Finance Smiths

Personal finance apprentices-in-training

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.

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.

Setting up UOB SimpleInvest from next month onwards

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We managed to send our son to preschool on Fri as he is mostly recovered from his cold and cough. It was good to have a break in the morning for us to catch up on our household chores and work. My wife had her farewell lunch and virtual send-off as she wrapped up about 10 years of service in her current division at the same bank. She has worked in 3 cities across 2 countries and made plenty of connections along the way. It’s a nice way to end her time there as she moves on to a new division at the same bank to do a different kind of work. The new job will be more demanding and interesting so I’m hoping she can adjust to the new role over time.

Anyway, the new cash buffer I have built up for investing by transferring our overseas cash here and cashing out some of our crypto gains has given me more flexibility when organising our monthly investment plans. Other than increasing the automated funds transfers (dollar-cost averaging approach) into our robo-advisor accounts, OCBC Blue Chip Investment Plan (BCIP) and POSB Invest-Saver, I have been considering setting up UOB SimpleInvest. Where the underlying financial assets of our robo-advisor accounts, OCBC BCIP and POSB Invest-Saver are ETFs, the underlying financial asset of UOB SimpleInvest is funds.

I mean, it’s all about what type of stocks and bonds are being held ultimately by the ETFs and funds but they are just packaged differently. The solutions (3 options) offered by UOB SimpleInvest are straightforward and I have selected regular dividends (to be reinvested) and capturing long-term growth opportunities. The monthly transfers into these UOB SimpleInvest funds are automated on different dates from OCBC BCIP and POSB Invest-Saver. Just to spread the various investments throughout the month.

UOB SimpleInvest forms part of my basic investing strategy where I dollar-cost average into ETFs (and now funds) every month. It’s my long-term hedge against volatility in the markets and underperformance in my manual selection of stocks. The returns are not high but decent when taking into account the minimal effort approach of automated funds transfers (fixed amounts on certain dates). This set and forget component of my investment portfolio has served me well in times of bear markets and recessions.

By my calculation, about a third of my savings from next month onwards will flow into such automated investments. Leaving me with a third of it for manual investments where I try to buy into stocks & cryptos for outperformance of ETFs & funds. And the remaining third for spending on expenses such as rent/mortgage, groceries and dining. Any remaining cash leftover at the end of every month will be kept as cash savings.

This increased utilisation of my cash balance for investing going forward is to ensure I don’t end up building up such a large cash balance over time anymore. It has been dragging down my investment portfolio returns and I’m hoping to address this issue now that I will be using up most of my cash for the remaining private property purchase downpayment. Running a low cash balance has its risks and it hinges a lot on us not losing our jobs. But I will do what I can to make it work.

Categories // MIP