Happy Index Investing in 2014

A feeling of deja vu. The Straits Times Index ETF roughly ended the same way it ended 2012, at $3.21.

As a real life case study, I have bought around 1,400 shares for Nikko AM STI ETF100 (G3B), at an average rate of roughly 100 shares each month. The average cost per share (excluding trading expenses) currently stands at S$3.2486, a little over a cent and a half higher than the price now (S$3.23) as I’m writing this post. Dividends collected came to a grand total of S$71.50 for 2013.

This is not Dollar Cost Averaging. I would have preferred to DCA, but we will have to wait for the Singapore Exchange (SGX) to reduce the standard board lot size to 1 unit before it is possible. Let’s keep our fingers crossed that we would be able to trade in lots of 100 units by this year, and in single units by 2015.

As you can see from my purchase log, I’m not too particularly about when I make the purchase in the month. Start of the month, end of the month, middle of the month – I’ve done it all. Heck, I’ve even forgotten during a month or two. As long as I have the discipline to stick my program, I’m guessing everything will average out over the course of my investment lifetime.

Here’s wishing you a Happy New Year! While wealth is important, there is nothing more important than good health, and happiness. May you have plenty of these two!

Celebrating 12 Months of Index Investing – Free Book Giveaway

I have moved! All present and future blog content have been migrated over to The Turtle Investor. All content on this blog will still be kept here, just that most updates will now go to my new blog instead.

The new website will contain content from my blogs relating to investment, personal finance as well as alternative income. See you there!

- The Turtle Investor @ www.turtleinvestor.net

To get a chance to win Free Book Giveaway (click here), please visit my new blog =)

Nikko AM STI ETF Highest Dividend Yet

Based on the latest information from SGX.com, the upcoming dividend payout from Nikko AM STI ETF (yes, they pay dividends if you didn't know) is the highest ever. Looking at historical data, Nikko AM STI ETF has traditionally lagged behind SPDR STI ETF when it comes to dividend payouts.

Nikko AM STI ETF
October 2013 - $0.045
May 2013 - $0.035
October 2012 - $0.035
May 2012 - $0.030

SPDR STI ETF
August 2013 - $0.045
February 2013 - $0.040
August 2012 - $0.040
February 2012 - $0.055

If you have been monitoring Nikko AM STI ETF prices, you might find it interesting that on Ex-date (Thursday, 10-Oct-2013), the price promptly dipped by the dividend amount to $3.18 together with a massive volume of 1,219,800 shares changing hands. This is considered a huge deviation from the norm because the daily average volume (past 3 months) is only 79,000 shares.

Happy Indexing!

NIKKO AM SINGAPORE STI ETF Ex-Date 10-Oct-2013

Upcoming Nikko AM STI ETF (Symbol = G3B) dividends.
Information extracted from SGX.com.

Expiry Date - 10 Oct 2013
Record Date - 14 Oct 2013
Date Paid/Payable - 31 Oct 2013
Dividend - SGD 0.045

Keching!

Expected Grand Total = SGD $54.00 ($0.045 x 1200)

The 10% Stock Picking Rule

Once again, this post was inspired by my readers who are looking for something more than Index Investing. One day, what if you can't help yourself and have an incredible urge to deviate from Index Investing? We are only humans, after all. Does this spell total disaster? Don't worry, you'll do just fine.

In the Millionaire Teacher's last chapter, Andrew Hallam recommends that if you really cannot refrain from picking individual stocks, do not commit more than 10% of your portfolio for stock picking. This is one rule that I agree with, and stick to religiously.

Like I have mentioned previously, this blog is about a personal story. A real story. My story. I won't kid you and declare that I don't pick individual stocks. I like to keep my finance journey fun. Who says growing my wealth cannot go hand-in-hand with having some fun?

The next question is, what stocks am I holding on to, besides STI ETFs?

Apple Inc. (AAPL) <USD>

No. of Shares : 1

Buy Price : $434.04
Prev Close : $489.56
Intention : Short / Mid Term

CapitaMall Trust (C38U) <SGD> 
No. of Shares : 1,000

Buy Price : $1.85
Prev Close : $1.98

Intention : Long Term

Both are very interesting companies which appeal me for a variety of reasons.

Trivial Question of the Day

Q : What does Apple and Capitamall Trust have in common?

A : Both pay quarterly dividends.

PS -
It was only a little more than a month ago that the STI almost dived under 3,000 points, halting at 3,004 points. Looks like it is sitting tight at 3,147 points today. Life goes on.

Government of Singapore Investment Corporation To Embrace Index Investing?

The world's eight biggest state fund with its portfolio valued at $248 billion is moving towards Index Investing. For a start, GIC is splitting its portfolio into two parts - one that is actively managed, and another tracks the market.

GIC Pte, manager of more than $100 billion of Singapore’s reserves, is changing its investment strategy for the second time in three decades to be more flexible as the global outlook becomes “complicated.”

GIC will split its portfolio into one that’s actively managed, and another that tracks the overall market, it said as its annual report showed returns were little changed. The company didn’t say how much of the assets will be managed or indexed against the market.

Source : Bloomberg 

Should I Care If The Straits Times Index Goes Under 3,000?

What a difference two weeks can make, you may ask.

 Two weeks ago, I bought 1 lot of Nikko AM STI ETF at $3.30. Since then STI ETF has been in a downward spiral. What is the price today? $3.09!

Okay, this may seem counter-intuitive to you, but does it matter to me now that it has dropped $0.21 (Omg! A loss!) in two weeks? Not at all! In fact, I hope that it will FALL even more.

Let's imagine I'm going shopping for something basic like groceries at Cold Storage supermarket. Assume I'm a Coca-Cola addict and drink it on a daily basis. Okay, I know it is not healthy but that's not the point here.

Do I like it when the price of my favourite Coca-Cola goes up? Nope. I want it to fall! Since I'm a Coca-Cola addict, I'm going to buy Coca-Cola regardless of the price increases (or decreases). Obviously, I would want the price to drop so that I will pay less for my daily fix of Coca-Cola. Makes sense?

Now, let's apply the same logic to STI ETF. Assume I'm a very disciplined investor in STI ETF and make a purchase every month, regardless of the price. Logically, I would want the price to be as low as possible when I'm stocking up on STI ETF so that I can buy it at a "discount".

The price only matters to me when I'm selling STI ETF - simple as that.Once you get used to this concept, you will find that price fluctuations is nothing more than mere distractions.

Meanwhile, I can look forward to Nikko AM STI ETF bi-annual dividends in October. Assuming I have 1,200 units by the expiry date, I can potentially pocket S$42 based on last year's dividend of $0.035.

Cheers!