[Sponsored] 14 Dividend Investing Terms You Need to Know as an Investor!
Dividends offer a great way to build passive income from investing. Given time and the compounding effect, dividends can grow exponentially.
In this post, let me go through the key dividend-related terms/jargon!
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#1 Dividend
Dividends are essentially a way that companies distribute their earnings to their shareholders.
By doing so, dividend creates a way for shareholders to receive income from their investments. In other words, as an investor, you receive a profit split from the company that you invest in via dividends.
That said, it is not compulsory for most companies to pay dividends.
Certain companies, especially growth-focused companies (eg. Tesla) may prefer to re-invest the profits to grow the business rather than paying them out to investors as dividends.
For consistent dividends, investors may look for stocks and Real Estate Investment Trusts (REITs) with a consistent dividend payout history, or dividend-focused Exchange-Traded Funds (ETFs).
#2 Dividend yield (DY)
Dividend yield is an expression of dividends in the form of percentage (%), relative to the share price.
The calculation for dividend yield is as below:
Dividend Yield = (Annual Distribution Per Unit (DPU)/Price) x 100
Example calculation for dividend yield:
Company A pays a total DPU of $0.10 for 2022. Company Aâs share price is $1.00 per unit.
As such, the dividend yield is 10%. [($0.1/$1) x 100]
Important:
Avoid investing in a company just because of its high dividend yield! Since DY is formulated by DPU divided by Price, a high DY may be due to a high DPU (generally good), and/or a drop in share price (mostly a bad thing).
#3 Dividend yield TTM
Dividend yield TTM refers to the Trailing Twelve (12) Months' dividend yield of a company.
Dividend TTM is useful for investors to track the yield based on the latest dividend payout.
#4 Distribution per unit (DPU)/Distribution per share (DPS)
DPU, or DPS refers to the dividend paid per unit of share.
So, letâs say you have 100 units of Apple shares and Apple distributes a DPU of $0.1/unit. How much in dividends will you get?
The answer is $10 (100 units x $0.1).
#5 Yield on cost
Yield on cost is the dividend you get from your investment, divided by the original cost of the investment.
Yield on cost = (Annual DPU/Cost of investment) x 100
As an example, you bought 100 units of Apple shares at $100/unit. Now, the share price is $150/unit and has a DPU of $5.
- What's the dividend yield? The dividend yield would be 3.33% ($5 dividend divided by the current $150/unit price).
- How about your yield on cost? In this case, the yield on cost would be $5 DPU divided by your original cost of $100/unit, 5% [($5/$100) x 100].
What if you bought additional shares in between?
Letâs say you bought another 100 units of shares at $120/unit, your cost basis would be:
- ((100 shares x $100) + (100 shares x $120))/200 shares = $110/unit (new cost basis)
Hence, the new yield on cost would be $5 divided by $110, or 4.55% [($5/$110) x 100].
#6 Dividend growth rate (DGR)
Dividend growth rate (DGR) refers to the growth in a dividend payout of a company over a period of time.
Letâs say Company X pays a DPU of $2 in 2021 and $3 in 2022. The DGR would be 50%. (($3 - $2)/$2) x 100).
What if you want to calculate DGR over multiple years (eg. 2018 to 2022)?
Year | DPU | DGR |
2018 | $1.00 | - |
2019 | $1.20 | 20% |
2020 | $1.70 | 41.7% |
2021 | $2.00 | 17.6% |
2022 | $3.00 | 50% |
From the table above, there are 2 ways to calculate DGR from 2018 to 2022:
Method 1: Arithmetic Mean DGRÂ
Arithmetic Mean DGR = (DGR1 + DGR2 + DGR3âŚ+DGRn)/n
Arithmetic Mean DGR from 2018 to 2022: (20% + 41.7% + 17.6% + 50%)/4 = 32.33%
*n = Number of periods where dividend growth rates are provided
Method 2: Compounded DGRÂ
Compounded DGR = [((DPUn/DPU0)^(1/n))-1] x 100
Compounded DGR from 2018 â 2022: [(($3/$1)^(1/5))-1] x 100 = 24.57%
*n = Number of years
#7 Dividend growth streak
Dividend growth streak refers to the continuous period where a company/ETF increases its dividend payout.
From the DGR example in the previous section, Company X has a 4-year dividend growth streak from 2018 â 2022.
#8 Dividend payout frequency
Dividend payout frequency indicates how many times a company/ETF pays out dividends in a year.
Out of all options, a quarterly payout (ie. 4x per year) is the most commonly seen payout policy.
However, there are companies/ETFs that adopt monthly and semi-annual payouts as well.
#9 Payout ratio (%)
Payout ratio measures the proportion of earnings a company pays to its shareholders as dividends.
Generally, a low payout ratio would mean the company is reinvesting its earnings to grow the business.
That said, it is common to see dividend stocks having a 40 â 60% payout ratio, while most REITs are required to pay out at least 90% of their profits to investors.
Important:
A payout ratio over 100% may indicate an unsustainable payout practice as it is paying more than it is earning.
#10 Dividend Reinvestment Plan (DRIP/DRP)
A Dividend Reinvestment Plan (DRIP or DRP) is a program that allows investors to reinvest their dividends into additional shares automatically.
DRIP is a great (and important) tool for investors to automate their dividend compounding process.
If you want to learn about DRIP, check out my detailed walkthrough + example calculations below!
READ MORE: Introduction to Dividend Reinvestment Plan (DRP) + Example Calculation
#11 Dividend withholding tax (WHT)
Dividend withholding tax (WHT) is a method whereby a country's government collects taxes from non-residents who have derived dividend income from the country.
Dividend WHT is deducted from the dividends before it is distributed to investors.
If you are a dividend investor, dividend WHT is a MUST-KNOW! Learn about Dividend WHT as a Malaysian investor HERE.
READ MORE: All you need to know about Dividend Withholding Tax (WHT)
#12 Dividend ex-date
Dividend ex-date refers to the day on which you have to hold on to a companyâs shares in order to be eligible for their announced dividend.
Example: Apple announces a dividend payout with a dividend ex-date of 1/1/2023.
In this case, to be eligible to receive the dividend, an investor will need to hold his/her shares until 1/1/2023.
#13 Dividend payout date
Dividend payout date is the day your dividends will be paid out to you (either via your brokerage account or bank account, depending on your brokers).
#14 Special dividends
A special dividend is usually a one-off dividend that is paid to investors when a company finds that it has excess cash.
Most of the time, this is due to a special occasion like the divestment of a property, which puts a company in the state of additional cash holdings.
No Money Lah Verdict
I hope this guide has been clear and helpful!
If you have any questions on dividend investing, or the jargon/terms involved, feel free to let me know in the comments section below!
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Disclaimers
This article is brought to you in collaboration with ProsperUs by CGS-CIMB.
Any of the information above is produced with my own best effort and research.Â
This post is produced purely for sharing purposes and should not be taken as a buy/sell recommendation. Past return is not indicative of future performance. Please seek advice from a licensed financial planner before making any financial decisions.
This post may contain promo code(s) that afford No Money Lah a small amount of commission (and help support the blog) should you sign up through my referral link.
Guide: 12 practical ways to protect yourself from financial scams
Financial scams are getting out of control.
Lately, Iâve seen reports/posts on scam cases popping up everyday on social media and news. It pains me to see peopleâs life savings go missing due to scams.
So, how does a financial scam happen? How to protect yourself from scams? More importantly, what should you do if this happens to you?
Letâs find out!
Oh ya! If you find this post useful, consider subscribing to my FREE weekly personal finance & investing newsletter! Iâd really appreciate it if you can share this post with your family and friends too!
Useful post:
- Guide: What to do if scammers stole money from your credit/debit card
- Guide: 4 things to do IMMEDIATELY if you fell for a scam!
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Different ways scammers can steal your money
A scam can happen in many ways. However, there are 2 most common ways scammers find their way to your hard-earned money:
#1 Phishing scams
Phishing is where you are tricked to disclose important financial information through different tactics.
Some of these tactics include:
- Email scams pretending to be from legitimate sources, such as Paypal, Amazon, and other shopping apps like Shopee or Lazada.
- Scam calls pretending to be from a bank officer, government agency (eg. LHDN, JPN), or delivery company (eg. Pos Laju).
- Fake SMS notifications, usually pretending to be from your bank.
- Fake websites from the real ones (eg. banks) to trick you to disclose your login credentials.
- Hacked social media accounts that send malicious links to you.
Usually, these tactics use a similar social engineering approach â to take advantage of oneâs trust and/or create a sense of urgency (eg. refund, account locked, limited-time promo) so people would fall for the scam when they are least rational/cautious.
#2 Data-theft
Data theft is where your important information (eg. credit card number & CVV, phone number, ID) is leaked without your consent.
This could be due to the failure of an organization/company/bank to keep your data private. Else, it could also be a lack of proper security infrastructure to safeguard customersâ information.
As a result, scammers can use this data to conduct illegal and unauthorized transactions without your consent.
Can money be stolen from your bank account without SMS OTP/TAC?
If yes, how?
Iâm sure youâve come across news where a victimâs money is stolen from their bank account even without One-Time Password (OTP).
From a security standpoint, an OTP is part of 2-Factor Authentication (2FA). 2FA is an additional security layer on top of our usual username and password where we have to key in an OTP to approve a transaction.
So, technically speaking, OTP should reduce fraudulent transactions and make transactions safer.
However, as you can see by now, OTP is not 100% secure â and it can be exploited.
Here are some ways scammers can exploit OTP against you:
- Installing malware/spyware that can read your SMS (where you get your OTP) when you install apps from unknown sources (apps that are not from Apple App Store/Google Playstore)
- Through phishing, scammers can trick victims to disclose their SMS OTP by creating trust or a sense of urgency.
- Impersonating you and requesting for bank to change the phone number linked to your bank account.
Scam prevention checklist â 12 ways to protect yourself from financial scams!
I hope it is clear now that we have to take our online security seriously. Hereâs a list of 12 ways we can do to protect ourselves online:
#1 Scam Calls: Stay cautious of calls from suspicious numbers.
Avoid disclosing ANY information and end the call immediately. Install apps like Truecaller to filter for fake/scam caller IDs.

