Most important investment idea from "Evening with AK."

Producing my latest video on Singapore banks made me think about questions from a few readers during "Evening with AK and friends 2023."

Although they were different questions, I could thread them together as they had something in common.

This could be the most important investment idea participants could take away with them that evening.

Someone asked me if I already had a very large position in a good investment, would I add more to it or look for other investments?

I said I would rather stick with an investment that was doing well and was likely to continue doing well than to go look for another investment which I was unfamiliar with.

I likened it to having a good wife who took good care of me and cooked for me everyday.

In such a situation, why would I go look for a mistress who might not know how to cook and I might have to cook for her instead?

Why look in far off places for gems when we could find them in our own backyard?

There were members of the audience who asked if they should invest in US REITs and a couple of healthcare REITs listed in Singapore.

I could have answered those questions using the same analogy.

We don't want to diversify just because we think diversifying is a good idea. 

As Peter Lynch once said, we could end up "diworsifying".

We are likely to find it easier to make better decisions and far less likely to make mistakes when we compare a potential investment with a good investment we already have in our portfolio.

See the "wife and mistress" analogy?

Of course, as an investor, we could be polygamous, so to speak.

A member of the audience asked me what should he do with investments suffering paper losses?

He further told me that they were not paying dividends and could end up asking for more money from their investors.

That sounded like a nightmare that's worse than Tesla or Alibaba. It sounded like GRAB.

Sometimes, we must simply bite the bullet, accept that we made a bad decision and get a divorce.

Sometimes, to be fair, it was not a bad decision to begin with but things changed for the worse over time.

A divorce could be costly but it isn't the end of the world.

Pick up the pieces and life goes on.

Then, a member of the audience asked why did I put money in Lion OCBC HS Tech ETF since it did not pay a dividend?

I am quite sure I blogged the reasons why I did it but to thread it with the theme of this blog, I would have some fun now.

Sometimes, although investors are polygamous, we might get bored with having the same partners.

So, we go out looking for fun.

When we go out looking for fun, please remember to keep it that way.

"Milk the cow to drink the milk but don't bring the cow home."

Translated from a Chinese saying.

Don't let something which is supposed to be fun become something "ma fun" which means "troublesome" in Chinese.

I know what some might say.

"It's complicated."

How difficult is it to drink milk outside and not to bring the cow home?

In my opinion, it becomes "complicated" if the cow is brought home.

Before I get carried away, back to the ETF.

So, the ETF was something I bought for trading because its price became too enticing to ignore.

Fortunately, I made money not once, not twice but thrice doing it.

I even said in one of my blogs that it reminded me of why I did so much trading in my younger days.

So, do you see the common thread?

Something to chew on for the weekend, maybe?

Now, a nice way to end this blog is to remind myself why would I want to add to my already significant investments in Singapore banks?

I will remind myself why with my latest YouTube video.

Hope you Like the video. Hint, hint! ;p

If AK can do it, so can you!

Related post:
Hope you enjoyed "Evening with AK."
Recently published:
1. Fixed income update.
2. Why AA REIT?

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.