On 12 Feb 25, my brokerage IBKR liquidated all my positions (shares and options contracts), realising a total loss of USD400k, when I failed to respond to a margin call that had happened due to a failed trade.
Full story here:
I Was Margin Called, IBKR Liquidated ALL My Positions & Realised S$540k (USD400k) Worth Of Losses
This was the summary of my portfolio capital allocation before the disaster happened:
*Figures denoted in SGD*
After the liquidation, my capital allocation looked like this:
My portfolio capital dropped from S$747.5k to S$206.8k in a single day, realizing a loss of S$540.7k (approximately USD400k).
Moving Forward & Rebuilding
Instead of crying over split milk, I chose to pick myself up, remember the precious lessons, and move on to rebuild my investment portfolio.
7 months later, this is how my portfolio looked:
I started my rebuilding journey with the first goal of maximizing my investment in SSB to 200k, to act as a financial safety net for my investments before I took on higher-risk asset classes. It is also my contingency fund, just in case I need money urgently. For buyers of the SSB (Singapore Savings Bond), both capital and interest are guaranteed, up to 10 years. That makes it a safe haven for many investors in uncertain times.
Besides purchasing SSB, I also bought US stocks for growth (capital gains) as well as SG dividend stocks, which I hope can bring me a stream of passive income, alongside the interest from SSB, so that I do not need to actively monitor the market every night.
The 3-Bucket Strategy
I adopted a 3-bucket strategy by splitting my capital into three different asset classes to manage my risk. The first bucket is the ultra safe SSB, where both capital and interest (projected 2.5 ~ 3%) are guaranteed for the next 10 years, regardless of what happens in the stock market. Then, I have my dividend stocks, which are stable and have relatively low risk as their share prices do not fluctuate a lot in a short period of time. Finally, I have my growth stocks in the 3rd bucket, which carries more risk than the other 2 buckets.
Trading Portfolio
Sometime in May 25, I used USD45k worth of capital to start a new trading portfolio and it consists of a mixture of shares and options contracts that I used for trading. This portfolio is parked under my “Growth Stocks” bucket, alongside the remaining capital that is used to purchase growth stocks for long-term investing. Over the last few months, I have managed to grow this portfolio from USD45k (May 25) to USD55k (Sep 25).
Read more here: Growing My USD45k Trading Portfolio Into USD54.7k In 4 Months (21.5% Return)
I share my trades on the same day over at my Patreon page so do follow me there if you need some references on what to trade and what strategies to use.
Click here to access my Patreon page
Concluding Thoughts
I feel that my portfolio now carries less risk as compared to the period before I was liquidated. Back then, I was trading on margins and frequently encountered liquidity warnings.
Now, my first 2 buckets (SSB and dividend stocks), which are relatively safe, make up 67% of my entire capital allocation, while the rest is used for the purchase of growth stocks for long-term investing and options trading for short-term gains.
My previous allocation had more than 60% of my total capital’s worth of shares tied to options contracts, which is high-risk and reduced my liquidity significantly as I was unable to sell them and withdraw the money when they are locked up by the options contracts.
It is easy to keep pouring money into high-risk assets when the market is booming but we must also manage our risk well and be ready for a market downturn and not wait till one before finding ourselves stuck or facing the risk of a margin call.
I have learnt my lesson the hard way when I was too optimistic and pessimistic at the wrong times when the market was either crashing or bottoming, and lost a lot of money in the process. You can read more about my 1M losses here:
The 6 Fatal Investing/ Trading Mistakes That Made Me Lose More Than $1M
I hope this article has been useful to you and feel free to leave a comment if you have any queries, or subscribe to my blog for more articles like this.
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*** FINANCE BOOKS ***
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