#2 Email Scams: Always check the email address whenever you receive emails from a supposedly official organization/company!
Official emails will never be sent through a personal Gmail or Hotmail.
#3 Phishing Links: Always double-check the links attached in an email/SMS before clicking on them.
If you are on your desktop, you can hover your cursor to the link/button and youâll be shown a preview of what you will click on to.
Do not click on links from suspicious email addresses, WhatsApp & telegram messages, and social media accounts.
#4 Fake Apps: Avoid installing unverified apps/APK outside of Apple App Store and Google Playstore.
Some of the recent examples include fake apps to hire maids. Who knows what other tactics will be raging next?
#5 Check for unknown apps & In-app permission.
Check if you have installed apps from unknown sources. Review the permission you give to the apps that you installed and remove unnecessary permissions. (eg. File access, SMS permission)
For Android users, you can access the permission setting section by going to Setting > Privacy > Permission Manager. Remember to especially check if you are giving SMS, microphone, camera, and file access to unnecessary apps (and remove them)!

#6 Privacy: Reveal as little private information online.
Never disclose your bank/card details + CVV security number and personal IC/ID on social media. Choose the platforms where you do transactions/online shopping carefully.
#7 Use a credit card instead of a debit card for online transactions.
Credit cards have an overall better consumer protection policy than debit cards. Find out more in my article HERE.

#8 Use a better authentication method:
Replace the legacy SMS OTP/TAC authentication with a more secure in-app authentication (eg. Maybankâs Secure2u, Google Authenticator) wherever you have the option to do so.
#9 Password: Use strong passwords and never reuse the same password twice!
Use password managers like Dashlane and LastPass to organize your passwords securely and consider updating your passwords regularly.
#10 Donât put all eggs in one basket.
Diversify your cash across different savings accounts and cash management platforms (eg. Versa Cash, StashAway Simple, KDI Save).
While this will not spare you from scams, it helps to reduce the damage should the worst-case scenario happens (ie. you fell for a scam).
#11 Use a VPN while going online:
VPN stands for âVirtual Private Networkâ and it disguises your online activities and protects it from external access.Â
There are free and paid VPN options such as Hotspot Shield, Proton VPN, Windscribe, and Nord VPN.
#12 Do not allow suspicious people to gain remote access to your computer (via Teamviewer or Anydesk).
This is a common refund scam that tricked victims into giving remote access to their computer to scam money out of the victim's bank, or worse, hold them ransom.
You can check out how scary it is by checking out the Youtube video below:
Guide: What to do if you fell for a scam
Falling for a scam is devastating.
It may seem like there is nothing much that you can do - BUT there are actually things you can do to potentially recover from the scam.
Check out my guide below for more info!

