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".

---------------

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.

Fixed income update. 3.78% p.a. 6 months T-bill. SSB?

The latest 6 months T-bill auction gave us a cut-off yield of 3.78% p.a. which was decent enough.

Some crazy kiasu people put in very low competitive bids which drove down the cut-off yield.

This is evident when we look at what the average yield was.

Why would anyone place a bid of below 3.26% p.a. is beyond my comprehension?

Even if we were to place a 6 months fixed deposit with OCBC using CPF OA money, we would get 3.3% p.a.

This is why I say many people are selfish and this is actually worse because it harms themselves and others at the same time with a lower cut-off yield for everybody being the result.

Simply inane.

I am not doing any shameless promotion for OCBC because it is my largest investment but take a look at their promotional interest rates: HERE.

Anyway, by now, we shouldn't be surprised anymore.

I am just happy that the cut-off yield is still much higher than what DBS, OCBC and UOB would offer for 6 months fixed deposit at this point.

This is because I am just rolling money from maturing T-bills into new ones by now.

Yes, my T-bill ladder is complete and it is another source of meaningful passive income for me.

Is this going to continue?

To be sure, I do not have a crystal ball.

However, for various reasons, inflation is likely to be sticky which means interest rates will probably stay higher for longer.

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.

This helps to grow the base of my pyramid which I mentioned again recently during "Evening with AK and friends."

As for Singapore Savings Bond, like I shared last month in a blog, my mission for the year was already accomplished. 

Fortunately, that was the case too as the 10 year average yield has declined significantly in this month's offer.

A much lower 2.81% p.a. 10 year average yield doesn't cut it for me.

Better off just doing voluntary contribution to my CPF account.

Not doing shameless advertising for DBS because it is one of my largest investments but if you have a shorter duration of two years in mind, a 2 year endowment plan offering guaranteed 3.92% p.a. by DBS is a not a bad idea.

I imagine that as doing a top up to my CPF SA which I am not allowed to do anymore.

See:
Update on saving for income.

Reminder to myself.

Why am I doing what I am doing in the fixed income space?

I want to invest in strong businesses to have peace of mind but, even more than that, I want to make sure I have a portfolio which has a stable footing as that really helps to promote peace of mind.

I always say don't do a Chicken Little.

The sky is not falling.

Don't go to extremes and have, say, 90% of our portfolio in T-bills unless we are old retirees nearing the end of our lives.

Of course, I am not saying that my way is how it should be for everybody but this works for me.

We should all have a plan, our own plan.

If AK can do it, so can you!

Recently published:
Why AA REIT?

Related post:
SSB and T-bill in April 2023.

Why defensive investing is a good idea for most of us?

If you have been following my blogs, you would be familiar with my reminder to myself that in the current environment, it is probably not a bad idea to be more defensive as investors.

The heightened geopolitical tensions in many parts of the world, sticky inflation, higher for longer interest rates, slowing economic growth and the prospect of economic recession in major economies make for a troubling brew.

I have also said that as a retiree investor for income, it really makes more sense for me to be more defensive and seek out capital preservation options, reducing beta or volatility in my portfolio.

When interest rates were very low, there were people who would borrow money to invest in real estate investment trusts and thought they were actually investing defensively.

Why?

An idea in defensive investing is to invest in assets which deliver stable earnings and meaningful dividends and real estate investment trusts, for the most part, looked like a good fit.

However, these investors who were borrowing money to invest in real estate investment trusts were not investing defensively. 

What they were doing was actually aggressive and would fall in the same class as margin trading and options trading.

If interest rates were to rise rapidly which they did, they could find themselves in a boatload of trouble as the unit prices of real estate investment trusts fell and cost of financing rose.

What they were doing had little difference with borrowing money to invest in Alibaba's common stock.

If the price of the common stock fall below a certain price, the lenders will come knocking which was what happened to some investment "gurus."

I never want to have to deal with such a possibility which is the reason for the word "bread" in "eating crusty bread with ink slowly."

If you are new to my blog and don't understand, I will leave a link to the relevant blog below.

Now, is defensive investing only good for retirees like AK?

I would argue that defensive investing is probably a good idea in varying degrees for people who do not have deep pockets.

For regular folks who still need their earned income, capital preservation should have a place in the overall scheme of things.

For retirees and people who do not have the ability to stomach big financial losses, their investment portfolio should be more defensive than not.

The ability to stomach big financial losses will vary from person to person.

How defensive an investment portfolio should be should have an inverse relationship with the ability to stomach big financial losses, theoretically.

