This is a recurring theme that I have been exploring for a few months. How can I merge my investment convictions with my expected needs into retirement? I have written about it in my previous blogs but would like to share more of my findings today.
The basis of a sustainable retirement lifestyle is to create more streams of passive incomes. One quick way would be to invest in exchange-listed REITs (Real Estate Investment Trusts) especially those in S’pore and the US where they are well regulated and backed by real assets. They have to distribute 90% of their income as dividends to shareholders and besides a board of directors, they also have an independent 3rd party trust to ensure that they adhere to strict policies of not being overly leveraged. S’pore does not permit borrowings of more than 45% of Total Assets. REIT yields in this current low yield environment are relatively attractive and stable, ranging from 3 to 9% per annum. To date, I have a total stock portfolio that provides me with more than $20k+ of dividend income per year, mainly REITs but it also includes some blue chip bonds. Looking to build this up as I near retirement.
The other interest of mine was on the concept of healthcare and retirement living. I had wanted to start a company locally for like-minded people above 60 years of age who wanted an active retirement lifestyle. Sadly, I could not bring my potential partners together to kick-start the project. Yet I still believe that this trend will grow strongly in the future, as my cohort ages and the grey population increases worldwide.
Ideally, I should be looking to marry both the above concepts from an investment standpoint. Apparently, there are US centric investment tools that allow me to do so, as their market has greater depth and a long history of development in these segments.
In the US, there are specific REITs that only invest in healthcare-related sectors. My research has helped me narrowed my focus onto 3 in particular that I am now looking at, pending appropriate levels to enter and accumulate during periods of price retracements. The overall global macro outlook points to more years of slow growth and interest rate increases, if any, will be slow. These stocks could be ideal to obtain a decent yield while minimising overall portfolio risk. The 3 that I have zoomed in at the moment are Welltower (HCN), HCP Inc (HCP) and Ventas (VTR).
I am also currently exploring ETFs that track REITs which will allow me to further spread out the risk while enjoying better yields. I am currently studying the Vanguard REIT ETF (VNQ) and iShares US Real Estate (IYR).
Please do provide your comments and inputs. I would love to hear from others and continue learning. Thanks.
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