Verdict: Do not take your online safety for granted
With scamming tactics getting more deceiving and advanced these days, it is more crucial than ever for us to protect ourselves with proper online safety routines and tools.
While the list above is not 100% foolproof, I am sure a combination of them will make your online presence more secure.
Oh ya, consider helping your less tech-savvy parents/friends out with the guide above! I am sure they'll appreciate the gesture.
If you find this post useful, consider subscribing to my FREE weekly personal finance & investing newsletter!
Disclaimers
This guide is produced with my own best effort and research. Online scams are evolving constantly and the list in this guide is not an exhaustive list of scamming tactics and preventative approaches.
Always refer to the official guideline from your bank and official Bank Negara Malaysia (or your respective central banks for my fellow foreign readers) for the latest info.
4 things to do immediately as a scam victim! (+1 last way if nothing works)
Financial scams are getting out of control these days.
We hear worrying cases such as scam calls pretending to be from government agencies or banks, and worse, people's hard-earned money is stolen from their banks without even receiving an OTP.
In this guide, let's find out what you should do immediately in the unfortunate event that you become a scam victim. I've also included 1 final method if you've tried everything and nothing works.
If you find this post useful, consider subscribing to my FREE weekly personal finance & investing newsletter! Iâd really appreciate it if you can share this post with your family and friends too!
Useful guides:
- Guide: What to do if scammers stole money from your credit/debit card
- Guide: 12 practical ways to protect yourself from financial scams
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What to do if you find out that you got scammed?
In the unfortunate event that you fell for a scam, here are 4 things you should do IMMEDIATELY:
Step 1: Remember, it is NOT the time to blame yourself!
Stay composed and proceed to the steps below as provided by Bank Negara Malaysia (BNM).
Step 2: Call your bankâs 24-hour fraud line and report the incident immediately.
Request for your card/bank account to be halted to avoid further unauthorized transactions.Â
Please find the 24-hour fraud hotline for Malaysia banks below. You can also Google for your bank's most updated hotline:
- Maybank: +603 5891 4744
- CIMB Bank: +603 6204 7788
- Public Bank: +603 2177 3555
- HSBC Bank: +603 8321 5400
- OCBC Bank: +03 8317 5200
- UOB Bank: +03 2612 8121
- Ambank: +03 2178 8888
- Citibank: Can't find a dedicated fraud hotline (or it is really not obvious lol). You can try contacting Citibank HERE.Â
- Standard Chartered Bank: Call the number on the back of your bank card or on your bank statement.
Banks are given a maximum of 60 days to investigate a dispute.
Step 3: Contact the following numbers (Malaysia):
- The Commercial Crime Investigation Department (CCID) Scam Response Centre at 03-2610 1559/1599
- BNMTELELINK at 1-300-88-5465
These organizations will facilitate immediate measures for CCID to coordinate with BNM and banks to help protect affected accounts.
Step 4: Lodge a police report to facilitate the investigation.
Can you get your money back if they are stolen/scammed from your bank account?
At this point, youâve done everything you can. Since banks are given 60 days to investigate your case, the only thing you can do is wait.
Whether you are able to get a refund is highly dependent on the investigation process of your bank, and if theyâd categorize your case as an âunauthorized transactionâ.
Like it or not, youâll really need a boost of luck at this stage.
That said, if you are unhappy with the final investigation result, you can file a dispute with the Ombudsman for Financial Services (OFS).
One Final Step: What is Ombudsman for Financial Services (OFS) and how it can help you
OFS is a special non-profit organization approved by BNM to provide dispute resolution between consumers/businesses and financial services.
If you've tried everything and nothing works, OFS is where you should go to. The mandate of OFS is to resolve disputes via facts/evidence without taking sides.
The jurisdiction of OFS:
OFS accepts disputes which involve monetary losses that fall within the following limits:
- Up to RM250,000 for banking products and insurance claims.
- Up to RM10,000 for motor 3rd party property damage insurance/takaful claims.
- Up to RM25,000 for cases involving unauthorized transactions through channels such as internet & mobile banking, ATM, or unauthorized cheques.
Check out the infographics below on how OFS resolves a dispute. For more info, check out OFS official site HERE.

Financial Scam FAQs:
Q1: Will Perbadanan Insurans Deposit Malaysia (PIDM) protect my money from scams?
A: No. PIDM only protects consumers in the case where their members (eg. banks) go bankrupt. They do not provide coverage from scams.
Q2: Will I be able to get a refund if my money is stolen from my bank?
A: It is highly dependent on your bankâs investigation on your case, so I canât give youâre a sure answer. Do your best to provide all the info you have to assist the investigation.
Q3: What should I do if I am not happy with the final investigation result from my bank?
A: Lodge a report to Ombudsman for Financial Services (OFS). OFS is established to help resolve disputes between consumers/businesses and financial services. Check out the prior section of this article for more info.
Verdict: We need more robinhoods against scammers.
Truthfully, seeing all the news of people falling to scams left me helpless and frustrated.
There are so many people losing their hard-earned savings to scammers everyday, yet our banks and regulators are WAYYY too slow and passive in handling the matter.
If your money has been unfortunately stolen by scammers while reading this, please know that this is not the end of the world. Remember, there are always people that love you â theyâll help you get through this together.
If thereâs any comfort in this, there are ethical hackers cum Youtubers like Scammer Payback and Scambaiter that are returning the âfavorâ to the scammers â letting them taste their own medicine. We certainly need more people like them.
I hope this guide is helpful and lastly, screw the scammers, and may they die in pain.
If you find this post useful, consider subscribing to my FREE weekly personal finance & investing newsletter!
Disclaimers
This guide is produced with my own best effort and research.Â
Always refer to the official guideline from your bank and official Bank Negara Malaysia (or your respective central banks for my fellow foreign readers) for the latest scam prevention info.
[Sponsored Post] Versa Invest Review: Designed to beat the market!
If you are looking for a better savings alternative to Fixed Deposit (FD), Versa Cash from Versa is an excellent cash management solution that I reviewed last year.
Since then, Versa Cash has been my go-to app to store my savings.
This year, Versa has introduced Versa Invest â the latest investment solution designed to beat the market!
What do I mean by beating the market - or rather, how? In this review, letâs find out more about Versa Invest!
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What is Versa Invest + Safety of funds
Versa Invest is a new investment solution within the Versa app that offers users diverse access to top funds globally with just a single investment.
Versa Invest is a partnership between Versa and Affin Hwang Asset Management (AM). In other words, all Versa Invest portfolios are designed & managed by the fund managers from Affin Hwang AM.
As a result, you can manage both your savings (via Versa Cash) and investments (via Versa Invest) in just a single app within Versa.
Regulation & Safety of funds
As a company that provides financial services, Versa is regulated by the Securities Commission of Malaysia. This ensures that Versa operates under the guideline of the authority.
Meanwhile, your funds are held in a separate trust account in CIMB Commerce Trustee Bhd. for Versa Invest. This protects you from the unlikely event that Versa goes bankrupt, as customers' funds are unmingled with Versa.
For the most updated product & regulation info, please visit Versa Invest and Versa Cash's product pages.
Highlights of Versa Invest
#1 Versa Invest is designed to beat the market
In my opinion, the main highlight of Versa Invest is that it is positioned to âbeat the marketâ.
How so? What makes Versa Invest different from all the existing robo-advisors?
To start with, Versa Investâs portfolios are designed to be actively managed.
Meaning, depending on market conditions, Versa Invest (through Affin Hwang AM) can deploy usersâ money in a combination of active and passive global funds.
Some of these funds include global funds from Vanguard, Blackrock, and Affin Hwangâs very own funds.
In other words, Versa Invest has the flexibility & diversity to invest in active funds when they are well-positioned to beat the market, while shifting to passive funds (eg. The S&P500 ETF) when the market favors them.
This investing approach separates Versa Invest from other robo-advisors in the market that generally only invest in passively managed ETFs.

