August 2022 3% SSB - lowest allocation yet

 After being pleasantly surprised with an $18k allocation to the July 2022 SSB, I knew the high allocations wouldn't last as Straits Time ran an article about the record SSB yields (luckily they ran it after applications for the July SSB closed) followed by more articles to hype up the August SSB.

The results for the August 2022 SSB are in and the allocation is a measly $9k.

In the meantime I have also been accumulating Astrea V and Astrea VI. I have posted earlier why they are good places to park your cash and I'm not the only one that thinks that way as V and VI prices have slowly been bid up. Astrea V is solidly above $1 now so I am happy that I managed to build up my position by buying at $1 and lower. 

For Astrea VI, I actually bought some at $0.964 earlier this week but after the August SSB results came out, someone bought VI on  the open market at $0.999! 

I will buy more V whenever it is below $1, and VI is ok at $0.97 but there are not many sellers and so if there are frustrated SSB applicants that need to park their cash somewhere, prices may remain elevated for the time being.

Strategy July 2022: Staying Optimistic

 

As I have posted before, my target is to breakeven in 2022 (0% return) which will protect my 19.7% 2021 return. 

Some tech investors have already seen their entire 2021 profit erased, though the silver lining is that if they had 'time in market', their 3 and 5 year CAGR should be positive so they did not lose money. For those that overtraded, there is of course always the risk that they timed their trades wrongly and may well be sitting on "real losses." 

The  current chart for VWRD shows that June-July was a good buying opportunity and I described how I have been accumulating various ETFs including VWRD when it fell below the psychological $100 level. As the circled portion shows, there were "3 bottoms" during that period but the levels held and the price bounced back.

The TA folks will say that it is too early to tell whether there will be a recovery and that is probably the problem with TA - by the time TA analysis says there is recovery, it seems like everyone else knows - and the price has already gone up quite a bit. FWIW, the price has just crossed 50MA.

As for myself, I am optimistic of a recovery because I feel that valuations now are very fair (not cheap, not expensive) and COVID related recovery will have a positive effect. Current supply chain problems are only temporary problems. 

Checking my portfolio, I will only need the market to stage a 5% rally in order for my portfolio to breakeven for 2022. As we are due to have a summer rally, I can totally see 5% happening and I might even hope for 10% from current levels (which would translated to S&P500 about 4350 at the end of the year). 

Of course, one might say breaking even in 2022 is equivalent to a loss because of the value destroyed by inflation. I guess that is true enough, but I want to keep spreadsheets simple so I'll just record down the nominal $ values rather than do inflation adjustments. As for whether inflation affects my Financial Independence, I think I am on track for my passive income to increase more than the inflation rate.

Reflections on >$10k monthly dividends

One outcome of buying counters that pay dividends is that you get a constant stream of passive income every month. Despite current market conditions, it seems like my passive income will continue to maintain above the $10k/month mark this year. While it is nice to have this extra income to supplement what I am getting from my job, I have no plans to spend it on luxuries this year - due to the $100k COE, I think I'm going to postpone my car replacement till next year (hopefully no major breakdown before that). However, I might treat myself to a nice holiday at the end of the year.

$10k+/month is of course an average as my graph shows. Some months you get more than other months For example, I guess many companies don't pay dividends during tax filing season as their finance department is busy with the accounts.

One reflection over the past few months where I got large dividend payments and various "refunds" (Frasers 3.65% bond maturing, Aviva return of capital, Westpac delisting of ADR etc), is that it forces me to have the discipline to reinvest my free cash flow.. otherwise too much of my cash is being eaten up by inflation. 

By regularly exercising my finger to press the "Buy" button, I avoid the paralysis that can sometimes accompany bearish or highly uncertain market convictions. Hopefully this will make me better prepared to deploy more cash once the bottom is established and the market recovers.

Having a steady free cash flow also makes it easy to rebalance without selling anything. As I mentioned earlier, I have been accumulating Astrea V and VI over the past few weeks as part of my bond component, and I can do this by redeploying my free cash flow instead of having to decide what shares to sell and when to sell them. 

July Strategy: Regular DCA, and Astrea V and VI accumulation

 There is a lot of uncertainty about this market. As I write, market has rallied for 3 days in a row compared to last weeks' decline. Based on this pattern, there would be an equally good chance it was decline again next week. 

I have no conviction what the short term movements are going to be so I am just doing regular DCA while waiting. Bought my regular VWRD/LSPU today and also added a bit of AV.  

As for 2022 as a whole, I'm still optimistic that the market will stage a rally and end the year flat/breakeven.

Got my refund from the delisting of WBK ADR which was a loss-making investment for me. Oh well.

I have also been accumulating Astrea V and Astrea VI. Astrea V looks pretty safe given the size of the reserve account. I'm just using them as a place to park some spare cash to earn higher interest. In terms of risk management, I will not hold more than $100k total of Astrea V and VI combined

Looking forward to applying at the end of the month for the 3% SSB but given the news reports about its yield, I think that it will be heavily oversubscribed. Maybe I'll get $15k if I'm lucky, though I'm not optimistic, hence the need to find alternatives for parking cash.

Dividends Collected: June 2022

 

Quarterly collection of Vanguard ETF dividends this month gives the total collected a big boost.