The more able a person is able to take big losses, the less defensive his investment portfolio could be, therefore.

However, I have often seen people who are ill able to take big financial losses adopting very aggressive investing ideas.

I think they should ask themselves if they liked the idea of living next to an active volcano.

Defensive investing is also a good idea for people who are mentally unable to take big financial losses.

Losing sleep because you lost a few thousand dollars in a recent investment?

Well, then, you might want to do more defensive investing.

How do we do defensive investing?

I will not tell anyone what to invest in but I will say this.

As long as we invest with an eye on capital preservation, minimizing the risk of financial losses, we are taking a step towards defensive investing.

Promises of astronomical growth and future returns from businesses which are burning cash do not interest defensive investors.

Thinking of becoming more defensive in your approach to investing now?

If AK can do it, so can you!

Related posts:
1. "Eat crusty bread with ink slowly."
2. Update on saving for income.
3. More in equities or fixed income?
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Investing or speculating in properties?

Singapore Savings Bond and T-bill allotment (April 2023.)

We have both Singapore Savings Bond and T-bill allotment results today.

As I increased the amount of money for both, I was crossing fingers for a full allotment in Singapore Savings Bond and also a relatively good cut-off yield for the T-bill.

Getting a full allotment in Singapore Savings Bond would not only mean mission accomplished with regards to money meant for voluntary contribution to my CPF account in 2024.

It would also mean possibly locking in a 10 year average yield of greater than 3% per annum which we might not see again from a Singapore Savings Bond for some time to come. 

This is a possibility with interest rates softening in recent months.

If I did not get a full allotment and if the 10 year average yield of Singapore Savings Bonds offered for the rest of the year should be lower than 3% per annum, then, I would have to do a voluntary contribution to my CPF account in the month of December later in the year.

Well, it seems that luck is on my side.

A total of $700 million was offered in Singapore Savings Bond but the applications within individual allotment limit totaled $697.2 million.

So, my application with a sum of $22,000 was fully allotted.

Mission to put $38,000 meant for CPF voluntary contribution in 2024 to work for a higher average yield is accomplished.

I will have one less thing on my mind and this makes me happy.

As for the 6 months T-bill, I have always placed non-competitive bids when using cash on hand since I am only a small timer.

Anyway, even a 3.65% cut-off yield would still be more attractive than fixed deposit rates offered by DBS, OCBC or UOB now.

The fact that the "interest" is paid at the start of the 6 months term means that the effective interest rate is actually higher too.

The latest auction's cut-off yield is 3.83% p.a.

This is a positive surprise as I had expected the cut-off yield to trend lower after the last 6 months T-bill's cut-off yield of 3.75% p.a.

This is doubly or triply good news for me since I had put in a non-competitive bid with a sum of $15,000 instead of $5,000 which I had originally planned to do.

My T-bill ladder is complete and the plan is to continue rolling funds from maturing T-bills into new T-bills as long as the front end of the yield curve remains elevated.

Make hay while the sun shines.

I am still on the path to preserving capital, believing that cash is not trash in the current environment.

With so many things that could go wrong in the world nowadays, it is probably not a bad idea to be slightly more defensive.

As an retiree investor for income, it gives me greater peace of mind to reduce beta or volatility in my portfolio.

This is done while ensuring that my investment portfolio continues to generate sustainable passive income for me now and in the future.

For sure, not everyone will find this path that I am on an interesting one as it is probably quite boring.

However, we can all come up with a plan to invest in bona fide income generating assets if we want to achieve financial freedom.

If AK can do it, so can you!

Related posts:
1. Update on saving for income.
2. CPF or Singapore Savings Bond?
3. Largest investments (4Q 2022.)

Update on my plan to save for income. Money I forgot I had. DBS SavvyEndowment11 and 3.92% p.a. guaranteed.

This is a quick update on my plan to save for income published in a blog at the beginning of April.

Back then, I said that I should be able to set aside $10,000 to apply for Singapore Savings Bond this month.

However, I have increased that figure to $22,000.

This is because a 5 months fixed deposit placed with DBS matured and I forgot I had it.

So, with more money at my disposal, I have decided to apply for $22,000 instead of $10,000.

Why $22,000?

If I should be successful in getting a full allotment, together with the $16,000 in Singapore Savings Bonds allotted in March, I would have hit $38,000.

$38,000 is the amount I had planned on setting aside for voluntary contribution to my CPF account in January 2024.

See:
CPF or SSB? No brainer?

