When you think about investing for the long term, how far do you think ahead?
Let me share what I have in mind.
I don’t just want stocks that will reward myself for life.
I want stocks that will benefit myself AND my children for life.
This means I look for stocks that can survive my lifetime and be passed on to the next generation.
When you adopt this decades-long perspective, you will change how you think about stocks.
It’s NOT about interest rates or what the US Federal Reserve will do in the next two weeks.
It’s NOT about inflation or where oil prices are going to go this week, this month or this year.
It’s NOT even about the threat of recessions, de-globalised economies or geopolitical uncertainty.
It’s about surviving ALL of the above and more.
Next-generation assets
The core of my investing philosophy is about LONGEVITY.
Close your eyes for a moment and let your mind wander …
What types of assets will remain resilient for decades to come?
Which businesses will still be around when you pass your stocks on to your heirs?
What are the trends which will still be prevalent decades from now?
This mindset leads us to real estate investment trusts (REITs).
For instance, many will be familiar with Plaza Singapura, a bustling mall owned by CapitaLand Integrated Commercial Trust (SGX: C38U), or CICT.
What you may not know is that this popular spot near Dhoby Ghaut MRT is almost 50 years old.
Despite its age, Plaza Singapura continues to draw thousands of shoppers every year, a testament to CICT’s ability to extend the longevity of the mall.
But how will this fact help investors?
For starters, a well-kept property can attract more footfall. With more shoppers, tenants will be able to earn more. Subsequently, the REIT will be able charge higher rents over time.
More rental revenue will lead to higher distributable income.
And you know what comes next: a steady stream of dividends for unitholders like yourself.
Along these lines, in Kuo’s Income Portfolio, I pick dividend stocks which own properties or assets that stand the test of time.
Next-generation consumers
I prefer the simple pleasures in life: food.
Hence, it should be no surprise that I have a fondness for businesses such as Nestle Malaysia (KLSE: 4707), a well-known household brand.
There is a reason why many consumers buy their products everyday.
The Swiss company set root in Malaysia over 100 years ago. Brand names such as MILO, KitKat, Maggi, and Nescafe, have become daily staples in Asia.
If you are looking for evidence of longevity, few will come close.
That’s why I have stocks such as Nestle Malaysia in my Malaysia Money Machine portfolio.
Speaking of longevity, you may have noticed a McDonald’s (NYSE: MCD) outlet during your daily commute or around the corner from where you live.
It’s no coincidence.
The Golden Arches have been around for over 40 years in the city state.
Today, its 135 restaurants island wide serve 6.5 million customers every month.
Beyond Singapore, there are almost 11,000 stores located all over Asia, making McDonald’s synonymous with fast food in Asia.
Similar to Nestle, McDonald’s is another example of a long-lasting business that is still serving the same burgers decades ago and is likely to continue to do so in the future.
Today, the stock sits in my Asian Consumer Portfolio.
To your health
The recent pandemic has shone a light on the state of Asian healthcare: it’s a priority.
That’s not all.
According to the Asian Development Bank, one in four Asians will be over 60 years old by 2050. The elderly population is expected to rise to almost 1.3 billion.
These are staggering numbers which demand attention.
It is also a big reason why we started a new Asian Health and Wellness Portfolio just two years ago.
Today, the portfolio has 20 stocks tapping on this key trend of healthcare and wellness within Asia. We expect demand for better solutions and services that last for decades.
Get Smart: All Weather Stocks
Peter Lynch once said, there is always something to worry about.
Whether it is recessions or geopolitical tensions, these are factors beyond our control.
What we can control, however, are the types of businesses we invest in, and receive dividends which make our efforts worth the while.
The best part about this mindset is that it is well within everyone’s reach.
Given the choice, what stocks would you prefer to own?
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Disclaimer: David Kuo owns shares of Nestle Malaysia, McDonald’s and CapitaLand Integrated Commercial Trust.
