Charity to Tzu Chi (慈济) with REITs & Business Trusts Investing Strategies for Passive Income

Ein55 Newsletter No 069 - image - Charity - REITS

Dr Tee, Ein55 Mentor & Graduates have together organised 4 charity investment courses (REITs/Business Trusts in Nov 2015 and May 2017, High Dividend stocks in Mar 2016, and Discounted NAV stocks in Sep 2016) in the past 2 years, donating net income of around $70,000 to Tzu Chi 慈济 (Singapore). We hope to inspire more Ein55 Graduates to reach out the society, helping others who are in need.  More importantly, they have also learned the secrets of making money through investment. When more Ein55 Graduates are successful financially, they could also contribute back to the society to help more people in future.

Here are key learning points from the recent Charity Course on REITs and Business Trusts:

1) Invest for dividend income is one of the important criteria that stock investor must not ignore because historical data shown that

– S&P 500 (1932 to 2014) – dividend contributes to 45% of portfolio return

– STI 30 (2003 to 2013) – dividend contributes to 49% of portfolio return

 

2) What is REITs (Real Estate Investment Trusts)?

REITs are collective investment schemes that invest in a portfolio of income generating real estate assets such as shopping malls, offices, hotels or serviced apartments and hospitals.  It is also a type of security that can trades on major exchanges like other listed securities.

– Assets of REITs are professionally managed

– Revenues are derived mostly from rental payments, >90%.

– Net income generated from assets must be distributed at least 90%, quarterly to unit holder.

 

3) What is Business Trust?

Business trust is an investment vehicle structured so that a single company, known as the “trustee-manager”, holds and operates business enterprises for the benefit of its investors but the unit holders do not have any operational control or shareholders’ rights.  Business trusts allow retail investors to have a direct exposure to cashflow-generating assets, such as utilities, shipping, sea port and it is suited to any businesses involving high initial capital expenditures with stable operating cash flows.

 

4) 7 Risk factors for REITs & BTs analysis are

– Market Risk and Income Risk which are intervene each other

– Foreign Country risk especial currency exchange rate change

– Concentration risk – depend on single property or few tenants

– Leverage risk – revalue down of asset resulting hit gearing limit

– Refinancing risk – unable to secure new loan or new loan at higher cost

– Liquidity risk – difficult to buy/sell portfolio asset

 

5) 4 common growth strategies adopting by REIT manager are:

– Acquisition – from sponsor or 3rd party

– Asset Enhancement Initiative (AEI) – shopping mall to increase NLA

– Organic growth – positive rental revision and increase occupancy

– Development & re-development – cap limit increase to 25% from Jan 2017

 

6) Best timing to Invest in REITs and Business Trusts will be

– Long-term Optimism and Mid-term Optimism < 25%

– Average dividend yield over 8%

 

We should drive the money (helping others when you are successful), not driven by the money (making money for own gain).  Investors should learn the unique Optimism Strategies with FA (Fundamental Analysis) + TA (Technical Analysis) + PA (Personal Analysis) developed by Dr Tee to choose strong global stocks, buying them at low price, then holding for consistent dividend payout or selling for capital gains.  Free high-quality investment courses are provided by Dr Tee to the public.

 

Bonus #1 for Readers:  FREE Investment Courses by Dr Tee

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How to Pay $50 to Exchange for $100 in Hongkong Land?

We could apply discounted asset strategy to buy good business at undervalue price.  One simple method is to buy strong property stocks with low Price-to-Book ratio (share price divided by net asset value).  Hongkong Land (H78.SI) is a property stock listed in Singapore with commercial properties in Hong Kong, Singapore and China.  Currently Price-to-Book ratio is exactly 0.5, at its historical low (see chart below), owing to falling share price and consistent growing net asset value.  If an investor owns Hongkong Land at current share price (about US$6), it is as good as owning a portion of Hongkong Land properties at 50% discount. This is a combination of value investing (buying at discount) and growth investing (company with growing business, share price went up 8 times over the past 15 years).

