Finance Smiths

Personal finance apprentices-in-training

Setting up Cake Defi and transfer cryptos from Hodlnaut

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It has been a busy 2 weeks as I juggle working from home with my wife working in the office. Initially, I was pleased that my boy was able to attend school this week without falling sick. He had been sick 1 week after every 2 weeks in school for the past 2 months so this was the first time he went in for 3 weeks in a row. He still has a cough that is difficult to shake but we went to the paediatrician to get medicine for it early in the week. It was towards the end of the week that things went south.

I made a bad call with stale infant milk formula that resulted in my son having tummy issues and diarrhoea. We ended up going back to the paediatrician again to get medicine for it as well. The resulting diaper rash caused quite a bit of discomfort for him, which made the necessary multiple diaper changes and application of cream a challenge to handle. I feel bad for making such a big mistake causing my wife and helper to have to step in to clean up the mess. I’m hoping we get to rest up more on Sun as the situation improves before the work week starts again.

I did manage to find some time to work on my cryptos portfolio. Previously, I had set up my automated investments into standalone robo-advisors (StashAway and Endowus), bank robo-advisor (OCBC RoboInvest) and bank monthly investment plans (POSB Invest-Saver, OCBC Blue Chip Investment Plan and UOB SimpleInvest). It took some time after having to set aside a large sum of cash and CPF-OA for the downpayment of my private property purchase. But I was finally able to restart my regular investing strategy every month.

Consistent investing into ETFs and funds are a critical element of my investment portfolio. The bigger this component gets, the more risk I can take on with individual stocks and cryptos to increase my returns. If I don’t manage the risk-return ratio well, the investment portfolio ends up being too conservative or too aggressive. Cryptos remains my riskiest position, hence the liquid asset allocation of 10% to it. I had already increased it from 5% previously after realising I didn’t have to sell much of my ETF holdings to buy the private property.

Originally, I had put all of my cryptos into Hodlnaut to earn interest. The returns were good but I started exploring ways to increase it further and I decided to give Cake Defi a try. I converted my DAI holdings on Hodlnaut to USDC and transferred it to Cake Defi after setting up an account there. I swapped half of my USDC holdings on Cake Defi to DFI to be staked and the other half was put into a liquidity mining pool. This means that about 20% of my crypto holdings is now on Cake Defi and the other 80% remains on Hodlnaut.

I have incurred quite a bit of transfer and transaction fees moving my crypto holdings around the various platforms – Coinhako, Hodlnaut and Cake Defi. But I view it as a necessary cost to understanding more about cryptos. Eventually, I will have to scale up my crypto activities even more to generate higher returns. But only after my investment portfolio grows big enough to either allow for more funds to be diverted to cryptos at a liquid asset allocation of 10% or to increase this further to 15%. I’m eager to learn but acknowledge my beginner level status with cryptos so I don’t get burnt too badly at the start.

Taking profits on Tesla, rebound in Chinese tech stocks and crypto dip impact on Hodlnaut

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I decided to sell my Tesla holdings and take profit. Not as big a percentage gain compared to the sale of my SEA, Invesco QQQ and Nvidia holdings on Fri. My percentage gain on the sale of my Tesla holdings is about 15%. In absolute terms, it translates to about a US$3,000 gain on a US$20,000 position. And I should be receiving my US$23,000 sale proceeds this week. The US tech stocks are on a tear recently and I have been cashing in the profits on selected US tech stocks in my investment portfolio that have done well.

I’m new to this US growth stocks investing strategy and only started building up my position in them late last year. I averaged down on all of my positions throughout this year to varying degrees. The problem was that everything seemed so new and exciting and I started buying into too many US tech stocks and active ETFs. I ended up with some of the positions being too small to have any impact on my investment portfolio because I bought them on a whim. I bought in more on my high conviction US tech stocks and active ETFs but still spread out my funds too much. Some paid off while others didn’t.

