Most of us will know that the S-REITs (Singapore Real Estate Investment Trust) are trust manged by REIT managers to invest in income generating real estate properties such as shopping malls, offices, hotels, etc. REITs generate their revenue mainly from the rental income of their properties and it is a mandate to distribute at least 90% of their net income to their investors.

As such, who doesn't love the Rental Income from these REITs?

REITs are known for their high distribution yield of 5-8%.

To those who want to learn more about REITs, please download Giraffe Value - The Complete Guide to REITs Singapore Investing (7 Chapters, 15,322 word):

Chapter 1 - REITs Singapore
Chapter 2 - Investors' Expectation & Risks
Chapter 3 - Understanding REITs Structure
Chapter 4 - REITs Growth, Basic, Risks, Tricks
Chapter 5 - REITs Sectors, Retail and Office
Chapter 6 - Industrial REITs, Hospital REITs, Hotel, Cross border and FTSE ST REIT Index
Chapter 7 - REITs Resources & Tools

A special shout-out to Giraffe Value. Thank you for this wonderful REITs book! I enjoyed it and thank you for giving me the permission to share this.

S-REITs: Important Component in my Portfolio

Put it this way, owning S-REITs / REITs in general is akin to becoming a Landlord of multiple properties. Although real estate prices (even REITs' prices) may not appreciate as fast as share prices of companies , it still has a big advantage of providing a regular stream of passive rental income.

If you still do not get the picture, imagine being the owner of several properties and earning a constant stream of rental income every month. S-REITs puts this dream of owning several properties and collecting rental income within your reach (unlike owning several individual properties / apartments in Singapore which is beyond many Singaporeans' reach).

Conclusion - continue to buy REITs on the dip

S-REITs is such an important component in my Portfolio to earn a constant stream of passive income. And I believe it offers the highest passive income among all asset classes. I may be wrong. I will continue to slowly add on more REITs counters or shares each month. Hopefully, one day, I do own enough REITs that generate enough passive income to cover my monthly expenses. I will then become financially free!

Finally, we have a Facebook page. (Shamelessly) Asking the readers to Like the page (the Like button is on the right of this blog). Hope those that have visited this blog over the last 1.5 years will continue to show their support. This blog is about documenting my investing journey and I really hope it could inspire anyone, any Singaporean, to think about investing and their retirement. If there was just one person that started this journey, I would be equally happy.

Thank you all! (Shamelessly again!) Please Like my page and follow my journey!

I just did my year-end appraisal for 2015 last month. Exactly, a year ago, at the start of 2015, my boss wanted us to write our business and personal goals for the year on a piece of paper and sealing it in an envelope (before passing it to him for safe keeping). He did not want to know the content of what was written. The envelope was handed back to us a year later during our appraisal. I could not remember much of the content in the letter. At that point of time, it was more of a self reflection, Anyway, my boss still do not know the content of what was written. I always thought he had secretly opened the letter.

Self-fulfilling Prophecy

Reading what was written a year ago was a strange feeling. So much had happened in 2015. Some of it was what was expected, other things came as a surprise. Reading my business / career goals I have set myself in 2015 and looking back on how far I came trying to accomplish those goals had a tremendous effect. I exceeded some goals. I felt short in other areas. The letter seem to have a self-fulfilling prophecy effect that directly or indirectly cause my goals to become true.

A self -written letter

This year, I have decided to adopt what my boss did. I wrote my goals and sealed the envelope. I can't wait to open the sealed enveloped on New Year's Eve. I really hope I will have exceeded the goals I have set for myself. The goals include the amount of saving, target for investing (Invested Capital), and some really personal goals I would want to achieve this year.

Feeling excited for 2016!

Growing up, tough times

We did not have the best food on the table. I remember being so afraid of eating canned sardine. We just had it too frequently. I also remember not being able to afford a McDonald meal / burger after class in secondary school. My peers could easily just buy a meal. At that very young age, I told myself I had to earn the money. Money could bring me certain comfort and happiness.

Earning money was not easy at all

I did not really understand how difficult it was to earn money until I got my first job in a fast food chain at 14 years old. I begin to understand how tough it was for my dad to support the whole family; forgoing things for himself. Always trying to get the essential stuffs for us and at the same time also supporting his aging parents (till today).

Thank you, Daddy

My dad struggled to earn the money but he still managed to put all of us through University. "In your own ways, you taught me the value of money. You got me the best thing and that was education."

6 months have passed since I posted my "2015 Balance Sheet" - Annual Report - 2015 [> S$500,000]. It has always been a yearly ritual since August 2012.  However, moving forward, I will like to know my progress at the half way mark and push myself to achieve higher goals at the end of my report card.

"I define my current asset has all assets that are reasonably expected to be converted into cash within a month. My current assets include cash in the bank and equities. For simplicity sake, anything from a long-term perspective, it will be placed in my non-current assets. This includes my insurance (value till date), CPF Ordinary & Special Account (similar to America's 401K), and Supplementary Retirement Scheme (SRS) Account."

