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 invitied 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?
1:07:26 Is property and cryptocurrency a good investment?
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.