Investment options

[mightyreds]

Hi folks!

I've been reading with interest on the topics in this forum and I must say it's a really good one. Kudos to Musicwhiz for setting this up. I think it's great to have a community of like-minded value investors here to discuss about good companies and businesses.

One thing it has always been bugging me is - where do value investors park their funds when they're not vested in equities? i.e after you have divested from a company after you've decided that it's fully valued esp. in the Singapore context.

We all know that the banks offer pathetic interest rates and FDs are not a good option as sometimes we need to invest the funds into another company once we have spotted a gem - and it can be anytime!

So I guess the criterias we're looking at are

1) reasonable returns - a least a couple of percent for parking the money
2) liquid - you can withdraw the money anytime (without loss of capital) to invest during a downturn
3) relatively low risk

I'm thinking of putting them in safe reits but I'm not sure if that's the best option out there.

What do you think are good options?

[Musicwhiz]

Hi Mightyreds,

Thanks for the encouragement! Though I'd like to add that Cyclone (Admin) was the one responsible for setting up Value Buddies; I merely helped out by being Moderator and starting some sub-forums and threads. So please give him due recognition too....

For myself, I park my opportunity funds in May Bank iSavvy account. It guarantees safety of principle but does not give an adequate return. But the key is that the funds must be accessible at any time and they should NOT depreciate in value; hence I will not park them in riskier assets or even a MMF.

Different strokes for different folks I guess.

[mightyreds]

Hi Mightyreds,

Thanks for the encouragement! Though I'd like to add that Cyclone (Admin) was the one responsible for setting up Value Buddies; I merely helped out by being Moderator and starting some sub-forums and threads. So please give him due recognition too....

For myself, I park my opportunity funds in May Bank iSavvy account. It guarantees safety of principle but does not give an adequate return. But the key is that the funds must be accessible at any time and they should NOT depreciate in value; hence I will not park them in riskier assets or even a MMF.

Different strokes for different folks I guess.

Oops! Sorry Cyclone! I missed that out and my apologies! Thanks for setting this forum up... it's really good!

MW: Just a thought, if your opportunity funds are parked in the isavvy for say 6-12 months, won't the opportunity cost be quite high? I did consider that but I just wondering if there are better low risk investments out there.

[Musicwhiz]

MW: Just a thought, if your opportunity funds are parked in the isavvy for say 6-12 months, won't the opportunity cost be quite high? I did consider that but I just wondering if there are better low risk investments out there.

Well, I don't look at it that way, because if there is nothing worth investing in, then it's better to park your money in such an account waiting to be deployed. Opportunity cost is one thing, but if one makes a mistake with deploying his cash then it would be more detrimental to his wealth as compared to just lost opportunities. So I'd rather make the mistake of omission, than make one of commission.

Hope this explains my stance.

[mightyreds]

Well, I don't look at it that way, because if there is nothing worth investing in, then it's better to park your money in such an account waiting to be deployed. Opportunity cost is one thing, but if one makes a mistake with deploying his cash then it would be more detrimental to his wealth as compared to just lost opportunities. So I'd rather make the mistake of omission, than make one of commission.

Hope this explains my stance.

Thanks for giving your rationale. In that case it's not a mistake, but rather a justified omission.

Hope to hear from others what they do with their opportunity funds!

[Zelphon]

Me 90% vested inequities already..

Accumulating opportunity funds for the next correction...

It is indeed tough to resist letting your money rot in the bank to wait for opportunity..

[Musicwhiz]

Me 90% vested inequities already..

Accumulating opportunity funds for the next correction...

It is indeed tough to resist letting your money rot in the bank to wait for opportunity..

It's true and I agree. It's tough psychologically to let your money "sit and rot". Then again, patience is also one important attribute for successful investing - to be able to amass enough funds to bet BIG when the opportunity presents itself; that is the way to capitalize on value and grow your money in a sustainable way.

[kazukirai]

Hi Mightyreds,

for me, I put my OP funds in both a StanChart e$aver and POSB MySavings a/c.
Mainly because I want it as liquid as possible while sourcing out bargains. Admittedly, the returns of holding it in cash is very low but as MW has put it, for me, it's also about preservation of capital.

When you talk about putting your 'waiting to be deployed' funds in 'safer' instruments such as REITs, my observation (and I could be wrong here) is that when the world goes to hell as it did in the last two years, you're going to find that even your 'safe' REITs may not be so safe. Neither did so-called hard assets e.g. Gold provide a safe harbour for returns. So even if studies show that asset allocation/rotation can provide you with the biggest gains, the question more correctly would be 'how sucessful is one able to do so?'. Even more so as a retail investor, I constantly ask myself that.

In sum, for me, a good defence is my best offence. Preservation of capital is key.

[PassiveReturns]

I'm thinking of putting them in safe reits but I'm not sure if that's the best option out there.

I agree with kazukirai reits will not be safe at all during a severe downturn, depending on the gearing and the amount of free cash flow they have during the tsunami.

I think there was a similar discussion here --

http://www.valuebuddies.com/Thread-How-a...es?pid=533

[goat]

mine is placed in fundsupermart - FIDELITY ASIAN HY AMDIST SGD-HGED funds (although its more risky, but comes with monthly dividends of around $0.005) about 6% pa.