US$300K portfolio sunk. Buy bonds, not stocks in 2023?

Reader says to AK:

Bond yields are rising again.

T-bills and Singapore Savings Bonds are looking  more attractive again.

I know you have always put money in your CPF account and, now, you are putting money in T-bills and Singapore Savings Bonds too.

I am now wondering if I should follow.

The Federal Reserve will continue to pursue their plan to keep increasing interest rates until stubbornly high inflation is under control.

We could see Fed Fund Rate at 6% or more.

This is going to impact earnings badly, crush equities and REITs, sending economies into recession.

I am worried about a hard landing and I am at a crossroads trying to decide if I should partially or wholly liquidate my US$300,000 portfolio or what is left of it in the US stock market which includes tech names. 

I also have exposure to US commercial REITs listed on SGX.

(Sensitive details omitted.)

Put more money into fixed income like you?

What is the best way forward?

I know you would say you don't give advice but please talk to yourself on this.

AK says to reader:

Let me cut to the chase.

You have misunderstood what I have been doing or at least the purpose of my actions.

It is true that I have always done voluntary contributions to my CPF account even as a "young" retiree, maxing out the annual contribution limit.

If you remember, it is not only because I think of the CPF as a risk free and volatility free AAA bond which pays a relatively attractive coupon.

It is also because I have always believed that we need some high quality bonds in our investment portfolio.

An investment portfolio that is 100% in equities is probably going to be more volatile and not everybody has a strong enough situation to accept more volatility.

It is also about not putting all our eggs in one basket because we don't know what we don't know.

Watch (or listen) to new YouTube video on buying bonds or stocks in 2023 by AK Production House:

As for my increased activity in the Singapore Savings Bond space, it is just a replacement for my activity in the CPF space.

I am not increasing allocation to fixed income in this instance, therefore.

As for my increased activity in the T-bill space, I am mostly just locking up money which was locked up before.

If that sounds like money which I would never have put in the stock market anyway, it is exactly that.

I am still very much invested in the REITs and businesses which I blog about regularly.

I think you know this but you might have been thinking a bit too much and need to clear up the mind fog.

Of course, I must say that I do not invest in the US stock market, tech stocks or not, and I do not have any exposure to US office REITs.

So, the equities and REITs in my investment portfolio would look very different from what you have in yours.

However, I will say that if you are losing sleep because of your investments, you could have put in more money than you should have and, in such an instance, reducing exposure to a level which gives you some solace might be a good idea.

Watch (or listen) to new YouTube video on buying US office REITs by AK Production House:

If I were you, I would go back to basics, especially if you are 100% in equities and if you do not have CPF savings.

Do you have an adequate emergency fund? 

If you do, that is the money you can put in T-bills and Singapore Savings Bonds. 

Why?

Well, that is money which should never be put to work in equities anyway.

Quite simply, if you should ever need the money in an emergency, you don't want to be at the mercy of Mr. Market.

You don't want to be in a situation where you must accept whatever price Mr. Market should offer because you don't have a choice.

An emergency fund is insurance.

I know some investment "gurus" say we don't need an emergency fund but it really is necessary.

I know some people would use their emergency fund to buy stocks but that is so wrong.

An emergency fund is not an opportunity fund!

What if an emergency should come hot on the heels of a supposedly good opportunity?

Swans are not all white in color.

I am going to leave a link to a blog which you might or might not have read before as I think it will be helpful to you.

You might want to take a break from the stock market if things are freaking you out.

Peace of mind is priceless.

Watch (or listen) to new YouTube video on retirement income for life by AK Production House:

References:

1. Buying US office REITs in 2023?

2. Survivability and opportunity in times of distress.

Related posts:
1. Largest investments.
2. T-bills, SSBs and CPF.

The Business Times, 6 Mar 23:
Holding cash will be a winning strategy in 2023.