It’s been a busy week at work and outside of work. Trying to finish up tasks before my colleagues head off for their block leave. And going for various celebratory events due to the festive season. We will probably be staying in at home tomorrow to rest and recover for the new work week ahead. It is likely to only start winding down as we get closer to the Christmas and New Year’s Eve holidays. Can’t wait!
There’s another thing to look forward to in the new few weeks. The payout of our salaries and my wife’s year-end bonus. I know the former happens every month but it’s always something to get excited about. While the latter happens once every year if we are lucky. This upcoming higher than average cash injection comes at a good time.
We may have overspent recently from all the gifts purchased, meetups and gatherings that we attended. Our cash holdings need topping up! Plus I am currently in the process of opening a Smartly robo-advisor account. They just started their referral program and I used my wife’s referral account to initiate the process. Like I said, I believe in both Smartly and StashAway as robo-advisors in Singapore. And I will continue to support them as long as they act in the interests of the retail investor i.e. offering platform/account fee waiver as part of the referral program in this case.
Something else has caught my eye. Actually, it’s all over the news and has caught everybody’s attention. The rocketing prices of cryptocurrencies. I remember writing a post a few months back about possibly purchasing a bit of cryptocurrencies to have a position in the market. Well, I didn’t do it in the end. Which leaves me with mixed feelings as I can only observe the meteoric rise of cryptocurrencies prices as a spectator and not benefit from it.
I would be lying if I don’t admit a small part of me regretted not buying just that 1 unit of Bitcoin or Ethereum that I was prepared to do by opening all the relevant accounts then. But I couldn’t bring myself to go through with it. No point asking me what I would have done in hindsight. I’m not one to dwell on such past events because I much prefer looking forward to improve the future version of me.
As for the reason why I didn’t do it. It’s because I realised there was no need for me to take that risk. I know the cryptocurrencies prices have tripled in value during the period of time. Which means a S$10,000 investment would have become S$30,000 in the short span of a few months i.e. gain of S$20,000 or 200%. It would have been an amazing result on an amount I might have been willing to risk on cryptocurrencies.
However, the cryptocurrencies prices could just have easily halved in value during the period of time if you were to consider historical prices. Which means a S$10,000 investment might have become S$5,000 instead i.e. loss of S$5,000 or 50%.
One of the most important rules of investing is that you should only invest what you can afford to lose. People keep saying this when you ask them how much did they invest in a particular risky financial asset. The majority always thinks they only invested what they could afford to lose. Until you actually lose the money. This is the part that gets me. Because I reckon my tolerance level for losses is a lot lower than I think.
Plus I don’t actually have cash I can afford to lose. It’s my hard-earned salary income and bonus. Why would I ever think I can afford to lose it? Making losses is a terrible position to be in and I don’t like being in that situation. Which is reflective in the way I invest in ETFs now, a more risk diversified financial asset. And I ensure my cash injections into savings and investments every month would more often than not be greater than any potential losses. This means my total assets usually increases from month to month. It keeps me in a positive head space and mood.
I like where we are now with our rate of progress on savings and investments. It’s steady, stable and still allows us to have a life that we enjoy. I won’t jeopardise that by taking a risk that could potentially blow up everything we have. You could say I’m risk-averse and would probably never make it in higher risk ventures such as entrepreneurship, self-employment and full-time investor.
But understanding and accepting this has provided me with an important perspective on life. Patience. Time builds character, relationships and so many other attributes I will need later on in my life. I’m not looking to shorten the journey but just want to enjoy this process as much as I can with all the ups and downs. I refuse to risk a high probability of 50% loss for a low probability of 200% gain with any money that I have. It’s unnecessary and bad odds no matter how I look at it. This is not how I invest. If anything, I will work harder to earn back the potential gain that I lost out on using my salary income and bonus. Keeps me motivated!