I also made a non-competitive bid for the T-bill  auction closing on 25 April with $15,000 instead of $5,000.

Apparently, I had mistakenly thought that I had a T-bill maturing on 24 April when it matured on 18 April.

So, instead of completing soon, my T-bill ladder is actually complete.

See:
Ladder completing soon.

Finally, with some excess cash on hand, I decided to put some money in an endowment plan suggested by DBS Digibank.

This is a 2 years endowment plan that pays a guaranteed 3.92% per annum.

This is almost as good as the CPF Special Account's 4% per annum.

Endowment plans are really savings plans with a tiny life insurance component thrown in.

I just think of this as a pseudo top up to my CPF Special Account which I am not allowed to do anymore, of course.

The product is "SavvyEndowment11" and it is available to anyone with a DBS Digibank account.

Minimum amount required is $5,000.

The application process is very easy and fast.

This is not an advertorial but here is the link for anyone who might be interested in saving money: 

DBS SavvyEndowment11.

"A spokesperson for Hong Leong Finance said that rates for fixed deposits have generally dropped slightly in the past two months. 

"Singapore Overnight Rate Average (SORA) remains relatively high and inflationary risk will take time to ease. 

"At the back of an uncertain economic outlook, rates are likely to soften later in the year. 

"A Maybank spokesperson highlighted the impact of US Federal Reserve interest rate hikes on interest rates in Singapore. 

"As Singapore dollar interest rates have a positive correlation to the US dollar, we can expect that if inflationary pressures recede, interest rates should soften if there is a recession risk."
Source: CNA.

So, for anyone with a fixed income component in their investment portfolio, it is probably not a bad idea to lock in higher interest rates now, if possible.

Recently published:
1. More in equities or fixed income?
2. Tesla's results and valuation.

Reference:
Saving for income.

Final T-bill using fresh funds. Ladder completing soon.

3.75% p.a.

That's the cut-off yield for the latest 6 months T-bill auction.

I said in an earlier blog that a cut-off yield of between 3.65% to 3.85% p.a. would still be relatively attractive.

Plus the fact that the "interest" is paid at the beginning of the tenure, if we are able to hold till maturity, 6 months T-bills offer better returns than 6 months fixed deposits placed with DBS, OCBC or UOB now.

I will go ahead with the plan to apply for the next 6 months T-bill which will have its auction on 26 April when it is available.

That will be the final T-bill I will apply for using fresh funds.

Why?

My T-bill ladder would be completed by then.

This is because the first 6 months T-bill I applied for in October last year will be maturing on the 24th this month.

I will use the returning funds from that maturing T-bill to apply for the first T-bill in May.

Every two weeks from the 24th of this month, I would be recycling returning funds from maturing T-bills.

Therefore, no fresh funds would be required for T-bill applications from then on.

Well, at least that is the plan for now.

As long as the front end of the yield curve stays elevated, this should generate some pocket money for me.

Always nice to have more pocket money.

Since I would not be injecting fresh funds into T-bills, the passive income generated by my investments for the rest of the year will go into my war chest after deductions are made for expenses.

I am in no hurry to increase exposure to equities.

This is largely because I am already substantially invested.

I also don't want to be caught in a situation where Mr. Market goes into a depression and I lack the resources to buy stocks from him on the cheap.

So, do I feel like this because I can see a recession is on the horizon?

Alamak!

If you think like this, you need help.

OK, at least I am not the only one who is mental here.

No, I am simply doing what I have always done.

What might that be?

"Eat crusty bread with ink slowly."

Constructing a T-bill ladder helps to fulfill the "I" in "ink" which stands for "income."

Buying Singapore Savings Bond when the 10 year average yield is above 3% p.a. really helps to fulfill the "c" in "crusty" which stands for "CPF."

The "w" in "with" stands for "war chest" and I need to fill up mine.

If you are new to my blog and feel a little lost with my taste in food, I will hyperlink the relevant blog post below.

I think it is quite tasty.

If AK can do it, so can you!

Updated on 14 April 23 with a new video on the latest from MAS:

Recently published:
Lean F.I.R.E. since 2014!

Reference:
Eat crusty bread with ink slowly.

Related post:
Saving for income.

Saving for income: SSB and T-bills in April 2023.

In my 1Q 2023 passive income update, I reminded myself that my portfolio was able to generate more income because I continued to put money to work.

Specifically, money was put to work in bona fide income generating assets.

I was also saving more money as it has become a more rewarding asset to hold.

Using 6 months T-bills to save money rewards me immediately as the "interest" is paid at the start of the tenure.

