Finance Smiths

Personal finance apprentices-in-training

Final Dec 2020 net worth and asset allocation update

by //

I have been going out so much this week that I’m actually glad the rainy weather today made me stay in to sleep and rest. I also had time to update my Google Sheet for the Dec 2020 net worth numbers and do a review of our financial progress for the year 2020. Other than in Mar 2020 when our net worth stayed flat, it has been increasing by an average of more than $20,000 every month. Mainly because of the lump sum investing we did then that boosted our investment portfolio when the markets recovered subsequently. And that we didn’t lose our jobs due to the recession so we retained our salary income.

From 30 Nov 2020 to 31 Dec 2020, our net worth has increased by $22,000 or 2.17% to $1,038,000. As for our asset allocation, cash has gone down to 28% while investments have gone up to 40% as I invested some cash into individual stocks in the last few weeks of Dec. Insurance stayed constant at 5% since the net surrender values of our wholesale life insurance policies only increases slightly with each month’s premium payment. Retirement funds have gone up to 27% due to the crediting of the CPF interest.

Overall, I’m happy with the financial progress we have made this year. It’s getting faster every year with the compounding effect of investing as long as we can maintain it. I’m hoping a more aggressive investing strategy will help us to speed this up. It gets exhausting to keep pushing all the time and I worry that we will run out of energy at the rate we are going. It’s tough managing everything even with just one kid and it will get worse if we decide to have another kid. Doesn’t help that household expenses only seem to climb with us renting a bigger apartment and sending our boy to childcare. Though we are still looking forward to what the new year 2021 brings for us!

Adopting a more aggressive investing strategy

by //

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.

Amending OCBC BCIP for Lion-OCBC Securities Hang Seng Tech ETF

by //

As more details surface about my wife’s new role from the major restructuring at her bank, it’s become clear that she has to do more work and manage more people but only with a small base pay increase. And her bonus for this year is terrible, just a token gesture that is better than nothing. While she’s fortunate to still have a job after such a bad year, her life at work should be tougher and more difficult to handle from next year onwards. Career progression comes at a cost after all. Just depends on whether you want to pay the price for it.

Anyway, I have heard about the launch of the Lion-OCBC Securities Hang Seng Tech ETF (HST) for a while now. But I was wondering what is a convenient way for me to invest in it. That’s when I noticed its addition to one of the ETFs available for investment on the OCBC Blue Chip Investment Plan (BCIP). I have a fixed monthly contribution amount to the OCBC BCIP as part of my Dollar-Cost Averaging (DCA) strategy. I didn’t want to change the total amount because that would mean committing more cash funds to it. So I decreased my OCBC BCIP monthly allocations to the Nikko AM STI ETF (G3B) and Lion-Phillip REIT ETF (CLR). And freed up those amounts for the Lion-OCBC Securities Hang Seng Tech ETF (HST).

I have always wanted to lower my exposure to the Singapore stock market and raise my exposure to the Technology sector. Seems like a good way to position myself for the future. I reckon there’s still value in the Singapore stock market but it’s just not going to grow the way global stocks can, especially the ones in US and China. I prefer to keep a diversified approach to my investment portfolio with a large cash balance on standby, but making changes to the weightages with any significant developments. That’s how I plan to navigate the uncertainties when it comes to investing.