This post stuck with me for weeks in draft mode before I have the courage to release it. Reason being I feel stuck in current portfolio setup. This is finally released when iReit Global release the rights issue today. Read on ...
For the past few weeks, I was wishing to squeeze more juices ( cash ) out of my portfolio lately but feeling quite difficult. On one hand I need to watch for dividend returns and the other holding to some core positions that I don't want to sell. However with current listless market in SG and turmoil in US Market, there maybe opportunity for some low hanging fruit pickings if we are to see major tech correction happening which may pull the whole market along.
|Still in Transition Chart|In-addition, the lines blurred between what can be use for investment aka War Chest and what is Reserve for Emergency or other needs. Therefore I decided to create a segment called Investment accounts. This will be my War Chest which is also primarily cash holding area for stocks sold as they are separate accounts from saving. In POEMS account situation, it is also Money Market Fund therefore not idle in returns. Above is still in the work. Here's previous update ( link ).
With this iron out, is clear to me what I can do with each accounts.
Saving and Fixed Deposits
I could explore some of my fixed deposits and see which I can terminate earlier now. After reviewing the 4 batches I have with DBS Bank, one of them expect to expire next month. Remainder on Year 2021. Since there is a large one near expiry, i will wait it out. This will release some funds.
In-addition, I also have some cash saving in foreign accounts and some amount will be moved to investment accounts.
Reprice my Housing Loan
Just found out the deal today. Is quite a significant downward adjustment by DBS. Other than the lowering interest rate another reason I suspect is the coming competition of Digital Banking. Not surprisingly the lock-in period extend to 5 years but the fixed package is attractive now with flexi after. This do gives peace of mind for years to come.
The downside is that FHR24 after 5 years can be tricky as such a long period usually drives higher rates even though currently is lowered. I guess mitigated by one free conversion. Overall this will reduce my monthly repayment loan some but won't see a sudden cash saving. However the cash reserves need to support this loan will be reduced quite drastically as I have more than 5 years of emergency funds currently parked for it in SSB, Cash and Fixed Deposits.
DBS just told me i need to wait a few more months more before I could re-price as the penalty for breaking current loan contract is high. I will wait out as is not pro-rated. Expects to Save $333 monthly or $3996 annually !
I borrowed a little money from my own CPF account that time to give myself a slightly larger boost in cash flow when I purchase my investment property. The more i look at it especially at current low interest rate, the more I feel the decision is bad as the Accrued Interest i need to pay back is growing as the cost is widening. I should return the borrowed back to my own account. It doesn't make sense for me to earn fixed deposit of less than 1% and need to pay back 2.5% to CPF Account. And if I have to shift the returned money to SA account, the cost is even wider ! What am I waiting for ..... . Ok need to work on clearing it. Maybe 10k at a time till zero. First I need to get my eNets working ...
On conservative level, I am able to generate about $58k ( comes down to 53.5k after some iReit Sales ) of dividends and with the additional $4k contribution from SSB will then totaled $62k (57.5k). SSB is where I reserve for housing loan, with current dividends, I reckon there is no need to have too high a bond allocation now. Hence I plan to reduce my Fixed deposit and Cash level amount instead since SSB provide better rates.
Usually i don't specially manage the reinvestment of dividend received. It will just go into my saving pool and manage as portfolio injection. So is opportunity based. I will be slowing down my procurement and keep most of the juices in Investment accounts.
Child Development Account
Just top up $6k through account transfer recently. However only the first 3K will be matched. For POSB CDA, up to the first $50k will enjoy 2% Interest rates. So currently she has at least 12k after Baby Bonus Matching and initial 3k grants. There are restriction of use so this cannot be classify as emergency fund. Unused sum will continue to progress to different level of account as the child grows. So is a long term thing but the rate will change. Something to note of. In-addition I have propose to my wife on possible CPF top-up for the kids as she is wanting for some form of saving for them.