My Portfolio

The key to my long term approach in creating a portfolio of war machines with enough sustainability to withstand risks and recessions is to create different sources of passive income. I generally viewed the cash holdings as an army of soldiers awaiting the commander's orders to seize and hold components capable of generating consistent cash flow. Eventually, the soldiers grew in strength which allowed me to further diversify the soldiers to attack others components.

(Ok. maybe I played too much war games, lol)

The idea is to make our money work for us rather than we work for them.

Over the years, I have created 4 different war machines to generate passive income. Each has different level of consistency and sustainability.    

The First War Machine -  Dividend Income

Update: April 2020*

The war machine which generate my first passive income since year 2008 during the infamous Global Economics Crisis.  My portfolio was slowly built up over a period of years. For now, my portfolio is rather heavily into Reit. Most of it were grabbed during the minor crisis of year 2015 and year 2016.  

General strategy is to stay invested for long term for generating passive income consistently. Trading is usually limited unless Mr Market offer a window of opportunity. Otherwise, the portfolio will remain almost unchanged throughout the months.   

Notes:- Please take note that all investments comes with a risk. The above counters were all selected based on my own risk level, assessment and positioning. It should NOT be used as an reference for any selection of counter for the purpose of building an individual portfolio or trading. 

The Second War Machine - Property rental Income

The second war machine is the traditional property which generate passive income in the form of rental. No. It is not those beautiful condominium we seen all over Singapore. It is just a simple HDB flat. I purchased my own HDB house in year 2011, and rent out my parents' HDB unit to generate rental income. Yes, it may not be the most profitable property and do not hold much value compared to a private property. But it is already fully paid with zero loan, and the monthly maintenance is low and sometime even zero thanks to the GST Rebate.

That is one of the main differences between private property and HDB, private properties has high maintenance and do not enjoy any GST rebate. Because of this, we could sleep with a peace of mind even if the house did not have any tenants for months. From year 2012 to present, only 10 months were without any tenants, rental income generally has been quite stable.

The Third War Machine - Fixed Deposit Annual Returns

The third war machine is a small machinery in the form of Fixed Deposits. Fixed Deposits are meant to generate passive income for long term on a fixed period, this is mainly to fully utilize the surplus cash holdings from rental income. Fixed Deposit offered more security as it is insured and covered under the Singapore Deposit Insurance Scheme. For now, we have 3 different Fixed Deposits paying out in 3 different months. My target is to eventually create 4 different Fixed Deposits. each paying out in different quarter. This is to ensure a consistent and stable cash flow return.

Many would says the Singapore Saving Bonds gives a better rate. But my goals is in creating consistent returns in a form of cash flow. Fixed Deposit do require a waiting period of 1 year to obtain some return, but my formula for it is to spread out the fixed deposits on different months. Yes, its the same concept as making the money work for us, but on different period. With enough distribution, the consistent returns start giving us the interest earned on regular basis of 2-3 months. This may sound confusing, a simple example would be like this:

NTUC Fixed D - pay in January
Hong Leong Fixed D - pay in March
OCBC Fixed D - pay in May
DBS Fixed D - pay in July

So by spreading them out, we gets a more consistent return on a regular basis. All these capital also functioned as secondary emergency funds which we could terminate in times of need.

The Fourth War Machine - The DBS Multiplier

I am sure most Singaporean will be familiar with our local bank DBS. This DBS Multiplier is a special account that allow account holder to leverage on higher interest rate based on the amount of transaction components you have in each month.

 

In February 2020, DBS revised this policy and recognized Dividend as 'INCOME' component. This means that this special account no longer require the salary component as mandatory. This fit in almost perfectly with my First War Machine - Dividend structure and at the same time fully utilized the emergency fund by transferring it from a normal saving account to this multiplier account to leverage on its higher interest component.

After experimenting it for 3 months, the payout was much higher than from a normal saving account. By leveraging on the sleeping emergency fund, the interest payout was enough to cover some of my monthly bills.

My first war machine itself is now generating income on almost a regular basis except for 2-3 cold months which may not have any dividend payout. So I could expect an almost consistent payout from this 4th war machine on the average of 9 - 10 months annually. At one bullet, it increased the working job scope of both my dividend war machine and emergency fund.

I have always emphasized on the concept of exploring ways to make our money work harder and generate passive income for us rather we have to work for it. This machine now matched my strategy in making the money work harder to generate money, and I do not need to do anything about it after it is set up.



The Future is on and not the end yet

I am always on a look out and exploring other platforms where I could use to generate other form of passive income. The idea is to not rely purely on just one source of income, but to create multiple sources of passive income to ensure sustainability. Aye. A down-to-earth approach.