MIP – Page 2

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

12.15.2020 by Finance Smiths //

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.

Reallocating our monthly investment plans

11.22.2020 by Finance Smiths //

We celebrated our wedding anniversary over the weekend with a nice dinner at a Jap restaurant. It was good for just my wife and I to get away and celebrate by ourselves. A pity we couldn’t kick on for drinks at a bar after the dinner as it would have been more fun to stay out later. Something to look forward to hopefully in Phase 3. Anyway, it started to rain heavily after we got back from lunch so we are stuck at home until dinner time when we should be heading out again. Both my wife and kid are taking a nap so I have time to squeeze in a short post.

When I look at our investment portfolio breakdown on StocksCafe, the split is about 65% global stocks and 35% local stocks. However, the weightage in our monthly investment plans is 50% global stocks and 50% local stocks. Which means that I’m manually investing into global stocks more during market dips and falls. I decided to reallocate some of our monthly investment plans from local stocks to global stocks to mirror our portfolio breakdown. It will be 65% global stocks and 35% local stocks from next month onwards. This is in line with the change in our investing strategy to shift away from local stocks to global stocks.

Just like us maintaining a large cash balance as a hedge even if it drags down the performance of our asset portfolio. It’s a personal preference to keep an exposure to the local stock market. May be under-performing, not exciting and a lagger in so many ways but I like the stability. We plan to build and grow our asset portfolio over a long time that is sustainable and can withstand shocks and unexpected events. This requires us to take a disciplined and diversified approach to investing.

Increasing our monthly Dollar Coast Averaging investment amount

03.15.2020 by Finance Smiths //

We caught up with family and friends this weekend. Had a lunch with my wife’s colleagues and it turns out they are starting to move to job roles in other divisions. Not a good sign as it seems like they are jumping off a sinking ship. They are older with more grown-up kids so they can take the risk to move out.

This is not the case for my wife with a 4.5 month old baby and us possibly wanting to have another one eventually. When the kid is so young, it really restricts your ability to take career risks. She’s frustrated at not being able to move out even though she can see herself taking a hit from the upcoming restructure. But we just have to be patient and see how it plays out for her.

Anyway, we had a chat with my wife’s mum for some advice. She’s on paid garden leave these few months. Something she negotiated for after resigning from her job. Which works well for her since she gets to reduce her workload and work from home. So she can spend more time helping out with taking care of the baby.

My mother-in-law continues to impress us with her ability to negotiate and career navigate. She’s still looking to retire after this but paid gardening leave does give her time to think about it and options to consider. This is why we go to her for career advice, especially for my wife as a working mum.

Our helper is not taking her off day today and she’s happy to stay at home to take care of the baby and household chores. Which gives my wife and I time to head out and catch up with each other as a couple. This time round, we went through our investment plans in more detail because of what’s happening in the markets.

My wife is okay with our investment plan for the main 3 batches of S$100,000 and spare 2 batches of S$100,000 i.e. S$500,000 in total. She would like me to exercise more restraint and spread each batch out more since this is likely to be a long drawn-out bear market and recession. Point noted as it’s easy to be emotional and difficult to be rational when it comes to investing.

My wife has asked me to notify her before I utilise the spare 2 batches of S$100,000 that’s meant to be spending cash. It should be 100% used if both of us keep our jobs, 50% used if only one of us keeps our jobs and not used if both of us lose our jobs. It’s a control measure for her to assess at that point whether continuing with my investment strategy is going to blow up the family finances. Otherwise, she’s happy to let me invest as I deem fit.

Currently, our monthly Dollar Cost Averaging (DCA) amount is S$3,500 (normal levels). Spread across monthly investment plans into ETFs and funds transfers into our robo-advisor accounts. I have just increased it by S$2,000 to S$5,500 (elevated levels). My guess is that this is going to turn out to be a long and drawn-out recession. The painful kind where the recovery doesn’t happen anytime soon.

Which means the markets are going to drop and stay at a low price level for a while. The lump sums of S$100,000 for each batch is to average down when there’s a significant downward movement in the markets. But they can just as well rebound off their lows and stay at a high price level for some time. This is when our monthly DCA ensures that we are still capturing the price level of the markets even if it goes no where.

Once I can see a clear uptrend in the markets, I will gradually reduce our monthly DCA from elevated levels back to normal levels. The key is not to adjust our monthly DCA too often. Triggers for adjustment would be like the recent bear market or the sustained bull market run before that. It shouldn’t be a month to month adjustment because that will require too much effort to monitor.