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My Asset Allocation As of October 2011

10.14.2011 · Posted in Budgeting & Portfolio

Recently, I received a comment that I haven’t posted anything regarding Asset Allocation. I guess I have yet to do it… So here it is!

My personal asset allocation as of October 2011.

 

img_asset_allocation_oct2011

For those who are not familiar, CPF stands for Central Provident Fund which is the savings/retirement account which all Singaporeans have to contribute to. It is similar to EPF in Malaysia and 401K in the US. Employers have to contribute based on a set ratio to employee contribution and all contributions are not taxable. The CPF money can be used in stock investment, unit trust/mutual fund investments, property investment, medical expenses, insurance and most importantly retirement.

I know there are a lot of portfolio theories which prescribe some sort of Bond to Equity ratio for Portfolio depending on your risk preference and age. However, I can’t be bother with bonds at this point of time due to a few reasons.

1. Corporate bonds require a large minimum sum for investment

2. Government bonds at this point have very low and unattractive yields

3. I still believe that equities beat bonds in the long run, since I am setting up a portfolio for the long run, makes sense to have equities instead!

I also do not have any investments in any rare metals such as Silver or Gold. The primary reason I don’t invest in them as I consider them speculative as they do not provide any source of income. You can read more about this at Dividend Stocks vs Gold.

The cash stated in the portfolio consists of emergency cash and investible cash. I make it a point to keep aside at least 6 months of my income to cater to any emergencies. Any other spare cash is basically more investible cash which I can deploy in stocks or properties. My stocks consist of my Singapore, Malaysian and US stocks which were listed in my previous postings.




My property values are based on Net Asset Values. What it means is that I take the Market Value of The Property and deduct the current outstanding loan on that property itself to determine the Net Asset Value. It’s basically my equity net worth in properties. Assets are heavily weighted against properties at the moment as I bought most of my properties during the 2008/2009 period and they have appreciated significantly since then. I do realize that a large chunk of my portfolio is in fixed assets, so I am actively trying to invest more of my income into liquid asset such as stocks.

What’s great about this portfolio is that I derive Passive Income from my stocks through dividends and my properties through rental, hence growing my assets a bit at a time while I do the things in life that matter to me.

 

For further reading, you may be interested in:

My Malaysia Stock Portfolio End September 2011

My Singapore Stock Portfolio End September 2011

My US Stock Portfolio End September 2011

Dividend Stocks vs Gold

My Journey to Financial Freedom

Investing In Real For Your Retirement: Pros and Cons

12 Responses to “My Asset Allocation As of October 2011”

  1. Hi Calvin, mind to share your property list which you have invested? Renting out property in Klang valley even KLCC and Bkt. Bintang seem not easy, mind to share your experience?

    Many thanks.

    Casey.

    • Hi Casey,

      I would just say that I have condos and landed houses in PJ, Mont Kiara, KLCC area as well as shoplots in Sunway and Seri Kembangan. :)

      It depends on the size of the property and the price. I would say sub 1000 sf condos are much easier to rent than those above 1000sf. Studios tend to have the highest demand. There is also a lack of demand due to lower numbers of expats in KLCC area and oversupply of condos, especially those above 1000sf. You will notice that those big units are mostly always empty at night in KLCC area. Bukit Bintang is not the best place for expats as it is more of a tourist spot rather than a place an expat can walk to work. Bukit Bintang area usually does better for short term rentals like few months to tourists and retirees.

      Since there is so much competition in KLCC area, the key factor would be price. If you bought your unit for RM 800-RM900psf versus the current price of RM1100-RM1500, you can easily price your rental 20% below other competing units and still cover your instalments. I believe most of the condos in KLCC are overpriced for the rental yield recieved, that’s why luxury properties are the first to fall in value in a downturn. Suburban properties supported by rental yields can hold their values much better.

  2. Hi Calvin, thanks very for sharing. I have a studio unit at somerset seri bukit Ceylon was once rented out for rm3800/month to a Japanese expat but now the unit has been vacant for 10 months. Do you think I shall lower the price or it doesn’t make any difference as told by the agent as it is mainly due to the on going construction at opposite land. Or shall I change the strategy to short term rental?

    I have another studio unit in Suasana bukit Ceylon opposite the wing tai’s verticas and ultra luxury St.John woods, the service apartment will be ready by end of 2012/2013. The unit is so tiny at only 721sf compare to those in verticas and st. John woods, do you have any advise on the rental strategy?

    Many thanks.
    Casey.

    • Hi Casey, if it is not getting rented out, you may want to consider lowering your asking rental. 10 months is a long time for a property to be vacant. What’s your monthly instalment on the unit? Yes, I know that development, currently UOA is building a new serviced apartment opposite the Somerset. Another thing you can do is offer one or two month free rentals instead of lowering the price. That way you have a higher rental yield to show potential buyers if you intend to sell it. I believe people can put up with the construction if its cheap enough as they can just turn on the aircon. You should do both long term and short term, see which comes first. For short term, you can usually charge higher rates. Minimum rent is one month though, not less than that.

