Bonus recharge with lower expenses and higher net worth

I updated our net worth Google Sheet last night with the end of month numbers. Since we invested a significant amount of cash into the markets in the last 2 weeks, the cash balance went down by a lot. My bonus was paid on the last day of the month so it helped to top up our cash balance.

Our investments asset value went up from investing the cash and so did our retirement funds from the CPF contributions. The mortgage liability dropped from us paying the housing loan instalment. The next effect of all these movements meant that our net worth still increased from last month.

But the percentage increase is the smallest it has been for the past several years. And even the bonus payout did little to mitigate the falling markets’ impact on our net worth. Such a disappointing end to the quarter but understandable given the severe consequences of the ongoing Covid-19 pandemic.

It looks like the situation is getting worse as the number of cases and deaths continue to climb. There is increasing pressure on employers in Singapore to allow staff to work from home. As a result, I’m finally being issued a laptop by my bank. It’s going to be a pain setting it up because bank systems and applications are so poorly equipped for work from home arrangements.

Anyway, my wife is mostly like going back to work next week from her maternity leave on a work from home arrangement. Which is good for her because she gets to spend more time with the baby at home. Once my laptop is set up properly, I can work from home as well and do the same. Productivity is going to drop with the limitations on bank systems and applications access using the laptop.

The bigger problem is that banks are starting to feel and show the negative effects of the worsening virus situation. With reduced traffic at bank branches, there’s less opportunities to sell products and services to individual customers. This is on top of a general decline in demand for such bank products and services by entity customers with their businesses suffering from the lockdowns.

• 

It’s a vicious cycle. Even though I still have a job, I’m already going into self-preservation mode by cutting expenses. Made easier by the fact that I can’t even go out much to spend money when I’m at work on weekdays and at home on weekends. I have just been buying groceries with our helper cooking more often for the family.

I still buy stuff online and have it delivered. But I have just kept myself busy with work and the baby. Helps me to forget what a depressing social situation we are in now with all the social distancing rules and restrictions on large group gatherings. It’s honestly just easier to stay home and be with my family.

As a result, my savings rate has gone up. But the banks have reduced the interest tiers on their high interest bank accounts. Annoying how they have all done it at the same time but it’s expected. Now the returns on holding cash are even lower than before. So I plan to invest more of the cash saved from this year.

I have set our Dollar-Cost Averaging to be weekly now since the markets are so volatile. I want to capture as much of the price action as possible. Every week from this month onwards, my automated investing amount is about S$1,250. So it comes up to S$5,000 per month. This will continue for as long as I have a job and there’s salary income inflow.

With the Government support to subsidise wages of local workers, I reckon banks can hold off from large-scale retrenchments until the end of the year. They will freeze headcount, pay and bonus. Maybe even reduce headcount by natural attrition. But stop at firing people outright in such a sensitive period of time unless it’s a last resort.

Which means surviving this year with a job while continuing to invest is crucial for us. By the end of this Covid-19 crisis, we should be holding much less cash and much more assets. This will form the foundation of our wealth for the next decade and we should take the opportunity to build it.