Friday, July 15, 2016

Building A Bigger Base For My Investment Portfolio

This post is written in reference to a fellow blog and buddy LP in an article which he wrote here.

Like him, I have a lot of similar thoughts on this subject matter regarding the different priorities at different points in life. There is a bigger learning to takeaway from this for those who understand it better.

There is no doubt that I am still in the building phase of my investment portfolio, which technically means I cannot rest on my shoulders, drop my worries and let nature runs its course. There is a goal which I wanted to achieve in my investment portfolio every year and that is to achieve a minimal of 10% return. This can be achieved by both dividend and capital gain. An ideal scenario would be 5% dividend and 5% capital gain. When stocks are high and they push the yield to a low 5% without any room to run for further capital gain due to stretch valuation, my immediate reaction is to sell.

There is no right or wrong with buying or selling at a certain period. So far, it works a perfect miracle for me. This may or may not be sustainable, until I prove another 5 to 10 years otherwise.

To grow the portfolio by injecting a fresh capital, I will have about $25k / year on average from 2017 onwards. There is a good announcement which I am expecting to make which will push the savings rate visually lower than before. Based on the latest Jul portfolio of $433k, the yearly capital injection represent a 5.7% growth on the portfolio. That is hardly significant if I were to reference based on my 10% goal. Working out and growing both organic and inorganically will create the most optimal scenario, but my energy will run low over the years. 

From understanding the above scenario, I can roughly know how long more I need to sustain my working lifestyle. I can either stretch the years of working or grow the portfolio inorganically at a higher and faster rate.

This does not mean that working is not an important factor when you are at the "growing the portfolio" stage. A 100% return on a $1k base is not as powerful as a 5% return on a $100k base. The earlier we work out those numbers, the better we understand what and where our situation are and we can channel our energies towards it better.


  1. Good that both of you (LP and you) have written the Ground Rule for retail investors. Grow our account size from our job.

    $XX,XXX or $XXX,XXX dividend income will come naturally after that.

    1. Hi Uncle CW

      Yea i guess need to remind ourselves and the people on the ground. The uptrend market is keeping people feet away from the ground.

  2. Sounds like you have another bundle of joy coming.

    1. Hi FFE

      Yes it's a happy problem which I am glad to undertake.

    2. On behalf of Singapore, I thank you for contributing to our nation-building :) Congrats!

  3. nice post. well done on your accomplishments!

    good of you to begin so early before having your children.
    a lot of people in their 20s would go have fun first instead.

    1. Hi SMK

      Thanks for your kind words.

      I am incredibly lucky to realize it earlier and not later. Otherwise, I'll be fighting for the rat competition even harder and faster, perhaps at the expense of another.

  4. It will take many years of patience to build a large investment base portfolio.

    1. Hi SR

      Indeed, its certainly not done overnight.

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  6. Working class have no choice but start investing in the stock market from a small capital.

    But dividend incomes from stock is quite substantial.
    UTD record show 33% is from dividend income 67% from gain.
    This is from 1993 UTD.
    i use Usoft Money for tracking.

    1. Hi Temperament

      I agree dividends do make up a lot of money over time, especially since we have for the rest of our lives compounding year after year.

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