My post last month mentioned that the cost for my SGX will come down to zero within the next three years. However, this is not going to be as I have added one more lot of SGX at end of last month.
The purpose of adding SGX is to balance my portfolio. My portfolio was set up using SGX, SPH and Starhub as foundation stocks, while Reits and other dividend stocks are supporting casts.
For the purpose of diversification and not to tie down the well being of my portfolio to the fortune of any single company, my three foundation stocks should not exceed 20% of the overall portfolio. On the other hand, the supporting casts should not exceed 10% of the overall portfolio.
One of my friend is holding Starhub in about 80% of his stock portfolio. While Starhub is a good company, he is bearing unnecessary risk by concentrating too much in a single stock - meaning putting too many eggs into a single basket. He is also working in Starhub, so his career and investment are all tie together with Starhub.
We do hope Starhub continues to do well in the coming years!
Someone asked me about the low cost of my SGX (average cost $2.68). Yes, I am holding SGX since its IPO days. I was very busy with my work then and practically brought the stock, kept it and forgot about it.
SGX has complete monopoly on its business and probably the only stock that will not fail. Although I have set aside an emergency fund, I treat SGX as my emergency fund in my stock portfolio.
After so many years, after many quarterly dividend payouts, and after the recent dividend in October, my breakeven cost for SGX has come down to just $0.81.
So, even if I am not doing anything, and suppose SGX maintains the same dividend payouts, my breakeven cost for SGX will come down to zero within the next three years. By buying low and keeping SGX over these years, buy and hold strategy does work.
Of course buy and hold strategy will not work its magic so soon if you brought SGX at cost >$10. And buy and hold strategy will not work on other companies without good fundamentals. I will write about another of my ex-stocks in the near future that buy and hold strategy failed miserably.
