Thanks to my boss, I should be able to adjust my portfolio a this year to meet my general Asset Allocation goal of 33% Bonds, 33% Stocks (ex REITs) & 33% REITs/Properties. 'Alo - don't lar go asking where I stuffed that 1% ;P.
My current Asset Allocation lopsidedness towards Stocks (ex REITs) is due to quarterly withdrawals from EPF to invest in Mutual Funds / Unit Trusts using a combination of Dollar & Value Cost Averaging program. Thus, my cash investments are mainly focused on REITs + Foreign focused mutual funds / unit trusts like PFES & PRSEC.
I just got a bit of TWRREIT last week, at RM0.975 based on D/E<=0.5 + ROE>=10% + DY>=8%, as part of my investment into REITs - just about 1/3 only. Heheh - I'm an amateur, thus, too chicken to jump in 100% since I don't have a crystal ball + I want to pickup other REITs at value prices to diversify my REITs holdings, just 2 others, BSDREIT + ATRIUM, not too die-worse-i-fried I hope :D. Any opinions, views and advices?
Sunday, June 7, 2009
Friday, June 5, 2009
Reloaded & back to basics - Money Management basics
What's been happening
I've been tied-up awhile due to job commitment + searching, learning & planning my next 10 year's of goals, financial & otherwise.
From hindsight, I found what I've been lacking - a basic template for money management. No, not investment money / risk management or sizing but basic money management in terms of allocating net income.
After finding two books - Secrets of the Millionaire Mind + Crashproof Your Life, trying and testing to live within the basic money management (a personalized version from those two books) and finding that it works... good, I thought I'd share the ideas here with you.
Basic Money Management (Net Income Allocation)
The percentages (%) below are allocations of Net Income for each stage, the left over % for each stage are for necessities. Thus, the trick here is to REDUCE necessities, thereby allowing you to reallocate the %.
Now, here's the double whammy - if you reduce necessities AND increase income (active or passive income), you get a serious turbocharging towards Financial Freedoom, where your passive income (investments) are making enough returns to cover your necessities.
Beginning:
10% Emergency Buffer
* to build an emergency buffer for 3 months' to 12 months' average monthly expenses
>2-4 months in savings or liquid area
>2-4 months in high interest accounts (staggered FDs/CDs, transaction accounts like Hong Leong eBroking, flexi mortgages like Standard Chartered's MortgageOne)
>2-4 months in short-term bonds or bond funds
* once you have enough emergency buffer built, the amount should be allocated (in addition) to your investments (see Intermediate below)
10% Feel Good
* play / fun / hobbies (or hobbits, whichever you prefer)
* reduce debts, especially credit card debts & personal loans
* charity - this includes charity to family, team members and of course charitable organi
* anything that feeds your spirit and inner self
Intermediate
10% Investments
* Asset Allocation
>Bonds, Stocks, REITs / Properties, others (eg. gold, commodities, collectables)
* Diversification within Asset Classes
>Domestic & Foreign
>SmallCap & LargeCap
Heheh - this area was where I was mostly focussed on - thus, an unbalanced approach.
10% Education
* family & self education & continuous learning (ie. books, audio books, seminars, etc.)
Advance
10% Accumulation for Specific Future Spending Goal
* eg. Car, House, Mortgage Paydown (suggested minimum additional 2 months' prepayment per year)
* this amount may be accumulated in high interest accounts, bonds, bond funds, even REITs given enough time horizon..
Heheh - see, with such a practise, we can play and have fun WHILE being disciplined in growing our assets. I tells you, it feels good to continuously give to charity (via credit card deduction lar, which have "cash back" ;P).
My monthly net income allocation is as above, all the way to Advance, ie. I'm only using 50% of my net income for necessities. In addition, I'm still taking a cut from gross income to contribute into my EPF (CPF / IRA equivalent). "Windfalls" like bonuses are 90% allocated to Investments & 10% to "Feel Good". Of course returns from investments are re-invested or earmarked for re-investment - bad habits die hard ;P.
