The year 2020 is finally coming to an end. So many things have happened that I find it incredible how we got to this point and it has only been a year. While we are on leave and enjoying the celebrations, we feel exhausted. We are also trying to rest and recharge in between to get ready for the new year. I’m not doing a year end net worth update yet because there’s still next week to go. But I’m okay with how the numbers are going so far. There’s still room for improvement, hence the title of today’s post.
We are making progress with our net worth every month and year despite having a more passive ETF-focused investing strategy and holding a large cash balance. The portfolio has grown to a sizeable amount and it’s getting more difficult to manage now. The direction we take with it can have a significant impact years down the road but the big problem is that we will only realise it too late. While ETFs are great as building blocks of a portfolio, they cannot provide that growth rate we are looking for long term.
We should be on a 50% work from office and 50% work from home operating model at our corporate jobs in the long run. The main benefit coming out from this is that we will have more time on our hands. And I plan to use some of it to adopt a more aggressive investing strategy. After the major restructuring at my wife’s bank, I realise her career situation will only get tougher over time. She may still have a job and her work environment remains better than most banks out there. But the expectations will only get higher as the bank looks to squeeze more out from her. The same applies to me but at a lower pay and rank level so I’m not put under as much stress and pressure as her.
I’m turning 35 and my wife is turning 33 next year in 2021. It’s a sobering realisation that we are practically in our mid 30s. We may want to have a 2nd kid and that’s going to drain us even more in terms of time, energy and money. With this, I have decided that our current passive ETF-focused investing strategy is not sufficient for the family as we grow older. Our pay may not grow much anymore but our expenses will keep going up. So we have to take on more risk to get a higher return from our salary income while we still can. I’m going to dedicate more time to learning about investments in general, other asset classes and research on individual stocks. This should hopefully allow us to shift away from passive ETFs and grow the portfolio even more.
Hi Finance Smiths,
What kind of returns are you looking at?
Isn’t a larger portfolio of active investing more difficult to manage than the current passive investing?
The problem with my current passive investing into ETFs is that it’s difficult to chase for higher market returns once the markets recover. Active investing requires more work but it’s still possible to achieve higher than market returns even after the markets recover. Especially when the economic recovery is uneven so you can look for value stocks to do a recovery play. Or even growth stocks that have the potential to continue growing just because of the nature of the business’ expansion.
I’m still trying to figure this out because I have tried active investing before and I’m not good at it. I’m hoping more effort in this area will translate into better results eventually.