Welcome

Welcome to my investment blog where I share with you my analysis of REITs in Singapore.

I hope that my investment philosophy will bring me a steady stream of income apart from my job. I am aiming for at least $3,000 per month which can sustain the current expenses of myself and my family.

Do enjoy reading my blog and post any comments that you have. I welcome them because it is a time to learn from each other.

When I am looking at investing in REIT, here are some of the guidelines that I am looking at. Feel free to comment on it. I am willing to listen to ideas.

-> at least 8% yield.
-> Price that is lower than its NAV.
-> Low gearing (if possible)
-> High secured NAV.

Current Dividend income is $4,200/month.

Thursday, March 12, 2015

Hypothesis - What happens if US increase their interest rates by 0.25%

One of my readers asked me about the impact of US interest rates hike which is coming soon. It brings me to think back on my portfolio and make some calculations.

When interest rates rises, it means that the risk-free rate increases and investors will seek a higher yield to match their investment profile. Thus, the price will drop. The question is how much.

I did some calculation and found that with every 0.25% hike, the market value of my portfolio will decreases by 4%. In fact, as I am writing this, it has dropped by 1.5% already. No doubt that my current portfolio is able to sustain the drop, but I ask myself whether I want to weather this storm that is coming. I have weathered the financial crisis and has reap rewards but was thinking whether I could have done better if I exited and re-enter again.

There are talks that interest rates may rises twice this year means that it is going to rise anyway. Thus, I am exiting my investment and hold cash while I wait for my next move. I have never tried this before so it is going to be an unusual decision from me. I would want to see whether this decision is correct or not to affirm my analysis skills.

By the way, here is my new facebook page. https://www.facebook.com/sreitinvestmentblog

4 comments:

  1. Are you exiting all investments or do you keep core holdings like Global Investments?

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  2. If that is your intention and cashflow is not robust, selling can't be helped.

    the question is what do you keep?

    Because not all will drop.

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  3. Black Swan appears, there will be no exception.

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  4. Well, I guess it depends on the maturity of debt that the companies/reits have. If debt is only going to mature in the long term, a short term rise will not increase interest expense. Have to be worried if debt are short term. refinancing these debt would definitely increase interest expense.

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