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QuestionsCategory: Investor PsychologyHolding on to cash
Nicholas Leong asked 2 years ago

Hello Fellow Community
I usually am a silent reader but I was wondering if any of you face the same problem as me? 
Im currently holding onto about $85k deployable cash but invest $1.2k/month in a roboadvisor for the past 2 years and also hold about $30k in REITs, Banks and Telcos for dividend income.
I feel like I am holding onto too much cash at the moment & couldn’t buy quickly enough during a small correction in May but from what I’ve calculated, almost all the REITs are overvalued but I can’t help but wonder “high can still go higher” and maybe punished for sitting out from the market.
Should I continue waiting until a more favourable time presents itself for those REITs and build my war chest more aggressively until then??
thanks a lot! (:

3 Answers
Jieren Zheng answered 2 years ago

For me, what I do is I expand my watchlist ^^”

I personally try to keep my cash position 30% and below unless I am facing crazy valuations.

I always try to add whenever I see valuations are attractive.

As my cash position shouldn’t swell so huge, as well as not a care for short term performance, I am doing overall okay I guess (still much more to improve though).

That being said a bull can go rather long and I won’t really know the top, so I don’t feel comfortable jumping in and trying to get out before the market falls.

Nicholas Leong replied 2 years ago

I guess I should expand my watch list.. thanks for the reply though!

I’m trying to build a portfolio of value stocks but seems “scary” hahahaha

Jieren Zheng replied 2 years ago

I see value as something more towards cheap in terms of valuations. Not too sure if we are talking about the same thing.

OCBC is good at say $10, but is is better at $5, something like that.

Victor Chng answered 2 years ago

Hi Nicholas,
 
you are in a very favourable situation as most people used up their cash when the market crash. Don;t be too eager to deploy your cash but rather focus on finding the good companies. Only when opportunity arises then deploy it. 
 

Nicholas Leong replied 2 years ago

Hello Victor

Thank you for the reply. I guess I should really take a wait and see approach now and build up the war chest and put into the high savings account at the moment hahaha

Karan Malhotra answered 2 years ago

Wow! That’s a really enviable position to be in. I would echo the comments above. If you think valuations are too high,I would urge you to use the time to prepare. I tell myself the same thing, just wish I had the cash level you do to take advantage :)
Alternatively, depending on the robo-advisor you use, you could set a low-risk portfolio and park some of the cash there to earn some low yield while you wait. Since it takes a few days to withdraw, you could keep a portion there and try to move it when you feel ready

Jieren Zheng replied 2 years ago

I would think high yield interest rate accounts (for Singapore where you can get higher interest of 2-3%), or Short Term Treasury Bonds (Singapore Savings Bonds for Singapore) or even money market funds would work. Robo-advisors have higher management fees from my experience.

Karan Malhotra replied 2 years ago

Yep, hence depending the situation, might be worth exploring. SSBs are sub 2% and take time to sell and recoup the funds into your account. No frills savings accounts are betwen 1 to 2%. Most robo advisors low risk portfolios are international bonds which are doing reasonable well, so if you’re being charged 0.5% but getting 4% upside, the differential could be worth it.

Again, depends on Nicholas’ personal situation and preference, just pointing out it’s an option to consider if he think he’s missing out by holding cash.

Jieren Zheng replied 2 years ago

If it makes you feel better, selling SSBs on the last week of the month, you’ll get it in 1 week.

I personally keep half of my funds in high interest accounts, and anything in excess in SSBs.

I would like to say that international bonds are yielding higher for a reason and bonds do default. So do keep it in mind. Be careful.

Victor Chng replied 2 years ago

Hi Guys, do take note of the duration for withdrawal of the funds. For SSB case, I think you need at least one month to get back your funds. Sometime the market’s opportunity changes very fast. If you remember what we taught in the investment quadrant, we usually split our purchase into three tranche. Hence, those funds that are in the SSB should be your third tranche while your first and second tranche are always there ready to deploy into the market.

The moment you started to deploy your second tranche into the market, you can start calling back your third tranche fund. Hence, there is no time lack on your side to miss out any opportunity.

Ang Chor Loo replied 2 years ago

U can explore placing funds with Maybank during this period…2% till end Oct…2.1% from Nov and Dec…earn higher interest while awaiting opportunities to surface.

Karan Malhotra replied 2 years ago

Agree with Victor actually, the SSBs are safe but not as liquid so it would be hard to even take advantage of a sudden swing like Dec’18 because the time involved in redemption.

I personally use CIMB Fast saver which is a no frills 1% yielding account perpetually and is easy to access. Also avoids cycling through too many accounts chasing higher yields.

Hi Ang Chor, would you have the link to this promotion? Is there a min deposit? Also, what happens after December :)

Ang Chor Loo replied 2 years ago

https://info.maybank2u.com.sg/promotion/deposits-banking/fresh-funds-top-up.aspx

Min $10k n above. Oh…for fresh fund promo, need to hunt for the next bank that offers these. Most banks do it for 2 months. For me…I rotate mainly amongst 3 banks, Maybank, SCB n Hsbc. Hsbc has conditions to fulfil though.

Ang Chor Loo replied 2 years ago

https://info.maybank2u.com.sg/promotion/deposits-banking/fresh-funds-top-up.aspx

Min $10k n above. Oh…for fresh fund promo, need to hunt for the next bank that offers these. Most banks do it for 2 months. For me…I rotate mainly amongst 3 banks, Maybank, SCB n Hsbc. Hsbc has conditions to fulfil though.

Jieren Zheng replied 2 years ago

Oh right I nearly forgot, FSMOne has a Sweep Account that yields about 1.4% currently which is similar to a money market fund too, just like what POEMS are offering.

Karan Malhotra replied 2 years ago

Yep, that’s an option if FSM is your primary broker, so it’s a better place to park your cash, but if you use another broker, there is I believe a couple of days delay in terms of withdrawing and transferring funds?

Jieren Zheng replied 2 years ago

Yea, so say if POEMS, probably their money market funds. Sadly, I haven’t managed to max out my OCBC 360 consistently enough though.
For me would be OCBC 360 -> DBS Multiplier, then SSB+FSMOne. Maxing out both 360 and Multiplier is a lot of liquid cash as ammo before SSB funds come into my account.

Ang Chor Loo replied 2 years ago

Without salary crediting, UobOne is also good. 3 Giros, $500 monthly Credit card spending, $75k deposit, Interest plus card rebates can hit $500/quarter.

Jieren Zheng replied 2 years ago

Yea, the UOB One is a good one if you can hit the CC spend (I can’t sadly).

Victor Chng replied 2 years ago

Great discussion guys. Keep it coming :)