#2 Gain exposure to premium funds at an affordable fee
Another benefit of investing in Versa Invest compared to typical unit trust is its relatively low fees to gain exposure to premium global funds.
As a user, you do not pay any fees to Versa while investing via Versa Invest. Instead, you only pay fees to fund managers:
You do not need to fork additional money to pay for these fees as they are charged on your invested amount (or Net Asset Value, NAV) monthly.
Whatâs amazing is unlike other unit trusts, there are no sales and withdrawal fees. This means all your investments are 100% invested to maximize your returns.
Annual Management Fee | 1% per annum |
Sales Charge | 0% |
Redemption Fee | 0% |
Trustee Fee | 0.04% per annum |
#3 Low barrier of entry to premium funds globally
Unlike conventional unit trust with a high barrier of entry from RM1,000 to RM10,000, Versa Invest makes it easy for users to gain exposure to premium global funds.
In this case, the minimum investment amount for Versa Invest is just RM100. This makes it easy to invest in a diversified global portfolio even if you are starting with a small capital.

#4 Hedge against currency fluctuation
Worried about currency fluctuation while investing globally?
To reduce currency risk, Versa Invest uses derivatives such as forward contracts & swaps to manage fluctuations in the exchange rate.
In other words, you can invest with peace of mind knowing that you have minimal exposure to currency fluctuations!
3 Different Versa Invest portfolios
There are 3 portfolios within Versa Invest for users of different risk preferences.
i. Versa Growth
Versa Growth is crafted for higher returns over the long term â suitable if you have a higher risk tolerance.
For time being, Versa Growthâs portfolio is mainly made up of equities (60%), followed by bonds (38%), and cash (2%).
Through Versaâs back-tested data, Versa Growth recorded an average annual return of 15.7% over the past 3 years.
For your reference, I compare the returns between the stock market (S&P500) relative to Versa Growth from 2019 to 2021 in the table below:
Returns | S&P 500 (Total return) | Versa Growth (Back-tested return) |
2021 | 28.71% | 77% |
2020 | 18.40% | 56.3% |
2019 | 31.49% | 14.5% |
Feel free to find out more about Versa Growth HERE.
[Important] Past returns and back-tested data are NOT indicative of future returns.

ii. Versa Moderate
Versa Moderate is designed for users looking for a more stable growth with smaller swings. It is suitable if you desire a more stable (hence less aggressive) returns on your investments.
Versa Moderate portfolio is mainly made up of bonds (67%), followed by equities (32%), and cash (1%).
In Versaâs back-tested data, Versa Moderate recorded an average annual return of 9.1% over the past 3 years.
For your reference, I compare the returns between the stock market (S&P500) relative to Versa Moderate from 2019 to 2021 in the table below:
Returns | S&P 500 (Total return) | Versa Moderate (Back-tested return) |
2021 | 28.71% | 41.3% |
2020 | 18.40% | 26% |
2019 | 31.49% | 11.3% |
Feel free to find out more about Versa Moderate HERE.
[Important] Past returns and back-tested data are NOT indicative of future returns.

iii. Versa Conservative
Versa Conservative, I believe, is for users with a smaller tolerance for up and down swings. As of this writing, it has not been launched â Iâll be sure to update this section when it is up!
My personal thoughts on Versa Invest
#1 I love the ease to save and invest within the Versa app itself
I think the beauty of innovative financial products is their ability to make usersâ financial life easier and seamless.
Through the Versa app, users can save and get rates on par with FD with Versa Cash, while investing for higher returns via Versa Invest.
If you are looking to manage your savings and investments in a place, Versa is a great choice.
And did I mention that I really enjoy the user interface (UI) of the Versa app?
Point of improvement: I hope to see Versa integrate an auto-debit feature where I can automate my investments from Versa Cash to Versa Invest on a periodic (eg. monthly) basis.

#2 Can Versa Invest outperform the market in the long run?
Personally, I think it is fresh and bold that Versa Invest is introduced as an investment solution positioned to beat the market.
It shows that the team behind Versa must be confident in Versa Invest to deliver massive value to users. Indeed, the back-tested data from 2019 â 2021 has shown that Versa Invest did outperform the market.
However, can the outperformance be replicated in reality â over a long-term horizon?
I think only time can tell if Versa Invest can withstand the test of time and the market.

Things you need to know + Risk of investing via Versa Invest
Here are 2 things you need to know before you start using Versa Invest:
- Versa Invest is not Shariah-compliant.
- Similar to any form of investment, expect market volatility while investing via Versa Invest.
If you are okay with larger swings in your portfolio, Versa Growth is a good choice.
Meanwhile, if you cannot withstand large swings in your portfolio, itâs best to try out the Versa Moderate portfolio instead.
That said, don't worry as youâll go through a risk assessment process during registration where you answer a few simple questions â and Versa will suggest the best portfolio for you!

Exclusive Versa Invest & Versa Cash Promo Code: VERSANML4
In collaboration with Versa, No Money Lah is bringing an exclusive deal for new users that are keen to start saving or investing with Versa!
Use my dedicated Versa referral code â VERSANML4, and you will get RM10 credited into your account* when you successfully make a minimum deposit of RM100 or more. Thatâs an instant 10% return on your investment.
Open Your Versa Account HERE.
Sign Up for a Versa account today!
How to start investing via Versa Invest?
- New Versa Users: Install the Versa app at Google Playstore or Apple Appstore and create an account.
- Existing Versa Cash Users: Update your Versa app to the latest version. Then, activate the Versa Invest feature by clicking on the 'Invest Now' button in the app.

