I have decided to take a break from writing about Google Sheets. I should go back to it eventually since there is a lot of material to cover but I might write about other topics in the meantime. Previously, I didn’t think I was going to disclose any more personal finance information as I had written about our ETF and Share Portfolios as well as the passive income received. However, I reckon it would be good to show the Other Portfolio to have a better illustration of our Investment Portfolio.
What does the Other Portfolio consist of?
We hold corporate bonds instead of Singapore Savings Bonds (SSBs) to have a higher yield on our investment. After all, these bonds form part of our investment portfolio and the SSBs are a more suitable vehicle for our emergency funds. We try to keep a lookout for retail bond issuances and allocate small sums to different corporate bonds.
Wholesale Life Insurance Policies
These are essentially life insurance policies with cash values (i.e. surrender values) that grow over time. Our parents bought these wholesale life insurance policies for us when we were young and we have taken over the payments now that we are working. Since these policies are what I call legacy assets, we have opted to retain them in our investment portfolio.
Investment Cash Holdings
We hold cash for investment purposes, to be used especially during market dips and bear markets. We try to consistently invest some of these cash holdings every month since we try not to time the market. However, it really only gets drained during bear markets and we just used a chunk of it in Jan and Feb 2016. As discussed in my previous post about asset allocation, we try to allocate a percentage of our savings each month to this component.
The ETF, Share and Other Portfolios form our Investment Portfolio. I won’t be disclosing the figures and percentages of our other cash holdings for emergencies & expenses and retirement funds. That gives too complete a picture of our Total Portfolio i.e. our entire assets. Maybe at a later time when we are more advanced in our journey to Financial Independence but we shall see.
For now, I should only track our Investment Portfolio on this blog. It’s important to understand the relationship between the ETF, Share and Other Portfolios with reference to your asset allocation strategy. The main reason why I decided to disclose our Other Portfolio was because I felt there were gaps when I was explaining our investment approach. You see, although we try to invest every month, it really depends on how the market is like for the month. If it’s trending upwards, we invest less and if it’s trending downwards, we invest more i.e. gradually increase our ETF and Share Portfolios over time.
The point I wanted to highlight is that this does not mean we force ourselves to invest all the time. Any cash not invested just increases our investment cash holdings. Yes, the ETF and Share Portfolios can grow very slowly in some months but that’s okay, because it means your Other Portfolio is growing more quickly. The key is that your Investment Portfolio in its entirety is still increasing. Sometimes, we focus so much on trying to increase our ETF and Share Portfolios that we forget it’s okay not to invest. This just means we have more cash holdings in our Investment Portfolio but it is also considered to be taking a position. By reflecting the Other Portfolio as well, we try to capture this concept when tracking our Investment Portfolio.