2020 is a year to remember, or simply forget. Covid-19 struck and everyone's plans have been tossed up in the air - from planned travels, career switches, to even the basics of being able to properly plan for finances.
As some of us are forced to re-adjust our lifestyles and our spending patterns to the new Covid-19 paradigm, we have invited a group of personal finance leaders to discuss the best and worst of money management and investing 2020.
3:38 Discussion: What is your greatest money management problem in 2020
5:12 Introduction to Endowus
13:19 Introduction by the bloggers
20:50 Managing your finances in 2020
27:34 Worst mistake about cashflow management
32:05 Recap on 2020 Financial Markets
38:22 Biggest Investment Mistakes
44:08 Importance of experience and perspective in investing
49:48 Readers' questions during the pandemic
58:00 Should we invest our CPF with market uncertainty?
Excerpts from the Webinar:
What are your biggest money management regrets in 2020?
Dinesh: Hindsight is always 20-20, everyone would have something that they wish they could have done better. I would like to have a bit of cash buffer to take advantage of the market drawdowns
Derrick: I think the biggest mistake for me was spending too much on brokerage charges. I counted that I've spent close to several hundred dollars on brokerage this year. I realised that buy and holding is the better strategy unless one can perfectly time the markets. Going forward will be looking to reduce excessive active management of my portfolio.
Peter: My mistake was in hoarding/buying too many air miles. I hoarded a lot of miles and had plans to travel with my wife and extended family this year, so last year I had purchased S$10k worth of airmiles. On top of that, I have been accumulating credit card miles for the past 6 years, so I currently have 1.6million miles on balance. That's roughly 8 roundtrips Biz Class tickets to New York City, worth around $50,000 in value.
Miles are a depreciating asset. It doesn't earn any interest and you face the risk of devaluations. So it's a bit like buying a car. In short, I had locked up cash which could have been used for investments.
What are your biggest investment mistakes in 2020?
Dinesh: This is the first major crisis for many of us who have invested. We have enjoyed almost 10 years of bull markets in history. I had most of my money invested. For me, following through my investment strategy is very important, unfortunately I run out of money to average down. I bought and held on to my investments
It is quite scary to see investments losing that much value at that quick a rate. Losing 50% on a $10,000 investment is not that painful, but if you have $1 million in the market, then the absolute amount of money lost can be a shocker for most people, especially retirees. Having like Endowus or a mentor and someone to coach you along the way is important.
Peter: The best time to invest is when there are forced sellers. I invested in stocks and high yield bonds at that point of time. T During the March-April period, there were margin calls occurring and that typically signals a good buying opportunity if you are not yet in the market.
To decide how much to invest in March, I looked at how long it took for the stock market to bottom in Singapore's prior four recessions. It took 9-14 months for the market to bottom from the onset of the first negative GDP print. I had a rough estimate that the stock market would have bottomed around Sept 2020 to Feb 2021, and my strategy was to buy 10-15% of my full intended investment amount per month. If the market was still weak in Feb 2021, I was open to using leverage to invest.
In retrospect, I should have been more aggressive in adding exposure in March.
Get a head start on financial literacy & general investing by watching our Investing 101 with Endowus 4-part series here.
Investment involves risk. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Past performance is not an indicator nor a guarantee of future performance. Rates of exchange may cause the value of investments to go up or down. Individual stock performance does not represent the return of a fund.
Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this material are subject to market influences and contingent upon matters outside the control of Endow.us Pte. Ltd (“Endowus”) and therefore may not be realised in the future. Further, any opinion or estimate is made on a general basis and subject to change without notice. In presenting the information above, none of Endowus Pte. Ltd., its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider (i) whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. You may also wish to seek financial advice through a financial advisor or the Endowus platform and independent legal, accounting, regulatory or tax advice, as appropriate.