Many things happened in the investment world in the last 3 months. I am just glad that my dividend yield target stays on track to deliver 5% return by end 2018 and my net “worth” has managed to hold on. I started tracking my net worth quarterly since Q4 last year because I came to believe that this is the main indicator to show how near I am getting towards financial freedom.
You can find many different definitions of net worth in the internet. I define net worth as “My liquid Assets minus My liabilities”. My liquid assets include all cash deposits, SSB, SRS funds and “marked-to-market” value of my investments, i.e. everything that I can convert to cash in a short time. My liabilities are all my loans – car, credit cards, personal and housing.
By this definition, I am already grateful to have a positive net worth. However, in the pursuit for financial freedom, this is not good enough.
We need to accumulate enough net worth to generate meaningful passive income so that we can carry on with life normally when we don’t have any source of active income like our jobs. The amount of “income” everyone needs depends on the lifestyle one desires and more often than not, it depends on what you are willing to give up. It varies from person to person and at different phases of life. It is good to reflect every now and then what level of passive income you need.
At this moment, I think my family should do fine with a $6000 a month income. But that’s a lot of money if it has to come from passive income. If I believe that I can get a hopeful 5% yield year on year, I will need at least $1.5 million net worth to fund that. In fact, that is my target – But it is still very very far away but each step forward is a progress.
My net worth has managed to hold on only because of my year-end bonus. The value of my investment has generally declined, probably by about 10%. It has underperformed STI which managed to hold on to the same value as on 2Jan18 on close of business Thursday 29Mar18. Dow, S&P have declined by 2-3% while Nasdaq was almost flat.
In between the turbulence, I have ploughed my year-end bonus in and reduced my cash level to increase my equity investments locally and in US and Hong Kong. My cash level has now declined from 10% to 6% of my net worth. I have managed to accumulate more of the following at a lower price than the average cost prices in my portfolio– eg Fraser Property, Starhill, Singtel etc.
What it also shows is how important is holding on to my current job in helping me fulfill my financial freedom dream – at least until I reaches 55 when I can withdraw some of my CPF savings and make it liquid.
Just to share, as at end of Q1 2018, my top 5 holdings are:
|OUE Com Reit|
As you can tell, my portfolio is heavily weighted on Reits and Telecoms.
How was Q1 2018 for you? Happy to hear from you. Thanks.
Take care and have a great weekend and then a great investment week.
- SPH Reit is reporting results and dividend yield on the 6th, here it goes again 🙂
- I will stop the tracking of results announcement dates and dividend declarations from this quarter onwards as StockCafe does a much better job than me.