Sign Up for a Versa account today!
Side Note: Use Versa Cash as a low-risk alternative to Fixed Deposits (FD)!
Are you looking for a savings alternative to Fixed Deposits, or prefer a (very) low-risk approach to store your funds?
If that's the case, you can consider using Versa Cash, which gives you a projected return of 2.50% annually!
Find out more about my review on Versa Cash HERE.
Disclaimers
This article is brought to you in collaboration with Versa. For the most updated info, please visit Versa Invest and Versa Cash's product page.Â
This post is produced purely for sharing purposes and should not be taken as a buy/sell recommendation. Past return is not indicative of future performance. Please seek advice from a licensed financial planner before making any financial decisions.
Delayed Gratification
When I was 9, I came across my first most desired âbig purchaseâ as a boy â THE Nintendo Gameboy.
Vividly, I remember stopping by every game store, staring at the super cool Gameboy behind the glass cupboard every time when me and family were out in the mall.
The thing is, my dad didnât buy me the GameBoy at 9, nor when I was 10 (or 11).
Instead, he made me save for it.
So, everyday for the next few years, I saved up at least 50% (or more) of my daily lunch money of RM2.
Instead of buying the delicious fried chicken and Vitagen like most of my schoolmates would do, Iâd just stick with the bread that I brought from home daily.
When my friends were playing the latest Pokemon (it was Pokemon Red, I think), I would sit by their side to watch them play (#envy).
It was definitely not fun.
But by 12, Iâve saved up something close to 200 bucks (if I recall correctly) â which was a huge amount for me as a boy (and enough for the Gameboy, I guess?).
Funnily enough, that was the UPSR year (the ultimate exam for secondary school entrance) â and I managed to get 6As (out of 7).
So finally, after 4 long years, at 12 (towards the end of the year), my dad actually got me the Gameboy as a reward â and I get to keep my hard-earned (big) savings.
4 years is certainly a long wait for me as a kid.
But in hindsight, I think the most valuable thing Iâve gained is the ability to hold on to gratification better since I was a boy.
Not surprisingly, this has helped me a ton in my self-employment and personal finance journey:
- You donât start a blog/Youtube channel/business and expect money to start pouring in the next day.
- You canât invest for 1 year and expect the dividends to cover your living expenses.
- And surely, you wonât become a pro by trying to achieve too many things in one go.
As many good things in life come in a compounding manner, there will be a grind in the journey where it seems like nothing is progressing â even when you have put in all your effort (eg. Saving RM1 everyday for a Gameboy, or sitting through a bear market)
So â hereâs my personal reflection:
Patience & effort may not always lead us to the most amazing things in life (wealth, health, relationships).
But patience & effort most certainly PRECEDE them to begin with.
Bear Market: Your Guide to Surviving the Bloodbath
It has not been a good time if you are investing in 2022.
As of Friday (13/5), the US stock market (ie. The S&P500 index) is down by over 16% from all-time highs. Meanwhile, the tech-focused Nasdaq 100 index is down by about 25% from its high.
Personally, my growth-focused Exchange-Traded Fund (ETF) portfolio dropped over 14% in the past 3 months.
In addition, a portion of my dividend-focused ETFs in the Freedom Fund has shed about 14% in value so far:
Seeing my investments down to this extent is not pleasant, but it is not the end of the world either.
In this post, I want to share with you several important insights on the stock market â and hopefully, this will boost your confidence to stay the course in this long game!
If you like this post, consider subscribing to my FREE weekly newsletter where I'll share all things I learn about personal finance & investment with you!
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#1 A bear market is not forever
Technically, a bear market is described as a market dropping over 20% from the all-time high.
While we are not there yet for the S&P500 index, I think we are close enough for me to call a bear market right now.
I canât tell for sure how long a bear market will last â but they do come to an end eventually. Letâs take a look at the history:
Over the 15 bear markets in the past, the average decline was about 30%, where the market generally took under a year to reach the bottom.
The recovery from the bottom? On average, a little more than 1 ½ year.
- That said, the last 3 bears recovered relatively quickly.
- 8 out of the 15 bears recovered within a year.
- The worst bears were in 1973-1974, 2000-2002, and 2007-2009 which all took more than 4 years to recover.
Iâm not certain how this one will play out â but as you can see, the market always recovers.
#2 Win by staying invested for the long term
For the last 95 years (1926 â Feb 2022), the US stock market (S&P500 index) has produced an average of 10 â 11% annually.
In fact, there has never been a 20-year period in the market where it is down on a nominal basis:
In other words, if you have a long-term time horizon, you are almost certainly going to see gains with your investments.
#3 Why does the market go up in the long run?
Why does the stock market go up in the long run?
One of the biggest reasons is because the economy grows and companies earn more money.
In the 1920s, the earnings per share (EPS) for the S&P 500 was $1.11Â while companies paid out $0.78 per share in dividends.
By the end of 2021, those numbers were $197.87 and $60.40 respectively.
Simply put, over the past 90+ years, earnings on the US stock market have grown by 6% annually, while dividends have grown 5% per year.

When you invest in the stock market, you are investing your money in assets that produce income on your behalf. This means you get to participate in the growth and innovations that come with it.
My Bear Market Survival Guide
If you are feeling miserable from this bear market, hopefully what youâve read so far can give you a big picture perspective on your investing journey.
Below are 3 things that Iâm personally practicing in this bear market:
#1 Stick to a long-term investment routine
Having an investment routine helps especially in times of chaos.
Since I cannot predict when a bear market will end, I will continue sticking to my investment routine (ie. Dollar Cost Average X amount monthly) knowing that I will be buying income-producing assets at a discount.
Remember, the market favors those who stay on course in the long run.
#2 Never invest the money you need in order to gain something you want
This is so important:
Avoid investing in such a way that your ability to put food on the table depends on the returns of your investments in the coming month:
- We cannot tell when a bear market will end.
- A new low can go lower!
- A bear market may lead to a recession - don't use the money you saved up for rainy days to invest!
#3 I will not let my investment performance affect how I look at myself
Your life is not defined by your investments. Neither is net worth because it is a poor definition of success in life.
Reflect and find meaning in your life outside of your portfolio. Eating and living healthier is a good place to start.
Useful Resources & Guide
- How to invest in the S&P500 index as a non-US resident.
- ETF investing guide - getting started!
- Learn dividend investing
Disclaimers
This post is produced purely for sharing purposes and should not be taken as a buy/sell recommendation. Past return is not indicative of future performance. Please seek advice from a licensed financial planner before making any financial decisions.
[Sponsored Post] How to invest during high inflation? (with data & evidence)
Inflation is hitting us hard in life.
If you have been spending on everyday goods, Iâm sure youâd have noticed that things are getting (a lot) more expensive.
As an example, in January, the average price of chicken in Malaysia rose by 13.6% from RM8.40/kg to RM9.54/kg compared to a year before. Furthermore, eggs and milk prices also went up by 13.5% and 3% respectively not too long ago.
Heck, my favorite chicken rice now costs 50 cents more.

Unfortunately, this is not an illusion.
- In Malaysia and Singapore, we are experiencing the highest inflation in 4 years since 2018.

- Even crazier, the US recorded an inflation rate of 7.5%, the highest since 1982.

Isnât this mad, given how our income hasnât been able to keep up with inflation at all?
For sure, inflation will erode the value of our cash. So, the BIG question now is: how should we invest during periods of high inflation?
Letâs dive into the data â I am confident youâll find it useful!
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A note before we start
Before we start, do note that Iâll be using data from the US because:
- The US is the largest market in the world, anything big that happens in the US creates ripples globally. These data will give us a good representation of what to expect.
- It is very hard to gather long-term data on various asset classes in Malaysia⌠so yeah.
Which asset classes perform best during inflation?
To begin, letâs look at the inflation-adjusted (ârealâ) annual returns of 6 different asset classes from 1972 to 2021.
To ensure that you can visualize the performance of these assets, Iâve capped all returns at 20% (-20%):

Here are several key takeaways from the chart above:
- Firstly, you may notice is certain assets are more volatile (Gold, S&P500, International Stocks, REITs) than others (US Treasury Bond, US home price).Â
- Moreover, asset classes with higher volatility tend to achieve higher real returns compared to assets with low volatility. You can observe this clearer in the table below, where I summarize the median real return of all 6 asset classes from 1972 to 2021:
- As you can see, equities (S&P500, International stocks) and REITs come in top, followed by gold, and ending with US Treasury Bond, and US home prices.
The interesting thing about this table is gold. Despite the huge volatility of gold (big swings up & down), it produced a subpar real return. Even if we use average real return (instead of median), gold still failed to outperform equities and REITs. In other words, this tends to go against the assumption that gold is a superior hedge against inflation.
To dive further, I plot the non-inflation-adjusted returns of all 6 asset classes against the inflation rate from 1972 to 2021:

