Finance Smiths

Personal finance apprentices-in-training

Starting to invest CPF-OA monies with Endowus

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As we get to the end of Aug, it seems to be a time of significant investing actions taken. With my CPF-OA and cash balances ready to pay for the remaining downpayment of my private property purchase, I have been busy adjusting my automated monthly investment plans to be effective from next month onwards. This includes increasing the cash funds transfers into our StashAway robo-advisor, OCBC Blue Chip Investment Plan (BCIP) and POSB Invest-Saver accounts. And setting up the new UOB SimpleInvest accounts. The next logical step is to look at how we can better utilise our CPF-OA monies by investing it.

We have always refrained from investing our CPF-OA monies as we wanted to keep it liquid for private property downpayment and monthly mortgage servicing payments. Given that this private property purchase is in my name only, it will wipe out my entire CPF-OA balance. Most of the monthly contribution to my CPF-OA will also be used for the mortgage payment. This means that my CPF-OA balance will take a long time to rebuild. But structuring my private property purchase transaction in such a manner means that my wife’s CPF-OA balance can continue to grow in the meantime.

I have been thinking about doing this since last year but held off until I could get clarity on our private property purchase costs. Back then, I didn’t know where and what type of private property we will be buying. I wasn’t sure how badly the ongoing Covid crisis will affect our jobs and salary income (including the monthly CPF contributions). I couldn’t gauge how much CPF-OA monies we will need for the private property and whether we will be purchasing it in 1 or 2 names. By waiting, I have lost out on potential gains that could have been made if I had invested my CPF-OA monies earlier.

But I’m not too concerned with such opportunity costs and downsides. It’s more important that I make the most suitable decision for my family at that time based on our entire situation (personal, professional and financial) then. Same reason for me buying a private property at what could be the peak of a cycle. I don’t try to time the property and stock markets when it comes to such big decisions that affect my family. I will evaluate and decide what’s the overall best decision for my family’s well-being on balance at that point in time. It may not make the most sense financially but the benefits on the personal and professional front can outweigh the financial costs.

Given the positive reviews I have been reading and hearing on Endowus, we figured it’s time for my wife to open a robo-advisor account with them to invest her CPF-OA monies. The Endowus onboarding process is smooth and links up well to the opening of the CPF Investment Account with UOB to allow for her CPF-OA monies to be invested. Both accounts should be opened by this week. While a significant portion of my wife’s CPF-OA balance is available for investing, she will be starting with an initial amount of S$1,000 and a monthly recurring amount of S$1,000 after that. Small sums that will be replenished by her monthly CPF contributions.

This means that a majority of my wife’s CPF-OA balance would still not be invested but new contributions will be invested going forward. In a way, it’s like her capital in CPF is protected but she can now take more risk with the additional funds. S$1,000 is the weekly number I try to work towards as a contribution for each component of my automated monthly investment plans. It’s not big enough to make a significant change to my monthly financial position but adds up over time to strengthen it.

That has always been my general approach to life. Make small, positive changes every week (daily changes are just too demanding and I have no capacity for this now) and I start to see their impact over months. It’s slow going and I’m usually behind the curve on lots of things. But I am consistent in my application and it gives me more time for the results to show in my performance. I’m hoping for less eventful weeks in the next few months where I don’t do much on the financial front. It’s stressful and I don’t like worrying about it.

Changes to our robo-advisor accounts

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We took the 2nd vaccine jab yesterday afternoon and had some Panadol after that at night as a preventative measure. The side effects are similar to the 1st vaccine jab – sore arm, body feeling warm and tiredness. We are hoping it doesn’t get worse and we start feeling better over the weekend. Anyway, Phase 2A (Heightened Alert) has started and we have rescheduled a few small group gatherings to late August and after. At least the pre-school is still open so our boy gets to go there for half a day to take part in the activities and have fun with his teachers and friends. We just got to find a way to get through this tough period of time.

As of today, we have completely liquidated our OCBC RoboInvest and DBS DigiPortfolio accounts to raise cash for the private property purchase downpayment. These were profitable positions but the fees charged by OCBC and DBS for managing the portfolios digitally were starting to eat into the profits. It was not obvious when the global and local equity markets were on a bull run previously but became more so when the markets have been rather flat. No automatic funds transfers into these accounts for investing also made it difficult for me to have to manually remember to transfer the funds every month. And we still find StashAway to be a superior robo-advisor at this time so we are going back to sticking with the one.

