Investing the Right Way

Investing is about setting targets. Of course, when one invest, the goal is to eventually make money.

But not everyone who set out to invest makes money. In fact, many people lose money. And very often, this is the result of not returning to their target set out in the beginning. 

So how do one set targets when investing? First, you got to ask yourself, what sort of investor are you? A conservative or an aggressive one? Are you investing for a stable income every month or investing for capital growth? 

Once you have established the above, you can start to plan your investment portfolio accordingly. 

For me, I am a conservative investor who is looking for a stable income to supplement my regular paycheck every month. How much am I looking at? I intend to hit $12K a year in dividends. But I set myself a preliminary goal - that is to hit $6K a year first. 

This is equivalent to $500 a month. To me, that is a lot and will go a long way towards alleviating my monthly expenses. 

Sometimes such "mini-targets" may mean nothing to you. You may wonder how effective is a $500 a month when the cost of living is so high nowadays? But if you return to my first post, I mentioned that the best way to get rich is to keep your day job. This extra $500 functions as pocket money which supplements your monthly income. So lets say you earn $3K a month, this $500 earn is a huge boost, entirely in cash and tax-free.

So how does one go about to achieve this $6k a year? I invest in high yield dividend stocks. These stocks must yield at least 4.5% in dividends. Actually, I target a 4.5% yield for blue chip stocks and at least 6% for Reits. 

On an average, I hope to achieve a 6% yield on a $100k portfolio. That will allow me to receive $6k a year or $500 every month. 

If you invest wisely, you can certainly hit this milestone quickly. Currently, I am at the $70k mark. I intend to hit $100K by the end of this year. 

I will go into details the stocks that I own in my next post. Huat ah! 

Investing in High Yield Dividend Stocks

So, you have received your paycheck, paid your bills, given your parents some money and have some leftover. What do you do?

You could spend the rest on socialising, clubbing, gambling or womanising. But I say, why not invest it?

Investing in high yield dividend stocks is the best way to get rich. Let me give you a scenario. Assuming you are earning $3,000 a month. If you put in $200,000 in dividend stocks at a 6% yield, you will receive $12,000 a year. That is $1,000 a month! Combine this with your monthly paycheck and you have $4,000 a month to spend.

As an investor, I can tell you nothing makes you happier than seeing dividends regularly stream into your bank account.

I will cut the chase and share with you the stocks that can help you achieve this regular dividend income.

First, do a broad scan of businesses that make money in Singapore. Can't think of any? Let me help you. I will give you an account of my life. Every morning, shortly after waking up, one of the first things I would do is to reach for a newspaper. Thereafter, I take a bus and stop by the neighbourhood mall to buy breakfast. On the train, I use Whatsapp, make phone calls and surf the net on my phone. After work, I go to the mall to shop and have dinner.

What is it that I am getting at? You see, what I have just described is the regular life of most Singaporeans. Consciously or not, you are actually spending money in your daily routine and enriching the coffers of certain businesses. So why not get some money back?

When you read a newspaper, it is likely published by Singapore Press Holdings (SPH). When you make a call, you are definitely using one of the three telcos in Singapore (Singtel, Starhub and M1). When you shop at a mall, there is a good chance that it is either owned by Capitamall Trust or FraserCentrepoint Trust.

These are public listed businesses or reits that pay very good dividends.

And any regular joe can buy these counters that trade every weekday on the Singapore stock exchange.

Using this broad sweep, you now have an idea of what sort of businesses that are unlikely to go bust. And this is crucial in determining how to choose a regular dividend paying stock.

For those who are starting out in investing, I suggest to focus on companies that "cannot fail". To begin, start with buying all the 3 telco operators - Singtel, Starhub and M1. Personally, I enter positions when I see that the dividend yield is at least 4.5% (dividend paid out in a year divided by the current trading price of the stock. For e.g Starhub pays $200 in dividends a year and is currently trading at $4.22. This translates into a yield of about 4.7%)

Why 4.5%? I think this yield can comfortably guard against inflation. Of course, your projection can be higher and you can wait for a price to enter around 6%. But I feel, 4.5% is suffice.

If you have a bit more savings, start pouring your cash into Frasercentrepoint Trust or Capitamall Trust. Both of these trusts own big malls like Tampines mall, Westgate, Northpoint and Causewaypoint. They pay really good dividends. One thing I really like about this business is that you can take a bus and swing by the mall to take a look at the human traffic. Have you ever seen a mall that is not crowded in Singapore? If not, why are you not benefiting from it?

I will elaborate more in my next post. For now, happy investing! HUAT ARH!

Earning a Stable Paycheck Through Dividends!

I am sure many of you want to be rich.

But many of you are also employees and depend on a monthly paycheck for survival. There are many blogs, books and forum threads out there that promise quick ways to get rich. They often propose one strategy or the other. Many of them are often too complex for the average layman to understand.

Through this blog, I hope to be able to write simply and propose a viable investment strategy that is easy to understand and execute.

Of course, before I begin, I must first issue the caveat: there is no risk-free investment. There are only investments that are less riskier than others.

With that in mind, I shall share with you my strategy. And of course, if you think there are easier to understand or better ways in investing, please feel free to leave a comment.

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As the title of my blog shows, the topic of my blog entries will centre on how to derive a stable paycheck. I am your average joe. I work a 8.30 to 6 pm job. I take a monthly salary and in good years, receive a bonus. I have never thought about making it rich and I never studied finance or economics.

Like many of you out there, I am often confused by the different investment strategies on offer. Any serious investor would have pored through theories by Warren Buffet, read the get rich schemes by Adam Khoo, scan through finance pages in the Straits Times and Business Times and even go through investment tombs in bookshops and the public libraries.

More often than not, after reading the wealth of literature available, you are none the wiser.

You see, investment is actually very simple. You got to ask yourself. What sort of investor are you? Are you a conservative or an aggressive investor? Do you want to get rich quickly or build up wealth over time?

Thereafter, you got to ask yourself. Is it feasible to get rich quickly? Has there been anyone out there that you know that are millionaires overnight?

Once you recognise that money doesn't fall from the sky and you have to work hard for it, you will be at inner peace with your desires.

Investment is certainly about controlling your greed.

What I will be proposing in this blog is a two-prong get rich strategy. 1) keep your day job 2) invest in dividend-paying stocks.

What is new you say?

Well, sometimes in our eagerness to get rich, we miss the forest for the tree. Nothing in this world is as certain as death and taxes. What follows is a need to live your life, get a job and invest.

I will not dwell on getting a day job as this is something that you MUST do to get some form of wealth.

What I will touch on is what to do with your monthly paycheck.

In my next post I will tell you how.