Finance Smiths

I had the chance to meet Michele and Rachel from StashAway as well as Kyith (Investment Moats) during the open discussion earlier in the week. It was great and I enjoyed the conversations we had on investing in general, pros & cons of StashAway, possible improvements to StashAway, etc. Looking forward to attending more of such events!

Anyway, I read Kyith’s latest post at Investment Moats on Your Returns if You Dollar Cost Average into the STI ETF with interest. Mainly because I’m attempting a similar endeavour for the next 10 years – mindless investing in the STI ETF via monthly investment plans. In fact, I’m doing the same thing with global ETFs via robo-advisors. Just that it is the robo-advisors doing all the behind-the-scenes work.

The returns for the past 10 years taking into account different cost structures are between 5% to 6%. That’s quite decent to me for just putting in the same amount of money into 1 ETF using 1 investing platform and doing nothing else. It makes me wonder what the returns would be like for the next 10 years. There are now more investing platforms with lower cost structures and it’s much easier to monitor and make adjustments.

After all, I doubt I will be the type to do nothing else. I mean, the argument is that this approach allows you to free up more time for other stuff. Spending it with your family & friends, working harder at your job to increase your salary income, watching more TV, meditating, volunteering, etc. The possibilities are endless and it’s entirely up to you to decide how to use that extra free time.

But I was just thinking when I looked at the historical price graph of the STI ETF. I know it’s in hindsight and it’s easy to talk about all sorts of actions I would have done to take advantage of the bear markets. Is it possible for me to just do one extra thing instead of doing nothing else when I employ this strategy? I don’t think it takes up much time to execute but I guess timing it would be the most difficult aspect.

If I see price dips of a significant degree, I start increasing my contribution amounts to the monthly investment plans and robo-advisors. Maybe a few hundred dollars every 5% drop? But not lowering my contribution amounts when the price subsequently increases so it’s only a one way price monitoring and investment action taken. Meaning my new base of monthly contribution amounts will only ever increase.

I guess this assumes a certain level of growth in my salary income to be able to sustain it. I reckon there should still be leftover time for me to focus on that. Besides, it’s not like spending more hours at work definitely equate to a higher salary income. There is some level of correlation but I would think more effort should go into trend monitoring so you still have a job with growth potential. Getting retrenched just eliminates or drastically reduce any shot you have at increasing your salary.

Let’s hope I’m still writing 10 years later so I can see whether this approach achieved a higher return. Taking into account all the events that will happen from now to 2027. Makes me wonder what the future us will be like.

My wife has completed her 2017 annual performance review and she just received her remuneration outcome – higher basic salary and a bonus. This is a better result than 2016, where she received no basic salary increase and a smaller bonus. That’s to be expected given that 2017 is a better year for the economy and bank compared to 2016.

I’m happy for my wife. She stepped up to fill in for a higher level role and worked hard to perform well. Even though she became busier with work, she improved her time-management skills to squeeze in personal training and gym sessions. I can see her evolving in so many ways to be better and I’m pleased.

The longer we work in Singapore, the more we start to expect a year-end bonus for our efforts. It’s our 4th year working here and we still can’t get over how big a consideration the year-end bonus is. We worked for 4 years in Australia and only my wife ever got some form of annual bonus at the bank while I have never received an annual bonus at the accounting firm.

Not that we are complaining over getting more money at the end of a work year in Singapore. But it does become something we have to consider after the bonus is confirmed. What to do with it? We are getting better with practice since it’s our 4th round. Since our financial and personal circumstances have changed every year since 2014, we usually end up using her bonus quite differently each time.

I mean, what her bonus gets allocated to is the same – savings, investments and spending. But the proportions differ depending on the markets and economic performance as well as other factors (e.g. level of retrenchment risk). This time round, we are unlikely to inject more cash funds from the bonus into the equity markets since we are in a bull run. Other than the existing monthly Dollar-Cost Averaging (DCA) of ETFs and contributions to robo-advisors accounts that come from our salary income. No need for adjustments yet.

We should be tapping into her bonus to pay for the ski holiday to Austria in Feb 2018. After all, it’s a big year for my wife as she turns 30 in Apr 2018. Let’s go all out and celebrate it! This should use up some of her bonus and we will leave the remaining bit as savings. I’m only going to let the cash funds of this savings portion flow through to our net worth Google Sheet. Not the spending portion since it has already been set aside.

Now that we have got the plans for her bonus out of the way. Just a few things to take note of for me. My wife’s last parcel of employee bank shares (allocated and dividend reinvestment) from working in Australia are about to vest in Dec 2017. I can finally move all of them out to her brokerage account and potentially sell it in one transaction to minimise trading commission costs. Besides, with the ASX on a high, this might be a good time to consider selling it. It’s not much as the net sale proceeds may only come up to about A$4,500. If this happens, I will no longer have direct exposure to the ASX i.e. no more Australian share portfolio.

Lastly, my own annual performance review is coming up. It’s my first one at a bank and I’m hoping the outcome is better than what I got at the accounting firm previously. I will have to be patient since the entire process can take a few months. I always knew out-earning my wife in the corporate was going to be a challenge. But I’m fine to keep myself close enough so I don’t lag behind by too much. Here goes nothing!