However, a trader or investor needs to apply optimism strategies to know the investment clock, when to buy and sell Hongkong Land.  Due to cooling measures of property in Hong Kong and Singapore with slowdown in economy, the market sentiment has corrected Hongkong Land to 26% Optimism.  It means the stock has 26% downside and 74% upside from long term perspective, Reward to Risk Ratio (RRR) nearly 3 to 1.  Optimism is a probability calculator, we could know the chances for trading or investing in short term, mid term and long term.

Ein55 Newsletter No 029 - image - Hongkong Land

Currently Hongkong Land is under both Level 2 crisis (bearish Singapore property market) and Level 3 crisis (Hong Kong Hang Seng Index at low optimism), suitable for medium term trading but technical analysis should be applied before entry.  For long term investing, this stock may be considered during Level 4 crisis (global financial crisis) one day when optimism of world stock indices are low.

Ein55 Charity Course: High Dividend Stocks (Learn Investing & Helping Needy People)

Ein55 Newsletter No 021 - image - Charity Course

The first charity course on REITs / Business Trust in Nov 2015 was a success (read report here), helping Ein55 Graduates in enriching the investment knowledge, helping other needy people at the same time. Chye Tin, an Ein55 Graduate Mentor and successful investor, together with Dr Tee, have organized the second Charity Course (High Dividend Stocks) on 12 Mar 2016.

The responses from Ein55 Graduates were overwhelming, about 230 students have attended this Charity Course, learning how to choose high dividend stocks, when to buy and sell them in future with investing-for-income strategies, using Fundamental Analysis, Optimism Methods and Technical Analysis.

The net income from this charity course is donated to Tzu Chi to help more needy people.  It is an honour that the CEO of Tzu Chi慈济(Singapore), Mr Low Swee Seh, also attended this charity event, sharing how Tzu Chi has helped numerous needy people regardless of races, religions and nationalities.  Through the combined effort of all Ein55 Graduates, we have donated an amount of $15,100 to Tzu Chi in this second Charity Course.

We hope to inspire more Ein55 Graduates to reach out the society, helping others who are in need.  More importantly, they have also learned the secrets of making money through passive income investing. When more Ein55 Graduates are as successful as Chye Tin, they could also contribute back to the society to help more people in future.

Here are a few useful learning points from Chye Tin in this High Dividend Stocks course:

1) We shall always ask will the dividend SUSTAINABLE and will the dividend continue to Grow? We should understand what are the factors affecting their business income? A companies without Free Cash-flow will not able to sustain the dividend pay out for long term.

2) Telecom, Utilities and Consumer Staples are considered defensive sectors that can make money in any economic environment. People are not going to shut off their power, give up their mobile line or Internet or stop buying toothpaste, food & drink when times get tough. The more predictable the revenues and earnings, the easier it is to give back some profits to shareholders.

3) For dividend investing, even in the right sector, we shall seek for the right stock that exhibited high dividend characteristic, then we shall study in detail the financial reporting of each sectors and do the peer comparison of the selected stocks in the same sector.

Q3/2015 Global Stock Market Correction: Mid-Term Opportunities to Buy Low Sell High

Chart of Global Stock - 2015-07-07

On 8 Jul 2015, I shared a newsletter when many readers were troubled by the global stock market correction (which turned out to be a mid-term low point if you compare with later second chart).  Figure above shows that in the past 1 month with charts till 7 Jul 2015, global stock market encounter series of negative news, from Greece crisis, bullish turned bearish China market, to speculation of possible US interest hike, etc.  As a result, most traders get worried, following herd mentality to exit or dare not enter the stock market again, especially observing more than 30% correction in China SSEC index.