This is how I have always approached deploying a new investing strategy. Try tinkering around with it using small positions, build them up during dips and falls before selling them during a rally. While this is good for delivering consistent gains, I’m unable to achieve any big gains because I don’t hold a sizeable amount of an individual stock that has the potential to do really well in the long term. And I don’t hold that individual stock for a long enough period of time to realise those big gains.

It comes down to the fact that I’m still not confident of my investing strategies for stocks. I’m better with my investing strategy for passive ETFs because I was able to practise it often in the past several years. It was basically a matter of dollar-cost averaging into them via robo-advisors and banks using automated monthly funds transfers. Before manually buying slowly during dips, moderately during falls and aggressive during crashes. Since passive ETFs track market indexes and paid/reinvested distributions, I can basically repeat this for as long as I have holding power.

I tried the passive ETFs investing strategy with stocks and active ETFs. When it worked (such as with my Singapore bank and US tech stocks), the gains were much more than I could achieve with passive ETFs. But when it didn’t work (such as with my Chinese tech stocks), the losses were also much more than what’s possible with passive ETFs. That is the reward to enjoy and price to pay for trying to achieve higher returns. Until I feel like my investing strategy for stocks and active ETFs is improving, I’m unlikely to take big positions and will take profits when I can. Like what I’m doing now and wait until the next time to try again.

Anyway, my Chinese tech stocks are gradually recovering and this helps to reduce the unrealised losses on them. I averaged down on them during the recent crash but it was not significant due to my lack of cash then. I should be holding these positions for quite a bit longer to see if I can realise the gains I’m looking for. Not possible now with the current regulatory headwinds but maybe in the future when these negative pressures subside. I shall patiently wait to see where they are headed.

Besides, I’m expecting an influx of US$ into my bank account that I’m thinking about how to manage. Lately, I have been converting S$ to DAI (because the US$ was down) using my Coinhako account before transferring it to my Hodlnaut account. This gets token swapped into USDC (generate crypto interest in BTC) and USDT (generate crypto interest in ETH) with the remainder in DAI (generate crypto interest in DAI). It ensures my Hodlnaut holdings in BTC, ETH, USDC, USDT and DAI are rather evenly split between typical cryptos and stablecoins.

I managed to get my Hodlnaut holdings up to S$100,000 before the drop in the crypto markets that just happened a few hours ago brought it down below that level. But I’m slowly getting used to the volatility and hope I have deployed a better investing strategy for cryptos this time round. I’m not planning to add more to my Hodlnaut holdings because it’s now about 10% of my investment portfolio. I’m going back to my Coinhako account to wait for buying opportunities to come up for altcoins before redeploying them in Hodlnaut.

This still leaves me with a sizeable amount of US$ that I will most likely convert to S$ and keep as cash. After my private property purchase is completed next month, the downpayment will wipe out most of my cash. I keep trying to convince myself that it’s a good time to start holding a low cash balance so I can invest most of my salary income every month. After all, in a low interest rate and high inflationary environment, holding cash is not ideal. I thought I was ready for this.

Turns out I’m not the kind to be comfortable with a low cash balance. The best investing moves I made in the past 1.5 years came from me having the flexibility to commit to them knowing I have a big cash buffer to draw on. I wasn’t recycling my investments between ETFs, value and growth stocks. I was investing fresh cash funds into the areas that weren’t doing well in certain periods of time. And I could wait for their recovery because of my holding power. Even in a short timeframe of 1.5 years, these investing moves could still pay off.

When I was averaging down on my Chinese tech stocks during the recent crash, I was hesitant in pulling the trigger multiple times because I had little to no cash buffer for further drops or even as protection. I couldn’t use cash set aside for my private property purchase because I will run the risk of not having enough cash for the downpayment to complete the transaction. My Chinese tech stocks may have recovered slightly but I didn’t like what I was feeling then.

