Friday, February 22, 2019

2019 Monthly Projected Income from my foreign investment

Most of my foreign investment are bonds , reits & preferred stocks.These investments have quarterly, monthly and semi-annual payout depending on the investment instruments. Therefore, it is quite easy to work out my estimated dividend and interest payouts every month throughout the whole year.
As I am planning for my retirement soon, I would like to know my projected monthly income. This is like having a regular paycheck from your regular job. Once we have some kind of assurance of our payout, we can plan our expense around what we received and not overspend during our retirement.

It takes me about 5 years to build an overseas investment portfolio that enable me to ladder my payout to suit my retirement planning. Laddered is a strategy that attempts to minimize risks associated with fixed-income securities while managing cash flows for the individual investor. Specifically, a bond ladder — which attempts to match cash flows with the demand for cash — is a multi-maturity investment strategy that diversifies bond holdings within a portfolio. It reduces the reinvestment risk associated with rolling over maturing bonds into similar fixed-income products all at once. It also helps manage the flow of money — helping to ensure a steady stream of cash flows throughout the year.

Excerpt from Investopedia :There are two main reasons to use the ladder approach. First, by staggering the maturity dates, you won't be locked into one particular bond for a long duration. A big problem with locking yourself into a bond for a long period of time is that you can't protect yourself from bullish and bearish bond markets. If you invested the full $50,000 into one single bond with a yield of five percent for a term of 10 years, you wouldn't be able to capitalize on increasing or decreasing interest rates.

For example, if interest rates hit a bottom five years (at maturity) after purchasing the bond, then your $50,000 would be stuck with a low interest rate even if you wanted to buy another bond. By using a bond ladder, you smooth out the fluctuations in the market because you have a bond maturing every year or so.
The second reason for using a bond ladder is that it provides investors with the ability to adjust cash flows according to their financial situation. For instance, going back to the $50,000 investment, you can guarantee a monthly income based upon the coupon payments from the laddered bonds by picking ones with different coupon dates. This is more important for retired individuals because they depend on the cash flows from investments as a source of income. Even if you are not dependent on the income, you will still have access to relatively liquid money by having steadily maturing bonds. If you suddenly lose your job or unexpected expenses arise, then you will have a steady source of funds to use as needed.

Currently , I am projecting 31k USD from overseas portfolio which supplement my SGX portfolio which yield about $SGD18K & a FD of SGD4 k P.A in 2019.



4 comments:

  1. Hi enjoy your interest articles on overseas bonds, is there any other taxes to take note for MLP Master Limited Partnerships and ETD Exchange-Traded Debt?

    Also what is major and little known risk about this type of securities? are they liquid enough to trade in the stock market?

    Thank you

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    1. There is no Withholding tax on ETD Exchange-Traded Debt . As for MLP Master Limited Partnerships , only non-US domicile will have no WHT. I have filtered a list of non-US domicile MLP and I am planning to write an article on MLP and ETD.Stay tuned. Thanks

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  2. Enjoyed your writings very much,... very, very informative indeed. Looking forward to your article on MLPs and ETDs. Have you posted the article somewhere ?

    CK
    wayneriley888@hotmail.com

    ReplyDelete
    Replies
    1. Hi, I just published an article on ETD.. https://globalincome50.blogspot.com/2019/05/us-exchange-traded-debt-etd-aka-baby.html

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