My Sweet Retirement – How Much Are You Paying For It?

Iceberg Illusion of A Sweet Retirement

When I first started My Sweet Retirement, I wrote about The Path to Financial Freedom which is about the underlying hard work and dedication to achieve our own determined success.

All of us define our own success differently. Some people define success as climbing to the top of the corporate ladder. Entrepreneurs define success as being their own boss and not having to work for others. For a few financial bloggers I knew, they often define achieve FIRE (Financial Independence, Retire Early) as our success.

The recent post “How Much Are You Paying For Financial Independence?” written by Brian has inspired me to reflect on the effort and hardship that I have put in towards my vision of a sweet retirement.

My past experience of being retrenched without any compensation has sparked me to scrimp, save and invest hard over the years. Prior to being retrenched, I have no concept of building an emergency funds for rainy days as I never expect retrenchment to fall onto me. During the period when I was jobless, I saw my savings falling as there are still expenses to pay such as utilities bills and living expenses.

During the days when I was jobless, I limited my spending on meals to S$2.50 per meal. After sending hundred of resumes, I found a job after three months. The job was not ideal and working hours was long, as much as 20 hours per day. Most of the time, I left office at 4 am in the morning. I quit after 6 months as my body could no longer sustain the long working hours.

The COVID-19 pandemic has reconfirmed that I have embarked on the right path to my sweet retirement. You may have read from the news that almost 800 and more businesses closed down during the COVID-19 period. Businesses could not operate because of “Circuit Breaker” measures and only essential services could operate. Companies had to lay off employees and they are unable to foresee when they are allowed to open again. I am ready this time as I have my emergency fund ready in Singapore Savings Bonds in the event I am retrenched.

You probably thought that I am working at home and my working hours are shorter than normal. The sad truth is that my company is in the business classified as essential service and I have to work longer hours during this period. I have to work 12 hours night shift on certain days. This is also probably why I dislike work because it takes away time from myself with my family. The tiredness build up from the long working hours made me reiterate to myself not to lose focus and continue my routine of saving, spending prudently and investing for more passive income.

During this difficult period, I continue to save part of my monthly salary. As the interest rates of Singapore Savings Bond has fallen drastically, there are alternative options such as Singlife Account and CIMB FastSaver which both offer higher interest rates.

There is a price to pay for a sweet retirement and I am paying for it now.

How are you working towards your sweet retirement?

Screening For Dividend Stocks In April 2020

Last month, the stock market had crashed due to the impact of COVID-19. Since then, the stock market has started its recovery when news of government from different countries started to provide stimulus budget to revive the economy. During the crisis, I have picked up OCBC Bank, Singtel, US Manulife REIT and added more of CapitaMall Trust when their stock prices fell. If you didn’t know, I am a dividend investor. Thus, I usually look out for stocks with attractive dividend yield that provides me with endless dividends many years ahead. The stock market crash has provided me with such an opportunity.

I will run the Stocks Café stock screener every month which gives me a list of stocks that fulfill my dividend criteria. I fall into the medium risk type of investor and thus I never looked at stocks with dividend yield more than 10%. Below are the criteria that I used to identify dividend stocks.

  • Current Yield (%) >= 5 and <= 10
  • Price / Earnings <=20
  • Price / Book <= 3
  • Market Capitalization >= 1B

Below are the top dividend yielding stocks as of 10th April 2020. I believe you will see some REITs that you have been eyeing for before the stock market had crashed. Even though the stock prices have started the recovery, the current yield is still attractive.

NameCurrent Yield %P/EP/BMarket Cap
Mapletree NAC Trust9.9814.440.6112.8B
OUE Commercial REIT8.71113.380.6182B
Ascendas-iTrust8.6445.291.0841.4B
DBS7.8377.650.99848.7B
Frasers Logistics and Industrial Trust7.5689.050.9742.1B
CapitaRetail China Trust7.5578.460.8451.6B
Frasers Commercial Trust7.3857.910.7941.2B
Suntec REIT7.379.210.6053.6B
CapitaMall Trust7.1258.890.7986.2B
Ascendas REIT7.03817.71.2910.1B
Yanlord Land6.7332.970.3582B
ComfortDelgro6.52712.251.2523.2B
Frasers Centrepoint Trust6.2759.410.872.2B
UOB6.1977.740.84933.4B
SIA Engineering6.1810.441.292B
CapitaCommercial Trust6.08212.770.7845.6B
SPH REIT6.08111.840.7862.1B
TCIL HK$6.04417.20.3293.7B
SATS5.93815.92.2113.6B
OCBC Bank5.9227.910.86339.4B
Jardine Cycle & Carriage5.8336.710.8758.1B
Mapletree Commercial Trust5.5955.450.9555.6B
Yangzijiang Ship Building5.4355.90.6013.6B
Guocoland5.3855.720.3741.4B
Olam International5.2089.010.8524.6B
SPH5.19512.190.722.5B
Frasers Property5.1287.320.4533.4B
Lonza5.0425.720.6595.9B

Last, I just want to mention again that the above list is for reference only and we should do our homework before buying into the stock simply for the dividend yield.

How To Fill Up W-8BEN Form For US Manulife REIT

Previously, I was hesitant to add US Manulife REIT into my stock portfolio given its average dividend yield. Taking opportunity of the stock market crash in March, I have added US Manulife REIT to my stock portfolio as the stock price has fallen to attractive levels.

US Manulife REIT is a pure-play United States (“U.S.”) office REIT. Since the REIT derives its income in the U.S., the U.S. Internal Revenue Service (“IRS”) requires certain documentation from the ultimate beneficial owner to ensure the appropriate level of withholding tax is deducted. The beneficial owner in this case refers to us, the unit holders of Manulife US REIT. Unit holders of Manulife REIT are subject to a maximum withholding tax rate of 30% on income they derive from U.S. investments. To be exempted from the certain withholding tax, we must submit certain documentation which is the W-8BEN Form.

For those who are not familiar with the W-8BEN form, it seem daunting to fill up the form. I must applaud US Manulife REIT for coming up with a comprehensive guide and sample on how to fill up the W-8BEN form and I am sharing the sample with you below.