I’m still here. I know it’s been more than a week since I last posted. Was busy with a few things at work and outside of work. But I got through them and got a bit of time now to write about stuff. On the financial front, nothing much seems to be happening. I’m satisfied with how the monthly bank investment plans and contributions to robo-advisor accounts have been progressing.
I’m aware that equity markets are at all-time high for this year (2017) and it’s not an ideal year to start Dollar-Cost Averaging (DCA). But I rather start deploying my cash funds regularly than delay, let it build and not know when to use it. Case in point. I have a sum of USD in my foreign currency settlement account that has been sitting there for a while and earning next to nothing in interest income.
I hesitated with what to do with it (i.e. invest or transfer out to my SGD account) and now that the USD has depreciated against the SGD with the equity markets climbing higher, I’m even more stuck than before. In fact, the same thing happened with a sum of GBP in my other foreign currency settlement account but the depreciation of the GBP against the SGD is much worse.
Yeah, it’s not so easy to time the markets. I’m fortunate to have a bunch of friends that are several years older than me with kids. It gives me the benefit of looking at how their lives have turned out based on the personal and financial decisions they have made. Their advice have also been useful in guiding us on how we make the same or different decisions. These life lessons are good learning points for us.
Navigate your corporate career when you plan to have kids
This is important for working men and essential for working women. We don’t have a blueprint of how our corporate career will progress. In fact, we don’t even do detailed planning on it. We moved from Melbourne to Sydney then to Singapore to chase job roles that were interesting and offered different working experiences. But when you are starting to plan for kids, you cannot afford to navigate your corporate career in such a manner.
There seems to be 2 ways to do this. Either we stay in low enough experienced positions where the workload is manageable or we move to high enough experienced positions where we can manage our workload. But both as part of a team and firm that we have been comfortably working in for a long time. I seem to be moving towards the former while my wife seems to be moving towards the latter. We are trying to avoid getting stuck in low level positions with high workloads in a dysfunctional team and firm. We have seen the damage acrimonious working environments can cause when you just had kids.
Get your savings and investments financial infrastructure in place before you have kids
Trying to get your savings and investments plans up and running when you just had kids is tough. There’s little time to think about what bank accounts & credit cards to have, what stocks & bonds to invest in, when you are busy managing your children and career. Do it now when you have the luxury of time to consider most of the factors, practice the steps and refine the system. Doing it later as a working dad and mum just increases the possibility and cost of failure, which can have far-reaching negative financial consequences. The last thing you want is to be stressed about your kids, money and work at the same time.
Timing the equity and property markets is tougher than you think
This continues to be the main financial takeaway from our friends. They have been through a few equity and property markets cycles. You see quite a range of outcomes even though most of them are financially savvy. Especially when all of them entered the 2007/2008 Global Financial Crisis severe market downcycle at the same time with good jobs and decent savings & investments. They were positioned well to take advantage of the equity and property markets crash in 2008 and 2009. Unlike us, where we just graduated into a bad employment market with entry-level or no jobs and little savings & investments.
Some of them took small positions in the major bear markets and profited from the subsequent rebound. The rest went into or stayed in cash because of higher retrenchment risk and things didn’t change much for them. Although none of them lost their jobs in the end, nobody took big positions to generate significant wealth. That period of time was one of the worst or best time to stay vested or invest depending on your personal and financial circumstances. But it was a great time to build wealth in hindsight. Only problem was it’s difficult to make that call even when you are at the right place, at the right time and with the right amount of cash funds.
The fact that none of them could do it despite being financially savvy means market timing is not easy to execute. The norm is for most people to fail to pull the trigger or pull the wrong trigger. While the exception is for a small number of people to pull the correct trigger. I honestly think I’m going to be the norm rather than the exception when it comes to market timing. I have already demonstrated that in the minor bear market we had in 2016. Didn’t utilise enough of my cash funds. Sold out too early when there was no reason to and lost gains on the remaining market upswing. Didn’t stick to my asset allocation strategy.
I know it comes down to being inexperienced. I’m hoping my new DCA and Value-Cost Averaging (VCA) strategy will help to correct some of it by keeping me closer to the markets. But attempting this in a year when they are at all-time high doesn’t bode well for my confidence. Let’s see whether I improve over time!
No worries! You’ll get better with experience. Only prob is that experience can be an expensive teacher …. Hohohoho!!! Try to limit your tuition fees by observing markets at 30,000 feet, and be a student of financial & market history.
For example, now may be an ok time for those looking to buy investment property. Not the best but so-so, compared to 2011-2013 when prices were overheating, or during 2014-2016 when you don’t want to catch a falling knife. Still not the best time, coz the drop from the highs is not deep enough — may not get significant gains going forward, and may have to suffer another deep property downcycle before another cyclical property boom. But for those who are longer term & able to hold for 10+ years, then ok lah.
Well, I know it’s important to learn from others but I find that the best way to learn is by navigating through such times. As long as I keep surviving and improving, I should get better eventually.
Yeah, I’m actually looking for a bigger owner-occupier property than the current 2 bedroom apartment that we stay in now. Would be nice to have more space when we decide to have kids. I do monitor the property cycle but prices have only been trending downwards. No significant falls yet. I wonder whether we should sell our current place before buying a new place or find a way to hang on to both although the higher stamp duties is a problem.
I reckon the property market is so different from the stock market. One mistake in the timing of the purchase or sale of a property and the financial consequences can be disastrous. Much tougher to recover from!
For now in Q3 2017, it’s still a buyer’s market in property. May see a bottoming in prices over Q4 17 & Q1 18 …. but that’s just speculation.
Without the massive artificial QE like in H2 2009, property price indices actually move in smoother curves almost like sine waves, haha. Traditionally you can wait a couple of quarters & still make good long-term buy/sell decisions.
Previously S’pore properties lag the stock market by about 6 months — similar to jobs markets. But since QE & easy monetary policies, there appears to be greater correlation & lag time can be just 3 months or less e.g. 2009.
Yup, I might just wait for a bit more since I’m not in a rush to make the decision whether to buy a second property or sell the current first property to buy a bigger property. Agree with your assessment on the property and stock markets. Let’s see how it works out!