We caught up with family and friends this weekend. Had a lunch with my wife’s colleagues and it turns out they are starting to move to job roles in other divisions. Not a good sign as it seems like they are jumping off a sinking ship. They are older with more grown-up kids so they can take the risk to move out.
This is not the case for my wife with a 4.5 month old baby and us possibly wanting to have another one eventually. When the kid is so young, it really restricts your ability to take career risks. She’s frustrated at not being able to move out even though she can see herself taking a hit from the upcoming restructure. But we just have to be patient and see how it plays out for her.
Anyway, we had a chat with my wife’s mum for some advice. She’s on paid garden leave these few months. Something she negotiated for after resigning from her job. Which works well for her since she gets to reduce her workload and work from home. So she can spend more time helping out with taking care of the baby.
My mother-in-law continues to impress us with her ability to negotiate and career navigate. She’s still looking to retire after this but paid gardening leave does give her time to think about it and options to consider. This is why we go to her for career advice, especially for my wife as a working mum.
Our helper is not taking her off day today and she’s happy to stay at home to take care of the baby and household chores. Which gives my wife and I time to head out and catch up with each other as a couple. This time round, we went through our investment plans in more detail because of what’s happening in the markets.
My wife is okay with our investment plan for the main 3 batches of S$100,000 and spare 2 batches of S$100,000 i.e. S$500,000 in total. She would like me to exercise more restraint and spread each batch out more since this is likely to be a long drawn-out bear market and recession. Point noted as it’s easy to be emotional and difficult to be rational when it comes to investing.
My wife has asked me to notify her before I utilise the spare 2 batches of S$100,000 that’s meant to be spending cash. It should be 100% used if both of us keep our jobs, 50% used if only one of us keeps our jobs and not used if both of us lose our jobs. It’s a control measure for her to assess at that point whether continuing with my investment strategy is going to blow up the family finances. Otherwise, she’s happy to let me invest as I deem fit.
Currently, our monthly Dollar Cost Averaging (DCA) amount is S$3,500 (normal levels). Spread across monthly investment plans into ETFs and funds transfers into our robo-advisor accounts. I have just increased it by S$2,000 to S$5,500 (elevated levels). My guess is that this is going to turn out to be a long and drawn-out recession. The painful kind where the recovery doesn’t happen anytime soon.
Which means the markets are going to drop and stay at a low price level for a while. The lump sums of S$100,000 for each batch is to average down when there’s a significant downward movement in the markets. But they can just as well rebound off their lows and stay at a high price level for some time. This is when our monthly DCA ensures that we are still capturing the price level of the markets even if it goes no where.
Once I can see a clear uptrend in the markets, I will gradually reduce our monthly DCA from elevated levels back to normal levels. The key is not to adjust our monthly DCA too often. Triggers for adjustment would be like the recent bear market or the sustained bull market run before that. It shouldn’t be a month to month adjustment because that will require too much effort to monitor.