I set up my OCBC RoboInvest Future World Portfolio last week with the minimum investment amount of US$1,000. I’m going to hold off on setting up the OCBC RoboInvest Gen-Z Winners and China Growth Portfolios until next month just to spread out my investments more over time. Just because I had already met my monthly Dollar-Cost Averaging (DCA) investment amount target for OCBC RoboInvest this month just by setting up the Future World Portfolio.
The user interface is simple and the top-up (additional investment with minimum amount of US$100) process seems straightforward. I noticed that OCBC RoboInvest allows for fractional ownership of the units in the ETFs the Future World Portfolio is invested in. This is important for a DCA investing strategy since it allows for a low minimum top-up amount of US$100 while ensuring it can be used to buy fractional units across all the ETFs in the portfolio if necessary. Fractional ownership is something I cannot achieve myself if I had invested in these ETFs manually via the online trading platform I use. And I would have to commit a bigger capital outflow each time I made an investment.
Anyway, back to my goal setting for 2021. I have already written about my 2021 goal for our investment portfolio, which includes ETFs, individual stocks, bonds, robo-advisors and cryptos. Next up for this post, I’m writing about my 2021 goal for cash. As of end Dec 2020, our cash position is S$480,000. It was much higher at the start of 2020 and went down significantly due to an aggressive capital deployment strategy to invest in the bear market and subsequent recovery. I don’t foresee us investing as aggressively this year unless there’s a market crash. But we would still be investing more than compared to previous years as we look to increase the returns from our investment portfolio.
I would be setting another stretch 2021 goal for our cash position to grow it by S$70,000 to S$550,000 by end Dec 2021. This would require a high savings rate along with the high investing rate. Difficult to achieve when our salary income is fixed every month and the household spending is going up with the upcoming rent and childcare expenses. I may receive a small salary increase and annual performance bonus in Mar as well as higher investment income this year. But I’m not sure how much this will help so we just have to keep trying.
Why do you keep that amount of cash you have, versus investing it?
It’s a personal preference to have a large cash balance. It acts as a hedge against bear markets and puts me in a decent position to invest more in such times if need be. Without having to worry as much about the drop in my investment portfolio value even if it is a significant fall. Essentially, it puts me in a strong psychological position to navigate adverse market conditions. But at the cost of lower returns.
Does the additional “exchange fees and charges” bother you at all for OCBC RoboInvest?
My approach of using monthly investment plans and robo-advisors as a component of my investment portfolio already accounts for higher fees and charges compared to the manual investment component. Having additional exchange fees and charges for OCBC RoboInvest does not bother me as much in the overall scheme of things.