What I Did With My Wealth For 2012

2012 was a year that was very tough to lose money in the equity market. I was happy that my portfolio gained in value but was sad that I did not benefit much from the mini bull market as I cut lost on about 50% of my equities in October 2011. I expected a further slide of about 20% to 30% in equity for the year 2012 but at the end of 2012 the STI was in fact up by more than 20%! Equity was my worst investment bet although I did make some money selling a large chunk of my remaining equities.

As I was still cautious about the equity market, I further reduced my exposure to about 3.5% of my investment portfolio. I sold most of my Reits and dividend stocks and increased my purchase of SGD denominated Corporate bonds. Below are some of my new addition:

1. Aspial Corp, 5.0%, 3 yrs
2. Aspial Corp, 4.5%, 2yrs
3. Swiber, 5.8%, 1yr
4. Ezra Holding 5.0%, 3yrs
5. Maybank Perp 6.0% (secondary market)
6. ABN Amro 4.7%, 5 yrs (secondary market)
7. NOL 5.0%, 5yrs
8. Genting Perp, 5.13%
9. Wing Tai Properties, 4.25%, 10yrs
10. Cambridge MTN, 4.75%, 3 yrs
11. Olam Perp, 7%

At the end 2011, my monthly passive income was about SGD40K per month and some of the contributions were from Reits and dividend stocks which average about 6% to 7% dividend yield. However, when I switched from equites to bonds, the average yield for the switch caused a drop to slightly less than 5% for the same fund. So am I going to achieve my passive income target of SGD50K per month? I decided to increase my leverage and bought more bonds. The cost of leverage was about 0.91% to 0.93% p.a. for short term loan and I earned a spread of about 4%. In 2012, I am using banks' money to make more money! However, a world of caution just in case someone read my blog and decided to leverage blindly as well. My leverage level is about 25% and I have intention to increase it 30% this year. Most my assets are can be leveraged up to at least 60% but I am capping it at maximum 30%. A the end of 2012, my passive income did cross the SGD50k mark and I am glad to achieve what I had targeted for the year 2012. The value of my portfolio increased about 8% (not including properties appreciation) which I believed was below market average.

Most analysts and private banks predicted a bull market for 2013. These are the same people that predicted a slum for 2012 equity market. I have lost all confidence in their prediction and I have no ideal where to park my excess fund (cash flow from dividends, maturing bonds and leveraging). My ammunition in case of a significant market correction will be my 5% increase in leverage. I may use it or maybe not.

For those who are curious about my monthly household expense, it is about SGD15 to SGD20K per month and about $2.5K is actually insurance (also a saving). Beside some big ticket items like buying new cars every 3 to 4 years, I reinvest the all the saving. My financial target for 2013 is relatively easy: maintain my passive income of SGD50K per months and resist from buying more big ticket items.        

My Asset and Investment Portfolio

Note: I have taken out Loan as part of my investment portfolio to avoid any confusion. Life insurance is the cash value and not the insured amount.