Finance Smiths

Personal finance apprentices-in-training

Leasing out my new place and delaying our moving in

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Happy CNY to everyone and I hope all of us enjoyed the holidays. I didn’t do any visiting this year and only had CNY lunches and dinners with our immediate families at their homes. I took the chance to rest up and it was a nice break away from work. As we start to settle into a new flexible work from home/office arrangement, the positive is an increased engagement with our teammates and stakeholders resulting in a higher level of productivity. It felt good to be able to socialise in the office setting again. The negative is an increased travel time & schedule coordination resulting in higher levels of fatigue. There’s always a trade-off and we just have to keep balancing the benefits and costs.

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The tech stocks and cryptos markets have continued to be volatile, rising and falling by quite a bit from day to day. I have just been averaging down and dollar-cost averaging into existing positions. Might as well take this opportunity to increase my investment portfolio allocation to tech stocks and cryptos. The Singapore stock market has been doing better and my local banks and STI ETF positions have been going up in value. I don’t plan to do any further rotation between the various components of my investment portfolio. Now that my cash position is recovering with savings from the salary income inflow as expenses start to stabilise, I can invest the cash and weight the investments accordingly to rebalance the asset allocation.

I have decided to delay my family’s moving in to our new place to next year. It was supposed to happen this year but I couldn’t line up the end of our tenancy agreement for the unit we are renting with the end of my tenant’s leasing agreement for the new unit. In short, I’m going to be a landlord for another year. While I prefer to renovate and move into our new place, it would have been a big negative impact to our finances. Mostly in the form of a double payment of rent and mortgage for several months along with renovation costs. Under normal circumstances, I may not have had such an issue with it – not ideal but manageable. Circumstances have changed on my wife’s side as I expect a spike in family expenses towards the end of the year. I don’t think we can handle what would be a massive negative impact to our finances. A delay of our moving in to the new place puts us in a stronger financial position next year to be more ready.

End Jan 2022 Liquid Assets down by the most since Covid recovery

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I just updated my Google Sheet numbers for the end Jan 2022 cash, securities, robo-advisors, cryptos, CPF-OA and liquid assets positions. It’s not looking good but that is to be expected given the recent bad performance in tech stocks and crypto markets. I invested more of my spare cash manually into these markets and even increased my dollar-cost averaging amounts. But that’s not enough to offset the fall in their values. For the first time in the past 2 years since Covid hit (bear market in Mar 2020 and a quick recovery after that), my liquid assets has gone down significantly to the point where monthly capital injections failed to make any difference.

It was already getting close in the past few months but my regular capital injections had kept my liquid assets afloat by keeping the investment portfolio value steady. This time around, the fall in both the tech stocks and cryptos markets (where I have bigger positions in now) was too much to buffer against. That being said, I should expect higher volatility given my exposure to tech stocks and cryptos. But it’s another thing to experience the wild swings in value on a daily, weekly and monthly basis. Learning how to stomach the higher volatility and timing the capital injections is still something I’m getting used to. Anyway, here are my end Jan 2022 liquid assets breakdown.

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Cash: S$32,000 (-S$4,000 and -11.11%)

This went down by quite a bit as I used up the savings from my monthly salary income and drew down on my cash buffer to do capital injections into my tech stocks and cryptos portfolio. I didn’t want to get too aggressive as it might be a prolonged downturn in these markets and I rather slowly feed the funds in instead of doing it too early at one shot. Especially when it seems like we are just at the beginning of this volatile period.

Securities: S$818,563 (-S$23,437 and -2.78%)

Ouch, not much to say other than it’s not fun to watch my securities value drop every month for the past 3 months. Each fall has been more than S$20,000. The recovery in the Singapore market was not enough to offset the losses in the tech stocks and cryptos markets. Tough times but I’m going to stick with my investing strategy of allocating more funds to these markets.

Robo-Advisors: S$106,560 (+S$60 and +0.06%)

Flat for the month despite regular contributions. The robo-advisor portfolios are more diversified so the values didn’t drop as much as my securities portfolio value. But I have also made them more tech-focused in the past year so they took a beating as well.

