Stock Portfolio Down by 50%. Feeling Weak in My Stomach

My Stock Portfolio is down 50%. I am totally weak in my stomach when I opened my UOB Kay Hian today to take a look at my portfolio. This global financial crisis has virtually wiped away all my gains over the past few years. I fear that the worse is still to come.

Nevertheless, to drive up my passive income, I have have decided to buy 1000 x First REIT @ $0.425 and 2000 x K1 Ventures @$0.205.

Cash is really King in this kind of stock market now. And I have been thinking about quitting my job. I keep thinking what if i had liquidated all my stock holdings earlier this year. I would have been able to use all my current paper loss to pay off my car loan! Aargh..

This is a painful lesson for me....I was too rash in making certain financial decisions...
But guess I still have 30 over more years infront of me. Compared to those retirees who bought the Lehman bonds, I am much better off. And I seriously thank God for that. I cannot imagine retiring and then losing all my retirement money due to bad investments. I really really cannot imagine. .. it is a totally scary thought. For the retirees, it is like lsoing all their 30 years of savings and hard work..... all gone down the drain just because of 1 single financial decision.

Passive Income is the way to go in these bad times.

A Jap Car In My Parking Lot is worth 2 Ferraris in Someone else's Parking Lot

It is amazing what all these bad news are doing to my mind (and of course my stock portfolio too).

The global financial crisis is making me afraid and I have been thinking of liquidating my portfolio. Surely the stock market will go lower and I can buy back all the stocks I own now at a better price..

This is so typical. When the stock market is good, I tell myself that I will wait for the crash to start buying into stocks. Now that the crash is here, I lack the guts to walk the talk and to continue buying stocks.

So.. I took a few days off blogging, a few days off thinking about investments, and asked myself this: "Am i addicted to money?" "Do I really want money so much?"

And the answer was " NO". I would rather spend my time with family and friends then be earning money or working. I would rather have a cheap Japanese car to drive NOW than to save up that money, invest it and be able to buy a Bugatti or Ferrari only 10-20 years down the road. As the proverb goes: " A jap car in my parking lot is worth 2 x Ferraris in someone else's parking lot." Why save up money that you can spend today?

So what should one do in this financial crisis?

Of course, the answer is to buy low sell high. That is the obvious answer, but do I have the guts to do it?

Should I spend $4000 to invest in stock that will give me 10 per cent yield per annum ($400 per annum) or should I just take that $4000 and spend it now? Why do I want to delay my gratification?

Hmmm.. stuff worth thinking about.....before i continue on my financial freedom journey..

The First Step of Financial Freedom

The very first step of any financial freedom journey needs to begin with this basic principle. This basic principle is spending less than you earn. Without obeying this basic principle, one can never be financially free even if one strikes the lottery or receives an inheritance. In this world, there are only 4 types of people:

People Living Above their Means

This is the kind of person who spends way above what they earn. They spend so much that they are probably in some kind of serious debt which they will never be able to repay as they are spending alot more than they are earning consistently each month.

People Living At their Means

This is the kind of person who spends every single cent he has. The time of the month that he looks forward to the most is payday. His bank account is close to zero as payday draws nearer.

People Living Within their Means

This is the person who probably spends less than they earn so that they have enough to set aside either for savings or for buying something that they really like. The amount they save though is not alot (less than 10 percent) as they are willing to live up the lifestyle expectations that they deem they are entitled to.

People Living Below their Means

This is the frugal person who could well afford a new car but would rather buy a second or third hand car. He could easily afford dining in at fancy restaurants each day but would be content with a simple home cooked meal at home. He could fly off to exotic holidays every year but would be content just taking a road trip to a nearby neighboring country or better still, just lazing at home. He is in other words content with what he has and sees no need to spend more so as to live up to the rest of the world's expectation. He can afford it but chooses to save up his money for other purposes.

Which one of these categories do you belong to?

The key idea then to financial freedom is having a budgeting system. The problem with people without a budget is that they are often saving what is left at the end of the month. Well, if you do not have a budgeting system, then a simple alternative is to always always "pay yourself first".

What does "pay yourself first" mean? It means basically to set aside a portion of your income for savings or investments. It could be 10% or 20% or whatever you are comfortable with. Once payday arrives, simply throw that money aside into another bank account or invest it through a regular savings account so that you will never spend that money at all.

Passive Income for Sept 08

This is a breakdown of my passive income for Sept 08

1. Growth Dividends : $225
2. Pac Andes Dividends: $765
3. Kingboard Dividends: $141

Total passive income for Sept 08 = $1131

Of course, the growth dividends is just a one time payout.

Dividends Recieved from Pac Andes

Received a total of $765.90 of dividends from holding Pac Andes last week.

Will be looking to invest this money to boost my passive income stocks portfolio.

The following are the stocks which I can choose to buy from to increase my passive income:
1. MacArthur Cook PSF
2. SingFood
3. First REIT
4. Ascott REIT
5. K1 Ventures

Which one should I buy? With $765.90, it does not provide me with a lot of options.

Should I Quit My Job

Been working for more than 3 years already.

Have been thinking about tendering my resignation later due to little job satisfaction even though the job pays well.

Am I financially stable enough to quit my job?
Will I be able to find a better job?
How long will it take me to find a job that I really like?
Will the economy (and job market) get worse?
Should I sell my car to decrease my monthly expenditure?

My adsense earnings have not been good enough for me to consider blogging as a full time career. I am still not sure how bloggers like Xiaxue manage to draw so much traffic to their blogs. Until now, I have still not achieved my target of earning more than $2 in a single day. But I will keep pressing on..

Will I ever earn enough passive income to be totally financially free?

Only time will tell...

Investments in this Bear Market

I increased my position in Hongguo today. Bought a total of 20 lots at $0.22. Will be transferring money from my Maybank savings account to pay for this so my passive income from Maybank might be lowered to below $10 per month.

Also received $141.10 as dividends from Kingboard shares.

NOL which i bought a few days back at $1.91 is now at $2.30. I might cash it in if it reaches $3.00 instead of waiting for the yearly dividends.

Will be looking for more opportunities to invest in other areas with all my spare cash and also dividends that I receive.

I intend to build up my stock portfolio in this bear market and ignore all noises that will make me trade irrationally.

My updated portfolio for passive income is as such:

1. 12,000 x Ascott REITs (DPU = 4.52 per half) = $90.40 per month
2. 16,000 x First REITs (DPU = 1.91 per qtr) = $101.87 per month
3. 1000 x Suntec REITs (DPU = 2.79 qtr) = $9.30 per month
4. 1000 x NOL (estimate 8 cents per year*) = $6.66 per month
5. Maybank iSavvy Deposit = $10 per month

Total avg monthly passive income = $218.23

My updated portfolio for capital gains is as such:

1. 30,000 x Kingboard
2. 24,000 x Hongguo
3. 37,000 x Pac Andes
4. 15,000 x Innotek
5. 7,000 x China Aviation Oil
6. 11,000 x Unifood