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Transitioning into an 'investor'

Nobody said it was going to be easy. I admit that I feel like giving up sometimes. Well, it's only human to choose the easiest path out.










For the second half of 2015, I have been actively seeking higher returns on my savings in bank accounts, been busy reading about the current economy, markets and checking the Straits Times Index (STI). After these few months, I'd would to think that I have improved slightly in developing the mindset, slowly but surely transitioning into becoming an 'investor'. 

Hunting for free money 

In the later half of 2015, I have opened up an additional bank account: CIMB FastSaver which offers 1% p.a with no strings attached. I have not started work and I have not paid for my own bills to earn higher interest in local banks(e.g the OCBC 360 account) 












When I shared with my parents and friends, they were skeptical. A Malaysian bank? Perhaps it doesn't inspire much confidence when they see our neighbour's currency sink and the constant negative news about them. Maybe it's also because we are used to the easy way out. We are comfortable with our Singapore banks and it is reassuring to see brick-and-mortar. 

I took some time to explain that the money was guaranteed by the Singapore Deposit Insurance Corporation (SDIC) and that it was free cash credit. With the promotion, the return is 1.7% for the first month. Since then, I have added another $800 and have designated it to be my investment warchest(thanks to Singapore's financial bloggers!) There are no ATM cards given and besides the ATMs are only in the CBD. 

For spending, I still use POSB and only placed my next month's expenses into it(zero-based budgeting). I converted the account from passbook to eSavings and the interest is honestly negligible. 

For emergency, I still use OCBC Frank. I keep it because the whole point of emergency funds was it to be liquid and the easiest to access. It didn't make sense to me to designate FastSaver as my emergency fund if I do need to withdraw cold hard cash. If cold-hard cash weren't reassuring, would the older generations have kept it in tin cans? I now have some 4 months of emergency funds. Not a lot by any measure, but I am still building up. 

Conclusion:  
No savings accounts can actually beat inflation of 3% I believe. The value of a dollar is simply eroding year-on-year in those accounts. But you need it. This are meant to be for day to day survival and it needs to be the most liquid. 

Buying into the index

Note: I have corrected the mistake in calculating CAGR and it is -33.83% instead of -46.1%. I have also used portfolio value instead of comparing against cost of investment.

In November, I started buying into the STI using POSB Invest-Saver RSP. I put in $100 per month based on what I can stomach at the moment. So far, it's a $29 dip in portfolio and CAGR of -33.83%. Why did I choose this? 

I have no clue about buying stocks. I have sped up in learning, but am still taking my time. I cannot go in blindly. So in the meantime, it is a good $100 invested to buy a whole bunch of stocks. I didn't lose sleep so far. 

Note: My noob opinion on buying into the index. Tunnel vision perhaps? 

What's next? 

Continue reading, reading and reading. Open up POEMS and have my CDP account. 

Take up short courses. In addition, the courses can open up a 'Professional Development' section in my resume. 

Am I better today than I was a year ago? Yes. I still need to make efforts. 

Transitioning... 

Till next time, 

Mr K. 








Comments

  1. "In November, I started buying into the STI using POSB Invest-Saver RSP. I put in $100 per month based on what I can stomach at the moment. So far, it's a $29 dip in portfolio and CAGR of -33.83%. Why did I choose this?"

    The market is currently in turmoil. And this means next months you can buy more of the stock with $100. I would up my monthly investment now to capture the "fire sale". You may wish to consider joining the "Index Investing Lounge" on Facebook. Its founded by Kevin Bogleheads (http://www.turtleinvestor.net/)

    ReplyDelete
    Replies
    1. Hi there,

      Indeed I feel tempted to increase my contributions. But I am also looking at the ABF Singapore Bond currently. I understand bonds can be affected by interest rates which seem unlikely this year but yields are likely higher too. What do you think?

      Mr K

      Delete
  2. This comment has been removed by the author.

    ReplyDelete
  3. Hi, I'm learning investment via blogs but it's been tough as people around me aren't financially knowledgeable. Have u tried free sgx talks? I'm planning to attend one soon.

    Feeling apprehensive about opening a posb invest saver account due to some reasons but based on what I know, it's rewarding if u invest long-term (10 years).

    I don't normally comment but just wondering if u face the same struggles as me. Feeling meh, there's so much complex info to learn.

    ReplyDelete
  4. Hi there Noob Investor,

    Most of my friends are also not quite savvy in financials, so I enlisted the help of books. I love spending my time in Kinokuniya. I have not attended any investment talks, quite silent now. I think it's nice because there's a chance to network with other like-minded individuals.

    I will probably work after NS. Enjoy your poly life (: Anyway, it's okay to feel apprehensive for the posb invest-saver. I do feel there are better options out there but I love this because it makes the purchasing decision for me and because I can only afford $100 per month. Do consider SPDR STI ETF and Stanchart online trading.

    Do make sure you have emergency funds before going into this. Otherwise, I feel you will really be affected by losses. Of course, long-term, I think around 20 years though. Medium term of 10-20 years. Short-term is like trading to me. I like the idea of passive income also and will work towards it.

    I feel overwhelmed too, given my limited knowledge but it's a lifelong thing so keep learning!

    Do let me know if you start on this, and what are your reasons! (:

    Mr K.

    ReplyDelete
    Replies
    1. Hi!

      I'm opening posb & scb accounts. Will use scb if I think it's a good time to buy more shares. Will learn about other investments & use scb to invest.

      Jiayou in NS yeah. :)

      Delete

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