As you can see, the assets that performed the best against inflation (especially when it is higher), are also those that tend to be more volatile (S&P500, International stocks, REITs, gold).
That said, volatility is just part of the story here. Reason being, if we filter the returns to only include years where inflation exceeds 4% (1973 to 1982, 1985, 1988 to 1991, 2008, 2021), gold still fails to impress:
In other words, gold might not be a superior inflation hedge as many assumed itâd be.
What should an investor do during high inflation?
So, what should most investors do when inflation is rising?
According to data: Buy equities, REITs, or physical real estate.Â
From what we've seen so far, we can interpret that equities (S&P500, International stocks), and real estate (REITs, housing) tend to preserve their value, even during periods of high inflation.
- In a way, this makes sense because these equities, REITs, and real estate are all based on monetary payments made to businesses or landowners. Hence, when payments go up during inflation, the value of these assets should go up as well.
- Generally, businesses are able to preserve their value during inflation as they can pass on inflation (through higher prices) to customers (thatâs us, lol). This may not be true for all businesses, but inflation isnât as scary for stocks as you might have thought itâd be.
- As for investment in physical properties, if your mortgage is FIXED instead of floating, then you are in a good place to be a debtor during high inflation periods.
- Why? Because with inflation, the value of your fixed payment (eg. RM2000/month) will shrink in real terms (a.k.a. when adjusted for inflation) with time. Again, FIXED mortgage payment, not floating.
In comparison, assets that offer fixed payments to investors (eg. Bonds) tend to underperform during high inflation periods.
- With inflation, the value of each fixed payment eroded, which impact the overall value of bonds as well.
Is Crypto a good hedge against inflation?
So, are cryptocurrencies like Bitcoin, Ether (ETH), and Ripple (XRP) good hedge against inflation?
To be honest, we have no clue due to a lack of data. Since cryptocurrencies only existed mainly during times of low inflation (2009 onwards), it is hard to tell what they will do now that inflation is on the rise.
Since there is no historical reference on crypto, a good gauge for a crypto investor to ask is: Does the crypto provides value to the owners? If you think it provides value (yet it is still undervalued), and such value continues to rise, then it may have a chance to outperform inflation.Â
Verdict: The One Thing that Always Outperforms Inflation
Regardless of stocks, real estate, gold, or crypto, there is one thing that will always protect your wealth against inflation â own things that provide value to humans.
If you own things that people want, no matter whatâs happening in the world, the assets you own will likely retain their value (and even better, grow in value).
Hence, the question that you should focus on and ask is: are you owning assets that provide value to people?
If you find this post insightful, consider subscribing to my FREE newsletter.Â
Useful ResourcesÂ
If you find this post insightful, here are several useful resources to get you going:
- Guide: How to invest in the S&P500
- Guide: How to invest in Singapore REIT ETF for consistent dividends
- Guide: How to make $1,000/month in passive income via REIT investing
This post is sponsored by ProsperUs by CGS-CIMB.
Check out my full review on ProsperUs by CGS-CIMB HERE on how you can start your investment journey.
ProsperUs by CGS-CIMB is a regulated broker from Singapore that gives investors access to 30+ exchanges in more than 8 countries. (US, Hong Kong, China, Japan, UK, Singapore, Malaysia, Europe, and more!)
In addition, ProsperUs offers multiple instruments from stocks, ETFs, futures, options, Forex, and CFDs. This is great for investors looking to diversify across different asset classes.
Exclusive ProsperUs Referral Code â MONEY20
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Disclaimers
The assets mentioned in this post are represented by:
- US Stock Market: The S&P500 indexÂ
- Bonds: US 10-year Treasury Bond
- International Stocks: MSCI EAFE (Europe, African, Far East) Index
- REIT: FTSE NaREIT All REITs total return index
- US Home Price: S&P/Case-Shiller Home Price Series
- Gold
This article is brought to you in collaboration with ProsperUs by CGS-CIMB.
This post is produced purely for sharing purposes and should not be taken as a buy/sell recommendation. Past return is not indicative of future performance. Please seek advice from a licensed financial planner before making any financial decisions.
This post may contain promo code(s) that afford No Money Lah a small amount of commission (and help support the blog) should you sign up through my referral link.
CIMB Octosavers Account-i: Open a Malaysia savings account, 100% online!
Opening a savings account in Malaysia has always been a troublesome experience. At some point, youâll have to visit the bank to activate your account and collect your debit card.
Luckily, thatâs not the case anymore with CIMB OctoSavers Account-i, where we finally get a 100% digital online account-opening experience.
In this quick guide, letâs go through all you need to know about CIMB OctoSavers Account-i, and how to open an account online!
Highlights of CIMB Octosavers Account-i
CIMB OctoSavers Account-i was launched by CIMB Bank Bhd and CIMB Islamic Bank Bhd in August 2021. It is the bank's first all-digital Islamic savings account that comes together with the new CIMB OctoDebit MasterCard.
In other words, with CIMB OctoSavers Account-i, you do not need to visit a physical bank branch to open a savings account at all!
- Fully digital: Account opening & onboarding process of Octosavers Account-i are done entirely online, while the debit card will be mailed to customers.
- Annual fee waiver: No annual fees for Debit Card
- Eligibility: Malaysians 18-year-old and above with MyKad can open an account
- Protected by PIDM up to RM250,000
- Profit rates of 0.30% per annum for account balances above RM3,000
- Shariah-compliant
How to open a CIMB Octosavers Account-i for new CIMB customers:
[Update 17/2/2022: It seems like CIMB has reactivated the online account opening of CIMB Octosavers Account-i for non-CIMB customers (it was paused prior to this). Feel free to proceed and open your account online!]
Step 1: Download the CIMB Apply app HEREÂ
Step 2: Select âOpen a new account and fill in your contact details

Step 3: Fill in the account opening application form
For identification purposes, youâll be required to scan your IC and do a simple facial recognition process.
Aside from that, you need to provide personal details (eg. Address, employment details), which is a normal procedure for the application of most financial services.Â

Step 4: Transfer a minimum initial deposit of RM20
Please note that this RM20 transfer needs to be from another bank account under your own name.
Step 5: Create your CIMB Clicks login credentials
CIMB Clicks is CIMBâs platform where you activate your OctoDebit Mastercard and manage your transactions to and from your savings account.
In this final step, youâll need to create things such as your CIMB Clicks user ID and password.
Step 6: Successful account creation!
Once you have completed all the steps, you will have your CIMB OctoSavers account created. You will receive an SMS upon successful application.
Within 7 â 14 working days, your Octo Debit Mastercard will also be mailed to the mailing address that you filled in during the application process.
Until then, you will not be able to operate your new account as youâll need to activate your debit card first.

