Circuit breaker is ending and we are moving into Phase 1 exit soon. The main change for us is the family visits & hairdressing appointments and we are looking forward to that. Everything else is likely to remain the same for us. We would still be working from home and buying even more groceries to cook at home. We only order takeaway food for pick-up/delivery about once or twice a week. It’s interesting how our dining habits have changed and it might stay this way even in Phase 2 exit. Still too much trouble to head out and dine in cafes/restaurants then.
Work picked up this week as we get into the swing of things and more staff are preparing to go back to the office. We plan to keep working from home for Phase 1 and 2 exits and might only start going into the office part of the week during Phase 3 exit. We have discussed this work from home/office arrangement with our managers and they are okay with it. As long as we get the job done, they don’t really care where we do it from. Which means we continue to be able to spend more time with our 7 month old baby at home. This has been the biggest win for us so far and we hang on to it as motivation to look beyond and push through the difficult times of being stuck at home during circuit breaker and Phase 1 exit.
As for our investment portfolio, the value has been going up with the rebounding markets and our automated Dollar-Cost Averaging of $1,250 every week. After our big lump sum manual investing of $200,000 in Mar, we haven’t made much additional manual investments since then. We increased the automatic investments since Mar for the Dollar-Cost Averaging to be more effective in down markets. These actions have corrected our previously cash overweight asset portfolio into a more evenly distributed one. Currently, the asset allocation is Cash – 35%, Investments – 35% and Retirement Funds – 30%.
We are surprised at how much the markets have rebounded in these 2 months. The financial markets have recovered much faster than the real economy and this disconnect is interesting to say the least. We wonder whether the financial markets are too forward looking and projecting too quick a recovery. There’s so much commentary on this and valid points have been raised on both sides of the argument. It just depends on your personal bias and view as to how you would position your asset portfolio as a result.
We try to tune the noise out and focus on what we know. We work in retail banks and as the biggest segment of the financial intermediary industry, we are connected to the most parts of the real economy. Just because of how extensive the business lines are. We had internal briefings on the economic outlooks from different perspectives at bank, division and department wide levels and one thing is clear. Nobody is sure about anything. Just like us, banks are flying blind and uncertain about how to navigate this crisis and its aftermath. So they take mitigating actions by managing their costs downwards, raising provisions and protecting revenue. Essentially, it’s all about risk management until there’s more certainty.
We apply the same approach as well. Our spending has gone down and we have taken this opportunity to lower our living expenses generally. The trigger we needed to make structural changes to our life so we spend less. We are doing everything we can to hang on to our jobs to keep the monthly salary income coming in. We know our jobs are value-adding and stable but the key is to stay ahead of any developments on restructuring and retrenchment. That requires us to keep ourselves connected to the right people and decision makers. Getting caught out now unexpectedly would be bad for us.
Lastly, we are rebuilding our cash position by not manually investing more of our salary income above our automated Dollar-Cost Averaging every week. This has been happening for the past 2 months and our cash balance is slowly recovering. We are okay to lose out on potential higher returns if we had invested more of our cash now. Because it’s the tail risk we are worried about. We earn and invest enough to be comfortable with the returns we have now. We don’t need to chase higher returns in a time when the tail risk of us being wiped out has increased. No matter how small the probability is. Managing our risk to hedge against economic uncertainty is a continual process and this looks to be in place until the end of this year.