Summary of March 2020 Transactions

We are coming to the end of March 2020 and this is time to look at my stock portfolio. I have never expect the COVID-19 outbreak to have such a significant impact on the world wide economy which caused all the stock markets to plunge into a sea of red. I guess it was too early when I assess the impact of the COVID-19 outbreak with the previous outbreak as the stock market was still relatively stable at that time.

From 11th March 2020, this is the period whereby the impact could be felt and the worst is the Straits Times Index Fell 6.03% Due to Oil Price War between Saudi Arabia and Russia. I have sold off The Hour Glass and Kingsmen Creatives at reasonable prices when I read about the impact of COVID-19 to retail and entertainment industry. I feel that the risk of these two stocks will be impacted the most when shoppers avoid malls and attractions such as NERF experience are closed.

Taking opportunity of the market crash, I have bought OCBC Bank and Singtel as the dividend yield has turned attractive. Of course, I am expecting dividends to be cut but the dividend payout should turn positive when the economy recovers. There are other blue chips whereby the current prices are attractive but if you look at my stock portfolio, I have already own a couple of them such as ST Engineering. The others such as SBS Transit, VICOM can be found in my wife’s stock portfolio.

The stock prices of REITs have fallen as much as 58% this month. As I have a limited war chest, I have nibbled at US Manulife REIT and keep the rest for deployment in tranches in upcoming months.

Last, I will like to share the investment lessons I have learnt during this crisis.

Even though we had bought some shares at the prices prevailing before the fall, we welcomed the decline because it allowed us to pick up many more shares at the new panic prices.

Berkshire Hathaway shareholder letters, 1990

Keep calm and continue investing!

NTUC Capital Plus Versus Singapore Savings Bonds

NTUC Capital Plus is a single premium savings plan that gives you a lump sum payout with guaranteed return of 2.13% per annum over 3 years. Instead of the minimum sum of S$20,000 that was offered in the previous tranche, the minimum amount for the current NTUC Capital Plus is only S$5,000 which you can pay using cash or using your Supplementary Retirement Scheme (SRS) fund.

I personally think it is a good choice to use your Supplementary Retirement Scheme (SRS) funds to purchase Capital Plus for a higher guaranteed yield since SRS can only be withdrawn after your retirement age.

Using the calculator that is offered at NTUC income’s website, I opt for the minimal investment amount of S$5,000.

NTUC Capital Plus Versus Singapore Savings Bonds

How does this fare against the Singapore Savings Bonds? The current issue of Singapore Savings Bonds (SBAPR20 GX20040X) offers an average interest rate of 1.63% over 10 years.

Even NTUC Capital Plus is a clear winner here with an interest payout of S$326.35 at the 3rd year, let us check how much interest will you receive if you redeem the Singapore Savings Bonds early at the 3rd year.

Based on the table below, it seems that the interest rate for April 2020 issue of Singapore Savings Bond is consistent at 1.46% for the first 3 years. You receive S$73 per year.

The total interest you will receive is S$73 per year x 3 years = S$219 if you held Singapore Savings Bonds (SBAPR20 GX20040X) and redeem it at the 3rd year.

Investment Lessons Learnt From This COVID-19 Crisis

As the COVID-19 outbreak gets more serious, this had caused a significant impact to the worldwide economy. Last week, we just saw the stock prices of REITs falling as much as 50 to 60 percent. My stock portfolio was not spared either. I have sold off The Hour Glass and Kingsmen Creatives earlier this month. I have bought Singtel and OCBC Bank at prices that I deemed attractive. The stock price of Singtel and OCBC Bank continue to fall and I believe no one knows how far the knife will drop.

Below are the lessons that I have learnt from this COVID-19 crisis.

  1. Have a war chest ready for such crisis.
  2. Deploy your cash in Tranches instead of throwing all your monies into the stock market all at once when the stock market crashes. Pace your purchases as well over a few weeks. We have seen the Straits Times Index crash multiple times within 2 weeks. It is very hard to predict or catch the bottom.
  3. Allocate your cash into a few stocks instead of a single stock. Certain companies recover faster than others. By allocating your cash into multiple stocks, this spreads out the risk should 1 out of the stocks you chosen fails to recover from the impact of such crisis. Example, if I have 10K, I will buy into 2 stocks, 5K each.
  4. Train your mind psychologically to follow your investment plan. Most of the time when market is good, we keep buying. When market crashes, we stopped investing out of fear. I believe that a good company will recover faster than the rest when the current crisis is over.
  5. Lastly, do not invest everything. Allocate cash for daily living in case the crisis turns out to be longer than expected.

5 years ago, I read this book titled “The Warren Buffett Stock Portfolio“. There is this quote inside the book that was from the letter that Berkshire Hathaway send to shareholders in 1990 which I felt is meaningful during this crisis.

Even though we had bought some shares at the prices prevailing before the fall, we welcomed the decline because it allowed us to pick up many more shares at the new panic prices.

Berkshire Hathaway shareholder letters, 1990

Keep calm and continue investing!