To Sell Or Not To Sell?

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Do note that the following are just thoughts and plans that I am thinking to do for myself, and nothing should be treated as advice of any sorts, because even I myself is unsure what action I should be taking moving forward for now.  

Recently, a series of events that happened made me think about what I should do for myself moving forward.  These events are:

1)     The strengthening of the Malaysia Ringgit (MYR) against the Singapore Dollar (SGD), and this appreciation may continue further in 2025 as US continue to gradually cut interest rates.

2)     The US markets have continued to hit another all time highs.

As such, I am contemplating to liquidate my entire US Growth Portfolio, and convert the monies to MYR and use it to pay down my mortgage loan in Malaysia.  The reasons for why I have this thought are as follows:

1)     The main advantage of this move is that it will improve my cash-flow in my Malaysia "assets", making my Malaysia investment cash-flow positive (yes, currently it is cash-flow negative, but rental income is sufficient to cover interest expense and part of loan principal amount, making it a sub-par investment).  

2)     Paying down my mortgage can help to save on interest payable in the long run, and the freed up cash can be deployed back into equities to rebuild the US Growth Portfolio

3)     Lowering outstanding debts definitely helps to alleviate financial stress and brings peace of mind to myself.  This will also help me to feel more financially independent, and psychologically makes me feel closer towards Barista FIRE.

4)     This move also has no impact to my dividend income number towards my Barista FIRE goal, because my SG Dividend Portfolio remains unaffected.  

Thus, coupled with the slight rebound in SGD against MYR in these recent few weeks, if I am able to materialize this move, this will help to improve my overall financial health in the near term.  With this move, I will be in a very healthy cash-flow positive position, and without any hiccups, this may help me reach my FIRE number earlier.

Since it sounds feasible and positive, why am I hesitant to materialize this?

There are a few reasons why I am hesitant to go ahead with this move:

1)     Building a portfolio takes time, and if I liquidate my US Growth Portfolio to pay down my mortgage, am I being penny-wise, pound-foolish?  I may incur huge opportunity cost if I go ahead with this move as historically, it has been proven that the returns from investment should be higher than the interest payable for mortgage loan.

2)     Mortgage debt is widely regarded as 'good debt'.  As such, there is no urgent reason for me to clear the mortgage loan using the portfolio that I have built up over the years.

3)     As I am still considerably young and abled-body, I am still able to generate an active income (despite me actively trying to pursue Barista FIRE).  Hence, from a responsible retirement planning perspective, I should keep my portfolio intact and let it compound with time.  The mortgage loan can be serviced slowly via my active income.

4)     If I move my investment capital in my portfolio to pay the mortgage, I may be concentrating too much of my funds in a single investment vehicle, which is property.  This is especially true for my case as my SG Dividend Portfolio is also highly concentrated in REITs.  If I liquidate my US Growth Portfolio, my equities portfolio will have more than 70% allocation towards REITs.  This is not a wise move for my case, as this move is going against my plan to diversify my investment vehicles.

This seems to be a good 'exercise' for me, as this post allows me to list down the pros and cons if I liquidate my US Growth Portfolio to pay down my Malaysia mortgage loan.  Looking logically at the various points above, I am inclined to keep my US Growth Portfolio intact for now, unless recent events make a U-turn, where SGD appreciates strongly against MYR, US Dollar (USD) appreciates strongly against SGD, and my portfolio propel to another all time high before the year ends.  If these 3 events magically happen at the same time, that may be a catalyst for me to execute the liquidation process to pare down my debts.  

*Update:  There was a revamp of my portfolio which I have already mentioned in the October update.  Previously my portfolio is combined with an additional 10% of invested capital from my family.  As of end of October, I have decided to liquidate this 10% of the portfolio to separate it entirely from my personal portfolio.  As such, this 10% of invested capital will be liquidated from the US Growth Portfolio to maximize profits for my family (37.1% profits over 3 years, nothing to shout about).  As such, my personal portfolio allocation will tip to 87.67% in SG Dividend Portfolio and only 12.33% in US Growth Portfolio.*

**Latest Update:  After Trump won the US Presidential Election, US equities are soaring, TLT crashes, 10-year bond yields soar through the roof and therefore REITs plunges like there is no tomorrow.  This win is expected to be inflationary in the longer term based on Trump's campaign policies.  What is going to truly happen moving forward is getting more uncertain, but this definitely adds more certainty to my decision.  I will definitely need to keep my US Growth Portfolio as a 'hedge' to my SG Dividend Portfolio, which is REITs-heavy.  Shall hang on to my portfolio and ride through the upcoming rough patch.** 

That's all the updates for now!  I shall continue to work hard and make full use of my active income to pare down my outstanding debts slowly and grow my equities portfolio at the same time.  Barista FIRE, here I come...!

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