Fear and doubt in what I was doing. And how long it would take for a recovery to kick in to stop the pain. Compressed into a few weeks and I came close to exiting my positions at the end. Possibly at substantial losses because that would have been the worst time to capitulate. Bad outcomes and possibilities kept playing in my mind to the point where it can be difficult to focus on what’s important. Which is to believe in the investing strategy and wait.

The problem wasn’t a lack of holding power. The rest of my investment portfolio was holding up well and I could have exited some profitable positions then to redirect cash funds to where they were needed. The problem was a lack of cash that made me believe I didn’t have holding power because I would actually have to exit profitable positions to sustain those loss making ones. Irrational thinking given the overall context but it seemed so logical at that time.

A rational mind gives me objectivity and patience when it comes to investing. My cash balance feeds into this in a positive way at a much stronger level than I expected. I don’t want to go back to the days of holding a large cash balance in the hope of a crash. But I also don’t want to hold such a low cash balance and be over-invested in the stock and crypto markets that it affects my judgement and stability. The key is to find the level of cash that keeps me sane with an acceptable level of opportunity costs by not investing it.

Increase funds in Hodlnaut crypto interest account and setting up OCBC RoboInvest again

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My wife has been going into the office to work this week since it’s the start of her new job. And I have been driving her into and out of the city in the morning and evening as well as dropping off and picking up our boy from the preschool in the morning and afternoon. My helper and parents-in-law have been taking turns to bring our boy out in the afternoon after his nap for a few hours just to give me some time and space to catch up on my work. It has only been 2 days and I’m feeling more exhausted than usual. Not having my wife around at home to help out with our boy is making things more difficult for me but I’m hoping to improve at it eventually.

Anyway, I managed to squeeze out some time for this despite my busy schedule. Because I wanted to organise my finances by the last day of Aug so I can start Sep on a fresh note. I transferred some cash from my bank account into my Coinhako account and bought DAI. It had gone down over the last few days and I now have an increased cash buffer for investing. I transferred the DAI to my Hodlnaut crypto interest account and token swapped a third of my total DAI into USDT. I changed the crypto interest payout (rate is higher than DAI) for this portion from USDT to ETH.

I token swapped another third of my total DAI into USDC and changed the crypto interest payout (rate is also higher than DAI) for this portion from USDC to BTC. I left the remaining third of my total DAI and the crypto interest payout as DAI (even though the rate is lower than both USDT and USDC). My total Hodlnaut crypto interest account balance has gone up to about S$70,000, which is more than 5% of my liquid assets. I’m slowly increasing this to 10% as I start to get more comfortable with cryptos taking up a bigger position in my investment portfolio.

After this, I was organising my sister’s OCBC RoboInvest account’s 2 portfolios when I noticed they now had a monthly investment plan option. I had previously exited my OCBC RoboInvest account 2 months ago because I needed cash funds then for the downpayment of my private property purchase. I was also getting annoyed with having to do manual transfers into my OCBC RoboInvest account and there was no way to automate it at that time. I’m happy to see this monthly investment plan option for OCBC RoboInvest and decided to reopen my account with 2 portfolios.

Each of my monthly investment plan has a different strategy and buys into different ETFs, stocks and funds. The total automated monthly cash drawdown to execute these investment plans will be significant. But this is exactly the kind of convenience I want in my life right now and I’m willing to pay higher fees for it. The way I see it is that I should only be allocating time and effort to making manual investments when there are big opportunities in the market. Otherwise, I will just be over-monitoring the market and too trigger happy with my cash balance for the sake of utilising it.

I’m better off just letting the automated investments do the work while I focus on my other priorities. Balancing my family and my needs is already proving to be a challenge without our finances coming into the mix. I don’t want us to have to keep worrying about our financial position on top of meeting the demands of our jobs. Let’s not forget the importance of self-care too. If I’m in a positive state of mind and feeling good about myself, it naturally extends to my family as well.