AskDrWealth: Financial Freedom, $1.5K Salary’s Problem & REIT Criteria

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Great news!

In less than a week, we have over 700 readers joining us and more than 481 engagements happened on Ask Dr Wealth community group, a place where we aim to foster a community of learners who want to become better investors.

There were a ton of high quality and meaningful discussion about financial freedom, stocks strategies and valuation techniques by the community members and the team at Dr Wealth like:


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Most importantly, a big congratulations to Jason Liew, Chua Mao Jie, and Lawrence Sia for winning a pair of Go Bear Personal Finance Masterclass tickets (worth $100) for posting the highest quality questions.

Here are the winners’ questions and the best answers:

Winner #1 – Jason Liew on Financial Freedom

This is a list of questions on financial freedom and passive income. Mainly, how many times of dividend income on expenses is enough to be considered safe and financially free given that expenses tend to increase over time while dividends may drop depending on the market condition.

Jason also asked about whether 3% drawdown rate is recommendable and whether he should diversify his passive income source rather than just relying on one source say dividends.

1) Safety factor is formally 7/4, almost twice.

2) Dividend income fluctuates but people leave jobs not because of high dividends but horrible bosses. You don’t have to quit if you work in a normal environment. Problem for folks like me is that my workplace was dysfunctional.

3) I think it’s ok to safely ignore the simulation models and go for 4% withdrawal. If you workplace is making you sick, you will quit on 8% withdrawal. For really anal folks, go for 3%.

4) More passive income sources the better, but REITS are too tax-efficient at the moment so it would seem that one class of passive income is enough. An income generating hobby is crucial to stay sane, otherwise you will be watching Netflix until you die of old age. – Chris Ng

Andrew Chiak also suggested that “the best thing to do ensure passive income is a few times of yearly expenses.”

Winner #2 – Chua Mao Jie on 1.5K Salary’s problem

Could someone who only manages to save $100 per month and with $40K debt dragging him behind still achieve financial freedom like Chirs Ng? You probably know the answer but the real question is, what can he actually do to improve his finances?

Certainly, he should not even consider investing until he has cleared his debt to prevent incurring more expenses from interest. And the best thing for him to do right now is to find jobs to increase his salary. I don’t know about you but monthly of salary $1,500 is just too low and there are many jobs in the market that pay more than that in which do not require high qualification. Let me know what you think over here (link).

As Jarrett suggested:

“He can do deliveroo or Cisco auxiliary officer. Deliveroo pays 20 dollars an hour if you opt in as a cyclist but use a vehicle to deliver *his a good driver too* or Cisco which pays 12 dollar and 18 dollars as ot. I used to work the latter as it was flexible timing and can earn up to 300 dollars a day if I work 20 hours… I used to work part time there and earn close to 3.4k but that means he have to be 24 /7 ready to snatch for jobs and work like a ____.”

And also:

“Sounds like a difficult situation. Dividends need capital. So he needs to build up the capital by finding ways to increase income without increasing his expenses. Clear his loan first then build capital. I would really focus on increasing income at this point”

Alvin Chow

“Follow like AK. He used to work multiple jobs when he was younger”

Augustine Lim

“still trying to digest. how would someone with an annual income of 18k being able to borrow 40k in unsecured personal loan from bank.. that aside. seems like out of the 400 that goes into insurance aren’t really insurance. could be a good mix of investments/savings. Lastly, 400 in daily expenses might seem a small amount. but if you compare it to his net take home pay, its ~30%, which i believe he could find ways to reduce to save more. just my 2cents”

Eddie Lin

Winner #3 – Lawrence Sia on screening good REITs, Value and Growth Stocks

On the first post, he was asking what are the criteria to determine a growth stock as well as a dividend stock.

Alvin suggested that “Growth stocks are harder to screen but we primarily use the Profitability Factor to determine the profitability and competitive advantage. And we also want to see rising EPS and FCF in the past 5 years. I prefer asset light businesses like tech and services. Need less capital to grow.”

And for dividend stock “free Cash Flow is the key criteria for dividends. FCF should be more than Dividends for most years. We just wrote a piece on it lately [link].”

The next question is on the factors to consider when selecting good REITs. “The three traditional factors are yield, pb ratio and gearing.” said Chris “These seem to work most of the time but empirical testing is required to confirm it.”

Alvin Wang commented that “Should we learn to read financial statement when choosing a REIT. I believe cash flow etc are quite impt too.”

“It is always helpful to read financial statements. REITs are instruments that are less prone to investor mistakes so it may be possible to have simpler strategies that do not require financial statement analysis.” Chris replied.


That’s all for this week’s community roundup.

If you’re looking to become a better investor and you’d love to share your investing knowledge with others, then I’d like to invite you to click on this link to join our Ask Dr Wealth community group (more giveaways are coming soon!).

I’ll see you on the other side!


P.S. If you don’t find the above interesting, that means you might be a seasoned investor! If so we’d love to invite you to share your investment experience with us by taking part in this contest:

Here’s how you do it:

  1. Join Ask Dr Wealth Facebook Group
  2. Post your best answers on post “What important investing lessons you wish you knew earlier?
  3. The best answer wins The Singapore Permanent Portfolio by Alvin Chow (worth $16.90). Contest ends 27 March 2019