With the second payout, my target for 20K passive income seem to be in my sight. Feeling comfortable with my bonds investment, I decided to load up a few more bonds issues. The following are the bonds that I had chosen for 2010:
- Temasek Bond (10yrs, 4.3%)
- DBS Preference Share (perpetual, 4.7%)
- Olam Bond (3yrs, 4.1%)
- Olam USD Bond (10yrs, 7.5%)
- Hyflux Bond (5yrs, 5%)
- Sembcorp Ind Bonds (5yrs, 3.73%)
- Arief (3yrs, 4.75%)
I started experimenting with equity linked notes (ELN) and I was sold the following benefits:
- get interest yield of about 7% to 10% if equity price on redemption day is above strike price.
- get the underlining equity at a price that I am comfortable with if the price is below strike price + interest
I was quite comfortable with ELN and was holding 3 to 4 contracts at any one time. Each ELN contract last about 45 days and I would go for yield that is about 10% to 15% depending on the volatility. About half the ELN that I held expired with the underlining equity below the strike price. I would hold them for a while and sold them at a small profit at a later date. I never really kept track of the average yield but it should be in the range of 7% to 10%.
After I am familiar with ELN, I become more comfortable with equity. When the market seem to be picking up, bonds yield seem to be dropping below my target yield of 5%. With some successes from ELN, I decided to buy some equities. I must admit that I had zero experience in the equity market and I could only relied on my private bankers for advice. Without any FA or TA, I decided to buy only blue chips and REITS for dividend yields. I end up buying REITS with strong sponsors like Capitalmall Trust, AREIT and Ascott Reit giving yields of about 6%.
I started reading up on all the equities that I own or had interest in and I started to form some personal view on the Reits market in Singapore. I decided to choose reits based on their dividend payout record for the past 3 years. For example, I found that Cambridge Ind Trust dividend payouts were very consistent for the past 3 years. With this simplistic logic, I added reits like Cambridge into my equity portfolio.
As a entrepreneur most of my working life, I was used to leveraging to grow my business. With the housing loan at a record low, I figured that getting a yield above 2% should be a piece of cake. Thus I decided to mortgage one of my properties and dump the fund into 'safe' bond such as Temasek bonds and earn the difference in interest spread.
No comments:
Post a Comment