Depleting cash

I never thought I would face this issue.

After accumulating $300k cash, and feeling that I've kept too much dirty fiat with me, I've been investing aggressively. Aggressive may not mean smart. In fact, I am feeling stupid because my investments have been doing badly 🙃

As a quick summary, this is what I've been doing over the past year:

  • Buying more REITS, just to name a few - Keppel dc, Ascendas, Capland China
  • Buying more US stocks, just to name a few - Tesla, Roblox, Sea
  • Converting SGD to USD for crypto
Just on crypto alone, in midst of the recent drop, I've pumped in $15k SGD to buy BTC and ETH 🙃embodying BTFD in my blood very literally, within a week. 

Am I worried? Of course! Each time I open my Tiger Broker + crypto apps, I see a blood of red. My limit orders on Gemini just keep setting off hahah. I've been doing what people call DCA, but man, the amount of transactions I made is quite crazy.

I've also just started Anchor Protocol for it's lucrative 19% interest. Just a low 4 figure. It's tempting to put more money in though since this beats what DBS Multiplier gave.

But, I needed some cash for mortgage loan and day to day expenses.

I am even thinking of selling out my Singapore Savings Bonds. The pathetic 1-2% returns is a joke. That said, I'm also thinking if I should keep these as a "safety net", in case I really lose it all in the stocks + crypto market. 

Currently, I still have $100k cash spread across SSB + saving account. I know this is A LOT. But I've this psychological fear of depleting money below it. After all, I spent many years to build this up....However, I see the current situation as an opportunity to load up more, so I may allow myself to drop this psychological barrier down to $70-80k. Let's see.

In any case, I am consoled that I've my CPF as my solid foundation. This untouchable account is really a saving grace for people with no self-control/discipline. Should I get retrenched (TOUCH WOOD), I would still have some money in OA to pay for mortgage for a good one year. 

I remain positive about what's to come. Hopefully when all the FUD pass, I'd be thanking myself for making these choices.


What have you been doing so far? Staying on the sideline, selling, or buying? 

Comments

  1. Hi there,

    What you are experiencing now is par for the course for any investor. So you are not alone.

    Key ingredients to keeping sane during market downturns, major corrections and crisis are:

    1. Job security
    2. Healthy emergency funds
    3. Substantial warchest
    4. Healthy savings, including the CPF
    5. No trades on leverage position

    And history tells us market goes in cycle. It goes up, it goes down.

    As long as you do not have to liquidate any stocks to fund your living expenses, you are in a good position.

    Job security
    I cannot emphasize this enough. Having a good and secure job gives an investor a great advantage over others who do not have such "luxury". A secure job with a good salary is a lifeline when your investment falter.

    Emergency funds
    Emergency funds are those money you set aside for emergencies such as unplanned expenses for eg., home or car repairs or big ticket item replacement for the home and medical needs. Important not to treat this fund as your war chest.

    War chest
    When you have a war chest, you actually look forward to a crisis. This is the time when you can buy good stocks at a great discount. How to recognise a crisis? Obvious signs :

    1. Retrenchments are in the thousands and governments are forced to introduce rescue packages such as quantitative easing (QE as in the US), job support scheme (JSS as in S'pore) etc,
    2. Home auctions are in high numbers and are going at huge discounts
    3. Cars are being repossessed in numbers as people cannot keep up with the loan payment
    4. If people still have their jobs, they see their salary reduced and without bonuses.

    The above happened in 1999/2000, 2008/9 and recently in 2020. In 2020, most governments acted very quickly and the economy recovered within 6 months to a year.

    This current market correction is NOT a crisis. It is a response to impending interest rate hikes to address an overheating economy.

    CPF Savings
    And yes, a healthy CPF Savings can give great peace of mind, any day, any situation. Contrary to what many people believe, CPF savings can be sufficient to provide one with a comfortable retirement. Build it up well. For eg., we are expecting $99,000 in interest from our combined CPF savings this year. At 65, we are expecting $61,000 0f interest from our combined OA & SA and another $49,000 from our CPF Life payout. This amount should be enough for a comfortable retirement.

    No leveraged trades
    Think for most of us who do not have the skill, knowledge nor time, best not to buy / trade stocks on loan. Buy only with cash that you can afford to lose.

    Finally be patient. As a young person you will have opportunities to probably experience first hand a few major economic crises. At events like these, there will be people who will swear never to touch stocks ever again after losing their fortunes and life savings, while others would have profited handsomely from them.

    Good luck on your investment journey!!

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