How to activate Octo Debit Mastercard
Once you receive your Octo Debit Mastercard, it is time to activate your Debit Card.
- Step 1: Firstly, you must sign on the signature panel at the back of the Octo Debit Card
- Step 2: Download the CIMB Clicks app
- Step 3: Log in to CIMB Clicks using your Clicks ID and password
- Step 4: Click âYes, activate nowâ when you are prompted to activate your debit card. Or under âCurrent/Savings, click âActivate Cardâ
- Step 5: Enter the 16-digit number of the Octo Debit card
- Step 6: Create your 6-digit Debit Card PIN and re-enter your 6-digit Debit Card PIN.
- Step 7: Request and enter the TAC code sent to your mobile number via SMS
Once you are done with the steps above, you can now use your CIMB Octosavers Account-i for online transactions!
Link your Octo Debit MasterCard to savings account for ATM cash withdrawals
There could be times where you will need to withdraw cash from ATM. Before you do so, be sure to link your debit card to your CIMB Octosavers Account-i:
- Step 1: Log in to CIMB Clicks
- Step 2: Go to âServicesâ
- Step 3: Select âAccount Linkingâ. Under âSavings/Currentâ, select âLink Accountâ
- Step 4: Select your CIMB Octosavers Account-i account and click the âSubmitâ button

Truly 100% online account-opening experience for CIMB SG
In the past, for Malaysians to open a Singapore bank account via CIMB SG (the easiest way), youâd have to first have a CIMB Malaysia account. If not, youâll have to visit a physical CIMB branch to activate your CIMB Malaysia account and collect your debit card.
Now, with the ability to open a CIMB Malaysia savings account online, you can complete all the processes at your own convenience at home!
READ: Step-by-step guide on how to open a Singapore bank account -100% online.

No Money Lahâs Verdict
Having to open a savings account online is a much-needed innovation in the financial services sector.
As such, I am glad to see CIMB stepping up its game to offer users a fully digital online account opening experience. I certainly hope to see other banks follow suit to offer a more digital experience within their services.
Meanwhile, do let me know your experience opening a CIMB Octosavers Account-i!
[Sponsored Post] How to use ASNB Target Labur to achieve your financial goals!
Do you have a financial goal in mind, and would like some form of accountability to help you achieve the goal?
If your answer is a YES, I think you will like the new Target Labur feature from ASNB!
RELATED READ: What is ASNB and how to invest in it?Â
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What is Target Labur from ASNB?
ASNB Target Labur is a goal-based investing feature within the myASNB app.
Through Target Labur, you can plan your financial goals, where you'll be given suggestions on how much to invest monthly in their goals.Â
In addition, you are able to track the progress of your goals easily with Target Labur to stay accountable to your goals.
Through Target Labur, ASNB aims to encourage more Malaysians to build healthier investing habits and achieve their financial goals.

How to use ASNB Target Labur?
ASNB Target Labur is open to all investors of ASNB funds within the myASNB portal or app.
- If you are totally new to ASNB (ie. Have not purchased any ASNB fund before), proceed to download the myASNB app to open an ASNB account. Once you have opened an account and purchased your first ASNB fund, you will be able to use the Target Labur feature.
- If you are an existing ASNB investor that does not have a myASNB account yet, definitely download the myASNB app and complete a short e-KYC process. Once that is done, you will be able to access the Target Labur feature.
Next, letâs go through how to use the Target Labur feature:
Step 1: Click on Target Labur in your myASNB app

Step 2: Select a suggested goal, or feel free to create your own customized goal!

Step 3: Key in the target amount & date to achieve your goal.
Then, set a return expectation for your investments. Do note that this is only a reference, and does not serve as an indication of future returns.
Step 4: You will be given suggestions on how much to invest monthly based on your goals.
This suggestion is made based on certain key factors and assumptions. I highly recommend you to read them up by clicking on the âbasis of calculationâ section.
Step 5: Once you have started your goal, you will be able to track your progress easily through the myASNB app.
If you need a tutorial on ASNB Target Labur, definitely watch their tutorial HERE.

