As mentioned in my previous post on the Mar 2016 Financial Update – P&L, this post will focus on the Balance Sheet (BS) – Assets and Liabilities. Again, I will summarise the main points of consideration for each item.
We have been building up our investment portfolio more aggressively since 2015. This is especially so for the ETF and Share portfolios due to the volatility in the stock markets in the past several months. However, the buying activity of ETFs and Shares have slowed down considerably given the recent rally in the stock markets. Our strategy is to continue to be vested, invest every month but only increase our ETF and Share portfolios aggressively in months that the stock markets are doing very badly. The growth in the Other portfolio has been more consistent.
We have started holding more cash due to the increased risk of retrenchment and this is expected to be the case for the next few months. It helps to know that we have sufficient cash to manage all of our expenses for as long as necessary in the event of job loss.
In fact, we have started building up our Central Provident Fund (CPF) Ordinary Account (OA) as well so it’s possible to pay the entire monthly mortgage amount from the OA for several months to reduce any cash drain if required.
Our biggest liability is the mortgage i.e. housing loan. The monthly loan repayment amount is about 30% of our combined monthly income so you can imagine the size of the mortgage that is causing it. I have always wondered what it will be like to pay less than 30% of our monthly income for accommodation since we have always been paying about 30%. It was for rent when we were in Australia and now it is for mortgage when we are in Singapore. This is what happens when we try to retain aspects of our life in Australia here in Singapore.
The only other liability we have is credit card debts. Although we pay them off in full every month, we count each credit card bill as a liability since we will have to pay the full amount in cash via GIRO on the payment date. Monitoring our credit card bills is actually how we manage our expenses since we try to charge most of them to our credit cards. We only spend cash on certain items (e.g. food at coffee shops or hawker centres) or in places that do not accept credit cards (e.g. shop houses). This makes it easier to track our cash expenses.