There is a slight drop in my current assets, mainly due to the performance of the stock market (portfolio is currently down 6.26%) and savings have increase at a much slower pace. In the last 4 years. there was a yearly transfer of S$12,750 to my SRS account and I think I am not able to save more without impacting my lifestyle. As much as I want to grow my savings, it gets harder to save the next S$100,000 for my war chest.

In the last 6 months, I seen another 10% increase in my current assets. My CPF has been growing at a much faster pace now.

Looking forward, I hope to surge pass the $650,000 mark. I will have to look into my spending and slowly, bit by bit, build this portfolio.

Just few months back, I received a cold call asking if I was interested in an annuity product from an established insurance company. I decided to hear more from the agent and fixed a date for a coffee.

Of course, I learned about their annuity product - why Singaporeans need it (blah... blah... blah...)? Retirement is getting expensive, etc. (blah... blah... blah...)?

The conversation led to the CPF Minimum Sum. These agents sure know how to lead the conversation to "why we must think about our retirement" (and their annuity products) NOW!

The agent recapped the history of the CPF Minimum Sum. He reminded me of the adjusted Minimum Sum for inflation. CPF Members who turned 55 back in 2014 had to set aside S$155,000 in their CPF-RA to receive a monthly payout of about S$1,200 when they turn 65. Next, he emphasized on the Minimum Sum for the current cohort (2015) was S$161,000. That was a S$6,000 jump.

Next, he showed  me this table (below):


Based on their calculation, the projected Minimum Sum will be S$564,797 in Year 2047. Just imagine that they were right!

Wake up! Minimum Sum will definitely go up

Cost of living will definitely go up. So will our Minimum Sum. Even, if the projection was wrong +- 20%, it will still be a big sum. If that doesn't wake you up to do something now, then just pray your kid/s or someone will be able to take care of your retirement expenses. 

The impulse to overspend with credit cards can happen to anyone. I am no angel and do splurge on holidays (that were over my budget). We all know, and I hope everyone knows, charging more to your credit card than you can pay off when your bills arrive can lead to huge interest charges (plus late fee charges etc.).

I remember reading an article 2 years back in the local papers regarding Singaporeans overspending and being in debts. In the same article, it mentioned that the Monetary Authority of Singapore estimated that 3 per cent of unsecured credit borrowers' debt exceeded their annual income. The paper also estimated 43,000 people had debts of more than a year's salary.

43,000 might seem a small number in a country with 5 million people. And you wonder how did these people reach that state? So it came as a shock to me when I had peers who were heavily in debt. These friends earned pretty well, probably had a higher income than me. Their stories will probably resonate with many people. Let's just named them as Mr. Alan, and Ms. Betty and Couple Charlie and Cathy.

Mr. Alan, the Gambler



Alan was always known as the Gambler in the group. It was a must to have him during Chinese New Year. As long as there a chance to gamble, Alan will be there. As we all grew older, we started to earn a higher income, so did his gambling bets. He started betting heavily on soccer matches and visited the casinos regularly. An addiction to Blackjack, Baccarat, and soccer betting had Alan maxing his credit cards' limits. Eventually, he started paying the minimum sum for each card (God knows how many cards he had) and his parents found out about his awful spiral of debt. I really hope he has learned his lesson. But no! It just got worse. Lies, after lies, to cover the many reasons to borrow money.




Ms. Betty, the Shopaholic


Betty is a very attractive girl and has many followers in her Instagram account. She is always the one to inform my partner about great deals online and talking about the latest designer bags etc. It is not a surprise to see her latest Instagram post on her latest designer bag, or her holidays in Europe, or the fine dining restaurants she visited. She is not a show-off. She earns well and she spends to reward herself. But she felt into the trap of overspending and chalking up massive credit card debts. I just felt that she was living a lifestyle not justified by her income.


Couple Charlie and Cathy, living the high life


I was really shocked to hear about Charlie and Cathy. After all, I thought they were really high income earners. I was not very close to Charlie and Cathy and the perception of them "doing very well in life" was formed by their updates of Facebook. Charlie was driving a expensive European car. They bought a relatively good condominium. They dressed well. They wore expensive watches (not one, I can't even recall seeing how many different brands and models) and accessories. Everything seems perfectly fine. But just like Betty, they were extending their limits in their credit card. Indulging themselves in things they could not afford anymore. Their life was based on future credit. How I wish I was earning Charlie's income? I guess the temptation to spend more when you earn more will always be there.

Spend "the right way"

We do want a better lifestyle and probably very much influence by the media. A lot of overspending might also be due to peer pressure. Whatever the reasons, it is not wrong to feel that you deserve to indulge yourself. We have all worked hard. But if we reach a stage that we can only afford to pay the minimum sum of our credit card bill or we choose to do so (for whatever reasons), please seek help. Do not get caught in spiral of credit card debts.

Conclusion

Spend within your means. How do you retire when you are in debt? If you are a working adult, with no savings... Speechless! If you think controlling your credit card spending is tough, request for a lower credit limit. The impulse to overspend with credit cards can happen to anyone, even people with high income.