Monday, June 1, 2015

Journey To Retirement Part 13, (CPFIS) Part 5, (SRS) Part 1 -- FrasersCom Trust

Added FrasersCom Trust at $0 cost via the scrip dividend scheme for cash, CPFIS and SRS investment.  This addition is classified under "Cashless/Strategic" category in the cash portfolio.  The objectives of this type of investment are :-

1. Build up investment of the stock at either $0 cost or just a token of the cost

2. The profit contributed by this stock is used to hedge against the potential unrealized loss in other investment in a worst case scenario

3. Build up wealth for retirement

Executed with Sun Tzu Art of War Chapter 3 — Strategic Attack (第三篇,谋攻篇), the investment so far needed $0 cost and thereby making it a "floating profit" stock for the time being.  In another word, impossible to lose money in this investment mathematically regardless of what the price movement will be.

For cash investment, this is definitely better return than by investing in corporate bonds or the so-called Singapore Savings Bonds or putting money in bank to earn interest rate even if there is a rate hike later on.  More important, the supposed capital that is committed to the investment is still available and could be used in other investment later on or sitting in bank to earn interest, one stone kills two birds.

For CPFIS and SRS, though the interest return is higher than what bank could offer but by all standard is still considered low giving in consideration of long term inflation.  With this investment, the investment continues to generate return and at the same time, the still available capital sitting in CPFIS and SRS account to continue earn interest return.  Another one stone kills two birds benefit.  Many saying of CPF money is invested in risk free Singapore bond, however, the method I am adopting here if plans carefully, will be as risk free as Singapore bond but comes with a much much higher return.

An advantage of this strategy is I totally eliminated the concerns of timing and price to invest in S-Reits which many including analysts are debating when is the correct timing and at what price to start invest in those.

Looking forwards, I have 2 options :-

1. Do not do anything and continue to accept scrip dividend at each distribution to grow the quantity of the stock and at the same time maintain absolutely $0 cost in the investment.  The perfect ideal way !

2. Every quarter upon dividend distribution, will execute Sun Tzu Art of War Chapter 3 — Strategic Attack (第三篇,谋攻篇) to accelerate the growth of the quantity but might face the risk that cost in investment could one day stay at non $0 cost but need a token of capital committed to it.

FrasersCom Trust

2 comments:

  1. Hi Sir, may I know what you mean by "zero cost" and able to use the money for something else ? Sounds like leverage. I am not sure, so I ask. Thxs.

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    1. "zero cost" as in no capital being tied to it. example initially use $10k to buy the share before XD at $1/share, after XD, sell the share at $1/share or above. then opt for scrip dividend. the scrip dividend is then considered as "zero cost"

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