The first step towards rebuilding my investment portfolio after a shocking S$540k loss in options trading is to max out my Singapore Saving Bonds (SSB) account to the cap of S$200k. In this article, I will explain the reasons for doing so and how I plan to buy SSB over the next 6 months.
I Was Margin Called, IBKR Liquidated ALL My Positions & Realised S$540k (USD400k) Worth Of Losses
Why Singapore Savings Bond (SSB)
Buying SSB at an average of around 3% interest per annum may not seem too attractive for some investors as they can easily earn a 5% ~ 6% dividend yield by investing in REIT or bank stocks.
However, what I like about SSB is that, unlike stocks, the capital is guaranteed, as well as the interest, for up to 10 years.
While there may be a chance of capital growth for dividend stocks, the capital is not guaranteed, and the stock price can fall drastically in a stock market crash or when something fundamentally wrong happens to the company.
The dividend yield may also increase or drop, depending on the company’s performance.
For SSB, capital and interest are guaranteed as long as you hold them, up to 10 years from the date of purchase.
SSB can be withdrawn any time during the 10 year tenure (within a month’s notice), which makes it an excellent choice as emergency/ contingency funds.
I previously assembled $120k of SSB which I bought during the higher interest period of 2022/23, but I cashed out half to pay for the deposit of my new house and thus, my SSB allocation is now at $60k.
The bulk of my savings was stuck inside my shares. While they were profitable, I could not withdraw them out as they were locked by the options contracts. So, I had to cash out my SSB instead.
The SSB Ladder Strategy
I plan to max out my SSB allocation not all in a single month but progressively over the next 6 months, using the SSB Ladder Strategy.
Every SSB pays out interest once every 6 months, and using the ladder method, I will get monthly payout (passive income) for the next 10 years.
I will keep each month’s allocation to about 33k. The monthly payout should be around:
200k x 3% pa interest ÷ 12 = 200,000 x 0.03 ÷ 12 = $500
This is my current payout based on a $60k SSB Portfolio and the red line is what I aspire to achieve when I have fully invested $200k into the portfolio:
$500 may not seem a lot of money but it is good enough to help offset some grocery costs, and at the same time, there is a substantial amount of reserved funds parked aside for contingency purposes.
Concluding Thoughts
I wanted to max out my SSB allocation as part of my new investment strategy to build a strong investment base that is made up of safer asset classes such as CPF, bonds (SSB) or property.
Thereafter, if there is any excess, I can put them into riskier assets such as equities, which can still sub divide into index funds (ETF), dividend stocks, and growth stocks. The smallest capital allocation will be on high-risk asset classes such as options or crypto.
I realised that my mistake previously was to put too much capital (more than 75%) into equities and options, which led to poor cash flow as the money is all locked up and I was not able to sell the shares for cash, due to the circumstances I was in.
Take, for example, the bear market of 2022 caused all the share prices to drop significantly, and selling the equities back then for emergency use would result in heavy loss of capital.
Things get complicated when options trading is involved, especially in the scenario of selling Covered Call, whereby the underlying shares can not be sold until the options contract is closed. Having placed the wrong trade can lead to huge unrealised losses as well.
Lastly, whether you are a beginner investor looking to kick-start your investing journey or someone who is looking to rebuild after losing a lot of money in the stock market, I hope you find this sharing useful.
Feel free to contact me if you have any questions via the comments section or email me if you do not wish to ask publicly. If you wish to be part of my rebuilding journey or are curious about my rebuilding plans, you may want to subscribe to my blog so that you will be notified for future updates.
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Hi Jason, if one is in his 40s and holding a corporate job, it is essential that one has a good, sustainable passive income flow. Even supposedly “iron rice bowl” organisations do manage (I.e. force) people out. You are now at the mercy of your boss and organisation. You got no cards to play. Good to see you are building up your emergency cash holdings. Keep it up! Jia you!
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It is like buying a lottery ticket, hope the returns will be huge compared to the capital used, in exchange for the risk involved.
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tbh this feels more like gambling than buying lottery. People don’t go all in when they buy lottery, but they do go all in when they gamble. You made massive losses with your LEAPS trade and perhaps you went all in again to recoup your losses. These are classic signs of gambling.
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You are currently in your early 40s. Imagine if you carried on and this hit in your 50s….gua gua gua.
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I think I misunderstood your first comment which you subsequently edited so I can’t find it anymore. I had thought that you were asking why I wanted to take on risker asset class as mentioned in this article, which was going to be a very small portion of my capital in the future, after I have built up my investment base. If you were referring to my previous trades, it was not ALL IN a particular counter and losing them all. The unrealised losses were huge because I sold Covered CALL at the wrong timing, just before the market turned bullish in 2023. So, I did not allocate that amount of capital into any trades and then lost it all. But for LEAPS portfolio collapse that happened in 2022, I would agree that I had invested that amount into the portfolio, which subsequently went to zero, but I broke even on that in 2024.
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Hi Jason, my 1st comment was on about how I felt it was somewhat like gambling.
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Oops, sorry for the confusion, I think I replied to wrong comment (yours instead of someone else’s) and thought it was amended as I could not find it anymore. That comment was on the other post (liquidation) instead.
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if I’m correct, the $496k actually understates the magnitude of wealth destruction in 1 day. You went from $860k “surrender” value for your liquid assets to perhaps just over $160 (60k SSB, 90k cash, high 3 digits legacy SG shares). That’s close to $690k wealth destruction.
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You’ve raised a good point. I went back to check my spreadsheet and saw that I made a mistake in updating 2 Nvidia trades. So, the total realised loss should be S$540k instead of S$496k. I have another advance credit of $110k from the opened options contracts, which makes up a total of $650k, which is close to what all my shares are worth when they are sold on 12 Feb, the day of liquidation.
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Hi Jason, I can only imagine how you must be feeling. I just feel it is such a shame. If you had placed the 800k in a handful of diversified ETFs and solid dividend stocks, with the compounding and your annual savings, you could have reached FI by your late 40s. Then you can just work for fun and not be held hostage by your bosses.
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Yah, there so many “if only”, such as I should not have sold my DBS stock that has an average price of 20+, it would have given me more than 12% dividend yield now, or after making 200+k in 2021, I should have bought stocks instead of LEAPS CALL options that eventually expire worthless. But hindsight vision is always 20/20. There is no other way but to look forward and rebuild again. If I can assembled 800k over the past 2 decades, I should be able to do it again in the next 2 decades.
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anyway why the decision to move house? Just curious, given you were rather tight on liquidity then.
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