Another Personal Finance and Investing Update

Apologies that I have not been posting any educational post lately. I have been procrastinating after finishing work each day that I did not really set aside time to do any reading or research. 

In this post, I will be making a quick update on what happened for the past 2 month since my last update in September.

Personal Finance – Thoughts on savings

I will cover two aspects in this section – namely saving and spending. 

I have not changed the cashflow allocation as disclosed in my last update as I feel that it is working fine for me at this stage. I will be allocating more to expenses if there is a need to adjust in the future. 

There are always reasons behind each action taken. These reasons motivate one into executing it. I shared in an interview that I was not born in a well to do family so I did not get to enjoy what other teenagers had when they were younger. I agree that I am envious of them at some point in life but it is useless comparing now as what’s past is past and I should focus on the future, when I am a parent, for instance. 

This is how I got my motivation and became passionate about finances at 16. Fast forward 5 years later (turning 21 in about a month later), I am confident that I am ahead of the race.

The stage where I saved aggressively should be the thing of the past as I come to a realisation that I have to enjoy my youth before I have to start work. We cannot earn back the lost time, it is time to change my mindset! Furthermore, the amount I can save will be a lot more based on the current allocation percentage when I start working in the future.

As a NSF myself, saving $10k might be a goal for some but it is not for everyone to achieve. One has to sacrifice significantly to achieve it. To be frank, I would have achieved saving $10k in 1 year 4 months, if not spending on the latest iPhone last month. I still have more big ticket purchases, such as a new laptop and an iPad to be purchased in the coming months to prepare for University. 

So what if you have saved $10k during NS, are you able to exchange it for the time you lost from the fun times you might have with your friends? However, to each their own, some might say that they are not missing out that much for focusing on saving during NS. I think the 2 years in NS is the best in everyone’s life because this is the freedom that everyone is dreaming of and should not be wasted to achieve monetary goals. 

Investing – Market at all time high, what’s next?

It has been very eventful for many investors for the past two months. Initially, the stock market rallied after the end of polling and was further boosted by the news of vaccines’ effectiveness. This resulted in sector rotation from growth to cyclical, making the DOW closed above $30k recently.

In recent weeks, the stock market has been in a fanatic mode as there is no obvious continuation of sector rotation from growth to cyclical as both are rallying. A look at the Fear and Greed Index shows that we are on extreme greed, the highest we have seen since the March crash. Based on the historical chart, the index will turn towards fear once it reaches extreme fear.

I am expecting a pullback after the end of Thanksgiving, which gives us an opportunity to add. This is in line with my strategy of exposing myself into US markets where my exposure in the US is now at 38.4%, an increase from 30.3% in September. This is because I recently added BABA at $265.50 after the news of anti-monopoly rules and the unsuccessful Ant Group IPO. 

Do keep a lookout for my next post where I will reflect on investing this year. 2020 is indeed a challenging year for investing and I think there’s a lot to learn from so stay tuned! 

Closing Thoughts

The recent run up in market has made me wonder whether I am too conservative and cautious to not initiate more positions. I think emotions are still in the play for myself, though I am able to resist myself from FOMO-ing.

As much as I am expecting a pullback, any significant dip should be good enough to initiate into new positions and to slowly add along the way. One thing that I need to change is to be more optimistic about the market.

If vaccination is confirmed, sector rotation will be more pronounced but I don’t think the tech will crash like the dotcom bubble (more like reversion to mean). This is why I am still not adding growth stocks in one single tranche so that I have bullets to average down if need be.

For now, we shall see how the market will unfold in the coming weeks and I will be happy to initiate more positions if it allows. Most importantly, be greedy (and more optimistic) when others are fearful.

Till next time.

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