Planning for Semi-Retirement and Financial Independence: Stocks Portfolio

This is my first post in this blog to document my journey. I have started investing since 2010, which is a great year to start investing after the Great Financial Crisis. However, without any proper planning and execution, I made many small profitable trades and also multiple losing trades. This results in a zero sum game, and I did not earn much profits at all despite the great recovery of the markets.

After some reflections, I managed to analyze and evaluate my actions, emotions and methods in “investing” to see where the problem lies. I concluded that my stock picking skills were total crap. One look into my portfolio at that time will show that only dividend-paying stocks were profitable. The so-called growth stocks always end up in the red. In addition, I restricted my investing to only shares listed in SGX. My limited knowledge makes me afraid to invest in US stocks and shares. As quoted from Benjamin Franklin, “Being ignorant is not so much a shame, as being unwilling to learn.” My ignorance and inaction accompanied me for seven long years, and that resulted in immense opportunity costs.

It was only in late 2017 that I decided to consolidate all my holdings and restart my investing journey with a concrete plan. First and foremost, I will need to minimize the number of buy and sell trades. I am not knowledgeable and nimble sufficiently to be a trader, so the rule of “buy low, sell high” was not as easy for me. I am impatient, and my bad habit of not setting stop losses just made my losing trades humongous. In addition, during the course of constant buying and selling, I was not able to put the power of compounding to work. All these mistakes basically caused me to waste the precious seven years, especially during the time when the market was roaring upwards. Therefore, I suppose it will be more beneficial for me to slowly accumulate and build up my portfolio. This brings me to the next point of dollar-cost averaging (DCA). Practicing DCA will enable me to slowly accumulate my portfolio with stocks that I have strong conviction in. This will build up my portfolio size, with dividend-paying stocks and REITs that I am most comfortable holding onto them long-term.

Fast-forward to January 2022, I was fortunate to be able to build up a small 6-figure portfolio. My plan forward is to split it into two portfolio: Currently it's 90% in Compounding Portfolio consisting of dividend stocks and REITs listed in SGX, and remaining 10% in Growth Portfolio consisting of US Shares and ETFs.

For Compounding Portfolio, I will tentatively stop injecting more capital into the portfolio.  Instead I will only continue to grow it by reinvesting all the dividends collected from the portfolio to enjoy the compounding effects. Hopefully this portfolio will be a stable income-producing portfolio that will be self-sustaining and it's one that becomes the stable base I have (apart from the CPF that I cannot withdraw till I am 55). For Growth Portfolio, I will continue to grow it at a faster pace from now on by injecting capital monthly via DCA. 

People may wonder why I hold such a large compounding portfolio relative to growth portfolio, as this doesn't seem to help my portfolio grow at a fast rate.  However, knowing myself, I think this is the right move for myself as the local market is slightly more stable and less volatile compared to the US market.  As seen in the most recent turbulent markets in late February and March 2022, the downward trend in US markets proved quite spooky, but thanks to my larger portfolio in the Singapore market, my portfolio is relatively cushioned.  This definitely prevented any sleepless nights.

I hope this will enable me to continue to grow my entire portfolio at a faster but steady pace. Hopefully in time to come, the dividend income can cover my monthly expenses. Coupled with part time tutoring work, I hope I can semi-retire in my home country soon!  Barista FIRE, here I come...!