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Retire Rich With REITs' Dividends

How much do we need to retire comfortably?

This is the one million dollar question that everyone wants to know. Exactly how much you need to save to have a comfortable retirement relies on so many factors. There is no single answer that fits everyone, just as no two people will live and retire the same way. One could very comfortable with an annual retirement income of $30,000, but another will need double or even triple of that.

What's the difference?

It is all about what you need and what you want. For example, how many holiday trips per year do you want to go? Where do you want to live after retirement? What is your basic living cost? How much do you want to spend on luxury stuff?

Another critical factor to consider is debt. Do you have any mortgage or credit card debt?

In Singapore, we have the world's longest life expectancy of 84.8 years. With the retirement age of 65, there would be at least 20 years of living after retirement. Excluding the CPF savings and payout, a simple estimation is to save an amount of $1 to $1.5 million, which will give you a spending amount of $50,000 a year for the next 20 to 30 years after retirement (assuming no interest earned throughout the period).

Take a couple hours, list down the needs and wants after your retirement. This list might change from time to time. But at least it will give you an idea on how much you need to save if you want to retire comfortably.

Are REITs Good For Retirement?

We think that REITs are an excellent instrument to help build a retirement portfolio that provides stable passive income to meet living expenses in retirement. As regulated, REITs are obligated to pay out at least 90% of their taxable income to the shareholders in the form of dividends. While the prices of the REITs fluctuate, as long as a careful analysis is done to pick REITs with strong fundamentals, there is no reason why REITs will stop paying dividends during the bear market. For example Parkway Life REIT (SGX: C2PU), a healthcare REIT that is in general "safe" and considered as blue chip REIT managed to grow its dividends during the 2008 Global Financial Crisis even though the price has corrected 40%. This also served as a perfect opportunity for REITs investor to increase their holdings.

Besides, REITs are asset-backed, which mean they are relatively "conservative" as compared to other asset classes. Thus, this makes REITs an excellent passive income in both good and bad market environments.

Our REITs Portfolio

Within our REITs premium service that we offer to our subscribers, we have two strategies which are differentiated based on risk profiles (Normal Strategy - lower risk and Advanced Strategy - higher risk). As shown below, both portfolios have generated impressive results over the years. We managed to outperform both the Straits Times Index and the FTSE REITs Index over the years.

Our advanced strategy with in-built portfolio rebalancing is instrumental in generating good results with reduced risk!

In 2019, our REITs picks have returned 12% YTD while the advanced strategy has returned 24% YTD as compared to Straits Times Index return of 5.5%.

Our portfolio now contains 9 REITs. We consider this portfolio to be a low-risk portfolio that was purposely designed to generate highly sustainable dividend income. Portfolio rebalancing is done on a monthly basis, and a major rebalancing will be done on an annual basis.

When you compare the track record of this portfolio with standard REIT benchmarks, you can see why this strategy has been highly successful. Of course, our REITs picks had both winners and losers over the years. The key objective is to build a REIT portfolio of $500K in size so that it generates an income of at least $50K per year. Using our advanced strategy which offers a yield of 10% on average, we are well-positioned to hit the $50k passive income target.


The success of our REITs strategy is built on answering the questing below:

  • How is the REIT generate more dividends than their peers?

  • How can the REIT grow their dividends in the next five years

  • Is the portfolio healthy and safe enough to navigate all the uncertainties and market volatilities?

  • What is the impact on interest hike?

  • Is REIT manage aligned with the shareholders' interest?

  • What is the growth segment that will boost the REIT sector?

  • And finally, one last question: Will I sleep well at night when I bought the REIT?

We have added a new feature to our Premium subscribers: S-REIT Corporate Action Calendar & Sentiment

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