The plan is to have at least 3 years of liquidity at any one time so that I do not need draw down my portfolio when it underperforms. The goal is to have an average return of 10% including dividend so that I can continue to fund the above cash flow and grow the portfolio. You can read this post Draw Down Plan for details.
Thanks to the market rally over the past month, the portfolio with projected dividend for this year hit a 10% return yesterday. With that, I decided to execute the draw down plan for the first time and sold off part of my portfolio so that I can cover my annual expenses from 2024 to 2026.
The idea is to sell off every counter by a certain percentage so that the composition of the portfolio will not change. However, I added two adjustments.
- Not selling counters bought with CPF as they don’t contribute to my current cash flow.
- The sold amount should be at least $800, so that the fees amounts to less than 1.5%.
In total, 20 counters are sold with a net gain of about $7.5k. One notable change that I observed with this strategy is that I wasn’t bothered by how each counter was performing against the initial investment. In a way, this sort of removes anchoring bias for individual stock. Two peeves are the updating is really a chore and I need to get used to not so nice numbers in terms of the number of shares held for each counter.
Done for the year?
Yes and no.
Unless the market continues to rally and portfolio’s return (including dividend) hits 21% (1.1 x 1.1), I am done with the selling this year. But I am not going to forget about my portfolio. Work still need to be done to monitor their quarterly report and if necessary, adjustments will be made to the portfolio.
The following chart shows the top 21 positions after selling.