Although T-bills accounted for a very modest portion of passive income in 1Q 2023, this component was missing in 1Q 2022.

Having another source of meaningful passive income is not only pleasing, it makes for a more resilient portfolio.

There is also a very high degree of reliability as T-bills are not only risk free, they are volatility free if we hold them to maturity.

Indeed, we don't have to be investing for income all the time as saving for income is also a viable alternative.

Although it could not generate any income for me in 1Q 2023, I applied for Singapore Savings Bond (SSB) last month and my $16,000 application was fully allotted.

I did not apply for the latest T-bill as I had decided to prioritize the SSB towards the end of the month in March.

That T-bill had a cut-off yield of 3.85% p.a. which was higher than the cut-off yield of 3.65% p.a. in the preceding auction.

The plan is to continue applying for T-bills this month as a cut-off yield of 3.65% p.a. to 3.85% p.a. would still be relatively attractive.

The plan is also to apply for this month's SSB if it should offer a 10 year average yield of greater than 3% p.a.

I think the Monetary Authority of Singapore read my blog.

It seems like I will be applying for the SSB.

I should be able to set aside $10,000 for the SSB and also $5,000 per T-bill application this month.

Although some experts feel that interest rates have peaked, now, with OPEC cutting back on production to prop up the price of crude oil, the outlook could change.

I have been very consistent in saying that I cannot predict what might happen in the future but I know for sure I can prepare for the future.

As an investor for income, this means putting money to work in income producing assets while building a war chest for in case Mr. Market goes into a depression.

I am happy that cash is no longer trash and that there is another way for me to be paid while I wait.

Saving for income has become more rewarding and it certainly gives me peace of mind.

For a more a complete picture of how I have been generating passive income, please read the related post below, especially if you are a new reader.

Related post:
1Q 2023 passive income.

Fixed income strategy: SSBs or T-bills? My plan.

I know I said I was going to take a break from blogging until end of the month before I blog about my passive income for 1Q 2023. 

However, my OCD grabbed me again, and this is an update on what I am doing in the fixed income space.  

Yields fell along the entire yield curve with the Fed's 0.25% interest rate hike decision recently.

It was lower than the 0.5% which Mr. Market thought the Fed would implement before the banking crisis unfolded earlier this month.

The Fed chose to defend financial stability with a smaller interest rate hike than to fight inflation with a bigger rate hike.

Mr. Market interpreted that decision by the Fed as relatively dovish. 

Apparently, Mr. Market is pricing in interest rate cuts to happen before the year ends.

This is despite Jerome Powell's statement that there would be no interest rate cut this year.

Well, Mr. Market's argument seems to be that if the U.S. economy goes into a recession later in the year, the Fed would have to cut interest rate.

Who is going to blink first?

Mr. Market or Mr. Powell?

Your guess is as good as mine.

The 6 months T-bill auction here in mid March saw cut-off yield declining to 3.65% p.a. from the 3.98% p.a. we saw in the early March auction.

So, what are my thoughts?

I am also expecting the U.S. economy to weaken and possibly go into recession before the end of the year.

In such an instance, yields are more than likely to decline.

So, if I can get some longer duration bonds with relatively attractive yields now, I think I should do it.

Instead of putting in a bid for the 6 months T-bill auction happening at the end of March with some incoming dividends, I have increased the size of my application for Singapore Savings Bond.

The Singapore Savings Bond offered in the month of March has a 3.15% p.a. 10 year average yield which is higher than the 3% p.a. average interest rate from the CPF for my age.

I am really not increasing allocation to fixed income here but diverting some funds which otherwise would have been earmarked for CPF voluntary contribution in 2024.

To reiterate, if Mr. Market is right and if the Fed is close to the end of their tightening cycle in the USA, then, there is more downside risk for yields, which are already on their way down. 

In such a situation, if we want to have some fixed income exposure, we might want to lock in higher yields in longer duration risk free and volatility free Singapore Savings Bonds while they are still available.

This is especially if I could get a higher return than what the CPF offers me.

Even with a lower yield, I am aware that the 6 months T-bill would probably give a higher than 3.15% p.a. cut-off yield.

However, given the outlook, my desire to lock in a higher yield for a longer duration outweighs my desire for a higher yield in the short term in this instance.

There is also reinvestment risk with the 6 months T-bill as yields could be substantially lower 6 months later if Mr. Market is right.

Having said this, I would most probably resume bidding for 6 months T-bill in April, especially if the 10 year average yield for Singapore Savings Bond falls below 3% p.a. 