Speaking of StashAway, we recently received an email from them about re-optimising our portfolios. Main reason is to capture growth opportunities globally and to protect our portfolios from rising inflation in the US. This is what they are doing to prepare our portfolios for the new economic conditions:

  • US-based assets will be optimised for an inflationary growth environment – positive inflationary momentum and positive growth momentum.
  • Non-US based assets will be optimised for a disinflationary growth environment – slowing inflationary momentum and positive growth momentum.

We agree with StashAway’s reoptimisation approach and can’t wait to see what the actual changed target asset allocations are. We are hoping not to have to liquidate any part of the StashAway accounts and will try to draw down our overseas cash funds & surrender values of wholelife insurance policies. There’s about 2 months plus left to pull together the remaining cash funds for the private property purchase downpayment and I’m hoping for more favourable conditions to facilitate this.

Updated StocksCafe, Robo Advisors and Coinhako blog pages

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After I updated my end Mar 2021 net worth numbers on our Net Worth Google Sheet and blog page, I proceeded to update the rest of my StocksCafe, Robo Advisors and Coinhako blog pages. Tracking our entire investment portfolio on StocksCafe is proving increasingly difficult as we open more Robo Advisor accounts (StashAway, DBS DigiPortfolio and OCBC RoboInvest). Each Robo Advisor portfolio has its own set of ETFs and our monthly contributions mean that there is quite a number of buy ETF manual transactions that have to be input on StocksCafe at the end of each quarter.

At this time, I have only input the buy individual SG and US stocks and ETFs transactions from our Stan Chart online equity trading accounts into StocksCafe. The total individual stocks and ETFs (excluding Robo Advisors) portfolio value adds up to about S$730,000 as of end Mar 2021.

Feb 2021 had incremental positions in the following SG stocks and ETFs:

  • Lion-OSPL HS Tech ETF
  • Singtel
  • Sembcorp
  • DairyFarm
  • CapitaLand
  • Keppel
  • ComfortDelGro

Mar 2021 saw a significant build up of positions in the following US stocks and ETFs:

  • Invesco QQQ ETF
  • Sea Ltd
  • Nio Inc
  • Nvidia Corp
  • Ark Innovation ETF
  • Ark Fintech Innovation ETF
  • Palantir Technologies Inc
  • Unity Software Inc
  • Paypal Holdings Inc
  • Fastly Inc
  • PinDuoDuo Inc

I have decided to stop inputting the Robo Advisor accounts transactions into StocksCafe and just track their portfolio values in my blog page. Too much effort for too little reward. Updating my Robo Advisor blog page involves taking screenshots of the portfolio values from our online accounts and pasting them in. Our StashAway and DBS DigiPortfolio portfolios are still in the green because we started contributing to them earlier (Sep 2017 and Dec 2019 respectively) when prices of the ETFs were lower. We started OCBC RoboInvest in Jan 2021 when prices of the ETFs were higher (especially the tech-focused ones in the thematic portfolios) and it’s in the red now. The total Robo Advisors portfolio value adds up to about S$100,000 as of end Mar 2021.

As for my Coinhako blog page, I just took a screenshot of my crypto portfolio from my online account and pasted it in. It has small positions in every Crypto available for trading on Coinhako and it’s in the green as I started in Aug 2020 and bought in during the dips. The total value adds up to about S$20,000 as of end Mar 2021. My wife is thinking about setting up an account with another provider to invest in Cryptos and perhaps do more with it then just hold them at an exchange like I do. There’s an entire body of knowledge on what to do with Cryptos to earn more money that we are only just beginning to explore.

Admittedly, we are slow adopters to anything new and picking up on trends. Look at how late we are to learning about technology stocks & Cryptos and we still don’t understand most of what’s going on. We don’t take high risks and are not as aggressive when it comes to investing. We are also not the kind to come up with something new and be at the forefront of anything. But we try to react accordingly and take the time to do it. This requires a lot of patience because it seems like everyone is ahead of the curve when we are so behind. We have to accept the negative sentiment & feelings, try not to let them affect us and just keep pushing forward.