Next Move: Investable Cash

I don't regard any investment as risky unless an investor puts his money in a ponzi scheme, an unprofitable company, and his own ignorance. But not having a pool of investable cash is risky.

Since venturing into the stock market a year ago, I have been filling my trading account with investable cash that will be used to buy stocks. I never used up the cash pool as I was entirely new to the stock market investment. After accumulating some experience and spotting the potentials in REITs, I gobbled up shares of various REIT companies until the cash pool was almost dry.

Realised that the cash pool was almost dry, I pressed the 'stop' button and ceased all future stock purchases. Why? There are two reasons a pool of investable cash must not be dried up. First, investable cash will come into handy during emergency times. I am not saying the economic emergency but your own emergency. That is, should you encounter any emergency in yourself or your family, and require urgent money, you can withdraw investable cash immediately. Don't ever think about selling stocks to liquidate cash - it's either you wait for many days for the liquidated cash to return back, or you clock real losses if the market moves down. And second, investable cash will provide you the golden opportunity to take advantage of a massive market downturn. During the 2008 recession, those investors having a large sum of investable cash took advantage by gobbling shares of strong companies at a ultra-discounted price, allowing these nobodies to become today's millionaires in just 3 years.

As of now, my investable cash is slowly restoring back after adding in NS allowance and stock dividends. I am looking forward to sell and liquidate some of my holdings in AIMS and Starhill Global when they are ready to test the resistance lines in coming weeks, using the strategy of "buy at supports, sell at resistance". The liquidated shares will go to the investable cash.

The market is relatively unstable now and economic sentiments are weak. While I can't say for sure whether there could be a worldwide economy crash, I can sense the debt pressure is rapidly building up among developed but debt-flooded economies. Once the pressure has reached the boiling and could no longer be contained, banks around the world will collapse (the same way as 2008) and another global economic recession will happen. This time round, without China to save the day (the dragon itself is hibernating due to economic slowdown), things can get very nasty.

As said, I am preparing for the worst scenario and thus a large sum of investable cash must be present.