Friday 11 July 2014

Blending Cash and Equity together

When you drink Chivas Regal or Johnnie Walker whiskey, do you know they are blended whiskey?

Blended whiskey is the product of mixing one or more higher-quality straight or single malt whiskies with lighter spirits and water.

And no, the best whiskey is not always the "pure" single malt kind. Wink.

Most people only consider black or white choices. Left or right? Yes or no? 

When it comes to investing, some can be very polemic - like "cash is rotting in the bank".

See below chart for something interesting:

Was it what you expected?

Can you figure out why most veteran retail investors/bloggers have some kind of opportunity fund war chest?

And no, emergency fund is separate from opportunity fund. They serve 2 different purposes.

This is nothing new to most fundamental investors, especially if you are business financed trained. 

If fundamental investors can enjoy reading boring Company Annual Reports, they can pretty much sit down and do their own reading and research into Portfolio Management.

How cash and bonds in a portfolio can reduce the volatility by quite a bit.

What if you don't like reading and studying (that's why you're not fundamental investor)? 

Well, there are a few options:

1) Talk to a financial adviser you trust - those got CFA behind their names OK? But whether they want to charge you a fee or do it for free (but sell you stuffs) you decide.
2) Buy your favourite finance blogger coffee and see if he/she can help answer your question. 

There's a bleeding heart that spoils market by giving "advice" for free. If you have to ask "who?" you are not part of his/her circle. It's always good manners to have a relationship first before asking something for free. Wink.

3) Crash got sound. Just like drinking coffee, some don't add sugar, some add 4 cubes of sugar. You'll find out how many cubes of sugars that's right for you by trying it out yourself. No plan, no knowledge. Just do first; figure it out later through stumbling along.

P.S.  This works whether you are planning for your retirement, journey towards financial freedom, investing for your child's uni fund, or saving towards that deposit for your dream private property.


  1. U like Monkey shoulder?

    1. pf,

      Oh! I'm not a drinker.

      Don't smoke. Only buy Toto and...

      But love to sip sip the taste of liquor.

      Miss the old days when SQ will give out quaint little bottles of liquor for me to try them out. I still have some as mementos.

  2. I enjoy drinking especially beer.

  3. Thanks Smol for your timely advice.

    I showed my wife what you commented on my post and she appreciates it a lot.

    1. B,

      You're welcomed!

      It's people first,

      then money,

      then things. (Stolen with pride from Suze Orman)

      I'm well "domesticated" by the women who crossed into my path ;)

  4. No beer now?

    How you survive those years in Europe without beer influence?

    When I was attending 2 months training course in Munich, seeing those ang mo drinking beer during their lunch breaks in the company canteen. Beer is just like ice water. LOL!

    1. CW,

      I am known as the Coke guy. There's always a glass of Coke light or zero on my desk at work.

      I heard Warren has his Cherry Coke; unfortunately, drinking Coke like water does little to my investing prowers :(

      But at least my intestines are super clean! Hawkers use Coke to clean pig intestines to remove the "smell" for "kway chup" ;)


    2. My youngest son is Coke son. Even his aunties have to keep a few cans of Coke for him during CNY house visits.

      Coke is addictive!

    3. CW,

      Yes, what is life without some addiction?

      I am addicted to coke, coffee, instant noodles, beautiful women...


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