Year In Review 2020 (YIR 2020)

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Another year has passed and 2020 was not the easiest for everybody. Allow me to write down some of my reflections of the year and how I intend to prepare for the year ahead.

Investment

I am convinced that I am unable to pick the right stocks. Hence, I have moved away from buying individual stocks and began an index based portfolio consisting of IWDA, EIMI and ES3. I had been consistently investing monthly into this portfolio since 2017. The portoflio wasnt very badly affected during the market sell-down in Mar 2020. Referring to Fig 1, the worst month was when the portfolio value fell by 7% at the end of Feb 2020.

Fig 1. IWDA + EIMI + ES3 portfolio P&L as a percentage of invested capital at the end of each month in 2020

Based on my experience, I believe that monthly DCA of index funds/ETFs is still the way to go for me. This approach takes away all the emotion but it requires discipline. However, I have accepted that approach will not give me exceptional gains nor losses. If you are intending to start a similar approach as mine, do not expect gains like Tesla’s phenomenal gains in 2020!

Towards the end of 2020, I also started to invest my SRS monies with Endowus, Stashaway and also LionGlobal All Seasons All Seasons Growth unit trust. I will write more about my SRS investment in a post in the future.

I took the opportunity to top up my CPF SA to the FRS (S$181,000) in 2020. I did this by transferring my OA to SA. CPF SA’s interest of 4% is a pretty good returns. If the rate of increase in FRS every year doesn’t increase beyond 4%, I will be able to meet the FRS amount when I reach 55 and formed the baseline of my retirement income.

Career

2020 was probably the worst year in my career. After the birth of my third child this year, I quit my job. The job that I originally signed up for was changed drastically without any communication and the environment had become unhealthy. However, I was able to spend a lot more time with my family and this was indeed a blessing. I missed much of the infant phase of my two elder kids, but I am very fortunate to see my third child’s infant growth phase.

Given the current market situation, it will not be easy to find another job. Sometimes, the situation is demoralising but sometimes it feels alright. Nevertheless, I shall perservere in my job search. I urge those who are in similar situation as I am in to trudge on and chin up. We will see the light at the end of the tunnel. We are almost at the bottom, how much worse can it get anyway!

Property

I have been renting for quite some time now. My wife and I were looking for a bigger home for some time. However, we have to rent as we were not able to time a new house before we sold our old house. Despite viewing many resale units, we have yet to find a suitable property with the right attributes at the price within our budget. Hence, we expanded our search for new launches and visited the showflats. The layout for one of the new launch was quite suitable for us and we submitted our cheque for the ballot. Despite a ballot number that’s not at the front, we were surprised that we were able to select our first choice unit. During this period, the cost of borrowing is actually pretty low and is quite ideal for buying properties. With the staggered payment schedule, this suit our situation nicely as I am currently not working. I guess it was fate that we managed to buy this unit. However, this also means that we have the rent for the next three to four years.

Moving Ahead

Fresh year and fresh beginning. On the career front, I guess I will have to continue to search and find the suitable job for myself. Despite being unpleasant experience in my previous job, I believe there are lessons that I have learnt. This also means that I will probably have more time to write more posts for this blog. If anyone would to collaborate on anything personal finance related, do drop me an email at finance4uandme@gmail.com to discuss further.

On the investment front, I will make changes to the constitution of my long term portfolio. First, I will divest ES3 at an appropriate time so that the core of my long term portfolio is IWDA and EIMI. This is because I feel that that volatility of ES3 is too small and doesnt allow me to maximise the benefits of DCA. Secondly, I will identify a few satellites ETFs to complement my core portfolio (IWDA and EIMI). 2020’s most notable ETF is the ARK Invest’s ARK Innovation Fund (ARKK) which experienced extraordinary growth in 2020. Hence, I will research and select suitable sector ETF(s) to complement my core portfolio.

Hope 2021 will be a better year for everyone and myself. I believe I will have more time on this blog this year and do contact me if you would like me to cover any personal finance topic.

Cheers,
Naro

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