Calculate your Portfolio Performance

How do you measure your portfolio performance if you bought and sold stocks, and received dividends during the year ? You can measure your return using the Internal Rate of Return (IRR).  IRR is used to measure the average annual return when capital were added or withdrawn during the investment period.

This calculation is tougher than expected but it can be easily determined using “XIRR” function in Excel.


Note: inflow and outflow of funds are reflected in positive and negative values respectively.

Formula = XIRR (‘select $’, select dates’)

Knowing your rate of return will help you make better financial decisions.


Do you know much dividend yield you are getting?

I was surprised when an ex-colleague of mine seasoned in stock investment asked me how do I determine the dividend yield.   I think all investors should be equipped with this knowledge for the purpose of stock selection.

What is dividend yield?

The dividend yield is a financial calculation which tells you how much money you will earn for every dollar invested in a stock at cost or at today’s price based on current dividend rate.   At a dividend yield of 3%, it means that you would expect to collect $300 dividend income per year at the current rate from a $10,000 stock investment.

To calculate the dividend yield of a stock, you may retrieve the dividend payable /paid from SGX’s website ( Let’s take Keppel Corporation as an example:

Keppel Corporation paid cash dividend of $0.30 (final dividend of $0.22 on 06 May 2016 & interim dividend of $0.08 on 10 Aug 2016) per share in 2016.

  • Dividend yield on Cost

If you owned 1,000 shares at a purchase cost of $6.00 (note current market price could be currently at $5.40), the dividend yield is simply taking

                                  Dividend yield= $300 ($0.30 per shares x 1000 shares) cash dividend received


$6,000 ($6.00 x 1000 shares) stock investment

The answer is 5%.

  • Market Dividend yield

If you do not own any Keppel Corporation shares and would like to know the yield based on current market price:

                                   Dividend yield= $300 ($0.30 per shares x 1000 shares) cash dividend


$5,400 ($5.40 x 1000 shares) stock price

The answer is 5.56%.


Apart from the dividend yield, stock investor is also entitled to capital gain (i.e. increase in the price of stock).  Expected stock return should be determined before you move your money from safer bucket like fixed deposits or government bonds into stocks.  Stock investment can generate greater return but it is also more risky.

The Singapore saving bonds which is capital guaranteed is currently generating around 1.75% return (if you hold the bond for 10 years to maturity), thus any stock investment return using cash should be more than 5% to compensate for the risk taken.

However, if you are using your CPF which is giving a return of 2.5% to 4%, the expected stock return should be at least 7% to 9% to compensate for the risk taken.  Any return lower, it might be better to leave the money in your CPF account.

How to invest in properties with as little as $1,000



We have all heard stories about people making their fortune through real estate and lament that it is out of reach for those without large sum of money. Though you may not be able to buy property and earn rental income directly, you can still earn such income from investing in real estate investment trusts (REITs).   REITs allow investor to have the opportunity to invest in real estate with as little of S$1,000, unlike investment in physical property will require a minimum $100,000.

Singapore REIT (S-REIT) is currently giving at least 5% dividend yield which is higher than the Singapore saving bonds 2%.  With careful planning and research, it is possible make solid gains from REIT.

  1. What is a REIT
  • Trusts which own properties e.g. shopping malls, office, industrial buildings, hotels and hospitals
  • Collect rental income
  • Listed and traded on stock exchange, thus it is more liquid than physical property
  • 90% of net income obtained by REIT is paid out as dividend. In addition,  investor can also enjoy the capital appreciation on the properties purchased by the REIT
  • First started in the U.S. during the 1960s
  1. Specific rules of S-REIT
  • No corporate income tax if REIT distributes at least 90% of its income
  • Maximum debts REIT can borrow : cannot exceed 45% of total assets. This ensure that REITs do not over-borrow
  • Not more than 25% of deposited property in development and uncompleted projects. At least 75% in income producing assets.  This rule ensures that amount of income for distribution is not affected.
  • Carried out at least 1 valuation per financial year by professional valuer.

The first S-REIT in Singapore was launched in July 2002.   As of now, there are in total around 40 REITs and property trusts listed in the Singapore Exchange.

  1. How do you value a REIT

 i) Net Asset Value (NAV) method

The NAV method gives an indication of the value of the REIT.  The primary value of a REIT comes from its properties less what it owns (liabilities).

       NAV= Value of total assets less total liabilities

Examples of Assets are properties, cash, associates, joint ventures, whilst examples of Liabilites are bank loans, trade payables.

