Archive for the ‘Stock Market’ Category

Investment strategy pays dividends

Friday, December 4th, 2009

Basically, Mr Ng was 31 when he ‘set his plan in motion’. Initially he was invested in unit trusts. But he had read Robert Kiyosaki’s ‘Rich Dad Poor Dad‘ before, and decided to sell off his unit trusts and in 3 years, manage to acquire enough dividend paying stocks to meet his monthly expenses.

This is what I’m kinda aiming for, though in my case, it’s our monthly mortgages that I wish to cover, because I’m investing with CPF funds. Currently payout from our investments can only cover half the monthly mortgage. Better than nothing I guess.

Imagine though, when it does cover all our mortgage, it’s like getting an already overpriced HDB for just a fraction of it’s cost!

Imagine having a payout from your investments that more than covers your monthly expenses.

Canny investor Ng Wai Chung is in this happy position at the age of 34.

Mr Ng, a senior IT manager – and an author of investment books – achieved this a year ago. But rather than retire, he stays in full-time employment.

His investment income stream is the result of a plan he set in motion three years ago. That was when he decided to sell his investments in unit trusts and buy stocks that pay high dividends.

‘Today, I am able to yield about $24,000 a year on my investment portfolio, enough to cover my expenses in most months,” he said.

This enviable portfolio consists of real estate investment trusts (Reits) and shares that yield high dividends, such as mainboard-listed Singapore Press Holdings (SPH). Dividends are the portions of profits which a company distributes to shareholders.

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How to calculate your CPF 35% stock limit? Use a Calculator!

Wednesday, August 19th, 2009

There is this CPF rule that you can invest only up to 35% of your CPF monies in the stock market. If your 35% is less than $20k, then you can’t invest any at all, as the 1st $20k in your CPF is locked.

I currently hold CPF-bought stocks, and have made money buying and selling, and through collecting dividends. Because CPF monies are pretty much stuck till the age of 55, the ability to hold is there.

However, this 35% limit has caught me off guard about 3-4 times now. I wasn’t really sure how it was being calculated, and seeing money left in my CPF Investment Account, I assume I could repurchase more stocks. Each of these 3-4 times I was wrong, and was forced to pick up some lots in cash. These cash stocks were later liquidated at a small loss, as I had no holding power.

One time, I sold stocks and bought it back at a lower price on the same day. Transaction was converted to cash sale. Asked broker, and he said that I have to wait for the next day before buying back.

The last straw was I sold off 4 lots of stock amounting to $10+k, and buying 3 lots of stock amounting to $9+k (the next day as advised), and was told again that I had exceeded the limit.

CONFUSING!

I’ve been googling on how this 35% is actually being calculated, and have come across sites like lioninvestor, CPF site and fundsupermart.

But the the simplest and quite automated solution is this:

Use CPF’s Stock and Gold limit Calculator!

Hopefully, that’ll be the last time I get the call telling me to fork out more cash!

** Note, CPF monies used to pay for your property is NOT included in calculations for investible amount. Thus, if your monthly mortgage is greater than your current contributions, your investible limit will get less and less. I think that was my problem.