What did AK tell a reader who aims to save $1.8K a month?

Hi AK shifu,

I have been following your blog for quite some time now (2-3 years)! I am 26 this year and have recently graduated and will be starting work next week. Over the past few years, I have made some money from trading physical goods and right now I have a warchest of about 30k. Once I start work, after accounting for all expenses, I will foresee myself saving around 1.8k a month.

Over the last one year, there have been a couple of corrections and on hindsight, its easy to say "damn! i should have bought some". However, a part of me is telling myself to hold on to the bulk of my money till the market crashes so that I start off at a good position. I think that is important. 

I see myself as a 'lazy' investor, so I am looking to invest in telecomms, various gov linked services and perhaps some reits for passive income which I believe to have upside in the next decade or two (healthcare and retail). Could I get your opinion on how to time my entry with this little money I have?

On a side note, I like what you have been doing with your CPF monies....

Why are cacti able to grow in deserts?

Hi,

You sound like a very down to earth kind of guy when it comes to money making. You are also financially prudent.

As for investing for income, timing the market is difficult. Time in the market is easier unless you are not the disciplined or patient type or if you are using money not meant for investing.

Timing the market is not impossible though. It boils down mostly to luck. Did I know that the GFC was going to happen? No, I could not have predicted it. However, I could prepare for it. That is where our war chest comes in.

We cannot predict but we can prepare.

However, if we keep waiting for another GFC to happen (and quite a few people I know have been waiting for years now), all the while leaving our money in our savings accounts, then, it is a little silly.

While waiting for that big crash to come along which inevitably will happen one day, put some of our money to work with each correction in the stock market.

Do you believe in having some assets that do not move in the same direction as the equities market? My CPF money, I treat it as the investment bond component of my portfolio. A risk free, volatility free component which pays relatively good dividends.

I treat my CPF-OA money as the ultimate war chest only to be used in the event of a huge crash in the stock market as the opportunity cost of using it is quite high. I treat my CPF-SA money as the ultimate in investment bonds with an unbeatable coupon plus the magic of compounding.

I believe you will do well, given time. Gambatte!

Best wishes,
AK

Related post:
Graduating soon?

Why investors for income buy gold and silver?

It has been a long time since I blogged about having some precious metals in our portfolio and some newer readers might not even know I blogged about gold and silver before.


What do gold and silver have to do with investing for income?

Sounds like a scam?






If you think like this, congratulations! 

You will never fall victim to Geneva Gold and their friends!


Gold and silver coins can be mesmerising. 

I know. 

They look so shiny and beautiful. 

They twinkle, reflecting light. 

They look almost like they are winking at you.

I have a friend who fell so much in love with the two silver coins I gave him as birthday presents that he went and bought many more in different designs. 

I gave him bullion coins but he went and bought proof coins with numismatic value (i.e. worthy of collection). 

Oh, dear.


Anyway, why do I have gold and silver in my investment portfolio? 

Are they investments?






Many people say that we should have some precious metals in our portfolios. 

The late Dennis Ng had 7% of his portfolio in gold and silver, if I remember correctly. 


Dennis was concerned with the excessive money printing in the world and this is also why Jim Rogers says we should have some gold.


Fiat currencies are flawed. 

Governments around the world can print as much of their own money as they like. 

The supply is, theoretically, limitless. 






This infinite supply of paper money is unlike gold and silver as their supply is finite. 

Technology has not found a way to synthesize gold or silver.

Basic economics tells us that, over time, excessive money printing leads to immense inflationary pressure.

So, if you think that I buy gold and silver as an insurance against fiat currencies, you are right.






Of course, if we are traders, we can trade some gold and silver for profit. 

However, if we are investors for income, then, buying gold and silver requires an understanding that although precious metals are not income generating assets, they are probably important enough assets to keep some.

I can hear some protesting.


Yes, gold and silver are not income generating assets and it will even probably cost us some money to hold them. 

OK, even if we do not keep our gold and silver in a safe storage facility, we would still incur opportunity cost as the money used to buy gold and silver could have been invested in income producing assets instead.


Ouch. 

Yes, I know the feeling.

Do you believe in insurance? 

In the purest (and correct) form, insurance is an expense. 

It is not free of cost. 

It is not an investment. 

It doesn't generate income.

The elderly understand and believe in gold as they see it as a store of value.

I remember when gold got cheaper in years past, my grandma would go to the goldsmith to buy more gold. 

Not the best way to buy gold as I would have bought gold bullion coins instead but why did she think the way she did and did the thing she did?

I like to think that I understand.







So, should you buy some gold and silver? 

I suppose it will depend on what you believe in.


Related posts:
1. Where to buy gold?
2. Silver bullion coins.
3. Silver savings account.