Finance Smiths

Personal finance apprentices-in-training

Private property purchase completion and StashAway Thematic Portfolios

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This is the week I complete my private property purchase and I have submitted the cashier’s order for the remaining portion of the downpayment to my lawyer. It’s the most significant sum of money I had to put down so far and I have been preparing for this in the last few months. Even though it’s an expected big drawdown of my cash balance, I’m still shocked by how little cash I have left. This is going to be a long rebuilding journey of my cash position given the upcoming renovation and car purchase costs in the next few years. I have allowed for this lifestyle inflation on housing and transport because I believe they will bring more value to my family in terms of time and effort savings in the long run.

While it will cost us financially in the short run to set up, the right level of lifestyle inflation can pay off. We are able to access our offices, kid’s preschool, general amenities (groceries, dining, etc) and parents’ caregiving support more easily than before. Resulting in a positive cycle of time and effort savings that allow us to squeeze more activities (personal, couple and family) and rest in a week. It’s not obvious when we look at it on a daily basis but more noticeable on a weekly basis. Especially when things go badly such as over the weekend when everyone was unwell because of my son falling sick and spreading it to us. It could have been a lot worse but we managed to weather it. The important thing is to know when to stop the lifestyle inflation because it doesn’t offer much value after that point. Instead, it does the opposite and the the upkeep drains you mentally and financially.

Anyway, we got emails today about StashAway introducing Thematic Portfolios. We have been wondering how long it would take for StashAway to start offering thematic investing since it has gotten more popular this year. We logged into our StashAway mobile apps to explore the 3 available Thematic Portfolios:

  1. Technology Enablers – Invest in Artificial Intelligence, Blockchain, Cloud Computing, Robotics, Semiconductors, and more.
  2. The Future of Consumer Tech – Invest in E-commerce, Fintech, Gaming, Internet, Future of Mobility, Social Media, and more.
  3. Healthcare Innovation – Invest in Biotech, Genomics, Medical Devices, Pharmaceuticals, and more.
brown field and blue sky
Photo by Pixabay on Pexels.com

These are exciting themes that offer a lot of upside potential in the future. We decided to increase our automated monthly investment plans with StashAway and split the deposits equally between our General Investing Portfolios and the 3 Thematic Portfolios. Essentially, we have diverted some of the monthly cash funds meant for investing into our General Investing Portfolios to the 3 Thematic Portfolios. Given the size of our General Investing Portfolios, we are comfortable with increasing the overall risk using Thematic Portfolios to generate higher returns from StashAway.

Automated monthly investment plans into a variety of ETFs and funds form a key component of our investing strategy. Regular capital contributions contribute to the growth of our investment portfolio just as much as gains. The selection of ETFs and funds used to be narrower but has since gotten wider in the past few years. This is the set and forget part of my Dollar-Cost Averaging approach where I just let the consistent capital injections do the work over time. While we use the remaining cash savings to manually invest to market time for even higher returns when there are good opportunities.

It’s an optimal combination investing strategy that works for us. Allows us to stay calm and vested with continuous investing to ensure we don’t feel like we are missing out on not buying into dips or not enjoying further gains in the markets. Also gives us a warchest on standby to use during market crashes for more excitement. A natural balance between being objective and emotional to managing our investment portfolio. The longer we stick to this, the higher the pay off. It just requires a lot of time and patience to see the results as we go through more market cycles.

Taking profits on SEA, Invesco QQQ & Nvidia and divert from StashAway to Endowus

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The US market, especially NASDAQ, has been on a roll recently after the dovish Jackson Hole speech of Powell. Some of my US tech stocks and ETF gains have increased along with the rally. Yesterday, I decided to take some profits off the table. Even if the market trends higher after that, my automated monthly investment plans should ensure that I can still benefit from further gains. Otherwise, a downward trend in the market means that I get to dollar cost average downwards on my existing positions.

I know the argument is that I should let my winners run. The last time I did that was with my Chinese tech stocks and ETF earlier in the year (didn’t take any profits). They crashed after the regulatory environment changed and I didn’t react quickly enough. Yes, I had the opportunity to average down on my Chinese tech stocks and ETF holdings. But these positions are still in unrealised losses and I have to wait for the recovery down the road to reverse them into gains.

The problem with overseas growth stocks in general is that only some of them will eventually grow bigger and become more profitable. The rest will either stagnate or get wiped out by their competitors. That’s just the nature of the industry and not all of them will thrive or even survive. The tricky part is to identify the gems early on and hold them for as long as possible. Riding through the up and down turns by just watching them grow.

