Monday, April 1, 2013

DW Mother's Retirement Income Fund (March 2013)

Regular readers of my blog would know that my parents are super resistant to any form of stock investments. This is due to the horror stories reported during the Asian Financial Crisis in 1998/1999. Reports of investors committing suicides were splashed all across the front pages of tabloids. My parents were not involved in the stock market back then, but the tragic stories were firmly etched in their minds. The US sub-prime crisis in 2008/2009 served to reinforce their utter distaste of stocks. So, imagine the chaos that ensued when I told them I bought shares 3 years ago. I tried convincing them to follow my footsteps to no avail. Finally, 2 months ago, my Mom decided to let me manage around S$20k of her savings. The rest of her money is in fixed deposits from various banks. As for my Dad, he is still as stubborn as a mule. Sigh......

Three main reasons spurred my Mom to change her mentality. Firstly, the banks are offering pathetically low interest rates. Secondly, she witnessed the steady stream of passive income flowing into my account. Lastly, the deal I gave her was too good to turn down. >_<"

I told her that the S$20k will be invested in quality income-generating blue-chips, companies that will not collapsed overnight. Furthermore, to put her mind at ease, I will also personally guarantee her principal capital. She would get to enjoy a flat 4% yield per year. On my end, I will just get the "left over" dividends as a token fee. The only restriction is that she must stay invested for at least 12 months. 

Company
Price
No. of lots
Mom’s yield
My yield
Singtel
3.52
3
4%
0.48%
Singpost
1.25
5
4%
1%
FCT
1.96
2
4%
0.89%

Yes, you read that right. Some of you may be thinking, "Wow! Personal guarantee! Still have 4% annual yield!" O_o"

Well, she is my Mom, so I want to put her mind at ease. Besides, S$20k is a manageable amount for me to guarantee as I have some savings. Promising her a 4% yield is not over-stretching. Of course, if my Mom puts S$20 million with me, there is no way I could possibly give any guarantees! 


Rock On,
Dividend Warrior

P.S.: I have replied all the comments in my previous post. ^^ 

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