Ok ok - my personal monthly allocation are:
10% Emergency Buffer
* 3 months in SCB Mortgage One (aiming for 4 months)
by pre-paying my principle, I don't pay interest on it & I can redraw anytime online or via cheque. hey, no one is going to give me 3.55% pa compounded daily ;P
* 1 month+ in bond fund (aiming for 4 months)
better returns, on average, than SCB's Mortgage One's BLR - 2.2%
* 0 months in REITs (aiming for 4 months)
potentially the best returns BUT most "illiquid" in the sense that liquidation during an emergency need may be at a "wrong market timing".
10% Feel Good
* Charity via credit card autodebit for UNICEF & WWF. FYI, SCB's JustOne Titanium Card gives 2% - 5% "cashback" without any need for balances carried forward monthly (ie. cleared monthly)
* Hobbies, family outings, treating friends & team members
10% Investment
* Dollar + Value Cost Averaging for foreign focussed funds
Public Mutual's Public Far East Select Fund (PFES) & Public Regional Sector Fund (PRSF)
* REITs in KLSE
DY >=8% & ROE >=10% & $/NAPS<=80% & D/E <=0.5
10% Education
* $250 pm for SSPN for my little Ariel's education account(she's 3 this year). Maximum tax relief pa is $3,000 only, thus the limiter of $250 pm
* $100 pm for Ariel's interest classes
* a set amount for REITs to generate $1,000 pa for my personal books in the future
* the rest for personal books & continuous learning
10% Accumulation for Specific Future Spending
* SCB Mortgage One 4 months prepayments each year
* Holidays
* Notebook replacement
I'm aiming to reduce my necessities from the current 50% of net income, to 40%-45%, thereby allowing me to increase allocation to "Feel Good" & "Investments" by 5% each. Call me crazy - I want to leave behind something significant for my little Ariel, UNICEF & WWF when I'm gone. Gambate!!!
Phew... and recently my boss gave my colleagues and I bonuses - yay!!! Thank you boss!
The 10% from this windfall is funding my holidays in China and the 90% is being used to boost my emergency buffer and investment in REITs - just got another position in TWRREIT, but that's for another day's blog ;P
I've been tied-up awhile due to job commitment + searching, learning & planning my next 10 year's of goals, financial & otherwise.
From hindsight, I found what I've been lacking - a basic template for money management. No, not investment money / risk management or sizing but basic money management in terms of allocating net income.
After finding two books - Secrets of the Millionaire Mind + Crashproof Your Life, trying and testing to live within the basic money management (a personalized version from those two books) and finding that it works... good, I thought I'd share the ideas here with you.
Basic Money Management (Net Income Allocation)
The percentages (%) below are allocations of Net Income for each stage, the left over % for each stage are for necessities. Thus, the trick here is to REDUCE necessities, thereby allowing you to reallocate the %.
Now, here's the double whammy - if you reduce necessities AND increase income (active or passive income), you get a serious turbocharging towards Financial Freedoom, where your passive income (investments) are making enough returns to cover your necessities.
Beginning:
10% Emergency Buffer
* to build an emergency buffer for 3 months' to 12 months' average monthly expenses
>2-4 months in savings or liquid area
>2-4 months in high interest accounts (staggered FDs/CDs, transaction accounts like Hong Leong eBroking, flexi mortgages like Standard Chartered's MortgageOne)
>2-4 months in short-term bonds or bond funds
* once you have enough emergency buffer built, the amount should be allocated (in addition) to your investments (see Intermediate below)
10% Feel Good
* play / fun / hobbies (or hobbits, whichever you prefer)
* reduce debts, especially credit card debts & personal loans
* charity - this includes charity to family, team members and of course charitable organi
* anything that feeds your spirit and inner self
Intermediate
10% Investments
* Asset Allocation
>Bonds, Stocks, REITs / Properties, others (eg. gold, commodities, collectables)
* Diversification within Asset Classes
>Domestic & Foreign
>SmallCap & LargeCap
Heheh - this area was where I was mostly focussed on - thus, an unbalanced approach.
