Everyone should probably know by now that I did a podcast with my friends at Fifth Person two weeks ago.
Apparently, it has turned out to be a blockbuster!
I so stunned like vegetable!
If you have not seen the podcast yet, here it is.
For readers who have been to “Evening with AK and friends” or who have been listening to me talking to myself for years, the stuff I said in the podcast wouldn’t be anything new.
I have said many times before that I am not allowed to give financial advice.
I am just sharing my story and what has worked for me.
It is also important to remember that I have not always been right.
However, like Peter Lynch said, we cannot be right all the time.
In this business, if we are right 6 times out of 10, we are doing OK.
Not in those exact words but you get the idea.
It is OK to have a couple of investments in our portfolio which are not doing as well sometimes but as long as they are fundamentally sound investments, the day will come when they shine.
I remind myself from time to time that in the short run, the market is a voting machine.
There are many people who are more interested in prices and they make money trading in the market which gives rise to volatility.
Nothing wrong with that especially if they are good at it.
When we are investing, we are weighing machines as we are more interested in valuations.
We want to buy stocks of businesses when they are undervalued or at least fairly valued.
Depending on what kind of investor we are, we would look at different things.
However, in the end, it is all about searching for value.
As an investor for income, I am more concerned with whether my investments are able and willing to pay me as expected.
So, during market meltdowns, I am usually pretty calm because I am not using borrowed money to invest with.
There is no need for me to sell at depressed prices to meet obligations as I am not using money meant for something else in life.
What I have achieved as an investor for income took many, many years of time and effort.
Totally worthwhile as I mostly do nothing most of the time unlike the days when I was more active as a trader.
I always say “If AK can do it, so can you”.
I really believe this.
As an average income earner, if we are prudent financially and patiently invest for income, we can become a millionaire too.
To invest, we need capital.
It is all going to come from our earned income in the early days, unless we have been lucky.
So, I talked to myself about how to save 100% of our take home pay.
It sounded funny but it wasn’t a joke.
If you search my blog or my YouTube channel, which is still a baby, you would find the content.
When the dividends we receive are able to pay for our lifestyle, we can save 100% of our take home pay.
Of course, we shouldn’t be saving for the sake of saving.
The money saved can be used to invest for more income when the time is right.
So, wealth creation continues.
When people see “$200K in annual dividends“, some think maybe AK had a $4 million inheritance or maybe he struck TOTO or something.
A 5% dividend yield on a $4 million investment would give $200K in annual dividends, after all.
When I started my journey, I only had a few thousand dollars and my monthly salary was only $3,000 a month.
Those were hard times.
Long time readers might remember my blog on how I bought my first lot or 1000 shares of ST Engineering at $1.55 a share.
That was more than half of my monthly salary.
I still have those shares today.
What is my dividend yield on those shares today?
Of course, a more recent example would be my investment in AIMS APAC REIT which I bought mostly during the Global Financial Crisis.
At a post consolidation price of less than $1 per unit and a distribution yield of more than 10% per annum on cost, my investment has been free of cost for many years.
Even more recently in 2016, I started investing in DBS at $13 to $14 a share.
Some readers might remember this.
What is my dividend yield on those shares today?
Of course, it would be a mistake to think that it is all just buying and holding as long time readers of my blog would know that I have sold many of my investments over the years too.
Some like Old Chang Kee and Hock Lian Seng, I sold half when their stock prices doubled which means that what I have today is free of cost.
I kept 50% of my original investment as I continued to like them and the dividends they paid.
Who doesn’t like free money?
Some of my investments like Lippo Mall Trust and First REIT, I reduced exposure significantly or sold completely for some hefty gains after some years of extraordinarily high distribution yields.
Why did I sell?
The same could be said for my investment in Sabana REIT many years ago and also Soilbuild REIT.
Then, there was a string of divestments after many years of receiving good income like Saizen REIT, Croesus Retail Trust, Accordia Golf Trust etc.
In all cases, I had good outcomes not only because of the dividends received but also because I invested in them when they were undervalued.
We cannot always count on a good selling price, after all.
Buying undervalued stocks gives us a better chance of having a good result.
Of course, the capital gains help to give me more ammo to fire when Mr. Market went into a depression again.
I bought about $200K worth of UOB’s common stock during the COVID-19 pandemic.
Where did a retiree like AK who depended on passive income for a living get the money from?
AK is so very long winded and almost lost his train of thought.
This is why I prefer blogging to talking because I can see what I was talking to myself about and how to continue.
Very good especially when my brain power is not what it used to be.
Anyway, what I want to say is some of what I have achieved is from “buy and hold” but if I was just purely buying and holding, I would not have what I have today.
Not when I started with only a few thousand dollars and a monthly salary of $3,000 a month.
Yes, I had a couple of side hustles and I was also fortunate enough to make some money as a trader for a few years.
These helped to give me more capital to invest with.
However, they are not the main reasons why I have what I have today.
All of us have different circumstances but we can all have the same philosophy.
If we stay true to that philosophy, we can all achieve success although in varying degrees.
There will always be naysayers out there.
“Alamak! $200K dividend income needs a few million dollars in capital lah! Walao! Where to find that kind of money?”
Well, if they keep thinking like this, they will never find the money.
Don’t let negative people tell us that we cannot achieve financial freedom.
We have to believe that we can and I believe that is half the battle won!
I truly believe it when I say if AK can do it, so can you!
Have a good weekend!