How Are You Spending Your Bonus?

I just received my performance review and will be getting my bonus sometime next week. It’s the first time I’ll be getting a proper promotion. ‘Proper’ because the previous one was known as a ‘cohort promotion’, which sort of implies that everybody would get it regardless of their performance. But I’ll admit that I’m not privy to HR practices and this may just be hearsay. So with a good bonus coming and increment to my monthly salary, it only gets my mind thinking about what I should do with the new inflows.

Most people will start fantasizing about that new phone model or play-thing they have been eyeing for a while. I’ve been joking with my wife… “Others are looking for new Apple phone while I’m looking Apple shares.”

But it’s not actually a joke. The market has been moving sideways this past month, and also dropping for some of the tech stocks that I own. Some of their valuations are looking more attractive that it’s worth considering again, compared to their February highs. Facebook, Nio, even Tesla (cause I last sold at US$700 and it’s now below that). I’ve also been eyeing some of the shares which I own but are much cheaper now, and it may be worth averaging on so that I can get higher dividend yields. For this, I’m thinking to add more to VICOM or Netlink. I will be monitoring these in my watchlist in the coming days.

I was initially considering if I should just buy in advance, before even knowing my performance or the bonus quantum. But I guess I am conservatively like that and would only prefer to spend money that I have / will have with some certainty, rather than money I wish I have. Some say it limits possibilities because I should be able to manage the short-term risk in the event things don’t work out according to plan. But I’m at a stage where I have systems in place to manage my cash outflows for savings, expenditures on fixed costs and leisure, medium-term big ticket items and even long-term retirement. This system has been working for me so far and money set aside for stock-picking is usually what’s left over, which I’m quite reluctant to change for the time being.

Perhaps I may reconsider when I’ve built up a bigger buffer and have set aside enough for my medium-term big ticket items. Read: additional funds set aside for upcoming property plans after hitting my MOP in about 2 years time.

How about you? How are you spending your bonus?

Beating the S&P 500

I know, I know… I have left this blog to gather some dust, because much of my ‘spare’ time has been focused on preparing for my CFA Level I exam, which is coming up at the end of the month. But today, a milestone finally happened which is worth putting here for the record.

For the first time since I started investing in 2016, my portfolio time-weighted returns (TWR) finally managed to outperform S&P 500. I had briefly discussed why I used that as a measure previously. This performance is largely attributable to the recent bull runs on both the local and US fronts but I must admit that I have been rather fortunate.

Seeing the red line jump above the orange one for the first time!

I haven’t made many transactions in recent months either. The only notable buy I had was iFast, which was one of the businesses that the monthly gatherings held by I-Min were discussing. Essentially, as I had earlier quipped to my fellow participant, I have made back the course fees and quite a bit more. After studying its fundamentals, I figured that it was a good buy and went in some time in October. And then the MAS’ announcement on new digital banks came, and iFast was unexpectedly not in the list, and so its share price plunged. I immediately bought at the dip because we knew that the announcement did not change the company fundamentally. At the same time, my long-held investment in Singtel finally saw some improvements too.

I don’t know when my luck will run out. But this is one signal that I am doing certain things right. That said, I should end by reminding myself not to be overly cocky, because if there is anything the CFA content has taught me, it is impossible to algorithmically beat the market.

The First $100,000

After 4 years and 4 months (I just checked) of stock-picking and being invested in the stock market, I find myself with a portfolio valuation that just passed the $100,000 mark. This comes in spite of the huge crash earlier this year, and me pouring in another $15,000 just the month before the crash. My lesson from that crash was to grit my teeth, knowing that the fundamentals of my stock picks were not changing drastically (yet) and I suppose the past 2-3 months have shown that they have indeed recovered.

Surpassing the $100k mark

But let’s be real. It’s not like I made $100,000 in profits. Truth be told, since my first day of trading, I have a capital inflow of $75,000, with $25,000 split between $16,000 in actual returns (i.e. closed transactions + dividend payouts) and $9,000 in paper gains. Digging deeper, I tend to compare my time-weighted returns (TWR) against the ES3 and SPY, which track the STI and S&P 500 indices respectively. This is reasonable since I am holding onto both SG and US stocks and if I cannot outperform either of these, then it means I might well be better off just investing in these indices instead.

TWR of 61% is not too far off from SPY’s 69%, but we should aim to do better than that.

My portfolio TWR was constantly performing before these indices up till mid-2018, where I made a drastic shift in my portfolio by selling some SG stocks to invest in more US stocks. And that’s where the portfolio slowly picked up and rode the wave of the US market to where it is today.

I must say that I am still on this learning journey. I know many people say making the first $XX is the hardest, and intuitively it makes sense because there should be reinvested dividends should yield higher returns. But I think the bigger gains comes from time in the market, experiencing the highs and lows and learning how one’s emotions respond to the market and how one should practice emotional restraint and not be too quick to buy or sell just based on what is trending. So it will be interesting to see how long I take to make the next $100,000 and whether it will indeed take me shorter than another 4 years 4 months. Hopefully with more knowledge of the markets and the businesses I am invested in, I will gain more confidence and trust in my stocks picks, alongside my other forms of investment tools.

The Stock Market

One way that I have been looking to generate passive incomes is to invest in stocks myself, without going through a stockbroker. Some may say that’s very risky, whereas I come with the point of view that any money lost will just be very expensive tuition fees for lessons from the stock market. Fortunately, after about 5 years of getting my hands dirty in the stock market, I have been turning in a pretty decent profit and annual dividends – definitely not the best of returns, but considering I started from scratch and was learning along the way, I’m quite pleased to learn to be calm even amidst the stock market turmoil even in this COVID-19 times.

How I keep track of my stocks is to use StocksCafe. I have tried a number of platforms early on and settled on StocksCafe for the long term, because Evan has been working very hard on improving the capabilities. So since 2016 when I first started investing, I have shown my support by committing myself to be a lifetime Friends of StocksCafe. Don’t think this option is available anymore (as explained here), so I would say that the $200 membership fee is thus far the best investment I have made so far!

What I like most about StocksCafe is its ability to track my dividends and even give me a sense of my projected dividends for the rest of the year. There are also other metrics to look at, such as current yield and cost yield, if you are really consider yourself a dividend investor. The daily reports also give a good sense of the progress of your portfolio over the years, and you can compare your time-weighted returns against STI or other benchmarks. I would not say that this platform is sufficient for all your investing needs, because there is a Friends page to constantly report bugs and features for Evan to work on and improve the platform. But it is a good base to start with, and you can use other tools like Simply Wall Street to complement your understanding of various companies out there.

Over the next posts where I will definitely talk about stocks at some point, and also the shares that I am holding on to, I will be sure to include more about how I use StocksCafe and have benefited from it. But meanwhile, here’s a look at the StocksCafe portfolio, which comprises a mix of US and SG stocks.

Any questions or comments on my portfolio? Will be useful for me to consider as future posts!