It’s a public holiday today and we are enjoying a much needed break from work. Especially for my wife, who had to deal with the fallout of the major restructuring announcement and a project deliverable in the last 2 weeks. This has been tough for her but it looks to be a long drawn-out battle of strategy, wits and negotiation. So she must rest when possible, ensure that job deliverables are still being met, while working on securing something internally at the bank for herself in the short to medium term.
Anyway, both of us are also clearing our work to get ready to go on leave for 1 to 2 weeks. We can’t travel anywhere internationally but should go out as a family to engage in domestic tourism here in Singapore. As long as we are not staying at home because we have been doing a lot of that in the past few months. It looks like we should still be working from home for now and this arrangement allows us to spend more time with the baby. He’s coming to 9 months old and is fortunate to have so much time with his parents every day.
Especially with me as a father because I wasn’t expecting to be there for him this much. Since I have been working from home, I didn’t see the need to take any leave during this period of time. As a result, I have built up a significant number of leave days for this year. I plan to use a bit every week from Sep to give myself shorter work weeks, encash some of them and carry forward the remaining to next year. When I eventually have to go back to the office, these leave days should come in handy then.
Since we still have our jobs for now, our salary income allows us to continue with our weekly investment plans. We have also started manually Dollar-Cost Averaging (DCA) into S&P 500 and World ETFs every other week to keep increasing our investment positions in the markets. Took a while to set this up because prices have gone up significantly in the last month. But we decided to just go ahead with a basic level of manual DCA and adjust the investing amounts accordingly depending on how the economic situation develops.
With the shares of local banks falling due to the announcement by MAS asking them to cap dividends this year in light of the economic uncertainty, we took the opportunity to invest in local bank stocks and SG ETF. As we haven’t been manually investing much since Mar, there has been a cash build-up with our savings going up and expenses going down. Banks have also cut the interest rates on their savings accounts. Which has translated into higher opportunity costs of holding cash for us. When the interest rates used to be higher, the opportunity costs were lower as we held more cash to wait for market falls to invest. Doing the same thing now no longer works as well with the lower interest rates on cash dragging the asset portfolio returns down.
We have changed this strategy to deploy our cash more readily every month when there’s price weakness in the markets. This rebalances the proportion split between cash and investments in our asset portfolio more frequently to keep the allocation healthy. We will always look to maintain a large cash balance because of the financial buffers it provide. But the key is to keep the cash holding percentage of our asset portfolio consistent and not let it go up. This means that the cash balance amount is still increasing but in proportion with the rest of the components of our asset portfolio. It’s a balanced asset allocation approach and works well to navigate such uncertain economic times.