Saturday, July 30, 2022

Letter to Batch 26 of the Early Retirement Masterclass

Dear Students of Batch 26,

It’s been a great honour and privilege to conduct a 5-Day Early Retirement Workshop for you.

Batch 26 is one of the luckiest batches to graduate from the ERM programme, just a tad less lucky compared to Batch 12, which managed to buy right at the market bottom of the pandemic crisis. Batch 12 bought the stocks in March 2020 and constructed a dividend portfolio that generated 7% per year. At the time of writing, they still managed an XIRR of 16% when the rest of ERM was plugging along with an XIRR of just 4%.

This can be considered the wrong time to invest for many people. The US had just completed two consecutive quarters of negative GDP growth. China is bogged down by the demon of its own design, otherwise known as the Zero COVID policy. Russia is still trying to invade Ukraine. The Fed has declared a crusade against inflation, leading to rising interest rates worldwide. And now, the Hungry Ghost month has just started.

But it is always the darkest before the dawn. ERM remains resolute that there is no better time to invest than now. The equity risk premium we track has been going up three batches in a row. A downturn worldwide has always been suitable for low beta, high dividend portfolios that our programme has been known for.

This is also the batch where a lot of calculated risk-taking took place, with Dasin Retail Trust being chosen after Group 3 did a detailed investigation on the odds of being able to enjoy the 16% current yield that it offers. The team was cognisant that the business could fail but was persuaded when they saw some recent purchases by Aqua Wealth holdings from the SGX announcements. Alumni should feel free to omit the purchase of this counter if they are uncomfortable with the risks involved.

Lastly, I hope that Batch 26 will participate actively in the FB group. Sometime in Q3 2022, we should be meeting up for an online community webinar.

Hope to see you then!


Christopher Ng Wai Chung

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