I stayed up late tonight to write this post because it’s been an eventful day and night of investing. In the past 2 weeks, I have invested about S$30,000 into the markets. And I was getting myself ready to increase the amount to be invested if the markets continued to drop. I didn’t think this would happen so quickly.

Just 2 days after writing my last post, there was another significant fall in the markets. Even bigger than the previous one. I had already planned for this so I invested another S$70,000 into the markets. Which concludes Phase 1 Round 2 for me as my 1st batch of S$100,000 has been utilised. Through manual investments of mostly ETFs and some stocks as well as funds transfers into my robo-advisor accounts.

The speed of the fall in the markets did catch me by surprise because I thought it will take a few weeks for such a significant drop to happen. I was only planning to invest another S$40,000 into the markets. But decided to go ahead with the additional S$30,000 because the falling price levels kept triggering my investment actions.

It’s not a bad thing for me when the markets are accelerating their falls. Because the job cuts have yet to happen. Which means as long as I can stay employed, my cash position can continue to be replenished. So I can continue to invest every month without worrying about drawing down the cash balance by too much over time.

Speaking of job cuts, I heard news in the pipeline that contract staff in my bank are having their contracts shortened from 1 year to 6 months. And some of their contracts are not being renewed. This always happens in every recession at a bank. Contract staff are usually the first to go. This is why I don’t go for contract roles even if they pay more than permanent roles.

I have a more long term view of my career in mind. Because I still believe only staff in permanent roles will end up getting the professional and personal development necessary to progress up the ranks. To get that bigger payoff in salary and bonus at a later stage. I just have to accept that I might lose out at the start and try to catch up & even exceed eventually.

Anyway, my 1st batch of S$100,000 has been invested into the markets. My cash allocation in the asset portfolio has gone down from 50% to 40%. While my equities allocation has gone up from 10% to 20%. It’s now a more evenly distributed asset portfolio, which better positions me for Stage 2 Round 1.

From here, I will be tapping into my 2nd batch of S$100,000 to be invested into the markets. I don’t think the speed of utilisation for this 2nd batch will be as quick as the 1st batch. At some point, the markets are going to hit a resistance level. When the deteriorating financial markets actually have to wait for the real economy to get worse to catch up. Before it continues to fall.

Or the real economy actually improves over time and things are not as bad as they seem. At which point the financial markets will rebound since they have been over sold. It’s difficult to make a call at this time but I have to be patient. With every month I stay employed, my job provides me with enough salary income to take another shot at the markets. And everything becomes clearer with time so I just have to wait and stick to my strategy.

I invested about S$10,000 1.5 weeks ago through a combination of manual purchases of ETFs, individual stocks and manual funds transfers into our robo-advisor accounts. The market dip then was not as big as the one today, which I consider a market fall. Which is why I invested more at about S$20,000 into the markets.

I feel like we are coming to the end of stage 1 when the market selloff is starting to worsen. Stage 1 Round 1 was 1.5 weeks ago when I invested about S$10,000. Stage 1 Round 2 is now and I have invested double the amount at S$20,000. Each stage for me has 2 rounds when the conditions deteriorate significantly to lead into the next round or stage.

Even if the markets stay at the specific stage and round for a while without going anywhere, my Dollar Cost Averaging (DCA) every week should be sufficient to keep increasing my position over time. The same applies even if the markets improve after that. It’s just that I won’t be manually making such investments of bigger amounts.

But it’s important I utilise my cash when the specific stage and round is reached. That’s the whole point of building up a large cash position. It’s for investing into income-producing assets and equities is just one asset class for me. So I don’t plan to use up too much of my cash. Still have to keep it for possible property investing that I will explain later.

Because I can only guess where the markets is headed as we continue to grapple with the costs of the worsening virus situation on the global economy. Even if it trends downwards for a period of time, no one knows for sure how severe and how long it would take for the recovery to kick in.

If it goes into Stage 2 Round 1, I should invest about S$50,000 by then. More than double of the S$20,000 I have invested now in Stage 1 Round 2. Because that’s when I believe job cuts will start. Right now, companies are doing everything they can to preserve jobs. By cutting salaries and bonuses of middle to senior management.

As long as the job market doesn’t get impacted much, most of us can keep our jobs as the main source of income. Even if there is no to minimal increase in pay and no to some bonus awarded. This means that even a drastic fall in equity markets can be followed by a quick rebound once the economy starts to recover. And people begin to spend and invest more.

However, job cuts mean the loss of our main source of income for the most of us. Once this happens, anything is possible and a recession or market crash can be prolonged. A widespread loss of jobs can happen within a short time hitting some industries harder than others.

The worse part is that it takes a much longer time for the jobs to return. Sometimes in a different form as the economy will have to restructure to recover. And we no longer have the relevant skill sets or are too old to apply for these jobs.

Unfortunately, this is also the best time to invest because both the equity and property markets will be down. It’s just a matter of whether you are in a position to do so. Which is why I’m keeping a lookout for Stage 2 Round 1. Job loss presents a bigger danger to us then not investing sufficiently.

There’s something else too. We went for a property viewing over the weekend. Since we will have to move to a bigger place in the next few years, we are on the lookout for a 3 to 4 bedroom apartment. Chances are we will have to sell our current 2 bedroom apartment before buying the next apartment to avoid paying the ABSD. This is for home-ownership and not property investment if we don’t de-couple.

If we de-couple, we start going into the area of property investing since it’s possible for us to buy a 3 to 4 bedroom apartment while hanging on to our 2 bedroom apartment. The latter should generate rental income for us. We have not considered property investing before but we know it requires large downpayments that drawdown our cash and CPF balances.

Another reason why we keep a large cash balance is to give ourselves the possibility of property investing. Equities is just one asset class and we will eventually have to diversify into another asset class. If done well, property investing can generate more wealth than equities with the use of higher leverage. If done poorly, that high levels of debt in the form of housing loans/mortgages from property investing can destroy wealth faster than equities.

So we will continue to invest in the equity markets cautiously while keeping a lookout for our jobs and property. With a large cash balance as a buffer to give ourselves options. That’s how we have positioned ourselves and we hope it works out.