See also
Note this post is Not about contingency reserve (see other blogpost.)
Context — in https://tanbinvest.dreamhosters.com/24246/make-your-money-work-hard4u/, some investment advisors (such as Claris of HSBC) seem to suggest that having more than “12x” is non-optimal. However, as of Dec 2021, I am unconvinced. 12 x 6k would be a paltry 70k. With such a small idle cash reserve,
- I couldn’t take advantage of the $2k bonus from SCB
- I couldn’t consider any premium financing deals
- I may not be able to sink 15k into SRS to optimize/reduce my income tax. 15k reduction in cash reserve is probably too big when I find myself in a (minor) cash crunch.
- The downpayment of a new home (hypothetically) 5 months down the road would amount to 200k and require an expensive bridge loan, unless we have lot of cpfOa. There is also up to 60k of other costs
- ^^ mostly investment opportunities to be lost
I have other blogposts on “too much SGD”. Now I think 300k is fine. I told YC that I want to keep 100k under my name, and another 100k under wife’s name.
YC said the standard advice on contingency planning is “6M worth of expenses”, excluding big-ticket purchases. Contingency is about livelihood needs, and therefore a multiple of expense, not a multiple of income.
Conclusion — for contingency reserve, a multiple of monthly burn rate is appropriate. For investment cashflow, this multiple is useless. Instead, I prefer a dollar amount.
— 100k + 100k for rEstate deal
For MAPIC Aus/UK properties, I promised wife I would keep 100k under wife’s name, and 100k under my name in case the deal becomes a crying baby [need more blood transfusion]. (Someone like P.L may not need this kind of buffer, but only because he is an experienced risk taker, and knows better about what risk he is taking.)
For SgCP, I think she would agree to let me use part of her 100k, but look at the paradox in divStock ^ investmentProperty: would I invest 300k.
MOETF is bite-sized. The 100k Cambodia quantums are also manageable. In contrast, another unit in 2022+ would be too big to chew. My net LIR exposure is already very big. Some (ambitious) Singaporeans don’t worry about “too much to chew” and don’t mind the big quantum … Bad influence!