Cash Management Update: Topping up FSMOne.

I had previously written about my cash management strategy which is perhaps not optimal and reflects a certain "laziness" on my part as I don't spend time chasing the best interest rate available. 

While my plan was to 'freeze' my cash holdings, the amount of cash has been creeping up because I can't bring myself to invest my entire cashflow into equities. Perhaps out of habit, I always 'save' a portion of my cashflow as cash - though I would add that a big market crash always sees a reduction in my cash holdings, as I like to buy after a crash.

One justification for doing so is that from an asset allocation perspective, saving a portion as cash ensures that my cash holdings is a certain % of my total portfolio.

At the same time, if there are easy improvements to my cash management that take very little effort, I should try to implement them.

I have decided to make the FSMOne auto-sweep account one of the places where I am going to hold my cash savings. I have been slowly topping it up further and my target is to start with $75k in it. 

In terms of liquidity, if I need to move the cash out of the iFast platform, it will take a few days. But if I need the cash for a stock market buying opportunity, it is instantly available in FSMOne to purchase SGX, LSE, HKSE, NYSE etc shares, so to that extent there is 'instant' liquidity.

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Previous cash management post for reference: BuyafterCrash: SSB T-Bill Cash Strategy

April Strategy: Europe's turn to outperform?

 

You can discern from my Portfolio page that I am overweight UK and European equities which has resulted in underperformance in the past. It is not because my UK/Euro equities lost money (they are also overall green thanks to my top Euro holdings being ETFs, Financials and Commodities). It is that I tended to pick Euro stocks that are supposed to be boring dividend payers rather than growth stocks with higher expected capital gain.

While I have Vodafone in the red, it has not been one of my top holdings though I have been adding to it after it crashed further, as I had mentioned in an earlier blogpost).

I was cheered by the fact that European markets have moving up slowly and steady with the UK FTSE 100 hitting a record. 

As a result, there appears to be a marked divergence between my portfolio performance and Vanguard World. I predict that our local forums and maybe even some local bloggers will start posting about investing in European stocks (eg: late to the party / FOMO sort of posts like "XXX has risen 100%, should you still invest???")

However, I will never underestimate the power of the S&P500, which means that I will continue to put at least 50% of my free cash flow into World/US ETFs.

Strategy: April 2024 - REIT 'correction'

 While Global Indices show a slight down trend, SG REITs have been falling sharply.

Today, Frasers Logistics Trust ("FLCT") went below $1.00 and I am happy to accumulate more under $1.00 so I bought more at $0.97. My average buying price is above $1 so this is one of my 'red' counters. 

I had noticed that earlier this week, a lot of local bloggers have been posting about SG REITs and some even shared their purchases of local REITs. That is usually a sign that there is going to be a correction. 😐

Nevertheless, I feel that fair value is above $1 so I will continue to accumulate at current prices. Previously I mentioned it was ok to buy even between $1.01-$1.05 and had been buying in that price range as well.

At the same time, I also bought more VWRD last night. As mentioned many times, I have resolved to be disciplined about adding to both my Global ETF holdings and individual stocks. 

Long time ago, I may have gone all in on cheap SG REITs but now, I am more diligent about dividing my purchases between individual stocks and ETFs. 

Comfort Delgro price rally

 

I have been holding Comfort Delgro for the longest time since the GFC. After the price crashed in 2022 and 2023, I have been accumulating more since I find it easier to buy good shares when their price is below my original buying price. This is sunk cost fallacy at work, and I freely admit that I'm susceptible to it. 😊

When it comes to reasons to buy Comfort Delgro, there seemed to be quite a few. The EPS crash during COVID was terrible but there was nothing preventing it from recovering to pre-COVID levels, in which case CDG would be seriously undervalued. The company generates steady cashflow in an industry where the Capex is not too high (compared to say Telcos). The barriers to entry come from the regulatory environment where the company has to bid for contracts to operate transport routes. Grab/Uber was no doubt a disruptor but the threat is receding as there is only so much cash Grab can burn before investors start insisting that they make a profit.

As you can see from the chart, there was a major crash in June 2023 where I think the price touched $1.00 briefly. So in June 2024, the 1 year performance of C52 will shoot up to the 40%++ region. Which is an illustration of how to 'cherry-pick' time periods to present a more favourable return.

Next recovery I am waiting for is Singtel. The rumours that they are planning to sell Optus have pushed up the price in recent weeks.

SIA 3.03% bonds redeemed!

 

In 2019, I subscribed to $85k of SIA 5-year bonds. Last week, SIA redeemed the bonds and I got all my money back.  

In 2020 after COVID struck and I was running out of cash to invest, I sold about half of bonds at slightly above $1 to fund more stock purchases.  

So at the end of the day, the bonds did their job which was to preserve wealth and provide a source of liquidity to buy stocks. 

Unfortunately, the market for retail bonds have dried up. Temasek is no longer issuing Astrea PE bonds as well. On the flipside, T-bill and cash management account rates are pretty decent. As I'm not very sure what to do with $45k, I will park it in the FSMOne cash management account to earn 3%+ for the time being.

Collecting passive income means that you have lots of cash entering your bank accounts every month, so you have to be prepared to spend a little bit of time doing cash management. Its not that hard as all you need to do is to park them in T-bills or in 3%+ cash management accounts like FSMOne. 

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Original Post: BuyafterCrash: SIA 5 yr 3.03% bonds