Cryptos: S$172,800 (-S$15,625 and -8.12%)

Urgh, worst monthly fall in cryptos portfolio value since I started investing in it. An even more volatile asset class than tech stocks. I injected the most capital into this and it had the bigger percentage fall across the various components of my liquid assets.

CPF-OA: S$147,400 (+S$6,900 and +4.91%)

The only bright point in this dismal monthly liquid asset update. A combination of CPF interest and higher CPF contribution (due to my wife’s bonus) led to a jump in CPF-OA balance.

Liquid Assets: S$1,277,323 (-S$35,742 and -2.72%)

Wow, liquid assets for the month went below S$1.3m with such a big drop. S$1.3m is a psychological threshold for me since that is what I started with after paying the downpayment of my private property purchase last year. I was making some progress with each month in terms of financial recovery but I’m basically back to the starting point. A disappointing revelation but a necessary reminder that such stress tests of my liquid assets are important in ensuring the longevity of my investment approach.

Increasing my Dollar Cost Averaging into tech stocks and cryptos

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It has been an eventful few weeks for many reasons. I started going back to the office once a week to work while it’s 3 days a week for my wife. We had to adjust the routines to ensure our boy still gets dropped off and picked up from his morning half-day at the preschool. On days when we are both in the office, my parents-in-law go with my helper to pick him up. It’s a lot more of schedules juggling and errands running than before. Didn’t help that he was sick for a number of days and couldn’t go to preschool at all. It took us a few weeks to get to a point where we are more comfortable with the new routines but the situation is always changing as he grows up.

Anyway, the tech stocks & ETFs and cryptos markets tanked during the same time as well. While I was actively averaging down on my existing positions, I was also increasing my Dollar Cost Averaging amounts into them. I find that this investment strategy works well when the markets are volatile and have daily or weekly big swings in price movements. Despite my increased investments into the tech stocks & ETFs and cryptos, the value of my investment portfolio continues to fall with each week. This is to be expected during a time of bloodbath in the markets like now. Not looking to my end of month liquid assets update as my Google Sheet is currently showing my first significant drop in total liquid assets for the past 2 years.

The question is how long can the tech stocks & ETFs and cryptos markets keep falling and whether I can keep up with my investment strategy – manual averaging down and automated Dollar Cost Averaging of positions. It’s always in a bear market that I realise the importance of active income flow. As long as I don’t lose my job and continue to receive my monthly salary income, it’s possible for me to ignore the gyrations in the markets and stick to my approach. In fact, the longer and more sustained the fall in the markets is, the greater the benefit to me as a long-term asset accumulator. Because I can get these assets at lower prices now than before.

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The next consideration is the effort required to maintain our jobs and the monthly salary income. If they are a big mental and physical drain, it doesn’t matter what the pay is if we don’t at least enjoy some parts of our work days. To be honest, we find work stimulating enough to keep going at it. Our jobs now are at an almost permanent flexible work from office/home arrangement basis. Meaning we work in the office on certain days (by choice or coordinating with our colleagues) and we work at home on other days. So I get to have the social and professional interaction with my colleagues in the workplace while being able to switch off from the demands at home. Balanced out with actually being at home the rest of the time so I can run errands and spend time with my family. This makes corporate jobs in the office much more bearable than before when we were stuck in the office 5 days a week with no flexibility and tons of wasted face & transport time.

When I started the new year 2022, I was getting ready to gear up and move jobs or gun for a promotion. My wife had went through a big restructure and changed jobs twice in the past 2 years. Her career trajectory has gone up and is stable now so I figured it was my turn to step up. But we got some big news recently on the personal front that is making me change my mind. There’s a chance our family has to go through another major transition in the later half of the year. And she’s going to need a lot more support from me than before. I doubt I can provide that in the midst of getting busier at work if I change jobs. It’s also going to impact the move-in timetable to our new place (factoring in the higher renovation costs and increased time taken due to worker shortages). I don’t want to get squeezed on both ends managing professional and personal issues at a time when she needs stability more so than ever. I will try to keep posting on my blog about these updates but as you can see, it’s already reducing the time I have to write. Let’s watch this space!