LifeStyle Fund

Recently, I was thinking about the prospect of investing in companies which offers products or services that I frequently use. The basic idea is to cover all my expenses incurred from the company with their annual dividends distributed to me. I will do an experiement on this by using my lifestyle as an example.

Spendings

Transport
I usually travel to work by train and occasionally taxi and these transport services are provided by SBS, ComfortDelGro and SMRT. I spend roughly $60 dollars each month on train transport and an average of $10 on cab transport. This adds up to a total amount of $720 and $120 on train and cab respectively each year.

SMRT - $720
ComfortDelgro - $120

I am aware that SMRT offers cab service too but for better illustration purposes, I will assume all cabs that I have taken are from ComfortDelgro.

Apparel
Assuming I always patronize GAP and other fashion boutiques operated by FJBenjamin to buy my new year clothings. I spend roughly $300 each year on apparel.

FJBenj - $300

Telecommunication
My current handphone line is subscribed under Singtel. My handphone bill adds up to an average of 40 plus dollars each month which sums up to $420 each year.

Singtel - $420

Cable TV
Both my cable TV and internet connection is offered by StarHub. The total bill adds up to 100 plus dollars each month which sums up to $1200 each year.

StarHub - $1200

Brokerage
I make approximately 20 trades a year and the commission charges incurred are paid to SGX and my brokerage company. A trade usually cost me $30 and sums up to $360 each year and to simply things, I will just assume SGX receives the full amount.

SGX - $360

Publication
Newspapers which I usually bought are Business Times and Newpaper and both of them are published by SPH. They cost me approximately $20 each month which sums up to $360 each year.

SPH - $360

Oil
I do drive occasionally and usually I will replenish my patrol in SPC. I dont drive frequently so in this case, I will just give an estimate figure.

SPC - $500

Mailing
I do send and receive mails frequently and as far as I know, SingPost is the only company which offers local courier services. Well I'm not too sure about the charges and the number of letters I have mailed out every year so again, I will just give an esimate again.

Singpost - $200

Food
I do buy breads quite frequently from BreadTalk and occasionally, I will also patronize a restaurant named Ding Tai Fung which is also operated by them. On an average, I spend around $20 each month on them which sums up to $240 each year.

I also buy drinks like soyabean and etc manufactured by F&N and spend an average of $500 each year.

BreadTalk - $240
F&N - $500

In total, my daily neccesities cost me $4920 annually.. So how can I adjust this portfolio accordingly to neturalise my expenses from dividends distributed by each company? To test out this theory, I will use the company's current stock price and last year's dividend payout for the calculation..

SMRT
Current Price : $1.720
Divdend paid out last year : 0.072500 per share owned

Money Spent on SMRT : $720
No of shares required to neutralise the expenses incurred : 9000 (9 Lots)

Total amount required to purchase the shares : $15 480

ComfortDelgro
Current Price : $1.940
Dividend paid out last year : 0.061250 per share owned

Money Spent on Comfort : $120
No of shares required to neutralise the expenses incurred : 2000 (2 Lots)

Total amount required to purchase the shares : $3880

FJBenjamin
Current Price : $0.860
Dividend paid out last year : 0.025000 per share owned

Money Spent on FJBen : $300
No of shares required to neutralise the expenses incurred : 12000 (12 Lots)

Total amount required to purchase the shares : $10 320

Singtel
Current Price : $3.980
Dividend paid out last year : 0.110000 per share owned

Money Spent on Singtel : $420
No of shares required to neutralise the expenses incurred : 4000 (4 Lots)

Total amount required to purchase the shares : $15 920

STARHUB
Current Price : $3.080
Dividend paid out last year : 0.115000 per share owned

Money Spent on StarHub : $1200
No of shares required to neutralise the expenses incurred : 11000 (11 Lots)

Total amount required to purchase the shares : $33 880

SGX
Current Price : $14.900
Dividend paid out last year : 0.360000 per share owned

Money Spent on SGX : $360
No of shares required to neutralise the expenses incurred : 1000 (1 Lot)

Total amount required to purchase the shares : 14 900

SPH
Current Price : $4.50
Dividend paid out last year : 0.160000 per share owned

Money Spent on SPH : $360
No of shares required to neutralise the expense incurred : 3000 (3 Lots)

Total amount required to purchase the shares : $13 500

SPC
Current Price : $8.850
Dividend paid out last year : 0.200000 per share owned

Money Spent on SPC :$500
No of shares required to neutralise the expense incurred : 3000 (3 Lots)

Total amount required to purchase the shares : $26 550

SingPost
Current Price : $1.220
Dividend paid out last year : $0.062500 per share owned

Money Spent on SingPost :200
No of shares required to neutralise the expense incurred : 4000 (4 Lots)

Total amount required to purchase the shares : $4880

BreadTalk
Current Price : $0.585
Dividend paid out last year : 0.004200 per share owned

Money Spent on BreadTalk : $240
No of shares required to neutralise the expense incurred : 57000 (57 Lots)

Total amount required to purchase the shares : $33 345

F&N
Current Price : $5.750
Dividend paid out last year : 0.280000 per share owned

Money Spent on F&N : $500
No of shares required to neutralise the expense incurred : 2000 (2 Lots)

Total amount required to purchase the shares : $11 500

WOOT! It addds up to an astronomical amount . ha .. The total sum is $184 155.. But don't be alarmed by this because both the current price and dividends used in the above example are not accurate. Because prior to purchasing any shares of the above, I will use fundamental analysis to determine my entry price although there might be a chance that the 'intrinsic' value conincides with the market value and secondly, the current price is taken into account of future expected dividends hence using past dividends together with current price would not be accurate. You must be wondering, if one is to have so much cash, why would the person be concerned with such meager expenses? In my opinion, theortically, you have nothing much to lose since in the event of bad recessions, majority of things stated above will still be used by most people and most probably you will still be earning dividends during the period. Assuming you buy them at the market peak and the market crashes right after that, there's nothing to worry about as most of the companies stated have good financial health to see them through bad times and if there are excess cash, one might consider cost averaging it. This is at a experimental stage, I will need to do further research to judge the feasibility but I'm sure the total amount derived from using fundamental analysis will be much lesser than this figure.