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In case I forget, this is a reminder to myself to get more T-bills.
Although I didn't blog about it, I got some earlier this month.
The cut-off yield was 4.2% per annum then.
Not bad.
Plan is still to keep adding as I continue to slowly grow the investment grade bond component of my portfolio.
This isn't something new as I was doing the same by making voluntary contributions to my CPF account annually to hit the annual contribution limit.
Of course, long time regular readers know I think of the CPF as a risk free and volatility free investment grade sovereign bond.
I know that some people are saying that inflation has peaked and interest rate has peaked or will peak soon.
So, they say we should be deploying funds into riskier assets like tech stocks.
Some might think that I am being overly conservative but I don't think so.
Remember if interest rates are cut later this year or next by the Fed, it probably means that the USA is in a recession and probably a pretty bad one.
It is not a bad idea to err on the side of caution.
Having some meaningful insurance is not a bad idea.
We can never be too sure of anything.
Also, I am really more exposed to equities than I am to bonds.
Compared to the more commonly recommended 60% equities and 40% bonds investment portfolio recommended to people with a profile like mine, my portfolio is way lighter in bonds.
So, in an event that interest rate does get a cut or a few in the second half of the year and next year like some people are expecting, my investment portfolio could benefit too if that is the way Mr. Market swings.
Oh, what profile was I talking about?
I am a retiree and do not have an earned income.
I depend fully on passive income for a living.
If my investments should go belly up, I am pretty much in trouble.
I am now also in my 50s and it would probably be harder for me to get a job, let alone a job that pays reasonably well, if I must rejoin the workforce.
OMG!
PTSD moment there.
Cold sweat.
If I were younger and still enjoyed an earned income but married and had a mortgage and children, I might want to be equally conservative.
Bad AK! Bad AK!
Seriously.
Something for some people to think about, maybe.
Enough horror stories.
Next T-bill auction on 18 Jan 23.
Anyway, I am just talking to myself here about what I think works for the real me (and the imaginary me.)
If you are still eavesdropping, remember you are listening in on the ramblings of a mental patient.
So, you do you.
Maybe you want to listen to my British lady friend on YouTube regarding having $1 million CPF too.
Huat ah!
Bloggy Award
6 comments:
Hi AK,
https://www.theedgesingapore.com/news/avs-and-evs/cdg-invests-54-mil-teleoperation-software-company-boost-autonomous-vehicle
What do you think of the above investment by CDG ? Looks like Mr market takes it negatively. Thank you.
Hi AK,
What do you think of CDP Securities Borrowing and Lending scheme? Are there any risks associated with signing up as a lender? I was thinking could it be a good idea to lend the securities out to earn additional income if one does not intend to participate in their AGMs?
Hi Betta man,
Although I reduced my investment in ComfortDelgro and reallocated funds to OCBC and UOB, I still retain a pretty significant investment.
I don't know enough about autonomous vehicles to comment on whether it is a good idea to invest in their development.
I know Elon Musk has been talking about the subject forever but has yet to deliver.
Could be transformative for ComfortDelgro or it could be money down the drain.
One reason to like ComfortDelgro is their strong balance sheet.
I hope they don't get too adventurous and squander their cash pile.
Technically, I would not be surprised to see the stock going lower to $1.16 or $1.15.
I might do some bottom fishing if that happens.
Reference:
Add ComfortDelgro or DBS, OCBC and UOB?
Hi Rellangis,
I don't like the idea of lending my stocks to anyone because it is usually people who want to short the stocks who want to borrow from us.
Intuitively, I just don't like short sellers. ;p
I do know the argument that they are part of the ecosystem etc. :)
As I am not an expert on the subject, I checked with Mr. Google:
"Securities lenders are typically institutional investors with long investment horizons such as retirement and pension funds, registered investment funds, government bodies, and insurance companies.
"Borrowers include broker-dealers and hedge funds, which usually borrow securities to short, avoid settlement failure, or profit from arbitrage opportunities.
"Lending agents (which is CDP in our case) take a cut of the lending revenue in exchange for matching lenders and borrowers.
"There are (risks and the bigger risk is) borrower default risk (which) is the risk that the counterparty fails to return the borrowed security back to the lender."
Source: Morningstar.
This site is US based but still a useful read.
Phillip Securities talks about potential benefits but not the risks.
Hi AK,
T-bill is short term.
Have you considered the upcoming 2-year and 10-year SGS Bonds? Or even Quasi government bonds like HDB and LTA?
Hi LLH,
For longer term bonds, I will make use of the CPF and SSB which have relatively attractive yields too.
Staying at the shorter end of the curve seems to be more rewarding which is why T-bills are a good fit now too.
Having said this, I am not a sophisticated bond holder and I don't have that much money to be deployed into other bonds either. ;p
Reference:
CPF is all we need unless we are very rich.
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