It's been four months since I last updated my blog.
That's how boring personal finance can be when you build a system around your money. At the start of every month, a portion of my salary is systematically moved into saving goals and another portion gets transferred to AutoWealth to be invested in my investment portfolio based on the asset allocation defined in the platform.
The only thing I need to do is to ensure that I do not overspend the remainder.
That freed up my time to focus on improving the other aspects of life such as both my physical and mental health.
But in this post, let me give you an update on some of the changes in my life.
Making a career switch
I've been happy with my job for the past 4 years but a recent reshuffle within the department has moved me into a role that isn't very interesting to me. While I'm not financially independent, I would like to think that having a strong financial standing made it easier for me to decide if I want to stick around and spend my time into a job that isn't that interesting.
I gave it a my employer a 3-month probation period to see if I would warm up to the new role and unfortunately it didn't. Hence a new job search ensued.
I have been very fortunate in my career journey because I started out as a digital marketer since Day 1 and the accumulated work experience in different companies across various industries allowed me to build up a skill stack that made me desirable as an employee to many companies.
By simply switching on the "Open to work" feature under Job Preferences in LinkedIn has increased the number of job opening messages I received from recruiters on behalf of their clients.
However, I soon found out after a few interviews that my employer was paying me rather well for my role (I would like to think I performed well enough to deserve the salary) and other companies who are hiring for similar roles were unable to offer a 15-20% increment above my current salary.
Expecting to be paid 15-20% more may be deemed unrealistic by some people and I recognise that I'm in a very privileged position in the current pandemic situation. That's not to mention that recruiters seem to assume that everyone should be happy to jump ship for a 10% increase in salary.
But because I have spent time and effort to build up my financial safety nets and career skill stack, I know what I'm worth in the job market and want to extract the best monetary value in exchange for 40 hours of my life each week.
Instead of continuing to interview for similar roles again, I went back to the drawing board and identified job opportunities that are different from what I am doing right now, but have similar job and experience requirements to my current role. I would then have transferrable skills from my skill stack that would give me an edge over other candidates who are intereviewing for these job opportunities.
I eventually landed myself in a new role that moved me away from the digital marketing department into the IT department. Instead of being a digital marketer, I now provide consulting services to digital marketers to help them run more effective campaigns and strategise new ideas to increase their marketing capabilities.
Financially, I now make 40% more than my previous job and that because I don't need that money, most of that salary increase goes into my investment portfolio each month.
TL;DR: Always continue to improve your career skill stack and be open to adapt to career moves that may place you in different roles that you have transferrable skills for.
Exiting the P2P lending space
I first started investing in P2P lending with Funding Societies in March 2019 and the performance has been extremely mediocre. After about 2.5 years with the platform, I finally closed my account with a 2.5% return after such a long time. It was both a waste of time and money with Funding Societies.
My learnings from this experience is that, in order to have a low default rate in your P2P lending portfolio, you should ideally have 200 quality (guaranteed or secured) P2P loans at any one time so that 3-4 defaults at any time would result in only a 1.5% loss. Because Singapore is such a small market, it is close to impossible to build up a portfolio of that many P2P loans.
In my opinion, I feel that Funding Societies does not have a strong KYC and credit checking procedure to gatekeep investors from both frauds and borrowers with high default probabilities. I had a total of 4 loan defaults where 3 of them were from the same company.
While the whole experience has been disappointing, I would like to think that I have learnt a lot about P2P lending in the process. I'm just glad that I managed to close this chapter without losing anything other than opportunity costs.
Upgrading my automated investing process
Most of my cash portfolio has invested through AutoWealth since October 2017 and I love their simple and automated investing process. On top of that, I can verify my portfolio holdings through the Saxo monitoring platform to be certain that every dollar invested through AutoWealth has gone into my portfolio. Investors of other robo advisors like Stashaway and Syfe will not be able to say the same.
I also love that AutoWealth does not try to actively manage my portfolio like Stashaway and Syfe where every change in their portfolio seem to have resulted in a much poorer result.
AutoWealth has generated ~10% time-weighted annualised returns on my cash portfolio since inception and as a lazy investor, I am quite pleased with the returns.
I have first started investing $10,000 with AutoWealth it has grown to a 6-figure portfolio after 4 years. Naturally the quarterly fees have also slowly increased with the growth in Asset under Management (AUM). Now I'm paying ~$400 per year. If you think of it, the fees is really very minimal in the grand scheme of things but as I am ramping up on my monthly DCA investing budget with the new job, I would expect the fees to increase at a faster rate in the next few years.
When I first started investing with AutoWealth with $10,000 in 2017 and only was able to DCA $1,000 each month, it was one of the most efficient way of investing in low-cost index ETFs with an automated investing and rebalancing system in place. Now in 2021, the landscape has changed with more robo advisors and automated regular investing products. We even have Interactive Brokers who expanded into Singapore in 2020, making DIY investing much cheaper for the average retail investor.
Now that I have a sizable cash portfolio and will be increasing my monthly DCA investing budget, it makes a lot of sense to now explore the way I invest today and upgrade my systematic approach.
After doing my research for the past month, I think that I am ready to migrate my cash portfolio from AutoWealth to this new system. If it all goes well, the new process should be as effective as most robo advisors but way cheaper. I'll test this out for the first half of 2022 and if it works well, I will write another post to elaborate on how the system works.
Thanks Brandon for your contribution
Part of the reason why I haven't closed this blog is knowing that some of my articles and tools are making a difference to my readers' personal finance.
Last week I received an email from a reader, Brandon, who found my CPF Tracker useful and helped him save a lot of time in projecting how his CPF would look like in future. He wanted to make a monetary contribution to this blog.
As I am still earning income from my employment and didn't really need the money, I promised Brandon that I would match his donation, dollar for dollar and donate it to a charity that I support.
Brandon made a donation of $5 via PayNow and on top of matching his donation, I decide to make a $50 donation to Make-A-Wish Singapore. Make-A-Wish Singapore is a children's charity organisation that creates life-changing wishes for children ages 3 to 18 years old with critical illnesses. I find what they do rather meaningful and am happy to support the great work that they are doing today.