You could pull these numbers from the balance sheet statement in the REIT’s annual report

The limitation of NAV method is that it is only reflect based on current state of the market and valuation is largely dependent on property valuer’s assumptions.   And property valuation is not the actual transacted value which could be lower

ii)Distribution Yield Method

This method indicates the distribution per unit which is taking distribution per unit (DPU) divided by Price.  DPU is derived as follows:


Distributable income

Total number of units outstanding

Distributable income is derived as follows:

Gross Property Income

Less: Property operating expense

Less: Management fees

Less: Trustee Fees

Less:  Finance Costs

Add:  Net effect of non-tax deductible items

Distributable income

Please note that this method is using historical DPU and may ignore future growth potential.   A forward looking DPU is more appropriate.  You should also compare the yield with other REIT within the same sector.

iii)Discounted Cashflows (DFC) Method

This method is frequently used by research analysts.  The value of REIT is based on the present value of future cashflows.  As this method requires a lot of assumptions, I will not elaborate on it.

Below is my checklist for REIT investment

Qualitative checklist
1 Sponsor A strong and reputable sponsor will play a very important role in its growth
2 Track record Check its historical DPU track record
3 Sector Outlook Check the current sector outlook
4 Growth drivers Are there any planned acquisition or Asset Enhancement initiatives which grow its DPU?
5 Pedigree Compare to other REITs in the same sector. Is it the best?


Quantitative checklist
6 Yield Should generate an attractive yield level
7 Gearing Preferably not close to 45% so that the REIT can still access to debt for future growth
8 Discount to NAV Look for attractive discount to NAV
9 Property Statistics Check the occupancy level trend and the tenant’s sales. Are the rental reversions favorable or unfavorable?
10 Debt Profile Check its credit rating , outlook on debt and the average maturity of its outstanding debt.



How to invest in Gold and Silver



With increasing global economic uncertainty, precious metals are becoming more popular in recent years.  Precious metals like gold and silver used as a hedge against currency devaluation and are also regarded as a “safe” haven during time of economic uncertainty.  So, how can you gain exposure to gold and silver?

1. Physical gold & silver

You can buy physical gold and silver in bulk form casted in bars or minted into coins.  Physical ownership involves storage, insurance and transactions costs.  It is not worth the effort if you are a small investor.

2. Buy stock in company dealing with gold or silver

You can invest in gold mining companies such as Yamana Gold (AUY) and Agnico Eagle Miners (AEM).

 The share price of the stock is also subject to the management of the company and may not follow in tandem with the gold and silver price.  For greater diversification, you could consider Unit trust or Exchange traded Fund (ETF).

3. Unit Trust or ETF

Unit trust is a fund formed to manage a portfolio of stock exchange securities and is offered by banks, insurance agents or financial advisors.

ETF is a fund that tracks the performance of a basket of stocks or commodities.  ETF is traded on the stock exchange and be purchased via internet trading or through your remisiers or brokers.

Advantage of ETF over unit trust

Unit trust ETF
Sales charges 3%
Brokerage commission NA 0.2% to 0.4%
Exact selling price Not available Available

I prefer to trade using ETF as its transaction cost is 86% cheaper compared to Unit trust.

The selling price of unit trust is only available after market close as it is based on forward pricing which will only be known after the market closed and the fund manger computes the per unit net asset value of the fund.  On the hand, the exact selling price of ETF is available real time based on prices listed on the stock exchanges.

Risk of ETF

ETF is subject to tracking error if the fund does not mirror the underlying index.  However, this type of tracking error is generally not significant.

If ETF is quoted in foreign currency, exchange rate fluctuation could also pose another risk.

How to invest during uptrend and downtrend

You could invest in different type of ETFs based on your view on the price trend of gold and silver prices.  I have listed some ETF that you could consider:


Uptrend ETF Downtrend ETF
SPDR Gold Trust (GLD) Proshares UltraShort Gold (GLL)
Proshares Ultra Gold (UGL) Proshares UltraShort Silver (ZSL)
Ishares Silver Trust (SLV)  
Proshares Ultra Silver (AGQ)

Note: downtrend ETF will have a “Short” as part of its name


Gold and silver investment is volatile; hence I would not invest more than 10% of my capital.  Please note that Silver being more volatile than gold is also not for the faint-hearted.

I do not invest in any gold bars or coins but I will continue to hold on to my gold jewellery which will come in handy during any sovereign or bank default.