#JomLabur Campaign â Win attractive prizes through Target Labur!
Looking to start achieving your financial goals with ASNB Target Labur?
Nowâs the best time to do so as you stand a chance to win attractive prizes worth up to RM200,000!
From 8th October 2021 to 31st March 2022, ASNB is running a #JomLabur campaign to encourage Malaysians to use the Target Labur feature in the myASNB app.
Itâs really easy to participate in the #JomLabur campaign:
- Create 2 goals worth at least RM5,000 each via the Target Labur feature in the myASNB app.
- Winners will be randomly selected in accordance with the terms and conditions of this campaign.
You can learn more about the terms & conditions of the #JomLabur campaign HERE.
No Money Lahâs Verdict
ASNB has been a go-to investment for many Malaysians. With the introduction of the Target Labur feature, itâll certainly help encourage a better investing habit among us all.
ASNB Target Labur FAQ
- Is it mandatory for ASNB investors to use the Target Labur feature?
Target Labur is a facility within the myASNB app aimed at encouraging healthy investment habits. It is not mandatory for myASNB app users or ASNB investors to use the Target Labur feature.
- Is there a limit on the number of goals you can create?
There is no limit to the number of goals a person can create, though the maximum target value per goal is fixed at RM100,000,000.
- Can I redeem the funds once it is allocated to Target Labur?
Allocation does not mean âlocking inâ - you are in complete control of your funds and can redeem as necessary, in accordance with redemption policies.
- If I delete a goal in Target Labur, will I lose my investments allocated to it?
Deleting a goal does not impact your investments in ASNB products. Deleting a goal simply allocates it to general savings or allows you to allocate your investments to other goals.
Disclaimers:
Target Labur investing is only for the purpose of simulation, and should not be construed as investment advice or financial planning. This facility is designed to assist you in determining the appropriate monthly investment in order to achieve your financial targets.
ASNB is not responsible/liable and does not guarantee the accuracy of the figures calculated. The figures calculated are for illustration only and shall not be regarded as recommendations or solicitations towards the buying or selling of ASNBâs products. Investors are advised to read and understand the Electronic Prospectus(es) and its Supplementary Prospectus(es) (if any) as well as the Product Highlight Sheet prior to making any investment decision. If in doubt, please consult a professional advisor
[Sponsored Post] Guide: How to make $1,000/month passive income from dividends via REIT?
Having a reliable passive income in life is the financial goal of many people (including myself).
However, most passive income streams require a conscious effort to maintain. Rarely do we see passive income that is completely, well, passive.
One of those rare exceptions is dividends from investing. In my opinion, dividends are the closest thing to pure passive income that you can get in life.
Once your money is invested in companies that pay dividends, they work for you while you are sleeping, eating, and exercising. And you get paid income in the form of dividends â how amazing is that?
In this post, I want to explore the idea of making $1,000/month* of passive income in the form of dividends, via Real Estate Investment Trusts (REITs). (*In our respective home currency)
Is it possible to make $1,000 in passive income from dividends via REITs? How much do we need? How long will it take?
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Quick introduction to dividends & REIT
A dividend is a form of return that companies agree to distribute to their shareholders. Here are some things you need to know about dividends:
- Dividends are not compulsory. Certain companies pay dividends while some companies can choose not to do so.
- Dividends are generally paid either monthly, quarterly, semi-annually, or annually (depending on a companyâs distribution policy).
- There are 2 ways to look at dividends: Distribution Per Unit (DPU), and Dividend Yield (DY).
- Distribution Per Unit (DPU) refers to the absolute amount per share that is being paid to shareholders. So, if you own 5000 shares of a REIT that pays a DPU of $0.05, then youâll get a total dividend of $250 (5000 shares*$0.05/unit).
- Dividend Yield (DY) refers to the percentage (%) of DPU relative to the price of the share (DY = (DPU/Price)*100). So, letâs say a REIT pays a DPU of $0.05 and the share price is $1.00/unit, then the dividend yield would be 5% [($0.05/$1.00)*100]
When it comes to dividends, REITs can be a good choice:
- REITs are unique companies in the stock market that allow investors to earn dividends by investing in income-generating properties.
- These properties can range from shopping centers, offices, factories, warehouses, data centers and more!
- REITs usually pay at least 90% of their income back to shareholders in the form of dividends. By investing in REITs, we are able to receive stable and (usually) higher-than-average dividends on a regular basis.
- There are 2 main ways to invest in REITs. One is to invest in individual REITs, and the other is to invest in REIT Exchange-Traded Funds (ETFs).
RELATED POST: 5 Singapore REIT ETFs to invest in for consistent dividends!Â
Expectation Setting: Why $1,000?Â
Now, before we proceed, itâll be helpful to know that dividend investing is a long journey - especially if we start off with small capital.
The reality is that dividend investing is capital intensive. For most people, itâs not something that can be achieved overnight.
However, in my opinion, a $1,000/month dividend is a realistic milestone target. With the power of compounding (more on this later), most people can achieve a respectable dividend income in life.
Some investors may think an extra $1,000 is too little.
But remember this: the extra $1,000 is close to passive. Plus, an additional $1,000/month means an extra $12,000/year! For many, it could mean better quality groceries, better meals, a new phone â and certainly more choices in life.
Execution: How to start & how long will it take?
To begin, letâs assume we are starting exactly from nothing. Here's what we are doing to do:
- Contribute $500 monthly into REITs. Investors can decide to either invest in individual REITs, or in REIT ETFs that track the performance of a diversified REIT portfolio.
- We'll assume an annual dividend yield of 6%. This is realistic, and is in line with Singapore REIT's average dividend yield.
Compound our return: All dividends received are reinvested into our REIT portfolio until we reach $12,000 in yearly dividends (ie. $1,000/month).
- NOTE: The calculations below are hypothetical and can deviate from real-life performance. In addition, the calculations below do not take into account of potential capital growth, which may impact actual real-life performance.
So, given a 6% annual yield, how long will it take for us to reach a total of $12,000 in yearly dividends?
From the table below, it will take 20 years before we reach more than $12,000 in yearly dividends. Another insight that we can extract from this is that weâll need about $200,000 in capital to achieve such a feat.
Twenty years is certainly a long time. But what if we can invest more on a regular basis?
Below, letâs find out how long itâll take for us to achieve $12,000 in yearly dividenda if we contribute $1,000/month instead of $500:
From the table below, with a $1,000 monthly contribution, itâll take about 13 years for us to achieve more than $12,000 in yearly dividends.
By year 20, weâd be getting more than $25,000 in yearly dividends, which is more than $2,000/month!
Note: All tables/calculations are done using the Compound Interest Calculator from Bankrate.com
Lesson & Mindset: Aiming for small, achievable milestones
So, what are some key takeaways from this post?
- Capital is required to build a meaningful passive income via dividends. As an example, to achieve $12,000 in yearly dividends, a capital of about $200,000 is required at a 6% annual yield.
- That said, everyone can start building towards their desired dividend income even with small capital. Of course, the more capital we can contribute to our REIT portfolio, the faster weâll be able to achieve our goals.
- Itâs crucial that we reinvest our dividends. Letting our returns compound will make our dividend investing journey exponentially faster.
Now, while 13 or 20 years might seem to be a long journey, it is actually very realistic from the perspective of long-term investing. In this era, I think we are too ingrained in the idea of achieving something fast, that we forget the importance of growing our wealth step-by-step.
That said, it is helpful to break down our progress into small, achievable milestones, as shown below:
- Short-term milestone: $1,000 in yield per year
- Medium-term milestone: $1,000 in yield per quarter
- Long-term milestone: $1,000 in yield per month
By breaking down our goal into smaller milestones, itâll make our investing journey much more meaningful. Below is the breakdown of each milestone using the same execution assumptions from the previous section:
(a) By investing $500/month, we can hit $1,000/year in dividend income by Year 4 and $1,000/quarter by Year 10.Â
(b) By investing $1,000/month, we can hit $1,000/year in dividend income by Year 2 and $1,000/quarter by Year 6.
The reward of compounding investment and patience?
A stream of reliable and passive income that requires almost no effort on our end â how awesome is that?
Resources: Want to learn more/invest in REITs & REIT ETFs?
There are 2 main ways to invest in REITs. One is to invest in individual REITs, and the other is to invest in REIT Exchange-Traded Funds (ETFs).
Both REITs and REIT ETFs are listed on the stock market and can be bought just like ordinary shares.
Useful resources:
- Iâve written an article on Singapore REIT ETFs, which I think youâll find helpful. Check out my guide on Singapore REIT ETFs HERE.
- To start investing in REITs or REIT ETFs, you will need a reliable broker. Check out my full review of ProsperUs by CGS-CIMB HERE for more details.
- In addition, Iâve written multiple articles on REITs as well. Definitely check out my REIT articles HERE.
2 other REIT investing methods that I did not cover in this post
In this post, Iâve covered the simplest way to invest in REIT to build towards our dividend milestones:
By investing in REITs or REIT ETFs and re-investing the dividends, anyone can build towards a reliable passive dividend income to supplement their wealth.
Now, are there faster ways for you to achieve your dividend goals? Of course, there are!
Here are 2 other methods that I did not cover in this post:
#1 Taking margin financing to invest in REITs:
In simple terms, borrowing money to invest in REITs.
Just like taking a loan to buy physical properties, margin financing provides leverage to investors to own a bigger number of REITs with relatively small capital.
This can be a risky move as investors are exposed to the risk of margin call. Personally, I am not familiar with this approach and hence not able to write much about it.
#2 Covered Call Strategy:
This is an approach where investors can boost their dividend yield by selling call options on the stocks that they own to another investor.
That said, this approach involves options, which I personally have little knowledge of. Iâll study this further and cover this topic sometime in the future.
This post is sponsored by ProsperUs by CGS-CIMB.
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Disclaimers
This article is brought to you in collaboration with ProsperUs by CGS-CIMB.
This post is produced purely for sharing purposes and should not be taken as a buy/sell recommendation. Past return is not indicative of future performance. Please seek advice from a licensed financial planner before making any financial decisions.
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