After 1 week later, now (as of 15 Jul 2015) the global market has regained the confidence after Greece crisis has a new political solution, China stock market is strongly supported by the government. The figure below shows a strong rebound in global stock market. The last fearful point on 8 Jul 2015 happened to be a low valley.

Chart of Global Stock - 2015-07-14

 

“Normal” retail traders would wait for friends around them to make money first, after share price is up more than 10%, only then having the confidence to enter the stock market at relatively high price.  This is happening in China stock market now, those who got burnt with earlier 30% fall, some start to try their luck again with rising price.

Similarly, when market turned bearish, most people are losing money, despite significant discount given, majority of the traders would prefer to wait.  They have to pay for premium in price to exchange for confirmation in trends to overcome their fearful emotion.  The mentality of buy high sell higher depends on the support of market speculation which may not be sustainable. Any major global news could potentially erase the speculated gains overnight.  Since we cannot accurately predict the future, we need to always buy low sell high to put ourselves at low risk, regardless you are a short term trader or a long term investor, only difference is just the timeframe of interest: buy low sell high for 1 month or buy low sell high for 5 years.

In a bullish stock market, as long as the optimism level is not too high, every correction due to bad news is an opportunity for safe entry for mid-term trading.  Investing Master, Jim Rogers’ open secret of success is “Buy Low Sell High”, but how low is considered low? The world’s richest investor, Warren Buffett, has a famous saying of “Be greedy when others are fearful”, but how fearful is considered too fearful?  The Ein55 Optimism Investing Strategy developed by Dr Tee will provide the answers.

 

Free eBook on Investment – Ein55 Global Market Outlook (2014 Q1-Q2 & Beyond)

Are you interested in a free eBook on investment?  I have compiled my views on global and regional investment markets outlook into an eBook (version for 2014 Q1-Q2 and beyond), total 30 pages in a format suitable for online reading, consisting of the following key topics:

Table of Contents

1.  Mass Market Sentiment Survey

2.  Review of 2013 Global Markets

3.  US Economy and Market Outlook

3.1  US Government Debt Limit

3.2  Tapering of QE3

3.3  Fed Interest Rate Hike

3.4  US Job Market

3.5  US Property Market

3.6  US Bond Market

3.7  US Dollar, Inflation & Gold / Silver / Oil

4.  Regional Economy and Market Outlook

4.1  Europe Market

4.2  China Market

4.3  Hong Kong Market

4.4  Japan Market

4.5  Southeast Asia Market

5.  Singapore Economy and Market Outlook

5.1  Singapore Stock Market

5.2  Singapore Property Market

6.  Stock Market Potential for 2014 and Beyond

7.  Conclusions and Recommendations

 

This eBook will be updated about every 6 months on the latest development and changes in global and regional investment market, so that the readers may better prepare themselves for the potential investment risk and opportunity ahead.  Comments and suggestions are welcomed for improvement of this eBook.

For those who are interested in further details, you may sign up for my market outlook workshop and short courses on stock investing, total value worth $555 (free for first 30 newsletter readers) You may share this link for free eBook download and free investment education programs to your friends:

http://www.ein55.com/free-public-education-on-investment-programs-by-dr-tee

 

Code

Programs

Comments

M11

Market   Outlook Workshop:Global &   Singapore Stock Market in the Year of Horse 2014

English

7:00pm – 10:00pm, 20 Mar 2014 (Thu)

C1

华语股票投资课程:市场乐观指数战略: 股市获利100%的秘密

华语

7:00pm – 10:00pm, 25 Mar 2014 (星期二)

S7

Full-Day   Investment Course:Mega-Market-Cycle   Stocks Investing with Ein55 Styles for 100% Capital Gain

English

12:30pm – 6:30pm, 29 Mar    2014 (Sat)

S8

Full Day Investment Course:Mega-Market-Cycle   Stocks Investing with Ein55 Styles for 100% Capital Gain

English

12:30pm – 6:30pm, 30 Mar    2014 (Sun)