fast, but day to day driving, the difference won't be that big especially on norma non-highway roads with traffic lights. 

This change in dynamics will alter most drivers' behaviour...to that of MUTUAL respect. It's like arms race between nations, if all nations have similar powerful armies, there will be mutual respect and ironically more periods of peace. Its like the internet, where anyone with internet has the same universal access to same information, so no one can simply claim to be more knowledgeable, made even so with GenAI chatbots at your disposal anywhere.

So drivers in future will plan their driving more intentionally, with the understanding that poor planning means no being able to make a left/right turn at next stop light due to heavy traffic (that can move as fast as what you drive lol).

CPF balances Sep 2024

 

Energy levels and sleepiness

 Uncle is entering semi-retirement now. Stopped working to see if this will work out

Suddenly, noticed that I will fall asleep every day at around 3-4pm. 

Initially I attributed it to my tiredness after years of stressful worklife

But after 2 weeks of taking naps, it didn't go away. 

Then it hit me....

Its my body and mind trying to find a new rhythm of life.

You see, when you have a full time job, the rigours and schedule of that job takes over your life. It becomes the center upon which you revolve the rest of your life around, including personal, family, schedules. 

Now, take that job away, and you lost your "center" schedule. And your mind and body goes hunting for directions, and becomes disoriented. 

I need to find a new center to replace the old one. But this time it will be a better version.Why?

Because, when you are employed, you have no control over this center of life, since it almost dictates when your "own" time starts and ends, and sometimes, it takes over all your time.

Now I can create my own center on my own terms

But I must be careful...

If I am lazy and creates a center that is too relaxed, I will decline, both in physical and mental capacity. Use it or lose it, right?

So I must instil a schedule, a discipline, and routine, that is not too relaxed, that is able to give me a little push to make me work hard, but yet at the back of my mind, take comfort in that this is totally in my control, and not someone else (ex Boss)

I hope this is the reason, but I have to try it. I think it should be it, because I am generally healthy and didn't have any issues based on recent health screening and blood tests.

Also, I don't think full retirement is in the cards, I should upskill and get a job for another 5 years or so to take money off the table!