Looking at my previous blog on this same topic, I wrote “My game plan for 2019 is to continue to grow my index portfolio, collect dividends and maintain a 5% yield portfolio, subscribe SSB to the new max and increase average views per month in my blog further.”
This year is no different except for the SSB part and average views for my blog.
In essence, my approach is to invest regularly (through peak and trough), to reduce risk and to take advantage of unexpected opportunities that appear.
The specific targets I set for myself are:
(1) To increase the value of my income+growth+index portfolios combined by 10%.
It may not look as challenging considering that I am targeting for 5% dividend yield.
But its tough and a lot depends on the market. I will invest a fixed amount monthly. Together with dividend reinvest, it will close the gap. But it will need some help from the market to meet the 10%.
Looking back at the last 3 years, the value of my portfolio has been up and down.
I managed to grow the value of my portfolios in 2017 and suffer losses in 2018 and then grow it again in 2019. So, its anybody’s guess whether I can continue to grow or I will make a loss like in 2018.
Uncertainty is still very much in the market. To “win”, we need to be able to stomach the volatility (its not easy when you are dealing with your own hard earned money) and yet have some cash reserve as warchest to swiftly deploy when opportunities arise unexpectedly from time to time, in the form of a black swan event.
How much warchest you may ask? I think keeping 10% of your assets in “liquid” form, i.e. cash or cash-like will be useful. Too much cash reserve is an opportunity cost as cash doesn’t earn much return.
(2) To further increase the percentage of income and index portfolio over total portfolio value by 3% and 2% respectively.
That means the percentage of growth portfolio over total will reduce by 5%.
I am slowly evolving my portfolio towards income shares and index ETFs. Currently, the growth portfolio is still the largest at about 50%.
This will determine the type of shares I would buy and increase my buying of ETFs.
(3) Further diversify my portfolio from SG stocks by increasing my International Holding (Hong Kong + USA) to 20%.
I think geographical diversification is important.
Hong Kong and USA markets are relatively easy to trade. Market information is available to do some simple research and analysis. They are also the markets into the 2 biggest economies of the world.
(4) Maintain 5% yield on equity portfolios (income + growth) and increase yield to 3% for index portfolio
As a result of latter, I may have to adjust my ratio of bonds : equity : REITs. Will monitor for a while first before I decide whether to make any change.
I am upping my yield from index portfolio as it is becoming a significant holding and if it is not providing sufficient yield then it will bring down the overall yield and the expected passive income from the same capital.
(5) Reduce concentration risk in my portfolio by limiting the exposure to Top-10 largest holding of shares combined to 35%.
The key lever will be to reduce my exposure to Singtel and Eagles Hospitality Trust. This year my Top10 stocks account for 37.75% of my equity investments, hopefully it will reduce to 35% by end 2020.
In wrapping up, I hope you will find the above useful in some ways to inspire similar investment target setting process for yourself.
I believe in having investment targets because it will drive your actions and behaviour towards a specific outcome when investing or trading in the market. Without targets, then we are just gaming the market.
Have a great investment week ahead.
Regards
Warriortan
Invest For Yourself 
Hi, very good portfolio management strategy !! All the best … hope you have a “huat-huat-huat ” 2020 … Cheers !! 😀
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Thank you, hope so for everyone!
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Will you consider preference shares as part of your strategy?
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Yes, I may. But the painful experience from Hyflux is still haunting … I will be very selective on the issue of the preference shares. From the big companies, their preference shares is not usually available to retail investors,.
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Thanks. I am trying to understand the advantages of preference shares vis a vis other shares. For instance DBS has a NCPS share category. But when I compare the dividend it gives with that of REITs, yield is lower. Trying to ask myself if going for this makes better sense.
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They are different investment instrument with different risk and hence the difference. If you invest in Reits, you may get higher yield because the Reits distribute almost all its cash income out to unitholders. But when the Reits want to grow, it may seek equity funding and you may find your shares in the Reits diluted if you don’t participate. Preference shares has no such concern. However, if the company is not doing well, it can defer its dividend payment to preference share holder as long as it also doesn’t pay dividend to its normal shareholder.
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is there any reason you are picking only HK and the US? Do you think that Europe will not offer any significant gains? Are you concerned about China’s and HK’s political issues impacting future growth in HK?
I am diversified into Europe, but am concerned about their future growth.
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I find it difficult to access the European markets and also which one to choose. Europe is also not growing as brightly as US and China.
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