Surprise! Passive income I received from T-bills. Reminders! "Buy and forget" assets! Why am I building my cash pile?

For readers who prefer reading, here is the transcript of a video I made recently on "buy and forget" assets, how important T-bills are in my strategy and why it isn't a bad idea to have more cash and cash equivalents?

There were a couple of mistakes I made in the video which I have corrected for this blog.

Not all that important but my OCD wouldn't let me get away with it.

"Old Change Kee" corrected to "Old Chang Kee".

"Q1 2023" corrected to "Q2 2023".

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I mentioned in a few blogs in the past that I would sometimes check my savings account and get a pleasant "surprise."

The "surprises" are dividends from investments that I have not done anything to for so long that I almost forget I have them.

You know what they say about buying and forgetting?

Some people would look down on people like that.

However, for me, it has not always been a bad thing.

These are stocks which are usually free of cost for me but are still generating income.

During "Evening with AK and friends 2023", I mentioned Old Chang Kee and Hock Lian Seng as two of such investments for me.

They are not the only two either but I cannot recall the others now.

I will remember when I see their dividends come in, I am sure.

My memory is getting quite terrible.

Anyway, why am I talking to myself about this?

Well, quite recently, there is a new addition to these "surprises".

T-bills.

As my 6 months T-bill ladder is complete, I have money coming back to me every 2 weeks.

However, as it is a relatively recent development, I am still not used to it.

This is especially when the amount is relatively big compared to "dividends" received from investments I sometimes forget I have.

Of course, I also have to remind myself that I am not receiving money that I can spend here.

It is a return of my capital.

I have quite a bit of money coming in this month as the month of May is usually a good month for dividends.

Mixed together with this is money coming back from T-bills bought in October and November last year.

Already bought some 6 months T-bills in the last round of auction which saw a cut-off yield of 3.78% p.a.

Will be putting in a non-competitive bid for the upcoming 6 months T-bill auction next week.

I would be quite happy to get a cut-off yield of 3.78% p.a. again or thereabout.

Basically, anything higher than the 6 months fixed deposit rates offered by DBS, OCBC or UOB would be good enough for me.

I remind myself that T-bills pay us at the beginning of the 6 months duration which means the "interest rate" is actually higher than what the cut-off yield indicates.

I also remind myself that this is not my main source of passive income and it should not be my main source of passive income.

To illustrate this, in Q2 2023 so far, I have bought three T-bills which have generated about $500 in passive income for me.

This is really pocket money compared to dividends I have received so far.

However, I never look down on pocket money especially if it flows into my pocket regularly.

Also, this is money which I didn't have before.

This is all thanks to higher interest rates.

(I am also very thankful for a strong Singapore Dollar. Even foreigners want to get Singapore T-bills.)

As an investor for income, I am a creature of comfort and I also said during "Evening with AK and friends 2023" that investing for income is very comforting.

I find T-bills more comforting now that they pay better than they did in a long time.

"The front end of the yield curve is still elevated even as the Fed has signaled a pause in rate hikes.

"I know there is talk of a Fed pivot by end of the year and it could well happen but worrying about whether it will happen or not does nothing to generate income for me.

"I would rather make hay while the sun shines.

"Anyway, my expectation is for 6 months T-bills to remain relatively rewarding in the near future, taking into consideration that it is risk free and volatility free just like the CPF."

Source: 

See related post at the end of this blog.

(My YouTube video on this topic.)

There is nothing wrong with having more cash and cash equivalents in our financial pyramid especially in an environment when cash is no longer trash.

If things should go terribly wrong like they do from time to time, with a stronger footing, we should have less to fear and greater ability to take advantage of investment opportunities.

AK is lazy and a creature of comfort.

Don't do what I do unless you meet those requirements.

Jokes aside, it is never my way or the highway.

We should all have a plan, our own plan.

If AK can do it, so can you!

Related post:

Fixed income update.