      To be frank I thought the Suasana Bukit Ceylon was a bit overpriced. It should be similar strategy to Somerset since its a studio unit in the same tourist location.

      Are you a Singaporean or Malaysian?

  3. Hi Calvin, for positive cash flow it must be rented out at rm2700/month. But it seems many other owners prefer to let them vacant than renting out at below rm3k. The holding power is very strong. As for suasana, it has to be rm3600/month. I know that many of Marc Residency and Parkview are doing short term, but some units worn out rather fast. I don’t mind lower rental but I am rather selective in choosing tenant to take care of the renovation.
    I bought suasana as the area is near to changkat bukit bintang, yet enjoying the serenity of bukit nanas, also, the price was rather not demanding compare to nearby verticas, st. John woods or even six ceylon. I heard many of elites and professionals are making bukit Ceylon as their home as many are buying big units in this area. How true?

    I am a Malaysian living in sg.

    • Hi Casey,

      RM 3.6k for a 721sf unit is definitely not cheap, it will take a high end tenant to fill the space. I am not too sure about expats buying big units in Bukit Ceylon, I think its quite tough to verify this information. From my experience though, an expat family would probably want a house which is close to an international school like the ones at Jalan Ampang and Mont Kiara. Single or couples with no children may stay in places like Bangsar, KLCC area, Bukit Bintang area. It’s just my guess though.

  4. Hi Calvin, forgot to thank you for sharing of ideas. Besides, is there any particular development worth to take a look?
    Thanks very much.
    Casey.

    • Hi Casey,

      I am currently invested in a development known as Solaris Dutamas by Sunrise. I feel that the prices are still quite reasonable, being a fairly new condo in the high end area close to Mont Kiara. The units either have a good view of the new Istana Negara or upcoming Matrade. It’s also conveniently located on top of Publika, a mid-high end shopping mall with plenty of good food.

  5. Hi. Calvin,

    You are back! Happy new year.
    Heard of Solaris few years ago. Did you make the purchase during the launch?
    Would you like to share your views on Mont Kiara? Between KLCC, Bkt.Bintang, Embassy row, Bangsar, Mont Kiara, Kenny hill and Sri Hartamas would you think the Mont Kiara is the better one?
    Casey.

    • Hi Casey,

      Happy New Year!

      I actually bought the units at Solaris Dutamas after it was completed. There was a chance during the period when the residences were completed but they were still working on the shopping malls. Due to lack of funds, Sunrise delayed the shopping mall construction for about 2 years and many of the owners became disillusioned and the price dropped. Once after UEM bought over Sunrise and the shopping mall started then I went in and bought Solaris Dutamas units for cheap. The shopping mall was ready even before I got my keys.

      Of all the places, I like Mont Kiara best because of the international schools. It’s an upmarket location with plenty of expats and the schools are very suitable for expat families. Bangsar is good for expat individuals or couples with no children as it is more “happening” with all the bars and pubs there. There are no schools there, so it’s not so good for families with small children. However, Bangsar has a favourite for expats for many years and still remains so.

      KLCC and Bukit Bintang suffers from oversupply and there are simply not enough expats or even locals willing to stay in the city center. Best to stick to studios as it will easier to rent. Embassy Row suffers from massive traffic jam, otherwise its not a bad area, especially for the Embassy officers.

      • Hi. Calvin,
        Thanks for your advise. I have finally rented out my unit but at much lower price of only 3k to a young local professional. The price of property at KLCC and bukit bintang seem too high nowadays. If investing in Mont kiara, would you think studio lot has the rental demand, a few of my expat friends living are with family… They told me that MK is also flooded with vacant units. To me, it seems that the prices there have stabilized, while other areas like bangsa south and nearby dutamas/segambut or even sentul are fast catching up. When the price gap has become even closer, or the price gap with bangsar become even bigger, i will put MK into my radar again. Share you view? Casey.

        • Hi Casey,

          Yes, you are right about the prices in KLCC and bukit bintang area being too high these days. KL luxury properties are currently quite expensive compared to the rentals they can potentially fetch. In Mont Kiara, the larger units (>800sf) which form the bulk of the units have a high vacancy rate. The studio units (<500sf) are definitely much easier to rent, however, the prices for these units are usually priced at 10-30% premium above larger units.

          My advice is to wait as the subsale market is softening and transactions are slowing down with government regulations on LTV and net income ruling. The next crisis will come again and all those developer overpriced properties will be brought down, that’s the time to buy. Similar to Singapore properties, there is now minimal upside but large downside for most properties in general.

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