2024 Q3 P/L Challenge

As rates fall, income-producing assets such as REITs (Real Estate Investment Trusts) and high-dividend stocks become more attractive. These assets tend to benefit from lower financing costs and investor demand for yield. Hence, I started to build my dividend portfolio focusing on Singapore banks and REITs in August 2024 with the expectation of impending interest rate cuts. I particularly like Singapore REITs (S-REITs) as some of these quality REITS have demonstrated attractive dividend yield and consistent dividend payout ratio. The share price of S-REITs has been on the downtrend since the hike of the interest rate. The begin of rate cut cycle is expected to improve the property valuation and boost the net asset value of the assets of the REITs.

My dividend portfolio also provides diversification and cushion to my growth portfolio focusing on US stock markets. During the market pull back in early September, my dividend portfolio unexpectedly demonstrated its resilience. S-REITs such as $FRASERS LOGISTICS & COM TRUST (BUOU.SG)$ $Cromwell Reit SGD (CWCU.SG)$ flew up so quickly in the past one month before I could accumulate more position.

Market likely will remain volatile with the presidential election around the corner and the concern on whether a soft landing can be achieved.  I will continue to stay nimble and accumulate quality growth and dividend stocks when opportunities present.

Here's my thought on the Do’s and Dont’s of building one’s portfolio.

1. Know your risk tolerance & investment horizon:  As the saying goes – high risk high return. While growth stock could provide higher return than bond/dividend stock, it could also be more volatile in the short term. Hence it is important  to adopt a long term horizon mindset when come to investing.
2. Diversification: This could be of different assets class, industries and countries etc. For my case, I have both growth portfolio focusing on US stock market and dividend portfolio focusing on SGX & MYR stock market.
3. Portfolio allocation & weightage: It would be helpful to know how many stocks does one intend to own and how much allocation to each stock. Some would think that one’s portfolio should consist of 15-20 stocks while others think it will be too much to handle. It all boils down to individual preference and how much time you have to manage the different stocks.
4. Time in the market than timing the market: Stay invested rather than predicting when will the market bottom.
5. Do your own due diligence: Instead of taking tips or rumours from others, always go back to the fundamentals of the company for investment purpose.

5 Don’ts
1. Don’t be affected by macro news: If one is investing in good quality companies with long term horizon, short-term market news are just noises.
2. Don’t use margin excessively: While buying on margin brings higher ROI, it also can lead to much higher losses.
3. Don’t put all eggs in one basket: Hence, diversification and portfolio allocation as shared above is important to reduce chances of losing all of the money at the same pace.
4. Don’t follow the herd: Avoid herd mentality. As the great investor Warran Buffet put it – Be greedy when others are fearful and fearful when others are greedy.
5. Don’t  ignore the power of compounding interest: Compounding is nothing but consistency coupled with patience. The Dividend Reinvestment Plan (DRIP) feature on Moomoo is a great way for investors to automatically reinvest the US stock’s cash dividend into the underlying stock.
Last but not but least, let’s continue learning and surrounded ourselves with community with positive investment mindset like what Moomoo has created for us. Thanks for reading and happy investing!