This is a reasonable expectation with yields softening at all points on the yield curve.

6 months T-bill is still a viable option for excess cash which we would like to put to work in the short term.

However, if the 10 year average yield of Singapore Savings Bond were to fall below 3% p.a., I would be better off doing voluntary contribution to my CPF account for exposure to longer duration bonds.

It is good to know that, in case yields continue to decline, voluntary contribution to CPF remains a viable option for someone like me who wants to maintain a meaningful exposure to fixed income in his investment portfolio.

There is no hurry to do voluntary contribution to CPF since we are many months away from the end of the year.

Will see what the Singapore Savings Bonds offer in the next few months.

What I do in April in the fixed income space will depend on the what the Singapore Savings Bond offers.

If you are also interested in this month's Singapore Savings Bond offer, remember to apply by 28 March 2023.

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Ticketing for "Evening with AK and friends 2023" is ongoing.

Buy DBS, OCBC and UOB? March expenses and plan.

Long time regular readers of ASSI know why AK was able to do much better on the investment front in 2022.

It wasn't only because AK avoided the highly speculative maze of cryptocurrencies and the high growth, zero dividends high tech space.

AK reallocated resources to enlarge an already relatively large exposure to our local banking sector in his investment portfolio.

Investments in DBS, OCBC and UOB did most of the heavy lifting in my portfolio in 2022, raising my full year passive income above the $200,000 mark.

In 2023, for various reasons, income generated from my investments in REITs as a group will likely take a hit as most have reported lower income distributions.

IREIT Global, Sabana REIT, CapitaLand China Trust and Frasers Logistics Trust have reported lower income distributions while AIMS APAC REIT and Ascott Residence Trust have reported higher income distributions.

With higher dividends declared by DBS, OCBC and UOB, I am hopeful that they, in the worst case scenario, would be enough to offset the weaker performance of REITs in my portfolio.

Not hoping for an increase in passive income, year on year, I would be happy to see passive income in 2023 staying the same as the year before.

March is the first month of the year in which I receive more meaningful sums of passive income.

I have quite a few more bills to pay this month as I have offered to pay more recurring expenses for my parents. 

The recurring expenses to be added to the list are motor insurance and road tax for the family car.

I must pay for my own car's motor insurance and road tax this month too.

Those are the big ticket items this month, which, thankfully, occur only once a year.

Still, I would have some money left to invest with and, as I shared in an earlier blog, I plan to apply for the Singapore Savings Bond offered this month.

I plan to set aside $10K for that.

Then, with whatever money is left from passive income received in March, I had planned to get some 6 months T-bills as short term yields remain elevated and, therefore, relatively attractive for the income investor.

However, when I took a look at the charts of DBS, OCBC and UOB today, they look pretty bad in a good way, if you know what I mean.

For DBS, it is currently testing an important long term support and if it should break, the eventual target could be $32.00 and, if that should happen, I might buy more. 

I would be averaging up in such an instance, of course, which was what I did with my investments in OCBC and UOB in October last year.

If I wasn't already substantially invested in DBS, the current level seems like a good place to get a foot in, especially with a bumper dividend on the way.

For OCBC, I see a positive divergence as the MFI, a momentum oscillator, seems to be forming a higher low as the stock price forms a lower low.

This suggests to me that smart money is still accumulating even as the stock price stays above long term supports provided by the 200 days moving averages.

This could change, of course, and if the longer term supports should break, which seems unlikely in the near term, I would be interested to increase exposure at under $12 a share.

UOB, unlike OCBC, does not have a positive divergence and the stock price breaking a long term support is, therefore, not surprising.

Still, another long term support, the 200 days moving average is at $28.48 and, with momentum staying negative, we could see that tested.

If that should happen, if I didn't already have a significant exposure, I could get some although I would prefer to buy only when I see a positive divergence.

Fundamentally, all three local lenders are well capitalized and well run.

It now looks like Mr. Market could possibly offer me lower prices to increase my exposure to all three local lenders in the not too distant future.

So, instead of putting all the excess money from my passive income in March into T-bills, I might hold more cash instead, just in case.

For readers who have not visited my blog in a while, I published a blog yesterday regarding "Evening with AK and friends 2023." 

You might want to take a look if you are interested in attending.

See:
Evening with AK and friends.

Have a good weekend!

Related posts:
1. T-bills and March strategy.
2. March dividends and SSB.
3. Give parents enough money?
4. UOB and OCBC final dividends.
5. DBS special dividend.
6. Largest investments updated.

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.