Otherwise, choosing the wrong stocks to stick with for the long term results in the initial gains becoming losses in the end. I’m not confident of my ability yet to identify these growth stocks so early on at this time. My approach is to take the profits once I achieve a significant percentage gain. Which is why I sold my holdings in SEA, Invesco QQQ and Nvidia yesterday. Overall percentage gain is about 50%, pocketed profits of US$12,000 and took back my capital of US$24,000.

My share sales proceeds of US$36,000 should be credited next week and I will rotate some of them into my value stock positions to average down. A portion to Coinhako to buy DAI for transfer into my Hodlnaut crypto interest account to be token swapped into USDC and USDT for higher interest earned as BTC and ETH. And the remaining to increase my cash buffer for any opportunities in the market that comes up.

In the meantime, my wife has diverted some of the automated monthly funds transfers from her StashAway account to her new Endowus account. Setting up a new ESG portfolio for this cash component in addition to the current Core portfolio for her CPF-OA. The total amount allocated to robo-advisors for investing every month remains the same but she’s keen to build up a bigger position in Endowus.

StashAway’s performance has been lagging that of Endowus in the past few months because of the different investing strategies adopted. My wife wants to take a chance on Endowus’ approach with some cash each month (that was originally meant for StashAway) since her CPF-OA would already be invested there. I’m in favour of her initiative as long as she’s not chopping and changing between robo-advisors.

Our aim for the automated monthly investment plans is to build up a large portfolio of ETFs and funds (some with distributions) over time that stablises the rest of our investment portfolio. Where we take on more risk to invest in individual stocks and cryptos for higher gains and dividend/crypto interest income. We can be more aggressive with our risk-taking as long as we have the knowledge that making big losses should not blow up the entire investment portfolio.

Increase funds in Hodlnaut crypto interest account and setting up OCBC RoboInvest again

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My wife has been going into the office to work this week since it’s the start of her new job. And I have been driving her into and out of the city in the morning and evening as well as dropping off and picking up our boy from the preschool in the morning and afternoon. My helper and parents-in-law have been taking turns to bring our boy out in the afternoon after his nap for a few hours just to give me some time and space to catch up on my work. It has only been 2 days and I’m feeling more exhausted than usual. Not having my wife around at home to help out with our boy is making things more difficult for me but I’m hoping to improve at it eventually.

Anyway, I managed to squeeze out some time for this despite my busy schedule. Because I wanted to organise my finances by the last day of Aug so I can start Sep on a fresh note. I transferred some cash from my bank account into my Coinhako account and bought DAI. It had gone down over the last few days and I now have an increased cash buffer for investing. I transferred the DAI to my Hodlnaut crypto interest account and token swapped a third of my total DAI into USDT. I changed the crypto interest payout (rate is higher than DAI) for this portion from USDT to ETH.

I token swapped another third of my total DAI into USDC and changed the crypto interest payout (rate is also higher than DAI) for this portion from USDC to BTC. I left the remaining third of my total DAI and the crypto interest payout as DAI (even though the rate is lower than both USDT and USDC). My total Hodlnaut crypto interest account balance has gone up to about S$70,000, which is more than 5% of my liquid assets. I’m slowly increasing this to 10% as I start to get more comfortable with cryptos taking up a bigger position in my investment portfolio.

After this, I was organising my sister’s OCBC RoboInvest account’s 2 portfolios when I noticed they now had a monthly investment plan option. I had previously exited my OCBC RoboInvest account 2 months ago because I needed cash funds then for the downpayment of my private property purchase. I was also getting annoyed with having to do manual transfers into my OCBC RoboInvest account and there was no way to automate it at that time. I’m happy to see this monthly investment plan option for OCBC RoboInvest and decided to reopen my account with 2 portfolios.

Each of my monthly investment plan has a different strategy and buys into different ETFs, stocks and funds. The total automated monthly cash drawdown to execute these investment plans will be significant. But this is exactly the kind of convenience I want in my life right now and I’m willing to pay higher fees for it. The way I see it is that I should only be allocating time and effort to making manual investments when there are big opportunities in the market. Otherwise, I will just be over-monitoring the market and too trigger happy with my cash balance for the sake of utilising it.

I’m better off just letting the automated investments do the work while I focus on my other priorities. Balancing my family and my needs is already proving to be a challenge without our finances coming into the mix. I don’t want us to have to keep worrying about our financial position on top of meeting the demands of our jobs. Let’s not forget the importance of self-care too. If I’m in a positive state of mind and feeling good about myself, it naturally extends to my family as well.