10% Education
* family & self education & continuous learning (ie. books, audio books, seminars, etc.)
Advance
10% Accumulation for Specific Future Spending Goal
* eg. Car, House, Mortgage Paydown (suggested minimum additional 2 months' prepayment per year)
* this amount may be accumulated in high interest accounts, bonds, bond funds, even REITs given enough time horizon..
Heheh - see, with such a practise, we can play and have fun WHILE being disciplined in growing our assets. I tells you, it feels good to continuously give to charity (via credit card deduction lar, which have "cash back" ;P).
My monthly net income allocation is as above, all the way to Advance, ie. I'm only using 50% of my net income for necessities. In addition, I'm still taking a cut from gross income to contribute into my EPF (CPF / IRA equivalent). "Windfalls" like bonuses are 90% allocated to Investments & 10% to "Feel Good". Of course returns from investments are re-invested or earmarked for re-investment - bad habits die hard ;P.
Ok ok - my personal monthly allocation are:
10% Emergency Buffer
* 3 months in SCB Mortgage One (aiming for 4 months)
by pre-paying my principle, I don't pay interest on it & I can redraw anytime online or via cheque. hey, no one is going to give me 3.55% pa compounded daily ;P
* 1 month+ in bond fund (aiming for 4 months)
better returns, on average, than SCB's Mortgage One's BLR - 2.2%
* 0 months in REITs (aiming for 4 months)
potentially the best returns BUT most "illiquid" in the sense that liquidation during an emergency need may be at a "wrong market timing".
10% Feel Good
* Charity via credit card autodebit for UNICEF & WWF. FYI, SCB's JustOne Titanium Card gives 2% - 5% "cashback" without any need for balances carried forward monthly (ie. cleared monthly)
* Hobbies, family outings, treating friends & team members
10% Investment
* Dollar + Value Cost Averaging for foreign focussed funds
Public Mutual's Public Far East Select Fund (PFES) & Public Regional Sector Fund (PRSF)
* REITs in KLSE
DY >=8% & ROE >=10% & $/NAPS<=80% & D/E <=0.5
10% Education
* $250 pm for SSPN for my little Ariel's education account(she's 3 this year). Maximum tax relief pa is $3,000 only, thus the limiter of $250 pm
* $100 pm for Ariel's interest classes
* a set amount for REITs to generate $1,000 pa for my personal books in the future
* the rest for personal books & continuous learning
10% Accumulation for Specific Future Spending
* SCB Mortgage One 4 months prepayments each year
* Holidays
* Notebook replacement
I'm aiming to reduce my necessities from the current 50% of net income, to 40%-45%, thereby allowing me to increase allocation to "Feel Good" & "Investments" by 5% each. Call me crazy - I want to leave behind something significant for my little Ariel, UNICEF & WWF when I'm gone. Gambate!!!
Phew... and recently my boss gave my colleagues and I bonuses - yay!!! Thank you boss!
The 10% from this windfall is funding my holidays in China and the 90% is being used to boost my emergency buffer and investment in REITs - just got another position in TWRREIT, but that's for another day's blog ;P
Still Alive & Kicking
Sorry for being away for awhile - busy on job + testing some money management basics & trend approach to investments.
I'll post my personal findings and views in a bit + start sharing my tweaked approach as I execute monthly. For now, I've uploaded some Excel worksheets into Google Docs and shared them for you to use, generate ideas and feedback. Please feel free to let me know how they can be improved, what you wish to see, ideas, etc. These worksheets are available on the right-navigation bar, bottom-right.
Domo arigato in advance.
I'll post my personal findings and views in a bit + start sharing my tweaked approach as I execute monthly. For now, I've uploaded some Excel worksheets into Google Docs and shared them for you to use, generate ideas and feedback. Please feel free to let me know how they can be improved, what you wish to see, ideas, etc. These worksheets are available on the right-navigation bar, bottom-right.
Domo arigato in advance.
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